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Employee Benefit and Deferred Compensation Plans
 12 Months Ended
Dec. 31, 2017
Retirement Benefits [Abstract]  
Employee Benefit and Deferred Compensation Plans
Employee Benefit and Deferred Compensation Plans
(In Thousands, Except Share Data)
Pension and Post-retirement Medical Plans
The Company sponsors a noncontributory defined benefit pension plan, under which participation and future benefit accruals ceased as of December 31, 1996. The Company’s funding policy is to contribute annually to the plan an amount at least equal to the minimum amount determined by consulting actuaries in accordance with the requirements of the Internal Revenue Code of 1986, as amended. No contributions were made to the pension plan in 2017 or 2016. The Company does not anticipate that a contribution will be required in 2018. The plan’s accumulated benefit obligation and respective projected benefit obligation are substantially the same since benefit accruals under the plan have ceased. The accumulated benefit obligation for the plan was $27,859 and $28,012 at December 31, 2017 and 2016, respectively. There is no additional minimum pension liability required to be recognized.
In connection with the acquisition of Heritage Financial Group, Inc. in 2015, the Company assumed the defined benefit pension plan maintained by HeritageBank, under which accruals had ceased and which had been terminated by HeritageBank immediately prior to the acquisition date. Final distribution of all benefits under the plan was completed in August 2016.
The Company also provides retiree health care benefits for certain employees who were employed by the Company and enrolled in the Company’s health plan as of December 31, 2004. To receive benefits, an eligible employee must retire from service with the Company and its affiliates between age 55 and 65 and be credited with at least 15 years of service or with 70 points, determined as the sum of age and service at retirement. The Company periodically determines the portion of the premium to be paid by each eligible retiree and the portion to be paid by the Company. Coverage ceases when an employee attains age 65 and is eligible for Medicare. The Company also provides life insurance coverage for each retiree in the face amount of $5 until age 70. Retirees can purchase additional insurance or continue coverage beyond age 70 at their sole expense. The Company contributed $119 and $152 to the plan in 2017 and 2016, respectively. The Company expects to contribute approximately $214 in 2018.
The Company has accounted for its obligation related to these retiree benefits in accordance with ASC 715, “Compensation – Retirement Benefits.” The assumed rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) for the next year is 5.5%. Increasing or decreasing the assumed health care cost trend rates by one percentage point in each year would not materially increase or decrease the accumulated post-retirement benefit obligation or the service and interest cost components of net periodic post-retirement benefit costs as of December 31, 2017, and for the year then ended.
Information relating to the legacy Renasant defined benefit pension plan (“Pension Benefits - Renasant”), the assumed HeritageBank defined benefit pension plan (“Pension Benefits - HeritageBank”) and post-retirement health and life plan (“Other Benefits”) as of December 31, 2017 and 2016 is as follows:
 
Pension Benefits Renasant
 
Pension Benefits HeritageBank(2)
 
Other Benefits
 
2017
 
2016
 
2016
 
2017
 
2016
Change in benefit obligation
 
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
28,012

 
$
27,856

 
$
12,913

 
$
1,566

 
$
1,704

Service cost
—

 
—

 
—

 
9

 
12

Interest cost
1,168

 
1,216

 
172

 
42

 
58

Plan participants’ contributions
—

 
—

 
—

 
77

 
76

Actuarial loss (gain)
582

 
(115
)
 
(481
)
 
(328
)
 
(56
)
Benefits paid
(1,903
)
 
(2,018
)
 
(22
)
 
(196
)
 
(228
)
Settlements(1)
—

 
—

 
(11,509
)
 
—

 
—

Transfer from HeritageBank Pension Plan
—

 
1,073

 
(1,073
)
 
—

 
—

Benefit obligation at end of year
$
27,859

 
$
28,012

 
$
—

 
$
1,170

 
$
1,566

Change in fair value of plan assets
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
25,241

 
$
24,434

 
$
12,458

 
 
 
 
Actual return on plan assets
3,575

 
1,752

 
29

 
 
 
 
Contribution by employer
—

 
—

 
142

 
 
 
 
Benefits paid
(1,903
)
 
(2,018
)
 
(22
)
 
 
 
 
Settlements(1)
—

 
—

 
(11,509
)
 
 
 
 
Expenses paid from plan trust
—

 
—

 
(25
)
 
 
 
 
Transfer from HeritageBank Pension Plan
—

 
1,073

 
(1,073
)
 
 
 
 
Fair value of plan assets at end of year
$
26,913

 
$
25,241

 
$
—

 
 
 
 
Funded status at end of year
$
(946
)
 
$
(2,771
)
 
$
—

 
$
(1,170
)
 
$
(1,566
)
Weighted-average assumptions as of December 31
 
 
 
 
 
 
 
 
 
Discount rate used to determine the benefit obligation
3.96
%
 
4.35
%
 
—
%
 
3.37
%
 
3.57
%

(1)
Settlements from the HeritageBank defined benefit pension plan represent the lump sum payments made to participants upon final distribution of benefits as a result of the plan’s termination.
(2)
Because final distribution of all benefits under the HeritageBank defined benefit pension plan was completed in August 2016, there was no impact on the Company’s consolidated financial statements as of and for the year ended December 31, 2017.
The discount rate assumptions at December 31, 2017 were determined using a yield curve approach. A yield curve was developed for a selection of high quality fixed-income investments whose cash flows approximate the timing and amount of expected cash flows from the benefit plans. The selected discount rate is the rate that produces the same present value of the benefit plan’s projected benefit payments.
The components of net periodic benefit cost and other amounts recognized in other comprehensive income for the defined benefit pension and post-retirement health and life plans for the year ended December 31, 2017, 2016 and 2015 are as follows: 
 
Pension Benefits Renasant
 
Pension Benefits HeritageBank(1)
 
Other Benefits
 
2017
 
2016
 
2015
 
2016
 
2015
 
2017
 
2016
 
2015
Service cost
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
9

 
$
12

 
$
17

Interest cost
1,168

 
1,216

 
1,095

 
172

 
305

 
42

 
58

 
60

Expected return on plan assets
(1,941
)
 
(1,872
)
 
(2,040
)
 
(113
)
 
(216
)
 
—

 
—

 
—

Prior service cost recognized
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Recognized actuarial loss
401

 
404

 
331

 
—

 
—

 
6

 
76

 
101

Settlement/curtailment/termination losses
—

 
—

 
—

 
(780
)
 
(65
)
 
—

 
—

 
—

Net periodic benefit cost
(372
)
 
(252
)
 
(614
)
 
(721
)
 
24

 
57

 
146

 
178

Net actuarial loss/(gain) arising during the period
(1,051
)
 
5

 
2,812

 
(397
)
 
(448
)
 
(328
)
 
(56
)
 
(37
)
Net Settlement/curtailment/termination losses
—

 
—

 
—

 
780

 
65

 
—

 
—

 
—

Amortization of net actuarial loss recognized in net periodic pension cost
(401
)
 
(404
)
 
(331
)
 
—

 
—

 
(6
)
 
(76
)
 
(101
)
Total recognized in other comprehensive income
(1,452
)
 
(399
)
 
2,481

 
383

 
(383
)
 
(334
)
 
(132
)
 
(138
)
Total recognized in net periodic benefit cost and other comprehensive income
$
(1,824
)
 
$
(651
)
 
$
1,867

 
$
(338
)
 
$
(359
)
 
$
(277
)
 
$
14

 
$
40

Weighted-average assumptions as of December 31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate used to determine net periodic pension cost
4.35
%
 
4.56
%
 
4.00
%
 
4.27
%
 
4.00
%
 
3.57
%
 
3.63
%
 
3.22
%
Expected return on plan assets
8.00
%
 
8.00
%
 
8.00
%
 
3.00
%
 
3.00
%
 
N/A

 
N/A

 
N/A


(1)
Because final distribution of all benefits under the HeritageBank defined benefit pension plan was completed in August 2016, there was no impact on the Company’s consolidated financial statements as of and for the year ended December 31, 2017.
Future estimated benefit payments under the Renasant defined benefit pension plan and post-retirement health and life plan are as follows:
 
Pension Benefits Renasant
 
Other
Benefits
2018
$
2,019

 
$
214

2019
2,036

 
182

2020
2,043

 
151

2021
2,048

 
148

2022
2,033

 
120

2023 - 2027
9,659

 
386


Amounts recognized in accumulated other comprehensive income, before tax, for the year ended December 31, 2017 are as follows:
 
Pension Benefits Renasant
 
Other
Benefits
Prior service cost
$
—

 
$
—

Actuarial loss
10,063

 
85

Total
$
10,063

 
$
85


The estimated costs that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are as follows:
 
Pension Benefits Renasant
 
Other
Benefits
Prior service cost
$
—

 
$
—

Actuarial loss
349

 
—

Total
$
349

 
$
—


The investment objective for the Renasant defined benefit pension plan is to achieve above average income and moderate long term growth. An investment committee appointed by management seeks to accomplish this objective by combining an equity income strategy (approximately 65% to 75%), which generally invests in larger capitalization common stocks, and an intermediate fixed income strategy (approximately 25% to 35%), which generally invests in U.S. Government securities and investment grade corporate bonds. In response to the current interest rate environment, the committee has begun allocating assets to the higher end of the target range for equity funds in order to lessen the impact of anticipated rising interest rates on the fixed income funds. It is the investment committee’s intent to give the investment managers flexibility within the overall guidelines with respect to investment decisions and their timing. However, significant modifications of any previously approved investments or anticipated use of derivatives to execute investment strategies must be approved by the committee.
The plan’s expected long-term rate of return was estimated using market benchmarks for investment classes applied to the plan’s target asset allocation. The expected return on investment classes was computed using a valuation methodology which projected future returns based on current equity valuations rather than historical returns.
The fair values of the Company’s defined benefit pension plan assets by category at December 31, 2017 and 2016 follow below. Corporate stocks consist primarily of common stocks of both U.S. companies and international companies that are traded in active markets and are valued based on quoted market prices of identical assets (Level 1). The Company’s investments in registered investment companies consist primarily of investments in funds that invest in investment grade fixed income securities. These investments are traded in active markets and are valued based on quoted market prices of identical assets (Level 1). Fixed income securities consist of U.S. Government securities, investment grade corporate debt, and foreign and municipal obligations. The fair values of these instruments are based on quoted market prices of similar instruments or a discounted cash flow model (Level 2).
 
Quoted Prices In
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Totals
December 31, 2017
 
 
 
 
 
 
 
Cash and cash equivalents
$
387

 
$
—

 
$
—

 
$
387

U.S. government securities
—

 
2,496

 
—

 
2,496

Corporate debt
—

 
1,908

 
—

 
1,908

Corporate stocks
20,557

 
—

 
—

 
20,557

Investments in registered investment companies
921

 
—

 
—

 
921

Foreign obligations
—

 
644

 
—

 
644

 
$
21,865

 
$
5,048

 
$
—

 
$
26,913


 
Quoted Prices In
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Totals
December 31, 2016
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,639

 
$
—

 
$
—

 
$
1,639

U.S. government securities
—

 
2,270

 
—

 
2,270

Corporate debt
—

 
1,991

 
—

 
1,991

Corporate stocks
17,823

 
—

 
—

 
17,823

Investments in registered investment companies
871

 
—

 
—

 
871

Foreign obligations
—

 
647

 
—

 
647

 
$
20,333

 
$
4,908

 
$
—

 
$
25,241


Other Retirement Plans
The Company maintains a 401(k) plan, which is a contributory plan maintained in the form of a “safe harbor” arrangement. Employees may contribute pre-tax earnings, subject to a maximum established annually by the IRS. The Company matches employee deferrals, up to 4% of compensation. Such matching contributions are allocated to participants at the end of each payroll cycle. The Company also makes a nondiscretionary contribution for each eligible employee in an amount equal to 5% of plan compensation and 5% of plan compensation in excess of the Social Security wage base. This nondiscretionary contribution is allocated to participants who are employed on the last day of each plan year and credited with 1000 hours of service during the year. Employees are automatically enrolled in the plan when employment commences. The Company’s costs related to the 401(k) plan, excluding employee deferrals, in 2017, 2016 and 2015 were $11,471, $10,762 and $9,271, respectively.
In connection with the KeyWorth acquisition, the Company assumed the KeyWorth Bank 401(k) Plan maintained by KeyWorth, under which all contributions had ceased and which had been terminated by KeyWorth immediately prior to the acquisition date. Distribution of benefits under this plan made solely on account of its termination was completed in June 2016. Similarly, in connection with the Metropolitan acquisition, the Company assumed the Metropolitan Bank 401(k) Plan maintained by Metropolitan Bank, under which all contributions had ceased and which had been terminated by Metropolitan Bank immediately prior to the acquisition date. Distribution of benefits under this plan made solely on account of its termination is anticipated to occur once a determination as to its qualified status in connection with its termination has been received from the Internal Revenue Service. There was no impact on the Company’s consolidated financial statements as of and for the years ended December 31, 2017 or 2016 associated with these plans.
The Company assumed supplemental executive retirement plans (SERPs) in connection with the acquisition of Capital in 2007. The SERPs were established by Capital to provide supplemental retirement benefits. The plans provide four officers of the Company specified annual benefits based upon a projected retirement date. These benefits are payable for a 15-year period after retirement. The supplemental executive retirement plan liabilities totaled $3,846 and $3,543 at December 31, 2017 and 2016, respectively. The plans are not qualified under Section 401 of the Internal Revenue Code.
Deferred Compensation Plans
The Company maintains three deferred compensation plans: a Deferred Stock Unit Plan which is invested in Company stock units and two deferred compensation plans invested in publicly-traded investment alternatives. Nonemployee directors may defer all or any portion of their fees and retainer to the Deferred Stock Unit Plan or the deferred compensation plan maintained for their benefit. Officers may defer base salary and bonus to the Deferred Stock Unit Plan or salary to the deferred compensation plan maintained for their benefit, subject to limits that may be determined annually by the Company. Amounts credited to the Deferred Stock Unit Plan are invested in units representing shares of the Company’s common stock. Amounts credited to the conventional deferred compensation plans are invested at the discretion of each participant from among designated investment alternatives. Directors and officers who participated in these deferred compensation plans on or before December 31, 2006, may invest in a preferential interest rate investment that is derived from the Moody’s Average Corporate Bond Rate, adjusted monthly, and the beneficiaries of participants in the deferred compensation plans as of such date may receive a preretirement death benefit in excess of the amounts credited to plan accounts at the time of death. All of the Company’s deferred compensation plans are unfunded. It is anticipated that the two deferred compensation plans will result in no additional cost to the Company because life insurance policies on the lives of the participants have been purchased in amounts estimated to be sufficient to pay plan benefits. The Company is both the owner and beneficiary of the life insurance policies. The expense recorded in 2017, 2016 and 2015 for the Company’s deferred compensation plans, inclusive of deferrals, was $1,935, $1,537 and $1,225, respectively. 
In connection with the Metropolitan acquisition, the Company assumed the Metropolitan BancGroup, Inc. Nonqualified Deferred Compensation Plan (“Metropolitan Bank Plan”) maintained by Metropolitan Bank. Participant deferrals were continued in accordance with deferral elections in place under the Metropolitan Bank Plan through December 31, 2017, at which time participant deferrals into this plan ceased. The distribution of accrued account balances will occur in accordance with distribution elections in place under the Metropolitan Bank Plan. Because funds were set aside by Metropolitan and actively invested in a manner identical to the participant account balances, investment gains and losses earned on the invested assets exactly offset the expense recorded to the participant accounts for the year ended December 31, 2017.
Incentive Compensation Plans
Under the Company’s “Performance Based Rewards” incentive compensation plan, annual cash bonuses are paid to eligible officers and employees, subject to the attainment of designated performance criteria. The Company designates minimum levels of performance for all participating profit centers and rewards employees on performance over the minimum level. The expense associated with the plan for 2017, 2016 and 2015 was $4,490, $2,307 and $3,608, respectively.
In March 2011, the Company adopted a long-term equity incentive plan, which provides for the grant of stock options and the award of restricted stock. The plan replaced the long-term incentive plan adopted in 2001, which expired in October 2011. The Company issues shares of treasury stock to satisfy stock options exercised or restricted stock granted under the plan. Options granted under the plan allow participants to acquire shares of the Company’s common stock at a fixed exercise price and expire ten years after the grant date. Options vest and become exercisable in installments over a three-year period measured from the grant date. Options that have not vested are forfeited and cancelled upon the termination of a participant’s employment. There were no stock options granted during the years ended December 31, 2017, 2016 or 2015. The Company recorded compensation expense of $73 for the year ended December 31, 2015 for options granted prior to 2015 under the plan. There was no compensation expense associated with options recorded for the years ended December 31, 2017 or 2016.
 
 
The following table summarizes information about options issued under the long-term equity incentive plan as of and for the three years ended December 31, 2017: 
 
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value
Outstanding at January 1, 2015
830,950

 
$
18.70

 
 
 
 
Granted
—

 
—

 
 
 
 
Exercised
(201,371
)
 
20.82

 
 
 
 
Forfeited
(8,133
)
 
29.45

 
 
 
 
Outstanding at December 31, 2015
621,446

 
$
17.88

 
3.91
 
$
10,274

Exercisable at December 31, 2015
606,027

 
$
17.85

 
3.83
 
$
10,038

Granted
—

 
—

 
 
 
 
Exercised
(435,177
)
 
18.67

 
 
 
 
Forfeited
(644
)
 
29.67

 
 
 
 
Outstanding at December 31, 2016
185,625

 
$
15.97

 
3.91
 
$
4,872

Exercisable at December 31, 2016
185,625

 
$
15.97

 
3.91
 
$
4,872

Granted
—

 
—

 
 
 
 
Exercised
(95,875
)
 
16.25

 
 
 
 
Forfeited
—

 
—

 
 
 
 
Outstanding at December 31, 2017
89,750

 
$
15.67

 
3.14
 
$
2,263

Exercisable at December 31, 2017
89,750

 
$
15.67

 
3.14
 
$
2,263


The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was $2,487, $8,323 and $2,445, respectively. The total grant date fair value of options vested during December 31, 2016 and 2015 was $78, and $235, respectively. All options outstanding during 2017 were fully vested and exercisable as of December 31, 2016.
The Company awards performance-based restricted stock to executives and other officers and time-based restricted stock to directors, executives and other officers and employees under the long-term equity incentive plan. The performance-based restricted stock vests upon completion of a designated service period and the attainment of specified performance goals. Target performance levels are derived from the Company’s budget, with threshold performance set at approximately 5% below target and superior performance set at approximately 5% above target. Performance-based restricted stock is granted at the target level; the number of shares ultimately awarded is determined at the end of the applicable performance period and may be increased or decreased depending upon the Company meeting or exceeding (or failing to meet or exceed) the financial performance measures defined by the Board of Directors. Time-based restricted stock vests at the end of the service period defined in the respective grant. The fair value of each restricted stock grant is the closing price of the Company’s common stock on the day immediately preceding the grant date. The Company recorded compensation expense of $5,293, $3,117 and $3,884 for the years ended December 31, 2017, 2016 and 2015, respectively, for restricted stock awarded under the plan. The following table summarizes the changes in restricted stock as of and for the year ended December 31, 2017:
 
Performance-
Based
Restricted
Stock(1)
 
Weighted
Average
Grant-Date
Fair Value
 
Time-
Based
Restricted
Stock
 
Weighted
Average
Grant-Date
Fair Value
Nonvested at beginning of year
—

 
$
—

 
117,345

 
$
31.76

Granted
57,204

 
42.22

 
153,270

 
42.81

Vested
(55,204
)
 
42.22

 
(43,305
)
 
32.36

Cancelled
(2,000
)
 
42.22

 
(9,235
)
 
39.49

Nonvested at end of year
—

 
$
—

 
218,075

 
$
39.08

(1) In January 2017, the Company awarded 54,450 shares of performance-based restricted stock based on the target level of performance goals of which 2,000 were cancelled prior to the attainment of performance goals. The Company exceeded the financial performance measures for the award; therefore, an additional 2,754 shares were issued for a total award of 55,204 shares.
Unrecognized stock-based compensation expense related to restricted stock totaled $2,105 at December 31, 2017. At such date, the weighted average period over which this unrecognized expense is expected to be recognized was approximately 1.60 years. There was no unrecognized stock-based compensation expense related to stock options at December 31, 2017.
At December 31, 2017, an aggregate of 2,273,192 shares of Company common stock were reserved for issuance under the Company’s employee benefit plans.