10-Q 1 rnst10q3312016.htm 10-Q SEC Document

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, 2016
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, 2016, 42,063,419 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, 2016
CONTENTS
 



PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries
Consolidated Balance Sheets

(In Thousands, Except Share Data)
 
(Unaudited)
 
 
 
March 31,
2016
 
December 31, 2015
Assets
 
 
 
Cash and due from banks
$
146,219

 
$
177,007

Interest-bearing balances with banks
72,264

 
34,564

Cash and cash equivalents
218,483

 
211,571

Securities held to maturity (fair value of $466,060 and $473,753, respectively)
448,376

 
458,400

Securities available for sale, at fair value
653,444

 
646,805

Mortgage loans held for sale, at fair value
298,365

 
225,254

Loans, net of unearned income:
 
 
 
Acquired and covered by FDIC loss-share agreements ("acquired covered loans")
44,989

 
93,142

Acquired and not covered by FDIC loss-share agreements ("acquired non-covered loans")
1,453,328

 
1,489,886

Not acquired
4,074,413

 
3,830,434

Total loans, net of unearned income
5,572,730

 
5,413,462

Allowance for loan losses
(42,859
)
 
(42,437
)
Loans, net
5,529,871

 
5,371,025

Premises and equipment, net
168,942

 
169,128

Other real estate owned:
 
 
 
Acquired and covered by FDIC loss-share agreements ("acquired covered loans")
1,373

 
2,818

Acquired and not covered by FDIC loss-share agreements ("acquired non-covered loans")
19,051

 
19,597

Not acquired
12,810

 
12,987

Total other real estate owned, net
33,234

 
35,402

Goodwill
449,425

 
445,871

Other intangible assets, net
27,114

 
28,811

FDIC loss-share indemnification asset
6,118

 
7,149

Other assets
312,857

 
327,080

Total assets
$
8,146,229

 
$
7,926,496

Liabilities and shareholders’ equity
 
 
 
Liabilities
 
 
 
Deposits
 
 
 
Noninterest-bearing
$
1,384,503

 
$
1,278,337

Interest-bearing
5,046,874

 
4,940,265

Total deposits
6,431,377

 
6,218,602

Short-term borrowings
414,255

 
422,279

Long-term debt
147,416

 
148,217

Other liabilities
100,003

 
100,580

Total liabilities
7,093,051

 
6,889,678

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, 41,292,045 and 41,292,045 shares issued, respectively; 40,373,753 and 40,293,291 shares outstanding, respectively
206,460

 
206,460

Treasury stock, at cost
(21,062
)
 
(22,385
)
Additional paid-in capital
584,757

 
585,938

Retained earnings
290,665

 
276,340

Accumulated other comprehensive loss, net of taxes
(7,642
)
 
(9,535
)
Total shareholders’ equity
1,053,178

 
1,036,818

Total liabilities and shareholders’ equity
$
8,146,229

 
$
7,926,496

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,
 
2016
 
2015
Interest income
 
 
 
Loans
$
69,237

 
$
47,437

Securities
 
 
 
Taxable
4,462

 
4,415

Tax-exempt
2,488

 
2,254

Other
72

 
60

Total interest income
76,259

 
54,166

Interest expense
 
 
 
Deposits
3,960

 
3,499

Borrowings
2,245

 
1,886

Total interest expense
6,205

 
5,385

Net interest income
70,054

 
48,781

Provision for loan losses
1,800

 
1,075

Net interest income after provision for loan losses
68,254

 
47,706

Noninterest income
 
 
 
Service charges on deposit accounts
7,991

 
6,335

Fees and commissions
4,331

 
3,695

Insurance commissions
1,962

 
1,967

Wealth management revenue
2,891

 
2,156

Net loss on sales of securities
(71
)
 

BOLI income
954

 
849

Mortgage banking income
11,915

 
5,429

Other
3,329

 
1,439

Total noninterest income
33,302

 
21,870

Noninterest expense
 
 
 
Salaries and employee benefits
42,393

 
28,260

Data processing
4,158

 
3,230

Net occupancy and equipment
8,224

 
5,559

Other real estate owned
957

 
532

Professional fees
1,214

 
824

Advertising and public relations
1,637

 
1,303

Intangible amortization
1,697

 
1,275

Communications
2,171

 
1,433

Merger and conversion related expenses
948

 
478

Other
6,415

 
4,425

Total noninterest expense
69,814

 
47,319

Income before income taxes
31,742

 
22,257

Income taxes
10,526

 
7,017

Net income
$
21,216

 
$
15,240

Basic earnings per share
$
0.53

 
$
0.48

Diluted earnings per share
$
0.52

 
$
0.48

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,
 
2016
 
2015
Net income
$
21,216

 
$
15,240

Other comprehensive income, net of tax:
 
 
 
Securities available for sale:
 
 
 
Unrealized holding gains on securities
3,107

 
2,624

Amortization of unrealized holding gains on securities transferred to the held to maturity category
(20
)
 
(32
)
Total securities
3,087

 
2,592

Derivative instruments:
 
 
 
       Unrealized holding losses on derivative instruments
(1,266
)
 
(669
)
Totals derivative instruments
(1,266
)
 
(669
)
Defined benefit pension and post-retirement benefit plans:
 
 
 
Amortization of net actuarial gain recognized in net periodic pension cost
72

 
57

Total defined benefit pension and post-retirement benefit plans
72

 
57

Other comprehensive income, net of tax
1,893

 
1,980

Comprehensive income
$
23,109

 
$
17,220


See Notes to Consolidated Financial Statements.

3


Renasant Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 
Three Months Ended March 31,
 
2016
 
2015
Operating activities
 
 
 
Net income
$
21,216

 
$
15,240

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for loan losses
1,800

 
1,075

Depreciation, amortization and accretion
739

 
3,772

Deferred income tax expense
2,832

 
6,408

Funding of mortgage loans held for sale
(458,500
)
 
(185,595
)
Proceeds from sales of mortgage loans held for sale
391,552

 
113,076

Gains on sales of mortgage loans held for sale
(5,847
)
 
(4,633
)
Loss on sales of securities
71

 

Losses on sales of premises and equipment
5

 
4

Stock-based compensation
859

 
864

Decrease in FDIC loss-share indemnification asset, net of accretion
1,067

 
2,213

Decrease (increase) in other assets
11,827

 
(483
)
Decrease in other liabilities
(8,298
)
 
(14,432
)
Net cash used in operating activities
(40,677
)
 
(62,491
)
Investing activities
 
 
 
Purchases of securities available for sale
(32,396
)
 
(13,651
)
Proceeds from sales of securities available for sale
4

 

Proceeds from call/maturities of securities available for sale
29,803

 
24,814

Purchases of securities held to maturity
(5,785
)
 
(54,824
)
Proceeds from call/maturities of securities held to maturity
15,193

 
13,922

Net (increase) decrease in loans
(157,198
)
 
30,542

Purchases of premises and equipment
(2,656
)
 
(5,924
)
Proceeds from sales of other assets
3,611

 
8,147

Net cash (used in) provided by investing activities
(149,424
)
 
3,026

Financing activities
 
 
 
Net increase in noninterest-bearing deposits
106,166

 
39,479

Net increase in interest-bearing deposits
106,105

 
64,872

Net decrease in short-term borrowings
(8,024
)
 
(25,671
)
Repayment of long-term debt
(938
)
 
(978
)
Cash paid for dividends
(6,892
)
 
(5,398
)
Cash received on exercise of stock-based compensation
382

 
28

Excess tax benefit (expense) from stock-based compensation
214

 
(71
)
Net cash provided by financing activities
197,013

 
72,261

Net increase in cash and cash equivalents
6,912

 
12,796

Cash and cash equivalents at beginning of period
211,571

 
161,583

Cash and cash equivalents at end of period
$
218,483

 
$
174,379

Supplemental disclosures
 
 
 
Cash paid for interest
$
6,297

 
$
5,663

Cash paid for income taxes
$
5,460

 
$
1,368

Noncash transactions:
 
 
 
Transfers of loans to other real estate owned
$
1,954

 
$
5,559

Financed sales of other real estate owned
$
92

 
$
480

Transfers of loans held for sale to loan portfolio
$
6,610

 
$

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 central Mississippi, Tennessee, Georgia, north and central Alabama and north Florida.
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, 2015 filed with the Securities and Exchange Commission on February 29, 2016.
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. On April 1, 2016, the Company completed its previously-announced acquisition of KeyWorth Bank (“KeyWorth”), a Georgia state bank headquartered in Atlanta, Georgia. The terms of the merger with KeyWorth are disclosed in Note M, "Mergers and Acquisitions". On April 26, 2016, shareholders of the Company approved a proposal to amend the Company's Articles of Incorporation to increase the number of authorized shares of common stock, par value $5.00 per share, from 75,000,000 shares to 150,000,000 shares. The increase in authorized shares of common stock does not impact the Company's financials as of March 31, 2016.
The Company has determined that other than the foregoing items, no significant events occurred after March 31, 2016 but prior to the issuance of these financial statements that would have a material impact on its Consolidated Financial Statements.

Impact of Recently-Issued Accounting Standards and Pronouncements:

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation - Stock Compensation (Topic 718):  Improvements to Employee Share -Based Payment Accounting; (“ASU 2016-09”).  ASU 2016-09 is intended to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions, including (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flow; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes. The amendments of ASU 2016-09 are effective for interim and annual periods beginning after December 15, 2016.  Management is currently evaluating the impact this ASU will have on the Company’s consolidated financial statements.
 
In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting; (“ASU 2016-07”).  ASU 2016-07 requires an investor to initially apply the equity method of accounting from the date it qualifies for that method, i.e., the date the investor obtains significant influence over the operating and financial policies of an investee. The ASU eliminates the previous requirement to retroactively adjust the investment and record a cumulative catch up for the periods that the investment had been held but did not qualify for the equity method of accounting. For public business entities, the amendments in ASU 2016-07 are effective for interim and annual periods beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method.  The Company is currently evaluating the provisions of ASU 2016-07 to determine the potential impact the new standard will have on the Company’s consolidated financial statements.
 
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”).  ASU 2016-02 amends the accounting model and disclosure requirements for leases.  The current accounting model for leases distinguishes between capital leases, which are recognized on-balance sheet, and operating leases, which are not.  Under the new standard, the lease classifications are defined

5


as finance leases, which are similar to capital leases under current U.S. GAAP, and operating leases.  Further, a lessee will recognize a lease liability and a right-of-use asset for all leases with a term greater than 12 months on its balance sheet regardless of the lease’s classification, which may significantly increase reported assets and liabilities.  The accounting model and disclosure requirements for lessors remains substantially unchanged from current U.S. GAAP.  ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018.   The Company is evaluating the impact ASU 2016-02 will have on its financial position, results of operations, and other financial disclosures.
 
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10); Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).  ASU 2016-01 revises the accounting for the classification and measurement of investments in equity securities and revises the presentation of certain fair value changes for financial liabilities measured at fair value.  For equity securities, the guidance in ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income.  For financial liabilities that are measured at fair value in accordance with the fair value option, the guidance requires presenting, in other comprehensive income, the change in fair value that relates to a change in instrument-specific credit risk. ASU 2016-01 also eliminates the disclosure assumptions used to estimate fair value for financial instruments measured at amortized cost and requires disclosure of an exit price notion in determining the fair value of financial instruments measured at amortized cost.  ASU 2016-01 is effective for interim and annual periods beginning after December 15, 2017.  The Company is evaluating the impact, if any, that ASU 2016-01 will have on its financial position, results of operations, and its financial statement disclosures.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement Period Adjustments (“ASU 2015-16”). The update simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. For public companies, this update became effective for interim and annual periods beginning after December 15, 2015, and is to be applied prospectively. ASU 2015-16 became effective for the Company on January 1, 2016 and did not have a significant impact on the Company’s consolidated financial statements.
 
In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in ASU 2015-03. In August 2015, the FASB issued ASU 2015-15 to clarify the Securities and Exchange Commission (“SEC”) staff’s position on presenting and measuring debt issue costs related to line-of-credit arrangements. ASU 2015-03 and ASU 2015-15 are effective for interim and annual periods beginning after December 15, 2015. ASU 2015-03 and ASU 2015-15 are not expected to have a significant impact on the Company’s financial position, results of operations, or its financial statement disclosures.

 In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which amends the consolidation requirements of ASU 810 by changing the consolidation analysis required under GAAP. The revised guidance amends the consolidation analysis based on certain fee arrangements or relationships to the reporting entity and, for limited partnerships, requires entities to consider the limited partner’s rights relative to the general partner. ASU 2015-02 is effective for annual and interim periods beginning after December 15, 2015. ASU 2015-02 is not expected to have a significant impact on the Company’s financial position, results of operations, or its financial statement disclosures.
 
In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity, a consensus of the FASB Emerging Issues Task Force (“ASU 2014-16”). This ASU clarifies how current U.S. GAAP should be interpreted in subjectively evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. ASU 2014-16 is effective for public business entities for annual periods and interim periods within those annual periods, beginning after December 15, 2015.  ASU 2014-16 became effective for the Company on January 1, 2016 and did not have a significant impact on the Company’s consolidated financial statements.
 
In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, a consensus of the FASB Emerging Issues Task Force (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2015. An entity may apply the standards (i) prospectively to all share-based payment awards that are granted or modified on or after the effective date, or (ii) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. Earlier application is permitted. ASU 2014-12

6


became effective for the Company on January 1, 2016 and did not have a significant impact on the Company’s consolidated financial statements.

Proposed Accounting Pronouncements - In December 2012, the FASB announced a project related to the impairment of financial instruments in an effort to provide new guidance that would significantly change how entities measure and recognize credit impairment for certain financial assets. While completion of the project and related guidance is still pending, it is anticipated that new guidance will replace the current incurred loss model that is utilized in estimating the allowance for loan and lease losses with a model that requires management to estimate all contractual cash flows that are not expected to be collected over the life of the loan. The FASB describes this revised model as the current expected credit loss (“CECL”) model and believes the CECL model will result in more timely recognition of credit losses since the CECL model incorporates expected credit losses versus incurred credit losses. The proposed scope of FASB’s CECL model would include loans, held-to-maturity debt instruments, lease receivables, loan commitments and financial guarantees that are not accounted for at fair value. The final issuance date and the implementation date of the CECL guidance is currently pending, and the Company will continue to monitor FASB’s progress on this topic.

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, 2016
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
93,498

 
$
58

 
$
(505
)
 
$
93,051

Obligations of states and political subdivisions
354,878

 
18,150

 
(19
)
 
373,009

 
$
448,376

 
$
18,208

 
$
(524
)
 
$
466,060

December 31, 2015
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
101,155

 
$
26

 
$
(1,214
)
 
$
99,967

Obligations of states and political subdivisions
357,245

 
16,636

 
(95
)
 
373,786

 
$
458,400

 
$
16,662

 
$
(1,309
)
 
$
473,753





7

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, 2016
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
6,087

 
$
140

 
$
(10
)
 
$
6,217

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
357,942

 
5,703

 
(573
)
 
363,072

Government agency collateralized mortgage obligations
179,764

 
2,205

 
(1,061
)
 
180,908

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
55,574

 
1,596

 
(35
)
 
57,135

Government agency collateralized mortgage obligations
4,839

 
209

 

 
5,048

Trust preferred securities
24,732

 

 
(5,785
)
 
18,947

Other debt securities
17,873

 
575

 
(22
)
 
18,426

Other equity securities
2,426

 
1,265

 

 
3,691

 
$
649,237

 
$
11,693

 
$
(7,486
)
 
$
653,444

 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2015
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
6,093

 
$
126

 
$
(19
)
 
$
6,200

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
362,669

 
3,649

 
(1,778
)
 
364,540

Government agency collateralized mortgage obligations
168,916

 
1,449

 
(2,305
)
 
168,060

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
58,864

 
1,002

 
(107
)
 
59,759

Government agency collateralized mortgage obligations
4,947

 
158

 
(1
)
 
5,104

Trust preferred securities
24,770

 

 
(5,301
)
 
19,469

Other debt securities
18,899

 
468

 
(34
)
 
19,333

Other equity securities
2,500

 
1,840

 

 
4,340

 
$
647,658

 
$
8,692

 
$
(9,545
)
 
$
646,805


During the three months ended March 31, 2016, the Company sold an "other equity security" with a carrying value of $75 at the time of sale for net proceeds of $4 resulting in a loss of $71. During the same period in 2015, there were no securities sold.


8

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




Gross realized gains on sales of securities available for sale for the three months ended March 31, 2016 and 2015 were as follows:
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Gross gains on sales of securities available for sale
 
$

 
$

Gross losses on sales of securities available for sale
 
(71
)
 

Loss on sales of securities available for sale, net
 
$
(71
)
 
$


At March 31, 2016 and December 31, 2015, securities with a carrying value of $703,158 and $679,492, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $40,755 and $39,275 were pledged as collateral for short-term borrowings and derivative instruments at March 31, 2016 and December 31, 2015, respectively.
The amortized cost and fair value of securities at March 31, 2016 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.
 
 
Held to Maturity
 
Available for Sale
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Due within one year
$
19,610

 
$
19,780

 
$

 
$

Due after one year through five years
106,455

 
109,612

 
6,087

 
6,217

Due after five years through ten years
199,168

 
206,350

 

 

Due after ten years
123,143

 
130,318

 
24,732

 
18,947

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities

 

 
357,942

 
363,072

Government agency collateralized mortgage obligations

 

 
179,764

 
180,908

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities

 

 
55,574

 
57,135

Government agency collateralized mortgage obligations

 

 
4,839

 
5,048

Other debt securities

 

 
17,873

 
18,426

Other equity securities

 

 
2,426

 
3,691

 
$
448,376

 
$
466,060

 
$
649,237

 
$
653,444



9

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, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
10
 
$
40,832

 
$
(264
)
 
5
 
$
24,745

 
$
(241
)
 
15
 
$
65,577

 
$
(505
)
Obligations of states and political subdivisions
9
 
8,604

 
(17
)
 
2
 
822

 
(2
)
 
11
 
9,426

 
(19
)
Total
19
 
$
49,436

 
$
(281
)
 
7
 
$
25,567

 
$
(243
)
 
26
 
75,003

 
$
(524
)
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
10
 
$
31,567

 
$
(414
)
 
8
 
$
38,688

 
$
(800
)
 
18
 
$
70,255

 
$
(1,214
)
Obligations of states and political subdivisions
6
 
4,815

 
(53
)
 
7
 
4,921

 
(42
)
 
13
 
9,736

 
(95
)
Total
16
 
$
36,382

 
$
(467
)
 
15
 
$
43,609

 
$
(842
)
 
31
 
$
79,991

 
$
(1,309
)
Available for Sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
1
 
$
3,990

 
$
(10
)
 
0
 
$

 
$

 
1
 
$
3,990

 
$
(10
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
10
 
31,374

 
(136
)
 
7
 
19,176

 
(437
)
 
17
 
50,550

 
(573
)
Government agency collateralized mortgage obligations
11
 
34,635

 
(115
)
 
13
 
39,797

 
(946
)
 
24
 
74,432

 
(1,061
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
4
 
6,874

 
(33
)
 
1
 
808

 
(2
)
 
5
 
7,682

 
(35
)
Government agency collateralized mortgage obligations
0
 

 

 
0
 

 

 
0
 

 

Trust preferred securities
0
 

 

 
3
 
18,946

 
(5,785
)
 
3
 
18,946

 
(5,785
)
Other debt securities
2
 
3,637

 
(13
)
 
1
 
1,398

 
(9
)
 
3
 
5,035

 
(22
)
Total
28
 
$
80,510

 
$
(307
)
 
25
 
$
80,125

 
$
(7,179
)
 
53
 
$
160,635

 
$
(7,486
)
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
1
 
$
3,981

 
$
(19
)
 
0
 
$

 
$

 
1
 
$
3,981

 
$
(19
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
34
 
130,306

 
(937
)
 
9
 
27,431

 
(841
)
 
43
 
157,737

 
(1,778
)
Government agency collateralized mortgage obligations
25
 
52,128

 
(347
)
 
16
 
51,574

 
(1,958
)
 
41
 
103,702

 
(2,305
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
8
 
16,782

 
(104
)
 
1
 
814

 
(3
)
 
9
 
17,596

 
(107
)
Government agency collateralized mortgage obligations
1
 
1,882

 
(1
)
 
0
 

 

 
1
 
1,882

 
(1
)
Trust preferred securities
0
 

 

 
3
 
19,469

 
(5,301
)
 
3
 
19,469

 
(5,301
)
Other debt securities
1
 
1,316

 
(3
)
 
2
 
3,866

 
(31
)
 
3
 
5,182

 
(34
)
Other equity securities
0
 

 

 
0
 

 

 
0
 

 

Total
70
 
$
206,395

 
$
(1,411
)
 
31
 
$
103,154

 
$
(8,134
)
 
101
 
$
309,549

 
$
(9,545
)
 

10

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 and, with the exception of one of its pooled trust preferred securities (discussed below), is collecting principal and interest payments from the respective issuers as scheduled. As such, the Company did not record any OTTI for the three months ended March 31, 2016 or 2015.
The Company holds investments in pooled trust preferred securities that had an amortized cost basis of $24,732 and $24,770 and a fair value of $18,947 and $19,469 at March 31, 2016 and December 31, 2015, respectively. At March 31, 2016, the investments in pooled trust preferred securities consisted of three securities representing interests in various tranches of trusts collateralized by debt issued by over 250 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 before recovery of the investments' amortized cost, 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, 2016, 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 three 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, 2016.
The Company's analysis of the pooled trust preferred securities during the second quarter of 2015 supported a return to accrual status for one of the three securities (XXVI). During the second quarter of 2014, the Company's analysis supported a return to accrual status for one of the other securities (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, the remaining security (XXIV) is still in "payment in kind" status where interest payments are not expected until a future date and, therefore, the qualitative and quantitative factors described above do not justify a return to accrual status at this time. As a result, pooled trust preferred security XXIV remains classified as a nonaccruing asset at March 31, 2016, 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, 2016:
 
Name
Single/
Pooled
 
Class/
Tranche
 
Amortized
Cost
 
Fair
Value
 
Unrealized
Loss
 
Lowest
Credit
Rating
 
Issuers
Currently in
Deferral or
Default
XXIII
Pooled
 
B-2
 
$
8,434

 
$
5,743

 
$
(2,691
)
 
Baa3
 
19
%
XXIV
Pooled
 
B-2
 
12,077

 
10,193

 
(1,884
)
 
Caa2
 
28
%
XXVI
Pooled
 
B-2
 
4,221

 
3,011

 
(1,210
)
 
Ba3
 
25
%
 
 
 
 
 
$
24,732

 
$
18,947

 
$
(5,785
)
 
 
 
 


11

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


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:
 
 
2016
 
2015
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,
2016
 
December 31, 2015
Commercial, financial, agricultural
$
654,934

 
$
636,837

Lease financing
43,605

 
35,978

Real estate – construction
377,574

 
357,665

Real estate – 1-4 family mortgage
1,777,495

 
1,735,323

Real estate – commercial mortgage
2,607,510

 
2,533,729

Installment loans to individuals
113,280

 
115,093

Gross loans
5,574,398

 
5,414,625

Unearned income
(1,668
)
 
(1,163
)
Loans, net of unearned income
5,572,730

 
5,413,462

Allowance for loan losses
(42,859
)
 
(42,437
)
Net loans
$
5,529,871

 
$
5,371,025


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

12

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, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
1,297

 
$
1,404

 
$
651,749

 
$
654,450

 
$

 
$
236

 
$
248

 
$
484

 
$
654,934

Lease financing

 

 
43,605

 
43,605

 

 

 

 

 
43,605

Real estate – construction
898

 
242

 
376,434

 
377,574

 

 

 

 

 
377,574

Real estate – 1-4 family mortgage
8,785

 
6,783

 
1,751,451

 
1,767,019

 
254

 
2,256

 
7,966

 
10,476

 
1,777,495

Real estate – commercial mortgage
6,962

 
9,057

 
2,575,720

 
2,591,739

 
10

 
1,318

 
14,443

 
15,771

 
2,607,510

Installment loans to individuals
406

 
157

 
112,682

 
113,245

 

 
28

 
7

 
35

 
113,280

Unearned income

 

 
(1,668
)
 
(1,668
)
 

 

 

 

 
(1,668
)
Total
$
18,348

 
$
17,643

 
$
5,509,973

 
$
5,545,964

 
$
264

 
$
3,838

 
$
22,664

 
$
26,766

 
$
5,572,730

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

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.

13

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


Loans accounted for under Financial Accounting Standards Board Accounting Standards Codification Topic (“ASC”) 310-20 “Nonrefundable Fees and Other Cost” (“ASC 310-20”) and are impaired loans recognized in conformity with 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, 2016
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
328

 
$
321

 
$

 
$
321

 
$
6

Lease financing

 

 

 

 

Real estate – construction

 

 

 

 

Real estate – 1-4 family mortgage
16,052

 
14,786

 

 
14,786

 
4,311

Real estate – commercial mortgage
20,067

 
16,450

 

 
16,450

 
3,082

Installment loans to individuals
67

 
67

 

 
67

 

Total
$
36,514

 
$
31,624

 
$

 
$
31,624

 
$
7,399

December 31, 2015
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
1,308

 
$
358

 
$
12

 
$
370

 
$
6

Lease financing

 

 

 

 

Real estate – construction
2,710

 
2,698

 

 
2,698

 
20

Real estate – 1-4 family mortgage
18,193

 
16,650

 

 
16,650

 
4,475

Real estate – commercial mortgage
20,169

 
16,819

 

 
16,819

 
3,099

Installment loans to individuals
90

 
90

 

 
90

 

Totals
$
42,470

 
$
36,615

 
$
12

 
$
36,627

 
$
7,600


The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and are impaired loans for the periods presented:
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Three Months Ended
 
March 31, 2016
 
March 31, 2015
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
326

 
$
2

 
$
950

 
$
7

Lease financing

 

 

 

Real estate – construction

 

 
104

 

Real estate – 1-4 family mortgage
15,252

 
90

 
13,886

 
67

Real estate – commercial mortgage
16,547

 
132

 
25,618

 
177

Installment loans to individuals
67

 
1

 

 

Total
$
32,192

 
$
225

 
$
40,558

 
$
251


14

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


Loans accounted for under ASC 310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”) and are impaired loans recognized in conformity with 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, 2016
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
24,323

 
$
4,807

 
$
9,643

 
$
14,450

 
$
422

Lease financing

 

 

 

 

Real estate – construction
2,635

 

 
2,504

 
2,504

 

Real estate – 1-4 family mortgage
107,167

 
16,573

 
72,391

 
88,964

 
335

Real estate – commercial mortgage
279,548

 
56,555

 
160,034

 
216,589

 
1,264

Installment loans to individuals
3,239

 
393

 
2,109

 
2,502

 
1

Total
$
416,912

 
$
78,328

 
$
246,681

 
$
325,009

 
$
2,022

December 31, 2015
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
27,049

 
$
5,197

 
$
11,292

 
$
16,489

 
$
353

Lease financing

 

 

 

 

Real estate – construction
2,916

 

 
2,749

 
2,749

 

Real estate – 1-4 family mortgage
109,293

 
15,702

 
75,947

 
91,649

 
256

Real estate – commercial mortgage
287,821

 
53,762

 
168,848

 
222,610

 
1,096

Installment loans to individuals
3,432

 
400

 
2,268

 
2,668

 
1

Totals
$
430,511

 
$
75,061

 
$
261,104

 
$
336,165

 
$
1,706


The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-30 and are impaired loans for the periods presented:

 
Three Months Ended
 
Three Months Ended
 
March 31, 2016
 
March 31, 2015
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
18,024

 
$
327

 
$
25,978

 
$
233

Lease financing

 

 

 

Real estate – construction
2,608

 
25

 

 

Real estate – 1-4 family mortgage
101,089

 
953

 
86,713

 
1,043

Real estate – commercial mortgage
250,041

 
2,831

 
242,712

 
2,871

Installment loans to individuals
2,954

 
29

 
4,215

 
46

Total
$
374,716

 
$
4,165

 
$
359,618

 
$
4,193

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 tables illustrate the impact of modifications classified as restructured loans and are segregated by class for the periods presented:
 

15

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, 2016
 
 
 
 
 
Commercial, financial, agricultural

 
$

 
$

Real estate – construction

 

 

Real estate – 1-4 family mortgage
10

 
780

 
662

Real estate – commercial mortgage
2

 
612

 
605

Installment loans to individuals

 

 

Total
12

 
$
1,392

 
$
1,267

March 31, 2015
 
 
 
 
 
Commercial, financial, agricultural

 
$

 
$

Real estate – construction

 

 

Real estate – 1-4 family mortgage
17

 
1,198

 
1,037

Real estate – commercial mortgage
8

 
6,899

 
6,463

Installment loans to individuals

 

 

Total
25

 
$
8,097

 
$
7,500


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 $136 that were contractually 90 days past due or more and still accruing at March 31, 2016 and two restructured loans totaling $314 that were contractually 90 days past due or more and still accruing at December 31, 2015. The outstanding balance of restructured loans on nonaccrual status was $12,531 and $13,517 at March 31, 2016 and December 31, 2015, respectively.

Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2016
86

 
$
13,453

Additional loans with concessions
12

 
1,267

Reductions due to:
 
 
 
Reclassified as nonperforming
(2
)
 
(134
)
Paid in full
(4
)
 
(398
)
Charge-offs

 

Transfer to other real estate owned

 

Principal paydowns

 
(142
)
Lapse of concession period

 

       Reclassified as performing

 

Totals at March 31, 2016
92

 
$
14,046


The allocated allowance for loan losses attributable to restructured loans was $1,010 and $979 at March 31, 2016 and December 31, 2015, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2016 or December 31, 2015.
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

16

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


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:
 
 
Pass
 
Watch
 
Substandard
 
Total
March 31, 2016
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
463,922

 
$
9,302

 
$
1,988

 
$
475,212

Lease financing

 

 

 

Real estate – construction
289,169

 
679