RNST 10-Q Quarterly Report Sept. 30, 2022

RENASANT CORP

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rnst-20220930

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, 2022


☐			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 31, 2022, 55,953,104 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, 2022

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	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	56

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	85

Item 4.	Controls and Procedures	85

PART II	Other Information


Item 1A.	Risk Factors	87

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87

Item 6.	Exhibits	88

SIGNATURES		89

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, 2022		December 31, 2021
Assets
Cash and due from banks	$	206,943	$	182,710
Interest-bearing balances with banks	272,557		1,695,255
Cash and cash equivalents	479,500		1,877,965
Securities held to maturity (net of allowance for credit losses of $ 32 at each of September 30, 2022 and December 31, 2021) (fair value of $ 1,218,656 and $ 415,552 , respectively)	1,353,502		416,357
Securities available for sale, at fair value	1,569,242		2,386,052
Loans held for sale, at fair value	144,642		453,533
Loans, net of unearned income:
Non purchased loans and leases	10,259,840		9,011,011
Purchased loans	845,164		1,009,903
Total loans, net of unearned income	11,105,004		10,020,914
Allowance for credit losses on loans	( 174,356 )		( 164,171 )
Loans, net	10,930,648		9,856,743
Premises and equipment, net	284,062		293,122
Other real estate owned:
Non purchased	867		951
Purchased	1,545		1,589
Total other real estate owned, net	2,412		2,540
Goodwill	946,291		939,683
Other intangible assets, net	20,170		24,098
Bank-owned life insurance	371,650		287,359
Mortgage servicing rights	81,980		89,018
Other assets	287,000		183,841
Total assets	$	16,471,099	$	16,810,311
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing	$	4,827,220	$	4,718,124
Interest-bearing	8,604,904		9,187,600
Total deposits	13,432,124		13,905,724
Short-term borrowings	312,818		13,947
Long-term debt	426,821		471,209
Other liabilities	207,055		209,578
Total liabilities	14,378,818		14,600,458
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; 55,953,104 and 55,756,233 shares outstanding, respectively	296,483		296,483
Treasury stock, at cost – 3,343,621 and 3,540,492 shares, respectively	( 111,577 )		( 118,027 )
Additional paid-in capital	1,299,476		1,300,192
Retained earnings	823,951		741,648
Accumulated other comprehensive loss, net of taxes	( 216,052 )		( 10,443 )
Total shareholders’ equity	2,092,281		2,209,853
Total liabilities and shareholders’ equity	$	16,471,099	$	16,810,311

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,
	2022		2021		2022		2021
Interest income
Loans	$	125,175	$	105,004	$	332,862	$	333,334
Securities
Taxable	12,636		6,749		32,137		17,285
Tax-exempt	1,864		1,667		5,669		5,025
Other	3,458		593		6,076		1,122
Total interest income	143,133		114,013		376,744		356,766
Interest expense
Deposits	7,241		6,972		17,896		22,920
Borrowings	5,574		3,749		15,386		11,327
Total interest expense	12,815		10,721		33,282		34,247
Net interest income	130,318		103,292		343,462		322,519
Provision for (recovery of provision for) credit losses on loans	9,800		( 1,200 )		13,300		( 1,200 )

Provision for (recovery of provision for) credit losses	9,800		( 1,200 )		13,300		( 1,200 )
Net interest income after provision for credit losses	120,518		104,492		330,162		323,719
Noninterest income
Service charges on deposit accounts	10,216		9,337		29,512		26,818
Fees and commissions	4,148		3,837		12,798		11,847
Insurance commissions	3,108		2,829		8,253		7,488
Wealth management revenue	5,467		5,371		17,102		15,182
Mortgage banking income	12,675		23,292		30,624		94,878
Net gain on sales of securities	—		764		—		2,121
BOLI income	2,296		1,602		6,780		5,318

Other	3,276		3,723		10,789		15,750
Total noninterest income	41,186		50,755		115,858		179,402
Noninterest expense
Salaries and employee benefits	66,463		69,115		194,282		218,104
Data processing	3,526		5,277		11,379		16,380
Net occupancy and equipment	11,266		11,748		33,697		35,660
Other real estate owned	34		168		( 394 )		313
Professional fees	3,087		2,972		9,016		8,566
Advertising and public relations	3,229		2,922		10,694		9,274
Intangible amortization	1,251		1,481		3,927		4,618
Communications	1,999		2,198		5,930		6,781
Merger and conversion related expenses	—		—		687		—
Restructuring charges	—		—		732		307


Other	10,719		8,118		23,923		28,708
Total noninterest expense	101,574		103,999		293,873		328,711
Income before income taxes	60,130		51,248		152,147		174,410
Income taxes	13,563		11,185		32,355		35,572
Net income	$	46,567	$	40,063	$	119,792	$	138,838


Basic earnings per share	$	0.83	$	0.71	$	2.14	$	2.47
Diluted earnings per share	$	0.83	$	0.71	$	2.13	$	2.46
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,
	2022		2021		2022		2021
Net income	$	46,567	$	40,063	$	119,792	$	138,838
Other comprehensive loss, net of tax:
Securities available for sale:
Unrealized holding losses on securities	( 63,579 )		( 9,250 )		( 220,999 )		( 20,491 )
Reclassification adjustment for gains realized in net income	—		( 570 )		—		( 1,582 )

Amortization of unrealized holding gains on securities transferred to the held to maturity category	1,207		—		969		—
Total securities available for sale	( 62,372 )		( 9,820 )		( 220,030 )		( 22,073 )
Derivative instruments:
Unrealized holding gains on derivative instruments	1,687		1,215		14,328		7,551

Total derivative instruments	1,687		1,215		14,328		7,551
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	31		49		93		148
Total defined benefit pension and post-retirement benefit plans	31		49		93		148
Other comprehensive loss, net of tax	( 60,654 )		( 8,556 )		( 205,609 )		( 14,374 )
Comprehensive (loss) income	$	( 14,087 )	$	31,507	$	( 85,817 )	$	124,464

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 Loss		Total
Nine Months Ended September 30, 2022	Shares	Amount
Balance at January 1, 2022	55,756,233	$	296,483	$	( 118,027 )	$	1,300,192	$	741,648	$	( 10,443 )	$	2,209,853

Net income	—	—		—		—		33,547		—		33,547
Other comprehensive loss	—	—		—		—		—		( 94,126 )		( 94,126 )
Comprehensive loss												( 60,579 )
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,505 )		—		( 12,505 )


Issuance of common stock for stock-based compensation awards	124,433	—		3,977		( 6,442 )		—		—		( 2,465 )
Stock-based compensation expense	—	—		—		3,338		—		—		3,338

Balance at March 31, 2022	55,880,666	$	296,483	$	( 114,050 )	$	1,297,088	$	762,690	$	( 104,569 )	$	2,137,642
Net income	—	—		—		—		39,678		—		39,678
Other comprehensive loss	—	—		—		—		—		( 50,829 )		( 50,829 )
Comprehensive loss												( 11,151 )
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,488 )		—		( 12,488 )


Issuance of common stock for stock-based compensation awards	51,351	—		1,755		( 1,833 )		—		—		( 78 )
Stock-based compensation expense	—	—		—		2,952		—		—		2,952

Balance at June 30, 2022	55,932,017	$	296,483	$	( 112,295 )	$	1,298,207	$	789,880	$	( 155,398 )	$	2,116,877
Net income	—	—		—		—		46,567		—		46,567
Other comprehensive loss	—	—		—		—		—		( 60,654 )		( 60,654 )
Comprehensive income												( 14,087 )
Cash dividends ($ 0.22 per share)	—	—		—		—		( 12,496 )		—		( 12,496 )


Issuance of common stock for stock-based compensation awards	21,087	—		718		( 1,000 )		—		—		( 282 )
Stock-based compensation expense	—	—		—		2,269		—		—		2,269

Balance at September 30, 2022	55,953,104	$	296,483	$	( 111,577 )	$	1,299,476	$	823,951	$	( 216,052 )	$	2,092,281

Table of Contents


	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

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,
	2022		2021
Operating activities
Net income	$	119,792	$	138,838
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (recovery of provision for) credit losses	13,300		( 1,200 )
Depreciation, amortization and accretion	33,590		34,421
Deferred income tax expense	3,600		5,071
Proceeds from sale of MSR	18,525		—
Gain on sale of MSR	( 2,960 )		—
Funding of mortgage loans held for sale	( 1,436,158 )		( 3,189,474 )
Proceeds from sales of mortgage loans held for sale	1,757,353		3,230,039
Gains on sales of mortgage loans held for sale	( 9,808 )		( 71,598 )
Valuation adjustment to mortgage servicing rights	—		( 13,561 )
Gains on sales of securities	—		( 2,121 )

Gains on sales of premises and equipment	( 245 )		( 519 )
Stock-based compensation expense	8,558		7,736

Increase in other assets	( 32,187 )		( 16,429 )
Decrease in other liabilities	( 10,253 )		( 31,032 )
Net cash provided by operating activities	463,107		90,171
Investing activities
Purchases of securities available for sale	( 708,457 )		( 1,743,105 )
Proceeds from sales of securities available for sale	—		176,406
Proceeds from call/maturities of securities available for sale	336,504		329,520
Purchases of securities held to maturity	( 91,803 )		—

Proceeds from call/maturities of securities held to maturity	35,980		—
Net (increase) decrease in loans	( 1,057,998 )		917,343
Purchases of premises and equipment	( 10,374 )		( 16,797 )
Proceeds from sales of premises and equipment	1,230		8,715
Purchase of bank-owned life insurance	( 80,000 )		( 50,000 )
Net change in FHLB stock	( 7,538 )		( 1,226 )
Proceeds from sales of other assets	2,458		4,081
Net cash paid in acquisition of businesses	( 10,066 )		—
Other, net	2,607		2,803
Net cash used in investing activities	( 1,587,457 )		( 372,260 )
Financing activities
Net increase in noninterest-bearing deposits	109,096		807,602
Net (decrease) increase in interest-bearing deposits	( 582,696 )		388,146
Net increase (decrease) in short-term borrowings	269,391		( 10,087 )

Repayment of long-term debt	( 32,417 )		( 1,742 )
Cash paid for dividends	( 37,489 )		( 37,578 )
Repurchase of shares in connection with stock repurchase program	—		( 21,314 )


Net cash (used in) provided by financing activities	( 274,115 )		1,125,027
Net (decrease) increase in cash and cash equivalents	( 1,398,465 )		842,938
Cash and cash equivalents at beginning of period	1,877,965		633,203
Cash and cash equivalents at end of period	$	479,500	$	1,476,141


Supplemental disclosures
Cash paid for interest	$	32,506	$	37,827
Cash paid for income taxes	$	19,245	$	41,248
Noncash transactions:
Transfers of loans to other real estate owned	$	1,828	$	3,171




Recognition of operating right-of-use assets	$	3,045	$	6,718
Recognition of operating lease liabilities	$	3,045	$	6,718

Table of Contents

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.

The Bank acquired Southeastern Commercial Finance, LLC (“SCF”), an asset-based lending company headquartered in Birmingham, Alabama, effective March 1, 2022. Prior to the end of the third quarter of 2022, all of SCF's assets were distributed to the Bank in connection with the conversion and integration of SCF into the Bank.

In September 2022, the Bank formed Renasant Capital Funding Corporation (the “REIT”), which is intended to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended. The REIT will purchase from the Bank, either by assignment or participation, eligible loans collateralized by real estate located in Georgia and Florida, which allows for more effective monitoring of the loans and better managing liquidity related to such real estate assets. The arrangement provides tax benefits in certain states in which we operate.

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, 2021 filed with the Securities and Exchange Commission on February 25, 2022.

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 September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (“ASU 2022-04”) , which enhances the transparency of supplier finance programs by requiring that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 will be effective on January 1, 2023. Early adoption is permitted, including in an interim period. The adoption of this accounting pronouncement will have no impact on the Company's financial statements.

In June 2022, FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”) , which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition, ASU 2022-03 requires the following disclosures for equity securities subject to contractual sale restrictions: (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restriction(s) and (3) the circumstances that could cause a lapse in the restrictions(s). ASU 2022-03 will be effective on January 1, 2024. Early adoption is permitted, including in an interim period. The adoption of this accounting pronouncement will have no impact on the Company's financial statements aside from additional and revised disclosures.

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, 2022 or December 31, 2021.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2022

Obligations of other U.S. Government agencies and corporations	$	170,000	$	—	$	( 5,480 )	$	164,520
Obligations of states and political subdivisions	155,188		88		( 14,635 )		140,641
Residential mortgage backed securities:
Government agency mortgage backed securities	528,196		13		( 59,181 )		469,028
Government agency collateralized mortgage obligations	626,821		—		( 102,823 )		523,998
Commercial mortgage backed securities:
Government agency mortgage backed securities	11,204		—		( 957 )		10,247
Government agency collateralized mortgage obligations	214,617		—		( 25,129 )		189,488

Other debt securities	74,888		3		( 3,571 )		71,320

	$	1,780,914	$	104	$	( 211,776 )	$	1,569,242


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2021
U.S. Treasury securities	$	3,007	$	3	$	—	$	3,010

Obligations of states and political subdivisions	153,847		5,532		( 269 )		159,110
Residential mortgage backed securities:
Government agency mortgage backed securities	967,497		7,854		( 6,816 )		968,535
Government agency collateralized mortgage obligations	1,008,514		457		( 20,371 )		988,600
Commercial mortgage backed securities:
Government agency mortgage backed securities	14,717		365		( 1 )		15,081
Government agency collateralized mortgage obligations	216,859		812		( 3,419 )		214,252

Other debt securities	36,515		1,097		( 148 )		37,464

	$	2,400,956	$	16,120	$	( 31,024 )	$	2,386,052

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The amortized cost and fair value of securities held to maturity were as follows as of the dates presented:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2022
Obligations of states and political subdivisions	$	292,769	$	—	$	( 63,602 )	$	229,167
Residential mortgage backed securities
Government agency mortgage backed securities	499,348		—		( 29,278 )		470,070
Government agency collateralized mortgage obligations	433,407		—		( 27,038 )		406,369
Commercial mortgage backed securities:
Government agency mortgage backed securities	17,011		—		( 3,429 )		13,582
Government agency collateralized mortgage obligations	45,655		—		( 6,200 )		39,455
Other debt securities	65,344		—		( 5,331 )		60,013
	$	1,353,534	$	—	$	( 134,878 )	$	1,218,656
Allowance for credit losses - held to maturity securities	( 32 )
Held to maturity securities, net of allowance for credit losses	$	1,353,502


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2021
Obligations of states and political subdivisions	$	267,641	$	333	$	( 685 )	$	267,289
Residential mortgage backed securities
Government agency mortgage backed securities	60,507		1		( 198 )		60,310
Government agency collateralized mortgage obligations	24,832		—		( 92 )		24,740
Commercial mortgage backed securities:
Government agency mortgage backed securities	1,855		—		—		1,855
Government agency collateralized mortgage obligations	39,505		—		( 117 )		39,388
Other debt securities	22,049		—		( 79 )		21,970
	$	416,389	$	334	$	( 1,171 )	$	415,552
Allowance for credit losses - held to maturity securities	( 32 )
Held to maturity securities, net of allowance for credit losses	$	416,357

During the third quarter, the Company transferred, at fair value, $ 882,927 of securities from the available for sale portfolio to the held to maturity portfolio as the Company has no intention to sell these securities. The related net unrealized loss of $ 99,675 (after tax losses of $ 74,307 ) remained in accumulated other comprehensive income (loss) and will be amortized over the remaining life of the securities, offsetting the related amortization of discount on the transferred securities. No gains or losses were recognized at the time of transfer.

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

There were no securities sold during the three and nine months ended September 30, 2022. Securities sold during the three and nine months ended September 30, 2021 were as set forth in the table below.


	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

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		2021
Gross gains on sales of securities available for sale	$	825	$	4,333
Gross losses on sales of securities available for sale	( 61 )		( 2,212 )
Gains on sales of securities available for sale, net	$	764	$	2,121

At September 30, 2022 and December 31, 2021, securities with a carrying value of $ 804,161 and $ 607,681 , respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $ 17,472 and $ 21,493 were pledged as collateral for short-term borrowings and derivative instruments at September 30, 2022 and December 31, 2021, respectively.

The amortized cost and fair value of securities at September 30, 2022 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.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Held to Maturity				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	150	$	147	$	8,900	$	8,864
Due after one year through five years	1,863		1,750		227,785		221,447
Due after five years through ten years	44,350		37,553		77,471		71,942
Due after ten years	246,406		189,717		75,791		65,160
Residential mortgage backed securities:
Government agency mortgage backed securities	500,348		471,070		528,196		469,028
Government agency collateralized mortgage obligations	433,407		406,369		626,821		523,998
Commercial mortgage backed securities:
Government agency mortgage backed securities	17,011		13,582		11,204		10,247
Government agency collateralized mortgage obligations	45,655		39,455		214,617		189,488
Other debt securities	64,344		59,013		10,129		9,068

	$	1,353,534	$	1,218,656	$	1,780,914	$	1,569,242

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, 2022
Obligations of other U.S. Government agencies and corporations	5	$	164,520	$	( 5,480 )	—	$	—	$	—	5	$	164,520	$	( 5,480 )
Obligations of states and political subdivisions	95	100,822		( 8,433 )		11	31,571		( 6,202 )		106	132,393		( 14,635 )
Residential mortgage backed securities:
Government agency mortgage backed securities	104	291,428		( 28,600 )		22	176,036		( 30,581 )		126	467,464		( 59,181 )
Government agency collateralized mortgage obligations	28	248,142		( 39,982 )		24	275,856		( 62,841 )		52	523,998		( 102,823 )
Commercial mortgage backed securities:
Government agency mortgage backed securities	4	10,247		( 957 )		—	—		—		4	10,247		( 957 )
Government agency collateralized mortgage obligations	18	119,176		( 11,340 )		11	70,312		( 13,789 )		29	189,488		( 25,129 )

Other debt securities	32	70,317		( 3,571 )		—	—		—		32	70,317		( 3,571 )
Total	286	$	1,004,652	$	( 98,363 )	68	$	553,775	$	( 113,413 )	354	$	1,558,427	$	( 211,776 )
December 31, 2021

Obligations of states and political subdivisions	8	$	34,303	$	( 216 )	3	$	3,892	$	( 53 )	11	$	38,195	$	( 269 )
Residential mortgage backed securities:
Government agency mortgage backed securities	41	727,546		( 6,312 )		1	12,305		( 504 )		42	739,851		( 6,816 )
Government agency collateralized mortgage obligations	49	966,126		( 20,371 )		—	—		—		49	966,126		( 20,371 )
Commercial mortgage backed securities:
Government agency mortgage backed securities	1	1,791		( 1 )		1	432		—		2	2,223		( 1 )
Government agency collateralized mortgage obligations	21	160,919		( 3,072 )		2	9,005		( 347 )		23	169,924		( 3,419 )
Trust preferred securities	—	—		—		—	—		—		—	—		—
Other debt securities	1	8,699		( 148 )		—	—		—		1	8,699		( 148 )

Total	121	$	1,899,384	$	( 30,120 )	7	$	25,634	$	( 904 )	128	$	1,925,018	$	( 31,024 )

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Less than 12 Months					12 Months or More					Total
	#	Fair Value		Unrealized Losses		#	Fair Value		Unrealized Losses		#	Fair Value		Unrealized Losses
Held to Maturity:
September 30, 2022
Obligations of states and political subdivisions	125	$	212,242	$	( 57,474 )	5	$	16,925	$	( 6,128 )	130	$	229,167	$	( 63,602 )
Residential mortgage backed securities:
Government agency mortgage backed securities	48	272,247		( 14,993 )		23	197,823		( 14,285 )		71	470,070		( 29,278 )
Government agency collateralized mortgage obligations	9	206,711		( 12,589 )		9	199,658		( 14,449 )		18	406,369		( 27,038 )
Commercial mortgage backed securities:
Government agency mortgage backed securities	1	13,582		( 3,429 )		—	—		—		1	13,582		( 3,429 )
Government agency collateralized mortgage obligations	3	13,190		( 1,522 )		6	26,265		( 4,678 )		9	39,455		( 6,200 )
Other debt securities	10	60,013		( 5,331 )		—	—		—		10	60,013		( 5,331 )
Total	196	$	777,985	$	( 95,338 )	43	$	440,671	$	( 39,540 )	239	$	1,218,656	$	( 134,878 )
December 31, 2021
Obligations of states and political subdivisions	24	$	62,131	$	( 685 )	—	$	—	$	—	24	$	62,131	$	( 685 )
Residential mortgage backed securities:
Government agency mortgage backed securities	50	53,560		( 181 )		1	5,354		( 17 )		51	58,914		( 198 )
Government agency collateralized mortgage obligations	1	24,740		( 92 )		—	—		—		1	24,740		( 92 )
Commercial mortgage backed securities:
Government agency collateralized mortgage obligations	7	39,388		( 117 )		—	—		—		7	39,388		( 117 )
Other debt securities	8	21,972		( 79 )		—	—		—		8	21,972		( 79 )
Total	90	$	201,791	$	( 1,154 )	1	$	5,354	$	( 17 )	91	$	207,145	$	( 1,171 )

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, 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. Based upon its review of securities with unrealized losses as of September 30, 2022, the Company determined that all such losses resulted from factors not deemed credit related. As such, the Company did not record any impairment for the first nine months of 2022.

The allowance for credit losses on held to maturity securities was $ 32 at September 30, 2022 and December 31, 2021. The Company monitors the credit quality of debt securities held to maturity using bond investment grades assigned by third party ratings agencies. Updated investment grades are obtained as they become available from agencies. As of September 30, 2022, 99.99 % of the amortized cost of debt securities held to maturity were rated A or higher by the ratings agencies.

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, 2022		December 31, 2021
Commercial, financial, agricultural (1)	$	1,435,275	$	1,332,962
Lease financing	108,517		80,192
Real estate – construction:
Residential	359,367		300,988
Commercial	848,941		798,914
Total real estate – construction	1,208,308		1,099,902
Real estate – 1-4 family mortgage:
Primary	2,041,885		1,682,050
Home equity	456,765		423,108
Rental/investment	306,165		268,245
Land development	151,986		135,070
Total real estate – 1-4 family mortgage	2,956,801		2,508,473
Real estate – commercial mortgage:
Owner-occupied	1,368,196		1,329,219
Non-owner occupied	2,963,631		2,446,370
Land development	120,026		110,395
Total real estate – commercial mortgage	4,451,853		3,885,984
Installment loans to individuals	104,246		107,565
Gross loans	10,265,000		9,015,078
Unearned income	( 5,160 )		( 4,067 )
Loans, net of unearned income	$	10,259,840	$	9,011,011

(1) Includes Paycheck Protection Program (“PPP”) loans of $ 5,476 and $ 58,391 as of September 30, 2022 and December 31, 2021, 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. For loans that are placed on nonaccrual status or charged-off, all interest accrued for the current year but not collected 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, 2022
Commercial, financial, agricultural	$	10,754	$	64	$	1,423,095	$	1,433,913	$	—	$	934	$	428	$	1,362	$	1,435,275
Lease financing	—		—		108,517		108,517		—		—		—		—		108,517
Real estate – construction:
Residential	179		—		358,956		359,135		153		79		—		232		359,367
Commercial	507		—		848,433		848,940		—		1		—		1		848,941
Total real estate – construction	686		—		1,207,389		1,208,075		153		80		—		233		1,208,308
Real estate – 1-4 family mortgage:
Primary	6,207		29		2,016,242		2,022,478		2,730		10,105		6,572		19,407		2,041,885
Home equity	2,116		—		453,351		455,467		119		636		543		1,298		456,765
Rental/investment	542		44		304,407		304,993		—		587		585		1,172		306,165
Land development	57		—		150,481		150,538		100		1,302		46		1,448		151,986
Total real estate – 1-4 family mortgage	8,922		73		2,924,481		2,933,476		2,949		12,630		7,746		23,325		2,956,801
Real estate – commercial mortgage:
Owner-occupied	1,041		—		1,361,701		1,362,742		—		3,534		1,920		5,454		1,368,196
Non-owner occupied	256		—		2,951,655		2,951,911		—		—		11,720		11,720		2,963,631
Land development	397		—		119,572		119,969		—		17		40		57		120,026
Total real estate – commercial mortgage	1,694		—		4,432,928		4,434,622		—		3,551		13,680		17,231		4,451,853
Installment loans to individuals	605		—		103,460		104,065		13		64		104		181		104,246
Unearned income	—		—		( 5,160 )		( 5,160 )		—		—		—		—		( 5,160 )
Loans, net of unearned income	$	22,661	$	137	$	10,194,710	$	10,217,508	$	3,115	$	17,259	$	21,958	$	42,332	$	10,259,840

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, 2021
Commercial, financial, agricultural	$	3,325	$	103	$	1,323,774	$	1,327,202	$	1,669	$	2,665	$	1,426	$	5,760	$	1,332,962
Lease financing	—		—		80,181		80,181		—		11		—		11		80,192
Real estate – construction:
Residential	1,077		—		299,911		300,988		—		—		—		—		300,988
Commercial	—		—		798,914		798,914		—		—		—		—		798,914
Total real estate – construction	1,077		—		1,098,825		1,099,902		—		—		—		—		1,099,902
Real estate – 1-4 family mortgage:
Primary	14,785		389		1,652,940		1,668,114		1,920		8,195		3,821		13,936		1,682,050
Home equity	1,468		—		420,695		422,163		182		546		217		945		423,108
Rental/investment	401		445		266,353		267,199		—		771		275		1,046		268,245
Land development	431		—		134,382		134,813		—		65		192		257		135,070
Total real estate – 1-4 family mortgage	17,085		834		2,474,370		2,492,289		2,102		9,577		4,505		16,184		2,508,473
Real estate – commercial mortgage:
Owner-occupied	720		36		1,325,776		1,326,532		163		822		1,702		2,687		1,329,219
Non-owner occupied	260		89		2,440,513		2,440,862		—		—		5,508		5,508		2,446,370
Land development	476		—		109,575		110,051		—		292		52		344		110,395
Total real estate – commercial mortgage	1,456		125		3,875,864		3,877,445		163		1,114		7,262		8,539		3,885,984
Installment loans to individuals	978		12		106,318		107,308		30		95		132		257		107,565
Unearned income	—		—		( 4,067 )		( 4,067 )		—		—		—		—		( 4,067 )
Loans, net of unearned income	$	23,921	$	1,074	$	8,955,265	$	8,980,260	$	3,964	$	13,462	$	13,325	$	30,751	$	9,011,011

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, 2022 or September 30, 2021. The outstanding balance of restructured loans on nonaccrual status was $ 14,186 and $ 12,411 at September 30, 2022 and September 30, 2021, 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 Amortized Cost		Post- Modification Amortized Cost
Three months ended September 30, 2022






Real estate – 1-4 family mortgage:
Primary	3	$	436	$	442










Total	3	$	436	$	442

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


	Number of Loans	Pre- Modification Amortized Cost		Post- Modification Amortized Cost
Nine months ended September 30, 2022






Real estate – 1-4 family mortgage:
Primary	15	$	2,146	$	2,168




Real estate – commercial mortgage:
Owner-occupied	1	246		246
Non-owner occupied	1	6,500		6,500

Total real estate – commercial mortgage	2	6,746		6,746

Total	17	$	8,892	$	8,914

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

With respect to loans that were restructured during the nine months ended September 30, 2022, $ 258 have subsequently defaulted as of the date of this report. 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.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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


	Number of Loans	Amortized Cost
Totals at January 1, 2022	97	$	14,650
Additional advances or loans with concessions	17	8,944
Reclassified as performing restructured loan	3	1,226
Reductions due to:
Reclassified as nonperforming	( 12 )	( 1,845 )
Paid in full	( 13 )	( 1,907 )
Charge-offs	—	—
Transfer to other real estate owned	—	—
Principal paydowns	—	( 416 )
Lapse of concession period	—	—
Totals at September 30, 2022	92	$	20,652

The allowance for credit losses attributable to restructured loans was $ 834 and $ 260 at September 30, 2022 and September 30, 2021, respectively. The Company had no restructured loans with remaining availability under commitments to lend additional funds at either September 30, 2022 or September 30, 2021.

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 4B) 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, if 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
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
September 30, 2022
Commercial, Financial, Agricultural	$	278,691	$	229,188	$	157,408	$	65,049	$	26,542	$	13,316	$	626,010	$	2,961	$	1,399,165
Pass	277,634		228,252		150,963		64,457		24,154		13,278		617,768		2,246		1,378,752
Special Mention	594		—		—		162		256		—		6,993		—		8,005
Substandard	463		936		6,445		430		2,132		38		1,249		715		12,408

Lease Financing Receivables	$	44,088	$	20,889	$	19,530	$	11,785	$	5,208	$	1,857	$	—	$	—	$	103,357
Pass	40,708		20,889		16,898		9,982		3,682		1,462		—		—		93,621
Special Mention	—		—		—		—		—		395		—		—		395
Substandard	3,380		—		2,632		1,803		1,526		—		—		—		9,341

Real Estate - Construction	$	447,899	$	459,751	$	122,418	$	47,829	$	—	$	—	$	18,516	$	—	$	1,096,413
Residential	198,849		42,847		593		—		—		—		5,183		—		247,472
Pass	198,849		42,694		593		—		—		—		5,183		—		247,319
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		153		—		—		—		—		—		—		153

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans

Commercial	249,050		416,904		121,825		47,829		—		—		13,333		—		848,941
Pass	249,050		416,904		121,825		47,829		—		—		13,333		—		848,941
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	203,241	$	155,577	$	52,387	$	25,732	$	18,635	$	14,716	$	29,166	$	733	$	500,187
Primary	13,310		9,906		6,089		2,513		2,959		2,329		5,781		108		42,995
Pass	11,071		9,906		6,089		2,498		2,959		2,329		5,781		108		40,741
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	2,239		—		—		15		—		—		—		—		2,254

Home Equity	228		1,201		—		39		121		—		15,032		8		16,629
Pass	228		1,201		—		39		121		—		15,032		8		16,629
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Rental/Investment	111,564		90,875		44,333		22,974		15,408		12,311		7,755		617		305,837
Pass	111,456		90,708		44,311		22,065		15,256		11,644		7,472		584		303,496
Special Mention	—		—		—		—		—		33		—		—		33
Substandard	108		167		22		909		152		634		283		33		2,308

Land Development	78,139		53,595		1,965		206		147		76		598		—		134,726
Pass	77,138		53,595		1,664		206		147		76		598		—		133,424
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	1,001		—		301		—		—		—		—		—		1,302

Real Estate - Commercial Mortgage	$	1,218,578	$	1,065,547	$	797,002	$	558,703	$	252,272	$	424,024	$	107,234	$	15,780	$	4,439,140
Owner-Occupied	259,980		317,839		264,207		178,756		124,945		173,537		45,455		3,345		1,368,064
Pass	259,492		314,960		261,115		177,213		117,283		158,319		45,197		3,345		1,336,924
Special Mention	—		1,157		1,024		327		—		—		—		—		2,508
Substandard	488		1,722		2,068		1,216		7,662		15,218		258		—		28,632

Non-Owner Occupied	912,598		718,884		521,624		373,079		122,806		248,669		53,702		12,240		2,963,602
Pass	912,363		709,652		521,624		359,844		105,306		179,055		53,702		12,240		2,853,786
Special Mention	—		—		—		11,266		17,500		24,294		—		—		53,060
Substandard	235		9,232		—		1,969		—		45,320		—		—		56,756

Land Development	46,000		28,824		11,171		6,868		4,521		1,818		8,077		195		107,474
Pass	46,000		28,783		10,850		6,868		4,445		1,818		8,077		195		107,036
Special Mention	—		41		—		—		—		—		—		—		41
Substandard	—		—		321		—		76		—		—		—		397

Installment loans to individuals	$	61	$	—	$	—	$	28	$	—	$	—	$	—	$	—	$	89
Pass	61		—		—		28		—		—		—		—		89
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Total loans subject to risk rating	$	2,192,558	$	1,930,952	$	1,148,745	$	709,126	$	302,657	$	453,913	$	780,926	$	19,474	$	7,538,351
Pass	2,184,050		1,917,544		1,135,932		691,029		273,353		367,981		772,143		18,726		7,360,758
Special Mention	594		1,198		1,024		11,755		17,756		24,722		6,993		—		64,042
Substandard	7,914		12,210		11,789		6,342		11,548		61,210		1,790		748		113,551

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
December 31, 2021
Commercial, Financial, Agricultural	$	300,748	$	245,940	$	122,350	$	44,533	$	15,384	$	11,103	$	557,628	$	2,757	$	1,300,443
Pass	299,731		245,657		120,102		43,042		14,603		8,605		553,541		2,002		1,287,283
Special Mention	—		136		1,798		281		605		1,196		651		—		4,667
Substandard	1,017		147		450		1,210		176		1,302		3,436		755		8,493






Real Estate - Construction	$	461,370	$	371,694	$	174,369	$	14,813	$	—	$	—	$	3,769	$	2,428	$	1,028,443
Residential	210,734		12,598		—		—		—		—		3,769		2,428		229,529
Pass	210,734		12,598		—		—		—		—		3,769		2,428		229,529
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Commercial	250,636		359,096		174,369		14,813		—		—		—		—		798,914
Pass	250,636		359,096		174,369		14,813		—		—		—		—		798,914
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
Real Estate - 1-4 Family Mortgage	$	205,137	$	83,038	$	60,240	$	30,044	$	28,340	$	8,846	$	25,534	$	941	$	442,120
Primary	15,599		7,698		3,662		5,985		4,150		1,066		4,727		—		42,887
Pass	15,599		7,698		3,496		5,985		4,066		1,057		4,716		—		42,617
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		166		—		84		9		11		—		270

Home Equity	1,318		—		42		131		—		—		13,615		10		15,116
Pass	1,318		—		42		131		—		—		13,615		10		15,116
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Rental/Investment	111,006		61,801		33,734		23,520		23,890		7,469		5,554		931		267,905
Pass	110,987		60,855		32,733		23,246		23,708		7,098		5,554		931		265,112
Special Mention	—		249		—		—		—		—		—		—		249
Substandard	19		697		1,001		274		182		371		—		—		2,544

Land Development	77,214		13,539		22,802		408		300		311		1,638		—		116,212
Pass	74,818		13,539		22,769		408		300		311		1,638		—		113,783
Special Mention	2,396		—		—		—		—		—		—		—		2,396
Substandard	—		—		33		—		—		—		—		—		33

Real Estate - Commercial Mortgage	$	1,168,118	$	836,549	$	680,506	$	344,089	$	298,644	$	376,652	$	147,446	$	21,644	$	3,873,648
Owner-Occupied	312,031		305,686		220,057		164,345		140,265		117,767		59,126		9,748		1,329,025
Pass	310,736		304,555		218,447		161,521		134,410		109,577		59,126		8,036		1,306,408
Special Mention	1,210		1,131		—		—		1,733		328		—		1,712		6,114
Substandard	85		—		1,610		2,824		4,122		7,862		—		—		16,503

Non-Owner Occupied	809,784		511,803		449,409		173,123		155,175		256,133		79,016		11,896		2,446,339
Pass	800,348		503,009		436,062		165,843		102,446		242,665		79,016		11,896		2,341,285
Special Mention	9,235		8,794		11,356		7,280		33,176		8,024		—		—		77,865
Substandard	201		—		1,991		—		19,553		5,444		—		—		27,189

Land Development	46,303		19,060		11,040		6,621		3,204		2,752		9,304		—		98,284
Pass	46,034		17,030		11,040		6,569		3,204		2,752		9,304		—		95,933
Special Mention	44		—		—		—		—		—		—		—		44
Substandard	225		2,030		—		52		—		—		—		—		2,307

Installment loans to individuals	$	—	$	—	$	42	$	—	$	—	$	—	$	—	$	—	$	42
Pass	—		—		42		—		—		—		—		—		42
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Total loans subject to risk rating	$	2,135,373	$	1,537,221	$	1,037,507	$	433,479	$	342,368	$	396,601	$	734,377	$	27,770	$	6,644,696
Pass	2,120,941		1,524,037		1,019,102		421,558		282,737		372,065		730,279		25,303		6,496,022
Special Mention	12,885		10,310		13,154		7,561		35,514		9,548		651		1,712		91,335
Substandard	1,547		2,874		5,251		4,360		24,117		14,988		3,447		755		57,339

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
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
September 30, 2022
Commercial, Financial, Agricultural	$	—	$	—	$	—	$	—	$	—	$	16,774	$	19,336	$	—	$	36,110
Performing Loans	—		—		—		—		—		16,774		19,336		—		36,110
Non-Performing Loans	—		—		—		—		—		—		—		—		—





Real Estate - Construction	$	37,074	$	72,550	$	1,694	$	577	$	—	$	—	$	—	$	—	$	111,895
Residential	37,074		72,550		1,694		577		—		—		—		—		111,895
Performing Loans	37,074		72,472		1,694		577		—		—		—		—		111,817
Non-Performing Loans	—		78		—		—		—		—		—		—		78

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

Real Estate - 1-4 Family Mortgage	$	584,747	$	548,163	$	364,506	$	160,804	$	122,688	$	236,271	$	436,673	$	2,762	$	2,456,614
Primary	576,169		543,197		362,828		160,212		121,295		235,189		—		—		1,998,890
Performing Loans	575,894		541,053		360,179		157,445		115,494		229,418		—		—		1,979,483
Non-Performing Loans	275		2,144		2,649		2,767		5,801		5,771		—		—		19,407

Home Equity	—		111		—		—		223		367		436,673		2,762		440,136
Performing Loans	—		111		—		—		223		298		435,952		2,254		438,838
Non-Performing Loans	—		—		—		—		—		69		721		508		1,298

Rental/Investment	—		—		—		—		—		328		—		—		328
Performing Loans	—		—		—		—		—		155		—		—		155
Non-Performing Loans	—		—		—		—		—		173		—		—		173

Land Development	8,578		4,855		1,678		592		1,170		387		—		—		17,260
Performing Loans	8,578		4,855		1,678		592		1,170		241		—		—		17,114
Non-Performing Loans	—		—		—		—		—		146		—		—		146

Real Estate - Commercial Mortgage	$	3,764	$	3,992	$	2,883	$	1,348	$	603	$	123	$	—	$	—	$	12,713
Owner-Occupied	—		—		132		—		—		—		—		—		132
Performing Loans	—		—		132		—		—		—		—		—		132
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Non-Owner Occupied	—		—		29		—		—		—		—		—		29
Performing Loans	—		—		29		—		—		—		—		—		29
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	3,764		3,992		2,722		1,348		603		123		—		—		12,552
Performing Loans	3,764		3,992		2,700		1,348		603		123		—		—		12,530
Non-Performing Loans	—		—		22		—		—		—		—		—		22

Installment loans to individuals	$	35,560	$	21,583	$	7,661	$	15,827	$	5,621	$	2,260	$	15,613	$	32	$	104,157
Performing Loans	35,535		21,548		7,644		15,787		5,610		2,214		15,613		24		103,975
Non-Performing Loans	25		35		17		40		11		46		—		8		182

Total loans not subject to risk rating	$	661,145	$	646,288	$	376,744	$	178,556	$	128,912	$	255,428	$	471,622	$	2,794	$	2,721,489
Performing Loans	660,845		644,031		374,056		175,749		123,100		249,223		470,901		2,278		2,700,183
Non-Performing Loans	300		2,257		2,688		2,807		5,812		6,205		721		516		21,306

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
December 31, 2021
Commercial, Financial, Agricultural	$	71	$	—	$	—	$	1	$	—	$	8,983	$	23,464	$	—	$	32,519
Performing Loans	71		—		—		1		—		8,983		23,464		—		32,519
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Lease Financing Receivables	$	26,301	$	23,270	$	15,504	$	7,713	$	2,169	$	1,168	$	—	$	—	$	76,125
Performing Loans	26,301		23,270		15,504		7,713		2,167		1,159		—		—		76,114
Non-Performing Loans	—		—		—		—		2		9		—		—		11

Real Estate - Construction	$	57,283	$	12,561	$	1,615	$	—	$	—	$	—	$	—	$	—	$	71,459
Residential	57,283		12,561		1,615		—		—		—		—		—		71,459
Performing Loans	57,283		12,561		1,615		—		—		—		—		—		71,459
Non-Performing Loans	—		—		—		—		—		—		—		—		—

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

Real Estate - 1-4 Family Mortgage	$	554,483	$	419,252	$	205,014	$	155,535	$	117,619	$	207,381	$	404,293	$	2,776	$	2,066,353
Primary	542,659		415,863		203,739		153,717		116,689		206,496		—		—		1,639,163
Performing Loans	542,053		414,931		201,273		148,649		114,669		203,416		—		—		1,624,991
Non-Performing Loans	606		932		2,466		5,068		2,020		3,080		—		—		14,172

Home Equity	111		—		79		225		—		508		404,293		2,776		407,992
Performing Loans	111		—		79		225		—		435		403,598		2,599		407,047
Non-Performing Loans	—		—		—		—		—		73		695		177		945

Rental/Investment	—		—		99		—		23		218		—		—		340
Performing Loans	—		—		99		—		23		164		—		—		286
Non-Performing Loans	—		—		—		—		—		54		—		—		54

Land Development	11,713		3,389		1,097		1,593		907		159		—		—		18,858
Performing Loans	11,688		3,298		1,065		1,593		832		159		—		—		18,635
Non-Performing Loans	25		91		32		—		75		—		—		—		223

Real Estate - Commercial Mortgage	$	5,265	$	3,584	$	2,082	$	800	$	468	$	137	$	—	$	—	$	12,336
Owner-Occupied	—		136		58		—		—		—		—		—		194
Performing Loans	—		136		58		—		—		—		—		—		194
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Non-Owner Occupied	—		31		—		—		—		—		—		—		31
Performing Loans	—		31		—		—		—		—		—		—		31
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	5,265		3,417		2,024		800		468		137		—		—		12,111
Performing Loans	5,265		3,417		2,008		800		468		86		—		—		12,044
Non-Performing Loans	—		—		16		—		—		51		—		—		67

Installment loans to individuals	$	44,302	$	15,436	$	23,114	$	7,717	$	1,985	$	1,917	$	13,016	$	36	$	107,523
Performing Loans	44,254		15,360		23,035		7,704		1,958		1,890		13,016		36		107,253
Non-Performing Loans	48		76		79		13		27		27		—		—		270

Total loans not subject to risk rating	$	687,705	$	474,103	$	247,329	$	171,766	$	122,241	$	219,586	$	440,773	$	2,812	$	2,366,315
Performing Loans	687,026		473,004		244,736		166,685		120,117		216,292		440,078		2,635		2,350,573
Non-Performing Loans	679		1,099		2,593		5,081		2,124		3,294		695		177		15,742

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, 2022		December 31, 2021
Commercial, financial, agricultural	$	77,816	$	90,308

Real estate – construction:
Residential	387		1,287
Commercial	6,361		3,707
Total real estate – construction	6,748		4,994
Real estate – 1-4 family mortgage:
Primary	102,234		134,070
Home equity	42,861		51,496
Rental/investment	16,679		20,229
Land development	9,314		9,978
Total real estate – 1-4 family mortgage	171,088		215,773
Real estate – commercial mortgage:
Owner-occupied	194,756		234,132
Non-owner occupied	356,485		410,577
Land development	13,571		18,344
Total real estate – commercial mortgage	564,812		663,053
Installment loans to individuals	24,700		35,775


Loans	$	845,164	$	1,009,903

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, 2022
Commercial, financial, agricultural	$	379	$	—	$	73,564	$	73,943	$	—	$	2,059	$	1,814	$	3,873	$	77,816

Real estate – construction:
Residential	—		—		387		387		—		—		—		—		387
Commercial	—		—		6,361		6,361		—		—		—		—		6,361
Total real estate – construction	—		—		6,748		6,748		—		—		—		—		6,748
Real estate – 1-4 family mortgage:
Primary	1,163		—		95,377		96,540		1,359		2,468		1,867		5,694		102,234
Home equity	658		—		41,659		42,317		95		119		330		544		42,861
Rental/investment	26		—		16,629		16,655		—		—		24		24		16,679
Land development	62		—		9,252		9,314		—		—		—		—		9,314
Total real estate – 1-4 family mortgage	1,909		—		162,917		164,826		1,454		2,587		2,221		6,262		171,088
Real estate – commercial mortgage:
Owner-occupied	439		1,432		191,217		193,088		33		152		1,483		1,668		194,756
Non-owner occupied	—		—		356,480		356,480		—		—		5		5		356,485
Land development	—		—		13,535		13,535		—		36		—		36		13,571
Total real estate – commercial mortgage	439		1,432		561,232		563,103		33		188		1,488		1,709		564,812
Installment loans to individuals	715		18		23,865		24,598		1		45		56		102		24,700

Loans, net of unearned income	$	3,442	$	1,450	$	828,326	$	833,218	$	1,488	$	4,879	$	5,579	$	11,946	$	845,164

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, 2021
Commercial, financial, agricultural	$	122	$	—	$	82,918	$	83,040	$	42	$	1,618	$	5,608	$	7,268	$	90,308

Real estate – construction:
Residential	—		—		1,287		1,287		—		—		—		—		1,287
Commercial	—		—		3,707		3,707		—		—		—		—		3,707
Total real estate – construction	—		—		4,994		4,994		—		—		—		—		4,994
Real estate – 1-4 family mortgage:
Primary	1,042		36		127,820		128,898		257		2,225		2,690		5,172		134,070
Home equity	149		—		50,573		50,722		—		373		401		774		51,496
Rental/investment	20		—		20,105		20,125		26		—		78		104		20,229
Land development	—		—		9,978		9,978		—		—		—		—		9,978
Total real estate – 1-4 family mortgage	1,211		36		208,476		209,723		283		2,598		3,169		6,050		215,773
Real estate – commercial mortgage:
Owner-occupied	1,511		323		230,305		232,139		—		289		1,704		1,993		234,132
Non-owner occupied	—		—		407,639		407,639		—		—		2,938		2,938		410,577
Land development	—		—		18,218		18,218		—		—		126		126		18,344
Total real estate – commercial mortgage	1,511		323		656,162		657,996		—		289		4,768		5,057		663,053
Installment loans to individuals	839		8		34,690		35,537		15		11		212		238		35,775

Loans, net of unearned income	$	3,683	$	367	$	987,240	$	991,290	$	340	$	4,516	$	13,757	$	18,613	$	1,009,903

There were no restructured loans contractually 90 days past due or more and still accruing at September 30, 2022. There was one restructured loan in the amount of $ 40 contractually 90 days past due or more and still accruing at September 30, 2021. The outstanding balance of restructured loans on nonaccrual status was $ 3,029 and $ 17,726 at September 30, 2022 and September 30, 2021, 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 Amortized Cost		Post- Modification Amortized Cost




















Three months ended September 30, 2021






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










Total	1	$	164	$	164

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Number of Loans	Pre- Modification Amortized Cost		Post- Modification Amortized Cost
Nine months ended September 30, 2022






Real estate – 1-4 family mortgage:



Land development	3	$	98	$	94








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

With respect to loans that were restructured during the nine months ended September 30, 2022 and September 30, 2021, none have subsequently defaulted 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, 2022	38	$	5,609
Additional advances or loans with concessions	3	206
Reclassified as performing restructured loan	8	4,064
Reductions due to:
Reclassified to nonperforming loans	( 6 )	( 231 )
Paid in full	( 6 )	( 2,064 )



Principal paydowns	—	( 568 )

Totals at September 30, 2022	37	$	7,016

The allowance for credit losses attributable to restructured loans was $ 37 and $ 111 at September 30, 2022 and September 30, 2021, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at September 30, 2022, as compared to $ 2 in remaining availability at September 30, 2021.

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
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
September 30, 2022
Commercial, Financial, Agricultural	$	—	$	—	$	—	$	993	$	927	$	26,235	$	48,917	$	744	$	77,816
Pass	—		—		—		993		378		19,174		47,121		403		68,069
Special Mention	—		—		—		—		226		—		—		—		226
Substandard	—		—		—		—		323		7,061		1,796		341		9,521






Real Estate - Construction	$	—	$	—	$	—	$	—	$	387	$	6,361	$	—	$	—	$	6,748
Residential	—		—		—		—		387		—		—		—		387
Pass	—		—		—		—		387		—		—		—		387
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Commercial	—		—		—		—		—		6,361		—		—		6,361
Pass	—		—		—		—		—		6,361		—		—		6,361
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Real Estate - 1-4 Family Mortgage	$	—	$	—	$	—	$	145	$	8,721	$	26,322	$	335	$	157	$	35,680
Primary	—		—		—		33		2,230		7,116		—		—		9,379
Pass	—		—		—		33		2,230		6,683		—		—		8,946
Special Mention	—		—		—		—		—		54		—		—		54
Substandard	—		—		—		—		—		379		—		—		379

Home Equity	—		—		—		—		—		30		333		157		520
Pass	—		—		—		—		—		30		333		—		363
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		157		157

Rental/Investment	—		—		—		112		308		16,259		—		—		16,679
Pass	—		—		—		112		308		15,550		—		—		15,970
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		709		—		—		709

Land Development	—		—		—		—		6,183		2,917		2		—		9,102
Pass	—		—		—		—		6,183		2,866		2		—		9,051
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		51		—		—		51

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Term Loans Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Real Estate - Commercial Mortgage	$	—	$	—	$	—	$	319	$	45,713	$	499,483	$	8,923	$	9,752	$	564,190
Owner-Occupied	—		—		—		—		10,461		177,284		7,011		—		194,756
Pass	—		—		—		—		10,461		167,960		7,011		—		185,432
Special Mention	—		—		—		—		—		595		—		—		595
Substandard	—		—		—		—		—		8,729		—		—		8,729

Non-Owner Occupied	—		—		—		319		35,013		309,833		1,568		9,752		356,485
Pass	—		—		—		319		35,008		287,093		1,568		—		323,988
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		5		22,740		—		9,752		32,497

Land Development	—		—		—		—		239		12,366		344		—		12,949
Pass	—		—		—		—		239		6,767		344		—		7,350
Special Mention	—		—		—		—		—		4,966		—		—		4,966
Substandard	—		—		—		—		—		633		—		—		633

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

Total loans subject to risk rating	$	—	$	—	$	—	$	1,457	$	55,748	$	558,401	$	58,175	$	10,653	$	684,434
Pass	—		—		—		1,457		55,194		512,484		56,379		403		625,917
Special Mention	—		—		—		—		226		5,615		—		—		5,841
Substandard	—		—		—		—		328		40,302		1,796		10,250		52,676


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2021
Commercial, Financial, Agricultural	$	—	$	—	$	646	$	12,199	$	12,247	$	25,562	$	38,328	$	1,326	$	90,308
Pass	—		—		646		11,612		8,918		18,877		37,555		899		78,507
Special Mention	—		—		—		246		—		—		—		—		246
Substandard	—		—		—		341		3,329		6,685		773		427		11,555






Real Estate - Construction	$	—	$	—	$	—	$	601	$	—	$	4,393	$	—	$	—	$	4,994
Residential	—		—		—		601		—		686		—		—		1,287
Pass	—		—		—		601		—		686		—		—		1,287
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—

Commercial	—		—		—		—		—		3,707		—		—		3,707
Pass	—		—		—		—		—		3,707		—		—		3,707
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
Real Estate - 1-4 Family Mortgage	$	—	$	—	$	152	$	10,151	$	2,781	$	32,841	$	1,476	$	201	$	47,602
Primary	—		—		34		2,485		1,367		12,336		161		—		16,383
Pass	—		—		34		2,485		1,367		9,408		161		—		13,455
Special Mention	—		—		—		—		—		59		—		—		59
Substandard	—		—		—		—		—		2,869		—		—		2,869

Home Equity	—		—		—		—		—		42		1,087		201		1,330
Pass	—		—		—		—		—		42		717		—		759
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		370		201		571

Rental/Investment	—		—		118		804		1,273		17,806		228		—		20,229
Pass	—		—		118		804		1,273		17,035		77		—		19,307
Special Mention	—		—		—		—		—		38		—		—		38
Substandard	—		—		—		—		—		733		151		—		884

Land Development	—		—		—		6,862		141		2,657		—		—		9,660
Pass	—		—		—		6,862		111		1,249		—		—		8,222
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		30		1,408		—		—		1,438

Real Estate - Commercial Mortgage	$	—	$	—	$	325	$	50,519	$	123,254	$	467,983	$	5,912	$	14,324	$	662,317
Owner-Occupied	—		—		—		13,344		17,621		200,111		3,056		—		234,132
Pass	—		—		—		13,344		13,888		182,779		3,056		—		213,067
Special Mention	—		—		—		—		1,553		394		—		—		1,947
Substandard	—		—		—		—		2,180		16,938		—		—		19,118

Non-Owner Occupied	—		—		325		35,887		103,739		254,080		2,222		14,324		410,577
Pass	—		—		325		19,510		100,682		222,048		2,222		4,418		349,205
Special Mention	—		—		—		16,370		—		359		—		—		16,729
Substandard	—		—		—		7		3,057		31,673		—		9,906		44,643

Land Development	—		—		—		1,288		1,894		13,792		634		—		17,608
Pass	—		—		—		1,288		1,894		7,904		634		—		11,720
Special Mention	—		—		—		—		—		5,141		—		—		5,141
Substandard	—		—		—		—		—		747		—		—		747

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

Total loans subject to risk rating	$	—	$	—	$	1,123	$	73,470	$	138,282	$	530,779	$	45,716	$	15,851	$	805,221
Pass	—		—		1,123		56,506		128,133		463,735		44,422		5,317		699,236
Special Mention	—		—		—		16,616		1,553		5,991		—		—		24,160
Substandard	—		—		—		348		8,596		61,053		1,294		10,534		81,825

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
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
September 30, 2022
Commercial, Financial, Agricultural	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—





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

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

Real Estate - 1-4 Family Mortgage	$	—	$	—	$	—	$	196	$	1,061	$	96,323	$	36,430	$	1,398	$	135,408
Primary	—		—		—		196		523		92,068		—		68		92,855
Performing Loans	—		—		—		196		378		86,567		—		68		87,209
Non-Performing Loans	—		—		—		—		145		5,501		—		—		5,646

Home Equity	—		—		—		—		538		4,043		36,430		1,330		42,341
Performing Loans	—		—		—		—		538		3,992		36,154		1,114		41,798
Non-Performing Loans	—		—		—		—		—		51		276		216		543

Rental/Investment	—		—		—		—		—		—		—		—		—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	—		—		—		—		—		212		—		—		212
Performing Loans	—		—		—		—		—		212		—		—		212
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - Commercial Mortgage	$	—	$	—	$	—	$	—	$	141	$	481	$	—	$	—	$	622
Owner-Occupied	—		—		—		—		—		—		—		—		—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Non-Owner Occupied	—		—		—		—		—		—		—		—		—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	—		—		—		—		141		481		—		—		622
Performing Loans	—		—		—		—		141		481		—		—		622
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Installment loans to individuals	$	—	$	—	$	—	$	—	$	13,734	$	9,644	$	1,272	$	50	$	24,700
Performing Loans	—		—		—		—		13,721		9,571		1,272		14		24,578
Non-Performing Loans	—		—		—		—		13		73		—		36		122

Total loans not subject to risk rating	$	—	$	—	$	—	$	196	$	14,936	$	106,448	$	37,702	$	1,448	$	160,730
Performing Loans	—		—		—		196		14,778		100,823		37,426		1,196		154,419
Non-Performing Loans	—		—		—		—		158		5,625		276		252		6,311

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
December 31, 2021
Commercial, Financial, Agricultural	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—





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

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

Real Estate - 1-4 Family Mortgage	$	—	$	—	$	202	$	1,480	$	19,988	$	101,060	$	44,086	$	1,355	$	168,171
Primary	—		—		202		938		17,505		98,961		—		81		117,687
Performing Loans	—		—		202		829		16,902		94,607		—		81		112,621
Non-Performing Loans	—		—		—		109		603		4,354		—		—		5,066

Home Equity	—		—		—		542		2,441		1,823		44,086		1,274		50,166
Performing Loans	—		—		—		542		2,441		1,769		43,700		1,141		49,593
Non-Performing Loans	—		—		—		—		—		54		386		133		573

Rental/Investment	—		—		—		—		—		—		—		—		—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	—		—		—		—		42		276		—		—		318
Performing Loans	—		—		—		—		42		276		—		—		318
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Real Estate - Commercial Mortgage	$	—	$	—	$	—	$	147	$	31	$	558	$	—	$	—	$	736
Owner-Occupied	—		—		—		—		—		—		—		—		—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Non-Owner Occupied	—		—		—		—		—		—		—		—		—
Performing Loans	—		—		—		—		—		—		—		—		—
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Land Development	—		—		—		147		31		558		—		—		736
Performing Loans	—		—		—		147		31		558		—		—		736
Non-Performing Loans	—		—		—		—		—		—		—		—		—

Installment loans to individuals	$	—	$	—	$	—	$	20,581	$	9,721	$	3,881	$	1,558	$	34	$	35,775
Performing Loans	—		—		—		20,566		9,714		3,684		1,541		23		35,528
Non-Performing Loans	—		—		—		15		7		197		17		11		247

Total loans not subject to risk rating	$	—	$	—	$	202	$	22,208	$	29,740	$	105,499	$	45,644	$	1,389	$	204,682
Performing Loans	—		—		202		22,084		29,130		100,894		45,241		1,245		198,796
Non-Performing Loans	—		—		—		124		610		4,605		403		144		5,886

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, 2022		December 31, 2021
Commercial, financial, agricultural (1)	$	1,513,091	$	1,423,270
Lease financing	108,517		80,192
Real estate – construction:
Residential	359,754		302,275
Commercial	855,302		802,621
Total real estate – construction	1,215,056		1,104,896
Real estate – 1-4 family mortgage:
Primary	2,144,119		1,816,120
Home equity	499,626		474,604
Rental/investment	322,844		288,474
Land development	161,300		145,048
Total real estate – 1-4 family mortgage	3,127,889		2,724,246
Real estate – commercial mortgage:
Owner-occupied	1,562,952		1,563,351
Non-owner occupied	3,320,116		2,856,947
Land development	133,597		128,739
Total real estate – commercial mortgage	5,016,665		4,549,037
Installment loans to individuals	128,946		143,340
Gross loans	11,110,164		10,024,981
Unearned income	( 5,160 )		( 4,067 )
Loans, net of unearned income	11,105,004		10,020,914
Allowance for credit losses on loans	( 174,356 )		( 164,171 )
Net loans	$	10,930,648	$	9,856,743

(1) Includes Paycheck Protection Program (“PPP”) loans of $ 5,476 and $ 58,391 as of September 30, 2022 and December 31, 2021, respectively.

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, 2021.

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, 2022 and December 31, 2021, the Company had accrued interest receivable for loans of $ 45,293 and $ 41,692 , 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

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

deferral program established in 2020 in response to the COVID-19 pandemic of $ 1,263 and $ 1,273 , respectively, as of September 30, 2022 and December 31, 2021.

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, 2022
Allowance for credit losses:
Beginning balance	$	30,193	$	17,290	$	41,910	$	64,373	$	1,802	$	10,563	$	166,131

Charge-offs	( 373 )		—		( 208 )		( 1,956 )		—		( 722 )		( 3,259 )
Recoveries	415		—		378		50		113		728		1,684
Net (charge-offs) recoveries	42		—		170		( 1,906 )		113		6		( 1,575 )
(Recovery of) provision for credit losses on loans	268		1,454		1,452		6,800		399		( 573 )		9,800
Ending balance	$	30,503	$	18,744	$	43,532	$	69,267	$	2,314	$	9,996	$	174,356
Nine Months Ended September 30, 2022
Allowance for credit losses:
Beginning balance	$	33,922	$	16,419	$	32,356	$	68,940	$	1,486	$	11,048	$	164,171
Impact of PCD loans acquired during the period	1,648		—		—		—		—		—		1,648
Charge-offs	( 4,714 )		—		( 532 )		( 2,670 )		( 7 )		( 2,351 )		( 10,274 )
Recoveries	1,982		—		725		397		136		2,271		5,511
Net (charge-offs) recoveries	( 2,732 )		—		193		( 2,273 )		129		( 80 )		( 4,763 )
(Recovery of) provision for credit losses on loans	( 2,335 )		2,325		10,983		2,600		699		( 972 )		13,300
Ending balance	$	30,503	$	18,744	$	43,532	$	69,267	$	2,314	$	9,996	$	174,356
Period-End Amount Allocated to:
Individually evaluated	$	4,064	$	—	$	—	$	2,649	$	—	$	370	$	7,083
Collectively evaluated	26,439		18,744		43,532		66,618		2,314		9,626		167,273
Ending balance	$	30,503	$	18,744	$	43,532	$	69,267	$	2,314	$	9,996	$	174,356
Loans:
Individually evaluated	$	9,088	$	153	$	5,965	$	19,043	$	—	$	370	$	34,619
Collectively evaluated	1,504,003		1,214,903		3,121,924		4,997,622		103,357		128,576		11,070,385
Ending balance	$	1,513,091	$	1,215,056	$	3,127,889	$	5,016,665	$	103,357	$	128,946	$	11,105,004

Nonaccruing loans with no allowance for credit losses	$	429	$	153	$	5,809	$	4,633	$	—	$	2	$	11,026

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, 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

The Company recorded a provision for credit losses of $ 9,800 during the third quarter of 2022, as compared to a negative provision for credit losses $ 1,200 recorded in the third quarter of 2021. The Company’s allowance for credit losses model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years . The provision activity during the current quarter was primarily driven by strong loan growth.

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 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, 2021.

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

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


Three Months Ended September 30,	2022		2021
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	19,935	$	20,535
Provision for (recovery of provision for) credit losses on unfunded loan commitments (included in other noninterest expense)	—		( 200 )
Ending balance	$	19,935	$	20,335

Nine Months Ended September 30,	2022		2021
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,035	$	20,535
Recovery of provision for credit losses on unfunded loan commitments (included in other noninterest expense)	( 100 )		( 200 )
Ending balance	$	19,935	$	20,335

Note 6 – Other Real Estate Owned

(In Thousands)

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

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


	Purchased OREO		Non Purchased OREO		Total OREO
September 30, 2022
Residential real estate	$	173	$	740	$	913
Commercial real estate	—		62		62
Residential land development	242		4		246
Commercial land development	1,130		61		1,191

Total	$	1,545	$	867	$	2,412
December 31, 2021
Residential real estate	$	93	$	166	$	259
Commercial real estate	39		722		761
Residential land development	301		4		305
Commercial land development	1,156		59		1,215

Total	$	1,589	$	951	$	2,540

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


	Purchased OREO		Non Purchased OREO		Total OREO
Balance at January 1, 2022	$	1,589	$	951	$	2,540


Transfers of loans	190		1,638		1,828

Impairments	( 96 )		( 14 )		( 110 )
Dispositions	( 137 )		( 1,710 )		( 1,847 )
Other	( 1 )		2		1
Balance at September 30, 2022	$	1,545	$	867	$	2,412

At September 30, 2022 and December 31, 2021, the amortized cost of loans secured by Real Estate - 1-4 Family Mortgage in the process of foreclosure was $ 780 and $ 22 , respectively.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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,
	2022		2021		2022		2021
Repairs and maintenance	$	24	$	17	$	44	$	60
Property taxes and insurance	7		6		69		54
Impairments	59		173		110		290
Net (gains) losses on OREO sales	( 54 )		( 24 )		( 611 )		( 74 )
Rental income	( 2 )		( 4 )		( 6 )		( 17 )
Total	$	34	$	168	$	( 394 )	$	313

Note 7 – Goodwill and Other Intangible Assets

(In Thousands)

The carrying amounts of goodwill by operating segments for the nine months ended September 30, 2022 were as follows:


	Community Banks		Insurance		Total
Balance at January 1, 2022	$	936,916	$	2,767	$	939,683
Additions to goodwill from the Southeastern Commercial Finance, LLC acquisition	6,608		—		6,608
Balance at September 30, 2022	$	943,524	$	2,767	$	946,291

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, 2022
Core deposit intangibles	$	82,492	$	( 63,190 )	$	19,302
Customer relationship intangible	2,470		( 1,602 )		868
Total finite-lived intangible assets	$	84,962	$	( 64,792 )	$	20,170
December 31, 2021
Core deposit intangibles	$	82,492	$	( 59,399 )	$	23,093
Customer relationship intangible	2,470		( 1,465 )		1,005
Total finite-lived intangible assets	$	84,962	$	( 60,864 )	$	24,098

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Amortization expense for:
Core deposit intangibles	$	1,206	$	1,436	$	3,791	$	4,482
Customer relationship intangible	45		45		136		136
Total intangible amortization	$	1,251	$	1,481	$	3,927	$	4,618

The estimated amortization expense of finite-lived intangible assets for the year ending December 31, 2022 and the succeeding four years is summarized as follows:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Core Deposit Intangibles		Customer Relationship Intangible		Total

2022	$	4,941	$	181	$	5,122
2023	4,044		181		4,225
2024	3,498		181		3,679
2025	3,102		181		3,283
2026	2,899		138		3,037

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, an increase in mortgage interest rates or a decrease in actual prepayment speeds may cause positive adjustments to the valuation of the Company’s MSRs.

MSRs 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 no valuation adjustment on MSRs during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, there was a positive valuation adjustment of $ 13,561 which was caused primarily by an increase in mortgage interest rates and a corresponding decrease in actual prepayment speeds.

During the third quarter of 2022, the Company sold MSRs relating to mortgage loans having an aggregate unpaid principal balance of $ 1,700,823 to a third party for net proceeds of $ 18,525 , resulting in a gain of $ 2,960 .

Changes in the Company’s MSRs were as follows:


Balance at January 1, 2022	$	89,018
Sale of MSRs	( 15,565 )
Capitalization	18,052
Amortization	( 9,525 )

Balance at September 30, 2022	$	81,980

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, 2022			December 31, 2021
Unpaid principal balance	$	7,406,373		$	8,728,629

Weighted-average prepayment speed (CPR)	7.08		%	10.56		%
Estimated impact of a 10% increase	$	( 5,254 )		$	( 3,875 )
Estimated impact of a 20% increase	( 10,089 )			( 7,464 )

Discount rate	10.34		%	9.82		%
Estimated impact of a 10% increase	$	( 323 )		$	( 4,153 )
Estimated impact of a 20% increase	( 891 )			( 8,119 )

Weighted-average coupon interest rate	3.43		%	3.29		%
Weighted-average servicing fee (basis points)	32.14			30.37
Weighted-average remaining maturity (in years)	8.24			6.69

The Company recorded servicing fees of $ 4,445 and $ 4,891 for the three months ended September 30, 2022 and 2021, respectively, and servicing fees of $ 13,868 and $ 13,578 for the nine months ended September 30, 2022 and 2021, 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,
	2022		2021			2022		2021
Service cost	$	—	$	—		$	1	$	2
Interest cost	185		171			3		4
Expected return on plan assets	( 421 )		( 442 )			—		—

Recognized actuarial loss (gain)	60		67			( 19 )		—

Net periodic (return) benefit cost	$	( 176 )	$	( 204 )		$	( 15 )	$	6



	Pension Benefits				Other Benefits
	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021			2022		2021
Service cost	$	—	$	—		$	3	$	4
Interest cost	554		512			9		11
Expected return on plan assets	( 1,263 )		( 1,326 )			—		—

Recognized actuarial loss (gain)	182		199			( 57 )		( 2 )

Net periodic (return) benefit cost	$	( 527 )	$	( 615 )		$	( 45 )	$	13

Table of Contents

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, 2022 or 2021. There were no stock options outstanding as of September 30, 2022.

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, 2022:


	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	146,561	$	34.67	603,714	$	34.48
Awarded	63,308	38.62		295,406	37.51
Vested	—	—		( 222,283 )	32.81
Cancelled	( 5,465 )	37.26		( 23,461 )	37.23
Nonvested at end of period	204,404	$	35.83	653,376	$	36.32

During the nine months ended September 30, 2022, the Company reissued 187,951 shares from treasury in connection with awards of restricted stock. The Company recorded total stock-based compensation expense of $ 2,268 and $ 2,595 for the three months ended September 30, 2022 and 2021, respectively, and $ 8,558 and $ 7,736 for the nine months ended September 30, 2022, 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 and adjustable-rate residential mortgage loans. The Company also enters into forward commitments to sell residential mortgage loans to secondary market investors.

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

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Balance Sheet	September 30, 2022				December 31, 2021
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivative assets:
Interest rate contracts	Other Assets	$	223,569	$	11,343	$	185,447	$	4,711
Interest rate lock commitments	Other Assets	44,785		657		310,941		5,304
Forward commitments	Other Assets	225,000		8,941		280,000		667
Totals		$	493,354	$	20,941	$	776,388	$	10,682
Derivative liabilities:
Interest rate contracts	Other Liabilities	$	223,569	$	11,343	$	185,447	$	4,711
Interest rate lock commitments	Other Liabilities	84,830		1,861		19,961		43
Forward commitments	Other Liabilities	10,000		49		320,000		736
Totals		$	318,399	$	13,253	$	525,408	$	5,490

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,
	2022		2021		2022		2021
Interest rate contracts:
Included in interest income on loans	$	811	$	589	$	1,255	$	1,795

Interest rate lock commitments:
Included in mortgage banking income	( 4,046 )		( 3,251 )		( 6,466 )		( 12,655 )
Forward commitments
Included in mortgage banking income	9,381		5,310		8,962		8,590
Total	$	6,146	$	2,648	$	3,751	$	( 2,270 )

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 both interest rate swap contracts and interest rate collars in an effort to manage future interest rate exposure on borrowings. The swap hedging strategy converts the LIBOR-based variable interest rate on the forecasted borrowings to a fixed interest rate. The collar hedging strategy stabilizes interest rate fluctuation by setting both a floor and a cap. The Company entered into an interest rate collar in June 2022 with a 2.25 % floor and 4.57 % cap. The Company entered into a second interest rate collar in October 2022 with a 2.75 % floor and 4.75 % cap. As of September 30, 2022, the Company is hedging its exposure to the variability of future cash flows through 2032 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, 2022				December 31, 2021
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivative assets:
Interest rate swaps	Other Assets	$	130,000	$	25,266	$	100,000	$	7,016


Derivative liabilities:
Interest rate swaps	Other Liabilities	$	—	$	—	$	62,000	$	2,902
Interest rate collars	Other Liabilities	250,000		1,934		—		—
Totals		$	250,000	$	1,934	$	62,000	$	2,902

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.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

There were no ineffective portions for the nine months ended September 30, 2022 or 2021. The impact on other comprehensive income for the nine months ended September 30, 2022 and 2021 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, 2022				December 31, 2021
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value



Derivative liabilities:
Interest rate swaps	Other Liabilities	$	100,000	$	20,643	$	100,000	$	5,411

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	2022		2021		2022		2021
Derivative liabilities:
Interest rate swaps - subordinated notes	Interest Expense	$	( 10,495 )	$	( 764 )	$	( 15,232 )	$	( 4,941 )

Derivative liabilities - hedged items:
Interest rate swaps - subordinated notes	Interest Expense	$	10,495	$	764	$	15,232	$	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, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Long-term debt	$	77,984	$	93,085	$	20,643	$	5,411

Offsetting

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

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Offsetting Derivative Assets				Offsetting Derivative Liabilities
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Gross amounts recognized	$	45,510	$	8,007	$	22,665	$	13,436
Gross amounts offset in the Consolidated Balance Sheets	—		—		—		—
Net amounts presented in the Consolidated Balance Sheets	45,510		8,007		22,665		13,436
Gross amounts not offset in the Consolidated Balance Sheets
Financial instruments	22,665		7,208		22,665		7,208
Financial collateral pledged	—		—		—		6,228
Net amounts	$	22,845	$	799	$	—	$	—

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,
	2022		2021
Deferred tax assets
Allowance for credit losses	$	51,156	$	50,712
Loans	2,017		2,855
Deferred compensation	14,029		14,522
Net unrealized losses on securities	73,827		3,545
Impairment of assets	355		392
Net operating loss carryforwards	682		1,211
Investment in partnerships	1,010		890

Lease liabilities under operating leases	15,013		17,106
Other	2,954		3,241
Total deferred tax assets	161,043		94,474


Deferred tax liabilities




Fixed assets	9,735		5,339
Mortgage servicing rights	18,984		20,779
Junior subordinated debt	2,018		2,130
Intangibles	2,817		3,177
Lease right-of-use asset	14,395		16,209
Other	1,178		1,607
Total deferred tax liabilities	49,127		49,241
Net deferred tax assets	$	111,916	$	45,233

For the nine months ended September 30, 2022 and 2021, the Company recorded a provision for income taxes totaling $ 32,355 and $ 35,572 , respectively. The provision for income taxes includes both federal and state income taxes and differs from the statutory rate due to favorable permanent differences.

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.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 and mortgage-backed 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, interest rate collars 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, 2022
Financial assets:

Securities available for sale	$	—	$	1,569,242	$	—	$	1,569,242
Derivative instruments	—		46,207		—		46,207
Mortgage loans held for sale in loans held for sale	—		144,642		—		144,642
Total financial assets	$	—	$	1,760,091	$	—	$	1,760,091
Financial liabilities:
Derivative instruments:	$	—	$	35,830	$	—	$	35,830


	Level 1		Level 2		Level 3		Totals
December 31, 2021
Financial assets:

Securities available for sale	$	—	$	2,386,052	$	—	$	2,386,052

Derivative instruments	—		17,698		—		17,698
Mortgage loans held for sale in loans held for sale	—		453,533		—		453,533
Total financial assets	$	—	$	2,857,283	$	—	$	2,857,283
Financial liabilities:
Derivative instruments	$	—	$	13,803	$	—	$	13,803

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, 2022.

For the three and nine months ended September 30, 2022 and the three months ended September 30, 2021, 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. The following table provides a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs, or Level 3 inputs, for the nine months ended September 30, 2021.


	2021
Three Months Ended September 30, 2022	Trust preferred securities














Nine Months Ended September 30,
Balance at beginning of period	$	9,012
Accretion included in net income	7
Unrealized gains included in other comprehensive income	941

Realized losses	2,061
Purchases	( 12,021 )





Balance at end of period	$	—

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:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


September 30, 2022	Level 1		Level 2		Level 3		Totals
Individually evaluated loans, net of allowance for credit losses	$	—	$	—	$	12,107	$	12,107
OREO	—		—		2,412		2,412

Total	$	—	$	—	$	14,519	$	14,519


December 31, 2021	Level 1		Level 2		Level 3		Totals
Individually evaluated loans, net of allowance for credit losses	$	—	$	—	$	7,928	$	7,928
OREO	—		—		2,540		2,540

Total	$	—	$	—	$	10,468	$	10,468

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 $ 14,774 and $ 12,939 at September 30, 2022 and December 31, 2021, respectively, and a specific reserve for these loans of $ 2,667 and $ 5,011 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, 2022		December 31, 2021







Carrying amount prior to remeasurement	$	2,517	$	2,556
Impairment recognized in results of operations	( 105 )		( 16 )
Fair value	$	2,412	$	2,540

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, 2022 and December 31, 2021. There were no valuation adjustments on MSRs during the nine months ended September 30, 2022 and $ 13,561 of positive valuation adjustments recognized during the nine months ended September 30, 2021.

The following table presents information as of September 30, 2022 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Financial instrument

Fair
Value

Valuation Technique

Significant
Unobservable Inputs

Range of Inputs

Individually evaluated loans, net of allowance for credit losses

12,107

Appraised value of collateral less estimated costs to sell

Estimated costs to sell

4 - 10 %

OREO

2,412

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 $ 14,537 and $ 10,425 resulting from fair value changes of these mortgage loans were recorded in income during the nine months ended September 30, 2022 and 2021, 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, 2022 and December 31, 2021:


	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
September 30, 2022
Mortgage loans held for sale measured at fair value	$	144,642	$	147,363	$	( 2,721 )



December 31, 2021
Mortgage loans held for sale measured at fair value	$	453,533	$	441,717	$	11,816

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:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


			Fair Value
As of September 30, 2022	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	479,500	$	479,500	$	—	$	—	$	479,500
Securities held to maturity	1,353,502		—		1,218,656		—		1,218,656
Securities available for sale	1,569,242		—		1,569,242		—		1,569,242
Loans held for sale	144,642		—		144,642		—		144,642
Loans, net	10,930,648		—		—		10,392,244		10,392,244
Mortgage servicing rights	81,980		—		—		119,752		119,752
Derivative instruments	46,207		—		46,207		—		46,207
Financial liabilities
Deposits	$	13,432,124	$	12,225,041	$	1,167,728	$	—	$	13,392,769
Short-term borrowings	312,818		312,818		—		—		312,818


Junior subordinated debentures	111,807		—		101,088		—		101,088
Subordinated notes	315,014		—		284,000		—		284,000
Derivative instruments	35,830		—		35,830		—		35,830


			Fair Value
As of December 31, 2021	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	1,877,965	$	1,877,965	$	—	$	—	$	1,877,965
Securities held to maturity	416,357		—		415,552		—		415,552
Securities available for sale	2,386,052		—		2,386,052		—		2,386,052
Loans held for sale	453,533		—		453,533		—		453,533
Loans, net	9,856,743		—		—		9,690,604		9,690,604
Mortgage servicing rights	89,018		—		—		99,425		99,425
Derivative instruments	17,698		—		17,698		—		17,698
Financial liabilities
Deposits	$	13,905,724	$	12,494,342	$	1,408,397	$	—	$	13,902,739
Short-term borrowings	13,947		13,947		—		—		13,947

Federal Home Loan Bank advances	417		—		422		—		422
Junior subordinated debentures	111,373		—		106,682		—		106,682
Subordinated notes	359,419		—		373,950		—		373,950
Derivative instruments	13,803		—		13,803		—		13,803

Table of Contents

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, 2022
Securities available for sale:
Unrealized holding losses on securities	$	( 85,283 )	$	( 21,704 )	$	( 63,579 )



Amortization of unrealized holding gains on securities transferred to the held to maturity category	1,619		412		1,207
Total securities available for sale	( 83,664 )		( 21,292 )		( 62,372 )
Derivative instruments:
Unrealized holding gains on derivative instruments	2,262		575		1,687

Total derivative instruments	2,262		575		1,687
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	42		11		31
Total defined benefit pension and post-retirement benefit plans	42		11		31
Total other comprehensive loss	$	( 81,360 )	$	( 20,706 )	$	( 60,654 )
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 )

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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, 2022
Securities available for sale:
Unrealized holding losses on securities	$	( 296,444 )	$	( 75,445 )	$	( 220,999 )



Amortization of unrealized holding gains on securities transferred to the held to maturity category	1,300		331		969
Total securities available for sale	( 295,144 )		( 75,114 )		( 220,030 )
Derivative instruments:
Unrealized holding gains on derivative instruments	19,219		4,891		14,328

Total derivative instruments	19,219		4,891		14,328
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	125		32		93
Total defined benefit pension and post-retirement benefit plans	125		32		93
Total other comprehensive loss	$	( 275,800 )	$	( 70,191 )	$	( 205,609 )

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 )

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


	September 30, 2022		December 31, 2021
Unrealized losses on securities	$	( 229,146 )	$	( 9,116 )

Unrealized gains on derivative instruments	18,290		3,963
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations	( 5,196 )		( 5,290 )
Total accumulated other comprehensive loss	$	( 216,052 )	$	( 10,443 )

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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, 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,
	2022		2021
Basic
Net income applicable to common stock	$	46,567	$	40,063
Average common shares outstanding	55,947,214		56,146,285
Net income per common share - basic	$	0.83	$	0.71
Diluted
Net income applicable to common stock	$	46,567	$	40,063
Average common shares outstanding	55,947,214		56,146,285
Effect of dilutive stock-based compensation	301,506		300,899
Average common shares outstanding - diluted	56,248,720		56,447,184
Net income per common share - diluted	$	0.83	$	0.71


	Nine Months Ended
	September 30,
	2022		2021
Basic
Net income applicable to common stock	$	119,792	$	138,838
Average common shares outstanding	55,888,226		56,237,056
Net income per common share - basic	$	2.14	$	2.47
Diluted
Net income applicable to common stock	$	119,792	$	138,838
Average common shares outstanding	55,888,226		56,237,056
Effect of dilutive stock-based compensation	281,660		296,038
Average common shares outstanding - diluted	56,169,886		56,533,094
Net income per common share - diluted	$	2.13	$	2.46

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,
	2022	2021
Number of shares	9,750	19,929


	Nine Months Ended
	September 30,
	2022	2021
Number of shares	19,750	19,929

Note 15 – Regulatory Matters

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

(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, 2022				December 31, 2021
	Amount		Ratio		Amount		Ratio
Renasant Corporation
Tier 1 Capital to Average Assets (Leverage)	$	1,493,705	9.39	%	$	1,422,077	9.15	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	1,385,489		10.64	%	1,314,295		11.18	%
Tier 1 Capital to Risk-Weighted Assets	1,493,705		11.47	%	1,422,077		12.10	%
Total Capital to Risk-Weighted Assets	1,973,206		15.15	%	1,897,167		16.14	%
Renasant Bank
Tier 1 Capital to Average Assets (Leverage)	$	1,645,539	10.34	%	$	1,580,904	10.18	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	1,645,539		12.61	%	1,580,904		13.46	%
Tier 1 Capital to Risk-Weighted Assets	1,645,539		12.61	%	1,580,904		13.46	%
Total Capital to Risk-Weighted Assets	1,789,382		13.71	%	1,697,163		14.44	%

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 table above, as of September 30, 2022, the Company’s CET1 capital was in excess of the capital conservation buffer.

The Company elected to take advantage of transitional relief offered by the Federal Reserve and the FDIC to delay for two years the estimated impact of ASC Topic 326, “Financial Instruments - Credit Losses” (“ASC 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. The three-year transitional period began on January 1, 2022 .

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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:


	Community Banks		Insurance		Wealth Management		Other		Consolidated
Three months ended September 30, 2022
Net interest income (loss)	$	134,528	$	98	$	794	$	( 5,102 )	$	130,318
Provision for credit losses	9,800		—		—		—		9,800
Noninterest income (loss)	32,324		3,123		6,132		( 393 )		41,186
Noninterest expense	94,474		2,190		4,553		357		101,574
Income (loss) before income taxes	62,578		1,031		2,373		( 5,852 )		60,130
Income tax expense (benefit)	14,811		268		—		( 1,516 )		13,563
Net income (loss)	$	47,767	$	763	$	2,373	$	( 4,336 )	$	46,567

Total assets	$	16,369,592	$	35,761	$	73,704	$	( 7,958 )	$	16,471,099
Goodwill	$	943,524	$	2,767	—		—		$	946,291

Three months ended September 30, 2021
Net interest income (loss)	$	106,506	$	115	$	404	$	( 3,733 )	$	103,292
Provision for (recovery of provision for) credit losses	( 1,088 )		—		( 112 )		—		( 1,200 )
Noninterest income (loss)	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

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Community Banks		Insurance		Wealth Management		Other		Consolidated
Nine months ended September 30, 2022
Net interest income (loss)	$	356,040	$	286	$	1,813	$	( 14,677 )	$	343,462
Provision for credit losses	13,300		—		—		—		13,300
Noninterest income (loss)	89,359		8,831		18,952		( 1,284 )		115,858
Noninterest expense	272,594		6,311		13,899		1,069		293,873
Income (loss) before income taxes	159,505		2,806		6,866		( 17,030 )		152,147
Income tax expense (benefit)	36,035		734		—		( 4,414 )		32,355
Net income (loss)	$	123,470	$	2,072	$	6,866	$	( 12,616 )	$	119,792

Total assets	$	16,369,592	$	35,761	$	73,704	$	( 7,958 )	$	16,471,099
Goodwill	$	943,524	$	2,767	$	—	$	—	$	946,291

Nine months ended September 30, 2021
Net interest income (loss)	$	332,234	$	333	$	1,184	$	( 11,232 )	$	322,519
Provision for (recovery of provision for) 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

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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,” “focus,” “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 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; (ii) the effect of economic conditions and interest rates on a national, regional or international basis; (iii) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (iv) competitive pressures in the consumer finance, commercial finance, insurance, financial services, asset management, retail banking, mortgage lending and auto lending industries; (v) the financial resources of, and products available from, competitors; (vi) changes in laws and regulations as well as changes in accounting standards; (vii) changes in policy by regulatory agencies; (viii) changes in the securities and foreign exchange markets; (ix) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (x) 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; (xi) an insufficient allowance for credit losses on loans or unfunded commitments as a result of inaccurate assumptions; (xii) general economic, market or business conditions, including the impact of inflation and changes in monetary policy by the Federal Reserve Board; (xiii) changes in demand for loan products and financial services; (xiv) concentration of credit exposure; (xv) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (xvi) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (xvii) civil unrest, natural disasters, epidemics (including the re-emergence of the COVID-19 pandemic) and other catastrophic events in the Company’s geographic area; (xviii) the impact, extent and timing of technological changes; and (xix) 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, 2022 compared to December 31, 2021.

Assets

Total assets were $16,471,099 at September 30, 2022 compared to $16,810,311 at December 31, 2021. Renasant Bank (“Renasant Bank” or the “Bank”) acquired Southeastern Commercial Finance, LLC, an asset-based lending company headquartered in Birmingham, Alabama, effective March 1, 2022, which added $43,946 in total assets, including $28,110 in loans, on the date of acquisition.

Investments

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The securities portfolio is used to provide a source for meeting liquidity needs and to supply securities to be used in collateralizing certain deposits and certain types of borrowings. The securities portfolio also serves as an outlet to deploy excess liquidity and generate interest income rather than hold such excess funds as cash. The following table shows the carrying value of our securities portfolio by investment type and the percentage of such investment type relative to the entire securities portfolio as of the dates presented:


	September 30, 2022				December 31, 2021
	Balance		Percentage of Portfolio		Balance		Percentage of Portfolio
U.S. Treasury securities	$	—	—	%	$	3,010	0.11	%
Obligations of other U.S. Government agencies and corporations	164,520		5.63		—		—
Obligations of states and political subdivisions	433,410		14.83		426,751		15.23
Mortgage-backed securities	2,188,182		74.87		2,313,167		82.54

Other debt securities	136,664		4.67		59,513		2.12

	$	2,922,776	100.00	%	$	2,802,441	100.00	%
Allowance for credit losses - held to maturity securities	(32)				(32)
Securities, net of allowance for credit losses	$	2,922,744			$	2,802,409

During the nine months ended September 30, 2022, we deployed a portion of our excess liquidity into the securities portfolio and purchased $800,260 in investment securities. Mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprised approximately 62% 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 other U.S. Government agencies and corporations comprised approximately 21% of purchases made during the first nine months of 2022. Obligations of state and political subdivisions comprised approximately 5% of purchases made during the first nine months of 2022. Other debt securities in our investment portfolio, consisting of corporate debt securities, issuances from the Small Business Administration (“SBA”) and subordinated debt issuances, comprised the remaining 12% of purchases made during the first nine months of 2022.

During the third quarter, the Company transferred, at fair value, $882,927 of securities from the available for sale portfolio to the held to maturity portfolio as the Company has no intention to sell these securities. The related net unrealized losses of $99,675 (after tax losses of $74,307) remained in accumulated other comprehensive income (loss) and will be amortized over the remaining life of the securities, offsetting the related amortization of discount on the transferred securities. No gains or losses were recognized at the time of transfer.

Rising interest rates in the first three quarters of 2022 had a negative impact on the value of our securities portfolio resulting in a fair market value adjustment of our available for sale securities of $296,442, which contributed to our accumulated other comprehensive loss.

Proceeds from maturities, calls and principal payments on securities during the first nine months of 2022 totaled $372,484. The Company did not sell any securities during the first nine months of 2022. Proceeds from the 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.

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 $144,642 at September 30, 2022, as compared to $453,533 at December 31, 2021. 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

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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 $11,105,004 at September 30, 2022 and $10,020,914 at December 31, 2021. Non purchased loans totaled $10,259,840 at September 30, 2022 compared to $9,011,011 at December 31, 2021. Loans purchased in previous acquisitions totaled $845,164 and $1,009,903 at September 30, 2022 and December 31, 2021, 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:


	September 30, 2022
	Non Purchased		Purchased		Total Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)	$	1,435,275	$	77,816	$	1,513,091	13.63	%
Lease financing, net of unearned income	103,357		—		103,357		0.93
Real estate – construction:
Residential	359,367		387		359,754		3.24
Commercial	848,941		6,361		855,302		7.70

Total real estate – construction	1,208,308		6,748		1,215,056		10.94
Real estate – 1-4 family mortgage:
Primary	2,041,885		102,234		2,144,119		19.31
Home equity	456,765		42,861		499,626		4.50
Rental/investment	306,165		16,679		322,844		2.91
Land development	151,986		9,314		161,300		1.45
Total real estate – 1-4 family mortgage	2,956,801		171,088		3,127,889		28.17
Real estate – commercial mortgage:
Owner-occupied	1,368,196		194,756		1,562,952		14.07
Non-owner occupied	2,963,631		356,485		3,320,116		29.90
Land development	120,026		13,571		133,597		1.20
Total real estate – commercial mortgage	4,451,853		564,812		5,016,665		45.17
Installment loans to individuals	104,246		24,700		128,946		1.16
Total loans, net of unearned income	$	10,259,840	$	845,164	$	11,105,004	100.00	%

(1) Includes Paycheck Protection Program (“PPP”) loans of $5,477 as of September 30, 2022.

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	December 31, 2021
	Non Purchased		Purchased		Total Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)	$	1,332,962	$	90,308	$	1,423,270	14.20	%
Lease financing, net of unearned income	76,125		—		76,125		0.76
Real estate – construction:
Residential	300,988		1,287		302,275		3.02
Commercial	798,914		3,707		802,621		8.01
Total real estate – construction	1,099,902		4,994		1,104,896		11.03
Real estate – 1-4 family mortgage:
Primary	1,682,050		134,070		1,816,120		18.12
Home equity	423,108		51,496		474,604		4.74
Rental/investment	268,245		20,229		288,474		2.88
Land development	135,070		9,978		145,048		1.45
Total real estate – 1-4 family mortgage	2,508,473		215,773		2,724,246		27.19
Real estate – commercial mortgage:
Owner-occupied	1,329,219		234,132		1,563,351		15.60
Non-owner occupied	2,446,370		410,577		2,856,947		28.51
Land development	110,395		18,344		128,739		1.28
Total real estate – commercial mortgage	3,885,984		663,053		4,549,037		45.39
Installment loans to individuals	107,565		35,775		143,340		1.43
Total loans, net of unearned income	$	9,011,011	$	1,009,903	$	10,020,914	100.00	%

(1) Includes PPP loans of $58,391 as of December 31, 2021.

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, 2022, 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 $13,432,124 and $13,905,724 at September 30, 2022 and December 31, 2021, respectively. Noninterest-bearing deposits were $4,827,220 and $4,718,124 at September 30, 2022 and December 31, 2021, respectively, while interest-bearing deposits were $8,604,904 and $9,187,600 at September 30, 2022 and December 31, 2021, respectively. Although there was an overall decline in deposits, noninterest-bearing deposits increased $109,096, and the Company's liquidity position remains strong.

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 35.94% of total deposits at September 30, 2022, as compared to 33.93% of total deposits at December 31, 2021. Under certain circumstances, 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 $1,696,290 and

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$1,787,414 at September 30, 2022 and December 31, 2021, respectively, and represented 12.63% and 12.85% of total deposits as of September 30, 2022 and December 31, 2021, 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, 2022		December 31, 2021
Security repurchase agreements	$	12,818	$	13,947

Short-term borrowings from the FHLB	300,000		—

	$	312,818	$	13,947

Long-term debt typically 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, 2022		December 31, 2021
Long-term FHLB advances	$	—	$	417
Junior subordinated debentures	111,807		111,373
Subordinated notes	315,014		359,419
	$	426,821	$	471,209

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. The Company had $3,818,637 of availability on unused lines of credit with the FHLB at September 30, 2022, as compared to $4,214,274 at December 31, 2021.

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 as regulatory capital. The subordinated notes qualify as Tier 2 capital under current regulatory guidelines.

On March 1, 2022, the Company redeemed at par the remaining $30,000 of its $60,000 5.00% fixed-to-floating rate subordinated notes. The Company redeemed the initial $30,000 of these notes in December 2021.

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 2022 was $46,567 compared to net income of $40,063 for the third quarter of 2021. Basic and diluted earnings per share (“EPS”) for the third quarter of 2022 were $0.83 as compared to basic and diluted EPS of $0.71 for the third quarter of 2021. Net income for the nine months ended September 30, 2022, was $119,792 compared to net income of $138,838 for the same period in 2021. Basic and diluted EPS were $2.14 and $2.13, respectively, for the first nine months of 2022 as compared to $2.47 and $2.46 for the first nine months of 2021.

From time to time, the Company incurs expenses and charges or recognizes valuation adjustments in connection with certain transactions with respect to which management is unable to accurately predict when these items will be incurred or, when incurred, the amount of such items. The following table presents the impact of these items on reported EPS for the dates presented. The “COVID-19 related expenses” line item in the table below primarily consists of (a) employee overtime and

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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, 2022						September 30, 2021
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS



Gain on sale of MSR	$	(2,960)	$	(2,292)	$	(0.04)	$	—	$	—	$	—

COVID-19 related expenses	—		—		—		323		253		—

	Nine Months Ended
	September 30, 2022						September 30, 2021
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS
Merger and conversion expenses	$	687	$	541	$	0.01	$	—	$	—	$	—

Gain on sale of MSR	(2,960)		(2,330)		(0.04)
MSR valuation adjustment	—		—		—		(13,561)		(10,549)		(0.19)
Restructuring charges	732		576		0.01		307		239		—
COVID-19 related expenses	—		—		—		1,478		1,151		0.02

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 76.28% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the third quarter of 2022. The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.

Net interest income was $130,318 and $343,462 for the three and nine months ended September 30, 2022, as compared to $103,292 and $322,519 for the same periods in 2021. On a tax equivalent basis, net interest income was $132,435 and $349,139 for the three and nine months ended September 30, 2022, as compared to $105,002 and $327,471 same periods in 2021.

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 on a tax-equivalent basis for the periods presented:

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	Three Months Ended September 30,
	2022						2021
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning assets:





Loans held for investment	$	10,829,137	$	124,614	4.57	%	$	10,017,742	$	103,770	4.11	%
Loans held for sale	143,837		2,075		5.77		451,586		2,376		2.13
Securities:
Taxable	2,773,924		12,439		1.79		1,942,647		6,688		1.38
Tax-exempt (1)	449,927		2,664		2.37		324,219		2,297		2.83
Interest-bearing balances with banks	663,218		3,458		2.07		1,520,227		592		0.15
Total interest-earning assets	14,860,043		145,250		3.89		14,256,421		115,723		3.23
Cash and due from banks	191,358						195,095
Intangible assets	967,154						965,960

Other assets	626,926						712,673
Total assets	$	16,645,481					$	16,130,149
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand (2)	$	6,462,940	$	6,061	0.37	%	$	6,231,718	$	3,821	0.24	%
Savings deposits	1,134,665		155		0.05		1,006,847		192		0.08
Time deposits	1,240,439		1,025		0.33		1,506,192		2,959		0.78
Total interest-bearing deposits	8,838,044		7,241		0.33		8,744,757		6,972		0.32
Borrowed funds	572,376		5,574		3.88		482,709		3,749		3.08
Total interest-bearing liabilities	9,410,420		12,815		0.54		9,227,466		10,721		0.46
Noninterest-bearing deposits	4,867,314						4,470,262
Other liabilities	194,339						212,990
Shareholders’ equity	2,173,408						2,219,431
Total liabilities and shareholders’ equity	$	16,645,481					$	16,130,149
Net interest income/net interest margin			$	132,435	3.54	%			$	105,002	2.93	%

(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,
	2022						2021
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning assets:
Loans held for investment	$	10,474,305	$	329,227	4.20	%	$	10,431,436	$	327,625	4.20	%
Loans held for sale	233,266		7,524		4.30		439,954		8,980		2.73
Securities:
Taxable	2,653,735		31,576		1.59		1,505,611		17,077		1.51
Tax-exempt (1)	446,762		8,018		2.39		316,159		6,915		2.92
Interest-bearing balances with banks	1,041,145		6,076		0.78		1,176,378		1,121		0.13
Total interest-earning assets	14,849,213		382,421		3.44		13,869,538		361,718		3.49
Cash and due from banks	201,436						198,955
Intangible assets	967,023						967,458

Other assets	640,403						687,159
Total assets	$	16,658,075					$	15,723,110
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand (2)	$	6,556,454	$	13,306	0.27	%	$	6,083,179	$	11,821	0.26	%
Savings deposits	1,123,433		441		0.05		953,391		547		0.08
Time deposits	1,305,800		4,149		0.42		1,575,220		10,552		0.90
Total interest-bearing deposits	8,985,687		17,896		0.27		8,611,790		22,920		0.36
Borrowed funds	534,296		15,386		3.84		483,230		11,327		3.13
Total interest-bearing liabilities	9,519,983		33,282		0.47		9,095,020		34,247		0.50
Noninterest-bearing deposits	4,745,409						4,202,364
Other liabilities	192,744						223,796
Shareholders’ equity	2,199,939						2,201,930
Total liabilities and shareholders’ equity	$	16,658,075					$	15,723,110
Net interest income/net interest margin			$	349,139	3.14	%			$	327,471	3.16	%

(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. The rising interest rate environment this year coupled with steady loan growth were the largest contributing factors to the increase in net interest income for the three and nine months ended September 30, 2022, as compared to the same periods in 2021. The Company has continued to focus on lowering, or at least mitigating increases in the cost of funding through growing noninterest-bearing deposits, staying disciplined yet competitive in pricing on interest-bearing deposits in the current rising rate environment and accessing alternative sources of liquidity. During the first six months of 2022, the Company also increased its purchases of investment securities in order to mitigate the pressure on net interest margin. During the third quarter of 2022, the Company slowed its purchases of investment securities, and cash flows were primarily reinvested in the securities portfolio or used to fund loan growth.

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 the three and nine months ended September 30, 2022, as compared to

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the same periods in 2021 (the changes attributable to the combined impact of yield/rate and volume have been allocated on a pro-rata basis using the absolute value of amounts calculated):


	Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021
	Volume		Rate		Net
Interest income:
Loans held for investment	$	8,763	$	12,082	$	20,845
Loans held for sale	(2,431)		2,130		(301)
Securities:
Taxable	3,320		2,430		5,750
Tax-exempt	792		(425)		367
Interest-bearing balances with banks	(514)		3,380		2,866
Total interest-earning assets	9,930		19,597		29,527
Interest expense:
Interest-bearing demand deposits	147		2,093		2,240
Savings deposits	22		(59)		(37)
Time deposits	(451)		(1,483)		(1,934)
Borrowed funds	760		1,065		1,825
Total interest-bearing liabilities	478		1,616		2,094
Change in net interest income	$	9,452	$	17,981	$	27,433

	Nine months ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021
	Volume		Rate		Net
Interest income:
Loans held for investment	$	1,438	$	164	$	1,602
Loans held for sale	(5,301)		3,845		(1,456)
Securities:
Taxable	13,623		876		14,499
Tax-exempt	2,494		(1,391)		1,103
Interest-bearing balances with banks	(143)		5,098		4,955
Total interest-earning assets	12,111		8,592		20,703
Interest expense:
Interest-bearing demand deposits	945		540		1,485
Savings deposits	86		(192)		(106)
Time deposits	(1,571)		(4,832)		(6,403)
Borrowed funds	1,284		2,775		4,059
Total interest-bearing liabilities	744		(1,709)		(965)
Change in net interest income	$	11,367	$	10,301	$	21,668

Interest income, on a tax equivalent basis, was $145,250 and $382,421, respectively, for the three and nine months ended September 30, 2022, as compared to $115,723 and $361,718, for the same periods in 2021. The increase in interest income, on a tax equivalent basis, for the three and nine months ended September 30, 2022 as compared to the same time periods in 2021 is due primarily to continued loan growth as well as the additional interest rate increases by the Federal Reserve since March 2022.

The following table presents 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,
	2022		2021		2022		2021
Loans held for investment, excl. PPP	72.83	%	69.38	%	4.57	%	4.02	%
Paycheck Protection Program	0.04		0.89		0.29		10.95
Loans held for sale	0.97		3.17		5.77		2.13
Securities	21.69		15.90		1.87		1.59
Other	4.47		10.66		2.07		0.15
Total earning assets	100.00	%	100.00	%	3.89	%	3.23	%


	Percentage of Total Average Earning Assets				Yield
	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Loans held for investment excl. PPP	70.42	%	71.04	%	4.20	%	4.12	%
Paycheck Protection Program	0.12		4.17		5.22		5.62
Loans held for sale	1.57		3.17		4.30		2.73
Securities	20.88		13.14		1.70		1.76
Interest-bearing balances with banks	7.01		8.48		0.78		0.13
Total earning assets	100.00	%	100.00	%	3.44	%	3.49	%

For the third quarter of 2022, interest income on loans held for investment, on a tax equivalent basis, increased $20,845 to $124,614 from $103,770 for the same period in 2021. For the nine months ended September 30, 2022, interest income on loans held for investment, on a tax equivalent basis, increased $1,602 to $329,227 from $327,625 in the same period in 2021. The Federal Reserve began to raise interest rates in March 2022, which impacted the Company's loan pricing, thereby resulting in the increase in interest income on loans held for investment for the quarterly and year-to-date periods in 2022 as compared to the corresponding periods in 2021. Interest income attributable to PPP loans included in loan interest income for the three months ended September 30, 2022, was $5, which consisted of $17 in interest income and $12 in amortization of net origination costs, as compared to $3,503 for the three months ended September 30, 2021, which consisted of $306 in interest income and $3,197 in accretion of net origination fees. Interest income attributable to PPP loans included in loan interest income for the nine months ended September 30, 2022, was $697, which consisted of $130 in interest income and $567 in accretion of net origination fees, as compared to $24,310 for the nine months ended September 30, 2021, which consisted of $4,222 in interest income and $20,088 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 did not impact margin or loan yield during the three or nine months ended September 30, 2022. PPP loans increased margin and loan yield by seven basis points and nine basis points, respectively, in the third quarter of 2021, and 11 basis points and eight basis points, respectively, in the first nine months of 2021.

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,
	2022			2021			2022			2021
Net interest income collected on problem loans	$	78		$	316		$	2,788		$	3,835
Accretable yield recognized on purchased loans (1)	1,317			2,871			4,573			8,597
Total impact to interest income on loans	$	1,395		$	3,187		$	7,361		$	12,432

Impact to loan yield	0.05		%	0.13		%	0.09		%	0.16		%

Impact to net interest margin	0.04		%	0.09		%	0.07		%	0.12		%

(1) Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $713 and $1,649 for the third quarter of 2022 and 2021, respectively. The impact was $2,269 and $4,145 for the nine months ended September 30, 2022 and 2021, respectively. This additional interest income increased total loan yield by three and seven basis points for the third quarter of 2022 and 2021, respectively, while increasing net interest margin by two and five basis points for the same respective periods. For the nine months ended September 30, 2022 and 2021, the additional interest income increased total loan yields by three and five basis points, respectively, while increasing net interest margin by two and four basis points, respectively.

For the third quarter of 2022, interest income on loans held for sale (consisting of mortgage loans held for sale) decreased $301 to $2,075 from $2,376 for the same period in 2021. For the nine months ended September 30, 2022, interest income on loans held for sale (consisting of mortgage loans held for sale), decreased $1,456 to $7,524 from $8,980 for the same period in 2021.

Investment income, on a tax equivalent basis, increased $6,118 to $15,103 for the third quarter of 2022 from $8,985 for the third quarter of 2021. Investment income, on a tax equivalent basis, increased $15,602 to $39,594 for the nine months ended September 30, 2022 from $23,992 for the same period in 2021. The tax equivalent yield on the investment portfolio for the third quarter of 2022 was 1.87%, up 28 basis points from 1.59% for the same period in 2021. The tax equivalent yield on the investment portfolio for the nine months ended September 30, 2022 was 1.70%, down 6 basis points from 1.76% in the same period in 2021. The decrease in taxable equivalent yield on securities for the nine months ended September 30, 2022 as compared to the same period in 2021 was a result of the low interest rate environment during the first half of the year before the Federal Reserve rate increases began to be seen in investment security yields. The growth in the Company’s investment securities portfolio during the year offset the loss of investment income due to lower yield on securities and caused the increase in taxable equivalent yield for the three months ended September 30, 2022 as compared to the same period in 2021.

Interest expense was $12,815 for the third quarter of 2022 as compared to $10,721 for the same period in 2021. Interest expense for the nine months ended September 30, 2022 was $33,282 as compared to $34,247 for the same period in 2021.

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,
	2022		2021		2022		2021
Noninterest-bearing demand	34.09	%	32.64	%	—	%	—	%
Interest-bearing demand	45.27		45.49		0.37		0.24
Savings	7.95		7.35		0.05		0.08
Time deposits	8.69		11.00		0.33		0.78
Short term borrowings	0.99		0.09		1.30		0.29
Long-term Federal Home Loan Bank advances	—		1.10		—		0.01
Subordinated notes	2.23		1.52		4.55		4.79
Other borrowed funds	0.78		0.81		5.24		4.36
Total deposits and borrowed funds	100.00	%	100.00	%	0.36	%	0.31	%

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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,
	2022		2021		2022		2021
Noninterest-bearing demand	33.27	%	31.60	%	—	%	—	%
Interest-bearing demand	45.96		45.75		0.27		0.26
Savings	7.88		7.17		0.05		0.08
Time deposits	9.15		11.85		0.42		0.90
Short-term borrowings	0.66		0.10		0.98		0.30
Long-term Federal Home Loan Bank advances	—		1.14		1.88		0.03
Subordinated notes	2.30		1.56		4.39		4.97
Other long term borrowings	0.78		0.83		4.66		4.27
Total deposits and borrowed funds	100.00	%	100.00	%	0.31	%	0.34	%

Interest expense on deposits was $7,241 and $6,972 for the three months ended September 30, 2022 and 2021, respectively. The cost of total deposits was 0.21% for both periods. Interest expense on deposits was $17,896 and $22,920 for the nine months ended September 30, 2022 and 2021, respectively, and the cost of total deposits was 0.17% and 0.24% for the same respective periods. The decrease in both deposit expense and cost for the nine months ended September 30, 2022 compared to the same period in 2021 is attributable to the Company’s efforts to reduce deposit rates as they repriced in a low interest rate environment. The increase in deposit expense for the third quarter of 2022 compared to the same period in 2021 is due to the recent rising rate environment which has resulted in higher deposit costs, which is expected to continue through the remainder of 2022. During 2022, the Company has continued its efforts to grow and maintain non-interest bearing deposits, and such deposits represent 35.94% of total deposits at September 30, 2022 compared to 33.93% of total deposits at December 31, 2021. Low cost deposits continue to be the preferred choice of funding; however, the Company may rely on wholesale borrowings when rates are advantageous as well as higher-costing deposits as dictated by liquidity needs.

Interest expense on total borrowings was $5,574 and $3,749 for the three months ended September 30, 2022 and 2021, respectively. Interest expense on total borrowings was $15,386 and $11,327 for the nine months ended September 30, 2022 and 2021, respectively. The increase in interest expense is a result of higher average borrowings, primarily due to the Company's issuance of $200,000 of subordinated notes in November 2021 and $300,000 in short-term advances from the FHLB in September 2022.

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,
2022	2021	2022	2021
0.98%	1.25%	0.93%	1.53%

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 $41,186 for the third quarter of 2022 as compared to $50,755 for the same period in 2021. Noninterest income was $115,858 for the nine months ended September 30, 2022 as compared to $179,402 for the same period in 2021. This decrease is primarily due to the reduction in mortgage banking income during the first nine months of 2022 (discussed in more detail below) as compared to record production during the first nine months of 2021.

Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees (which encompasses traditional overdraft fees as well as non-sufficient funds fees). Service charges on deposit accounts were $10,216 and $9,337 for the third quarter of 2022 and 2021, respectively, and $29,512 and $26,818 for the nine months ended September 30, 2022 and 2021, respectively. Overdraft fees, the largest component of service charges on deposits, were $5,540 for the three months ended September 30, 2022, as compared to $4,876 for the same period in 2021. These fees were $15,967 for the nine months ended September 30, 2022 compared to $13,830 for the same period in 2021. The Company plans to eliminate consumer non-sufficient funds fees as well as transfer fees to linked

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customer accounts. These changes will take effect January 1, 2023. The fees to be eliminated totaled approximately $1,500 and $4,100 for the three and nine months ended September 30, 2022, respectively.

Fees and commissions were $4,148 during the third quarter of 2022 as compared to $3,837 for the same period in 2021, and were $12,798 for the first nine months of 2022 as compared to $11,847 for the same period in 2021. Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. For the third quarter of 2022, interchange fees were $2,341 as compared to $2,685 for the same period in 2021. Interchange fees were $7,419 for the nine months ended September 30, 2022 as compared to $7,901 for the same period in 2021.

Through Renasant Insurance, we offer a range of commercial and personal insurance products through major insurance carriers. Income earned on insurance products was $3,108 and $2,829 for the three months ended September 30, 2022 and 2021, respectively, and was $8,253 and $7,488 for the nine months ended September 30, 2022 and 2021, 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 $10 and $4 for the three months ended September 30, 2022 and 2021, respectively, and $559 and $1,057 for the nine months ended September 30, 2022 and 2021, 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 $5,467 for the third quarter of 2022 compared to $5,371 for the same period in 2021, and was $17,102 for the nine months ended September 30, 2022 compared to $15,182 for the same period in 2021. The market value of assets under management or administration was $4,842,723 and $4,687,357 at September 30, 2022 and September 30, 2021, 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 $359,444 in the third quarter of 2022 compared to $966,651 for the same period in 2021. Mortgage loan originations totaled $1,436,158 in the nine months ended September 30, 2022 compared to $3,189,474 for the same period in 2021. During the first nine months of 2022 mortgage loan originations continued to normalize and trend toward pre-pandemic levels while margins on the sale of loans in the secondary market compressed as interest rates rose and housing inventories remained below demand. Mortgage banking income was $12,675 and $23,292 for the three months ended September 30, 2022 and 2021, respectively, and was $30,624 for the first nine months ended September 30, 2022 compared to $94,878 for the same period in 2021. During the third quarter of 2022, the Company sold MSRs relating to mortgage loans having an aggregate unpaid principal balance of $1,700,823 to a third party for net proceeds of $18,525, resulting in a gain of $2,960. 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,
	2022		2021		2022		2021
Gain on sales of loans, net (1)	$	5,263	$	20,116	$	14,800	$	71,598
Fees, net	2,405		3,420		8,522		12,841
Mortgage servicing income (loss), net	2,047		(244)		4,342		(3,122)
Gain on sale of MSRs	2,960		—		2,960		—
MSR valuation adjustment	—		—		—		13,561
Mortgage banking income, net	$	12,675	$	23,292	$	30,624	$	94,878

(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 $2,296 for the three months ended September 30, 2022 as compared to $1,602 for the same period in 2021, and $6,780 for the nine months ended

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September 30, 2022 as compared to $5,318 for the same period in 2021. The Company purchased an additional $80,000 in BOLI policies during the first quarter of 2022.

Other noninterest income was $3,276 and $3,723 for the three months ended September 30, 2022 and 2021, respectively, and was $10,789 and $15,750 for the nine months ended September 30, 2022 and 2021, 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.

Noninterest Expense


Noninterest Expense to Average Assets
Three Months Ended September 30,		Nine Months Ended September 30,
2022	2021	2022	2021
2.42%	2.56%	2.36%	2.80%

Noninterest expense was $101,574 and $103,999 for the third quarter of 2022 and 2021, respectively, and was $293,873 and $328,711 for the nine months ended September 30, 2022 and 2021, respectively.

Salaries and employee benefits decreased $2,652 to $66,463 for the third quarter of 2022 as compared to $69,115 for the same period in 2021. Salaries and employee benefits decreased $23,822 to $194,282 for the nine months ended September 30, 2022 as compared to $218,104 for the same period in 2021. The decrease in salaries and employee benefits is primarily due to a decrease in mortgage commissions and incentives, driven by the decrease in mortgage production described above, offset by increases in the minimum wage we pay our employees that were implemented in May 2022.

Data processing costs decreased to $3,526 in the third quarter of 2022 from $5,277 for the same period in 2021 and were $11,379 for the nine months ended September 30, 2022 as compared to $16,380 for the same period in 2021. The decline in the first nine months of 2022 as compared to the same period in 2021 is primarily due to the Company's renegotiation of certain vendor contracts. 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 2022 was $11,266, down from $11,748 for the same period in 2021. These expenses for the first nine months of 2022 were $33,697, down from $35,660 for the same period in 2021. The decrease in occupancy and equipment expense is primarily attributable to the restructuring and non-renewal or termination of certain branch leases.

For the third quarter of 2022 the Company had expenses of $34 related to other real estate owned as compared to expenses of $168 for the same period in 2021. The Company experienced a net gain of $394 in other real estate expense for the first nine months of 2022 as compared to expenses of $313 for the same period in 2021. 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 $110 and $290 for the first nine months of 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, other real estate owned with a cost basis of $1,847 and $4,007, respectively, was sold, resulting in a net gain of $611 and $74, 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 $3,087 for the third quarter of 2022 as compared to $2,972 for the same period in 2021, and $9,016 for the nine months ended September 30, 2022 as compared to $8,566 for the same period in 2021.

Advertising and public relations expense was $3,229 for the third quarter of 2022 as compared to $2,922 for the same period in 2021, and $10,694 for the nine months ended September 30, 2022 as compared to $9,274 for the same period in 2021. During the nine months ended September 30, 2022, the Company contributed approximately $1,350 to charitable organizations throughout Mississippi, Georgia and Alabama, which contributions are included in our advertising and public relations expense, for which it received a dollar-for-dollar tax credit.

Amortization of intangible assets totaled $1,251 and $1,481 for the third quarter of 2022 and 2021, respectively, and $3,927 and $4,618 for the nine months ended September 30, 2022 and 2021, 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 1 year to 7 years.

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Communication expenses, those expenses incurred for communication to clients and between employees, were $1,999 for the third quarter of 2022 as compared to $2,198 for the same period in 2021. Communication expenses were $5,930 for the nine months ended September 30, 2022 as compared to $6,781 for the same period in 2021.

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 $10,719 and $23,923 for the three and nine months ended September 30, 2022 as compared to $8,118 and $28,708 for the same periods in 2021. There was no provision for unfunded commitments recorded for the third quarter of 2022 and a recovery of provision for unfunded commitments of $100 for the nine months ended September 30, 2022. The provision for unfunded commitments was $200 for the three and nine months ended September 30, 2021.

Efficiency Ratio


	Efficiency Ratio
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Efficiency ratio (GAAP)	58.50	%	66.77	%	63.20	%	64.85	%







Adjusted efficiency ratio (Non-GAAP) (1)	58.78	%	66.06	%	62.47	%	65.66	%

(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 its 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, for the third quarter of 2022, the gain from our sale of mortgage servicing rights. 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 2022 and 2021 was $13,563 and $11,185, respectively, and $32,355 and $35,572 for the nine months ended September 30, 2022 and 2021, respectively. The Company recognized tax credits of approximately $1,350 in the first nine months of 2022 (as mentioned above in the advertising and public relations discussion) as compared to the one-time state tax credit of $3,460 that reduced income taxes for the first nine months 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

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 commercial and real estate loans rather than consumer and small balance consumer mortgage loans, such as 1-4 family mortgage loans.

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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 to criticized due to a decline in the collateral value or cash flow of the borrower. 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. Any remaining balance is charged-off, which reduces 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 management believes the uncollectability of a loan balance is confirmed and such losses are reasonably quantified. Net charge-offs for the first nine months of 2022 were $4,763, or 0.06% of average loans (annualized), compared to net charge-offs of $4,906, or 0.06% of average loans (annualized), for the same period in 2021. The charge-offs were fully reserved for in the Company’s allowance for credit losses on loans. Subsequent recoveries, if any, are credited to the 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. 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 change in GDP 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. In determining the allowance for credit losses on loans evaluated on a collective basis, the Company further categorizes the loan segments based on risk rating. The Company uses two CECL models: (1) for the Real Estate - 1-4 Family Mortgage, Real Estate - Construction and the Installment Loans to Individuals portfolio segments, the Company uses a loss rate model, based on average historical life-of-loan loss rates, 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

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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 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, 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, 2022				December 31, 2021			September 30, 2021
	Balance		% of Total			Balance		% of Total		Balance		% of Total
Commercial, financial, agricultural	$	30,503	13.63	%		$	33,922	14.20	%	$	34,977	14.34	%
Lease financing	2,314		0.93	%		1,486		0.76	%	1,570		0.79	%
Real estate – construction	18,744		10.94	%		16,419		11.03	%	16,169		10.89	%
Real estate – 1-4 family mortgage	43,532		28.17	%		32,356		27.19	%	32,181		27.21	%
Real estate – commercial mortgage	69,267		45.17	%		68,940		45.39	%	73,895		45.27	%
Installment loans to individuals	9,996		1.16	%		11,048		1.43	%	11,246		1.50	%
Total	$	174,356	100.00	%		$	164,171	100.00	%	$	170,038	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 provision for credit losses of $9,800 in the third quarter of 2022 and $13,300 in the first nine months of 2022, as compared to a $1,200 recovery of provision for credit losses recorded for the three and nine months of 2021. The Company’s allowance for credit losses model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years. The provision activity during the current quarter was primarily driven by strong loan growth.

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

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	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Balance at beginning of period	$	166,131		$	172,354		$	164,171		$	176,144
Impact of PCD loans acquired during the period	—			—			1,648			—
Charge-offs
Commercial, financial, agricultural	373			1,225			4,714			5,907
Lease financing	—			13			7			13
Real estate – construction	—			—			—			52
Real estate – 1-4 family mortgage	208			276			532			529
Real estate – commercial mortgage	1,956			184			2,670			416
Installment loans to individuals	722			1,281			2,351			4,286
Total charge-offs	3,259			2,979			10,274			11,203
Recoveries
Commercial, financial, agricultural	415			418			1,982			940
Lease financing	113			11			136			36
Real estate – construction	—			—			—			13
Real estate – 1-4 family mortgage	378			193			725			855
Real estate – commercial mortgage	50			190			397			504
Installment loans to individuals	728			1,051			2,271			3,949
Total recoveries	1,684			1,863			5,511			6,297
Net charge-offs	1,575			1,116			4,763			4,906
Provision for credit losses on loans	9,800			(1,200)			13,300			(1,200)
Balance at end of period	$	174,356		$	170,038		$	174,356		$	170,038
Net charge-offs (annualized) to average loans	0.06		%	0.04		%	0.06		%	0.06		%
Net charge-offs to allowance for credit losses on loans	0.90		%	0.66		%	2.73		%	2.89		%
Allowance for credit losses on loans to:
Total loans							1.57		%	1.70		%
Total loans excluding PPP loans (1)							1.57		%	1.71		%
Nonperforming loans							312.10		%	299.68		%
Nonaccrual loans							321.23		%	304.96		%

(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, 2022					September 30, 2021
	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	$	2,732	$	1,474,633	0.25%	$	4,967	$	1,968,541	0.34%
Lease financing	(129)		93,838		(0.18)	(23)		75,620		(0.04)%
Real estate – construction	—		1,124,713		—	39		986,337		0.01%
Real estate – 1-4 family mortgage	(193)		2,976,081		(0.01)	(326)		2,711,619		(0.02)%
Real estate – commercial mortgage	2,273		4,670,508		0.07	(88)		4,519,793		—%
Installment loans to individuals	80		134,532		0.08	337		169,526		0.27%
Total	$	4,763	$	10,474,305	0.06%	$	4,906	$	10,431,436	0.06%

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Real estate – construction:
Residential	$	—	$	—	$	—	$	39


Total real estate – construction	—		—		—		39
Real estate – 1-4 family mortgage:
Primary	(59)		115		98		57
Home equity	(44)		(46)		(92)		(109)
Rental/investment	(19)		7		(40)		(192)
Land development	(48)		7		(159)		(82)
Total real estate – 1-4 family mortgage	(170)		83		(193)		(326)
Real estate – commercial mortgage:
Owner-occupied	(36)		18		490		(98)
Non-owner occupied	1,951		(24)		1,949		(14)
Land development	(9)		—		(166)		24
Total real estate – commercial mortgage	1,906		(6)		2,273		(88)
Total net charge-offs of loans secured by real estate	$	1,736	$	77	$	2,080	$	(375)

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,	2022		2021
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	19,935	$	20,535

Provision for (recovery of provision for) credit losses on unfunded loan commitments (included in other noninterest expense)	—		(200)
Ending balance	$	19,935	$	20,335

Nine Months Ended September 30,	2022		2021
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	20,035	$	20,535

Recovery of provision for credit losses on unfunded loan commitments (included in other noninterest expense)	(100)		(200)
Ending balance	$	19,935	$	20,335

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

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

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


	Non Purchased		Purchased		Total
September 30, 2022
Nonaccruing loans	$	42,332	$	11,946	$	54,278
Accruing loans past due 90 days or more	137		1,450		1,587
Total nonperforming loans	42,469		13,396		55,865
Other real estate owned	867		1,545		2,412


Total nonperforming assets	$	43,336	$	14,941	$	58,277
Nonperforming loans to total loans					0.50		%
Nonaccruing loans to total loans					0.49		%
Nonperforming assets to total assets					0.35		%

December 31, 2021
Nonaccruing loans	$	30,751	$	18,613	$	49,364
Accruing loans past due 90 days or more	1,074		367		1,441
Total nonperforming loans	31,825		18,980		50,805
Other real estate owned	951		1,589		2,540


Total nonperforming assets	$	32,776	$	20,569	$	53,345
Nonperforming loans to total loans					0.51		%
Nonaccruing loans to total loans					0.49		%
Nonperforming assets to total assets					0.32		%

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


	September 30, 2022		December 31, 2021		September 30, 2021
Commercial, financial, agricultural	$	5,299	$	13,131	$	16,027
Lease financing	—		11		11
Real estate – construction:
Residential	232		—		—
Commercial	1		—		—
Total real estate – construction	233		—		—
Real estate – 1-4 family mortgage:
Primary	25,130		19,533		17,378
Home equity	1,842		1,719		2,041
Rental/investment	1,240		1,595		1,016
Land development	1,448		257		243
Total real estate – 1-4 family mortgage	29,660		23,104		20,678
Real estate – commercial mortgage:
Owner-occupied	8,554		5,039		5,732
Non-owner occupied	11,725		8,535		13,412
Land development	93		470		366
Total real estate – commercial mortgage	20,372		14,044		19,510
Installment loans to individuals	301		515		514

Total nonperforming loans	$	55,865	$	50,805	$	56,740

Total nonperforming loans as a percentage of total loans were 0.50% as of September 30, 2022 as compared to 0.51% and 0.57% as of December 31, 2021 and September 30, 2021, respectively. The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 312.10% as of September 30, 2022 as compared to 323.14% as of December 31, 2021 and 299.68% as of September 30, 2021.

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, 2022. Management also continually monitors past due loans for potential credit quality deterioration. Total loans 30-89 days past due but still accruing interest were $26,103, or 0.25% of total loans, at September 30, 2022 as compared to $27,604, or 0.26% of total loans, at December 31, 2021 and $14,806, or 0.15% of total loans, at September 30, 2021.

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 $27,669 at September 30, 2022 as compared to $20,259 at December 31, 2021 and $20,183 at September 30, 2021. At September 30, 2022, loans restructured through interest rate concessions represented 15% of total restructured loans, while loans restructured by a concession in payment terms represented the remainder. The following table provides further details of the Company’s restructured loans in compliance with their modified terms as of the dates presented:

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	September 30, 2022		December 31, 2021		September 30, 2021
Commercial, financial, agricultural	$	5,232	$	967	$	1,062





Real estate – 1-4 family mortgage:
Primary	10,688		11,750		11,415
Home equity	157		298		299
Rental/investment	238		350		354
Land development	90		—		—
Total real estate – 1-4 family mortgage	11,173		12,398		12,068
Real estate – commercial mortgage:
Owner-occupied	3,623		5,407		5,546
Non-owner occupied	7,515		1,341		1,357
Land development	72		75		76
Total real estate – commercial mortgage	11,210		6,823		6,979
Installment loans to individuals	54		71		74
Total restructured loans in compliance with modified terms	$	27,669	$	20,259	$	20,183

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


	2022		2021
Balance at January 1,	$	20,259	$	20,448
Additional advances or loans with concessions	9,150		10,852
Reclassified as performing restructured loan	5,290		150
Reductions due to:
Reclassified as nonperforming	(2,076)		(2,855)
Paid in full	(3,971)		(7,341)

Charge-offs	—		(205)

Paydowns	(984)		(866)

Balance at September 30,	$	27,668	$	20,183

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, 2022		December 31, 2021		September 30, 2021
Nonaccruing loans	$	54,278	$	49,364	$	55,758
Accruing loans past due 90 days or more	1,587		1,441		982
Total nonperforming loans	55,865		50,805		56,740
Restructured loans in compliance with modified terms	27,669		20,259		20,183
Total nonperforming and restructured loans	$	83,534	$	71,064	$	76,923

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

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	September 30, 2022		December 31, 2021		September 30, 2021
Residential real estate	$	913	$	259	$	503
Commercial real estate	62		761		2,671
Residential land development	246		305		315
Commercial land development	1,191		1,215		1,216

Total other real estate owned	$	2,412	$	2,540	$	4,705

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


	2022		2021
Balance at January 1,	$	2,540	$	5,972

Transfers of loans	1,828		3,171

Impairments	(110)		(290)
Dispositions	(1,847)		(4,007)
Other	1		(141)
Balance at September 30,	$	2,412	$	4,705

Other real estate owned with a cost basis of $1,847 was sold during the nine months ended September 30, 2022, resulting in a net gain of $611, while 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.

Interest Rate Risk

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

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

Net interest income forecast 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 future 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, 2022, in each case as compared to the result under rates present in the market on September 30, 2022. The changes in interest rates assume an instantaneous and parallel shift in the yield curve and do not account for changes in the slope of the yield curve.

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	Percentage Change In:
Immediate Change in Rates of (in basis points):	Economic Value Equity (EVE)	Earning at Risk (Net Interest Income)
	Static	1-12 Months	13-24 Months
+400	4.77%	17.57%	23.58%
+300	4.10%	13.40%	17.88%
+200	3.02%	9.25%	12.27%
+100	1.74%	4.72%	6.25%
-100	(4.62)%	(6.77)%	(8.90)%
-200	(12.51)%	(15.06)%	(19.96)%
-300	(23.15)%	(23.25)%	(32.22)%

The rate shock results for the net interest income simulations for the next 24 months produce an asset sensitive position at September 30, 2022. 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, 200, 300 and 400 and minus 100, 200 and 300 basis points. 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, collars, caps and/or floors, forward commitments, and interest rate lock commitments, as part of its ongoing efforts to mitigate its interest rate risk exposure. For more information about the Company’s derivatives, see the information under the heading “Loan Commitments and Other Off-Balance Sheet Arrangements” in the Liquidity and Capital Resources section below and 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 ALCO.

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 17.28% 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, 2022, securities with a carrying value of $821,633 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 $629,174 similarly pledged at December 31, 2021.

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 $300,000 in short-term borrowings from the FHLB at September 30, 2022, as compared to no such borrowings at December 31, 2021. 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, 2022, there were no outstanding long-term advances with the FHLB as compared to $417 at December 31, 2021. The total amount of the remaining credit available to us from the FHLB at September 30, 2022 was $3,818,637. We also maintain lines of credit with other commercial banks totaling

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$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, 2022 or December 31, 2021.

Finally, we can access the capital markets to meet liquidity needs, as we did in 2016, 2020 and 2021 in the form of subordinated notes. 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 carrying value of the subordinated notes, net of unamortized debt issuance costs, was $315,014 at September 30, 2022. We redeemed $30,000 of subordinated notes in the first quarter of 2022.

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


	Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Noninterest-bearing demand	33.27	%	31.60	%	—	%	—	%
Interest-bearing demand	45.96		45.75		0.27		0.26
Savings	7.88		7.17		0.05		0.08
Time deposits	9.15		11.85		0.42		0.90
Short-term borrowings	0.66		0.10		0.98		0.30
Long-term Federal Home Loan Bank advances	—		1.14		1.88		0.03
Subordinated notes	2.30		1.56		4.39		4.97
Other borrowed funds	0.78		0.83		4.66		4.27
Total deposits and borrowed funds	100.00	%	100.00	%	0.31	%	0.34	%

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 $479,500 at September 30, 2022, as compared to $1,476,141 at September 30, 2021. Cash used in investing activities for the nine months ended September 30, 2022 was $1,587,457, as compared to cash used in investing activities of $372,260 for the nine months ended September 30, 2021. Proceeds from the sale, maturity or call of securities within our investment portfolio were $372,484 for the nine months ended September 30, 2022, as compared to $505,926 for the same period in 2021. These proceeds were primarily reinvested into the investment portfolio or, during 2022, used to fund loan growth. Purchases of investment securities were $800,260 for the first nine months of 2022, as compared to $1,743,105 for the same period in 2021.

Cash used in financing activities for the nine months ended September 30, 2022 was $274,115, as compared to cash provided by financing activities of $1,125,027 for the same period in 2021. Deposits decreased $473,600 and increased $1,195,748 for the nine months ended September 30, 2022 and 2021, 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 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

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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, 2022, the maximum amount available for transfer from the Bank to the Company in the form of loans was $178,938. 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, 2022.

These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the nine months ended September 30, 2022, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.

Loan Commitments and Other Off-Balance Sheet Arrangements

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

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


	September 30, 2022		December 31, 2021
Loan commitments	$	3,476,743	$	3,104,940
Standby letters of credit	98,075		89,830

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 also reviews these commitments as part of its analysis of loan concentrations within the loan portfolio. 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.

The Company utilizes derivative financial instruments, including interest rate contracts such as swaps, collars, 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, 2022, the Company had notional amounts of $223,569 on interest rate contracts with corporate customers and $223,569 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts and certain fixed rate loans.

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

The Company also enters into forward interest rate swap contracts on its FHLB borrowings and its junior subordinated debentures that are accounted for as cash flow hedges. Under each of these contracts, the Company pays a fixed rate of interest and receives a variable rate of interest based on the three-month or one-month LIBOR plus a predetermined spread. The Company entered into an interest rate swap contract on its subordinated notes that is accounted for as a fair value hedge. Under this contract, the Company pays a variable rate of interest based on the three-month LIBOR plus a predetermined spread and receives a fixed rate of interest. Additionally, the Company entered into an interest rate collar on forecasted borrowings in June 2022 with a 2.25% floor and 4.57% cap, which is accounted for as a cash flow hedge. The Company entered into a second interest rate collar in October 2022 with a 2.75% floor and 4.75% cap. The collar hedging strategy stabilizes interest rate fluctuation by setting both a floor and a cap.

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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.

Shareholders’ Equity and Regulatory Matters

Total shareholders’ equity of the Company was $2,092,281 at September 30, 2022 compared to $2,209,853 at December 31, 2021. Book value per share was $37.39 and $39.63 at September 30, 2022 and December 31, 2021, respectively. The decrease in shareholders’ equity was attributable to changes in accumulated other comprehensive income and dividends declared, partially offset by current period earnings.

On October 26, 2021, the Company’s Board of Directors approved a stock repurchase program, authorizing the Company to repurchase up to $50,000 of its outstanding common stock, which expired in October 2022 and was replaced with a new stock repurchase program, authorizing the Company to repurchase up to $100,000 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 did not repurchase any of its common stock under the stock repurchase plan in the first nine months of 2022.

The Company has junior subordinated debentures with a carrying value of $111,807 at September 30, 2022, of which $108,216 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, 2022. 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 we make any acquisition of a financial institution now that 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 par value of $340,000 at September 30, 2022, of which $335,657 is included in the Company’s Tier 2 capital.

Capital Tiers

Tier 1 Capital to
Average Assets
(Leverage)

Common Equity Tier 1 to
Risk - Weighted Assets

Tier 1 Capital to
Risk - Weighted
Assets

Total Capital to
Risk - Weighted
Assets

Well capitalized

5% or above

6.5% or above

8% or above

10% or above

Adequately capitalized

4% or above

4.5% or above

6% or above

8% or above

Undercapitalized

Less than 4%

Less than 4.5%

Less than 6%

Less than 8%

Significantly undercapitalized

Less than 3%

Less than 4%

Less than 6%

Critically undercapitalized

Tangible Equity / Total Assets less than 2%

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


	Actual				Minimum Capital Requirement to be Well Capitalized				Minimum Capital Requirement to be Adequately Capitalized (including the Capital Conservation Buffer)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2022
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,385,489	10.64	%	$	846,403	6.50	%	$	911,511	7.00	%
Tier 1 risk-based capital ratio	1,493,705		11.47	%	1,041,727		8.00	%	1,106,835		8.50	%
Total risk-based capital ratio	1,973,206		15.15	%	1,302,159		10.00	%	1,367,267		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,493,705		9.39	%	795,621		5.00	%	636,497		4.00	%

Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,645,539	12.61	%	$	848,358	6.50	%	$	913,616	7.00	%
Tier 1 risk-based capital ratio	1,645,539		12.61	%	1,044,132		8.00	%	1,109,391		8.50	%
Total risk-based capital ratio	1,789,382		13.71	%	1,305,165		10.00	%	1,370,424		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,645,539		10.34	%	795,852		5.00	%	636,681		4.00	%

December 31, 2021
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,314,295	11.18	%	$	763,952	6.50	%	$	822,717	7.00	%
Tier 1 risk-based capital ratio	1,422,077		12.10	%	940,248		8.00	%	999,014		8.50	%
Total risk-based capital ratio	1,897,167		16.14	%	1,175,610		10.00	%	1,234,076		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,422,077		9.15	%	777,289		5.00	%	621,831		4.00	%

Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	1,580,904	13.46	%	$	763,713	6.50	%	$	822,460	7.00	%
Tier 1 risk-based capital ratio	1,580,904		13.46	%	939,954		8.00	%	998,702		8.50	%
Total risk-based capital ratio	1,697,163		14.44	%	1,174,943		10.00	%	1,233,690		10.50	%
Leverage capital ratios:
Tier 1 leverage ratio	1,580,904		10.18	%	776,700		5.00	%	621,360		4.00	%

The Company 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. The three-year transitional period began on January 1, 2022.

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.

Critical Accounting Estimates

We have identified certain accounting estimates that involve significant judgment and estimates which can have a material impact on our financial condition or results of operations. Our accounting policies are more fully described in Note 1,

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“Significant Accounting Policies,” in the Notes to Consolidated Financial Statements of the Company in Item 8, Financial Statements and Supplementary Data, in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022. Actual amounts and values as of the balance sheet dates may be materially different than the amounts and values reported due to the inherent uncertainty in the estimation process. Also, future amounts and values could differ materially from those estimates due to changes in values and circumstances after the balance sheet date.

The critical accounting estimates that we believe to be the most critical in preparing our consolidated financial statements relate to the allowance for credit losses and acquisition accounting, which are described under “Critical Accounting Policies and Estimates” 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, 2021. Since December 31, 2021, there have been no material changes in these critical accounting estimates.

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, among others, merger and conversion related expenses, COVID-19 related expenses and a recovery of a portion of the reserve for unfunded commitments, gains on sales of securities and mortgage servicing rights 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 gains from the sale of mortgage servicing rights 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.

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Adjusted Efficiency Ratio
	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Interest income (fully tax equivalent basis)	$	145,250		$	115,723		$	382,421		$	361,718
Interest expense	12,815			10,721			33,282			34,247
Net interest income (fully tax equivalent basis)	132,435			105,002			349,139			327,471

Total noninterest income	41,186			50,755			115,858			179,402
Net gains on sales of securities	—			764			—			2,121
MSR valuation adjustment	—			—			—			13,561
Gain on sale of MSR	2,960			—			2,960			—
Adjusted noninterest income	38,226			49,991			112,898			163,720

Total noninterest expense	101,574			103,999			293,873			328,711
Intangible amortization	1,251			1,481			3,927			4,618
Merger and conversion related expenses	—			—			687			—

Restructuring (benefit) charges	—			—			732			307
COVID-19 related expenses	—			323			—			1,478
Partial recovery of reserves for unfunded commitments	—			(200)			(100)			(200)
Adjusted noninterest expense	100,323			102,395			288,627			322,508

Efficiency Ratio (GAAP)	58.50		%	66.77		%	63.20		%	64.85		%
Adjusted Efficiency Ratio (non-GAAP)	58.78		%	66.06		%	62.47		%	65.66		%


Allowance for Credit Losses on Loans to Total Loans, excluding PPP Loans
	September 30, 2022			December 31, 2021
Total loans (GAAP)	$	11,105,004		$	10,020,914
Less PPP loans	5,476			58,391
Adjusted total loans (non-GAAP)	$	11,099,528		$	9,962,523

Allowance for Credit Losses on Loans	$	174,356		$	164,171
ACL/Total loans (GAAP)	1.57		%	1.64		%
ACL/Total loans excluding PPP loans (non-GAAP)	1.57		%	1.65		%

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, 2021. For additional information regarding our market risk, see our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022.

Item 4. CONTROLS AND PROCEDURES

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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 was no change in the Company’s internal control over financial reporting during the fiscal quarter covered by this quarterly report that has materially affected, or is 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, 2021. There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2022.

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, 2022, 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 of Shares or Approximate Dollar Value of Shares That May Yet Be Purchased Under Share Repurchase Plans (2)
July 1, 2022 to July 31, 2022	5,840	$	30.80	—	$	50,000
August 1, 2022 to August 31, 2022	2,993	33.40		—	50,000
September 1, 2022 to September 30, 2022	64	33.23		—	50,000
Total	8,897	$	31.69	—

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

The Company announced a $50.0 million stock repurchase program in October 2021 under which the Company was authorized to repurchase outstanding shares of its common stock either in open market purchases or privately-negotiated transactions. No shares were repurchased during the third quarter of 2022 under this plan, which expired in October 2022 and was replaced with a $100.0 million stock repurchase program approved in October 2022. This new plan will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased.

(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)

(3)(iv)						Articles of Amendment to the Amended and Restated Bylaws of Renasant Corporation (4)

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

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

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

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

(101)						The following materials from Renasant Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 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, 2022, formatted in Inline XBRL (included in Exhibit 101).

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

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

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

(4) Filed as exhibit 3(ii) to the Form 8-K of the Company filed with the Commission on January 28, 2022 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 4, 2022	/s/ C. Mitchell Waycaster
		C. Mitchell Waycaster
		President and
		Chief Executive Officer
		(Principal Executive Officer)

Date:	November 4, 2022	/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) (3)(iv) Articles of Amendment to the Amended and Restated Bylaws of Renasant Corporation(4) (31)(i) Certification of the Principal Executive Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)(ii) Certification of the Principal Financial Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (32)(i) Certification of the Principal Executive Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (32)(ii) Certification of the Principal Financial Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

RNST 10-Q Quarter ended Sept. 30, 2022

Exhibits