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RENASANT CORP - Quarter Report: 2021 March (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 March 31, 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 April 30, 2021, 56,314,166 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 March 31, 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)
March 31,
2021		December 31, 2020
Assets
Cash and due from banks$206,992 $176,372 
Interest-bearing balances with banks1,054,924 456,831 
Cash and cash equivalents1,261,916 633,203 
Securities available for sale, at fair value1,536,041 1,343,457 
Loans held for sale, at fair value502,002 417,771 
Loans, net of unearned income:
Non purchased loans and leases9,292,502 9,419,540 
Purchased loans1,395,906 1,514,107 
Total loans, net of unearned income10,688,408 10,933,647 
Allowance for credit losses(173,106)(176,144)
Loans, net10,515,302 10,757,503 
Premises and equipment, net300,917 300,496 
Other real estate owned:
Non purchased2,292 2,045 
Purchased3,679 3,927 
Total other real estate owned, net5,971 5,972 
Goodwill939,683 939,683 
Other intangible assets, net28,542 30,139 
Bank-owned life insurance233,508 230,609 
Mortgage servicing rights80,263 62,994 
Other assets218,426 207,785 
Total assets$15,622,571 $14,929,612 
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing$4,135,360 $3,685,048 
Interest-bearing8,601,548 8,374,033 
Total deposits12,736,908 12,059,081 
Short-term borrowings12,154 21,340 
Long-term debt467,660 474,970 
Other liabilities232,148 241,488 
Total liabilities13,448,870 12,796,879 
Shareholders’ equity
Preferred stock, $0.01 par value – 5,000,000 shares authorized; no shares issued and outstanding
— — 
Common stock, $5.00 par value – 150,000,000 shares authorized; 59,296,725 shares issued; 56,294,346 and 56,200,487 shares outstanding, respectively
296,483 296,483 
Treasury stock, at cost – 3,002,379 and 3,096,238 shares, respectively
(98,949)(101,554)
Additional paid-in capital1,294,911 1,296,963 
Retained earnings661,117 615,773 
Accumulated other comprehensive income, net of taxes20,139 25,068 
Total shareholders’ equity2,173,701 2,132,733 
Total liabilities and shareholders’ equity$15,622,571 $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 Ended
 March 31,
 20212020
Interest income
Loans$115,005 $120,606 
Securities
Taxable4,917 7,302 
Tax-exempt1,657 1,454 
Other183 811 
Total interest income121,762 130,173 
Interest expense
Deposits8,279 18,494 
Borrowings3,835 5,077 
Total interest expense12,114 23,571 
Net interest income109,648 106,602 
Provision for loan losses— 26,350 
Provision for other credit losses— — 
Provision for credit losses— 26,350 
Net interest income after provision for credit losses109,648 80,252 
Noninterest income
Service charges on deposit accounts8,023 9,070 
Fees and commissions3,900 3,054 
Insurance commissions2,237 1,991 
Wealth management revenue4,792 4,002 
Mortgage banking income50,733 15,535 
Net gain on sales of securities1,357 — 
BOLI income2,072 1,163 
Other7,923 2,755 
Total noninterest income81,037 37,570 
Noninterest expense
Salaries and employee benefits78,696 73,189 
Data processing5,451 5,006 
Net occupancy and equipment12,538 14,120 
Other real estate owned41 418 
Professional fees2,921 2,641 
Advertising and public relations3,252 3,400 
Intangible amortization1,598 1,895 
Communications2,292 2,198 
Restructuring charges292 — 
Other8,854 12,174 
Total noninterest expense115,935 115,041 
Income before income taxes74,750 2,781 
Income taxes16,842 773 
Net income$57,908 $2,008 
Basic earnings per share$1.03 $0.04 
Diluted earnings per share$1.02 $0.04 
Cash dividends per common share$0.22 $0.22 
See Notes to Consolidated Financial Statements.
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Renasant Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
(In Thousands)
 
Three Months Ended
 March 31,
 20212020
Net income$57,908 $2,008 
Other comprehensive income, net of tax:
Securities available for sale:
Unrealized holding (losses) gains on securities(14,943)16,694 
Reclassification adjustment for gains realized in net income(1,012)— 
Total securities available for sale(15,955)16,694 
Derivative instruments:
Unrealized holding gains (losses) on derivative instruments10,984 (3,003)
Total derivative instruments10,984 (3,003)
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost42 46 
Total defined benefit pension and post-retirement benefit plans42 46 
Other comprehensive (loss) income, net of tax(4,929)13,737 
Comprehensive income$52,979 $15,745 

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
Three Months Ended March 31, 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 
Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive IncomeTotal
Three Months Ended March 31, 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 

See Notes to Consolidated Financial Statements.
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Renasant Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 Three Months Ended March 31,
 20212020
Operating activities
Net income$57,908 $2,008 
Adjustments to reconcile net income to net cash used in operating activities:
Provision for credit losses— 26,350 
Depreciation, amortization and accretion10,059 4,937 
Deferred income tax expense (benefit)5,542 (2,791)
Funding of mortgage loans held for sale(1,143,349)(715,760)
Proceeds from sales of mortgage loans held for sale1,082,538 607,017 
Gains on sales of mortgage loans held for sale(33,901)(21,782)
Valuation adjustment to mortgage servicing rights(13,561)9,571 
Gains on sales of securities(1,357)— 
Gains on sales of premises and equipment(22)— 
Stock-based compensation expense2,756 2,750 
Increase in other assets(11,800)(70,631)
(Decrease) increase in other liabilities(11,601)35,331 
Net cash used in operating activities(56,788)(123,000)
Investing activities
Purchases of securities available for sale(465,245)(123,670)
Proceeds from sales of securities available for sale155,391 — 
Proceeds from call/maturities of securities available for sale95,382 76,269 
Net decrease (increase) in loans243,250 (69,337)
Purchases of premises and equipment(2,630)(1,941)
Proceeds from sales of premises and equipment34 — 
Net change in FHLB stock(24)(12,432)
Proceeds from sales of other assets1,962 770 
Other, net1,346 — 
Net cash provided by (used in) investing activities29,466 (130,341)
Financing activities
Net increase in noninterest-bearing deposits450,312 90,289 
Net increase in interest-bearing deposits227,515 109,115 
Net (decrease) increase in short-term borrowings(9,186)313,946 
Repayment of long-term debt(42)(43)
Cash paid for dividends(12,564)(12,555)
Repurchase of shares in connection with stock repurchase program— (24,569)
Net cash provided by financing activities656,035 476,183 
Net increase in cash and cash equivalents628,713 222,842 
Cash and cash equivalents at beginning of period633,203 414,930 
Cash and cash equivalents at end of period$1,261,916 $637,772 
Supplemental disclosures
Cash paid for interest$15,108 $26,264 
Cash paid for income taxes$18,032 $4,176 
Noncash transactions:
Transfers of loans to other real estate owned$2,039 $1,641 
Financed sales of other real estate owned$— $159 
Recognition of operating right-of-use assets$3,601 $1,968 
Recognition of operating lease liabilities$3,601 $2,034 

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.
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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 March 31, 2021 or December 31, 2020.
 
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
March 31, 2021
U.S. Treasury securities$3,028 $22 $— $3,050 
Obligations of other U.S. Government agencies and corporations1,001 3 — 1,004 
Obligations of states and political subdivisions321,156 9,344 (1,682)328,818 
Residential mortgage backed securities:
Government agency mortgage backed securities453,792 14,869 (2,206)466,455 
Government agency collateralized mortgage obligations538,317 1,733 (4,718)535,332 
Commercial mortgage backed securities:
Government agency mortgage backed securities22,448 580 (23)23,005 
Government agency collateralized mortgage obligations115,103 1,889 (1,814)115,178 
Other debt securities61,113 2,126 (40)63,199 
$1,515,958 $30,566 $(10,483)$1,536,041 
 
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 follows for the periods presented:
Carrying ValueNet ProceedsGain/(Loss)
Three months ended March 31, 2021
Obligations of states and political subdivisions$47 $50 $3 
Residential mortgage backed securities:
Government agency mortgage backed securities136,340 139,735 3,395 
Government agency collateralized mortgage obligations5,626 5,646 20 
Trust preferred securities12,021 9,960 (2,061)
$154,034 $155,391 $1,357 

There were no securities sold during the three months ended March 31, 2020.
Gross realized gains and losses on sales of securities available for sale for the three months ended March 31, 2021 were as follows:
Three Months Ended
 March 31,
 2021
Gross gains on sales of securities available for sale$3,508 
Gross losses on sales of securities available for sale(2,151)
Gains on sales of securities available for sale, net$1,357 

At March 31, 2021 and December 31, 2020, securities with a carrying value of $611,832 and $582,338, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $21,256 and $32,272 were pledged as collateral for short-term borrowings and derivative instruments at March 31, 2021 and December 31, 2020, respectively.
The amortized cost and fair value of securities at March 31, 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.
 
 Available for Sale
 Amortized
Cost		Fair
Value
Due within one year$10,286 $10,401 
Due after one year through five years40,177 41,896 
Due after five years through ten years66,563 69,568 
Due after ten years235,945 239,498 
Residential mortgage backed securities:
Government agency mortgage backed securities453,792 466,455 
Government agency collateralized mortgage obligations538,317 535,332 
Commercial mortgage backed securities:
Government agency mortgage backed securities22,448 23,005 
Government agency collateralized mortgage obligations115,103 115,178 
Other debt securities33,327 34,708 
$1,515,958 $1,536,041 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


The following table presents the age of gross unrealized losses and fair value by investment category for which an allowance for credit losses has not been recorded as of the dates presented:
 
 Less than 12 Months12 Months or MoreTotal
 #Fair
Value		Unrealized
Losses		#Fair
Value		Unrealized
Losses		#Fair
Value		Unrealized
Losses
Available for Sale:
March 31, 2021
Obligations of states and political subdivisions41$97,392 $(1,634)1$2,133 $(48)42$99,525 $(1,682)
Residential mortgage backed securities:
Government agency mortgage backed securities14119,498 (2,206)—— — 14119,498 (2,206)
Government agency collateralized mortgage obligations17351,956 (4,718)—— — 17351,956 (4,718)
Commercial mortgage backed securities:
Government agency mortgage backed securities11,082 (23)1452 — 21,534 (23)
Government agency collateralized mortgage obligations1058,722 (1,814)—— — 1058,722 (1,814)
Other debt securities69,042 (37)1557 (3)79,599 (40)
Total89$637,692 $(10,432)3$3,142 $(51)92$640,834 $(10,483)
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 it is 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 March 31, 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:
 
March 31,
2021		December 31, 2020
Commercial, financial, agricultural(1)
$2,105,444 $2,360,471 
Lease financing79,271 80,022 
Real estate – construction:
Residential252,795 243,814 
Commercial680,791 583,338 
Total real estate – construction933,586 827,152 
Real estate – 1-4 family mortgage:
Primary1,576,212 1,536,181 
Home equity432,207 432,768 
Rental/investment256,979 264,436 
Land development115,522 123,179 
Total real estate – 1-4 family mortgage2,380,920 2,356,564 
Real estate – commercial mortgage:
Owner-occupied1,344,154 1,334,765 
Non-owner occupied2,221,206 2,194,739 
Land development110,800 120,125 
Total real estate – commercial mortgage3,676,160 3,649,629 
Installment loans to individuals121,136 149,862 
Gross loans9,296,517 9,423,700 
Unearned income(4,015)(4,160)
Loans, net of unearned income$9,292,502 $9,419,540 

(1)Includes Paycheck Protection Program (“PPP”) loans of $860,864 and $1,128,703 as of March 31, 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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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
March 31, 2021
Commercial, financial, agricultural$685 $555 $2,098,742 $2,099,982 $213 $1,606 $3,643 $5,462 $2,105,444 
Lease financing— — 79,271 79,271 — — — — 79,271 
Real estate – construction:
Residential— — 252,795 252,795 — — — — 252,795 
Commercial— — 680,791 680,791 — — — — 680,791 
Total real estate – construction— — 933,586 933,586 — — — — 933,586 
Real estate – 1-4 family mortgage:
Primary7,325 536 1,558,960 1,566,821 1,910 2,782 4,699 9,391 1,576,212 
Home equity545 150 430,672 431,367 65 343 432 840 432,207 
Rental/investment819 354 255,319 256,492 — 194 293 487 256,979 
Land development248 — 115,223 115,471 — 19 32 51 115,522 
Total real estate – 1-4 family mortgage8,937 1,040 2,360,174 2,370,151 1,975 3,338 5,456 10,769 2,380,920 
Real estate – commercial mortgage:
Owner-occupied1,333 550 1,340,262 1,342,145 — 1,444 565 2,009 1,344,154 
Non-owner occupied3,687 — 2,211,485 2,215,172 — 360 5,674 6,034 2,221,206 
Land development41 — 110,536 110,577 — 179 44 223 110,800 
Total real estate – commercial mortgage5,061 550 3,662,283 3,667,894 — 1,983 6,283 8,266 3,676,160 
Installment loans to individuals1,147 90 119,602 120,839 57 219 21 297 121,136 
Unearned income— — (4,015)(4,015)— — — — (4,015)
Loans, net of unearned income$15,830 $2,235 $9,249,643 $9,267,708 $2,245 $7,146 $15,403 $24,794 $9,292,502 
 
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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$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 March 31, 2021 and two restructured loans in the amount of $164 contractually 90 days past due or more and still accruing at March 31, 2020. The outstanding balance of restructured loans on nonaccrual status was $5,965 and $2,596 at March 31, 2021 and March 31, 2020, respectively.
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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 March 31, 2021
Real estate – 1-4 family mortgage:
Primary3 432 435 
Real estate – commercial mortgage:
Non-owner occupied1 837 810 
Total4 $1,269 $1,245 
Three months ended March 31, 2020
Commercial, financial, agricultural2 $898 $898 
Real estate – 1-4 family mortgage:
Primary3 447 449 
Total5 $1,345 $1,347 
With respect to loans that were restructured during the three months ended March 31, 2021 and March 31, 2020, none have subsequently defaulted as of the date of this report.

Changes in the Company’s restructured loans are set forth in the table below:
 
Number of
Loans		Recorded
Investment
Totals at January 1, 202176 $11,761 
Additional advances or loans with concessions4 1,257 
Reductions due to:
Reclassified as nonperforming(1)(179)
Principal paydowns— (122)
Totals at March 31, 202179 $12,717 

The allowance for credit losses attributable to restructured loans was $328 and $193 at March 31, 2021 and March 31, 2020, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2021 and March 31, 2020.

In response to the economic environment caused by the COVID-19 pandemic, the Company implemented a loan deferral program in the first 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 complies with the guidance set forth in the
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Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and related guidance from the FDIC and other banking regulators. As of March 31, 2021, the Company has discontinued its deferral program but 453 loans with total balances of approximately $82,000 remained on deferral. In accordance with the applicable guidance, none of these loans were 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
March 31, 2021
Commercial, Financial, Agricultural$90,011 $1,163,170 $159,958 $69,853 $33,564 $29,678 $262,085 $3,572 $1,811,891 
Pass89,570 1,162,800 156,958 66,302 28,427 26,643 255,690 2,363 1,788,753 
Special Mention— 121 1,842 306 690 1,460 213 — 4,632 
Substandard441 249 1,158 3,245 4,447 1,575 6,182 1,209 18,506 
Real Estate - Construction$92,532 $436,057 $282,944 $48,981 $155 $— $12,280 $— $872,949 
Residential$58,265 $119,326 $4,745 $— $— $— $12,280 $— $194,616 
Pass58,265 118,233 4,745 — — — 12,280 — 193,523 
Special Mention— 808 — — — — — — 808 
Substandard— 285 — — — — — — 285 
Commercial$34,267 $316,731 $278,199 $48,981 $155 $— $— $— $678,333 
Pass34,267 316,731 273,501 48,981 155 — — — 673,635 
Special Mention— — 4,698 — — — — — 4,698 
Substandard— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$31,603 $95,809 $72,233 $26,901 $21,376 $15,190 $14,359 $546 $278,017 
Primary$4,437 $7,928 $5,065 $3,869 $3,979 $1,152 $1,217 $— $27,647 
Pass4,437 7,928 4,257 3,869 3,979 1,139 1,217 — 26,826 
Special Mention— — 122 — — — — — 122 
Substandard— — 686 — — 13 — — 699 
Home Equity$766 $169 $— $— $— $— $8,240 $— $9,175 
Pass766 169 — — — — 8,240 — 9,175 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Rental/Investment$15,467 $50,956 $29,321 $21,108 $17,061 $13,474 $717 $546 $148,650 
Pass15,447 50,865 28,397 20,249 16,853 12,984 717 546 146,058 
Special Mention— — — — 77 208 — — 285 
Substandard20 91 924 859 131 282 — — 2,307 
Land Development$10,933 $36,756 $37,847 $1,924 $336 $564 $4,185 $— $92,545 
Pass10,933 33,939 37,498 1,924 336 563 4,185 — 89,378 
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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
Special Mention— 2,817 — — — — — — 2,817 
Substandard— — 349 — — 1 — — 350 
Real Estate - Commercial Mortgage$171,777 $934,961 $768,175 $420,655 $396,113 $569,509 $80,820 $21,426 $3,363,436 
Owner-Occupied$60,551 $301,265 $235,112 $183,534 $164,501 $169,547 $22,732 $9,313 $1,146,555 
Pass60,551 299,469 233,528 178,701 158,299 165,302 22,715 7,526 1,126,091 
Special Mention— 1,153 840 — 1,972 532 — 1,787 6,284 
Substandard— 643 744 4,833 4,230 3,713 17 — 14,180 
Non-Owner Occupied$106,264 $600,412 $516,319 $230,201 $228,491 $394,757 $51,818 $12,113 $2,140,375 
Pass106,264 591,416 507,372 224,229 183,705 361,486 51,818 12,113 2,038,403 
Special Mention— 8,996 — 5,972 39,161 15,319 — — 69,448 
Substandard— — 8,947 — 5,625 17,952 — — 32,524 
Land Development$4,962 $33,284 $16,744 $6,920 $3,121 $5,205 $6,270 $— $76,506 
Pass4,962 31,148 16,744 5,815 3,058 4,339 6,270 — 72,336 
Special Mention— — — 1,105 63 46 — — 1,214 
Substandard— 2,136 — — — 820 — — 2,956 
Installment loans to individuals$53 $45 $3 $— $— $— $— $— $101 
Pass53 45 3 — — — — — 101 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total loans subject to risk rating$385,976 $2,630,042 $1,283,313 $566,390 $451,208 $614,377 $369,544 $25,544 $6,326,394 
Pass385,515 2,612,743 1,263,003 550,070 394,812 572,456 363,132 22,548 6,164,279 
Special Mention— 13,895 7,502 7,383 41,963 17,565 213 1,787 90,308 
Substandard461 3,404 12,808 8,937 14,433 24,356 6,199 1,209 71,807 

 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 
Pass244,242 251,937 50,406 29,300 — — 4 — 575,889 
Special Mention— 4,698 — — — — — — 4,698 
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$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:
16
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
March 31, 2021
Commercial, Financial, Agricultural$14,217 $22,648 $13,758 $8,645 $5,216 $11,821 $216,971 $277 $293,553 
Performing Loans14,217 22,648 13,513 8,627 4,996 11,730 216,554 277 292,562 
Non-Performing Loans— — 245 18 220 91 417 — 991 
Lease Financing Receivables$6,376 $29,408 $23,195 $10,129 $3,725 $2,423 $— $— $75,256 
Performing Loans6,376 29,408 23,195 10,129 3,725 2,423 — — 75,256 
Non-Performing Loans— — — — — — — — — 
Real Estate - Construction$4,500 $51,817 $4,168 $— $152 $— $— $— $60,637 
Residential$3,933 $50,418 $3,676 $— $152 $— $— $— $58,179 
Performing Loans3,933 50,418 3,676 — 152 — — — 58,179 
Non-Performing Loans— — — — — — — — — 
Commercial$567 $1,399 $492 $— $— $— $— $— $2,458 
Performing Loans567 1,399 492 — — — — — 2,458 
Non-Performing Loans— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$137,286 $536,741 $311,138 $240,837 $179,410 $271,009 $422,860 $3,622 $2,102,903 
Primary$124,455 $491,825 $290,701 $220,720 $162,131 $257,114 $1,574 $45 $1,548,565 
Performing Loans124,455 491,758 288,911 216,768 160,569 254,570 1,563 45 1,538,639 
Non-Performing Loans— 67 1,790 3,952 1,562 2,544 11 — 9,926 
Home Equity$49 $— $125 $368 $— $817 $418,553 $3,120 $423,032 
Performing Loans49 — 125 368 — 704 418,039 2,756 422,041 
Non-Performing Loans— — — — — 113 514 364 991 
Rental/Investment$9,505 $32,937 $18,465 $16,855 $15,873 $11,999 $2,238 $457 $108,329 
Performing Loans9,505 32,631 18,370 16,855 15,790 11,789 2,238 457 107,635 
Non-Performing Loans— 306 95 — 83 210 — — 694 
Land Development$3,277 $11,979 $1,847 $2,894 $1,406 $1,079 $495 $— $22,977 
Performing Loans3,277 11,979 1,847 2,891 1,376 1,060 495 — 22,925 
Non-Performing Loans— — — 3 30 19 — — 52 
Real Estate - Commercial Mortgage$22,358 $78,624 $65,782 $50,946 $43,187 $40,740 $10,561 $526 $312,724 
Owner-Occupied$13,295 $47,352 $41,946 $33,008 $28,117 $28,199 $5,351 $331 $197,599 
Performing Loans13,295 47,352 41,946 33,008 27,952 27,692 5,351 331 196,927 
Non-Performing Loans— — — — 165 507 — — 672 
Non-Owner Occupied$6,441 $19,530 $17,407 $13,692 $12,532 $8,918 $2,166 $145 $80,831 
Performing Loans6,441 19,530 17,407 13,634 12,532 8,868 2,166 145 80,723 
Non-Performing Loans— — — 58 — 50 — — 108 
Land Development$2,622 $11,742 $6,429 $4,246 $2,538 $3,623 $3,044 $50 $34,294 
Performing Loans2,622 11,737 6,429 4,246 2,535 3,478 3,044 50 34,141 
Non-Performing Loans— 5 — — 3 145 — — 153 
Installment loans to individuals$10,052 $41,255 $41,440 $11,944 $3,380 $3,296 $9,619 $49 $121,035 
Performing Loans10,052 41,168 41,334 11,887 3,339 3,245 9,609 15 120,649 
Non-Performing Loans— 87 106 57 41 51 10 34 386 
Total loans not subject to risk rating$194,789 $760,493 $459,481 $322,501 $235,070 $329,289 $660,011 $4,474 $2,966,108 
Performing Loans194,789 760,028 457,245 318,413 232,966 325,559 659,059 4,076 2,952,135 
Non-Performing Loans— 465 2,236 4,088 2,104 3,730 952 398 13,973 
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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
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 
18
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:
 
March 31,
2021		December 31, 2020
Commercial, financial, agricultural$143,843 $176,513 
Real estate – construction:
Residential2,561 2,859 
Commercial19,771 28,093 
Total real estate – construction22,332 30,952 
Real estate – 1-4 family mortgage:
Primary190,539 214,770 
Home equity72,413 80,392 
Rental/investment28,800 31,928 
Land development13,389 14,654 
Total real estate – 1-4 family mortgage305,141 341,744 
Real estate – commercial mortgage:
Owner-occupied300,616 323,041 
Non-owner occupied546,663 552,728 
Land development25,588 29,454 
Total real estate – commercial mortgage872,867 905,223 
Installment loans to individuals51,723 59,675 
Loans$1,395,906 $1,514,107 
19
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
March 31, 2021
Commercial, financial, agricultural$213 $2 $133,655 $133,870 $65 $1,762 $8,146 $9,973 $143,843 
Real estate – construction:
Residential— — 2,561 2,561 — — — — 2,561 
Commercial— — 19,771 19,771 — — — — 19,771 
Total real estate – construction— — 22,332 22,332 — — — — 22,332 
Real estate – 1-4 family mortgage:
Primary2,819 11 181,372 184,202 339 3,470 2,528 6,337 190,539 
Home equity857 21 70,110 70,988 — 760 665 1,425 72,413 
Rental/investment135 — 28,338 28,473 — 257 70 327 28,800 
Land development66 — 13,289 13,355 — — 34 34 13,389 
Total real estate – 1-4 family mortgage3,877 32 293,109 297,018 339 4,487 3,297 8,123 305,141 
Real estate – commercial mortgage:
Owner-occupied586 50 297,666 298,302 — 675 1,639 2,314 300,616 
Non-owner occupied— — 538,699 538,699 — 145 7,819 7,964 546,663 
Land development— — 25,245 25,245 — 138 205 343 25,588 
Total real estate – commercial mortgage586 50 861,610 862,246 — 958 9,663 10,621 872,867 
Installment loans to individuals1,295 45 50,153 51,493 12 118 100 230 51,723 
Loans, net of unearned income$5,971 $129 $1,360,859 $1,366,959 $416 $7,325 $21,206 $28,947 $1,395,906 

20
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 were no restructured loans contractually 90 days past due or more and still accruing at March 31, 2021 and two restructured loans in the aggregate amount of $134 contractually 90 days past due or more and still accruing at March 31, 2020. The outstanding balance of restructured loans on nonaccrual status was $19,140 and $3,797 at March 31, 2021 and March 31, 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 table below illustrates 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 March 31, 2021
Commercial, financial, agricultural1 $135 $135 
Three months ended March 31, 2020
Real estate – 1-4 family mortgage:
Primary1 $223 $114 

With respect to loans that were restructured during the three months ended March 31, 2021 and March 31, 2020, none have subsequently defaulted and remain outstanding as of the date of this report.

21
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Changes in the Company’s restructured loans are set forth in the table below:
 
Number of
Loans		Recorded
Investment
Totals at January 1, 202148 $8,687 
Additional advances or loans with concessions1 364 
Reductions due to:
Reclassified to nonperforming loans(1)(1,317)
Principal paydowns— (81)
Totals at March 31, 202148 $7,653 

The allowance for credit losses attributable to restructured loans was $167 and $56 at March 31, 2021 and March 31, 2020, respectively. The Company had $153 and $7 in remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2021 and March 31, 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 March 31, 2021, the Company had 139 loans with total balances of approximately $12,000 remaining on deferral. Under the applicable guidance, none of these loans were considered “restructured loans.”
22
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
March 31, 2021
Commercial, Financial, Agricultural$— $— $695 $19,849 $19,070 $36,825 $57,113 $992 $134,544 
Pass— — 695 17,492 12,727 28,753 49,572 480 109,719 
Special Mention— — — 341 87 89 — — 517 
Substandard— — — 2,016 6,256 7,983 7,541 512 24,308 
Real Estate - Construction$— $— $— $10,679 $449 $10,783 $— $— $21,911 
Residential$— $— $— $1,006 $449 $685 $— $— $2,140 
Pass— — — 1,006 449 685 — — 2,140 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Commercial$— $— $— $9,673 $— $10,098 $— $— $19,771 
Pass— — — 9,673 — 10,098 — — 19,771 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$— $— $— $14,248 $5,259 $35,994 $847 $234 $56,582 
Primary$— $— $— $5,773 $2,699 $16,786 $— $— $25,258 
Pass— — — 4,438 2,608 12,494 — — 19,540 
Special Mention— — — — — 970 — — 970 
Substandard— — — 1,335 91 3,322 — — 4,748 
Home Equity$— $— $— $— $— $— $756 $234 $990 
Pass— — — — — — 60 — 60 
Special Mention— — — — — — — — — 
Substandard— — — — — — 696 234 930 
Rental/Investment$— $— $— $— $1,863 $16,242 $88 $— $18,193 
Pass— — — — 1,863 15,062 88 — 17,013 
Special Mention— — — — — — — — — 
Substandard— — — — — 1,180 — — 1,180 
Land Development$— $— $— $8,475 $697 $2,966 $3 $— $12,141 
Pass— — — 8,475 677 1,498 3 — 10,653 
Special Mention— — — — — — — — — 
Substandard— — — — 20 1,468 — — 1,488 
23
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20212020201920182017PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
Real Estate - Commercial Mortgage$— $— $— $72,095 $160,878 $575,810 $20,364 $4,551 $833,698 
Owner-Occupied$— $— $— $14,539 $33,862 $225,908 $3,632 $2 $277,943 
Pass— — — 14,539 28,985 190,103 3,605 — 237,232 
Special Mention— — — — 1,596 11,187 — — 12,783 
Substandard— — — — 3,281 24,618 27 2 27,928 
Non-Owner Occupied$— $— $— $55,609 $123,232 $335,246 $16,500 $4,549 $535,136 
Pass— — — 36,677 115,553 291,494 6,447 — 450,171 
Special Mention— — — 2,561 — 7,877 — — 10,438 
Substandard— — — 16,371 7,679 35,875 10,053 4,549 74,527 
Land Development$— $— $— $1,947 $3,784 $14,656 $232 $— $20,619 
Pass— — — 1,947 3,784 8,017 232 — 13,980 
Special Mention— — — — — 5,306 — — 5,306 
Substandard— — — — — 1,333 — — 1,333 
Installment loans to individuals$— $— $— $— $— $— $— $— $— 
Pass— — — — — — — — — 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total loans subject to risk rating$— $— $695 $116,871 $185,656 $659,412 $78,324 $5,777 $1,046,735 
Pass— — 695 94,247 166,646 558,204 60,007 480 880,279 
Special Mention— — — 2,902 1,683 25,429 — — 30,014 
Substandard— — — 19,722 17,327 75,779 18,317 5,297 136,442 

 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 $— $— $— $28,093 
Pass— — 8,979 9,017 10,097 — — — 28,093 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
24
Table of Contents
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
Real Estate - 1-4 Family Mortgage$— $— $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 

The following tables present the performing status of the Company’s loan portfolio not subject to risk rating by origination date:
25
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
March 31, 2021
Commercial, Financial, Agricultural$— $— $— $412 $384 $3,004 $5,260 $239 $9,299 
Performing Loans— — — 412 384 3,004 5,240 239 9,279 
Non-Performing Loans— — — — — — 20 — 20 
Real Estate - Construction$— $— $— $421 $— $— $— $— $421 
Residential$— $— $— $421 $— $— $— $— $421 
Performing Loans— — — 421 — — — — 421 
Non-Performing Loans— — — — — — — — — 
Commercial$— $— $— $— $— $— $— $— $— 
Performing Loans— — — — — — — — — 
Non-Performing Loans— — — — — — — — — 
Real Estate - 1-4 Family Mortgage$— $— $368 $2,520 $29,796 $149,758 $63,625 $2,492 $248,559 
Primary$— $— $246 $1,899 $26,826 $135,980 $233 $97 $165,281 
Performing Loans— — 246 1,789 26,072 131,995 233 24 160,359 
Non-Performing Loans— — — 110 754 3,985 — 73 4,922 
Home Equity$— $— $— $550 $2,702 $2,504 $63,272 $2,395 $71,423 
Performing Loans— — — 550 2,702 2,416 62,569 1,975 70,212 
Non-Performing Loans— — — — — 88 703 420 1,211 
Rental/Investment$— $— $122 $— $196 $10,169 $120 $— $10,607 
Performing Loans— — 122 — 196 10,080 120 — 10,518 
Non-Performing Loans— — — — — 89 — — 89 
Land Development$— $— $— $71 $72 $1,105 $— $— $1,248 
Performing Loans— — — 71 72 1,105 — — 1,248 
Non-Performing Loans— — — — — — — — — 
Real Estate - Commercial Mortgage$— $— $334 $1,230 $994 $34,460 $2,151 $— $39,169 
Owner-Occupied$— $— $— $654 $607 $19,757 $1,655 $— $22,673 
Performing Loans— — — 654 607 19,437 1,655 — 22,353 
Non-Performing Loans— — — — — 320 — — 320 
Non-Owner Occupied$— $— $334 $424 $— $10,347 $422 $— $11,527 
Performing Loans— — 334 424 — 10,215 422 — 11,395 
Non-Performing Loans— — — — — 132 — — 132 
Land Development$— $— $— $152 $387 $4,356 $74 $— $4,969 
Performing Loans— — — 152 387 4,301 74 — 4,914 
Non-Performing Loans— — — — — 55 — — 55 
Installment loans to individuals$— $— $— $30,610 $13,880 $5,004 $2,179 $50 $51,723 
Performing Loans— — — 30,572 13,826 4,849 2,174 28 51,449 
Non-Performing Loans— — — 38 54 155 5 22 274 
Total loans not subject to risk rating$— $— $702 $35,193 $45,054 $192,226 $73,215 $2,781 $349,171 
Performing Loans— — 702 35,045 44,246 187,402 72,487 2,266 342,148 
Non-Performing Loans— — — 148 808 4,824 728 515 7,023 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Term Loans Amortized Cost Basis by Origination Year
 20202019201820172016PriorRevolving LoansRevolving Loans Converted to TermTotal
Loans
December 31, 2020
Commercial, Financial, Agricultural$— $— $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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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:
 
March 31,
2021		December 31, 2020
Commercial, financial, agricultural$2,249,287 $2,536,984 
Lease financing79,271 80,022 
Real estate – construction:
Residential255,356 246,673 
Commercial700,562 611,431 
Total real estate – construction955,918 858,104 
Real estate – 1-4 family mortgage:
Primary1,766,751 1,750,951 
Home equity504,620 513,160 
Rental/investment285,779 296,364 
Land development128,911 137,833 
Total real estate – 1-4 family mortgage2,686,061 2,698,308 
Real estate – commercial mortgage:
Owner-occupied1,644,770 1,657,806 
Non-owner occupied2,767,869 2,747,467 
Land development136,388 149,579 
Total real estate – commercial mortgage4,549,027 4,554,852 
Installment loans to individuals172,859 209,537 
Gross loans10,692,423 10,937,807 
Unearned income(4,015)(4,160)
Loans, net of unearned income10,688,408 10,933,647 
Allowance for credit losses on loans(173,106)(176,144)
Net loans$10,515,302 $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 March 31, 2021 and December 31, 2020, the Company had accrued interest receivable for loans of $56,199 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 $1,375 and $1,500, respectively, as of March 31, 2021 and December 31, 2020. The decrease in the balance during the first quarter of 2021 is due to the charge-off of deferred interest balances.
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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 March 31, 2021
Allowance for credit losses:
Beginning balance$39,031 $16,047 $32,165 $76,127 $1,624 $11,150 $176,144 
Charge-offs(3,498)(52)(101)(61)— (1,658)(5,370)
Recoveries289 13 261 171 11 1,587 2,332 
Net (charge-offs) recoveries(3,209)(39)160 110 11 (71)(3,038)
Provision for credit losses on loans1,770 (1,031)(631)(12)(89)(7)— 
Ending balance$37,592 $14,977 $31,694 $76,225 $1,546 $11,072 $173,106 
Period-End Amount Allocated to:
Individually evaluated$9,908 $— $232 $4,846 $— $607 $15,593 
Collectively evaluated 27,684 14,977 31,462 71,379 1,546 10,465 157,513 
Ending balance$37,592 $14,977 $31,694 $76,225 $1,546 $11,072 $173,106 
Loans:
Individually evaluated$15,435 $— $6,311 $18,508 $— $621 $40,875 
Collectively evaluated 2,233,852 955,918 2,679,750 4,530,519 75,256 172,238 10,647,533 
Ending balance$2,249,287 $955,918 $2,686,061 $4,549,027 $75,256 $172,859 $10,688,408 
Nonaccruing loans with no allowance for credit losses$1,848 $— $4,695 $2,113 $— $— $8,656 


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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 March 31, 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(393)— (221)(2,047)— (2,688)(5,349)
Recoveries190 — 88 1,699 5 2,556 4,538 
Net (charge-offs) recoveries(203)— (133)(348)5 (132)(811)
Provision for credit losses on loans4,131 2,390 3,325 15,302 152 1,050 26,350 
Ending balance$25,937 $10,924 $27,320 $44,237 $1,588 $10,179 $120,185 
Period-End Amount Allocated to:
Individually evaluated$3,653 $— $370 $856 $— $270 $5,149 
Collectively evaluated22,284 10,924 26,950 43,381 1,588 9,909 115,036 
Ending balance$25,937 $10,924 $27,320 $44,237 $1,588 $10,179 $120,185 
Loans:
Individually evaluated$10,460 $2,728 $5,865 $7,508 $— $625 $27,186 
Collectively evaluated1,414,116 785,167 2,840,436 4,301,200 84,679 316,593 9,742,191 
Ending balance$1,424,576 $787,895 $2,846,301 $4,308,708 $84,679 $317,218 $9,769,377 
Nonaccruing loans with no allowance for credit losses$4,224 $2,728 $3,309 $2,594 $— $— $12,855 
 
The Company did not record a provision for credit losses during the first quarter of 2021, as compared to a provision for credit losses on loans of $26,350 in the first quarter of 2020. The Company’s allowance for credit loss model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years. Based on the continual improvements in these forecasts over the last few quarters, the Company determined that additional provisioning during the first quarter of 2021 was not necessary.
Allowance for Credit Losses on Unfunded Loan Commitments
The Company maintains a separate allowance for credit losses on unfunded loan commitments, which is included in the “Other liabilities” line item on the Consolidated Balance Sheets. For more information about the Company’s policies and procedures for determining the amount of the allowance for credit losses on unfunded loan commitments, please refer to the discussion in 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.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Three Months Ended March 31, 2021
Allowance for credit losses on unfunded loan commitments:
Beginning balance$20,535 
Provision for credit losses on unfunded loan commitments (included in other noninterest expense) — 
Ending balance$20,535 
Three Months Ended March 31, 2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance$946 
Impact of the adoption of ASC 326
10,389 
Provision for credit losses on unfunded loan commitments (included in other noninterest expense)3,400 
Ending balance$14,735 

Note 6 – Other Real Estate Owned
(In Thousands)

The following tables provide 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
March 31, 2021
Residential real estate$405 $79 $484 
Commercial real estate1,161 1,948 3,109 
Residential land development337 4 341 
Commercial land development1,776 261 2,037 
Total$3,679 $2,292 $5,971 
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:
 
Purchased
OREO		Non Purchased OREOTotal
OREO
Balance at January 1, 2021$3,927 $2,045 $5,972 
Transfers of loans516 1,523 2,039 
Impairments— (70)(70)
Dispositions(700)(1,206)(1,906)
Other(64)— (64)
Balance at March 31, 2021$3,679 $2,292 $5,971 

At March 31, 2021 and December 31, 2020, the amortized cost of loans secured by Real Estate - 1-4 Family Mortgage in the process of foreclosure was $1,830 and $1,308, respectively.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Components of the line item “Other real estate owned” in the Consolidated Statements of Income were as follows for the periods presented:
 
Three Months Ended
 March 31,
 20212020
Repairs and maintenance$20 $86 
Property taxes and insurance11 133 
Impairments70 197 
Net (gains) losses on OREO sales(56)12 
Rental income(4)(10)
Total$41 $418 


Note 7 – Goodwill and Other Intangible Assets
(In Thousands)
The carrying amounts of goodwill by operating segments for the three months ended March 31, 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 March 31, 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
March 31, 2021
Core deposit intangibles$82,492 $(55,091)$27,401 
Customer relationship intangible2,470 (1,329)1,141 
Total finite-lived intangible assets$84,962 $(56,420)$28,542 
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.
Three Months Ended
March 31,
20212020
Amortization expense for:
  Core deposit intangibles$1,553 $1,850 
  Customer relationship intangible45 45 
Total intangible amortization$1,598 $1,895 

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:
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
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. 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 three months ended March 31, 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 three months ended March 31, 2020 there was a negative valuation adjustment of $9,571 which was caused by a difference between actual prepayment speeds and the Company’s assumptions with respect to prepayment speeds. 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.
Changes in the Company’s MSRs were as follows: 
Balance at January 1, 2021$62,994 
Capitalization9,409 
Amortization(5,701)
Valuation adjustment13,561 
Balance at March 31, 2021$80,263 

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)
March 31, 2021December 31, 2020
Unpaid principal balance$7,776,998 $7,322,671 
Weighted-average prepayment speed (CPR)11.53 %15.05 %
Estimated impact of a 10% increase$(3,776)$(4,001)
Estimated impact of a 20% increase(7,330)(7,674)
Discount rate9.84 %9.86 %
Estimated impact of a 10% increase$(3,163)$(2,144)
Estimated impact of a 20% increase(6,097)(4,144)
Weighted-average coupon interest rate3.46 %3.58 %
Weighted-average servicing fee (basis points)30.32 29.94 
Weighted-average remaining maturity (in years)6.375.14
The Company recorded servicing fees of $4,071 and $2,623 for the three months ended March 31, 2021 and 2020, respectively, 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
 March 31,March 31,
 2021202020212020
Service cost$— $— $1 $2 
Interest cost166 242 4 5 
Expected return on plan assets(443)(413)— — 
Recognized actuarial loss (gain)54 79 — (18)
Net periodic (return) benefit cost$(223)$(92)$5 $(11)

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 three months ended March 31, 2021 or 2020.
The following table summarizes information about options outstanding, exercised and forfeited as of and for the three months ended March 31, 2021:
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
SharesWeighted Average Exercise Price
Options outstanding at beginning of period10,500 $14.96 
Granted— — 
Exercised(2,000)14.96 
Forfeited— — 
Options outstanding at end of period8,500 $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 three months ended March 31, 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 34.02 212,224 36.20 
Vested— — (89,240)40.20 
Cancelled— — (19,461)37.05 
Nonvested at end of period211,057 $33.30 651,939 $33.90 
During the three months ended March 31, 2021, the Company reissued 93,859 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 $2,756 and $2,750 for the three months ended March 31, 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.
The following table provides a summary of the Company’s derivatives not designated as hedging instruments as of the dates presented:
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 Balance SheetMarch 31, 2021December 31, 2020
 LocationNotional AmountFair ValueNotional AmountFair Value
Derivative assets:
  Interest rate contractsOther Assets$232,095 $7,111 $222,933 $9,884 
  Interest rate lock commitmentsOther Assets598,448 11,875 589,701 19,824 
Forward commitmentsOther Assets847,000 13,767 — — 
Totals$1,677,543 $32,753 $812,634 $29,708 
Derivative liabilities:
  Interest rate contractsOther Liabilities$232,095 $7,111 $222,933 $9,884 
Interest rate lock commitmentsOther Liabilities51,290 373 — — 
  Forward commitmentsOther Liabilities60,000 53 716,000 5,090 
Totals$343,385 $7,537 $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 March 31,
 20212020
Interest rate contracts:
Included in interest income on loans$370 $736 
Interest rate lock commitments:
Included in mortgage banking income(8,322)21,821 
Forward commitments
Included in mortgage banking income18,803 (15,470)
Total$10,851 $7,087 
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 March 31, 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 SheetMarch 31, 2021December 31, 2020
 LocationNotional AmountFair ValueNotional AmountFair Value
Derivative assets:
  Interest rate swapsOther Assets$200,000 $16,474 $175,000 $3,866 
Derivative liabilities:
  Interest rate swapsOther Liabilities$62,000 $3,798 $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 three months ended March 31, 2021 or 2020. The impact on other comprehensive income for the three months ended March 31, 2021 and 2020 is discussed in Note 13, “Other Comprehensive Income (Loss).”
Derivatives designated as fair value hedges
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
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 SheetMarch 31, 2021December 31, 2020
 LocationNotional AmountFair ValueNotional AmountFair Value
Derivative liabilities:
  Interest rate swapsOther Liabilities$100,000 $7,650 $100,000 $209 
The following table presents the effects of the Company’s fair value hedge relationships on the Consolidated Statements of Income for the periods presented:
 Amount of Gain (Loss Recognized in Income)
Income StatementThree Months Ended March 31,
 Location20212020
Derivative liabilities:
  Interest rate swaps - subordinated notesInterest Expense$(7,650)$— 
Derivative liabilities - hedged items:
  Interest rate swaps - subordinated notesInterest Expense$7,650 $— 
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 LocationMarch 31, 2021December 31, 2020March 31, 2021December 31, 2020
Long-term debt$90,717 $98,114 $7,650 $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:

Offsetting Derivative AssetsOffsetting Derivative Liabilities
March 31,
2021		December 31, 2020March 31,
2021		December 31, 2020
Gross amounts recognized$30,352 $3,866 $18,501 $21,107 
Gross amounts offset in the Consolidated Balance Sheets— — — — 
Net amounts presented in the Consolidated Balance Sheets30,352 3,866 18,501 21,107 
Gross amounts not offset in the Consolidated Balance Sheets
Financial instruments9,172 3,866 9,172 3,866 
Financial collateral pledged— — 9,329 14,042 
Net amounts$21,180 $— $— $3,199 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

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.

March 31,December 31,
20212020
Deferred tax assets
Allowance for credit losses$53,318 $53,597 
Loans4,883 5,526 
Deferred compensation12,311 13,114 
Impairment of assets874 1,067 
Net operating loss carryforwards1,667 1,857 
Lease liabilities under operating leases18,168 17,732 
Other3,504 3,539 
Total deferred tax assets94,725 96,432 
Deferred tax liabilities
Net unrealized gains on securities6,804 8,434 
Investment in partnerships719 793 
Fixed assets2,534 3,285 
Mortgage servicing rights19,025 14,623 
Junior subordinated debt2,223 2,245 
Intangibles3,968 3,882 
Lease right-of-use asset17,239 16,833 
Other1,459 1,672 
Total deferred tax liabilities53,971 51,767 
Net deferred tax assets$40,754 $44,665 

For the three months ended March 31, 2021 and 2020, the Company recorded a provision for income taxes totaling $16,842 and $773, respectively. The provision for income taxes includes both federal and state income taxes and differs from the statutory rate due to favorable permanent differences. The effective tax rate was 22.59% and 27.80% for the three months ended March 31, 2021 and 2020, respectively.
The Company and its subsidiaries file a consolidated U.S. federal income tax return. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state departments of revenue for the years ending December 31, 2017 through December 31, 2019.
The Company acquired both federal and state net operating losses as part of its previous acquisitions with varying expiration periods. The federal and state net operating losses acquired in its acquisition of Brand Group Holdings, Inc. (“Brand”) were $81,288 and $55,067, respectively, as of the September 1, 2018 acquisition date, all created in 2018. As part of The Tax Cuts and Jobs Act and corresponding state tax laws, the federal net operating losses and the majority of the state net operating losses created by Brand have an indefinite carryforward period. As of March 31, 2021, there are state net operating losses acquired in the Brand acquisition without expiration periods of $21,781. The federal and state net operating losses acquired in the Company’s acquisition of Heritage Financial Group, Inc. (“Heritage”) in 2015 were $18,321 and $16,849, respectively, of which $2,788 and $1,965 remain to be utilized as of March 31, 2021. The net operating losses related to the Heritage acquisition begin to expire in 2029 and are expected to be utilized. Because the benefits are expected to be fully realized, the Company recorded no valuation allowance against the net operating losses for the period ending March 31, 2021.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Note 12 – Fair Value Measurements
(In Thousands)
Fair Value Measurements and the Fair Level Hierarchy
FASB Accounting Standards Codification Topic (“ASC”) 820, “Fair Value Measurements and Disclosures,” provides guidance for using fair value to measure assets and liabilities and also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to a valuation based on quoted prices in active markets for identical assets and liabilities (Level 1), moderate priority to a valuation based on quoted prices in active markets for similar assets and liabilities and/or based on assumptions that are observable in the market (Level 2), and the lowest priority to a valuation based on assumptions that are not observable in the market (Level 3).
Recurring Fair Value Measurements
The Company carries certain assets and liabilities at fair value on a recurring basis in accordance with applicable standards. The Company’s recurring fair value measurements are based on the requirement to carry such assets and liabilities at fair value or the Company’s election to carry certain eligible assets and liabilities at fair value. Assets and liabilities that are required to be carried at fair value on a recurring basis include securities available for sale and derivative instruments. The Company has elected to carry mortgage loans held for sale at fair value on a recurring basis as permitted under the guidance in ASC 825, “Financial Instruments” (“ASC 825”).
The following methods and assumptions are used by the Company to estimate the fair values of the Company’s financial assets and liabilities that are measured on a recurring basis:
Securities available for sale: Securities available for sale consist primarily of debt securities, such as obligations of U.S. Government agencies and corporations, obligations of states and political subdivisions, mortgage-backed securities and trust preferred securities. Where quoted market prices in active markets are available, securities are classified within Level 1 of the fair value hierarchy. If quoted prices from active markets are not available, fair values are based on quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active, or model-based valuation techniques where all significant assumptions are observable in the market. Such instruments are classified within Level 2 of the fair value hierarchy. When assumptions used in model-based valuation techniques are not observable in the market, the assumptions used by management reflect estimates of assumptions used by other market participants in determining fair value. When there is limited transparency around the inputs to the valuation, the instruments are classified within Level 3 of the fair value hierarchy.
Derivative instruments: Most of the Company’s derivative contracts are extensively traded in over-the-counter markets and are valued using discounted cash flow models which incorporate observable market based inputs including current market interest rates, credit spreads, and other factors. Such instruments are categorized within Level 2 of the fair value hierarchy and include interest rate swaps and other interest rate contracts such as interest rate caps and/or floors. The Company’s interest rate lock commitments are valued using current market prices for mortgage-backed securities with similar characteristics, adjusted for certain factors including servicing and risk. The value of the Company’s forward commitments is based on current prices for securities backed by similar types of loans. Because these assumptions are observable in active markets, the Company’s interest rate lock commitments and forward commitments are categorized within Level 2 of the fair value hierarchy.
Mortgage loans held for sale in loans held for sale: Mortgage loans held for sale are primarily agency loans which trade in active secondary markets. The fair value of these instruments is derived from current market pricing for similar loans, adjusted for differences in loan characteristics, including servicing and risk. Because the valuation is based on external pricing of similar instruments, mortgage loans held for sale are classified within Level 2 of the fair value hierarchy.
The following tables present assets and liabilities that are measured at fair value on a recurring basis as of the dates presented:
 
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Level 1Level 2Level 3Totals
March 31, 2021
Financial assets:
Securities available for sale$— $1,536,041 $— $1,536,041 
Derivative instruments— 49,227 — 49,227 
Mortgage loans held for sale in loans held for sale— 502,002 — 502,002 
Total financial assets$— $2,087,270 $— $2,087,270 
Financial liabilities:
Derivative instruments:$— $18,985 $— $18,985 

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 three months ended March 31, 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 March 31, 2021Trust preferred
securities		Trust preferred
securities
Three Months Ended March 31,
Balance at beginning of period$9,012 $9,986 
   Accretion included in net income7 9 
   Unrealized gains (losses) included in other comprehensive income941 (1,319)
   Realized losses2,061 — 
   Sales(12,021)— 
   Settlements— (72)
Balance at end of period$— $8,604 
 
For the three months ended March 31, 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.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
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:
 
March 31, 2021Level 1Level 2Level 3Totals
Individually evaluated loans, net of allowance for credit losses$— $— $8,810 $8,810 
OREO— — 215 215 
Mortgage servicing rights— — 80,263 80,263 
Total$— $— $89,288 $89,288 
 
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 $14,477 and $36,990 at March 31, 2021 and December 31, 2020, respectively, and a specific reserve for these loans of $5,667 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:
 
March 31,
2021		December 31, 2020
Carrying amount prior to remeasurement$285 $4,051 
Impairment recognized in results of operations(70)(1,315)
Fair value$215 $2,736 

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 March 31, 2021 and fair value at December 31, 2020. There were $13,561 of positive valuation adjustments on MSRs during the three months ended March 31, 2021 and $11,726 of negative valuation adjustments recognized during the twelve months ended December 31, 2020.
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Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
The following table presents information as of March 31, 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$8,810 Appraised value of collateral less estimated costs to sellEstimated costs to sell
4-10%
OREO$215 Appraised value of property less estimated costs to sellEstimated costs to sell
4-10%

Fair Value Option
The Company elected to measure all mortgage loans originated for sale on or after July 1, 2012 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 $12,231 and net gains of $12,709 resulting from fair value changes of these mortgage loans were recorded in income during the three months ended March 31, 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 March 31, 2021 and December 31, 2020:
 
Aggregate
Fair Value		Aggregate
Unpaid
Principal
Balance		Difference
March 31, 2021
Mortgage loans held for sale measured at fair value$502,002 $492,064 $9,938 
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 March 31, 2021Carrying
Value		Level 1Level 2Level 3Total
Financial assets
Cash and cash equivalents$1,261,916 $1,261,916 $— $— $1,261,916 
Securities available for sale1,536,041 — 1,536,041 — 1,536,041 
Loans held for sale502,002 — 502,002 — 502,002 
Loans, net10,515,302 — — 10,420,129 10,420,129 
Mortgage servicing rights80,263 — — 83,730 83,730 
Derivative instruments49,227 — 49,227 — 49,227 
Financial liabilities
Deposits$12,736,908 $11,133,259 $1,610,535 $— $12,743,794 
Short-term borrowings12,154 12,154 — — 12,154 
Federal Home Loan Bank advances152,124 — 157,139 — 157,139 
Junior subordinated debentures110,939 — 99,076 — 99,076 
Subordinated notes204,597 — 219,900 — 219,900 
Derivative instruments18,985 — 18,985 — 18,985 
 
  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 March 31, 2021
Securities available for sale:
Unrealized holding losses on securities$(20,044)$(5,101)$(14,943)
Reclassification adjustment for gains realized in net income(1,357)(345)(1,012)
Total securities available for sale(21,401)(5,446)(15,955)
Derivative instruments:
Unrealized holding gains on derivative instruments14,734 3,750 10,984 
Total derivative instruments14,734 3,750 10,984 
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost54 12 42 
Total defined benefit pension and post-retirement benefit plans54 12 42 
Total other comprehensive loss$(6,613)$(1,684)$(4,929)
Three months ended March 31, 2020
Securities available for sale:
Unrealized holding gains on securities$22,389 $5,695 $16,694 
Total securities available for sale22,389 5,695 16,694 
Derivative instruments:
Unrealized holding losses on derivative instruments(4,028)(1,025)(3,003)
Total derivative instruments(4,028)(1,025)(3,003)
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost62 16 46 
Total defined benefit pension and post-retirement benefit plans62 16 46 
Total other comprehensive income$18,423 $4,686 $13,737 

The accumulated balances for each component of other comprehensive income, net of tax, were as follows as of the dates presented:
 
March 31,
2021		December 31, 2020
Unrealized gains on securities$14,972 $42,246 
Non-credit related portion of previously recorded other-than-temporary impairment on securities— (11,319)
Unrealized gains (losses) on derivative instruments10,346 (638)
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations(5,179)(5,221)
Total accumulated other comprehensive income$20,139 $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
 March 31,
 20212020
Basic
Net income applicable to common stock$57,908 $2,008 
Average common shares outstanding56,240,201 56,534,816 
Net income per common share - basic$1.03 $0.04 
Diluted
Net income applicable to common stock$57,908 $2,008 
Average common shares outstanding56,240,201 56,534,816 
Effect of dilutive stock-based compensation278,998 171,473 
Average common shares outstanding - diluted56,519,199 56,706,289 
Net income per common share - diluted$1.02 $0.04 

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
 March 31,
 20212020
Number of shares1,875236,327
Exercise prices (for stock option awards)——

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

 March 31, 2021December 31, 2020
 AmountRatioAmountRatio
Renasant Corporation
Tier 1 Capital to Average Assets (Leverage)$1,353,317 9.49 %$1,306,597 9.37 %
Common Equity Tier 1 Capital to Risk-Weighted Assets1,245,969 11.05 %1,199,394 10.93 %
Tier 1 Capital to Risk-Weighted Assets1,353,317 12.00 %1,306,597 11.91 %
Total Capital to Risk-Weighted Assets1,701,667 15.09 %1,653,694 15.07 %
Renasant Bank
Tier 1 Capital to Average Assets (Leverage)$1,412,831 9.91 %$1,369,994 9.83 %
Common Equity Tier 1 Capital to Risk-Weighted Assets1,412,831 12.52 %1,369,994 12.49 %
Tier 1 Capital to Risk-Weighted Assets1,412,831 12.52 %1,369,994 12.49 %
Total Capital to Risk-Weighted Assets1,548,990 13.72 %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 March 31, 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 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.
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Notes to Consolidated Financial Statements (Unaudited)
•The Wealth Management segment, through the Trust division, offers a broad range of fiduciary services including the administration (as trustee or in other fiduciary or representative capacities) of benefit plans, management of trust accounts, inclusive of personal and corporate benefit accounts, and custodial accounts, as well as accounting and money management for trust accounts. In addition, the Wealth Management segment, through the Financial Services division, provides specialized products and services to customers, which include fixed and variable annuities, mutual funds and other investment services through a third party broker-dealer.
In order to give the Company’s divisional management a more precise indication of the income and expenses they can control, the results of operations for the Community Banks, the Insurance and the Wealth Management segments reflect the direct revenues and expenses of each respective segment. Indirect revenues and expenses, including but not limited to income from the Company’s investment portfolio as well as certain costs associated with data processing and back office functions, primarily support the operations of the community banks and, therefore, are included in the results of the Community Banks segment. Included in “Other” are the operations of the holding company and other eliminations which are necessary for purposes of reconciling to the consolidated amounts.
The following table provides financial information for the Company’s operating segments as of and for the periods presented:
Community
Banks		InsuranceWealth
Management		OtherConsolidated
Three months ended March 31, 2021
Net interest income (loss)$112,948 $107 $384 $(3,791)$109,648 
Provision for credit losses— — — — — 
Noninterest income (loss)73,070 3,248 5,171 (452)81,037 
Noninterest expense109,586 1,923 4,101 325 115,935 
Income (loss) before income taxes76,432 1,432 1,454 (4,568)74,750 
Income tax expense (benefit)17,656 367 — (1,181)16,842 
Net income (loss)$58,776 $1,065 $1,454 $(3,387)$57,908 
Total assets$15,525,500 $31,004 $64,320 $1,747 $15,622,571 
Goodwill$936,916 $2,767 $— $— $939,683 
Three months ended March 31, 2020
Net interest income (loss)$108,869 $187 $441 $(2,895)$106,602 
Provision for credit losses26,212 — 138 — 26,350 
Noninterest income (loss)30,683 2,940 4,344 (397)37,570 
Noninterest expense (benefit)109,284 1,886 3,945 (74)115,041 
Income (loss) before income taxes4,056 1,241 702 (3,218)2,781 
Income tax expense (benefit)1,280 330 — (837)773 
Net income (loss)$2,776 $911 $702 $(2,381)$2,008 
Total assets$13,776,076 $28,448 $71,895 $24,131 $13,900,550 
Goodwill$936,916 $2,767 $— $— $939,683 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In Thousands, Except Share Data)
This Form 10-Q may contain or incorporate by reference statements regarding Renasant Corporation (referred to herein as the “Company”, “we”, “our”, or “us”) that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “projects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “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 for 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.
In the current environment, one of the most important factors that could cause the Company’s actual results to differ materially from those in forward-looking statements is the continued impact of the COVID-19 pandemic and related governmental measures to respond to the pandemic on the United States economy and the economies of the markets in which the Company operates and its participation in government programs related to the pandemic. In this Form 10-Q, the Company addresses the historical impact of the pandemic on certain aspects of the Company’s operations and sets forth certain expectations regarding the COVID-19 pandemic’s future impact on the Company’s business, financial condition, results of operations, liquidity, asset quality, capital, cash flows and prospects. The Company believes that its statements regarding future events and conditions in light of the COVID-19 pandemic are reasonable, but these statements are based on assumptions regarding, among other things, how long the pandemic will continue, the pace at which the COVID-19 vaccine can be distributed and administered to residents of the markets the Company serves and the United States generally, the duration, extent and effectiveness of the governmental measures implemented to contain the pandemic and ameliorate its impact on businesses and individuals throughout the United States, and the impact of the pandemic and the government’s virus containment measures on national and local economies, all of which are out of the Company’s control. If the Company’s assumptions underlying its statements about future events prove to be incorrect, the Company’s business, financial condition, results of operations, liquidity, asset quality, capital, cash flows and prospects may be materially different from what is presented in the Company’s forward-looking statements.
Important factors other than the COVID-19 pandemic currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following: (1) 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; (2) the effect of economic conditions and interest rates on a national, regional or international basis; (3) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (4) competitive pressures in the consumer finance, commercial finance, insurance, financial services, asset management, retail banking, mortgage lending and auto lending industries; (5) the financial resources of, and products available from, competitors; (6) changes in laws and regulations as well as changes in accounting standards; (7) changes in policy by regulatory agencies; (8) changes in the securities and foreign exchange markets; (9) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (10) 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; (11) an insufficient allowance for credit losses as a result of inaccurate assumptions; (12) general economic, market or business conditions, including the impact of inflation; (13) changes in demand for loan products and financial services; (14) concentration of credit exposure; (15) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (16) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (17) natural disasters, epidemics and other catastrophic events in the Company’s geographic area; (18) the impact, extent and timing of technological changes; and (19) other circumstances, many of which are beyond management’s control. The COVID-19 pandemic has exacerbated, and is likely to continue to exacerbate, the impact of any of these factors on the Company. Management believes that the assumptions underlying the Company’s forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate.
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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 March 31, 2021 compared to December 31, 2020.
Assets
Total assets were $15,622,571 at March 31, 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 available for sale, by investment type and the percentage of such investment type relative to the entire securities portfolio as of the dates presented:
March 31, 2021December 31, 2020
BalancePercentage of
Portfolio		BalancePercentage of
Portfolio
U.S. Treasury securities$3,050 0.20 %$7,079 0.53 %
Obligations of other U.S. Government agencies and corporations1,004 0.07 1,009 0.08 
Obligations of states and political subdivisions328,818 21.41 305,201 22.72 
Mortgage-backed securities1,139,970 74.21 955,549 71.12 
Trust preferred securities— — 9,012 0.67 
Other debt securities63,199 4.11 65,607 4.88 
$1,536,041 100.00 %$1,343,457 100.00 %
During the three months ended March 31, 2021, we purchased $465,245 in investment securities. Mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprised approximately 93% 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 7% of purchases made during the first three months of 2021.
Proceeds from maturities, calls and principal payments on securities during the first three months of 2021 totaled $95,382. The Company sold municipal securities, residential mortgage backed securities, and trust preferred securities with a carrying value of $154,034 at the time of sale for net proceeds of $155,391, resulting in a net gain on sale of $1,357 during the first three months of 2021. Proceeds from the maturities, calls and principal payments on securities during the first three months of 2020 totaled $76,269. The Company did not sell any securities during the first three 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 $502,002 at March 31, 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
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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 $10,688,408 at March 31, 2021 and $10,933,647 at December 31, 2020. Non purchased loans totaled $9,292,502 at March 31, 2021 compared to $9,419,540 at December 31, 2020. Loans purchased in previous acquisitions totaled $1,395,906 and $1,514,107 at March 31, 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:
 March 31, 2021
 Non PurchasedPurchasedTotal
Loans		Percentage of Total Loans
Commercial, financial, agricultural (1)
$2,105,444 $143,843 $2,249,287 21.04 %
Lease financing, net of unearned income75,256 — 75,256 0.70 
Real estate – construction:
Residential252,795 2,561 255,356 2.39 
Commercial680,791 19,771 700,562 6.55 
Total real estate – construction933,586 22,332 955,918 8.94 
Real estate – 1-4 family mortgage:
Primary1,576,212 190,539 1,766,751 16.53 
Home equity432,207 72,413 504,620 4.72 
Rental/investment256,979 28,800 285,779 2.67 
Land development115,522 13,389 128,911 1.21 
Total real estate – 1-4 family mortgage2,380,920 305,141 2,686,061 25.13 
Real estate – commercial mortgage:
Owner-occupied1,344,154 300,616 1,644,770 15.39 
Non-owner occupied2,221,206 546,663 2,767,869 25.90 
Land development110,800 25,588 136,388 1.28 
Total real estate – commercial mortgage3,676,160 872,867 4,549,027 42.57 
Installment loans to individuals121,136 51,723 172,859 1.62 
Total loans, net of unearned income$9,292,502 $1,395,906 $10,688,408 100.00 %
(1)Includes Paycheck Protection Program (“PPP”) loans of $860,864 as of March 31, 2021.
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 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.
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 March 31, 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 $12,736,908 and $12,059,081 at March 31, 2021 and December 31, 2020, respectively. Noninterest-bearing deposits were $4,135,360 and $3,685,048 at March 31, 2021 and December 31, 2020, respectively, while interest-bearing deposits were $8,601,548 and $8,374,033 at March 31, 2021 and December 31, 2020, respectively.
The growth in noninterest-bearing deposits across the Company’s footprint during the current year is 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. Noninterest bearing deposits represented 32.47% of total deposits at March 31, 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 municipalities, including school boards and utilities. Public fund deposits were $1,548,228 and $1,398,330 at March 31, 2021 and December 31, 2020, respectively.
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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:
March 31, 2021December 31, 2020
BalanceBalance
Security repurchase agreements$12,154 $10,947 
Federal funds purchased— 10,393 
$12,154 $21,340 
At March 31, 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:
March 31, 2021December 31, 2020
BalanceBalance
Long-term FHLB advances$152,124 $152,167 
Junior subordinated debentures110,939 110,794 
Subordinated notes204,597 212,009 
$467,660 $474,970 
Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and also are used to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. At March 31, 2021, there were $89 in outstanding long-term FHLB advances scheduled to mature within twelve months or less. The Company had $3,681,061 of availability on unused lines of credit with the FHLB at March 31, 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 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 first quarter of 2021 was $57,908 compared to net income of $2,008 for the first quarter of 2020. Basic and diluted earnings per share (“EPS”) for the first quarter of 2021 were $1.03 and $1.02, respectively, as compared to basic and diluted EPS of $0.04 for the first quarter of 2020. As discussed in more detail below, our net income was significantly impacted by an adjustment to the valuation of our mortgage servicing rights (“MSR”) and the absence of a provision for credit losses expense in the quarter.
From time to time, the Company incurs expenses and charges or recognizes valuation adjustments in connection with certain transactions with respect to which management is unable to accurately predict when these items will be incurred or, when incurred, the amount of such items. The following table presents the impact of these items on reported EPS for the dates presented. The “COVID-19 related expenses” line item in the table below primarily consists of (a) employee overtime and employee benefit accruals directly related to the Company’s response to both the COVID-19 pandemic itself and federal
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legislation enacted to address the pandemic, such as the CARES Act, and (b) expenses associated with supplying branches with protective equipment and sanitation supplies (such as floor markings and cautionary signage for branches, face coverings and hand sanitizer) as well as more frequent and rigorous branch cleaning.
Three Months Ended
 March 31, 2021March 31, 2020
Pre-taxAfter-taxImpact to Diluted EPSPre-taxAfter-taxImpact to Diluted EPS
MSR valuation adjustment$(13,561)$(10,497)$(0.19)$9,571 $6,911 $0.12 
Restructuring charges292 226 0.01 — — — 
COVID-19 related expenses785 608 0.01 2,903 2,096 0.04 
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 57.86% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the first quarter of 2021. The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.
Net interest income was $109,648 for the three months ended March 31, 2021 as compared to $106,602 for the same period in 2020. On a tax equivalent basis, net interest income was $111,264 for the three months ended March 31, 2021 as compared to $108,316 for the same time period in 2020.
The following table sets 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:
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 Three Months Ended March 31,
 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$8,362,793 $81,928 3.97 %$7,654,662 $88,554 4.65 %
Purchased1,454,637 20,457 5.69 2,032,623 30,187 5.97 
Paycheck Protection Program985,561 10,687 4.40 — — — 
Total loans held for investment10,802,991 113,072 4.24 9,687,285 118,741 4.93 
Loans held for sale406,397 2,999 2.96 336,829 2,988 3.57 
Securities:
Taxable(1)
1,065,779 4,840 1.82 1,067,274 7,289 2.75 
Tax-exempt306,344 2,284 2.98 225,601 2,058 3.67 
Interest-bearing balances with banks777,166 183 0.10 292,488 811 1.12 
Total interest-earning assets13,358,677 123,378 3.74 11,609,477 131,887 4.57 
Cash and due from banks205,830 186,317 
Intangible assets969,001 975,933 
Other assets670,183 700,823 
Total assets$15,203,691 $13,472,550 
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand(2)
$5,906,230 $3,932 0.27 %$4,939,757 $9,253 0.75 %
Savings deposits882,758 169 0.08 681,182 252 0.15 
Time deposits1,655,778 4,178 1.02 2,116,676 8,989 1.71 
Total interest-bearing deposits8,444,766 8,279 0.40 7,737,615 18,494 0.96 
Borrowed funds483,907 3,835 3.21 829,320 5,077 2.46 
Total interest-bearing liabilities8,928,673 12,114 0.55 8,566,935 23,571 1.11 
Noninterest-bearing deposits3,862,422 2,586,963 
Other liabilities240,171 213,509 
Shareholders’ equity2,172,425 2,105,143 
Total liabilities and shareholders’ equity$15,203,691 $13,472,550 
Net interest income/net interest margin$111,264 3.37 %$108,316 3.75 %
(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 table 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 months ended March 31, 2021, as compared to the same period in 2020. The Company has continued to focus on lowering the cost of funding through growing noninterest-bearing deposits and aggressively lowering interest rates on interest-bearing deposits.
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The following table sets forth a summary of the changes in interest earned, on a tax equivalent basis, and interest paid resulting from changes in volume and rates for the Company for the three months ended March 31, 2021, as compared to the same period in 2020 (the changes attributable to the combined impact of yield/rate and volume have been allocated on a pro-rata basis using the absolute value of amounts calculated):
Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020
VolumeRateNet
Interest income:
Loans held for investment:
Non purchased$7,496 $(14,122)$(6,626)
Purchased(8,319)(1,411)(9,730)
Paycheck Protection Program10,687 — 10,687 
Loans held for sale565 (554)11 
Securities:
Taxable(10)(2,439)(2,449)
Tax-exempt654 (428)226 
Interest-bearing balances with banks551 (1,179)(628)
Total interest-earning assets11,624 (20,133)(8,509)
Interest expense:
Interest-bearing demand deposits1,531 (6,852)(5,321)
Savings deposits61 (144)(83)
Time deposits(1,694)(3,117)(4,811)
Borrowed funds(2,505)1,263 (1,242)
Total interest-bearing liabilities(2,607)(8,850)(11,457)
Change in net interest income$14,231 $(11,283)$2,948 
Interest income, on a tax equivalent basis, was $123,378 for the three months ended March 31, 2021, as compared to $131,887 for the same period 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 quarter due to increased liquidity on the balance sheet.
The following table presents the percentage of total average earning assets, by type and yield, for the periods presented:
 Percentage of Total Average Earning AssetsYield
Three Months EndedThree Months Ended
 March 31,March 31,
 2021202020212020
Loans held for investment, excl. PPP73.49 %83.44 %4.22 %4.93 %
Paycheck Protection Program7.38 — 4.40 — 
Loans held for sale3.04 2.90 2.96 3.57 
Securities10.27 11.14 2.08 2.91 
Other5.82 2.52 0.10 1.12 
Total earning assets100.00 %100.00 %3.74 %4.57 %

For the first quarter of 2021, interest income on loans held for investment, on a tax equivalent basis, decreased $5,669 to $113,072 from $118,741 in the same period in 2020. Interest income on loans held for investment decreased primarily due to the Federal Reserve maintaining low interest rates since March 2020. Interest income attributable to PPP loans included in loan interest income for the first quarter of 2021 was $10,687, which consisted of $2,392 in interest income and $8,295 in accretion of net origination fees. There was no interest income attributable to PPP loans during the three months ended March 31, 2020.
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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 eight basis points and two basis points, respectively, during the first quarter of 2021. There was no impact to margin and loan yield attributable to PPP loans for the same period in 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.
Three Months Ended
 March 31,
 20212020
Net interest income collected on problem loans$2,180 $218 
Accretable yield recognized on purchased loans(1)
3,088 5,469 
Total impact to interest income on loans$5,268 $5,687 
Impact to loan yield0.20 %0.24 %
Impact to net interest margin0.16 %0.20 %
(1)Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $1,272 and $2,187, for the first quarter of 2021 and 2020, respectively. This additional interest income increased total loan yield by five basis points and nine basis points for the first quarter of 2021 and 2020, respectively, while increasing net interest margin by four and eight basis points for the same respective periods.
For the first quarter of 2021, interest income on loans held for sale (consisting of mortgage loans held for sale), on a tax equivalent basis, increased $11 to $2,999 from $2,988 in the same period in 2020.
Investment income, on a tax equivalent basis, decreased $2,223 to $7,124 for the first quarter of 2021 from $9,347 for the first quarter of 2020. The tax equivalent yield on the investment portfolio for the first quarter of 2021 was 2.08%, down 83 basis points from 2.91% for the same period in 2020. The decrease in taxable equivalent yield on securities was a result of the current interest rate environment.
Interest expense was $12,114 for the first quarter of 2021 as compared to $23,571 for the same period in 2020.
The following table presents, by type, the Company’s funding sources, which consist of total average deposits and borrowed funds, and the total cost of each funding source for the periods presented:
 Percentage of Total Average Deposits and Borrowed FundsCost of Funds
Three Months EndedThree Months Ended
 March 31,March 31,
 2021202020212020
Noninterest-bearing demand30.20 %23.19 %— %— %
Interest-bearing demand46.18 44.29 0.27 0.75 
Savings6.90 6.11 0.08 0.15 
Time deposits12.94 18.98 1.02 1.71 
Short term borrowings0.10 4.06 0.31 1.44 
Long-term Federal Home Loan Bank advances1.19 1.37 0.05 1.42 
Subordinated notes1.63 1.01 5.15 5.59 
Other borrowed funds0.86 0.99 4.24 4.85 
Total deposits and borrowed funds100.00 %100.00 %0.38 %0.85 %

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Interest expense on deposits was $8,279 and $18,494 for the three months ended March 31, 2021 and 2020, respectively. The cost of total deposits was 0.27% and 0.72% 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 32.47% of total deposits at March 31, 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 $3,835 and $5,077 for the three months ended March 31, 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 March 31,
2021 2020
2.16% 1.13%
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 $81,037 for the first quarter of 2021 as compared to $37,570 for the same period in 2020.
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 $8,023 and $9,070 for the first quarter of 2021 and 2020, respectively. Overdraft fees, the largest component of service charges on deposits, were $3,955 for the three months ended March 31, 2021, as compared to $5,896 for the same period in 2020. Management believes the decrease in the first quarter of 2021 relative to the prior period can be attributed to excess customer liquidity driven by the various government stimulus programs initiated in response to the COVID-19 pandemic.
Fees and commissions were $3,900 during the first quarter of 2021 as compared to $3,054 for the same period in 2020. Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. For the first quarter of 2021, interchange fees were $2,392 as compared to $2,054 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 $2,237 and $1,991 for the three months ended March 31, 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 $1,006 and $892 for the three months ended March 31, 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 $4,792 for the first quarter of 2021 compared to $4,002 for the same period in 2020. The market value of assets under management or administration was $4,453,355 and $3,628,163 at March 31, 2021 and March 31, 2020, respectively.
Mortgage banking income is derived from the origination and sale of mortgage loans and the servicing of mortgage loans that the Company has sold but retained the right to service. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market. Originations of mortgage loans to be sold totaled $1,143,349 in the first quarter of 2021 compared to $715,760 for the same period in 2020.
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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 $50,733 and $15,535 for the three months ended March 31, 2021 and 2020, respectively. The increase in mortgage banking income is primarily the result of a positive mortgage servicing rights valuation adjustment of $13,561 during the first three months of 2021 compared to a $9,571 negative valuation adjustment 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 March 31,
2021 2020
Gain on sales of loans, net$33,901 $21,782 
Fees, net4,902 2,919 
Mortgage servicing (loss) income, net(1,631)405 
MSR valuation adjustment13,561 (9,571)
Mortgage banking income, net$50,733 $15,535 
Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance policies and death benefits received on covered individuals. BOLI income was $2,072 for the three months ended March 31, 2021 as compared to $1,163 for the same period in 2020. The increase is primarily due to the $896 of life insurance proceeds received during the first three months of 2021. There were no life insurance proceeds received during the three months ended March 31, 2020.
Other noninterest income was $7,923 and $2,755 for the three months ended March 31, 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.  During the quarter the Company entered into a referral relationship with a separate firm to originate PPP loans under the latest round of funding. The Company earned $2,310 of PPP referral fees during the three months ended March 31, 2021.
Noninterest Expense
Noninterest Expense to Average Assets
Three Months Ended March 31,
2021 2020
3.09%3.46%
Noninterest expense was $115,935 and $115,041 for the first quarter of 2021 and 2020, respectively.
Salaries and employee benefits increased $5,507 to $78,696 for the first quarter of 2021 as compared to $73,189 for the same period in 2020. The increase in salaries and employee benefits is primarily due to incentive expenses recognized during the first quarter of 2021. This increase was partially offset by cost savings realized by the voluntary early retirement program offered during the fourth quarter of 2020.
Data processing costs increased to $5,451 in the first quarter of 2021 from $5,006 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 first quarter of 2021 was $12,538, down from $14,120 for the same period in 2020. The decrease in occupancy and equipment expense is primarily attributable to the restructuring and nonrenewal of certain leases.
Expenses related to other real estate owned for the first quarter of 2021 were $41 as compared to $418 for the same period in 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 $70 and $197 for the first three months of 2021 and 2020, respectively. For the three months ended March 31, 2021 and 2020, other real estate owned with a cost basis of $1,906 and $782, respectively, was sold, resulting in a net gain of $56 and a net loss of $12, 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 $2,921 for the first quarter of 2021 as compared to $2,641 for the same period in 2020.
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Advertising and public relations expense was $3,252 for the first quarter of 2021 as compared to $3,400 for the same period in 2020.
Amortization of intangible assets totaled $1,598 and $1,895 for the first quarter of 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 to 8 years.
Communication expenses, those expenses incurred for communication to clients and between employees, were $2,292 for the first quarter of 2021 as compared to $2,198 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 $8,854 for the three months ended March 31, 2021 as compared to $12,174 for the same period in 2020. The provision for unfunded commitments was $3,400 for the three months ended March 31, 2020. There was no provision recorded for unfunded commitments recorded for the same period in 2021.
Efficiency Ratio
Efficiency Ratio
Three Months Ended March 31,
2021 2020
Efficiency ratio (GAAP)60.29 %78.86 %
Adjusted efficiency ratio (Non-GAAP)(1)
63.85 %68.73 %
(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 first quarter of 2021 and 2020 was $16,842 and $773, respectively. The effective tax rates for those periods were 22.59% and 27.80%, respectively.

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 March 31, 2021, the Company’s credit quality metrics remained stable. The Company is continuing to monitor all asset categories given that any category or borrower could be negatively impacted by the pandemic, with enhanced monitoring of loans remaining on deferral as well as a focus on those industries more highly impacted by the pandemic, primarily the hospitality and senior living industries. In addition, to provide necessary relief to the Company’s borrowers – both consumer and commercial clients – the Company established loan deferral programs allowing qualified clients to defer principal and interest payments for up to 90 days. A second 90-day deferral was available to borrowers that remained current on taxes and insurance and also satisfied underwriting standards established by the Company that analyzed the ability of the borrower to service its loan in accordance with its existing terms in light of the impact of the COVID-19 pandemic on the borrower, its industry and the markets in which it operated. The Company has discontinued its deferral programs as economic
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conditions in the Company’s markets have improved to the extent that management viewed a broad deferral program as no longer necessary. At March 31, 2021, the Company had 592 loans (not in thousands) on deferral with an aggregate balance of approximately $94,000 or 0.96% of our loan portfolio (excluding PPP loans) by dollar value. In accordance with the applicable guidance, none of these loans were considered “restructured loans” and thus are not included in the discussion of our restructured loans below.

The Company’s credit quality in future quarters may be impacted by both external and internal factors related to the pandemic in addition to those factors that traditionally affect credit quality. External factors outside the Company’s control include items such as the pace at which the COVID-19 vaccine is administered to residents in the Company’s markets and the United States generally, federal, state and local government measures, the re-imposition of “shelter-in-place” orders, and the economic impact of government programs, including additional fiscal stimulus and the extension of the Paycheck Protection Program. Internal factors that will potentially impact credit quality include items such as the performance of the Company’s loans that remain on deferral, involvement in government offered programs and the related financial impact of these programs. The impact of each of these items are unknown at this time and could materially and adversely impact future credit quality.
Management of Credit Risk. Inherent in any lending activity is credit risk, that is, the risk of loss should a borrower default. Credit risk is monitored and managed on an ongoing basis by a credit administration department, a problem asset resolution committee and the Board of Directors Credit Review Committee. Oversight of the Company’s lending operations (including adherence to our policies and procedures governing the loan approval and monitoring process), credit quality and loss mitigation are major concerns of credit administration and these committees. The Company’s central appraisal review department reviews and approves third-party appraisals obtained by the Company on real estate collateral and monitors loan maturities to ensure updated appraisals are obtained. This department is managed by a State Certified General Real Estate Appraiser and employs three additional State Certified General Real Estate Appraisers and four real estate evaluators. In addition, we maintain a loan review staff to independently monitor loan quality and lending practices. Loan review personnel monitor and, if necessary, adjust the grades assigned to loans through periodic examination, focusing their review on commercial and real estate loans rather than consumer and small balance consumer mortgage loans, such as 1-4 family mortgage loans.
In compliance with loan policy, the lending staff is given lending limits based on their knowledge and experience. In addition, each lending officer’s prior performance is evaluated for credit quality and compliance as a tool for establishing and enhancing lending limits. Before funds are advanced on consumer and commercial loans below certain dollar thresholds, loans are reviewed and scored using centralized underwriting methodologies. Loan quality, or “risk-rating,” grades are assigned based upon certain factors, which include the scoring of the loans. This information is used to assist management in monitoring credit quality. Loan requests of amounts greater than an officer’s lending limits 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 debtor; 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 described in the above paragraph), 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 three months of 2021 were $3,038, or 0.11% of average loans (annualized), compared to net charge-offs of $811, or 0.03% 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
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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 pool) basis, where such loans are segregated into loan portfolio segments based upon similarity of credit risk. In determining the allowance for credit losses on loans evaluated on a collective basis, the Company categorizes loan pools based on loan type and/or risk rating. The Company uses two CECL models: (1) a loss rate model, based on average historical life-of-loan loss rates, is used for the Real Estate - 1-4 Family Mortgage, Real Estate - Construction and the Installment Loans to Individuals portfolio segments, and (2) for the Commercial, Real Estate - Commercial Mortgage and Lease Financing portfolio segments, the Company uses a probability of default/loss given default model, which calculates an expected loss percentage for each loan pool by considering (a) the probability of default, based on the migration of loans from performing (using risk ratings) to default using life-of-loan analysis periods, and (b) the historical severity of loss, based on the aggregate net lifetime losses incurred per loan pool.

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

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

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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. 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:
 
March 31, 2021December 31, 2020March 31, 2020
Balance% of TotalBalance% of TotalBalance% of Total
Commercial, financial, agricultural$37,592 21.04 %$39,031 23.20 %$25,937 14.58 %
Lease financing1,546 0.70 %1,624 0.69 %1,588 0.87 %
Real estate – construction14,977 8.94 %16,047 7.85 %10,924 8.07 %
Real estate – 1-4 family mortgage31,694 25.13 %32,165 24.68 %27,320 29.13 %
Real estate – commercial mortgage76,225 42.57 %76,127 41.66 %44,237 44.10 %
Installment loans to individuals11,072 1.62 %11,150 1.92 %10,179 3.25 %
Total$173,106 100.00 %$176,144 100.00 %$120,185 100.00 %

The provision for credit losses on loans charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for credit losses on loans at a level that is believed to be adequate to meet the inherent risks of losses in our loan portfolio. The Company did not record a provision for credit losses during the first quarter of 2021, as compared to a provision for credit losses on loans of $26,350 in the first quarter of 2020. The Company’s allowance for credit loss model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years. Based on the continual improvements in these forecasts over the last few quarters, the Company determined that additional provisioning during the first quarter of 2021 was not necessary.

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The table below reflects the activity in the allowance for credit losses on loans for the periods presented:
Three Months Ended
 March 31,
 20212020
Balance at beginning of period$176,144 $52,162 
Impact of the adoption of ASC 326— 42,484 
Charge-offs
Commercial, financial, agricultural3,498 393 
Lease financing— — 
Real estate – construction52 — 
Real estate – 1-4 family mortgage101 221 
Real estate – commercial mortgage61 2,047 
Installment loans to individuals1,658 2,688 
Total charge-offs5,370 5,349 
Recoveries
Commercial, financial, agricultural289 190 
Lease financing11 5 
Real estate – construction13 — 
Real estate – 1-4 family mortgage261 88 
Real estate – commercial mortgage171 1,699 
Installment loans to individuals1,587 2,556 
Total recoveries2,332 4,538 
Net charge-offs3,038 811 
Provision for credit losses on loans— 26,350 
Balance at end of period$173,106 $120,185 
Net charge-offs (annualized) to average loans0.11 %0.03 %
Net charge-offs to allowance for credit losses on loans
Allowance for credit losses on loans to:
Total loans1.62 %1.23 %
Total loans excluding PPP loans(1)
1.76 %1.23 %
Nonperforming loans308.54 %240.19 %
Nonaccrual loans322.11 %296.94 %
(1) Allowance for credit losses on loans to total loans excluding PPP loans is a non-GAAP financial measure. A reconciliation of this financial measure from GAAP to non-GAAP as well as an explanation of why the Company provides non-GAAP financial measures can be found under the “Non-GAAP Financial Measures” heading at the end of this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations

The table below reflects annualized net charge-offs to daily average loans outstanding, by loan category, during the periods presented:
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Three Months Ended
March 31, 2021March 31, 2020
Net Charge-offsAverage LoansAnnualized Net Charge-offs to Average LoansNet Charge-offsAverage LoansAnnualized Net Charge-offs to Average Loans
Commercial, financial, agricultural$3,209$2,382,4540.55%$203$1,377,1560.06%
Lease financing(11)75,429(0.06)(5)82,709(0.02)
Real estate – construction39921,8030.02—829,211—
Real estate – 1-4 family mortgage(160)2,674,824(0.02)1332,847,1870.02
Real estate – commercial mortgage(110)4,558,003(0.01)3484,236,5610.03
Installment loans to individuals71190,4780.15132314,4610.17
Total$3,038$10,802,9910.11%$811$9,687,2850.03%

The following table provides further details of the Company’s net charge-offs (recoveries) of loans secured by real estate for the periods presented:
 
Three Months Ended
 March 31,
 20212020
Real estate – construction:
Residential$39 $— 
Total real estate – construction39 — 
Real estate – 1-4 family mortgage:
Primary(79)151 
Home equity(93)(11)
Rental/investment34 28 
Land development(22)(35)
Total real estate – 1-4 family mortgage(160)133 
Real estate – commercial mortgage:
Owner-occupied(159)1,443 
Non-owner occupied25 (1,118)
Land development24 23 
Total real estate – commercial mortgage(110)348 
Total net charge-offs of loans secured by real estate$(231)$481 

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 table below.
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Three Months Ended
March 31,
20212020
Beginning balance$20,535 $946 
Impact of the adoption of ASC 326— 10,389 
Provision for credit losses on unfunded loan commitments (included in other noninterest expense) — 3,400 
Ending balance$20,535 $14,735 
Nonperforming Assets. Nonperforming assets consist of nonperforming loans and other real estate owned. Nonperforming loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue. Generally, the accrual of interest is discontinued when the full collection of principal or interest is in doubt or when the payment of principal or interest has been contractually 90 days past due, unless the obligation is both well secured and in the process of collection. Management, the problem asset resolution committee and our loan review staff closely monitor loans that are considered to be nonperforming.

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

The following tables provide details of the Company’s non purchased and purchased nonperforming assets as of the dates presented.
Non PurchasedPurchased Total
March 31, 2021
Nonaccruing loans$24,794 $28,947 $53,741 
Accruing loans past due 90 days or more2,235 129 2,364 
Total nonperforming loans27,029 29,076 56,105 
Other real estate owned2,292 3,679 5,971 
Total nonperforming assets$29,321 $32,755 $62,076 
Nonperforming loans to total loans0.52 %
Nonaccruing loans to total loans0.50 %
Nonperforming assets to total assets0.40 %
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 $635 from December 31, 2020 to March 31, 2021, while OREO decreased $1 during the same period.
The following table presents nonperforming loans by loan category as of the dates presented:
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March 31,
2021		December 31, 2020March 31,
2020
Commercial, financial, agricultural$15,992 $16,668 $13,615 
Lease financing— 48 277 
Real estate – construction:
Residential— 497 3,012 
Commercial— — — 
Total real estate – construction— 497 3,012 
Real estate – 1-4 family mortgage:
Primary16,275 16,317 16,078 
Home equity2,436 2,273 2,819 
Rental/investment1,168 1,526 1,408 
Land development85 345 407 
Total real estate – 1-4 family mortgage19,964 20,461 20,712 
Real estate – commercial mortgage:
Owner-occupied4,923 6,364 9,226 
Non-owner occupied13,998 10,204 1,929 
Land development566 572 673 
Total real estate – commercial mortgage19,487 17,140 11,828 
Installment loans to individuals662 656 593 
Total nonperforming loans$56,105 $55,470 $50,037 
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Total nonperforming loans as a percentage of total loans were 0.52% as of March 31, 2021 as compared to 0.51% as of December 31, 2020 and March 31, 2020. The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 308.54% as of March 31, 2021 as compared to 317.55% as of December 31, 2020 and 240.19% as of March 31, 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 March 31, 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 $21,801 at March 31, 2021 as compared to $26,286 at December 31, 2020 and $45,524 at March 31, 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 $20,370 at March 31, 2021 as compared to $20,448 at December 31, 2020 and $11,039 at March 31, 2020. At March 31, 2021, loans restructured through interest rate concessions represented 37% 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:

March 31,
2021		December 31, 2020March 31,
2020
Commercial, financial, agricultural$2,639 $2,326 $1,411 
Real estate – 1-4 family mortgage:
Primary8,363 9,460 6,853 
Home equity331 332 212 
Rental/investment427 432 587 
Total real estate – 1-4 family mortgage9,121 10,224 7,652 
Real estate – commercial mortgage:
Owner-occupied6,757 6,838 1,398 
Non-owner occupied1,595 797 520 
Land development179 183 — 
Total real estate – commercial mortgage8,531 7,818 1,918 
Installment loans to individuals79 80 58 
Total restructured loans in compliance with modified terms$20,370 $20,448 $11,039 
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Changes in the Company’s restructured loans are set forth in the table below:
 
20212020
Balance at January 1,$20,448 $11,954 
Additional advances or loans with concessions1,621 1,574 
Reclassified as performing restructured loan— 58 
Reductions due to:
Reclassified as nonperforming(1,495)(2,449)
Paid in full— (34)
Charge-offs— (3)
Paydowns(204)(61)
Balance at March 31,$20,370 $11,039 

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.
 
March 31,
2021		December 31, 2020March 31,
2020
Nonaccruing loans$53,741 $51,420 $40,474 
Accruing loans past due 90 days or more2,364 4,050 9,563 
Total nonperforming loans56,105 55,470 50,037 
Restructured loans in compliance with modified terms20,370 20,448 11,039 
Total nonperforming and restructured loans$76,475 $75,918 $61,076 
The following table provides details of the Company’s other real estate owned as of the dates presented:
 
March 31,
2021		December 31, 2020March 31,
2020
Residential real estate$484 $179 $1,661 
Commercial real estate3,109 2,665 3,411 
Residential land development341 1,013 959 
Commercial land development2,037 2,115 2,640 
Total other real estate owned$5,971 $5,972 $8,671 

Changes in the Company’s other real estate owned were as follows:
20212020
Balance at January 1,$5,972 $8,010 
Transfers of loans2,039 1,640 
Impairments(70)(197)
Dispositions(1,906)(782)
Other(64)— 
Balance at March 31,$5,971 $8,671 
Other real estate owned with a cost basis of $1,906 was sold during the three months ended March 31, 2021, resulting in a net gain of $56, while other real estate owned with a cost basis of $782 was sold during the three months ended March 31, 2020, resulting in a net loss of $12.

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
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have significant investments in fixed assets and inventories. Our market risk arises primarily from interest rate risk inherent in lending and deposit-taking activities. Management believes a significant impact on the Company’s financial results stems from our ability to react to changes in interest rates. A sudden and substantial change in interest rates may adversely impact our earnings because the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis.
Because of the impact of interest rate fluctuations on our profitability, the Board of Directors and management actively monitor and manage our interest rate risk exposure. We have an Asset/Liability Committee (“ALCO”) that is authorized by the Board of Directors to monitor our interest rate sensitivity and to make decisions relating to that process. The ALCO’s goal is to structure our asset/liability composition to maximize net interest income while managing interest rate risk so as to minimize the adverse impact of changes in interest rates on net interest income and capital. The ALCO uses an asset/liability model as the primary quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model is used to perform both net interest income forecast simulations for multiple year horizons and economic value of equity (“EVE”) analyses, each under various interest rate scenarios, which could impact the results presented in the table below.
Net interest income simulations measure the short and medium-term earnings exposure from changes in market interest rates in a rigorous and explicit fashion. Our current financial position is combined with assumptions regarding future business to calculate net interest income under various hypothetical rate scenarios. EVE measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time for a given set of market rate assumptions. An increase in EVE due to a specified rate change indicates an improvement in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet.
The following table presents the projected impact of a change in interest rates on (1) static EVE and (2) earnings at risk (that is, net interest income) for the 1-12 and 13-24 month periods commencing April 1, 2021, in each case as compared to the result under rates present in the market on March 31, 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
+20017.75%18.52%25.83%
+1009.79%9.25%13.19%

The rate shock results for the net interest income simulations for the next twenty-four months produce an asset sensitive position at March 31, 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 March 31, 2021, the Company had notional amounts of $232,095 on interest rate contracts with corporate customers and $232,095 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 14.60% 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 March 31, 2021, securities with a carrying value of $633,088 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 March 31, 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 March 31, 2021, the balance of our outstanding long-term advances with the FHLB was $152,124 compared to $152,167 at December 31, 2020. The total amount of the remaining credit available to us from the FHLB at March 31, 2021 was $3,681,061. 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 March 31, 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 $204,597 at March 31, 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
Three Months EndedThree Months Ended
 March 31,March 31,
 2021202020212020
Noninterest-bearing demand30.20 %23.19 %— %— %
Interest-bearing demand46.17 44.29 0.27 0.75 
Savings6.90 6.11 0.08 0.15 
Time deposits12.94 18.98 1.02 1.71 
Short-term borrowings0.10 4.06 0.31 1.44 
Long-term Federal Home Loan Bank advances1.19 1.37 0.05 1.42 
Subordinated notes1.63 1.01 5.15 5.59 
Other borrowed funds0.87 0.99 4.24 4.85 
Total deposits and borrowed funds100.00 %100.00 %0.38 %0.84 %

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 $1,261,916 at March 31, 2021, as compared to $637,772 at March 31, 2020. Cash provided by investing activities for the three months ended March 31, 2021 was $29,466, as compared to cash used in investing activities of $130,341 for the three months ended March 31, 2020. Proceeds from the sale, maturity or call of securities within our investment portfolio were $250,773 for the three months ended March 31, 2021, as compared to $76,269 for the same period in 2020. These proceeds were primarily reinvested into the investment portfolio. Purchases of investment securities were $465,245 for the first three months of 2021, as compared to $123,670 for the same period in 2020.

Cash provided by financing activities for the three months ended March 31, 2021 was $656,035, as compared to $476,183 for the same period in 2020. Deposits increased $677,827 and $199,404 for the three months ended March 31, 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 (the “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 March 31, 2021, the maximum amount available for transfer from the Bank to the Company in the form of loans was $154,899. The Company maintains a line of credit collateralized by cash with the Bank totaling $3,070. There were no amounts outstanding under this line of credit at March 31, 2021.
These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the three months ended March 31, 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:
March 31, 2021December 31, 2020
Loan commitments$2,886,616 $2,749,988 
Standby letters of credit92,525 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 $2,173,701 at March 31, 2021 compared to $2,132,733 at December 31, 2020. Book value per share was $38.61 and $37.95 at March 31, 2021 and December 31, 2020, respectively. The growth in shareholders’ equity was attributable to earnings retention offset by changes in accumulated other comprehensive income and dividends declared.

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

On October 20, 2020, the Company’s Board of Directors approved a stock repurchase program, authorizing the Company to repurchase up to $50,000 of its outstanding common stock, either in open market purchases or privately-negotiated transactions. The repurchase program will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased. The Company did not repurchase any of its common stock under the stock repurchase plan in the first quarter of 2021.

The Company has junior subordinated debentures with a carrying value of $110,939 at March 31, 2021, of which $107,348 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 amount of debentures we include in Tier 1 capital at March 31, 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 $204,597 at March 31, 2021, of which $212,191 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
March 31, 2021
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio$1,245,969 11.05 %$732,824 6.50 %$789,195 7.00 %
Tier 1 risk-based capital ratio1,353,317 12.00 %901,937 8.00 %958,308 8.50 %
Total risk-based capital ratio1,701,667 15.09 %1,127,421 10.00 %1,183,792 10.50 %
Leverage capital ratios:
Tier 1 leverage ratio1,353,317 9.49 %713,071 5.00 %570,457 4.00 %
Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio$1,412,831 12.52 %$733,719 6.50 %$790,159 7.00 %
Tier 1 risk-based capital ratio1,412,831 12.52 %903,039 8.00 %959,479 8.50 %
Total risk-based capital ratio1,548,990 13.72 %1,128,799 10.00 %1,185,238 10.50 %
Leverage capital ratios:
Tier 1 leverage ratio1,412,831 9.91 %712,621 5.00 %570,097 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, swap termination 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 March 31,
20212020
Interest income (fully tax equivalent basis)$123,378 $131,887 
Interest expense12,114 23,571 
Net interest income (fully tax equivalent basis)111,264 108,316 
Total noninterest income81,037 37,570 
Net gains on sales of securities1,357 — 
MSR valuation adjustment13,561 (9,571)
Adjusted noninterest income66,119 47,141 
Total noninterest expense115,935 115,041 
Intangible amortization1,598 1,895 
Restructuring charges292 — 
COVID-19 related expenses785 2,903 
Provision for unfunded commitments— 3,400 
Adjusted noninterest expense113,260 106,843 
Efficiency Ratio (GAAP)60.29 %78.86 %
Adjusted Efficiency Ratio (non-GAAP)63.85 %68.73 %

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Allowance for Credit Losses on Loans to Total Loans, excluding PPP Loans
March 31, 2021December 31, 2020
Total loans (GAAP)$10,688,408 $10,933,647 
Less PPP loans860,864 1,128,703 
Adjusted total loans (non-GAAP)$9,827,544 $9,804,944 
Allowance for Credit Losses on Loans$173,106 $176,144 
ACL/Total loans (GAAP)1.62 %1.61 %
ACL/Total loans excluding PPP loans (non-GAAP)1.76 %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 March 31, 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)
January 1, 2021 to January 31, 202113,024 $33.68 — $50,000 
February 1, 2021 to February 28, 20211,253 39.60 — 50,000 
March 1, 2021 to March 31, 202139,344 44.35 — 50,000 
Total53,621 $41.65 — 
(1)Share amounts in this column represent shares of Renasant Corporation stock withheld to satisfy federal and state tax liabilities related to the exercise of stock options and the vesting of time-based restricted stock awards.
The Company announced a $50.0 million stock repurchase program on October 20, 2020 which will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased. No shares were repurchased during the first quarter of 2021 under this plan.
(2)Dollars in thousands
Please refer to the information discussing restrictions on the Company’s ability to pay dividends under the heading “Liquidity and Capital Resources” in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report, which is incorporated by reference herein.
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Item 6. EXHIBITS
 
Exhibit
Number		 Description
(3)(i) 
(3)(ii) 
(3)(iii)
(10)(i)
(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 March 31, 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 March 31, 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:May 7, 2021/s/ C. Mitchell Waycaster
 C. Mitchell Waycaster
 President and
 Chief Executive Officer
 (Principal Executive Officer)
Date:May 7, 2021/s/ James C. Mabry IV
 James C. Mabry IV
 Executive Vice President and
 Chief Financial Officer
 (Principal Financial Officer)
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