Loans and the Allowance for Loan Losses

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Loans and the Allowance for Loan Losses

Loans and the Allowance for Loan Losses

(In Thousands, Except Number of Loans)

The following is a summary of loans at December 31:

	2015			2014
Commercial, financial, agricultural	$	636,837		$	483,283
Lease financing	35,978			10,427
Real estate – construction	357,665			212,061
Real estate – 1-4 family mortgage	1,735,323			1,236,360
Real estate – commercial mortgage	2,533,729			1,956,914
Installment loans to individuals	115,093			89,142
Gross loans	5,414,625			3,988,187
Unearned income	(1,163		)	(313		)
Loans, net of unearned income	5,413,462			3,987,874
Allowance for loan losses	(42,437		)	(42,289		)
Net loans	$	5,371,025		$	3,945,585

Past Due and Nonaccrual Loans

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
December 31, 2015
Commercial, financial, agricultural	$	1,296	$	1,077	$	634,037		$	636,410		$	30	$	133	$	264	$	427	$	636,837
Lease financing	—		—		35,978			35,978			—		—		—		—		35,978
Real estate – construction	69		176		357,420			357,665			—		—		—		—		357,665
Real estate – 1-4 family mortgage	9,196		6,457		1,707,230			1,722,883			528		3,663		8,249		12,440		1,735,323
Real estate – commercial mortgage	4,849		8,581		2,504,192			2,517,622			568		2,263		13,276		16,107		2,533,729
Installment loans to individuals	260		102		114,671			115,033			—		53		7		60		115,093
Unearned income	—		—		(1,163		)	(1,163		)	—		—		—		—		(1,163		)
Total	$	15,670	$	16,393	$	5,352,365		$	5,384,428		$	1,126	$	6,112	$	21,796	$	29,034	$	5,413,462
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 or more past due or placed on nonaccrual status are reported as nonperforming loans. There were two restructured loans totaling $314 that were contractually 90 days past due or more and still accruing at December 31, 2015. There were no restructured loans contractually 90 days past due or more and still accruing at December 31, 2014. The outstanding balance of restructured loans on nonaccrual status was $13,517 and $11,392 at December 31, 2015 and 2014, respectively.

Impaired Loans

Impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates and periods presented:

	As of December 31, 2015						Year Ended December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With a related allowance recorded:
Commercial, financial, agricultural	$	5,555	$	6,242	$	359	$	5,300	$	229
Lease financing	—		—		—		—		—
Real estate – construction	2,698		2,710		20		899		78
Real estate – 1-4 family mortgage	32,352		34,195		4,731		32,961		1,193
Real estate – commercial mortgage	70,580		78,119		4,195		74,830		3,155
Installment loans to individuals	491		784		1		491		15
Total	$	111,676	$	122,050	$	9,306	$	114,481	$	4,670
With no related allowance recorded:
Commercial, financial, agricultural	$	12	$	1,140	$	—	$	93	$	—
Lease financing	—		—		—		—		—
Real estate – construction	—		—		—		—		—
Real estate – 1-4 family mortgage	6,019		8,707		—		7,055		28
Real estate – commercial mortgage	4,998		7,689		—		5,744		115
Installment loans to individuals	7		16		—		18		—
Total	$	11,036	$	17,552	$	—	$	12,910	$	143
Totals	$	122,712	$	139,602	$	9,306	$	127,391	$	4,813

	As of December 31, 2014						Year Ended December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With a related allowance recorded:
Commercial, financial, agricultural	$	7,214	$	7,718	$	285	$	7,025	$	319
Lease financing	—		—		—		—		—
Real estate – construction	164		164		—		155		—
Real estate – 1-4 family mortgage	30,805		33,901		5,066		32,697		1,468
Real estate – commercial mortgage	81,257		104,404		6,629		89,939		4,338
Installment loans to individuals	560		853		1		598		35
Total	$	120,000	$	147,040	$	11,981	$	130,414	$	6,160
With no related allowance recorded:
Commercial, financial, agricultural	$	249	$	2,364	$	—	$	1,428	$	80
Lease financing	—		—		—		—		—
Real estate – construction	—		—		—		—		—
Real estate – 1-4 family mortgage	5,886		9,191		—		8,222		194
Real estate – commercial mortgage	16,032		26,344		—		24,381		913
Installment loans to individuals	17		48		—		56		1
Total	$	22,184	$	37,947	$	—	$	34,087	$	1,188
Totals	$	142,184	$	184,987	$	11,981	$	164,501	$	7,348

The average recorded investment in impaired loans for the year ended December 31, 2013 was $123,756. Interest income recognized on impaired loans for the year ended December 31, 2013 was $1,820.

Restructured Loans

The following table presents restructured loans segregated by class as of the dates presented:

	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
December 31, 2015
Commercial, financial, agricultural	1	$	257	$	257
Lease financing	—	—		—
Real estate – construction	—	—		—
Real estate – 1-4 family mortgage	63	6,588		5,778
Real estate – commercial mortgage	21	9,023		7,351
Installment loans to individuals	1	67		67
Total	86	$	15,935	$	13,453
December 31, 2014
Commercial, financial, agricultural	2	$	507	$	507
Lease financing	—	—		—
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, 2013	41		$	21,478
Additional loans with concessions	25		3,554
Reductions due to:
Reclassified as nonperforming	(5	)	(3,196		)
Paid in full	(6	)	(6,659		)
Charge-offs	(2	)	(191		)
Transfer to other real estate owned	—		—
Principal paydowns			(649		)
Lapse of concession period	—		—
Totals at December 31, 2014	53		$	14,337
Additional loans with concessions	63		13,418
Reductions due to:
Reclassified as nonperforming	(7	)	(3,145		)
Paid in full	(21	)	(8,127		)
Charge-offs	(1	)	(56		)
Transfer to other real estate owned	—		—
Principal paydowns	—		(751		)
Lapse of concession period	—		—
TDR reclassified as performing loan	(1	)	$	(2,223	)
Totals at December 31, 2015	86		$	13,453

The allocated allowance for loan losses attributable to restructured loans was $979 and $1,547 at December 31, 2015 and 2014, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at December 31, 2015 and six thousand dollars in remaining availability under commitments to lend additional funds on these restructured loans at December 31, 2014.

Credit Quality

For commercial and commercial real estate secured loans, 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 commercial and commercial real estate secured 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. The “Watch” grade (those with a risk rating of 5) is utilized on a temporary basis for “Pass” grade loans where a significant 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 those related loan balances. The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:

	Pass		Watch		Substandard		Total
December 31, 2015
Commercial, financial, agricultural	$	465,185	$	8,498	$	1,734	$	475,417
Real estate – construction	273,398		483		—		273,881
Real estate – 1-4 family mortgage	275,269		9,712		15,460		300,441
Real estate – commercial mortgage	1,968,352		27,175		20,683		2,016,210
Installment loans to individuals	51		—		5		56
Total	$	2,982,255	$	45,868	$	37,882	$	3,066,005
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 similar loan types, 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
December 31, 2015
Commercial, financial, agricultural	$	144,838	$	93	$	144,931
Lease financing	34,815		—		34,815
Real estate – construction	81,035		—		81,035
Real estate – 1-4 family mortgage	1,340,356		2,877		1,343,233
Real estate – commercial mortgage	294,042		867		294,909
Installment loans to individuals	112,275		94		112,369
Total	$	2,007,361	$	3,931	$	2,011,292
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:

	Impaired Covered Loans		Other Covered Loans		Not Covered Loans		Total
December 31, 2015
Commercial, financial, agricultural	$	1,370	$	389	$	14,730	$	16,489
Lease financing	—		—		—		—
Real estate – construction	—		91		2,658		2,749
Real estate – 1-4 family mortgage	6,358		24,996		60,295		91,649
Real estate – commercial mortgage	15,120		18,606		188,884		222,610
Installment loans to individuals	—		43		2,625		2,668
Total	$	22,848	$	44,125	$	269,192	$	336,165
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 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 as of the dates presented:

	Impaired Covered Loans			Other Covered Loans			Not Covered Loans			Total
December 31, 2015
Contractually-required principal and interest	$	24,152		$	54,963		$	388,662		$	467,777
Nonaccretable difference(1)	(1,304		)	(7,138		)	(74,878		)	(83,320		)
Cash flows expected to be collected	22,848			47,825			313,784			384,457
Accretable yield(2)	—			(3,700		)	(44,592		)	(48,292		)
Fair value	$	22,848		$	44,125		$	269,192		$	336,165
December 31, 2014
Contractually-required principal and interest	$	32,451		$	163,271		$	281,716		$	477,438
Nonaccretable difference(1)	(24,446		)	(25,611		)	(50,523		)	(100,580		)
Cash flows expected to be collected	8,005			137,660			231,193			376,858
Accretable yield(2)	(1		)	(2,623		)	(29,809		)	(32,433		)
Fair value	$	8,004		$	135,037		$	201,384		$	344,425

⁽¹⁾  Represents contractual principal cash flows of $83,078 and $95,081, respectively, and interest cash flows of $241 and $5,499, respectively, not expected to be collected.

⁽²⁾  Represents contractual interest payments expected to be collected of $2,312 and $2,798, respectively, and purchase discount of $45,980 and $29,635, respectively.

Changes in the accretable yield of loans acquired with deteriorated credit quality were as follows:

	Impaired Covered Loans				Other Covered Loans			Not Covered Loans			Total
Balance at January 1, 2014	$	(1	)		$	(3,758	)	$	(36,191	)	$	(39,950	)
Additions through acquisition	—				—			—			—
Reclasses from nonaccretable difference	(104		)		(6,343		)	(683		)	(7,130		)
Accretion	104				7,478			6,006			13,588
Charge-off	—				—			1,059			1,059
Balance at December 31, 2014	$	(1	)		$	(2,623	)	$	(29,809	)	$	(32,433	)
Additions through acquisition	—				(4,939		)	(23,107		)	(28,046		)
Reclasses from nonaccretable difference	(914		)		(528		)	(5,175		)	(6,617		)
Accretion	915				4,390			11,907			17,212
Charge-off	—			—	—			1,592			1,592
Balance at December 31, 2015	$	—			$	(3,700	)	$	(44,592	)	$	(48,292	)

The following table presents the fair value of loans acquired from Heritage as of the July 1, 2015 acquisition date.

At acquisition date:	July 1, 2015
Contractually-required principal and interest	$	1,205,159
Nonaccretable difference	14,260
Cash flows expected to be collected	1,190,899
Accretable yield	68,702
Fair value	$	1,122,197

Allowance for Loan Losses

The following table provides a rollforward of the allowance for loan losses and a breakdown of the ending balance of the allowance based on the Company’s impairment methodology for the periods presented:

	Commercial			Real Estate  - Construction			Real Estate - 1-4 Family Mortgage			Real Estate  - Commercial Mortgage			Installment and Other(1)			Total
Year Ended December 31, 2015
Allowance for loan losses:
Beginning balance	$	3,305		$	1,415		$	13,549		$	22,759		$	1,261		$	42,289
Charge-offs	(943		)	(26		)	(2,173		)	(2,613		)	(1,021		)	(6,776		)
Recoveries	361			26			1,064			614			109			2,174
Net charge-offs	(582		)	—			(1,109		)	(1,999		)	(912		)	(4,602		)
Provision for loan losses	1,489			435			650			312			1,027			3,913
Benefit attributable to FDIC loss-share agreements	(64		)	—			(91		)	(717		)	—			(872		)
Recoveries payable to FDIC	38			2			909			756			4			1,709
Provision for loan losses charged to operations	1,463			437			1,468			351			1,031			4,750
Ending balance	$	4,186		$	1,852		$	13,908		$	21,111		$	1,380		$	42,437
Period-End Amount Allocated to:
Individually evaluated for impairment	$	6		$	20		$	4,475		$	3,099		$	—		$	7,600
Collectively evaluated for impairment	3,827			1,832			9,177			16,916			1,379			33,131
Acquired with deteriorated credit quality	353			—			256			1,096			1			1,706
Ending balance	$	4,186		$	1,852		$	13,908		$	21,111		$	1,380		$	42,437

	Commercial			Real Estate  - Construction		Real Estate - 1-4 Family Mortgage			Real Estate  - Commercial Mortgage			Installment and Other(1)			Total
Year Ended December 31, 2014
Allowance for loan losses:
Beginning balance	$	3,090		$	1,091	$	18,629		$	23,688		$	1,167		$	47,665
Charge-offs	(1,516		)	—		(5,662		)	(6,186		)	(495		)	(13,859		)
Recoveries	455			33		1,325			436			67			2,316
Net charge-offs	(1,061		)	33		(4,337		)	(5,750		)	(428		)	(11,543		)
Provision for loan losses	1,297			290		(452		)	9,260			522			10,917
Benefit attributable to FDIC loss-share agreements	(204		)	—		(816		)	(5,258		)	—			(6,278		)
Recoveries payable to FDIC	183			1		525			819			—			1,528
Provision for loan losses charged to operations	1,276			291		(743		)	4,821			522			6,167
Ending balance	$	3,305		$	1,415	$	13,549		$	22,759		$	1,261		$	42,289
Period-End Amount Allocated to:
Individually evaluated for impairment	$	5		$	—	$	4,786		$	5,465		$	—		$	10,256
Collectively evaluated for impairment	3,020			1,415		8,483			16,130			1,260			30,308
Acquired with deteriorated credit quality	280			—		280			1,164			1			1,725
Ending balance	$	3,305		$	1,415	$	13,549		$	22,759		$	1,261		$	42,289
Year Ended December 31, 2013
Allowance for loan losses:
Beginning balance	$	3,307		$	711	$	18,347		$	21,416		$	566		$	44,347
Charge-offs	(1,184		)	—		(3,093		)	(4,782		)	(492		)	(9,551		)
Recoveries	356			75		1,044			980			64			2,519
Net charge-offs	(828		)	75		(2,049		)	(3,802		)	(428		)	(7,032		)
Provision for loan losses	982			304		2,496			6,927			1,029			11,738
Benefit attributable to FDIC loss-share agreements	(403		)	—		(1,039		)	(919		)	—			(2,361		)
Recoveries payable to FDIC	32			1		874			66			—			973
Provision for loan losses charged to operations	$	611		$	305	$	2,331		$	6,074		$	1,029		$	10,350
Ending balance	$	3,090		$	1,091	$	18,629		$	23,688		$	1,167		$	47,665
Period-End Amount Allocated to:
Individually evaluated for impairment	$	260		$	—	$	7,353		$	7,036		$	1		$	14,650
Collectively evaluated for impairment	2,624			1,091		11,257			16,369			1,030			32,371
Acquired with deteriorated credit quality	206			—		19			283			136			644
Ending balance	$	3,090		$	1,091	$	18,629		$	23,688		$	1,167		$	47,665

⁽¹⁾  Includes lease financing receivables.

The following table provides the recorded investment in loans, net of unearned income, based on the Company’s impairment methodology as of the dates presented:

	Commercial		Real Estate  - Construction		Real Estate - 1-4 Family Mortgage		Real Estate  - Commercial Mortgage		Installment and Other(1)		Total
December 31, 2015
Individually evaluated for impairment	$	370	$	2,698	$	16,650	$	16,819	$	90	$	36,627
Collectively evaluated for impairment	619,978		352,218		1,627,024		2,294,300		147,150		5,040,670
Acquired with deteriorated credit quality	16,489		2,749		91,649		222,610		2,668		336,165
Ending balance	$	636,837	$	357,665	$	1,735,323	$	2,533,729	$	149,908	$	5,413,462
December 31, 2014
Individually evaluated for impairment	$	984	$	164	$	18,401	$	29,079	$	21	$	48,649
Collectively evaluated for impairment	458,895		211,897		1,135,140		1,693,590		95,278		3,594,800
Acquired with deteriorated credit quality	23,404		—		82,819		234,245		3,957		344,425
Ending balance	$	483,283	$	212,061	$	1,236,360	$	1,956,914	$	99,256	$	3,987,874

⁽¹⁾  Includes lease financing receivables.

Related Party Loans

Certain executive officers and directors of Renasant Bank and their associates are customers of and have other transactions with Renasant Bank. Related party loans and commitments are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company or the Bank and do not involve more than a normal risk of collectability or present other unfavorable features. A summary of the changes in related party loans follows:

Loans at December 31, 2014	$	18,029
New loans and advances	1,517
Payments received	(5,108		)
Changes in related parties	1,575
Loans at December 31, 2015	$	16,013

No related party loans were classified as past due, nonaccrual, impaired or restructured at December 31, 2015 or 2014. Unfunded commitments to certain executive officers and directors and their associates totaled $5,780 and $5,184 at December 31, 2015 and 2014, respectively.