0000715072-15-000042.txt : 20150508 0000715072-15-000042.hdr.sgml : 20150508 20150508160513 ACCESSION NUMBER: 0000715072-15-000042 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20150331 FILED AS OF DATE: 20150508 DATE AS OF CHANGE: 20150508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RENASANT CORP CENTRAL INDEX KEY: 0000715072 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 640676974 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13253 FILM NUMBER: 15846682 BUSINESS ADDRESS: STREET 1: 209 TROY STREET CITY: TUPELO STATE: MS ZIP: 38804-4827 BUSINESS PHONE: (662) 680-1001 MAIL ADDRESS: STREET 1: P.O. BOX 709 CITY: TUPELO STATE: MS ZIP: 38802-0709 FORMER COMPANY: FORMER CONFORMED NAME: PEOPLES HOLDING CO DATE OF NAME CHANGE: 19920703 10-Q 1 rnst10q3312015.htm 10-Q RNST 10Q 3.31.2015
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 March 31, 2015
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
o
 
 
 
 
Non-accelerated filer
o  (Do not check if a smaller reporting company)
Smaller reporting company
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 April 30, 2015, 31,625,581 shares of the registrant’s common stock, $5.00 par value per share, were outstanding. The registrant has no other classes of securities outstanding.


Renasant Corporation and Subsidiaries
Form 10-Q
For the Quarterly Period Ended March 31, 2015
CONTENTS
 


PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Renasant Corporation and Subsidiaries
Consolidated Balance Sheets

(In Thousands, Except Share Data)
 
(Unaudited)
 
 
 
March 31,
2015
 
December 31, 2014
Assets
 
 
 
Cash and due from banks
$
78,716

 
$
95,793

Interest-bearing balances with banks
95,663

 
65,790

Cash and cash equivalents
174,379

 
161,583

Securities held to maturity (fair value of $486,624 and $442,488, respectively)
470,597

 
430,163

Securities available for sale, at fair value
545,797

 
553,584

Mortgage loans held for sale, at fair value
102,780

 
25,628

Loans, net of unearned income:
 
 
 
Acquired and covered by FDIC loss-share agreements ("covered loans")
125,773

 
143,041

Acquired and not covered by FDIC loss-share agreements ("acquired non-covered loans")
553,574

 
577,347

Not acquired
3,274,314

 
3,267,486

Total loans, net of unearned income
3,953,661

 
3,987,874

Allowance for loan losses
(42,302
)
 
(42,289
)
Loans, net
3,911,359

 
3,945,585

Premises and equipment, net
117,769

 
113,735

Other real estate owned:
 
 
 
Covered under FDIC loss-share agreements
4,325

 
6,368

Not covered under FDIC loss-share agreements
27,361

 
28,104

Total other real estate owned, net
31,686

 
34,472

Goodwill
274,705

 
274,706

Other intangible assets, net
21,348

 
22,624

FDIC loss-share indemnification asset
8,934

 
12,516

Other assets
222,495

 
230,533

Total assets
$
5,881,849

 
$
5,805,129

Liabilities and shareholders’ equity
 
 
 
Liabilities
 
 
 
Deposits
 
 
 
Noninterest-bearing
$
959,351

 
$
919,872

Interest-bearing
3,983,418

 
3,918,546

Total deposits
4,942,769

 
4,838,418

Short-term borrowings
6,732

 
32,403

Long-term debt
155,581

 
156,422

Other liabilities
53,571

 
66,235

Total liabilities
5,158,653

 
5,093,478

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

 
—

Common stock, $5.00 par value – 75,000,000 shares authorized, 32,656,166 shares issued; 31,604,937 and 31,545,145 shares outstanding, respectively
163,281

 
163,281

Treasury stock, at cost
(21,312
)
 
(22,128
)
Additional paid-in capital
344,119

 
345,213

Retained earnings
242,726

 
232,883

Accumulated other comprehensive loss, net of taxes
(5,618
)
 
(7,598
)
Total shareholders’ equity
723,196

 
711,651

Total liabilities and shareholders’ equity
$
5,881,849

 
$
5,805,129

See Notes to Consolidated Financial Statements.

1

Renasant Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In Thousands, Except Share Data)

 
Three Months Ended
 
March 31,
 
2015
 
2014
Interest income
 
 
 
Loans
$
47,437

 
$
49,546

Securities
 
 
 
Taxable
4,415

 
4,243

Tax-exempt
2,254

 
2,189

Other
60

 
199

Total interest income
54,166

 
56,177

Interest expense
 
 
 
Deposits
3,438

 
4,373

Borrowings
1,886

 
1,833

Total interest expense
5,324

 
6,206

Net interest income
48,842

 
49,971

Provision for loan losses
1,075

 
1,450

Net interest income after provision for loan losses
47,767

 
48,521

Noninterest income
 
 
 
Service charges on deposit accounts
5,933

 
5,916

Fees and commissions
4,894

 
4,972

Insurance commissions
1,967

 
1,863

Wealth management revenue
2,190

 
2,144

BOLI income
848

 
731

Gains on sales of mortgage loans held for sale
4,633

 
1,585

Other
1,439

 
1,405

Total noninterest income
21,904

 
18,616

Noninterest expense
 
 
 
Salaries and employee benefits
28,260

 
28,428

Data processing
3,181

 
2,695

Net occupancy and equipment
5,559

 
4,847

Other real estate owned
532

 
1,701

Professional fees
824

 
1,200

Advertising and public relations
1,303

 
1,528

Intangible amortization
1,275

 
1,471

Communications
1,433

 
1,682

Merger-related expenses
478

 
195

Other
4,569

 
3,898

Total noninterest expense
47,414

 
47,645

Income before income taxes
22,257

 
19,492

Income taxes
7,017

 
5,895

Net income
$
15,240

 
$
13,597

Basic earnings per share
$
0.48

 
$
0.43

Diluted earnings per share
$
0.48

 
$
0.43

Cash dividends per common share
$
0.17

 
$
0.17


See Notes to Consolidated Financial Statements.

2

Renasant Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
(In Thousands, Except Share Data)
 
 
Three Months Ended
 
March 31,
 
2015
 
2014
Net income
$
15,240

 
$
13,597

Other comprehensive income, net of tax:
 
 
 
Securities:
 
 
 
Net change in unrealized holding gains on securities
2,624

 
2,784

Amortization of unrealized holding losses on securities transferred to the held to maturity category
(32
)
 
(44
)
Total securities
2,592

 
2,740

Derivative instruments:
 
 
 
Net change in unrealized holding losses on derivative instruments
(669
)
 
(419
)
Totals derivative instruments
(669
)
 
(419
)
Defined benefit pension and post-retirement benefit plans:
 
 
 
Amortization of net actuarial loss recognized in net periodic pension cost
57

 
45

Total defined benefit pension and post-retirement benefit plans
57

 
45

Other comprehensive income, net of tax
1,980

 
2,366

Comprehensive income
$
17,220

 
$
15,963


See Notes to Consolidated Financial Statements.

3

Renasant Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 
Three Months Ended March 31,
 
2015
 
2014
Operating activities
 
 
 
Net income
$
15,240

 
$
13,597

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for loan losses
1,075

 
1,450

Depreciation, amortization and accretion
3,772

 
2,542

Deferred income tax expense
6,408

 
5,284

Funding of mortgage loans held for sale
(185,595
)
 
(104,353
)
Proceeds from sales of mortgage loans held for sale
113,076

 
110,773

Gains on sales of mortgage loans held for sale
(4,633
)
 
(1,585
)
Losses (gains) on sales of premises and equipment
4

 
(12
)
Stock-based compensation
864

 
871

Decrease in FDIC loss-share indemnification asset, net of accretion
2,213

 
1,601

Decrease in other assets
7,664

 
5,885

Decrease in other liabilities
(14,432
)
 
(15,793
)
Net cash (used in) provided by operating activities
$
(54,344
)
 
$
20,260

Investing activities
 
 
 
Purchases of securities available for sale
(13,651
)
 
(76,282
)
Proceeds from call/maturities of securities available for sale
24,814

 
17,069

Purchases of securities held to maturity
(54,824
)
 
(128,684
)
Proceeds from call/maturities of securities held to maturity
13,922

 
57,890

Net increase in loans
30,542

 
12,038

Purchases of premises and equipment
(5,924
)
 
(2,293
)
Net cash used in investing activities
(5,121
)
 
(120,262
)
Financing activities
 
 
 
Net increase in noninterest-bearing deposits
39,479

 
58,944

Net increase in interest-bearing deposits
64,872

 
103,928

Net decrease in short-term borrowings
(25,671
)
 
(2,283
)
Repayment of long-term debt
(978
)
 
(989
)
Cash paid for dividends
(5,398
)
 
(5,372
)
Cash received on exercise of stock-based compensation
28

 
—

Excess tax (expense) benefit from stock-based compensation
(71
)
 
741

Net cash provided by financing activities
72,261

 
154,969

Net increase in cash and cash equivalents
12,796

 
54,967

Cash and cash equivalents at beginning of period
161,583

 
246,648

Cash and cash equivalents at end of period
$
174,379

 
$
301,615

Supplemental disclosures
 
 
 
Cash paid for interest
$
5,663

 
$
6,543

Cash paid for income taxes
$
1,368

 
$
4,993

Noncash transactions:
 
 
 
Transfers of loans to other real estate owned
$
5,559

 
$
2,497

Financed sales of other real estate owned
$
480

 
$
153

See Notes to Consolidated Financial Statements.

4

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

Note A – Summary of Significant Accounting Policies
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. The Company offers a diversified range of financial, fiduciary and insurance services to its retail and commercial customers through its subsidiaries and full service offices located throughout north and north central Mississippi, Tennessee, north and central Alabama and north Georgia.
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 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 accounting principles generally accepted in the United States of America 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. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission on March 2, 2015.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.
Subsequent Events: The Company has evaluated, for consideration of recognition or disclosure, subsequent events that have occurred through the date of issuance of its financial statements, and has determined that no significant events occurred after March 31, 2015 but prior to the issuance of these financial statements that would have a material impact on its Consolidated Financial Statements.

Note B – Securities
(In Thousands, Except Number of Securities)
The amortized cost and fair value of securities held to maturity were as follows as of the dates presented:
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
March 31, 2015
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
165,589

 
$
47

 
$
(957
)
 
$
164,679

Obligations of states and political subdivisions
305,008

 
17,062

 
(125
)
 
321,945

 
$
470,597

 
$
17,109

 
$
(1,082
)
 
$
486,624

December 31, 2014
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
125,081

 
$
10

 
$
(2,915
)
 
$
122,176

Obligations of states and political subdivisions
305,082

 
15,428

 
(198
)
 
320,312

 
$
430,163

 
$
15,438

 
$
(3,113
)
 
$
442,488





5
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


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
March 31, 2015
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
6,113

 
$
170

 
$
(52
)
 
$
6,231

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
292,587

 
5,981

 
(486
)
 
298,082

Government agency collateralized mortgage obligations
151,075

 
2,131

 
(1,398
)
 
151,808

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
42,019

 
1,583

 
(32
)
 
43,570

Government agency collateralized mortgage obligations
4,553

 
273

 
—

 
4,826

Trust preferred securities
26,057

 
79

 
(6,010
)
 
20,126

Other debt securities
16,999

 
537

 
(42
)
 
17,494

Other equity securities
2,331

 
1,329

 
—

 
3,660

 
$
541,734

 
$
12,083

 
$
(8,020
)
 
$
545,797

 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2014
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
6,119

 
$
147

 
$
(119
)
 
$
6,147

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
292,283

 
4,908

 
(832
)
 
296,359

Government agency collateralized mortgage obligations
158,436

 
1,523

 
(2,523
)
 
157,436

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
45,714

 
1,608

 
(137
)
 
47,185

Government agency collateralized mortgage obligations
4,970

 
202

 
—

 
5,172

Trust preferred securities
26,400

 
137

 
(6,781
)
 
19,756

Other debt securities
17,517

 
487

 
(74
)
 
17,930

Other equity securities
2,331

 
1,268

 
—

 
3,599

 
$
553,770

 
$
10,280

 
$
(10,466
)
 
$
553,584


There were no held to maturity or available for sale securities sold during the three months ended March 31, 2015 or 2014.
 
 
 
 
 
At March 31, 2015 and December 31, 2014, securities with a carrying value of $694,737 and $617,189, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $18,840 and $16,410 were pledged as collateral for short-term borrowings and derivative instruments at March 31, 2015 and December 31, 2014, respectively.
The amortized cost and fair value of securities at March 31, 2015 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.
 

6
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
Held to Maturity
 
Available for Sale
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Due within one year
$
51,995

 
$
52,081

 
$
—

 
$
—

Due after one year through five years
78,507

 
80,593

 
1,059

 
1,127

Due after five years through ten years
213,069

 
218,280

 
5,054

 
5,104

Due after ten years
127,026

 
135,670

 
26,057

 
20,126

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
—

 
—

 
292,587

 
298,082

Government agency collateralized mortgage obligations
—

 
—

 
151,075

 
151,808

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
—

 
—

 
42,019

 
43,570

Government agency collateralized mortgage obligations
—

 
—

 
4,553

 
4,826

Other debt securities
—

 
—

 
16,999

 
17,494

Other equity securities
—

 
—

 
2,331

 
3,660

 
$
470,597

 
$
486,624

 
$
541,734

 
$
545,797


7
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
Held to Maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
5
 
$
11,478

 
$
(24
)
 
21
 
$
96,177

 
$
(933
)
 
26
 
$
107,655

 
$
(957
)
Obligations of states and political subdivisions
8
 
6,117

 
(38
)
 
7
 
4,091

 
(87
)
 
15
 
10,208

 
(125
)
Total
13
 
$
17,595

 
$
(62
)
 
28
 
$
100,268

 
$
(1,020
)
 
41
 
117,863

 
$
(1,082
)
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
2
 
$
1,000

 
$
(1
)
 
26
 
$
119,174

 
$
(2,914
)
 
28
 
$
120,174

 
$
(2,915
)
Obligations of states and political subdivisions
3
 
3,353

 
(29
)
 
16
 
10,052

 
(169
)
 
19
 
13,405

 
(198
)
Total
5
 
$
4,353

 
$
(30
)
 
42
 
$
129,226

 
$
(3,083
)
 
47
 
$
133,579

 
$
(3,113
)
Available for Sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$
—

 
$
—

 
1
 
$
3,948

 
$
(52
)
 
1
 
$
3,948

 
$
(52
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
3
 
7,688

 
(15
)
 
9
 
31,928

 
(471
)
 
12
 
39,616

 
(486
)
Government agency collateralized mortgage obligations
1
 
2,194

 
(2
)
 
16
 
60,066

 
(1,396
)
 
17
 
62,260

 
(1,398
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
0
 
—

 
—

 
2
 
5,863

 
(32
)
 
2
 
5,863

 
(32
)
Government agency collateralized mortgage obligations
0
 
—

 
—

 
0
 
—

 
—

 
0
 
—

 
—

Trust preferred securities
0
 
—

 
—

 
3
 
18,930

 
(6,010
)
 
3
 
18,930

 
(6,010
)
Other debt securities
0
 
—

 
—

 
2
 
4,186

 
(42
)
 
2
 
4,186

 
(42
)
Total
4
 
$
9,882

 
$
(17
)
 
33
 
$
124,921

 
$
(8,003
)
 
37
 
$
134,803

 
$
(8,020
)
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$
—

 
$
—

 
1
 
$
3,881

 
$
(119
)
 
1
 
$
3,881

 
$
(119
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
3
 
18,924

 
(39
)
 
13
 
49,612

 
(793
)
 
16
 
68,536

 
(832
)
Government agency collateralized mortgage obligations
6
 
32,169

 
(138
)
 
18
 
65,552

 
(2,385
)
 
24
 
97,721

 
(2,523
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
0
 
—

 
—

 
3
 
10,651

 
(137
)
 
3
 
10,651

 
(137
)
Government agency collateralized mortgage obligations
0
 
—

 
—

 
0
 
—

 
—

 
0
 
—

 
—

Trust preferred securities
0
 
—

 
—

 
3
 
18,503

 
(6,781
)
 
3
 
18,503

 
(6,781
)
Other debt securities
0
 
—

 
—

 
2
 
4,175

 
(74
)
 
2
 
4,175

 
(74
)
Other equity securities
0
 
—

 
—

 
0
 
—

 
—

 
0
 
—

 
—

Total
9
 
$
51,093

 
$
(177
)
 
40
 
$
152,374

 
$
(10,289
)
 
49
 
$
203,467

 
$
(10,466
)
 


8
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)




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 of the securities in an unrealized loss position, 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 greater than twelve months, the Company has experienced an overall improvement in the fair value of its investment portfolio on account of the decrease in interest rates from the prior year and is collecting principal and interest payments from the respective issuers as scheduled. As such, the Company did not record any OTTI for the three month period ending March 31, 2015 or 2014.
The Company holds investments in pooled trust preferred securities that had an amortized cost basis of $26,057 and $26,400 and a fair value of $20,126 and $19,756, at March 31, 2015 and December 31, 2014, respectively. The investments in pooled trust preferred securities consist of four securities representing interests in various tranches of trusts collateralized by debt issued by over 310 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, 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 March 31, 2015, 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 all four trust preferred securities and recognized credit related impairment losses on these securities in 2010 and 2011. No additional impairment was recognized during the three months ended March 31, 2015.
The Company's analysis of the pooled trust preferred securities during the second quarter of 2014 supported a return to accrual status for two of the four securities (XIII and XXIII). An observed history of principal and interest payments combined with improved qualitative and quantitative factors described above justified the accrual of interest on these securities. However, one of the remaining securities (XXIV) is still in "payment in kind" status where interest payments are not expected until a future date, and, although the Company has received principal payments from the fourth security (XXVI), the Company's analysis of the qualitative and quantitative factors described above does not justify a return to accrual status at this time. As a result, pooled trust preferred securities XXIV and XXVI remain classified as nonaccruing assets at March 31, 2015, and investment interest is recorded on the cash-basis method until qualifying for return to accrual status.
The following table provides information regarding the Company’s investments in pooled trust preferred securities at March 31, 2015:
 
Name
Single/
Pooled
 
Class/
Tranche
 
Amortized
Cost
 
Fair
Value
 
Unrealized
Loss
 
Lowest
Credit
Rating
 
Issuers
Currently in
Deferral or
Default
XIII
Pooled
 
B-2
 
$
1,117

 
$
1,196

 
$
79

 
B3
 
27
%
XXIII
Pooled
 
B-2
 
8,630

 
6,093

 
(2,537
)
 
Baa3
 
18
%
XXIV
Pooled
 
B-2
 
12,076

 
9,447

 
(2,629
)
 
Ca
 
28
%
XXVI
Pooled
 
B-2
 
4,234

 
3,390

 
(844
)
 
B3
 
24
%
 
 
 
 
 
$
26,057

 
$
20,126

 
$
(5,931
)
 
 
 
 

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:
 

9
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
2015
 
2014
Balance at January 1
$
(3,337
)
 
$
(3,337
)
Additions related to credit losses for which OTTI was not previously recognized
—

 
—

Increases in credit loss for which OTTI was previously recognized
—

 
—

Balance at March 31
$
(3,337
)
 
$
(3,337
)


Note C – Loans and the Allowance for Loan Losses
(In Thousands, Except Number of Loans)
The following is a summary of loans as of the dates presented:
 
 
March 31,
2015
 
December 31, 2014
Commercial, financial, agricultural
$
474,788

 
$
483,283

Lease financing
11,863

 
10,427

Real estate – construction
201,449

 
212,061

Real estate – 1-4 family mortgage
1,239,455

 
1,236,360

Real estate – commercial mortgage
1,938,994

 
1,956,914

Installment loans to individuals
87,415

 
89,142

Gross loans
3,953,964

 
3,988,187

Unearned income
(303
)
 
(313
)
Loans, net of unearned income
3,953,661

 
3,987,874

Allowance for loan losses
(42,302
)
 
(42,289
)
Net loans
$
3,911,359

 
$
3,945,585


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 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 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. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

10
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
March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
684

 
$
1,506

 
$
471,674

 
$
473,864

 
$
34

 
$
545

 
$
345

 
$
924

 
$
474,788

Lease financing
—

 
—

 
11,441

 
11,441

 
—

 
422

 
—

 
422

 
11,863

Real estate – construction
71

 
37

 
201,070

 
201,178

 
—

 
271

 
—

 
271

 
201,449

Real estate – 1-4 family mortgage
7,806

 
1,852

 
1,216,794

 
1,226,452

 
309

 
5,244

 
7,450

 
13,003

 
1,239,455

Real estate – commercial mortgage
9,655

 
7,417

 
1,899,224

 
1,916,296

 
1,063

 
12,714

 
8,921

 
22,698

 
1,938,994

Installment loans to individuals
366

 
17

 
86,964

 
87,347

 
—

 
59

 
9

 
68

 
87,415

Unearned income
—

 
—

 
(303
)
 
(303
)
 
—

 
—

 
—

 
—

 
(303
)
Total
$
18,582

 
$
10,829

 
$
3,886,864

 
$
3,916,275

 
$
1,406

 
$
19,255

 
$
16,725

 
$
37,386

 
$
3,953,661

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
1,113

 
$
636

 
$
480,332

 
$
482,081

 
$
16

 
$
820

 
$
366

 
$
1,202

 
$
483,283

Lease financing
462

 
—

 
9,965

 
10,427

 
—

 
—

 
—

 
—

 
10,427

Real estate – construction
—

 
37

 
211,860

 
211,897

 
—

 
164

 
—

 
164

 
212,061

Real estate – 1-4 family mortgage
8,398

 
2,382

 
1,212,214

 
1,222,994

 
355

 
4,604

 
8,407

 
13,366

 
1,236,360

Real estate – commercial mortgage
6,924

 
7,637

 
1,912,758

 
1,927,319

 
1,826

 
16,928

 
10,841

 
29,595

 
1,956,914

Installment loans to individuals
269

 
21

 
88,782

 
89,072

 
—

 
59

 
11

 
70

 
89,142

Unearned income
—

 
—

 
(313
)
 
(313
)
 
—

 
—

 
—

 
—

 
(313
)
Total
$
17,166

 
$
10,713

 
$
3,915,598

 
$
3,943,477

 
$
2,197

 
$
22,575

 
$
19,625

 
$
44,397

 
$
3,987,874


Restructured loans that are not performing in accordance with their restructured terms that are either contractually 90 days past due or placed on nonaccrual status are reported as nonperforming loans. There were no restructured loans contractually 90 days past due or more and still accruing at March 31, 2015 or December 31, 2014. The outstanding balance of restructured loans on nonaccrual status was $9,484 and $11,392 at March 31, 2015 and December 31, 2014, respectively.
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 above a minimum dollar amount threshold by either 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, 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.

11
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Impaired loans recognized in conformity with Financial Accounting Standards Board Accounting Standards Codification Topic ("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
March 31, 2015
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
5,722

 
$
944

 
$
1,936

 
$
2,880

 
$
1,095

Real estate – construction
104

 
104

 
—

 
104

 
5

Real estate – 1-4 family mortgage
21,043

 
13,783

 
3,115

 
16,898

 
4,841

Real estate – commercial mortgage
78,688

 
25,267

 
24,583

 
49,850

 
4,459

Installment loans to individuals
—

 
—

 
—

 
—

 
—

Total
$
105,557

 
$
40,098

 
$
29,634

 
$
69,732

 
$
10,400

December 31, 2014
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
4,871

 
$
984

 
$
1,375

 
$
2,359

 
$
171

Real estate – construction
164

 
164

 
—

 
164

 
—

Real estate – 1-4 family mortgage
31,906

 
18,401

 
7,295

 
25,696

 
4,824

Real estate – commercial mortgage
90,196

 
29,079

 
28,784

 
57,863

 
5,767

Installment loans to individuals
397

 
21

 
51

 
72

 
—

Totals
$
127,534

 
$
48,649

 
$
37,505

 
$
86,154

 
$
10,762


The following table presents the average recorded investment and interest income recognized on impaired loans for the periods presented:
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Three Months Ended
 
March 31, 2015
 
March 31, 2014
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
4,416

 
$
8

 
$
7,745

 
$
5

Real estate – construction
104

 
—

 
2,037

 
2

Real estate – 1-4 family mortgage
17,636

 
72

 
27,754

 
34

Real estate – commercial mortgage
55,420

 
274

 
91,277

 
64

Installment loans to individuals
—

 
—

 
—

 
—

Total
$
77,576

 
$
354

 
$
128,813

 
$
105

Restructured Loans
Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and which are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest.
The following table presents restructured loans segregated by class as of the dates presented:
 

12
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
March 31, 2015
 
 
 
 
 
Commercial, financial, agricultural
2

 
$
507

 
$
489

Real estate – construction
—

 
—

 
—

Real estate – 1-4 family mortgage
51

 
6,177

 
5,402

Real estate – commercial mortgage
23

 
17,067

 
15,442

Installment loans to individuals
—

 
—

 
—

Total
76

 
$
23,751

 
$
21,333

December 31, 2014
 
 
 
 
 
Commercial, financial, agricultural
2

 
$
507

 
$
507

Real estate – construction
—

 
—

 
—

Real estate – 1-4 family mortgage
35

 
5,212

 
4,567

Real estate – commercial mortgage
16

 
10,590

 
9,263

Installment loans to individuals
—

 
—

 
—

Total
53

 
$
16,309

 
$
14,337


Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2015
53

 
$
14,337

Additional loans with concessions
25

 
7,508

Reductions due to:
 
 
 
Reclassified as nonperforming
—

 
—

Paid in full
(2
)
 
(411
)
Charge-offs
—

 
—

Transfer to other real estate owned
—

 
—

Principal paydowns
—

 
(101
)
Lapse of concession period
—

 
—

Totals at March 31, 2015
76

 
$
21,333


The allocated allowance for loan losses attributable to restructured loans was $1,332 and $1,547 at March 31, 2015 and December 31, 2014, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2015 or December 31, 2014.
Credit Quality
For loans originated for commercial purposes, internal risk-rating grades are assigned by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the portfolio balances of these loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans that migrate toward the “Pass” grade (those with a risk rating between 1 and 4) or within the “Pass” grade generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. The “Watch” grade (those with a risk rating of 5) is utilized on a temporary basis for “Pass” grade loans where a significant adverse risk-modifying action is anticipated in the near term. Loans that migrate toward the “Substandard” grade (those with a risk rating between 6 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to the related loan balances. The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:
 

13
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
Pass
 
Watch
 
Substandard
 
Total
March 31, 2015
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
333,160

 
$
6,731

 
$
2,259

 
$
342,150

Real estate – construction
142,470

 
556

 
—

 
143,026

Real estate – 1-4 family mortgage
124,635

 
3,497

 
12,981

 
141,113

Real estate – commercial mortgage
1,396,707

 
21,748

 
28,995

 
1,447,450

Installment loans to individuals
624

 
—

 
—

 
624

Total
$
1,997,596

 
$
32,532

 
$
44,235

 
$
2,074,363

December 31, 2014
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
337,998

 
$
5,255

 
$
1,451

 
$
344,704

Real estate – construction
150,683

 
855

 
—

 
151,538

Real estate – 1-4 family mortgage
122,608

 
6,079

 
11,479

 
140,166

Real estate – commercial mortgage
1,389,787

 
31,109

 
33,554

 
1,454,450

Installment loans to individuals
1,402

 
—

 
—

 
1,402

Total
$
2,002,478

 
$
43,298

 
$
46,484

 
$
2,092,260


For portfolio balances of consumer, consumer mortgage and certain other loans originated for other than commercial purposes, allowance factors are determined based on historical loss ratios by portfolio for the preceding eight quarters and may be adjusted by other qualitative criteria. The following table presents the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented:
 
 
Performing
 
Non-
Performing
 
Total
March 31, 2015
 
 
 
 
 
Commercial, financial, agricultural
$
111,612

 
$
369

 
$
111,981

Lease financing
11,560

 
—

 
11,560

Real estate – construction
58,220

 
203

 
58,423

Real estate – 1-4 family mortgage
1,016,755

 
1,295

 
1,018,050

Real estate – commercial mortgage
273,285

 
1,408

 
274,693

Installment loans to individuals
83,126

 
39

 
83,165

Total
$
1,554,558

 
$
3,314

 
$
1,557,872

December 31, 2014
 
 
 
 
 
Commercial, financial, agricultural
$
114,996

 
$
179

 
$
115,175

Lease financing
10,114

 
—

 
10,114

Real estate – construction
60,323

 
200

 
60,523

Real estate – 1-4 family mortgage
1,010,645

 
2,730

 
1,013,375

Real estate – commercial mortgage
266,867

 
1,352

 
268,219

Installment loans to individuals
83,744

 
39

 
83,783

Total
$
1,546,689

 
$
4,500

 
$
1,551,189


Loans Acquired with Deteriorated Credit Quality
Loans acquired in business combinations that exhibited, at the date of acquisition, evidence of deterioration of the credit quality since origination, such that it was probable that all contractually required payments would not be collected, were as follows as of the dates presented:
 

14
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
Impaired
Covered
Loans
 
Other
Covered
Loans
 
Not
Covered
Loans
 
Total
March 31, 2015
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
—

 
$
3,917

 
$
16,740

 
$
20,657

Lease financing
—

 
—

 
—

 
—

Real estate – construction
—

 
—

 
—

 
—

Real estate – 1-4 family mortgage
420

 
42,338

 
37,534

 
80,292

Real estate – commercial mortgage
7,376

 
71,688

 
137,787

 
216,851

Installment loans to individuals
—

 
34

 
3,592

 
3,626

Total
$
7,796

 
$
117,977

 
$
195,653

 
$
321,426

December 31, 2014
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
—

 
$
6,684

 
$
16,720

 
$
23,404

Lease financing
—

 
—

 
—

 
—

Real estate – construction
—

 
—

 
—

 
—

Real estate – 1-4 family mortgage
420

 
43,597

 
38,802

 
82,819

Real estate – commercial mortgage
7,584

 
84,720

 
141,941

 
234,245

Installment loans to individuals
—

 
36

 
3,921

 
3,957

Total
$
8,004

 
$
135,037

 
$
201,384

 
$
344,425


The references in the table above and elsewhere in these Notes to "covered loans" and "not covered loans" (as well as to "covered OREO" and "not covered OREO") refer to loans (or OREO, as applicable) covered and not covered, respectively, by loss-share agreements with the FDIC. See Note E, "FDIC Loss-Share Indemnification Asset," below for more information.

The following table presents the fair value of loans determined to be impaired at the time of acquisition and determined not to be impaired at the time of acquisition at March 31, 2015:
 
 
Impaired
Covered
Loans
 
Other
Covered
Loans
 
Not
Covered
Loans
 
Total
Contractually-required principal and interest
$
29,901

 
$
141,917

 
$
275,703

 
$
447,521

Nonaccretable difference(1)
(22,104
)
 
(21,766
)
 
(52,137
)
 
(96,007
)
Cash flows expected to be collected
7,797

 
120,151

 
223,566

 
351,514

Accretable yield(2)
(1
)
 
(2,174
)
 
(27,913
)
 
(30,088