0000715072-17-000100.txt : 20170510 0000715072-17-000100.hdr.sgml : 20170510 20170510154821 ACCESSION NUMBER: 0000715072-17-000100 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 131 CONFORMED PERIOD OF REPORT: 20170331 FILED AS OF DATE: 20170510 DATE AS OF CHANGE: 20170510 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: 17830054 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 rnst10q3312017.htm 10-Q 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, 2017
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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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
 
 
 
 
Emerging growth company
o
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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, 2017, 44,396,150 shares of the registrant’s common stock, $5.00 par value per share, were outstanding.



Renasant Corporation and Subsidiaries
Form 10-Q
For the Quarterly Period Ended March 31, 2017
CONTENTS
 



PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries
Consolidated Balance Sheets

(In Thousands, Except Share Data)
 
(Unaudited)
 
 
 
March 31,
2017
 
December 31, 2016
Assets
 
 
 
Cash and due from banks
$
119,985

 
$
160,570

Interest-bearing balances with banks
250,759

 
145,654

Cash and cash equivalents
370,744

 
306,224

Securities held to maturity (fair value of $357,216 and $362,893, respectively)
347,977

 
356,282

Securities available for sale, at fair value
696,885

 
674,248

Mortgage loans held for sale, at fair value
158,619

 
177,866

Loans, net of unearned income:
 
 
 
Non purchased loans and leases
4,834,085

 
4,713,572

Purchased loans
1,401,720

 
1,489,137

Total loans, net of unearned income
6,235,805

 
6,202,709

Allowance for loan losses
(42,923
)
 
(42,737
)
Loans, net
6,192,882

 
6,159,972

Premises and equipment, net
179,930

 
179,223

Other real estate owned:
 
 
 
Non purchased
5,056

 
5,929

Purchased
16,266

 
17,370

Total other real estate owned, net
21,322

 
23,299

Goodwill
470,534

 
470,534

Other intangible assets, net
22,511

 
24,074

Bank-owned life insurance
153,309

 
152,305

Mortgage servicing rights
28,776

 
26,302

Other assets
121,222

 
149,522

Total assets
$
8,764,711

 
$
8,699,851

Liabilities and shareholders’ equity
 
 
 
Liabilities
 
 
 
Deposits
 
 
 
Noninterest-bearing
$
1,579,581

 
$
1,561,357

Interest-bearing
5,651,269

 
5,497,780

Total deposits
7,230,850

 
7,059,137

Short-term borrowings
9,955

 
109,676

Long-term debt
192,051

 
202,459

Other liabilities
80,790

 
95,696

Total liabilities
7,513,646

 
7,466,968

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

 

Common stock, $5.00 par value – 150,000,000 shares authorized; 45,107,066 shares issued; 44,394,707 and 44,332,273 shares outstanding, respectively
225,535

 
225,535

Treasury stock, at cost
(20,786
)
 
(21,692
)
Additional paid-in capital
705,748

 
707,408

Retained earnings
353,478

 
337,536

Accumulated other comprehensive loss, net of taxes
(12,910
)
 
(15,904
)
Total shareholders’ equity
1,251,065

 
1,232,883

Total liabilities and shareholders’ equity
$
8,764,711

 
$
8,699,851

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,
 
2017
 
2016
Interest income
 
 
 
Loans
$
74,407

 
$
69,237

Securities
 
 
 
Taxable
4,352

 
4,462

Tax-exempt
2,574

 
2,488

Other
556

 
72

Total interest income
81,889

 
76,259

Interest expense
 
 
 
Deposits
5,149

 
3,960

Borrowings
2,725

 
2,245

Total interest expense
7,874

 
6,205

Net interest income
74,015

 
70,054

Provision for loan losses
1,500

 
1,800

Net interest income after provision for loan losses
72,515

 
68,254

Noninterest income
 
 
 
Service charges on deposit accounts
7,931

 
7,991

Fees and commissions
5,199

 
4,243

Insurance commissions
1,860

 
1,962

Wealth management revenue
2,884

 
2,891

Mortgage banking income
10,504

 
11,915

Net loss on sales of securities

 
(71
)
BOLI income
1,113

 
954

Other
2,530

 
3,417

Total noninterest income
32,021

 
33,302

Noninterest expense
 
 
 
Salaries and employee benefits
42,209

 
42,393

Data processing
4,234

 
4,158

Net occupancy and equipment
9,319

 
8,224

Other real estate owned
532

 
957

Professional fees
2,067

 
1,214

Advertising and public relations
1,592

 
1,637

Intangible amortization
1,563

 
1,697

Communications
1,863

 
2,171

Extinguishment of debt
205

 

Merger and conversion related expenses
345

 
948

Other
5,380

 
6,415

Total noninterest expense
69,309

 
69,814

Income before income taxes
35,227

 
31,742

Income taxes
11,255

 
10,526

Net income
$
23,972

 
$
21,216

Basic earnings per share
$
0.54

 
$
0.53

Diluted earnings per share
$
0.54

 
$
0.52

Cash dividends per common share
$
0.18

 
$
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,
 
2017
 
2016
Net income
$
23,972

 
$
21,216

Other comprehensive income, net of tax:
 
 
 
Securities available for sale:
 
 
 
Unrealized holding gains on securities
2,907

 
3,107

Amortization of unrealized holding gains on securities transferred to the held to maturity category
(151
)
 
(20
)
Total securities
2,756

 
3,087

Derivative instruments:
 
 
 
Unrealized holding gains (losses) on derivative instruments
169

 
(1,266
)
Total derivative instruments
169

 
(1,266
)
Defined benefit pension and post-retirement benefit plans:
 
 
 
Amortization of net actuarial loss recognized in net periodic pension cost
69

 
72

Total defined benefit pension and post-retirement benefit plans
69

 
72

Other comprehensive income, net of tax
2,994

 
1,893

Comprehensive income
$
26,966

 
$
23,109


See Notes to Consolidated Financial Statements.

3


Renasant Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 
Three Months Ended March 31,
 
2017
 
2016
Operating activities
 
 
 
Net income
$
23,972

 
$
21,216

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Provision for loan losses
1,500

 
1,800

Depreciation, amortization and accretion
11,566

 
739

Deferred income tax expense
3,946

 
2,832

Funding of mortgage loans held for sale
(318,144
)
 
(458,500
)
Proceeds from sales of mortgage loans held for sale
343,945

 
391,552

Gains on sales of mortgage loans held for sale
(6,554
)
 
(5,847
)
Losses on sales of securities

 
71

Penalty on extinguishment of debt
205

 

Losses on sales of premises and equipment
512

 
5

Stock-based compensation
1,174

 
859

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

 
1,067

Decrease in other assets
18,882

 
11,827

Decrease in other liabilities
(14,662
)
 
(8,298
)
Net cash provided by (used in) operating activities
66,342

 
(40,677
)
Investing activities
 
 
 
Purchases of securities available for sale
(52,683
)
 
(32,396
)
Proceeds from sales of securities available for sale
2,946

 
4

Proceeds from call/maturities of securities available for sale
30,800

 
29,803

Purchases of securities held to maturity

 
(5,785
)
Proceeds from call/maturities of securities held to maturity
7,710

 
15,193

Net increase in loans
(43,182
)
 
(157,198
)
Purchases of premises and equipment
(4,441
)
 
(2,656
)
Proceeds from sales of premises and equipment
13

 

Proceeds from sales of other assets
5,307

 
3,611

Net cash used in investing activities
(53,530
)
 
(149,424
)
Financing activities
 
 
 
Net increase in noninterest-bearing deposits
18,224

 
106,166

Net increase in interest-bearing deposits
154,001

 
106,105

Net decrease in short-term borrowings
(99,721
)
 
(8,024
)
Repayment of long-term debt
(10,790
)
 
(938
)
Cash paid for dividends
(8,030
)
 
(6,892
)
Net stock-based compensation transactions
(1,976
)
 
382

Excess tax benefit from stock-based compensation

 
214

Net cash provided by financing activities
51,708

 
197,013

Net increase in cash and cash equivalents
64,520

 
6,912

Cash and cash equivalents at beginning of period
306,224

 
211,571

Cash and cash equivalents at end of period
$
370,744

 
$
218,483

Supplemental disclosures
 
 
 
Cash paid for interest
$
9,635

 
$
6,297

Cash paid for income taxes
$
7,181

 
$
5,460

Noncash transactions:
 
 
 
Transfers of loans to other real estate owned
$
3,168

 
$
1,954

Financed sales of other real estate owned
$
237

 
$
92

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 1 – 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 (“GAAP”) 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 GAAP 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. Certain prior year amounts have been reclassified to conform to the current year presentation. 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/A for the year ended December 31, 2016 filed with the Securities and Exchange Commission on February 28, 2017.
Business Combinations: The Company completed its acquisition of KeyWorth Bank ("KeyWorth") on April 1, 2016. The acquired institution's financial condition and results of operations are included in the Company's financial condition and results of operations as of the acquisition date.
Use of Estimates: The preparation of financial statements in conformity with GAAP 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. The Company has determined that no significant events occurred after March 31, 2017 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 May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 provides guidance that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of this standard to annual and interim periods beginning after December 15, 2017. The Company is currently evaluating the impact, if any, ASU 2014-09 will have on its financial position, results of operations, and its financial statement disclosures.
In January 2016, FASB issued ASU 2016-01, “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 February 2016, FASB issued ASU 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 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

5


interim periods in fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact ASU 2016-02 will have on its financial position, results of operations, and other financial statement disclosures, and the expected results include the recognition of leased assets and related lease liabilities on the balance sheet, along with leasehold amortization and interest expense recognized in the statement of income.
In March 2016, the FASB issued 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 flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes. The Company adopted ASU 2016-09 beginning January 1, 2017 and, as a result recognized as income tax expense in the Company's consolidated statement of income for the three months ended March 31, 2017 an excess tax benefit realized from the exercise of stock options and vesting of restricted stock. Furthermore, the presentation of certain elements of share-based payment transactions in the Company's consolidated statements of cash flows was updated to comply with the standard update.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). The update will significantly change the way entities recognize impairment on many financial assets by requiring immediate recognition of estimated credit losses expected to occur over the asset's remaining life. The FASB describes this impairment recognition 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 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. For public companies, this update becomes effective for interim and annual periods beginning after December 15, 2019. The Company has formed an implementation committee comprised of both accounting and credit employees to guide Renasant Bank through the implementation of ASU 2016-13. Currently, this committee is gaining an understanding of the potential impact of the CECL model, reviewing the model requirements and ensuring data integrity across all reporting systems. The Company has also engaged consulting firms and software providers to assist in evaluating the varying approaches to the implementation of the CECL model.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows, including (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transactions and (8) separately identifiable cash flows and application of the predominance principle. For public companies, this amendment becomes effective for interim and annual periods beginning after December 15, 2017. The ASU only impacts the presentation of specific items within the Statement of Cash Flows and is not expected to have a material impact to the Company.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805), Clarifying the Definition of a Business” (“ASU 2017-01”) that changes the definition of a business when evaluating whether transactions should be accounted for as the acquisition of assets or the acquisition of a business.  ASU 2017-01 requires an entity to evaluate if substantially all of the fair value of the assets acquired are concentrated in a single asset or a group of similar identifiable assets; if so, the acquired assets or group of similar identifiable assets is not considered a business.  In addition, the guidance requires that to be considered a business, the acquired assets must include an input and a substantive process that together significantly contribute to the ability to create output. The ASU removes the evaluation of whether a market participant could replace any of the missing elements.  ASU 2017-01 is effective for interim and annual periods beginning after December 15, 2017 and is not expected to have a material impact on the Company’s financial statements.
In January 2017, the FASB issued ASU 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323) Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings” (“ASU 2017-03”), that provides guidance on additional qualitative disclosures required when the impact that the adoption of ASU 2014-09, ASU 2016-02 and ASU 2016-13 will have on a registrant's financial statements cannot reasonably be estimated by a registrant. ASU 2017-03 was effective when issued and the appropriate disclosures have been added where necessary.
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350)” (“ASU 2017-04”). ASU 2017-04 will amend and simplify current goodwill impairment testing by eliminating certain testing under the current provisions.

6


Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU 2017-04 will be effective for interim and annual periods beginning after December 15, 2019 and is not expected to have a significant impact on the Company’s financial statements.
In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). ASU 2017-07 requires employers to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. These amendments also allow only the service cost component to be eligible for capitalization when applicable. ASU 2017-07 will be effective for interim and annual periods beginning after December 15, 2017.  The Company is evaluating the effect that ASU 2017-07 will have on its financial position, results of operations and its financial statement disclosures.
In March 2017, the FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-08”). ASU 2017-08 requires the amortization period for certain callable debt securities held at a premium to be the earliest call date. ASU 2017-08 will be effective for interim and annual periods beginning after December 15, 2018.  The Company is evaluating the effect that ASU 2017-08 will have on its financial position, results of operations and its financial statement disclosures.
Note 2 – Mergers and Acquisitions
(In Thousands, Except Share Data)
Merger with Metropolitan BancGroup, Inc.
On January 17, 2017, the Company and Metropolitan BancGroup, Inc. (“Metropolitan”), the parent company of Metropolitan Bank, jointly announced the signing of a definitive merger agreement pursuant to which the Company will acquire Metropolitan in an all-stock merger. Under the terms of the agreement, Metropolitan will be merged with and into Renasant, and Renasant will be the surviving corporation. Immediately after the merger of Metropolitan with and into Renasant, Metropolitan Bank will merge with and into Renasant Bank, with Renasant Bank continuing as the surviving banking corporation in the merger.
According to the terms of the merger agreement, each Metropolitan common shareholder will have the right to receive 0.6066 shares of Renasant common stock for each share of Metropolitan common stock, and the merger is expected to qualify as a tax-free reorganization for Metropolitan shareholders.
Metropolitan operates eight offices in Nashville and Memphis, Tennessee and the Jackson, Mississippi MSA and as of March 31, 2017, had approximately $1,164,500 in total assets, which included approximately $929,700 in total loans, and approximately $945,100 in total deposits.
The Company has received all federal bank regulatory approvals, including approval from the Federal Deposit Insurance Corporation, necessary to complete the proposed acquisition of Metropolitan. Subject to the approval by the shareholders of Metropolitan and the satisfaction of other customary closing conditions contained in the merger agreement, the acquisition is expected to be completed in the third quarter of 2017.

Acquisition of KeyWorth Bank
Effective April 1, 2016, the Company completed its acquisition of KeyWorth in a transaction valued at approximately $58,884. The Company issued 1,680,021 shares of common stock and paid approximately $3,594 to KeyWorth stock option and warrant holders for 100% of the voting equity interest in KeyWorth. At closing, KeyWorth merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger.

As a result of the KeyWorth acquisition, the Company acquired total assets with a fair value of $415,232, total loans with a fair value of $272,330 and total deposits with a fair value of $348,961, and six banking locations in the Atlanta metropolitan area.

The Company recorded approximately $22,643 in intangible assets which consist of goodwill of $20,633 and a core deposit intangible of $2,010. 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.


7

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


Note 3 – 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, 2017
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
12,602

 
$
4

 
$
(137
)
 
$
12,469

Obligations of states and political subdivisions
335,375

 
10,299

 
(927
)
 
344,747

 
$
347,977

 
$
10,303

 
$
(1,064
)
 
$
357,216

December 31, 2016
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
14,101

 
$
4

 
$
(187
)
 
$
13,918

Obligations of states and political subdivisions
342,181

 
8,572

 
(1,778
)
 
348,975

 
$
356,282

 
$
8,576

 
$
(1,965
)
 
$
362,893





8

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, 2017
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
2,060

 
$
89

 
$

 
$
2,149

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
412,710

 
2,710

 
(4,165
)
 
411,255

Government agency collateralized mortgage obligations
192,294

 
879

 
(2,787
)
 
190,386

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
50,397

 
777

 
(302
)
 
50,872

Government agency collateralized mortgage obligations
1,756

 
1

 
(13
)
 
1,744

Trust preferred securities
22,646

 

 
(4,823
)
 
17,823

Other debt securities
22,442

 
354

 
(140
)
 
22,656

 
$
704,305

 
$
4,810

 
$
(12,230
)
 
$
696,885

 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2016
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
2,066

 
$
92

 
$

 
$
2,158

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
414,019

 
1,941

 
(6,643
)
 
409,317

Government agency collateralized mortgage obligations
171,362

 
831

 
(3,367
)
 
168,826

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
50,628

 
696

 
(461
)
 
50,863

Government agency collateralized mortgage obligations
2,528

 
38

 
(16
)
 
2,550

Trust preferred securities
23,749

 

 
(5,360
)
 
18,389

Other debt securities
22,053

 
310

 
(218
)
 
22,145

 
$
686,405

 
$
3,908

 
$
(16,065
)
 
$
674,248


During the first quarter of 2017, the Company sold residential mortgage backed securities with a carrying value of $2,946 at the time of sale for net proceeds of $2,946 resulting in no gain or loss on the sale. During the same time period in 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.


9

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, 2017 and 2016, respectively, were as follows:
 
Three Months Ended
 
March 31,
 
2017
 
2016
Gross gains on sales of securities available for sale
$

 
$

Gross losses on sales of securities available for sale

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

 
$
(71
)

At March 31, 2017 and December 31, 2016, securities with a carrying value of $654,378 and $642,447, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $21,466 and $24,426 were pledged as collateral for short-term borrowings and derivative instruments at March 31, 2017 and December 31, 2016, respectively.
The amortized cost and fair value of securities at March 31, 2017 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
$
14,742

 
$
14,860

 
$

 
$

Due after one year through five years
107,452

 
110,966

 
2,060

 
2,148

Due after five years through ten years
128,319

 
130,878

 
2,043

 
2,071

Due after ten years
97,464

 
100,512

 
22,646

 
17,823

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities

 

 
412,710

 
411,255

Government agency collateralized mortgage obligations

 

 
192,294

 
190,386

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities

 

 
50,397

 
50,872

Government agency collateralized mortgage obligations

 

 
1,756

 
1,744

Other debt securities

 

 
20,399

 
20,586

 
$
347,977

 
$
357,216

 
$
704,305

 
$
696,885



10

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, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
4
 
$
11,965

 
$
(137
)
 
0
 
$

 
$

 
4
 
$
11,965

 
$
(137
)
Obligations of states and political subdivisions
53
 
44,193

 
(927
)
 
0
 

 

 
53
 
44,193

 
(927
)
Total
57
 
$
56,158

 
$
(1,064
)
 
0
 
$

 
$

 
57
 
56,158

 
$
(1,064
)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
4
 
$
11,915

 
$
(187
)
 
0
 
$

 
$

 
4
 
$
11,915

 
$
(187
)
Obligations of states and political subdivisions
102
 
83,362

 
(1,778
)
 
0
 

 

 
102
 
83,362

 
(1,778
)
Total
106
 
$
95,277

 
$
(1,965
)
 
0
 
$

 
$

 
106
 
$
95,277

 
$
(1,965
)
Available for Sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$

 
$

 
0
 
$

 
$

 
0
 
$

 
$

Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
104
 
256,655

 
(3,585
)
 
8
 
17,487

 
(580
)
 
112
 
274,142

 
(4,165
)
Government agency collateralized mortgage obligations
36
 
106,006

 
(1,475
)
 
15
 
34,769

 
(1,312
)
 
51
 
140,775

 
(2,787
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
6
 
15,666

 
(294
)
 
2
 
1,091

 
(8
)
 
8
 
16,757

 
(302
)
Government agency collateralized mortgage obligations
1
 
1,723

 
(13
)
 
0
 

 

 
1
 
1,723

 
(13
)
Trust preferred securities
0
 

 

 
3
 
17,823

 
(4,823
)
 
3
 
17,823

 
(4,823
)
Other debt securities
2
 
6,971

 
(131
)
 
2
 
2,410

 
(9
)
 
4
 
9,381

 
(140
)
Total
149
 
$
387,021

 
$
(5,498
)
 
30
 
$
73,580

 
$
(6,732
)
 
179
 
$
460,601

 
$
(12,230
)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$

 
$

 
0
 
$

 
$

 
0
 
$

 
$

Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
131
 
298,400

 
(6,042
)
 
5
 
11,504

 
(601
)
 
136
 
309,904

 
(6,643
)
Government agency collateralized mortgage obligations
40
 
97,356

 
(1,845
)
 
14
 
33,786

 
(1,522
)
 
54
 
131,142

 
(3,367
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
9
 
21,933

 
(453
)
 
2
 
1,101

 
(8
)
 
11
 
23,034

 
(461
)
Government agency collateralized mortgage obligations
1
 
1,729

 
(16
)
 
0
 

 

 
1
 
1,729

 
(16
)
Trust preferred securities
0
 

 

 
3
 
18,389

 
(5,360
)
 
3
 
18,389

 
(5,360
)
Other debt securities
3
 
7,946

 
(208
)
 
2
 
2,475

 
(10
)
 
5
 
10,421

 
(218
)
Total
184
 
$
427,364

 
$
(8,564
)
 
26
 
$
67,255

 
$
(7,501
)
 
210
 
$
494,619

 
$
(16,065
)
 


11

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 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, 2017 or 2016.
The Company holds investments in pooled trust preferred securities that had an amortized cost basis of $22,646 and $23,749 and a fair value of $17,823 and $18,389 at March 31, 2017 and December 31, 2016, respectively. At March 31, 2017, 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, 2017, 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, 2017.
The Company's analysis of the pooled trust preferred securities during prior years has supported a return to accrual status for two of the three securities (XXVI 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. As to the remaining security (XXIV), the Company only began collecting interest payments on such security during the fourth quarter of 2016 when it exited "payment in kind" status. Therefore, absent an observed history of payments, 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, 2017, 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, 2017:
 
Name
Single/
Pooled
 
Class/
Tranche
 
Amortized
Cost
 
Fair
Value
 
Unrealized
Loss
 
Lowest
Credit
Rating
 
Issuers
Currently in
Deferral or
Default
XXIII
Pooled
 
B-2
 
$
8,286

 
$
5,790

 
$
(2,496
)
 
Baa3
 
17
%
XXIV
Pooled
 
B-2
 
10,167

 
8,917

 
(1,250
)
 
Caa2
 
23
%
XXVI
Pooled
 
B-2
 
4,193

 
3,116

 
(1,077
)
 
Ba3
 
19
%
 
 
 
 
 
$
22,646

 
$
17,823

 
$
(4,823
)
 
 
 
 


12

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:
 
 
2017
 
2016
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 4 – Non Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 4, all references to “loans” mean non purchased loans.

The following is a summary of non purchased loans and leases as of the dates presented:
 
 
March 31,
2017
 
December 31, 2016
Commercial, financial, agricultural
$
626,237

 
$
589,290

Lease financing
50,462

 
49,250

Real estate – construction
378,061

 
483,926

Real estate – 1-4 family mortgage
1,485,663

 
1,425,730

Real estate – commercial mortgage
2,203,639

 
2,075,137

Installment loans to individuals
92,669

 
92,648

Gross loans
4,836,731

 
4,715,981

Unearned income
(2,646
)
 
(2,409
)
Loans, net of unearned income
4,834,085

 
4,713,572


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 status 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.

13

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, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
300

 
$
59

 
$
623,693

 
$
624,052

 
$
467

 
$
1,407

 
$
311

 
$
2,185

 
$
626,237

Lease financing
181

 

 
50,281

 
50,462

 

 

 

 

 
50,462

Real estate – construction
231

 

 
377,830

 
378,061

 

 

 

 

 
378,061

Real estate – 1-4 family mortgage
4,234

 
718

 
1,476,098

 
1,481,050

 
88

 
1,848

 
2,677

 
4,613

 
1,485,663

Real estate – commercial mortgage
2,435

 
1,315

 
2,194,109

 
2,197,859

 

 
1,892

 
3,888

 
5,780

 
2,203,639

Installment loans to individuals
346

 
82

 
92,189

 
92,617

 


 
52

 

 
52

 
92,669

Unearned income


 


 
(2,646
)
 
(2,646
)
 


 


 


 

 
(2,646
)
Total
$
7,727

 
$
2,174

 
$
4,811,554

 
$
4,821,455

 
$
555

 
$
5,199

 
$
6,876

 
$
12,630

 
$
4,834,085

December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
811

 
$
720

 
$
586,730

 
$
588,261

 
$

 
$
932

 
$
97

 
$
1,029

 
$
589,290

Lease financing
193

 

 
48,919

 
49,112

 

 
138

 

 
138

 
49,250

Real estate – construction
995

 

 
482,931

 
483,926

 

 

 

 

 
483,926

Real estate – 1-4 family mortgage
6,189

 
1,136

 
1,414,254

 
1,421,579

 
161

 
1,222

 
2,768

 
4,151

 
1,425,730

Real estate – commercial mortgage
2,283

 
99

 
2,066,821

 
2,069,203

 
580

 
2,778

 
2,576

 
5,934

 
2,075,137

Installment loans to individuals
324

 
124

 
92,179

 
92,627

 

 
21

 

 
21

 
92,648

Unearned income

 

 
(2,409
)
 
(2,409
)
 

 

 

 

 
(2,409
)
Total
$
10,795

 
$
2,079

 
$
4,689,425

 
$
4,702,299

 
$
741

 
$
5,091

 
$
5,441

 
$
11,273

 
$
4,713,572

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.

14

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


Loans accounted for under FASB Accounting Standards Codification Topic (“ASC”) 310-20, “Nonrefundable Fees and Other Cost” (“ASC 310-20”), and which 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, 2017
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,788

 
$
2,185

 
$

 
$
2,185

 
$
147

Lease financing

 

 

 

 

Real estate – construction

 

 

 

 

Real estate – 1-4 family mortgage
12,679

 
10,999

 

 
10,999

 
1,085

Real estate – commercial mortgage
19,071

 
14,478

 
568

 
15,046

 
2,618

Installment loans to individuals
117

 
117

 

 
117

 

Total
$
34,655

 
$
27,779

 
$
568

 
$
28,347

 
$
3,850

December 31, 2016
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
1,577

 
$
1,175

 
$

 
$
1,175

 
$
136

Lease financing

 

 

 

 

Real estate – construction
517

 
517

 

 
517

 
1

Real estate – 1-4 family mortgage
10,823

 
9,207

 

 
9,207

 
1,091

Real estate – commercial mortgage
15,007

 
10,053

 
568

 
10,621

 
2,397

Installment loans to individuals
87

 
87

 

 
87

 
1

Totals
$
28,011

 
$
21,039

 
$
568

 
$
21,607

 
$
3,626


The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Three Months Ended
 
March 31, 2017
 
March 31, 2016
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
2,714

 
$
39

 
$
318

 
$
2

Lease financing

 

 

 

Real estate – construction

 

 

 

Real estate – 1-4 family mortgage
11,088

 
26

 
14,442

 
81

Real estate – commercial mortgage
15,314

 
106

 
15,031

 
122

Installment loans to individuals
118

 

 
67

 
1

Total
$
29,234

 
$
171

 
$
29,858

 
$
206


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
Three months ended March 31, 2017
 
 
 
 
 
Real estate – 1-4 family mortgage
2

 
177

 
174

Real estate – commercial mortgage
2

 
146

 
156

Total
4

 
$
323

 
$
330

Three months ended March 31, 2016
 
 
 
 
 
Real estate – 1-4 family mortgage
5

 
428

 
421

Total
5

 
$
428

 
$
421


 
 
 
 
 
 
Restructured loans 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 was one restructured loan in the amount of $57 contractually 90 days past due or more and still accruing at March 31, 2017 and two restructured loans in the amount of $136 contractually 90 days past due or more and still accruing at March 31, 2016. The outstanding balance of restructured loans on nonaccrual status was $6,086 and $7,490 at March 31, 2017 and March 31, 2016, respectively.

Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2017
53

 
$
7,447

Additional loans with concessions
4

 
334

Reductions due to:
 
 
 
Reclassified as nonperforming
(1
)
 
(56
)
Paid in full
(2
)
 
(217
)
Charge-offs
(1
)
 
(250
)
Principal paydowns

 
(85
)
Totals at March 31, 2017
53

 
$
7,173


The allocated allowance for loan losses attributable to restructured loans was $241 and $919 at March 31, 2017 and March 31, 2016, respectively. The Company had $142 and no remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2017 and March 31, 2016, respectively.

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:
 

16

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


 
Pass
 
Watch
 
Substandard
 
Total
March 31, 2017
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
470,252

 
$
1,846

 
$
1,662

 
$
473,760

Lease financing

 

 

 

Real estate – construction
329,322

 
225

 

 
329,547

Real estate – 1-4 family mortgage
205,083

 
3,739

 
6,073

 
214,895

Real estate – commercial mortgage
1,860,714

 
16,266

 
13,053

 
1,890,033

Installment loans to individuals

 

 

 

Total
$
2,865,371

 
$
22,076

 
$
20,788

 
$
2,908,235

December 31, 2016
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
434,323

 
$
4,531

 
$
850

 
$
439,704

Lease financing

 

 

 

Real estate – construction
402,156

 
393

 

 
402,549

Real estate – 1-4 family mortgage
190,882

 
3,374

 
6,129

 
200,385

Real estate – commercial mortgage
1,734,523

 
18,118

 
13,088

 
1,765,729

Installment loans to individuals

 

 

 

Total
$
2,761,884

 
$
26,416

 
$
20,067

 
$
2,808,367


For portfolio balances of consumer, small balance consumer mortgage loans, such as 1-4 family mortgage loans 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, 2017
 
 
 
 
 
Commercial, financial, agricultural
$
151,232

 
$
1,245

 
$
152,477

Lease financing
47,816

 

 
47,816

Real estate – construction
48,514

 

 
48,514

Real estate – 1-4 family mortgage
1,268,160

 
2,608

 
1,270,768

Real estate – commercial mortgage
312,431

 
1,175

 
313,606

Installment loans to individuals
92,535

 
134

 
92,669

Total
$
1,920,688

 
$
5,162

 
$
1,925,850

December 31, 2016
 
 
 
 
 
Commercial, financial, agricultural
$
148,499

 
$
1,087

 
$
149,586

Lease financing
46,703

 
138

 
46,841

Real estate – construction
81,377

 

 
81,377

Real estate – 1-4 family mortgage
1,222,816

 
2,529

 
1,225,345

Real estate – commercial mortgage
308,609

 
799

 
309,408

Installment loans to individuals
92,504

 
144

 
92,648

Total
$
1,900,508

 
$
4,697

 
$
1,905,205



Note 5 – Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 5, all references to “loans” mean purchased loans.

The following is a summary of purchased loans as of the dates presented:

17

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


 
 
March 31,
2017
 
December 31, 2016
Commercial, financial, agricultural
$
115,229

 
$
128,200

Lease financing

 

Real estate – construction
35,673

 
68,753

Real estate – 1-4 family mortgage
431,904

 
452,447

Real estate – commercial mortgage
804,790

 
823,758

Installment loans to individuals
14,124

 
15,979

Gross loans
1,401,720

 
1,489,137

Unearned income

 

Loans, net of unearned income
1,401,720

 
1,489,137


Past Due and Nonaccrual Loans
The Company’s policies with respect to placing loans on nonaccrual status or charging off loans, and its accounting for interest on any such loans, are described above in Note 4, “Non Purchased 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
March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
524

 
$
868

 
$
113,142

 
$
114,534

 
$
2

 
$
185

 
$
508

 
$
695

 
$
115,229

Lease financing