RNST 10-Q Quarterly Report June 30, 2021

RENASANT CORP

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rnst-20210630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

________________________________________________________

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2021


☐			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 CORP ORATION

(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)

________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $5.00 par value per share	RNST	The NASDAQ Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Table of Contents

As of July 30, 2021, 56,352,052 shares of the registrant’s common stock, $5.00 par value per share, were outstanding.

Table of Contents

Renasant Corporation and Subsidiaries

Form 10-Q

For the Quarterly Period Ended June 30, 2021

CONTENTS


		Page
PART I	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Changes in Shareholders’ Equity	4
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	54

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	83

Item 4.	Controls and Procedures	83

PART II	Other Information


Item 1A.	Risk Factors	84

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	84

Item 6.	Exhibits	85

SIGNATURES		86

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Data)


	(Unaudited)
	June 30, 2021		December 31, 2020
Assets
Cash and due from banks	$	221,205	$	176,372
Interest-bearing balances with banks	1,384,283		456,831
Cash and cash equivalents	1,605,488		633,203

Securities available for sale, at fair value	2,163,820		1,343,457
Loans held for sale, at fair value	448,959		417,771
Loans, net of unearned income:
Non purchased loans and leases	8,892,544		9,419,540
Purchased loans	1,256,698		1,514,107
Total loans, net of unearned income	10,149,242		10,933,647
Allowance for credit losses	( 172,354 )		( 176,144 )
Loans, net	9,976,888		10,757,503
Premises and equipment, net	293,203		300,496
Other real estate owned:
Non purchased	1,675		2,045
Purchased	3,264		3,927
Total other real estate owned, net	4,939		5,972
Goodwill	939,683		939,683
Other intangible assets, net	27,003		30,139
Bank-owned life insurance	279,444		230,609
Mortgage servicing rights	84,912		62,994
Other assets	198,047		207,785
Total assets	$	16,022,386	$	14,929,612
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing	$	4,349,135	$	3,685,048
Interest-bearing	8,766,216		8,374,033
Total deposits	13,115,351		12,059,081
Short-term borrowings	14,933		21,340
Long-term debt	469,406		474,970
Other liabilities	218,889		241,488
Total liabilities	13,818,579		12,796,879
Shareholders’ equity
Preferred stock, $ 0.01 par value – 5,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $ 5.00 par value – 150,000,000 shares authorized; 59,296,725 shares issued; 56,350,878 and 56,200,487 shares outstanding, respectively	296,483		296,483
Treasury stock, at cost – 2,945,847 and 3,096,238 shares, respectively	( 97,249 )		( 101,554 )
Additional paid-in capital	1,295,879		1,296,963
Retained earnings	689,444		615,773
Accumulated other comprehensive income, net of taxes	19,250		25,068
Total shareholders’ equity	2,203,807		2,132,733
Total liabilities and shareholders’ equity	$	16,022,386	$	14,929,612

See Notes to Consolidated Financial Statements.

Table of Contents

Renasant Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)

(In Thousands, Except Share Data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Interest income
Loans	$	113,325	$	115,672	$	228,330	$	236,277
Securities
Taxable	5,619		6,418		10,536		13,720
Tax-exempt	1,702		1,670		3,359		3,124
Other	345		195		528		1,007
Total interest income	120,991		123,955		242,753		254,128
Interest expense
Deposits	7,669		13,871		15,949		32,366
Borrowings	3,743		4,302		7,577		9,378
Total interest expense	11,412		18,173		23,526		41,744
Net interest income	109,579		105,782		219,227		212,384
Provision for loan losses	—		26,900		—		53,250
Provision for other credit losses	—		—		—		—
Provision for credit losses	—		26,900		—		53,250
Net interest income after provision for credit losses	109,579		78,882		219,227		159,134
Noninterest income
Service charges on deposit accounts	9,458		6,832		17,481		15,902
Fees and commissions	4,110		2,971		8,010		6,025
Insurance commissions	2,422		2,125		4,659		4,116
Wealth management revenue	5,019		3,824		9,811		7,826
Mortgage banking income	20,853		45,490		71,586		61,025
Net gain on sales of securities	—		31		1,357		31
BOLI income	1,644		1,329		3,716		2,492
Other	4,104		1,568		12,027		4,323
Total noninterest income	47,610		64,170		128,647		101,740
Noninterest expense
Salaries and employee benefits	70,293		79,361		148,989		152,550
Data processing	5,652		5,047		11,103		10,053
Net occupancy and equipment	11,374		13,511		23,912		27,631
Other real estate owned	104		620		145		1,038
Professional fees	2,674		2,517		5,595		5,159
Advertising and public relations	3,100		2,920		6,352		6,320
Intangible amortization	1,539		1,834		3,137		3,729
Communications	2,291		2,181		4,583		4,379

Restructuring charges	15		—		307		—

Debt prepayment penalty	—		90		—		90
Other	11,735		10,204		20,589		22,377
Total noninterest expense	108,777		118,285		224,712		233,326
Income before income taxes	48,412		24,767		123,162		27,548
Income taxes	7,545		4,637		24,387		5,410
Net income	$	40,867	$	20,130	$	98,775	$	22,138


Basic earnings per share	$	0.73	$	0.36	$	1.75	$	0.39
Diluted earnings per share	$	0.72	$	0.36	$	1.75	$	0.39
Cash dividends per common share	$	0.22	$	0.22	$	0.44	$	0.44

See Notes to Consolidated Financial Statements.

Table of Contents

Renasant Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(In Thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net income	$	40,867	$	20,130	$	98,775	$	22,138
Other comprehensive income, net of tax:
Securities available for sale:
Unrealized holding gains (losses) on securities	3,702		2,603		( 11,241 )		19,297
Reclassification adjustment for gains realized in net income	—		( 23 )		( 1,012 )		( 23 )


Total securities available for sale	3,702		2,580		( 12,253 )		19,274
Derivative instruments:
Unrealized holding (losses) gains on derivative instruments	( 4,648 )		( 793 )		6,336		( 3,796 )

Total derivative instruments	( 4,648 )		( 793 )		6,336		( 3,796 )
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	57		51		99		97
Total defined benefit pension and post-retirement benefit plans	57		51		99		97
Other comprehensive (loss) income, net of tax	( 889 )		1,838		( 5,818 )		15,575
Comprehensive income	$	39,978	$	21,968	$	92,957	$	37,713

See Notes to Consolidated Financial Statements.

Table of Contents

Renasant Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(In Thousands, Except Share Data)


	Common Stock			Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Six Months Ended June 30, 2021	Shares	Amount
Balance at January 1, 2021	56,200,487	$	296,483	$	( 101,554 )	$	1,296,963	$	615,773	$	25,068	$	2,132,733

Net income	—	—		—		—		57,908		—		57,908
Other comprehensive loss	—	—		—		—		—		( 4,929 )		( 4,929 )
Comprehensive income												52,979
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,564 )		—		( 12,564 )


Issuance of common stock for stock-based compensation awards	93,859	—		2,605		( 4,808 )		—		—		( 2,203 )
Stock-based compensation expense	—	—		—		2,756		—		—		2,756

Balance at March 31, 2021	56,294,346	$	296,483	$	( 98,949 )	$	1,294,911	$	661,117	$	20,139	$	2,173,701
Net income	—	—		—		—		40,867		—		40,867
Other comprehensive loss	—	—		—		—		—		( 889 )		( 889 )
Comprehensive income												39,978
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,540 )		—		( 12,540 )


Issuance of common stock for stock-based compensation awards	56,532	—		1,700		( 1,417 )		—		—		283
Stock-based compensation expense	—	—		—		2,385		—		—		2,385

Balance at June 30, 2021	56,350,878	$	296,483	$	( 97,249 )	$	1,295,879	$	689,444	$	19,250	$	2,203,807

Table of Contents


	Common Stock			Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Six Months Ended June 30, 2020	Shares	Amount
Balance at January 1, 2020	56,855,002	$	296,483	$	( 83,189 )	$	1,294,276	$	617,355	$	764	$	2,125,689
Cumulative effect adjustment due to the adoption of ASU 2016-13	—	—		—		—		( 35,099 )		—		( 35,099 )
Net income	—	—		—		—		2,008		—		2,008
Other comprehensive income	—	—		—		—		—		13,737		13,737
Comprehensive income												15,745
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,555 )		—		( 12,555 )
Repurchase of shares in connection with stock repurchase program	( 818,886 )	—		( 24,569 )		—		—		—		( 24,569 )

Issuance of common stock for stock-based compensation awards	104,902	—		4,138		( 5,587 )		—		—		( 1,449 )
Stock-based compensation expense	—	—		—		2,750		—		—		2,750

Balance at March 31, 2020	56,141,018	$	296,483	$	( 103,620 )	$	1,291,439	$	571,709	$	14,501	$	2,070,512
Net income	—	—		—		—		20,130		—		20,130
Other comprehensive income	—	—		—		—		—		1,838		1,838
Comprehensive income												21,968
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,525 )		—		( 12,525 )


Issuance of common stock for stock-based compensation awards	40,944	—		1,397		( 1,404 )		—		—		( 7 )
Stock-based compensation expense	—	—		—		2,998		—		—		2,998

Balance at June 30, 2020	56,181,962	$	296,483	$	( 102,223 )	$	1,293,033	$	579,314	$	16,339	$	2,082,946

See Notes to Consolidated Financial Statements.

Table of Contents

Renasant Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(In Thousands)


	Six Months Ended June 30,
	2021		2020
Operating activities
Net income	$	98,775	$	22,138
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	—		53,250
Depreciation, amortization and accretion	22,459		13,247
Deferred income tax expense (benefit)	4,975		( 9,812 )
Funding of mortgage loans held for sale	( 2,222,822 )		( 2,023,834 )
Proceeds from sales of mortgage loans held for sale	2,249,240		2,070,701
Gains on sales of mortgage loans held for sale	( 51,482 )		( 68,342 )
Valuation adjustment to mortgage servicing rights	( 13,561 )		14,522
Gains on sales of securities	( 1,357 )		( 31 )
Penalty on prepayment of debt	—		90
(Gains) losses on sales of premises and equipment	( 687 )		35
Stock-based compensation expense	5,142		5,748

Increase in other assets	( 15,117 )		( 68,031 )
(Decrease) increase in other liabilities	( 25,985 )		45,232
Net cash provided by operating activities	49,580		54,913
Investing activities
Purchases of securities available for sale	( 1,190,400 )		( 182,745 )
Proceeds from sales of securities available for sale	155,391		8,773
Proceeds from call/maturities of securities available for sale	195,114		183,807



Net decrease (increase) in loans	783,838		( 1,296,880 )
Purchases of premises and equipment	( 12,953 )		( 3,856 )
Proceeds from sales of premises and equipment	8,715		—
Purchase of bank-owned life insurance	( 45,000 )		—
Net change in FHLB stock	( 1,207 )		( 496 )
Proceeds from sales of other assets	3,378		2,228

Other, net	2,803		—
Net cash used in investing activities	( 100,321 )		( 1,289,169 )
Financing activities
Net increase in noninterest-bearing deposits	664,087		1,188,526
Net increase in interest-bearing deposits	392,183		444,810
Net decrease in short-term borrowings	( 6,407 )		( 147,281 )

Repayment of long-term debt	( 1,733 )		( 177 )
Cash paid for dividends	( 25,104 )		( 25,080 )
Repurchase of shares in connection with stock repurchase program	—		( 24,569 )


Net cash provided by financing activities	1,023,026		1,436,229
Net increase in cash and cash equivalents	972,285		201,973
Cash and cash equivalents at beginning of period	633,203		414,930
Cash and cash equivalents at end of period	$	1,605,488	$	616,903


Supplemental disclosures
Cash paid for interest	$	24,146	$	43,564
Cash paid for income taxes	$	31,443	$	16,163
Noncash transactions:
Transfers of loans to other real estate owned	$	2,503	$	4,259
Financed sales of other real estate owned	$	130	$	154



Recognition of operating right-of-use assets	$	3,624	$	4,235
Recognition of operating lease liabilities	$	3,624	$	2,766

See Notes to Consolidated Financial Statements.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies

(In Thousands)

Nature of Operations : Renasant Corporation (referred to herein as the “Company”) owns and operates Renasant Bank (“Renasant Bank” or the “Bank”), Renasant Insurance, Inc. and Park Place Capital Corporation. Through its subsidiaries, the Company offers a diversified range of financial, wealth management, fiduciary and insurance services to its retail and commercial customers from full service offices located throughout Mississippi, Tennessee, Alabama, Georgia, Florida, North Carolina and South Carolina.

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. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on February 26, 2021.

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, and such differences may be material.

Impact of Recently-Issued Accounting Standards and Pronouncements :

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 842): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides temporary, optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions if certain criteria are met that reference LIBOR or another reference rate expected to be discontinued. As the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect only from March 12, 2020 through December 31, 2022. The Company has established a LIBOR Transition Committee and is currently evaluating the impact of adopting ASU 2020-04 on the Company’s financial statements.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 2 – Securities

(In Thousands, Except Number of Securities)

The amortized cost and fair value of securities available for sale were as follows as of the dates presented in the tables below. There was no allowance for credit losses allocated to any of the Company’s available for sale securities as of June 30, 2021 or December 31, 2020.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2021
U.S. Treasury securities	$	3,021	$	16	$	—	$	3,037

Obligations of states and political subdivisions	314,675		11,270		( 425 )		325,520
Residential mortgage backed securities:
Government agency mortgage backed securities	742,392		13,670		( 1,572 )		754,490
Government agency collateralized mortgage obligations	800,299		2,267		( 4,324 )		798,242
Commercial mortgage backed securities:
Government agency mortgage backed securities	21,461		795		—		22,256
Government agency collateralized mortgage obligations	197,401		1,729		( 1,571 )		197,559

Other debt securities	59,523		3,193		—		62,716

	$	2,138,772	$	32,940	$	( 7,892 )	$	2,163,820


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2020
U.S. Treasury securities	$	7,047	$	32	$	—	$	7,079
Obligations of other U.S. Government agencies and corporations	1,003		6		—		1,009
Obligations of states and political subdivisions	291,231		14,015		( 45 )		305,201
Residential mortgage backed securities:
Government agency mortgage backed securities	581,105		21,564		( 23 )		602,646
Government agency collateralized mortgage obligations	218,373		1,946		( 51 )		220,268
Commercial mortgage backed securities:
Government agency mortgage backed securities	29,053		1,235		( 1 )		30,287
Government agency collateralized mortgage obligations	99,377		2,992		( 21 )		102,348
Trust preferred securities	12,013		—		( 3,001 )		9,012
Other debt securities	62,771		2,909		( 73 )		65,607

	$	1,301,973	$	44,699	$	( 3,215 )	$	1,343,457

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Securities sold were as set forth in the tables below. There were no securities sold during the three months ended June 30, 2021 and 2020.




	Carrying Value		Net Proceeds		Gain/(Loss)













Six months ended June 30, 2021

Obligations of states and political subdivisions	$	47	$	50	$	3
Residential mortgage backed securities:
Government agency mortgage backed securities	136,340		139,735		3,395
Government agency collateralized mortgage obligations	5,626		5,646		20



Trust preferred securities	12,021		9,960		( 2,061 )


	$	154,034	$	155,391	$	1,357



	Carrying Value		Net Proceeds		Gain/(Loss)













Six months ended June 30, 2020

Obligations of states and political subdivisions	$	2,696	$	2,561	$	( 135 )
Residential mortgage backed securities:
Government agency mortgage backed securities	6,046		6,212		166







	$	8,742	$	8,773	$	31

Gross realized gains and losses on sales of securities available for sale for the three and six months ended June 30, 2021 were as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Gross gains on sales of securities available for sale	$	—	$	166	$	3,508	$	166
Gross losses on sales of securities available for sale	—		( 135 )		( 2,151 )		( 135 )
Gains on sales of securities available for sale, net	$	—	$	31	$	1,357	$	31

At June 30, 2021 and December 31, 2020, securities with a carrying value of $ 596,836 and $ 582,338 , respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $ 20,873 and $ 32,272 were pledged as collateral for short-term borrowings and derivative instruments at June 30, 2021 and December 31, 2020, respectively.

The amortized cost and fair value of securities at June 30, 2021 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.

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Available for Sale
		Amortized Cost		Fair Value
Due within one year		$	36,914	$	39,268
Due after one year through five years		23,273		24,061
Due after five years through ten years		57,089		59,654
Due after ten years		228,196		234,605
Residential mortgage backed securities:
Government agency mortgage backed securities		742,392		754,490
Government agency collateralized mortgage obligations		800,299		798,242
Commercial mortgage backed securities:
Government agency mortgage backed securities		21,461		22,256
Government agency collateralized mortgage obligations		197,401		197,559
Other debt securities		31,747		33,685

		$	2,138,772	$	2,163,820

Table of Contents

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 for which an allowance for credit losses has not been recorded 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









Available for Sale:
June 30, 2021

Obligations of states and political subdivisions	20	$	40,176	$	( 414 )	1	$	2,166	$	( 11 )	21	$	42,342	$	( 425 )
Residential mortgage backed securities:
Government agency mortgage backed securities	25	210,509		( 1,572 )		—	—		—		25	210,509		( 1,572 )
Government agency collateralized mortgage obligations	25	537,594		( 4,324 )		—	—		—		25	537,594		( 4,324 )
Commercial mortgage backed securities:
Government agency mortgage backed securities	—	—		—		1	446		—		1	446		—
Government agency collateralized mortgage obligations	—	—		—		13	115,433		( 1,571 )		13	115,433		( 1,571 )

Other debt securities	1	1,000		—		—	—		—		1	1,000		—
Total	71	$	789,279	$	( 6,310 )	15	$	118,045	$	( 1,582 )	86	$	907,324	$	( 7,892 )
December 31, 2020

Obligations of states and political subdivisions	6	$	9,403	$	( 45 )	—	$	—	$	—	6	$	9,403	$	( 45 )
Residential mortgage backed securities:
Government agency mortgage backed securities	2	19,755		( 23 )		—	—		—		2	19,755		( 23 )
Government agency collateralized mortgage obligations	5	27,143		( 51 )		—	—		—		5	27,143		( 51 )
Commercial mortgage backed securities:
Government agency mortgage backed securities	1	1,538		( 1 )		1	459		—		2	1,997		( 1 )
Government agency collateralized mortgage obligations	3	14,190		( 21 )		—	—		—		3	14,190		( 21 )
Trust preferred securities	—	—		—		2	9,012		( 3,001 )		2	9,012		( 3,001 )
Other debt securities	4	3,330		( 70 )		1	566		( 3 )		5	3,896		( 73 )

Total	21	$	75,359	$	( 211 )	4	$	10,037	$	( 3,004 )	25	$	85,396	$	( 3,215 )

The Company evaluates its investment portfolio for impairment related to credit losses 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. 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 security is impaired and written down to fair value with all losses recognized in earnings.

The Company does not intend to sell any securities in an unrealized loss position that it holds, 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 longer than twelve months, the Company is collecting principal and interest payments from the respective issuers as scheduled. As a result, no allowance for credit losses for securities was needed at June 30, 2021.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 3 – Non Purchased Loans

(In Thousands, Except Number of Loans)

For purposes of this Note 3, all references to “loans” mean non purchased loans excluding loans held for sale.

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


	June 30, 2021		December 31, 2020
Commercial, financial, agricultural (1)	$	1,509,908	$	2,360,471
Lease financing	78,028		80,022
Real estate – construction:
Residential	274,599		243,814
Commercial	764,014		583,338
Total real estate – construction	1,038,613		827,152
Real estate – 1-4 family mortgage:
Primary	1,623,987		1,536,181
Home equity	426,845		432,768
Rental/investment	271,397		264,436
Land development	113,345		123,179
Total real estate – 1-4 family mortgage	2,435,574		2,356,564
Real estate – commercial mortgage:
Owner-occupied	1,373,150		1,334,765
Non-owner occupied	2,249,112		2,194,739
Land development	101,047		120,125
Total real estate – commercial mortgage	3,723,309		3,649,629
Installment loans to individuals	111,137		149,862
Gross loans	8,896,569		9,423,700
Unearned income	( 4,025 )		( 4,160 )
Loans, net of unearned income	$	8,892,544	$	9,419,540

(1) Includes Paycheck Protection Program (“PPP”) loans of $ 246,931 and $ 1,128,703 as of June 30, 2021 and December 31, 2020, respectively.

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 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.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following tables provide an aging of past due accruing and nonaccruing 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, 2021
Commercial, financial, agricultural	$	2,909	$	113	$	1,501,970	$	1,504,992	$	10	$	1,512	$	3,394	$	4,916	$	1,509,908
Lease financing	20		—		78,008		78,028		—		—		—		—		78,028
Real estate – construction:
Residential	—		—		274,599		274,599		—		—		—		—		274,599
Commercial	—		—		764,014		764,014		—		—		—		—		764,014
Total real estate – construction	—		—		1,038,613		1,038,613		—		—		—		—		1,038,613
Real estate – 1-4 family mortgage:
Primary	3,345		505		1,610,000		1,613,850		1,414		3,545		5,178		10,137		1,623,987
Home equity	975		—		425,225		426,200		30		446		169		645		426,845
Rental/investment	723		138		269,930		270,791		—		103		503		606		271,397
Land development	39		—		113,117		113,156		—		104		85		189		113,345
Total real estate – 1-4 family mortgage	5,082		643		2,418,272		2,423,997		1,444		4,198		5,935		11,577		2,435,574
Real estate – commercial mortgage:
Owner-occupied	2,342		—		1,368,353		1,370,695		477		706		1,272		2,455		1,373,150
Non-owner occupied	82		2		2,241,403		2,241,487		—		2,002		5,623		7,625		2,249,112
Land development	89		42		100,717		100,848		—		159		40		199		101,047
Total real estate – commercial mortgage	2,513		44		3,710,473		3,713,030		477		2,867		6,935		10,279		3,723,309
Installment loans to individuals	769		—		110,039		110,808		10		168		151		329		111,137
Unearned income	—		—		( 4,025 )		( 4,025 )		—		—		—		—		( 4,025 )
Loans, net of unearned income	$	11,293	$	800	$	8,853,350	$	8,865,443	$	1,941	$	8,745	$	16,415	$	27,101	$	8,892,544

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	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
December 31, 2020
Commercial, financial, agricultural	$	1,124	$	231	$	2,354,716	$	2,356,071	$	164	$	1,804	$	2,432	$	4,400	$	2,360,471
Lease financing	—		—		79,974		79,974		—		48		—		48		80,022
Real estate – construction:
Residential	—		—		243,317		243,317		—		497		—		497		243,814
Commercial	—		—		583,338		583,338		—		—		—		—		583,338
Total real estate – construction	—		—		826,655		826,655		—		497		—		497		827,152
Real estate – 1-4 family mortgage:
Primary	11,889		1,754		1,513,716		1,527,359		1,865		2,744		4,213		8,822		1,536,181
Home equity	1,152		360		430,702		432,214		66		111		377		554		432,768
Rental/investment	663		210		263,064		263,937		61		194		244		499		264,436
Land development	97		—		123,051		123,148		—		—		31		31		123,179
Total real estate – 1-4 family mortgage	13,801		2,324		2,330,533		2,346,658		1,992		3,049		4,865		9,906		2,356,564
Real estate – commercial mortgage:
Owner-occupied	779		795		1,330,155		1,331,729		—		2,598		438		3,036		1,334,765
Non-owner occupied	922		127		2,191,440		2,192,489		—		2,197		53		2,250		2,194,739
Land development	113		115		119,820		120,048		44		29		4		77		120,125
Total real estate – commercial mortgage	1,814		1,037		3,641,415		3,644,266		44		4,824		495		5,363		3,649,629
Installment loans to individuals	896		191		148,620		149,707		4		117		34		155		149,862
Unearned income	—		—		( 4,160 )		( 4,160 )		—		—		—		—		( 4,160 )
Loans, net of unearned income	$	17,635	$	3,783	$	9,377,753	$	9,399,171	$	2,204	$	10,339	$	7,826	$	20,369	$	9,419,540

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 were no restructured loans contractually 90 days past due or more and still accruing at June 30, 2021 and three restructured loans in the amount of $ 352 contractually 90 days past due or more and still accruing at June 30, 2020. The outstanding balance of restructured loans on nonaccrual status was $ 11,241 and $ 2,306 at June 30, 2021 and June 30, 2020, respectively.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Restructured Loans

Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and which are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest.

The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end.



	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Three months ended June 30, 2021
Commercial, financial, agricultural	6	$	5,228	$	5,228





Real estate – 1-4 family mortgage:
Primary	9	1,371		1,377










Total	15	$	6,599	$	6,605

Three months ended June 30, 2020
Commercial, financial, agricultural	4	$	933	$	930





Real estate – 1-4 family mortgage:
Primary	12	1,709		1,714

Rental/investment	1	109		110

Total real estate – 1-4 family mortgage	13	1,818		1,824
Real estate – commercial mortgage:
Owner-occupied	1	2,663		2,613
Non-owner occupied	1	189		189

Total real estate – commercial mortgage	2	2,852		2,802
Installment loans to individuals	2	24		21
Total	21	$	5,627	$	5,577

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)



	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Six months ended June 30, 2021
Commercial, financial, agricultural	6	$	5,228	$	5,228





Real estate – 1-4 family mortgage:
Primary	12	1,803		1,812




Real estate – commercial mortgage:

Non-owner occupied	1	837		810



Total	19	$	7,868	$	7,850

Six months ended June 30, 2020
Commercial, financial, agricultural	6	$	1,831	$	1,828





Real estate – 1-4 family mortgage:
Primary	15	2,155		2,163

Rental/investment	1	109		110

Total real estate – 1-4 family mortgage	16	2,264		2,273
Real estate – commercial mortgage:
Owner-occupied	1	2,663		2,613
Non-owner occupied	1	189		189

Total real estate – commercial mortgage	2	2,852		2,802
Installment loans to individuals	2	24		21
Total	26	$	6,971	$	6,924

With respect to loans that were restructured during the six months ended June 30, 2021, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the six months ended June 30, 2020, $ 84 have subsequently defaulted, and remain outstanding, as of the date of this report.

Changes in the Company’s restructured loans are set forth in the table below:


	Number of Loans	Recorded Investment
Totals at January 1, 2021	76	$	11,761
Additional advances or loans with concessions	19	7,865
Reclassified as performing restructured loan	1	35
Reductions due to:
Reclassified as nonperforming	( 1 )	( 179 )
Paid in full	( 5 )	( 428 )


Principal paydowns	—	( 216 )

Totals at June 30, 2021	90	$	18,838

The allowance for credit losses attributable to restructured loans was $ 612 and $ 299 at June 30, 2021 and June 30, 2020, respectively. The Company had $ 305 in remaining availability under commitments to lend additional funds on these restructured loans at June 30, 2021. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at June 30, 2020.

In response to the economic environment caused by the COVID-19 pandemic, the Company implemented a loan deferral program in the second quarter of 2020 to provide temporary payment relief to both consumer and commercial customers. Any

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

customer current on loan payments, taxes and insurance qualified for an initial 90 -day deferral of principal and interest payments. A second 90 -day deferral was available to borrowers that remained current on taxes and insurance through the first deferral period and also satisfied underwriting standards established by the Company that analyzed the ability of the borrower to service its loan in accordance with its existing terms in light of the impact of the COVID-19 pandemic on the borrower, its industry and the markets in which it operated. The Company’s loan deferral program complied with the guidance set forth in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and related guidance from the FDIC and other banking regulators. As of June 30, 2021, the Company has discontinued its deferral program but 108 loans with total balances of approximately $ 18,300 remained on deferral. In accordance with the applicable guidance, none of these loans are considered “restructured loans.”

Credit Quality

For loans with a commercial purpose, internal risk-rating grades are assigned by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the portfolio balances of commercial and commercial real estate secured loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans within the “Pass” grade (reserved for loans with a risk rating between 1 and 4C) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. The “Special Mention” grade (those with a risk rating of 4E) represents a loan where a significant adverse risk-modifying action is anticipated in the near term and, left uncorrected, could result in deterioration of the credit quality of the loan. Loans that migrate toward the “Substandard” grade (those with a risk rating between 5 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to those related loan balances.

The following tables present the Company’s loan portfolio by year of origination and internal risk-rating grades as of the dates presented:


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
June 30, 2021
Commercial, Financial, Agricultural	$	161,337	$	521,228	$	171,979	$	61,489	$	30,000	$	17,698	$	441,033	$	2,941	$	1,407,705
Pass	160,584		520,874		168,388		58,126		24,990		15,221		439,248		2,137		1,389,568
Special Mention	—		115		2,527		298		673		1,410		252		—		5,275
Substandard	753		239		1,064		3,065		4,337		1,067		1,533		804		12,862






Real Estate - Construction	$	221,640	$	407,728	$	293,244	$	29,050	$	149	$	—	$	6,907	$	5,803	$	964,521
Residential	$	130,319	$	58,469	$	2,093	$	—	$	—	$	—	$	6,907	$	5,803	$	203,591
Pass	130,319		57,922		2,093		—		—		—		6,907		5,803		203,044
Special Mention	—		547		—		—		—		—		—		—		547
Substandard	—		—		—		—		—		—		—		—		—

Commercial	$	91,321	$	349,259	$	291,151	$	29,050	$	149	$	—	$	—	$	—	$	760,930
Pass	91,321		349,259		286,471		29,050		149		—		—		—		756,250
Special Mention	—		—		4,680		—		—		—		—		—		4,680
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	83,874	$	82,347	$	57,180	$	22,817	$	19,601	$	12,129	$	13,870	$	538	$	292,356
Primary	$	6,270	$	7,639	$	4,917	$	3,754	$	3,913	$	972	$	4,930	$	—	$	32,395
Pass	6,270		7,639		4,131		3,754		3,913		960		4,930		—		31,597
Special Mention	—		—		120		—		—		—		—		—		120
Substandard	—		—		666		—		—		12		—		—		678

Home Equity	$	1,171	$	200	$	—	$	—	$	—	$	—	$	3,676	$	—	$	5,047
Pass	1,171		200		—		—		—		—		3,676		—		5,047
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Rental/Investment	$	46,639	$	48,640	$	24,234	$	18,526	$	15,448	$	10,668	$	985	$	538	$	165,678

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Pass	46,619		48,541		23,172		18,394		15,324		10,326		985		538		163,899
Special Mention	—		—		—		—		—		74		—		—		74
Substandard	20		99		1,062		132		124		268		—		—		1,705

Land Development	$	29,794	$	25,868	$	28,029	$	537	$	240	$	489	$	4,279	$	—	$	89,236
Pass	29,794		23,192		27,922		537		240		489		4,279		—		86,453
Special Mention	—		2,676		—		—		—		—		—		—		2,676
Substandard	—		—		107		—		—		—		—		—		107

Real Estate - Commercial Mortgage	$	401,283	$	910,479	$	734,366	$	398,252	$	344,733	$	502,800	$	99,932	$	21,054	$	3,412,899
Owner-Occupied	$	145,768	$	297,847	$	226,086	$	165,077	$	143,037	$	155,885	$	33,928	$	9,132	$	1,176,760
Pass	144,957		295,064		224,524		160,888		136,955		146,755		33,562		7,395		1,150,100
Special Mention	—		2,205		832		—		1,877		5,568		351		1,737		12,570
Substandard	811		578		730		4,189		4,205		3,562		15		—		14,090

Non-Owner Occupied	$	241,893	$	591,175	$	493,814	$	227,568	$	198,930	$	343,230	$	60,008	$	11,922	$	2,168,540
Pass	240,138		582,245		484,917		214,227		154,425		311,334		60,008		11,922		2,059,216
Special Mention	1,545		8,930		246		13,341		38,928		16,081		—		—		79,071
Substandard	210		—		8,651		—		5,577		15,815		—		—		30,253

Land Development	$	13,622	$	21,457	$	14,466	$	5,607	$	2,766	$	3,685	$	5,996	$	—	$	67,599
Pass	13,577		19,325		14,466		5,607		2,707		3,674		5,996		—		65,352
Special Mention	45		—		—		—		59		—		—		—		104
Substandard	—		2,132		—		—		—		11		—		—		2,143

Installment loans to individuals	$	—	$	6	$	2	$	—	$	—	$	—	$	—	$	—	$	8
Pass	—		6		2		—		—		—		—		—		8
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Total loans subject to risk rating	$	868,134	$	1,921,788	$	1,256,771	$	511,608	$	394,483	$	532,627	$	561,742	$	30,336	$	6,077,489
Pass	864,750		1,904,267		1,236,086		490,583		338,703		488,759		559,591		27,795		5,910,534
Special Mention	1,590		14,473		8,405		13,639		41,537		23,133		603		1,737		105,117
Substandard	1,794		3,048		12,280		7,386		14,243		20,735		1,548		804		61,838


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2020
Commercial, Financial, Agricultural	$	1,448,273	$	183,627	$	76,912	$	36,866	$	18,124	$	15,844	$	255,522	$	2,449	$	2,037,617
Pass	1,447,594		180,979		73,325		31,362		16,308		14,626		250,528		1,562		2,016,284
Special Mention	128		1,952		2,091		3,850		1,416		109		187		—		9,733
Substandard	551		696		1,496		1,654		400		1,109		4,807		887		11,600






Real Estate - Construction	$	398,891	$	266,471	$	52,520	$	29,300	$	—	$	—	$	13,927	$	—	$	761,109
Residential	$	154,649	$	9,836	$	2,114	$	—	$	—	$	—	$	13,923	$	—	$	180,522
Pass	154,419		9,339		2,114		—		—		—		13,923		—		179,795
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	230		497		—		—		—		—		—		—		727

Commercial	$	244,242	$	256,635	$	50,406	$	29,300	$	—	$	—	$	4	$	—	$	580,587
Pass	244,242		251,937		50,406		29,300		—		—		4		—		575,889

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Special Mention	—		4,698		—		—		—		—		—		—		4,698
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	110,246	$	78,482	$	36,613	$	30,018	$	13,197	$	7,172	$	10,658	$	1,909	$	288,295
Primary	$	9,422	$	6,691	$	3,988	$	4,644	$	371	$	1,060	$	629	$	—	$	26,805
Pass	9,422		5,870		3,988		4,644		371		1,045		629		—		25,969
Special Mention	—		125		—		—		—		—		—		—		125
Substandard	—		696		—		—		—		15		—		—		711

Home Equity	$	157	$	184	$	—	$	—	$	—	$	—	$	6,051	$	—	$	6,392
Pass	157		184		—		—		—		—		6,051		—		6,392
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Rental/Investment	$	50,558	$	32,656	$	27,483	$	25,019	$	12,620	$	5,699	$	1,066	$	557	$	155,658
Pass	50,371		31,724		26,695		24,872		12,439		5,166		1,066		557		152,890
Special Mention	—		—		—		83		77		133		—		—		293
Substandard	187		932		788		64		104		400		—		—		2,475

Land Development	$	50,109	$	38,951	$	5,142	$	355	$	206	$	413	$	2,912	$	1,352	$	99,440
Pass	50,109		38,388		5,142		355		203		413		2,912		1,352		98,874
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		563		—		—		3		—		—		—		566

Real Estate - Commercial Mortgage	$	967,746	$	801,083	$	444,205	$	402,110	$	340,774	$	277,789	$	76,115	$	20,845	$	3,330,667
Owner-Occupied	$	295,642	$	256,807	$	199,082	$	169,527	$	99,540	$	85,614	$	16,683	$	9,733	$	1,132,628
Pass	293,851		255,206		193,716		163,358		96,128		83,582		16,043		7,896		1,109,780
Special Mention	1,167		847		—		2,067		228		311		—		1,837		6,457
Substandard	624		754		5,366		4,102		3,184		1,721		640		—		16,391

Non-Owner Occupied	$	635,232	$	522,998	$	237,075	$	229,304	$	236,347	$	189,077	$	52,456	$	11,112	$	2,113,601
Pass	624,289		514,030		237,075		184,673		218,106		175,702		52,456		11,112		2,017,443
Special Mention	9,105		—		—		39,007		4,688		10,788		—		—		63,588
Substandard	1,838		8,968		—		5,624		13,553		2,587		—		—		32,570

Land Development	$	36,872	$	21,278	$	8,048	$	3,279	$	4,887	$	3,098	$	6,976	$	—	$	84,438
Pass	34,719		21,278		6,925		3,210		3,274		3,098		6,976		—		79,480
Special Mention	—		—		1,123		69		46		—		—		—		1,238
Substandard	2,153		—		—		—		1,567		—		—		—		3,720

Installment loans to individuals	$	74	$	4	$	—	$	—	$	—	$	—	$	—	$	16	$	94
Pass	74		4		—		—		—		—		—		16		94
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Total loans subject to risk rating	$	2,925,230	$	1,329,667	$	610,250	$	498,294	$	372,095	$	300,805	$	356,222	$	25,219	$	6,417,782
Pass	2,909,247		1,308,939		599,386		441,774		346,829		283,632		350,588		22,495		6,262,890
Special Mention	10,400		7,622		3,214		45,076		6,455		11,341		187		1,837		86,132
Substandard	5,583		13,106		7,650		11,444		18,811		5,832		5,447		887		68,760

The following tables present the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
June 30, 2021
Commercial, Financial, Agricultural	$	15,099	$	16,477	$	11,460	$	7,023	$	4,389	$	11,052	$	36,398	$	305	$	102,203
Performing Loans	15,099		16,477		11,313		6,915		4,174		10,969		36,151		305		101,403
Non-Performing Loans	—		—		147		108		215		83		247		—		800

Lease Financing Receivables	$	14,387	$	25,526	$	19,722	$	9,276	$	3,046	$	2,046	$	—	$	—	$	74,003
Performing Loans	14,387		25,526		19,722		9,276		3,046		2,046		—		—		74,003
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - Construction	$	20,974	$	50,321	$	2,777	$	—	$	20	$	—	$	—	$	—	$	74,092
Residential	$	19,370	$	49,080	$	2,538	$	—	$	20	$	—	$	—	$	—	$	71,008
Performing Loans	19,370		49,080		2,538		—		20		—		—		—		71,008
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Commercial	$	1,604	$	1,241	$	239	$	—	$	—	$	—	$	—	$	—	$	3,084
Performing Loans	1,604		1,241		239		—		—		—		—		—		3,084
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	295,117	$	508,702	$	274,815	$	210,531	$	159,432	$	268,946	$	422,623	$	3,052	$	2,143,218
Primary	$	267,460	$	468,784	$	257,747	$	192,337	$	143,698	$	259,743	$	1,823	$	—	$	1,591,592
Performing Loans	267,460		468,317		255,346		188,569		142,013		257,432		1,812		—		1,580,949
Non-Performing Loans	—		467		2,401		3,768		1,685		2,311		11		—		10,643

Home Equity	$	342	$	—	$	124	$	364	$	—	$	614	$	417,798	$	2,556	$	421,798
Performing Loans	342		—		124		364		—		538		417,373		2,411		421,152
Non-Performing Loans	—		—		—		—		—		76		425		145		646

Rental/Investment	$	19,972	$	29,786	$	15,217	$	15,178	$	14,417	$	7,991	$	2,662	$	496	$	105,719
Performing Loans	19,834		29,786		15,143		15,178		14,340		7,826		2,662		496		105,265
Non-Performing Loans	138		—		74		—		77		165		—		—		454

Land Development	$	7,343	$	10,132	$	1,727	$	2,652	$	1,317	$	598	$	340	$	—	$	24,109
Performing Loans	7,343		10,132		1,727		2,650		1,234		494		340		—		23,920
Non-Performing Loans	—		—		—		2		83		104		—		—		189

Real Estate - Commercial Mortgage	$	49,654	$	73,344	$	61,707	$	45,145	$	38,791	$	31,790	$	9,536	$	443	$	310,410
Owner-Occupied	$	28,626	$	45,009	$	39,590	$	29,545	$	26,029	$	22,529	$	4,762	$	300	$	196,390
Performing Loans	28,626		45,009		39,113		29,545		25,871		22,225		4,762		300		195,451
Non-Performing Loans	—		—		477		—		158		304		—		—		939

Non-Owner Occupied	$	14,585	$	17,891	$	16,379	$	11,892	$	10,548	$	6,853	$	2,281	$	143	$	80,572
Performing Loans	14,585		17,891		16,379		11,892		10,548		6,806		2,281		143		80,525
Non-Performing Loans	—		—		—		—		—		47		—		—		47

Land Development	$	6,443	$	10,444	$	5,738	$	3,708	$	2,214	$	2,408	$	2,493	$	—	$	33,448
Performing Loans	6,443		10,439		5,738		3,666		2,214		2,264		2,493		—		33,257
Non-Performing Loans	—		5		—		42		—		144		—		—		191

Installment loans to individuals	$	23,111	$	31,025	$	31,744	$	10,187	$	2,875	$	2,372	$	9,770	$	45	$	111,129
Performing Loans	23,055		30,940		31,661		10,162		2,857		2,330		9,770		25		110,800
Non-Performing Loans	56		85		83		25		18		42		—		20		329

Total loans not subject to risk rating	$	418,342	$	705,395	$	402,225	$	282,162	$	208,553	$	316,206	$	478,327	$	3,845	$	2,815,055
Performing Loans	418,148		704,838		399,043		278,217		206,317		312,930		477,644		3,680		2,800,817
Non-Performing Loans	194		557		3,182		3,945		2,236		3,276		683		165		14,238

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2020
Commercial, Financial, Agricultural	$	33,805	$	16,455	$	10,381	$	6,396	$	2,826	$	7,201	$	245,485	$	305	$	322,854
Performing Loans	33,794		16,343		10,340		6,026		2,748		7,181		245,059		305		321,796
Non-Performing Loans	11		112		41		370		78		20		426		—		1,058

Lease Financing Receivables	$	32,150	$	25,270	$	10,999	$	4,231	$	1,040	$	2,172	$	—	$	—	$	75,862
Performing Loans	32,150		25,270		10,999		4,231		992		2,172		—		—		75,814
Non-Performing Loans	—		—		—		—		48		—		—		—		48

Real Estate - Construction	$	54,918	$	10,334	$	295	$	153	$	—	$	—	$	343	$	—	$	66,043
Residential	$	53,108	$	9,393	$	295	$	153	$	—	$	—	$	343	$	—	$	63,292
Performing Loans	53,108		9,393		295		153		—		—		343		—		63,292
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Commercial	$	1,810	$	941	$	—	$	—	$	—	$	—	$	—	$	—	$	2,751
Performing Loans	1,810		941		—		—		—		—		—		—		2,751
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	517,553	$	344,643	$	261,735	$	196,777	$	105,216	$	212,214	$	426,437	$	3,694	$	2,068,269
Primary	$	470,034	$	321,155	$	239,542	$	176,926	$	92,195	$	207,721	$	1,758	$	45	$	1,509,376
Performing Loans	470,034		318,929		235,816		175,219		91,479		205,530		1,747		45		1,498,799
Non-Performing Loans	—		2,226		3,726		1,707		716		2,191		11		—		10,577

Home Equity	$	—	$	203	$	372	$	—	$	45	$	799	$	421,838	$	3,119	$	426,376
Performing Loans	—		203		372		—		45		684		421,516		2,642		425,462
Non-Performing Loans	—		—		—		—		—		115		322		477		914

Rental/Investment	$	34,079	$	20,499	$	18,319	$	17,758	$	11,907	$	3,356	$	2,330	$	530	$	108,778
Performing Loans	34,079		20,404		18,245		17,595		11,901		3,196		2,330		530		108,280
Non-Performing Loans	—		95		74		163		6		160		—		—		498

Land Development	$	13,440	$	2,786	$	3,502	$	2,093	$	1,069	$	338	$	511	$	—	$	23,739
Performing Loans	13,440		2,786		3,502		2,062		1,069		338		511		—		23,708
Non-Performing Loans	—		—		—		31		—		—		—		—		31

Real Estate - Commercial Mortgage	$	81,953	$	71,063	$	56,193	$	47,013	$	35,801	$	15,679	$	10,772	$	488	$	318,962
Owner-Occupied	$	48,814	$	44,606	$	36,661	$	30,266	$	23,974	$	11,608	$	5,919	$	289	$	202,137
Performing Loans	48,814		44,344		36,349		30,097		23,885		11,216		5,904		289		200,898
Non-Performing Loans	—		262		312		169		89		392		15		—		1,239

Non-Owner Occupied	$	20,483	$	18,585	$	14,544	$	13,821	$	8,068	$	3,491	$	1,999	$	147	$	81,138
Performing Loans	20,483		18,460		14,486		13,821		8,068		3,439		1,999		147		80,903
Non-Performing Loans	—		125		58		—		—		52		—		—		235

Land Development	$	12,656	$	7,872	$	4,988	$	2,926	$	3,759	$	580	$	2,854	$	52	$	35,687
Performing Loans	12,656		7,872		4,988		2,922		3,759		466		2,854		52		35,569
Non-Performing Loans	—		—		—		4		—		114		—		—		118

Installment loans to individuals	$	60,133	$	57,198	$	13,704	$	4,019	$	2,459	$	1,535	$	10,661	$	59	$	149,768
Performing Loans	60,081		57,119		13,611		3,986		2,407		1,535		10,661		21		149,421
Non-Performing Loans	52		79		93		33		52		—		—		38		347

Total loans not subject to risk rating	$	780,512	$	524,963	$	353,307	$	258,589	$	147,342	$	238,801	$	693,698	$	4,546	$	3,001,758
Performing Loans	780,449		522,064		349,003		256,112		146,353		235,757		692,924		4,031		2,986,693
Non-Performing Loans	63		2,899		4,304		2,477		989		3,044		774		515		15,065

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 4 – Purchased Loans

(In Thousands, Except Number of Loans)

For purposes of this Note 4, all references to “loans” mean purchased loans excluding loans held for sale.

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


	June 30, 2021		December 31, 2020
Commercial, financial, agricultural	$	124,725	$	176,513

Real estate – construction:
Residential	2,564		2,859
Commercial	10,182		28,093
Total real estate – construction	12,746		30,952
Real estate – 1-4 family mortgage:
Primary	166,535		214,770
Home equity	63,088		80,392
Rental/investment	25,944		31,928
Land development	10,950		14,654
Total real estate – 1-4 family mortgage	266,517		341,744
Real estate – commercial mortgage:
Owner-occupied	290,041		323,041
Non-owner occupied	492,917		552,728
Land development	23,902		29,454
Total real estate – commercial mortgage	806,860		905,223
Installment loans to individuals	45,850		59,675


Loans	$	1,256,698	$	1,514,107

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Past Due and Nonaccrual Loans

The Company’s policies with respect to placing loans on nonaccrual status or charging off loans, and its accounting for interest on any such loans, are described above in Note 3, “Non Purchased Loans.”

The following tables provide an aging of past due accruing and nonaccruing 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, 2021
Commercial, financial, agricultural	$	376	$	—	$	113,802	$	114,178	$	1,293	$	1,698	$	7,556	$	10,547	$	124,725

Real estate – construction:
Residential	46		—		2,518		2,564		—		—		—		—		2,564
Commercial	—		—		10,182		10,182		—		—		—		—		10,182
Total real estate – construction	46		—		12,700		12,746		—		—		—		—		12,746
Real estate – 1-4 family mortgage:
Primary	1,530		37		160,292		161,859		625		1,958		2,093		4,676		166,535
Home equity	555		—		61,140		61,695		36		680		677		1,393		63,088
Rental/investment	104		—		25,730		25,834		41		56		13		110		25,944
Land development	100		—		10,838		10,938		—		—		12		12		10,950
Total real estate – 1-4 family mortgage	2,289		37		258,000		260,326		702		2,694		2,795		6,191		266,517
Real estate – commercial mortgage:
Owner-occupied	60		—		287,642		287,702		89		654		1,596		2,339		290,041
Non-owner occupied	—		845		484,120		484,965		—		—		7,952		7,952		492,917
Land development	86		55		23,481		23,622		—		138		142		280		23,902
Total real estate – commercial mortgage	146		900		795,243		796,289		89		792		9,690		10,571		806,860
Installment loans to individuals	926		8		44,535		45,469		12		148		221		381		45,850

Loans, net of unearned income	$	3,783	$	945	$	1,224,280	$	1,229,008	$	2,096	$	5,332	$	20,262	$	27,690	$	1,256,698

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	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
December 31, 2020
Commercial, financial, agricultural	$	818	$	101	$	163,658	$	164,577	$	74	$	2,024	$	9,838	$	11,936	$	176,513

Real estate – construction:
Residential	—		—		2,859		2,859		—		—		—		—		2,859
Commercial	—		—		28,093		28,093		—		—		—		—		28,093
Total real estate – construction	—		—		30,952		30,952		—		—		—		—		30,952
Real estate – 1-4 family mortgage:
Primary	2,394		74		206,635		209,103		687		2,799		2,181		5,667		214,770
Home equity	294		43		78,739		79,076		4		674		638		1,316		80,392
Rental/investment	180		14		30,931		31,125		—		724		79		803		31,928
Land development	109		—		14,231		14,340		—		—		314		314		14,654
Total real estate – 1-4 family mortgage	2,977		131		330,536		333,644		691		4,197		3,212		8,100		341,744
Real estate – commercial mortgage:
Owner-occupied	2,511		—		317,997		320,508		193		447		1,893		2,533		323,041
Non-owner occupied	207		—		544,694		544,901		7,682		—		145		7,827		552,728
Land development	112		—		28,962		29,074		—		164		216		380		29,454
Total real estate – commercial mortgage	2,830		—		891,653		894,483		7,875		611		2,254		10,740		905,223
Installment loans to individuals	2,026		35		57,339		59,400		31		136		108		275		59,675

Loans, net of unearned income	$	8,651	$	267	$	1,474,138	$	1,483,056	$	8,671	$	6,968	$	15,412	$	31,051	$	1,514,107

There was one restructured loan in the aggregate amount of $ 37 contractually 90 days past due or more and still accruing at June 30, 2021 and three restructured loans in the aggregate amount of $ 207 contractually 90 days past due or more and still accruing at June 30, 2020. The outstanding balance of restructured loans on nonaccrual status was $ 18,279 and $ 7,851 at June 30, 2021 and June 30, 2020, respectively.

Restructured Loans

An explanation of what constitutes a “restructured loan,” and management’s analysis in determining whether to restructure a loan, are described above in Note 3, “Non Purchased Loans.”

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)



	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Three months ended June 30, 2021






Real estate – 1-4 family mortgage:
Primary	1	862		862











Three months ended June 30, 2020
Commercial, financial, agricultural	1	$	1,029	$	1,031





Real estate – 1-4 family mortgage:
Primary	1	$	66	$	68
Home equity	1	159		162


Total real estate – 1-4 family mortgage	2	225		230
Real estate – commercial mortgage:
Owner-occupied	1	69		69
Non-owner occupied	1	542		544

Total real estate – commercial mortgage	2	611		613
Installment loans to individuals	1	25		19
Total	6	$	1,890	$	1,893



	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Six months ended June 30, 2021
Commercial, financial, agricultural	1	$	135	$	135





Real estate – 1-4 family mortgage:
Primary	1	862		862










Total	2	$	997	$	997
Six months ended June 30, 2020
Commercial, financial, agricultural	1	$	1,029	$	1,031





Real estate – 1-4 family mortgage:
Primary	2	290		183
Home equity	1	159		162


Total real estate – 1-4 family mortgage	3	449		345
Real estate – commercial mortgage:
Owner-occupied	1	69		69
Non-owner occupied	1	542		544

Total real estate – commercial mortgage	2	611		613
Installment loans to individuals	1	25		19
Total	7	$	2,114	$	2,008

With respect to loans that were restructured during the six months ended June 30, 2021 and June 30, 2020, none have subsequently defaulted and remain outstanding as of the date of this report.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Changes in the Company’s restructured loans are set forth in the table below:


	Number of Loans	Recorded Investment
Totals at January 1, 2021	48	$	8,687
Additional advances or loans with concessions	2	1,236

Reductions due to:
Reclassified to nonperforming loans	( 3 )	( 2,470 )
Paid in full	( 4 )	( 1,222 )
Charge-offs	( 1 )	( 205 )


Principal paydowns	—	( 154 )

Totals at June 30, 2021	42	$	5,872

The allowance for credit losses attributable to restructured loans was $ 127 and $ 302 at June 30, 2021 and June 30, 2020, respectively. The Company had $ 1 and $ 242 in remaining availability under commitments to lend additional funds on these restructured loans at June 30, 2021 and June 30, 2020, respectively.

As discussed in Note 3, “Non Purchased Loans,” the Company implemented a loan deferral program in response to the COVID-19 pandemic. As of June 30, 2021, the Company had 33 loans with total balances of approximately $ 2,300 remaining on deferral. Under the applicable guidance, none of these loans were considered “restructured loans.”

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Credit Quality

A discussion of the Company’s policies regarding internal risk-rating of loans is discussed above in Note 3, “Non Purchased Loans.” The following tables present the Company’s loan portfolio by year of origination and internal risk-rating grades as of the dates presented:


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
June 30, 2021
Commercial, Financial, Agricultural	$	—	$	—	$	679	$	18,481	$	16,855	$	30,643	$	47,497	$	1,879	$	116,034
Pass	—		—		679		16,261		11,563		23,206		42,942		412		95,063
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		2,220		5,292		7,437		4,555		1,467		20,971






Real Estate - Construction	$	—	$	—	$	—	$	1,005	$	452	$	10,867	$	—	$	—	$	12,324
Residential	$	—	$	—	$	—	$	1,005	$	452	$	685	$	—	$	—	$	2,142
Pass	—		—		—		1,005		452		685		—		—		2,142
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Commercial	$	—	$	—	$	—	$	—	$	—	$	10,182	$	—	$	—	$	10,182
Pass	—		—		—		—		—		10,182		—		—		10,182
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	—	$	—	$	—	$	11,373	$	4,555	$	30,598	$	888	$	226	$	47,640
Primary	$	—	$	—	$	—	$	4,239	$	2,600	$	13,586	$	—	$	—	$	20,425
Pass	—		—		—		4,239		2,514		9,567		—		—		16,320
Special Mention	—		—		—		—		—		1,014		—		—		1,014
Substandard	—		—		—		—		86		3,005		—		—		3,091

Home Equity	$	—	$	—	$	—	$	—	$	—	$	—	$	651	$	226	$	877
Pass	—		—		—		—		—		—		162		—		162
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		489		226		715

Rental/Investment	$	—	$	—	$	—	$	—	$	1,841	$	14,415	$	237	$	—	$	16,493
Pass	—		—		—		—		1,841		13,564		87		—		15,492
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		851		150		—		1,001

Land Development	$	—	$	—	$	—	$	7,134	$	114	$	2,597	$	—	$	—	$	9,845
Pass	—		—		—		7,134		87		1,184		—		—		8,405
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		27		1,413		—		—		1,440

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Real Estate - Commercial Mortgage	$	—	$	—	$	—	$	57,113	$	159,064	$	528,632	$	9,749	$	14,559	$	769,117
Owner-Occupied	$	—	$	—	$	—	$	14,682	$	33,181	$	217,414	$	3,174	$	2	$	268,453
Pass	—		—		—		14,682		29,288		193,496		3,166		—		240,632
Special Mention	—		—		—		—		1,582		1,971		—		—		3,553
Substandard	—		—		—		—		2,311		21,947		8		2		24,268

Non-Owner Occupied	$	—	$	—	$	—	$	40,506	$	122,120	$	297,530	$	6,380	$	14,557	$	481,093
Pass	—		—		—		24,133		114,441		254,147		6,380		—		399,101
Special Mention	—		—		—		—		—		10,570		—		—		10,570
Substandard	—		—		—		16,373		7,679		32,813		—		14,557		71,422

Land Development	$	—	$	—	$	—	$	1,925	$	3,763	$	13,688	$	195	$	—	$	19,571
Pass	—		—		—		1,925		3,763		7,522		195		—		13,405
Special Mention	—		—		—		—		—		5,253		—		—		5,253
Substandard	—		—		—		—		—		913		—		—		913

Installment loans to individuals	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Pass	—		—		—		—		—		—		—		—		—
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Total loans subject to risk rating	$	—	$	—	$	679	$	87,972	$	180,926	$	600,740	$	58,134	$	16,664	$	945,115
Pass	—		—		679		69,379		163,949		513,553		52,932		412		800,904
Special Mention	—		—		—		—		1,582		18,808		—		—		20,390
Substandard	—		—		—		18,593		15,395		68,379		5,202		16,252		123,821


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2020
Commercial, Financial, Agricultural	$	—	$	711	$	28,242	$	27,222	$	22,377	$	20,759	$	64,563	$	1,788	$	165,662
Pass	—		711		24,211		20,930		17,240		16,880		56,736		409		137,117
Special Mention	—		—		357		97		104		—		—		—		558
Substandard	—		—		3,674		6,195		5,033		3,879		7,827		1,379		27,987






Real Estate - Construction	$	—	$	—	$	10,522	$	9,228	$	10,781	$	—	$	—	$	—	$	30,531
Residential	$	—	$	—	$	1,543	$	211	$	684	$	—	$	—	$	—	$	2,438
Pass	—		—		1,543		211		684		—		—		—		2,438
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Commercial	$	—	$	—	$	8,979	$	9,017	$	10,097	$	—	$	—	$	—	$	28,093
Pass	—		—		8,979		9,017		10,097		—		—		—		28,093
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Real Estate - 1-4 Family Mortgage	$	—	$	—	$	14,022	$	7,126	$	1,112	$	38,747	$	957	$	253	$	62,217
Primary	$	—	$	—	$	6,873	$	3,212	$	595	$	17,223	$	249	$	—	$	28,152
Pass	—		—		5,556		3,212		594		12,665		249		—		22,276
Special Mention	—		—		—		—		—		1,120		—		—		1,120
Substandard	—		—		1,317		—		1		3,438		—		—		4,756

Home Equity	$	—	$	—	$	—	$	—	$	—	$	—	$	697	$	253	$	950
Pass	—		—		—		—		—		—		59		—		59
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		638		253		891

Rental/Investment	$	—	$	—	$	—	$	1,883	$	232	$	18,275	$	9	$	—	$	20,399
Pass	—		—		—		1,883		232		16,139		9		—		18,263
Special Mention	—		—		—		—		—		44		—		—		44
Substandard	—		—		—		—		—		2,092		—		—		2,092

Land Development	$	—	$	—	$	7,149	$	2,031	$	285	$	3,249	$	2	$	—	$	12,716
Pass	—		—		7,149		2,009		285		1,793		2		—		11,238
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		22		—		1,456		—		—		1,478

Real Estate - Commercial Mortgage	$	—	$	—	$	76,557	$	153,960	$	171,487	$	435,073	$	22,631	$	4,688	$	864,396
Owner-Occupied	$	—	$	—	$	15,001	$	32,567	$	61,568	$	181,007	$	9,723	$	2	$	299,868
Pass	—		—		15,001		29,276		43,962		161,790		5,808		—		255,837
Special Mention	—		—		—		—		9,670		—		—		—		9,670
Substandard	—		—		—		3,291		7,936		19,217		3,915		2		34,361

Non-Owner Occupied	$	—	$	—	$	55,962	$	117,592	$	107,004	$	242,249	$	12,720	$	4,686	$	540,213
Pass	—		—		37,002		109,910		83,738		221,423		6,431		—		458,504
Special Mention	—		—		2,591		—		5,302		2,622		—		—		10,515
Substandard	—		—		16,369		7,682		17,964		18,204		6,289		4,686		71,194

Land Development	$	—	$	—	$	5,594	$	3,801	$	2,915	$	11,817	$	188	$	—	$	24,315
Pass	—		—		5,594		3,801		2,780		4,962		188		—		17,325
Special Mention	—		—		—		—		—		5,438		—		—		5,438
Substandard	—		—		—		—		135		1,417		—		—		1,552

Installment loans to individuals	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Pass	—		—		—		—		—		—		—		—		—
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Total loans subject to risk rating	$	—	$	711	$	129,343	$	197,536	$	205,757	$	494,579	$	88,151	$	6,729	$	1,122,806
Pass	—		711		105,035		180,249		159,612		435,652		69,482		409		951,150
Special Mention	—		—		2,948		97		15,076		9,224		—		—		27,345
Substandard	—		—		21,360		17,190		31,069		49,703		18,669		6,320		144,311

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following tables present the performing status of the Company’s loan portfolio not subject to risk rating by origination date:


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
June 30, 2021
Commercial, Financial, Agricultural	$	—	$	—	$	—	$	383	$	337	$	2,727	$	5,021	$	223	$	8,691
Performing Loans	—		—		—		383		337		2,727		5,001		223		8,671
Non-Performing Loans	—		—		—		—		—		—		20		—		20





Real Estate - Construction	$	—	$	—	$	—	$	422	$	—	$	—	$	—	$	—	$	422
Residential	$	—	$	—	$	—	$	422	$	—	$	—	$	—	$	—	$	422
Performing Loans	—		—		—		422		—		—		—		—		422
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Commercial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	—	$	—	$	363	$	2,233	$	26,840	$	131,914	$	55,416	$	2,111	$	218,877
Primary	$	—	$	—	$	243	$	1,684	$	24,349	$	119,577	$	166	$	91	$	146,110
Performing Loans	—		—		243		1,574		23,741		115,772		166		22		141,518
Non-Performing Loans	—		—		—		110		608		3,805		—		69		4,592

Home Equity	$	—	$	—	$	—	$	549	$	2,295	$	2,109	$	55,238	$	2,020	$	62,211
Performing Loans	—		—		—		549		2,295		2,031		54,552		1,618		61,045
Non-Performing Loans	—		—		—		—		—		78		686		402		1,166

Rental/Investment	$	—	$	—	$	120	$	—	$	124	$	9,195	$	12	$	—	$	9,451
Performing Loans	—		—		120		—		124		9,112		12		—		9,368
Non-Performing Loans	—		—		—		—		—		83		—		—		83

Land Development	$	—	$	—	$	—	$	—	$	72	$	1,033	$	—	$	—	$	1,105
Performing Loans	—		—		—		—		72		1,033		—		—		1,105
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - Commercial Mortgage	$	—	$	—	$	331	$	1,199	$	1,112	$	33,778	$	1,323	$	—	$	37,743
Owner-Occupied	$	—	$	—	$	—	$	644	$	589	$	19,562	$	793	$	—	$	21,588
Performing Loans	—		—		—		644		589		19,301		793		—		21,327
Non-Performing Loans	—		—		—		—		—		261		—		—		261

Non-Owner Occupied	$	—	$	—	$	331	$	404	$	138	$	10,536	$	415	$	—	$	11,824
Performing Loans	—		—		331		404		—		10,409		415		—		11,559
Non-Performing Loans	—		—		—		—		138		127		—		—		265

Land Development	$	—	$	—	$	—	$	151	$	385	$	3,680	$	115	$	—	$	4,331
Performing Loans	—		—		—		151		385		3,625		115		—		4,276
Non-Performing Loans	—		—		—		—		—		55		—		—		55

Installment loans to individuals	$	—	$	—	$	—	$	26,952	$	12,424	$	4,625	$	1,785	$	64	$	45,850
Performing Loans	—		—		—		26,908		12,370		4,367		1,785		32		45,462
Non-Performing Loans	—		—		—		44		54		258		—		32		388

Total loans not subject to risk rating	$	—	$	—	$	694	$	31,189	$	40,713	$	173,044	$	63,545	$	2,398	$	311,583
Performing Loans	—		—		694		31,035		39,913		168,377		62,839		1,895		304,753
Non-Performing Loans	—		—		—		154		800		4,667		706		503		6,830

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2020
Commercial, Financial, Agricultural	$	—	$	—	$	445	$	349	$	303	$	2,899	$	6,809	$	46	$	10,851
Performing Loans	—		—		445		349		303		2,899		6,784		46		10,826
Non-Performing Loans	—		—		—		—		—		—		25		—		25





Real Estate - Construction	$	—	$	—	$	421	$	—	$	—	$	—	$	—	$	—	$	421
Residential	$	—	$	—	$	421	$	—	$	—	$	—	$	—	$	—	$	421
Performing Loans	—		—		421		—		—		—		—		—		421
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Commercial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	—	$	371	$	3,082	$	33,674	$	28,169	$	140,689	$	70,870	$	2,672	$	279,527
Primary	$	—	$	248	$	1,953	$	30,078	$	25,956	$	127,642	$	630	$	111	$	186,618
Performing Loans	—		248		1,842		29,321		25,935		122,970		630		25		180,971
Non-Performing Loans	—		—		111		757		21		4,672		—		86		5,647

Home Equity	$	—	$	—	$	742	$	3,324	$	1,668	$	1,027	$	70,120	$	2,561	$	79,442
Performing Loans	—		—		742		3,324		1,668		960		69,518		2,124		78,336
Non-Performing Loans	—		—		—		—		—		67		602		437		1,106

Rental/Investment	$	—	$	123	$	—	$	200	$	193	$	10,893	$	120	$	—	$	11,529
Performing Loans	—		123		—		200		193		10,800		120		—		11,436
Non-Performing Loans	—		—		—		—		—		93		—		—		93

Land Development	$	—	$	—	$	387	$	72	$	352	$	1,127	$	—	$	—	$	1,938
Performing Loans	—		—		387		30		117		1,127		—		—		1,661
Non-Performing Loans	—		—		—		42		235		—		—		—		277

Real Estate - Commercial Mortgage	$	—	$	337	$	597	$	1,063	$	982	$	35,946	$	1,902	$	—	$	40,827
Owner-Occupied	$	—	$	—	$	—	$	625	$	660	$	20,531	$	1,357	$	—	$	23,173
Performing Loans	—		—		—		625		660		20,253		1,357		—		22,895
Non-Performing Loans	—		—		—		—		—		278		—		—		278

Non-Owner Occupied	$	—	$	337	$	443	$	49	$	66	$	11,467	$	153	$	—	$	12,515
Performing Loans	—		337		443		49		66		11,331		153		—		12,379
Non-Performing Loans	—		—		—		—		—		136		—		—		136

Land Development	$	—	$	—	$	154	$	389	$	256	$	3,948	$	392	$	—	$	5,139
Performing Loans	—		—		154		389		256		3,890		392		—		5,081
Non-Performing Loans	—		—		—		—		—		58		—		—		58

Installment loans to individuals	$	—	$	—	$	34,976	$	15,497	$	1,118	$	4,348	$	3,676	$	60	$	59,675
Performing Loans	—		—		34,942		15,405		1,051		4,262		3,676		29		59,365
Non-Performing Loans	—		—		34		92		67		86		—		31		310

Total loans not subject to risk rating	$	—	$	708	$	39,521	$	50,583	$	30,572	$	183,882	$	83,257	$	2,778	$	391,301
Performing Loans	—		708		39,376		49,692		30,249		178,492		82,630		2,224		383,371
Non-Performing Loans	—		—		145		891		323		5,390		627		554		7,930

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 5 – Allowance for Credit Losses

(In Thousands)

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


	June 30, 2021		December 31, 2020
Commercial, financial, agricultural	$	1,634,633	$	2,536,984
Lease financing	78,028		80,022
Real estate – construction:
Residential	277,163		246,673
Commercial	774,196		611,431
Total real estate – construction	1,051,359		858,104
Real estate – 1-4 family mortgage:
Primary	1,790,522		1,750,951
Home equity	489,933		513,160
Rental/investment	297,341		296,364
Land development	124,295		137,833
Total real estate – 1-4 family mortgage	2,702,091		2,698,308
Real estate – commercial mortgage:
Owner-occupied	1,663,191		1,657,806
Non-owner occupied	2,742,029		2,747,467
Land development	124,949		149,579
Total real estate – commercial mortgage	4,530,169		4,554,852
Installment loans to individuals	156,987		209,537
Gross loans	10,153,267		10,937,807
Unearned income	( 4,025 )		( 4,160 )
Loans, net of unearned income	10,149,242		10,933,647
Allowance for credit losses on loans	( 172,354 )		( 176,144 )
Net loans	$	9,976,888	$	10,757,503

Allowance for Credit Losses on Loans

The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the entire loan portfolio. Management evaluates the adequacy of the allowance for credit losses on a quarterly basis. Expected credit loss inherent in non-cancellable off-balance-sheet credit exposures is accounted for as a separate liability in the Consolidated Balance Sheets. The allowance for credit losses on loans held for investment, as reported in the Company’s Consolidated Balance Sheets, is adjusted by a provision for credit losses, which is reported in earnings, and reduced by net charge-offs. Loan losses are charged against the allowance for credit losses when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. For more information about the Company’s policies and procedures for determining the amount of the allowance for credit losses, please refer to the discussion in Note 1, “Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The Company has made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses in the Company’s loan portfolio. As of June 30, 2021 and December 31, 2020, the Company had accrued interest receivable for loans of $ 48,774 and $ 56,459 , respectively, which is recorded in the “Other assets” line item on the Consolidated Balance Sheets. Although the Company made the election to exclude accrued interest from the measurement of the allowance for credit losses, the Company did have an allowance for credit losses on interest deferred as part of the loan deferral program of $ 1,367 and $ 1,500 , respectively, as of June 30, 2021 and December 31, 2020. The decrease in the balance during the first half of 2021 is due to the charge-off of deferred interest balances.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following tables provide a roll-forward of the allowance for credit losses by loan category and a breakdown of the ending balance of the allowance based on the Company’s credit loss methodology for the periods presented:



	Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Lease Financing		Installment Loans to Individuals		Total
Three Months Ended June 30, 2021
Allowance for credit losses:
Beginning balance	$	37,592	$	14,977	$	31,694	$	76,225	$	1,546	$	11,072	$	173,106

Charge-offs	( 1,184 )		—		( 152 )		( 171 )		—		( 1,347 )		( 2,854 )
Recoveries	233		—		401		143		14		1,311		2,102
Net (charge-offs) recoveries	( 951 )		—		249		( 28 )		14		( 36 )		( 752 )
Provision for credit losses on loans	353		752		( 640 )		( 1,304 )		( 49 )		888		—
Ending balance	$	36,994	$	15,729	$	31,303	$	74,893	$	1,511	$	11,924	$	172,354
Six Months Ended June 30, 2021
Allowance for credit losses:
Beginning balance	$	39,031	$	16,047	$	32,165	$	76,127	$	1,624	$	11,150	$	176,144

Charge-offs	( 4,682 )		( 52 )		( 253 )		( 232 )		—		( 3,005 )		( 8,224 )
Recoveries	522		13		662		314		25		2,898		4,434
Net (charge-offs) recoveries	( 4,160 )		( 39 )		409		82		25		( 107 )		( 3,790 )
Provision for credit losses on loans	2,123		( 279 )		( 1,271 )		( 1,316 )		( 138 )		881		—
Ending balance	$	36,994	$	15,729	$	31,303	$	74,893	$	1,511	$	11,924	$	172,354
Period-End Amount Allocated to:
Individually evaluated	$	9,121	$	—	$	228	$	4,207	$	—	$	612	$	14,168
Collectively evaluated	27,873		15,729		31,075		70,686		1,511		11,312		158,186
Ending balance	$	36,994	$	15,729	$	31,303	$	74,893	$	1,511	$	11,924	$	172,354
Loans:
Individually evaluated	$	14,409	$	—	$	5,017	$	20,810	$	—	$	636	$	40,872
Collectively evaluated	1,620,224		1,051,359		2,697,074		4,509,359		74,003		156,351		10,108,370
Ending balance	$	1,634,633	$	1,051,359	$	2,702,091	$	4,530,169	$	74,003	$	156,987	$	10,149,242

Nonaccruing loans with no allowance for credit losses	$	2,826	$	—	$	2,841	$	4,953	$	—	$	10	$	10,630

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)



	Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Lease Financing		Installment Loans to Individuals		Total

Three Months Ended June 30, 2020
Allowance for credit losses:
Beginning balance	$	25,937	$	10,924	$	27,320	$	44,237	$	1,588	$	10,179	$	120,185

Charge-offs	( 1,156 )		( 532 )		( 142 )		—		—		( 1,736 )		( 3,566 )
Recoveries	108		—		48		41		5		1,666		1,868
Net (charge-offs) recoveries	( 1,048 )		( 532 )		( 94 )		41		5		( 70 )		( 1,698 )
Provision for credit losses on loans	5,796		2,146		2,175		15,783		219		781		26,900
Ending balance	$	30,685	$	12,538	$	29,401	$	60,061	$	1,812	$	10,890	$	145,387
Six Months Ended June 30, 2020
Allowance for credit losses:
Beginning balance	$	10,658	$	5,029	$	9,814	$	24,990	$	910	$	761	$	52,162
Impact of the adoption of ASC 326	11,351		3,505		14,314		4,293		521		8,500		42,484
Charge-offs	( 1,549 )		( 532 )		( 363 )		( 2,047 )		—		( 4,424 )		( 8,915 )
Recoveries	298		—		136		1,740		10		4,222		6,406
Net (charge-offs) recoveries	( 1,251 )		( 532 )		( 227 )		( 307 )		10		( 202 )		( 2,509 )
Provision for credit losses on loans	9,927		4,536		5,500		31,085		371		1,831		53,250
Ending balance	$	30,685	$	12,538	$	29,401	$	60,061	$	1,812	$	10,890	$	145,387
Period-End Amount Allocated to:
Individually evaluated	$	3,882	$	—	$	378	$	550	$	—	$	270	$	5,080
Collectively evaluated	26,803		12,538		29,023		59,511		1,812		10,620		140,307
Ending balance	$	30,685	$	12,538	$	29,401	$	60,061	$	1,812	$	10,890	$	145,387
Loans:
Individually evaluated	$	9,736	$	—	$	5,142	$	7,883	$	—	$	626	$	23,387
Collectively evaluated	2,631,862		791,108		2,783,371		4,402,870		80,779		283,927		10,973,917
Ending balance	$	2,641,598	$	791,108	$	2,788,513	$	4,410,753	$	80,779	$	284,553	$	10,997,304

Nonaccruing loans with no allowance for credit losses	$	720	$	—	$	2,503	$	3,910	$	—	$	2	$	7,135

The Company did no t record a provision for credit losses during the second quarter or first half of 2021, as compared to a provision for credit losses on loans of $ 26,900 in the second quarter of 2020 and $ 53,250 in the first half of 2020. The Company’s allowance for credit loss model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years . Based on the continual improvements in these forecasts over the last few quarters, the Company determined that additional provisioning during the second quarter of 2021 was not necessary.

Allowance for Credit Losses on Unfunded Loan Commitments

The Company maintains a separate allowance for credit losses on unfunded loan commitments, which is included in the “Other liabilities” line item on the Consolidated Balance Sheets. For more information about the Company’s policies and procedures for determining the amount of the allowance for credit losses on unfunded loan commitments, please refer to the discussion in

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 1, “Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The following tables provide a roll-forward of the allowance for credit losses on unfunded loan commitments for the periods presented.



Three Months Ended June 30,	2021		2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,535	$	14,735

Provision for credit losses on unfunded loan commitments (included in other noninterest expense)	—		2,600
Ending balance	$	20,535	$	17,335








Six Months Ended June 30,	2021		2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,535	$	946
Impact of the adoption of ASC 326	—		10,389
Provision for credit losses on unfunded loan commitments (included in other noninterest expense)	—		6,000
Ending balance	$	20,535	$	17,335

Note 6 – Other Real Estate Owned

(In Thousands)

The following table provides details of the Company’s other real estate owned (“OREO”) purchased and non purchased, net of

valuation allowances and direct write-downs, as of the dates presented:


	Purchased OREO		Non Purchased OREO		Total OREO
June 30, 2021
Residential real estate	$	197	$	64	$	261
Commercial real estate	1,048		1,548		2,596
Residential land development	337		4		341
Commercial land development	1,682		59		1,741

Total	$	3,264	$	1,675	$	4,939
December 31, 2020
Residential real estate	$	72	$	107	$	179
Commercial real estate	1,741		924		2,665
Residential land development	337		676		1,013
Commercial land development	1,777		338		2,115

Total	$	3,927	$	2,045	$	5,972

Changes in the Company’s purchased and non purchased OREO were as follows:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Purchased OREO		Non Purchased OREO		Total OREO
Balance at January 1, 2021	$	3,927	$	2,045	$	5,972


Transfers of loans	967		1,536		2,503

Impairments	( 47 )		( 70 )		( 117 )
Dispositions	( 1,492 )		( 1,836 )		( 3,328 )
Other	( 91 )		—		( 91 )
Balance at June 30, 2021	$	3,264	$	1,675	$	4,939

At June 30, 2021 and December 31, 2020, the amortized cost of loans secured by Real Estate - 1-4 Family Mortgage in the process of foreclosure was $ 58 and $ 1,308 , respectively.

Components of the line item “Other real estate owned” in the Consolidated Statements of Income were as follows for the periods presented:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Repairs and maintenance	$	22	$	85	$	42	$	170
Property taxes and insurance	37		16		48		149
Impairments	47		630		117		827
Net losses (gains) on OREO sales	6		( 101 )		( 50 )		( 89 )
Rental income	( 8 )		( 10 )		( 12 )		( 19 )
Total	$	104	$	620	$	145	$	1,038

Note 7 – Goodwill and Other Intangible Assets

(In Thousands)

The carrying amounts of goodwill by operating segments for the six months ended June 30, 2021 were as follows:


	Community Banks		Insurance		Total
Balance at January 1, 2021	$	936,916	$	2,767	$	939,683
Additions to goodwill and other adjustments	—		—		—
Balance at June 30, 2021	$	936,916	$	2,767	$	939,683

The following table provides a summary of finite-lived intangible assets as of the dates presented:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2021
Core deposit intangibles	$	82,492	$	( 56,584 )	$	25,908
Customer relationship intangible	2,470		( 1,375 )		1,095
Total finite-lived intangible assets	$	84,962	$	( 57,959 )	$	27,003
December 31, 2020
Core deposit intangibles	$	82,492	$	( 53,539 )	$	28,953
Customer relationship intangible	2,470		( 1,284 )		1,186
Total finite-lived intangible assets	$	84,962	$	( 54,823 )	$	30,139

Current year amortization expense for finite-lived intangible assets is presented in the table below.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Amortization expense for:
Core deposit intangibles	$	1,494	$	1,789	$	3,046	$	3,639
Customer relationship intangible	45		45		91		90
Total intangible amortization	$	1,539	$	1,834	$	3,137	$	3,729

The estimated amortization expense of finite-lived intangible assets for the year ending December 31, 2021 and the succeeding four years is summarized as follows:


	Core Deposit Intangibles		Customer Relationship Intangible		Total

2021	$	5,860	$	181	$	6,041
2022	4,940		181		5,121
2023	4,044		181		4,225
2024	3,498		181		3,679
2025	3,103		181		3,284

Note 8 – Mortgage Servicing Rights

(In Thousands)

The Company retains the right to service certain mortgage loans that it sells to secondary market investors. These mortgage servicing rights (“MSRs”) are recognized as a separate asset on the date the corresponding mortgage loan is sold. MSRs are amortized in proportion to and over the period of estimated net servicing income. These servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions, including expected cash flows, prepayment speeds, market discount rates, servicing costs, and other factors, and is subject to significant fluctuation as a result of actual prepayment speeds, default rates and losses differing from estimates thereof. For example, a decline in mortgage interest rates or an increase in actual prepayment speeds may cause negative adjustments to the valuation of the Company’s MSRs.

Servicing rights are evaluated for impairment (or reversals of prior impairments) quarterly based upon the fair value of the rights as compared to the carrying amount. Impairment is recognized through a valuation allowance in the amount that unamortized cost exceeds fair value. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the valuation allowance may be recorded as an increase to income. Changes in valuation allowances related to servicing rights are reported in “Mortgage banking income” on the Consolidated Statements of Income.

There was a positive valuation adjustment of $ 13,561 during the six months ended June 30, 2021 on MSRs. This positive adjustment primarily arose from an increase in mortgage interest rates and a corresponding decrease in actual prepayment speeds. During the six months ended June 30, 2020 there was a negative valuation adjustment of $ 14,522 which was caused by a difference between actual prepayment speeds and the Company’s assumptions with respect to prepayment speeds.

Changes in the Company’s MSRs were as follows:


Balance at January 1, 2021	$	62,994

Capitalization	19,922
Amortization	( 11,565 )
Valuation adjustment	13,561
Balance at June 30, 2021	$	84,912

Data and key economic assumptions related to the Company’s MSRs are as follows as of the dates presented:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	June 30, 2021			December 31, 2020
Unpaid principal balance	$	8,364,217		$	7,322,671

Weighted-average prepayment speed (CPR)	12.07		%	15.05		%
Estimated impact of a 10% increase	$	( 4,177 )		$	( 4,001 )
Estimated impact of a 20% increase	( 8,080 )			( 7,674 )

Discount rate	9.81		%	9.86		%
Estimated impact of a 10% increase	$	( 3,212 )		$	( 2,144 )
Estimated impact of a 20% increase	( 6,198 )			( 4,144 )

Weighted-average coupon interest rate	3.38		%	3.58		%
Weighted-average servicing fee (basis points)	30.28			29.94
Weighted-average remaining maturity (in years)	6.09			5.14

The Company recorded servicing fees of $ 4,616 and $ 2,990 for the three months ended June 30, 2021 and 2020, respectively, and servicing fees of $ 8,687 and $ 5,612 for the six months ended June 30, 2021 and 2020, respectively, all of which are included in “Mortgage banking income” in the Consolidated Statements of Income.

Note 9 - 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, and it provides retiree medical benefits, consisting of the opportunity to purchase coverage at subsidized rates under the Company’s group medical plan.

Information related to the defined benefit pension plan maintained by Renasant Bank (“Pension Benefits”) and to the post-retirement health and life plan (“Other Benefits”) as of the dates presented is as follows:



	Pension Benefits				Other Benefits
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2021		2020			2021		2020
Service cost	$	—	$	—		$	1	$	1
Interest cost	175		250			3		2
Expected return on plan assets	( 441 )		( 413 )			—		—

Recognized actuarial loss (gain)	78		96			( 2 )		( 27 )

Net periodic (return) benefit cost	$	( 188 )	$	( 67 )		$	2	$	( 24 )



	Pension Benefits				Other Benefits
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020			2021		2020
Service cost	$	—	$	—		$	2	$	3
Interest cost	341		492			7		7
Expected return on plan assets	( 884 )		( 826 )			—		—

Recognized actuarial loss (gain)	132		175			( 2 )		( 45 )

Net periodic (return) benefit cost	$	( 411 )	$	( 159 )		$	7	$	( 35 )

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Incentive Compensation Plans

The Company maintains a long-term equity compensation plan that provides for the grant of stock options and the award of restricted stock. There were no stock options granted, nor compensation expense associated with options recorded, during the six months ended June 30, 2021 or 2020.

The following table summarizes information about options outstanding, exercised and forfeited as of and for the six months ended June 30, 2021:


	Shares	Weighted Average Exercise Price
Options outstanding at beginning of period	10,500	$	14.96
Granted	—	—
Exercised	( 5,000 )	14.96
Forfeited	—	—
Options outstanding at end of period	5,500	$	14.96

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.

The following table summarizes the changes in restricted stock as of and for the six months ended June 30, 2021:


	Performance-Based Restricted Stock	Weighted Average Grant-Date Fair Value		Time-Based Restricted Stock	Weighted Average Grant-Date Fair Value
Nonvested at beginning of period	132,827	$	32.88	548,416	$	34.15
Awarded	78,230	34.02		250,483	37.24
Vested	—	—		( 126,121 )	37.20
Cancelled	—	—		( 53,007 )	37.67
Nonvested at end of period	211,057	$	33.30	619,771	$	34.48

During the six months ended June 30, 2021, the Company reissued 126,147 shares from treasury in connection with the exercise of stock options and awards of restricted stock. The Company recorded total stock-based compensation expense of $ 2,385 and $ 2,998 for the three months ended June 30, 2021 and 2020, respectively and $ 5,141 and $ 5,748 for the six months ended June 30, 2021 and 2020, respectively.

Note 10 – Derivative Instruments

(In Thousands)

The Company uses certain derivative instruments to meet the needs of customers as well as to manage the interest rate risk associated with certain transactions.

Non-hedge derivatives

The Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into an offsetting derivative contract position. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures.

The Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate residential mortgage loans. The Company also enters into forward commitments to sell residential mortgage loans to secondary market investors.

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following table provides a summary of the Company’s derivatives not designated as hedging instruments as of the dates presented:


	Balance Sheet	June 30, 2021				December 31, 2020
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivative assets:
Interest rate contracts	Other Assets	$	204,113	$	6,450	$	222,933	$	9,884
Interest rate lock commitments	Other Assets	517,860		10,448		589,701		19,824
Forward commitments	Other Assets	73,000		68		—		—
Totals		$	794,973	$	16,966	$	812,634	$	29,708
Derivative liabilities:
Interest rate contracts	Other Liabilities	$	204,113	$	6,450	$	222,933	$	9,884
Interest rate lock commitments	Other Liabilities	10,908		28		—		—
Forward commitments	Other Liabilities	723,000		1,878		716,000		5,090
Totals		$	938,021	$	8,356	$	938,933	$	14,974

Gains and losses included in the Consolidated Statements of Income related to the Company’s derivative financial instruments were as follows as of the dates presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Interest rate contracts:
Included in interest income on loans	$	836	$	523	$	1,206	$	1,259

Interest rate lock commitments:
Included in mortgage banking income	( 1,082 )		2,924		( 9,404 )		24,745
Forward commitments
Included in mortgage banking income	( 15,523 )		11,321		3,280		( 4,149 )
Total	$	( 15,769 )	$	14,768	$	( 4,918 )	$	21,855

Derivatives designated as cash flow hedges

Cash flow hedge relationships mitigate exposure to the variability of future cash flow or other forecasted transactions. The Company uses interest rate swap contracts in an effort to manage future interest rate exposure on borrowings. The hedging strategy converts the LIBOR-based variable interest rate on the forecasted borrowings to a fixed interest rate. As of June 30, 2021, the Company is hedging its exposure to the variability of future cash flows through 2030 and a portion of these hedges are forward starting.

The following table provides a summary of the Company’s derivatives designated as cash flow hedges as of the dates presented:


	Balance Sheet	June 30, 2021				December 31, 2020
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivative assets:
Interest rate swaps	Other Assets	$	200,000	$	10,504	$	175,000	$	3,866

Derivative liabilities:
Interest rate swaps	Other Liabilities	$	62,000	$	4,062	$	87,000	$	5,924

Changes in fair value of the cash flow hedges are, to the extent that the hedging relationship is effective, recorded as other comprehensive income and are subsequently recognized in earnings at the same time that the hedged item is recognized in earnings. The ineffective portions of the changes in fair value of the hedging instruments are immediately recognized in earnings. The assessment of the effectiveness of the hedging relationship is evaluated under the hypothetical derivative method. There were no ineffective portions for the six months ended June 30, 2021 or 2020. The impact on other comprehensive income for the six months ended June 30, 2021 and 2020 is discussed in Note 13, “Other Comprehensive Income (Loss).”

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Derivatives designated as fair value hedges

Fair value hedges protect against changes in the fair value of an asset, liability, or firm commitment. The Company enters into interest rate swap agreements to manage interest rate exposure on certain of the Company’s fixed-rate subordinated notes. The agreements convert the fixed interest rates to LIBOR-based variable interest rates.

The following table provides a summary of the Company's derivatives designated as fair value hedges as of the dates presented:


	Balance Sheet	June 30, 2021				December 31, 2020
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value



Derivative liabilities:
Interest rate swaps	Other Liabilities	$	100,000	$	4,386	$	100,000	$	209

The following table presents the effects of the Company’s fair value hedge relationships on the Consolidated Statements of Income for the periods presented:


		Amount of Gain (Loss) Recognized in Income
	Income Statement	Three Months Ended June 30,				Six Months Ended June 30,
	Location	2021		2020		2021		2020
Derivative liabilities:
Interest rate swaps - subordinated notes	Interest Expense	$	3,264	$	—	$	( 4,177 )	$	—

Derivative liabilities - hedged items:
Interest rate swaps - subordinated notes	Interest Expense	$	( 3,264 )	$	—	$	4,177	$	—

The following table presents the amounts that were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of the dates presented:


	Carrying Amount of the Hedged Liability				Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Liability
Balance Sheet Location	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Long-term debt	$	94,024	$	98,114	$	4,386	$	209

Offsetting

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet when the “right of offset” exists or when the instruments are subject to an enforceable master netting agreement, which includes the right of the non-defaulting party or non-affected party to offset recognized amounts, including collateral posted with the counterparty, to determine a net receivable or net payable upon early termination of the agreement. Certain of the Company’s derivative instruments are subject to master netting agreements; however, the Company has not elected to offset such financial instruments in the Consolidated Balance Sheets. The following table presents the Company’s gross derivative positions as recognized in the Consolidated Balance Sheets as well as the net derivative positions, including collateral pledged to the extent the application of such collateral did not reduce the net derivative liability position below zero, had the Company elected to offset those instruments subject to an enforceable master netting agreement:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Offsetting Derivative Assets				Offsetting Derivative Liabilities
	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Gross amounts recognized	$	10,643	$	3,866	$	16,705	$	21,107
Gross amounts offset in the Consolidated Balance Sheets	—		—		—		—
Net amounts presented in the Consolidated Balance Sheets	10,643		3,866		16,705		21,107
Gross amounts not offset in the Consolidated Balance Sheets
Financial instruments	5,987		3,866		5,987		3,866
Financial collateral pledged	—		—		9,092		14,042
Net amounts	$	4,656	$	—	$	1,626	$	3,199

Note 11 – Income Taxes

(In Thousands)

The following table is a summary of the Company’s temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities and their approximate tax effects as of the dates presented.


	June 30,		December 31,
	2021		2020
Deferred tax assets
Allowance for credit losses	$	53,316	$	53,597
Loans	4,123		5,526
Deferred compensation	12,280		13,114

Investment in partnerships	114		—
Impairment of assets	655		1,067
Net operating loss carryforwards	1,477		1,857

Lease liabilities under operating leases	16,804		17,732
Other	4,043		3,539
Total deferred tax assets	92,812		96,432


Deferred tax liabilities

Net unrealized gains on securities	6,501		8,434
Investment in partnerships	—		793

Fixed assets	1,942		3,285
Mortgage servicing rights	20,211		14,623
Junior subordinated debt	2,200		2,245
Intangibles	3,524		3,882
Lease right-of-use asset	15,907		16,833
Other	903		1,672
Total deferred tax liabilities	51,188		51,767
Net deferred tax assets	$	41,624	$	44,665

For the six months ended June 30, 2021 and 2020, the Company recorded a provision for income taxes totaling $ 24,387 and $ 5,410 , respectively. The provision for income taxes includes both federal and state income taxes and differs from the statutory rate due to favorable permanent differences. During the second quarter of 2021 the Company recognized a one-time state tax credit investment of $ 3,460 which reduced income taxes as a discrete item. The effective tax rate, excluding discrete items, was 22.21 % and 19.64 % for the six months ended June 30, 2021 and 2020, respectively.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The Company and its subsidiaries file a consolidated U.S. federal income tax return. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state departments of revenue for the years ending December 31, 2017 through December 31, 2019.

Note 12 – Fair Value Measurements

(In Thousands)

Fair Value Measurements and the Fair Level Hierarchy

FASB Accounting Standards Codification Topic (“ASC”) 820, “Fair Value Measurements and Disclosures,” provides guidance for using fair value to measure assets and liabilities and also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to a valuation based on quoted prices in active markets for identical assets and liabilities (Level 1), moderate priority to a valuation based on quoted prices in active markets for similar assets and liabilities and/or based on assumptions that are observable in the market (Level 2), and the lowest priority to a valuation based on assumptions that are not observable in the market (Level 3).

Recurring Fair Value Measurements

The Company carries certain assets and liabilities at fair value on a recurring basis in accordance with applicable standards. The Company’s recurring fair value measurements are based on the requirement to carry such assets and liabilities at fair value or the Company’s election to carry certain eligible assets and liabilities at fair value. Assets and liabilities that are required to be carried at fair value on a recurring basis include securities available for sale and derivative instruments. The Company has elected to carry mortgage loans held for sale at fair value on a recurring basis as permitted under the guidance in ASC 825, “Financial Instruments” (“ASC 825”).

The following methods and assumptions are used by the Company to estimate the fair values of the Company’s financial assets and liabilities that are measured on a recurring basis:

Securities available for sale : Securities available for sale consist primarily of debt securities, such as obligations of U.S. Government agencies and corporations, obligations of states and political subdivisions, mortgage-backed securities and trust preferred securities. Where quoted market prices in active markets are available, securities are classified within Level 1 of the fair value hierarchy. If quoted prices from active markets are not available, fair values are based on quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active, or model-based valuation techniques where all significant assumptions are observable in the market. Such instruments are classified within Level 2 of the fair value hierarchy. When assumptions used in model-based valuation techniques are not observable in the market, the assumptions used by management reflect estimates of assumptions used by other market participants in determining fair value. When there is limited transparency around the inputs to the valuation, the instruments are classified within Level 3 of the fair value hierarchy.

Derivative instruments : Most of the Company’s derivative contracts are extensively traded in over-the-counter markets and are valued using discounted cash flow models which incorporate observable market based inputs including current market interest rates, credit spreads, and other factors. Such instruments are categorized within Level 2 of the fair value hierarchy and include interest rate swaps and other interest rate contracts such as interest rate caps and/or floors. The Company’s interest rate lock commitments are valued using current market prices for mortgage-backed securities with similar characteristics, adjusted for certain factors including servicing and risk. The value of the Company’s forward commitments is based on current prices for securities backed by similar types of loans. Because these assumptions are observable in active markets, the Company’s interest rate lock commitments and forward commitments are categorized within Level 2 of the fair value hierarchy.

Mortgage loans held for sale in loans held for sale : Mortgage loans held for sale are primarily agency loans which trade in active secondary markets. The fair value of these instruments is derived from current market pricing for similar loans, adjusted for differences in loan characteristics, including servicing and risk. Because the valuation is based on external pricing of similar instruments, mortgage loans held for sale are classified within Level 2 of the fair value hierarchy.

The following tables present assets and liabilities that are measured at fair value on a recurring basis as of the dates presented:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Level 1		Level 2		Level 3		Totals
June 30, 2021
Financial assets:

Securities available for sale	$	—	$	2,163,820	$	—	$	2,163,820
Derivative instruments	—		27,470		—		27,470
Mortgage loans held for sale in loans held for sale	—		448,959		—		448,959
Total financial assets	$	—	$	2,640,249	$	—	$	2,640,249
Financial liabilities:
Derivative instruments:	$	—	$	16,804	$	—	$	16,804


	Level 1		Level 2		Level 3		Totals
December 31, 2020
Financial assets:
Trust preferred securities	$	—	$	—	$	9,012	$	9,012
Other available for sale securities	—		1,334,445		—		1,334,445
Total securities available for sale	—		1,334,445		9,012		1,343,457
Derivative instruments	—		33,574		—		33,574
Mortgage loans held for sale in loans held for sale	—		417,771		—		417,771
Total financial assets	$	—	$	1,785,790	$	9,012	$	1,794,802
Financial liabilities:
Derivative instruments	$	—	$	21,107	$	—	$	21,107

The Company reviews fair value hierarchy classifications on a quarterly basis. Changes in the Company’s ability to observe inputs to the valuation may cause reclassification of certain assets or liabilities within the fair value hierarchy. Transfers between levels of the hierarchy are deemed to have occurred at the end of period. There were no such transfers between levels of the fair value hierarchy during the six months ended June 30, 2021.

The following tables provide a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs, or Level 3 inputs, as of the dates presented:


	2021		2020
Three Months Ended June 30, 2021	Trust preferred securities		Trust preferred securities
Three Months Ended June 30,
Balance at beginning of period	$	—	$	8,604
Accretion included in net income	—		9
Unrealized losses included in other comprehensive income	—		( 903 )





Settlements	—		( 31 )


Balance at end of period	$	—	$	7,679

Six Months Ended June 30,
Balance at beginning of period	$	9,012	$	9,986
Accretion included in net income	7		18
Unrealized gains (losses) included in other comprehensive income	941		( 2,222 )

Realized losses	2,061		—
Purchases	( 12,021 )		—


Settlements	—		( 103 )


Balance at end of period	$	—	$	7,679

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

For each of the three and six months ended June 30, 2021 and 2020, respectively, there were no gains or losses included in earnings that were attributable to the change in unrealized gains or losses related to assets or liabilities held at the end of each respective period that were measured on a recurring basis using significant unobservable inputs.

Nonrecurring Fair Value Measurements

Certain assets and liabilities may be recorded at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically are a result of the application of the lower of cost or market accounting or a write-down occurring during the period. The following tables provide the fair value measurement for assets measured at fair value on a nonrecurring basis that were still held on the Consolidated Balance Sheets as of the dates presented and the level within the fair value hierarchy each is classified:


June 30, 2021	Level 1		Level 2		Level 3		Totals
Individually evaluated loans, net of allowance for credit losses	$	—	$	—	$	11,150	$	11,150
OREO	—		—		549		549
Mortgage servicing rights	—		—		84,912		84,912
Total	$	—	$	—	$	96,611	$	96,611


December 31, 2020	Level 1		Level 2		Level 3		Totals
Individually evaluated loans, net of allowance for credit losses	$	—	$	—	$	24,145	$	24,145
OREO	—		—		2,736		2,736
Mortgage servicing rights	—		—		62,994		62,994
Total	$	—	$	—	$	89,875	$	89,875

The following methods and assumptions are used by the Company to estimate the fair values of the Company’s financial assets measured on a nonrecurring basis:

Individually evaluated loans: Loans are individually evaluated for credit losses each quarter taking into account the fair value of the collateral less estimated selling costs. Collateral may be real estate and/or business assets including but not limited to equipment, inventory and accounts receivable. The fair value of real estate is determined based on appraisals by qualified licensed appraisers. The fair value of the business assets is generally based on amounts reported on the business’s financial statements. Appraised and reported values may be adjusted based on changes in market conditions from the time of valuation and management’s knowledge of the client and the client’s business. Since not all valuation inputs are observable, these nonrecurring fair value determinations are classified as Level 3. Individually evaluated loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors previously identified. Individually evaluated loans that were measured or re-measured at fair value had a carrying value of $ 16,141 and $ 36,990 at June 30, 2021 and December 31, 2020, respectively, and a specific reserve for these loans of $ 4,991 and $ 12,845 was included in the allowance for credit losses as of such dates.

Other real estate owned : OREO is comprised of commercial and residential real estate obtained in partial or total satisfaction of loan obligations. OREO acquired in settlement of indebtedness is recorded at the fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Fair value, when recorded, is determined based on appraisals by qualified licensed appraisers and adjusted for management’s estimates of costs to sell. Accordingly, values for OREO are classified as Level 3.

The following table presents OREO measured at fair value on a nonrecurring basis that was still held on the Consolidated Balance Sheets as of the dates presented:


	June 30, 2021		December 31, 2020







Carrying amount prior to remeasurement	$	596	$	4,051
Impairment recognized in results of operations	( 47 )		( 1,315 )
Fair value	$	549	$	2,736

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Mortgage servicing rights : Mortgage servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. Because these factors are not all observable and include management’s assumptions, mortgage servicing rights are classified within Level 3 of the fair value hierarchy. Mortgage servicing rights were carried at amortized cost at June 30, 2021 and fair value at December 31, 2020. There were $ 13,561 of positive valuation adjustments on MSRs during the six months ended June 30, 2021 and $ 14,522 of negative valuation adjustments recognized during the six months ended June 30, 2020.

The following table presents information as of June 30, 2021 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:

Financial instrument

Fair
Value

Valuation Technique

Significant
Unobservable Inputs

Range of Inputs

Individually evaluated loans, net of allowance for credit losses

11,150

Appraised value of collateral less estimated costs to sell

Estimated costs to sell

4 - 10 %

OREO

549

Appraised value of property less estimated costs to sell

Estimated costs to sell

4 - 10 %

Fair Value Option

The Company has elected to measure all mortgage loans held for sale at fair value under the fair value option as permitted under ASC 825. Electing to measure these assets at fair value reduces certain timing differences and better matches the changes in fair value of the loans with changes in the fair value of derivative instruments used to economically hedge them.

Net losses of $ 7,520 and net gains of $ 9,617 resulting from fair value changes of these mortgage loans were recorded in income during the six months ended June 30, 2021 and 2020, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both mortgage loans held for sale and the related derivative instruments are recorded in “Mortgage banking income” in the Consolidated Statements of Income.

The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal. Interest income on mortgage loans held for sale measured at fair value is accrued as it is earned based on contractual rates and is reflected in loan interest income on the Consolidated Statements of Income.

The following table summarizes the differences between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of June 30, 2021 and December 31, 2020:


	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
June 30, 2021
Mortgage loans held for sale measured at fair value	$	448,959	$	434,310	$	14,649



December 31, 2020
Mortgage loans held for sale measured at fair value	$	417,771	$	395,602	$	22,169

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments, including those assets and liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows as of the dates presented:

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


			Fair Value
As of June 30, 2021	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	1,605,488	$	1,605,488	$	—	$	—	$	1,605,488

Securities available for sale	2,163,820		—		2,163,820		—		2,163,820
Loans held for sale	448,959		—		448,959		—		448,959
Loans, net	9,976,888		—		—		9,868,318		9,868,318
Mortgage servicing rights	84,912		—		—		87,531		87,531
Derivative instruments	27,470		—		27,470		—		27,470
Financial liabilities
Deposits	$	13,115,351	$	11,582,111	$	1,537,071	$	—	$	13,119,182
Short-term borrowings	14,933		14,933		—		—		14,933

Federal Home Loan Bank advances	150,434		—		155,828		—		155,828
Junior subordinated debentures	111,083		—		100,243		—		100,243
Subordinated notes	207,889		—		219,676		—		219,676
Derivative instruments	16,804		—		16,804		—		16,804


			Fair Value
As of December 31, 2020	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	633,203	$	633,203	$	—	$	—	$	633,203

Securities available for sale	1,343,457		—		1,334,445		9,012		1,343,457
Loans held for sale	417,771		—		417,771		—		417,771
Loans, net	10,757,503		—		—		10,668,625		10,668,625
Mortgage servicing rights	62,994		—		—		62,994		62,994
Derivative instruments	33,574		—		33,574		—		33,574
Financial liabilities
Deposits	$	12,059,081	$	10,363,193	$	1,706,005	$	—	$	12,069,198
Short-term borrowings	21,340		21,340		—		—		21,340

Federal Home Loan Bank advances	152,167		—		158,914		—		158,914
Junior subordinated debentures	110,794		—		93,092		—		93,092
Subordinated notes	212,009		—		217,575		—		217,575
Derivative instruments	21,107		—		21,107		—		21,107

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 13 – Other Comprehensive Income (Loss)

(In Thousands)

Changes in the components of other comprehensive income, net of tax, were as follows for the periods presented:


	Pre-Tax		Tax Expense (Benefit)		Net of Tax
Three months ended June 30, 2021
Securities available for sale:
Unrealized holding gains on securities	$	4,965	$	1,263	$	3,702




Total securities available for sale	4,965		1,263		3,702
Derivative instruments:
Unrealized holding losses on derivative instruments	( 6,234 )		( 1,586 )		( 4,648 )

Total derivative instruments	( 6,234 )		( 1,586 )		( 4,648 )
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	76		19		57
Total defined benefit pension and post-retirement benefit plans	76		19		57
Total other comprehensive loss	$	( 1,193 )	$	( 304 )	$	( 889 )
Three months ended June 30, 2020
Securities available for sale:
Unrealized holding gains on securities	$	3,496	$	893	$	2,603


Reclassification adjustment for gains realized in net income	( 31 )		( 8 )		( 23 )

Total securities available for sale	3,465		885		2,580
Derivative instruments:
Unrealized holding losses on derivative instruments	( 1,064 )		( 271 )		( 793 )

Total derivative instruments	( 1,064 )		( 271 )		( 793 )
Defined benefit pension and post-retirement benefit plans:

Amortization of net actuarial loss recognized in net periodic pension cost	68		17		51
Total defined benefit pension and post-retirement benefit plans	68		17		51
Total other comprehensive income	$	2,469	$	631	$	1,838

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)




	Pre-Tax		Tax Expense (Benefit)		Net of Tax
Six months ended June 30, 2021
Securities available for sale:
Unrealized holding losses on securities	$	( 15,079 )	$	( 3,838 )	$	( 11,241 )

Reclassification adjustment for gains realized in net income	( 1,357 )		( 345 )		( 1,012 )


Total securities available for sale	( 16,436 )		( 4,183 )		( 12,253 )
Derivative instruments:
Unrealized holding gains on derivative instruments	8,500		2,164		6,336

Total derivative instruments	8,500		2,164		6,336
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	130		31		99
Total defined benefit pension and post-retirement benefit plans	130		31		99
Total other comprehensive loss	$	( 7,806 )	$	( 1,988 )	$	( 5,818 )

Six months ended June 30, 2020
Securities available for sale:
Unrealized holding gains on securities	$	25,885	$	6,588	$	19,297


Reclassification adjustment for gains realized in net income	( 31 )		( 8 )		( 23 )

Total securities available for sale	25,854		6,580		19,274
Derivative instruments:
Unrealized holding losses on derivative instruments	( 5,092 )		( 1,296 )		( 3,796 )

Total derivative instruments	( 5,092 )		( 1,296 )		( 3,796 )
Defined benefit pension and post-retirement benefit plans:

Amortization of net actuarial loss recognized in net periodic pension cost	130		33		97
Total defined benefit pension and post-retirement benefit plans	130		33		97
Total other comprehensive income	$	20,892	$	5,317	$	15,575

The accumulated balances for each component of other comprehensive income, net of tax, were as follows as of the dates presented:


	June 30, 2021		December 31, 2020
Unrealized gains on securities	$	18,674	$	42,246
Non-credit related portion of previously recorded other-than-temporary impairment on securities	—		( 11,319 )
Unrealized gains (losses) on derivative instruments	5,698		( 638 )
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations	( 5,122 )		( 5,221 )
Total accumulated other comprehensive income	$	19,250	$	25,068

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 14 – Net Income Per Common Share

(In Thousands, Except Share Data)

Basic net income per common share is calculated by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per common share reflects the pro forma dilution of shares outstanding, assuming outstanding service-based restricted stock awards fully vested and outstanding stock options were exercised into common shares, calculated in accordance with the treasury method. Basic and diluted net income per common share calculations are as follows for the periods presented:


	Three Months Ended
	June 30,
	2021		2020
Basic
Net income applicable to common stock	$	40,867	$	20,130
Average common shares outstanding	56,325,717		56,165,452
Net income per common share - basic	$	0.73	$	0.36
Diluted
Net income applicable to common stock	$	40,867	$	20,130
Average common shares outstanding	56,325,717		56,165,452
Effect of dilutive stock-based compensation	310,181		160,024
Average common shares outstanding - diluted	56,635,898		56,325,476
Net income per common share - diluted	$	0.72	$	0.36



	Six Months Ended
	June 30,
	2021		2020
Basic
Net income applicable to common stock	$	98,775	$	22,138
Average common shares outstanding	56,283,195		56,350,134
Net income per common share - basic	$	1.75	$	0.39
Diluted
Net income applicable to common stock	$	98,775	$	22,138
Average common shares outstanding	56,283,195		56,350,134
Effect of dilutive stock-based compensation	295,385		164,465
Average common shares outstanding - diluted	56,578,580		56,514,599
Net income per common share - diluted	$	1.75	$	0.39

Stock-based compensation awards that could potentially dilute basic net income per common share in the future that were not included in the computation of diluted net income per common share due to their anti-dilutive effect were as follows for the periods presented:


	Three Months Ended
	June 30,
	2021	2020
Number of shares	19,929	264,183
Exercise prices (for stock option awards)	—	—



	Six Months Ended
	June 30,
	2021	2020
Number of shares	19,929	247,093
Exercise prices (for stock option awards)	—	—

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 15 – Regulatory Matters

(In Thousands)

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Federal Reserve, the FDIC and the Office of the Comptroller of the Currency have issued guidelines governing the levels of capital that bank holding companies and banks must maintain. Those guidelines specify capital tiers, which include the following classifications:

Capital Tiers

Tier 1 Capital to
Average Assets
(Leverage)

Common Equity Tier 1 to
Risk - Weighted Assets

Tier 1 Capital to
Risk - Weighted
Assets

Total Capital to
Risk - Weighted
Assets

Well capitalized

5 % or above

6.5 % or above

8 % or above

10 % or above

Adequately capitalized

4 % or above

4.5 % or above

6 % or above

8 % or above

Undercapitalized

Less than 4 %

Less than 4.5 %

Less than 6 %

Less than 8 %

Significantly undercapitalized

Less than 3 %

Less than 4 %

Less than 6 %

Critically undercapitalized

Tangible Equity / Total Assets less than 2 %

The following table provides the capital and risk-based capital and leverage ratios for the Company and for the Bank as of the dates presented:


	June 30, 2021				December 31, 2020
	Amount		Ratio		Amount		Ratio
Renasant Corporation
Tier 1 Capital to Average Assets (Leverage)	$	1,385,657	9.30	%	$	1,306,597	9.37	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	1,278,165		11.14	%	1,199,394		10.93	%
Tier 1 Capital to Risk-Weighted Assets	1,385,657		12.07	%	1,306,597		11.91	%
Total Capital to Risk-Weighted Assets	1,734,376		15.11	%	1,653,694		15.07	%
Renasant Bank
Tier 1 Capital to Average Assets (Leverage)	$	1,444,582	9.70	%	$	1,369,994	9.83	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	1,444,582		12.59	%	1,369,994		12.49	%
Tier 1 Capital to Risk-Weighted Assets	1,444,582		12.59	%	1,369,994		12.49	%
Total Capital to Risk-Weighted Assets	1,581,025		13.78	%	1,504,985		13.73	%

Common equity Tier 1 capital (“CET1”) generally consists of common stock, retained earnings, accumulated other comprehensive income and certain minority interests, less certain adjustments and deductions. In addition, the Company must maintain a “capital conservation buffer,” which is a specified amount of CET1 capital in addition to the amount necessary to meet minimum risk-based capital requirements. The capital conservation buffer is designed to absorb losses during periods of economic stress. If the Company’s ratio of CET1 to risk-weighted capital is below the capital conservation buffer, the Company will face restrictions on its ability to pay dividends, repurchase outstanding stock and make certain discretionary bonus payments. The required capital conservation buffer is 2.5% of CET1 to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. As shown in the tables above, as of June 30, 2021, the Company’s CET1 capital was in excess of the capital conservation buffer.

The Company has elected to take advantage of transitional relief offered by the Federal Reserve and the FDIC to delay for two years the estimated impact of Accounting Standards Codification Topic 326, “Financial Instruments - Credit Losses” (“ASC

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

326”), often referred to as CECL, on regulatory capital, followed by a three-year transitional period to phase out the capital benefit provided by the two-year delay.

Note 16 – Segment Reporting

(In Thousands)

The operations of the Company’s reportable segments are described as follows:

• The Community Banks segment delivers a complete range of banking and financial services to individuals and small to medium-sized businesses including checking and savings accounts, business and personal loans, asset-based lending and equipment leasing, as well as safe deposit and night depository facilities.

• The Insurance segment includes a full service insurance agency offering all major lines of commercial and personal insurance through major carriers.

• The Wealth Management segment, through the Trust division, offers a broad range of fiduciary services including the administration (as trustee or in other fiduciary or representative capacities) of benefit plans, management of trust accounts, inclusive of personal and corporate benefit accounts, and custodial accounts, as well as accounting and money management for trust accounts. In addition, the Wealth Management segment, through the Financial Services division, provides specialized products and services to customers, which include fixed and variable annuities, mutual funds and other investment services through a third party broker-dealer.

In order to give the Company’s divisional management a more precise indication of the income and expenses they can control, the results of operations for the Community Banks, the Insurance and the Wealth Management segments reflect the direct revenues and expenses of each respective segment. Indirect revenues and expenses, including but not limited to income from the Company’s investment portfolio as well as certain costs associated with data processing and back office functions, primarily support the operations of the community banks and, therefore, are included in the results of the Community Banks segment. Included in “Other” are the operations of the holding company and other eliminations which are necessary for purposes of reconciling to the consolidated amounts.

The following tables provide financial information for the Company’s operating segments as of and for the periods presented:

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)



	Community Banks		Insurance		Wealth Management		Other		Consolidated
Three months ended June 30, 2021
Net interest income (loss)	$	112,780	$	111	$	396	$	( 3,708 )	$	109,579
Provision for loan losses	—		—		—		—		—
Noninterest income	40,149		2,475		5,430		( 444 )		47,610
Noninterest expense	102,426		1,987		4,047		317		108,777
Income (loss) before income taxes	50,503		599		1,779		( 4,469 )		48,412
Income tax expense (benefit)	8,547		153		—		( 1,155 )		7,545
Net income (loss)	$	41,956	$	446	$	1,779	$	( 3,314 )	$	40,867

Total assets	$	15,910,027	$	31,978	$	63,656	$	16,725	$	16,022,386
Goodwill	$	936,916	$	2,767	—		—		$	939,683

Three months ended June 30, 2020
Net interest income (loss)	$	108,110	$	111	$	397	$	( 2,836 )	$	105,782
Provision for loan losses	26,861		—		39		—		26,900
Noninterest income	58,115		2,153		4,312		( 410 )		64,170
Noninterest expense	112,776		1,848		3,452		209		118,285
Income (loss) before income taxes	26,588		416		1,218		( 3,455 )		24,767
Income tax expense (benefit)	5,425		111		—		( 899 )		4,637
Net income (loss)	$	21,163	$	305	$	1,218	$	( 2,556 )	$	20,130

Total assets	$	14,775,811	$	29,095	$	68,257	$	24,044	$	14,897,207
Goodwill	$	936,916	$	2,767	—		—		$	939,683


	Community Banks		Insurance		Wealth Management		Other		Consolidated
Six months ended June 30, 2021
Net interest income (loss)	$	225,728	$	218	$	780	$	( 7,499 )	$	219,227
Provision for credit losses	—		—		—		—		—
Noninterest income (loss)	113,219		5,723		10,601		( 896 )		128,647
Noninterest expense	212,012		3,910		8,148		642		224,712
Income (loss) before income taxes	126,935		2,031		3,233		( 9,037 )		123,162
Income tax expense (benefit)	26,203		520		—		( 2,336 )		24,387
Net income (loss)	$	100,732	$	1,511	$	3,233	$	( 6,701 )	$	98,775

Total assets	$	15,910,027	$	31,978	$	63,656	$	16,725	$	16,022,386
Goodwill	$	936,916	$	2,767	$	—	$	—	$	939,683

Six months ended June 30, 2020
Net interest income (loss)	$	216,970	$	298	$	847	$	( 5,731 )	$	212,384
Provision for credit losses	53,073		—		177		—		53,250
Noninterest income (loss)	88,798		5,093		8,656		( 807 )		101,740
Noninterest expense (benefit)	222,060		3,734		7,397		135		233,326
Income (loss) before income taxes	30,635		1,657		1,929		( 6,673 )		27,548
Income tax expense (benefit)	6,705		441		—		( 1,736 )		5,410
Net income (loss)	$	23,930	$	1,216	$	1,929	$	( 4,937 )	$	22,138

Total assets	$	14,775,811	$	29,095	$	68,257	$	24,044	$	14,897,207
Goodwill	$	936,916	$	2,767	$	—	$	—	$	939,683

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In Thousands, Except Share Data)

This Form 10-Q may contain or incorporate by reference statements regarding Renasant Corporation (referred to herein as the “Company”, “we”, “our”, or “us”) that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “projects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “possible,” “may increase,” “may fluctuate,” “will likely result,” and similar expressions, or future or conditional verbs such as “will,” “should,” “would” and “could,” are generally forward-looking in nature and not historical facts. Forward-looking statements include information about the Company’s future financial performance, business strategy, projected plans and objectives and are based on the current beliefs and expectations of management. The Company’s management believes these forward-looking statements are reasonable, but they are all inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and, accordingly, investors should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.

Important factors currently known to management that could cause our actual results to differ materially from those in forward-looking statements include the following: (i) the continued impact of the COVID-19 pandemic and related governmental response measures on the U.S. economy and the economies of the markets in which we operate; (ii) the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management; (iii) the effect of economic conditions and interest rates on a national, regional or international basis; (iv) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (v) competitive pressures in the consumer finance, commercial finance, insurance, financial services, asset management, retail banking, mortgage lending and auto lending industries; (vi) the financial resources of, and products available from, competitors; (vii) changes in laws and regulations as well as changes in accounting standards; (viii) changes in policy by regulatory agencies; (ix) changes in the securities and foreign exchange markets; (x) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (xi) changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers; (xii) an insufficient allowance for credit losses as a result of inaccurate assumptions; (xiii) general economic, market or business conditions, including the impact of inflation; (xiv) changes in demand for loan products and financial services; (xv) concentration of credit exposure; (xvi) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (xvii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (xviii) civil unrest, natural disasters, epidemics and other catastrophic events in the Company’s geographic area; (xix) the impact, extent and timing of technological changes; and (xx) other circumstances, many of which are beyond management’s control. Management believes that the assumptions underlying the Company’s forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate.

The Company undertakes no obligation, and specifically disclaims any obligation, to update or revise forward-looking statements, whether as a result of new information or to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by federal securities laws.

Financial Condition

The following discussion provides details regarding the changes in significant balance sheet accounts at June 30, 2021 compared to December 31, 2020.

Assets

Total assets were $16,022,386 at June 30, 2021 compared to $14,929,612 at December 31, 2020.

Investments

The securities portfolio is a liquid source of interest income that also can be used in collateralizing certain deposits and other types of borrowings. The following table shows the carrying value of our securities portfolio, all of which are classified as

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available for sale, by investment type and the percentage of such investment type relative to the entire securities portfolio as of the dates presented:


	June 30, 2021				December 31, 2020
	Balance		Percentage of Portfolio		Balance		Percentage of Portfolio
U.S. Treasury securities	$	3,037	0.14	%	$	7,079	0.53	%
Obligations of other U.S. Government agencies and corporations	—		—		1,009		0.08
Obligations of states and political subdivisions	325,520		15.04		305,201		22.72
Mortgage-backed securities	1,772,547		81.92		955,549		71.12
Trust preferred securities	—		—		9,012		0.67
Other debt securities	62,716		2.90		65,607		4.88

	$	2,163,820	100.00	%	$	1,343,457	100.00	%

During the six months ended June 30, 2021, we deployed a portion of our excess liquidity into the securities portfolio and purchased $1,190,400 in investment securities. Mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprised approximately 97% of these purchases. CMOs are included in the “Mortgage-backed securities” line item in the above table. The mortgage-backed securities and CMOs held in our investment portfolio are primarily issued by government sponsored entities. Obligations of state and political subdivisions comprised approximately 3% of purchases made during the first six months of 2021.

Proceeds from maturities, calls and principal payments on securities during the first six months of 2021 totaled $195,114. The Company sold municipal securities, residential mortgage backed securities, and trust preferred securities with a carrying value of $154,034 at the time of sale for net proceeds of $155,391, resulting in a net gain on sale of $1,357 during the first six months of 2021. Proceeds from the maturities, calls and principal payments on securities during the first six months of 2020 totaled $183,807. The Company sold municipal securities and residential mortgage backed securities with a carrying value of $8,742 at the time of sale for net proceeds of $8,773, resulting in net gain on sale of $31 during the first six months of 2020.

For more information about the Company’s security portfolio, see Note 2, “Securities,” in the Notes to Consolidated Financial Statements of the Company in Item 1, Financial Statements, in this report.

Loans Held for Sale

Loans held for sale, which consist of residential mortgage loans being held until they are sold in the secondary market, were $448,959 at June 30, 2021, as compared to $417,771 at December 31, 2020. Mortgage loans to be sold are sold either on a “best efforts” basis or under a mandatory delivery sales agreement. Under a “best efforts” sales agreement, residential real estate originations are locked in at a contractual rate with third party private investors or directly with government sponsored agencies, and the Company is obligated to sell the mortgages to such investors only if the mortgages are closed and funded. The risk we assume is conditioned upon loan underwriting and market conditions in the national mortgage market. Under a mandatory delivery sales agreement, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price and delivery date. Penalties are paid to the investor if we fail to satisfy the contract. Gains and losses are realized at the time consideration is received and all other criteria for sales treatment have been met. Our standard practice is to sell the loans within 30-40 days after the loan is funded. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market.

Loans

Total loans, excluding loans held for sale, were $10,149,242 at June 30, 2021 and $10,933,647 at December 31, 2020. Non purchased loans totaled $8,892,544 at June 30, 2021 compared to $9,419,540 at December 31, 2020. Loans purchased in previous acquisitions totaled $1,256,698 and $1,514,107 at June 30, 2021 and December 31, 2020, respectively.

The tables below set forth the balance of loans outstanding, net of unearned income and excluding loans held for sale, by loan type and the percentage of each loan type to total loans as of the dates presented:

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	June 30, 2021
	Non Purchased		Purchased		Total Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)	$	1,509,908	$	124,725	$	1,634,633	16.11	%
Lease financing, net of unearned income	74,003		—		74,003		0.73
Real estate – construction:
Residential	274,599		2,564		277,163		2.73
Commercial	764,014		10,182		774,196		7.63

Total real estate – construction	1,038,613		12,746		1,051,359		10.36
Real estate – 1-4 family mortgage:
Primary	1,623,987		166,535		1,790,522		17.64
Home equity	426,845		63,088		489,933		4.83
Rental/investment	271,397		25,944		297,341		2.93
Land development	113,345		10,950		124,295		1.22
Total real estate – 1-4 family mortgage	2,435,574		266,517		2,702,091		26.62
Real estate – commercial mortgage:
Owner-occupied	1,373,150		290,041		1,663,191		16.39
Non-owner occupied	2,249,112		492,917		2,742,029		27.01
Land development	101,047		23,902		124,949		1.23
Total real estate – commercial mortgage	3,723,309		806,860		4,530,169		44.63
Installment loans to individuals	111,137		45,850		156,987		1.55
Total loans, net of unearned income	$	8,892,544	$	1,256,698	$	10,149,242	100.00	%

(1) Includes Paycheck Protection Program (“PPP”) loans of $246,931 as of June 30, 2021.


	December 31, 2020
	Non Purchased		Purchased		Total Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)	$	2,360,471	$	176,513	$	2,536,984	23.20	%
Lease financing, net of unearned income	75,862		—		75,862		0.69
Real estate – construction:
Residential	243,814		2,859		246,673		2.26
Commercial	583,338		28,093		611,431		5.59
Total real estate – construction	827,152		30,952		858,104		7.85
Real estate – 1-4 family mortgage:
Primary	1,536,181		214,770		1,750,951		16.02
Home equity	432,768		80,392		513,160		4.69
Rental/investment	264,436		31,928		296,364		2.71
Land development	123,179		14,654		137,833		1.26
Total real estate – 1-4 family mortgage	2,356,564		341,744		2,698,308		24.68
Real estate – commercial mortgage:
Owner-occupied	1,334,765		323,041		1,657,806		15.16
Non-owner occupied	2,194,739		552,728		2,747,467		25.13
Land development	120,125		29,454		149,579		1.37
Total real estate – commercial mortgage	3,649,629		905,223		4,554,852		41.66
Installment loans to individuals	149,862		59,675		209,537		1.92
Total loans, net of unearned income	$	9,419,540	$	1,514,107	$	10,933,647	100.00	%

(1) Includes PPP loans of $1,128,703 as of December 31, 2020.

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Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. At June 30, 2021, there were no concentrations of loans exceeding 10% of total loans which are not disclosed as a category of loans separate from the categories listed above.

Deposits

The Company relies on deposits as its major source of funds. Total deposits were $13,115,351 and $12,059,081 at June 30, 2021 and December 31, 2020, respectively. Noninterest-bearing deposits were $4,349,135 and $3,685,048 at June 30, 2021 and December 31, 2020, respectively, while interest-bearing deposits were $8,766,216 and $8,374,033 at June 30, 2021 and December 31, 2020, respectively.

The growth in noninterest-bearing deposits across the Company’s footprint during the current year has been driven by government stimulus payments and client sentiment to maintain liquidity. Management continues to focus on growing and maintaining a stable source of funding, specifically noninterest-bearing deposits and other core deposits (that is, deposits excluding time deposits greater than $250,000). Noninterest bearing deposits represented 33.16% of total deposits at June 30, 2021, as compared to 30.56% of total deposits at December 31, 2020. Under certain circumstances, however, management may elect to acquire non-core deposits in the form of time deposits or public fund deposits (which are deposits of counties, municipalities or other political subdivisions). The source of funds that we select depends on the terms and how those terms assist us in mitigating interest rate risk, maintaining our liquidity position and managing our net interest margin. Accordingly, funds are acquired to meet anticipated funding needs at the rate and with other terms that, in management’s view, best address our interest rate risk, liquidity and net interest margin parameters.

Public fund deposits may be readily obtained based on the Company’s pricing bid in comparison with competitors. Because public fund deposits are obtained through a bid process, these deposit balances may fluctuate as competitive and market forces change. Although the Company has focused on growing stable sources of deposits to reduce reliance on public fund deposits, it participates in the bidding process for public fund deposits when pricing and other terms make it reasonable given market conditions or when management perceives that other factors, such as the public entity’s use of our treasury management or other products and services, make such participation advisable. Our public fund transaction accounts are principally obtained from public universities and municipalities, including school boards and utilities. Public fund deposits were $1,563,608 and $1,398,330 at June 30, 2021 and December 31, 2020, respectively.

Borrowed Funds

Total borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the FHLB, subordinated notes and junior subordinated debentures and are classified on the Consolidated Balance Sheets as either short-term borrowings or long-term debt. Short-term borrowings have original maturities less than one year and typically include federal funds purchased, securities sold under agreements to repurchase, and short-term FHLB advances. The following table presents our short-term borrowings by type as of the dates presented:


	June 30, 2021		December 31, 2020
Security repurchase agreements	$	14,933	$	10,947
Federal funds purchased	—		10,393


	$	14,933	$	21,340

At June 30, 2021, long-term debt consists of long-term FHLB advances, our junior subordinated debentures and our subordinated notes. The following table presents our long-term debt by type as of the dates presented:


	June 30, 2021		December 31, 2020
Long-term FHLB advances	$	150,434	$	152,167
Junior subordinated debentures	111,083		110,794
Subordinated notes	207,889		212,009
	$	469,406	$	474,970

Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and also are used to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. At June 30, 2021, there were no outstanding long-term FHLB advances

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scheduled to mature within twelve months or less. The Company had $3,864,732 of availability on unused lines of credit with the FHLB at June 30, 2021, as compared to $3,784,520 at December 31, 2020.

The Company has issued subordinated notes, the proceeds of which have been used for general corporate purposes, including providing capital to support the Company’s growth organically or through strategic acquisitions, repaying indebtedness and financing investments and capital expenditures, and for investments in Renasant Bank (the “Bank”) as regulatory capital. The subordinated notes qualify as Tier 2 capital under the current regulatory guidelines.

The Company owns the outstanding common securities of business trusts that issued corporation-obligated mandatorily redeemable preferred capital securities to third-party investors. The trusts used the proceeds from the issuance of their preferred capital securities and common securities (collectively referred to as “capital securities”) to buy floating rate junior subordinated debentures issued by the Company (or by companies that the Company subsequently acquired). The debentures are the trusts’ only assets and interest payments from the debentures finance the distributions paid on the capital securities.

Results of Operations

Net Income

Net income for the second quarter of 2021 was $40,867 compared to net income of $20,130 for the second quarter of 2020. Basic and diluted earnings per share (“EPS”) for the second quarter of 2021 were $0.73 and $0.72, respectively, as compared to basic and diluted EPS of $0.36 for the second quarter of 2020. Net income for the six months ended June 30, 2021, was $98,775 compared to net income of $22,138 for the same period in 2020. Basic and diluted EPS were $1.75 for the first six months of 2021 as compared to $0.39 for the first six months of 2020. As discussed in more detail below, our net income was significantly impacted by mortgage banking income, including an adjustment to the valuation of our mortgage servicing rights (“MSR”), and the absence of a provision for credit losses expense in the second quarter of 2021.

From time to time, the Company incurs expenses and charges or recognizes valuation adjustments in connection with certain transactions with respect to which management is unable to accurately predict when these items will be incurred or, when incurred, the amount of such items. The following table presents the impact of these items on reported EPS for the dates presented. The “COVID-19 related expenses” line item in the table below primarily consists of (a) employee overtime and employee benefit accruals directly related to the Company’s response to both the COVID-19 pandemic itself and federal legislation enacted to address the pandemic, such as the CARES Act, and (b) expenses associated with supplying branches with protective equipment and sanitation supplies (such as floor markings and cautionary signage for branches, face coverings and hand sanitizer) as well as more frequent and rigorous branch cleaning.


	Three Months Ended
	June 30, 2021						June 30, 2020
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS


MSR valuation adjustment	$	—	$	—	$	—	$	4,951	$	4,047	$	0.07
Restructuring charges	15		12		—		—		—		—
COVID-19 related expenses	370		289		0.01		6,257		5,113		0.09

	Six Months Ended
	June 30, 2021						June 30, 2020
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS


MSR valuation adjustment	$	(13,561)	$	(10,549)	$	(0.19)	$	14,522	$	11,835	$	0.21
Restructuring charges	307		239		—		—		—		—
COVID-19 related expenses	1,154		898		0.02		9,160		7,465		0.13

Net Interest Income

Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of our net income, comprising 70.02% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the second quarter of 2021 and 63.36% of total revenue for the first six months of 2021. The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.

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Net interest income was $109,579 and $219,227 for the three and six months ended June 30, 2021, respectively, as compared to $105,782 and $212,384 for the same respective periods in 2020. On a tax equivalent basis, net interest income was $111,205 and $222,469 for the three and six months ended June 30, 2021, respectively, as compared to $107,457 and $215,773 for the same respective periods in 2020.

The following tables set forth average balance sheet data, including all major categories of interest-earning assets and interest-bearing liabilities, together with the interest earned or interest paid and the average yield or average rate paid on each such category for the periods presented:



	Three Months Ended June 30,
	2021						2020
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning assets:
Loans held for investment:
Non purchased	$	8,521,028	$	82,774	3.90	%	$	7,872,371	$	81,836	4.18	%
Purchased	1,328,631		17,891		5.40		1,877,698		26,005		5.57

Paycheck Protection Program	628,462		10,120		6.46		866,078		5,886		2.73
Total loans held for investment	10,478,121		110,785		4.24		10,616,147		113,727		4.31
Loans held for sale	461,752		3,604		3.12		340,582		2,976		3.51
Securities:
Taxable (1)	1,503,605		5,549		1.48		1,031,740		6,386		2.49
Tax-exempt	317,824		2,333		2.94		263,799		2,346		3.58
Interest-bearing balances with banks	1,227,962		346		0.11		524,376		195		0.15
Total interest-earning assets	13,989,264		122,617		3.51		12,776,644		125,630		3.95
Cash and due from banks	195,982						214,079
Intangible assets	967,430						974,237

Other assets	678,342						741,067
Total assets	$	15,831,018					$	14,706,027
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand (2)	$	6,109,956	$	4,069	0.27	%	$	5,151,713	$	5,524	0.43	%
Savings deposits	969,982		185		0.08		747,173		173		0.09
Time deposits	1,564,448		3,415		0.88		2,034,149		8,174		1.62
Total interest-bearing deposits	8,644,386		7,669		0.36		7,933,035		13,871		0.70
Borrowed funds	483,081		3,743		3.11		1,000,789		4,302		1.73
Total interest-bearing liabilities	9,127,467		11,412		0.50		8,933,824		18,173		0.82
Noninterest-bearing deposits	4,271,464						3,439,634
Other liabilities	218,344						231,477
Shareholders’ equity	2,213,743						2,101,092
Total liabilities and shareholders’ equity	$	15,831,018					$	14,706,027
Net interest income/net interest margin			$	111,205	3.19	%			$	107,457	3.38	%

(1) U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.

(2) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.

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	Six Months Ended June 30,
	2021						2020
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning assets:
Loans held for investment:
Non purchased	$	8,441,910	$	164,702	3.93	%	$	7,763,516	$	170,390	4.41	%
Purchased	1,391,634		38,347		5.55		1,955,161		56,192		5.78

Paycheck Protection Program	807,012		20,807		5.20		433,039		5,886		2.73
Total loans held for investment	10,640,556		223,856		4.24		10,151,716		232,468		4.61
Loans held for sale	434,075		6,604		3.05		338,706		5,964		3.54
Securities:
Taxable (1)	1,284,692		10,389		1.62		1,049,507		13,675		2.62
Tax-exempt	312,084		4,617		2.96		244,700		4,404		3.62
Interest-bearing balances with banks	1,002,564		529		0.11		408,432		1,006		0.50
Total interest-earning assets	13,673,971		245,995		3.62		12,193,061		257,517		4.25
Cash and due from banks	200,906						200,198
Intangible assets	968,215						975,085

Other assets	674,262						720,945
Total assets	$	15,517,354					$	14,089,289
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand (2)	$	6,008,093	$	8,002	0.27	%	$	5,045,735	$	14,777	0.59	%
Savings deposits	926,370		354		0.08		714,177		426		0.12
Time deposits	1,610,113		7,593		0.95		2,075,412		17,163		1.66
Total interest-bearing deposits	8,544,576		15,949		0.38		7,835,324		32,366		0.83
Borrowed funds	483,494		7,577		3.16		915,054		9,378		2.06
Total interest-bearing liabilities	9,028,070		23,526		0.53		8,750,378		41,744		0.96
Noninterest-bearing deposits	4,066,943						3,013,298
Other liabilities	229,257						222,495
Shareholders’ equity	2,193,084						2,103,118
Total liabilities and shareholders’ equity	$	15,517,354					$	14,089,289
Net interest income/net interest margin			$	222,469	3.28	%			$	215,773	3.56	%

(1) U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.

(2) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.

The average balances of nonaccruing assets are included in the tables above. Interest income and weighted average yields on tax-exempt loans and securities have been computed on a fully tax equivalent basis assuming a federal tax rate of 21% and a state tax rate of 4.45%, which is net of federal tax benefit.

Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes in volume, mix and pricing decisions. External factors include changes in market interest rates, competition and the shape of the interest rate yield curve. As discussed in more detail below, the decline in loan yields due to the current low interest rate environment as well as changes in the mix of earning assets during the quarter due to increased liquidity on the balance sheet were the largest contributing factors to the decrease in net interest margin for the three and six months ended June 30, 2021, as compared to the same periods in 2020. The Company has continued to focus on lowering the cost of funding through growing noninterest-bearing deposits and aggressively lowering interest rates on interest-bearing deposits.

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The following tables set forth a summary of the changes in interest earned, on a tax equivalent basis, and interest paid resulting from changes in volume and rates for the Company for both the three and six months ended June 30, 2021, as compared to the same respective periods in 2020 (the changes attributable to the combined impact of yield/rate and volume have been allocated on a pro-rata basis using the absolute value of amounts calculated):


	Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020
	Volume		Rate		Net
Interest income:
Loans held for investment:
Non purchased	$	6,642	$	(5,704)	$	938
Purchased	(7,355)		(759)		(8,114)

Paycheck Protection Program	(1,986)		6,220		4,234
Loans held for sale	984		(356)		628
Securities:
Taxable	2,315		(3,152)		(837)
Tax-exempt	443		(456)		(13)
Interest-bearing balances with banks	210		(59)		151
Total interest-earning assets	1,253		(4,266)		(3,013)
Interest expense:
Interest-bearing demand deposits	906		(2,361)		(1,455)
Savings deposits	46		(34)		12
Time deposits	(1,594)		(3,165)		(4,759)
Borrowed funds	(2,928)		2,369		(559)
Total interest-bearing liabilities	(3,570)		(3,191)		(6,761)
Change in net interest income	$	4,823	$	(1,075)	$	3,748

	Six months ended June 30, 2021 Compared to the Six Months Ended June 30, 2020
	Volume		Rate		Net
Interest income:
Loans held for investment:
Non purchased	$	14,008	$	(19,696)	$	(5,688)
Purchased	(15,683)		(2,162)		(17,845)

Paycheck Protection Program	7,298		7,623		14,921
Loans held for sale	1,542		(902)		640
Securities:
Taxable	2,652		(5,938)		(3,286)
Tax-exempt	1,094		(881)		213
Interest-bearing balances with banks	718		(1,195)		(477)
Total interest-earning assets	11,629		(23,151)		(11,522)
Interest expense:
Interest-bearing demand deposits	2,415		(9,190)		(6,775)
Savings deposits	105		(177)		(72)
Time deposits	(3,291)		(6,279)		(9,570)
Borrowed funds	(5,542)		3,741		(1,801)
Total interest-bearing liabilities	(6,313)		(11,905)		(18,218)
Change in net interest income	$	17,942	$	(11,246)	$	6,696

Interest income, on a tax equivalent basis, was $122,617 and $245,995, respectively, for the three and six months ended June 30, 2021, as compared to $125,630 and $257,517, respectively, for the same periods in 2020. This decrease in interest income,

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on a tax equivalent basis, is due primarily to the Federal Reserve maintaining low interest rates since March 2020 and changes in the mix of earning assets during the quarter due to increased liquidity on the balance sheet.

The following tables present the percentage of total average earning assets, by type and yield, for the periods presented:


	Percentage of Total Average Earning Assets				Yield
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Loans held for investment, excl. PPP	70.41	%	76.31	%	4.10	%	4.45	%
Paycheck Protection Program	4.49		6.78		6.46		2.73
Loans held for sale	3.30		2.67		3.12		3.51
Securities	13.02		10.14		1.73		2.71
Other	8.78		4.10		0.11		0.15
Total earning assets	100.00	%	100.00	%	3.51	%	3.95	%



	Percentage of Total Average Earning Assets				Yield
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Loans held for investment excl. PPP	71.91	%	79.71	%	4.16	%	4.69	%
Paycheck Protection Program	5.90		3.55		5.20		2.73
Loans held for sale	3.17		2.78		3.05		3.54
Securities	11.68		10.61		1.88		2.81
Interest-bearing balances with banks	7.34		3.35		0.11		0.50
Total earning assets	100.00	%	100.00	%	3.62	%	4.25	%

For the second quarter of 2021, interest income on loans held for investment, on a tax equivalent basis, decreased $2,942 to $110,785 from $113,727 in the same period in 2020. For the six months ended June 30, 2021, interest income on loans held for investment, on a tax equivalent basis, decreased $8,612 to $223,856 from $232,468 in the same period in 2020. Interest income on loans held for investment decreased primarily due to the Federal Reserve maintaining low interest rates since March 2020. Interest income attributable to PPP loans included in loan interest income for the three months ended June 30, 2021, was $10,120, which consisted of $1,524 in interest income and $8,596 in accretion of net origination fees, as compared to $5,889 for the three months ended June 30, 2020, which consisted of $2,324 in interest income and $3,565 in accretion of net origination fees. Interest income attributable to PPP loans included in loan interest income for the six months ended June 30, 2021, was $20,807, which consisted of $3,916 in interest income and $16,891 in accretion of net origination fees, as compared to $5,889 for the six months ended June 30, 2020, which consisted of $2,324 in interest income and $3,565 in accretion of net origination fees. The PPP origination fees, net of agent fees paid and other origination costs, are being accreted into interest income over the life of the loan. If a PPP loan is forgiven in whole or in part, as provided under the CARES Act, the Company will recognize the non-accreted portion of the net origination fee attributable to the forgiven portion of such loan as of the date of the final forgiveness determination. PPP loans increased margin and loan yield by 15 basis points and 14 basis points, respectively, during the second quarter of 2021, and 12 basis points and eight basis points, respectively, in the first half of 2021. PPP loans reduced margin and loan yield by five basis points and 14 basis points, respectively, in the second quarter of 2020 and three basis points and eight basis points, respectively, in the first half of 2020.

The impact from interest income collected on problem loans and purchase accounting adjustments on loans to total interest income on loans held for investment, loan yield and net interest margin is shown in the following table for the periods presented.

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Net interest income collected on problem loans	$	1,339		$	384		$	3,519		$	602
Accretable yield recognized on purchased loans (1)	2,638			4,700			5,726			10,169
Total impact to interest income on loans	$	3,977		$	5,084		$	9,245		$	10,771

Impact to loan yield	0.15		%	0.19		%	0.18		%	0.21		%

Impact to net interest margin	0.11		%	0.16		%	0.14		%	0.18		%

(1) Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $1,224 and $1,731, for the second quarter of 2021 and 2020, respectively. The impact was $2,496 and $3,919 for the six months ended June 30, 2021 and 2020, respectively. This additional interest income increased total loan yield by five basis points and six basis points for the second quarter of 2021 and 2020, respectively, while increasing net interest margin by four and five basis points for the same respective periods. For the six months ended June 30, 2021 and 2020, the additional interest income increased total loan yields by five basis points and eight basis points, respectively, while increasing net interest margin by four basis points and six basis points, respectively.

For the second quarter of 2021, interest income on loans held for sale (consisting of mortgage loans held for sale), on a tax equivalent basis, increased $628 to $3,604 from $2,976 in the same period in 2020. For the six months ended June 30, 2021, interest income on loans held for sale (consisting of mortgage loans held for sale), on a tax equivalent basis, increased $640 to $6,604 from $5,964 for the same period in 2020.

Investment income, on a tax equivalent basis, decreased $850 to $7,882 for the second quarter of 2021 from $8,732 for the second quarter of 2020. Investment income, on a tax equivalent basis, decreased $3,073 to $15,006 for the six months ended June 30, 2021 from $18,079 for the same period in 2020. The tax equivalent yield on the investment portfolio for the second quarter of 2021 was 1.73%, down 98 basis points from 2.71% for the same period in 2020. The tax equivalent yield on the investment portfolio for the six months ended June 30, 2021 was 1.88%, down 93 basis points from 2.81% in the same period in 2020. The decrease in taxable equivalent yield on securities was a result of the current interest rate environment.

Interest expense was $11,412 for the second quarter of 2021 as compared to $18,173 for the same period in 2020. Interest expense for the six months ended June 30, 2021 was $23,526 as compared to $41,744 for the same period in 2020.

The following tables present, by type, the Company’s funding sources, which consist of total average deposits and borrowed funds, and the total cost of each funding source for the periods presented:


	Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Noninterest-bearing demand	31.88	%	27.80	%	—	%	—	%
Interest-bearing demand	45.59		41.64		0.27		0.43
Savings	7.24		6.04		0.08		0.09
Time deposits	11.68		16.44		0.88		1.62
Short term borrowings	0.10		5.04		0.31		0.75
Long-term Federal Home Loan Bank advances	1.13		1.23		0.04		0.84
Subordinated notes	1.54		0.92		4.96		5.60
Other borrowed funds	0.84		0.89		4.21		4.52
Total deposits and borrowed funds	100.00	%	100.00	%	0.34	%	0.59	%

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	Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Noninterest-bearing demand	31.06	%	25.62	%	—	%	—	%
Interest-bearing demand	45.88		42.89		0.27		0.59
Savings	7.07		6.07		0.08		0.12
Time deposits	12.30		17.64		0.95		1.66
Short-term borrowings	0.10		4.58		0.31		1.04
Long-term Federal Home Loan Bank advances	1.16		1.29		0.04		1.13
Subordinated notes	1.58		0.97		5.06		5.60
Other long term borrowings	0.85		0.94		4.22		4.69
Total deposits and borrowed funds	100.00	%	100.00	%	0.36	%	0.71	%

Interest expense on deposits was $7,669 and $13,871 for the three months ended June 30, 2021 and 2020, respectively. The cost of total deposits was 0.24% and 0.49% for the same respective periods. Interest expense on deposits was $15,949 and $32,366 for the six months ended June 30, 2021 and 2020, respectively, and the cost of total deposits was 0.26% and 0.60% for the same respective periods. The decrease in both deposit expense and cost is attributable to the Company’s efforts to reduce deposit rates as they reprice in the current low interest rate environment. During 2021, the Company has continued its efforts to grow non-interest bearing deposits, and such deposits represent 33.16% of total deposits at June 30, 2021 compared to 30.56% of total deposits at December 31, 2020. The growth in non-interest bearing deposits during the year to date has been primarily driven by government stimulus payments and client sentiment. Low cost deposits continue to be the preferred choice of funding; however, the Company may rely on wholesale borrowings when rates are advantageous.

Interest expense on total borrowings was $3,743 and $4,302 for the three months ended June 30, 2021 and 2020, respectively. Interest expense on total borrowings was $7,577 and $9,378 for the six months ended June 30, 2021 and 2020, respectively. The decrease in interest expense is a result of lower average borrowings.

A more detailed discussion of the cost of our funding sources is set forth below under the heading “Liquidity and Capital Resources” in this Item.

Noninterest Income


Noninterest Income to Average Assets
Three Months Ended June 30,		Six Months Ended June 30,
2021	2020	2021	2020
1.21%	1.75%	1.67%	1.45%

Total noninterest income includes fees generated from deposit services and other fees and commissions, income from our insurance, wealth management and mortgage banking operations, realized gains on the sale of securities and all other noninterest income. Our focus is to develop and enhance our products that generate noninterest income in order to diversify revenue sources. Noninterest income was $47,610 for the second quarter of 2021 as compared to $64,170 for the same period in 2020. Noninterest income was $128,647 for the six months ended June 30, 2021 as compared to $101,740 for the same period in 2020. During the second quarter of 2021, with the exception of mortgage banking operations, all categories of noninterest income increased when compared to the prior period as market activity returned to normal conditions with the lifting of pandemic-related restrictions across our footprint.

Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees. Service charges on deposit accounts were $9,458 and $6,832 for the second quarter of 2021 and 2020, respectively, and $17,481 and $15,902 for the six months ended June 30, 2021 and 2020, respectively. Overdraft fees, the largest component of service charges on deposits, were $4,998 for the three months ended June 30, 2021, as compared to $3,740 for the same period in 2020. These fees were $8,954 for the six months ended June 30, 2021 compared to $9,636 for the same period in 2020.

Fees and commissions were $4,110 during the second quarter of 2021 as compared to $2,971 for the same period in 2020, and were $8,010 for the first six months of 2021 as compared to $6,025 for the same period in 2020. Fees and commissions include

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fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. For the second quarter of 2021, interchange fees were $2,823 as compared to $2,158 for the same period in 2020. Interchange fees were $5,215 for the six months ended June 30, 2021 as compared to $4,212 for the same period in 2020.

Through Renasant Insurance, we offer a range of commercial and personal insurance products through major insurance carriers. Income earned on insurance products was $2,422 and $2,125 for the three months ended June 30, 2021 and 2020, respectively, and was $4,659 and $4,116 for the six months ended June 30, 2021 and 2020, respectively. Contingency income is a bonus received from the insurance underwriters and is based both on commission income and claims experience on our clients’ policies during the previous year. Increases and decreases in contingency income are reflective of corresponding increases and decreases in the number of claims paid by insurance carriers. Contingency income, which is included in “Other noninterest income” in the Consolidated Statements of Income, was $47 and $25 for the three months ended June 30, 2021 and 2020, respectively, and $1,053 and $918 for the six months ended June 30, 2021 and 2020, respectively.

Our Wealth Management segment has two primary divisions: Trust and Financial Services. The Trust division operates on a custodial basis which includes administration of benefit plans, as well as accounting and money management for trust accounts. The division manages a number of trust accounts inclusive of personal and corporate benefit accounts, IRAs, and custodial accounts. Fees for managing these accounts are based on changes in market values of the assets under management in the account, with the amount of the fee depending on the type of account. The Financial Services division provides specialized products and services to our customers, which include fixed and variable annuities, mutual funds, and stocks offered through a third party provider. Wealth Management revenue was $5,019 for the second quarter of 2021 compared to $3,824 for the same period in 2020 and was $9,811 for the six months ended June 30, 2021 compared to $7,826 for the same period in 2020. The market value of assets under management or administration was $4,560,891 and $3,806,023 at June 30, 2021 and June 30, 2020, respectively.

Mortgage banking income is derived from the origination and sale of mortgage loans and the servicing of mortgage loans that the Company has sold but retained the right to service. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market. Originations of mortgage loans to be sold totaled $1,079,474 in the second quarter of 2021 compared to $1,308,074 for the same period in 2020. Mortgage loan originations totaled $2,222,822 in the six months ended June 30, 2021 compared to $2,023,834 for the same period in 2020. While mortgage loan originations remain elevated compared to pre-pandemic levels, margins have compressed as the interest rate environment has begun to rise and housing inventories are below demand. Mortgage banking income was $20,853 and $45,490 for the three months ended June 30, 2021 and 2020, respectively, and was $71,586 for the first six months ended June 30, 2021 compared to $61,025 for the same period in 2020. The table below presents the components of mortgage banking income included in noninterest income for the periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Gain on sales of loans, net	$	17,581	$	46,560	$	51,482	$	68,342
Fees, net	4,519		5,309		9,421		8,228
Mortgage servicing loss, net	(1,247)		(1,428)		(2,878)		(1,023)
MSR valuation adjustment	—		(4,951)		13,561		(14,522)
Mortgage banking income, net	$	20,853	$	45,490	$	71,586	$	61,025

Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance policies and proceeds received upon the death of covered individuals. BOLI income was $1,644 for the three months ended June 30, 2021 as compared to $1,329 for the same period in 2020, and $3,716 for the first six months of June 30, 2021 as compared to $2,492 for the same period in 2020. The increase is primarily due to the $1,222 of life insurance proceeds received during the first six months of 2021. There were no life insurance proceeds received during the six months ended June 30, 2020.

Other noninterest income was $4,104 and $1,568 for the three months ended June 30, 2021 and 2020, respectively, and was $12,027 and $4,323 for the six months ended June 30, 2021 and 2020, respectively. Other noninterest income includes income from our SBA banking division and other miscellaneous income and can fluctuate based on production in our SBA banking division and recognition of other seasonal income items. In the first six months of 2021, the Company entered into a referral relationship with a third party to utilize its technology platform to originate PPP loans under the latest round of funding. The Company earned $3,734 of PPP referral fees from its partner during the six months ended June 30, 2021.

Noninterest Expense

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Noninterest Expense to Average Assets
Three Months Ended June 30,		Six Months Ended June 30,
2021	2020	2021	2020
2.76%	3.24%	2.92%	3.33%

Noninterest expense was $108,777 and $118,285 for the second quarter of 2021 and 2020, respectively, and was $224,712 and $233,326 for the six months ended June 30, 2021 and 2020, respectively. The decrease in noninterest expense for both the three and six month periods ending June 30, 2021, as compared to the corresponding periods in 2020, was largely a result of declines in salary and employee benefits and net occupancy and equipment expenses.

Salaries and employee benefits decreased $9,068 to $70,293 for the second quarter of 2021 as compared to $79,361 for the same period in 2020. Salaries and employee benefits decreased $3,561 to $148,989 for the six months ended June 30, 2021 as compared to $152,550 for the same period in 2020. The decrease in salaries and employee benefits is primarily due to a decrease in incentive expenses recognized for the six months ended June 30, 2021 and the cost savings realized by the voluntary early retirement program offered during the fourth quarter of 2020.

Data processing costs increased to $5,652 in the second quarter of 2021 from $5,047 for the same period in 2020 and were $11,103 for the six months ended June 30, 2021 as compared to $10,053 for the same period in 2020. The Company continues to examine new and existing contracts to negotiate favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume.

Net occupancy and equipment expense for the second quarter of 2021 was $11,374, down from $13,511 for the same period in 2020. These expenses for the first six months of 2021 were $23,912, down from $27,631 for the same period in 2020. The decrease in occupancy and equipment expense is primarily attributable to the restructuring and non-renewal of certain branch leases.

Expenses related to other real estate owned for the second quarter of 2021 were $104 as compared to $620 for the same period in 2020 and were $145 and $1,038, respectively, for the first six months of 2021 and 2020. Expenses on other real estate owned included write downs of the carrying value to fair value on certain pieces of property held in other real estate owned of $117 and $827 for the first six months of 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, other real estate owned with a cost basis of $3,328 and $2,317, respectively, was sold, resulting in a net gain of $50 and $89, respectively.

Professional fees include fees for legal and accounting services, such as routine litigation matters, external audit services as well as assistance in complying with newly-enacted and existing banking and governmental regulations. Professional fees were $2,674 for the second quarter of 2021 as compared to $2,517 for the same period in 2020 and $5,595 for the six months ended June 30, 2021 as compared to $5,159 for the same period in 2020.

Advertising and public relations expense was $3,100 for the second quarter of 2021 as compared to $2,920 for the same period in 2020, and $6,352 for the six months ended June 30, 2021 compared to $6,320 for the same period in 2020.

Amortization of intangible assets totaled $1,539 and $1,834 for the second quarter of 2021 and 2020, respectively, and $3,137 and $3,729 for the six months ended June 30, 2021 and 2020, respectively. This amortization relates to finite-lived intangible assets which are being amortized over the useful lives as determined at acquisition. These finite-lived intangible assets have remaining estimated useful lives ranging from approximately 2 years to 8 years.

Communication expenses, those expenses incurred for communication to clients and between employees, were $2,291 for the second quarter of 2021 as compared to $2,181 for the same period in 2020. Communication expenses were $4,583 for the six months ended June 30, 2021 as compared to $4,379 for the same period in 2020.

Other noninterest expense includes the provision for unfunded commitments, business development and travel expenses, other discretionary expenses, loan fees expense and other miscellaneous fees and operating expenses. Other noninterest expense was $11,735 and $20,589 for the three and six months ended June 30, 2021 as compared to $10,204 and $22,377 for the same periods in 2020. The provision for unfunded commitments was $2,600 and $6,000 for the three and six months ended June 30, 2020. There was no provision recorded for unfunded commitments recorded for the same periods in 2021.

Efficiency Ratio

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	Efficiency Ratio
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Efficiency ratio (GAAP)	68.49	%	68.92	%	64.00	%	73.49	%







Adjusted efficiency ratio (Non-GAAP) (1)	67.28	%	60.89	%	65.47	%	64.56	%

(1) A reconciliation of this financial measure from GAAP to non-GAAP can be found under the “Non-GAAP Financial Measures” heading at the end of this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The efficiency ratio is a measure of productivity in the banking industry. (This ratio is a measure of our ability to turn expenses into revenue. That is, the ratio is designed to reflect the percentage of one dollar that we must expend to generate a dollar of revenue.) The Company calculates this ratio by dividing noninterest expense by the sum of net interest income on a fully tax equivalent basis and noninterest income. The table above shows the impact on the efficiency ratio of items that (1) the Company does not consider to be part of our core operating activities, such as amortization of intangibles, or (2) the Company incurred in connection with certain transactions where management is unable to accurately predict the timing of when these items will be incurred or, when incurred, the amount of such items, such as expenses or recoveries incurred in connection with our response to the COVID-19 pandemic, our MSR valuation adjustment and the provision for unfunded commitments. We remain committed to aggressively managing our costs within the framework of our business model. Our goal is to improve the efficiency ratio over time from currently reported levels as a result of revenue growth while at the same time controlling noninterest expenses.

Income Taxes

Income tax expense for the second quarter of 2021 and 2020 was $7,545 and $4,637, respectively. The effective tax rates for those periods were 21.62% and 18.72%, respectively. Income tax expenses for the six months ended June 30, 2021 and 2020 were $24,387 and $5,410, respectively. The effective tax rates for those periods were 22.21% and 19.64%, respectively. In the second quarter of 2021 the Company received a benefit from a one-time state tax credit investment. The investment of $3,112 was fully amortized in other noninterest expense and the credit of $3,460 reduced income taxes for the second quarter of 2021.

Risk Management

The management of risk is an on-going process. Primary risks that are associated with the Company include credit, interest rate and liquidity risk. Credit risk and interest rate risk are discussed below, while liquidity risk is discussed in the next subsection under the heading “Liquidity and Capital Resources.”

Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments

COVID-19 Update . At June 30, 2021, the Company’s credit quality metrics remained stable. The Company is continuing to monitor all asset categories given that any category or borrower could be negatively impacted by the pandemic, with enhanced monitoring of loans remaining on deferral as well as a focus on those industries more highly impacted by the pandemic, primarily the hospitality and senior living industries. To provide necessary relief to the Company’s borrowers – both consumer and commercial clients – in 2020 the Company established loan deferral programs allowing qualified clients to defer principal and interest payments for up to 90 days. A second 90-day deferral was available to borrowers that remained current on taxes and insurance and also satisfied underwriting standards established by the Company that analyzed the ability of the borrower to service its loan in accordance with its existing terms in light of the impact of the COVID-19 pandemic on the borrower, its industry and the markets in which it operated. The Company has discontinued its deferral programs as economic conditions in the Company’s markets have improved to the extent that management viewed a broad deferral program as no longer necessary. At June 30, 2021, the Company had 141 loans (not in thousands) on deferral with an aggregate balance of approximately $20,600, or 0.21% of our loan portfolio (excluding PPP loans) by dollar value. In accordance with the applicable guidance, none of these loans are considered “restructured loans” and thus are not included in the discussion of our restructured loans below.

The Company’s credit quality in future quarters may be impacted by both external and internal factors related to the pandemic in addition to those factors that traditionally affect credit quality. External factors outside the Company’s control include items such as the spread of variants of COVID-19, the pace at which the COVID-19 vaccine is administered to residents in the Company’s markets and the United States generally, the effectiveness of vaccinations on COVID-19 variants, federal, state and local government measures, the re-imposition of “shelter-in-place” orders, and the economic impact of government programs, including additional fiscal stimulus. Internal factors that will potentially impact credit quality include items such as the performance of the Company’s loans that remain on deferral, involvement in government offered programs and the related

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financial impact of these programs. The impact of each of these items are unknown at this time and could materially and adversely impact future credit quality.

Management of Credit Risk . Inherent in any lending activity is credit risk, that is, the risk of loss should a borrower default. Credit risk is monitored and managed on an ongoing basis by a credit administration department, a problem asset resolution committee and the Board of Directors Credit Review Committee. Oversight of the Company’s lending operations (including adherence to our policies and procedures governing the loan approval and monitoring process), credit quality and loss mitigation are major concerns of credit administration and these committees. The Company’s central appraisal review department reviews and approves third-party appraisals obtained by the Company on real estate collateral and monitors loan maturities to ensure updated appraisals are obtained. This department is managed by a State Certified General Real Estate Appraiser and employs three additional State Certified General Real Estate Appraisers and four real estate evaluators. In addition, we maintain a loan review staff to independently monitor loan quality and lending practices. Loan review personnel monitor and, if necessary, adjust the grades assigned to loans through periodic examination, focusing their review on commercial and real estate loans rather than consumer and small balance consumer mortgage loans, such as 1-4 family mortgage loans.

In compliance with loan policy, the lending staff is given lending limits based on their knowledge and experience. In addition, each lending officer’s prior performance is evaluated for credit quality and compliance as a tool for establishing and enhancing lending limits. Before funds are advanced on consumer and commercial loans below certain dollar thresholds, loans are reviewed and scored using centralized underwriting methodologies. Loan quality, or “risk-rating,” grades are assigned based upon certain factors, which include the scoring of the loans. This information is used to assist management in monitoring credit quality. Loan requests of amounts greater than an officer’s lending limit are reviewed for approval by senior credit officers.

For loans with a commercial purpose, risk-rating grades are assigned by lending, credit administration and loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Loan grades range from 1 to 9, with 1 rated loans having the least credit risk.

Management’s problem asset resolution committee and the Board of Directors’ Credit Review Committee monitor loans that are past due or those that have been downgraded and placed on the Company’s internal watch list due to a decline in the collateral value or cash flow of the borrower; the committees then adjust loan grades accordingly. This information is used to assist management in monitoring credit quality. When the ultimate collectability of a loan’s principal is in doubt, wholly or partially, the loan is placed on nonaccrual.

After all collection efforts have failed, collateral securing loans may be repossessed and sold or, for loans secured by real estate, foreclosure proceedings initiated. The collateral is sold at public auction for fair market value (based upon recent appraisals as described above), with fees associated with the foreclosure being deducted from the sales price. The purchase price is applied to the outstanding loan balance. If the loan balance is greater than the sales proceeds, the deficient balance is sent to the Board of Directors’ Credit Review Committee for charge-off approval. These charge-offs reduce the allowance for credit losses on loans. Charge-offs reflect the realization of losses in the portfolio that were recognized previously through the provision for credit losses on loans.

The Company’s practice is to charge off estimated losses as soon as such losses are identified and reasonably quantified. Net charge-offs for the first six months of 2021 were $3,790, or 0.07% of average loans (annualized), compared to net charge-offs of $2,509, or 0.05% of average loans (annualized), for the same period in 2020. The charge-offs were fully reserved for in the Company’s allowance for credit losses on loans.

Allowance for Credit Losses on Loans; Provision for Credit Losses on Loans . The allowance for credit losses is available to absorb credit losses inherent in the loans held for investment portfolio. Loan losses are charged against the allowance for credit losses when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management evaluates the adequacy of the allowance on a quarterly basis.

The appropriate level of the allowance is based on an ongoing analysis of the loan portfolio and represents an amount that management deems adequate to provide for inherent losses, including loans evaluated on a collective (pooled) basis and those evaluated on an individual basis as set forth in ASC 326. The credit loss estimation process involves procedures to appropriately consider the unique characteristics of the Company’s loan portfolio segments. Credit quality is assessed and monitored by evaluating various attributes, and the results of those evaluations are utilized in underwriting new loans and in the Company’s process for the estimation of expected credit losses. Credit quality monitoring procedures and indicators can include an assessment of problem loans, the types of loans, historical loss experience, new lending products, emerging credit trends, changes in the size and character of loan categories, and other factors, including our risk rating system, regulatory guidance and economic conditions, such as the unemployment rate and GDP growth in the national and local economies as well as trends in

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the market values of underlying collateral securing loans, all as determined based on input from management, loan review staff and other sources. This evaluation is complex and inherently subjective, as it requires estimates by management that are inherently uncertain and therefore susceptible to significant revision as more information becomes available. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and provision for credit loss in those future periods.

The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, a collective or pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics; and second, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans.

• The allowance for credit losses for loans that share similar risk characteristics with other loans is calculated on a collective (or pooled) basis, where such loans are segregated into loan portfolio segments based upon similarity of credit risk. In determining the allowance for credit losses on loans evaluated on a collective basis, the Company categorizes loan pools based on loan type and/or risk rating. The Company uses two CECL models: (1) a loss rate model, based on average historical life-of-loan loss rates, is used for the Real Estate - 1-4 Family Mortgage, Real Estate - Construction and the Installment Loans to Individuals portfolio segments, and (2) for the Commercial, Real Estate - Commercial Mortgage and Lease Financing portfolio segments, the Company uses a probability of default/loss given default model, which calculates an expected loss percentage for each loan pool by considering (a) the probability of default, based on the migration of loans from performing (using risk ratings) to default using life-of-loan analysis periods, and (b) the historical severity of loss, based on the aggregate net lifetime losses incurred per loan pool.

The historical loss rates calculated as described above are adjusted, as necessary, for both internal and external qualitative factors where there are differences in the historical loss data of the Company and current or projected future conditions. Internal factors include loss history, changes in credit quality (including movement between risk ratings) and/or credit concentration and the nature and volume of the respective loan portfolio segments. External factors include current and reasonable and supportable forecasted economic conditions and changes in collateral values. These factors are used to adjust the historical loss rates (as described above) to ensure that they reflect management’s expectation of future conditions based on a reasonable and supportable forecast period. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, when necessary, the models immediately revert back to the historical loss rates adjusted for qualitative factors related to current conditions.

• For loans that do not share similar risk characteristics with other loans, an individual analysis is performed to determine the expected credit loss. If the respective loan is collateral dependent (that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral), the expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of collateral is initially based on external appraisals. Generally, collateral values for loans for which measurement of expected losses is dependent on the fair value of such collateral are updated every twelve months, either from external third parties or in-house certified appraisers. Third-party appraisals are obtained from a pre-approved list of independent, third-party, local appraisal firms. The fair value of the collateral derived from the external appraisal is then adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral. Other acceptable methods for determining the expected credit losses for individually evaluated loans (typically used for loans that are not collateral dependent) is a discounted cash flow approach or, if applicable, an observable market price. Once the expected credit loss amount is determined, an allowance equal to such expected credit loss is included in the allowance for credit losses.

In addition to its quarterly analysis of the allowance for credit losses, on a regular basis management and the Board of Directors review loan ratios. These ratios include the allowance for credit losses as a percentage of total loans, net charge-offs as a percentage of average loans, the provision for credit losses as a percentage of average loans, nonperforming loans as a percentage of total loans and the allowance coverage on nonperforming loans, among others. Also, management reviews past due ratios by officer, community bank and the Company as a whole.

The following table presents the allocation of the allowance for credit losses on loans by loan category and the percentage of loans in each category to total loans as of the dates presented:

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	June 30, 2021				December 31, 2020			June 30, 2020
	Balance		% of Total			Balance		% of Total		Balance		% of Total
Commercial, financial, agricultural	$	36,994	16.11	%		$	39,031	23.20	%	$	30,685	24.02	%
Lease financing	1,511		0.73	%		1,624		0.69	%	1,812		0.73	%
Real estate – construction	15,729		10.36	%		16,047		7.85	%	12,538		7.19	%
Real estate – 1-4 family mortgage	31,303		26.62	%		32,165		24.68	%	29,401		25.36	%
Real estate – commercial mortgage	74,893		44.63	%		76,127		41.66	%	60,061		40.11	%
Installment loans to individuals	11,924		1.55	%		11,150		1.92	%	10,890		2.59	%
Total	$	172,354	100.00	%		$	176,144	100.00	%	$	145,387	100.00	%

The provision for credit losses on loans charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for credit losses on loans at a level that is believed to be adequate to meet the inherent risks of losses in our loan portfolio. The Company did not record a provision for credit losses during the second quarter or first half of 2021, as compared to a provision for credit losses on loans of $26,900 in the second quarter of 2020 and $53,250 in the first half of 2020. The Company’s allowance for credit loss model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years. Based on the continual improvements in these forecasts over the last few quarters, the Company determined that additional provisioning during the first half of 2021 was not necessary.

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The table below reflects the activity in the allowance for credit losses on loans for the periods presented:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Balance at beginning of period	$	173,106		$	120,185		$	176,144		$	52,162
Impact of the adoption of ASC 326	—			—			—			42,484
Charge-offs
Commercial, financial, agricultural	1,184			1,156			4,682			1,549
Lease financing	—			—			—			—
Real estate – construction	—			532			52			532
Real estate – 1-4 family mortgage	152			142			253			363
Real estate – commercial mortgage	171			—			232			2,047
Installment loans to individuals	1,347			1,736			3,005			4,424
Total charge-offs	2,854			3,566			8,224			8,915
Recoveries
Commercial, financial, agricultural	233			108			522			298
Lease financing	14			5			25			10
Real estate – construction	—			—			13			—
Real estate – 1-4 family mortgage	401			48			662			136
Real estate – commercial mortgage	143			41			314			1,740
Installment loans to individuals	1,311			1,666			2,898			4,222
Total recoveries	2,102			1,868			4,434			6,406
Net charge-offs	752			1,698			3,790			2,509
Provision for credit losses on loans	—			26,900			—			53,250
Balance at end of period	$	172,354		$	145,387		$	172,354		$	145,387
Net charge-offs (annualized) to average loans	0.03		%	0.06		%	0.07		%	0.05		%
Net charge-offs to allowance for credit losses on loans	0.44		%	1.17		%	2.20		%	1.73		%
Allowance for credit losses on loans to:
Total loans							1.70		%	1.32		%
Total loans excluding PPP loans (1)							1.74		%	1.50		%
Nonperforming loans							304.86		%	329.65		%
Nonaccrual loans							314.57		%	383.08		%

(1) Allowance for credit losses on loans to total loans excluding PPP loans is a non-GAAP financial measure. A reconciliation of this financial measure from GAAP to non-GAAP as well as an explanation of why the Company provides non-GAAP financial measures can be found under the “Non-GAAP Financial Measures” heading at the end of this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations

The table below reflects annualized net charge-offs to daily average loans outstanding, by loan category, during the periods presented:

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	Six Months Ended
	June 30, 2021					June 30, 2020
	Net Charge-offs		Average Loans		Annualized Net Charge-offs to Average Loans	Net Charge-offs		Average Loans		Annualized Net Charge-offs to Average Loans
Commercial, financial, agricultural	$	4,160	$	2,208,424	0.38%	$	1,251	$	1,828,975	0.14%
Lease financing	(25)		75,159		(0.07)	(10)		82,682		(0.02)
Real estate – construction	39		946,497		0.01	532		817,725		0.13
Real estate – 1-4 family mortgage	(409)		2,687,224		(0.03)	227		2,831,783		0.02
Real estate – commercial mortgage	(82)		4,545,471		—	307		4,281,991		0.01
Installment loans to individuals	107		177,781		0.12	202		308,560		0.13
Total	$	3,790	$	10,640,556	0.07%	$	2,509	$	10,151,716	0.05%

The following table provides further details of the Company’s net charge-offs (recoveries) of loans secured by real estate for the periods presented:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Real estate – construction:
Residential	$	—	$	532	$	39	$	532


Total real estate – construction	—		532		39		532
Real estate – 1-4 family mortgage:
Primary	21		109		(58)		260
Home equity	29		(11)		(63)		(22)
Rental/investment	(232)		—		(199)		28
Land development	(67)		(4)		(89)		(39)
Total real estate – 1-4 family mortgage	(249)		94		(409)		227
Real estate – commercial mortgage:
Owner-occupied	43		(29)		(116)		1,414
Non-owner occupied	(15)		(12)		10		(1,130)
Land development	—		—		24		23
Total real estate – commercial mortgage	28		(41)		(82)		307
Total net charge-offs of loans secured by real estate	$	(221)	$	585	$	(452)	$	1,066

Allowance for Credit Losses on Unfunded Commitments; Provision for Credit Losses on Unfunded Commitments . The Company maintains a separate allowance for credit losses on unfunded loan commitments, which is included in the “Other liabilities” line item on the Consolidated Balance Sheets. Management estimates the amount of expected losses on unfunded loan commitments by calculating a likelihood of funding over the contractual period for exposures that are not unconditionally cancellable by the Company and applying the loss factors used in the allowance for credit losses on loans methodology described above to unfunded commitments for each loan type. No credit loss estimate is reported for off-balance-sheet credit exposures that are unconditionally cancellable by the Company. A roll-forward of the allowance for credit losses on unfunded commitments is shown in the tables below.

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Three Months Ended June 30,	2021		2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,535	$	14,735

Provision for credit losses on unfunded loan commitments (included in other noninterest expense)	—		2,600
Ending balance	$	20,535	$	17,335

Six Months Ended June 30,	2021		2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,535	$	946
Impact of the adoption of ASC 326	—		10,389
Provision for credit losses on unfunded loan commitments (included in other noninterest expense)	—		6,000
Ending balance	$	20,535	$	17,335

Nonperforming Assets . Nonperforming assets consist of nonperforming loans and other real estate owned. Nonperforming loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue. Generally, the accrual of interest is discontinued when the full collection of principal or interest is in doubt or when the payment of principal or interest has been contractually 90 days past due, unless the obligation is both well secured and in the process of collection. Management, the problem asset resolution committee and our loan review staff closely monitor loans that are considered to be nonperforming.

Other real estate owned consists of properties acquired through foreclosure or acceptance of a deed in lieu of foreclosure. These properties are carried at the lower of cost or fair market value based on appraised value less estimated selling costs. Losses arising at the time of foreclosure of properties are charged against the allowance for credit losses on loans. Reductions in the carrying value subsequent to acquisition are charged to earnings and are included in “Other real estate owned” in the Consolidated Statements of Income.

The following tables provide details of the Company’s non purchased and purchased nonperforming assets as of the dates presented.


	Non Purchased		Purchased		Total
June 30, 2021
Nonaccruing loans	$	27,101	$	27,690	$	54,791
Accruing loans past due 90 days or more	800		945		1,745
Total nonperforming loans	27,901		28,635		56,536
Other real estate owned	1,675		3,264		4,939


Total nonperforming assets	$	29,576	$	31,899	$	61,475
Nonperforming loans to total loans					0.56		%
Nonaccruing loans to total loans					0.54		%
Nonperforming assets to total assets					0.38		%

December 31, 2020
Nonaccruing loans	$	20,369	$	31,051	$	51,420
Accruing loans past due 90 days or more	3,783		267		4,050
Total nonperforming loans	24,152		31,318		55,470
Other real estate owned	2,045		3,927		5,972


Total nonperforming assets	$	26,197	$	35,245	$	61,442
Nonperforming loans to total loans					0.51		%
Nonaccruing loans to total loans					0.47		%
Nonperforming assets to total assets					0.41		%

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The level of nonperforming loans increased $1,066 from December 31, 2020 to June 30, 2021, while OREO decreased $1,033 during the same period.

The following table presents nonperforming loans by loan category as of the dates presented:


	June 30, 2021		December 31, 2020		June 30, 2020
Commercial, financial, agricultural	$	15,576	$	16,668	$	10,526
Lease financing	—		48		151
Real estate – construction:
Residential	—		497		—
Commercial	—		—		—
Total real estate – construction	—		497		—
Real estate – 1-4 family mortgage:
Primary	15,355		16,317		17,077
Home equity	2,038		2,273		2,219
Rental/investment	854		1,526		1,596
Land development	201		345		426
Total real estate – 1-4 family mortgage	18,448		20,461		21,318
Real estate – commercial mortgage:
Owner-occupied	4,794		6,364		8,695
Non-owner occupied	16,424		10,204		2,126
Land development	576		572		609
Total real estate – commercial mortgage	21,794		17,140		11,430
Installment loans to individuals	718		656		678

Total nonperforming loans	$	56,536	$	55,470	$	44,103

Total nonperforming loans as a percentage of total loans were 0.56% as of June 30, 2021 as compared to 0.51% and 0.40% as of December 31, 2020 and June 30, 2020, respectively. The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 304.85% as of June 30, 2021 as compared to 317.55% as of December 31, 2020 and 329.65% as of June 30, 2020.

Management has evaluated the aforementioned loans and other loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses at June 30, 2021. Management also continually monitors past due loans for potential credit quality deterioration. Total loans 30-89 days past due but still accruing interest were $15,076 at June 30, 2021 as compared to $26,286 at December 31, 2020 and $9,675 at June 30, 2020.

Although not classified as nonperforming loans, restructured loans are another category of assets that contribute to our credit risk. Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest. Restructured loans that are not performing in accordance with their restructured terms that are either contractually 90 days past due or placed on nonaccrual status are reported as nonperforming loans.

As shown below, restructured loans totaled $24,710 at June 30, 2021 as compared to $20,448 at December 31, 2020 and $18,078 at June 30, 2020. At June 30, 2021, loans restructured through interest rate concessions represented 26% of total restructured loans, while loans restructured by a concession in payment terms represented the remainder. The following table provides further details of the Company’s restructured loans in compliance with their modified terms as of the dates presented:

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	June 30, 2021		December 31, 2020		June 30, 2020
Commercial, financial, agricultural	$	6,523	$	2,326	$	3,286





Real estate – 1-4 family mortgage:
Primary	10,183		9,460		8,680
Home equity	299		332		374
Rental/investment	420		432		696

Total real estate – 1-4 family mortgage	10,902		10,224		9,750
Real estate – commercial mortgage:
Owner-occupied	5,633		6,838		3,679
Non-owner occupied	1,575		797		1,077
Land development	—		183		189
Total real estate – commercial mortgage	7,208		7,818		4,945
Installment loans to individuals	77		80		97
Total restructured loans in compliance with modified terms	$	24,710	$	20,448	$	18,078

Changes in the Company’s restructured loans are set forth in the table below:


	2021		2020
Balance at January 1,	$	20,448	$	11,954
Additional advances or loans with concessions	9,101		9,105
Reclassified as performing restructured loan	35		188
Reductions due to:
Reclassified as nonperforming	(2,649)		(2,539)
Paid in full	(1,650)		(422)

Charge-offs	(205)		(3)

Paydowns	(370)		(205)

Balance at June 30,	$	24,710	$	18,078

The following table shows the principal amounts of nonperforming and restructured loans as of the dates presented. All loans where information exists about possible credit problems that would cause us to have serious doubts about the borrower’s ability to comply with the current repayment terms of the loan have been reflected in the table below.


	June 30, 2021		December 31, 2020		June 30, 2020
Nonaccruing loans	$	54,791	$	51,420	$	37,952
Accruing loans past due 90 days or more	1,745		4,050		6,151
Total nonperforming loans	56,536		55,470		44,103
Restructured loans in compliance with modified terms	24,710		20,448		18,078
Total nonperforming and restructured loans	$	81,246	$	75,918	$	62,181

The following table provides details of the Company’s other real estate owned as of the dates presented:

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	June 30, 2021		December 31, 2020		June 30, 2020
Residential real estate	$	261	$	179	$	901
Commercial real estate	2,596		2,665		2,514
Residential land development	341		1,013		3,040
Commercial land development	1,741		2,115		2,670

Total other real estate owned	$	4,939	$	5,972	$	9,125

Changes in the Company’s other real estate owned were as follows:


	2021		2020
Balance at January 1,	$	5,972	$	8,010

Transfers of loans	2,503		4,259

Impairments	(117)		(827)
Dispositions	(3,328)		(2,317)
Other	(91)		—
Balance at June 30,	$	4,939	$	9,125

Other real estate owned with a cost basis of $3,328 was sold during the six months ended June 30, 2021, resulting in a net gain of $50, while other real estate owned with a cost basis of $2,317 was sold during the six months ended June 30, 2020, resulting in a net gain of $89.

Interest Rate Risk

Market risk is the risk of loss from adverse changes in market prices and rates. The majority of assets and liabilities of a financial institution are monetary in nature and therefore differ greatly from most commercial and industrial companies that have significant investments in fixed assets and inventories. Our market risk arises primarily from interest rate risk inherent in lending and deposit-taking activities. Management believes a significant impact on the Company’s financial results stems from our ability to react to changes in interest rates. A sudden and substantial change in interest rates may adversely impact our earnings because the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis.

Because of the impact of interest rate fluctuations on our profitability, the Board of Directors and management actively monitor and manage our interest rate risk exposure. We have an Asset/Liability Committee (“ALCO”) that is authorized by the Board of Directors to monitor our interest rate sensitivity and to make decisions relating to that process. The ALCO’s goal is to structure our asset/liability composition to maximize net interest income while managing interest rate risk so as to minimize the adverse impact of changes in interest rates on net interest income and capital. The ALCO uses an asset/liability model as the primary quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model is used to perform both net interest income forecast simulations for multiple year horizons and economic value of equity (“EVE”) analyses, each under various interest rate scenarios, which could impact the results presented in the table below.

Net interest income simulations measure the short and medium-term earnings exposure from changes in market interest rates in a rigorous and explicit fashion. Our current financial position is combined with assumptions regarding future business to calculate net interest income under various hypothetical rate scenarios. EVE measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time for a given set of market rate assumptions. An increase in EVE due to a specified rate change indicates an improvement in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet.

The following table presents the projected impact of a change in interest rates on (1) static EVE and (2) earnings at risk (that is, net interest income) for the 1-12 and 13-24 month periods commencing July 1, 2021, in each case as compared to the result under rates present in the market on June 30, 2021. The changes in interest rates assume an instantaneous and parallel shift in the yield curve and do not account for changes in the slope of the yield curve.

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	Percentage Change In:
Immediate Change in Rates of (in basis points):	Economic Value Equity (EVE)	Earning at Risk (Net Interest Income)
	Static	1-12 Months	13-24 Months


+200	18.87%	21.38%	30.35%
+100	10.52%	10.72%	15.57%

The rate shock results for the net interest income simulations for the next twenty-four months produce an asset sensitive position at June 30, 2021 and are all within the parameters set by the Board of Directors. The preceding measures assume no change in the size or asset/liability compositions of the balance sheet, and they do not reflect future actions the ALCO may undertake in response to such changes in interest rates.

The scenarios assume instantaneous movements in interest rates in increments of plus 100 and 200. As interest rates are adjusted over a period of time, it is our strategy to proactively change the volume and mix of our balance sheet in order to mitigate our interest rate risk. The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions, including asset prepayment speeds, the impact of competitive factors on our pricing of loans and deposits, how responsive our deposit repricing is to the change in market rates and the expected life of non-maturity deposits. These business assumptions are based upon our experience, business plans and published industry experience; however, such assumptions may not necessarily reflect the manner or timing in which cash flows, asset yields and liability costs respond to changes in market rates. Because these assumptions are inherently uncertain, actual results will differ from simulated results.

The Company utilizes derivative financial instruments, including interest rate contracts such as swaps, caps and/or floors, as part of its ongoing efforts to mitigate its interest rate risk exposure and to facilitate the needs of its customers. The Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into an offsetting derivative contract position with other financial institutions. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures. At June 30, 2021, the Company had notional amounts of $204,113 on interest rate contracts with corporate customers and $204,113 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts and certain fixed rate loans.

Additionally, the Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate and adjustable rate residential mortgage loans and also enters into forward commitments to sell residential mortgage loans to secondary market investors.

The Company also enters into forward interest rate swap contracts on its FHLB borrowings and its junior subordinated debentures that are accounted for as cash flow hedges. Under each of these contracts, the Company pays a fixed rate of interest and receives a variable rate of interest based on the three-month or one-month LIBOR plus a predetermined spread. The Company entered into an interest rate swap contract on its subordinated notes that is accounted for as a fair value hedge. Under this contract, the Company pays a variable rate of interest based on the three-month LIBOR plus a predetermined spread and receives a fixed rate of interest.

For more information about the Company’s derivatives, see Note 10, “Derivative Instruments,” in the Notes to Consolidated Financial Statements of the Company in Item 1, Financial Statements.

Liquidity and Capital Resources

Liquidity management is the ability to meet the cash flow requirements of customers who may be either depositors wishing to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs.

Core deposits, which are deposits excluding time deposits greater than $250,000, are the major source of funds used by the Bank to meet cash flow needs. Maintaining the ability to acquire these funds as needed in a variety of markets is the key to assuring the Bank’s liquidity. Management continually monitors the Bank’s liquidity and non-core dependency ratios to ensure compliance with targets established by the Asset/Liability Management Committee.

Our investment portfolio is another alternative for meeting liquidity needs. These assets generally have readily available markets that offer conversions to cash as needed. Within the next twelve months, the securities portfolio is forecasted to generate cash flow through principal payments and maturities equal to approximately 16.50% of the carrying value of the total securities portfolio. Securities within our investment portfolio are also used to secure certain deposit types, short-term

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borrowings and derivative instruments. At June 30, 2021, securities with a carrying value of $617,709 were pledged to secure public fund deposits and as collateral for short-term borrowings and derivative instruments as compared to securities with a carrying value of $614,610 similarly pledged at December 31, 2020.

Other sources available for meeting liquidity needs include federal funds purchased and short-term and long-term advances from the FHLB. Interest is charged at the prevailing market rate on federal funds purchased and FHLB advances. There were no short-term borrowings from the FHLB at June 30, 2021 or December 31, 2020. Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and also are used to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. At June 30, 2021, the balance of our outstanding long-term advances with the FHLB was $150,434 compared to $152,167 at December 31, 2020. The total amount of the remaining credit available to us from the FHLB at June 30, 2021 was $3,864,732. We also maintain lines of credit with other commercial banks totaling $180,000. These are unsecured lines of credit with the majority maturing at various times within the next twelve months. There were no amounts outstanding under these lines of credit at June 30, 2021 or December 31, 2020.

In 2016 and 2020, we accessed the capital markets to generate liquidity in the form of subordinated notes. In addition, we assumed subordinated notes in connection with our acquisition of Metropolitan BancGroup, Inc. in 2017. The carrying value of the subordinated notes, net of unamortized debt issuance costs, was $207,889 at June 30, 2021.

The following table presents, by type, the Company’s funding sources, which consist of total average deposits and borrowed funds, and the total cost of each funding source for the periods presented:


	Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Noninterest-bearing demand	31.06	%	25.62	%	—	%	—	%
Interest-bearing demand	45.88		42.89		0.27		0.59
Savings	7.07		6.07		0.08		0.12
Time deposits	12.30		17.64		0.95		1.66
Short-term borrowings	0.10		4.58		0.31		1.04
Long-term Federal Home Loan Bank advances	1.16		1.29		0.04		1.13
Subordinated notes	1.58		0.97		5.06		5.60
Other borrowed funds	0.85		0.94		4.22		4.69
Total deposits and borrowed funds	100.00	%	100.00	%	0.36	%	0.71	%

Our strategy in choosing funds is focused on minimizing cost in the context of our balance sheet composition and interest rate risk position. Accordingly, management targets growth of noninterest-bearing deposits. While we do not control the types of deposit instruments our clients choose, we do influence those choices with the rates and the deposit specials we offer. We constantly monitor our funds position and evaluate the effect that various funding sources have on our financial position.

Cash and cash equivalents were $1,605,488 at June 30, 2021, as compared to $616,903 at June 30, 2020. Cash used in investing activities for the six months ended June 30, 2021 was $100,321, as compared to cash used in investing activities of $1,289,169 for the six months ended June 30, 2020. Proceeds from the sale, maturity or call of securities within our investment portfolio were $350,505 for the six months ended June 30, 2021, as compared to $192,580 for the same period in 2020. These proceeds were primarily reinvested into the investment portfolio. Purchases of investment securities were $1,190,400 for the first six months of 2021, as compared to $182,745 for the same period in 2020.

Cash provided by financing activities for the six months ended June 30, 2021 was $1,023,026, as compared to $1,436,229 for the same period in 2020. Deposits increased $1,056,270 and $1,633,336 for the six months ended June 30, 2021 and 2020, respectively.

Restrictions on Bank Dividends, Loans and Advances

The Company’s liquidity and capital resources, as well as its ability to pay dividends to its shareholders, are substantially dependent on the ability of the Renasant Bank to transfer funds to the Company in the form of dividends, loans and advances.

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Under Mississippi law, a Mississippi bank may not pay dividends unless its earned surplus is in excess of three times capital stock. A Mississippi bank with earned surplus in excess of three times capital stock may pay a dividend, subject to the approval of the Mississippi Department of Banking and Consumer Finance (the “DBCF”). In addition, the FDIC also has the authority to prohibit the Bank from engaging in business practices that the FDIC considers to be unsafe or unsound, which, depending on the financial condition of the bank, could include the payment of dividends. Accordingly, the approval of the DBCF is required prior to the Bank paying dividends to the Company, and under certain circumstances the approval of the FDIC may be required.

Federal Reserve regulations also limit the amount the Bank may loan to the Company unless such loans are collateralized by specific obligations. At June 30, 2021, the maximum amount available for transfer from the Bank to the Company in the form of loans was $158,102. The Company maintains a line of credit collateralized by cash with the Bank totaling $3,079. There were no amounts outstanding under this line of credit at June 30, 2021.

These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the six months ended June 30, 2021, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.

Potential Demands on Liquidity from Off-Balance Sheet Arrangements

The Company enters into loan commitments and standby letters of credit in the normal course of its business. Loan commitments are made to accommodate the financial needs of the Company’s customers. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Both arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Company’s normal credit policies, including establishing a provision for credit losses on unfunded commitments. Collateral (e.g., securities, receivables, inventory, equipment, etc.) is obtained based on management’s credit assessment of the customer.

Loan commitments and standby letters of credit do not necessarily represent future cash requirements of the Company in that while the borrower has the ability to draw upon these commitments at any time, these commitments often expire without being drawn upon. The Company’s unfunded loan commitments and standby letters of credit outstanding were as follows as of the dates presented:


	June 30, 2021		December 31, 2020
Loan commitments	$	2,953,982	$	2,749,988
Standby letters of credit	95,473		90,597

The Company closely monitors the amount of remaining future commitments to borrowers in light of prevailing economic conditions and adjusts these commitments and the provision related thereto as necessary. The Company will continue this process as new commitments are entered into or existing commitments are renewed. For a more detailed discussion related to the allowance and provision for credit losses on unfunded loan commitments, refer to the “Risk Management” section above.

Shareholders’ Equity and Regulatory Matters

Total shareholders’ equity of the Company was $2,203,807 at June 30, 2021 compared to $2,132,733 at December 31, 2020. Book value per share was $39.11 and $37.95 at June 30, 2021 and December 31, 2020, respectively. The growth in shareholders’ equity was attributable to earnings retention offset by changes in accumulated other comprehensive income and dividends declared.

The Company maintains a shelf registration statement with the Securities and Exchange Commission (“SEC”). The shelf registration statement, which was effective upon filing, allows the Company to raise capital from time to time through the sale of common stock, preferred stock, depositary shares, debt securities, rights, warrants and units, or a combination thereof, subject to market conditions. Specific terms and prices will be determined at the time of any offering under a separate prospectus supplement that the Company will file with the SEC at the time of the specific offering. The proceeds of the sale of securities, if and when offered, will be used for general corporate purposes or as otherwise described in the prospectus supplement applicable to the offering and could include the expansion of the Company’s banking, insurance and wealth management operations as well as other business opportunities.

On October 20, 2020, the Company’s Board of Directors approved a stock repurchase program, authorizing the Company to repurchase up to $50,000 of its outstanding common stock, either in open market purchases or privately-negotiated transactions. The repurchase program will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock

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authorized to be repurchased. The Company did not repurchase any of its common stock under the stock repurchase plan during the first six months of 2021.

The Company has junior subordinated debentures with a carrying value of $111,083 at June 30, 2021, of which $107,492 is included in the Company’s Tier 1 capital. Federal Reserve guidelines limit the amount of securities that, similar to our junior subordinated debentures, are includable in Tier 1 capital, but these guidelines did not impact the debentures we include in Tier 1 capital at June 30, 2021. Although our existing junior subordinated debentures are currently unaffected by these Federal Reserve guidelines, on account of changes enacted as part of the Dodd-Frank Act, any new trust preferred securities are not includable in Tier 1 capital. Further, if as a result of an acquisition we exceed $15,000,000 in assets, or if we make any acquisition after we have exceeded $15,000,000 in assets, we will lose Tier 1 treatment of our junior subordinated debentures.

The Company has subordinated notes with a carrying value of $207,889 at June 30, 2021, of which $212,275 is included in the Company’s Tier 2 capital.

Capital Tiers

Tier 1 Capital to
Average Assets
(Leverage)

Common Equity Tier 1 to
Risk - Weighted Assets

Tier 1 Capital to
Risk - Weighted
Assets

Total Capital to
Risk - Weighted
Assets

Well capitalized

5% or above

6.5% or above

8% or above

10% or above

Adequately capitalized

4% or above

4.5% or above

6% or above

8% or above

Undercapitalized

Less than 4%

Less than 4.5%

Less than 6%

Less than 8%

Significantly undercapitalized

Less than 3%

Less than 4%

Less than 6%

Critically undercapitalized

Tangible Equity / Total Assets less than 2%

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The following table provides the capital and risk-based capital and leverage ratios for the Company and for Renasant Bank as of the dates presented:


	Actual				Minimum Capital Requirement to be Well Capitalized				Minimum Capital Requirement to be Adequately Capitalized (including the Capital Conservation Buffer)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2021
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,278,165	11.14	%	$	745,917	6.50	%	$	803,295	7.00	%
Tier 1 risk-based capital ratio	1,385,657		12.07	%	918,052		8.00	%	975,430		8.50	%
Total risk-based capital ratio	1,734,376		15.11	%	1,147,564		10.00	%	1,204,943		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,385,657		9.30	%	744,961		5.00	%	595,969		4.00	%

Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,444,582	12.59	%	$	745,647	6.50	%	$	803,004	7.00	%
Tier 1 risk-based capital ratio	1,444,582		12.59	%	917,719		8.00	%	975,076		8.50	%
Total risk-based capital ratio	1,581,025		13.78	%	1,147,149		10.00	%	1,204,506		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,444,582		9.70	%	744,592		5.00	%	595,674		4.00	%

December 31, 2020
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,199,394	10.93	%	$	713,086	6.50	%	$	767,939	7.00	%
Tier 1 risk-based capital ratio	1,306,597		11.91	%	877,644		8.00	%	932,497		8.50	%
Total risk-based capital ratio	1,653,694		15.07	%	1,097,055		10.00	%	1,151,908		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,306,597		9.37	%	697,579		5.00	%	558,063		4.00	%

Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,369,994	12.49	%	$	712,709	6.50	%	$	767,533	7.00	%
Tier 1 risk-based capital ratio	1,369,994		12.49	%	877,181		8.00	%	932,004		8.50	%
Total risk-based capital ratio	1,504,985		13.73	%	1,096,476		10.00	%	1,151,299		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,369,994		9.83	%	696,738		5.00	%	557,391		4.00	%

The Company has elected to take advantage of transitional relief offered by the Federal Reserve and FDIC to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transitional period to phase out the capital benefit provided by the two-year delay.

For more information regarding the capital adequacy guidelines applicable to the Company and Renasant Bank, please refer to Note 15, “Regulatory Matters,” in the Notes to the Consolidated Financial Statements of the Company in Item 1, Financial Statements.

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Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), this document contains certain non-GAAP financial measures, namely, an adjusted efficiency ratio and the allowance for credit losses on loans to total loans, excluding PPP loans (the “adjusted allowance ratio”). The adjusted allowance ratio only excludes PPP loans; the adjusted efficiency ratio adjusts GAAP financial measures to exclude the amortization of intangible assets and certain items (such as, when applicable, COVID-19 related expenses, debt prepayment penalties, restructuring charges, provision for unfunded commitments, gains on sales of securities and asset valuation adjustments) with respect to which the Company is unable to accurately predict when these items will be incurred or, when incurred, the amount thereof. With respect to COVID-19 related expenses in particular, management added these expenses as a charge to exclude when calculating non-GAAP financial measures because the expenses included within this line item are readily quantifiable and possess the same characteristics with respect to management’s inability to accurately predict the timing or amount thereof as the other items excluded when calculating non-GAAP financial measures. Management uses the adjusted efficiency ratio when evaluating capital utilization and adequacy, while it uses the adjusted allowance ratio to determine the adequacy of our allowance with respect to loans not fully guaranteed by the U.S. Small Business Administration. In addition, the Company believes that non-GAAP financial measures facilitate the making of period-to-period comparisons and are meaningful indicators of its operating performance, particularly because these measures are widely used by industry analysts for companies with merger and acquisition activities. Also, because the amortization of intangible assets and items such as restructuring charges and COVID-19 related expenses can vary extensively from company to company and, as to intangible assets, are excluded from the calculation of a financial institution’s regulatory capital, the Company believes that the presentation of this non-GAAP financial information allows readers to more easily compare the Company’s results to information provided in other regulatory reports and the results of other companies. The reconciliations from GAAP to non-GAAP for these financial measures are below.


Adjusted Efficiency Ratio
	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Interest income (fully tax equivalent basis)	$	122,617		$	125,630		$	245,995		$	257,517
Interest expense	11,412			18,173			23,526			41,744
Net interest income (fully tax equivalent basis)	111,205			107,457			222,469			215,773

Total noninterest income	47,610			64,170			128,647			101,740
Net gains on sales of securities	—			31			1,357			31
MSR valuation adjustment	—			(4,951)			13,561			(14,522)
Adjusted noninterest income	47,610			69,090			113,729			116,231

Total noninterest expense	108,777			118,285			224,712			233,326
Intangible amortization	1,539			1,834			3,137			3,729

Debt prepayment penalty	—			90			—			90
Restructuring charges	15			—			307			—
COVID-19 related expenses	370			6,257			1,155			9,160
Provision for unfunded commitments	—			2,600			—			6,000
Adjusted noninterest expense	106,853			107,504			220,113			214,347

Efficiency Ratio (GAAP)	68.49		%	68.92		%	64.00		%	73.49		%
Adjusted Efficiency Ratio (non-GAAP)	67.28		%	60.89		%	65.47		%	64.56		%

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Allowance for Credit Losses on Loans to Total Loans, excluding PPP Loans
	June 30, 2021			December 31, 2020
Total loans (GAAP)	$	10,149,242		$	10,933,647
Less PPP loans	246,931			1,128,703
Adjusted total loans (non-GAAP)	$	9,902,311		$	9,804,944

Allowance for Credit Losses on Loans	$	172,354		$	176,144
ACL/Total loans (GAAP)	1.70		%	1.61		%
ACL/Total loans excluding PPP loans (non-GAAP)	1.74		%	1.80		%

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Readers of this Form 10-Q should note that, because there are no standard definitions for the calculations as well as the results, the Company’s calculations may not be comparable to a similarly-titled measure presented by other companies. Also, there may be limits in the usefulness of this measure to readers of this document. As a result, the Company encourages readers to consider its consolidated financial statements and footnotes thereto in their entirety and not to rely on any single financial measure.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk since December 31, 2020. For additional information regarding our market risk, see our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 4. CONTROLS AND PROCEDURES

Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective for ensuring that information the Company is required to disclose in reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Principal Executive and Principal Financial Officers, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1A. RISK FACTORS

When evaluating the risk of an investment in the Company’s common stock, potential investors should carefully consider the risk factors appearing in Part I, Item 1A, Risk Factors, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

During the three month period ended June 30, 2021, the Company repurchased shares of its common stock as indicated in the following table:


	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Plans (1)	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under Share Repurchase Plans (2)
April 1, 2021 to April 30, 2021	188	$	41.97	—	$	50,000
May 1, 2021 to May 31, 2021	5,045	42.65		—	50,000
June 1, 2021 to June 30, 2021	629	41.83		—	50,000
Total	5,862	$	42.54	—

(1) Share amounts in this column represent shares of Renasant Corporation stock withheld to satisfy federal and state tax liabilities related to the exercise of stock options and the vesting of time-based restricted stock awards.

The Company announced a $50.0 million stock repurchase program on October 20, 2020 which will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased. No shares were repurchased during the second quarter of 2021 under this plan.

(2) Dollars in thousands

Please refer to the information discussing restrictions on the Company’s ability to pay dividends under the heading “Liquidity and Capital Resources” in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report, which is incorporated by reference herein.

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Item 6. EXHIBITS


Exhibit Number						Description

(3)(i)						Articles of Incorporation of Renasant Corporation, as amended (1)

(3)(ii)						Amended and Restated Bylaws of Renasant Corporation (2)

(3)(iii)						Articles of Amendment to the Amended and Restated Bylaws of Renasant Corporation (3)

(10)(i)						Amendment No. 3 to Executive Employment Agreement effective April 27, 2021, by and between Renasant Corporation and E. Robinson McGraw ( 4)

(31)(i)						Certification of the Principal Executive Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(31)(ii)						Certification of the Principal Financial Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32)(i)						Certification of the Principal Executive Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32)(ii)						Certification of the Principal Financial Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(101)						The following materials from Renasant Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 were formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements (Unaudited).

(104)						The cover page of Renasant Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL (included in Exhibit 101).

(1) Filed as exhibit 3.1 to the Form 10-Q of the Company filed with the Securities and Exchange Commission (the “Commission”) on May 10, 2016 and incorporated herein by reference.

(2) Filed as exhibit 3(ii) to the Form 8-K of the Company filed with the Commission on July 20, 2018 and incorporated herein by reference.

(3) Filed as exhibit 3(ii) to the Form 8-K of the Company filed with the Commission on April 30, 2021 and incorporated herein by reference.

(4) Filed as exhibit 10(i) to the Form 10-Q of the Company filed with the Commission on May 7, 2021 and incorporated herein by reference.

The Company does not have any long-term debt instruments under which securities are authorized exceeding ten percent of the total assets of the Company and its subsidiaries on a consolidated basis. The Company will furnish to the Securities and Exchange Commission, upon its request, a copy of all long-term debt instruments.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		RENASANT CORPORATION
		(Registrant)

Date:	August 6, 2021	/s/ C. Mitchell Waycaster
		C. Mitchell Waycaster
		President and
		Chief Executive Officer
		(Principal Executive Officer)

Date:	August 6, 2021	/s/ James C. Mabry IV
		James C. Mabry IV
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

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Part I. Financial Information Item 1. Financial Statements Note 1 Summary Of Significant Accounting Policies Note 2 Securities Note 3 Non Purchased Loans Note 4 Purchased Loans Note 5 Allowance For Credit Losses Note 6 Other Real Estate Owned Note 7 Goodwill and Other Intangible Assets Note 8 Mortgage Servicing Rights Note 9 - Employee Benefit and Deferred Compensation Plans Note 10 Derivative Instruments Note 11 Income Taxes Note 12 Fair Value Measurements Note 13 Other Comprehensive Income (loss)Note 14 Net Income Per Common Share Note 15 Regulatory Matters Note 16 Segment Reporting Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II. Other Information Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 6. Exhibits

Exhibits

(3)(i) Articles of Incorporation of Renasant Corporation, as amended(1) (3)(ii) Amended and Restated Bylaws of Renasant Corporation(2) (3)(iii) Articles of Amendment to the Amended and Restated Bylaws of Renasant Corporation(3) (10)(i) Amendment No. 3 to Executive Employment Agreement effective April 27, 2021, by and between Renasant Corporation and E. Robinson McGraw(4) (31)(i) Certification of the Principal Executive Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)(ii) Certification of the Principal Financial Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (32)(i) Certification of the Principal Executive Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (32)(ii) Certification of the Principal Financial Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

RNST 10-Q Quarter ended June 30, 2021

Exhibits