Mergers and Acquisition

6 Months Ended

Jun. 30, 2014

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 6,175,576 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 $116.5 million in intangible assets which consist of goodwill of $91,512 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	6,175,576
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				1,321
Total Purchase Price				$	156,845
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)	(45,761		)
Fixed assets	(3,228		)
Core deposits intangible, net of First M&F’s existing core deposit intangible	21,158
Other real estate owned(1)	(5,797		)
Other assets	(443		)
Deposits	(3,207		)
Junior Subordinated Debt	12,371
Other liabilities	1,748
Deferred income taxes	8,799
Total Net Assets Acquired				65,333
Goodwill resulting from merger(2)				$	91,512

(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 associated with First M&F's

mortgage operations. As a result, the values included in the following table are preliminary and may change.

Cash and cash equivalents	$	169,995
Securities	227,693
Mortgage loans held for sale	1,659
Loans, net of unearned income	899,236
Premises and equipment	32,101
Other real estate owned	13,527
Intangible assets	116,544
Other assets	55,848
Total assets	1,516,603
Deposits	1,325,872
Borrowings	25,346
Other liabilities	9,861

The following unaudited pro forma combined condensed consolidated financial information presents the results of operations for the three and six months ended June 30, 2013 of the Company as though the merger with First M&F had been completed as of the beginning of 2013.

	Three Months Ended June 30,		Six Months Ended June 30,
	2013		2013
Interest income	$	55,946	$	110,800
Interest expense	7,588		15,294
Net interest income	48,358		95,506
Provision for loan losses	4,380		8,710
Noninterest income	19,903		42,983
Noninterest expense	52,474		104,120
Income before income taxes	11,407		25,659
Income taxes	2,829		6,646
Net income	$	8,578	$	19,013
Earnings per share:
Basic	$	0.28	$	0.61
Diluted	$	0.27	$	0.60