0000715072-17-000167.txt : 20170809 0000715072-17-000167.hdr.sgml : 20170809 20170809120811 ACCESSION NUMBER: 0000715072-17-000167 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 130 CONFORMED PERIOD OF REPORT: 20170630 FILED AS OF DATE: 20170809 DATE AS OF CHANGE: 20170809 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: 171017027 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 rnst10q6302017.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 June 30, 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, a 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 July 31, 2017, 49,315,127 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 June 30, 2017
CONTENTS
 



PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries
Consolidated Balance Sheets

(In Thousands, Except Share Data)
 
(Unaudited)
 
 
 
June 30,
2017
 
December 31, 2016
Assets
 
 
 
Cash and due from banks
$
152,316

 
$
160,570

Interest-bearing balances with banks
83,745

 
145,654

Cash and cash equivalents
236,061

 
306,224

Securities held to maturity (fair value of $353,064 and $362,893, respectively)
339,619

 
356,282

Securities available for sale, at fair value
737,006

 
674,248

Mortgage loans held for sale, at fair value
232,398

 
177,866

Loans, net of unearned income:
 
 
 
Non purchased loans and leases
5,058,898

 
4,713,572

Purchased loans
1,312,109

 
1,489,137

Total loans, net of unearned income
6,371,007

 
6,202,709

Allowance for loan losses
(44,149
)
 
(42,737
)
Loans, net
6,326,858

 
6,159,972

Premises and equipment, net
178,277

 
179,223

Other real estate owned:
 
 
 
Non purchased
4,305

 
5,929

Purchased
15,409

 
17,370

Total other real estate owned, net
19,714

 
23,299

Goodwill
470,534

 
470,534

Other intangible assets, net
21,018

 
24,074

Bank-owned life insurance
154,312

 
152,305

Mortgage servicing rights
31,826

 
26,302

Other assets
124,649

 
149,522

Total assets
$
8,872,272

 
$
8,699,851

Liabilities and shareholders’ equity
 
 
 
Liabilities
 
 
 
Deposits
 
 
 
Noninterest-bearing
$
1,642,863

 
$
1,561,357

Interest-bearing
5,559,162

 
5,497,780

Total deposits
7,202,025

 
7,059,137

Short-term borrowings
120,121

 
109,676

Long-term debt
191,956

 
202,459

Other liabilities
86,384

 
95,696

Total liabilities
7,600,486

 
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; 44,430,335 and 44,332,273 shares outstanding, respectively
225,535

 
225,535

Treasury stock, at cost
(20,107
)
 
(21,692
)
Additional paid-in capital
706,103

 
707,408

Retained earnings
370,723

 
337,536

Accumulated other comprehensive loss, net of taxes
(10,468
)
 
(15,904
)
Total shareholders’ equity
1,271,786

 
1,232,883

Total liabilities and shareholders’ equity
$
8,872,272

 
$
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
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Interest income
 
 
 
 
 
 
 
Loans
$
80,133

 
$
76,785

 
$
154,540

 
$
146,022

Securities
 
 
 
 
 
 
 
Taxable
4,627

 
4,654

 
8,979

 
9,115

Tax-exempt
2,310

 
2,465

 
4,884

 
4,953

Other
509

 
104

 
1,065

 
177

Total interest income
87,579

 
84,008

 
169,468

 
160,267

Interest expense
 
 
 
 
 
 
 
Deposits
5,314

 
4,420

 
10,463

 
8,380

Borrowings
2,662

 
2,431

 
5,387

 
4,676

Total interest expense
7,976

 
6,851

 
15,850

 
13,056

Net interest income
79,603

 
77,157

 
153,618

 
147,211

Provision for loan losses
1,750

 
1,430

 
3,250

 
3,230

Net interest income after provision for loan losses
77,853

 
75,727

 
150,368

 
143,981

Noninterest income
 
 
 
 
 
 
 
Service charges on deposit accounts
7,958

 
7,521

 
15,889

 
15,512

Fees and commissions
5,470

 
4,877

 
10,669

 
9,121

Insurance commissions
2,181

 
2,175

 
4,041

 
4,137

Wealth management revenue
3,037

 
2,872

 
5,921

 
5,763

Mortgage banking income
12,424

 
13,420

 
22,928

 
25,335

Net gain on sales of securities

 
1,257

 

 
1,186

BOLI income
985

 
996

 
2,098

 
1,950

Other
2,210

 
2,468

 
4,740

 
5,884

Total noninterest income
34,265

 
35,586

 
66,286

 
68,888

Noninterest expense
 
 
 
 
 
 
 
Salaries and employee benefits
45,014

 
45,387

 
87,223

 
87,780

Data processing
3,835

 
4,502

 
8,069

 
8,660

Net occupancy and equipment
8,814

 
8,531

 
18,133

 
16,755

Other real estate owned
781

 
1,614

 
1,313

 
2,571

Professional fees
1,882

 
1,846

 
3,949

 
3,635

Advertising and public relations
2,430

 
1,742

 
4,022

 
3,379

Intangible amortization
1,493

 
1,742

 
3,056

 
3,439

Communications
1,908

 
2,040

 
3,771

 
4,211

Extinguishment of debt

 
329

 
205

 
329

Merger and conversion related expenses
3,044

 
2,807

 
3,389

 
3,755

Other
5,640

 
6,719

 
11,020

 
12,559

Total noninterest expense
74,841

 
77,259

 
144,150

 
147,073

Income before income taxes
37,277

 
34,054

 
72,504

 
65,796

Income taxes
11,993

 
11,154

 
23,248

 
21,680

Net income
$
25,284

 
$
22,900

 
$
49,256

 
$
44,116

Basic earnings per share
$
0.57

 
$
0.54

 
$
1.11

 
$
1.07

Diluted earnings per share
$
0.57

 
$
0.54

 
$
1.11

 
$
1.06

Cash dividends per common share
$
0.18

 
$
0.18

 
$
0.36

 
$
0.35

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
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
25,284

 
$
22,900

 
$
49,256

 
$
44,116

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
Securities available for sale:
 
 
 
 
 
 
 
Unrealized holding gains on securities
2,569

 
812

 
5,476

 
3,875

Reclassification adjustment for gains realized in net income

 
(772
)
 

 
(728
)
Amortization of unrealized holding gains on securities transferred to the held to maturity category
(18
)
 
(18
)
 
(169
)
 
(38
)
Total securities
2,551

 
22

 
5,307

 
3,109

Derivative instruments:
 
 
 
 
 
 
 
Unrealized holding (losses) gains on derivative instruments
(165
)
 
(428
)
 
4

 
(1,694
)
Total derivative instruments
(165
)
 
(428
)
 
4

 
(1,694
)
Defined benefit pension and post-retirement benefit plans:
 
 
 
 
 
 
 
Amortization of net actuarial loss recognized in net periodic pension cost
56

 
80

 
125

 
152

Total defined benefit pension and post-retirement benefit plans
56

 
80

 
125

 
152

Other comprehensive income (loss), net of tax
2,442

 
(326
)
 
5,436

 
1,567

Comprehensive income
$
27,726

 
$
22,574

 
$
54,692

 
$
45,683


See Notes to Consolidated Financial Statements.

3


Renasant Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 
Six Months Ended June 30,
 
2017
 
2016
Operating activities
 
 
 
Net income
$
49,256

 
$
44,116

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Provision for loan losses
3,250

 
3,230

Depreciation, amortization and accretion
2,625

 
1,309

Deferred income tax expense
2,219

 
3,845

Funding of mortgage loans held for sale
(772,456
)
 
(1,006,507
)
Proceeds from sales of mortgage loans held for sale
729,532

 
968,800

Gains on sales of mortgage loans held for sale
(11,608
)
 
(12,971
)
Gains on sales of securities

 
(1,186
)
Penalty on prepayment of debt
205

 
329

Losses on sales of premises and equipment
546

 
102

Stock-based compensation expense
2,411

 
1,715

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

 
1,049

Decrease (increase) in other assets
10,428

 
(6,613
)
Decrease in other liabilities
(8,715
)
 
(3,464
)
Net cash provided by (used in) operating activities
7,693

 
(6,246
)
Investing activities
 
 
 
Purchases of securities available for sale
(119,766
)
 
(34,651
)
Proceeds from sales of securities available for sale
2,946

 
4,028

Proceeds from call/maturities of securities available for sale
60,928

 
72,069

Purchases of securities held to maturity

 
(9,073
)
Proceeds from call/maturities of securities held to maturity
15,507

 
81,510

Net increase in loans
(163,349
)
 
(272,514
)
Purchases of premises and equipment
(7,668
)
 
(5,651
)
Proceeds from sales of premises and equipment
1,255

 
1,198

Proceeds from sales of other assets
7,385

 
7,957

Net cash received in acquisition of businesses

 
25,263

Net cash used in investing activities
(202,762
)
 
(129,864
)
Financing activities
 
 
 
Net increase in noninterest-bearing deposits
81,506

 
107,969

Net increase in interest-bearing deposits
62,405

 
25,791

Net increase in short-term borrowings
10,445

 
20,361

Proceeds from long-term borrowings

 
277

Repayment of long-term debt
(11,063
)
 
(5,436
)
Cash paid for dividends
(16,068
)
 
(14,498
)
Net stock-based compensation transactions
(2,319
)
 
401

Excess tax benefit from stock-based compensation

 
482

Net cash provided by financing activities
124,906

 
135,347

Net decrease in cash and cash equivalents
(70,163
)
 
(763
)
Cash and cash equivalents at beginning of period
306,224

 
211,571

Cash and cash equivalents at end of period
$
236,061

 
$
210,808

Supplemental disclosures
 
 
 
Cash paid for interest
$
16,155

 
$
12,624

Cash paid for income taxes
$
12,701

 
$
16,411

Noncash transactions:
 
 
 
Transfers of loans to other real estate owned
$
4,227

 
$
3,508

Financed sales of other real estate owned
$
257

 
$
150

Transfers of loans held for sale to loan portfolio
$

 
$
14,375

Common stock issued in acquisition of businesses
$

 
$
55,290


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, 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. KeyWorth’s financial condition and results of operations are included in the Company's financial condition and results of operations as of the acquisition date. The Company also recently completed its acquisition of Metropolitan BancGroup, Inc. (“Metropolitan”); the Metropolitan acquisition was completed on July 1, 2017, after the date of the financial statements included in this Form 10-Q.
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. On July 1, 2017, the Company completed its previously-announced acquisition of Metropolitan. The terms of the merger with Metropolitan are disclosed in Note 2, “Mergers and Acquisitions”. The Company has determined that no other significant events occurred after June 30, 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 and 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 and 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 GAAP, and operating leases.  Further, a lessee will recognize

5


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 GAAP.  ASU 2016-02 is effective for annual and 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 and results of operations, and its 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, FASB issued ASU 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 six months ended June 30, 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, FASB issued ASU 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. 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, FASB issued ASU 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. ASU 2016-15 only impacts the presentation of specific items within the Statement of Cash Flows and is not expected to have a material impact on the Company's financial statements.
In January 2017, 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, 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 of the adoption of ASU 2014-09, ASU 2016-02 and ASU 2016-13 on a registrant's financial statements cannot reasonably be estimated by the registrant. ASU 2017-03 was effective when issued and the appropriate disclosures have been added where necessary.

6


In January 2017, 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. 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 material impact on the Company’s financial statements.
In March 2017, 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 and results of operations and its financial statement disclosures.
In March 2017, 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 and results of operations and its financial statement disclosures.
In May 2017, FASB issued ASU 2017-09, “Compensation - Stock Compensation (Subtopic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.  ASU 2017-09 will be effective for interim and annual periods beginning after December 15, 2018.  The Company is evaluating the effect that ASU 2017-09 will have on its financial position and results of operations and its financial statement disclosures.

Note 2 – Mergers and Acquisitions
(In Thousands, Except Share Data)
Acquisition of Metropolitan BancGroup, Inc.
Effective July 1, 2017, the Company completed its acquisition of Metropolitan, the parent company of Metropolitan Bank, in a transaction valued at approximately $218,000. The Company issued 4,883,182 shares of common stock and paid approximately $4,764 to Metropolitan stock option holders for 100% of the voting equity interest in Metropolitan. At closing, Metropolitan merged with and into Renasant, with Renasant the surviving corporation in the merger; immediately thereafter, Metropolitan Bank merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger.
Prior to any determination of purchase accounting adjustments, as a result of the acquisition, the Company acquired total assets of approximately $1,220,000, which included total loans of approximately $990,000, total deposits of approximately $940,000, and eight banking locations in Nashville and Memphis, Tennessee and the Jackson, Mississippi Metropolitan Statistical Area. The Company is finalizing the fair value of assets acquired and liabilities assumed as part of the acquisition.
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

7


basis over the estimated useful life, currently expected to be approximately 10 years. The goodwill is not deductible for income tax purposes.


8

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
June 30, 2017
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
12,602

 
$
6

 
$
(77
)
 
$
12,531

Obligations of states and political subdivisions
327,017

 
13,657

 
(141
)
 
340,533

 
$
339,619

 
$
13,663

 
$
(218
)
 
$
353,064

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





9

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
June 30, 2017
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
2,053

 
$
81

 
$

 
$
2,134

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
419,848

 
3,317

 
(2,288
)
 
420,877

Government agency collateralized mortgage obligations
222,110

 
1,133

 
(1,948
)
 
221,295

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
50,167

 
1,032

 
(146
)
 
51,053

Government agency collateralized mortgage obligations
1,746

 
8

 

 
1,754

Trust preferred securities
21,793

 

 
(4,801
)
 
16,992

Other debt securities
22,519

 
427

 
(45
)
 
22,901

 
$
740,236

 
$
5,998

 
$
(9,228
)
 
$
737,006

 
 
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. There were no securities sold during the second quarter of 2017. During the first six months of 2016, the Company sold "other equity" securities with a carrying value of $2,842 at the time of sale for net proceeds of $4,028 resulting in a net gain of $1,186.


10

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




Gross realized gains on sales of securities available for sale for the three and six months ended June 30, 2017 and 2016, respectively, were as follows:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Gross gains on sales of securities available for sale
$

 
$
1,257

 
$

 
$
1,257

Gross losses on sales of securities available for sale

 

 

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

 
$
1,257

 
$

 
$
1,186


At June 30, 2017 and December 31, 2016, securities with a carrying value of $349,741 and $642,447, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $21,163 and $24,426 were pledged as collateral for short-term borrowings and derivative instruments at June 30, 2017 and December 31, 2016, respectively.
The amortized cost and fair value of securities at June 30, 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
$
14,605

 
$
14,735

 
$

 
$

Due after one year through five years
108,014

 
111,811

 
2,053

 
2,134

Due after five years through ten years
129,897

 
135,500

 
3,040

 
3,116

Due after ten years
87,103

 
91,018

 
21,793

 
16,992

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities

 

 
419,848

 
420,877

Government agency collateralized mortgage obligations

 

 
222,110

 
221,295

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities

 

 
50,167

 
51,053

Government agency collateralized mortgage obligations

 

 
1,746

 
1,754

Other debt securities

 

 
19,479

 
19,785

 
$
339,619

 
$
353,064

 
$
740,236

 
$
737,006



11

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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
4
 
$
12,025

 
$
(77
)
 
0
 
$

 
$

 
4
 
$
12,025

 
$
(77
)
Obligations of states and political subdivisions
17
 
11,846

 
(136
)
 
2
 
523

 
(5
)
 
19
 
12,369

 
(141
)
Total
21
 
$
23,871

 
$
(213
)
 
2
 
$
523

 
$
(5
)
 
23
 
24,394

 
$
(218
)
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$

 
$

 
0
 
$

 
$

 
0
 
$

 
$

Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
89
 
213,161

 
(1,911
)
 
8
 
16,818

 
(377
)
 
97
 
229,979

 
(2,288
)
Government agency collateralized mortgage obligations
29
 
94,314

 
(911
)
 
16
 
36,107

 
(1,037
)
 
45
 
130,421

 
(1,948
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
3
 
7,862

 
(138
)
 
2
 
1,082

 
(8
)
 
5
 
8,944

 
(146
)
Government agency collateralized mortgage obligations
0
 

 

 
0
 

 

 
0
 

 

Trust preferred securities
0
 

 

 
3
 
16,992

 
(4,801
)
 
3
 
16,992

 
(4,801
)
Other debt securities
2
 
6,658

 
(38
)
 
1
 
1,205

 
(7
)
 
3
 
7,863

 
(45
)
Total
123
 
$
321,995

 
$
(2,998
)
 
30
 
$
72,204

 
$
(6,230
)
 
153
 
$
394,199

 
$
(9,228
)
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
)
 


12

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 or six months ended June 30, 2017 or 2016.
The Company holds investments in pooled trust preferred securities that had an amortized cost basis of $21,793 and $23,749 and a fair value of $16,992 and $18,389 at June 30, 2017 and December 31, 2016, respectively. At June 30, 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 June 30, 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 six months ended June 30, 2017.
The Company's analysis of the pooled trust preferred securities during the second quarter of 2017 supported a return to accrual status for the last remaining security (XXIV), which had been in "payment in kind" status until December 2016. An observed history of principal and interest payments combined with improved qualitative and quantitative factors described above justified the accrual of interest on this security. The Company had in previous years placed the other two pooled trust preferred securities (XXIII and XXVI) back on accrual status.
The following table provides information regarding the Company’s investments in pooled trust preferred securities at June 30, 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
 
$
8,293

 
$
5,788

 
$
(2,505
)
 
Baa3
 
16
%
XXIV
Pooled
 
B-2
 
9,327

 
8,078

 
(1,249
)
 
Ba1
 
22
%
XXVI
Pooled
 
B-2
 
4,173

 
3,126

 
(1,047
)
 
Ba3
 
19
%
 
 
 
 
 
$
21,793

 
$
16,992

 
$
(4,801
)
 
 
 
 


13

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 June 30
$
(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:
 
 
June 30,
2017
 
December 31, 2016
Commercial, financial, agricultural
$
657,713

 
$
589,290

Lease financing
52,347

 
49,250

Real estate – construction
424,861

 
483,926

Real estate – 1-4 family mortgage
1,551,934

 
1,425,730

Real estate – commercial mortgage
2,281,220

 
2,075,137

Installment loans to individuals
94,104

 
92,648

Gross loans
5,062,179

 
4,715,981

Unearned income
(3,281
)
 
(2,409
)
Loans, net of unearned income
5,058,898

 
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.

14

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
June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
975

 
$

 
$
654,670

 
$
655,645

 
$

 
$
1,770

 
$
298

 
$
2,068

 
$
657,713

Lease financing

 
170

 
52,177

 
52,347

 

 

 

 

 
52,347

Real estate – construction

 

 
424,861

 
424,861

 

 

 

 

 
424,861

Real estate – 1-4 family mortgage
6,722

 
538

 
1,540,332

 
1,547,592

 

 
1,999

 
2,343

 
4,342

 
1,551,934

Real estate – commercial mortgage
1,068

 
517

 
2,274,705

 
2,276,290

 
634

 
2,395

 
1,901

 
4,930

 
2,281,220

Installment loans to individuals
293

 
58

 
93,680

 
94,031

 

 
65

 
8

 
73

 
94,104

Unearned income

 

 
(3,281
)
 
(3,281
)
 

 

 

 

 
(3,281
)
Total
$
9,058

 
$
1,283

 
$
5,037,144

 
$
5,047,485

 
$
634

 
$
6,229

 
$
4,550

 
$
11,413

 
$
5,058,898

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.

15

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
June 30, 2017
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,298

 
$
2,068

 
$

 
$
2,068

 
$
150

Real estate – construction
314

 
314

 

 
314

 
2

Real estate – 1-4 family mortgage
10,692

 
8,860

 

 
8,860

 
830

Real estate – commercial mortgage
16,543

 
13,742

 
568

 
14,310

 
2,148

Installment loans to individuals
144

 
142

 

 
142

 

Total
$
29,991

 
$
25,126

 
$
568

 
$
25,694

 
$
3,130

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

 
$
1,175

 
$

 
$
1,175

 
$
136

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
 
June 30, 2017
 
June 30, 2016
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
1,873

 
$

 
$
1,232

 
$
21

Real estate – construction
295

 
6

 
117

 
2

Real estate – 1-4 family mortgage
8,911

 
89

 
16,157

 
123

Real estate – commercial mortgage
14,487

 
176

 
11,660

 
91

Installment loans to individuals
160

 
2

 
67

 
1

Total
$
25,726

 
$
273

 
$
29,233

 
$
238

 
Six Months Ended
 
Six Months Ended
 
June 30, 2017
 
June 30, 2016
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
2,187

 
$

 
$
1,265

 
$
23

Real estate – construction
268

 
6

 
58

 
2

Real estate – 1-4 family mortgage
8,892

 
110

 
16,415

 
195

Real estate – commercial mortgage
14,635

 
279

 
11,986

 
196

Installment loans to individuals
166

 
2

 
67

 
1

Total
$
26,148

 
$
397

 
$
29,791

 
$
417


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

16

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


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 which were held on the Consolidated Balance Sheet at period end and are segregated by class for the periods presented.
 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Three months ended June 30, 2017
 
 
 
 
 
Real estate – 1-4 family mortgage
3

 
$
127

 
$
126

Real estate – commercial mortgage
1

 
366

 
62

Installment loans to individuals
1

 
4

 
4

Total
5

 
$
497

 
$
192

Three months ended June 30, 2016
 
 
 
 
 
Real estate – 1-4 family mortgage
3

 
$
676

 
$
662

Total
3

 
$
676

 
$
662


 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Six months ended June 30, 2017
 
 
 
 
 
Real estate – 1-4 family mortgage
5

 
$
304

 
$
297

Real estate – commercial mortgage
2

 
453

 
147

Installment loans to individuals
1

 
4

 
4

Total
8

 
$
761

 
$
448

Six months ended June 30, 2016
 
 
 
 
 
Real estate – 1-4 family mortgage
7

 
$
987

 
$
963

Total
7

 
$
987

 
$
963


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 $71 contractually 90 days past due or more and still accruing at June 30, 2017 and no restructured loans contractually 90 days past due or more and still accruing at June 30, 2016. The outstanding balance of restructured loans on nonaccrual status was $4,409 and $5,562 at June 30, 2017 and June 30, 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
9

 
536

Reductions due to:
 
 
 
Reclassified as nonperforming
(2
)
 
(126
)
Paid in full
(6
)
 
(368
)
Charge-offs
(1
)
 
(250
)
Principal paydowns

 
(181
)
Totals at June 30, 2017
53