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RENASANT CORP - Quarter Report: 2021 September (Form 10-Q)

Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________________________
FORM 10-Q
 ________________________________________________________
(Mark One)
☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021
Or
☐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 CORPORATION
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $5.00 par value per shareRNSTThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Table of Contents
As of October 29, 2021, 55,747,407 shares of the registrant’s common stock, $5.00 par value per share, were outstanding.

Table of Contents
Renasant Corporation and Subsidiaries
Form 10-Q
For the Quarterly Period Ended September 30, 2021
CONTENTS
 
  Page
PART I
Item 1.
Consolidated Balance Sheets
Item 2.
Item 3.
Item 4.
PART II
Item 1A.
Item 2.
Item 6.

Table of Contents


PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries
Consolidated Balance Sheets

(In Thousands, Except Share Data)
(Unaudited)
September 30,
2021		December 31, 2020
Assets
Cash and due from banks$169,474 $176,372 
Interest-bearing balances with banks1,306,667 456,831 
Cash and cash equivalents1,476,141 633,203 
Securities available for sale, at fair value2,544,643 1,343,457 
Loans held for sale, at fair value452,869 417,771 
Loans, net of unearned income:
Non purchased loans and leases8,875,880 9,419,540 
Purchased loans1,140,944 1,514,107 
Total loans, net of unearned income10,016,824 10,933,647 
Allowance for credit losses(170,038)(176,144)
Loans, net9,846,786 10,757,503 
Premises and equipment, net294,499 300,496 
Other real estate owned:
Non purchased2,252 2,045 
Purchased2,453 3,927 
Total other real estate owned, net4,705 5,972 
Goodwill939,683 939,683 
Other intangible assets, net25,522 30,139 
Bank-owned life insurance286,088 230,609 
Mortgage servicing rights86,387 62,994 
Other assets198,227 207,785 
Total assets$16,155,550 $14,929,612 
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing$4,492,650 $3,685,048 
Interest-bearing8,762,179 8,374,033 
Total deposits13,254,829 12,059,081 
Short-term borrowings11,253 21,340 
Long-term debt468,863 474,970 
Other liabilities216,661 241,488 
Total liabilities13,951,606 12,796,879 
Shareholders’ equity
Preferred stock, $0.01 par value – 5,000,000 shares authorized; no shares issued and outstanding
— — 
Common stock, $5.00 par value – 150,000,000 shares authorized; 59,296,725 shares issued; 55,747,407 and 56,200,487 shares outstanding, respectively
296,483 296,483 
Treasury stock, at cost – 3,549,318 and 3,096,238 shares, respectively
(118,288)(101,554)
Additional paid-in capital1,298,022 1,296,963 
Retained earnings717,033 615,773 
Accumulated other comprehensive income, net of taxes10,694 25,068 
Total shareholders’ equity2,203,944 2,132,733 
Total liabilities and shareholders’ equity$16,155,550 $14,929,612 
See Notes to Consolidated Financial Statements.    
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Renasant Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In Thousands, Except Share Data)
Three Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Interest income
Loans$105,004 $114,914 $333,334 $351,192 
Securities
Taxable6,749 5,499 17,285 19,219 
Tax-exempt1,667 1,573 5,025 4,697 
Other593 92 1,122 1,098 
Total interest income114,013 122,078 356,766 376,206 
Interest expense
Deposits6,972 11,810 22,920 44,175 
Borrowings3,749 3,982 11,327 13,361 
Total interest expense10,721 15,792 34,247 57,536 
Net interest income103,292 106,286 322,519 318,670 
(Recovery of) provision for loan losses(1,200)23,100 (1,200)76,350 
Provision for other credit losses— — — — 
(Recovery of) provision for credit losses(1,200)23,100 (1,200)76,350 
Net interest income after provision for credit losses104,492 83,186 323,719 242,320 
Noninterest income
Service charges on deposit accounts9,337 7,486 26,818 23,388 
Fees and commissions3,837 3,402 11,847 9,427 
Insurance commissions2,829 2,681 7,488 6,797 
Wealth management revenue5,371 4,364 15,182 12,190 
Mortgage banking income23,292 49,714 94,878 110,739 
Net gain on sales of securities764 — 2,121 31 
BOLI income1,602 1,267 5,318 3,759 
Other3,723 2,014 15,750 6,337 
Total noninterest income50,755 70,928 179,402 172,668 
Noninterest expense
Salaries and employee benefits69,115 75,406 218,104 227,956 
Data processing5,277 5,259 16,380 15,312 
Net occupancy and equipment11,748 13,296 35,660 40,927 
Other real estate owned168 1,033 313 2,071 
Professional fees2,972 3,197 8,566 8,355 
Advertising and public relations2,922 2,240 9,274 8,560 
Intangible amortization1,481 1,733 4,618 5,462 
Communications2,198 2,319 6,781 6,698 
Restructuring charges— — 307 — 
Debt prepayment penalty— 28 — 118 
Other8,118 11,999 28,708 34,377 
Total noninterest expense103,999 116,510 328,711 349,836 
Income before income taxes51,248 37,604 174,410 65,152 
Income taxes11,185 7,612 35,572 13,022 
Net income$40,063 $29,992 $138,838 $52,130 
Basic earnings per share$0.71 $0.53 $2.47 $0.93 
Diluted earnings per share$0.71 $0.53 $2.46 $0.92 
Cash dividends per common share$0.22 $0.22 $0.66 $0.66 
See Notes to Consolidated Financial Statements.
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Renasant Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
(In Thousands)
 
Three Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Net income$40,063 $29,992 $138,838 $52,130 
Other comprehensive income, net of tax:
Securities available for sale:
Unrealized holding (losses) gains on securities(9,250)388 (20,491)19,685 
Reclassification adjustment for gains realized in net income(570)— (1,582)(23)
Total securities available for sale(9,820)388 (22,073)19,662 
Derivative instruments:
Unrealized holding gains (losses) on derivative instruments1,215 1,175 7,551 (2,621)
Total derivative instruments1,215 1,175 7,551 (2,621)
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost49 48 148 145 
Total defined benefit pension and post-retirement benefit plans49 48 148 145 
Other comprehensive (loss) income, net of tax(8,556)1,611 (14,374)17,186 
Comprehensive income$31,507 $31,603 $124,464 $69,316 

See Notes to Consolidated Financial Statements.
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Renasant Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)

(In Thousands, Except Share Data)

Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Nine Months Ended September 30, 2021SharesAmount
Balance at January 1, 202156,200,487 $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 income52,979 
Cash dividends ($0.22 per share)
— — — — (12,564)— (12,564)
Issuance of common stock for stock-based compensation awards93,859 — 2,605 (4,808)— — (2,203)
Stock-based compensation expense— — — 2,756 — — 2,756 
Balance at March 31, 202156,294,346 $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 income39,978 
Cash dividends ($0.22 per share)
— — — — (12,540)— (12,540)
Issuance of common stock for stock-based compensation awards56,532 — 1,700 (1,417)— — 283 
Stock-based compensation expense— — — 2,385 — — 2,385 
Balance at June 30, 202156,350,878 $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 income31,507 
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 awards8,636 — 275 (451)— — (176)
Stock-based compensation expense— — — 2,594 — — 2,594 
Balance at September 30, 202155,747,407 $296,483 $(118,288)$1,298,022 $717,033 $10,694 $2,203,944 
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Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive IncomeTotal
Nine Months Ended September 30, 2020SharesAmount
Balance at January 1, 202056,855,002 $296,483 $(83,189)$1,294,276 $617,355 $764 $2,125,689 
Cumulative effect adjustment due to the adoption of ASU 2016-13
— — — — (35,099)— (35,099)
Net income— — — — 2,008 — 2,008 
Other comprehensive income— — — — — 13,737 13,737 
Comprehensive income15,745 
Cash dividends ($0.22 per share)
— — — — (12,555)— (12,555)
Repurchase of shares in connection with stock repurchase program(818,886)— (24,569)— — — (24,569)
Issuance of common stock for stock-based compensation awards104,902 — 4,138 (5,587)— — (1,449)
Stock-based compensation expense— — — 2,750 — — 2,750 
Balance at March 31, 202056,141,018 $296,483 $(103,620)$1,291,439 $571,709 $14,501 $2,070,512 
Net income— — — — 20,130 — 20,130 
Other comprehensive income— — — — — 1,838 1,838 
Comprehensive income21,968 
Cash dividends ($0.22 per share)
— — — — (12,525)— (12,525)
Issuance of common stock for stock-based compensation awards40,944 — 1,397 (1,404)— — (7)
Stock-based compensation expense— — — 2,998 — — 2,998 
Balance at June 30, 202056,181,962 $296,483 $(102,223)$1,293,033 $579,314 $16,339 $2,082,946 
Net income— — — — 29,992 — 29,992 
Other comprehensive income— — — — — 1,611 1,611 
Comprehensive income31,603 
Cash dividends ($0.22 per share)
— — — — (12,527)— (12,527)
Issuance of common stock for stock-based compensation awards11,743 — 423 (550)— — (127)
Stock-based compensation expense— — — 2,405 — — 2,405 
Balance at September 30, 202056,193,705 $296,483 $(101,800)$1,294,888 $596,779 $17,950 $2,104,300 

See Notes to Consolidated Financial Statements.
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Renasant Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 Nine Months Ended September 30,
 20212020
Operating activities
Net income$138,838 $52,130 
Adjustments to reconcile net income to net cash provided by operating activities:
(Recovery of) provision for credit losses(1,200)76,350 
Depreciation, amortization and accretion34,421 22,727 
Deferred income tax expense (benefit)5,071 (8,494)
Funding of mortgage loans held for sale(3,189,474)(3,277,576)
Proceeds from sales of mortgage loans held for sale3,230,039 3,310,402 
Gains on sales of mortgage loans held for sale(71,598)(114,327)
Valuation adjustment to mortgage servicing rights(13,561)13,694 
Gains on sales of securities(2,121)(31)
Penalty on prepayment of debt— 118 
(Gains) losses on sales of premises and equipment(519)35 
Stock-based compensation expense7,736 8,153 
Increase in other assets(16,429)(87,405)
(Decrease) increase in other liabilities(31,032)48,269 
Net cash provided by operating activities90,171 44,045 
Investing activities
Purchases of securities available for sale(1,743,105)(304,955)
Proceeds from sales of securities available for sale176,406 8,773 
Proceeds from call/maturities of securities available for sale329,520 314,363 
Net decrease (increase) in loans917,343 (1,383,382)
Purchases of premises and equipment(16,797)(6,824)
Proceeds from sales of premises and equipment8,715 — 
Purchase of bank-owned life insurance(50,000)— 
Net change in FHLB stock(1,226)10,607 
Proceeds from sales of other assets4,081 6,020 
Other, net2,803 — 
Net cash used in investing activities(372,260)(1,355,398)
Financing activities
Net increase in noninterest-bearing deposits807,602 1,206,472 
Net increase in interest-bearing deposits388,146 514,646 
Net decrease in short-term borrowings(10,087)(446,467)
Proceeds from the issuance of long-term debt, net of issuance costs— 98,299 
Repayment of long-term debt(1,742)(246)
Cash paid for dividends(37,578)(37,607)
Repurchase of shares in connection with stock repurchase program(21,314)(24,569)
Net cash provided by financing activities1,125,027 1,310,528 
Net increase (decrease) in cash and cash equivalents842,938 (825)
Cash and cash equivalents at beginning of period633,203 414,930 
Cash and cash equivalents at end of period$1,476,141 $414,105 
Supplemental disclosures
Cash paid for interest$37,827 $61,351 
Cash paid for income taxes$41,248 $26,148 
Noncash transactions:
Transfers of loans to other real estate owned$3,171 $7,887 
Financed sales of other real estate owned$442 $151 
Recognition of operating right-of-use assets$6,718 $4,151 
Recognition of operating lease liabilities$6,718 $4,151 

See Notes to Consolidated Financial Statements.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies

(In Thousands)
Nature of Operations: Renasant Corporation (referred to herein as the “Company”) owns and operates Renasant Bank (“Renasant Bank” or the “Bank”), Renasant Insurance, Inc. and Park Place Capital Corporation. Through its subsidiaries, the Company offers a diversified range of financial, wealth management, fiduciary and insurance services to its retail and commercial customers from full service offices located throughout Mississippi, Tennessee, Alabama, Georgia, Florida, North Carolina and South Carolina.
Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on February 26, 2021.
Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material.

Impact of Recently-Issued Accounting Standards and Pronouncements:
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 842): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides temporary, optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions if certain criteria are met that reference LIBOR or another reference rate expected to be discontinued. As the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect only from March 12, 2020 through December 31, 2022. The Company has established a LIBOR Transition Committee and is currently evaluating the impact of adopting ASU 2020-04 on the Company’s financial statements.
Subsequent Events:
On October 1, 2021, the Company redeemed at par $15,000 of 6.50% Fixed-to-Floating Rate Subordinated Notes that were assumed as part of the Metropolitan BancGroup, Inc. acquisition in 2017.

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

On October 27, 2021, the Bank terminated swaps with a total notional amount of $100,000. These swaps hedged forecasted future FHLB borrowings which are no longer forecasted to occur. As a result of the termination the Company recognized a gain of $4,730.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 2 – Securities
(In Thousands, Except Number of Securities)

The amortized cost and fair value of securities available for sale were as follows as of the dates presented in the tables below. There was no allowance for credit losses allocated to any of the Company’s available for sale securities as of September 30, 2021 or December 31, 2020.
 
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
September 30, 2021
U.S. Treasury securities$3,014 $10 $— $3,024 
Obligations of states and political subdivisions372,311 9,096 (2,426)378,981 
Residential mortgage backed securities:
Government agency mortgage backed securities935,233 11,694 (3,689)943,238 
Government agency collateralized mortgage obligations962,684 1,225 (6,172)957,737 
Commercial mortgage backed securities:
Government agency mortgage backed securities16,650 515 (1)17,164 
Government agency collateralized mortgage obligations191,554 1,316 (2,338)190,532 
Other debt securities51,321 2,646 — 53,967 
$2,532,767 $26,502 $(14,626)$2,544,643 
 
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
December 31, 2020
U.S. Treasury securities$7,047 $32 $— $7,079 
Obligations of other U.S. Government agencies and corporations1,003 6 — 1,009 
Obligations of states and political subdivisions291,231 14,015 (45)305,201 
Residential mortgage backed securities:
Government agency mortgage backed securities581,105 21,564 (23)602,646 
Government agency collateralized mortgage obligations218,373 1,946 (51)220,268 
Commercial mortgage backed securities:
Government agency mortgage backed securities29,053 1,235 (1)30,287 
Government agency collateralized mortgage obligations99,377 2,992 (21)102,348 
Trust preferred securities12,013 — (3,001)9,012 
Other debt securities62,771 2,909 (73)65,607 
$1,301,973 $44,699 $(3,215)$1,343,457 


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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Securities sold were as set forth in the tables below. There were no securities sold during the three months ended September 30, 2020.
Carrying ValueNet ProceedsGain/(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 obligations6,736 6,866 130 
Other debt securities4,283 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 securities145,572 149,474 3,902 
Government agency collateralized mortgage obligations12,362 12,512 150 
Trust preferred securities12,021 9,960 (2,061)
Other debt securities4,283 4,410 127 
$174,285 $176,406 $2,121 

Carrying ValueNet ProceedsGain/(Loss)
Nine months ended September 30, 2020
Obligations of states and political subdivisions$2,696 $2,561 $(135)
Residential mortgage backed securities:
Government agency mortgage backed securities6,046 6,212 166 
$8,742 $8,773 $31 

Gross realized gains and losses on sales of securities available for sale for the three and nine months ended September 30, 2021 were as follows:
Three Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Gross gains on sales of securities available for sale$825 $— $4,333 $166 
Gross losses on sales of securities available for sale(61)— (2,212)(135)
Gains on sales of securities available for sale, net$764 $— $2,121 $31 

At September 30, 2021 and December 31, 2020, securities with a carrying value of $536,018 and $582,338, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $21,445 and $32,272 were pledged as collateral for short-term borrowings and derivative instruments at September 30, 2021 and December 31, 2020, respectively.
The amortized cost and fair value of securities at September 30, 2021 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.
 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Available for Sale
 Amortized
Cost		Fair
Value
Due within one year$9,229 $9,334 
Due after one year through five years42,312 44,024 
Due after five years through ten years58,334 61,568 
Due after ten years290,472 293,271 
Residential mortgage backed securities:
Government agency mortgage backed securities935,233 943,238 
Government agency collateralized mortgage obligations962,684 957,737 
Commercial mortgage backed securities:
Government agency mortgage backed securities16,650 17,164 
Government agency collateralized mortgage obligations191,554 190,532 
Other debt securities26,299 27,775 
$2,532,767 $2,544,643 
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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 Months12 Months or MoreTotal
 #Fair
Value		Unrealized
Losses		#Fair
Value		Unrealized
Losses		#Fair
Value		Unrealized
Losses
Available for Sale:
September 30, 2021
Obligations of states and political subdivisions46$145,658 $(2,338)3$3,884 $(88)49$149,542 $(2,426)
Residential mortgage backed securities:
Government agency mortgage backed securities45508,398 (3,689)—— — 45508,398 (3,689)
Government agency collateralized mortgage obligations33726,128 (6,172)—— — 33726,128 (6,172)
Commercial mortgage backed securities:
Government agency mortgage backed securities173,673 (1)1439 — 184,112 (1)
Government agency collateralized mortgage obligations2129,054 (2,303)13,004 (35)3132,058 (2,338)
Total143$1,512,911 $(14,503)5$7,327 $(123)148$1,520,238 $(14,626)
December 31, 2020
Obligations of states and political subdivisions6$9,403 $(45)—$— $— 6$9,403 $(45)
Residential mortgage backed securities:
Government agency mortgage backed securities219,755 (23)—— — 219,755 (23)
Government agency collateralized mortgage obligations527,143 (51)—— — 527,143 (51)
Commercial mortgage backed securities:
Government agency mortgage backed securities11,538 (1)1459 — 21,997 (1)
Government agency collateralized mortgage obligations314,190 (21)—— — 314,190 (21)
Trust preferred securities—— — 29,012 (3,001)29,012 (3,001)
Other debt securities43,330 (70)1566 (3)53,896 (73)
Total21$75,359 $(211)4$10,037 $(3,004)25$85,396 $(3,215)
 
The Company evaluates its investment portfolio for impairment related to credit losses on a quarterly basis. Impairment is assessed at the individual security level. The Company considers an investment security impaired if the fair value of the security is less than its cost or amortized cost basis. If the Company intends to sell the investment security or if the Company does not expect to recover the entire amortized cost basis of the security before the Company is required to sell the security or before the security’s maturity, the security is impaired and written down to fair value with all losses recognized in earnings.

The Company does not intend to sell any securities in an unrealized loss position that it holds, and it is not more likely than not that the Company will be required to sell any such security prior to the recovery of its amortized cost basis, which may be at maturity. Furthermore, even though a number of these securities have been in a continuous unrealized loss position for a period longer than twelve months, the Company is collecting principal and interest payments from the respective issuers as scheduled. As a result, no allowance for credit losses for securities was needed at September 30, 2021.


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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 3 – Non Purchased Loans
(In Thousands, Except Number of Loans)

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

The following is a summary of non purchased loans and leases as of the dates presented:
 
September 30,
2021		December 31, 2020
Commercial, financial, agricultural(1)
$1,321,569 $2,360,471 
Lease financing83,496 80,022 
Real estate – construction:
Residential306,537 243,814 
Commercial779,766 583,338 
Total real estate – construction1,086,303 827,152 
Real estate – 1-4 family mortgage:
Primary1,657,195 1,536,181 
Home equity424,860 432,768 
Rental/investment268,609 264,436 
Land development133,732 123,179 
Total real estate – 1-4 family mortgage2,484,396 2,356,564 
Real estate – commercial mortgage:
Owner-occupied1,365,288 1,334,765 
Non-owner occupied2,323,135 2,194,739 
Land development106,475 120,125 
Total real estate – commercial mortgage3,794,898 3,649,629 
Installment loans to individuals109,499 149,862 
Gross loans8,880,161 9,423,700 
Unearned income(4,281)(4,160)
Loans, net of unearned income$8,875,880 $9,419,540 

(1)Includes Paycheck Protection Program (“PPP”) loans of $67,462 and $1,128,703 as of September 30, 2021 and December 31, 2020, respectively.

Past Due and Nonaccrual Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, the recognition of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer and other retail loans are typically charged-off no later than the time the loan is 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. All interest accrued for the current year, but not collected, for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
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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 LoansNonaccruing Loans 
 30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		Total
Loans
September 30, 2021
Commercial, financial, agricultural$1,708 $395 $1,313,683 $1,315,786 $414 $2,534 $2,835 $5,783 $1,321,569 
Lease financing— — 83,485 83,485 — 11 — 11 83,496 
Real estate – construction:
Residential853 — 305,684 306,537 — — — — 306,537 
Commercial— — 779,766 779,766 — — — — 779,766 
Total real estate – construction853 — 1,085,450 1,086,303 — — — — 1,086,303 
Real estate – 1-4 family mortgage:
Primary5,583 452 1,639,206 1,645,241 981 5,951 5,022 11,954 1,657,195 
Home equity1,225 — 422,897 424,122 61 502 175 738 424,860 
Rental/investment301 22 267,420 267,743 — 383 483 866 268,609 
Land development125 33 133,376 133,534 — 119 79 198 133,732 
Total real estate – 1-4 family mortgage7,234 507 2,462,899 2,470,640 1,042 6,955 5,759 13,756 2,484,396 
Real estate – commercial mortgage:
Owner-occupied609 2 1,360,882 1,361,493 — 1,052 2,743 3,795 1,365,288 
Non-owner occupied167 4 2,317,375 2,317,546 — 13 5,576 5,589 2,323,135 
Land development273 — 106,088 106,361 — 114 — 114 106,475 
Total real estate – commercial mortgage1,049 6 3,784,345 3,785,400 — 1,179 8,319 9,498 3,794,898 
Installment loans to individuals765 — 108,516 109,281 79 34 105 218 109,499 
Unearned income— — (4,281)(4,281)— — — — (4,281)
Loans, net of unearned income$11,609 $908 $8,834,097 $8,846,614 $1,535 $10,713 $17,018 $29,266 $8,875,880 
 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Accruing LoansNonaccruing Loans 
 30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		Total
Loans
December 31, 2020
Commercial, financial, agricultural$1,124 $231 $2,354,716 $2,356,071 $164 $1,804 $2,432 $4,400 $2,360,471 
Lease financing— — 79,974 79,974 — 48 — 48 80,022 
Real estate – construction:
Residential— — 243,317 243,317 — 497 — 497 243,814 
Commercial— — 583,338 583,338 — — — — 583,338 
Total real estate – construction— — 826,655 826,655 — 497 — 497 827,152 
Real estate – 1-4 family mortgage:
Primary11,889 1,754 1,513,716 1,527,359 1,865 2,744 4,213 8,822 1,536,181 
Home equity1,152 360 430,702 432,214 66 111 377 554 432,768 
Rental/investment663 210 263,064 263,937 61 194 244 499 264,436 
Land development97 — 123,051 123,148 — — 31 31 123,179 
Total real estate – 1-4 family mortgage13,801 2,324 2,330,533 2,346,658 1,992 3,049 4,865 9,906 2,356,564 
Real estate – commercial mortgage:
Owner-occupied779 795 1,330,155 1,331,729 — 2,598 438 3,036 1,334,765 
Non-owner occupied922 127 2,191,440 2,192,489 — 2,197 53 2,250 2,194,739 
Land development113 115 119,820 120,048 44 29 4 77 120,125 
Total real estate – commercial mortgage1,814 1,037 3,641,415 3,644,266 44 4,824 495 5,363 3,649,629 
Installment loans to individuals896 191 148,620 149,707 4 117 34 155 149,862 
Unearned income— — (4,160)(4,160)— — — — (4,160)
Loans, net of unearned income$17,635 $3,783 $9,377,753 $9,399,171 $2,204 $10,339 $7,826 $20,369 $9,419,540 

Restructured loans not performing in accordance with their restructured terms that are either contractually 90 days or more past due or placed on nonaccrual status are reported as nonperforming loans. There were no restructured loans contractually 90 days past due or more and still accruing at September 30, 2021 and one restructured loan in the amount of $92 contractually 90 days past due or more and still accruing at September 30, 2020. The outstanding balance of restructured loans on nonaccrual status was $12,411 and $3,703 at September 30, 2021 and September 30, 2020, respectively.
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Restructured Loans
Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and which are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest.
The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end.
Number of
Loans		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment
Three months ended September 30, 2021
Commercial, financial, agricultural1 $30 $30 
Real estate – 1-4 family mortgage:
Primary11 1,518 1,538 
Total12 $1,548 $1,568 
Three months ended September 30, 2020
Commercial, financial, agricultural1 $31 $31 
Real estate – 1-4 family mortgage:
Primary2 201 200 
Rental/investment1 33 32 
Total real estate – 1-4 family mortgage3 234 232 
Real estate – commercial mortgage:
Owner-occupied2 357 357 
Non-owner occupied2 210 210 
Total real estate – commercial mortgage4 567 567 
Total8 $832 $830 
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Number of
Loans		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment
Nine months ended September 30, 2021
Commercial, financial, agricultural7 $5,258 $5,258 
Real estate – 1-4 family mortgage:
Primary23 3,321 3,350 
Real estate – commercial mortgage:
Non-owner occupied1 837 810 
Total31 $9,416 $9,418 
Nine months ended September 30, 2020
Commercial, financial, agricultural7 $1,862 $1,859 
Real estate – 1-4 family mortgage:
Primary17 2,356 2,363 
Rental/investment2 142 142 
Total real estate – 1-4 family mortgage19 2,498 2,505 
Real estate – commercial mortgage:
Owner-occupied3 3,019 2,970 
Non-owner occupied2 210 210 
Land development1 189 189 
Total real estate – commercial mortgage6 3,418 3,369 
Installment loans to individuals2 24 21 
Total34 $7,802 $7,754 
With respect to loans that were restructured during the nine months ended September 30, 2021, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the nine months ended September 30, 2020, $64 have subsequently defaulted, and remain outstanding, as of the date of this report.

Changes in the Company’s restructured loans are set forth in the table below:
 
Number of
Loans		Recorded
Investment
Totals at January 1, 202176 $11,761 
Additional advances or loans with concessions31 9,441 
Reclassified as performing restructured loan1 35 
Reductions due to:
Reclassified as nonperforming(4)(370)
Paid in full(14)(6,031)
Principal paydowns— (645)
Totals at September 30, 202190 $14,191 

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

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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
In response to the economic environment caused by the COVID-19 pandemic, the Company implemented a loan deferral program in the second quarter of 2020 to provide temporary payment relief to both consumer and commercial customers. Any customer current on loan payments, taxes and insurance qualified for an initial 90-day deferral of principal and interest payments. A second 90-day deferral was available to borrowers that remained current on taxes and insurance through the first deferral period and also satisfied underwriting standards established by the Company that analyzed the ability of the borrower to service its loan in accordance with its existing terms in light of the impact of the COVID-19 pandemic on the borrower, its industry and the markets in which it operated. The Company’s loan deferral program complied with the guidance set forth in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and related guidance from the FDIC and other banking regulators. As of September 30, 2021, the Company has discontinued its deferral program but 30 loans with total balances of approximately $3,300 remained on deferral. In accordance with the applicable guidance, none of these loans are considered “restructured loans.”
Credit Quality
For loans with a commercial purpose, internal risk-rating grades are assigned by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the portfolio balances of commercial and commercial real estate secured loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans within the “Pass” grade (reserved for loans with a risk rating between 1 and 4C) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. The “Special Mention” grade (those with a risk rating of 4E) represents a loan where a significant adverse risk-modifying action is anticipated in the near term and, left uncorrected, could result in deterioration of the credit quality of the loan. Loans that migrate toward the “Substandard” grade (those with a risk rating between 5 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to those related loan balances.
The following tables present the Company’s loan portfolio by year of origination and internal risk-rating grades as of the dates presented:
 Term Loans Amortized Cost Basis by Origination Year
 20212020201920182017PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
September 30, 2021
Commercial, Financial, Agricultural$219,635 $300,742 $156,654 $51,385 $23,011 $13,120 $453,330 $2,846 $1,220,723 
Pass218,622 300,504 153,728 49,799 22,140 10,419 449,649 2,047 1,206,908 
Special Mention— 143 2,386 290 635 1,251 458 — 5,163 
Substandard1,013 95 540 1,296 236 1,450 3,223 799 8,652 
Real Estate - Construction$335,332 $404,063 $243,552 $13,876 $— $— $6,136 $5,499 $1,008,458 
Residential$187,482 $32,508 $— $— $— $— $6,136 $5,499 $231,625 
Pass187,482 32,508 — — — — 6,136 5,499 231,625 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Commercial$147,850 $371,555 $243,552 $13,876 $— $— $— $— $776,833 
Pass147,850 371,555 238,899 13,876 — — — — 772,180 
Special Mention— — 4,653 — — — — — 4,653 
Substandard— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$125,762 $73,169 $49,283 $20,751 $17,571 $9,480 $13,409 $525 $309,950 
Primary$7,686 $6,791 $2,769 $3,636 $3,645 $747 $2,901 $— $28,175 
Pass7,686 6,791 2,470 3,636 3,561 731 2,890 — 27,765 
Special Mention— — 117 — — — — — 117 
Substandard— — 182 — 84 16 11 — 293 
Home Equity$768 $303 $— $— $— $— $6,300 $— $7,371 
Pass768 303 — — — — 6,300 — 7,371 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
17
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20212020201920182017PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
Rental/Investment$59,238 $42,994 $23,169 $16,598 $13,706 $8,251 $1,017 $525 $165,498 
Pass59,218 42,646 22,049 16,466 13,515 7,791 1,017 525 163,227 
Special Mention— 250 — — — 74 — — 324 
Substandard20 98 1,120 132 191 386 — — 1,947 
Land Development$58,070 $23,081 $23,345 $517 $220 $482 $3,191 $— $108,906 
Pass58,070 20,687 23,345 517 220 482 3,191 — 106,512 
Special Mention— 2,394 — — — — — — 2,394 
Substandard— — — — — — — — — 
Real Estate - Commercial Mortgage$682,955 $870,341 $674,008 $349,402 $323,092 $440,289 $124,028 $20,904 $3,485,019 
Owner-Occupied$197,995 $283,768 $206,047 $154,453 $129,531 $136,496 $51,478 $9,064 $1,168,832 
Pass197,206 281,580 204,259 150,300 123,413 127,970 51,039 7,327 1,143,094 
Special Mention— 2,188 248 — 1,806 535 424 1,737 6,938 
Substandard789 — 1,540 4,153 4,312 7,991 15 — 18,800 
Non-Owner Occupied$458,535 $566,698 $457,532 $189,762 $190,987 $300,923 $66,342 $11,840 $2,242,619 
Pass456,834 557,835 448,778 176,525 116,126 287,266 66,273 11,840 2,121,477 
Special Mention1,495 8,863 6,739 13,237 55,167 — — — 85,501 
Substandard206 — 2,015 — 19,694 13,657 69 — 35,641 
Land Development$26,425 $19,875 $10,429 $5,187 $2,574 $2,870 $6,208 $— $73,568 
Pass26,154 17,840 10,429 5,146 2,574 2,870 6,208 — 71,221 
Special Mention271 — — — — — — — 271 
Substandard— 2,035 — 41 — — — — 2,076 
Installment loans to individuals$— $— $48 $— $— $— $— $— $48 
Pass— — 48 — — — — — 48 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total loans subject to risk rating$1,363,684 $1,648,315 $1,123,545 $435,414 $363,674 $462,889 $596,903 $29,774 $6,024,198 
Pass1,359,890 1,632,249 1,104,005 416,265 281,549 437,529 592,703 27,238 5,851,428 
Special Mention1,766 13,838 14,143 13,527 57,608 1,860 882 1,737 105,361 
Substandard2,028 2,228 5,397 5,622 24,517 23,500 3,318 799 67,409 

 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
December 31, 2020
Commercial, Financial, Agricultural$1,448,273 $183,627 $76,912 $36,866 $18,124 $15,844 $255,522 $2,449 $2,037,617 
Pass1,447,594 180,979 73,325 31,362 16,308 14,626 250,528 1,562 2,016,284 
Special Mention128 1,952 2,091 3,850 1,416 109 187 — 9,733 
Substandard551 696 1,496 1,654 400 1,109 4,807 887 11,600 
Real Estate - Construction$398,891 $266,471 $52,520 $29,300 $— $— $13,927 $— $761,109 
Residential$154,649 $9,836 $2,114 $— $— $— $13,923 $— $180,522 
Pass154,419 9,339 2,114 — — — 13,923 — 179,795 
Special Mention— — — — — — — — — 
Substandard230 497 — — — — — — 727 
Commercial$244,242 $256,635 $50,406 $29,300 $— $— $4 $— $580,587 
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
Pass244,242 251,937 50,406 29,300 — — 4 — 575,889 
Special Mention— 4,698 — — — — — — 4,698 
Substandard— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$110,246 $78,482 $36,613 $30,018 $13,197 $7,172 $10,658 $1,909 $288,295 
Primary$9,422 $6,691 $3,988 $4,644 $371 $1,060 $629 $— $26,805 
Pass9,422 5,870 3,988 4,644 371 1,045 629 — 25,969 
Special Mention— 125 — — — — — — 125 
Substandard— 696 — — — 15 — — 711 
Home Equity$157 $184 $— $— $— $— $6,051 $— $6,392 
Pass157 184 — — — — 6,051 — 6,392 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Rental/Investment$50,558 $32,656 $27,483 $25,019 $12,620 $5,699 $1,066 $557 $155,658 
Pass50,371 31,724 26,695 24,872 12,439 5,166 1,066 557 152,890 
Special Mention— — — 83 77 133 — — 293 
Substandard187 932 788 64 104 400 — — 2,475 
Land Development$50,109 $38,951 $5,142 $355 $206 $413 $2,912 $1,352 $99,440 
Pass50,109 38,388 5,142 355 203 413 2,912 1,352 98,874 
Special Mention— — — — — — — — — 
Substandard— 563 — — 3 — — — 566 
Real Estate - Commercial Mortgage$967,746 $801,083 $444,205 $402,110 $340,774 $277,789 $76,115 $20,845 $3,330,667 
Owner-Occupied$295,642 $256,807 $199,082 $169,527 $99,540 $85,614 $16,683 $9,733 $1,132,628 
Pass293,851 255,206 193,716 163,358 96,128 83,582 16,043 7,896 1,109,780 
Special Mention1,167 847 — 2,067 228 311 — 1,837 6,457 
Substandard624 754 5,366 4,102 3,184 1,721 640 — 16,391 
Non-Owner Occupied$635,232 $522,998 $237,075 $229,304 $236,347 $189,077 $52,456 $11,112 $2,113,601 
Pass624,289 514,030 237,075 184,673 218,106 175,702 52,456 11,112 2,017,443 
Special Mention9,105 — — 39,007 4,688 10,788 — — 63,588 
Substandard1,838 8,968 — 5,624 13,553 2,587 — — 32,570 
Land Development$36,872 $21,278 $8,048 $3,279 $4,887 $3,098 $6,976 $— $84,438 
Pass34,719 21,278 6,925 3,210 3,274 3,098 6,976 — 79,480 
Special Mention— — 1,123 69 46 — — — 1,238 
Substandard2,153 — — — 1,567 — — — 3,720 
Installment loans to individuals$74 $4 $— $— $— $— $— $16 $94 
Pass74 4 — — — — — 16 94 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total loans subject to risk rating$2,925,230 $1,329,667 $610,250 $498,294 $372,095 $300,805 $356,222 $25,219 $6,417,782 
Pass2,909,247 1,308,939 599,386 441,774 346,829 283,632 350,588 22,495 6,262,890 
Special Mention10,400 7,622 3,214 45,076 6,455 11,341 187 1,837 86,132 
Substandard5,583 13,106 7,650 11,444 18,811 5,832 5,447 887 68,760 

The following tables present the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented:
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20212020201920182017PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
September 30, 2021
Commercial, Financial, Agricultural$20,672 $13,972 $9,042 $5,886 $3,437 $10,986 $36,502 $349 $100,846 
Performing Loans20,672 13,953 9,042 5,886 3,437 10,986 36,494 349 100,819 
Non-Performing Loans— 19 — — — — 8 — 27 
Lease Financing Receivables$24,603 $24,360 $17,486 $8,496 $2,535 $1,735 $— $— $79,215 
Performing Loans24,603 24,360 17,486 8,496 2,533 1,726 — — 79,204 
Non-Performing Loans— — — — 2 9 — — 11 
Real Estate - Construction$43,491 $31,599 $2,666 $— $— $— $89 $— $77,845 
Residential$41,261 $30,985 $2,666 $— $— $— $— $— $74,912 
Performing Loans41,261 30,985 2,666 — — — — — 74,912 
Non-Performing Loans— — — — — — — — — 
Commercial$2,230 $614 $— $— $— $— $89 $— $2,933 
Performing Loans2,230 614 — — — — 89 — 2,933 
Non-Performing Loans— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$476,276 $479,523 $247,128 $189,253 $144,872 $216,510 $417,620 $3,264 $2,174,446 
Primary$435,290 $446,636 $231,955 $172,662 $130,572 $210,490 $1,415 $— $1,629,020 
Performing Loans434,913 446,129 229,184 167,927 128,923 208,295 1,415 — 1,616,786 
Non-Performing Loans377 507 2,771 4,735 1,649 2,195 — — 12,234 
Home Equity$411 $— $123 $360 $— $580 $413,191 $2,824 $417,489 
Performing Loans411 — 123 360 — 505 412,695 2,657 416,751 
Non-Performing Loans— — — — — 75 496 167 738 
Rental/Investment$29,306 $25,081 $13,641 $13,893 $13,045 $5,037 $2,668 $440 $103,111 
Performing Loans29,306 25,081 13,641 13,893 13,042 4,963 2,668 440 103,034 
Non-Performing Loans— — — — 3 74 — — 77 
Land Development$11,269 $7,806 $1,409 $2,338 $1,255 $403 $346 $— $24,826 
Performing Loans11,269 7,806 1,376 2,338 1,176 317 346 — 24,628 
Non-Performing Loans— — 33 — 79 86 — — 198 
Real Estate - Commercial Mortgage$74,534 $68,291 $57,010 $41,371 $35,189 $23,312 $9,742 $430 $309,879 
Owner-Occupied$43,335 $42,497 $37,434 $27,126 $23,562 $17,031 $5,182 $289 $196,456 
Performing Loans43,335 42,497 36,964 27,126 23,562 17,031 5,181 289 195,985 
Non-Performing Loans— — 470 — — — 1 — 471 
Non-Owner Occupied$20,903 $17,143 $14,725 $11,041 $9,657 $5,015 $1,891 $141 $80,516 
Performing Loans20,903 17,143 14,725 11,041 9,657 4,971 1,888 141 80,469 
Non-Performing Loans— — — — — 44 3 — 47 
Land Development$10,296 $8,651 $4,851 $3,204 $1,970 $1,266 $2,669 $— $32,907 
Performing Loans10,296 8,646 4,835 3,204 1,970 1,215 2,669 — 32,835 
Non-Performing Loans— 5 16 — — 51 — — 72 
Installment loans to individuals$37,328 $21,508 $26,714 $8,805 $2,322 $2,162 $10,575 $37 $109,451 
Performing Loans37,267 21,503 26,657 8,781 2,294 2,122 10,575 33 109,232 
Non-Performing Loans61 5 57 24 28 40 — 4 219 
Total loans not subject to risk rating$676,904 $639,253 $360,046 $253,811 $188,355 $254,705 $474,528 $4,080 $2,851,682 
Performing Loans676,466 638,717 356,699 249,052 186,594 252,131 474,020 3,909 2,837,588 
Non-Performing Loans438 536 3,347 4,759 1,761 2,574 508 171 14,094 
20
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
December 31, 2020
Commercial, Financial, Agricultural$33,805 $16,455 $10,381 $6,396 $2,826 $7,201 $245,485 $305 $322,854 
Performing Loans33,794 16,343 10,340 6,026 2,748 7,181 245,059 305 321,796 
Non-Performing Loans11 112 41 370 78 20 426 — 1,058 
Lease Financing Receivables$32,150 $25,270 $10,999 $4,231 $1,040 $2,172 $— $— $75,862 
Performing Loans32,150 25,270 10,999 4,231 992 2,172 — — 75,814 
Non-Performing Loans— — — — 48 — — — 48 
Real Estate - Construction$54,918 $10,334 $295 $153 $— $— $343 $— $66,043 
Residential$53,108 $9,393 $295 $153 $— $— $343 $— $63,292 
Performing Loans53,108 9,393 295 153 — — 343 — 63,292 
Non-Performing Loans— — — — — — — — — 
Commercial$1,810 $941 $— $— $— $— $— $— $2,751 
Performing Loans1,810 941 — — — — — — 2,751 
Non-Performing Loans— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$517,553 $344,643 $261,735 $196,777 $105,216 $212,214 $426,437 $3,694 $2,068,269 
Primary$470,034 $321,155 $239,542 $176,926 $92,195 $207,721 $1,758 $45 $1,509,376 
Performing Loans470,034 318,929 235,816 175,219 91,479 205,530 1,747 45 1,498,799 
Non-Performing Loans— 2,226 3,726 1,707 716 2,191 11 — 10,577 
Home Equity$— $203 $372 $— $45 $799 $421,838 $3,119 $426,376 
Performing Loans— 203 372 — 45 684 421,516 2,642 425,462 
Non-Performing Loans— — — — — 115 322 477 914 
Rental/Investment$34,079 $20,499 $18,319 $17,758 $11,907 $3,356 $2,330 $530 $108,778 
Performing Loans34,079 20,404 18,245 17,595 11,901 3,196 2,330 530 108,280 
Non-Performing Loans— 95 74 163 6 160 — — 498 
Land Development$13,440 $2,786 $3,502 $2,093 $1,069 $338 $511 $— $23,739 
Performing Loans13,440 2,786 3,502 2,062 1,069 338 511 — 23,708 
Non-Performing Loans— — — 31 — — — — 31 
Real Estate - Commercial Mortgage$81,953 $71,063 $56,193 $47,013 $35,801 $15,679 $10,772 $488 $318,962 
Owner-Occupied$48,814 $44,606 $36,661 $30,266 $23,974 $11,608 $5,919 $289 $202,137 
Performing Loans48,814 44,344 36,349 30,097 23,885 11,216 5,904 289 200,898 
Non-Performing Loans— 262 312 169 89 392 15 — 1,239 
Non-Owner Occupied$20,483 $18,585 $14,544 $13,821 $8,068 $3,491 $1,999 $147 $81,138 
Performing Loans20,483 18,460 14,486 13,821 8,068 3,439 1,999 147 80,903 
Non-Performing Loans— 125 58 — — 52 — — 235 
Land Development$12,656 $7,872 $4,988 $2,926 $3,759 $580 $2,854 $52 $35,687 
Performing Loans12,656 7,872 4,988 2,922 3,759 466 2,854 52 35,569 
Non-Performing Loans— — — 4 — 114 — — 118 
Installment loans to individuals$60,133 $57,198 $13,704 $4,019 $2,459 $1,535 $10,661 $59 $149,768 
Performing Loans60,081 57,119 13,611 3,986 2,407 1,535 10,661 21 149,421 
Non-Performing Loans52 79 93 33 52 — — 38 347 
Total loans not subject to risk rating$780,512 $524,963 $353,307 $258,589 $147,342 $238,801 $693,698 $4,546 $3,001,758 
Performing Loans780,449 522,064 349,003 256,112 146,353 235,757 692,924 4,031 2,986,693 
Non-Performing Loans63 2,899 4,304 2,477 989 3,044 774 515 15,065 
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 4 – Purchased Loans
(In Thousands, Except Number of Loans)

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

The following is a summary of purchased loans as of the dates presented:
 
September 30,
2021		December 31, 2020
Commercial, financial, agricultural$114,450 $176,513 
Real estate – construction:
Residential1,288 2,859 
Commercial3,705 28,093 
Total real estate – construction4,993 30,952 
Real estate – 1-4 family mortgage:
Primary150,944 214,770 
Home equity56,692 80,392 
Rental/investment22,507 31,928 
Land development10,204 14,654 
Total real estate – 1-4 family mortgage240,347 341,744 
Real estate – commercial mortgage:
Owner-occupied264,939 323,041 
Non-owner occupied456,102 552,728 
Land development19,791 29,454 
Total real estate – commercial mortgage740,832 905,223 
Installment loans to individuals40,322 59,675 
Loans$1,140,944 $1,514,107 
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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 LoansNonaccruing Loans 
 30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		Total
Loans
September 30, 2021
Commercial, financial, agricultural$183 $1 $104,418 $104,602 $66 $1,640 $8,142 $9,848 $114,450 
Real estate – construction:
Residential— — 1,288 1,288 — — — — 1,288 
Commercial— — 3,705 3,705 — — — — 3,705 
Total real estate – construction— — 4,993 4,993 — — — — 4,993 
Real estate – 1-4 family mortgage:
Primary639 — 145,333 145,972 428 2,360 2,184 4,972 150,944 
Home equity490 — 54,899 55,389 — 813 490 1,303 56,692 
Rental/investment148 26 22,231 22,405 — 54 48 102 22,507 
Land development75 — 10,117 10,192 — — 12 12 10,204 
Total real estate – 1-4 family mortgage1,352 26 232,580 233,958 428 3,227 2,734 6,389 240,347 
Real estate – commercial mortgage:
Owner-occupied624 — 262,380 263,004 — 291 1,644 1,935 264,939 
Non-owner occupied— — 448,283 448,283 — — 7,819 7,819 456,102 
Land development167 — 19,372 19,539 — 118 134 252 19,791 
Total real estate – commercial mortgage791 — 730,035 730,826 — 409 9,597 10,006 740,832 
Installment loans to individuals871 47 39,155 40,073 4 23 222 249 40,322 
Loans, net of unearned income$3,197 $74 $1,111,181 $1,114,452 $498 $5,299 $20,695 $26,492 $1,140,944 

23
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Accruing LoansNonaccruing Loans 
 30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		30-89 Days
Past Due		90 Days
or More
Past Due		Current
Loans		Total
Loans		Total
Loans
December 31, 2020
Commercial, financial, agricultural$818 $101 $163,658 $164,577 $74 $2,024 $9,838 $11,936 $176,513 
Real estate – construction:
Residential— — 2,859 2,859 — — — — 2,859 
Commercial— — 28,093 28,093 — — — — 28,093 
Total real estate – construction— — 30,952 30,952 — — — — 30,952 
Real estate – 1-4 family mortgage:
Primary2,394 74 206,635 209,103 687 2,799 2,181 5,667 214,770 
Home equity294 43 78,739 79,076 4 674 638 1,316 80,392 
Rental/investment180 14 30,931 31,125 — 724 79 803 31,928 
Land development109 — 14,231 14,340 — — 314 314 14,654 
Total real estate – 1-4 family mortgage2,977 131 330,536 333,644 691 4,197 3,212 8,100 341,744 
Real estate – commercial mortgage:
Owner-occupied2,511 — 317,997 320,508 193 447 1,893 2,533 323,041 
Non-owner occupied207 — 544,694 544,901 7,682 — 145 7,827 552,728 
Land development112 — 28,962 29,074 — 164 216 380 29,454 
Total real estate – commercial mortgage2,830 — 891,653 894,483 7,875 611 2,254 10,740 905,223 
Installment loans to individuals2,026 35 57,339 59,400 31 136 108 275 59,675 
Loans, net of unearned income$8,651 $267 $1,474,138 $1,483,056 $8,671 $6,968 $15,412 $31,051 $1,514,107 

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

Restructured Loans
An explanation of what constitutes a “restructured loan,” and management’s analysis in determining whether to restructure a loan, are described above in Note 3, “Non Purchased Loans.”
The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end.
Number of
Loans		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment
Three months ended September 30, 2021
Real estate – 1-4 family mortgage:
Primary1 164 164 
Three months ended September 30, 2020
Real estate – 1-4 family mortgage:
Primary2 $44 $44 
Real estate – commercial mortgage:
Owner-occupied4 3,104 2,844 
Total6 $3,148 $2,888 
24
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Number of
Loans		Pre-
Modification
Outstanding
Recorded
Investment		Post-
Modification
Outstanding
Recorded
Investment
Nine months ended September 30, 2021
Commercial, financial, agricultural1 $135 $135 
Real estate – 1-4 family mortgage:
Primary2 1,026 1,026 
Total3 $1,161 $1,161 
Nine months ended September 30, 2020
Commercial, financial, agricultural1 $1,029 $1,031 
Real estate – 1-4 family mortgage:
Primary4 334 227 
Home equity1 159 162 
Total real estate – 1-4 family mortgage5 493 389 
Real estate – commercial mortgage:
Owner-occupied5 3,173 2,913 
Non-owner occupied1 542 544 
Total real estate – commercial mortgage6 3,715 3,457 
Installment loans to individuals1 25 19 
Total13 $5,262 $4,896 

With respect to loans that were restructured during the nine months ended September 30, 2021, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the nine months ended September 30, 2020, $1,101 have subsequently defaulted, and remain outstanding, as of the date of this report.

Changes in the Company’s restructured loans are set forth in the table below:
 
Number of
Loans		Recorded
Investment
Totals at January 1, 202148 $8,687 
Additional advances or loans with concessions3 1,411 
Reclassified as performing restructured loan2 115 
Reductions due to:
Reclassified to nonperforming loans(4)(2,485)
Paid in full(5)(1,310)
Charge-offs(1)(205)
Principal paydowns— (221)
Totals at September 30, 202143 $5,992 

The allowance for credit losses attributable to restructured loans was $111 and $491 at September 30, 2021 and September 30, 2020, respectively. The Company had $2 and $539 in remaining availability under commitments to lend additional funds on these restructured loans at September 30, 2021 and September 30, 2020, respectively.

As discussed in Note 3, “Non Purchased Loans,” the Company implemented a loan deferral program in response to the COVID-19 pandemic. As of September 30, 2021, the Company had 11 loans with total balances of approximately $360 remaining on deferral. Under the applicable guidance, none of these loans were considered “restructured loans.”
25
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
 20212020201920182017PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
September 30, 2021
Commercial, Financial, Agricultural$— $— $663 $15,971 $14,278 $25,957 $47,190 $2,285 $106,344 
Pass— — 663 14,210 9,602 18,894 42,695 898 86,962 
Special Mention— — — 254 — — — — 254 
Substandard— — — 1,507 4,676 7,063 4,495 1,387 19,128 
Real Estate - Construction$— $— $— $180 $— $4,392 $— $— $4,572 
Residential$— $— $— $180 $— $687 $— $— $867 
Pass— — — 180 — 687 — — 867 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Commercial$— $— $— $— $— $3,705 $— $— $3,705 
Pass— — — — — 3,705 — — 3,705 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$— $— $— $11,974 $4,477 $26,442 $930 $212 $44,035 
Primary$— $— $— $4,205 $2,542 $12,861 $— $— $19,608 
Pass— — — 4,205 2,456 9,777 — — 16,438 
Special Mention— — — — — 61 — — 61 
Substandard— — — — 86 3,023 — — 3,109 
Home Equity$— $— $— $— $— $— $693 $212 $905 
Pass— — — — — — 269 — 269 
Special Mention— — — — — — — — — 
Substandard— — — — — — 424 212 636 
Rental/Investment$— $— $— $815 $1,818 $11,358 $237 $— $14,228 
Pass— — — 815 1,818 10,440 87 — 13,160 
Special Mention— — — — — 40 — — 40 
Substandard— — — — — 878 150 — 1,028 
Land Development$— $— $— $6,954 $117 $2,223 $— $— $9,294 
Pass— — — 6,954 86 820 — — 7,860 
Special Mention— — — — — — — — — 
Substandard— — — — 31 1,403 — — 1,434 
26
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20212020201920182017PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
Real Estate - Commercial Mortgage$— $— $— $52,761 $146,704 $481,098 $9,224 $14,371 $704,158 
Owner-Occupied$— $— $— $14,063 $32,268 $191,688 $4,763 $— $242,782 
Pass— — — 14,063 28,406 168,961 4,754 — 216,184 
Special Mention— — — — 1,568 1,701 — — 3,269 
Substandard— — — — 2,294 21,026 9 — 23,329 
Non-Owner Occupied$— $— $— $36,795 $112,866 $277,021 $4,326 $14,371 $445,379 
Pass— — — 20,420 105,055 236,855 4,326 4,415 371,071 
Special Mention— — — 16,367 — 7,949 — — 24,316 
Substandard— — — 8 7,811 32,217 — 9,956 49,992 
Land Development$— $— $— $1,903 $1,570 $12,389 $135 $— $15,997 
Pass— — — 1,903 1,570 6,316 135 — 9,924 
Special Mention— — — — — 5,197 — — 5,197 
Substandard— — — — — 876 — — 876 
Installment loans to individuals$— $— $— $— $— $— $— $— $— 
Pass— — — — — — — — — 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total loans subject to risk rating$— $— $663 $80,886 $165,459 $537,889 $57,344 $16,868 $859,109 
Pass— — 663 62,750 148,993 456,455 52,266 5,313 726,440 
Special Mention— — — 16,621 1,568 14,948 — — 33,137 
Substandard— — — 1,515 14,898 66,486 5,078 11,555 99,532 

 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
December 31, 2020
Commercial, Financial, Agricultural$— $711 $28,242 $27,222 $22,377 $20,759 $64,563 $1,788 $165,662 
Pass— 711 24,211 20,930 17,240 16,880 56,736 409 137,117 
Special Mention— — 357 97 104 — — — 558 
Substandard— — 3,674 6,195 5,033 3,879 7,827 1,379 27,987 
Real Estate - Construction$— $— $10,522 $9,228 $10,781 $— $— $— $30,531 
Residential$— $— $1,543 $211 $684 $— $— $— $2,438 
Pass— — 1,543 211 684 — — — 2,438 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Commercial$— $— $8,979 $9,017 $10,097 $— $— $— $28,093 
Pass— — 8,979 9,017 10,097 — — — 28,093 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
Real Estate - 1-4 Family Mortgage$— $— $14,022 $7,126 $1,112 $38,747 $957 $253 $62,217 
Primary$— $— $6,873 $3,212 $595 $17,223 $249 $— $28,152 
Pass— — 5,556 3,212 594 12,665 249 — 22,276 
Special Mention— — — — — 1,120 — — 1,120 
Substandard— — 1,317 — 1 3,438 — — 4,756 
Home Equity$— $— $— $— $— $— $697 $253 $950 
Pass— — — — — — 59 — 59 
Special Mention— — — — — — — — — 
Substandard— — — — — — 638 253 891 
Rental/Investment$— $— $— $1,883 $232 $18,275 $9 $— $20,399 
Pass— — — 1,883 232 16,139 9 — 18,263 
Special Mention— — — — — 44 — — 44 
Substandard— — — — — 2,092 — — 2,092 
Land Development$— $— $7,149 $2,031 $285 $3,249 $2 $— $12,716 
Pass— — 7,149 2,009 285 1,793 2 — 11,238 
Special Mention— — — — — — — — — 
Substandard— — — 22 — 1,456 — — 1,478 
Real Estate - Commercial Mortgage$— $— $76,557 $153,960 $171,487 $435,073 $22,631 $4,688 $864,396 
Owner-Occupied$— $— $15,001 $32,567 $61,568 $181,007 $9,723 $2 $299,868 
Pass— — 15,001 29,276 43,962 161,790 5,808 — 255,837 
Special Mention— — — — 9,670 — — — 9,670 
Substandard— — — 3,291 7,936 19,217 3,915 2 34,361 
Non-Owner Occupied$— $— $55,962 $117,592 $107,004 $242,249 $12,720 $4,686 $540,213 
Pass— — 37,002 109,910 83,738 221,423 6,431 — 458,504 
Special Mention— — 2,591 — 5,302 2,622 — — 10,515 
Substandard— — 16,369 7,682 17,964 18,204 6,289 4,686 71,194 
Land Development$— $— $5,594 $3,801 $2,915 $11,817 $188 $— $24,315 
Pass— — 5,594 3,801 2,780 4,962 188 — 17,325 
Special Mention— — — — — 5,438 — — 5,438 
Substandard— — — — 135 1,417 — — 1,552 
Installment loans to individuals$— $— $— $— $— $— $— $— $— 
Pass— — — — — — — — — 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total loans subject to risk rating$— $711 $129,343 $197,536 $205,757 $494,579 $88,151 $6,729 $1,122,806 
Pass— 711 105,035 180,249 159,612 435,652 69,482 409 951,150 
Special Mention— — 2,948 97 15,076 9,224 — — 27,345 
Substandard— — 21,360 17,190 31,069 49,703 18,669 6,320 144,311 




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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
 20212020201920182017PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
September 30, 2021
Commercial, Financial, Agricultural$— $— $— $364 $126 $2,457 $4,949 $210 $8,106 
Performing Loans— — — 364 126 2,457 4,949 210 8,106 
Non-Performing Loans— — — — — — — — — 
Real Estate - Construction$— $— $— $421 $— $— $— $— $421 
Residential$— $— $— $421 $— $— $— $— $421 
Performing Loans— — — 421 — — — — 421 
Non-Performing Loans— — — — — — — — — 
Commercial$— $— $— $— $— $— $— $— $— 
Performing Loans— — — — — — — — — 
Non-Performing Loans— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$— $— $359 $1,741 $22,792 $120,168 $49,654 $1,598 $196,312 
Primary$— $— $240 $1,195 $20,320 $109,331 $164 $86 $131,336 
Performing Loans— — 240 1,085 19,715 105,326 164 21 126,551 
Non-Performing Loans— — — 110 605 4,005 — 65 4,785 
Home Equity$— $— $— $546 $2,278 $1,966 $49,485 $1,512 $55,787 
Performing Loans— — — 546 2,278 1,890 48,906 1,077 54,697 
Non-Performing Loans— — — — — 76 579 435 1,090 
Rental/Investment$— $— $119 $— $121 $8,034 $5 $— $8,279 
Performing Loans— — 119 — 121 8,034 5 — 8,279 
Non-Performing Loans— — — — — — — — — 
Land Development$— $— $— $— $73 $837 $— $— $910 
Performing Loans— — — — 73 837 — — 910 
Non-Performing Loans— — — — — — — — — 
Real Estate - Commercial Mortgage$— $— $328 $1,400 $954 $32,755 $1,237 $— $36,674 
Owner-Occupied$— $— $— $860 $573 $19,864 $860 $— $22,157 
Performing Loans— — — 860 573 19,848 860 — 22,141 
Non-Performing Loans— — — — — 16 — — 16 
Non-Owner Occupied$— $— $328 $391 $— $9,735 $269 $— $10,723 
Performing Loans— — 328 391 — 9,735 269 — 10,723 
Non-Performing Loans— — — — — — — — — 
Land Development$— $— $— $149 $381 $3,156 $108 $— $3,794 
Performing Loans— — — 149 381 3,156 108 — 3,794 
Non-Performing Loans— — — — — — — — — 
Installment loans to individuals$— $— $— $23,428 $10,892 $4,306 $1,654 $40 $40,320 
Performing Loans— — — 23,373 10,876 4,101 1,644 30 40,024 
Non-Performing Loans— — — 55 16 205 10 10 296 
Total loans not subject to risk rating$— $— $687 $27,354 $34,764 $159,686 $57,494 $1,848 $281,833 
Performing Loans— — 687 27,189 34,143 155,384 56,905 1,338 275,646 
Non-Performing Loans— — — 165 621 4,302 589 510 6,187 
29
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
December 31, 2020
Commercial, Financial, Agricultural$— $— $445 $349 $303 $2,899 $6,809 $46 $10,851 
Performing Loans— — 445 349 303 2,899 6,784 46 10,826 
Non-Performing Loans— — — — — — 25 — 25 
Real Estate - Construction$— $— $421 $— $— $— $— $— $421 
Residential$— $— $421 $— $— $— $— $— $421 
Performing Loans— — 421 — — — — — 421 
Non-Performing Loans— — — — — — — — — 
Commercial$— $— $— $— $— $— $— $— $— 
Performing Loans— — — — — — — — — 
Non-Performing Loans— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$— $371 $3,082 $33,674 $28,169 $140,689 $70,870 $2,672 $279,527 
Primary$— $248 $1,953 $30,078 $25,956 $127,642 $630 $111 $186,618 
Performing Loans— 248 1,842 29,321 25,935 122,970 630 25 180,971 
Non-Performing Loans— — 111 757 21 4,672 — 86 5,647 
Home Equity$— $— $742 $3,324 $1,668 $1,027 $70,120 $2,561 $79,442 
Performing Loans— — 742 3,324 1,668 960 69,518 2,124 78,336 
Non-Performing Loans— — — — — 67 602 437 1,106 
Rental/Investment$— $123 $— $200 $193 $10,893 $120 $— $11,529 
Performing Loans— 123 — 200 193 10,800 120 — 11,436 
Non-Performing Loans— — — — — 93 — — 93 
Land Development$— $— $387 $72 $352 $1,127 $— $— $1,938 
Performing Loans— — 387 30 117 1,127 — — 1,661 
Non-Performing Loans— — — 42 235 — — — 277 
Real Estate - Commercial Mortgage$— $337 $597 $1,063 $982 $35,946 $1,902 $— $40,827 
Owner-Occupied$— $— $— $625 $660 $20,531 $1,357 $— $23,173 
Performing Loans— — — 625 660 20,253 1,357 — 22,895 
Non-Performing Loans— — — — — 278 — — 278 
Non-Owner Occupied$— $337 $443 $49 $66 $11,467 $153 $— $12,515 
Performing Loans— 337 443 49 66 11,331 153 — 12,379 
Non-Performing Loans— — — — — 136 — — 136 
Land Development$— $— $154 $389 $256 $3,948 $392 $— $5,139 
Performing Loans— — 154 389 256 3,890 392 — 5,081 
Non-Performing Loans— — — — — 58 — — 58 
Installment loans to individuals$— $— $34,976 $15,497 $1,118 $4,348 $3,676 $60 $59,675 
Performing Loans— — 34,942 15,405 1,051 4,262 3,676 29 59,365 
Non-Performing Loans— — 34 92 67 86 — 31 310 
Total loans not subject to risk rating$— $708 $39,521 $50,583 $30,572 $183,882 $83,257 $2,778 $391,301 
Performing Loans— 708 39,376 49,692 30,249 178,492 82,630 2,224 383,371 
Non-Performing Loans— — 145 891 323 5,390 627 554 7,930 

 

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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 5 – Allowance for Credit Losses
(In Thousands)
The following is a summary of total non purchased and purchased loans as of the dates presented:
 
September 30,
2021		December 31, 2020
Commercial, financial, agricultural$1,436,019 $2,536,984 
Lease financing83,496 80,022 
Real estate – construction:
Residential307,825 246,673 
Commercial783,471 611,431 
Total real estate – construction1,091,296 858,104 
Real estate – 1-4 family mortgage:
Primary1,808,139 1,750,951 
Home equity481,552 513,160 
Rental/investment291,116 296,364 
Land development143,936 137,833 
Total real estate – 1-4 family mortgage2,724,743 2,698,308 
Real estate – commercial mortgage:
Owner-occupied1,630,227 1,657,806 
Non-owner occupied2,779,237 2,747,467 
Land development126,266 149,579 
Total real estate – commercial mortgage4,535,730 4,554,852 
Installment loans to individuals149,821 209,537 
Gross loans10,021,105 10,937,807 
Unearned income(4,281)(4,160)
Loans, net of unearned income10,016,824 10,933,647 
Allowance for credit losses on loans(170,038)(176,144)
Net loans$9,846,786 $10,757,503 

Allowance for Credit Losses on Loans

The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the entire loan portfolio. Management evaluates the adequacy of the allowance for credit losses on a quarterly basis. Expected credit loss inherent in non-cancellable off-balance-sheet credit exposures is accounted for as a separate liability in the Consolidated Balance Sheets. The allowance for credit losses on loans held for investment, as reported in the Company’s Consolidated Balance Sheets, is adjusted by a provision for credit losses, which is reported in earnings, and reduced by net charge-offs. Loan losses are charged against the allowance for credit losses when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. For more information about the Company’s policies and procedures for determining the amount of the allowance for credit losses, please refer to the discussion in Note 1, “Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
The Company has made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses in the Company’s loan portfolio. As of September 30, 2021 and December 31, 2020, the Company had accrued interest receivable for loans of $45,404 and $56,459, respectively, which is recorded in the “Other assets” line item on the Consolidated Balance Sheets. Although the Company made the election to exclude accrued interest from the measurement of the allowance for credit losses, the Company did have an allowance for credit losses on interest deferred as part of the loan deferral program of $1,356 and $1,500, respectively, as of September 30, 2021 and December 31, 2020. The decrease in the balance during the first nine months of 2021 is due to the charge-off of deferred interest balances.
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
The following tables provide a roll-forward of the allowance for credit losses by loan category and a breakdown of the ending balance of the allowance based on the Company’s credit loss methodology for the periods presented:
CommercialReal Estate -
Construction		Real Estate -
1-4 Family
Mortgage		Real Estate  -
Commercial
Mortgage		Lease FinancingInstallment
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)
Recoveries418 — 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)
Recoveries940 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 loans913 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 


32
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
CommercialReal Estate -
Construction		Real Estate -
1-4 Family
Mortgage		Real Estate  -
Commercial
Mortgage		Lease FinancingInstallment Loans to IndividualsTotal
Three Months Ended September 30, 2020
Allowance for credit losses:
Beginning balance$30,685 $12,538 $29,401 $60,061 $1,812 $10,890 $145,387 
Charge-offs(420)(136)(720)(553)(168)(1,579)(3,576)
Recoveries698 31 152 711 1 1,594 3,187 
Net (charge-offs) recoveries278 (105)(568)158 (167)15 (389)
Provision for credit losses on loans7,232 1,386 3,872 10,363 187 60 23,100 
Ending balance$38,195 $13,819 $32,705 $70,582 $1,832 $10,965 $168,098 
Nine Months Ended September 30, 2020
Allowance for credit losses:
Beginning balance$10,658 $5,029 $9,814 $24,990 $910 $761 $52,162 
Impact of the adoption of ASC 326
11,351 3,505 14,314 4,293 521 8,500 42,484 
Charge-offs(1,969)(668)(1,083)(2,600)(168)(6,003)(12,491)
Recoveries996 31 288 2,451 11 5,816 9,593 
Net (charge-offs) recoveries(973)(637)(795)(149)(157)(187)(2,898)
Provision for credit losses on loans17,159 5,922 9,372 41,448 558 1,891 76,350 
Ending balance$38,195 $13,819 $32,705 $70,582 $1,832 $10,965 $168,098 
Period-End Amount Allocated to:
Individually evaluated$10,211 $— $275 $380 $— $270 $11,136 
Collectively evaluated27,984 13,819 32,430 70,202 1,832 10,695 156,962 
Ending balance$38,195 $13,819 $32,705 $70,582 $1,832 $10,965 $168,098 
Loans:
Individually evaluated$17,670 $— $4,718 $6,596 $— $618 $29,602 
Collectively evaluated2,630,392 773,119 2,755,676 4,570,413 82,928 242,608 11,055,136 
Ending balance$2,648,062 $773,119 $2,760,394 $4,577,009 $82,928 $243,226 $11,084,738 
Nonaccruing loans with no allowance for credit losses$589 $— $4,147 $3,644 $— $— $8,380 
 
The Company recorded a negative provision (recovery) for credit losses of $1,200 during the third quarter and first nine months of 2021, as compared to a provision for credit losses on loans of $23,100 in the third quarter of 2020 and $76,350 in the first nine months of 2020. The Company’s allowance for credit loss model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years. Based on the continual improvements in these forecasts over the last few quarters, the Company’s allowance model indicated that a release of the allowance for credit losses was appropriate during the third quarter of 2021.
Allowance for Credit Losses on Unfunded Loan Commitments
The Company maintains a separate allowance for credit losses on unfunded loan commitments, which is included in the “Other liabilities” line item on the Consolidated Balance Sheets. For more information about the Company’s policies and procedures for determining the amount of the allowance for credit losses on unfunded loan commitments, please refer to the discussion in
33
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1, “Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
The following tables provide a roll-forward of the allowance for credit losses on unfunded loan commitments for the periods presented.
Three Months Ended September 30,20212020
Allowance for credit losses on unfunded loan commitments:
Beginning balance$20,535 $17,335 
(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense) (200)2,700 
Ending balance$20,335 $20,035 
Nine Months Ended September 30,20212020
Allowance for credit losses on unfunded loan commitments:
Beginning balance$20,535 $946 
Impact of the adoption of ASC 326
— 10,389 
(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense)(200)8,700 
Ending balance$20,335 $20,035 

Note 6 – Other Real Estate Owned
(In Thousands)

The following table provides details of the Company’s other real estate owned (“OREO”) purchased and non purchased, net of
valuation allowances and direct write-downs, as of the dates presented:
 
Purchased OREONon Purchased OREOTotal
OREO
September 30, 2021
Residential real estate$127 $376 $503 
Commercial real estate858 1,813 2,671 
Residential land development311 4 315 
Commercial land development1,157 59 1,216 
Total$2,453 $2,252 $4,705 
December 31, 2020
Residential real estate$72 $107 $179 
Commercial real estate1,741 924 2,665 
Residential land development337 676 1,013 
Commercial land development1,777 338 2,115 
Total$3,927 $2,045 $5,972 

Changes in the Company’s purchased and non purchased OREO were as follows:
 
34
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Purchased
OREO		Non Purchased OREOTotal
OREO
Balance at January 1, 2021$3,927 $2,045 $5,972 
Transfers of loans1,047 2,124 3,171 
Impairments(220)(70)(290)
Dispositions(2,171)(1,836)(4,007)
Other(130)(11)(141)
Balance at September 30, 2021$2,453 $2,252 $4,705 

At September 30, 2021 and December 31, 2020, the amortized cost of loans secured by Real Estate - 1-4 Family Mortgage in the process of foreclosure was $1,220 and $1,308, respectively.
Components of the line item “Other real estate owned” in the Consolidated Statements of Income were as follows for the periods presented:
 
Three Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Repairs and maintenance$17 $64 $60 $234 
Property taxes and insurance6 35 54 186 
Impairments173 820 290 1,647 
Net (gains) losses on OREO sales(24)117 (74)27 
Rental income(4)(3)(17)(23)
Total$168 $1,033 $313 $2,071 


Note 7 – Goodwill and Other Intangible Assets
(In Thousands)
The carrying amounts of goodwill by operating segments for the nine months ended September 30, 2021 were as follows:
 Community BanksInsuranceTotal
Balance at January 1, 2021$936,916 $2,767 $939,683 
Additions to goodwill and other adjustments— — — 
Balance at September 30, 2021$936,916 $2,767 $939,683 

The following table provides a summary of finite-lived intangible assets as of the dates presented:
 
Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
September 30, 2021
Core deposit intangibles$82,492 $(58,020)$24,472 
Customer relationship intangible2,470 (1,420)1,050 
Total finite-lived intangible assets$84,962 $(59,440)$25,522 
December 31, 2020
Core deposit intangibles$82,492 $(53,539)$28,953 
Customer relationship intangible2,470 (1,284)1,186 
Total finite-lived intangible assets$84,962 $(54,823)$30,139 

Current year amortization expense for finite-lived intangible assets is presented in the table below.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Amortization expense for:
  Core deposit intangibles$1,436 $1,688 $4,482 $5,326 
  Customer relationship intangible45 45 136 136 
Total intangible amortization$1,481 $1,733 $4,618 $5,462 

The estimated amortization expense of finite-lived intangible assets for the year ending December 31, 2021 and the succeeding four years is summarized as follows:
Core Deposit IntangiblesCustomer Relationship IntangibleTotal
2021$5,860 $181 $6,041 
20224,940 181 5,121 
20234,044 181 4,225 
20243,498 181 3,679 
20253,103 181 3,284 

Note 8 – Mortgage Servicing Rights
(In Thousands)
The Company retains the right to service certain mortgage loans that it sells to secondary market investors. These mortgage servicing rights (“MSRs”) are recognized as a separate asset on the date the corresponding mortgage loan is sold. MSRs are amortized in proportion to and over the period of estimated net servicing income. These servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions, including expected cash flows, prepayment speeds, market discount rates, servicing costs, and other factors, and is subject to significant fluctuation as a result of actual prepayment speeds, default rates and losses differing from estimates thereof. For example, a decline in mortgage interest rates or an increase in actual prepayment speeds may cause negative adjustments to the valuation of the Company’s MSRs.
Servicing rights are evaluated for impairment (or reversals of prior impairments) quarterly based upon the fair value of the rights as compared to the carrying amount. Impairment is recognized through a valuation allowance in the amount that unamortized cost exceeds fair value. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the valuation allowance may be recorded as an increase to income. Changes in valuation allowances related to servicing rights are reported in “Mortgage banking income” on the Consolidated Statements of Income.
There was a positive valuation adjustment of $13,561 during the nine months ended September 30, 2021 on MSRs. This positive adjustment primarily arose from an increase in mortgage interest rates and a corresponding decrease in actual prepayment speeds. During the nine months ended September 30, 2020 there was a negative valuation adjustment of $13,694 which was caused by a difference between actual prepayment speeds and the Company’s assumptions with respect to prepayment speeds.
Changes in the Company’s MSRs were as follows: 
Balance at January 1, 2021$62,994 
Capitalization26,532 
Amortization(16,700)
Valuation adjustment13,561 
Balance at September 30, 2021$86,387 

Data and key economic assumptions related to the Company’s MSRs are as follows as of the dates presented:
 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2021December 31, 2020
Unpaid principal balance$8,470,973 $7,322,671 
Weighted-average prepayment speed (CPR)11.68 %15.05 %
Estimated impact of a 10% increase$(4,258)$(4,001)
Estimated impact of a 20% increase(8,254)(7,674)
Discount rate9.83 %9.86 %
Estimated impact of a 10% increase$(3,381)$(2,144)
Estimated impact of a 20% increase(6,520)(4,144)
Weighted-average coupon interest rate3.33 %3.58 %
Weighted-average servicing fee (basis points)30.52 29.94 
Weighted-average remaining maturity (in years)6.235.14
The Company recorded servicing fees of $4,891 and $3,400 for the three months ended September 30, 2021 and 2020, respectively, and servicing fees of $13,578 and $9,012 for the nine months ended September 30, 2021 and 2020, respectively, all of which are included in “Mortgage banking income” in the Consolidated Statements of Income.

Note 9 - Employee Benefit and Deferred Compensation Plans
(In Thousands, Except Share Data)

Pension and Post-retirement Medical Plans
The Company sponsors a noncontributory defined benefit pension plan, under which participation and benefit accruals ceased as of December 31, 1996, and it provides retiree medical benefits, consisting of the opportunity to purchase coverage at subsidized rates under the Company’s group medical plan.

Information related to the defined benefit pension plan maintained by Renasant Bank (“Pension Benefits”) and to the post-retirement health and life plan (“Other Benefits”) as of the dates presented is as follows:
 
Pension BenefitsOther Benefits
Three Months EndedThree Months Ended
 September 30,September 30,
 2021202020212020
Service cost $— $— $2 $2 
Interest cost171 246 4 3 
Expected return on plan assets(442)(412)— — 
Recognized actuarial loss (gain)67 87 — (23)
Net periodic (return) benefit cost $(204)$(79)$6 $(18)

 
Pension BenefitsOther Benefits
Nine Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Service cost$— $— $4 $5 
Interest cost512 738 11 10 
Expected return on plan assets(1,326)(1,238)— — 
Recognized actuarial loss (gain)199 262 (2)(68)
Net periodic (return) benefit cost$(615)$(238)$13 $(53)
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Incentive Compensation Plans
The Company maintains a long-term equity compensation plan that provides for the grant of stock options and the award of restricted stock. There were no stock options granted, nor compensation expense associated with options recorded, during the nine months ended September 30, 2021 or 2020.
The following table summarizes information about options outstanding, exercised and forfeited as of and for the nine months ended September 30, 2021:
SharesWeighted Average Exercise Price
Options outstanding at beginning of period10,500 $14.96 
Granted— — 
Exercised(5,000)14.96 
Forfeited— — 
Options outstanding at end of period5,500 $14.96 

The Company also awards performance-based restricted stock to executives and other officers and employees and time-based restricted stock to non-employee directors, executives, and other officers and employees.
The following table summarizes the changes in restricted stock as of and for the nine months ended September 30, 2021:

Performance-Based Restricted StockWeighted Average Grant-Date Fair ValueTime-Based Restricted StockWeighted Average Grant-Date Fair Value
Nonvested at beginning of period132,827 $32.88 548,416 $34.15 
Awarded78,230 34.02 253,733 37.22 
Vested— — (139,752)36.89 
Cancelled— — (53,737)37.65 
Nonvested at end of period211,057 $33.30 608,660 $34.49 
During the nine months ended September 30, 2021, the Company reissued 134,783 shares from treasury in connection with the exercise of stock options and awards of restricted stock. The Company recorded total stock-based compensation expense of $2,595 and $2,405 for the three months ended September 30, 2021 and 2020, respectively and $7,736 and $8,153 for the nine months ended September 30, 2021 and 2020, respectively.

Note 10 – Derivative Instruments
(In Thousands)
The Company uses certain derivative instruments to meet the needs of customers as well as to manage the interest rate risk associated with certain transactions.
Non-hedge derivatives
The Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into an offsetting derivative contract position. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures.
The Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate residential mortgage loans. The Company also enters into forward commitments to sell residential mortgage loans to secondary market investors.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
The following table provides a summary of the Company’s derivatives not designated as hedging instruments as of the dates presented:
 Balance SheetSeptember 30, 2021December 31, 2020
 LocationNotional AmountFair ValueNotional AmountFair Value
Derivative assets:
  Interest rate contractsOther Assets$190,200 $5,268 $222,933 $9,884 
  Interest rate lock commitmentsOther Assets422,596 7,592 589,701 19,824 
Forward commitmentsOther Assets550,000 3,659 — — 
Totals$1,162,796 $16,519 $812,634 $29,708 
Derivative liabilities:
  Interest rate contractsOther Liabilities$190,200 $5,268 $222,933 $9,884 
Interest rate lock commitmentsOther Liabilities101,591 423 — — 
  Forward commitmentsOther Liabilities82,000 158 716,000 5,090 
Totals$373,791 $5,849 $938,933 $14,974 
Gains and losses included in the Consolidated Statements of Income related to the Company’s derivative financial instruments were as follows as of the dates presented:
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Interest rate contracts:
Included in interest income on loans$589 $451 $1,795 $1,710 
Interest rate lock commitments:
Included in mortgage banking income(3,251)(1,135)(12,655)23,610 
Forward commitments
Included in mortgage banking income5,310 2,754 8,590 (1,395)
Total$2,648 $2,070 $(2,270)$23,925 
Derivatives designated as cash flow hedges
Cash flow hedge relationships mitigate exposure to the variability of future cash flow or other forecasted transactions. The Company uses interest rate swap contracts in an effort to manage future interest rate exposure on borrowings. The hedging strategy converts the LIBOR-based variable interest rate on the forecasted borrowings to a fixed interest rate. As of September 30, 2021, the Company is hedging its exposure to the variability of future cash flows through 2030 and a portion of these hedges are forward starting.
The following table provides a summary of the Company’s derivatives designated as cash flow hedges as of the dates presented:
 Balance SheetSeptember 30, 2021December 31, 2020
 LocationNotional AmountFair ValueNotional AmountFair Value
Derivative assets:
  Interest rate swapsOther Assets$200,000 $11,615 $175,000 $3,866 
Derivative liabilities:
  Interest rate swapsOther Liabilities$62,000 $3,544 $87,000 $5,924 
Changes in fair value of the cash flow hedges are, to the extent that the hedging relationship is effective, recorded as other comprehensive income and are subsequently recognized in earnings at the same time that the hedged item is recognized in earnings. The ineffective portions of the changes in fair value of the hedging instruments are immediately recognized in earnings. The assessment of the effectiveness of the hedging relationship is evaluated under the hypothetical derivative method. There were no ineffective portions for the nine months ended September 30, 2021 or 2020. The impact on other comprehensive
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
income for the nine months ended September 30, 2021 and 2020 is discussed in Note 13, “Other Comprehensive Income (Loss).”
Derivatives designated as fair value hedges
Fair value hedges protect against changes in the fair value of an asset, liability, or firm commitment. The Company enters into interest rate swap agreements to manage interest rate exposure on certain of the Company’s fixed-rate subordinated notes. The agreements convert the fixed interest rates to LIBOR-based variable interest rates.
The following table provides a summary of the Company's derivatives designated as fair value hedges as of the dates presented:
 Balance SheetSeptember 30, 2021December 31, 2020
 LocationNotional AmountFair ValueNotional AmountFair Value
Derivative liabilities:
  Interest rate swapsOther Liabilities$100,000 $5,150 $100,000 $209 
The following table presents the effects of the Company’s fair value hedge relationships on the Consolidated Statements of Income for the periods presented:
 Amount of Gain (Loss) Recognized in Income
Income StatementThree Months Ended September 30,Nine Months Ended September 30,
 Location2021202020212020
Derivative liabilities:
  Interest rate swaps - subordinated notesInterest Expense$(764)$— $(4,941)$— 
Derivative liabilities - hedged items:
  Interest rate swaps - subordinated notesInterest Expense$764 $— $4,941 $— 
The following table presents the amounts that were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of the dates presented:
Carrying Amount of the Hedged LiabilityCumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Liability
Balance Sheet LocationSeptember 30, 2021December 31, 2020September 30, 2021December 31, 2020
Long-term debt$93,303 $98,114 $(5,150)$209 
Offsetting

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

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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Offsetting Derivative AssetsOffsetting Derivative Liabilities
September 30,
2021		December 31, 2020September 30,
2021		December 31, 2020
Gross amounts recognized$15,373 $3,866 $14,021 $21,107 
Gross amounts offset in the Consolidated Balance Sheets— — — — 
Net amounts presented in the Consolidated Balance Sheets15,373 3,866 14,021 21,107 
Gross amounts not offset in the Consolidated Balance Sheets
Financial instruments6,605 3,866 6,605 3,866 
Financial collateral pledged— — 7,416 14,042 
Net amounts$8,768 $— $— $3,199 

Note 11 – Income Taxes

(In Thousands)

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

September 30,December 31,
20212020
Deferred tax assets
Allowance for credit losses$52,345 $53,597 
Loans3,471 5,526 
Deferred compensation13,598 13,114 
Investment in partnerships154 — 
Impairment of assets508 1,067 
Net operating loss carryforwards1,287 1,857 
Lease liabilities under operating leases17,189 17,732 
Other3,613 3,539 
Total deferred tax assets92,165 96,432 
Deferred tax liabilities
Net unrealized gains on securities3,580 8,434 
Investment in partnerships— 793 
Fixed assets1,182 3,285 
Mortgage servicing rights20,587 14,623 
Junior subordinated debt2,162 2,245 
Intangibles3,349 3,882 
Lease right-of-use asset16,291 16,833 
Other565 1,672 
Total deferred tax liabilities47,716 51,767 
Net deferred tax assets$44,449 $44,665 

For the nine months ended September 30, 2021 and 2020, the Company recorded a provision for income taxes totaling $35,572 and $13,022, respectively. The provision for income taxes includes both federal and state income taxes and differs from the statutory rate due to favorable permanent differences. During the second quarter of 2021 the Company recognized a one-time state tax credit investment of $3,460 which reduced income taxes as a discrete item. The effective tax rate, excluding discrete items, was 22.10% and 20.28% for the nine months ended September 30, 2021 and 2020, respectively.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
The Company and its subsidiaries file a consolidated U.S. federal income tax return. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state departments of revenue for the years ending December 31, 2018 through December 31, 2020.

Note 12 – Fair Value Measurements
(In Thousands)
Fair Value Measurements and the Fair Level Hierarchy
FASB Accounting Standards Codification Topic (“ASC”) 820, “Fair Value Measurements and Disclosures,” provides guidance for using fair value to measure assets and liabilities and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to a valuation based on quoted prices in active markets for identical assets and liabilities (Level 1), moderate priority to a valuation based on quoted prices in active markets for similar assets and liabilities and/or based on assumptions that are observable in the market (Level 2), and the lowest priority to a valuation based on assumptions that are not observable in the market (Level 3).
Recurring Fair Value Measurements
The Company carries certain assets and liabilities at fair value on a recurring basis in accordance with applicable standards. The Company’s recurring fair value measurements are based on the requirement to carry such assets and liabilities at fair value or the Company’s election to carry certain eligible assets and liabilities at fair value. Assets and liabilities that are required to be carried at fair value on a recurring basis include securities available for sale and derivative instruments. The Company has elected to carry mortgage loans held for sale at fair value on a recurring basis as permitted under the guidance in ASC 825, “Financial Instruments” (“ASC 825”).
The following methods and assumptions are used by the Company to estimate the fair values of the Company’s financial assets and liabilities that are measured on a recurring basis:
Securities available for sale: Securities available for sale consist primarily of debt securities, such as obligations of U.S. Government agencies and corporations, obligations of states and political subdivisions, mortgage-backed securities and trust preferred securities. Where quoted market prices in active markets are available, securities are classified within Level 1 of the fair value hierarchy. If quoted prices from active markets are not available, fair values are based on quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active, or model-based valuation techniques where all significant assumptions are observable in the market. Such instruments are classified within Level 2 of the fair value hierarchy. When assumptions used in model-based valuation techniques are not observable in the market, the assumptions used by management reflect estimates of assumptions used by other market participants in determining fair value. When there is limited transparency around the inputs to the valuation, the instruments are classified within Level 3 of the fair value hierarchy.
Derivative instruments: Most of the Company’s derivative contracts are extensively traded in over-the-counter markets and are valued using discounted cash flow models which incorporate observable market based inputs including current market interest rates, credit spreads, and other factors. Such instruments are categorized within Level 2 of the fair value hierarchy and include interest rate swaps and other interest rate contracts such as interest rate caps and/or floors. The Company’s interest rate lock commitments are valued using current market prices for mortgage-backed securities with similar characteristics, adjusted for certain factors including servicing and risk. The value of the Company’s forward commitments is based on current prices for securities backed by similar types of loans. Because these assumptions are observable in active markets, the Company’s interest rate lock commitments and forward commitments are categorized within Level 2 of the fair value hierarchy.
Mortgage loans held for sale in loans held for sale: Mortgage loans held for sale are primarily agency loans which trade in active secondary markets. The fair value of these instruments is derived from current market pricing for similar loans, adjusted for differences in loan characteristics, including servicing and risk. Because the valuation is based on external pricing of similar instruments, mortgage loans held for sale are classified within Level 2 of the fair value hierarchy.
The following tables present assets and liabilities that are measured at fair value on a recurring basis as of the dates presented:
 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Level 1Level 2Level 3Totals
September 30, 2021
Financial assets:
Securities available for sale$— $2,544,643 $— $2,544,643 
Derivative instruments— 28,134 — 28,134 
Mortgage loans held for sale in loans held for sale— 452,869 — 452,869 
Total financial assets$— $3,025,646 $— $3,025,646 
Financial liabilities:
Derivative instruments:$— $14,543 $— $14,543 

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

The Company reviews fair value hierarchy classifications on a quarterly basis. Changes in the Company’s ability to observe inputs to the valuation may cause reclassification of certain assets or liabilities within the fair value hierarchy. Transfers between levels of the hierarchy are deemed to have occurred at the end of period. There were no such transfers between levels of the fair value hierarchy during the nine months ended September 30, 2021.
The following tables provide a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs, or Level 3 inputs, as of the dates presented:
 
 20212020
Three Months Ended September 30, 2021Trust preferred
securities		Trust preferred
securities
Three Months Ended September 30,
Balance at beginning of period$— $7,679 
   Accretion included in net income— 8 
   Unrealized losses included in other comprehensive income— 840 
   Settlements— (35)
Balance at end of period$— $8,492 
Nine Months Ended September 30,
Balance at beginning of period$9,012 $9,986 
   Accretion included in net income7 26 
   Unrealized gains (losses) included in other comprehensive income941 (1,382)
   Realized losses2,061 — 
   Sales(12,021)— 
   Settlements— (138)
Balance at end of period$— $8,492 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
For each of the three and nine months ended September 30, 2021 and 2020, respectively, there were no gains or losses included in earnings that were attributable to the change in unrealized gains or losses related to assets or liabilities held at the end of each respective period that were measured on a recurring basis using significant unobservable inputs.

Nonrecurring Fair Value Measurements
Certain assets and liabilities may be recorded at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically are a result of the application of the lower of cost or market accounting or a write-down occurring during the period. The following tables provide the fair value measurement for assets measured at fair value on a nonrecurring basis that were still held on the Consolidated Balance Sheets as of the dates presented and the level within the fair value hierarchy each is classified:
 
September 30, 2021Level 1Level 2Level 3Totals
Individually evaluated loans, net of allowance for credit losses$— $— $9,410 $9,410 
OREO— — 170 170 
Mortgage servicing rights— — 86,387 86,387 
Total$— $— $95,967 $95,967 
 
December 31, 2020Level 1Level 2Level 3Totals
Individually evaluated loans, net of allowance for credit losses$— $— $24,145 $24,145 
OREO— — 2,736 2,736 
Mortgage servicing rights— — 62,994 62,994 
Total$— $— $89,875 $89,875 

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

Individually evaluated loans: Loans are individually evaluated for credit losses each quarter taking into account the fair value of the collateral less estimated selling costs. Collateral may be real estate and/or business assets including but not limited to equipment, inventory and accounts receivable. The fair value of real estate is determined based on appraisals by qualified licensed appraisers. The fair value of the business assets is generally based on amounts reported on the business’s financial statements. Appraised and reported values may be adjusted based on changes in market conditions from the time of valuation and management’s knowledge of the client and the client’s business. Since not all valuation inputs are observable, these nonrecurring fair value determinations are classified as Level 3. Individually evaluated loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors previously identified. Individually evaluated loans that were measured or re-measured at fair value had a carrying value of $17,959 and $36,990 at September 30, 2021 and December 31, 2020, respectively, and a specific reserve for these loans of $8,549 and $12,845 was included in the allowance for credit losses as of such dates.
Other real estate owned: OREO is comprised of commercial and residential real estate obtained in partial or total satisfaction of loan obligations. OREO acquired in settlement of indebtedness is recorded at the fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Fair value, when recorded, is determined based on appraisals by qualified licensed appraisers and adjusted for management’s estimates of costs to sell. Accordingly, values for OREO are classified as Level 3.
The following table presents OREO measured at fair value on a nonrecurring basis that was still held on the Consolidated Balance Sheets as of the dates presented:
 
September 30,
2021		December 31, 2020
Carrying amount prior to remeasurement$445 $4,051 
Impairment recognized in results of operations(275)(1,315)
Fair value$170 $2,736 

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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Mortgage servicing rights: Mortgage servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. Because these factors are not all observable and include management’s assumptions, mortgage servicing rights are classified within Level 3 of the fair value hierarchy. Mortgage servicing rights were carried at amortized cost at September 30, 2021 and fair value at December 31, 2020. There were $13,561 of positive valuation adjustments on MSRs during the nine months ended September 30, 2021 and $13,694 of negative valuation adjustments recognized during the nine months ended September 30, 2020.
The following table presents information as of September 30, 2021 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
 
Financial instrumentFair
Value		Valuation TechniqueSignificant
Unobservable Inputs		Range of Inputs
Individually evaluated loans, net of allowance for credit losses$9,410 Appraised value of collateral less estimated costs to sellEstimated costs to sell
4-10%
OREO$170 Appraised value of property less estimated costs to sellEstimated costs to sell
4-10%

Fair Value Option
The Company has elected to measure all mortgage loans held for sale at fair value under the fair value option as permitted under ASC 825. Electing to measure these assets at fair value reduces certain timing differences and better matches the changes in fair value of the loans with changes in the fair value of derivative instruments used to economically hedge them.
Net losses of $10,425 and net gains of $10,876 resulting from fair value changes of these mortgage loans were recorded in income during the nine months ended September 30, 2021 and 2020, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both mortgage loans held for sale and the related derivative instruments are recorded in “Mortgage banking income” in the Consolidated Statements of Income.
The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal. Interest income on mortgage loans held for sale measured at fair value is accrued as it is earned based on contractual rates and is reflected in loan interest income on the Consolidated Statements of Income.
The following table summarizes the differences between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of September 30, 2021 and December 31, 2020:
 
Aggregate
Fair Value		Aggregate
Unpaid
Principal
Balance		Difference
September 30, 2021
Mortgage loans held for sale measured at fair value$452,869 $441,125 $11,744 
December 31, 2020
Mortgage loans held for sale measured at fair value$417,771 $395,602 $22,169 

Fair Value of Financial Instruments
The carrying amounts and estimated fair values of the Company’s financial instruments, including those assets and liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows as of the dates presented:
 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
  Fair Value
As of September 30, 2021Carrying
Value		Level 1Level 2Level 3Total
Financial assets
Cash and cash equivalents$1,476,141 $1,476,141 $— $— $1,476,141 
Securities available for sale2,544,643 — 2,544,643 — 2,544,643 
Loans held for sale452,869 — 452,869 — 452,869 
Loans, net9,846,786 — — 9,726,732 9,726,732 
Mortgage servicing rights86,387 — — 90,738 90,738 
Derivative instruments28,134 — 28,134 — 28,134 
Financial liabilities
Deposits$13,254,829 $11,787,346 $1,467,955 $— $13,255,301 
Short-term borrowings11,253 11,253 — — 11,253 
Federal Home Loan Bank advances150,425 — 155,832 — 155,832 
Junior subordinated debentures111,228 — 105,546 — 105,546 
Subordinated notes207,210 — 221,700 — 221,700 
Derivative instruments14,543 — 14,543 — 14,543 
 
  Fair Value
As of December 31, 2020Carrying
Value		Level 1Level 2Level 3Total
Financial assets
Cash and cash equivalents$633,203 $633,203 $— $— $633,203 
Securities available for sale1,343,457 — 1,334,445 9,012 1,343,457 
Loans held for sale417,771 — 417,771 — 417,771 
Loans, net10,757,503 — — 10,668,625 10,668,625 
Mortgage servicing rights62,994 — — 62,994 62,994 
Derivative instruments33,574 — 33,574 — 33,574 
Financial liabilities
Deposits$12,059,081 $10,363,193 $1,706,005 $— $12,069,198 
Short-term borrowings21,340 21,340 — — 21,340 
Federal Home Loan Bank advances152,167 — 158,914 — 158,914 
Junior subordinated debentures110,794 — 93,092 — 93,092 
Subordinated notes212,009 — 217,575 — 217,575 
Derivative instruments21,107 — 21,107 — 21,107 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Note 13 – Other Comprehensive Income (Loss)
(In Thousands)
Changes in the components of other comprehensive income, net of tax, were as follows for the periods presented:
 
Pre-TaxTax Expense
(Benefit)		Net of Tax
Three months ended September 30, 2021
Securities available for sale:
Unrealized holding losses on securities$(12,408)$(3,158)$(9,250)
Reclassification adjustment for gains realized in net income(764)(194)(570)
Total securities available for sale(13,172)(3,352)(9,820)
Derivative instruments:
Unrealized holding gains on derivative instruments1,629 414 1,215 
Total derivative instruments1,629 414 1,215 
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost67 18 49 
Total defined benefit pension and post-retirement benefit plans67 18 49 
Total other comprehensive loss$(11,476)$(2,920)$(8,556)
Three months ended September 30, 2020
Securities available for sale:
Unrealized holding gains on securities$519 $131 $388 
Total securities available for sale519 131 388 
Derivative instruments:
Unrealized holding gains on derivative instruments1,576 401 1,175 
Total derivative instruments1,576 401 1,175 
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost65 17 48 
Total defined benefit pension and post-retirement benefit plans65 17 48 
Total other comprehensive income$2,160 $549 $1,611 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Pre-TaxTax Expense
(Benefit)		Net of Tax
Nine months ended September 30, 2021
Securities available for sale:
Unrealized holding losses on securities$(27,487)$(6,996)$(20,491)
Reclassification adjustment for gains realized in net income(2,121)(539)(1,582)
Total securities available for sale(29,608)(7,535)(22,073)
Derivative instruments:
Unrealized holding gains on derivative instruments10,129 2,578 7,551 
Total derivative instruments10,129 2,578 7,551 
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost197 49 148 
Total defined benefit pension and post-retirement benefit plans197 49 148 
Total other comprehensive loss$(19,282)$(4,908)$(14,374)
Nine months ended September 30, 2020
Securities available for sale:
Unrealized holding gains on securities$26,404 $6,719 $19,685 
Reclassification adjustment for gains realized in net income(31)(8)(23)
Total securities available for sale26,373 6,711 19,662 
Derivative instruments:
Unrealized holding losses on derivative instruments(3,516)(895)(2,621)
Total derivative instruments(3,516)(895)(2,621)
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost195 50 145 
Total defined benefit pension and post-retirement benefit plans195 50 145 
Total other comprehensive income$23,052 $5,866 $17,186 

The accumulated balances for each component of other comprehensive income, net of tax, were as follows as of the dates presented:
 
September 30,
2021		December 31, 2020
Unrealized gains on securities$8,854 $42,246 
Non-credit related portion of previously recorded other-than-temporary impairment on securities— (11,319)
Unrealized gains (losses) on derivative instruments6,913 (638)
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations(5,073)(5,221)
Total accumulated other comprehensive income$10,694 $25,068 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Note 14 – Net Income Per Common Share
(In Thousands, Except Share Data)
Basic net income per common share is calculated by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per common share reflects the pro forma dilution of shares outstanding, assuming outstanding service-based restricted stock awards fully vested and outstanding stock options were exercised into common shares, calculated in accordance with the treasury method. Basic and diluted net income per common share calculations are as follows for the periods presented:
 
Three Months Ended
 September 30,
 20212020
Basic
Net income applicable to common stock$40,063 $29,992 
Average common shares outstanding56,146,285 56,185,884 
Net income per common share - basic$0.71 $0.53 
Diluted
Net income applicable to common stock$40,063 $29,992 
Average common shares outstanding56,146,285 56,185,884 
Effect of dilutive stock-based compensation300,899 200,269 
Average common shares outstanding - diluted56,447,184 56,386,153 
Net income per common share - diluted$0.71 $0.53 
Nine Months Ended
 September 30,
 20212020
Basic
Net income applicable to common stock$138,838 $52,130 
Average common shares outstanding56,237,056 56,294,984 
Net income per common share - basic$2.47 $0.93 
Diluted
Net income applicable to common stock$138,838 $52,130 
Average common shares outstanding56,237,056 56,294,984 
Effect of dilutive stock-based compensation296,038 173,593 
Average common shares outstanding - diluted56,533,094 56,468,577 
Net income per common share - diluted$2.46 $0.92 

Stock-based compensation awards that could potentially dilute basic net income per common share in the future that were not included in the computation of diluted net income per common share due to their anti-dilutive effect were as follows for the periods presented:
Three Months Ended
 September 30,
 20212020
Number of shares19,929237,212
Exercise prices (for stock option awards)——
Nine Months Ended
 September 30,
 20212020
Number of shares19,929255,448
Exercise prices (for stock option awards)——
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Note 15 – Regulatory Matters
(In Thousands)
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Federal Reserve, the FDIC and the Office of the Comptroller of the Currency have issued guidelines governing the levels of capital that bank holding companies and banks must maintain. Those guidelines specify capital tiers, which include the following classifications:
Capital TiersTier 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 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, 2021December 31, 2020
 AmountRatioAmountRatio
Renasant Corporation
Tier 1 Capital to Average Assets (Leverage)$1,395,321 9.18 %$1,306,597 9.37 %
Common Equity Tier 1 Capital to Risk-Weighted Assets1,287,684 11.02 %1,199,394 10.93 %
Tier 1 Capital to Risk-Weighted Assets1,395,321 11.94 %1,306,597 11.91 %
Total Capital to Risk-Weighted Assets1,712,500 14.66 %1,653,694 15.07 %
Renasant Bank
Tier 1 Capital to Average Assets (Leverage)$1,454,879 9.58 %$1,369,994 9.83 %
Common Equity Tier 1 Capital to Risk-Weighted Assets1,454,879 12.45 %1,369,994 12.49 %
Tier 1 Capital to Risk-Weighted Assets1,454,879 12.45 %1,369,994 12.49 %
Total Capital to Risk-Weighted Assets1,574,697 13.48 %1,504,985 13.73 %

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

The Company has elected to take advantage of transitional relief offered by the Federal Reserve and the FDIC to delay for two years the estimated impact of Accounting Standards Codification Topic 326, “Financial Instruments - Credit Losses” (“ASC
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
326”), often referred to as CECL, on regulatory capital, followed by a three-year transitional period to phase out the capital benefit provided by the two-year delay.


Note 16 – Segment Reporting
(In Thousands)
The operations of the Company’s reportable segments are described as follows:
•The Community Banks segment delivers a complete range of banking and financial services to individuals and small to medium-sized businesses including checking and savings accounts, business and personal loans, asset-based lending and equipment leasing, as well as safe deposit and night depository facilities.
•The Insurance segment includes a full service insurance agency offering all major lines of commercial and personal insurance through major carriers.
•The Wealth Management segment, through the Trust division, offers a broad range of fiduciary services including the administration (as trustee or in other fiduciary or representative capacities) of benefit plans, management of trust accounts, inclusive of personal and corporate benefit accounts, and custodial accounts, as well as accounting and money management for trust accounts. In addition, the Wealth Management segment, through the Financial Services division, provides specialized products and services to customers, which include fixed and variable annuities, mutual funds and other investment services through a third party broker-dealer.
To give the Company’s divisional management a more precise indication of the income and expenses they can control, the results of operations for the Community Banks, the Insurance and the Wealth Management segments reflect the direct revenues and expenses of each respective segment. Indirect revenues and expenses, including but not limited to income from the Company’s investment portfolio as well as certain costs associated with data processing and back office functions, primarily support the operations of the community banks and, therefore, are included in the results of the Community Banks segment. Included in “Other” are the operations of the holding company and other eliminations which are necessary for purposes of reconciling to the consolidated amounts.
The following tables provide financial information for the Company’s operating segments as of and for the periods presented:
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Community
Banks		InsuranceWealth
Management		OtherConsolidated
Three months ended September 30, 2021
Net interest income (loss)$106,506 $115 $404 $(3,733)$103,292 
Recovery of loan losses(1,088)— (112)— (1,200)
Noninterest income42,546 2,835 5,820 (446)50,755 
Noninterest expense97,437 2,095 4,189 278 103,999 
Income (loss) before income taxes52,703 855 2,147 (4,457)51,248 
Income tax expense (benefit)12,117 220 — (1,152)11,185 
Net income (loss)$40,586 $635 $2,147 $(3,305)$40,063 
Total assets$16,040,728 $33,036 $67,204 $14,582 $16,155,550 
Goodwill$936,916 $2,767 — — $939,683 
Three months ended September 30, 2020
Net interest income (loss)$108,909 $126 $403 $(3,152)$106,286 
Provision for loan losses22,408 — 692 — 23,100 
Noninterest income 63,918 2,694 4,714 (398)70,928 
Noninterest expense110,430 1,974 3,818 288 116,510 
Income (loss) before income taxes39,989 846 607 (3,838)37,604 
Income tax expense (benefit)8,383 217 — (988)7,612 
Net income (loss)$31,606 $629 $607 $(2,850)$29,992 
Total assets$14,694,683 $30,138 $68,261 $15,851 $14,808,933 
Goodwill$936,916 $2,767 — — $939,683 
Community
Banks		InsuranceWealth
Management		OtherConsolidated
Nine months ended September 30, 2021
Net interest income (loss)$332,234 $333 $1,184 $(11,232)$322,519 
Recovery of credit losses(1,088)— (112)— (1,200)
Noninterest income (loss)155,765 8,558 16,421 (1,342)179,402 
Noninterest expense309,449 6,005 12,337 920 328,711 
Income (loss) before income taxes179,638 2,886 5,380 (13,494)174,410 
Income tax expense (benefit)38,320 740 — (3,488)35,572 
Net income (loss)$141,318 $2,146 $5,380 $(10,006)$138,838 
Total assets$16,040,728 $33,036 $67,204 $14,582 $16,155,550 
Goodwill$936,916 $2,767 $— $— $939,683 
Nine months ended September 30, 2020
Net interest income (loss)$325,879 $424 $1,250 $(8,883)$318,670 
Provision for credit losses75,481 — 869 — 76,350 
Noninterest income (loss)152,716 7,787 13,370 (1,205)172,668 
Noninterest expense (benefit)332,490 5,708 11,215 423 349,836 
Income (loss) before income taxes70,624 2,503 2,536 (10,511)65,152 
Income tax expense (benefit)15,088 658 — (2,724)13,022 
Net income (loss)$55,536 $1,845 $2,536 $(7,787)$52,130 
Total assets$14,694,683 $30,138 $68,261 $15,851 $14,808,933 
Goodwill$936,916 $2,767 $— $— $939,683 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In Thousands, Except Share Data)
This Form 10-Q may contain or incorporate by reference statements regarding Renasant Corporation (referred to herein as the “Company”, “we”, “our”, or “us”) that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “projects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “possible,” “may increase,” “may fluctuate,” “will likely result,” and similar expressions, or future or conditional verbs such as “will,” “should,” “would” and “could,” are generally forward-looking in nature and not historical facts. Forward-looking statements include information about the Company’s future financial performance, business strategy, projected plans and objectives and are based on the current beliefs and expectations of management. The Company’s management believes these forward-looking statements are reasonable, but they are all inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and, accordingly, investors should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.
Important factors currently known to management that could cause our actual results to differ materially from those in forward-looking statements include the following: (i) the continued impact of the COVID-19 pandemic and related governmental response measures on the U.S. economy and the economies of the markets in which we operate; (ii) the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management; (iii) the effect of economic conditions and interest rates on a national, regional or international basis; (iv) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (v) competitive pressures in the consumer finance, commercial finance, insurance, financial services, asset management, retail banking, mortgage lending and auto lending industries; (vi) the financial resources of, and products available from, competitors; (vii) changes in laws and regulations as well as changes in accounting standards; (viii) changes in policy by regulatory agencies; (ix) changes in the securities and foreign exchange markets; (x) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (xi) changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers; (xii) an insufficient allowance for credit losses as a result of inaccurate assumptions; (xiii) general economic, market or business conditions, including the impact of inflation; (xiv) changes in demand for loan products and financial services; (xv) concentration of credit exposure; (xvi) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (xvii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (xviii) civil unrest, natural disasters, epidemics and other catastrophic events in the Company’s geographic area; (xix) the impact, extent and timing of technological changes; and (xx) other circumstances, many of which are beyond management’s control. Management believes that the assumptions underlying the Company’s forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate.

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

Financial Condition
The following discussion provides details regarding the changes in significant balance sheet accounts at September 30, 2021 compared to December 31, 2020.
Assets
Total assets were $16,155,550 at September 30, 2021 compared to $14,929,612 at December 31, 2020.
Investments
The securities portfolio is a liquid source of interest income that also can be used in collateralizing certain deposits and other types of borrowings. The following table shows the carrying value of our securities portfolio, all of which are classified as
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available for sale, by investment type and the percentage of such investment type relative to the entire securities portfolio as of the dates presented:
September 30, 2021December 31, 2020
BalancePercentage of
Portfolio		BalancePercentage of
Portfolio
U.S. Treasury securities$3,024 0.12 %$7,079 0.53 %
Obligations of other U.S. Government agencies and corporations— — 1,009 0.08 
Obligations of states and political subdivisions378,981 14.89 305,201 22.72 
Mortgage-backed securities2,108,671 82.87 955,549 71.12 
Trust preferred securities— — 9,012 0.67 
Other debt securities53,967 2.12 65,607 4.88 
$2,544,643 100.00 %$1,343,457 100.00 %
During the nine months ended September 30, 2021, we deployed a portion of our excess liquidity into the securities portfolio and purchased $1,743,105 in investment securities. Mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprised approximately 94% of these purchases. CMOs are included in the “Mortgage-backed securities” line item in the above table. The mortgage-backed securities and CMOs held in our investment portfolio are primarily issued by government sponsored entities. Obligations of state and political subdivisions comprised approximately 6% of purchases made during the first nine months of 2021.
Proceeds from maturities, calls and principal payments on securities during the first nine months of 2021 totaled $329,520. The Company sold municipal securities, residential mortgage backed securities, trust preferred securities, and other debt securities with a carrying value of $174,285 at the time of sale for net proceeds of $176,406, resulting in a net gain on sale of $2,121 during the first nine months of 2021. Proceeds from the maturities, calls and principal payments on securities during the first nine months of 2020 totaled $314,363. The Company sold municipal securities and residential mortgage backed securities with a carrying value of $8,742 at the time of sale for net proceeds of $8,773, resulting in net gain on sale of $31 during the first nine months of 2020.
For more information about the Company’s security portfolio, see Note 2, “Securities,” in the Notes to Consolidated Financial Statements of the Company in Item 1, Financial Statements, in this report.
Loans Held for Sale
Loans held for sale, which consist of residential mortgage loans being held until they are sold in the secondary market, were $452,869 at September 30, 2021, as compared to $417,771 at December 31, 2020. Mortgage loans to be sold are sold either on a “best efforts” basis or under a mandatory delivery sales agreement. Under a “best efforts” sales agreement, residential real estate originations are locked in at a contractual rate with third party private investors or directly with government sponsored agencies, and the Company is obligated to sell the mortgages to such investors only if the mortgages are closed and funded. The risk we assume is conditioned upon loan underwriting and market conditions in the national mortgage market. Under a mandatory delivery sales agreement, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price and delivery date. Penalties are paid to the investor if we fail to satisfy the contract. Gains and losses are realized at the time consideration is received and all other criteria for sales treatment have been met. Our standard practice is to sell the loans within 30-40 days after the loan is funded. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market.
Loans
Total loans, excluding loans held for sale, were $10,016,824 at September 30, 2021 and $10,933,647 at December 31, 2020. Non purchased loans totaled $8,875,880 at September 30, 2021 compared to $9,419,540 at December 31, 2020. Loans purchased in previous acquisitions totaled $1,140,944 and $1,514,107 at September 30, 2021 and December 31, 2020, respectively.
The tables below set forth the balance of loans outstanding, net of unearned income and excluding loans held for sale, by loan type and the percentage of each loan type to total loans as of the dates presented:
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 September 30, 2021
 Non PurchasedPurchasedTotal
Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)
$1,321,569 $114,450 $1,436,019 14.34 %
Lease financing, net of unearned income79,215 — 79,215 0.79 
Real estate – construction:
Residential306,537 1,288 307,825 3.07 
Commercial779,766 3,705 783,471 7.82 
Total real estate – construction1,086,303 4,993 1,091,296 10.89 
Real estate – 1-4 family mortgage:
Primary1,657,195 150,944 1,808,139 18.05 
Home equity424,860 56,692 481,552 4.81 
Rental/investment268,609 22,507 291,116 2.91 
Land development133,732 10,204 143,936 1.44 
Total real estate – 1-4 family mortgage2,484,396 240,347 2,724,743 27.21 
Real estate – commercial mortgage:
Owner-occupied1,365,288 264,939 1,630,227 16.27 
Non-owner occupied2,323,135 456,102 2,779,237 27.74 
Land development106,475 19,791 126,266 1.26 
Total real estate – commercial mortgage3,794,898 740,832 4,535,730 45.27 
Installment loans to individuals109,499 40,322 149,821 1.50 
Total loans, net of unearned income$8,875,880 $1,140,944 $10,016,824 100.00 %
(1)Includes Paycheck Protection Program (“PPP”) loans of $67,462 as of September 30, 2021.
 December 31, 2020
 Non PurchasedPurchasedTotal
Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)
$2,360,471 $176,513 $2,536,984 23.20 %
Lease financing, net of unearned income75,862 — 75,862 0.69 
Real estate – construction:
Residential243,814 2,859 246,673 2.26 
Commercial583,338 28,093 611,431 5.59 
Total real estate – construction827,152 30,952 858,104 7.85 
Real estate – 1-4 family mortgage:
Primary1,536,181 214,770 1,750,951 16.02 
Home equity432,768 80,392 513,160 4.69 
Rental/investment264,436 31,928 296,364 2.71 
Land development123,179 14,654 137,833 1.26 
Total real estate – 1-4 family mortgage2,356,564 341,744 2,698,308 24.68 
Real estate – commercial mortgage:
Owner-occupied1,334,765 323,041 1,657,806 15.16 
Non-owner occupied2,194,739 552,728 2,747,467 25.13 
Land development120,125 29,454 149,579 1.37 
Total real estate – commercial mortgage3,649,629 905,223 4,554,852 41.66 
Installment loans to individuals149,862 59,675 209,537 1.92 
Total loans, net of unearned income$9,419,540 $1,514,107 $10,933,647 100.00 %
(1)Includes PPP loans of $1,128,703 as of December 31, 2020.
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Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. At September 30, 2021, there were no concentrations of loans exceeding 10% of total loans which are not disclosed as a category of loans separate from the categories listed above.
Deposits
The Company relies on deposits as its major source of funds. Total deposits were $13,254,829 and $12,059,081 at September 30, 2021 and December 31, 2020, respectively. Noninterest-bearing deposits were $4,492,650 and $3,685,048 at September 30, 2021 and December 31, 2020, respectively, while interest-bearing deposits were $8,762,179 and $8,374,033 at September 30, 2021 and December 31, 2020, respectively.
The growth in noninterest-bearing deposits across the Company’s footprint during the current year has been driven by government stimulus payments and client sentiment to maintain liquidity. Management continues to focus on growing and maintaining a stable source of funding, specifically noninterest-bearing deposits and other core deposits (that is, deposits excluding time deposits greater than $250,000). Noninterest bearing deposits represented 33.89% of total deposits at September 30, 2021, as compared to 30.56% of total deposits at December 31, 2020. Under certain circumstances, however, management may elect to acquire non-core deposits (in the form of time deposits) or public fund deposits (which are deposits of counties, municipalities or other political subdivisions). The source of funds that we select depends on the terms and how those terms assist us in mitigating interest rate risk, maintaining our liquidity position and managing our net interest margin. Accordingly, funds are acquired to meet anticipated funding needs at the rate and with other terms that, in management’s view, best address our interest rate risk, liquidity and net interest margin parameters.
Public fund deposits may be readily obtained based on the Company’s pricing bid in comparison with competitors. Because public fund deposits are obtained through a bid process, these deposit balances may fluctuate as competitive and market forces change. Although the Company has focused on growing stable sources of deposits to reduce reliance on public fund deposits, it participates in the bidding process for public fund deposits when pricing and other terms make it reasonable given market conditions or when management perceives that other factors, such as the public entity’s use of our treasury management or other products and services, make such participation advisable. Our public fund transaction accounts are principally obtained from public universities and municipalities, including school boards and utilities. Public fund deposits were $1,534,547 and $1,398,330 at September 30, 2021 and December 31, 2020, respectively.
Borrowed Funds
Total borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the FHLB, subordinated notes and junior subordinated debentures and are classified on the Consolidated Balance Sheets as either short-term borrowings or long-term debt. Short-term borrowings have original maturities less than one year and typically include federal funds purchased, securities sold under agreements to repurchase, and short-term FHLB advances. The following table presents our short-term borrowings by type as of the dates presented:
September 30, 2021December 31, 2020
Security repurchase agreements$11,253 $10,947 
Federal funds purchased— 10,393 
$11,253 $21,340 
At September 30, 2021, long-term debt consists of long-term FHLB advances, our junior subordinated debentures and our subordinated notes. The following table presents our long-term debt by type as of the dates presented:
September 30, 2021December 31, 2020
Long-term FHLB advances$150,425 $152,167 
Junior subordinated debentures111,228 110,794 
Subordinated notes207,210 212,009 
$468,863 $474,970 
Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. At September 30, 2021, there were no outstanding long-term FHLB advances scheduled to
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mature within twelve months or less. The Company had $3,977,848 of availability on unused lines of credit with the FHLB at September 30, 2021, as compared to $3,784,520 at December 31, 2020.
The Company has issued subordinated notes, the proceeds of which have been used for general corporate purposes, including providing capital to support the Company’s growth organically or through strategic acquisitions, repaying indebtedness and financing investments and capital expenditures, and for investments in Renasant Bank (the “Bank”) as regulatory capital. The subordinated notes qualify as Tier 2 capital under the current regulatory guidelines.
The Company owns the outstanding common securities of business trusts that issued corporation-obligated mandatorily redeemable preferred capital securities to third-party investors. The trusts used the proceeds from the issuance of their preferred capital securities and common securities (collectively referred to as “capital securities”) to buy floating rate junior subordinated debentures issued by the Company (or by companies that the Company subsequently acquired). The debentures are the trusts’ only assets and interest payments from the debentures finance the distributions paid on the capital securities.

Results of Operations
Net Income
Net income for the third quarter of 2021 was $40,063 compared to net income of $29,992 for the third quarter of 2020. Basic and diluted earnings per share (“EPS”) for the third quarter of 2021 were $0.71 as compared to basic and diluted EPS of $0.53 for the third quarter of 2020. Net income for the nine months ended September 30, 2021 was $138,838 compared to net income of $52,130 for the same period in 2020. Basic and diluted EPS were $2.47 and $2.46 for the first nine months of 2021, respectively, as compared to $0.93 and $0.92 for the first nine months of 2020, respectively.
From time to time, the Company incurs expenses and charges or recognizes valuation adjustments in connection with certain transactions with respect to which management is unable to accurately predict when these items will be incurred or, when incurred, the amount of such items. The following table presents the impact of these items on reported EPS for the dates presented. The “COVID-19 related expenses” line item in the table below primarily consists of (a) employee overtime and employee benefit accruals directly related to the Company’s response to both the COVID-19 pandemic itself and federal legislation enacted to address the pandemic, such as the CARES Act, and (b) expenses associated with supplying branches with protective equipment and sanitation supplies (such as floor markings and cautionary signage for branches, face coverings and hand sanitizer) as well as more frequent and rigorous branch cleaning.
Three Months Ended
 September 30, 2021September 30, 2020
Pre-taxAfter-taxImpact to Diluted EPSPre-taxAfter-taxImpact to Diluted EPS
Debt prepayment penalty$— $— $— $28 $22 $— 
MSR valuation adjustment— — — (828)(650)(0.01)
COVID-19 related expenses323 253 — 570 448 0.01 
Nine Months Ended
 September 30, 2021September 30, 2020
Pre-taxAfter-taxImpact to Diluted EPSPre-taxAfter-taxImpact to Diluted EPS
Debt prepayment penalties$— $— $— $118 $94 $— 
MSR valuation adjustment(13,561)(10,564)(0.19)13,694 10,916 0.19 
Restructuring charges307 239 — — — — 
COVID-19 related expenses1,478 1,151 0.02 9,730 7,758 0.14 
Net Interest Income
Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of our net income, comprising 67.41% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the third quarter of 2021 and 64.61% of total revenue for the first nine months of 2021. The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.
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Net interest income was $103,292 and $322,519 for the three and nine months ended September 30, 2021, respectively, as compared to $106,286 and $318,670 for the same respective periods in 2020. On a tax equivalent basis, net interest income was $105,002 and $327,471 for the three and nine months ended September 30, 2021, respectively, as compared to $107,885 and $323,659 for the same respective periods in 2020.
The following tables set forth average balance sheet data, including all major categories of interest-earning assets and interest-bearing liabilities, together with the interest earned or interest paid and the average yield or average rate paid on each such category for the periods presented:
 Three Months Ended September 30,
 20212020
 Average
Balance		Interest
Income/
Expense		Yield/
Rate		Average
Balance		Interest
Income/
Expense		Yield/
Rate
Assets
Interest-earning assets:
Loans held for investment:
Non purchased$8,690,443 $84,427 3.86 %$8,012,741 $81,281 4.04 %
Purchased1,200,429 15,840 5.24 1,723,714 24,034 5.55 
Paycheck Protection Program126,870 3,503 10.95 1,305,229 7,449 2.27 
Total loans held for investment10,017,742 103,770 4.11 11,041,684 112,764 4.06 
Loans held for sale451,586 2,376 2.13 378,225 3,144 3.31 
Securities:
Taxable(1)
1,942,647 6,688 1.38 1,003,886 5,473 2.17 
Tax-exempt324,219 2,297 2.83 265,679 2,205 3.30 
Interest-bearing balances with banks1,520,227 592 0.15 344,948 91 0.10 
Total interest-earning assets14,256,421 115,723 3.23 13,034,422 123,677 3.77 
Cash and due from banks195,095 210,278 
Intangible assets965,960 972,394 
Other assets712,673 711,065 
Total assets$16,130,149 $14,928,159 
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand(2)
$6,231,718 $3,821 0.24 %$5,405,085 $4,839 0.36 %
Savings deposits1,006,847 192 0.08 796,841 167 0.08 
Time deposits1,506,192 2,959 0.78 1,907,918 6,804 1.42 
Total interest-bearing deposits8,744,757 6,972 0.32 8,109,844 11,810 0.58 
Borrowed funds482,709 3,749 3.08 719,800 3,982 2.20 
Total interest-bearing liabilities9,227,466 10,721 0.46 8,829,644 15,792 0.71 
Noninterest-bearing deposits4,470,262 3,723,059 
Other liabilities212,990 255,956 
Shareholders’ equity2,219,431 2,119,500 
Total liabilities and shareholders’ equity$16,130,149 $14,928,159 
Net interest income/net interest margin$105,002 2.93 %$107,885 3.29 %
(1)U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.
(2)Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.
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 Nine Months Ended September 30,
 20212020
 Average
Balance		Interest
Income/
Expense		Yield/
Rate		Average
Balance		Interest
Income/
Expense		Yield/
Rate
Assets
Interest-earning assets:
Loans held for investment:
Non purchased$8,525,359 $249,128 3.91 %$7,847,197 $251,671 4.28 %
Purchased1,327,434 54,187 5.46 1,877,449 80,226 5.71 
Paycheck Protection Program578,643 24,310 5.62 725,891 13,335 2.45 
Total loans held for investment10,431,436 327,625 4.20 10,450,537 345,232 4.41 
Loans held for sale439,954 8,980 2.73 351,975 9,108 3.46 
Securities:
Taxable(1)
1,505,611 17,077 1.51 1,034,189 19,148 2.47 
Tax-exempt316,159 6,915 2.92 251,744 6,609 3.51 
Interest-bearing balances with banks1,176,378 1,121 0.13 387,116 1,098 0.38 
Total interest-earning assets13,869,538 361,718 3.49 12,475,561 381,195 4.08 
Cash and due from banks198,955 203,582 
Intangible assets967,458 974,182 
Other assets687,159 717,628 
Total assets$15,723,110 $14,370,953 
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand(2)
$6,083,179 $11,821 0.26 %$5,166,393 $19,616 0.51 %
Savings deposits953,391 547 0.08 741,933 592 0.11 
Time deposits1,575,220 10,552 0.90 2,019,173 23,967 1.59 
Total interest-bearing deposits8,611,790 22,920 0.36 7,927,499 44,175 0.74 
Borrowed funds483,230 11,327 3.13 849,494 13,361 2.10 
Total interest-bearing liabilities9,095,020 34,247 0.50 8,776,993 57,536 0.88 
Noninterest-bearing deposits4,202,364 3,251,612 
Other liabilities223,796 233,730 
Shareholders’ equity2,201,930 2,108,618 
Total liabilities and shareholders’ equity$15,723,110 $14,370,953 
Net interest income/net interest margin$327,471 3.16 %$323,659 3.47 %
(1)U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.
(2)Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.

The average balances of nonaccruing assets are included in the tables above. Interest income and weighted average yields on tax-exempt loans and securities have been computed on a fully tax equivalent basis assuming a federal tax rate of 21% and a state tax rate of 4.45%, which is net of federal tax benefit.
Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes in volume, mix and pricing decisions. External factors include changes in market interest rates, competition and the shape of the interest rate yield curve. As discussed in more detail below, the decline in loan yields due to the current low interest rate environment as well as changes in the mix of earning assets during the quarter due to increased liquidity on the balance sheet were the largest contributing factors to the decrease in net interest margin for the three and nine months ended September 30, 2021, as compared to the same periods in 2020. The Company has continued to focus on lowering the cost of funding through growing noninterest-bearing deposits and aggressively lowering interest rates on interest-bearing deposits. The
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Company has also increased its purchases of investment securities and continues to evaluate options to mitigate the pressure on net interest margin.
The following tables set forth a summary of the changes in interest earned, on a tax equivalent basis, and interest paid resulting from changes in volume and rates for the Company for both the three and nine months ended September 30, 2021, as compared to the same respective periods in 2020 (the changes attributable to the combined impact of yield/rate and volume have been allocated on a pro-rata basis using the absolute value of amounts calculated):
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Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
VolumeRateNet
Interest income:
Loans held for investment:
Non purchased$6,821 $(3,675)$3,146 
Purchased(6,947)(1,247)(8,194)
Paycheck Protection Program(11,665)7,719 (3,946)
Loans held for sale521 (1,289)(768)
Securities:
Taxable3,756 (2,541)1,215 
Tax-exempt438 (346)92 
Interest-bearing balances with banks441 60 501 
Total interest-earning assets(6,635)(1,319)(7,954)
Interest expense:
Interest-bearing demand deposits671 (1,689)(1,018)
Savings deposits41 (16)25 
Time deposits(1,225)(2,620)(3,845)
Borrowed funds(1,548)1,315 (233)
Total interest-bearing liabilities(2,061)(3,010)(5,071)
Change in net interest income$(4,574)$1,691 $(2,883)
Nine months ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020
VolumeRateNet
Interest income:
Loans held for investment:
Non purchased $20,693 $(23,236)$(2,543)
Purchased(22,646)(3,393)(26,039)
Paycheck Protection Program(3,182)14,157 10,975 
Loans held for sale2,010 (2,138)(128)
Securities:
Taxable6,914 (8,985)(2,071)
Tax-exempt1,528 (1,222)306 
Interest-bearing balances with banks1,118 (1,095)23 
Total interest-earning assets6,435 (25,912)(19,477)
Interest expense:
Interest-bearing demand deposits3,025 (10,820)(7,795)
Savings deposits146 (191)(45)
Time deposits(4,506)(8,909)(13,415)
Borrowed funds(7,090)5,056 (2,034)
Total interest-bearing liabilities(8,425)(14,864)(23,289)
Change in net interest income$14,860 $(11,048)$3,812 
Interest income, on a tax equivalent basis, was $115,723 and $361,718, respectively, for the three and nine months ended September 30, 2021, as compared to $123,677 and $381,195, respectively, for the same periods in 2020. This decrease in interest income, on a tax equivalent basis, is due primarily to the Federal Reserve maintaining low interest rates since March 2020 and changes in the mix of earning assets during the year due to increased liquidity on the balance sheet.
The following tables present the percentage of total average earning assets, by type and yield, for the periods presented:
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 Percentage of Total Average Earning AssetsYield
Three Months EndedThree Months Ended
 September 30,September 30,
 2021202020212020
Loans held for investment, excl. PPP69.38 %74.70 %4.02 %4.30 %
Paycheck Protection Program0.89 10.01 10.95 2.27 
Loans held for sale3.17 2.90 2.13 3.31 
Securities15.90 9.74 1.59 2.41 
Other10.66 2.65 0.15 0.10 
Total earning assets100.00 %100.00 %3.23 %3.77 %
 Percentage of Total Average Earning AssetsYield
Nine Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Loans held for investment excl. PPP71.04 %77.95 %4.12 %4.56 %
Paycheck Protection Program4.17 5.82 5.62 2.45 
Loans held for sale3.17 2.82 2.73 3.46 
Securities13.14 10.31 1.76 2.68 
Interest-bearing balances with banks8.48 3.10 0.13 0.38 
Total earning assets100.00 %100.00 %3.49 %4.08 %

For the third quarter of 2021, interest income on loans held for investment, on a tax equivalent basis, decreased $8,994 to $103,770 from $112,764 for the same period in 2020. For the nine months ended September 30, 2021, interest income on loans held for investment, on a tax equivalent basis, decreased $17,607 to $327,625 from $345,232 for the same period in 2020. Interest income on loans held for investment decreased primarily due to the Federal Reserve maintaining low interest rates since March 2020. Interest income attributable to PPP loans included in loan interest income for the three months ended September 30, 2021, was $3,503, which consisted of $306 in interest income and $3,197 in accretion of net origination fees, as compared to $7,449 for the three months ended September 30, 2020, which consisted of $3,262 in interest income and $4,187 in accretion of net origination fees. Interest income attributable to PPP loans included in loan interest income for the nine months ended September 30, 2021, was $24,310, which consisted of $4,222 in interest income and $20,088 in accretion of net origination fees, as compared to $13,335 for the nine months ended September 30, 2020, which consisted of $5,586 in interest income and $7,749 in accretion of net origination fees. The PPP origination fees, net of agent fees paid and other origination costs, are being accreted into interest income over the life of the loan. If a PPP loan is forgiven in whole or in part, as provided under the CARES Act, the Company will recognize the non-accreted portion of the net origination fee attributable to the forgiven portion of such loan as of the date of the final forgiveness determination. PPP loans increased margin and loan yield by 7 basis points and 9 basis points, respectively, during the third quarter of 2021, and 11 basis points and 8 basis points, respectively, in the first nine months of 2021. PPP loans reduced margin and loan yield by 12 basis points and 23 basis points, respectively, in the third quarter of 2020 and 6 basis points and 14 basis points, respectively, in the first nine months of 2020.
The impact from interest income collected on problem loans and purchase accounting adjustments on loans to total interest income on loans held for investment, loan yield and net interest margin is shown in the following table for the periods presented.
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Three Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Net interest income collected on problem loans$316 $282 $3,835 $884 
Accretable yield recognized on purchased loans(1)
2,871 4,949 8,597 15,118 
Total impact to interest income on loans$3,187 $5,231 $12,432 $16,002 
Impact to loan yield0.13 %0.18 %0.16 %0.20 %
Impact to net interest margin0.09 %0.16 %0.12 %0.17 %
(1)Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $1,649 and $2,286, for the third quarter of 2021 and 2020, respectively. The impact was $4,145 and $6,205 for the nine months ended September 30, 2021 and 2020, respectively. This additional interest income increased total loan yield by 7 basis points and 8 basis points for the third quarter of 2021 and 2020, respectively, while increasing net interest margin by 5 and 7 basis points for the same respective periods. For the nine months ended September 30, 2021 and 2020, the additional interest income increased total loan yields by 5 basis points and 8 basis points, respectively, while increasing net interest margin by 4 basis points and 7 basis points, respectively.
For the third quarter of 2021, interest income on loans held for sale (consisting of mortgage loans held for sale), on a tax equivalent basis, decreased $768 to $2,376 from $3,144 for the same period in 2020. For the nine months ended September 30, 2021, interest income on loans held for sale (consisting of mortgage loans held for sale), on a tax equivalent basis, decreased $128 to $8,980 from $9,108 for the same period in 2020.
Investment income, on a tax equivalent basis, increased $1,307 to $8,985 for the third quarter of 2021 from $7,678 for the third quarter of 2020. Investment income, on a tax equivalent basis, decreased $1,765 to $23,992 for the nine months ended September 30, 2021 from $25,757 for the same period in 2020. The tax equivalent yield on the investment portfolio for the third quarter of 2021 was 1.59%, down 82 basis points from 2.41% for the same period in 2020. The tax equivalent yield on the investment portfolio for the nine months ended September 30, 2021 was 1.76%, down 92 basis points from 2.68% for the same period in 2020. The decrease in taxable equivalent yield on securities was a result of the current interest rate environment. The growth in the Company’s investment securities portfolio during the year has helped offset the loss of investment income due to lower yield on securities.
Interest expense was $10,721 for the third quarter of 2021 as compared to $15,792 for the same period in 2020. Interest expense for the nine months ended September 30, 2021 was $34,247 as compared to $57,536 for the same period in 2020.
The following tables present, by type, the Company’s funding sources, which consist of total average deposits and borrowed funds, and the total cost of each funding source for the periods presented:
 Percentage of Total Average Deposits and Borrowed FundsCost of Funds
Three Months EndedThree Months Ended
 September 30,September 30,
 2021202020212020
Noninterest-bearing demand32.64 %29.66 %— %— %
Interest-bearing demand45.49 43.06 0.24 0.36 
Savings7.35 6.35 0.08 0.08 
Time deposits11.00 15.20 0.78 1.42 
Short term borrowings0.09 2.49 0.29 0.95 
Long-term Federal Home Loan Bank advances1.10 1.21 0.01 0.16 
Subordinated notes1.52 1.15 4.79 5.46 
Other borrowed funds0.81 0.88 4.36 4.32 
Total deposits and borrowed funds100.00 %100.00 %0.31 %0.50 %
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 Percentage of Total Average Deposits and Borrowed FundsCost of Funds
Nine Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Noninterest-bearing demand31.60 %27.03 %— %— %
Interest-bearing demand45.75 42.95 0.26 0.51 
Savings7.17 6.17 0.08 0.11 
Time deposits11.85 16.79 0.90 1.59 
Short-term borrowings0.10 3.85 0.30 1.02 
Long-term Federal Home Loan Bank advances1.14 1.27 0.03 0.80 
Subordinated notes1.56 1.03 4.97 5.54 
Other long term borrowings0.83 0.91 4.27 4.56 
Total deposits and borrowed funds100.00 %100.00 %0.34 %0.64 %

Interest expense on deposits was $6,972 and $11,810 for the three months ended September 30, 2021 and 2020, respectively. The cost of total deposits was 0.21% and 0.40% for the same respective periods. Interest expense on deposits was $22,920 and $44,175 for the nine months ended September 30, 2021 and 2020, respectively, and the cost of total deposits was 0.24% and 0.53% for the same respective periods. The decrease in both deposit expense and cost is attributable to the Company’s efforts to reduce deposit rates as they reprice in the current low interest rate environment. During 2021, the Company has continued its efforts to grow non-interest bearing deposits, and such deposits represent 33.89% of total deposits at September 30, 2021 compared to 30.56% of total deposits at December 31, 2020. The growth in non-interest bearing deposits during the year to date has been primarily driven by government stimulus payments and client sentiment. Low cost deposits continue to be the preferred choice of funding; however, the Company may rely on wholesale borrowings when rates are advantageous.

Interest expense on total borrowings was $3,749 and $3,982 for the three months ended September 30, 2021 and 2020, respectively. Interest expense on total borrowings was $11,327 and $13,361 for the nine months ended September 30, 2021 and 2020, respectively. The decrease in interest expense is a result of lower average borrowings.
A more detailed discussion of the cost of our funding sources is set forth below under the heading “Liquidity and Capital Resources” in this Item.
Noninterest Income
Noninterest Income to Average Assets
Three Months Ended September 30,Nine Months Ended September 30,
2021 20202021 2020
1.25% 1.89%1.53% 1.60%
Total noninterest income includes fees generated from deposit services and other fees and commissions, income from our insurance, wealth management and mortgage banking operations, realized gains on the sale of securities and all other noninterest income. Our focus is to develop and enhance our products that generate noninterest income in order to diversify revenue sources. Noninterest income was $50,755 for the third quarter of 2021 as compared to $70,928 for the same period in 2020. Noninterest income was $179,402 for the nine months ended September 30, 2021 as compared to $172,668 for the same period in 2020. During the third quarter of 2021, with the exception of mortgage banking operations, all categories of noninterest income increased when compared to the prior period as market activity began to rebound with the lifting of pandemic-related restrictions across our footprint.
Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees. Service charges on deposit accounts were $9,337 and $7,486 for the third quarter of 2021 and 2020, respectively, and $26,818 and $23,388 for the nine months ended September 30, 2021 and 2020, respectively. Overdraft fees, the largest component of service charges on deposits, were $4,876 for the three months ended September 30, 2021, as compared to $4,299 for the same period in 2020. These fees were $13,830 for the nine months ended September 30, 2021 compared to $13,935 for the same period in 2020.
Fees and commissions were $3,837 during the third quarter of 2021 as compared to $3,402 for the same period in 2020, and were $11,847 for the first nine months of 2021 as compared to $9,427 for the same period in 2020. Fees and commissions
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include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. For the third quarter of 2021, interchange fees were $2,685 as compared to $2,323 for the same period in 2020. Interchange fees were $7,901 for the nine months ended September 30, 2021 as compared to $6,534 for the same period in 2020.
Through Renasant Insurance, we offer a range of commercial and personal insurance products through major insurance carriers. Income earned on insurance products was $2,829 and $2,681 for the three months ended September 30, 2021 and 2020, respectively, and was $7,488 and $6,797 for the nine months ended September 30, 2021 and 2020, respectively. Contingency income is a bonus received from the insurance underwriters and is based both on commission income and claims experience on our clients’ policies during the previous year. Increases and decreases in contingency income are reflective of corresponding increases and decreases in the number of claims paid by insurance carriers. Contingency income, which is included in “Other noninterest income” in the Consolidated Statements of Income, was $4 and $8 for the three months ended September 30, 2021 and 2020, respectively, and $1,057 and $926 for the nine months ended September 30, 2021 and 2020, respectively.
Our Wealth Management segment has two primary divisions: Trust and Financial Services. The Trust division operates on a custodial basis which includes administration of benefit plans, as well as accounting and money management for trust accounts. The division manages a number of trust accounts inclusive of personal and corporate benefit accounts, IRAs, and custodial accounts. Fees for managing these accounts are based on changes in market values of the assets under management in the account, with the amount of the fee depending on the type of account. The Financial Services division provides specialized products and services to our customers, which include fixed and variable annuities, mutual funds, and stocks offered through a third party provider. Wealth Management revenue was $5,371 for the third quarter of 2021 compared to $4,364 for the same period in 2020 and was $15,182 for the nine months ended September 30, 2021 compared to $12,190 for the same period in 2020. The market value of assets under management or administration was $4,687,357 and $3,890,374 at September 30, 2021 and September 30, 2020, respectively.
Mortgage banking income is derived from the origination and sale of mortgage loans and the servicing of mortgage loans that the Company has sold but retained the right to service. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market. Originations of mortgage loans to be sold totaled $966,651 in the third quarter of 2021 compared to $1,253,742 for the same period in 2020. Mortgage loan originations totaled $3,189,474 in the nine months ended September 30, 2021 compared to $3,277,576 for the same period in 2020. While mortgage loan originations remain elevated compared to pre-pandemic levels, margins have compressed as the interest rate environment has begun to rise and housing inventories are below demand. Mortgage banking income was $23,292 and $49,714 for the three months ended September 30, 2021 and 2020, respectively, and was $94,878 for the first nine months ended September 30, 2021 compared to $110,739 for the same period in 2020. The table below presents the components of mortgage banking income included in noninterest income for the periods presented.
Three Months Ended September 30,Nine Months Ended September 30,
2021 20202021 2020
Gain on sales of loans, net (1)
$20,116 $45,985 $71,598 $114,327 
Fees, net3,420 5,367 12,841 13,597 
Mortgage servicing loss, net(244)(2,466)(3,122)(3,491)
MSR valuation adjustment— 828 13,561 (13,694)
Mortgage banking income, net$23,292 $49,714 $94,878 $110,739 
(1) Gain on sales of loans, net includes pipeline fair value adjustments
Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance policies and proceeds received upon the death of covered individuals. BOLI income was $1,602 for the three months ended September 30, 2021 as compared to $1,267 for the same period in 2020, and $5,318 for the first nine months of September 30, 2021 as compared to $3,759 for the same period in 2020. The increase is primarily due to the $1,222 of life insurance proceeds received during the first nine months of 2021. There were no life insurance proceeds received during the nine months ended September 30, 2020. Additionally, the Company purchased $50,000 in BOLI policies during the first nine months of 2021.
Other noninterest income was $3,723 and $2,014 for the three months ended September 30, 2021 and 2020, respectively, and was $15,750 and $6,337 for the nine months ended September 30, 2021 and 2020, respectively. Other noninterest income includes income from our SBA banking division and other miscellaneous income and can fluctuate based on production in our SBA banking division and recognition of other seasonal income items.  In the first nine months of 2021, the Company entered
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into a referral relationship with a third party to utilize its technology platform to originate PPP loans under the latest round of funding. The Company earned $3,734 of PPP referral fees from its partner during the nine months ended September 30, 2021.
Noninterest Expense
Noninterest Expense to Average Assets
Three Months Ended September 30,Nine Months Ended September 30,
2021 20202021 2020
2.56%3.10%2.80% 3.25%
Noninterest expense was $103,999 and $116,510 for the third quarter of 2021 and 2020, respectively, and was $328,711 and $349,836 for the nine months ended September 30, 2021 and 2020, respectively.
Salaries and employee benefits decreased $6,291 to $69,115 for the third quarter of 2021 as compared to $75,406 for the same period in 2020. Salaries and employee benefits decreased $9,852 to $218,104 for the nine months ended September 30, 2021 as compared to $227,956 for the same period in 2020. The decrease in salaries and employee benefits is primarily due to a decrease in incentive expenses recognized for the nine months ended September 30, 2021 and the cost savings realized by the voluntary early retirement program offered during the fourth quarter of 2020.
Data processing costs increased to $5,277 in the third quarter of 2021 from $5,259 for the same period in 2020 and were $16,380 for the nine months ended September 30, 2021 as compared to $15,312 for the same period in 2020. The Company continues to examine new and existing contracts to negotiate favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume.
Net occupancy and equipment expense for the third quarter of 2021 was $11,748, down from $13,296 for the same period in 2020. These expenses for the first nine months of 2021 were $35,660, down from $40,927 for the same period in 2020. The decrease in occupancy and equipment expense is primarily attributable to the restructuring and non-renewal of certain branch leases.
Expenses related to other real estate owned for the third quarter of 2021 were $168 as compared to $1,033 for the same period in 2020 and were $313 and $2,071, respectively, for the first nine months of 2021 and 2020. Expenses on other real estate owned included write downs of the carrying value to fair value on certain pieces of property held in other real estate owned of $290 and $1,647 for the first nine months of 2021 and 2020, respectively. For the nine months ended September 30, 2021 and 2020, other real estate owned with a cost basis of $4,007 and $6,047, respectively, was sold, resulting in a net gain of $74 and net loss of $27, respectively.
Professional fees include fees for legal and accounting services, such as routine litigation matters, external audit services as well as assistance in complying with newly-enacted and existing banking and governmental regulations. Professional fees were $2,972 for the third quarter of 2021 as compared to $3,197 for the same period in 2020 and $8,566 for the nine months ended September 30, 2021 as compared to $8,355 for the same period in 2020.
Advertising and public relations expense was $2,922 for the third quarter of 2021 as compared to $2,240 for the same period in 2020, and $9,274 for the nine months ended September 30, 2021 compared to $8,560 for the same period in 2020.
Amortization of intangible assets totaled $1,481 and $1,733 for the third quarter of 2021 and 2020, respectively, and $4,618 and $5,462 for the nine months ended September 30, 2021 and 2020, respectively. This amortization relates to finite-lived intangible assets which are being amortized over the useful lives as determined at acquisition. These finite-lived intangible assets have remaining estimated useful lives ranging from approximately 2 years to 8 years.
Communication expenses, those expenses incurred for communication to clients and between employees, were $2,198 for the third quarter of 2021 as compared to $2,319 for the same period in 2020. Communication expenses were $6,781 for the nine months ended September 30, 2021 as compared to $6,698 for the same period in 2020.
Other noninterest expense includes the provision for unfunded commitments, business development and travel expenses, other discretionary expenses, loan fees expense and other miscellaneous fees and operating expenses. Other noninterest expense was $8,118 and $28,708 for the three and nine months ended September 30, 2021 as compared to $11,999 and $34,377 for the same periods in 2020. During the third quarter of 2021 there was a recovery of provision for unfunded commitments of $200. The provision for unfunded commitments was $2,700 and $8,700 for the three and nine months ended September 30, 2020.
Efficiency Ratio
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Efficiency Ratio
Three Months Ended September 30,Nine Months Ended September 30,
2021 20202021 2020
Efficiency ratio (GAAP)66.77 %65.16 %64.85 % 70.49 %
Adjusted efficiency ratio (Non-GAAP)(1)
66.06 %62.63 %65.66 %63.89 %
(1)A reconciliation of this financial measure from GAAP to non-GAAP can be found under the “Non-GAAP Financial Measures” heading at the end of this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The efficiency ratio is a measure of productivity in the banking industry. (This ratio is a measure of our ability to turn expenses into revenue. That is, the ratio is designed to reflect the percentage of one dollar that we must expend to generate a dollar of revenue.) The Company calculates this ratio by dividing noninterest expense by the sum of net interest income on a fully tax equivalent basis and noninterest income. The table above shows the impact on the efficiency ratio of items that (1) the Company does not consider to be part of our core operating activities, such as amortization of intangibles, or (2) the Company incurred in connection with certain transactions where management is unable to accurately predict the timing of when these items will be incurred or, when incurred, the amount of such items, such as expenses or recoveries incurred in connection with our response to the COVID-19 pandemic, our MSR valuation adjustment and the provision for unfunded commitments. We remain committed to aggressively managing our costs within the framework of our business model. Our goal is to improve the efficiency ratio over time from currently reported levels as a result of revenue growth while at the same time controlling noninterest expenses.
Income Taxes
Income tax expense for the third quarter of 2021 and 2020 was $11,185 and $7,612, respectively. The effective tax rates for those periods were 21.84% and 21.58%, respectively. Income tax expense for the nine months ended September 30, 2021 and 2020 was $35,572 and $13,022, respectively. The effective tax rates for those periods were 22.10% and 20.28%, respectively. In the second quarter of 2021 the Company received a benefit from a one-time state tax credit investment. The investment of $3,112 was fully amortized in other noninterest expense and the credit of $3,460 reduced income taxes for the second quarter of 2021.

Risk Management

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

COVID-19 Update. At September 30, 2021, the Company’s credit quality metrics remained stable. The Company is continuing to monitor all asset categories given that any category or borrower could be negatively impacted by the pandemic, with enhanced monitoring of loans remaining on deferral under the Company’s loan deferral programs implemented in 2020 and described in more detail in the section entitled “Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments” in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020, as well as a focus on those industries more highly impacted by the pandemic, primarily the hospitality and senior living industries. At September 30, 2021, the Company had 41 loans (not in thousands) on deferral with an aggregate balance of approximately $3,360, or 0.04% of our loan portfolio (excluding PPP loans) by dollar value. In accordance with the applicable guidance, none of these loans are considered “restructured loans” and thus are not included in the discussion of our restructured loans below.

Management of Credit Risk. Inherent in any lending activity is credit risk, that is, the risk of loss should a borrower default. Credit risk is monitored and managed on an ongoing basis by our credit administration department, our problem asset resolution committee and the Board of Directors Credit Review Committee. Oversight of the Company’s lending operations (including adherence to our policies and procedures governing the loan approval and monitoring process), credit quality and loss mitigation are major concerns of credit administration and these committees. The Company’s central appraisal review department reviews and approves third-party appraisals obtained by the Company on real estate collateral and monitors loan maturities to ensure updated appraisals are obtained. This department is managed by a State Certified General Real Estate Appraiser and employs three additional State Certified General Real Estate Appraisers and four real estate evaluators. In addition, we maintain a loan review staff to independently monitor loan quality and lending practices. Loan review personnel monitor and, if necessary, adjust the grades assigned to loans through periodic examination, focusing their review on
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commercial and real estate loans rather than consumer and small balance consumer mortgage loans, such as 1-4 family mortgage loans.
In compliance with loan policy, the lending staff is given lending limits based on their knowledge and experience. In addition, each lending officer’s prior performance is evaluated for credit quality and compliance as a tool for establishing and enhancing lending limits. Before funds are advanced on consumer and commercial loans below certain dollar thresholds, loans are reviewed and scored using centralized underwriting methodologies. Loan quality, or “risk-rating,” grades are assigned based upon certain factors, which include the scoring of the loans. This information is used to assist management in monitoring credit quality. Loan requests of amounts greater than an officer’s lending limit are reviewed for approval by senior credit officers.
For loans with a commercial purpose, risk-rating grades are assigned by lending, credit administration and loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Loan grades range from 1 to 9, with 1 rated loans having the least credit risk.
Management’s problem asset resolution committee and the Board of Directors’ Credit Review Committee monitor loans that are past due or those that have been downgraded and placed on the Company’s internal watch list due to a decline in the collateral value or cash flow of the borrower; the committees then adjust loan grades accordingly. This information is used to assist management in monitoring credit quality. When the ultimate collectability of a loan’s principal is in doubt, wholly or partially, the loan is placed on nonaccrual.
After all collection efforts have failed, collateral securing loans may be repossessed and sold or, for loans secured by real estate, foreclosure proceedings initiated. The collateral is sold at public auction for fair market value (based upon recent appraisals as described above), with fees associated with the foreclosure being deducted from the sales price. The purchase price is applied to the outstanding loan balance. If the loan balance is greater than the sales proceeds, the deficient balance is sent to the Board of Directors’ Credit Review Committee for charge-off approval. These charge-offs reduce the allowance for credit losses on loans. Charge-offs reflect the realization of losses in the portfolio that were recognized previously through the provision for credit losses on loans.
The Company’s practice is to charge off estimated losses as soon as such losses are identified and reasonably quantified. Net charge-offs for the first nine months of 2021 were $4,906, or 0.06% of average loans (annualized), compared to net charge-offs of $2,898, or 0.04% of average loans (annualized), for the same period in 2020. The charge-offs were fully reserved for in the Company’s allowance for credit losses on loans.

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

The appropriate level of the allowance is based on an ongoing analysis of the loan portfolio and represents an amount that management deems adequate to provide for inherent losses, including loans evaluated on a collective (pooled) basis and those evaluated on an individual basis as set forth in ASC 326. The credit loss estimation process involves procedures to appropriately consider the unique characteristics of the Company’s loan portfolio segments. Credit quality is assessed and monitored by evaluating various attributes, and the results of those evaluations are utilized in underwriting new loans and in the Company’s process for the estimation of expected credit losses. Credit quality monitoring procedures and indicators can include an assessment of problem loans, the types of loans, historical loss experience, new lending products, emerging credit trends, changes in the size and character of loan categories, and other factors, including our risk rating system, regulatory guidance and economic conditions, such as the unemployment rate and GDP growth in the national and local economies as well as trends in the market values of underlying collateral securing loans, all as determined based on input from management, loan review staff and other sources. This evaluation is complex and inherently subjective, as it requires estimates by management that are inherently uncertain and therefore susceptible to significant revision as more information becomes available. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and provision for credit loss in those future periods.

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

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

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

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

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

The following table presents the allocation of the allowance for credit losses on loans by loan category and the percentage of loans in each category to total loans as of the dates presented:
 
September 30, 2021December 31, 2020September 30, 2020
Balance% of TotalBalance% of TotalBalance% of Total
Commercial, financial, agricultural$34,977 14.34 %$39,031 23.20 %$38,195 23.89 %
Lease financing1,570 0.79 %1,624 0.69 %1,832 0.75 %
Real estate – construction16,169 10.89 %16,047 7.85 %13,819 6.98 %
Real estate – 1-4 family mortgage32,181 27.21 %32,165 24.68 %32,705 24.89 %
Real estate – commercial mortgage73,895 45.27 %76,127 41.66 %70,582 41.30 %
Installment loans to individuals11,246 1.50 %11,150 1.92 %10,965 2.19 %
Total$170,038 100.00 %$176,144 100.00 %$168,098 100.00 %

The provision for credit losses on loans charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for credit losses on loans at a level that is believed to be adequate to meet the inherent risks of losses in our loan portfolio. The Company recorded a negative provision (recovery) for credit losses of $1,200 during the
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third quarter and first nine months of 2021, as compared to a provision for credit losses on loans of $23,100 in the third quarter of 2020 and $76,350 in the first nine months of 2020. The Company’s allowance for credit loss model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years. Based on the continual improvements in these forecasts over the last few quarters, the Company’s allowance model indicated that a release of $1,200 of the allowance for credit losses was appropriate during the third quarter of 2021.
The table below reflects the activity in the allowance for credit losses on loans for the periods presented:
Three Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Balance at beginning of period$172,354 $145,387 $176,144 $52,162 
Impact of the adoption of ASC 326— — — 42,484 
Charge-offs
Commercial, financial, agricultural1,225 420 5,907 1,969 
Lease financing13 168 13 168 
Real estate – construction— 136 52 668 
Real estate – 1-4 family mortgage276 720 529 1,083 
Real estate – commercial mortgage184 553 416 2,600 
Installment loans to individuals1,281 1,579 4,286 6,003 
Total charge-offs2,979 3,576 11,203 12,491 
Recoveries
Commercial, financial, agricultural418 698 940 996 
Lease financing11 1 36 11 
Real estate – construction— 31 13 31 
Real estate – 1-4 family mortgage193 152 855 288 
Real estate – commercial mortgage190 711 504 2,451 
Installment loans to individuals1,051 1,594 3,949 5,816 
Total recoveries1,863 3,187 6,297 9,593 
Net charge-offs1,116 389 4,906 2,898 
Provision for credit losses on loans(1,200)23,100 (1,200)76,350 
Balance at end of period$170,038 $168,098 $170,038 $168,098 
Net charge-offs (annualized) to average loans0.04 %0.01 %0.06 %0.04 %
Net charge-offs to allowance for credit losses on loans0.66 %0.23 %2.89 %1.72 %
Allowance for credit losses on loans to:
Total loans1.70 %1.52 %
Total loans excluding PPP loans(1)
1.71 %1.72 %
Nonperforming loans299.68 %367.05 %
Nonaccrual loans304.96 %385.09 %
(1) Allowance for credit losses on loans to total loans excluding PPP loans is a non-GAAP financial measure. A reconciliation of this financial measure from GAAP to non-GAAP as well as an explanation of why the Company provides non-GAAP financial measures can be found under the “Non-GAAP Financial Measures” heading at the end of this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations


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The table below reflects annualized net charge-offs to daily average loans outstanding, by loan category, during the periods presented:
Nine Months Ended
September 30, 2021September 30, 2020
Net Charge-offsAverage LoansAnnualized Net Charge-offs to Average LoansNet Charge-offsAverage LoansAnnualized Net Charge-offs to Average Loans
Commercial, financial, agricultural$4,967$1,968,5410.34%$973$2,109,7870.06%
Lease financing(23)75,620(0.04)15783,8440.25
Real estate – construction39986,3370.01637818,7790.10
Real estate – 1-4 family mortgage(326)2,711,619(0.02)7952,808,6460.04
Real estate – commercial mortgage(88)4,519,793—1494,335,604—
Installment loans to individuals337169,5260.27187293,8770.08
Total$4,906$10,431,4360.06%$2,898$10,450,5370.04%

The following table provides further details of the Company’s net charge-offs (recoveries) of loans secured by real estate for the periods presented:
 
Three Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Real estate – construction:
Residential$— $105 $39 $637 
Total real estate – construction— 105 39 637 
Real estate – 1-4 family mortgage:
Primary115 661 57 921 
Home equity(46)(29)(109)(51)
Rental/investment7 (8)(192)20 
Land development7 (56)(82)(95)
Total real estate – 1-4 family mortgage83 568 (326)795 
Real estate – commercial mortgage:
Owner-occupied18 (190)(98)1,224 
Non-owner occupied(24)33 (14)(1,097)
Land development— (1)24 22 
Total real estate – commercial mortgage(6)(158)(88)149 
Total net charge-offs of loans secured by real estate$77 $515 $(375)$1,581 

Allowance for Credit Losses on Unfunded Commitments; Provision for Credit Losses on Unfunded Commitments. The Company maintains a separate allowance for credit losses on unfunded loan commitments, which is included in the “Other liabilities” line item on the Consolidated Balance Sheets. Management estimates the amount of expected losses on unfunded loan commitments by calculating a likelihood of funding over the contractual period for exposures that are not unconditionally cancellable by the Company and applying the loss factors used in the allowance for credit losses on loans methodology described above to unfunded commitments for each loan type. No credit loss estimate is reported for off-balance-sheet credit exposures that are unconditionally cancellable by the Company. A roll-forward of the allowance for credit losses on unfunded commitments is shown in the tables below.
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Three Months Ended September 30,20212020
Allowance for credit losses on unfunded loan commitments:
Beginning balance$20,535 $17,335 
(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense)(200)2,700 
Ending balance$20,335 $20,035 
Nine Months Ended September 30,20212020
Allowance for credit losses on unfunded loan commitments:
Beginning balance$20,535 $946 
Impact of the adoption of ASC 326
— 10,389 
(Recovery of) provision for credit losses on unfunded loan commitments (included in other noninterest expense)(200)8,700 
Ending balance$20,335 $20,035 
Nonperforming Assets. Nonperforming assets consist of nonperforming loans and other real estate owned. Nonperforming loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue. Generally, the accrual of interest is discontinued when the full collection of principal or interest is in doubt or when the payment of principal or interest has been contractually 90 days past due, unless the obligation is both well secured and in the process of collection. Management, the problem asset resolution committee and our loan review staff closely monitor loans that are considered to be nonperforming.

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

The following tables provide details of the Company’s non purchased and purchased nonperforming assets as of the dates presented.
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Non PurchasedPurchased Total
September 30, 2021
Nonaccruing loans$29,266 $26,492 $55,758 
Accruing loans past due 90 days or more908 74 982 
Total nonperforming loans30,174 26,566 56,740 
Other real estate owned2,252 2,453 4,705 
Total nonperforming assets$32,426 $29,019 $61,445 
Nonperforming loans to total loans0.57 %
Nonaccruing loans to total loans0.56 %
Nonperforming assets to total assets0.38 %
December 31, 2020
Nonaccruing loans$20,369 $31,051 $51,420 
Accruing loans past due 90 days or more3,783 267 4,050 
Total nonperforming loans24,152 31,318 55,470 
Other real estate owned2,045 3,927 5,972 
Total nonperforming assets$26,197 $35,245 $61,442 
Nonperforming loans to total loans0.51 %
Nonaccruing loans to total loans0.47 %
Nonperforming assets to total assets0.41 %

The level of nonperforming loans increased $1,270 from December 31, 2020 to September 30, 2021, while OREO decreased $1,267 during the same period.
The following table presents nonperforming loans by loan category as of the dates presented:
September 30,
2021		December 31, 2020September 30,
2020
Commercial, financial, agricultural$16,027 $16,668 $17,422 
Lease financing11 48 — 
Real estate – construction:
Residential— 497 — 
Commercial— — — 
Total real estate – construction— 497 — 
Real estate – 1-4 family mortgage:
Primary17,378 16,317 15,583 
Home equity2,041 2,273 1,949 
Rental/investment1,016 1,526 1,284 
Land development243 345 395 
Total real estate – 1-4 family mortgage20,678 20,461 19,211 
Real estate – commercial mortgage:
Owner-occupied5,732 6,364 6,805 
Non-owner occupied13,412 10,204 1,201 
Land development366 572 519 
Total real estate – commercial mortgage19,510 17,140 8,525 
Installment loans to individuals514 656 638 
Total nonperforming loans$56,740 $55,470 $45,796 

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Total nonperforming loans as a percentage of total loans were 0.57% as of September 30, 2021 as compared to 0.51% and 0.41% as of December 31, 2020 and September 30, 2020, respectively. The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 299.68% as of September 30, 2021 as compared to 317.55% as of December 31, 2020 and 367.05% as of September 30, 2020.

Management has evaluated the aforementioned loans and other loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses at September 30, 2021. Management also continually monitors past due loans for potential credit quality deterioration. Total loans 30-89 days past due but still accruing interest were $14,806 at September 30, 2021 as compared to $26,286 at December 31, 2020 and $16,644 at September 30, 2020.

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

As shown below, restructured loans totaled $20,183 at September 30, 2021 as compared to $20,448 at December 31, 2020 and $20,322 at September 30, 2020. At September 30, 2021, loans restructured through interest rate concessions represented 34% of total restructured loans, while loans restructured by a concession in payment terms represented the remainder. The following table provides further details of the Company’s restructured loans in compliance with their modified terms as of the dates presented:

September 30,
2021		December 31, 2020September 30,
2020
Commercial, financial, agricultural$1,062 $2,326 $2,417 
Real estate – 1-4 family mortgage:
Primary11,415 9,460 8,359 
Home equity299 332 333 
Rental/investment354 432 724 
Total real estate – 1-4 family mortgage12,068 10,224 9,416 
Real estate – commercial mortgage:
Owner-occupied5,546 6,838 6,854 
Non-owner occupied1,357 797 1,355 
Land development76 183 186 
Total real estate – commercial mortgage6,979 7,818 8,395 
Installment loans to individuals74 80 94 
Total restructured loans in compliance with modified terms$20,183 $20,448 $20,322 

Changes in the Company’s restructured loans are set forth in the table below:
 
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20212020
Balance at January 1,$20,448 $11,954 
Additional advances or loans with concessions10,852 12,946 
Reclassified as performing restructured loan150 428 
Reductions due to:
Reclassified as nonperforming(2,855)(2,999)
Paid in full(7,341)(1,360)
Charge-offs(205)(3)
Paydowns(866)(644)
Balance at September 30,$20,183 $20,322 

The following table shows the principal amounts of nonperforming and restructured loans as of the dates presented. All loans where information exists about possible credit problems that would cause us to have serious doubts about the borrower’s ability to comply with the current repayment terms of the loan have been reflected in the table below.
 
September 30,
2021		December 31, 2020September 30,
2020
Nonaccruing loans$55,758 $51,420 $43,652 
Accruing loans past due 90 days or more982 4,050 2,144 
Total nonperforming loans56,740 55,470 45,796 
Restructured loans in compliance with modified terms20,183 20,448 20,322 
Total nonperforming and restructured loans$76,923 $75,918 $66,118 
The following table provides details of the Company’s other real estate owned as of the dates presented:
 
September 30,
2021		December 31, 2020September 30,
2020
Residential real estate$503 $179 $1,870 
Commercial real estate2,671 2,665 2,403 
Residential land development315 1,013 1,669 
Commercial land development1,216 2,115 2,211 
Total other real estate owned$4,705 $5,972 $8,153 

Changes in the Company’s other real estate owned were as follows:
20212020
Balance at January 1,$5,972 $8,010 
Transfers of loans3,171 7,887 
Impairments(290)(1,647)
Dispositions(4,007)(6,047)
Other(141)(50)
Balance at September 30,$4,705 $8,153 
Other real estate owned with a cost basis of $4,007 was sold during the nine months ended September 30, 2021, resulting in a net gain of $74, while other real estate owned with a cost basis of $6,047 was sold during the nine months ended September 30, 2020, resulting in a net loss of $27.

Interest Rate Risk
Market risk is the risk of loss from adverse changes in market prices and rates. The majority of assets and liabilities of a financial institution are monetary in nature and therefore differ greatly from most commercial and industrial companies that have significant investments in fixed assets and inventories. Our market risk arises primarily from interest rate risk inherent in lending and deposit-taking activities. Management believes a significant impact on the Company’s financial results stems from
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our ability to react to changes in interest rates. A sudden and substantial change in interest rates may adversely impact our earnings because the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis.
Because of the impact of interest rate fluctuations on our profitability, the Board of Directors and management actively monitor and manage our interest rate risk exposure. We have an Asset/Liability Committee (“ALCO”) that is authorized by the Board of Directors to monitor our interest rate sensitivity and to make decisions relating to that process. The ALCO’s goal is to structure our asset/liability composition to maximize net interest income while managing interest rate risk so as to minimize the adverse impact of changes in interest rates on net interest income and capital. The ALCO uses an asset/liability model as the primary quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model is used to perform both net interest income forecast simulations for multiple year horizons and economic value of equity (“EVE”) analyses, each under various interest rate scenarios, which could impact the results presented in the table below.
Net interest income simulations measure the short and medium-term earnings exposure from changes in market interest rates in a rigorous and explicit fashion. Our current financial position is combined with assumptions regarding future business to calculate net interest income under various hypothetical rate scenarios. EVE measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time for a given set of market rate assumptions. An increase in EVE due to a specified rate change indicates an improvement in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet.
The following table presents the projected impact of a change in interest rates on (1) static EVE and (2) earnings at risk (that is, net interest income) for the 1-12 and 13-24 month periods commencing October 1, 2021, in each case as compared to the result under rates present in the market on September 30, 2021. The changes in interest rates assume an instantaneous and parallel shift in the yield curve and do not account for changes in the slope of the yield curve.
 Percentage Change In:
Immediate Change in Rates of (in basis points):Economic Value Equity (EVE)Earning at Risk (Net Interest Income)
Static1-12 Months13-24 Months
+20011.83%16.87%22.94%
+1007.20%8.57%12.20%

The rate shock results for the net interest income simulations for the next twenty-four months produce an asset sensitive position at September 30, 2021 and are all within the parameters set by the Board of Directors. The preceding measures assume no change in the size or asset/liability compositions of the balance sheet, and they do not reflect future actions the ALCO may undertake in response to such changes in interest rates.
The scenarios assume instantaneous movements in interest rates in increments of plus 100 and 200. As interest rates are adjusted over a period of time, it is our strategy to proactively change the volume and mix of our balance sheet in order to mitigate our interest rate risk. The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions, including asset prepayment speeds, the impact of competitive factors on our pricing of loans and deposits, how responsive our deposit repricing is to the change in market rates and the expected life of non-maturity deposits. These business assumptions are based upon our experience, business plans and published industry experience; however, such assumptions may not necessarily reflect the manner or timing in which cash flows, asset yields and liability costs respond to changes in market rates. Because these assumptions are inherently uncertain, actual results will differ from simulated results.
The Company utilizes derivative financial instruments, including interest rate contracts such as swaps, caps and/or floors, as part of its ongoing efforts to mitigate its interest rate risk exposure and to facilitate the needs of its customers. The Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into an offsetting derivative contract position with other financial institutions. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures. At September 30, 2021, the Company had notional amounts of $190,200 on interest rate contracts with corporate customers and $190,200 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts and certain fixed rate loans.

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Additionally, the Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate and adjustable rate residential mortgage loans and also enters into forward commitments to sell residential mortgage loans to secondary market investors.
The Company also enters into forward interest rate swap contracts on its FHLB borrowings and its junior subordinated debentures that are accounted for as cash flow hedges. Under each of these contracts, the Company pays a fixed rate of interest and receives a variable rate of interest based on the three-month or one-month LIBOR plus a predetermined spread. The Company entered into an interest rate swap contract on its subordinated notes that is accounted for as a fair value hedge. Under this contract, the Company pays a variable rate of interest based on the three-month LIBOR plus a predetermined spread and receives a fixed rate of interest.
For more information about the Company’s derivatives, see Note 10, “Derivative Instruments,” in the Notes to Consolidated Financial Statements of the Company in Item 1, Financial Statements.

Liquidity and Capital Resources

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

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

Our investment portfolio is another alternative for meeting liquidity needs. These assets generally have readily available markets that offer conversions to cash as needed. Within the next twelve months, the securities portfolio is forecasted to generate cash flow through principal payments and maturities equal to approximately 18.85% of the carrying value of the total securities portfolio. Securities within our investment portfolio are also used to secure certain deposit types, short-term borrowings and derivative instruments. At September 30, 2021, securities with a carrying value of $557,463 were pledged to secure public fund deposits and as collateral for short-term borrowings and derivative instruments as compared to securities with a carrying value of $614,610 similarly pledged at December 31, 2020.

Other sources available for meeting liquidity needs include federal funds purchased and short-term and long-term advances from the FHLB. Interest is charged at the prevailing market rate on federal funds purchased and FHLB advances. There were no short-term borrowings from the FHLB at September 30, 2021 or December 31, 2020. Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and also are used to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. At September 30, 2021, the balance of our outstanding long-term advances with the FHLB was $150,425 compared to $152,167 at December 31, 2020. The total amount of the remaining credit available to us from the FHLB at September 30, 2021 was $3,977,848. We also maintain lines of credit with other commercial banks totaling $180,000. These are unsecured lines of credit with the majority maturing at various times within the next twelve months. There were no amounts outstanding under these lines of credit at September 30, 2021 or December 31, 2020.

In 2016 and 2020, we accessed the capital markets to generate liquidity in the form of subordinated notes. In addition, we assumed subordinated notes in connection with our acquisition of Metropolitan BancGroup, Inc. in 2017. The carrying value of the subordinated notes, net of unamortized debt issuance costs, was $207,210 at September 30, 2021.

The following table presents, by type, the Company’s funding sources, which consist of total average deposits and borrowed funds, and the total cost of each funding source for the periods presented:
 
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 Percentage of Total Average Deposits and Borrowed FundsCost of Funds
Nine Months EndedNine Months Ended
 September 30,September 30,
 2021202020212020
Noninterest-bearing demand31.60 %27.03 %— %— %
Interest-bearing demand45.75 42.95 0.26 0.51 
Savings7.17 6.17 0.08 0.11 
Time deposits11.85 16.79 0.90 1.59 
Short-term borrowings0.10 3.85 0.30 1.02 
Long-term Federal Home Loan Bank advances1.14 1.27 0.03 0.80 
Subordinated notes1.56 1.03 4.97 5.54 
Other borrowed funds0.83 0.91 4.27 4.56 
Total deposits and borrowed funds100.00 %100.00 %0.34 %0.64 %

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

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

Cash provided by financing activities for the nine months ended September 30, 2021 was $1,125,027, as compared to $1,310,528 for the same period in 2020. Deposits increased $1,195,748 and $1,721,118 for the nine months ended September 30, 2021 and 2020, respectively.

Restrictions on Bank Dividends, Loans and Advances
The Company’s liquidity and capital resources, as well as its ability to pay dividends to its shareholders, are substantially dependent on the ability of the Renasant Bank to transfer funds to the Company in the form of dividends, loans and advances. Under Mississippi law, a Mississippi bank may not pay dividends unless its earned surplus is in excess of three times capital stock. A Mississippi bank with earned surplus in excess of three times capital stock may pay a dividend, subject to the approval of the Mississippi Department of Banking and Consumer Finance (the “DBCF”). In addition, the FDIC also has the authority to prohibit the Bank from engaging in business practices that the FDIC considers to be unsafe or unsound, which, depending on the financial condition of the bank, could include the payment of dividends. Accordingly, the approval of the DBCF is required prior to the Bank paying dividends to the Company, and under certain circumstances the approval of the FDIC may be required.
Federal Reserve regulations also limit the amount the Bank may loan to the Company unless such loans are collateralized by specific obligations. At September 30, 2021, the maximum amount available for transfer from the Bank to the Company in the form of loans was $157,470. The Company maintains a $3,000 line of credit collateralized by cash with the Bank. There were no amounts outstanding under this line of credit at September 30, 2021.
These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the nine months ended September 30, 2021, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.

Potential Demands on Liquidity from Off-Balance Sheet Arrangements
The Company enters into loan commitments and standby letters of credit in the normal course of its business. Loan commitments are made to accommodate the financial needs of the Company’s customers. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Both arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Company’s normal credit
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policies, including establishing a provision for credit losses on unfunded commitments. Collateral (e.g., securities, receivables, inventory, equipment, etc.) is obtained based on management’s credit assessment of the customer.
Loan commitments and standby letters of credit do not necessarily represent future cash requirements of the Company in that while the borrower has the ability to draw upon these commitments at any time, these commitments often expire without being drawn upon. The Company’s unfunded loan commitments and standby letters of credit outstanding were as follows as of the dates presented:
September 30, 2021December 31, 2020
Loan commitments$3,058,740 $2,749,988 
Standby letters of credit95,201 90,597 

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


Shareholders’ Equity and Regulatory Matters

Total shareholders’ equity of the Company was $2,203,944 at September 30, 2021 compared to $2,132,733 at December 31, 2020. Book value per share was $39.53 and $37.95 at September 30, 2021 and December 31, 2020, respectively. The growth in shareholders’ equity was attributable to earnings retention offset by changes in accumulated other comprehensive income and dividends declared.

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

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

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

The Company has junior subordinated debentures with a carrying value of $111,228 at September 30, 2021, of which $107,637 is included in the Company’s Tier 1 capital. Federal Reserve guidelines limit the amount of securities that, similar to our junior subordinated debentures, are includable in Tier 1 capital, but these guidelines did not impact the debentures we include in Tier 1 capital at September 30, 2021. Although our existing junior subordinated debentures are currently unaffected by these Federal Reserve guidelines, on account of changes enacted as part of the Dodd-Frank Act, any new trust preferred securities are not includable in Tier 1 capital. Further, if as a result of an acquisition we exceed $15,000,000 in assets, or if we make any acquisition after we have exceeded $15,000,000 in assets, we will lose Tier 1 treatment of our junior subordinated debentures.

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

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:
 
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Capital TiersTier 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 capitalized5% or above6.5% or above 8% or above 10% or above
Adequately capitalized4% or above4.5% or above 6% or above 8% or above
UndercapitalizedLess than 4%Less than 4.5% Less than 6% Less than 8%
Significantly undercapitalizedLess than 3%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:
 ActualMinimum Capital
Requirement to be
Well Capitalized		Minimum Capital
Requirement to be
Adequately
Capitalized (including the Capital Conservation Buffer)
 AmountRatioAmountRatioAmountRatio
September 30, 2021
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio$1,287,684 11.02 %$759,458 6.50 %$817,878 7.00 %
Tier 1 risk-based capital ratio1,395,321 11.94 %934,717 8.00 %993,137 8.50 %
Total risk-based capital ratio1,712,500 14.66 %1,168,397 10.00 %1,226,816 10.50 %
Leverage capital ratios:
Tier 1 leverage ratio1,395,321 9.18 %759,755 5.00 %607,804 4.00 %
Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio$1,454,879 12.45 %$759,370 6.50 %$817,783 7.00 %
Tier 1 risk-based capital ratio1,454,879 12.45 %934,609 8.00 %993,022 8.50 %
Total risk-based capital ratio1,574,697 13.48 %1,168,261 10.00 %1,226,674 10.50 %
Leverage capital ratios:
Tier 1 leverage ratio1,454,879 9.58 %758,964 5.00 %607,171 4.00 %
December 31, 2020
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio$1,199,394 10.93 %$713,086 6.50 %$767,939 7.00 %
Tier 1 risk-based capital ratio1,306,597 11.91 %877,644 8.00 %932,497 8.50 %
Total risk-based capital ratio1,653,694 15.07 %1,097,055 10.00 %1,151,908 10.50 %
Leverage capital ratios:
Tier 1 leverage ratio1,306,597 9.37 %697,579 5.00 %558,063 4.00 %
Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio$1,369,994 12.49 %$712,709 6.50 %$767,533 7.00 %
Tier 1 risk-based capital ratio1,369,994 12.49 %877,181 8.00 %932,004 8.50 %
Total risk-based capital ratio1,504,985 13.73 %1,096,476 10.00 %1,151,299 10.50 %
Leverage capital ratios:
Tier 1 leverage ratio1,369,994 9.83 %696,738 5.00 %557,391 4.00 %

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

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

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

Adjusted Efficiency Ratio
Three months ended September 30,Nine months ended September 30,
2021202020212020
Interest income (fully tax equivalent basis)$115,723 $123,677 $361,718 $381,195 
Interest expense10,721 15,792 34,247 57,536 
Net interest income (fully tax equivalent basis)105,002 107,885 327,471 323,659 
Total noninterest income50,755 70,928 179,402 172,668 
Net gains on sales of securities764 — 2,121 31 
MSR valuation adjustment— 828 13,561 (13,694)
Adjusted noninterest income49,991 70,100 163,720 186,331 
Total noninterest expense103,999 116,510 328,711 349,836 
Intangible amortization1,481 1,733 4,618 5,462 
Debt prepayment penalty— 28 — 118 
Restructuring charges— — 307 — 
COVID-19 related expenses323 570 1,478 9,730 
Provision for unfunded commitments(200)2,700 (200)8,700 
Adjusted noninterest expense102,395 111,479 322,508 325,826 
Efficiency Ratio (GAAP)66.77 %65.16 %64.85 %70.49 %
Adjusted Efficiency Ratio (non-GAAP)66.06 %62.63 %65.66 %63.89 %

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Allowance for Credit Losses on Loans to Total Loans, excluding PPP Loans
September 30, 2021December 31, 2020
Total loans (GAAP)$10,016,824 $10,933,647 
Less PPP loans67,462 1,128,703 
Adjusted total loans (non-GAAP)$9,949,362 $9,804,944 
Allowance for Credit Losses on Loans$170,038 $176,144 
ACL/Total loans (GAAP)1.70 %1.61 %
ACL/Total loans excluding PPP loans (non-GAAP)1.71 %1.80 %

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


Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our market risk since December 31, 2020. For additional information regarding our market risk, see our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 4. CONTROLS AND PROCEDURES
Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective for ensuring that information the Company is required to disclose in reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Principal Executive and Principal Financial Officers, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II. OTHER INFORMATION

Item 1A. RISK FACTORS

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

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
None.
Issuer Purchases of Equity Securities

During the three month period ended September 30, 2021, the Company repurchased shares of its common stock as indicated in the following table:
Total Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Share Repurchase Plans
Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under Share Repurchase Plans(2)
July 1, 2021 to July 31, 2021342 $38.70 — $50,000 
August 1, 2021 to August 31, 2021334,503 35.69 331,510 38,177 
September 1, 2021 to September 30, 2021282,257 33.80 280,597 28,704 
Total617,102 $34.83 612,107 
(1)The Company announced a $50.0 million stock repurchase program on October 20, 2020 which expired as of October 20, 2021. Under the plan, 612,107 shares were repurchased in the third quarter of 2021.
Share amounts in this column also include shares of Renasant Corporation stock withheld to satisfy federal and state tax liabilities related to the vesting of time-based restricted stock awards during the period. A total of 342, 2,993, and 1,660 shares were withheld for such purpose in July, August and September, respectively.
(2)Dollars in thousands
Please refer to the information discussing restrictions on the Company’s ability to pay dividends under the heading “Liquidity and Capital Resources” in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report, which is incorporated by reference herein.
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Item 6. EXHIBITS
 
Exhibit
Number		 Description
(3)(i) 
(3)(ii) 
(3)(iii)
(31)(i) 
(31)(ii) 
(32)(i) 
(32)(ii) 
(101) The following materials from Renasant Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 were formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements (Unaudited).
(104)The cover page of Renasant Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL (included in Exhibit 101).

(1)Filed as exhibit 3.1 to the Form 10-Q of the Company filed with the Securities and Exchange Commission (the “Commission”) on May 10, 2016 and incorporated herein by reference.
(2)Filed as exhibit 3(ii) to the Form 8-K of the Company filed with the Commission on July 20, 2018 and incorporated herein by reference.
(3)Filed as exhibit 3(ii) to the Form 8-K of the Company filed with the Commission on April 30, 2021 and incorporated herein by reference.

The Company does not have any long-term debt instruments under which securities are authorized exceeding ten percent of the total assets of the Company and its subsidiaries on a consolidated basis. The Company will furnish to the Securities and Exchange Commission, upon its request, a copy of all long-term debt instruments.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 RENASANT CORPORATION
 (Registrant)
Date:November 5, 2021/s/ C. Mitchell Waycaster
 C. Mitchell Waycaster
 President and
 Chief Executive Officer
 (Principal Executive Officer)
Date:November 5, 2021/s/ James C. Mabry IV
 James C. Mabry IV
 Executive Vice President and
 Chief Financial Officer
 (Principal Financial Officer)
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