Mergers and Acquisitions

(Dollar Amounts In Thousands, Except Share Data)

Acquisition of Brand Group Holdings, Inc.

Effective September 1, 2018, the Company completed its acquisition by merger of Brand, the parent company of The Brand Banking Company (“Brand Bank”), in a transaction valued at approximately $474,453. The Company issued 9,306,477 shares of common stock and paid approximately $21,879 to Brand shareholders, excluding cash paid for fractional shares, and paid approximately $17,157, net of tax benefit, to Brand stock option holders for 100% of the voting equity interest in Brand. At closing, Brand merged with and into the Company, with the Company the surviving corporation in the merger; immediately thereafter, Brand Bank merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger. On September 1, 2018, Brand operated thirteen banking locations throughout the greater Atlanta market.

The Company recorded approximately $349,459 in intangible assets which consist of goodwill of $321,925 and a core deposit intangible of $27,534. Goodwill resulted from a combination of revenue enhancements from expansion in existing markets and efficiencies resulting from operational synergies. The fair value of the core deposit intangible is being amortized over the estimated useful life, currently expected to be approximately 10 years. The goodwill is not deductible for income tax purposes.

The following table summarizes the allocation of purchase price to assets and liabilities acquired in connection with the Company’s acquisition of Brand based on their fair values on September 1, 2018.



Purchase Price:
Shares issued to common shareholders	9,306,477
Purchase price per share	$	46.69
Value of stock paid				$	434,519
Cash consideration paid				21,879
Cash paid for fractional shares				4
Cash settlement for stock options, net of tax benefit				17,157
Deal charges				894
Total Purchase Price				$	474,453
Net Assets Acquired:
Stockholders’ equity at acquisition date	$	138,896
Increase (decrease) to net assets as a result of fair value adjustments to assets acquired and liabilities assumed:
Securities	(231		)
Loans, including loans held for sale	(20,969		)
Premises and equipment	910
Intangible assets	27,534
Other assets	(3,304		)
Deposits	(1,367		)
Borrowings	(3,236		)
Other liabilities	13,338
Deferred income taxes	957
Total Net Assets Acquired				152,528
Goodwill resulting from merger⁽¹⁾				$	321,925

(1) The goodwill resulting from the merger has been assigned to the Community Banks operating segment.

The following table summarizes the estimated fair value on September 1, 2018 of assets acquired and liabilities assumed on that date in connection with the merger with Brand. These estimates are subject to change pending the finalization of all valuations.



Cash and cash equivalents	$	193,436
Securities	71,246
Loans, including loans held for sale	1,589,195
Premises and equipment	20,070
Intangible assets	349,459
Other assets	112,066
Total assets	$	2,335,472

Deposits	$	1,714,177
Borrowings	90,912
Other liabilities	55,930
Total liabilities	$	1,861,019

As part of the merger agreement, Brand agreed to divest the operations of its subsidiary Brand Mortgage Group, LLC (“BMG”), which was completed as of October 31, 2018. As a result, the balance sheet and results of operations of BMG, which the Company considers to be immaterial to the overall results of the Company, were included in the Company's balance sheet and results of operations from September 1, 2018 to October 31, 2018. The following table summarizes the significant assets acquired and liabilities assumed from BMG:



	September 1, 2018
Loans held for sale	$	48,100
Borrowings	34,139

Supplemental Pro Forma Combined Condensed Results of Operations

The following unaudited pro forma combined condensed consolidated financial information presents the results of operations for the three months ended March 31, 2019 and 2018 of the Company as though the Brand merger had been completed as of January 1, 2018. The unaudited pro forma information combines the historical results of Brand with the Company’s historical consolidated results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the periods presented. The pro forma information is not necessarily indicative of what would have occurred had the acquisition taken place on January 1, 2018. The pro forma information does not include the effect of any cost-saving or revenue-enhancing strategies. Merger expenses are reflected in the period in which they were incurred.



	(Unaudited)
	Three Months Ended
	March 31,
	2019		2018
Net interest income - pro forma	$	113,147	$	111,618

Noninterest income - pro forma	$	35,885	$	42,497

Noninterest expense - pro forma	$	88,832	$	99,774

Net income - pro forma	$	45,110	$	40,296

Earnings per share - pro forma:
Basic	$	0.77	$	0.69
Diluted	$	0.77	$	0.69