Company Quick10K Filing
Quick10K
Renasant
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$38.90 59 $2,280
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2019-02-14 Regulation FD, Exhibits
8-K 2019-01-22 Earnings, Exhibits
8-K 2018-10-24 Other Events, Exhibits
8-K 2018-10-22 Earnings, Exhibits
8-K 2018-10-16 Officers, Exhibits
8-K 2018-09-01 M&A, Off-BS Arrangement, Officers, Exhibits
8-K 2018-08-06 Other Events, Exhibits
8-K 2018-07-31 Regulation FD, Exhibits
8-K 2018-07-17 Earnings, Exhibits
8-K 2018-07-17 Amend Bylaw, Exhibits
8-K 2018-07-01 Officers
8-K 2018-05-16 Officers, Exhibits
8-K 2018-05-07 Regulation FD, Exhibits
8-K 2018-04-24 Officers, Shareholder Vote
8-K 2018-03-28 Enter Agreement, Other Events, Exhibits
8-K 2018-02-07 Regulation FD, Exhibits
8-K 2018-01-16 Earnings, Exhibits
JPM JPMorgan Chase
BBT BB&T
TCF TCF Financial
LKFN Lakeland Financial
SBSI Southside Bancshares
UVSP Univest of Pennsylvania
FFIC Flushing Financial
FMNB Farmers National Banc
RIVE Riverview Financial
RNDB Randolph Bancorp
RNST 2018-09-30
Part I. Financial Information
Item 1. Financial Statements
Note 1 - Summary of Significant Accounting Policies
Note 2 - Mergers and Acquisitions
Note 3 - Securities
Note 4 - Non Purchased Loans
Note 5 - Purchased Loans
Note 6 - Allowance for Loan Losses
Note 7 - Other Real Estate Owned
Note 8 - Goodwill and Other Intangible Assets
Note 9 - Mortgage Servicing Rights
Note 10 - Employee Benefit and Deferred Compensation Plans
Note 11 - Derivative Instruments
Note 12 - Income Taxes
Note 13 - Investments in Qualified Affordable Housing Projects
Note 14 - Fair Value Measurements
Note 15 - Other Comprehensive Income (Loss)
Note 16 - Net Income per Common Share
Note 17 - Regulatory Matters
Note 18 - Segment Reporting
Note 19 - Revenue Recognition
Note 20 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 rnst9302018ex311.htm
EX-31.2 rnst9302018ex312.htm
EX-32.1 rnst9302018ex321.htm
EX-32.2 rnst9302018ex322.htm

Renasant Earnings 2018-09-30

RNST 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 rnst10q93020181.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________________________
FORM 10-Q
 ________________________________________________________
(Mark One)
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2018
Or
o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission file number: 001-13253
 ________________________________________________________
RENASANT CORPORATION
(Exact name of registrant as specified in its charter)
 ________________________________________________________
Mississippi
 
64-0676974
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
 
 
209 Troy Street, Tupelo, Mississippi
 
38804-4827
(Address of principal executive offices)
 
(Zip Code)
(662) 680-1001
(Registrant’s telephone number, including area code)
 ________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
o
 
 
 
 
Non-accelerated filer
o 
Smaller reporting company
o
 
 
 
 
Emerging growth company
o
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  ý
As of October 31, 2018, 58,714,751 shares of the registrant’s common stock, $5.00 par value per share, were outstanding.



Renasant Corporation and Subsidiaries
Form 10-Q
For the Quarterly Period Ended September 30, 2018
CONTENTS
 





PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries
Consolidated Balance Sheets

(In Thousands, Except Share Data)
 
(Unaudited)
 
 
 
September 30,
2018
 
December 31, 2017
Assets
 
 
 
Cash and due from banks
$
170,438

 
$
187,838

Interest-bearing balances with banks
199,158

 
93,615

Cash and cash equivalents
369,596

 
281,453

Securities available for sale, at fair value
1,177,606

 
671,488

Loans held for sale ($252,025 and $108,316 carried at fair value at September 30, 2018 and December 31, 2017, respectively)
463,287

 
108,316

Loans, net of unearned income:
 
 
 
Non purchased loans and leases
6,210,238

 
5,588,556

Purchased loans
2,912,669

 
2,031,766

Total loans, net of unearned income
9,122,907

 
7,620,322

Allowance for loan losses
(48,610
)
 
(46,211
)
Loans, net
9,074,297

 
7,574,111

Premises and equipment, net
206,831

 
183,254

Other real estate owned:
 
 
 
Non purchased
4,665

 
4,410

Purchased
7,932

 
11,524

Total other real estate owned, net
12,597

 
15,934

Goodwill
927,261

 
611,046

Other intangible assets, net
46,854

 
24,510

Bank-owned life insurance
219,264

 
175,863

Mortgage servicing rights
46,413

 
39,339

Other assets
202,933

 
144,667

Total assets
$
12,746,939

 
$
9,829,981

Liabilities and shareholders’ equity
 
 
 
Liabilities
 
 
 
Deposits
 
 
 
Noninterest-bearing
$
2,359,859

 
$
1,840,424

Interest-bearing
7,812,089

 
6,080,651

Total deposits
10,171,948

 
7,921,075

Short-term borrowings
175,559

 
89,814

Long-term debt
263,957

 
207,546

Other liabilities
124,764

 
96,563

Total liabilities
10,736,228

 
8,314,998

Shareholders’ equity
 
 
 
Preferred stock, $.01 par value – 5,000,000 shares authorized; no shares issued and outstanding

 

Common stock, $5.00 par value – 150,000,000 shares authorized; 59,296,725 shares issued; 58,743,814 and 49,321,231 shares outstanding, respectively
296,484

 
249,951

Treasury stock, at cost
(17,225
)
 
(19,906
)
Additional paid-in capital
1,287,063

 
898,095

Retained earnings
468,612

 
397,354

Accumulated other comprehensive loss, net of taxes
(24,223
)
 
(10,511
)
Total shareholders’ equity
2,010,711

 
1,514,983

Total liabilities and shareholders’ equity
$
12,746,939

 
$
9,829,981

See Notes to Consolidated Financial Statements.    

1


Renasant Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In Thousands, Except Share Data)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Interest income
 
 
 
 
 
 
 
Loans
$
108,577

 
$
92,536

 
$
301,351

 
$
247,076

Securities
 
 
 
 
 
 
 
Taxable
6,632

 
5,061

 
16,326

 
14,040

Tax-exempt
1,592

 
2,400

 
4,926

 
7,284

Other
994

 
698

 
2,146

 
1,763

Total interest income
117,795

 
100,695

 
324,749

 
270,163

Interest expense
 
 
 
 
 
 
 
Deposits
13,556

 
6,834

 
32,534

 
17,297

Borrowings
4,800

 
3,844

 
11,147

 
9,231

Total interest expense
18,356

 
10,678

 
43,681

 
26,528

Net interest income
99,439

 
90,017

 
281,068

 
243,635

Provision for loan losses
2,250

 
2,150

 
5,810

 
5,400

Net interest income after provision for loan losses
97,189

 
87,867

 
275,258

 
238,235

Noninterest income
 
 
 
 
 
 
 
Service charges on deposit accounts
8,847

 
8,676

 
25,591

 
24,565

Fees and commissions
5,944

 
5,618

 
17,546

 
16,287

Insurance commissions
2,461

 
2,365

 
6,576

 
6,406

Wealth management revenue
3,386

 
2,963

 
10,094

 
8,884

Mortgage banking income
14,350

 
10,616

 
38,149

 
33,544

Net gain on sales of securities
(16
)
 
57

 
(16
)
 
57

BOLI income
1,186

 
1,136

 
3,326

 
3,234

Other
1,895

 
1,982

 
6,321

 
6,722

Total noninterest income
38,053

 
33,413

 
107,587

 
99,699

Noninterest expense
 
 
 
 
 
 
 
Salaries and employee benefits
55,187

 
48,530

 
155,981

 
135,753

Data processing
4,614

 
4,179

 
13,458

 
12,248

Net occupancy and equipment
10,668

 
9,470

 
30,295

 
27,603

Other real estate owned
278

 
603

 
1,167

 
1,916

Professional fees
2,056

 
1,552

 
6,370

 
5,501

Advertising and public relations
2,242

 
1,802

 
7,092

 
5,824

Intangible amortization
1,765

 
1,766

 
5,010

 
4,822

Communications
2,190

 
1,927

 
6,036

 
5,698

Extinguishment of debt

 

 

 
205

Merger and conversion related expenses
11,221

 
6,266

 
12,621

 
9,655

Other
4,525

 
4,565

 
13,686

 
15,585

Total noninterest expense
94,746

 
80,660

 
251,716

 
224,810

Income before income taxes
40,496

 
40,620

 
131,129

 
113,124

Income taxes
8,532

 
14,199

 
28,629

 
37,447

Net income
$
31,964

 
$
26,421

 
$
102,500

 
$
75,677

Basic earnings per share
$
0.61

 
$
0.54

 
$
2.03

 
$
1.64

Diluted earnings per share
$
0.61

 
$
0.53

 
$
2.03

 
$
1.64

Cash dividends per common share
$
0.20

 
$
0.18

 
$
0.59

 
$
0.54

See Notes to Consolidated Financial Statements.

2


Renasant Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
(In Thousands)
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Net income
$
31,964

 
$
26,421

 
$
102,500

 
$
75,677

Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
Securities available for sale:
 
 
 
 
 
 
 
Unrealized holding (losses) gains on securities
(4,882
)
 
(729
)
 
(15,791
)
 
4,747

Reclassification adjustment for losses (gains) realized in net income
11

 
(35
)
 
11

 
(35
)
Unrealized holding gains on securities transferred from held to maturity to available for sale


 
8,108

 

 
8,108

Amortization of unrealized holding gains on securities transferred to the held to maturity category

 
(4
)
 

 
(173
)
Total securities
(4,871
)
 
7,340

 
(15,780
)
 
12,647

Derivative instruments:
 
 
 
 
 
 
 
Unrealized holding gains on derivative instruments
639

 
100

 
1,884

 
104

Total derivative instruments
639

 
100

 
1,884

 
104

Defined benefit pension and post-retirement benefit plans:
 
 
 
 
 
 
 
Amortization of net actuarial loss recognized in net periodic pension cost
61

 
62

 
184

 
187

Total defined benefit pension and post-retirement benefit plans
61

 
62

 
184

 
187

Other comprehensive (loss) income, net of tax
(4,171
)
 
7,502

 
(13,712
)
 
12,938

Comprehensive income
$
27,793

 
$
33,923

 
$
88,788

 
$
88,615


See Notes to Consolidated Financial Statements.

3


Renasant Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 
Nine Months Ended September 30,
 
2018
 
2017
Operating activities
 
 
 
Net income
$
102,500

 
$
75,677

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
 
 
Provision for loan losses
5,810

 
5,400

Depreciation, amortization and accretion
3,689

 
3,541

Deferred income tax expense
7,335

 
1,669

Funding of mortgage loans held for sale
(1,318,484
)
 
(1,256,233
)
Proceeds from sales of mortgage loans held for sale
1,253,680

 
1,245,301

Gains on sales of mortgage loans held for sale
(30,805
)
 
(15,719
)
Losses (gains) on sales of securities
16

 
(57
)
Penalty on prepayment of debt

 
205

(Gains) losses on sales of premises and equipment
(188
)
 
553

Stock-based compensation expense
5,556

 
3,771

Increase in other assets
(57
)
 
(2,059
)
Decrease in other liabilities
(27,084
)
 
(9,652
)
Net cash provided by operating activities
1,968

 
52,397

Investing activities
 
 
 
Purchases of securities available for sale
(576,579
)
 
(191,679
)
Proceeds from sales of securities available for sale
2,387

 
43,494

Proceeds from call/maturities of securities available for sale
113,511

 
132,044

Proceeds from sales of securities held to maturity

 
4,876

Proceeds from call/maturities of securities held to maturity

 
15,882

Net increase in loans
(156,082
)
 
(272,618
)
Purchases of premises and equipment
(15,599
)
 
(11,925
)
Proceeds from sales of premises and equipment
912

 
1,255

Proceeds from sales of other assets
5,286

 
11,485

Net cash received in acquisition of businesses
153,502

 
41,685

Net cash used in investing activities
(472,662
)
 
(225,501
)
Financing activities
 
 
 
Net increase in noninterest-bearing deposits
90,240

 
6,464

Net increase in interest-bearing deposits
448,675

 
112,854

Net increase in short-term borrowings
51,606

 
274,554

Repayment of long-term debt
(643
)
 
(169,961
)
Cash paid for dividends
(31,242
)
 
(25,004
)
Net stock-based compensation transactions
201

 
173

Net cash provided by financing activities
558,837

 
199,080

Net increase in cash and cash equivalents
88,143

 
25,976

Cash and cash equivalents at beginning of period
281,453

 
306,224

Cash and cash equivalents at end of period
$
369,596

 
$
332,200

Supplemental disclosures
 
 
 
Cash paid for interest
$
43,317

 
$
26,974

Cash paid for income taxes
$
21,305

 
$
29,491

Noncash transactions:
 
 
 
Transfers of loans to other real estate owned
$
2,657

 
$
5,418

Financed sales of other real estate owned
$
495

 
$
257

Transfers of loans held for sale to loans held for investment
$
1,510

 
$

Common stock issued in acquisition of businesses
$
434,519

 
$
213,590


See Notes to Consolidated Financial Statements.

4


Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies

(In Thousands)
Nature of Operations: Renasant Corporation (referred to herein as the “Company”) owns and operates Renasant Bank (“Renasant Bank” or the “Bank”) and Renasant Insurance, Inc. (“Renasant Insurance”). The Company offers a diversified range of financial, wealth management and insurance services to its retail and commercial customers through its subsidiaries and full service offices located throughout north and central Mississippi, Tennessee, Georgia, Alabama and north Florida.
Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior year amounts have been reclassified to conform to the current year presentation. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on February 28, 2018.
Business Combinations: The Company completed its acquisitions of Metropolitan BancGroup, Inc. (“Metropolitan”) and Brand Group Holdings, Inc. (“Brand”) on July 1, 2017 and September 1, 2018, respectively. The acquired institutions’ financial condition and results of operations are included in the Company’s financial condition and results of operations as of the applicable acquisition date. Due to the timing of the respective system conversions and the integration of operations into the Company's existing operations, historical reporting for acquired operations is impracticable, and, therefore disclosure of the amounts of revenue and expenses of the acquired institutions since the acquisition dates is impracticable.
In connection with the acquisition of Brand, the Company acquired a portfolio of non-mortgage consumer loans, which is included in the line item “Loans held for sale” on the Company’s Consolidated Balance Sheet as of September 30, 2018. The Company is currently evaluating its long-term plans with respect to this portfolio. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 850, “Business Combinations”, these loans were measured at fair value as of the acquisition date. Subsequent to the acquisition date, these loans are carried at the lower of amortized cost or fair value.
Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material.

Impact of Recently-Issued Accounting Standards and Pronouncements:
In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 amends the accounting model and disclosure requirements for leases.  The current accounting model for leases distinguishes between capital leases, which are recognized on the balance sheet, and operating leases, which are not.  Under the new standard, the lease classifications are defined as finance leases, which are similar to capital leases under current GAAP, and operating leases.  Further, a lessee will recognize a lease liability and a right-of-use asset for all leases with a term greater than 12 months on its balance sheet regardless of the lease’s classification, which may significantly increase reported assets and liabilities.  The accounting model and disclosure requirements for lessors remains substantially unchanged from current GAAP.  ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact ASU 2016-02 will have on its financial position and results of operations, and its financial statement disclosures, and the expected results include the recognition of leased assets and related lease liabilities on the balance sheet, along with leasehold amortization and interest expense recognized in the statements of income.
In June 2016, FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This update will significantly change the way entities recognize impairment on many financial assets by requiring immediate recognition of estimated credit losses expected to occur over the asset’s remaining life. FASB describes this impairment recognition model as the current expected credit loss (“CECL”) model and believes the CECL model will result in more timely recognition of credit losses since it incorporates expected credit losses versus incurred credit losses. The scope of FASB’s CECL model includes loans, held-to-maturity debt instruments, lease receivables, loan commitments

5


and financial guarantees that are not accounted for at fair value. For public companies, this update is effective for interim and annual periods beginning after December 15, 2019. The Company has formed an implementation committee comprised of both accounting and credit employees to guide Renasant Bank through the implementation of ASU 2016-13. Currently, this committee is working with a consulting firm to develop the Company’s CECL model, which includes reviewing the different model requirements and ensuring historical data integrity across all reporting systems.
In January 2017, FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350)” (“ASU 2017-04”). ASU 2017-04 will amend and simplify current goodwill impairment testing by eliminating certain testing under the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU 2017-04 will be effective for interim and annual periods beginning after December 15, 2019 and is not expected to have a material impact on the Company’s financial statements.
In March 2017, FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-08”). ASU 2017-08 requires the amortization period for certain callable debt securities held at a premium to be the earliest call date.  ASU 2017-08 will be effective for interim and annual periods beginning after December 15, 2018.  The Company is currently evaluating the effect that ASU 2017-08 will have on its financial position and results of operations and its financial statement disclosures.
In August 2017, FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 is intended to simplify hedge accounting by eliminating the requirement to separately measure and report hedge effectiveness. ASU 2017-12 also seeks to expand the application of hedge accounting by modifying current requirements to include hedge accounting on partial-term hedges, the hedging of prepayable financial instruments and other strategies.  ASU 2017-12 will be effective for interim and annual periods beginning after December 15, 2018.  The Company is currently evaluating the effect that ASU 2017-12 will have on its financial position and results of operations and its financial statement disclosures.
In August 2018, FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 is intended to improve the disclosures on fair value measurements by eliminating, amending and adding certain disclosure requirements. These changes are intended to reduce costs for preparers while providing more useful information for financial statement users.   ASU 2018-13 will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted.  The Company is currently evaluating the effect that ASU 2018-13 will have on its financial position and results of operations and its financial statement disclosures.

Note 2 – Mergers and Acquisitions
(Dollar Amounts In Thousands, Except Share Data)
Acquisition of Brand Group Holdings, Inc.

Effective September 1, 2018, the Company completed its acquisition by merger of Brand, the parent company of The Brand Banking Company (“Brand Bank”), in a transaction valued at approximately $474,453. The Company issued 9,306,477 shares of common stock and paid approximately $21,879 to Brand shareholders, excluding cash paid for factional shares, and paid approximately $17,157, net of tax benefit, to Brand stock option holders for 100% of the voting equity interest in Brand. At closing, Brand merged with and into the Company, with the Company the surviving corporation in the merger; immediately thereafter, Brand Bank merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger. On September 1, 2018, Brand operated thirteen banking locations throughout the greater Atlanta market.
The Company recorded approximately $343,569 in intangible assets which consist of goodwill of $316,215 and a core deposit intangible of $27,354. Goodwill resulted from a combination of revenue enhancements from expansion in existing markets and efficiencies resulting from operational synergies. The fair value of the core deposit intangible is being amortized over the estimated useful life, currently expected to be approximately 10 years. The goodwill is not deductible for income tax purposes.

The following table summarizes the allocation of purchase price to assets and liabilities acquired in connection with the Company’s acquisition of Brand based on their fair values on September 1, 2018.

6


Purchase Price:
 
 
Shares issued to common shareholders
9,306,477

 
Purchase price per share
$
46.69

 
Value of stock paid
 
$
434,519

Cash consideration paid
 
21,879

Cash paid for fractional shares
 
4

Cash settlement for stock options, net of tax benefit
 
17,157

Deal charges
 
894

  Total Purchase Price
 
$
474,453

Net Assets Acquired:
 
 
Stockholders’ equity at acquisition date
$
138,896

 
Increase (decrease) to net assets as a result of fair value adjustments
to assets acquired and liabilities assumed:
 
 
  Securities
(1,354
)
 
  Loans, including loans held for sale
(16,287
)
 
  Premises and equipment
1,621

 
  Intangible assets
27,354

 
  Other assets
(35
)
 
  Deposits
(1,367
)
 
  Borrowings
(3,236
)
 
  Other liabilities
13,675

 
  Deferred income taxes
(1,029
)
 
     Total Net Assets Acquired
 
158,238

     Goodwill resulting from merger(1)
 
$
316,215

(1) The goodwill resulting from the merger has been assigned to the Community Banks operating segment.

The following table summarizes the estimated fair value on September 1, 2018 of assets acquired and liabilities assumed on that date in connection with the merger with Brand. These estimates are subject to change pending the finalization of all valuations.

Cash and cash equivalents
 
$
193,436

Securities
 
70,123

Loans, including loans held for sale
 
1,593,894

Premises and equipment
 
20,782

Intangible assets
 
343,569

Other assets
 
113,324

Total assets
 
$
2,335,128

 
 
 
Deposits
 
$
1,714,177

Borrowings
 
90,912

Other liabilities
 
55,586

Total liabilities
 
$
1,860,675



7


As part of the merger agreement, Brand agreed to divest the operations of its subsidiary Brand Mortgage Group, LLC (“BMG”), which transaction was not completed until October 31, 2018. As a result, the balance sheet and results of operations of BMG, which the Company considers to be immaterial to the overall results of the Company, are included in the Company's results for the third quarter of 2018 since the acquisition date and will be included in the Company’s balance sheet and consolidated results of operations through October 31, 2018. The following table summarizes the significant assets acquired and liabilities assumed from BMG:
(in thousands)
 
September 1, 2018

Loans held for sale
 
$
48,100

Borrowings
 
34,139

The following table summarizes the results of operations for BMG included in the Company’s Consolidated Statements of Income for the three and nine months ended September 30, 2018:
(in thousands)
 
 
Interest income
 
$
186

Interest expense
 
143

Net interest income
 
43

Noninterest income
 
1,696

Noninterest expense
 
2,029

Net income before taxes
 
$
(290
)
Acquisition of Metropolitan BancGroup, Inc.
Effective July 1, 2017, the Company completed its acquisition of Metropolitan, the parent company of Metropolitan Bank, in a transaction valued at approximately $219,461. The Company issued 4,883,182 shares of common stock and paid approximately $4,764 to Metropolitan stock option holders for 100% of the voting equity interest in Metropolitan. At closing, Metropolitan merged with and into the Company, with the Company the surviving corporation in the merger; immediately thereafter, Metropolitan Bank merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger. On July 1, 2017, Metropolitan operated eight banking locations in Nashville and Memphis, Tennessee and the Jackson, Mississippi Metropolitan Statistical Area.
The Company recorded approximately $147,478 in intangible assets which consist of goodwill of $140,512 and a core deposit intangible of $6,966. Goodwill resulted from a combination of revenue enhancements from expansion in existing markets and efficiencies resulting from operational synergies. The fair value of the core deposit intangible is being amortized on an accelerated basis over the estimated useful life, currently expected to be approximately 10 years. The goodwill is not deductible for income tax purposes.

The following table summarizes the allocation of purchase price to assets and liabilities acquired in connection with the Company’s acquisition of Metropolitan based on their fair values on July 1, 2017.

8


Purchase Price:
 
 
Shares issued to common shareholders
4,883,182

 
Purchase price per share
$
43.74

 
Value of stock paid
 
$
213,590

Cash paid for fractional shares
 
5

Cash settlement for stock options
 
4,764

Deal charges, net of taxes
 
1,102

  Total Purchase Price
 
$
219,461

Net Assets Acquired:
 
 
Stockholders’ equity at acquisition date
$
89,253

 
Increase (decrease) to net assets as a result of fair value adjustments
to assets acquired and liabilities assumed:
 
 
  Securities
(731
)
 
Mortgage loans held for sale
30

 
Loans, net of Metropolitan’s allowance for loan losses
(13,071
)
 
Premises and equipment
(4,629
)
 
Intangible assets, net of Metropolitan’s existing intangibles
2,340

 
Other real estate owned
(1,251
)
 
Other assets
2,731

 
  Deposits
(3,603
)
 
  Borrowings
(1,294
)
 
  Other liabilities
3,930

 
  Deferred income taxes
5,244

 
     Total Net Assets Acquired
 
$
78,949

Goodwill resulting from merger(1)
 
$
140,512

(1) The goodwill resulting from the merger has been assigned to the Community Banks operating segment.

The following table summarizes the fair value on July 1, 2017 of assets acquired and liabilities assumed on that date in connection with the merger with Metropolitan.

Cash and cash equivalents
 
$
47,556

Securities
 
108,697

Loans, including mortgage loans held for sale
 
967,804

Premises and equipment
 
8,576

Other real estate owned
 
1,203

Intangible assets
 
147,478

Other assets
 
69,567

Total assets
 
$
1,350,881

 
 
 
Deposits
 
$
942,084

Borrowings
 
174,522

Other liabilities
 
20,685

Total liabilities
 
$
1,137,291


Supplemental Pro Forma Combined Condensed Results of Operations
The following unaudited pro forma combined condensed consolidated financial information presents the results of operations for the nine months ended September 30, 2018 and 2017 of the Company as though the Brand and Metropolitan mergers had been completed as of January 1, 2017. The unaudited pro forma information combines the historical results of Brand and Metropolitan with the Company’s historical consolidated results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the periods presented. The pro forma information is not necessarily indicative of what would have occurred

9


had the acquisitions taken place on January 1, 2017. The pro forma information does not include the effect of any cost-saving or revenue-enhancing strategies. Merger expenses are reflected in the period in which they were incurred.
 
(Unaudited)
 
Nine Months Ended
 
September 30,
 
2018
 
2017
Net interest income - pro forma
$
341,946

 
$
336,250

 
 
 
 
Noninterest income - pro forma
$
117,476

 
$
139,328

 
 
 
 
Noninterest expense - pro forma
$
359,386

 
$
327,566

 
 
 
 
Net income - pro forma
$
72,719

 
$
93,570

 
 
 
 
Earnings per share - pro forma:
 
 
 
Basic
$
1.24

 
$
1.60

Diluted
$
1.24

 
$
1.59




10

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Note 3 – Securities
(In Thousands, Except Number of Securities)

The amortized cost and fair value of securities available for sale were as follows as of the dates presented:
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
September 30, 2018
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
3,541

 
$
13

 
$
(48
)
 
$
3,506

Obligations of states and political subdivisions
208,885

 
2,627

 
(1,193
)
 
210,319

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
573,236

 
240

 
(12,889
)
 
560,587

Government agency collateralized mortgage obligations
316,642

 
13

 
(9,427
)
 
307,228

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
22,094

 
203

 
(562
)
 
21,735

Government agency collateralized mortgage obligations
29,332

 

 
(370
)
 
28,962

Trust preferred securities
12,351

 

 
(2,047
)
 
10,304

Other debt securities
35,308

 
104

 
(447
)
 
34,965

 
$
1,201,389

 
$
3,200

 
$
(26,983
)
 
$
1,177,606

 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2017
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
3,554

 
$
40

 
$
(30
)
 
$
3,564

Obligations of states and political subdivisions
228,589

 
6,161

 
(269
)
 
234,481

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
196,121

 
888

 
(3,059
)
 
193,950

Government agency collateralized mortgage obligations
180,258

 
133

 
(3,752
)
 
176,639

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
31,015

 
389

 
(234
)
 
31,170

Government agency collateralized mortgage obligations
5,019

 
1

 
(14
)
 
5,006

Trust preferred securities
12,442

 

 
(3,054
)
 
9,388

Other debt securities
17,106

 
260

 
(76
)
 
17,290

 
$
674,104

 
$
7,872

 
$
(10,488
)
 
$
671,488


During the third quarter of 2018, the Company sold municipal securities and residential mortgage backed securities with a carrying value of $2,403 at the time of sale for net proceeds of $2,387. There were no other sales of securities during the nine months ended September 30, 2018. During the third quarter of 2017, the Company sold one of its pooled trust preferred securities (XXIV) with a carrying value of $9,346 at the time of sale for net proceeds of $9,403 resulting in a gain of $57 on the sale. During the first nine months of 2017, the Company also sold certain securities acquired in connection with its acquisition of Metropolitan. These included $14,750 in mortgage backed securities, $16,395 in collateralized mortgage obligations and $4,876 in obligations of states and political subdivisions. These securities were sold at carrying value and did not result in a gain or loss. Finally, during the first nine months of 2017, the Company sold residential mortgage backed securities with a carrying value of $2,946 at the time of the sale for net proceeds of $2,946 resulting in no gain or loss on the sale.


11

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Gross realized gains and losses on sales of securities available for sale for the three and nine months ended September 30, 2018 and 2017, respectively, were as follows:
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Gross gains on sales of securities available for sale
$
11

 
$
57

 
$
11

 
$
57

Gross losses on sales of securities available for sale
(27
)
 

 
(27
)
 

(Losses) Gains on sales of securities available for sale, net
$
(16
)
 
$
57

 
$
(16
)
 
$
57


At September 30, 2018 and December 31, 2017, securities with a carrying value of $576,135 and $217,867, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $18,349 and $25,888 were pledged as collateral for short-term borrowings and derivative instruments at September 30, 2018 and December 31, 2017, respectively.
The amortized cost and fair value of securities at September 30, 2018 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.
 
 
 
Available for Sale
 
 
Amortized
Cost
 
Fair
Value
Due within one year
 
$
41,421

 
$
41,815

Due after one year through five years
 
48,858

 
49,351

Due after five years through ten years
 
81,381

 
81,580

Due after ten years
 
61,925

 
60,153

Residential mortgage backed securities:
 
 
 
 
Government agency mortgage backed securities
 
573,236

 
560,587

Government agency collateralized mortgage obligations
 
316,642

 
307,228

Commercial mortgage backed securities:
 
 
 
 
Government agency mortgage backed securities
 
22,094

 
21,735

Government agency collateralized mortgage obligations
 
29,332

 
28,962

Other debt securities
 
26,500

 
26,195

 
 
$
1,201,389

 
$
1,177,606



12

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)




The following table presents the age of gross unrealized losses and fair value by investment category as of the dates presented:
 
 
Less than 12 Months
 
12 Months or More
 
Total
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
Available for Sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
1
 
$
490

 
$
(10
)
 
2
 
$
1,982

 
$
(38
)
 
3
 
$
2,472

 
$
(48
)
Obligations of states and political subdivisions

79
 
52,161

 
(758
)
 
12
 
7,432

 
(435
)
 
91
 
59,593

 
(1,193
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
119
 
440,200

 
(7,536
)
 
52
 
94,329

 
(5,353
)
 
171
 
534,529

 
(12,889
)
Government agency collateralized mortgage obligations
51
 
186,677

 
(3,468
)
 
40
 
108,568

 
(5,959
)
 
91
 
295,245

 
(9,427
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
8
 
11,396

 
(188
)
 
2
 
5,072

 
(374
)
 
10
 
16,468

 
(562
)
Government agency collateralized mortgage obligations
5
 
28,996

 
(370
)
 
0
 

 

 
5
 
28,996

 
(370
)
Trust preferred securities
0
 

 

 
2
 
10,304

 
(2,047
)
 
2
 
10,304

 
(2,047
)
Other debt securities
14
 
13,823

 
(208
)
 
3
 
6,020

 
(239
)
 
17
 
19,843

 
(447
)
Total
277
 
$
733,743

 
$
(12,538
)
 
113
 
$
233,707

 
$
(14,445
)
 
390
 
$
967,450

 
$
(26,983
)
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
1
 
$
497

 
$
(3
)
 
2
 
$
1,999

 
$
(27
)
 
3
 
$
2,496

 
$
(30
)
Obligations of states and political subdivisions
23
 
11,860

 
(59
)
 
12
 
7,728

 
(210
)
 
35
 
19,588

 
(269
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
29
 
64,595

 
(659
)
 
44
 
89,414

 
(2,400
)
 
73
 
154,009

 
(3,059
)
Government agency collateralized mortgage obligations
33
 
102,509

 
(1,470
)
 
29
 
62,406

 
(2,282
)
 
62
 
164,915

 
(3,752
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
2
 
5,629

 
(17
)
 
3
 
5,872

 
(217
)
 
5
 
11,501

 
(234
)
Government agency collateralized mortgage obligations
1
 
4,986

 
(14
)
 
0
 

 

 
1
 
4,986

 
(14
)
Trust preferred securities
0
 

 

 
2
 
9,388

 
(3,054
)
 
2
 
9,388

 
(3,054
)
Other debt securities
2
 
756

 
(12
)
 
2
 
6,308

 
(64
)
 
4
 
7,064

 
(76
)
Total
91
 
$
190,832

 
$
(2,234
)
 
94
 
$
183,115

 
$
(8,254
)
 
185
 
$
373,947

 
$
(10,488
)
 
The Company evaluates its investment portfolio for other-than-temporary-impairment (“OTTI”) on a quarterly basis. Impairment is assessed at the individual security level. The Company considers an investment security impaired if the fair value of the security is less than its cost or amortized cost basis. Impairment is considered to be other-than-temporary if the Company intends to sell the investment security or if the Company does not expect to recover the entire amortized cost basis of the security before the Company is required to sell the security or before the security’s maturity.

The Company does not intend to sell any securities in an unrealized loss position that it holds, and it is not more likely than not that the Company will be required to sell any such security prior to the recovery of its amortized cost basis, which may be at maturity. Furthermore, even though a number of these securities have been in a continuous unrealized loss position for a period

13

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


greater than twelve months, the Company is collecting principal and interest payments from the respective issuers as scheduled. As such, the Company did not record any OTTI for the nine months ended September 30, 2018 or 2017.
The Company holds investments in pooled trust preferred securities that had an amortized cost basis of $12,351 and $12,442 and a fair value of $10,304 and $9,388 at September 30, 2018 and December 31, 2017, respectively. At September 30, 2018, the investments in pooled trust preferred securities consisted of two securities representing interests in various tranches of trusts collateralized by debt issued by over 160 financial institutions. Management’s determination of the fair value of each of its holdings in pooled trust preferred securities is based on the current credit ratings, the known deferrals and defaults by the underlying issuing financial institutions and the degree to which future deferrals and defaults would be required to occur before the cash flow for the Company’s tranches is negatively impacted. In addition, management continually monitors key credit quality and capital ratios of the issuing institutions. This determination is further supported by quarterly valuations, which are performed by third parties, of each security obtained by the Company. The Company does not intend to sell the investments before recovery of the investments’ amortized cost, and it is not more likely than not that the Company will be required to sell the investments before recovery of the investments’ amortized cost, which may be at maturity. At September 30, 2018, management did not, and does not currently, believe such securities will be settled at a price less than the amortized cost of the investment, but the Company previously concluded that it was probable that there had been an adverse change in estimated cash flows for both trust preferred securities and recognized credit related impairment losses on these securities in 2011. No additional impairment was recognized during the nine months ended September 30, 2018.
The following table provides information regarding the Company’s investments in pooled trust preferred securities at September 30, 2018:
 
Name
Single/
Pooled
 
Class/
Tranche
 
Amortized
Cost
 
Fair
Value
 
Unrealized
Loss
 
Lowest
Credit
Rating
 
Issuers
Currently in
Deferral or
Default
XXIII
Pooled
 
B-2
 
$
8,283

 
$
6,689

 
$
(1,594
)
 
BB
 
16
%
XXVI
Pooled
 
B-2
 
4,068

 
3,615

 
(453
)
 
B
 
19
%
 
 
 
 
 
$
12,351

 
$
10,304

 
$
(2,047
)
 
 
 
 

The following table provides a summary of the cumulative credit related losses recognized in earnings for which a portion of OTTI has been recognized in other comprehensive income:
 
 
2018
 
2017
Balance at January 1
$
(261
)
 
$
(3,337
)
Additions related to credit losses for which OTTI was not previously recognized

 

Increases in credit loss for which OTTI was previously recognized

 

Reductions for securities sold during the period

 
3,076

Balance at September 30
$
(261
)
 
$
(261
)


14

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)



Note 4 – Non Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 4, all references to “loans” mean non purchased loans.

The following is a summary of non purchased loans and leases as of the dates presented:
 
 
September 30,
2018
 
December 31, 2017
Commercial, financial, agricultural
$
817,799

 
$
763,823

Lease financing
57,576

 
57,354

Real estate – construction
624,892

 
547,658

Real estate – 1-4 family mortgage
2,000,770

 
1,729,534

Real estate – commercial mortgage
2,609,510

 
2,390,076

Installment loans to individuals
102,995

 
103,452

Gross loans
6,213,542

 
5,591,897

Unearned income
(3,304
)
 
(3,341
)
Loans, net of unearned income
$
6,210,238

 
$
5,588,556


Past Due and Nonaccrual Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, the recognition of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer and other retail loans are typically charged-off no later than the time the loan is 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. All interest accrued for the current year, but not collected, for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

15

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented:
 
 
Accruing Loans
 
Nonaccruing Loans
 
 
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
Total
Loans
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
1,606

 
$
319

 
$
814,246

 
$
816,171

 
$

 
$
1,423

 
$
205

 
$
1,628

 
$
817,799

Lease financing
320

 

 
57,256

 
57,576

 

 

 

 

 
57,576

Real estate – construction
1,069

 

 
623,823

 
624,892

 

 

 

 

 
624,892

Real estate – 1-4 family mortgage
7,928

 
2,965

 
1,986,079

 
1,996,972

 
207

 
2,678

 
913

 
3,798

 
2,000,770

Real estate – commercial mortgage
3,080

 
480

 
2,601,728

 
2,605,288

 
324

 
2,328

 
1,570

 
4,222

 
2,609,510

Installment loans to individuals
860

 
42

 
102,045

 
102,947

 
6

 
38

 
4

 
48

 
102,995

Unearned income

 

 
(3,304
)
 
(3,304
)
 

 

 

 

 
(3,304
)
Total
$
14,863

 
$
3,806

 
$
6,181,873

 
$
6,200,542

 
$
537

 
$
6,467

 
$
2,692

 
$
9,696

 
$
6,210,238

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,722

 
$
22

 
$
759,143

 
$
761,887

 
$
205

 
$
1,033

 
$
698

 
$
1,936

 
$
763,823

Lease financing
47

 

 
57,148

 
57,195

 

 
159

 

 
159

 
57,354

Real estate – construction
50

 

 
547,608

 
547,658

 

 

 

 

 
547,658

Real estate – 1-4 family mortgage
11,810

 
2,194

 
1,712,982

 
1,726,986

 

 
1,818

 
730

 
2,548

 
1,729,534

Real estate – commercial mortgage
1,921

 
727

 
2,381,871

 
2,384,519

 

 
2,877

 
2,680

 
5,557

 
2,390,076

Installment loans to individuals
429

 
72

 
102,901

 
103,402

 
1

 
28

 
21

 
50

 
103,452

Unearned income

 

 
(3,341
)
 
(3,341
)
 

 

 

 

 
(3,341
)
Total
$
16,979

 
$
3,015

 
$
5,558,312

 
$
5,578,306

 
$
206

 
$
5,915

 
$
4,129

 
$
10,250

 
$
5,588,556

Impaired Loans
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan-by-loan basis for commercial, consumer and construction loans of $500 or more by, as applicable, the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are evaluated collectively for impairment. When the ultimate collectability of an impaired loan’s principal is in doubt, wholly or partially, the loan is placed on nonaccrual status and all cash receipts are applied to principal. Once the recorded balance has been reduced to zero, future cash receipts are applied to interest income, to the extent any interest has been foregone, and then they are recorded as recoveries of any amounts previously charged-off. For impaired loans, a specific reserve is established to adjust the carrying value of the loan to its estimated net realizable value.

16

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Loans accounted for under FASB ASC 310-20, “Nonrefundable Fees and Other Cost” (“ASC 310-20”), and which are impaired loans recognized in conformity with ASC 310, “Receivables” (“ASC 310”), segregated by class, were as follows as of the dates presented:
 
 
Unpaid
Contractual
Principal
Balance
 
Recorded
Investment
With
Allowance
 
Recorded
Investment
With No
Allowance
 
Total
Recorded
Investment
 
Related
Allowance
September 30, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,426

 
$
1,952

 
$

 
$
1,952

 
$
377

Lease financing

 

 

 

 

Real estate – construction
9,725

 
7,560

 
2,165

 
9,725

 
65

Real estate – 1-4 family mortgage
8,841

 
8,115

 

 
8,115

 
58

Real estate – commercial mortgage
8,781

 
4,954

 
1,277

 
6,231

 
611

Installment loans to individuals
119

 
112

 

 
112

 
1

Total
$
29,892

 
$
22,693

 
$
3,442

 
$
26,135

 
$
1,112

December 31, 2017
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
3,043

 
$
2,365

 
$

 
$
2,365

 
$
138

Lease financing
159

 
159

 

 
159

 
2

Real estate – construction
578

 
578

 

 
578

 
4

Real estate – 1-4 family mortgage
10,018

 
8,169

 
703

 
8,872

 
561

Real estate – commercial mortgage
12,463

 
9,652

 

 
9,652

 
1,861

Installment loans to individuals
121

 
117

 

 
117

 
1

Totals
$
26,382

 
$
21,040

 
$
703

 
$
21,743

 
$
2,567


The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
September 30, 2018
 
September 30, 2017
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
1,979

 
$
11

 
$
1,960

 
$
8

Lease financing

 

 

 

Real estate – construction
9,725

 
42

 
897

 
33

Real estate – 1-4 family mortgage
8,136

 
51

 
8,897

 
71

Real estate – commercial mortgage
6,258

 
37

 
7,575

 
46

Installment loans to individuals
118

 
1

 
140

 
1

Total
$
26,216

 
$
142

 
$
19,469

 
$
159


17

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
Nine Months Ended
 
Nine Months Ended
 
September 30, 2018
 
September 30, 2017
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
2,204

 
$
31

 
$
2,140

 
$
8

Lease financing

 

 

 

Real estate – construction
9,621

 
109

 
861