Mergers and Acquisition

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Mergers and Acquisition

Mergers and Acquisitions

On September 1, 2013, the Company completed its acquisition by merger of First M&F, a bank holding company headquartered in Kosciusko, Mississippi, and the parent of Merchants and Farmers Bank, a Mississippi banking corporation. On the same date, Merchants and Farmers Bank was merged into Renasant Bank. On August 31, 2013, First M&F operated 43 banking and insurance locations in Mississippi, Alabama and Tennessee. The acquisition of First M&F allowed the Company to further its strategic initiatives by expanding its geographic footprint into certain markets of Mississippi, Alabama and Tennessee. The Company issued 6,175,586 shares of its common stock for 100% of the voting equity interests in First M&F. The aggregate transaction value, including the dilutive impact of First M&F’s stock based compensation assumed by the Company, was $156.8 million.

The Company recorded approximately $115.6 million in intangible assets which consist of goodwill of $90,548 and core deposit intangible of $25,033. 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 intangible assets are not deductible for income tax purposes.

The Company assumed $30.9 million in fixed/floating rate junior subordinated deferrable interest debentures payable to First M&F Statutory Trust I that mature in March 2036. The acquired subordinated debentures require interest to be paid quarterly at a rate of 90-day LIBOR plus 1.33%. The fair value adjustment on the junior subordinated debentures of $12,371 will be amortized on a straight line basis over the remaining life.

The following table summarizes the allocation of purchase price to assets and liabilities acquired in connection with the Company’s acquisition of First M&F based on their fair values on September 1, 2013. The Company is finalizing the fair value of certain assets and liabilities. As a result, the adjustments included in the following table are preliminary and may change.

Allocation of Purchase Price for First M&F Corporation.
Purchase Price:
Shares issued to common shareholders	6,175,586
Purchase price per share	$	25.17
Value of stock paid				$	155,439
Cash paid for fractional shares				17
Fair value of stock based compensation assumed				68
Deal charges				1,255
Total Purchase Price				$	156,779
Net Assets Acquired:
Stockholders’ equity at 9/1/13	$	79,440
Increase (decrease) to net assets as a result of fair value adjustments to assets acquired and liabilities assumed:
Securities	253
Loans, net of First M&F's allowance for loan losses(1)	(45,751		)
Fixed assets	(2,314		)
Core deposits intangible, net of First M&F’s existing core deposit intangible	21,158
Other real estate owned(1)	(5,797		)
Deposits	(3,207		)
Junior Subordinated Debt	12,371
Other liabilities	1,804
Deferred income taxes	8,274
Total Net Assets Acquired				66,231
Goodwill resulting from merger(2)				$	90,548

(1) The fair value adjustments to acquired loans and other real estate owned reflect management’s expectations to more aggressively market and liquidate problem assets quickly.

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

The following table summarizes the fair value of assets acquired and liabilities assumed at acquisition date in connection with the merger with First M&F. The Company is finalizing the fair value of certain assets and liabilities. As a result, the values included in the following table are preliminary and may change.

Cash and cash equivalents	$	170,061
Securities	227,693
Mortgage loans held for sale	1,659
Loans, net of unearned income	899,246
Premises and equipment	33,014
Other real estate owned	13,527
Intangible assets	115,581
Other assets	55,767
Total assets	1,516,548
Deposits	1,325,872
Borrowings	25,346
Other liabilities	9,806

The following unaudited pro forma combined condensed consolidated financial information presents the results of operations for the nine months ended September 30, 2013 and 2012 of the Company as though the merger with First M&F and the equity offering to fund the cash portion of the merger consideration had been completed as of the beginning of each respective period.

	Nine Months Ended September 30,
	2013		2012
Interest income	$	165,592	$	171,897
Interest expense	21,845		28,421
Net interest income	143,747		143,476
Provision for loan losses	11,030		20,665
Noninterest income	62,833		67,702
Noninterest expense	163,993		157,927
Income before income taxes	31,557		32,586
Income taxes	6,576		5,666
Net income	$	24,981	$	26,920
Earnings per share:
Basic	$	0.80	$	0.82
Diluted	$	0.79	$	0.81