Mergers and Acquisitions

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Mergers and Acquisitions

Mergers and Acquisitions

(Dollar amounts in thousands)

Definitive merger agreement with KeyWorth Bank

On October 20, 2015, the Company and KeyWorth Bank (“KeyWorth”), a Georgia state bank headquartered in Atlanta, Georgia, jointly announced the signing of a definitive merger agreement pursuant to which the Company will acquire KeyWorth in an all-stock merger in a transaction valued at approximately $58,700 as of the announcement date. Under the terms of the agreement, KeyWorth will be merged with and into Renasant Bank, with Renasant Bank continuing as the surviving institution in the Merger.

According to the terms of the merger agreement, each KeyWorth common shareholder will have the right to receive 0.4494 shares of Renasant common stock for each share of KeyWorth common stock, and the merger is expected to qualify as a tax-free reorganization for KeyWorth shareholders.

KeyWorth operates six offices in the Atlanta metropolitan area and as of December 31, 2015, had approximately $407,782 in total assets, which included approximately $252,092 in total loans, and approximately $355,117 in total deposits.

The acquisition is expected to close in the second quarter of 2016 and is subject to KeyWorth shareholder approval and other customary conditions set forth in the merger agreement.

Acquisition of Heritage Financial Group, Inc.

Effective July 1, 2015, the Company completed its acquisition by merger with Heritage Financial Group, Inc. (“Heritage”) in a transaction valued at $295,380. The Company issued 8,635,879 shares of common stock and paid $5,915 to Heritage stock option holders for 100% of the voting equity interest in Heritage. At closing, Heritage merged with and into the Company, with the Company surviving the merger. On the same date, HeritageBank of the South, Heritage’s wholly-owned subsidiary (“HeritageBank”), was merged into Renasant Bank. On July 1, 2015, Heritage operated 48 banking, mortgage and investment offices in Alabama, Georgia and Florida.

The Company recorded approximately $183,438 in intangible assets which consist of goodwill of $171,182 and a core deposit intangible of $12,256. Goodwill resulted from a combination of revenue enhancements from expansion into new 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 Heritage based on their fair values on July 1, 2015. 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.

Purchase Price:
Shares issued to common shareholders	8,635,879
Fair value of common stock on date of issuance	$	32.60
Value of stock paid				$	281,530
Cash paid for fractional shares				26
Cash settlement for stock options				5,915
Deal charges paid on behalf of Heritage				7,909
Total Purchase Price				$	295,380
Net Assets Acquired:
Stockholders’ equity at acquisition date	$	160,652
Increase (decrease) to net assets as a result of fair value adjustments to assets acquired and liabilities assumed:
Securities	(1,401		)
Mortgage loans held for sale	(2,640		)
Loans, net of Heritage’s allowance for loan losses	(15,524		)
Fixed assets	(7,169		)
Intangible assets, net of Heritage’s existing core deposit intangible	18,193
Other real estate owned	1,390
FDIC loss-share indemnification asset	(15,247		)
Other assets	3,182
Deposits	(3,776		)
Other liabilities	(2,882		)
Deferred income taxes	(10,580		)
Total Net Assets Acquired				124,198
Goodwill resulting from merger(1)				$	171,182

⁽¹⁾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 Heritage. 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.

Cash and cash equivalents	$	38,626
Securities	177,849
Loans, including mortgage loans held for sale, net of unearned income	1,460,242
Premises and equipment	42,164
Other real estate owned	9,972
Intangible assets	183,438
Other assets	102,591
Total assets	2,014,882
Deposits	1,375,354
Borrowings	314,656
Other liabilities	29,492
Total liabilities	1,719,502

The following unaudited pro forma combined condensed consolidated financial information presents the results of operations for the twelve months ended December 31, 2015 and 2014 of the Company as though the merger with Heritage had been completed as of January 1, 2014. The unaudited estimated pro forma information combines the historical consolidated results of Heritage 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 indicative of what would have occurred had the acquisition taken place on January 1, 2014. 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.

	Twelve Months Ended
	December 31,
	2015		2014
Interest income	$	301,226	$	305,868
Interest expense	21,858		29,575
Net interest income	279,368		276,293
Provision for loan and lease losses	5,050		7,736
Noninterest income	135,379		107,218
Noninterest expense	309,803		270,868
Income before income taxes	99,894		104,907
Income taxes	31,772		32,723
Net income	$	68,122	$	72,184
Earnings per share:
Basic	$	1.69	$	1.80
Diluted	$	1.68	$	1.79

The Company’s consolidated financial statements as of and for the year ended December 31, 2015 include the impact of Heritage’s operations since the acquisition date. Due to the system conversion during the third quarter of 2015 and the integration of Heritage’s operating activities into the Company’s existing operations, historical reporting for Heritage operations is impracticable, and, therefore, disclosure of the amounts of revenue and expenses of Heritage included in the Company’s Consolidated Statement of Income since the acquisition date is impracticable.

Acquisition of First M&F Corporation

On September 1, 2013, the Company completed its acquisition by merger of First M&F Corporation (“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 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 $156,845.

The Company recorded approximately $115,159 in intangible assets which consist of goodwill of $90,127 and core deposit intangible of $25,032. Goodwill resulted from a combination of revenue enhancements from expansion into new 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 Company assumed $30,928 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 is being amortized on a straight line basis over the remaining life.