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Employee Benefit and Deferred Compensation Plans
 12 Months Ended
Dec. 31, 2018
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 benefit accruals ceased as of December 31, 1996. The Company’s funding policy is to contribute annually to the plan an amount not less than the minimum required contribution, as determined annually by consulting actuaries in accordance with funding standards imposed under the Internal Revenue Code of 1986, as amended. No contributions were made or required in 2018 or 2017. The Company does not anticipate that a contribution will be required in 2019. The plan’s accumulated benefit obligation and projected benefit obligation are substantially the same since benefit accruals have ceased. The accumulated benefit obligation was $24,945 and $27,859 at December 31, 2018 and 2017, respectively. There is no additional minimum pension liability required to be recognized.
In connection with the acquisition of Heritage Financial Group, Inc., and its affiliates, in 2015, the Company assumed the HeritageBank of the South Defined Benefit Plan. The plan was terminated by HeritageBank of the South immediately prior to the acquisition, and final distribution of all benefits was completed in August 2016.
The Company provides retiree medical benefits, consisting of the opportunity to purchase coverage at subsidized rates under the Company’s group medical plan. Employees eligible to participate must: (i) have been employed by the Company and enrolled in the Company’s group medical plan as of December 31, 2004; and (ii) retire from the Company between ages 55 and 65 with at least 15 years of service or 70 points (points determined as the sum of age and service.) The Company periodically determines the portion of the premiums to be paid by each retiree and the portion to be paid by the Company. Coverage ceases when a retiree attains age 65 and is eligible for Medicare. The Company also provides life insurance for each retiree who receives retiree medical benefits. The face amount of the coverage is $5; coverage is provided until each retiree attains age 70. Retirees may purchase additional insurance or continue coverage beyond age 70 at their sole expense. The Company contributed $89 and $119 to the plan in 2018 and 2017, respectively; the Company expects to contribute approximately $156 in 2019.
The Company accounts for its obligations related to 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., the health care cost trend rate) for the next year is 5.6%. 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, 2018 and for the year then ended.
Information relating to the defined benefit pension plan maintained by the Renasant Bank (“Pension Benefits - Renasant”) and to the post-retirement health and life plan (“Other Benefits”) as of December 31, 2018 and 2017 is as follows:
 
Pension Benefits Renasant
 
Other Benefits
 
2018
 
2017
 
2018
 
2017
Change in benefit obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
27,859

 
$
28,012

 
$
1,170

 
$
1,566

Service cost
—

 
—

 
8

 
9

Interest cost
1,043

 
1,168

 
31

 
42

Plan participants’ contributions
—

 
—

 
75

 
77

Actuarial (gain) loss
(2,016
)
 
582

 
(239
)
 
(328
)
Benefits paid
(1,941
)
 
(1,903
)
 
(164
)
 
(196
)
Benefit obligation at end of year
$
24,945

 
$
27,859

 
$
881

 
$
1,170

Change in fair value of plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
26,913

 
$
25,241

 
 
 
 
Actual return on plan assets
234

 
3,575

 
 
 
 
Contribution by employer
—

 
—

 
 
 
 
Benefits paid
(1,941
)
 
(1,903
)
 
 
 
 
Fair value of plan assets at end of year
$
25,206

 
$
26,913

 
 
 
 
Funded status at end of year
$
261

 
$
(946
)
 
$
(881
)
 
$
(1,170
)
Weighted-average assumptions as of December 31
 
 
 
 
 
 
 
Discount rate used to determine the benefit obligation
4.56
%
 
3.96
%
 
4.07
%
 
3.37
%

The discount rate assumptions at December 31, 2018 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 plans. The selected discount rate is the rate that produces the same present value of the plans' 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 years ended December 31, 2018, 2017 and 2016 are as follows: 
 
Pension Benefits Renasant
 
Pension Benefits HeritageBank(1)
 
Other Benefits
 
2018
 
2017
 
2016
 
2016
 
2018
 
2017
 
2016
Service cost
$
—

 
$
—

 
$
—

 
$
—

 
$
8

 
$
9

 
$
12

Interest cost
1,043

 
1,168

 
1,216

 
172

 
31

 
42

 
58

Expected return on plan assets
(2,077
)
 
(1,941
)
 
(1,872
)
 
(113
)
 
—

 
—

 
—

Prior service cost recognized
—

 
—

 
—

 
—

 
—

 
—

 
—

Recognized actuarial loss
328

 
401

 
404

 
—

 
—

 
6

 
76

Settlement/curtailment/termination losses
—

 
—

 
—

 
(780
)
 
—

 
—

 
—

Net periodic benefit cost
(706
)
 
(372
)
 
(252
)
 
(721
)
 
39

 
57

 
146

Net actuarial (gain) loss arising during the period
(173
)
 
(1,051
)
 
5

 
(397
)
 
(240
)
 
(328
)
 
(56
)
Net Settlement/curtailment/termination losses
—

 
—

 
—

 
780

 
—

 
—

 
—

Amortization of net actuarial loss recognized in net periodic pension cost
(328
)
 
(401
)
 
(404
)
 
—

 
—

 
(6
)
 
(76
)
Total recognized in other comprehensive income
(501
)
 
(1,452
)
 
(399
)
 
(383
)
 
(240
)
 
(334
)
 
(132
)
Total recognized in net periodic benefit cost and other comprehensive income
$
(1,207
)
 
$
(1,824
)
 
$
(651
)
 
$
(338
)
 
$
(201
)
 
$
(277
)
 
$
14

Weighted-average assumptions as of December 31
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate used to determine net periodic pension cost
3.96
%
 
4.35
%
 
4.56
%
 
4.27
%
 
3.37
%
 
3.57
%
 
3.63
%
Expected return on plan assets
6.00
%
 
8.00
%
 
8.00
%
 
3.00
%
 
N/A

 
N/A

 
N/A


(1) 
Because the final distribution of benefits under the HeritageBank of the South Defined Benefit Plan was completed in 2016, there was no impact on the Company’s consolidated financial statements as of and for the years ended December 31, 2018 and 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
2019
$
1,968

 
$
156

2020
1,973

 
141

2021
1,988

 
126

2022
1,980

 
103

2023
1,958

 
101

2024 - 2028
9,277

 
279


Amounts recognized in accumulated other comprehensive income, before tax, for the year ended December 31, 2018 are as follows:
 
Pension Benefits Renasant
 
Other
Benefits
Prior service cost
$
—

 
$
—

Actuarial loss (gain)
9,562

 
(155
)
Total
$
9,562

 
$
(155
)

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 (gain)
345

 
(56
)
Total
$
345

 
$
(56
)

The investment objective of the Company’s defined benefit plan has been to achieve above average income and moderate long-term growth, by combining an equity income strategy (allocation of 65% to 75% of assets) and an intermediate fixed income strategy (allocation of 25% to 35% of assets) and investing directly in debt and equity securities. In 2018, the Company’s investment committee modified the plan’s investment strategy in a manner intended to preserve its funded status by focusing on the achievement of portfolio growth and including an interest rate hedging strategy. As a consequence, substantially all of the plan’s assets were liquidated and the proceeds reinvested in a collective or pooled trust, which invests in other collective or pooled trusts with distinct investment mandates. The trust’s asset allocation is approximately 55% in growth assets, consisting of interests in trusts invested in equity securities, high yield fixed income securities, and direct real estate investments (approximately 5% of assets), and approximately 45% to assets intended to hedge against volatility arising from interest rate risk, consisting of interests in trusts invested in long duration fixed income securities. The trust is actively managed allowing changes in asset allocations to enhance returns and mitigate risk. The Company’s Trust Investment Committee, as designated by the senior management pension committee, periodically reviews the trust’s performance and asset allocations to ensure the plan’s investment objectives are satisfied and that the investment strategy of the trust has not materially changed.
The expected long-term rate of return was estimated using market benchmarks for investment classes applied to the plan’s target asset allocation and was computed using a valuation methodology which projects future returns based on current valuations rather than historical returns. The decrease in the expected return for 2018 (as compared to 2017) is attributable to the change in investment strategy, which resulted in a more conservative asset allocation.
The fair values of the Company’s defined benefit pension plan assets by category at December 31, 2018 and 2017 are below. For 2018, investments in collective trusts, which are measured at net asset value per share (or "NAV"), consist of trusts that invest primarily in liquid equity and fixed income securities and have a small direct investment in real estate. There is generally no restriction on redemptions or withdrawals for benefit payments or in the event of plan termination; 60 day notice is required to redeem or withdraw assets for any other purpose. For 2017, direct investments in corporate stocks consisted 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 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)
 
Measured at NAV
 
Totals
December 31, 2018
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
40

 
$
—

 
$
—

 
$
—

 
$
40

Investments in collective trusts
—

 
—

 
—

 
25,166

 
25,166

 
$
40

 
$
—

 
$
—

 
$
25,166

 
$
25,206

 
Quoted Prices In
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Measured at NAV
 
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


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 are immediately enrolled in the plan and make pre-tax deferrals, subject to limits imposed under the plan and the deferral limit established annually by the IRS. Each pay period, the Company matches employee deferrals on a dollar for dollar basis, up to 4% of compensation. The Company also makes a nondiscretionary contribution for each eligible participant in an amount equal to 5% of plan compensation and 5% of plan compensation in excess of the Social Security wage base. In order to participate in the nondiscretionary contribution, an employee must: (i) be employed on the last day of the year and be credited with 1000 hours of service during the year; (ii) die or become disabled during the year; or (iii) have attained the plan’s early or normal retirement age (as defined in the plan). The Company’s costs related to the 401(k) plan, excluding employee deferrals, in 2018, 2017 and 2016 were $13,477, $11,471 and $10,762, respectively.
In connection with the acquisition of Metropolitan BancGroup, Inc. and its affiliates, the Company assumed the Metropolitan BancGroup, Inc. 401(k) Plan. The plan was terminated by Metropolitan BancGroup, Inc. prior to the acquisition, and the distribution of all account balances was completed during 2018. There was no impact on the Company’s consolidated financial statements as of and for the years ended December 31, 2018 or 2017 associated with these plans.
In connection with the acquisition of Brand Group Holdings, Inc. and its affiliates, the Company assumed the Brand Group Holdings, Inc. 401(k) and Employee Stock Ownership Plan. The plan was terminated by Brand Group Holdings, Inc. immediately prior to the acquisition. The final distribution of account balances is expected to occur once a favorable determination as to the plan’s tax-qualified status is issued by the Internal Revenue Service. There was no impact on the Company’s consolidated financial statements as of and for the years ended December 31, 2018 or 2017 associated with the plan.
Deferred Compensation Plans and Arrangements
The Company maintains a Deferred Stock Unit Plan and two deferred compensation plans. Nonemployee directors may defer all or a 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 base salary to the deferred compensation plan maintained for their benefit, subject to limits determined annually by the Company. Amounts deferred to the Deferred Stock Unit Plan are invested in units representing shares of the Company’s common stock; benefits are paid in the form of common stock, with cash distributed in lieu of fractional shares. Amounts credited to the deferred compensation plans are notionally invested in the discretion of each participant from among investment alternatives substantially similar to those available under the Company’s 401(k) plan. Directors and officers who participated in these deferred compensation plans on or before December 31, 2006, may also invest in a preferential interest rate alternative that is derived from the Moody’s Average Corporate Bond Rate. Benefits payable from the deferred compensation plans generally equal the account balances of each participant. Beneficiaries of eligible directors and officers may receive a preretirement death benefit in excess of the amounts credited to plan accounts (eligible directors and officers must have continuously deferred at rates prescribed by the Company since January 1, 2005 and die while employed by the Company).
In connection with the acquisition of Metropolitan BancGroup, Inc. and its affiliates, the Company assumed and now maintains the Metropolitan BancGroup, Inc. Nonqualified Deferred Compensation Plan. Deferral elections in effect as of the time of acquisition were continued through and until December 31, 2017; no further deferrals will be made to the plan. Account balances maintained under the plan will be distributed as provided under the terms of the plan and individual participant elections. Pending distribution, balances will be notionally invested by each participant in designated investment alternatives.
In connection with its acquisition of Brand Group Holdings, Inc. and its affiliates, the Company assumed the Brand Group Holdings, Inc. Deferred Compensation Plan. Deferral elections in effect as of the time of acquisition will be given effect for compensation earned during 2018; no further deferrals will be made to the plan. Account balances maintained under the plan will be distributed as provided under the terms of the plan and individual participant elections. Pending distribution, balances will be notionally invested by each participant in designated investment alternatives.
All of the Company’s deferred compensation plans described above are unfunded. It is anticipated that the plans will result in no additional cost to the Company because life insurance policies on the lives of participants have been purchased in amounts estimated to be sufficient to pay plan benefits. The Company is both the owner and beneficiary of the policies. The expense recorded in 2018, 2017 and 2016 for the Company’s Deferred Stock Unit and deferred compensation plans, inclusive of deferrals, was $1,290, $1,935 and $1,537, respectively. 
In 2007, the Company assumed supplemental executive retirement plans (SERPs) in connection with the acquisition of Capital Bancorp, Inc. and its affiliates. The plans are designed to provide four officers specified annual benefits for a 15-year period upon the attainment of a designated retirement age. Liabilities associated with the SERPs totaled $3,865 and $3,846 at December 31, 2018 and 2017, respectively. The plans are not qualified under Section 401 of the Internal Revenue Code.
Incentive Compensation Plans
Under the Company’s Performance Based Rewards Plan, annual cash bonuses are paid to eligible officers and employees, subject to the attainment of designated performance criteria that may relate to the Company’s performance, the performance of an affiliate, region, division or profit center, and/or to individual or team performance. The Company annually sets minimum, target, and superior levels of performance. Minimum performance must be attained for the payment of any bonus; superior performance must be attained for maximum payouts. The expense associated with the plan for 2018, 2017 and 2016 was $5,117, $4,490 and $2,307, respectively.
The Company maintains a long-term equity compensation plan that 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. Options granted under the plan permit the acquisition of shares of the Company’s common stock at an exercise price equal to the fair market value of the shares on the date of grant. Options are subject to time-based vesting and expire ten years after the date of grant. Options that do not vest or expire unexercised are forfeited and canceled. There were no stock options granted during the years ended December 31, 2018, 2017 or 2016. There was no compensation expense associated with options recorded for the years ended December 31, 2018, 2017 or 2016.
 
 
The following table summarizes information about options outstanding, exercised and forfeited as of and for the three years ended December 31, 2018, 2017 and 2016: 
 
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value
Outstanding at January 1, 2016
621,446

 
$
17.88

 
 
 
 
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

Granted
—

 
—

 
 
 
 
Exercised
(41,000
)
 
15.54

 
 
 
 
Forfeited
(5,000
)
 
15.32

 
 
 
 
Outstanding at December 31, 2018
43,750

 
$
15.84

 
2.63
 
$
627

Exercisable at December 31, 2018
43,750

 
$
15.84

 
2.63
 
$
627


The total intrinsic value of options exercised during the three years ended December 31, 2018, 2017 and 2016 was $1,180, $2,487 and $8,323, respectively. The total grant date fair value of options vested during December 31, 2016 was $78. All options outstanding during 2018 and 2017 were fully vested and exercisable as of December 31, 2016.
The Company also awards performance-based restricted stock to executives and other officers and employees and time-based restricted stock to non-employee directors, executives, and other officers and employees. Performance-based awards are subject to the attainment of designated performance criteria during a fixed performance cycle. Performance criteria may relate to the Company’s performance or to the performance of an affiliate, region, division or profit center in each case measured on an absolute basis or relative to a defined peer group. The Company annually sets minimum, target, and superior levels of performance. Minimum performance must be attained for the vesting of any shares; superior performance must be attained for maximum payouts. Time-based restricted stock awards relate to a fixed number of shares that vest at the end of a designated service period.
The fair value of each restricted stock award is the closing price of the Company’s common stock on the business day immediately preceding the date of the award. For restricted stock awarded under the plan, the Company recorded compensation expense of $7,251, $5,293 and $3,117 for the years ended December 31, 2018, 2017 and 2016, respectively. The following table summarizes the changes in restricted stock as of and for the year ended December 31, 2018:
 
Performance-
Based
Restricted
Stock(1)
 
Weighted
Average
Grant-Date
Fair Value
 
Time-
Based
Restricted
Stock
 
Weighted
Average
Grant-Date
Fair Value
Not vested at beginning of year
—

 
$
—

 
218,075

 
$
39.08

Granted
110,652

 
40.89

 
188,272

 
42.93

Vested
(66,338
)
 
40.89

 
(75,829
)
 
36.98

Cancelled
(3,014
)
 
40.89

 
(25,563
)
 
40.97

Not vested at end of year
41,300

 
$
40.89

 
304,955

 
$
41.82

(1) In January 2018, the Company awarded an aggregate of 53,883 shares of performance-based restricted stock (at the target level), subject to a one-year performance cycle. An aggregate of 3,014 shares was forfeited and canceled prior to the end of the performance cycle. The Company's financial performance exceeded target levels, increasing the award by an aggregate of 15,469 shares.
Unrecognized stock-based compensation expense related to restricted stock totaled $7,909 at December 31, 2018. As of such date, the weighted average period over which the unrecognized expense is expected to be recognized was approximately 1.45 years. There was no unrecognized stock-based compensation expense related to stock options at December 31, 2018.
At December 31, 2018, an aggregate of 2,043,402 shares of Company common stock were reserved for issuance under the Company’s employee benefit plans.