RNST 10-Q Quarterly Report Sept. 30, 2021

RENASANT CORP

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rnst-20210930

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 September 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 October 29, 2021, 55,747,407 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 September 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	53

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)
	September 30, 2021		December 31, 2020
Assets
Cash and due from banks	$	169,474	$	176,372
Interest-bearing balances with banks	1,306,667		456,831
Cash and cash equivalents	1,476,141		633,203

Securities available for sale, at fair value	2,544,643		1,343,457
Loans held for sale, at fair value	452,869		417,771
Loans, net of unearned income:
Non purchased loans and leases	8,875,880		9,419,540
Purchased loans	1,140,944		1,514,107
Total loans, net of unearned income	10,016,824		10,933,647
Allowance for credit losses	( 170,038 )		( 176,144 )
Loans, net	9,846,786		10,757,503
Premises and equipment, net	294,499		300,496
Other real estate owned:
Non purchased	2,252		2,045
Purchased	2,453		3,927
Total other real estate owned, net	4,705		5,972
Goodwill	939,683		939,683
Other intangible assets, net	25,522		30,139
Bank-owned life insurance	286,088		230,609
Mortgage servicing rights	86,387		62,994
Other assets	198,227		207,785
Total assets	$	16,155,550	$	14,929,612
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing	$	4,492,650	$	3,685,048
Interest-bearing	8,762,179		8,374,033
Total deposits	13,254,829		12,059,081
Short-term borrowings	11,253		21,340
Long-term debt	468,863		474,970
Other liabilities	216,661		241,488
Total liabilities	13,951,606		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; 55,747,407 and 56,200,487 shares outstanding, respectively	296,483		296,483
Treasury stock, at cost – 3,549,318 and 3,096,238 shares, respectively	( 118,288 )		( 101,554 )
Additional paid-in capital	1,298,022		1,296,963
Retained earnings	717,033		615,773
Accumulated other comprehensive income, net of taxes	10,694		25,068
Total shareholders’ equity	2,203,944		2,132,733
Total liabilities and shareholders’ equity	$	16,155,550	$	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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Interest income
Loans	$	105,004	$	114,914	$	333,334	$	351,192
Securities
Taxable	6,749		5,499		17,285		19,219
Tax-exempt	1,667		1,573		5,025		4,697
Other	593		92		1,122		1,098
Total interest income	114,013		122,078		356,766		376,206
Interest expense
Deposits	6,972		11,810		22,920		44,175
Borrowings	3,749		3,982		11,327		13,361
Total interest expense	10,721		15,792		34,247		57,536
Net interest income	103,292		106,286		322,519		318,670
(Recovery of) provision for loan losses	( 1,200 )		23,100		( 1,200 )		76,350
Provision for other credit losses	—		—		—		—
(Recovery of) provision for credit losses	( 1,200 )		23,100		( 1,200 )		76,350
Net interest income after provision for credit losses	104,492		83,186		323,719		242,320
Noninterest income
Service charges on deposit accounts	9,337		7,486		26,818		23,388
Fees and commissions	3,837		3,402		11,847		9,427
Insurance commissions	2,829		2,681		7,488		6,797
Wealth management revenue	5,371		4,364		15,182		12,190
Mortgage banking income	23,292		49,714		94,878		110,739
Net gain on sales of securities	764		—		2,121		31
BOLI income	1,602		1,267		5,318		3,759
Other	3,723		2,014		15,750		6,337
Total noninterest income	50,755		70,928		179,402		172,668
Noninterest expense
Salaries and employee benefits	69,115		75,406		218,104		227,956
Data processing	5,277		5,259		16,380		15,312
Net occupancy and equipment	11,748		13,296		35,660		40,927
Other real estate owned	168		1,033		313		2,071
Professional fees	2,972		3,197		8,566		8,355
Advertising and public relations	2,922		2,240		9,274		8,560
Intangible amortization	1,481		1,733		4,618		5,462
Communications	2,198		2,319		6,781		6,698

Restructuring charges	—		—		307		—

Debt prepayment penalty	—		28		—		118
Other	8,118		11,999		28,708		34,377
Total noninterest expense	103,999		116,510		328,711		349,836
Income before income taxes	51,248		37,604		174,410		65,152
Income taxes	11,185		7,612		35,572		13,022
Net income	$	40,063	$	29,992	$	138,838	$	52,130


Basic earnings per share	$	0.71	$	0.53	$	2.47	$	0.93
Diluted earnings per share	$	0.71	$	0.53	$	2.46	$	0.92
Cash dividends per common share	$	0.22	$	0.22	$	0.66	$	0.66

See Notes to Consolidated Financial Statements.

Table of Contents

Renasant Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(In Thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income	$	40,063	$	29,992	$	138,838	$	52,130
Other comprehensive income, net of tax:
Securities available for sale:
Unrealized holding (losses) gains on securities	( 9,250 )		388		( 20,491 )		19,685
Reclassification adjustment for gains realized in net income	( 570 )		—		( 1,582 )		( 23 )


Total securities available for sale	( 9,820 )		388		( 22,073 )		19,662
Derivative instruments:
Unrealized holding gains (losses) on derivative instruments	1,215		1,175		7,551		( 2,621 )

Total derivative instruments	1,215		1,175		7,551		( 2,621 )
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	49		48		148		145
Total defined benefit pension and post-retirement benefit plans	49		48		148		145
Other comprehensive (loss) income, net of tax	( 8,556 )		1,611		( 14,374 )		17,186
Comprehensive income	$	31,507	$	31,603	$	124,464	$	69,316

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
Nine Months Ended September 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
Net income	—	—		—		—		40,063		—		40,063
Other comprehensive loss	—	—		—		—		—		( 8,556 )		( 8,556 )
Comprehensive income												31,507
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,474 )		—		( 12,474 )
Repurchase of shares in connection with stock repurchase program	( 612,107 )	—		( 21,314 )		—		—		—		( 21,314 )

Issuance of common stock for stock-based compensation awards	8,636	—		275		( 451 )		—		—		( 176 )
Stock-based compensation expense	—	—		—		2,594		—		—		2,594

Balance at September 30, 2021	55,747,407	$	296,483	$	( 118,288 )	$	1,298,022	$	717,033	$	10,694	$	2,203,944

Table of Contents


	Common Stock			Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Nine Months Ended September 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
Net income	—	—		—		—		29,992		—		29,992
Other comprehensive income	—	—		—		—		—		1,611		1,611
Comprehensive income												31,603
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,527 )		—		( 12,527 )


Issuance of common stock for stock-based compensation awards	11,743	—		423		( 550 )		—		—		( 127 )
Stock-based compensation expense	—	—		—		2,405		—		—		2,405

Balance at September 30, 2020	56,193,705	$	296,483	$	( 101,800 )	$	1,294,888	$	596,779	$	17,950	$	2,104,300

See Notes to Consolidated Financial Statements.

Table of Contents

Renasant Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(In Thousands)


	Nine Months Ended September 30,
	2021		2020
Operating activities
Net income	$	138,838	$	52,130
Adjustments to reconcile net income to net cash provided by operating activities:
(Recovery of) provision for credit losses	( 1,200 )		76,350
Depreciation, amortization and accretion	34,421		22,727
Deferred income tax expense (benefit)	5,071		( 8,494 )
Funding of mortgage loans held for sale	( 3,189,474 )		( 3,277,576 )
Proceeds from sales of mortgage loans held for sale	3,230,039		3,310,402
Gains on sales of mortgage loans held for sale	( 71,598 )		( 114,327 )
Valuation adjustment to mortgage servicing rights	( 13,561 )		13,694
Gains on sales of securities	( 2,121 )		( 31 )
Penalty on prepayment of debt	—		118
(Gains) losses on sales of premises and equipment	( 519 )		35
Stock-based compensation expense	7,736		8,153

Increase in other assets	( 16,429 )		( 87,405 )
(Decrease) increase in other liabilities	( 31,032 )		48,269
Net cash provided by operating activities	90,171		44,045
Investing activities
Purchases of securities available for sale	( 1,743,105 )		( 304,955 )
Proceeds from sales of securities available for sale	176,406		8,773
Proceeds from call/maturities of securities available for sale	329,520		314,363



Net decrease (increase) in loans	917,343		( 1,383,382 )
Purchases of premises and equipment	( 16,797 )		( 6,824 )
Proceeds from sales of premises and equipment	8,715		—
Purchase of bank-owned life insurance	( 50,000 )		—
Net change in FHLB stock	( 1,226 )		10,607
Proceeds from sales of other assets	4,081		6,020

Other, net	2,803		—
Net cash used in investing activities	( 372,260 )		( 1,355,398 )
Financing activities
Net increase in noninterest-bearing deposits	807,602		1,206,472
Net increase in interest-bearing deposits	388,146		514,646
Net decrease in short-term borrowings	( 10,087 )		( 446,467 )
Proceeds from the issuance of long-term debt, net of issuance costs	—		98,299
Repayment of long-term debt	( 1,742 )		( 246 )
Cash paid for dividends	( 37,578 )		( 37,607 )
Repurchase of shares in connection with stock repurchase program	( 21,314 )		( 24,569 )


Net cash provided by financing activities	1,125,027		1,310,528
Net increase (decrease) in cash and cash equivalents	842,938		( 825 )
Cash and cash equivalents at beginning of period	633,203		414,930
Cash and cash equivalents at end of period	$	1,476,141	$	414,105


Supplemental disclosures
Cash paid for interest	$	37,827	$	61,351
Cash paid for income taxes	$	41,248	$	26,148
Noncash transactions:
Transfers of loans to other real estate owned	$	3,171	$	7,887
Financed sales of other real estate owned	$	442	$	151



Recognition of operating right-of-use assets	$	6,718	$	4,151
Recognition of operating lease liabilities	$	6,718	$	4,151

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.

Subsequent Events :

On October 1, 2021, the Company redeemed at par $ 15,000 of 6.50 % Fixed-to-Floating Rate Subordinated Notes that were assumed as part of the Metropolitan BancGroup, Inc. acquisition in 2017.

On October 27, 2021, the Company prepaid a $ 150,000 long-term advance from the Federal Home Loan Bank (“FHLB”). The long-term advance featured a floating rate of three-month LIBOR less 50 basis points with a 0 % floor that converted to a fixed rate of 1.358 % in October 2021. As a result of this early prepayment, the Company incurred penalty charges of $ 6,123 .

On October 27, 2021, the Bank terminated swaps with a total notional amount of $ 100,000 . These swaps hedged forecasted future FHLB borrowings which are no longer forecasted to occur. As a result of the termination the Company recognized a gain of $ 4,730 .

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 September 30, 2021 or December 31, 2020.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2021
U.S. Treasury securities	$	3,014	$	10	$	—	$	3,024

Obligations of states and political subdivisions	372,311		9,096		( 2,426 )		378,981
Residential mortgage backed securities:
Government agency mortgage backed securities	935,233		11,694		( 3,689 )		943,238
Government agency collateralized mortgage obligations	962,684		1,225		( 6,172 )		957,737
Commercial mortgage backed securities:
Government agency mortgage backed securities	16,650		515		( 1 )		17,164
Government agency collateralized mortgage obligations	191,554		1,316		( 2,338 )		190,532

Other debt securities	51,321		2,646		—		53,967

	$	2,532,767	$	26,502	$	( 14,626 )	$	2,544,643


	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

Table of Contents

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 September 30, 2020.




	Carrying Value		Net Proceeds		Gain/(Loss)
Three months ended September 30, 2021


Residential mortgage backed securities:
Government agency mortgage backed securities	$	9,232	$	9,739	$	507
Government agency collateralized mortgage obligations	6,736		6,866		130




Other debt securities	4,283		4,410		127

	$	20,251	$	21,015	$	764
Nine months ended September 30, 2021

Obligations of states and political subdivisions	$	47	$	50	$	3
Residential mortgage backed securities:
Government agency mortgage backed securities	145,572		149,474		3,902
Government agency collateralized mortgage obligations	12,362		12,512		150



Trust preferred securities	12,021		9,960		( 2,061 )
Other debt securities	4,283		4,410		127

	$	174,285	$	176,406	$	2,121



	Carrying Value		Net Proceeds		Gain/(Loss)













Nine months ended September 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 nine months ended September 30, 2021 were as follows:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Gross gains on sales of securities available for sale	$	825	$	—	$	4,333	$	166
Gross losses on sales of securities available for sale	( 61 )		—		( 2,212 )		( 135 )
Gains on sales of securities available for sale, net	$	764	$	—	$	2,121	$	31

At September 30, 2021 and December 31, 2020, securities with a carrying value of $ 536,018 and $ 582,338 , respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $ 21,445 and $ 32,272 were pledged as collateral for short-term borrowings and derivative instruments at September 30, 2021 and December 31, 2020, respectively.

The amortized cost and fair value of securities at September 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		$	9,229	$	9,334
Due after one year through five years		42,312		44,024
Due after five years through ten years		58,334		61,568
Due after ten years		290,472		293,271
Residential mortgage backed securities:
Government agency mortgage backed securities		935,233		943,238
Government agency collateralized mortgage obligations		962,684		957,737
Commercial mortgage backed securities:
Government agency mortgage backed securities		16,650		17,164
Government agency collateralized mortgage obligations		191,554		190,532
Other debt securities		26,299		27,775

		$	2,532,767	$	2,544,643

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following tables present 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:
September 30, 2021

Obligations of states and political subdivisions	46	$	145,658	$	( 2,338 )	3	$	3,884	$	( 88 )	49	$	149,542	$	( 2,426 )
Residential mortgage backed securities:
Government agency mortgage backed securities	45	508,398		( 3,689 )		—	—		—		45	508,398		( 3,689 )
Government agency collateralized mortgage obligations	33	726,128		( 6,172 )		—	—		—		33	726,128		( 6,172 )
Commercial mortgage backed securities:
Government agency mortgage backed securities	17	3,673		( 1 )		1	439		—		18	4,112		( 1 )
Government agency collateralized mortgage obligations	2	129,054		( 2,303 )		1	3,004		( 35 )		3	132,058		( 2,338 )


Total	143	$	1,512,911	$	( 14,503 )	5	$	7,327	$	( 123 )	148	$	1,520,238	$	( 14,626 )
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 September 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:


	September 30, 2021		December 31, 2020
Commercial, financial, agricultural (1)	$	1,321,569	$	2,360,471
Lease financing	83,496		80,022
Real estate – construction:
Residential	306,537		243,814
Commercial	779,766		583,338
Total real estate – construction	1,086,303		827,152
Real estate – 1-4 family mortgage:
Primary	1,657,195		1,536,181
Home equity	424,860		432,768
Rental/investment	268,609		264,436
Land development	133,732		123,179
Total real estate – 1-4 family mortgage	2,484,396		2,356,564
Real estate – commercial mortgage:
Owner-occupied	1,365,288		1,334,765
Non-owner occupied	2,323,135		2,194,739
Land development	106,475		120,125
Total real estate – commercial mortgage	3,794,898		3,649,629
Installment loans to individuals	109,499		149,862
Gross loans	8,880,161		9,423,700
Unearned income	( 4,281 )		( 4,160 )
Loans, net of unearned income	$	8,875,880	$	9,419,540

(1) Includes Paycheck Protection Program (“PPP”) loans of $ 67,462 and $ 1,128,703 as of September 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
September 30, 2021
Commercial, financial, agricultural	$	1,708	$	395	$	1,313,683	$	1,315,786	$	414	$	2,534	$	2,835	$	5,783	$	1,321,569
Lease financing	—		—		83,485		83,485		—		11		—		11		83,496
Real estate – construction:
Residential	853		—		305,684		306,537		—		—		—		—		306,537
Commercial	—		—		779,766		779,766		—		—		—		—		779,766
Total real estate – construction	853		—		1,085,450		1,086,303		—		—		—		—		1,086,303
Real estate – 1-4 family mortgage:
Primary	5,583		452		1,639,206		1,645,241		981		5,951		5,022		11,954		1,657,195
Home equity	1,225		—		422,897		424,122		61		502		175		738		424,860
Rental/investment	301		22		267,420		267,743		—		383		483		866		268,609
Land development	125		33		133,376		133,534		—		119		79		198		133,732
Total real estate – 1-4 family mortgage	7,234		507		2,462,899		2,470,640		1,042		6,955		5,759		13,756		2,484,396
Real estate – commercial mortgage:
Owner-occupied	609		2		1,360,882		1,361,493		—		1,052		2,743		3,795		1,365,288
Non-owner occupied	167		4		2,317,375		2,317,546		—		13		5,576		5,589		2,323,135
Land development	273		—		106,088		106,361		—		114		—		114		106,475
Total real estate – commercial mortgage	1,049		6		3,784,345		3,785,400		—		1,179		8,319		9,498		3,794,898
Installment loans to individuals	765		—		108,516		109,281		79		34		105		218		109,499
Unearned income	—		—		( 4,281 )		( 4,281 )		—		—		—		—		( 4,281 )
Loans, net of unearned income	$	11,609	$	908	$	8,834,097	$	8,846,614	$	1,535	$	10,713	$	17,018	$	29,266	$	8,875,880

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 September 30, 2021 and one restructured loan in the amount of $ 92 contractually 90 days past due or more and still accruing at September 30, 2020. The outstanding balance of restructured loans on nonaccrual status was $ 12,411 and $ 3,703 at September 30, 2021 and September 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 September 30, 2021
Commercial, financial, agricultural	1	$	30	$	30





Real estate – 1-4 family mortgage:
Primary	11	1,518		1,538










Total	12	$	1,548	$	1,568

Three months ended September 30, 2020
Commercial, financial, agricultural	1	$	31	$	31





Real estate – 1-4 family mortgage:
Primary	2	201		200

Rental/investment	1	33		32

Total real estate – 1-4 family mortgage	3	234		232
Real estate – commercial mortgage:
Owner-occupied	2	357		357
Non-owner occupied	2	210		210

Total real estate – commercial mortgage	4	567		567

Total	8	$	832	$	830

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
Nine months ended September 30, 2021
Commercial, financial, agricultural	7	$	5,258	$	5,258





Real estate – 1-4 family mortgage:
Primary	23	3,321		3,350




Real estate – commercial mortgage:

Non-owner occupied	1	837		810



Total	31	$	9,416	$	9,418

Nine months ended September 30, 2020
Commercial, financial, agricultural	7	$	1,862	$	1,859





Real estate – 1-4 family mortgage:
Primary	17	2,356		2,363

Rental/investment	2	142		142

Total real estate – 1-4 family mortgage	19	2,498		2,505
Real estate – commercial mortgage:
Owner-occupied	3	3,019		2,970
Non-owner occupied	2	210		210
Land development	1	189		189
Total real estate – commercial mortgage	6	3,418		3,369
Installment loans to individuals	2	24		21
Total	34	$	7,802	$	7,754

With respect to loans that were restructured during the nine months ended September 30, 2021, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the nine months ended September 30, 2020, $ 64 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	31	9,441
Reclassified as performing restructured loan	1	35
Reductions due to:
Reclassified as nonperforming	( 4 )	( 370 )
Paid in full	( 14 )	( 6,031 )


Principal paydowns	—	( 645 )

Totals at September 30, 2021	90	$	14,191

The allowance for credit losses attributable to restructured loans was $ 260 and $ 279 at September 30, 2021 and September 30, 2020, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at September 30, 2021 and September 30, 2020.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 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 September 30, 2021, the Company has discontinued its deferral program but 30 loans with total balances of approximately $ 3,300 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
September 30, 2021
Commercial, Financial, Agricultural	$	219,635	$	300,742	$	156,654	$	51,385	$	23,011	$	13,120	$	453,330	$	2,846	$	1,220,723
Pass	218,622		300,504		153,728		49,799		22,140		10,419		449,649		2,047		1,206,908
Special Mention	—		143		2,386		290		635		1,251		458		—		5,163
Substandard	1,013		95		540		1,296		236		1,450		3,223		799		8,652






Real Estate - Construction	$	335,332	$	404,063	$	243,552	$	13,876	$	—	$	—	$	6,136	$	5,499	$	1,008,458
Residential	$	187,482	$	32,508	$	—	$	—	$	—	$	—	$	6,136	$	5,499	$	231,625
Pass	187,482		32,508		—		—		—		—		6,136		5,499		231,625
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Commercial	$	147,850	$	371,555	$	243,552	$	13,876	$	—	$	—	$	—	$	—	$	776,833
Pass	147,850		371,555		238,899		13,876		—		—		—		—		772,180
Special Mention	—		—		4,653		—		—		—		—		—		4,653
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	125,762	$	73,169	$	49,283	$	20,751	$	17,571	$	9,480	$	13,409	$	525	$	309,950
Primary	$	7,686	$	6,791	$	2,769	$	3,636	$	3,645	$	747	$	2,901	$	—	$	28,175
Pass	7,686		6,791		2,470		3,636		3,561		731		2,890		—		27,765
Special Mention	—		—		117		—		—		—		—		—		117
Substandard	—		—		182		—		84		16		11		—		293

Home Equity	$	768	$	303	$	—	$	—	$	—	$	—	$	6,300	$	—	$	7,371
Pass	768		303		—		—		—		—		6,300		—		7,371
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

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

Rental/Investment	$	59,238	$	42,994	$	23,169	$	16,598	$	13,706	$	8,251	$	1,017	$	525	$	165,498
Pass	59,218		42,646		22,049		16,466		13,515		7,791		1,017		525		163,227
Special Mention	—		250		—		—		—		74		—		—		324
Substandard	20		98		1,120		132		191		386		—		—		1,947

Land Development	$	58,070	$	23,081	$	23,345	$	517	$	220	$	482	$	3,191	$	—	$	108,906
Pass	58,070		20,687		23,345		517		220		482		3,191		—		106,512
Special Mention	—		2,394		—		—		—		—		—		—		2,394
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - Commercial Mortgage	$	682,955	$	870,341	$	674,008	$	349,402	$	323,092	$	440,289	$	124,028	$	20,904	$	3,485,019
Owner-Occupied	$	197,995	$	283,768	$	206,047	$	154,453	$	129,531	$	136,496	$	51,478	$	9,064	$	1,168,832
Pass	197,206		281,580		204,259		150,300		123,413		127,970		51,039		7,327		1,143,094
Special Mention	—		2,188		248		—		1,806		535		424		1,737		6,938
Substandard	789		—		1,540		4,153		4,312		7,991		15		—		18,800

Non-Owner Occupied	$	458,535	$	566,698	$	457,532	$	189,762	$	190,987	$	300,923	$	66,342	$	11,840	$	2,242,619
Pass	456,834		557,835		448,778		176,525		116,126		287,266		66,273		11,840		2,121,477
Special Mention	1,495		8,863		6,739		13,237		55,167		—		—		—		85,501
Substandard	206		—		2,015		—		19,694		13,657		69		—		35,641

Land Development	$	26,425	$	19,875	$	10,429	$	5,187	$	2,574	$	2,870	$	6,208	$	—	$	73,568
Pass	26,154		17,840		10,429		5,146		2,574		2,870		6,208		—		71,221
Special Mention	271		—		—		—		—		—		—		—		271
Substandard	—		2,035		—		41		—		—		—		—		2,076

Installment loans to individuals	$	—	$	—	$	48	$	—	$	—	$	—	$	—	$	—	$	48
Pass	—		—		48		—		—		—		—		—		48
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Total loans subject to risk rating	$	1,363,684	$	1,648,315	$	1,123,545	$	435,414	$	363,674	$	462,889	$	596,903	$	29,774	$	6,024,198
Pass	1,359,890		1,632,249		1,104,005		416,265		281,549		437,529		592,703		27,238		5,851,428
Special Mention	1,766		13,838		14,143		13,527		57,608		1,860		882		1,737		105,361
Substandard	2,028		2,228		5,397		5,622		24,517		23,500		3,318		799		67,409


	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

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
Pass	244,242		251,937		50,406		29,300		—		—		4		—		575,889
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
September 30, 2021
Commercial, Financial, Agricultural	$	20,672	$	13,972	$	9,042	$	5,886	$	3,437	$	10,986	$	36,502	$	349	$	100,846
Performing Loans	20,672		13,953		9,042		5,886		3,437		10,986		36,494		349		100,819
Non-Performing Loans	—		19		—		—		—		—		8		—		27

Lease Financing Receivables	$	24,603	$	24,360	$	17,486	$	8,496	$	2,535	$	1,735	$	—	$	—	$	79,215
Performing Loans	24,603		24,360		17,486		8,496		2,533		1,726		—		—		79,204
Non-Performing Loans	—		—		—		—		2		9		—		—		11

Real Estate - Construction	$	43,491	$	31,599	$	2,666	$	—	$	—	$	—	$	89	$	—	$	77,845
Residential	$	41,261	$	30,985	$	2,666	$	—	$	—	$	—	$	—	$	—	$	74,912
Performing Loans	41,261		30,985		2,666		—		—		—		—		—		74,912
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Commercial	$	2,230	$	614	$	—	$	—	$	—	$	—	$	89	$	—	$	2,933
Performing Loans	2,230		614		—		—		—		—		89		—		2,933
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	476,276	$	479,523	$	247,128	$	189,253	$	144,872	$	216,510	$	417,620	$	3,264	$	2,174,446
Primary	$	435,290	$	446,636	$	231,955	$	172,662	$	130,572	$	210,490	$	1,415	$	—	$	1,629,020
Performing Loans	434,913		446,129		229,184		167,927		128,923		208,295		1,415		—		1,616,786
Non-Performing Loans	377		507		2,771		4,735		1,649		2,195		—		—		12,234

Home Equity	$	411	$	—	$	123	$	360	$	—	$	580	$	413,191	$	2,824	$	417,489
Performing Loans	411		—		123		360		—		505		412,695		2,657		416,751
Non-Performing Loans	—		—		—		—		—		75		496		167		738

Rental/Investment	$	29,306	$	25,081	$	13,641	$	13,893	$	13,045	$	5,037	$	2,668	$	440	$	103,111
Performing Loans	29,306		25,081		13,641		13,893		13,042		4,963		2,668		440		103,034
Non-Performing Loans	—		—		—		—		3		74		—		—		77

Land Development	$	11,269	$	7,806	$	1,409	$	2,338	$	1,255	$	403	$	346	$	—	$	24,826
Performing Loans	11,269		7,806		1,376		2,338		1,176		317		346		—		24,628
Non-Performing Loans	—		—		33		—		79		86		—		—		198

Real Estate - Commercial Mortgage	$	74,534	$	68,291	$	57,010	$	41,371	$	35,189	$	23,312	$	9,742	$	430	$	309,879
Owner-Occupied	$	43,335	$	42,497	$	37,434	$	27,126	$	23,562	$	17,031	$	5,182	$	289	$	196,456
Performing Loans	43,335		42,497		36,964		27,126		23,562		17,031		5,181		289		195,985
Non-Performing Loans	—		—		470		—		—		—		1		—		471

Non-Owner Occupied	$	20,903	$	17,143	$	14,725	$	11,041	$	9,657	$	5,015	$	1,891	$	141	$	80,516
Performing Loans	20,903		17,143		14,725		11,041		9,657		4,971		1,888		141		80,469
Non-Performing Loans	—		—		—		—		—		44		3		—		47

Land Development	$	10,296	$	8,651	$	4,851	$	3,204	$	1,970	$	1,266	$	2,669	$	—	$	32,907
Performing Loans	10,296		8,646		4,835		3,204		1,970		1,215		2,669		—		32,835
Non-Performing Loans	—		5		16		—		—		51		—		—		72

Installment loans to individuals	$	37,328	$	21,508	$	26,714	$	8,805	$	2,322	$	2,162	$	10,575	$	37	$	109,451
Performing Loans	37,267		21,503		26,657		8,781		2,294		2,122		10,575		33		109,232
Non-Performing Loans	61		5		57		24		28		40		—		4		219

Total loans not subject to risk rating	$	676,904	$	639,253	$	360,046	$	253,811	$	188,355	$	254,705	$	474,528	$	4,080	$	2,851,682
Performing Loans	676,466		638,717		356,699		249,052		186,594		252,131		474,020		3,909		2,837,588
Non-Performing Loans	438		536		3,347		4,759		1,761		2,574		508		171		14,094

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:


	September 30, 2021		December 31, 2020
Commercial, financial, agricultural	$	114,450	$	176,513

Real estate – construction:
Residential	1,288		2,859
Commercial	3,705		28,093
Total real estate – construction	4,993		30,952
Real estate – 1-4 family mortgage:
Primary	150,944		214,770
Home equity	56,692		80,392
Rental/investment	22,507		31,928
Land development	10,204		14,654
Total real estate – 1-4 family mortgage	240,347		341,744
Real estate – commercial mortgage:
Owner-occupied	264,939		323,041
Non-owner occupied	456,102		552,728
Land development	19,791		29,454
Total real estate – commercial mortgage	740,832		905,223
Installment loans to individuals	40,322		59,675


Loans	$	1,140,944	$	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
September 30, 2021
Commercial, financial, agricultural	$	183	$	1	$	104,418	$	104,602	$	66	$	1,640	$	8,142	$	9,848	$	114,450

Real estate – construction:
Residential	—		—		1,288		1,288		—		—		—		—		1,288
Commercial	—		—		3,705		3,705		—		—		—		—		3,705
Total real estate – construction	—		—		4,993		4,993		—		—		—		—		4,993
Real estate – 1-4 family mortgage:
Primary	639		—		145,333		145,972		428		2,360		2,184		4,972		150,944
Home equity	490		—		54,899		55,389		—		813		490		1,303		56,692
Rental/investment	148		26		22,231		22,405		—		54		48		102		22,507
Land development	75		—		10,117		10,192		—		—		12		12		10,204
Total real estate – 1-4 family mortgage	1,352		26		232,580		233,958		428		3,227		2,734		6,389		240,347
Real estate – commercial mortgage:
Owner-occupied	624		—		262,380		263,004		—		291		1,644		1,935		264,939
Non-owner occupied	—		—		448,283		448,283		—		—		7,819		7,819		456,102
Land development	167		—		19,372		19,539		—		118		134		252		19,791
Total real estate – commercial mortgage	791		—		730,035		730,826		—		409		9,597		10,006		740,832
Installment loans to individuals	871		47		39,155		40,073		4		23		222		249		40,322

Loans, net of unearned income	$	3,197	$	74	$	1,111,181	$	1,114,452	$	498	$	5,299	$	20,695	$	26,492	$	1,140,944

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 no restructured loans contractually 90 days past due or more and still accruing at September 30, 2021 and one restructured loan in the aggregate amount of $ 40 contractually 90 days past due or more and still accruing at September 30, 2020. The outstanding balance of restructured loans on nonaccrual status was $ 17,726 and $ 7,775 at September 30, 2021 and September 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.”



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






Real estate – 1-4 family mortgage:
Primary	1	164		164











Three months ended September 30, 2020






Real estate – 1-4 family mortgage:
Primary	2	$	44	$	44




Real estate – commercial mortgage:
Owner-occupied	4	3,104		2,844




Total	6	$	3,148	$	2,888

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
Nine months ended September 30, 2021
Commercial, financial, agricultural	1	$	135	$	135





Real estate – 1-4 family mortgage:
Primary	2	1,026		1,026










Total	3	$	1,161	$	1,161
Nine months ended September 30, 2020
Commercial, financial, agricultural	1	$	1,029	$	1,031





Real estate – 1-4 family mortgage:
Primary	4	334		227
Home equity	1	159		162


Total real estate – 1-4 family mortgage	5	493		389
Real estate – commercial mortgage:
Owner-occupied	5	3,173		2,913
Non-owner occupied	1	542		544

Total real estate – commercial mortgage	6	3,715		3,457
Installment loans to individuals	1	25		19
Total	13	$	5,262	$	4,896

With respect to loans that were restructured during the nine months ended September 30, 2021, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the nine months ended September 30, 2020, $ 1,101 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	48	$	8,687
Additional advances or loans with concessions	3	1,411
Reclassified as performing restructured loan	2	115
Reductions due to:
Reclassified to nonperforming loans	( 4 )	( 2,485 )
Paid in full	( 5 )	( 1,310 )
Charge-offs	( 1 )	( 205 )


Principal paydowns	—	( 221 )

Totals at September 30, 2021	43	$	5,992

The allowance for credit losses attributable to restructured loans was $ 111 and $ 491 at September 30, 2021 and September 30, 2020, respectively. The Company had $ 2 and $ 539 in remaining availability under commitments to lend additional funds on these restructured loans at September 30, 2021 and September 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 September 30, 2021, the Company had 11 loans with total balances of approximately $ 360 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
September 30, 2021
Commercial, Financial, Agricultural	$	—	$	—	$	663	$	15,971	$	14,278	$	25,957	$	47,190	$	2,285	$	106,344
Pass	—		—		663		14,210		9,602		18,894		42,695		898		86,962
Special Mention	—		—		—		254		—		—		—		—		254
Substandard	—		—		—		1,507		4,676		7,063		4,495		1,387		19,128






Real Estate - Construction	$	—	$	—	$	—	$	180	$	—	$	4,392	$	—	$	—	$	4,572
Residential	$	—	$	—	$	—	$	180	$	—	$	687	$	—	$	—	$	867
Pass	—		—		—		180		—		687		—		—		867
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Commercial	$	—	$	—	$	—	$	—	$	—	$	3,705	$	—	$	—	$	3,705
Pass	—		—		—		—		—		3,705		—		—		3,705
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	—	$	—	$	—	$	11,974	$	4,477	$	26,442	$	930	$	212	$	44,035
Primary	$	—	$	—	$	—	$	4,205	$	2,542	$	12,861	$	—	$	—	$	19,608
Pass	—		—		—		4,205		2,456		9,777		—		—		16,438
Special Mention	—		—		—		—		—		61		—		—		61
Substandard	—		—		—		—		86		3,023		—		—		3,109

Home Equity	$	—	$	—	$	—	$	—	$	—	$	—	$	693	$	212	$	905
Pass	—		—		—		—		—		—		269		—		269
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		424		212		636

Rental/Investment	$	—	$	—	$	—	$	815	$	1,818	$	11,358	$	237	$	—	$	14,228
Pass	—		—		—		815		1,818		10,440		87		—		13,160
Special Mention	—		—		—		—		—		40		—		—		40
Substandard	—		—		—		—		—		878		150		—		1,028

Land Development	$	—	$	—	$	—	$	6,954	$	117	$	2,223	$	—	$	—	$	9,294
Pass	—		—		—		6,954		86		820		—		—		7,860
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		31		1,403		—		—		1,434

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	$	—	$	—	$	—	$	52,761	$	146,704	$	481,098	$	9,224	$	14,371	$	704,158
Owner-Occupied	$	—	$	—	$	—	$	14,063	$	32,268	$	191,688	$	4,763	$	—	$	242,782
Pass	—		—		—		14,063		28,406		168,961		4,754		—		216,184
Special Mention	—		—		—		—		1,568		1,701		—		—		3,269
Substandard	—		—		—		—		2,294		21,026		9		—		23,329

Non-Owner Occupied	$	—	$	—	$	—	$	36,795	$	112,866	$	277,021	$	4,326	$	14,371	$	445,379
Pass	—		—		—		20,420		105,055		236,855		4,326		4,415		371,071
Special Mention	—		—		—		16,367		—		7,949		—		—		24,316
Substandard	—		—		—		8		7,811		32,217		—		9,956		49,992

Land Development	$	—	$	—	$	—	$	1,903	$	1,570	$	12,389	$	135	$	—	$	15,997
Pass	—		—		—		1,903		1,570		6,316		135		—		9,924
Special Mention	—		—		—		—		—		5,197		—		—		5,197
Substandard	—		—		—		—		—		876		—		—		876

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

Total loans subject to risk rating	$	—	$	—	$	663	$	80,886	$	165,459	$	537,889	$	57,344	$	16,868	$	859,109
Pass	—		—		663		62,750		148,993		456,455		52,266		5,313		726,440
Special Mention	—		—		—		16,621		1,568		14,948		—		—		33,137
Substandard	—		—		—		1,515		14,898		66,486		5,078		11,555		99,532


	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
September 30, 2021
Commercial, Financial, Agricultural	$	—	$	—	$	—	$	364	$	126	$	2,457	$	4,949	$	210	$	8,106
Performing Loans	—		—		—		364		126		2,457		4,949		210		8,106
Non-Performing Loans	—		—		—		—		—		—		—		—		—





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	$	—	$	—	$	359	$	1,741	$	22,792	$	120,168	$	49,654	$	1,598	$	196,312
Primary	$	—	$	—	$	240	$	1,195	$	20,320	$	109,331	$	164	$	86	$	131,336
Performing Loans	—		—		240		1,085		19,715		105,326		164		21		126,551
Non-Performing Loans	—		—		—		110		605		4,005		—		65		4,785

Home Equity	$	—	$	—	$	—	$	546	$	2,278	$	1,966	$	49,485	$	1,512	$	55,787
Performing Loans	—		—		—		546		2,278		1,890		48,906		1,077		54,697
Non-Performing Loans	—		—		—		—		—		76		579		435		1,090

Rental/Investment	$	—	$	—	$	119	$	—	$	121	$	8,034	$	5	$	—	$	8,279
Performing Loans	—		—		119		—		121		8,034		5		—		8,279
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	$	—	$	—	$	—	$	—	$	73	$	837	$	—	$	—	$	910
Performing Loans	—		—		—		—		73		837		—		—		910
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - Commercial Mortgage	$	—	$	—	$	328	$	1,400	$	954	$	32,755	$	1,237	$	—	$	36,674
Owner-Occupied	$	—	$	—	$	—	$	860	$	573	$	19,864	$	860	$	—	$	22,157
Performing Loans	—		—		—		860		573		19,848		860		—		22,141
Non-Performing Loans	—		—		—		—		—		16		—		—		16

Non-Owner Occupied	$	—	$	—	$	328	$	391	$	—	$	9,735	$	269	$	—	$	10,723
Performing Loans	—		—		328		391		—		9,735		269		—		10,723
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	$	—	$	—	$	—	$	149	$	381	$	3,156	$	108	$	—	$	3,794
Performing Loans	—		—		—		149		381		3,156		108		—		3,794
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Installment loans to individuals	$	—	$	—	$	—	$	23,428	$	10,892	$	4,306	$	1,654	$	40	$	40,320
Performing Loans	—		—		—		23,373		10,876		4,101		1,644		30		40,024
Non-Performing Loans	—		—		—		55		16		205		10		10		296

Total loans not subject to risk rating	$	—	$	—	$	687	$	27,354	$	34,764	$	159,686	$	57,494	$	1,848	$	281,833
Performing Loans	—		—		687		27,189		34,143		155,384		56,905		1,338		275,646
Non-Performing Loans	—		—		—		165		621		4,302		589		510		6,187

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:


	September 30, 2021		December 31, 2020
Commercial, financial, agricultural	$	1,436,019	$	2,536,984
Lease financing	83,496		80,022
Real estate – construction:
Residential	307,825		246,673
Commercial	783,471		611,431
Total real estate – construction	1,091,296		858,104
Real estate – 1-4 family mortgage:
Primary	1,808,139		1,750,951
Home equity	481,552		513,160
Rental/investment	291,116		296,364
Land development	143,936		137,833
Total real estate – 1-4 family mortgage	2,724,743		2,698,308
Real estate – commercial mortgage:
Owner-occupied	1,630,227		1,657,806
Non-owner occupied	2,779,237		2,747,467
Land development	126,266		149,579
Total real estate – commercial mortgage	4,535,730		4,554,852
Installment loans to individuals	149,821		209,537
Gross loans	10,021,105		10,937,807
Unearned income	( 4,281 )		( 4,160 )
Loans, net of unearned income	10,016,824		10,933,647
Allowance for credit losses on loans	( 170,038 )		( 176,144 )
Net loans	$	9,846,786	$	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 September 30, 2021 and December 31, 2020, the Company had accrued interest receivable for loans of $ 45,404 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 $ 1,356 and $ 1,500 , respectively, as of September 30, 2021 and December 31, 2020. The decrease in the balance during the first nine months 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 September 30, 2021
Allowance for credit losses:
Beginning balance	$	36,994	$	15,729	$	31,303	$	74,893	$	1,511	$	11,924	$	172,354

Charge-offs	( 1,225 )		—		( 276 )		( 184 )		( 13 )		( 1,281 )		( 2,979 )
Recoveries	418		—		193		190		11		1,051		1,863
Net (charge-offs) recoveries	( 807 )		—		( 83 )		6		( 2 )		( 230 )		( 1,116 )
(Recovery of) provision for credit losses on loans	( 1,210 )		440		961		( 1,004 )		61		( 448 )		( 1,200 )
Ending balance	$	34,977	$	16,169	$	32,181	$	73,895	$	1,570	$	11,246	$	170,038
Nine Months Ended September 30, 2021
Allowance for credit losses:
Beginning balance	$	39,031	$	16,047	$	32,165	$	76,127	$	1,624	$	11,150	$	176,144

Charge-offs	( 5,907 )		( 52 )		( 529 )		( 416 )		( 13 )		( 4,286 )		( 11,203 )
Recoveries	940		13		855		504		36		3,949		6,297
Net (charge-offs) recoveries	( 4,967 )		( 39 )		326		88		23		( 337 )		( 4,906 )
(Recovery of) provision for credit losses on loans	913		161		( 310 )		( 2,320 )		( 77 )		433		( 1,200 )
Ending balance	$	34,977	$	16,169	$	32,181	$	73,895	$	1,570	$	11,246	$	170,038
Period-End Amount Allocated to:
Individually evaluated	$	9,717	$	—	$	206	$	5,968	$	—	$	607	$	16,498
Collectively evaluated	25,260		16,169		31,975		67,927		1,570		10,639		153,540
Ending balance	$	34,977	$	16,169	$	32,181	$	73,895	$	1,570	$	11,246	$	170,038
Loans:
Individually evaluated	$	15,193	$	—	$	5,311	$	19,120	$	—	$	617	$	40,241
Collectively evaluated	1,420,826		1,091,296		2,719,432		4,516,610		79,215		149,204		9,976,583
Ending balance	$	1,436,019	$	1,091,296	$	2,724,743	$	4,535,730	$	79,215	$	149,821	$	10,016,824

Nonaccruing loans with no allowance for credit losses	$	2,658	$	—	$	3,039	$	2,865	$	—	$	10	$	8,572

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 September 30, 2020
Allowance for credit losses:
Beginning balance	$	30,685	$	12,538	$	29,401	$	60,061	$	1,812	$	10,890	$	145,387

Charge-offs	( 420 )		( 136 )		( 720 )		( 553 )		( 168 )		( 1,579 )		( 3,576 )
Recoveries	698		31		152		711		1		1,594		3,187
Net (charge-offs) recoveries	278		( 105 )		( 568 )		158		( 167 )		15		( 389 )
Provision for credit losses on loans	7,232		1,386		3,872		10,363		187		60		23,100
Ending balance	$	38,195	$	13,819	$	32,705	$	70,582	$	1,832	$	10,965	$	168,098
Nine Months Ended September 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	( 1,969 )		( 668 )		( 1,083 )		( 2,600 )		( 168 )		( 6,003 )		( 12,491 )
Recoveries	996		31		288		2,451		11		5,816		9,593
Net (charge-offs) recoveries	( 973 )		( 637 )		( 795 )		( 149 )		( 157 )		( 187 )		( 2,898 )
Provision for credit losses on loans	17,159		5,922		9,372		41,448		558		1,891		76,350
Ending balance	$	38,195	$	13,819	$	32,705	$	70,582	$	1,832	$	10,965	$	168,098
Period-End Amount Allocated to:
Individually evaluated	$	10,211	$	—	$	275	$	380	$	—	$	270	$	11,136
Collectively evaluated	27,984		13,819		32,430		70,202		1,832		10,695		156,962
Ending balance	$	38,195	$	13,819	$	32,705	$	70,582	$	1,832	$	10,965	$	168,098
Loans:
Individually evaluated	$	17,670	$	—	$	4,718	$	6,596	$	—	$	618	$	29,602
Collectively evaluated	2,630,392		773,119		2,755,676		4,570,413		82,928		242,608		11,055,136
Ending balance	$	2,648,062	$	773,119	$	2,760,394	$	4,577,009	$	82,928	$	243,226	$	11,084,738

Nonaccruing loans with no allowance for credit losses	$	589	$	—	$	4,147	$	3,644	$	—	$	—	$	8,380

The Company recorded a negative provision (recovery) for credit losses of $ 1,200 during the third quarter and first nine months of 2021, as compared to a provision for credit losses on loans of $ 23,100 in the third quarter of 2020 and $ 76,350 in the first nine months 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’s allowance model indicated that a release of the allowance for credit losses was appropriate during the third quarter of 2021.

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 September 30,	2021		2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,535	$	17,335

(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense)	( 200 )		2,700
Ending balance	$	20,335	$	20,035








Nine Months Ended September 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
(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense)	( 200 )		8,700
Ending balance	$	20,335	$	20,035

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
September 30, 2021
Residential real estate	$	127	$	376	$	503
Commercial real estate	858		1,813		2,671
Residential land development	311		4		315
Commercial land development	1,157		59		1,216

Total	$	2,453	$	2,252	$	4,705
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	1,047		2,124		3,171

Impairments	( 220 )		( 70 )		( 290 )
Dispositions	( 2,171 )		( 1,836 )		( 4,007 )
Other	( 130 )		( 11 )		( 141 )
Balance at September 30, 2021	$	2,453	$	2,252	$	4,705

At September 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 $ 1,220 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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Repairs and maintenance	$	17	$	64	$	60	$	234
Property taxes and insurance	6		35		54		186
Impairments	173		820		290		1,647
Net (gains) losses on OREO sales	( 24 )		117		( 74 )		27
Rental income	( 4 )		( 3 )		( 17 )		( 23 )
Total	$	168	$	1,033	$	313	$	2,071

Note 7 – Goodwill and Other Intangible Assets

(In Thousands)

The carrying amounts of goodwill by operating segments for the nine months ended September 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 September 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
September 30, 2021
Core deposit intangibles	$	82,492	$	( 58,020 )	$	24,472
Customer relationship intangible	2,470		( 1,420 )		1,050
Total finite-lived intangible assets	$	84,962	$	( 59,440 )	$	25,522
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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Amortization expense for:
Core deposit intangibles	$	1,436	$	1,688	$	4,482	$	5,326
Customer relationship intangible	45		45		136		136
Total intangible amortization	$	1,481	$	1,733	$	4,618	$	5,462

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 nine months ended September 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 nine months ended September 30, 2020 there was a negative valuation adjustment of $ 13,694 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	26,532
Amortization	( 16,700 )
Valuation adjustment	13,561
Balance at September 30, 2021	$	86,387

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)


	September 30, 2021			December 31, 2020
Unpaid principal balance	$	8,470,973		$	7,322,671

Weighted-average prepayment speed (CPR)	11.68		%	15.05		%
Estimated impact of a 10% increase	$	( 4,258 )		$	( 4,001 )
Estimated impact of a 20% increase	( 8,254 )			( 7,674 )

Discount rate	9.83		%	9.86		%
Estimated impact of a 10% increase	$	( 3,381 )		$	( 2,144 )
Estimated impact of a 20% increase	( 6,520 )			( 4,144 )

Weighted-average coupon interest rate	3.33		%	3.58		%
Weighted-average servicing fee (basis points)	30.52			29.94
Weighted-average remaining maturity (in years)	6.23			5.14

The Company recorded servicing fees of $ 4,891 and $ 3,400 for the three months ended September 30, 2021 and 2020, respectively, and servicing fees of $ 13,578 and $ 9,012 for the nine months ended September 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
	September 30,				September 30,
	2021		2020			2021		2020
Service cost	$	—	$	—		$	2	$	2
Interest cost	171		246			4		3
Expected return on plan assets	( 442 )		( 412 )			—		—

Recognized actuarial loss (gain)	67		87			—		( 23 )

Net periodic (return) benefit cost	$	( 204 )	$	( 79 )		$	6	$	( 18 )



	Pension Benefits				Other Benefits
	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020			2021		2020
Service cost	$	—	$	—		$	4	$	5
Interest cost	512		738			11		10
Expected return on plan assets	( 1,326 )		( 1,238 )			—		—

Recognized actuarial loss (gain)	199		262			( 2 )		( 68 )

Net periodic (return) benefit cost	$	( 615 )	$	( 238 )		$	13	$	( 53 )

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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 nine months ended September 30, 2021 or 2020.

The following table summarizes information about options outstanding, exercised and forfeited as of and for the nine months ended September 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 nine months ended September 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		253,733	37.22
Vested	—	—		( 139,752 )	36.89
Cancelled	—	—		( 53,737 )	37.65
Nonvested at end of period	211,057	$	33.30	608,660	$	34.49

During the nine months ended September 30, 2021, the Company reissued 134,783 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 $ 2,595 and $ 2,405 for the three months ended September 30, 2021 and 2020, respectively and $ 7,736 and $ 8,153 for the nine months ended September 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	September 30, 2021				December 31, 2020
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivative assets:
Interest rate contracts	Other Assets	$	190,200	$	5,268	$	222,933	$	9,884
Interest rate lock commitments	Other Assets	422,596		7,592		589,701		19,824
Forward commitments	Other Assets	550,000		3,659		—		—
Totals		$	1,162,796	$	16,519	$	812,634	$	29,708
Derivative liabilities:
Interest rate contracts	Other Liabilities	$	190,200	$	5,268	$	222,933	$	9,884
Interest rate lock commitments	Other Liabilities	101,591		423		—		—
Forward commitments	Other Liabilities	82,000		158		716,000		5,090
Totals		$	373,791	$	5,849	$	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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest rate contracts:
Included in interest income on loans	$	589	$	451	$	1,795	$	1,710

Interest rate lock commitments:
Included in mortgage banking income	( 3,251 )		( 1,135 )		( 12,655 )		23,610
Forward commitments
Included in mortgage banking income	5,310		2,754		8,590		( 1,395 )
Total	$	2,648	$	2,070	$	( 2,270 )	$	23,925

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 September 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	September 30, 2021				December 31, 2020
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivative assets:
Interest rate swaps	Other Assets	$	200,000	$	11,615	$	175,000	$	3,866

Derivative liabilities:
Interest rate swaps	Other Liabilities	$	62,000	$	3,544	$	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 nine months ended September 30, 2021 or 2020. The impact on other comprehensive

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

income for the nine months ended September 30, 2021 and 2020 is discussed in Note 13, “Other Comprehensive Income (Loss).”

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	September 30, 2021				December 31, 2020
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value



Derivative liabilities:
Interest rate swaps	Other Liabilities	$	100,000	$	5,150	$	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 September 30,				Nine Months Ended September 30,
	Location	2021		2020		2021		2020
Derivative liabilities:
Interest rate swaps - subordinated notes	Interest Expense	$	( 764 )	$	—	$	( 4,941 )	$	—

Derivative liabilities - hedged items:
Interest rate swaps - subordinated notes	Interest Expense	$	764	$	—	$	4,941	$	—

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	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Long-term debt	$	93,303	$	98,114	$	( 5,150 )	$	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:

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Offsetting Derivative Assets				Offsetting Derivative Liabilities
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Gross amounts recognized	$	15,373	$	3,866	$	14,021	$	21,107
Gross amounts offset in the Consolidated Balance Sheets	—		—		—		—
Net amounts presented in the Consolidated Balance Sheets	15,373		3,866		14,021		21,107
Gross amounts not offset in the Consolidated Balance Sheets
Financial instruments	6,605		3,866		6,605		3,866
Financial collateral pledged	—		—		7,416		14,042
Net amounts	$	8,768	$	—	$	—	$	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.


	September 30,		December 31,
	2021		2020
Deferred tax assets
Allowance for credit losses	$	52,345	$	53,597
Loans	3,471		5,526
Deferred compensation	13,598		13,114

Investment in partnerships	154		—
Impairment of assets	508		1,067
Net operating loss carryforwards	1,287		1,857

Lease liabilities under operating leases	17,189		17,732
Other	3,613		3,539
Total deferred tax assets	92,165		96,432


Deferred tax liabilities

Net unrealized gains on securities	3,580		8,434
Investment in partnerships	—		793

Fixed assets	1,182		3,285
Mortgage servicing rights	20,587		14,623
Junior subordinated debt	2,162		2,245
Intangibles	3,349		3,882
Lease right-of-use asset	16,291		16,833
Other	565		1,672
Total deferred tax liabilities	47,716		51,767
Net deferred tax assets	$	44,449	$	44,665

For the nine months ended September 30, 2021 and 2020, the Company recorded a provision for income taxes totaling $ 35,572 and $ 13,022 , 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 22.10 % and 20.28 % for the nine months ended September 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, 2018 through December 31, 2020.

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 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
September 30, 2021
Financial assets:

Securities available for sale	$	—	$	2,544,643	$	—	$	2,544,643
Derivative instruments	—		28,134		—		28,134
Mortgage loans held for sale in loans held for sale	—		452,869		—		452,869
Total financial assets	$	—	$	3,025,646	$	—	$	3,025,646
Financial liabilities:
Derivative instruments:	$	—	$	14,543	$	—	$	14,543


	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 nine months ended September 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 September 30, 2021	Trust preferred securities		Trust preferred securities
Three Months Ended September 30,
Balance at beginning of period	$	—	$	7,679
Accretion included in net income	—		8
Unrealized losses included in other comprehensive income	—		840





Settlements	—		( 35 )


Balance at end of period	$	—	$	8,492

Nine Months Ended September 30,
Balance at beginning of period	$	9,012	$	9,986
Accretion included in net income	7		26
Unrealized gains (losses) included in other comprehensive income	941		( 1,382 )

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


Settlements	—		( 138 )


Balance at end of period	$	—	$	8,492

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

For each of the three and nine months ended September 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:


September 30, 2021	Level 1		Level 2		Level 3		Totals
Individually evaluated loans, net of allowance for credit losses	$	—	$	—	$	9,410	$	9,410
OREO	—		—		170		170
Mortgage servicing rights	—		—		86,387		86,387
Total	$	—	$	—	$	95,967	$	95,967


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 $ 17,959 and $ 36,990 at September 30, 2021 and December 31, 2020, respectively, and a specific reserve for these loans of $ 8,549 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:


	September 30, 2021		December 31, 2020







Carrying amount prior to remeasurement	$	445	$	4,051
Impairment recognized in results of operations	( 275 )		( 1,315 )
Fair value	$	170	$	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 September 30, 2021 and fair value at December 31, 2020. There were $ 13,561 of positive valuation adjustments on MSRs during the nine months ended September 30, 2021 and $ 13,694 of negative valuation adjustments recognized during the nine months ended September 30, 2020.

The following table presents information as of September 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

9,410

Appraised value of collateral less estimated costs to sell

Estimated costs to sell

4 - 10 %

OREO

170

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 $ 10,425 and net gains of $ 10,876 resulting from fair value changes of these mortgage loans were recorded in income during the nine months ended September 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 September 30, 2021 and December 31, 2020:


	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
September 30, 2021
Mortgage loans held for sale measured at fair value	$	452,869	$	441,125	$	11,744



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 September 30, 2021	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	1,476,141	$	1,476,141	$	—	$	—	$	1,476,141

Securities available for sale	2,544,643		—		2,544,643		—		2,544,643
Loans held for sale	452,869		—		452,869		—		452,869
Loans, net	9,846,786		—		—		9,726,732		9,726,732
Mortgage servicing rights	86,387		—		—		90,738		90,738
Derivative instruments	28,134		—		28,134		—		28,134
Financial liabilities
Deposits	$	13,254,829	$	11,787,346	$	1,467,955	$	—	$	13,255,301
Short-term borrowings	11,253		11,253		—		—		11,253

Federal Home Loan Bank advances	150,425		—		155,832		—		155,832
Junior subordinated debentures	111,228		—		105,546		—		105,546
Subordinated notes	207,210		—		221,700		—		221,700
Derivative instruments	14,543		—		14,543		—		14,543


			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 September 30, 2021
Securities available for sale:
Unrealized holding losses on securities	$	( 12,408 )	$	( 3,158 )	$	( 9,250 )

Reclassification adjustment for gains realized in net income	( 764 )		( 194 )		( 570 )


Total securities available for sale	( 13,172 )		( 3,352 )		( 9,820 )
Derivative instruments:
Unrealized holding gains on derivative instruments	1,629		414		1,215

Total derivative instruments	1,629		414		1,215
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	67		18		49
Total defined benefit pension and post-retirement benefit plans	67		18		49
Total other comprehensive loss	$	( 11,476 )	$	( 2,920 )	$	( 8,556 )
Three months ended September 30, 2020
Securities available for sale:
Unrealized holding gains on securities	$	519	$	131	$	388




Total securities available for sale	519		131		388
Derivative instruments:
Unrealized holding gains on derivative instruments	1,576		401		1,175

Total derivative instruments	1,576		401		1,175
Defined benefit pension and post-retirement benefit plans:

Amortization of net actuarial loss recognized in net periodic pension cost	65		17		48
Total defined benefit pension and post-retirement benefit plans	65		17		48
Total other comprehensive income	$	2,160	$	549	$	1,611

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)




	Pre-Tax		Tax Expense (Benefit)		Net of Tax
Nine months ended September 30, 2021
Securities available for sale:
Unrealized holding losses on securities	$	( 27,487 )	$	( 6,996 )	$	( 20,491 )

Reclassification adjustment for gains realized in net income	( 2,121 )		( 539 )		( 1,582 )


Total securities available for sale	( 29,608 )		( 7,535 )		( 22,073 )
Derivative instruments:
Unrealized holding gains on derivative instruments	10,129		2,578		7,551

Total derivative instruments	10,129		2,578		7,551
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	197		49		148
Total defined benefit pension and post-retirement benefit plans	197		49		148
Total other comprehensive loss	$	( 19,282 )	$	( 4,908 )	$	( 14,374 )

Nine months ended September 30, 2020
Securities available for sale:
Unrealized holding gains on securities	$	26,404	$	6,719	$	19,685


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

Total securities available for sale	26,373		6,711		19,662
Derivative instruments:
Unrealized holding losses on derivative instruments	( 3,516 )		( 895 )		( 2,621 )

Total derivative instruments	( 3,516 )		( 895 )		( 2,621 )
Defined benefit pension and post-retirement benefit plans:

Amortization of net actuarial loss recognized in net periodic pension cost	195		50		145
Total defined benefit pension and post-retirement benefit plans	195		50		145
Total other comprehensive income	$	23,052	$	5,866	$	17,186

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


	September 30, 2021		December 31, 2020
Unrealized gains on securities	$	8,854	$	42,246
Non-credit related portion of previously recorded other-than-temporary impairment on securities	—		( 11,319 )
Unrealized gains (losses) on derivative instruments	6,913		( 638 )
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations	( 5,073 )		( 5,221 )
Total accumulated other comprehensive income	$	10,694	$	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
	September 30,
	2021		2020
Basic
Net income applicable to common stock	$	40,063	$	29,992
Average common shares outstanding	56,146,285		56,185,884
Net income per common share - basic	$	0.71	$	0.53
Diluted
Net income applicable to common stock	$	40,063	$	29,992
Average common shares outstanding	56,146,285		56,185,884
Effect of dilutive stock-based compensation	300,899		200,269
Average common shares outstanding - diluted	56,447,184		56,386,153
Net income per common share - diluted	$	0.71	$	0.53



	Nine Months Ended
	September 30,
	2021		2020
Basic
Net income applicable to common stock	$	138,838	$	52,130
Average common shares outstanding	56,237,056		56,294,984
Net income per common share - basic	$	2.47	$	0.93
Diluted
Net income applicable to common stock	$	138,838	$	52,130
Average common shares outstanding	56,237,056		56,294,984
Effect of dilutive stock-based compensation	296,038		173,593
Average common shares outstanding - diluted	56,533,094		56,468,577
Net income per common share - diluted	$	2.46	$	0.92

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
	September 30,
	2021	2020
Number of shares	19,929	237,212
Exercise prices (for stock option awards)	—	—



	Nine Months Ended
	September 30,
	2021	2020
Number of shares	19,929	255,448
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:


	September 30, 2021				December 31, 2020
	Amount		Ratio		Amount		Ratio
Renasant Corporation
Tier 1 Capital to Average Assets (Leverage)	$	1,395,321	9.18	%	$	1,306,597	9.37	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	1,287,684		11.02	%	1,199,394		10.93	%
Tier 1 Capital to Risk-Weighted Assets	1,395,321		11.94	%	1,306,597		11.91	%
Total Capital to Risk-Weighted Assets	1,712,500		14.66	%	1,653,694		15.07	%
Renasant Bank
Tier 1 Capital to Average Assets (Leverage)	$	1,454,879	9.58	%	$	1,369,994	9.83	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	1,454,879		12.45	%	1,369,994		12.49	%
Tier 1 Capital to Risk-Weighted Assets	1,454,879		12.45	%	1,369,994		12.49	%
Total Capital to Risk-Weighted Assets	1,574,697		13.48	%	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 September 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.

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 September 30, 2021
Net interest income (loss)	$	106,506	$	115	$	404	$	( 3,733 )	$	103,292
Recovery of loan losses	( 1,088 )		—		( 112 )		—		( 1,200 )
Noninterest income	42,546		2,835		5,820		( 446 )		50,755
Noninterest expense	97,437		2,095		4,189		278		103,999
Income (loss) before income taxes	52,703		855		2,147		( 4,457 )		51,248
Income tax expense (benefit)	12,117		220		—		( 1,152 )		11,185
Net income (loss)	$	40,586	$	635	$	2,147	$	( 3,305 )	$	40,063

Total assets	$	16,040,728	$	33,036	$	67,204	$	14,582	$	16,155,550
Goodwill	$	936,916	$	2,767	—		—		$	939,683

Three months ended September 30, 2020
Net interest income (loss)	$	108,909	$	126	$	403	$	( 3,152 )	$	106,286
Provision for loan losses	22,408		—		692		—		23,100
Noninterest income	63,918		2,694		4,714		( 398 )		70,928
Noninterest expense	110,430		1,974		3,818		288		116,510
Income (loss) before income taxes	39,989		846		607		( 3,838 )		37,604
Income tax expense (benefit)	8,383		217		—		( 988 )		7,612
Net income (loss)	$	31,606	$	629	$	607	$	( 2,850 )	$	29,992

Total assets	$	14,694,683	$	30,138	$	68,261	$	15,851	$	14,808,933
Goodwill	$	936,916	$	2,767	—		—		$	939,683


	Community Banks		Insurance		Wealth Management		Other		Consolidated
Nine months ended September 30, 2021
Net interest income (loss)	$	332,234	$	333	$	1,184	$	( 11,232 )	$	322,519
Recovery of credit losses	( 1,088 )		—		( 112 )		—		( 1,200 )
Noninterest income (loss)	155,765		8,558		16,421		( 1,342 )		179,402
Noninterest expense	309,449		6,005		12,337		920		328,711
Income (loss) before income taxes	179,638		2,886		5,380		( 13,494 )		174,410
Income tax expense (benefit)	38,320		740		—		( 3,488 )		35,572
Net income (loss)	$	141,318	$	2,146	$	5,380	$	( 10,006 )	$	138,838

Total assets	$	16,040,728	$	33,036	$	67,204	$	14,582	$	16,155,550
Goodwill	$	936,916	$	2,767	$	—	$	—	$	939,683

Nine months ended September 30, 2020
Net interest income (loss)	$	325,879	$	424	$	1,250	$	( 8,883 )	$	318,670
Provision for credit losses	75,481		—		869		—		76,350
Noninterest income (loss)	152,716		7,787		13,370		( 1,205 )		172,668
Noninterest expense (benefit)	332,490		5,708		11,215		423		349,836
Income (loss) before income taxes	70,624		2,503		2,536		( 10,511 )		65,152
Income tax expense (benefit)	15,088		658		—		( 2,724 )		13,022
Net income (loss)	$	55,536	$	1,845	$	2,536	$	( 7,787 )	$	52,130

Total assets	$	14,694,683	$	30,138	$	68,261	$	15,851	$	14,808,933
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 September 30, 2021 compared to December 31, 2020.

Assets

Total assets were $16,155,550 at September 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:


	September 30, 2021				December 31, 2020
	Balance		Percentage of Portfolio		Balance		Percentage of Portfolio
U.S. Treasury securities	$	3,024	0.12	%	$	7,079	0.53	%
Obligations of other U.S. Government agencies and corporations	—		—		1,009		0.08
Obligations of states and political subdivisions	378,981		14.89		305,201		22.72
Mortgage-backed securities	2,108,671		82.87		955,549		71.12
Trust preferred securities	—		—		9,012		0.67
Other debt securities	53,967		2.12		65,607		4.88

	$	2,544,643	100.00	%	$	1,343,457	100.00	%

During the nine months ended September 30, 2021, we deployed a portion of our excess liquidity into the securities portfolio and purchased $1,743,105 in investment securities. Mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprised approximately 94% 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 6% of purchases made during the first nine months of 2021.

Proceeds from maturities, calls and principal payments on securities during the first nine months of 2021 totaled $329,520. The Company sold municipal securities, residential mortgage backed securities, trust preferred securities, and other debt securities with a carrying value of $174,285 at the time of sale for net proceeds of $176,406, resulting in a net gain on sale of $2,121 during the first nine months of 2021. Proceeds from the maturities, calls and principal payments on securities during the first nine months of 2020 totaled $314,363. 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 nine 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 $452,869 at September 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 $10,016,824 at September 30, 2021 and $10,933,647 at December 31, 2020. Non purchased loans totaled $8,875,880 at September 30, 2021 compared to $9,419,540 at December 31, 2020. Loans purchased in previous acquisitions totaled $1,140,944 and $1,514,107 at September 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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	September 30, 2021
	Non Purchased		Purchased		Total Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)	$	1,321,569	$	114,450	$	1,436,019	14.34	%
Lease financing, net of unearned income	79,215		—		79,215		0.79
Real estate – construction:
Residential	306,537		1,288		307,825		3.07
Commercial	779,766		3,705		783,471		7.82

Total real estate – construction	1,086,303		4,993		1,091,296		10.89
Real estate – 1-4 family mortgage:
Primary	1,657,195		150,944		1,808,139		18.05
Home equity	424,860		56,692		481,552		4.81
Rental/investment	268,609		22,507		291,116		2.91
Land development	133,732		10,204		143,936		1.44
Total real estate – 1-4 family mortgage	2,484,396		240,347		2,724,743		27.21
Real estate – commercial mortgage:
Owner-occupied	1,365,288		264,939		1,630,227		16.27
Non-owner occupied	2,323,135		456,102		2,779,237		27.74
Land development	106,475		19,791		126,266		1.26
Total real estate – commercial mortgage	3,794,898		740,832		4,535,730		45.27
Installment loans to individuals	109,499		40,322		149,821		1.50
Total loans, net of unearned income	$	8,875,880	$	1,140,944	$	10,016,824	100.00	%

(1) Includes Paycheck Protection Program (“PPP”) loans of $67,462 as of September 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 September 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 $13,254,829 and $12,059,081 at September 30, 2021 and December 31, 2020, respectively. Noninterest-bearing deposits were $4,492,650 and $3,685,048 at September 30, 2021 and December 31, 2020, respectively, while interest-bearing deposits were $8,762,179 and $8,374,033 at September 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 33.89% of total deposits at September 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 $1,534,547 and $1,398,330 at September 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:


	September 30, 2021		December 31, 2020
Security repurchase agreements	$	11,253	$	10,947
Federal funds purchased	—		10,393


	$	11,253	$	21,340

At September 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:


	September 30, 2021		December 31, 2020
Long-term FHLB advances	$	150,425	$	152,167
Junior subordinated debentures	111,228		110,794
Subordinated notes	207,210		212,009
	$	468,863	$	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 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 September 30, 2021, there were no outstanding long-term FHLB advances scheduled to

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mature within twelve months or less. The Company had $3,977,848 of availability on unused lines of credit with the FHLB at September 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 third quarter of 2021 was $40,063 compared to net income of $29,992 for the third quarter of 2020. Basic and diluted earnings per share (“EPS”) for the third quarter of 2021 were $0.71 as compared to basic and diluted EPS of $0.53 for the third quarter of 2020. Net income for the nine months ended September 30, 2021 was $138,838 compared to net income of $52,130 for the same period in 2020. Basic and diluted EPS were $2.47 and $2.46 for the first nine months of 2021, respectively, as compared to $0.93 and $0.92 for the first nine months of 2020, respectively.

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
	September 30, 2021						September 30, 2020
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS

Debt prepayment penalty	$	—	$	—	$	—	$	28	$	22	$	—
MSR valuation adjustment	—		—		—		(828)		(650)		(0.01)

COVID-19 related expenses	323		253		—		570		448		0.01

	Nine Months Ended
	September 30, 2021						September 30, 2020
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS

Debt prepayment penalties	$	—	$	—	$	—	$	118	$	94	$	—
MSR valuation adjustment	(13,561)		(10,564)		(0.19)		13,694		10,916		0.19
Restructuring charges	307		239		—		—		—		—
COVID-19 related expenses	1,478		1,151		0.02		9,730		7,758		0.14

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 67.41% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the third quarter of 2021 and 64.61% of total revenue for the first nine 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 $103,292 and $322,519 for the three and nine months ended September 30, 2021, respectively, as compared to $106,286 and $318,670 for the same respective periods in 2020. On a tax equivalent basis, net interest income was $105,002 and $327,471 for the three and nine months ended September 30, 2021, respectively, as compared to $107,885 and $323,659 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 September 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	$	8,690,443	$	84,427	3.86	%	$	8,012,741	$	81,281	4.04	%
Purchased	1,200,429		15,840		5.24		1,723,714		24,034		5.55

Paycheck Protection Program	126,870		3,503		10.95		1,305,229		7,449		2.27
Total loans held for investment	10,017,742		103,770		4.11		11,041,684		112,764		4.06
Loans held for sale	451,586		2,376		2.13		378,225		3,144		3.31
Securities:
Taxable (1)	1,942,647		6,688		1.38		1,003,886		5,473		2.17
Tax-exempt	324,219		2,297		2.83		265,679		2,205		3.30
Interest-bearing balances with banks	1,520,227		592		0.15		344,948		91		0.10
Total interest-earning assets	14,256,421		115,723		3.23		13,034,422		123,677		3.77
Cash and due from banks	195,095						210,278
Intangible assets	965,960						972,394

Other assets	712,673						711,065
Total assets	$	16,130,149					$	14,928,159
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand (2)	$	6,231,718	$	3,821	0.24	%	$	5,405,085	$	4,839	0.36	%
Savings deposits	1,006,847		192		0.08		796,841		167		0.08
Time deposits	1,506,192		2,959		0.78		1,907,918		6,804		1.42
Total interest-bearing deposits	8,744,757		6,972		0.32		8,109,844		11,810		0.58
Borrowed funds	482,709		3,749		3.08		719,800		3,982		2.20
Total interest-bearing liabilities	9,227,466		10,721		0.46		8,829,644		15,792		0.71
Noninterest-bearing deposits	4,470,262						3,723,059
Other liabilities	212,990						255,956
Shareholders’ equity	2,219,431						2,119,500
Total liabilities and shareholders’ equity	$	16,130,149					$	14,928,159
Net interest income/net interest margin			$	105,002	2.93	%			$	107,885	3.29	%

(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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	Nine Months Ended September 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	$	8,525,359	$	249,128	3.91	%	$	7,847,197	$	251,671	4.28	%
Purchased	1,327,434		54,187		5.46		1,877,449		80,226		5.71

Paycheck Protection Program	578,643		24,310		5.62		725,891		13,335		2.45
Total loans held for investment	10,431,436		327,625		4.20		10,450,537		345,232		4.41
Loans held for sale	439,954		8,980		2.73		351,975		9,108		3.46
Securities:
Taxable (1)	1,505,611		17,077		1.51		1,034,189		19,148		2.47
Tax-exempt	316,159		6,915		2.92		251,744		6,609		3.51
Interest-bearing balances with banks	1,176,378		1,121		0.13		387,116		1,098		0.38
Total interest-earning assets	13,869,538		361,718		3.49		12,475,561		381,195		4.08
Cash and due from banks	198,955						203,582
Intangible assets	967,458						974,182

Other assets	687,159						717,628
Total assets	$	15,723,110					$	14,370,953
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand (2)	$	6,083,179	$	11,821	0.26	%	$	5,166,393	$	19,616	0.51	%
Savings deposits	953,391		547		0.08		741,933		592		0.11
Time deposits	1,575,220		10,552		0.90		2,019,173		23,967		1.59
Total interest-bearing deposits	8,611,790		22,920		0.36		7,927,499		44,175		0.74
Borrowed funds	483,230		11,327		3.13		849,494		13,361		2.10
Total interest-bearing liabilities	9,095,020		34,247		0.50		8,776,993		57,536		0.88
Noninterest-bearing deposits	4,202,364						3,251,612
Other liabilities	223,796						233,730
Shareholders’ equity	2,201,930						2,108,618
Total liabilities and shareholders’ equity	$	15,723,110					$	14,370,953
Net interest income/net interest margin			$	327,471	3.16	%			$	323,659	3.47	%

(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 nine months ended September 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. The

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Company has also increased its purchases of investment securities and continues to evaluate options to mitigate the pressure on net interest margin.

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 nine months ended September 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):

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	Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
	Volume		Rate		Net
Interest income:
Loans held for investment:
Non purchased	$	6,821	$	(3,675)	$	3,146
Purchased	(6,947)		(1,247)		(8,194)

Paycheck Protection Program	(11,665)		7,719		(3,946)
Loans held for sale	521		(1,289)		(768)
Securities:
Taxable	3,756		(2,541)		1,215
Tax-exempt	438		(346)		92
Interest-bearing balances with banks	441		60		501
Total interest-earning assets	(6,635)		(1,319)		(7,954)
Interest expense:
Interest-bearing demand deposits	671		(1,689)		(1,018)
Savings deposits	41		(16)		25
Time deposits	(1,225)		(2,620)		(3,845)
Borrowed funds	(1,548)		1,315		(233)
Total interest-bearing liabilities	(2,061)		(3,010)		(5,071)
Change in net interest income	$	(4,574)	$	1,691	$	(2,883)

	Nine months ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020
	Volume		Rate		Net
Interest income:
Loans held for investment:
Non purchased	$	20,693	$	(23,236)	$	(2,543)
Purchased	(22,646)		(3,393)		(26,039)

Paycheck Protection Program	(3,182)		14,157		10,975
Loans held for sale	2,010		(2,138)		(128)
Securities:
Taxable	6,914		(8,985)		(2,071)
Tax-exempt	1,528		(1,222)		306
Interest-bearing balances with banks	1,118		(1,095)		23
Total interest-earning assets	6,435		(25,912)		(19,477)
Interest expense:
Interest-bearing demand deposits	3,025		(10,820)		(7,795)
Savings deposits	146		(191)		(45)
Time deposits	(4,506)		(8,909)		(13,415)
Borrowed funds	(7,090)		5,056		(2,034)
Total interest-bearing liabilities	(8,425)		(14,864)		(23,289)
Change in net interest income	$	14,860	$	(11,048)	$	3,812

Interest income, on a tax equivalent basis, was $115,723 and $361,718, respectively, for the three and nine months ended September 30, 2021, as compared to $123,677 and $381,195, respectively, for the same periods in 2020. This decrease in interest income, 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 year 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:

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	Percentage of Total Average Earning Assets				Yield
	Three Months Ended				Three Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Loans held for investment, excl. PPP	69.38	%	74.70	%	4.02	%	4.30	%
Paycheck Protection Program	0.89		10.01		10.95		2.27
Loans held for sale	3.17		2.90		2.13		3.31
Securities	15.90		9.74		1.59		2.41
Other	10.66		2.65		0.15		0.10
Total earning assets	100.00	%	100.00	%	3.23	%	3.77	%



	Percentage of Total Average Earning Assets				Yield
	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Loans held for investment excl. PPP	71.04	%	77.95	%	4.12	%	4.56	%
Paycheck Protection Program	4.17		5.82		5.62		2.45
Loans held for sale	3.17		2.82		2.73		3.46
Securities	13.14		10.31		1.76		2.68
Interest-bearing balances with banks	8.48		3.10		0.13		0.38
Total earning assets	100.00	%	100.00	%	3.49	%	4.08	%

For the third quarter of 2021, interest income on loans held for investment, on a tax equivalent basis, decreased $8,994 to $103,770 from $112,764 for the same period in 2020. For the nine months ended September 30, 2021, interest income on loans held for investment, on a tax equivalent basis, decreased $17,607 to $327,625 from $345,232 for 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 September 30, 2021, was $3,503, which consisted of $306 in interest income and $3,197 in accretion of net origination fees, as compared to $7,449 for the three months ended September 30, 2020, which consisted of $3,262 in interest income and $4,187 in accretion of net origination fees. Interest income attributable to PPP loans included in loan interest income for the nine months ended September 30, 2021, was $24,310, which consisted of $4,222 in interest income and $20,088 in accretion of net origination fees, as compared to $13,335 for the nine months ended September 30, 2020, which consisted of $5,586 in interest income and $7,749 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 7 basis points and 9 basis points, respectively, during the third quarter of 2021, and 11 basis points and 8 basis points, respectively, in the first nine months of 2021. PPP loans reduced margin and loan yield by 12 basis points and 23 basis points, respectively, in the third quarter of 2020 and 6 basis points and 14 basis points, respectively, in the first nine months 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						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Net interest income collected on problem loans	$	316		$	282		$	3,835		$	884
Accretable yield recognized on purchased loans (1)	2,871			4,949			8,597			15,118
Total impact to interest income on loans	$	3,187		$	5,231		$	12,432		$	16,002

Impact to loan yield	0.13		%	0.18		%	0.16		%	0.20		%

Impact to net interest margin	0.09		%	0.16		%	0.12		%	0.17		%

(1) Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $1,649 and $2,286, for the third quarter of 2021 and 2020, respectively. The impact was $4,145 and $6,205 for the nine months ended September 30, 2021 and 2020, respectively. This additional interest income increased total loan yield by 7 basis points and 8 basis points for the third quarter of 2021 and 2020, respectively, while increasing net interest margin by 5 and 7 basis points for the same respective periods. For the nine months ended September 30, 2021 and 2020, the additional interest income increased total loan yields by 5 basis points and 8 basis points, respectively, while increasing net interest margin by 4 basis points and 7 basis points, respectively.

For the third quarter of 2021, interest income on loans held for sale (consisting of mortgage loans held for sale), on a tax equivalent basis, decreased $768 to $2,376 from $3,144 for the same period in 2020. For the nine months ended September 30, 2021, interest income on loans held for sale (consisting of mortgage loans held for sale), on a tax equivalent basis, decreased $128 to $8,980 from $9,108 for the same period in 2020.

Investment income, on a tax equivalent basis, increased $1,307 to $8,985 for the third quarter of 2021 from $7,678 for the third quarter of 2020. Investment income, on a tax equivalent basis, decreased $1,765 to $23,992 for the nine months ended September 30, 2021 from $25,757 for the same period in 2020. The tax equivalent yield on the investment portfolio for the third quarter of 2021 was 1.59%, down 82 basis points from 2.41% for the same period in 2020. The tax equivalent yield on the investment portfolio for the nine months ended September 30, 2021 was 1.76%, down 92 basis points from 2.68% for the same period in 2020. The decrease in taxable equivalent yield on securities was a result of the current interest rate environment. The growth in the Company’s investment securities portfolio during the year has helped offset the loss of investment income due to lower yield on securities.

Interest expense was $10,721 for the third quarter of 2021 as compared to $15,792 for the same period in 2020. Interest expense for the nine months ended September 30, 2021 was $34,247 as compared to $57,536 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
	September 30,				September 30,
	2021		2020		2021		2020
Noninterest-bearing demand	32.64	%	29.66	%	—	%	—	%
Interest-bearing demand	45.49		43.06		0.24		0.36
Savings	7.35		6.35		0.08		0.08
Time deposits	11.00		15.20		0.78		1.42
Short term borrowings	0.09		2.49		0.29		0.95
Long-term Federal Home Loan Bank advances	1.10		1.21		0.01		0.16
Subordinated notes	1.52		1.15		4.79		5.46
Other borrowed funds	0.81		0.88		4.36		4.32
Total deposits and borrowed funds	100.00	%	100.00	%	0.31	%	0.50	%

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	Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Noninterest-bearing demand	31.60	%	27.03	%	—	%	—	%
Interest-bearing demand	45.75		42.95		0.26		0.51
Savings	7.17		6.17		0.08		0.11
Time deposits	11.85		16.79		0.90		1.59
Short-term borrowings	0.10		3.85		0.30		1.02
Long-term Federal Home Loan Bank advances	1.14		1.27		0.03		0.80
Subordinated notes	1.56		1.03		4.97		5.54
Other long term borrowings	0.83		0.91		4.27		4.56
Total deposits and borrowed funds	100.00	%	100.00	%	0.34	%	0.64	%

Interest expense on deposits was $6,972 and $11,810 for the three months ended September 30, 2021 and 2020, respectively. The cost of total deposits was 0.21% and 0.40% for the same respective periods. Interest expense on deposits was $22,920 and $44,175 for the nine months ended September 30, 2021 and 2020, respectively, and the cost of total deposits was 0.24% and 0.53% 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 33.89% of total deposits at September 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 $3,749 and $3,982 for the three months ended September 30, 2021 and 2020, respectively. Interest expense on total borrowings was $11,327 and $13,361 for the nine months ended September 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 September 30,		Nine Months Ended September 30,
2021	2020	2021	2020
1.25%	1.89%	1.53%	1.60%

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 $50,755 for the third quarter of 2021 as compared to $70,928 for the same period in 2020. Noninterest income was $179,402 for the nine months ended September 30, 2021 as compared to $172,668 for the same period in 2020. During the third 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 began to rebound 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 $9,337 and $7,486 for the third quarter of 2021 and 2020, respectively, and $26,818 and $23,388 for the nine months ended September 30, 2021 and 2020, respectively. Overdraft fees, the largest component of service charges on deposits, were $4,876 for the three months ended September 30, 2021, as compared to $4,299 for the same period in 2020. These fees were $13,830 for the nine months ended September 30, 2021 compared to $13,935 for the same period in 2020.

Fees and commissions were $3,837 during the third quarter of 2021 as compared to $3,402 for the same period in 2020, and were $11,847 for the first nine months of 2021 as compared to $9,427 for the same period in 2020. Fees and commissions

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include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. For the third quarter of 2021, interchange fees were $2,685 as compared to $2,323 for the same period in 2020. Interchange fees were $7,901 for the nine months ended September 30, 2021 as compared to $6,534 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 $2,829 and $2,681 for the three months ended September 30, 2021 and 2020, respectively, and was $7,488 and $6,797 for the nine months ended September 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 $4 and $8 for the three months ended September 30, 2021 and 2020, respectively, and $1,057 and $926 for the nine months ended September 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 $5,371 for the third quarter of 2021 compared to $4,364 for the same period in 2020 and was $15,182 for the nine months ended September 30, 2021 compared to $12,190 for the same period in 2020. The market value of assets under management or administration was $4,687,357 and $3,890,374 at September 30, 2021 and September 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 $966,651 in the third quarter of 2021 compared to $1,253,742 for the same period in 2020. Mortgage loan originations totaled $3,189,474 in the nine months ended September 30, 2021 compared to $3,277,576 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 $23,292 and $49,714 for the three months ended September 30, 2021 and 2020, respectively, and was $94,878 for the first nine months ended September 30, 2021 compared to $110,739 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Gain on sales of loans, net (1)	$	20,116	$	45,985	$	71,598	$	114,327
Fees, net	3,420		5,367		12,841		13,597
Mortgage servicing loss, net	(244)		(2,466)		(3,122)		(3,491)
MSR valuation adjustment	—		828		13,561		(13,694)
Mortgage banking income, net	$	23,292	$	49,714	$	94,878	$	110,739

(1) Gain on sales of loans, net includes pipeline fair value adjustments

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 $1,602 for the three months ended September 30, 2021 as compared to $1,267 for the same period in 2020, and $5,318 for the first nine months of September 30, 2021 as compared to $3,759 for the same period in 2020. The increase is primarily due to the $1,222 of life insurance proceeds received during the first nine months of 2021. There were no life insurance proceeds received during the nine months ended September 30, 2020. Additionally, the Company purchased $50,000 in BOLI policies during the first nine months of 2021.

Other noninterest income was $3,723 and $2,014 for the three months ended September 30, 2021 and 2020, respectively, and was $15,750 and $6,337 for the nine months ended September 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 nine months of 2021, the Company entered

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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 nine months ended September 30, 2021.

Noninterest Expense


Noninterest Expense to Average Assets
Three Months Ended September 30,		Nine Months Ended September 30,
2021	2020	2021	2020
2.56%	3.10%	2.80%	3.25%

Noninterest expense was $103,999 and $116,510 for the third quarter of 2021 and 2020, respectively, and was $328,711 and $349,836 for the nine months ended September 30, 2021 and 2020, respectively.

Salaries and employee benefits decreased $6,291 to $69,115 for the third quarter of 2021 as compared to $75,406 for the same period in 2020. Salaries and employee benefits decreased $9,852 to $218,104 for the nine months ended September 30, 2021 as compared to $227,956 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 nine months ended September 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 $5,277 in the third quarter of 2021 from $5,259 for the same period in 2020 and were $16,380 for the nine months ended September 30, 2021 as compared to $15,312 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 third quarter of 2021 was $11,748, down from $13,296 for the same period in 2020. These expenses for the first nine months of 2021 were $35,660, down from $40,927 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 third quarter of 2021 were $168 as compared to $1,033 for the same period in 2020 and were $313 and $2,071, respectively, for the first nine 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 $290 and $1,647 for the first nine months of 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, other real estate owned with a cost basis of $4,007 and $6,047, respectively, was sold, resulting in a net gain of $74 and net loss of $27, 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 $2,972 for the third quarter of 2021 as compared to $3,197 for the same period in 2020 and $8,566 for the nine months ended September 30, 2021 as compared to $8,355 for the same period in 2020.

Advertising and public relations expense was $2,922 for the third quarter of 2021 as compared to $2,240 for the same period in 2020, and $9,274 for the nine months ended September 30, 2021 compared to $8,560 for the same period in 2020.

Amortization of intangible assets totaled $1,481 and $1,733 for the third quarter of 2021 and 2020, respectively, and $4,618 and $5,462 for the nine months ended September 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 $2,198 for the third quarter of 2021 as compared to $2,319 for the same period in 2020. Communication expenses were $6,781 for the nine months ended September 30, 2021 as compared to $6,698 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 $8,118 and $28,708 for the three and nine months ended September 30, 2021 as compared to $11,999 and $34,377 for the same periods in 2020. During the third quarter of 2021 there was a recovery of provision for unfunded commitments of $200. The provision for unfunded commitments was $2,700 and $8,700 for the three and nine months ended September 30, 2020.

Efficiency Ratio

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	Efficiency Ratio
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Efficiency ratio (GAAP)	66.77	%	65.16	%	64.85	%	70.49	%







Adjusted efficiency ratio (Non-GAAP) (1)	66.06	%	62.63	%	65.66	%	63.89	%

(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 third quarter of 2021 and 2020 was $11,185 and $7,612, respectively. The effective tax rates for those periods were 21.84% and 21.58%, respectively. Income tax expense for the nine months ended September 30, 2021 and 2020 was $35,572 and $13,022, respectively. The effective tax rates for those periods were 22.10% and 20.28%, 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 September 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 under the Company’s loan deferral programs implemented in 2020 and described in more detail in the section entitled “Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments” in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020, as well as a focus on those industries more highly impacted by the pandemic, primarily the hospitality and senior living industries. At September 30, 2021, the Company had 41 loans (not in thousands) on deferral with an aggregate balance of approximately $3,360, or 0.04% 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.

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 our credit administration department, our 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

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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 nine months of 2021 were $4,906, or 0.06% of average loans (annualized), compared to net charge-offs of $2,898, or 0.04% 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 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

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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:


	September 30, 2021				December 31, 2020			September 30, 2020
	Balance		% of Total			Balance		% of Total		Balance		% of Total
Commercial, financial, agricultural	$	34,977	14.34	%		$	39,031	23.20	%	$	38,195	23.89	%
Lease financing	1,570		0.79	%		1,624		0.69	%	1,832		0.75	%
Real estate – construction	16,169		10.89	%		16,047		7.85	%	13,819		6.98	%
Real estate – 1-4 family mortgage	32,181		27.21	%		32,165		24.68	%	32,705		24.89	%
Real estate – commercial mortgage	73,895		45.27	%		76,127		41.66	%	70,582		41.30	%
Installment loans to individuals	11,246		1.50	%		11,150		1.92	%	10,965		2.19	%
Total	$	170,038	100.00	%		$	176,144	100.00	%	$	168,098	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 recorded a negative provision (recovery) for credit losses of $1,200 during the

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third quarter and first nine months of 2021, as compared to a provision for credit losses on loans of $23,100 in the third quarter of 2020 and $76,350 in the first nine months 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’s allowance model indicated that a release of $1,200 of the allowance for credit losses was appropriate during the third quarter of 2021.

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


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Balance at beginning of period	$	172,354		$	145,387		$	176,144		$	52,162
Impact of the adoption of ASC 326	—			—			—			42,484
Charge-offs
Commercial, financial, agricultural	1,225			420			5,907			1,969
Lease financing	13			168			13			168
Real estate – construction	—			136			52			668
Real estate – 1-4 family mortgage	276			720			529			1,083
Real estate – commercial mortgage	184			553			416			2,600
Installment loans to individuals	1,281			1,579			4,286			6,003
Total charge-offs	2,979			3,576			11,203			12,491
Recoveries
Commercial, financial, agricultural	418			698			940			996
Lease financing	11			1			36			11
Real estate – construction	—			31			13			31
Real estate – 1-4 family mortgage	193			152			855			288
Real estate – commercial mortgage	190			711			504			2,451
Installment loans to individuals	1,051			1,594			3,949			5,816
Total recoveries	1,863			3,187			6,297			9,593
Net charge-offs	1,116			389			4,906			2,898
Provision for credit losses on loans	(1,200)			23,100			(1,200)			76,350
Balance at end of period	$	170,038		$	168,098		$	170,038		$	168,098
Net charge-offs (annualized) to average loans	0.04		%	0.01		%	0.06		%	0.04		%
Net charge-offs to allowance for credit losses on loans	0.66		%	0.23		%	2.89		%	1.72		%
Allowance for credit losses on loans to:
Total loans							1.70		%	1.52		%
Total loans excluding PPP loans (1)							1.71		%	1.72		%
Nonperforming loans							299.68		%	367.05		%
Nonaccrual loans							304.96		%	385.09		%

(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

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


	Nine Months Ended
	September 30, 2021					September 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	$	4,967	$	1,968,541	0.34%	$	973	$	2,109,787	0.06%
Lease financing	(23)		75,620		(0.04)	157		83,844		0.25
Real estate – construction	39		986,337		0.01	637		818,779		0.10
Real estate – 1-4 family mortgage	(326)		2,711,619		(0.02)	795		2,808,646		0.04
Real estate – commercial mortgage	(88)		4,519,793		—	149		4,335,604		—
Installment loans to individuals	337		169,526		0.27	187		293,877		0.08
Total	$	4,906	$	10,431,436	0.06%	$	2,898	$	10,450,537	0.04%

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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Real estate – construction:
Residential	$	—	$	105	$	39	$	637


Total real estate – construction	—		105		39		637
Real estate – 1-4 family mortgage:
Primary	115		661		57		921
Home equity	(46)		(29)		(109)		(51)
Rental/investment	7		(8)		(192)		20
Land development	7		(56)		(82)		(95)
Total real estate – 1-4 family mortgage	83		568		(326)		795
Real estate – commercial mortgage:
Owner-occupied	18		(190)		(98)		1,224
Non-owner occupied	(24)		33		(14)		(1,097)
Land development	—		(1)		24		22
Total real estate – commercial mortgage	(6)		(158)		(88)		149
Total net charge-offs of loans secured by real estate	$	77	$	515	$	(375)	$	1,581

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 September 30,	2021		2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,535	$	17,335

(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense)	(200)		2,700
Ending balance	$	20,335	$	20,035

Nine Months Ended September 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
(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense)	(200)		8,700
Ending balance	$	20,335	$	20,035

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.

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	Non Purchased		Purchased		Total
September 30, 2021
Nonaccruing loans	$	29,266	$	26,492	$	55,758
Accruing loans past due 90 days or more	908		74		982
Total nonperforming loans	30,174		26,566		56,740
Other real estate owned	2,252		2,453		4,705


Total nonperforming assets	$	32,426	$	29,019	$	61,445
Nonperforming loans to total loans					0.57		%
Nonaccruing loans to total loans					0.56		%
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		%

The level of nonperforming loans increased $1,270 from December 31, 2020 to September 30, 2021, while OREO decreased $1,267 during the same period.

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


	September 30, 2021		December 31, 2020		September 30, 2020
Commercial, financial, agricultural	$	16,027	$	16,668	$	17,422
Lease financing	11		48		—
Real estate – construction:
Residential	—		497		—
Commercial	—		—		—
Total real estate – construction	—		497		—
Real estate – 1-4 family mortgage:
Primary	17,378		16,317		15,583
Home equity	2,041		2,273		1,949
Rental/investment	1,016		1,526		1,284
Land development	243		345		395
Total real estate – 1-4 family mortgage	20,678		20,461		19,211
Real estate – commercial mortgage:
Owner-occupied	5,732		6,364		6,805
Non-owner occupied	13,412		10,204		1,201
Land development	366		572		519
Total real estate – commercial mortgage	19,510		17,140		8,525
Installment loans to individuals	514		656		638

Total nonperforming loans	$	56,740	$	55,470	$	45,796

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Total nonperforming loans as a percentage of total loans were 0.57% as of September 30, 2021 as compared to 0.51% and 0.41% as of December 31, 2020 and September 30, 2020, respectively. The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 299.68% as of September 30, 2021 as compared to 317.55% as of December 31, 2020 and 367.05% as of September 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 September 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 $14,806 at September 30, 2021 as compared to $26,286 at December 31, 2020 and $16,644 at September 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 $20,183 at September 30, 2021 as compared to $20,448 at December 31, 2020 and $20,322 at September 30, 2020. At September 30, 2021, loans restructured through interest rate concessions represented 34% 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:


	September 30, 2021		December 31, 2020		September 30, 2020
Commercial, financial, agricultural	$	1,062	$	2,326	$	2,417





Real estate – 1-4 family mortgage:
Primary	11,415		9,460		8,359
Home equity	299		332		333
Rental/investment	354		432		724

Total real estate – 1-4 family mortgage	12,068		10,224		9,416
Real estate – commercial mortgage:
Owner-occupied	5,546		6,838		6,854
Non-owner occupied	1,357		797		1,355
Land development	76		183		186
Total real estate – commercial mortgage	6,979		7,818		8,395
Installment loans to individuals	74		80		94
Total restructured loans in compliance with modified terms	$	20,183	$	20,448	$	20,322

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

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	2021		2020
Balance at January 1,	$	20,448	$	11,954
Additional advances or loans with concessions	10,852		12,946
Reclassified as performing restructured loan	150		428
Reductions due to:
Reclassified as nonperforming	(2,855)		(2,999)
Paid in full	(7,341)		(1,360)

Charge-offs	(205)		(3)

Paydowns	(866)		(644)

Balance at September 30,	$	20,183	$	20,322

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.


	September 30, 2021		December 31, 2020		September 30, 2020
Nonaccruing loans	$	55,758	$	51,420	$	43,652
Accruing loans past due 90 days or more	982		4,050		2,144
Total nonperforming loans	56,740		55,470		45,796
Restructured loans in compliance with modified terms	20,183		20,448		20,322
Total nonperforming and restructured loans	$	76,923	$	75,918	$	66,118

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


	September 30, 2021		December 31, 2020		September 30, 2020
Residential real estate	$	503	$	179	$	1,870
Commercial real estate	2,671		2,665		2,403
Residential land development	315		1,013		1,669
Commercial land development	1,216		2,115		2,211

Total other real estate owned	$	4,705	$	5,972	$	8,153

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	3,171		7,887

Impairments	(290)		(1,647)
Dispositions	(4,007)		(6,047)
Other	(141)		(50)
Balance at September 30,	$	4,705	$	8,153

Other real estate owned with a cost basis of $4,007 was sold during the nine months ended September 30, 2021, resulting in a net gain of $74, while other real estate owned with a cost basis of $6,047 was sold during the nine months ended September 30, 2020, resulting in a net loss of $27.

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

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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 October 1, 2021, in each case as compared to the result under rates present in the market on September 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.


	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	11.83%	16.87%	22.94%
+100	7.20%	8.57%	12.20%

The rate shock results for the net interest income simulations for the next twenty-four months produce an asset sensitive position at September 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 September 30, 2021, the Company had notional amounts of $190,200 on interest rate contracts with corporate customers and $190,200 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.

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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 18.85% of the carrying value of the total securities portfolio. Securities within our investment portfolio are also used to secure certain deposit types, short-term borrowings and derivative instruments. At September 30, 2021, securities with a carrying value of $557,463 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 September 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 September 30, 2021, the balance of our outstanding long-term advances with the FHLB was $150,425 compared to $152,167 at December 31, 2020. The total amount of the remaining credit available to us from the FHLB at September 30, 2021 was $3,977,848. 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 September 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 $207,210 at September 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:

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	Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Noninterest-bearing demand	31.60	%	27.03	%	—	%	—	%
Interest-bearing demand	45.75		42.95		0.26		0.51
Savings	7.17		6.17		0.08		0.11
Time deposits	11.85		16.79		0.90		1.59
Short-term borrowings	0.10		3.85		0.30		1.02
Long-term Federal Home Loan Bank advances	1.14		1.27		0.03		0.80
Subordinated notes	1.56		1.03		4.97		5.54
Other borrowed funds	0.83		0.91		4.27		4.56
Total deposits and borrowed funds	100.00	%	100.00	%	0.34	%	0.64	%

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 $1,476,141 at September 30, 2021, as compared to $414,105 at September 30, 2020. Cash used in investing activities for the nine months ended September 30, 2021 was $372,260, as compared to cash used in investing activities of $1,355,398 for the nine months ended September 30, 2020. Proceeds from the sale, maturity or call of securities within our investment portfolio were $505,926 for the nine months ended September 30, 2021, as compared to $323,136 for the same period in 2020. These proceeds were primarily reinvested into the investment portfolio. Purchases of investment securities were $1,743,105 for the first nine months of 2021, as compared to $304,955 for the same period in 2020.

Cash provided by financing activities for the nine months ended September 30, 2021 was $1,125,027, as compared to $1,310,528 for the same period in 2020. Deposits increased $1,195,748 and $1,721,118 for the nine months ended September 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. 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 September 30, 2021, the maximum amount available for transfer from the Bank to the Company in the form of loans was $157,470. The Company maintains a $3,000 line of credit collateralized by cash with the Bank. There were no amounts outstanding under this line of credit at September 30, 2021.

These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the nine months ended September 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

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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:


	September 30, 2021		December 31, 2020
Loan commitments	$	3,058,740	$	2,749,988
Standby letters of credit	95,201		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 $2,203,944 at September 30, 2021 compared to $2,132,733 at December 31, 2020. Book value per share was $39.53 and $37.95 at September 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.

The Company repurchased $21,315 of its common stock at a weighted average price of $34.82 per share during the first nine months of 2021.

On October 26, 2021, the Company’s Board of Directors approved a new stock repurchase program (the previous program having just expired), authorizing the Company to repurchase up to $50,000 of its outstanding common stock, either in open market purchases or privately-negotiated transactions. The new repurchase program will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased.

The Company has junior subordinated debentures with a carrying value of $111,228 at September 30, 2021, of which $107,637 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 September 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 $207,210 at September 30, 2021, of which $197,360 is included in the Company’s Tier 2 capital.

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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
September 30, 2021
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,287,684	11.02	%	$	759,458	6.50	%	$	817,878	7.00	%
Tier 1 risk-based capital ratio	1,395,321		11.94	%	934,717		8.00	%	993,137		8.50	%
Total risk-based capital ratio	1,712,500		14.66	%	1,168,397		10.00	%	1,226,816		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,395,321		9.18	%	759,755		5.00	%	607,804		4.00	%

Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,454,879	12.45	%	$	759,370	6.50	%	$	817,783	7.00	%
Tier 1 risk-based capital ratio	1,454,879		12.45	%	934,609		8.00	%	993,022		8.50	%
Total risk-based capital ratio	1,574,697		13.48	%	1,168,261		10.00	%	1,226,674		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,454,879		9.58	%	758,964		5.00	%	607,171		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 September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Interest income (fully tax equivalent basis)	$	115,723		$	123,677		$	361,718		$	381,195
Interest expense	10,721			15,792			34,247			57,536
Net interest income (fully tax equivalent basis)	105,002			107,885			327,471			323,659

Total noninterest income	50,755			70,928			179,402			172,668
Net gains on sales of securities	764			—			2,121			31
MSR valuation adjustment	—			828			13,561			(13,694)
Adjusted noninterest income	49,991			70,100			163,720			186,331

Total noninterest expense	103,999			116,510			328,711			349,836
Intangible amortization	1,481			1,733			4,618			5,462

Debt prepayment penalty	—			28			—			118
Restructuring charges	—			—			307			—
COVID-19 related expenses	323			570			1,478			9,730
Provision for unfunded commitments	(200)			2,700			(200)			8,700
Adjusted noninterest expense	102,395			111,479			322,508			325,826

Efficiency Ratio (GAAP)	66.77		%	65.16		%	64.85		%	70.49		%
Adjusted Efficiency Ratio (non-GAAP)	66.06		%	62.63		%	65.66		%	63.89		%

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Allowance for Credit Losses on Loans to Total Loans, excluding PPP Loans
	September 30, 2021			December 31, 2020
Total loans (GAAP)	$	10,016,824		$	10,933,647
Less PPP loans	67,462			1,128,703
Adjusted total loans (non-GAAP)	$	9,949,362		$	9,804,944

Allowance for Credit Losses on Loans	$	170,038		$	176,144
ACL/Total loans (GAAP)	1.70		%	1.61		%
ACL/Total loans excluding PPP loans (non-GAAP)	1.71		%	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 September 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	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under Share Repurchase Plans (2)
July 1, 2021 to July 31, 2021	342	$	38.70	—	$	50,000
August 1, 2021 to August 31, 2021	334,503	35.69		331,510	38,177
September 1, 2021 to September 30, 2021	282,257	33.80		280,597	28,704
Total	617,102	$	34.83	612,107

(1) The Company announced a $50.0 million stock repurchase program on October 20, 2020 which expired as of October 20, 2021. Under the plan, 612,107 shares were repurchased in the third quarter of 2021.

Share amounts in this column also include shares of Renasant Corporation stock withheld to satisfy federal and state tax liabilities related to the vesting of time-based restricted stock awards during the period. A total of 342, 2,993, and 1,660 shares were withheld for such purpose in July, August and September, respectively.

(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)

(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 September 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 September 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.

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:	November 5, 2021	/s/ C. Mitchell Waycaster
		C. Mitchell Waycaster
		President and
		Chief Executive Officer
		(Principal Executive Officer)

Date:	November 5, 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) (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 Sept. 30, 2021

Exhibits