UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

________________________________________________________

(Mark One)



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

For the quarterly period ended June 30, ~~2017~~2018



o	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)

________________________________________________________

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 ý No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ý No o

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	ý	Accelerated filer	o

Non-accelerated filer	o ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	o

Emerging growth company	o

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. o

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

As of July 31, ~~2017, 49,315,127~~2018, 49,438,848 shares of the registrant’s common stock, $5.00 par value per share, were outstanding.

Renasant Corporation and Subsidiaries

Form 10-Q

For the Quarterly Period Ended June 30, ~~2017~~2018

CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Data)


	(Unaudited)						(Unaudited)
	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Assets
Cash and due from banks	$	152,316		$	160,570		$	155,235		$	187,838
Interest-bearing balances with banks	83,745			145,654			137,717			93,615
Cash and cash equivalents	236,061			306,224			292,952			281,453
Securities held to maturity (fair value of $353,064 and $362,893, respectively)	339,619			356,282
Securities available for sale, at fair value	737,006			674,248			1,088,779			671,488
Mortgage loans held for sale, at fair value	232,398			177,866			245,046			108,316
Loans, net of unearned income:
Non purchased loans and leases	5,058,898			4,713,572			6,057,766			5,588,556
Purchased loans	1,312,109			1,489,137			1,709,891			2,031,766
Total loans, net of unearned income	6,371,007			6,202,709			7,767,657			7,620,322
Allowance for loan losses	(44,149		)	(42,737		)	(47,355		)	(46,211		)
Loans, net	6,326,858			6,159,972			7,720,302			7,574,111
Premises and equipment, net	178,277			179,223			186,568			183,254
Other real estate owned:
Non purchased	4,305			5,929			4,698			4,410
Purchased	15,409			17,370			9,006			11,524
Total other real estate owned, net	19,714			23,299			13,704			15,934
Goodwill	470,534			470,534			611,046			611,046
Other intangible assets, net	21,018			24,074			21,265			24,510
Bank-owned life insurance	154,312			152,305			177,973			175,863
Mortgage servicing rights	31,826			26,302			43,239			39,339
Other assets	124,649			149,522			143,601			144,667
Total assets	$	8,872,272		$	8,699,851		$	10,544,475		$	9,829,981
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing	$	1,642,863		$	1,561,357		$	1,888,561		$	1,840,424
Interest-bearing	5,559,162			5,497,780			6,492,159			6,080,651
Total deposits	7,202,025			7,059,137			8,380,720			7,921,075
Short-term borrowings	120,121			109,676			313,393			89,814
Long-term debt	191,956			202,459			207,354			207,546
Other liabilities	86,384			95,696			84,340			96,563
Total liabilities	7,600,486			7,466,968			8,985,807			8,314,998
Shareholders’ equity
Preferred stock, $.01 par value – 5,000,000 shares authorized; no shares issued and outstanding	—			—			—			—
Common stock, $5.00 par value – 150,000,000 shares authorized; 45,107,066 shares issued; 44,430,335 and 44,332,273 shares outstanding, respectively	225,535			225,535
Common stock, $5.00 par value – 150,000,000 shares authorized; 49,990,248 shares issued; 49,424,339 and 49,321,231 shares outstanding, respectively							249,951			249,951
Treasury stock, at cost	(20,107		)	(21,692		)	(17,523		)	(19,906		)
Additional paid-in capital	706,103			707,408			897,817			898,095
Retained earnings	370,723			337,536			448,475			397,354
Accumulated other comprehensive loss, net of taxes	(10,468		)	(15,904		)	(20,052		)	(10,511		)
Total shareholders’ equity	1,271,786			1,232,883			1,558,668			1,514,983
Total liabilities and shareholders’ equity	$	8,872,272		$	8,699,851		$	10,544,475		$	9,829,981

See Notes to Consolidated Financial Statements.

Renasant Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)

(In Thousands, Except Share Data)


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Interest income
Loans	$	80,133	$	76,785	$	154,540	$	146,022	$	98,656	$	80,133	$	192,774	$	154,540
Securities
Taxable	4,627		4,654		8,979		9,115		5,700		4,627		9,694		8,979
Tax-exempt	2,310		2,465		4,884		4,953		1,649		2,310		3,334		4,884
Other	509		104		1,065		177		569		509		1,152		1,065
Total interest income	87,579		84,008		169,468		160,267		106,574		87,579		206,954		169,468
Interest expense
Deposits	5,314		4,420		10,463		8,380		10,919		5,314		18,978		10,463
Borrowings	2,662		2,431		5,387		4,676		3,266		2,662		6,347		5,387
Total interest expense	7,976		6,851		15,850		13,056		14,185		7,976		25,325		15,850
Net interest income	79,603		77,157		153,618		147,211		92,389		79,603		181,629		153,618
Provision for loan losses	1,750		1,430		3,250		3,230		1,810		1,750		3,560		3,250
Net interest income after provision for loan losses	77,853		75,727		150,368		143,981		90,579		77,853		178,069		150,368
Noninterest income
Service charges on deposit accounts	7,958		7,521		15,889		15,512		8,271		7,958		16,744		15,889
Fees and commissions	5,470		4,877		10,669		9,121		5,917		5,470		11,602		10,669
Insurance commissions	2,181		2,175		4,041		4,137		2,110		2,181		4,115		4,041
Wealth management revenue	3,037		2,872		5,921		5,763		3,446		3,037		6,708		5,921
Mortgage banking income	12,424		13,420		22,928		25,335		12,839		12,424		23,799		22,928
Net gain on sales of securities	—		1,257		—		1,186
BOLI income	985		996		2,098		1,950		1,195		985		2,140		2,098
Other	2,210		2,468		4,740		5,884		1,803		2,210		4,426		4,740
Total noninterest income	34,265		35,586		66,286		68,888		35,581		34,265		69,534		66,286
Noninterest expense
Salaries and employee benefits	45,014		45,387		87,223		87,780		52,010		45,014		100,794		87,223
Data processing	3,835		4,502		8,069		8,660		4,600		3,835		8,844		8,069
Net occupancy and equipment	8,814		8,531		18,133		16,755		9,805		8,814		19,627		18,133
Other real estate owned	781		1,614		1,313		2,571		232		781		889		1,313
Professional fees	1,882		1,846		3,949		3,635		2,176		1,882		4,314		3,949
Advertising and public relations	2,430		1,742		4,022		3,379		2,647		2,430		4,850		4,022
Intangible amortization	1,493		1,742		3,056		3,439		1,594		1,493		3,245		3,056
Communications	1,908		2,040		3,771		4,211		1,877		1,908		3,846		3,771
Extinguishment of debt	—		329		205		329		—		—		—		205
Merger and conversion related expenses	3,044		2,807		3,389		3,755		500		3,044		1,400		3,389
Other	5,640		6,719		11,020		12,559		3,585		5,640		9,161		11,020
Total noninterest expense	74,841		77,259		144,150		147,073		79,026		74,841		156,970		144,150
Income before income taxes	37,277		34,054		72,504		65,796		47,134		37,277		90,633		72,504
Income taxes	11,993		11,154		23,248		21,680		10,424		11,993		20,097		23,248
Net income	$	25,284	$	22,900	$	49,256	$	44,116	$	36,710	$	25,284	$	70,536	$	49,256
Basic earnings per share	$	0.57	$	0.54	$	1.11	$	1.07	$	0.74	$	0.57	$	1.43	$	1.11
Diluted earnings per share	$	0.57	$	0.54	$	1.11	$	1.06	$	0.74	$	0.57	$	1.42	$	1.11
Cash dividends per common share	$	0.18	$	0.18	$	0.36	$	0.35	$	0.20	$	0.18	$	0.39	$	0.36

See Notes to Consolidated Financial Statements.

Renasant Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(In Thousands, Except Share Data)


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Net income	$	25,284		$	22,900		$	49,256		$	44,116		$	36,710		$	25,284		$	70,536		$	49,256
Other comprehensive income, net of tax:
Other comprehensive (loss) income, net of tax:
Securities available for sale:
Unrealized holding gains on securities	2,569			812			5,476			3,875
Reclassification adjustment for gains realized in net income	—			(772		)	—			(728		)
Unrealized holding (losses) gains on securities													(3,000		)	2,569			(10,909		)	5,476
Amortization of unrealized holding gains on securities transferred to the held to maturity category	(18		)	(18		)	(169		)	(38		)	—			(18		)	—			(169		)
Total securities	2,551			22			5,307			3,109			(3,000		)	2,551			(10,909		)	5,307
Derivative instruments:
Unrealized holding (losses) gains on derivative instruments	(165		)	(428		)	4			(1,694		)
Unrealized holding gains (losses) on derivative instruments													387			(165		)	1,245			4
Total derivative instruments	(165		)	(428		)	4			(1,694		)	387			(165		)	1,245			4
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost	56			80			125			152			57			56			123			125
Total defined benefit pension and post-retirement benefit plans	56			80			125			152			57			56			123			125
Other comprehensive income (loss), net of tax	2,442			(326		)	5,436			1,567
Other comprehensive (loss) income, net of tax													(2,556		)	2,442			(9,541		)	5,436
Comprehensive income	$	27,726		$	22,574		$	54,692		$	45,683		$	34,154		$	27,726		$	60,995		$	54,692

See Notes to Consolidated Financial Statements.

Renasant Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(In Thousands)


	Six Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2018			2017
Operating activities
Net income	$	49,256		$	44,116		$	70,536		$	49,256
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses	3,250			3,230			3,560			3,250
Depreciation, amortization and accretion	2,625			1,309			1,854			2,625
Deferred income tax expense	2,219			3,845			3,476			2,219
Funding of mortgage loans held for sale	(772,456		)	(1,006,507		)	(838,564		)	(772,456		)
Proceeds from sales of mortgage loans held for sale	729,532			968,800			721,351			729,532
Gains on sales of mortgage loans held for sale	(11,608		)	(12,971		)	(19,517		)	(11,608		)
Gains on sales of securities	—			(1,186		)
Penalty on prepayment of debt	205			329			—			205
Losses on sales of premises and equipment	546			102
(Gains) losses on sales of premises and equipment							(225		)	546
Stock-based compensation expense	2,411			1,715			3,712			2,411
Decrease in FDIC loss-share indemnification asset, net of accretion	—			1,049
Decrease (increase) in other assets	10,428			(6,613		)
(Increase) decrease in other assets							(6,649		)	10,428
Decrease in other liabilities	(8,715		)	(3,464		)	(12,657		)	(8,715		)
Net cash provided by (used in) operating activities	7,693			(6,246		)
Net cash (used in) provided by operating activities							(73,123		)	7,693
Investing activities
Purchases of securities available for sale	(119,766		)	(34,651		)	(497,845		)	(119,766		)
Proceeds from sales of securities available for sale	2,946			4,028			—			2,946
Proceeds from call/maturities of securities available for sale	60,928			72,069			63,655			60,928
Purchases of securities held to maturity	—			(9,073		)
Proceeds from call/maturities of securities held to maturity	15,507			81,510			—			15,507
Net increase in loans	(163,349		)	(272,514		)	(140,205		)	(163,349		)
Purchases of premises and equipment	(7,668		)	(5,651		)	(10,313		)	(7,668		)
Proceeds from sales of premises and equipment	1,255			1,198			233			1,255
Proceeds from sales of other assets	7,385			7,957			4,026			7,385
Net cash received in acquisition of businesses	—			25,263
Net cash used in investing activities	(202,762		)	(129,864		)	(580,449		)	(202,762		)
Financing activities
Net increase in noninterest-bearing deposits	81,506			107,969			48,137			81,506
Net increase in interest-bearing deposits	62,405			25,791			413,003			62,405
Net increase in short-term borrowings	10,445			20,361			223,579			10,445
Proceeds from long-term borrowings	—			277
Repayment of long-term debt	(11,063		)	(5,436		)	(436		)	(11,063		)
Cash paid for dividends	(16,068		)	(14,498		)	(19,413		)	(16,068		)
Net stock-based compensation transactions	(2,319		)	401			201			(2,319		)
Excess tax benefit from stock-based compensation	—			482
Net cash provided by financing activities	124,906			135,347			665,071			124,906
Net decrease in cash and cash equivalents	(70,163		)	(763		)
Net increase (decrease) in cash and cash equivalents							11,499			(70,163		)
Cash and cash equivalents at beginning of period	306,224			211,571			281,453			306,224
Cash and cash equivalents at end of period	$	236,061		$	210,808		$	292,952		$	236,061
Supplemental disclosures
Cash paid for interest	$	16,155		$	12,624		$	24,652		$	16,155
Cash paid for income taxes	$	12,701		$	16,411		$	12,044		$	12,701
Noncash transactions:
Transfers of loans to other real estate owned	$	4,227		$	3,508		$	2,291		$	4,227
Financed sales of other real estate owned	$	257		$	150		$	418		$	257
Transfers of loans held for sale to loan portfolio	$	—		$	14,375
Common stock issued in acquisition of businesses	$	—		$	55,290
Transfers of loans held for sale to loans held for investment							$	663		$	—

See Notes to Consolidated Financial Statements.

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”) and Renasant Insurance, Inc. (“Renasant Insurance”). The Company offers a diversified range of financial, ~~fiduciary~~wealth management and insurance services to its retail and commercial customers through its subsidiaries and full service offices located throughout north and central Mississippi, Tennessee, Georgia, Alabama and north Florida.

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. Certain prior year amounts have been reclassified to conform to the current year presentation. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and ~~footnotes~~notes thereto included in the Company’s Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2016~~2017 filed with the Securities and Exchange Commission on February 28, ~~2017.~~2018.

Business Combinations: The Company completed its acquisition of ~~KeyWorth Bank~~Metropolitan BancGroup, Inc. (“~~KeyWorth”~~Metropolitan”) on ~~April~~July 1, ~~2016. KeyWorth’s~~2017. Metropolitan’s financial condition and results of operations are included in the ~~Company's~~Company’s financial condition and results of operations as of the acquisition date. The Company also recently completed its acquisition of Metropolitan BancGroup, Inc. (“Metropolitan”); the Metropolitan acquisition was completed on July 1, 2017, after the date of the financial statements included in this Form 10-Q.

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.~~estimates, and such differences may be material.

Subsequent Events: The Company has evaluated, for consideration of recognition or disclosure, subsequent events that have occurred through the date of issuance of its financial statements. ~~On July 1, 2017, the Company completed its previously-announced acquisition of Metropolitan. The terms of the merger with Metropolitan are disclosed in Note 2, “Mergers and Acquisitions”.~~ The Company has determined that no ~~other~~ significant events occurred after June 30, ~~2017~~2018 but prior to the issuance of these financial statements that would have a material impact on its Consolidated Financial Statements.

Impact of Recently-Issued Accounting Standards and Pronouncements:

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09,~~ ~~“Revenue from Contracts with Customers”~~ (“ASU 2014-09”). ASU 2014-09 provides guidance that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of this standard to annual and interim periods beginning after December 15, 2017. The Company is currently evaluating the impact, if any, ASU 2014-09 will have on its financial position and results of operations, and its financial statement disclosures.

~~In January 2016, FASB issued ASU 2016-01,~~ ~~“Recognition and Measurement of Financial Assets and Financial Liabilities”~~ (“ASU 2016-01”). ASU 2016-01 revises the accounting for the classification and measurement of investments in equity securities and revises the presentation of certain fair value changes for financial liabilities measured at fair value. For equity securities, the guidance in ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income. For financial liabilities that are measured at fair value in accordance with the fair value option, the guidance requires presenting, in other comprehensive income, the change in fair value that relates to a change in instrument-specific credit risk. ASU 2016-01 also eliminates the disclosure assumptions used to estimate fair value for financial instruments measured at amortized cost and requires disclosure of an exit price notion in determining the fair value of financial instruments measured at amortized cost. ASU 2016-01 is effective for interim and annual periods beginning after December 15, 2017. The Company is evaluating the impact, if any, that ASU 2016-01 will have on its financial position and results of operations, and its financial statement disclosures.

In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 amends the accounting model and disclosure requirements for leases. The current accounting model for leases distinguishes between capital leases, which are recognized ~~on-balance~~on the balance sheet, and operating leases, which are not. Under the new standard, the lease classifications are defined as finance leases, which are similar to capital leases under current GAAP, and operating leases. Further, a lessee will recognize

a lease liability and a right-of-use asset for all leases with a term greater than 12 months on its balance sheet regardless of the lease’s classification, which may significantly increase reported assets and liabilities. The accounting model and disclosure requirements for lessors remains substantially unchanged from current GAAP. ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact ASU 2016-02 will have on its financial position and results of operations, and its financial statement disclosures, and the expected results include the recognition of leased assets and related lease liabilities on the balance sheet, along with leasehold amortization and interest expense recognized in the ~~statement~~statements of income.

~~In March 2016, FASB issued ASU 2016-09,~~ ~~“Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”~~ (“ASU 2016-09”). ASU 2016-09 is intended to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions, including (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes. The Company adopted ASU 2016-09 beginning January 1, 2017 and, as a result recognized as income tax expense in the Company's consolidated statement of income for the six months ended June 30, 2017 an excess tax benefit realized from the exercise of stock options and vesting of restricted stock. Furthermore, the presentation of certain elements of share-based payment transactions in the Company's consolidated statements of cash flows was updated to comply with the standard update.

In June 2016, FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ~~The~~This update will significantly change the way entities recognize impairment on many financial assets by requiring immediate recognition of estimated credit losses expected to occur over the ~~asset's~~asset’s remaining life. FASB describes this impairment recognition model as the current expected credit loss (“CECL”) model and believes the CECL model will result in more timely recognition of credit losses since ~~the CECL model~~it incorporates expected credit losses versus incurred credit losses. The scope of FASB’s CECL model ~~would include~~includes loans, held-to-maturity debt instruments, lease receivables, loan commitments and financial guarantees that are not accounted for at fair value. For public companies, this update ~~becomes~~is effective for interim and annual periods beginning after December 15, 2019. The Company has formed an implementation committee comprised of both accounting and credit employees to guide Renasant Bank through the implementation of ASU 2016-13. Currently, this committee is ~~gaining an understanding of~~working with a consulting firm to develop the ~~potential impact of the~~Company’s CECL model, which includes reviewing the different model requirements and ensuring historical data integrity across all reporting systems. ~~The Company has also engaged consulting firms and software providers to assist in evaluating the varying approaches to the implementation of the CECL model.~~

~~In August 2016, FASB issued ASU 2016-15,~~ ~~“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”~~ (“ASU 2016-15”). ASU 2016-15 is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows, including (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transactions and (8) separately identifiable cash flows and application of the predominance principle. For public companies, this amendment becomes effective for interim and annual periods beginning after December 15, 2017. ASU 2016-15 only impacts the presentation of specific items within the Statement of Cash Flows and is not expected to have a material impact on the Company's financial statements.

~~In January 2017, FASB issued ASU 2017-01,~~ ~~“Business Combinations (Topic 805), Clarifying the Definition of a Business”~~ ~~(“ASU 2017-01”),~~that changes the definition of a business when evaluating whether transactions should be accounted for as the acquisition of assets or the acquisition of a business. ASU 2017-01 requires an entity to evaluate if substantially all of the fair value of the assets acquired are concentrated in a single asset or a group of similar identifiable assets; if so, the acquired assets or group of similar identifiable assets is not considered a business. In addition, the guidance requires that, to be considered a business, the acquired assets must include an input and a substantive process that together significantly contribute to the ability to create output. The ASU removes the evaluation of whether a market participant could replace any of the missing elements. ASU 2017-01 is effective for interim and annual periods beginning after December 15, 2017 and is not expected to have a material impact on the Company’s financial statements.

~~In January 2017, FASB issued ASU 2017-03,~~ “Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323) Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings” (“ASU 2017-03”), that provides guidance on additional qualitative disclosures required when the impact of the adoption of ASU 2014-09, ASU 2016-02 and ASU 2016-13 on a registrant's financial statements cannot reasonably be estimated by the registrant. ASU 2017-03 was effective when issued and the appropriate disclosures have been added where necessary.

In January 2017, FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350)” (“ASU 2017-04”). ASU 2017-04 will amend and simplify current goodwill impairment testing by eliminating certain testing under the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU 2017-04 will be effective for interim and annual periods beginning after December 15, 2019 and is not expected to have a material impact on the Company’s financial statements.

In March 2017, FASB issued ASU ~~2017-07,~~ ~~“Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”~~ (“ASU 2017-07”). ASU 2017-07 requires employers to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. These amendments also allow only the service cost component to be eligible for capitalization when applicable. ASU 2017-07 will be effective for interim and annual periods beginning after December 15, 2017. The Company is evaluating the effect that ASU 2017-07 will have on its financial position and results of operations and its financial statement disclosures.

~~In March 2017, FASB issued ASU~~ 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-08”). ASU 2017-08 requires the amortization period for certain callable debt securities held at a premium to be the earliest call date. ASU 2017-08 will be effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the effect that ASU 2017-08 will have on its financial position and results of operations and its financial statement disclosures.

In ~~May~~August 2017, FASB issued ASU ~~2017-09,~~2017-12, “~~Compensation - Stock Compensation (Subtopic 718)~~Derivatives and Hedging (Topic 815): ~~Scope of Modification Accounting”~~Targeted Improvements to Accounting for Hedging Activities” (“ASU ~~2017-09”~~2017-12”). ASU ~~2017-09 provides guidance about which changes~~2017-12 is intended to simplify hedge accounting by eliminating the ~~terms or conditions~~requirement to separately measure and report hedge effectiveness. ASU 2017-12 also seeks to expand the application of ~~a share-based payment award require an entity~~hedge accounting by modifying current requirements to ~~apply modification~~include hedge accounting ~~in Topic 718.~~on partial-term hedges, the hedging of prepayable financial instruments and other strategies. ASU ~~2017-09~~2017-12 will be effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the effect that ASU ~~2017-09~~2017-12 will have on its financial position and results of operations and its financial statement disclosures.

Note 2 – Mergers and Acquisitions

(In Thousands, Except Share Data)

Merger with Brand Group Holdings, Inc.

On March 28, 2018, the Company and Brand Group Holdings, Inc. (“Brand”), the parent company of The Brand Banking Company (“Brand Bank”), jointly announced the signing of a definitive merger agreement pursuant to which the Company will acquire Brand. Under the terms of the agreement, Brand will merge with and into Renasant, with Renasant continuing as the surviving corporation. Immediately after the merger of Brand with and into Renasant, Brand Bank will merge with and into Renasant Bank, with Renasant Bank continuing as the surviving banking corporation in the merger.

Under the terms of the merger agreement, the merger consideration to be received by Brand shareholders and the amount to be paid to cash out in-the-money Brand stock options is contingent (and subject to reduction only) upon Brand's divestiture of certain assets, as outlined in the definitive merger agreement filed with the Securities and Exchange Commission on March 30, 2018. Although the deadline for fixing the merger consideration and the option cash-out amount has not yet occurred, as of July 20, 2018 Brand had already divested all of the assets impacting the merger consideration and the option cash-out amount. Accordingly, the Company does not anticipate any further adjustments to the merger consideration and the option cash-out amount. After adjusting the merger consideration and the option cash-out amount to reflect Brand’s divestiture of these assets, each Brand shareholder will have the right to receive 31.72 shares of Renasant common stock and $74.57 in cash for each share of Brand common stock. Additionally, all in-the-money Brand stock options will be cashed out at an amount equal to the excess of $1,519 per share over the exercise price of such option (underwater options will be cancelled).

As of June 30, 2018, Brand, which has 13 locations throughout the greater Atlanta market, had approximately $2,240,000 in total assets, which included approximately $1,730,000 in total loans (excluding mortgage loans held for sale), and approximately $1,800,000 in total deposits.

The acquisition is expected to close in the third quarter of 2018 and is subject customary conditions set forth in the merger agreement. Brand shareholders approved the merger on July 26, 2018 and all required regulatory approvals have been received.

Acquisition of Metropolitan BancGroup, Inc.

Effective July 1, 2017, the Company completed its acquisition of Metropolitan, the parent company of Metropolitan Bank, in a transaction valued at approximately ~~$218,000.~~$219,461. The Company issued 4,883,182 shares of common stock and paid approximately $4,764 to Metropolitan stock option holders for 100% of the voting equity interest in Metropolitan. At closing, Metropolitan merged with and into ~~Renasant,~~the Company, with ~~Renasant~~the Company the surviving corporation in the merger; immediately thereafter, Metropolitan Bank merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger.

Prior to any determination of purchase accounting adjustments, as a result of the acquisition, the Company acquired total assets of approximately $1,220,000, which included total loans of approximately $990,000, total deposits of approximately $940,000, and On July 1, 2017, Metropolitan operated eight banking locations in Nashville and Memphis, Tennessee and the Jackson, Mississippi Metropolitan Statistical Area. ~~The Company is finalizing the fair value of assets acquired and liabilities assumed as part of the acquisition.~~

~~Acquisition of KeyWorth Bank~~

Effective April 1, 2016, the Company completed its acquisition of KeyWorth in a transaction valued at approximately $58,884. The Company issued 1,680,021 shares of common stock and paid approximately $3,594 to KeyWorth stock option and warrant holders for 100% of the voting equity interest in KeyWorth. At closing, KeyWorth merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger.

As a result of the KeyWorth acquisition, the Company acquired total assets with a fair value of $415,232, total loans with a fair value of $272,330 and total deposits with a fair value of $348,961, and six banking locations in the Atlanta metropolitan area.

The Company recorded approximately ~~$22,643~~$147,478 in intangible assets which consist of goodwill of ~~$20,633~~$140,512 and a core deposit intangible of ~~$2,010.~~$6,966. Goodwill resulted from a combination of revenue enhancements from expansion ~~into new~~in existing markets and efficiencies resulting from operational synergies. The fair value of the core deposit intangible is being amortized on an accelerated

basis over the estimated useful life, currently expected to be approximately 10 years. The goodwill is not deductible for income tax purposes.

The following table summarizes the allocation of purchase price to assets and liabilities acquired in connection with the Company’s acquisition of Metropolitan based on their fair values on July 1, 2017.



Purchase Price:
Shares issued to common shareholders	4,883,182
Purchase price per share	$	43.74
Value of stock paid				$	213,590
Cash paid for fractional shares				5
Cash settlement for stock options				4,764
Deal charges, net of taxes				1,102
Total Purchase Price				$	219,461
Net Assets Acquired:
Stockholders’ equity at acquisition date	$	89,253
Increase (decrease) to net assets as a result of fair value adjustments to assets acquired and liabilities assumed:
Securities	(731		)
Mortgage loans held for sale	30
Loans, net of Metropolitan’s allowance for loan losses	(13,071		)
Premises and equipment	(4,629		)
Intangible assets, net of Metropolitan’s existing intangibles	2,340
Other real estate owned	(1,251		)
Other assets	2,731
Deposits	(3,603		)
Borrowings	(1,294		)
Other liabilities	3,930
Deferred income taxes	5,244
Total Net Assets Acquired				$	78,949
Goodwill resulting from merger⁽¹⁾				$	140,512

(1) The goodwill resulting from the merger has been assigned to the Community Banks operating segment.

The following table summarizes the fair value on July 1, 2017 of assets acquired and liabilities assumed on that date in connection with the merger with Metropolitan.



Cash and cash equivalents	$	47,556
Securities	108,697
Loans, including mortgage loans held for sale, net of unearned income	967,804
Premises and equipment	8,576
Other real estate owned	1,203
Intangible assets	147,478
Other assets	69,567
Total assets	$	1,350,881

Deposits	$	942,084
Borrowings	174,522
Other liabilities	20,685
Total liabilities	$	1,137,291

The following unaudited pro forma combined condensed consolidated financial information presents the results of operations for the six months ended June 30, 2018 and 2017 of the Company as though the Metropolitan merger had been completed as of January 1, 2016. The unaudited pro forma information combines the historical results of Metropolitan with the Company’s historical consolidated results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the periods presented. The pro forma information is not necessarily indicative of what would have occurred had the acquisition taken place on January 1, 2016. The pro forma information does not include the effect of any cost-saving or revenue-enhancing strategies. Merger expenses are reflected in the period in which they were incurred.



	(Unaudited)
	Six Months Ended
	June 30,
	2018		2017
Net interest income - pro forma	$	181,629	$	173,508

Net income - pro forma	$	70,536	$	46,912

Earnings per share - pro forma:
Basic	$	1.43	$	1.00
Diluted	$	1.42	$	1.00

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 3 – Securities

(In Thousands, Except Number of Securities)

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

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value
June 30, 2017
Obligations of other U.S. Government agencies and corporations $ 12,602
$ 6
$ (77 ) $ 12,531
Obligations of states and political subdivisions 327,017
13,657
(141 ) 340,533
$ 339,619
$ 13,663
$ (218 ) $ 353,064
December 31, 2016
Obligations of other U.S. Government agencies and corporations $ 14,101
$ 4
$ (187 ) $ 13,918
Obligations of states and political subdivisions 342,181
8,572
(1,778 ) 348,975
$ 356,282
$ 8,576
$ (1,965 ) $ 362,893

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~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

The amortized cost and fair value of securities available for sale were as follows as of the dates presented:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2017
June 30, 2018
Obligations of other U.S. Government agencies and corporations	$	2,053	$	81	$	—		$	2,134	$	3,545	$	19	$	(49	)	$	3,515
Obligations of states and political subdivisions										217,847		3,787		(758		)	220,876
Residential mortgage backed securities:
Government agency mortgage backed securities	419,848		3,317		(2,288		)	420,877		493,001		336		(10,212		)	483,125
Government agency collateralized mortgage obligations	222,110		1,133		(1,948		)	221,295		303,625		59		(7,679		)	296,005
Commercial mortgage backed securities:
Government agency mortgage backed securities	50,167		1,032		(146		)	51,053		27,468		251		(530		)	27,189
Government agency collateralized mortgage obligations	1,746		8		—			1,754		24,585		—		(264		)	24,321
Trust preferred securities	21,793		—		(4,801		)	16,992		12,402		—		(2,001		)	10,401
Other debt securities	22,519		427		(45		)	22,901		23,555		94		(302		)	23,347
	$	740,236	$	5,998	$	(9,228	)	$	737,006	$	1,106,028	$	4,546	$	(21,795	)	$	1,088,779


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2016
December 31, 2017
Obligations of other U.S. Government agencies and corporations	$	2,066	$	92	$	—		$	2,158	$	3,554	$	40	$	(30	)	$	3,564
Obligations of states and political subdivisions										228,589		6,161		(269		)	234,481
Residential mortgage backed securities:
Government agency mortgage backed securities	414,019		1,941		(6,643		)	409,317		196,121		888		(3,059		)	193,950
Government agency collateralized mortgage obligations	171,362		831		(3,367		)	168,826		180,258		133		(3,752		)	176,639
Commercial mortgage backed securities:
Government agency mortgage backed securities	50,628		696		(461		)	50,863		31,015		389		(234		)	31,170
Government agency collateralized mortgage obligations	2,528		38		(16		)	2,550		5,019		1		(14		)	5,006
Trust preferred securities	23,749		—		(5,360		)	18,389		12,442		—		(3,054		)	9,388
Other debt securities	22,053		310		(218		)	22,145		17,106		260		(76		)	17,290
	$	686,405	$	3,908	$	(16,065	)	$	674,248	$	674,104	$	7,872	$	(10,488	)	$	671,488

There were no sales of securities during the six months ended June 30, 2018. During the first quarter of 2017, the Company sold residential mortgage backed securities with a carrying value of $2,946 at the time of the sale for net proceeds of $2,946 resulting in no gain or loss on the sale. There were no securities sold during the second quarter of 2017. ~~During the first six months of 2016, the Company sold "other equity"~~

At June 30, 2018 and December 31, 2017, securities with a carrying value of ~~$2,842 at the time of sale for net proceeds of $4,028 resulting in a net gain of $1,186.~~

~~Table of Contents~~

~~Renasant Corporation~~$443,011 and ~~Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~Gross realized gains on sales of securities available for sale for the three and six months ended June 30, 2017 and 2016, respectively, were as follows:~~

Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Gross gains on sales of securities available for sale $ —
$ 1,257
$ —
$ 1,257
Gross losses on sales of securities available for sale —
—
—
(71 )
Gains on sales of securities available for sale, net $ —
$ 1,257
$ —
$ 1,186

~~At June 30, 2017 and December 31, 2016, securities with a carrying value of $349,741 and $642,447,~~$217,867, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of ~~$21,163~~$18,278 and ~~$24,426~~$25,888 were pledged as collateral for short-term borrowings and derivative instruments at June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

The amortized cost and fair value of securities at June 30, ~~2017~~2018 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Held to Maturity				Available for Sale				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	14,605	$	14,735	$	—	$	—	$	41,602	$	42,138
Due after one year through five years	108,014		111,811		2,053		2,134		54,549		55,472
Due after five years through ten years	129,897		135,500		3,040		3,116		80,531		81,272
Due after ten years	87,103		91,018		21,793		16,992		65,931		64,758
Residential mortgage backed securities:
Government agency mortgage backed securities	—		—		419,848		420,877		493,001		483,125
Government agency collateralized mortgage obligations	—		—		222,110		221,295		303,625		296,005
Commercial mortgage backed securities:
Government agency mortgage backed securities	—		—		50,167		51,053		27,468		27,189
Government agency collateralized mortgage obligations	—		—		1,746		1,754		24,585		24,321
Other debt securities	—		—		19,479		19,785		14,736		14,499
	$	339,619	$	353,064	$	740,236	$	737,006	$	1,106,028	$	1,088,779

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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 as of the dates presented:


	Less than 12 Months						12 Months or More						Total						Less than 12 Months						12 Months or More						Total
	#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses
Held to Maturity:
June 30, 2017
Available for Sale:
June 30, 2018
Obligations of other U.S. Government agencies and corporations	4	$	12,025	$	(77	)	0	$	—	$	—		4	$	12,025	$	(77	)	1	$	492	$	(8	)	2	$	1,980	$	(41	)	3	$	2,472	$	(49	)
Obligations of states and political subdivisions	17	11,846		(136		)	2	523		(5		)	19	12,369		(141		)	51	32,251		(386		)	13	7,800		(372		)	64	40,051		(758		)
Total	21	$	23,871	$	(213	)	2	$	523	$	(5	)	23	24,394		$	(218	)
December 31, 2016
Obligations of other U.S. Government agencies and corporations	4	$	11,915	$	(187	)	0	$	—	$	—		4	$	11,915	$	(187	)
Obligations of states and political subdivisions	102	83,362		(1,778		)	0	—		—			102	83,362		(1,778		)
Total	106	$	95,277	$	(1,965	)	0	$	—	$	—		106	$	95,277	$	(1,965	)
Available for Sale:
June 30, 2017
Obligations of other U.S. Government agencies and corporations	0	$	—	$	—		0	$	—	$	—		0	$	—	$	—
Residential mortgage backed securities:
Government agency mortgage backed securities	89	213,161		(1,911		)	8	16,818		(377		)	97	229,979		(2,288		)	105	361,859		(5,623		)	47	88,914		(4,589		)	152	450,773		(10,212		)
Government agency collateralized mortgage obligations	29	94,314		(911		)	16	36,107		(1,037		)	45	130,421		(1,948		)	52	178,776		(3,538		)	34	74,271		(4,141		)	86	253,047		(7,679		)
Commercial mortgage backed securities:
Government agency mortgage backed securities	3	7,862		(138		)	2	1,082		(8		)	5	8,944		(146		)	8	14,530		(178		)	3	5,659		(352		)	11	20,189		(530		)
Government agency collateralized mortgage obligations	0	—		—			0	—		—			0	—		—			4	24,321		(264		)	0	—		—			4	24,321		(264		)
Trust preferred securities	0	—		—			3	16,992		(4,801		)	3	16,992		(4,801		)	0	—		—			2	10,401		(2,001		)	2	10,401		(2,001		)
Other debt securities	2	6,658		(38		)	1	1,205		(7		)	3	7,863		(45		)	10	10,011		(110		)	2	5,815		(192		)	12	15,826		(302		)
Total	123	$	321,995	$	(2,998	)	30	$	72,204	$	(6,230	)	153	$	394,199	$	(9,228	)	231	$	622,240	$	(10,107	)	103	$	194,840	$	(11,688	)	334	$	817,080	$	(21,795	)
December 31, 2016
December 31, 2017
Obligations of other U.S. Government agencies and corporations	0	$	—	$	—		0	$	—	$	—		0	$	—	$	—		1	$	497	$	(3	)	2	$	1,999	$	(27	)	3	$	2,496	$	(30	)
Obligations of states and political subdivisions																			23	11,860		(59		)	12	7,728		(210		)	35	19,588		(269		)
Residential mortgage backed securities:
Government agency mortgage backed securities	131	298,400		(6,042		)	5	11,504		(601		)	136	309,904		(6,643		)	29	64,595		(659		)	44	89,414		(2,400		)	73	154,009		(3,059		)
Government agency collateralized mortgage obligations	40	97,356		(1,845		)	14	33,786		(1,522		)	54	131,142		(3,367		)	33	102,509		(1,470		)	29	62,406		(2,282		)	62	164,915		(3,752		)
Commercial mortgage backed securities:
Government agency mortgage backed securities	9	21,933		(453		)	2	1,101		(8		)	11	23,034		(461		)	2	5,629		(17		)	3	5,872		(217		)	5	11,501		(234		)
Government agency collateralized mortgage obligations	1	1,729		(16		)	0	—		—			1	1,729		(16		)	1	4,986		(14		)	0	—		—			1	4,986		(14		)
Trust preferred securities	0	—		—			3	18,389		(5,360		)	3	18,389		(5,360		)	0	—		—			2	9,388		(3,054		)	2	9,388		(3,054		)
Other debt securities	3	7,946		(208		)	2	2,475		(10		)	5	10,421		(218		)	2	756		(12		)	2	6,308		(64		)	4	7,064		(76		)
Total	184	$	427,364	$	(8,564	)	26	$	67,255	$	(7,501	)	210	$	494,619	$	(16,065	)	91	$	190,832	$	(2,234	)	94	$	183,115	$	(8,254	)	185	$	373,947	$	(10,488	)

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~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

The Company evaluates its investment portfolio for other-than-temporary-impairment (“OTTI”) 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. Impairment is considered to be other-than-temporary 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 Company does not intend to sell any ~~of the~~ 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

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

greater than twelve months, the Company ~~has experienced an overall improvement in the fair value of its investment portfolio and~~ is collecting principal and interest payments from the respective issuers as scheduled. As such, the Company did not record any OTTI for the ~~three or~~ six months ended June 30, ~~2017~~2018 or ~~2016.~~2017.

The Company holds investments in pooled trust preferred securities that had an amortized cost basis of $~~21,793~~12,402 and $~~23,749~~12,442 and a fair value of $~~16,992~~10,401 and $~~18,389~~9,388 at June 30, ~~2017~~2018 and December 31, ~~2016~~2017, respectively. At June 30, ~~2017,~~2018, the investments in pooled trust preferred securities consisted of ~~three~~two securities representing interests in various tranches of trusts collateralized by debt issued by over ~~250~~160 financial institutions. Management’s determination of the fair value of each of its holdings in pooled trust preferred securities is based on the current credit ratings, the known deferrals and defaults by the underlying issuing financial institutions and the degree to which future deferrals and defaults would be required to occur before the cash flow for the Company’s tranches is negatively impacted. In addition, management continually monitors key credit quality and capital ratios of the issuing institutions. This determination is further supported by quarterly valuations, which are performed by third parties, of each security obtained by the Company. The Company does not intend to sell the investments before recovery of the ~~investments'~~investments’ amortized cost, and it is not more likely than not that the Company will be required to sell the investments before recovery of the investments’ amortized cost, which may be at maturity. At June 30, ~~2017~~2018, management did not, and does not currently, believe such securities will be settled at a price less than the amortized cost of the investment, but the Company previously concluded that it was probable that there had been an adverse change in estimated cash flows for ~~all~~ ~~three~~both trust preferred securities and recognized credit related impairment losses on these securities in ~~2010 and~~ 2011. No additional impairment was recognized during the six months ended June 30, ~~2017~~2018.

The Company's analysis of the pooled trust preferred securities during the second quarter of 2017 supported a return to accrual status for the last remaining security (XXIV), which had been in "payment in kind" status until December 2016. An observed history of principal and interest payments combined with improved qualitative and quantitative factors described above justified the accrual of interest on this security. The Company had in previous years placed the other two pooled trust preferred securities (XXIII and XXVI) back on accrual status.

The following table provides information regarding the Company’s investments in pooled trust preferred securities at June 30, ~~2017~~2018:

Name
Single/
Pooled

Class/
Tranche

Amortized
Cost

Fair
Value

Unrealized
Loss

Lowest
Credit
Rating

Issuers
Currently in
Deferral or
Default
XXIII Pooled B-2 $ 8,293
$ 5,788
$ (2,505 ) Baa3 16 %
XXIV Pooled B-2 9,327
8,078
(1,249 ) Ba1 22 %
XXVI Pooled B-2 4,173
3,126
(1,047 ) Ba3 19 %
$ 21,793
$ 16,992
$ (4,801 )

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~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~



Name	Single/ Pooled	Class/ Tranche	Amortized Cost		Fair Value		Unrealized Loss			Lowest Credit Rating	Issuers Currently in Deferral or Default
XXIII	Pooled	B-2	$	8,313	$	6,751	$	(1,562	)	BB	16	%
XXVI	Pooled	B-2	4,089		3,650		(439		)	B	19	%
			$	12,402	$	10,401	$	(2,001	)

The following table provides a summary of the cumulative credit related losses recognized in earnings for which a portion of OTTI has been recognized in other comprehensive income:


	2017			2016			2018			2017
Balance at January 1	$	(3,337	)	$	(3,337	)	$	(261	)	$	(3,337	)
Additions related to credit losses for which OTTI was not previously recognized	—			—			—			—
Increases in credit loss for which OTTI was previously recognized	—			—			—			—
Reductions for securities sold during the period							—			3,076
Balance at June 30	$	(3,337	)	$	(3,337	)	$	(261	)	$	(261	)

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 4 – Non Purchased Loans

(In Thousands, Except Number of Loans)

For purposes of this Note 4, all references to “loans” mean non purchased loans.

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


	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Commercial, financial, agricultural	$	657,713		$	589,290		$	790,363		$	763,823
Lease financing	52,347			49,250			55,749			57,354
Real estate – construction	424,861			483,926			642,380			547,658
Real estate – 1-4 family mortgage	1,551,934			1,425,730			1,912,450			1,729,534
Real estate – commercial mortgage	2,281,220			2,075,137			2,554,955			2,390,076
Installment loans to individuals	94,104			92,648			105,195			103,452
Gross loans	5,062,179			4,715,981			6,061,092			5,591,897
Unearned income	(3,281		)	(2,409		)	(3,326		)	(3,341		)
Loans, net of unearned income	5,058,898			4,713,572			$	6,057,766		$	5,588,556

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 mortgage and commercial 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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Notes to Consolidated Financial Statements (Unaudited)

The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented:


	Accruing Loans										Nonaccruing Loans											Accruing Loans										Nonaccruing Loans
	30-89 Days Past Due		90 Days or More Past Due		Current Loans			Total Loans			30-89 Days Past Due		90 Days or More Past Due		Current Loans		Total Loans		Total Loans			30-89 Days Past Due		90 Days or More Past Due		Current Loans			Total Loans			30-89 Days Past Due		90 Days or More Past Due		Current Loans		Total Loans		Total Loans
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	975	$	—	$	654,670		$	655,645		$	—	$	1,770	$	298	$	2,068	$	657,713		$	1,575	$	150	$	786,645		$	788,370		$	—	$	1,900	$	93	$	1,993	$	790,363
Lease financing	—		170		52,177			52,347			—		—		—		—		52,347			288		44		55,082			55,414			—		335		—		335		55,749
Real estate – construction	—		—		424,861			424,861			—		—		—		—		424,861			273		49		642,058			642,380			—		—		—		—		642,380
Real estate – 1-4 family mortgage	6,722		538		1,540,332			1,547,592			—		1,999		2,343		4,342		1,551,934			6,921		1,663		1,901,680			1,910,264			286		1,158		742		2,186		1,912,450
Real estate – commercial mortgage	1,068		517		2,274,705			2,276,290			634		2,395		1,901		4,930		2,281,220			2,069		254		2,548,264			2,550,587			14		2,427		1,927		4,368		2,554,955
Installment loans to individuals	293		58		93,680			94,031			—		65		8		73		94,104			487		30		104,639			105,156			6		23		10		39		105,195
Unearned income	—		—		(3,281		)	(3,281		)	—		—		—		—		(3,281		)	—		—		(3,326		)	(3,326		)	—		—		—		—		(3,326		)
Total	$	9,058	$	1,283	$	5,037,144		$	5,047,485		$	634	$	6,229	$	4,550	$	11,413	$	5,058,898		$	11,613	$	2,190	$	6,035,042		$	6,048,845		$	306	$	5,843	$	2,772	$	8,921	$	6,057,766
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	811	$	720	$	586,730		$	588,261		$	—	$	932	$	97	$	1,029	$	589,290		$	2,722	$	22	$	759,143		$	761,887		$	205	$	1,033	$	698	$	1,936	$	763,823
Lease financing	193		—		48,919			49,112			—		138		—		138		49,250			47		—		57,148			57,195			—		159		—		159		57,354
Real estate – construction	995		—		482,931			483,926			—		—		—		—		483,926			50		—		547,608			547,658			—		—		—		—		547,658
Real estate – 1-4 family mortgage	6,189		1,136		1,414,254			1,421,579			161		1,222		2,768		4,151		1,425,730			11,810		2,194		1,712,982			1,726,986			—		1,818		730		2,548		1,729,534
Real estate – commercial mortgage	2,283		99		2,066,821			2,069,203			580		2,778		2,576		5,934		2,075,137			1,921		727		2,381,871			2,384,519			—		2,877		2,680		5,557		2,390,076
Installment loans to individuals	324		124		92,179			92,627			—		21		—		21		92,648			429		72		102,901			103,402			1		28		21		50		103,452
Unearned income	—		—		(2,409		)	(2,409		)	—		—		—		—		(2,409		)	—		—		(3,341		)	(3,341		)	—		—		—		—		(3,341		)
Total	$	10,795	$	2,079	$	4,689,425		$	4,702,299		$	741	$	5,091	$	5,441	$	11,273	$	4,713,572		$	16,979	$	3,015	$	5,558,312		$	5,578,306		$	206	$	5,915	$	4,129	$	10,250	$	5,588,556

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan-by-loan basis for commercial, consumer and construction loans ~~above a minimum dollar amount threshold~~of $500 or more by, ~~either~~as applicable, the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are evaluated collectively for impairment. When the ultimate collectability of an impaired loan’s principal is in doubt, wholly or partially, the loan is placed on nonaccrual status and all cash receipts are applied to principal. Once the recorded balance has been reduced to zero, future cash receipts are applied to interest income, to the extent any interest has been foregone, and then they are recorded as recoveries of any amounts previously charged-off. For impaired loans, a specific reserve is established to adjust the carrying value of the loan to its estimated net realizable value.

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Notes to Consolidated Financial Statements (Unaudited)

Loans accounted for under FASB ~~Accounting Standards Codification Topic (“ASC”)~~ASC 310-20, “Nonrefundable Fees and Other Cost” (“ASC 310-20”), and which are impaired loans recognized in conformity with ASC 310, “Receivables” (“ASC 310”), segregated by class, were as follows as of the dates presented:


	Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance		Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	2,298	$	2,068	$	—	$	2,068	$	150	$	2,634	$	2,319	$	—	$	2,319	$	376
Lease financing											335		335		—		335		4
Real estate – construction	314		314		—		314		2		—		—		—		—		—
Real estate – 1-4 family mortgage	10,692		8,860		—		8,860		830		8,065		6,935		—		6,935		64
Real estate – commercial mortgage	16,543		13,742		568		14,310		2,148		8,901		4,454		1,316		5,770		948
Installment loans to individuals	144		142		—		142		—		109		104		—		104		1
Total	$	29,991	$	25,126	$	568	$	25,694	$	3,130	$	20,044	$	14,147	$	1,316	$	15,463	$	1,393
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	1,577	$	1,175	$	—	$	1,175	$	136	$	3,043	$	2,365	$	—	$	2,365	$	138
Lease financing											159		159		—		159		2
Real estate – construction	517		517		—		517		1		578		578		—		578		4
Real estate – 1-4 family mortgage	10,823		9,207		—		9,207		1,091		10,018		8,169		703		8,872		561
Real estate – commercial mortgage	15,007		10,053		568		10,621		2,397		12,463		9,652		—		9,652		1,861
Installment loans to individuals	87		87		—		87		1		121		117		—		117		1
Totals	$	28,011	$	21,039	$	568	$	21,607	$	3,626	$	26,382	$	21,040	$	703	$	21,743	$	2,567

The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:


	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	June 30, 2017				June 30, 2016				June 30, 2018				June 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	1,873	$	—	$	1,232	$	21	$	2,663	$	8	$	1,873	$	—
Lease financing									335		—		—		—
Real estate – construction	295		6		117		2		—		—		295		6
Real estate – 1-4 family mortgage	8,911		89		16,157		123		7,442		57		8,911		89
Real estate – commercial mortgage	14,487		176		11,660		91		5,807		38		14,487		176
Installment loans to individuals	160		2		67		1		106		1		160		2
Total	$	25,726	$	273	$	29,233	$	238	$	16,353	$	104	$	25,726	$	273

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Six Months Ended				Six Months Ended				Six Months Ended				Six Months Ended
	June 30, 2017				June 30, 2016				June 30, 2018				June 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	2,187	$	—	$	1,265	$	23	$	2,653	$	19	$	2,187	$	—
Lease financing									335		—		—		—
Real estate – construction	268		6		58		2		—		—		268		6
Real estate – 1-4 family mortgage	8,892		110		16,415		195		7,507		123		8,892		110
Real estate – commercial mortgage	14,635		279		11,986		196		6,041		130		14,635		279
Installment loans to individuals	166		2		67		1		108		2		166		2
Total	$	26,148	$	397	$	29,791	$	417	$	16,644	$	274	$	26,148	$	397

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

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~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

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 following tables illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance ~~Sheet~~Sheets at the respective period ~~end and are segregated by class for the periods presented.~~end:


	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Three months ended June 30, 2018
Real estate – 1-4 family mortgage						1	$	49	$	49
Total						1	$	49	$	49
Three months ended June 30, 2017
Real estate – 1-4 family mortgage	3	$	127	$	126	3	$	127	$	126
Real estate – commercial mortgage	1	366		62		1	366		62
Installment loans to individuals	1	4		4		1	4		4
Total	5	$	497	$	192	5	$	497	$	192
Three months ended June 30, 2016
Real estate – 1-4 family mortgage	3	$	676	$	662
Total	3	$	676	$	662


	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
						Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Six months ended June 30, 2018
Real estate – 1-4 family mortgage						4	$	625	$	625
Real estate – commercial mortgage						1	83		78
Total						5	$	708	$	703
Six months ended June 30, 2017
Real estate – 1-4 family mortgage	5	$	304	$	297	5	$	304	$	297
Real estate – commercial mortgage	2	453		147		2	453		147
Installment loans to individuals	1	4		4		1	4		4
Total	8	$	761	$	448	8	$	761	$	448
Six months ended June 30, 2016
Real estate – 1-4 family mortgage	7	$	987	$	963
Total	7	$	987	$	963

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

With respect to loans that were restructured during the six months ended June 30, 2018, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the six months ended June 30, 2017, $156 subsequently defaulted within twelve months of the restructuring.

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 ~~was~~were two restructured loans in the amount of $468 contractually 90 days past due or more and still accruing at June 30, 2018 and one restructured loan in the amount of $71 contractually 90 days past due or more and still accruing at June 30, ~~2017 and no restructured loans contractually 90 days past due or more and still accruing at June 30, 2016.~~2017. The outstanding balance of restructured loans on nonaccrual status was ~~$4,409~~$2,417 and ~~$5,562~~$4,409 at June 30, ~~2017~~2018 and June 30, ~~2016,~~2017, respectively.

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

Number of
Loans

Recorded
Investment
Totals at January 1, 2017 53
$ 7,447
Additional loans with concessions 9
536
Reductions due to:
Reclassified as nonperforming (2 ) (126 )
Paid in full (6 ) (368 )
Charge-offs (1 ) (250 )
Principal paydowns —
(181 )
Totals at June 30, 2017 53
$ 7,058

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~~Notes to Consolidated Financial Statements (Unaudited)~~



	Number of Loans		Recorded Investment
Totals at January 1, 2018	54		$	5,588
Additional loans with concessions	5		707
Reclassified as performing	2		154
Reductions due to:
Reclassified as nonperforming	(5	)	(370		)
Paid in full	(5	)	(1,268		)
Principal paydowns	—		(126		)
Totals at June 30, 2018	51		$	4,685

The allocated allowance for loan losses attributable to restructured loans was $~~238~~37 and ~~$790~~$238 at June 30, ~~2017~~2018 and June 30, ~~2016,~~2017, respectively. The Company had no$22 in remaining availability under commitments to lend additional funds on these restructured loans at June 30, ~~2017~~ ~~and~~2018. There was no remaining availability under commitments to lend additional funds on these restructured loans at June 30, ~~2016, respectively.~~2017.

Credit Quality

For commercial and commercial real estate loans, 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 these loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans ~~that migrate toward~~within the “Pass” grade ~~(those~~(historically, those with a risk rating between 1 and 4~~) or within the “Pass” grade~~4) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. Management has established more granular risk rating categories to better identify heightened credit risk as loans migrate downward in the risk rating system. The “Pass” grade is now reserved for loans with a risk rating between 1 and 4A, and the “Watch” grade (those with a risk rating of 54B and 4E) is utilized on a temporary basis for “Pass” grade loans where a significant adverse risk-modifying action is anticipated in the near term. Loans that migrate toward the “Substandard” grade (those with a risk rating between 65 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to the related loan balances. The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Pass		Watch		Substandard		Total		Pass		Watch		Substandard		Total
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	486,168	$	2,032	$	1,122	$	489,322	$	576,063	$	13,105	$	5,015	$	594,183
Real estate – construction	368,987		444		—		369,431		575,005		8,258		125		583,388
Real estate – 1-4 family mortgage	227,554		2,938		5,018		235,510		281,968		1,159		6,983		290,110
Real estate – commercial mortgage	1,919,279		15,594		11,463		1,946,336		2,150,721		51,372		18,826		2,220,919
Installment loans to individuals									548		—		—		548
Total	$	3,001,988	$	21,008	$	17,603	$	3,040,599	$	3,584,305	$	73,894	$	30,949	$	3,689,148
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	434,323	$	4,531	$	850	$	439,704	$	554,943	$	11,496	$	4,402	$	570,841
Real estate – construction	402,156		393		—		402,549		483,498		662		81		484,241
Real estate – 1-4 family mortgage	190,882		3,374		6,129		200,385		254,643		505		8,697		263,845
Real estate – commercial mortgage	1,734,523		18,118		13,088		1,765,729		1,983,750		50,428		24,241		2,058,419
Installment loans to individuals									921		—		—		921
Total	$	2,761,884	$	26,416	$	20,067	$	2,808,367	$	3,277,755	$	63,091	$	37,421	$	3,378,267

For portfolio balances of consumer, small balance consumer mortgage loans, such as 1-4 family mortgage loans, and certain other loans originated for other than commercial purposes, allowance factors are determined based on historical loss ratios by portfolio for the preceding eight quarters and may be adjusted by other qualitative criteria. The following table presents the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented:

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~


	Performing		Non- Performing		Total		Performing		Non- Performing		Total
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	166,730	$	1,661	$	168,391	$	194,765	$	1,415	$	196,180
Lease financing	48,896		170		49,066		52,044		379		52,423
Real estate – construction	55,430		—		55,430		58,943		49		58,992
Real estate – 1-4 family mortgage	1,314,051		2,373		1,316,424		1,618,669		3,671		1,622,340
Real estate – commercial mortgage	333,298		1,586		334,884		333,351		685		334,036
Installment loans to individuals	93,973		131		94,104		104,577		70		104,647
Total	$	2,012,378	$	5,921	$	2,018,299	$	2,362,349	$	6,269	$	2,368,618
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	148,499	$	1,087	$	149,586	$	191,473	$	1,509	$	192,982
Lease financing	46,703		138		46,841		53,854		159		54,013
Real estate – construction	81,377		—		81,377		63,417		—		63,417
Real estate – 1-4 family mortgage	1,222,816		2,529		1,225,345		1,462,347		3,342		1,465,689
Real estate – commercial mortgage	308,609		799		309,408		330,441		1,216		331,657
Installment loans to individuals	92,504		144		92,648		102,409		122		102,531
Total	$	1,900,508	$	4,697	$	1,905,205	$	2,203,941	$	6,348	$	2,210,289

Note 5 – Purchased Loans

(In Thousands, Except Number of Loans)

For purposes of this Note 5, all references to “loans” mean purchased loans.

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

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Commercial, financial, agricultural	$	102,869	$	128,200	$	197,455	$	275,570
Real estate – construction	35,946		68,753		70,438		85,731
Real estate – 1-4 family mortgage	400,460		452,447		520,649		614,187
Real estate – commercial mortgage	759,743		823,758		906,219		1,037,454
Installment loans to individuals	13,091		15,979		15,130		18,824
Gross loans	1,312,109		1,489,137		1,709,891		2,031,766
Unearned income	—		—		—		—
Loans, net of unearned income	1,312,109		1,489,137		$	1,709,891	$	2,031,766

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 4, “Non Purchased Loans.”

The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented:

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~



	Accruing Loans								Nonaccruing Loans
	30-89 Days Past Due		90 Days or More Past Due		Current Loans		Total Loans		30-89 Days Past Due		90 Days or More Past Due		Current Loans		Total Loans		Total Loans
June 30, 2018
Commercial, financial, agricultural	$	894	$	514	$	195,614	$	197,022	$	—	$	349	$	84	$	433	$	197,455
Real estate – construction	919		—		69,519		70,438		—		—		—		—		70,438
Real estate – 1-4 family mortgage	3,127		2,177		512,235		517,539		260		1,236		1,614		3,110		520,649
Real estate – commercial mortgage	1,150		2,770		901,527		905,447		430		132		210		772		906,219
Installment loans to individuals	73		30		14,781		14,884		2		93		151		246		15,130
Total	$	6,163	$	5,491	$	1,693,676	$	1,705,330	$	692	$	1,810	$	2,059	$	4,561	$	1,709,891
December 31, 2017
Commercial, financial, agricultural	$	1,119	$	532	$	273,488	$	275,139	$	—	$	199	$	232	$	431	$	275,570
Real estate – construction	415		—		85,316		85,731		—		—		—		—		85,731
Real estate – 1-4 family mortgage	6,070		2,280		602,464		610,814		385		879		2,109		3,373		614,187
Real estate – commercial mortgage	2,947		2,910		1,031,141		1,036,998		191		99		166		456		1,037,454
Installment loans to individuals	208		9		18,443		18,660		59		—		105		164		18,824
Total	$	10,759	$	5,731	$	2,010,852	$	2,027,342	$	635	$	1,177	$	2,612	$	4,424	$	2,031,766

Accruing Loans Nonaccruing Loans

30-89 Days
Past Due

90 Days
or More
Past Due

Current
Loans

Total
Loans

30-89 Days
Past Due

90 Days
or More
Past Due

Current
Loans

Total
Loans

Total
Loans
June 30, 2017
Commercial, financial, agricultural $ 124
$ 564
$ 101,732
$ 102,420
$ —
$ 173
$ 276
$ 449
$ 102,869
Real estate – construction —
—
35,946
35,946
—
—
—
—
35,946
Real estate – 1-4 family mortgage 2,363
3,210
391,218
396,791
207
2,208
1,254
3,669
400,460
Real estate – commercial mortgage 1,874
4,347
751,880
758,101
—
287
1,355
1,642
759,743
Installment loans to individuals 118
7
12,799
12,924
10
2
155
167
13,091
Unearned income —
—
—
—
—
—
—
—
—
Total $ 4,479
$ 8,128
$ 1,293,575
$ 1,306,182
$ 217
$ 2,670
$ 3,040
$ 5,927
$ 1,312,109
December 31, 2016
Commercial, financial, agricultural $ 823
$ 990
$ 125,417
$ 127,230
$ 260
$ 381
$ 329
$ 970
$ 128,200
Real estate – construction 527
321
67,760
68,608
—
145
—
145
68,753
Real estate – 1-4 family mortgage 4,572
3,382
440,258
448,212
417
2,047
1,771
4,235
452,447
Real estate – commercial mortgage 3,045
6,112
808,886
818,043
—
2,661
3,054
5,715
823,758
Installment loans to individuals 96
10
15,591
15,697
—
156
126
282
15,979
Unearned income —
—
—
—
—
—
—
—
—
Total $ 9,063
$ 10,815
$ 1,457,912
$ 1,477,790
$ 677
$ 5,390
$ 5,280
$ 11,347
$ 1,489,137

2019

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Impaired Loans

The Company’s policies with respect to the determination of whether a loan is impaired and the treatment of such loans are described above in Note 4, “Non Purchased Loans.”

Loans accounted for under ASC 310-20, and which are impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates presented:


	Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance		Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	350	$	112	$	221	$	333	$	16	$	439	$	329	$	49	$	378	$	41
Real estate – 1-4 family mortgage	5,058		1,724		2,715		4,439		48		5,225		700		3,926		4,626		12
Real estate – commercial mortgage	2,581		1,642		888		2,530		11		1,466		1,287		156		1,443		66
Installment loans to individuals	24		6		13		19		3		248		247		—		247		3
Total	$	8,013	$	3,484	$	3,837	$	7,321	$	78	$	7,378	$	2,563	$	4,131	$	6,694	$	122
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	732	$	487	$	224	$	711	$	310	$	757	$	625	$	74	$	699	$	52
Real estate – construction	147		145		—		145		—		1,207		—		1,199		1,199		—
Real estate – 1-4 family mortgage	3,095		1,496		1,385		2,881		43		6,173		1,385		4,225		5,610		45
Real estate – commercial mortgage	2,485		2,275		183		2,458		48		901		728		165		893		6
Installment loans to individuals	215		135		55		190		114		165		154		9		163		4
Totals	$	6,674	$	4,538	$	1,847	$	6,385	$	515	$	9,203	$	2,892	$	5,672	$	8,564	$	107

The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:


	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	June 30, 2017				June 30, 2016				June 30, 2018				June 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	342	$	1	$	237	$	2	$	380	$	3	$	342	$	1
Real estate – 1-4 family mortgage	4,960		47		1,644		5		5,135		34		4,960		47
Real estate – commercial mortgage	2,515		30		2,504		35		1,462		12		2,515		30
Installment loans to individuals	19		—		12		—		247		—		19		—
Total	$	7,836	$	78	$	4,397	$	42	$	7,224	$	49	$	7,836	$	78



	Six Months Ended				Six Months Ended				Six Months Ended				Six Months Ended
	June 30, 2017				June 30, 2016				June 30, 2018				June 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	347	$	3	$	241	$	2	$	383	$	6	$	347	$	3
Real estate – 1-4 family mortgage	5,032		62		1,634		14		5,252		74		5,032		62
Real estate – commercial mortgage	2,284		51		2,474		45		1,479		30		2,284		51
Installment loans to individuals	21		—		14		—		247		—		21		—
Total	$	7,684	$	116	$	4,363	$	61	$	7,361	$	110	$	7,684	$	116

Loans accounted for under ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”), and which are impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates presented:

2120

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance		Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	19,906	$	6,255	$	5,751	$	12,006	$	339	$	18,239	$	3,845	$	6,570	$	10,415	$	325
Real estate – 1-4 family mortgage	74,931		19,206		43,950		63,156		692		56,339		14,254		32,122		46,376		528
Real estate – commercial mortgage	196,028		56,788		103,063		159,851		1,128		170,327		63,365		79,328		142,693		1,400
Installment loans to individuals	1,927		665		1,118		1,783		1		1,645		715		842		1,557		3
Total	$	292,792	$	82,914	$	153,882	$	236,796	$	2,160	$	246,550	$	82,179	$	118,862	$	201,041	$	2,256
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	20,697	$	4,555	$	7,439	$	11,994	$	372	$	24,179	$	5,768	$	9,547	$	15,315	$	312
Real estate – construction	1,141		—		840		840		—
Real estate – 1-4 family mortgage	86,725		21,887		50,065		71,952		841		65,049		15,910		38,059		53,969		572
Real estate – commercial mortgage	229,075		62,449		122,538		184,987		1,606		186,720		65,108		91,230		156,338		892
Installment loans to individuals	2,466		366		1,619		1,985		1		1,761		698		940		1,638		1
Totals	$	340,104	$	89,257	$	182,501	$	271,758	$	2,820	$	277,709	$	87,484	$	139,776	$	227,260	$	1,777

The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-30 and which are impaired loans for the periods presented:


	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	June 30, 2017				June 30, 2016				June 30, 2018				June 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	14,894	$	252	$	16,361	$	287	$	12,815	$	192	$	14,894	$	252
Real estate – construction	—		—		3,562		39
Real estate – 1-4 family mortgage	72,933		759		98,200		1,083		54,634		647		72,933		759
Real estate – commercial mortgage	181,007		2,169		239,564		2,903		162,712		1,933		181,007		2,169
Installment loans to individuals	1,935		19		2,705		29		1,651		18		1,935		19
Total	$	270,769	$	3,199	$	360,392	$	4,341	$	231,812	$	2,790	$	270,769	$	3,199


	Six Months Ended				Six Months Ended				Six Months Ended				Six Months Ended
	June 30, 2017				June 30, 2016				June 30, 2018				June 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	14,048	$	487	$	16,872	$	611	$	13,051	$	417	$	14,048	$	487
Real estate – construction	—		—		3,572		65
Real estate – 1-4 family mortgage	73,656		1,582		98,874		2,030		55,293		1,320		73,656		1,582
Real estate – commercial mortgage	182,894		4,394		240,254		5,593		163,959		3,905		182,894		4,394
Installment loans to individuals	1,966		38		2,776		56		1,640		36		1,966		38
Total	$	272,564	$	6,501	$	362,348	$	8,355	$	233,943	$	5,678	$	272,564	$	6,501

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 4, “Non Purchased Loans.”

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)



	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Three months ended June 30, 2018
Real estate – 1-4 family mortgage	1	$	18	$	17
Total	1	$	18	$	17
Three months ended June 30, 2017
Real estate – 1-4 family mortgage	4	$	463	$	367
Total	4	$	463	$	367




	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Six months ended June 30, 2018
Commercial, financial, agricultural	1	$	48	$	44
Real estate – 1-4 family mortgage	1	$	18	$	17
Real estate – commercial mortgage	1	8		7
Total	3	$	74	$	68
Six months ended June 30, 2017
Real estate – 1-4 family mortgage	14	$	2,684	$	2,178
Real estate – commercial mortgage	4	2,721		1,999
Total	18	$	5,405	$	4,177

With respect to loans that were restructured during the first six months ended June 30, 2018, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the first six months ended June 30, 2017, $368 subsequently defaulted within twelve months of the restructuring.

There were four restructured loans in the amount of $425 contractually 90 days past due or more and still accruing at June 30, 2018 and seven restructured loans in the amount of $534 contractually 90 days past due or more and still accruing at June 30, 2017. The outstanding balance of restructured loans on nonaccrual status was $684 and $446 at June 30, 2018 and June 30, 2017, respectively.

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



	Number of Loans		Recorded Investment
Totals at January 1, 2018	68		$	8,965
Additional loans with concessions	3		132
Reclassified as performing restructured loan	2		23
Reductions due to:
Reclassified to nonperforming loans	(4	)	(425		)
Paid in full	(1	)	(76		)
Principal paydowns	—		(486		)
Totals at June 30, 2018	68		$	8,133

The allocated allowance for loan losses attributable to restructured loans was $69 and $27 at June 30, 2018 and June 30, 2017, respectively. The Company had $2 and $5 in remaining availability under commitments to lend additional funds on these restructured loans at June 30, 2018 and June 30, 2017, respectively.

Credit Quality

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Number of
Loans

Pre-
Modification
Outstanding
Recorded
Investment

Post-
Modification
Outstanding
Recorded
Investment
Three months ended June 30, 2017
Real estate – 1-4 family mortgage 4
$ 463
$ 367
Total 4
$ 463
$ 367
Three months ended June 30, 2016
Real estate – 1-4 family mortgage 2
$ 148
$ 147
Total 2
$ 148
$ 147

Number of
Loans

Pre-
Modification
Outstanding
Recorded
Investment

Post-
Modification
Outstanding
Recorded
Investment
Six months ended June 30, 2017
Real estate – 1-4 family mortgage 14
$ 2,684
$ 2,178
Real estate – commercial mortgage 4
2,721
1,999
Total 18
$ 5,405
$ 4,177
Six months ended June 30, 2016
Real estate – 1-4 family mortgage 8
$ 501
$ 390
Real estate – commercial mortgage 2
612
606
Total 10
$ 1,113
$ 996

There were seven restructured loans in the amount of $534 contractually 90 days past due or more and still accruing at June 30, 2017 and no restructured loans contractually 90 days past due or more and still accruing at June 30, 2016. The outstanding balance of restructured loans on nonaccrual status was $446 and $4,979 at June 30, 2017 and June 30, 2016, respectively.

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

Number of
Loans

Recorded
Investment
Totals at January 1, 2017 42
$ 4,028
Additional loans with concessions 18
4,209
Reductions due to:
Reclassified as nonperforming (6 ) (534 )
Charge-offs (1 ) (17 )
Lapse of concession period (1 ) (101 )
Totals at June 30, 2017 52
$ 7,409

The allocated allowance for loan losses attributable to restructured loans was $27 and $34 at June 30, 2017 and June 30, 2016, respectively. The Company had $5 and no remaining availability under commitments to lend additional funds on these restructured loans at June 30, 2017 and June 30, 2016, respectively.

~~Credit Quality~~

A discussion of the Company’s policies regarding internal risk-rating of loans is discussed above in Note 4, “Non Purchased Loans.” The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~


	Pass		Watch		Substandard		Total		Pass		Watch		Substandard		Total
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	76,505	$	2,054	$	409	$	78,968	$	168,753	$	4,562	$	3,262	$	176,577
Real estate – construction	35,007		—		—		35,007		67,609		1,538		263		69,410
Real estate – 1-4 family mortgage	89,147		6,003		204		95,354		75,205		1,798		4,820		81,823
Real estate – commercial mortgage	565,140		7,585		972		573,697		708,999		14,634		9,541		733,174
Installment loans to individuals	—		—		4		4		627		—		2		629
Total	$	765,799	$	15,642	$	1,589	$	783,030	$	1,021,193	$	22,532	$	17,888	$	1,061,613
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	102,777	$	2,370	$	1,491	$	106,638	$	241,195	$	4,974	$	2,824	$	248,993
Real estate – construction	61,206		2,640		—		63,846		81,220		—		—		81,220
Real estate – 1-4 family mortgage	105,265		7,665		364		113,294		91,369		2,498		6,172		100,039
Real estate – commercial mortgage	608,192		8,445		723		617,360		827,372		17,123		9,003		853,498
Installment loans to individuals	—		—		114		114		678		—		3		681
Total	$	877,440	$	21,120	$	2,692	$	901,252	$	1,241,834	$	24,595	$	18,002	$	1,284,431

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


	Performing			Non- Performing		Total		Performing		Non- Performing		Total
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	11,833		$	62	$	11,895	$	10,424	$	39	$	10,463
Real estate – construction	939			—		939		1,028		—		1,028
Real estate – 1-4 family mortgage	240,610			1,340		241,950		390,746		1,704		392,450
Real estate – commercial mortgage	25,403			792		26,195		30,234		118		30,352
Installment loans to individuals	11,142			162		11,304		12,670		274		12,944
Total	$	289,927		$	2,356	$	292,283	$	445,102	$	2,135	$	447,237
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	9,489		$	79	$	9,568	$	11,216	$	46	$	11,262
Real estate – construction	3,601		5	466		4,067		4,511		—		4,511
Real estate – 1-4 family mortgage	265,697			1,504		267,201		459,038		1,141		460,179
Real estate – commercial mortgage	21,353			58		21,411		27,495		123		27,618
Installment loans to individuals	13,712			168		13,880		16,344		161		16,505
Total	$	313,852		$	2,275	$	316,127	$	518,604	$	1,471	$	520,075

Loans Purchased with Deteriorated Credit Quality

Loans purchased in business combinations that exhibited, at the date of acquisition, evidence of deterioration of the credit quality since origination, such that it was probable that all contractually required payments would not be collected, were as follows as of the dates presented:

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Notes to Consolidated Financial Statements (Unaudited)


	Total Purchased Credit Deteriorated Loans		Total Purchased Credit Deteriorated Loans
June 30, 2017
June 30, 2018
Commercial, financial, agricultural	$	12,006	$	10,415
Real estate – 1-4 family mortgage	63,156		46,376
Real estate – commercial mortgage	159,851		142,693
Installment loans to individuals	1,783		1,557
Total	$	236,796	$	201,041
December 31, 2016
December 31, 2017
Commercial, financial, agricultural	$	11,994	$	15,315
Real estate – construction	840
Real estate – 1-4 family mortgage	71,952		53,969
Real estate – commercial mortgage	184,987		156,338
Installment loans to individuals	1,985		1,638
Total	$	271,758	$	227,260

The following table presents the fair value of loans ~~determined to be impaired at the time~~that exhibited evidence of ~~acquisition and determined not to be impaired~~deteriorated credit quality at the time of acquisition at June 30, ~~2017:~~2018:


	Total Purchased Credit Deteriorated Loans			Total Purchased Credit Deteriorated Loans
Contractually-required principal and interest	$	344,571		$	282,632
Nonaccretable difference⁽¹⁾	(78,519		)	(52,424		)
Cash flows expected to be collected	266,052			230,208
Accretable yield⁽²⁾	(29,256		)	(29,167		)
Fair value	$	236,796		$	201,041


(1)	Represents contractual principal and interest cash flows of ~~$78,502~~$43,499 and ~~$17,~~$8,925, respectively, not expected to be collected.


(2)	Represents contractual principal and interest ~~payments~~cash flows of ~~$756~~$1,579 and $27,588, respectively, expected to be ~~collected and purchase discount of $28,500.~~collected.

Changes in the accretable yield of loans purchased with deteriorated credit quality were as ~~follows:~~

follows as of June 30, 2018:

Total Purchased Credit Deteriorated Loans
Balance at January 1, 2017 $ (36,326 )
Additions due to acquisition —
Reclasses from nonaccretable difference 294
Accretion 6,035
Charge-offs 741
Balance at June 30, 2017 $ (29,256 )



	Total Purchased Credit Deteriorated Loans
Balance at January 1, 2018	$	(32,207	)
Reclassification from nonaccretable difference	(3,678		)
Accretion	6,660
Charge-offs	58
Balance at June 30, 2018	$	(29,167	)

The following table presents the fair value of loans purchased from ~~KeyWorth~~Metropolitan as of the ~~April~~July 1, ~~2016~~2017 acquisition date.



At acquisition date:	July 1, 2017
Contractually-required principal and interest	$	1,198,741
Nonaccretable difference	(79,165		)
Cash flows expected to be collected	1,119,576
Accretable yield	(154,543		)
Fair value	$	965,033

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Notes to Consolidated Financial Statements (Unaudited)

At acquisition date: April 1, 2016
  Contractually-required principal and interest $ 289,495
  Nonaccretable difference 3,848
  Cash flows expected to be collected 285,647
  Accretable yield 13,317
      Fair value $ 272,330

Note 6 – Allowance for Loan Losses

(In ~~Thousands, Except Number of Loans)~~Thousands)

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


	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Commercial, financial, agricultural	$	760,582		$	717,490		$	987,818		$	1,039,393
Lease financing	52,347			49,250			55,749			57,354
Real estate – construction	460,807			552,679			712,818			633,389
Real estate – 1-4 family mortgage	1,952,394			1,878,177			2,433,099			2,343,721
Real estate – commercial mortgage	3,040,963			2,898,895			3,461,174			3,427,530
Installment loans to individuals	107,195			108,627			120,325			122,276
Gross loans	6,374,288			6,205,118			7,770,983			7,623,663
Unearned income	(3,281		)	(2,409		)	(3,326		)	(3,341		)
Loans, net of unearned income	6,371,007			6,202,709			7,767,657			7,620,322
Allowance for loan losses	(44,149		)	(42,737		)	(47,355		)	(46,211		)
Net loans	$	6,326,858		$	6,159,972		$	7,720,302		$	7,574,111

Allowance for Loan Losses

The allowance for loan losses is maintained at a level believed adequate by management based on its ongoing analysis of the loan portfolio to absorb probable credit losses inherent in the entire loan portfolio, including collective impairment as recognized under ASC 450, “Contingencies”. Collective impairment is calculated based on loans grouped by grade. Another component of the allowance is losses on loans assessed as impaired under ASC 310. The balance of these loans and their related allowance is included in management’s estimation and analysis of the allowance for loan losses. Management and the internal loan review staff evaluate the adequacy of the allowance for loan losses quarterly. The allowance for loan losses is evaluated based on a continuing 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 its risk rating system, regulatory guidance and economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is established through a provision for loan losses charged to earnings resulting from measurements of inherent credit risk in the loan portfolio and estimates of probable losses or impairments of individual loans. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following table provides a roll forward of the allowance for loan losses and a breakdown of the ending balance of the allowance based on the Company’s impairment methodology for the periods presented:



	Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate - Commercial Mortgage			Installment and Other⁽¹⁾			Total
Three Months Ended June 30, 2018
Allowance for loan losses:
Beginning balance	$	7,071		$	4,198	$	11,404		$	21,914		$	1,814		$	46,401
Charge-offs	(457		)	—		(979		)	(46		)	(99		)	(1,581		)
Recoveries	114			3		83			496			29			725
Net (charge-offs) recoveries	(343		)	3		(896		)	450			(70		)	(856		)
Provision for loan losses charged to operations	418			501		1,149			86			(344		)	1,810
Ending balance	$	7,146		$	4,702	$	11,657		$	22,450		$	1,400		$	47,355



	Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate - Commercial Mortgage			Installment and Other⁽¹⁾			Total
Six Months Ended June 30, 2018
Allowance for loan losses:
Beginning balance	$	5,542		$	3,428	$	12,009		$	23,384		$	1,848		$	46,211
Charge-offs	(1,116		)	—		(1,650		)	(659		)	(221		)	(3,646		)
Recoveries	349			7		216			604			54			1,230
Net (charge-offs) recoveries	(767		)	7		(1,434		)	(55		)	(167		)	(2,416		)
Provision for loan losses charged to operations	2,371			1,267		1,082			(879		)	(281		)	3,560
Ending balance	$	7,146		$	4,702	$	11,657		$	22,450		$	1,400		$	47,355
Period-End Amount Allocated to:
Individually evaluated for impairment	$	417		$	—	$	76		$	1,014		$	8		$	1,515
Collectively evaluated for impairment	6,404			4,702		11,053			20,036			1,389			43,584
Purchased with deteriorated credit quality	325			—		528			1,400			3			2,256
Ending balance	$	7,146		$	4,702	$	11,657		$	22,450		$	1,400		$	47,355



	Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate - Commercial Mortgage			Installment and Other⁽¹⁾			Total
Three Months Ended June 30, 2017
Allowance for loan losses:
Beginning balance	$	5,112		$	2,119	$	12,162		$	22,073		$	1,457		$	42,923
Charge-offs	(304		)	—		(551		)	(434		)	(125		)	(1,414		)
Recoveries	64			3		64			717			42			890
Net (charge-offs) recoveries	(240		)	3		(487		)	283			(83		)	(524		)
Provision for loan losses charged to operations	220			458		429			244			399			1,750
Ending balance	$	5,092		$	2,580	$	12,104		$	22,600		$	1,773		$	44,149

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Commercial
Real Estate -
Construction

Real Estate -
1-4 Family
Mortgage

Real Estate -
Commercial
Mortgage

Installment
and Other⁽¹⁾
Total
Three Months Ended June 30, 2017
Allowance for loan losses:
Beginning balance $ 5,112
$ 2,119
$ 12,162
$ 22,073
$ 1,457
$ 42,923
Charge-offs (304 ) —
(551 ) (434 ) (125 ) (1,414 )
Recoveries 64
3
64
717
42
890
Net (charge-offs) recoveries (240 ) 3
(487 ) 283
(83 ) (524 )
Provision for loan losses charged to operations ⁽²⁾
220
458
429
244
399
1,750
Ending balance $ 5,092
$ 2,580
$ 12,104
$ 22,600
$ 1,773
$ 44,149

Commercial
Real Estate -
Construction

Real Estate -
1-4 Family
Mortgage

Real Estate -
Commercial
Mortgage

Installment
and Other⁽¹⁾
Total
Six Months Ended June 30, 2017
Allowance for loan losses:
Beginning balance $ 5,486
$ 2,380
$ 14,294
$ 19,059
$ 1,518
$ 42,737
Charge-offs (1,136 ) —
(826 ) (661 ) (389 ) (3,012 )
Recoveries 121
34
146
812
61
1,174
Net (charge-offs) recoveries (1,015 ) 34
(680 ) 151
(328 ) (1,838 )
Provision for loan losses charged to operations ⁽²⁾
621
166
(1,510 ) 3,390
583
3,250
Ending balance $ 5,092
$ 2,580
$ 12,104
$ 22,600
$ 1,773
$ 44,149
Period-End Amount Allocated to:
Individually evaluated for impairment $ 166
$ 2
$ 878
$ 2,159
$ 3
$ 3,208
Collectively evaluated for impairment 4,587
2,578
10,534
19,313
1,769
38,781
Purchased with deteriorated credit quality 339
—
692
1,128
1
2,160
Ending balance $ 5,092
$ 2,580
$ 12,104
$ 22,600
$ 1,773
$ 44,149

Commercial
Real Estate -
Construction

Real Estate -
1-4 Family
Mortgage

Real Estate -
Commercial
Mortgage

Installment
and Other⁽¹⁾
Total
Three Months Ended June 30, 2016
Allowance for loan losses:
Beginning balance $ 4,171
$ 1,943
$ 14,542
$ 20,775
$ 1,428
$ 42,859
Charge-offs (48 ) —
(387 ) (186 ) (192 ) (813 )
Recoveries 105
5
170
309
33
622
Net (charge-offs) recoveries 57
5
(217 ) 123
(159 ) (191 )
Provision for loan losses 265
315
(186 ) 624
146
1,164
Benefit attributable to FDIC loss-share agreements 15
—
(78 ) 117
—
54
Recoveries payable to FDIC 4
6
158
44
—
212
Provision for loan losses charged to operations 284
321
(106 ) 785
146
1,430
Ending balance $ 4,512
$ 2,269
$ 14,219
$ 21,683
$ 1,415
$ 44,098

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~


	Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate - Commercial Mortgage			Installment and Other⁽¹⁾			Total
Six Months Ended June 30, 2016
																		Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate - Commercial Mortgage			Installment and Other⁽¹⁾			Total

Six Months Ended June 30, 2017
Allowance for loan losses:
Beginning balance	$	4,186		$	1,852	$	13,908		$	21,111		$	1,380		$	42,437		$	5,486		$	2,380	$	14,294		$	19,059		$	1,518		$	42,737
Charge-offs	(705		)	—		(503		)	(1,187		)	(372		)	(2,767		)	(1,136		)	—		(826		)	(661		)	(389		)	(3,012		)
Recoveries	158			11		565			401			63			1,198			121			34		146			812			61			1,174
Net (charge-offs) recoveries	(547		)	11		62			(786		)	(309		)	(1,569		)	(1,015		)	34		(680		)	151			(328		)	(1,838		)
Provision for loan losses	866			400		179			1,154			344			2,943
Benefit attributable to FDIC loss-share agreements	—			—		(115		)	(1		)	—			(116		)
Recoveries payable to FDIC	7			6		185			205			—			403
Provision for loan losses charged to operations	873			406		249			1,358			344			3,230			621			166		(1,510		)	3,390			583			3,250
Ending balance	$	4,512		$	2,269	$	14,219		$	21,683		$	1,415		$	44,098		$	5,092		$	2,580	$	12,104		$	22,600		$	1,773		$	44,149
Period-End Amount Allocated to:
Individually evaluated for impairment	$	164		$	—	$	4,924		$	2,531		$	—		$	7,619		$	166		$	2	$	878		$	2,159		$	3		$	3,208
Collectively evaluated for impairment	3,947			2,269		8,951			17,726			1,414			34,307			4,587			2,578		10,534			19,313			1,769			38,781
Purchased with deteriorated credit quality	401			—		344			1,426			1			2,172			339			—		692			1,128			1			2,160
Ending balance	$	4,512		$	2,269	$	14,219		$	21,683		$	1,415		$	44,098		$	5,092		$	2,580	$	12,104		$	22,600		$	1,773		$	44,149


(1)	Includes lease financing receivables.


~~(2)~~	~~Due to the termination of the loss-share agreements on December 8, 2016, there was no loss-share impact to the provision for loan losses in 2017.~~

The following table provides the recorded investment in loans, net of unearned income, based on the Company’s impairment methodology as of the dates presented:


	Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Installment and Other⁽¹⁾		Total		Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Installment and Other⁽¹⁾		Total
June 30, 2017
June 30, 2018
Individually evaluated for impairment	$	2,401	$	314	$	13,299	$	16,840	$	161	$	33,015	$	2,697	$	—	$	11,561	$	7,213	$	686	$	22,157
Collectively evaluated for impairment	746,175		460,493		1,875,939		2,864,272		154,317		6,101,196		974,706		712,818		2,375,162		3,311,268		170,505		7,544,459
Purchased with deteriorated credit quality	12,006		—		63,156		159,851		1,783		236,796		10,415		—		46,376		142,693		1,557		201,041
Ending balance	$	760,582	$	460,807	$	1,952,394	$	3,040,963	$	156,261	$	6,371,007	$	987,818	$	712,818	$	2,433,099	$	3,461,174	$	172,748	$	7,767,657
December 31, 2016
December 31, 2017
Individually evaluated for impairment	$	1,886	$	662	$	12,088	$	13,079	$	277	$	27,992	$	3,064	$	1,777	$	14,482	$	10,545	$	439	$	30,307
Collectively evaluated for impairment	703,610		551,177		1,794,137		2,700,829		153,206		5,902,959		1,021,014		631,612		2,275,270		3,260,648		174,211		7,362,755
Purchased with deteriorated credit quality	11,994		840		71,952		184,987		1,985		271,758		15,315		—		53,969		156,337		1,639		227,260
Ending balance	$	717,490	$	552,679	$	1,878,177	$	2,898,895	$	155,468	$	6,202,709	$	1,039,393	$	633,389	$	2,343,721	$	3,427,530	$	176,289	$	7,620,322


(1)	Includes lease financing receivables.

Note 7 – Other Real Estate Owned

(In Thousands)

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

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

2827

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Notes to Consolidated Financial Statements (Unaudited)


	Purchased OREO		Non Purchased OREO		Total OREO		Purchased OREO		Non Purchased OREO		Total OREO
June 30, 2017
June 30, 2018
Residential real estate	$	1,392	$	521	$	1,913	$	543	$	1,540	$	2,083
Commercial real estate	7,145		1,362		8,507		3,257		1,484		4,741
Residential land development	1,707		913		2,620		724		605		1,329
Commercial land development	5,165		1,509		6,674		4,482		1,069		5,551
Total	$	15,409	$	4,305	$	19,714	$	9,006	$	4,698	$	13,704
December 31, 2016
December 31, 2017
Residential real estate	$	2,230	$	699	$	2,929	$	1,683	$	758	$	2,441
Commercial real estate	6,401		1,680		8,081		4,314		1,624		5,938
Residential land development	2,344		1,688		4,032		1,100		781		1,881
Commercial land development	6,395		1,862		8,257		4,427		1,247		5,674
Total	$	17,370	$	5,929	$	23,299	$	11,524	$	4,410	$	15,934

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


	Purchased OREO			Non Purchased OREO			Total OREO			Purchased OREO			Non Purchased OREO			Total OREO
Balance at January 1, 2017	$	17,370		$	5,929		$	23,299
Balance at January 1, 2018										$	11,524		$	4,410		$	15,934
Transfers of loans	3,925			302			4,227			515			1,776			2,291
Capitalized improvements	—			—			—
Impairments	(379		)	(378		)	(757		)	(455		)	(294		)	(749		)
Dispositions	(5,142		)	(1,844		)	(6,986		)	(2,576		)	(1,193		)	(3,769		)
Other	(365		)	296			(69		)	(2		)	(1		)	(3		)
Balance at June 30, 2017	$	15,409		$	4,305		$	19,714
Balance at June 30, 2018										$	9,006		$	4,698		$	13,704

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


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Repairs and maintenance	$	199		$	409		$	396		$	606		$	55		$	199		$	168		$	396
Property taxes and insurance	76			148			408			618			37			76			149			408
Impairments	379			987			757			1,281			397			379			749			757
Net losses (gains) on OREO sales	189			181			(138		)	231			(239		)	189			(143		)	(138		)
Rental income	(62		)	(111		)	(110		)	(165		)	(18		)	(62		)	(34		)	(110		)
Total	$	781		$	1,614		$	1,313		$	2,571		$	232		$	781		$	889		$	1,313

Note 8 – Goodwill and Other Intangible Assets

(In Thousands)

The carrying amounts of goodwill by operating segments for the six months ended June 30, ~~2017~~2018 were as follows:

Community Banks Insurance Total
Balance at January 1, 2017 $ 467,767
$ 2,767
$ 470,534
Addition to goodwill from acquisition —
—
—
Adjustment to previously recorded goodwill —
—
—
Balance at June 30, 2017 $ 467,767
$ 2,767
$ 470,534

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

~~There were no adjustments to goodwill during the six months ended June 30, 2017.~~



	Community Banks		Insurance		Total
Balance at January 1, 2018	$	608,279	$	2,767	$	611,046
Addition to goodwill from acquisition	—		—		—
Adjustment to previously recorded goodwill	—		—		—
Balance at June 30, 2018	$	608,279	$	2,767	$	611,046

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


	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
June 30, 2017
June 30, 2018
Core deposit intangibles	$	47,992	$	(28,178	)	$	19,814	$	54,958	$	(34,765	)	$	20,193
Customer relationship intangible	1,970		(766		)	1,204		1,970		(898		)	1,072
Total finite-lived intangible assets	$	49,962	$	(28,944	)	$	21,018	$	56,928	$	(35,663	)	$	21,265
December 31, 2016
December 31, 2017
Core deposit intangibles	$	47,992	$	(25,188	)	$	22,804	$	54,958	$	(31,586	)	$	23,372
Customer relationship intangible	1,970		(700		)	1,270		1,970		(832		)	1,138
Total finite-lived intangible assets	$	49,962	$	(25,888	)	$	24,074	$	56,928	$	(32,418	)	$	24,510

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

Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Amortization expense for:
Core deposit intangibles $ 1,460
$ 1,709
$ 2,990
$ 3,373
Customer relationship intangible 33
33
66
66
Total intangible amortization $ 1,493
$ 1,742
$ 3,056
$ 3,439

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~~Notes to Consolidated Financial Statements (Unaudited)~~



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Amortization expense for:
Core deposit intangibles	$	1,561	$	1,460	$	3,179	$	2,990
Customer relationship intangible	33		33		66		66
Total intangible amortization	$	1,594	$	1,493	$	3,245	$	3,056

The estimated amortization expense of finite-lived intangible assets for the year ending December 31, ~~2017~~2018 and the succeeding four years is summarized as follows:


	Core Deposit Intangibles		Customer Relationship Intangible		Total		Core Deposit Intangibles		Customer Relationship Intangible		Total

2017	$	5,723	$	131	$	5,854
2018	4,881		131		5,012		$	6,130	$	131	$	6,261
2019	4,101		131		4,232		5,212		131		5,343
2020	3,213		131		3,344		4,186		131		4,317
2021	2,273		131		2,404		3,107		131		3,238
2022							2,187		131		2,318

Note 9 – 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 ~~market~~ value. Fair ~~market~~ value is determined using an income approach with various assumptions including expected cash flows, prepayment speeds, market discount rates, servicing costs, and other factors. Impairment losses on MSRs are recognized to the extent by which the unamortized cost exceeds fair value. ~~During the first six months of 2016, the Company recognized an impairment loss on MSRs in earnings in the amount of $40.~~ There were no impairment losses recognized during the six months ended June 30, ~~2017.~~

During the first quarter of 2016, the Company sold MSRs relating to mortgage loans having an aggregate unpaid principal balance totaling $1,830,444 to a third party for net proceeds of $18,508. There were no sales of MSRs during the six months ended June 30,2018 and 2017.

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Notes to Consolidated Financial Statements (Unaudited)

Changes in the Company’s MSRs were as follows:


Balance at January 1, 2017	$	26,302
Balance at January 1, 2018				$	39,339
Capitalization	7,194			6,303
Amortization	(1,670		)	(2,403		)
Balance at June 30, 2017	$	31,826
Balance at June 30, 2018				$	43,239

Data and key economic assumptions related to the Company’s MSRs are as follows as of ~~June 30, 2017~~ ~~and December 31, 2016 are as follows:~~the dates presented:


	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Unpaid principal balance	$	3,315,293		$	2,763,344		$	4,315,261		$	4,012,519

Weighted-average prepayment speed (CPR)	8.80		%	7.34		%	7.32		%	8.04		%
Estimated impact of a 10% increase	$	(1,348	)	$	(1,034	)	$	(1,792	)	$	(1,592	)
Estimated impact of a 20% increase	(2,615		)	(2,010		)	(3,475		)	(3,095		)

Discount rate	9.66		%	9.64		%	9.42		%	9.69		%
Estimated impact of a 10% increase	$	(1,540	)	$	(1,368	)	$	(2,573	)	$	(2,027	)
Estimated impact of a 20% increase	(2,964		)	(2,629		)	(4,937		)	(3,896		)

Weighted-average coupon interest rate	3.85		%	3.83		%	3.94		%	3.89		%
Weighted-average servicing fee (basis points)	26.06			25.87			26.77			26.36
Weighted-average remaining maturity (in years)	14.02			11.11			8.35			7.98

The Company recorded servicing fees of ~~$1,434~~$2,124 and ~~$321~~$1,434 for the three months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively, which isare included in “Mortgage banking income” in the Consolidated Statements of Income. The Company recorded servicing fees of ~~$2,667~~$4,494 and ~~$1,617~~$2,667 for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

~~Note 10 – Redemption of Long-term Debt~~

~~(In Thousands)~~

During the first quarter of 2017, the Company redeemed the Heritage Financial Statutory Trust I junior subordinated debentures. The debentures were redeemed for an aggregate amount of $10,515, which included the principal amount of $10,310 and a prepayment penalty of $205. Prior to the redemption, the Company obtained all required board and regulatory approval.

~~During the second quarter of 2016, the Company incurred a prepayment penalty of $329 in connection with the prepayment of $3,483 in long-term borrowings from the Federal Home Loan Bank.~~

~~There were no other prepayments of long-term debt during the first six months of 2017 or 2016.~~

Note 1110 - 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 future benefit accruals ceased as of December 31, 1996. In connection with the acquisition of Heritage Financial Group, Inc. (“Heritage”) in July 2015, the Company assumed the noncontributory defined benefit pension plan maintained by HeritageBank of the South, Heritage's wholly-owned banking subsidiary (“HeritageBank”), under which accruals had ceased and the plan had been terminated by HeritageBank immediately prior to the acquisition date. Final distribution of all benefits under the plan was completed in August 2016.

The Company also provides retiree health benefits for certain employees who were employed by the Company and enrolled in the ~~Company's~~Company’s health plan as of December 31, 2004. To receive benefits, an eligible employee must retire from service with the Company and its affiliates between age 55 and 65 and be credited with at least 15 years of service or with 70 points, determined as the sum of age and service at retirement. The Company periodically determines the portion of the premium to be paid by each eligible retiree and the portion to be paid by the Company. Coverage ceases when an employee attains age 65 and is eligible for

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~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

Medicare. The Company also provides life insurance coverage for each retiree in the face amount of $5 until age 70. Retirees can purchase additional insurance or continue coverage beyond age 70 at their sole expense.

The plan expense for the legacy Renasant defined benefit pension plan (“Pension Benefits - Renasant”)~~, the assumed HeritageBank defined pension plan (“Pension Benefits - HeritageBank”)~~ and post-retirement health and life plans (“Other Benefits”) for the periods presented was as follows:

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Notes to Consolidated Financial Statements (Unaudited)

Pension Benefits Pension Benefits
Renasant HeritageBank Other Benefits
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016
Service cost $ —
$ —
$ —
$ —
$ 1
$ 4
Interest cost 291
302
—
69
8
15
Expected return on plan assets (487 ) (467 ) —
(45 ) —
—
Recognized actuarial loss (gain) 100
102
—
—
(10 ) 17
Net periodic benefit (return) cost $ (96 ) $ (63 ) $ —
$ 24
$ (1 ) $ 36



	Pension Benefits
	Renasant						Other Benefits
	Three Months Ended						Three Months Ended
	June 30,						June 30,
	2018			2017			2018		2017
Service cost	$	—		$	—		$	2	$	1
Interest cost	256			291			7		8
Expected return on plan assets	(520		)	(487		)	—		—
Recognized actuarial loss (gain)	77			100			—		(10		)
Net periodic benefit (return) cost	$	(187	)	$	(96	)	$	9	$	(1	)



	Pension Benefits
	Renasant						Other Benefits
	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018		2017
Service cost	$	—		$	—		$	4	$	4
Interest cost	522			584			16		21
Expected return on plan assets	(1,038		)	(971		)	—		—
Recognized actuarial loss	164			200			—		3
Net periodic benefit (return) cost	$	(352	)	$	(187	)	$	20	$	28

Pension Benefits Pension Benefits
Renasant HeritageBank Other Benefits
Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016
Service cost $ —
$ —
$ —
$ —
$ 4
$ 8
Interest cost 584
608
—
138
21
29
Expected return on plan assets (971 ) (936 ) —
(90 ) —
—
Recognized actuarial loss 200
202
—
—
3
34
Net periodic benefit (return) cost $ (187 ) $ (126 ) $ —
$ 48
$ 28
$ 71

Incentive Compensation Plans

In March 2011, the Company adopted a long-term equity incentive plan, which provides for the grant of stock options and the award of restricted stock. The plan replaced the long-term incentive plan adopted in 2001, which expired in October 2011. The Company issues shares of treasury stock to satisfy stock options exercised or restricted stock granted under the plan. Options granted under the plan allow participants to acquire shares of the ~~Company's~~Company’s common stock at a fixed exercise price and expire ten years after the grant date. Options vest and become exercisable in installments over a three-year period measured from the grant date. Options that have not vested are forfeited and ~~canceled~~cancelled upon the termination of a ~~participant's~~participant’s employment. There were no stock options granted during the ~~three or~~ six months ended June 30, ~~2017~~2018 or ~~2016.~~2017.

The following table summarizes the changes in stock options as of and for the six months ended June 30, ~~2017~~2018:


	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding at beginning of period	185,625		$	15.97	89,750		$	15.67
Granted	—		—		—		—
Exercised	(88,625	)	16.14		(38,000	)	15.48
Forfeited	—		—		(5,000	)	15.32
Options outstanding at end of period	97,000		$	15.82	46,750		$	15.87

The Company awards performance-based restricted stock to executives and other officers ~~and employees~~ and time-based restricted stock to directors, executives and other officers and employees under the long-term equity incentive plan. The performance-based restricted stock vests upon completion of a ~~one-year~~designated service period ~~and~~or the attainment of ~~certain~~specified performance goals. Target performance levels are derived from the Company’s budget, with threshold performance set at approximately 5% below target and superior performance set at approximately 5% above target. Performance-based restricted stock is ~~issued~~granted at the target level; the number of shares ultimately awarded is determined at the end of ~~each year~~

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~~Notes to Consolidated Financial Statements (Unaudited)~~

the applicable performance period and may be increased or decreased depending onupon the Company ~~falling short of,~~ meeting or exceeding (or failing to meet or exceed) the financial performance measures defined by the Board of Directors. Time-based restricted stock vests at the end of the service period defined in the respective grant. The fair

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Notes to Consolidated Financial Statements (Unaudited)

value of each restricted stock ~~award~~grant is the closing price of the ~~Company's~~Company’s common stock on the day immediately preceding the ~~award~~grant date. The following table summarizes the changes in restricted stock as of and for the six months ended June 30, ~~2017~~2018:


	Performance-Based Restricted Stock	Weighted Average Grant-Date Fair Value		Time- Based Restricted Stock		Weighted Average Grant-Date Fair Value		Performance-Based Restricted Stock		Weighted Average Grant-Date Fair Value		Time- Based Restricted Stock		Weighted Average Grant-Date Fair Value
Nonvested at beginning of period	—	$	—	117,345		$	31.76	—		$	—	218,075		$	39.08
Awarded	54,450	42.22		99,093		42.34		95,183		40.89		138,061		41.91
Vested	—	—		(40,790	)	32.26		—		—		(56,646	)	38.43
Cancelled	—	—		(350	)	28.93		(3,014	)	40.89		(14,646	)	41.97
Nonvested at end of period	54,450	$	42.22	175,298		$	37.63	92,169		$	40.89	284,844		$	40.43

During the six months endedJune 30, ~~2017~~,2018, the Company reissued ~~92,610~~93,511 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 ~~$1,237~~$1,920 and ~~$856~~$1,237 for the three months ended June 30, ~~2017~~2018 and ~~2016~~,2017, respectively, and ~~$2,411~~$3,712 and ~~$1,715~~$2,411 for the six months ended June 30, 2018 and 2017, ~~and 2016,~~ respectively.

Note 1211 – Derivative Instruments

(In Thousands)

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 also from time to time 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. At June 30, ~~2017~~2018, the Company had notional amounts of $~~91,810~~219,738 on interest rate contracts with corporate customers and $~~91,810~~219,738 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.

In June 2014, the Company entered into two forward interest rate swap contracts on floating rate liabilities at the Bank level with notional amounts of $15,000 each. The interest rate swap contracts are each accounted for as a cash flow hedge with the objective of protecting against any interest rate volatility on future FHLB borrowings for a four-year and five-year period beginning June 1, 2018 and December 3, 2018 and ending June 2022 and June 2023, respectively. Under these contracts, Renasant Bank will pay a fixed interest rate and will receive a variable interest rate based on the three-month LIBOR plus a pre-determined spread, with quarterly net settlements.

In March and April 2012, the Company entered into two interest rate swap agreements effective March 30, 2014 and March 17, 2014, respectively. Under these swap agreements, the Company receives a variable rate of interest based on the three-month LIBOR plus a pre-determined spread and pays a fixed rate of interest. The agreements, which both terminate in March 2022, are accounted for as cash flow hedges to reduce the variability in cash flows resulting from changes in interest rates on $32,000 of the Company’s junior subordinated debentures.

In ~~connection with its merger with First M&F Corporation (“First M&F”),~~April 2018, the Company ~~assumed~~entered into an interest rate swap ~~designed to convert floating rate interest payments into fixed rate payments. Based on the terms of the~~ agreement ~~which terminates in March 2018,~~effective June 15, 2018. Under this swap agreement, the Company receives a variable rate of interest based on the three-month LIBOR plus a pre-determined spread and pays a fixed rate of interest. The ~~interest rate swap~~agreement, which terminates in June 2028, is accounted for as a cash flow hedge to reduce the variability in cash flows resulting from changes in interest rates on ~~$30,000~~$30,000 of the Company’s junior subordinated ~~debentures assumed in the merger with First M&F.~~debentures.

The Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate and adjustable-rate residential mortgage loans. The notional amount of commitments to fund fixed-rate and adjustable-rate mortgage loans was $~~244,772~~196,667 and ~~$120,050~~$131,000 at June 30, ~~2017~~2018 and December 31, ~~2016~~2017, respectively. The Company also enters into forward commitments to sell residential mortgage loans to secondary market investors. The notional amount of commitments to sell residential mortgage loans to secondary market investors was $374,000 and $199,000 at June 30, 2018 and December 31, 2017, respectively.

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Notes to Consolidated Financial Statements (Unaudited)

~~residential mortgage loans to secondary market investors was~~ ~~$414,000~~ ~~and $257,000 at~~ ~~June 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively.~~

The following table provides details on the Company’s derivative financial instruments as of the dates presented:


		Fair Value					Fair Value
	Balance Sheet Location	June 30, 2017		December 31, 2016		Balance Sheet Location	June 30, 2018		December 31, 2017
Derivative assets:
Designated as hedging instruments
Interest rate swap						Other Assets	$	181	$	—
Totals							$	181	$	—
Not designated as hedging instruments:
Interest rate contracts	Other Assets	$	1,882	$	1,985	Other Assets	$	4,142	$	3,171
Interest rate lock commitments	Other Assets	3,781		2,643		Other Assets	4,699		2,756
Forward commitments	Other Assets	1,123		4,480		Other Assets	98		50
Totals		$	6,786	$	9,108		$	8,939	$	5,977
Derivative liabilities:
Designated as hedging instruments:
Interest rate swaps	Other Liabilities	$	3,404	$	3,410	Other Liabilities	$	1,047	$	2,536
Totals		$	3,404	$	3,410		$	1,047	$	2,536
Not designated as hedging instruments:
Interest rate contracts	Other Liabilities	$	1,882	$	1,985	Other Liabilities	$	4,142	$	3,171
Interest rate lock commitments	Other Liabilities	70		246		Other Liabilities	1		4
Forward commitments	Other Liabilities	525		269		Other Liabilities	1,301		328
Totals		$	2,477	$	2,500		$	5,444	$	3,503

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


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Derivatives not designated as hedging instruments:
Interest rate contracts:
Included in interest income on loans	$	690		$	593		$	1,369		$	1,126		$	1,038		$	690		$	2,024		$	1,369
Interest rate lock commitments:
Included in mortgage banking income	(1,538		)	(566		)	1,315			1,062			(238		)	(1,538		)	1,946			1,315
Forward commitments
Included in mortgage banking income	2,256			(931		)	(3,613		)	(4,619		)	(1,012		)	2,256			(924		)	(3,613		)
Total	$	1,408		$	(904	)	$	(929	)	$	(2,431	)	$	(212	)	$	1,408		$	3,046		$	(929	)

For the ~~Company's~~Company’s derivatives designated as cash flow hedges, changes in fair value of the cash flow hedges are, to the extent that the hedging relationship is effective, recorded as other comprehensive income and are subsequently recognized in earnings at the same time that the hedged item is recognized in earnings. The ineffective portions of the changes in fair value of the hedging instruments are immediately recognized in earnings. The assessment of the effectiveness of the hedging relationship is evaluated under the hypothetical derivative method. There were no ineffective portions for the six months ended June 30, ~~2017~~2018 or ~~2016.~~2017. The impact on other comprehensive income for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively, can be seen at Note ~~16, "Other~~15, “Other Comprehensive ~~Income."~~Income (Loss).”

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

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Notes to Consolidated Financial Statements (Unaudited)

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~~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~~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 Assets				Offsetting Derivative Liabilities				Offsetting Derivative Assets				Offsetting Derivative Liabilities
	June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Gross amounts recognized	$	1,357	$	4,778	$	5,327	$	4,893	$	3,659	$	717	$	3,111	$	5,303
Gross amounts offset in the Consolidated Balance Sheets	—		—		—		—		—		—		—		—
Net amounts presented in the Consolidated Balance Sheets	1,357		4,778		5,327		4,893		3,659		717		3,111		5,303
Gross amounts not offset in the Consolidated Balance Sheets
Financial instruments	759		567		759		567		884		717		884		717
Financial collateral pledged	—		—		4,568		4,326		—		—		175		4,357
Net amounts	$	598	$	4,211	$	—	$	—	$	2,775	$	—	$	2,052	$	229

Note 1312 – Income Taxes

(In Thousands)

The following table is a summary of the ~~Company's~~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 ~~indicated.~~presented.

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	June 30,				December 31,		June 30,				December 31,
	2017		2016		2016		2018		2017		2017
Deferred tax assets
Allowance for loan losses	$	20,566	$	20,541	$	19,934	$	15,800	$	20,566	$	13,966
Loans	19,575		31,477		23,240		11,789		19,575		15,062
Deferred compensation	9,845		11,628		11,254		7,098		9,845		7,093
Securities	2,440		2,346		2,439		—		2,440		3,659
Net unrealized losses on securities - OCI	6,670		5,093		10,096		6,916		6,670		—
Impairment of assets	1,986		3,129		2,512		1,791		1,986		1,748
Federal and State net operating loss carryforwards	3,081		3,808		2,867		1,297		3,081		2,419
Intangibles	1,758		—		1,247		—		1,758		—
Other	3,577		8,027		3,463		4,310		3,577		4,722
Total deferred tax assets	69,498		86,049		77,052		49,001		69,498		48,669
Deferred tax liabilities
FDIC loss-share indemnification asset	—		1,579		—
Investment in partnerships	1,272		2,163		1,556		548		1,272		757
Core deposit intangible	—		3,015		—
Fixed assets	1,875		1,668		2,517		3,073		1,875		3,163
Mortgage servicing rights	3,360		3,976		3,360		11,224		3,360		10,139
Junior subordinated debt	4,004		4,181		4,111		2,352		4,004		2,394
Other	2,000		4,714		2,876		1,665		2,000		1,859
Total deferred tax liabilities	12,511		21,296		14,420		18,862		12,511		18,312
Net deferred tax assets	$	56,987	$	64,753	$	62,632	$	30,139	$	56,987	$	30,357

The Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. As a result, the Company ~~acquired~~calculated taxes in the current quarter based on a 21% federal corporate tax rate, whereas taxes were calculated in previous periods based on a 35% federal corporate tax rate. Under the guidance of ASC 740, “Income Taxes” (“ASC 740”), the Company revalued its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. After reviewing the Company’s inventory of deferred tax assets and ~~state net operating losses as part~~liabilities on the date of enactment and giving consideration to the future impact of the ~~Heritage acquisition. The federal~~lower corporate tax rates and other provisions of the new legislation, the Company’s revaluation of its net ~~operating loss acquired totaled $18,321,~~deferred tax assets was $14,486, which was included as a reduction in “Income taxes” in the Consolidated Statements of Income for the year ended December 31, 2017. Although in the normal course of business the Company is required to make estimates and assumptions for certain tax items which ~~$6,478 remained to~~cannot be ~~utilized~~fully determined at period end, the Company did not identify items for which the income tax effects of the Tax Act had not been completed as of ~~June 30,~~December 31, 2017 ~~while state net operating losses totaled $17,168,~~and, therefore, considered its accounting for the tax effects of ~~which $9,664 remained~~the Tax Act on its deferred tax assets and liabilities to ~~be utilized~~have been completed as of ~~June 30,~~December 31, 2017. ~~Both the federal and state net operating losses will expire at various dates beginning in 2024.~~

The Company expects to utilize ~~the~~its federal and state net operating losses prior to expiration. Because the benefits are expected to be fully realized, the Company recorded no valuation allowance against the net operating losses for the six months ended June 30, ~~2017~~2018 or ~~2016~~2017 or the year ended December 31, ~~2016.~~2017.

Note 1413 – Investments in Qualified Affordable Housing Projects

(In Thousands)

The Company has investments in qualified affordable housing projects (“QAHPs”) that provide low income housing tax credits and operating loss benefits over an extended period. At June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the Company’s carrying value of QAHPs was ~~$3,361~~$6,855 and ~~$6,331,~~$7,637, respectively. ~~During the first quarter, the Company sold its interest in a limited liability partnership which reduced the carrying value of the investment in QAHPs by approximately $2,450.~~ The Company has no remaining funding obligations related to the QAHPs. The investments in QAHPs are being accounted for using the effective yield method. The investments in QAHPs are included in “Other assets” on the Consolidated Balance Sheets.

Components of the ~~Company's~~Company’s investments in QAHPs were included in the line item “Income taxes” in the Consolidated Statements of Income for the periods presented:

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Notes to Consolidated Financial Statements (Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Tax credit amortization	$	262		$	324		$	523		$	648		$	410		$	262		$	804		$	523
Tax credits and other benefits	(388		)	(471		)	(848		)	(942		)	(572		)	(388		)	(1,145		)	(848		)
Total	$	(126	)	$	(147	)	$	(325	)	$	(294	)	$	(162	)	$	(126	)	$	(341	)	$	(325	)

Note 1514 – Fair Value Measurements

(In Thousands)

Fair Value Measurements and the Fair Level Hierarchy

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, trust preferred securities, and other debt 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: The Company uses derivatives to manage various financial risks. 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: 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.

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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



	Level 1		Level 2		Level 3		Totals
June 30, 2018
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	3,515	$	—	$	3,515
Obligations of states and political subdivisions	—		220,876		—		$	220,876
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		483,125		—		483,125
Government agency collateralized mortgage obligations	—		296,005		—		296,005
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		27,189		—		27,189
Government agency collateralized mortgage obligations	—		24,321		—		24,321
Trust preferred securities	—		—		10,401		10,401
Other debt securities	—		23,347		—		23,347
Total securities available for sale	—		1,078,378		10,401		1,088,779
Derivative instruments:
Interest rate swaps	—		181		—		181
Interest rate contracts	—		4,142		—		4,142
Interest rate lock commitments	—		4,699		—		4,699
Forward commitments	—		98		—		98
Total derivative instruments	—		9,120		—		9,120
Mortgage loans held for sale	—		245,046		—		245,046
Total financial assets	$	—	$	1,332,544	$	10,401	$	1,342,945
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	1,047	$	—	$	1,047
Interest rate contracts	—		4,142		—		4,142
Interest rate lock commitments	—		1		—		1
Forward commitments	—		1,301		—		1,301
Total derivative instruments	—		6,491		—		6,491
Total financial liabilities	$	—	$	6,491	$	—	$	6,491

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Level 1 Level 2 Level 3 Totals
June 30, 2017
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations $ —
$ 2,134
$ —
$ 2,134
Residential mortgage-backed securities:
Government agency mortgage backed securities —
420,877
—
420,877
Government agency collateralized mortgage obligations —
221,295
—
221,295
Commercial mortgage-backed securities:
Government agency mortgage backed securities —
51,053
—
51,053
Government agency collateralized mortgage obligations —
1,754
—
1,754
Trust preferred securities —
—
16,992
16,992
Other debt securities —
22,901
—
22,901
Total securities available for sale —
720,014
16,992
737,006
Derivative instruments:
Interest rate contracts —
1,882
—
1,882
Interest rate lock commitments —
3,781
—
3,781
Forward commitments —
1,123
—
1,123
Total derivative instruments —
6,786
—
6,786
Mortgage loans held for sale —
232,398
—
232,398
Total financial assets $ —
$ 959,198
$ 16,992
$ 976,190
Financial liabilities:
Derivative instruments:
Interest rate swaps $ —
$ 3,404
$ —
$ 3,404
Interest rate contracts —
1,882
—
1,882
Interest rate lock commitments —
70
—
70
Forward commitments —
525
—
525
Total derivative instruments —
5,881
—
5,881
Total financial liabilities $ —
$ 5,881
$ —
$ 5,881

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~


	Level 1		Level 2		Level 3		Totals		Level 1		Level 2		Level 3		Totals
December 31, 2016
December 31, 2017
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	2,158	$	—	$	2,158	$	—	$	3,564	$	—	$	3,564
Obligations of states and political subdivisions									—		234,481		—		234,481
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		409,317		—		409,317		—		193,950		—		193,950
Government agency collateralized mortgage obligations	—		168,826		—		168,826		—		176,639		—		176,639
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		50,863		—		50,863		—		31,170		—		31,170
Government agency collateralized mortgage obligations	—		2,550		—		2,550		—		5,006		—		5,006
Trust preferred securities	—		—		18,389		18,389		—		—		9,388		9,388
Other debt securities	—		22,145		—		22,145		—		17,290		—		17,290
Total securities available for sale	—		655,859		18,389		674,248		—		662,100		9,388		671,488
Derivative instruments:
Interest rate contracts	—		1,985		—		1,985		—		3,171		—		3,171
Interest rate lock commitments	—		2,643		—		2,643		—		2,756		—		2,756
Forward commitments	—		4,480		—		4,480		—		50		—		50
Total derivative instruments	—		9,108		—		9,108		—		5,977		—		5,977
Mortgage loans held for sale	—		177,866		—		177,866		—		108,316		—		108,316
Total financial assets	$	—	$	842,833	$	18,389	$	861,222	$	—	$	776,393	$	9,388	$	785,781
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	3,410	$	—	$	3,410	$	—	$	2,536	$	—	$	2,536
Interest rate contracts	—		1,985		—		1,985		—		3,171		—		3,171
Interest rate lock commitments	—		246		—		246		—		4		—		4
Forward commitments	—		269		—		269		—		328		—		328
Total derivative instruments	—		5,910		—		5,910		—		6,039		—		6,039
Total financial liabilities	$	—	$	5,910	$	—	$	5,910	$	—	$	6,039	$	—	$	6,039

The Company reviews fair value hierarchy classifications on a quarterly basis. Changes in the Company’s ability to observe inputs to the valuation may cause reclassification of certain assets or liabilities within the fair value hierarchy. Transfers between levels of the hierarchy are deemed to have occurred at the end of period. There were no such transfers between levels of the fair value hierarchy during the six months ended June 30, ~~2017~~2018.

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, ~~during~~as of the ~~six months endedJune 30, 2017~~dates presented:

Table of Contents

Renasant Corporation and ~~2016, respectively:~~Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)



Three Months Ended June 30, 2018	Trust preferred securities
Balance at April 1, 2018	$	10,045
Accretion included in net income	8
Unrealized gains included in other comprehensive income	383
Purchases	—
Sales	—
Issues	—
Settlements	(35		)
Transfers into Level 3	—
Transfers out of Level 3	—
Balance at June 30, 2018	$	10,401



Three Months Ended June 30, 2017	Trust preferred securities
Balance at April 1, 2017	$	17,823
Accretion included in net income	38
Unrealized gains included in other comprehensive income	22
Purchases	—
Sales	—
Issues	—
Settlements	(891		)
Transfers into Level 3	—
Transfers out of Level 3	—
Balance at June 30, 2017	$	16,992




Six Months Ended June 30, 2018	Trust preferred securities
Balance at January 1, 2018	$	9,388
Accretion included in net income	17
Unrealized gains included in other comprehensive income	1,052
Purchases	—
Sales	—
Issues	—
Settlements	(56		)
Transfers into Level 3	—
Transfers out of Level 3	—
Balance at June 30, 2018	$	10,401

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended June 30, 2017
Trust preferred
securities
Balance at April 1, 2017 $ 17,823
Accretion included in net income 38
Unrealized gains included in other comprehensive income 22
Purchases —
Sales —
Issues —
Settlements (891 )
Transfers into Level 3 —
Transfers out of Level 3 —
Balance at June 30, 2017 $ 16,992

Three Months Ended June 30, 2016
Trust preferred
securities
Balance at April 1, 2016 $ 18,947
Accretion included in net income 8
Unrealized losses included in other comprehensive income (711 )
Purchases —
Sales —
Issues —
Settlements (65 )
Transfers into Level 3 —
Transfers out of Level 3 —
Balance at June 30, 2016 $ 18,179

Six Months Ended June 30, 2017
Trust preferred
securities
Balance at January 1, 2017 $ 18,389
Accretion included in net income 46
Unrealized gains included in other comprehensive income 559
Purchases —
Sales —
Issues —
Settlements (2,002 )
Transfers into Level 3

Transfers out of Level 3 —
Balance at June 30, 2017 $ 16,992

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~



Six Months Ended June 30, 2016	Trust preferred securities
Balance at January 1, 2016	$	19,469
Six Months Ended June 30, 2017				Trust preferred securities
Balance at January 1, 2017				$	18,389
Accretion included in net income	16			46
Unrealized losses included in other comprehensive income	(1,195		)	559
Reclassification adjustment	—			—
Purchases	—			—
Sales	—			—
Issues	—			—
Settlements	(111		)	(2,002		)
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Balance at June 30, 2016	$	18,179
Balance at June 30, 2017				$	16,992

For each of the three and six months ended June 30, ~~2017~~2018 and ~~2016~~2017, 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.

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

The following table presents information as of June 30, ~~2017~~2018 about significant unobservable inputs (Level 3) used in the valuation of assets and liabilities measured at fair value on a recurring basis:

Financial instrument

Fair

Value

Valuation Technique

Significant

Unobservable Inputs

Range of Inputs

Fair

Value

Valuation Technique

Significant

Unobservable Inputs

Range of Inputs

Trust preferred securities

16,992

Discounted cash flows

Default rate

0-100%

10,401

Discounted cash flows

Default rate

0-100%

Nonrecurring Fair Value Measurements

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


June 30, 2017	Level 1		Level 2		Level 3		Totals
June 30, 2018									Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	3,389	$	3,389	$	—	$	—	$	3,964	$	3,964
OREO	—		—		6,167		6,167		—		—		2,662		2,662
Total	$	—	$	—	$	9,556	$	9,556	$	—	$	—	$	6,626	$	6,626


December 31, 2016	Level 1		Level 2		Level 3		Totals
December 31, 2017									Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	4,101	$	4,101	$	—	$	—	$	9,251	$	9,251
OREO	—		—		6,741		6,741		—		—		7,392		7,392
Mortgage servicing rights	—		—		26,302		26,302
Total	$	—	$	—	$	37,144	$	37,144	$	—	$	—	$	16,643	$	16,643

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:

Impaired loans: Loans considered impaired are reserved for at the time the loan is identified as impaired 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

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

determinations are classified as Level 3. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors previously identified. Impaired loans that were measured or re-measured at fair value had a carrying value of $~~4,063~~4,518 and ~~$4,406~~$9,608 at June 30, ~~2017~~2018 and December 31, ~~2016~~2017, respectively, and a specific reserve for these loans of $~~674~~554 and $~~305~~357 was included in the allowance for loan 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 in the Consolidated Balance Sheets as of the dates presented:


	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Carrying amount prior to remeasurement	$	6,750		$	8,290		$	3,212		$	8,732
Impairment recognized in results of operations	(583		)	(1,549		)	(550		)	(1,340		)
Fair value	$	6,167		$	6,741		$	2,662		$	7,392

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~Mortgage servicing rights~~: Mortgage servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. Because these factors are not all observable and include management’s assumptions, mortgage servicing rights are classified within Level 3 of the fair value hierarchy. Mortgage servicing rights were carried at amortized cost at June 30, 2017 and December 31, 2016, and $40 in impairment charges were recognized in earnings during the twelve months ended December 31, 2016. There were no impairment charges recognized in earnings for the six months ended June 30, 2017.

Financial instrument

Fair

Value

Valuation Technique

Significant

Unobservable Inputs

Range of Inputs

Fair

Value

Valuation Technique

Significant

Unobservable Inputs

Range of Inputs

Impaired loans

3,389

Appraised value of collateral less estimated costs to sell

Estimated costs to sell

4-10%

3,964

Appraised value of collateral less estimated costs to sell

Estimated costs to sell

4-10%

OREO

6,167

Appraised value of property less estimated costs to sell

Estimated costs to sell

4-10%

2,662

Appraised value of property less estimated costs to sell

Estimated 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 gains of ~~$6,092~~$4,177 and ~~$6,172~~$6,092 resulting from fair value changes of these mortgage loans were recorded in income during the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both mortgage loans held for sale and the related derivative instruments are recorded in “Mortgage banking income” in the Consolidated Statements of Income.

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

The following table summarizes the differences between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of June 30, ~~2017:~~2018:

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference		Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
Mortgage loans held for sale measured at fair value	$	232,398	$	224,404	$	7,994	$	245,046	$	237,373	$	7,673
Past due loans of 90 days or more	—		—		—		—		—		—
Nonaccrual loans	—		—		—		—		—		—

4342

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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:


			Fair Value										Fair Value
As of June 30, 2017	Carrying Value		Level 1		Level 2		Level 3		Total
As of June 30, 2018											Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	236,061	$	236,061	$	—	$	—	$	236,061	$	292,952	$	292,952	$	—	$	—	$	292,952
Securities held to maturity	339,619		—		353,064		—		353,064
Securities available for sale	737,006		—		720,014		16,992		737,006		1,088,779		—		1,078,378		10,401		1,088,779
Mortgage loans held for sale	232,398		—		232,398		—		232,398		245,046		—		245,046		—		245,046
Loans, net	6,326,858		—		—		6,241,238		6,241,238		7,720,302		—		—		7,608,411		7,608,411
Mortgage servicing rights	31,826		—		—		37,563		37,563		43,239		—		—		57,575		57,575
Derivative instruments	6,786		—		6,786		—		6,786		9,120		—		9,120		—		9,120
Financial liabilities
Deposits	$	7,202,025	$	5,588,280	$	1,615,277	$	—	$	7,203,557	$	8,380,720	$	6,508,375	$	1,867,633	$	—	$	8,376,008
Short-term borrowings	120,121		120,121		—		—		120,121		313,393		313,393		—		—		313,393
Other long-term borrowings	122		122		—		—		122		73		73		—		—		73
Federal Home Loan Bank advances	8,024		—		8,280		—		8,280		7,082		—		7,135		—		7,135
Junior subordinated debentures	85,607		—		66,826		—		66,826		86,155		—		82,166		—		82,166
Subordinated notes	98,203		—		101,950		—		101,950		114,044		—		116,650		—		116,650
Derivative instruments	5,881		—		5,881		—		5,881		6,491		—		6,491		—		6,491


			Fair Value										Fair Value
As of December 31, 2016	Carrying Value		Level 1		Level 2		Level 3		Total
As of December 31, 2017											Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	306,224	$	306,224	$	—	$	—	$	306,224	$	281,453	$	281,453	$	—	$	—	$	281,453
Securities held to maturity	356,282		—		362,893		—		362,893
Securities available for sale	674,248		—		655,859		18,389		674,248		671,488		—		662,100		9,388		671,488
Mortgage loans held for sale	177,866		—		177,866		—		177,866		108,316		—		108,316		—		108,316
Loans, net	6,159,972		—		—		5,989,790		5,989,790		7,574,111		—		—		7,514,185		7,514,185
Mortgage servicing rights	26,302		—		—		32,064		32,064		39,339		—		—		47,868		47,868
Derivative instruments	9,108		—		9,108		—		9,108		5,977		—		5,977		—		5,977
Financial liabilities
Deposits	$	7,059,137	$	5,438,384	$	1,631,027	$	—	$	7,069,411	$	7,921,075	$	6,114,391	$	1,809,085	$	—	$	7,923,476
Short-term borrowings	109,676		109,676		—		—		109,676		89,814		89,814		—		—		89,814
Other long-term borrowings	147		147		—		—		147		98		98		—		—		98
Federal Home Loan Bank advances	8,542		—		8,777		—		8,777		7,493		—		7,661		—		7,661
Junior subordinated debentures	95,643		—		73,301		—		73,301		85,881		—		69,702		—		69,702
Subordinated notes	98,127		—		101,000		—		101,000		114,074		—		118,650		—		118,650
Derivative instruments	5,910		—		5,910		—		5,910		6,039		—		6,039		—		6,039

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. The methodologies for estimating the fair value of financial assets and liabilities that are measured at fair value on a recurring or nonrecurring basis were discussed previously.

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Notes to Consolidated Financial Statements (Unaudited)

~~Cash and cash equivalents~~: Cash and cash equivalents consist of cash and due from banks and interest-bearing balances with banks. The carrying amount reported in the Consolidated Balance Sheets for cash and cash equivalents approximates fair value based on the short-term nature of these assets.

~~Securities held to maturity~~: Securities held to maturity consist of debt securities such as obligations of U.S. Government agencies, states, and other political subdivisions. Where quoted market prices in active markets are available, securities are classified within Level 1 of the fair value hierarchy. If quoted prices in 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.

~~Loans, net~~: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values of fixed-rate loans, including mortgages, commercial, agricultural and consumer loans, are estimated using a discounted cash flow analysis based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

~~Deposits~~: The fair values disclosed for demand deposits, both interest-bearing and noninterest-bearing, are, by definition, equal to the amount payable on demand at the reporting date. Such deposits are classified within Level 1 of the fair value hierarchy. The fair values of certificates of deposit and individual retirement accounts are estimated using a discounted cash flow based on currently effective interest rates for similar types of deposits. These deposits are classified within Level 2 of the fair value hierarchy.

~~Short-term borrowings~~: Short-term borrowings consist of securities sold under agreements to repurchase and short-term FHLB advances. The fair value of these borrowings approximates the carrying value of the amounts reported in the Consolidated Balance Sheets for each respective account given the short-term nature of the liabilities.

~~Federal Home Loan Bank advances: The fair value for Federal Home Loan Bank (“FHLB”) advances is determined by discounting the expected future cash outflows using current market rates for similar borrowings, or Level 2 inputs.~~

~~Junior subordinated debentures and subordinated notes: The fair value for the Company’s junior subordinated debentures and subordinated notes is determined using quoted market prices for similar instruments traded in active markets.~~

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 1615 – Other Comprehensive Income (Loss)

(In Thousands)

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


	Pre-Tax			Tax Expense (Benefit)			Net of Tax			Pre-Tax			Tax Expense (Benefit)			Net of Tax
Three months ended June 30, 2018
Securities available for sale:
Unrealized holding losses on securities										$	(4,025	)	$	(1,025	)	$	(3,000	)
Total securities available for sale										(4,025		)	(1,025		)	(3,000		)
Derivative instruments:
Unrealized holding gains on derivative instruments										519			132			387
Total derivative instruments										519			132			387
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost										77			20			57
Total defined benefit pension and post-retirement benefit plans										77			20			57
Total other comprehensive loss										$	(3,429	)	$	(873	)	$	(2,556	)
Three months ended June 30, 2017
Securities available for sale:
Unrealized holding gains on securities	$	4,188		$	1,619		$	2,569		$	4,188		$	1,619		$	2,569
Amortization of unrealized holding gains on securities transferred to the held to maturity category	(29		)	(11		)	(18		)	(29		)	(11		)	(18		)
Total securities available for sale	4,159			1,608			2,551			4,159			1,608			2,551
Derivative instruments:
Unrealized holding losses on derivative instruments	(270		)	(105		)	(165		)	(270		)	(105		)	(165		)
Total derivative instruments	(270		)	(105		)	(165		)	(270		)	(105		)	(165		)
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost	91			35			56			91			35			56
Total defined benefit pension and post-retirement benefit plans	91			35			56			91			35			56
Total other comprehensive income	$	3,980		$	1,538		$	2,442		$	3,980		$	1,538		$	2,442
Three months ended June 30, 2016
Securities available for sale:
Unrealized holding gains on securities	$	1,326		$	514		$	812
Reclassification adjustment for gains realized in net income	(1,257		)	(485		)	(772		)
Amortization of unrealized holding gains on securities transferred to the held to maturity category	(28		)	(10		)	(18		)
Total securities available for sale	41			19			22
Derivative instruments:
Unrealized holding losses on derivative instruments	(704		)	(276		)	(428		)
Total derivative instruments	(704		)	(276		)	(428		)
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost	119			39			80
Total defined benefit pension and post-retirement benefit plans	119			39			80
Total other comprehensive loss	$	(544	)	$	(218	)	$	(326	)

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Notes to Consolidated Financial Statements (Unaudited)



										Pre-Tax			Tax Expense (Benefit)			Net of Tax
Six months ended June 30, 2018
Securities available for sale:
Unrealized holding losses on securities										$	(14,634	)	$	(3,725	)	$	(10,909	)
Total securities available for sale										(14,634		)	(3,725		)	(10,909		)
Derivative instruments:
Unrealized holding gains on derivative instruments										1,670			425			1,245
Total derivative instruments										1,670			425			1,245
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost										164			41			123
Total defined benefit pension and post-retirement benefit plans										164			41			123
Total other comprehensive loss										$	(12,800	)	$	(3,259	)	$	(9,541	)
	Pre-Tax			Tax Expense (Benefit)			Net of Tax
Six months ended June 30, 2017
Securities available for sale:
Unrealized holding gains on securities	$	8,927		$	3,451		$	5,476		$	8,927		$	3,451		$	5,476
Amortization of unrealized holding gains on securities transferred to the held to maturity category	(275		)	(106		)	(169		)	(275		)	(106		)	(169		)
Total securities available for sale	8,652			3,345			5,307			8,652			3,345			5,307
Derivative instruments:
Unrealized holding gains on derivative instruments	6			2			4			6			2			4
Total derivative instruments	6			2			4			6			2			4
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost	204			79			125			204			79			125
Total defined benefit pension and post-retirement benefit plans	204			79			125			204			79			125
Total other comprehensive income	$	8,862		$	3,426		$	5,436		$	8,862		$	3,426		$	5,436
Six months ended June 30, 2016
Securities available for sale:
Unrealized holding gains on securities	$	6,315		$	2,440		$	3,875
Reclassification adjustment for gains realized in net income	(1,186		)	(458		)	(728		)
Amortization of unrealized holding gains on securities transferred to the held to maturity category	(61		)	(23		)	(38		)
Total securities available for sale	5,068			1,959			3,109
Derivative instruments:
Unrealized holding losses on derivative instruments	(2,766		)	(1,072		)	(1,694		)
Total derivative instruments	(2,766		)	(1,072		)	(1,694		)
Defined benefit pension and post-retirement benefit plans:
Amortization of net actuarial loss recognized in net periodic pension cost	236			84			152
Total defined benefit pension and post-retirement benefit plans	236			84			152
Total other comprehensive income	$	2,538		$	971		$	1,567

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

June 30,
2017 December 31, 2016
Unrealized gains on securities $ 14,797
$ 9,490
Non-credit related portion of other-than-temporary impairment on securities (16,719 ) (16,719 )
Unrealized losses on derivative instruments (1,351 ) (1,355 )
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations (7,195 ) (7,320 )
Total accumulated other comprehensive loss $ (10,468 ) $ (15,904 )



	June 30, 2018			December 31, 2017
Unrealized gains (losses) on securities	$	(1,540	)	$	7,363
Non-credit related portion of other-than-temporary impairment on securities	(11,319		)	(9,313		)
Unrealized gains (losses) on derivative instruments	250			(995		)
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations	(7,443		)	(7,566		)
Total accumulated other comprehensive loss	$	(20,052	)	$	(10,511	)

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Notes to Consolidated Financial Statements (Unaudited)

Note 1716 – 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				Three Months Ended
	June 30,				June 30,
	2017		2016		2018		2017
Basic
Net income applicable to common stock	$	25,284	$	22,900	$	36,710	$	25,284
Average common shares outstanding	44,415,423		42,066,168		49,413,754		44,415,423
Net income per common share - basic	$	0.57	$	0.54	$	0.74	$	0.57
Diluted
Net income applicable to common stock	$	25,284	$	22,900	$	36,710	$	25,284
Average common shares outstanding	44,415,423		42,066,168		49,413,754		44,415,423
Effect of dilutive stock-based compensation	108,118		237,458		136,007		108,118
Average common shares outstanding - diluted	44,523,541		42,303,626		49,549,761		44,523,541
Net income per common share - diluted	$	0.57	$	0.54	$	0.74	$	0.57


	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2018		2017
Basic
Net income applicable to common stock	$	49,256	$	44,116	$	70,536	$	49,256
Average common shares outstanding	44,390,021		41,200,133		49,385,244		44,390,021
Net income per common share - basic	$	1.11	$	1.07	$	1.43	$	1.11
Diluted
Net income applicable to common stock	$	49,256	$	44,116	$	70,536	$	49,256
Average common shares outstanding	44,390,021		41,200,133		49,385,244		44,390,021
Effect of dilutive stock-based compensation	110,259		235,830		136,801		110,259
Average common shares outstanding - diluted	44,500,280		41,435,963		49,522,045		44,500,280
Net income per common share - diluted	$	1.11	$	1.06	$	1.42	$	1.11

~~Stock options~~

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



	Three Months Ended
	June 30,
	2018	2017
Number of shares	44,273	—
Exercise prices (for stock option awards)	—	—

Three Months Ended
June 30,
2017 2016
Number of shares — 19,000
Exercise prices — $32.60

Six Months Ended
June 30,
2017 2016
Number of shares — 19,000
Exercise prices — $32.60



	Six Months Ended
	June 30,
	2018	2017
Number of shares	44,273	—
Exercise prices (for stock option awards)	—	—

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Notes to Consolidated Financial Statements (Unaudited)

Note 1817 – Regulatory Matters

(In Thousands)

~~Renasant~~The Company and the Bank isare 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 ~~Renasant Bank’s~~the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, ~~Renasant~~the Company and the Bank must meet specific capital guidelines that involve quantitative measures of ~~Renasant Bank’s~~ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. ~~Renasant Bank’s capital~~Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

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



Capital Tiers	Tier 1 Capital to Average Assets (Leverage)	Common Equity Tier 1 to Risk - Weighted Assets	Tier 1 Capital to Risk – Weighted Assets	Total Capital to Risk – Weighted Assets
Well capitalized	5% or above	6.5% or above	8% or above	10% or above
Adequately capitalized	4% or above	4.5% or above	6% or above	8% or above
Undercapitalized	Less than 4%	Less than 4.5%	Less than 6%	Less than 8%
Significantly undercapitalized	Less than 3%	Less than 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 Renasant Bank as of the dates presented:


	June 30, 2017				December 31, 2016				June 30, 2018				December 31, 2017
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Renasant Corporation
Tier 1 Capital to Average Assets (Leverage)	$	880,239	10.68	%	$	858,850	10.59	%	$	1,034,498	10.63	%	$	979,604	10.18	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	797,620		11.65	%	766,560		11.47	%	951,490		11.71	%	896,733		11.34	%
Tier 1 Capital to Risk-Weighted Assets	880,239		12.86	%	858,850		12.86	%	1,034,498		12.73	%	979,604		12.39	%
Total Capital to Risk-Weighted Assets	1,026,916		15.00	%	1,004,038		15.03	%	1,198,046		14.75	%	1,142,926		14.46	%
Renasant Bank
Tier 1 Capital to Average Assets (Leverage)	$	884,090	10.75	%	$	824,850	10.20	%	$	1,057,998	10.89	%	$	1,000,715	10.42	%
Common Equity Tier 1 Capital to Risk-Weighted Assets	884,090		12.93	%	824,850		12.38	%	1,057,998		13.04	%	1,000,715		12.69	%
Tier 1 Capital to Risk-Weighted Assets	884,090		12.93	%	824,850		12.38	%	1,057,998		13.04	%	1,000,715		12.69	%
Total Capital to Risk-Weighted Assets	932,564		13.64	%	871,911		13.09	%	1,108,178		13.66	%	1,050,751		13.32	%

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 ~~July 2013,~~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. When fully phased in on January 1, 2019, the required capital conservation buffer will be 2.5% of CET1 to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements; as of June 30, 2018, the capital conservation buffer is 1.875% of risk-weighted assets. In addition, the Basel III regulatory capital reforms and rules effecting certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 issued by the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency ~~approved the implementation of the Basel III regulatory capital reforms and issued rules effecting certain changes required by the Dodd-Frank Act~~ (the “Basel III Rules”) that call for broad and comprehensive revision of regulatory capital standards for U.S. banking organizations. Generally, the new Basel III Rules became effective on January 1, 2015, although parts of the Basel III Rules will be phased in through 2019. The Basel III Rules implemented a new common equity Tier 1 minimum capital requirement (“CET1”), and a higher minimum Tier 1 capital requirement, as reflected in the table above, and adjusted other items affecting the calculation of the numerator of a banking organization’s risk-based capital ratios. The new CET1 capital ratio includes common equity as defined under GAAP and does not include any other type of non-common equity under GAAP. Additionally, the Basel III Rules apply limits to a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a specified amount of CET1 capital in addition to the amount necessary to meet its minimum risk-based capital requirements.

~~Further, the Basel III Rules changed~~have revised the agencies’ ~~general risk-based capital requirements~~rules for ~~determining~~calculating risk-weighted assets ~~which affect the calculation of the denominator of a banking organization’s risk-based capital ratios. The Basel III Rules have~~to enhance

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Notes to Consolidated Financial Statements (Unaudited)

~~revised the agencies’ rules for calculating risk-weighted assets to enhance~~ risk sensitivity and to incorporate certain international capital standards of the Basel Committee on Banking ~~Supervision set forth in~~Supervision. These revisions affect the ~~standardized approach of the “International Convergence of Capital Measurement and Capital Standards: A Revised Framework”.~~

~~The~~ calculation of ~~risk-weighted assets in~~ the denominator of ~~the Basel III~~a banking organization’s risk-based capital ratios ~~has been adjusted~~ to reflect the ~~higher risk~~higher-risk nature of certain types of loans. ~~Specifically, as~~As applicable to ~~the Company and~~ Renasant Bank:

— ~~Residential mortgages: Replaced~~For residential mortgages, the former 50% risk weight for performing residential first-lien mortgages and a 100% risk-weight for all other mortgages has been replaced with a risk weight of between 35% and 200% determined by the mortgage’s loan-to-value ratio and whether the mortgage falls into one of two categories based on eight criteria that include the term, use of negative amortization and balloon payments, certain rate increases and documented and verified borrower income.

— ~~Commercial mortgages: Replaced the former 100% risk weight with~~For commercial mortgages, a 150% risk weight for certain high volatility commercial real estate acquisition, development and construction ~~loans.~~loans has been substituted for the former 100% risk weight.

— ~~Nonperforming loans: Replaced~~For nonperforming loans, the former 100% risk weight ~~with~~is now a 150% risk weight for loans, other than residential mortgages, that are 90 days past due or on nonaccrual status.

~~The Basel III Rules also introduce a new~~Finally, Tier 1 capital ~~conservation buffer designed~~treatment for “hybrid” capital items like trust preferred securities has been eliminated, subject to absorb losses during periods of economic stress. The capital conservation buffer is composed entirely of CET1, on top of these minimum risk-weighted asset ratios. In addition, the Final Rules provide for a countercyclical capital buffer applicable only to certain covered institutions. It is not expected that the countercyclical capital buffer will be applicable to the Company or Renasant Bank. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer (or below the combined capital conservation buffervarious grandfathering and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a 4-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019).transition rules.

~~Table of Contents~~

~~Renasant Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 1918 – Segment Reporting

(In Thousands)

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

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

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

The Wealth Management segment offers a broad range of fiduciary services which include the administration and management of trust accounts including personal and corporate benefit accounts, self-directed IRAs, and custodial accounts. In addition, the Wealth Management segment offers 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
Insurance
Wealth
Management
Other Consolidated
Three months ended June 30, 2017
Net interest income (loss) $ 81,392
$ 124
$ 524
$ (2,437 ) $ 79,603
Provision for loan losses 1,750
—
—
—
1,750
Noninterest income 28,592
2,264
3,267
142
34,265
Noninterest expense 70,018
1,766
2,905
152
74,841
Income (loss) before income taxes 38,216
622
886
(2,447 ) 37,277
Income tax expense (benefit) 12,712
238
—
(957 ) 11,993
Net income (loss) $ 25,504
$ 384
$ 886
$ (1,490 ) $ 25,284

Total assets $ 8,776,737
$ 24,746
$ 58,156
$ 12,633
$ 8,872,272
Goodwill 467,767
2,767
—
—
470,534

Three months ended June 30, 2016
Net interest income (loss) $ 77,564
$ 88
$ 443
$ (938 ) $ 77,157
Provision for loan losses 1,425
—
5
—
1,430
Noninterest income 29,172
2,280
3,062
1,072
35,586
Noninterest expense 72,448
1,741
2,829
241
77,259
Income (loss) before income taxes 32,863
627
671
(107 ) 34,054
Income tax expense (benefit) 10,952
243
—
(41 ) 11,154
Net income (loss) $ 21,911
$ 384
$ 671
$ (66 ) $ 22,900

Total assets $ 8,429,596
$ 21,484
$ 51,239
$ 27,247
$ 8,529,566
Goodwill 467,767
2,767
—
—
470,534

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Notes to Consolidated Financial Statements (Unaudited)


	Community Banks		Insurance		Wealth Management			Other			Consolidated		Community Banks		Insurance		Wealth Management		Other			Consolidated
Six months ended June 30, 2017
Net interest income (loss)	$	157,348	$	216	$	1,011		$	(4,957	)	$	153,618
Provision for loan losses	3,250		—		—			—			3,250
Noninterest income (loss)	55,170		4,813		6,386			(83		)	66,286
Noninterest expense	134,239		3,458		5,901			552			144,150
Income (loss) before income taxes	75,029		1,571		1,496			(5,592		)	72,504
Income tax expense (benefit)	24,822		613		—			(2,187		)	23,248
Net income (loss)	$	50,207	$	958	$	1,496		$	(3,405	)	$	49,256

Total assets	$	8,776,737	$	24,746	$	58,156		$	12,633		$	8,872,272
Goodwill	467,767		2,767		—			—			470,534

Six months ended June 30, 2016
Three months ended June 30, 2018
Net interest income (loss)	$	148,385	$	174	$	877		$	(2,225	)	$	147,211	$	94,676	$	118	$	315	$	(2,720	)	$	92,389
Provision for loan losses	3,238		—		(8		)	—			3,230		1,810		—		—		—			1,810
Noninterest income	56,743		5,280		6,047			818			68,888		29,949		2,148		3,714		(230		)	35,581
Noninterest expense	137,659		3,477		5,567			370			147,073		73,628		1,819		3,213		366			79,026
Income (loss) before income taxes	64,231		1,977		1,365			(1,777		)	65,796		49,187		447		816		(3,316		)	47,134
Income tax expense (benefit)	21,591		773		—			(684		)	21,680		11,165		116		—		(857		)	10,424
Net income (loss)	$	42,640	$	1,204	$	1,365		$	(1,093	)	$	44,116	$	38,022	$	331	$	816	$	(2,459	)	$	36,710

Total assets	$	8,429,596	$	21,484	$	51,239		$	27,247		$	8,529,566	$	10,439,785	$	24,513	$	61,869	$	18,308		$	10,544,475
Goodwill	467,767		2,767		—			—			470,534		$	608,279	$	2,767	—		—			$	611,046

Three months ended June 30, 2017
Net interest income (loss)													$	81,392	$	124	$	524	$	(2,437	)	$	79,603
Provision for loan losses													1,750		—		—		—			1,750
Noninterest income													28,592		2,264		3,267		142			34,265
Noninterest expense													70,018		1,766		2,905		152			74,841
Income (loss) before income taxes													38,216		622		886		(2,447		)	37,277
Income tax expense (benefit)													12,712		238		—		(957		)	11,993
Net income (loss)													$	25,504	$	384	$	886	$	(1,490	)	$	25,284

Total assets													$	8,776,737	$	24,746	$	58,156	$	12,633		$	8,872,272
Goodwill													$	467,767	$	2,767	—		—			$	470,534




	Community Banks		Insurance		Wealth Management		Other			Consolidated
Six months ended June 30, 2018
Net interest income (loss)	$	186,103	$	224	$	628	$	(5,326	)	$	181,629
Provision for loan losses	3,560		—				—			3,560
Noninterest income (loss)	57,867		4,920		7,241		(494		)	69,534
Noninterest expense	146,261		3,550		6,605		554			156,970
Income (loss) before income taxes	94,149		1,594		1,264		(6,374		)	90,633
Income tax expense (benefit)	21,332		413		—		(1,648		)	20,097
Net income (loss)	$	72,817	$	1,181	$	1,264	$	(4,726	)	$	70,536

Total assets	$	10,439,785	$	24,513	$	61,869	$	18,308		$	10,544,475
Goodwill	$	608,279	$	2,767	—		—			$	611,046

Six months ended June 30, 2017
Net interest income (loss)	$	157,348	$	216	$	1,011	$	(4,957	)	$	153,618
Provision for loan losses	3,250		—		—		—			3,250
Noninterest income	55,170		4,813		6,386		(83		)	66,286
Noninterest expense	134,239		3,458		5,901		552			144,150
Income (loss) before income taxes	75,029		1,571		1,496		(5,592		)	72,504
Income tax expense (benefit)	24,822		613		—		(2,187		)	23,248
Net income (loss)	$	50,207	$	958	$	1,496	$	(3,405	)	$	49,256

Total assets	$	8,776,737	$	24,746	$	58,156	$	12,633		$	8,872,272
Goodwill	$	467,767	$	2,767	—		—			$	470,534

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 19 – Revenue Recognition

(In Thousands)

The Company adopted ASU 2014-09, an update to ASC 606, in the first quarter of 2018. The majority of the Company’s revenue streams are governed by other authoritative guidance and, therefore, considered out-of-scope of ASC 606. The Company’s revenue streams that are considered in-scope of ASC 606 are discussed below.

ASC 606 requires costs that are incremental to obtaining a contract to be capitalized. In the case of the Company, these costs would include sales commissions for insurance and wealth management products. ASC 606 has established, and the Company has utilized, a practical expedient allowing costs that, if capitalized, would have an amortization period of one year or less to instead be expensed as incurred.

Service Charges on Deposit Accounts

Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees. The contracts with deposit account customers are day-to-day contracts and are considered to be terminable at will by either party. Therefore, the fees are all considered to be earned when charged and simultaneously collected.

Insurance Commissions

Through Renasant Insurance, we offer a range of commercial and personal insurance products through major insurance carriers, which include health and life insurance and property and casualty insurance. Insurance commissions are earned when policies are placed by customers with the insurance carriers and are collected and recognized using two different methods: the agency bill method and the direct bill method.

Under the agency bill method, Renasant Insurance is responsible for billing the customers directly and then collecting and remitting the premiums to the insurance carriers. Agency bill revenue is recognized at the later of the invoice date or effective date of the policy. The Company has established a reserve for such policies which is derived from historical collection experience and updated annually. The contract balances (i.e. accounts receivable and accounts payable related to insurance commisions earned and premiums due) and the reserve established are considered inconsequential to the overall financial results of the Company.

Under the direct bill method, premium billing and collections are handled by the insurance carriers, and a commission is then paid to Renasant Insurance. Direct bill revenue is recognized when the cash is received from the insurance carriers. While there is recourse on these commissions in the event of policy cancellations, based on the Company’s historical data, significant or material reversals of revenue based on policy cancellations are not anticipated. The Company monitors policy cancellations on a monthly basis and, if a significant or material set of transactions occurred, the Company will adjust earnings accordingly.

The Company also earns contingency income that it recognizes on a cash basis. Contingency income is a bonus received from the insurance underwriters and is based both on commission income and claims experience on the Company’s clients’ policies during the previous year. Increases and decreases in contingency income are reflective of corresponding increases and decreases in the amount of claims paid by insurance carriers. Contingency income, which is included in “Other noninterest income” in the Consolidated Statements of Income, was $31 and $79 for the three months ending June 30, 2018 and 2017, respectively, and $794 and $766 for the six months ending June 30, 2018 and 2017, respectively.

Wealth Management Revenue

Wealth management consists of the Trust division and the Financial Services division. 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, self-directed IRAs, and custodial accounts. Fees for managing these accounts are based on the value of assets under management in the account, with the amount of the fee depending on the type of account. Revenue is recognized on monthly basis, and there is little to no risk of a material reversal of revenue. The contract balance (i.e. management fee receivable) recognized is considered inconsequential to the overall financial results of the Company.

The Financial Services division provides specialized products and services to the Company’s customers, which include investment guidance relating to fixed and variable annuities, mutual funds, stocks and other investments offered through a third party provider. Fees are recognized based on either trade activity, which are recognized at the time of the trade, or assets under management, which are recognized monthly.

Sales of Other Real Estate Owned

Table of Contents

Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The Company continually markets the properties included in the OREO portfolio. The Company will at times, in the ordinary course of business, provide seller-financing on the sales of OREO. In cases where a sale is seller-financed, the Company must ensure the commitment of both parties to perform their respective obligations and the collectability of the transaction price in order to properly recognize the revenue on the sale of OREO. This is accomplished through the Company’s loan underwriting process. In this process the Company considers things such as the buyer’s initial equity in the property, the credit quality of the borrower, the financing terms of the loan and the cash flow from the property, if applicable. If it is determined that the contract criteria in ASC 606 have been met, the revenue on the sale of OREO will be recognized on the closing date of the sale when the Company has transferred title to the buyer and obtained the right to receive payment for the property. In instances where sales are not seller-financed, the Company recognizes revenue on the closing date of the sale when the Company has obtained payment for the property and transferred title to the buyer. For additional information on OREO, please see Note 7, “Other Real Estate Owned.”

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”) ~~which may~~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. Such forward-looking statements usually include words such as “expects,” “projects,” “proposes,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” ~~“possible”~~“possible,” “approximately,” “should” and variations of such words and other similar expressions. ~~Prospective investors~~The forward-looking statements in, or incorporated by reference into, this report reflect our current assumptions and estimates of, among other things, future economic circumstances, industry conditions, business strategy and decisions, Company performance and financial results. Management believes its assumptions and estimates are reasonable, but they are all inherently subject to significant business, economic and competitive risks and uncertainties, many beyond management’s control, that could cause the Company’s actual results and experience to differ from the anticipated results and expectations indicated or implied in such forward-looking statements. Such differences may be material. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and, ~~involve risks and uncertainties and that actual results may differ materially from those contemplated by such~~accordingly, investors should not place undue reliance on these forward-looking ~~statements.~~statements, which speak only as of the date they are made.

Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following risks: (1) the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses, ~~and~~ grow the acquired ~~operations;~~operations and realize the cost savings expected from an acquisition to the extent and in the time frame anticipated by management, including with respect to its pending acquisition of Brand Group Holdings, Inc.; (2) the effect of economic conditions and interest rates on a national, regional or international basis; (3) ~~the~~ 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 to, competitors; (6) changes in laws and regulations ~~including~~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 loan losses as a result of inaccurate assumptions; (12) general economic, market or business ~~conditions;~~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 and ~~(16)~~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. ~~Management undertakes no~~

The Company expressly disclaims any obligation to update or revise forward-looking statements to reflect changed assumptions or estimates, the occurrence of unanticipated events or changes to future operating results ~~over time.~~that occur after the date the forward-looking statements are made.

Non-GAAP Financial Measures

~~In addition to results presented~~

This report presents the Company's efficiency ratio, in accordance with generally accepted accounting principles in the United States of America ~~("GAAP"~~(“GAAP”),. Additionally, this ~~document contains certain~~report presents an adjusted efficiency ratio, which is a non-GAAP financial ~~measures that exclude~~measure. We calculated the efficiency ratio by dividing noninterest expense by the sums of net interest income ~~collected~~ on ~~problem loans~~a fully tax equivalent basis and ~~purchase accounting adjustments from loan interest income~~noninterest income.The adjusted efficiency ratio excludes expenses that (1) the Company does not consider to be part of our normal operations, 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 expenses will be incurred or, when incurred, the amount of such expenses, such as merger and ~~net interest income when calculating the Company's taxable equivalent loan yields~~conversion related expenses and ~~net interest margin, respectively.~~debt prepayment penalties. Management uses ~~these non-GAAP financial measures~~the adjusted efficiency ratio to evaluate ongoing operating results and ~~to assess ongoing profitability.~~efficiency of the Company's operations. The ~~reconciliations~~reconciliation from GAAP to non-GAAP for ~~these~~this financial ~~measures can be found in “Results of Operations”~~measure is below.



Efficiency Ratio
	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Interest income (fully tax equivalent basis)	$	107,991		$	89,429		$	209,938		$	173,210
Interest expense	14,185			7,976			25,325			15,850
Net interest income (fully tax equivalent basis)	93,806			81,453			184,613			157,360

Total noninterest income	35,581			34,265			69,534			66,286
Net gains on sales of securities	—			—			—			—
Adjusted noninterest income	35,581			34,265			69,534			66,286

Total noninterest expense	79,026			74,841			156,970			144,150
Intangible amortization	1,594			1,493			3,245			3,056
Merger and conversion related expenses	500			3,044			1,400			3,389
Extinguishment of debt	—			—			—			205
Adjusted noninterest expense	76,932			70,304			152,325			137,500

Efficiency Ratio (GAAP)	61.08		%	64.68		%	61.76		%	64.45		%
Adjusted Efficiency Ratio (non-GAAP)	59.46		%	60.75		%	59.94		%	61.48		%

The presentation of ~~these~~this non-GAAP financial ~~measures~~measure 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~~Company’s calculations may not be comparable to other ~~similarly titled~~similarly-titled measures presented by other companies. Also, there may be limits in the usefulness of ~~these measures~~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.

Financial Condition

The following discussion provides details regarding the changes in significant balance sheet accounts at June 30, ~~2017~~2018 compared to December 31, ~~2016.~~2017.

Assets

Total assets were ~~$8,872,272~~$10,544,475 at June 30, ~~2017~~2018 compared to ~~$8,699,851~~$9,829,981 at December 31, ~~2016.~~2017.

Investments

The securities portfolio is used to provide a source for meeting liquidity needs and to supply securities to be used in collateralizing certain deposits and 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:


	June 30, 2017				December 31, 2016				June 30, 2018				December 31, 2017
	Balance		Percentage of Portfolio		Balance		Percentage of Portfolio		Balance		Percentage of Portfolio		Balance		Percentage of Portfolio
Obligations of other U.S. Government agencies and corporations	$	14,736	1.37	%	$	16,259	1.58	%	$	3,515	0.32	%	$	3,564	0.53	%
Obligations of states and political subdivisions	327,017		30.37		342,181		33.20		220,876		20.29		234,481		34.92
Mortgage-backed securities	694,979		64.55		631,556		61.29		830,640		76.29		406,765		60.58
Trust preferred securities	16,992		1.58		18,389		1.78		10,401		0.96		9,388		1.40
Other debt securities	22,901		2.13		22,145		2.15		23,347		2.14		17,290		2.57
	$	1,076,625	100.00	%	$	1,030,530	100.00	%	$	1,088,779	100.00	%	$	671,488	100.00	%

The balance of our securities portfolio at June 30, ~~2017~~2018 increased ~~$46,095~~$417,291 to ~~$1,076,625~~$1,088,779 from ~~$1,030,530~~$671,488 at December 31, ~~2016.~~2017. As discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, in the fourth quarter of 2017, we implemented strategic initiatives, collectively referred to as our “deleveraging strategy,” to manage total assets below $10,000,000 as of December 31, 2017, which included the sale of certain investment securities. During the six months ended June 30, ~~2017,~~2018, we purchased ~~$119,766~~$497,845 in investment securities; the majority of these purchases were made as part of the releveraging of the Company’s balance sheet, which was completed in the second quarter of 2018, with the remainder of our purchases being ordinary course purchases of investment securities. Mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprised approximately ~~98%~~99% of ~~the purchases during the first six months of~~ ~~2017.~~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. Proceeds from maturities, calls ~~sales~~ and principal payments on securities during the first six months of ~~2017~~2018 totaled ~~$79,381.~~

The Company holds investments in pooled trust preferred securities. This portfolio had a cost basis of $21,793 and $23,749 and a fair value of $16,992 and $18,389 at June 30, 2017 and December 31, 2016, respectively. At June 30, 2017, the investment in pooled trust preferred$63,655. There were no securities consisted of three securities representing interests in various tranches of trusts collateralized by debt issued by over 250 financial institutions. Management’s determination of the fair value of each of its holdings is based on the current credit ratings, the known deferrals and defaults by the underlying issuing financial institutions and the degree to which future deferrals and defaults would be required to occur before the cash flow for our tranches is negatively impacted. The Company’s quarterly evaluation of these investments for other-than-temporary-impairment resulted in no additional write-downssold during the first six months ~~ended June 30, 2017 or 2016. Furthermore, the Company's analysis~~ of the pooled trust preferred securities during the second quarter of 2017 supported a return to accrual status for the last remaining security, which had been in "payment in kind" status until December 2016. An observed history of principal and interest payments combined with improved qualitative and quantitative factors described above justified the accrual of interest on this security. The Company had in prior years placed the other two pooled trust preferred securities back on accrual status. 2018.

For more information about the Company’s ~~trust preferred securities,~~security portfolio, see Note 3, “Securities,” in the Notes to Consolidated Financial Statements of the Company in Item 1, ~~“Financial~~Financial Statements,” in this report.

Loans

Total loans at June 30, ~~2017~~2018 were ~~$6,371,007,~~$7,767,657, an increase of ~~$168,298~~$147,335 from ~~$6,202,709~~$7,620,322 at December 31, ~~2016.~~2017.

The table below sets forth the balance of loans, net of unearned income, outstanding by loan type and the percentage of each loan type to total loans as of the dates presented:


	June 30, 2017				December 31, 2016				June 30, 2018				December 31, 2017
	Balance		Percentage of Total Loans		Balance		Percentage of Total Loans		Balance		Percentage of Total Loans		Balance		Percentage of Total Loans
Commercial, financial, agricultural	$	760,582	11.94	%	$	717,490	11.57	%	$	987,818	12.72	%	$	1,039,393	13.64	%
Lease financing	49,066		0.78		46,841		0.75		52,423		0.67		54,013		0.71
Real estate – construction	460,807		7.23		552,679		8.91		712,818		9.18		633,389		8.31
Real estate – 1-4 family mortgage	1,952,394		30.64		1,878,177		30.28		2,433,099		31.32		2,343,721		30.76
Real estate – commercial mortgage	3,040,963		47.73		2,898,895		46.74		3,461,174		44.56		3,427,530		44.98
Installment loans to individuals	107,195		1.68		108,627		1.75		120,325		1.55		122,276		1.60
Total loans, net of unearned income	$	6,371,007	100.00	%	$	6,202,709	100.00	%	$	7,767,657	100.00	%	$	7,620,322	100.00	%

Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities ~~which~~that would cause them to be similarly impacted by economic or other conditions. At June 30, ~~2017,~~2018, 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.

Non purchased loans totaled ~~$5,058,898~~$6,057,766 at June 30, ~~2017~~2018 compared to ~~$4,713,572~~$5,588,556 at December 31, ~~2016.~~2017. With the exception of ~~construction loans,~~lease financing, the Company experienced loan growth across all categories of non purchased loans, with loans from our specialty commercial business lines, which consist of our asset-based lending, healthcare, factoring, and equipment lease financing banking groups as well as loans meeting the criteria to be guaranteed by the Small Business Administration (“SBA”), contributing ~~$45,948~~$55,107 of the total increase in non purchased loans from December 31, ~~2016.~~2017.

Looking at the change in loans geographically, non purchased loans in our Mississippi, Georgia, and Tennessee markets increased ~~by $58,313, $180,911,~~$68,947, $195,447, and ~~$41,254,~~$71,287, respectively, when compared to December 31, ~~2016.~~2017. Non purchased loans in our Alabama and Florida markets (collectively referred to as our “Central Region”) increased ~~$58,781.~~$127,301.

Loans purchased in previous acquisitions totaled ~~$1,312,109~~$1,709,891 and ~~$1,489,137~~$2,031,766 at June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The following tables provide a breakdown of non purchased loans and purchased loans as of the dates presented:


	June 30, 2017						June 30, 2018
	Non Purchased		Purchased		Total Loans		Non Purchased		Purchased		Total Loans
Commercial, financial, agricultural	$	657,713	$	102,869	$	760,582	$	790,363	$	197,455	$	987,818
Lease financing, net of unearned income	49,066		—		49,066		52,423		—		52,423
Real estate – construction:
Residential	176,466		2,758		179,224		194,164		7,669		201,833
Commercial	245,676		33,188		278,864		435,107		62,769		497,876
Condominiums	2,719		—		2,719		13,109		—		13,109
Total real estate – construction	424,861		35,946		460,807		642,380		70,438		712,818
Real estate – 1-4 family mortgage:
Primary	808,236		246,391		1,054,627		1,088,293		340,821		1,429,114
Home equity	423,992		70,672		494,664		446,564		99,992		546,556
Rental/investment	246,530		69,270		315,800		285,626		63,360		348,986
Land development	73,176		14,127		87,303		91,967		16,476		108,443
Total real estate – 1-4 family mortgage	1,551,934		400,460		1,952,394		1,912,450		520,649		2,433,099
Real estate – commercial mortgage:
Owner-occupied	872,634		352,320		1,224,954		993,797		386,088		1,379,885
Non-owner occupied	1,279,700		372,724		1,652,424		1,425,481		485,392		1,910,873
Land development	128,886		34,699		163,585		135,677		34,739		170,416
Total real estate – commercial mortgage	2,281,220		759,743		3,040,963		2,554,955		906,219		3,461,174
Installment loans to individuals	94,104		13,091		107,195		105,195		15,130		120,325
Total loans, net of unearned income	$	5,058,898	$	1,312,109	$	6,371,007	$	6,057,766	$	1,709,891	$	7,767,657


	December 31, 2016						December 31, 2017
	Non Purchased		Purchased		Total Loans		Non Purchased		Purchased		Total Loans
Commercial, financial, agricultural	$	589,290	$	128,200	$	717,490	$	763,823	$	275,570	$	1,039,393
Lease financing, net of unearned income	46,841		—		46,841		54,013		—		54,013
Real estate – construction:
Residential	197,029		19,282		216,311		178,400		25,041		203,441
Commercial	285,638		49,471		335,109		361,345		55,734		417,079
Condominiums	1,259		—		1,259		7,913		4,956		12,869
Total real estate – construction	483,926		68,753		552,679		547,658		85,731		633,389
Real estate – 1-4 family mortgage:
Primary	747,678		281,721		1,029,399		924,468		403,637		1,328,105
Home equity	400,448		86,151		486,599		445,149		116,990		562,139
Rental/investment	219,237		62,917		282,154		281,662		72,590		354,252
Land development	58,367		21,658		80,025		78,255		20,970		99,225
Total real estate – 1-4 family mortgage	1,425,730		452,447		1,878,177		1,729,534		614,187		2,343,721
Real estate – commercial mortgage:
Owner-occupied	833,509		378,756		1,212,265		938,444		436,011		1,374,455
Non-owner occupied	1,106,727		397,404		1,504,131		1,319,453		554,239		1,873,692
Land development	134,901		47,598		182,499		132,179		47,204		179,383
Total real estate – commercial mortgage	2,075,137		823,758		2,898,895		2,390,076		1,037,454		3,427,530
Installment loans to individuals	92,648		15,979		108,627		103,452		18,824		122,276
Total loans, net of unearned income	$	4,713,572	$	1,489,137	$	6,202,709	$	5,588,556	$	2,031,766	$	7,620,322

Mortgage Loans Held for Sale

Mortgage loans held for sale were ~~$232,398~~$245,046 at June 30, ~~2017~~2018 compared to ~~$177,866~~$108,316 at December 31, ~~2016. Even though production is down year-to-date compared to 2016, production in~~2017. The Company's aforementioned deleveraging strategy included shortening the ~~second quarter~~holding period of ~~2017 was improved compared to~~mortgage loans held for sale. At the ~~fourth quarter~~beginning of ~~2016. This resulted in an increased balance in~~2018, the holding period of mortgage loans held for sale ~~at June 30,~~reverted to standard practice, which was the primary reason for the increase in the balance from December 31, 2017.

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. ~~These~~Our standard practice is to sell the loans ~~are typically sold~~ within ~~thirty to forty~~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.

Deposits

The Company relies on deposits as its major source of funds. Total deposits were ~~$7,202,025~~$8,380,720 and ~~$7,059,137~~$7,921,075 at June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Noninterest-bearing deposits were ~~$1,642,863~~$1,888,561 and ~~$1,561,357~~$1,840,424 at June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, while interest-bearing deposits were ~~$5,559,162~~$6,492,159 and ~~$5,497,780~~$6,080,651 at June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. Management continues to focus on growing and maintaining a stable source of funding, specifically core deposits. Under certain circumstances, however, management may ~~elect~~seek to acquire non-core deposits in the form of public fund deposits or time deposits. 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 ~~only~~ acquired ~~when needed~~to meet anticipated funding needs at the rate and atwith other terms that, in management’s view, best address our interest rate risk, liquidity and net interest margin parameters. During the fourth quarter of 2017, as part of our deleveraging strategy, the Company reduced the balance of its wholesale deposit funding sources. These deposits were reacquired during the first quarter of 2018 accounting for a ~~rate that is prudent under~~portion of the ~~circumstances.~~increase in deposits from December 31, 2017.

Public fund deposits are those of counties, municipalities or other political subdivisions and may be readily obtained based on the Company’s pricing bid in comparison with competitors. Since public fund deposits are obtained through a bid process, these deposit balances may fluctuate as competitive and market forces change. The Company has focused on growing stable sources of deposits to reduce reliance on public fund deposits. However, the Company continues to participate in the bidding process for public fund deposits when it is reasonable under the circumstances. Our public fund transaction accounts are principally obtained

from municipalities including school boards and utilities. Public fund deposits were ~~$949,580~~$1,160,984 and ~~$894,321~~$1,000,324 at June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

Looking at the change in deposits geographically, deposits in our Mississippi and Georgia markets increased ~~$193,751~~$289,915 and ~~$30,260,~~$58,835, respectively, from December 31, ~~2016,~~2017, while deposits in our Tennessee and ~~our~~ Central Division markets decreased ~~$25,516~~$25,047 and ~~$55,607,~~$40,165, respectively, from December 31, ~~2016.~~2017. The decrease in these markets is primarily related to a decrease in public fund deposits.

Borrowed Funds

Total borrowings include securities sold under agreements to repurchase, short-term borrowings, 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 securities sold under agreements to repurchase, federal funds purchased and short-term FHLB advances. At June 30, ~~2017,~~2018, short-term borrowings consisted of ~~$9,521~~$8,393 in security repurchase agreements and short-term borrowings from the FHLB of ~~$110,600,~~$305,000, compared to security repurchase agreements of ~~$9,676~~$6,814 and short-term borrowings from the FHLB of ~~$100,000~~$83,000 at December 31, ~~2016.~~2017.

At June 30, ~~2017,~~2018, long-term debt, consisting of long-term FHLB advances, our junior subordinated debentures and our subordinated notes, totaled ~~$191,956~~$207,354 compared to ~~$202,459~~$207,546 at December 31, ~~2016.~~2017. Funds are borrowed from the FHLB primarily to match-fund against certain loans, negating interest rate exposure when rates rise. Such match-funded loans are typically large, fixed rate commercial or real estate loans with long-term maturities. Long-term FHLB advances were ~~$8,024~~$7,082 and ~~$8,542~~$7,493 at June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. At June 30, ~~2017, $178 of the total~~2018, there were no long-term FHLB advances outstanding ~~were~~ scheduled to mature within twelve months or less. The Company had ~~$2,336,922~~$2,649,635 of availability on unused lines of credit with the FHLB at June 30, ~~2017~~2018 compared to ~~$2,633,543~~$2,670,141 at December 31, ~~2016. The cost of our long-term FHLB advances was 3.46% and 4.10% for the first six months of 2017 and 2016, respectively.~~2017.

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'~~trusts’ only assets and interest payments from the debentures finance the distributions paid on the capital securities. ~~During the first quarter of 2017, the Company prepaid $10,310 of junior subordinated debentures and incurred a prepayment penalty of $205.~~ The ~~Company's~~Company’s junior subordinated debentures totaled ~~$85,607~~$86,155 at June 30, ~~2017~~2018 compared to ~~$95,643~~$85,881 at December 31, ~~2016.~~2017.

The Company’s subordinated notes, net of unamortized debt issuance costs, totaled ~~$98,203~~$114,044 at June 30, ~~2017~~2018 compared to ~~$98,127~~$114,074 at December 31, ~~2016.~~2017.

Results of Operations

~~Three Months Ended June 30, 2017 as Compared to the Three Months Ended June 30, 2016~~

Net Income

Net income for the ~~three month period~~second quarter of 2018 was $36,710 compared to net income of $25,284 for the second quarter of 2017. Basic and diluted earnings per share (“EPS”) for the second quarter of 2018 were $0.74, as compared to basic and diluted EPS of $0.57 for the second quarter of 2017. Net income for the six months ended June 30, ~~2017~~2018 was $~~25,284~~70,536 compared to net income of $~~22,900~~49,256 for the ~~three month period~~six months ended June 30, ~~2016~~2017. Basic and diluted ~~earnings per share ("EPS")~~EPS for the ~~three month period~~six months ended June 30, ~~2017~~2018 were $~~0.57~~1.43, and $1.42, respectively, as compared to basic and diluted EPS of $~~0.54~~1.11 for the ~~three month period~~six months ended June 30, ~~2016~~2017.

The Company incurred expenses and charges in connection with certain transactions ~~that are considered~~with respect to which management is unable to accurately predict the timing of when these expenses or charges will be ~~infrequent~~incurred or, ~~non-recurring in nature.~~when incurred, the amount of such expenses or charges. The following table presents the impact of these expenses and charges on reported earnings per share for the dates presented:

Three Months Ended
June 30, 2017 June 30, 2016
Pre-tax After-tax Impact to Diluted EPS Pre-tax After-tax Impact to Diluted EPS
Merger and Conversion expenses $ 3,044
$ 2,065
$ 0.04
$ 2,807
$ 1,888
$ 0.05
Debt prepayment penalty —
—
—
329
221
0.01



	Three Months Ended
	June 30, 2018						June 30, 2017
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS
Merger and conversion expenses	$	500	$	389	$	0.01	$	3,044	$	2,065	$	0.04

	Six Months Ended
	June 30, 2018						June 30, 2017
	Pre-tax		After-tax		Impact to Diluted EPS		Pre-tax		After-tax		Impact to Diluted EPS
Merger and conversion expenses	$	1,400	$	1,090	$	0.02	$	3,389	$	2,302	$	0.05
Debt prepayment penalties	—		—		—		205		139		—

Net Interest Income

Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of our net income, comprising ~~70.39%~~72.50% of total ~~net~~ revenue ~~for the second quarter of 2017. Total net revenue consists~~

of(i.e., net interest income on a fully taxable equivalent basis and noninterest ~~income. The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.~~

~~Net interest income increased to $79,603~~income) for the second quarter of 2017 compared to $77,157 for the same period in 2016. On a tax equivalent basis, net interest income was $81,453 for the second quarter of 2017 as compared to $78,932 for the second quarter of 2016. Net interest margin, the tax equivalent net yield on earning assets, decreased to 4.27% during the second quarter of 2017 compared to 4.29% for the second quarter of 2016. Net interest margin, excluding the impact from interest income collected on problem loans2018 and purchase accounting adjustments on loans, was 3.84% and 3.79% for the second quarter of 2017 and 2016, respectively. The table below presents the reconciliation of this non-GAAP financial measure to reported net interest margin.

Three Months Ended
June 30,
2017 2016
Taxable equivalent net interest income, as reported $ 81,453
$ 78,932
Net interest income collected on problem loans 2,734
969
Accretable yield recognized on purchased loans⁽¹⁾
5,410
8,276
Net interest income (adjusted) $ 73,309
$ 69,687

Average earning assets $ 7,657,849
$ 7,396,283

Net interest margin, as reported 4.27 % 4.29 %
Net interest margin, adjusted 3.84 % 3.79 %


⁽¹⁾	~~Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $2,674 and $4,533 for the~~ ~~three months ended June 30, 2017~~ ~~and 2016, respectively, which increased net interest margin by 14 basis points and 25 basis points for the same periods, respectively.~~

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. Overall, after excluding the impact from purchase accounting adjustments, the Company is beginning to replace maturing loans with new or renewed loans at similar rates. The increasing loan yield is outpacing the increasing cost of deposits, which is a result of competitive market forces, driving the increase in net interest income.

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:

Three Months Ended June 30,
2017 2016

Average
Balance

Interest
Income/
Expense

Yield/
Rate

Average
Balance

Interest
Income/
Expense

Yield/
Rate
Assets
Interest-earning assets:
Loans:
Not purchased $ 4,938,922
$ 54,955
4.46 % $ 4,190,646
$ 46,012
4.42 %
Purchased 1,354,575
23,902
7.08 % 1,665,623
27,623
6.67 %
Purchased and covered⁽¹⁾
—
—
— % 41,381
1,073
10.43 %
Total Loans 6,293,497
78,857
5.03 % 5,897,650
74,708
5.09 %
Mortgage loans held for sale 168,650
1,831
4.35 % 306,011
2,472
3.25 %
Securities:
Taxable⁽²⁾
737,494
4,340
2.36
755,220
4,321
2.30
Tax-exempt 331,750
3,891
4.70
356,611
4,178
4.71
Interest-bearing balances with banks 126,458
510
1.62
80,791
104
0.52
Total interest-earning assets 7,657,849
89,429
4.68
7,396,283
85,783
4.66
Cash and due from banks 116,783
139,681

Intangible assets 492,349
499,503

FDIC loss-share indemnification asset⁽¹⁾
—
5,969

Other assets 453,679
500,382

Total assets $ 8,720,660
$ 8,541,818

Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand⁽³⁾
$ 3,368,363
$ 1,917
0.23 % $ 3,111,718
$ 1,421
0.18 %
Savings deposits 568,535
98
0.07
526,596
93
0.07
Time deposits 1,603,800
3,300
0.83
1,607,092
2,906
0.73
Total interest-bearing deposits 5,540,698
5,315
0.38
5,245,406
4,420
0.34
Borrowed funds 233,542
2,661
4.57
594,459
2,431
1.64
Total interest-bearing liabilities 5,774,240
7,976
0.55
5,839,865
6,851
0.47
Noninterest-bearing deposits 1,608,467
1,477,380

Other liabilities 79,018
103,275

Shareholders’ equity 1,258,935
1,121,298

Total liabilities and shareholders’ equity $ 8,720,660
$ 8,541,818

Net interest income/net interest margin $ 81,453
4.27 % $ 78,932
4.29 %


⁽¹⁾	~~Represents information associated with purchased loans covered under loss-share agreements prior to the termination of such agreements on December 8, 2016.~~


⁽²⁾	~~U.S. Government and some U.S. Government agency securities are tax-exempt in the states in which we operate.~~


⁽³⁾	~~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 35% and a state tax rate of 3.66%, which is net of federal tax benefit.

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 second quarter of 2017 compared to the second quarter of 2016:

Volume Rate
Net⁽¹⁾
Interest income:
Loans:
Not purchased $ 8,445
$ 498
$ 8,943
Purchased (5,380 ) 1,659
(3,721 )
Purchased and covered ⁽²⁾
(1,073 ) —
(1,073 )
Mortgage loans held for sale (1,476 ) 835
(641 )
Securities:
Taxable (269 ) 288
19
Tax-exempt (280 ) (7 ) (287 )
Interest-bearing balances with banks 185
221
406
Total interest-earning assets 152
3,494
3,646
Interest expense:
Interest-bearing demand deposits 147
349
496
Savings deposits 8
(3 ) 5
Time deposits (7 ) 401
394
Borrowed funds (4,235 ) 4,465
230
Total interest-bearing liabilities (4,087 ) 5,212
1,125
Change in net interest income $ 4,239
$ (1,718 ) $ 2,521


⁽¹⁾	~~Changes in interest due to both volume and rate have been allocated on a pro-rata basis using the absolute ratio value of amounts calculated.~~


⁽²⁾	~~Represents information associated with purchased loans covered under loss-share agreements prior to the termination of such agreements on December 8, 2016.~~

~~Interest income, on a tax equivalent basis, was $89,429 for the second quarter of 2017 compared to $85,783 for the same period in~~ ~~2016~~. This increase in interest income, on a tax equivalent basis, is due primarily to the loan growth in the Company's non purchased loan portfolio coupled with an overall increase in the yield on the Company's earning assets due to replacing maturing assets with assets earning similar or higher rates of interest.

~~The following table presents the percentage of total average earning assets, by type and yield, for the periods presented:~~

Percentage of Total Yield
Three Months Ended Three Months Ended
June 30, June 30,
2017 2016 2017 2016
Loans 82.19 % 79.74 % 5.03 % 5.09 %
Mortgage loans held for sale 2.20
4.14
4.35
3.25
Securities 13.96
15.03
3.09
3.07
Other 1.65
1.09
1.62
0.52
Total earning assets 100.00 % 100.00 % 4.68 % 4.66 %

For the second quarter of 2017, loan income, on a tax equivalent basis, increased $4,149 to $78,857 from $74,708 compared to the same period in 2016. The average balance of loans increased $395,847 from the second quarter of 2017 compared to the second quarter of 2016 due to organic loan growth. The tax equivalent yield on loans was 5.03% for the second quarter of 2017, a 6 basis point decrease from the ~~second quarter of 2016~~. Excluding the impact from interest income collected on problem loans and purchase accounting adjustments on loans, the tax equivalent yield on loans was 4.51% and 4.46% for the second quarter of 2017 and 2016, respectively. The table below presents the reconciliation of this non-GAAP financial measure to reported taxable equivalent yield on loans.

Three Months Ended
June 30,
2017 2016
Taxable equivalent interest income on loans, as reported $ 78,857
$ 74,708
Net interest income collected on problem loans 2,734
969
Accretable yield recognized on purchased loans⁽¹⁾
5,410
8,276
Interest income on loans (adjusted) $ 70,713
$ 65,463

Average loans $ 6,293,497
$ 5,897,650

Loan yield, as reported 5.03 % 5.09 %
Loan yield, adjusted 4.51 % 4.46 %


⁽¹⁾	~~Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $2,674 and $4,533 for the~~ ~~three months ended June 30, 2017~~ ~~and 2016, respectively, which increased our taxable equivalent loan yield by 17 basis points and 31 basis points for the same periods, respectively.~~

~~Investment income, on a tax equivalent basis, decreased $268 to~~ ~~$8,231~~ ~~for the~~ ~~second quarter of 2017~~ ~~from~~ ~~$8,499~~ ~~for the second quarter of 2016. The average balance in the investment portfolio for the~~ ~~second quarter of 2017~~ ~~was~~ ~~$1,069,244~~ ~~compared to~~ ~~$1,111,831~~ ~~for the same period in~~ ~~2016~~, as proceeds from the investment portfolio were primarily used to fund loan growth. The tax equivalent yield on the investment portfolio for the second quarter of 2017 was 3.09%, up 2 basis points from the same period in ~~2016~~.

~~Interest expense was $7,976 for the second quarter of 2017 as compared to $6,851 for the same period in 2016. The cost of interest-bearing liabilities was 0.55% for the~~ ~~three months ended June 30, 2017~~ ~~as compared to 0.47% for the three months ended June 30, 2017.~~

~~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 Cost of Funds
Three Months Ended Three Months Ended
June 30, June 30,
2017 2016 2017 2016
Noninterest-bearing demand 21.79 % 20.19 % — % — %
Interest-bearing demand 45.63
42.53
0.23
0.18
Savings 7.70
7.20
0.07
0.07
Time deposits 21.72
21.96
0.83
0.73
Short term borrowings 0.56
6.11
1.29
0.52
Long-term Federal Home Loan Bank advances 0.11
0.71
3.43
4.11
Subordinated notes 1.33
—
5.48
—
Other borrowed funds 1.16
1.30
5.23
5.57
Total deposits and borrowed funds 100.00 % 100.00 % 0.43 % 0.38 %

Interest expense on deposits was $5,315 and $4,420 for the second quarter of 2017 and 2016, respectively. The cost of total deposits was 0.30% and 0.26% for the same periods. The increase is attributable to both the increase in the average balance of total interest bearing deposits as well as an increase in the interest rates on interest bearing demand deposits and time deposits. Although the Company continues to seek changes in the mix of our deposits from higher costing time deposits to lower costing interest-bearing deposits and non-interest bearing deposits, rates offered on the Company's interest-bearing deposit accounts, including time deposits, have increased to match competitive market interest rates in order to maintain stable sources of funding.

Interest expense on total borrowings was $2,661 and $2,431 for the second quarter of 2017 and 2016, respectively. The average balance of borrowings decreased $360,917 to $233,542 for the three months ended June 30, 2017, as compared to $594,459 for

the same period in 2016. The decrease is attributable to a decrease in short-term borrowings from the Federal Home Loan Bank offset by the subordinated notes offered in the third quarter of 2016. The cost of total borrowed funds was 4.57% and 1.64% for the second quarter of 2017 and 2016, respectively. Although the average balance of borrowings have decreased, the lower costing short-term borrowings discussed above were replaced with the higher costing subordinated notes.

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

~~Noninterest Income~~

Noninterest Income to Average Assets
Three Months Ended June 30,
2017 2016
1.58% 1.68%

Total noninterest income includes fees generated from deposit services, originations and sales of mortgage loans, insurance products, trust and other wealth management products and services, security gains and all other noninterest income. Our focus is to develop and enhance our products that generate noninterest income in order to diversify our revenue sources. Noninterest income was ~~$34,265~~ ~~for the~~ ~~second quarter of 2017~~ ~~as compared to~~ ~~$35,586~~ for the same period in 2016. The decrease in noninterest income and its related components is primarily attributable to a decrease in mortgage banking income and the absence of a gain on the sale of securities in the second quarter of 2017 as compared to the corresponding period in 2016.

~~Fees and commissions increased to~~ ~~$5,470~~ ~~during the~~ ~~second quarter of 2017~~ ~~as compared to~~ ~~$4,877~~ ~~for the same period in~~ ~~2016~~. Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. For the second quarter of 2017, interchange fees on debit card transactions, the largest component of fees and commissions, were $4,579 as compared to $4,155 for the same period in ~~2016~~.

~~Through Renasant Insurance, we offer a range of commercial and personal insurance products through major insurance carriers.~~

~~Income earned on insurance products was~~ ~~$2,181~~ ~~and~~ ~~$2,175~~ ~~for the~~ ~~three months ended June 30, 2017~~ ~~and~~ ~~2016~~, 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 amount of claims paid by insurance carriers. Contingency income, which is included in “Other noninterest income” in the Consolidated Statements of Income, was $79 and $97 for the ~~three months ended June 30, 2017~~ ~~and 2016, respectively.~~

The Trust division within the Wealth Management segment operates on both a fully discretionary and a directed basis which includes administration of employee benefit plans, as well as accounting and money management for trust accounts. The division manages a number of trust accounts inclusive of personal, corporate and employee benefit accounts, self-directed 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. Additionally, the Financial Services division within the Wealth Management segment provides specialized investment 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 ~~$3,037~~ ~~for the~~ ~~second quarter of 2017~~ ~~compared to~~ ~~$2,872~~ ~~for the same period in~~ ~~2016. The market value of assets under management or administration was $2,944,381 and $3,072,888 at~~ ~~June 30, 2017~~ ~~and~~ ~~June 30, 2016, 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 $454,312 in the three months ended June 30, 2017 compared to $548,007 for the same period in 2016. The decrease in mortgage loan originations is due to a reduction in the refinancing of mortgage loans as mortgage interest rates have increased. The following table presents the components of mortgage banking income included in noninterest income for the three months ending June 30:

2017 2016
Mortgage servicing income, net $ 583
$ (283 )
Gain on sales of loans, net 5,054
7,123
Fees, net 6,787
6,580
Mortgage banking income, net $ 12,424
$ 13,420

Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance policies. BOLI income decreased slightly to $985 for the three months ended June 30, 2017 as compared to $996 for the same period in 2016.

~~Other noninterest income was $2,210 and $2,468 for the~~ ~~three months ended June 30, 2017~~ and 2016, respectively. Other noninterest income includes contingency income from our insurance underwriters, income from our SBA banking division, and other miscellaneous income and can fluctuate based on the claims experience in our Insurance agency, production in our SBA banking division, and recognition of other unseasonal income items.

~~Noninterest Expense~~

Noninterest Expense to Average Assets
Three Months Ended June 30,
2017 2016
3.44% 3.64%

Noninterest expense was $74,841 and $77,259 for the second quarter of 2017 and 2016, respectively. The Company recorded merger and conversion expenses of $3,044 for the three months ended June 30, 2017, as compared to $2,807 for the same period in 2016. During the second quarter of 2016, the Company recognized a penalty charge of $329 in connection with the prepayment of certain long-term FHLB advances. No such charge was incurred during the comparable quarter in 2017. Merger and conversion expenses and debt prepayment penalties are considered nonrecurring expenses.

Salaries and employee benefits decreased $373 to $45,014 for the second quarter of 2017 as compared to $45,387 for the same period in 2016. Commission expense from mortgage production decreased year over year as a result of the decrease in mortgage originations during the second quarter of 2017 when compared to the same period of 2016.

~~Data processing costs decreased to $3,835 in the second quarter of 2017 from $4,502 for the same period in 2016. The decrease for the second quarter of 2017 as compared to the same period in~~ ~~2016~~ ~~was primarily attributable to the cost savings realized through contract renegotiations.~~

Net occupancy and equipment expense for the second quarter of 2017 was $8,814, up from $8,531 for the same period in 2016. The increase is primarily attributable to the enhancements to our IT infrastructure in response to banking and governmental regulation and increased global risk from cyber security breaches.

Expenses related to other real estate owned for the second quarter of 2017 were $781 compared to $1,614 for the same period in 2016. Expenses on other real estate owned for the second quarter of 2017 included write downs of $379 of the carrying value to fair value on certain pieces of property held in other real estate owned. Other real estate owned with a cost basis of $2,267 was sold during the three months ended June 30, 2017, resulting in a net loss of $189. Expenses on other real estate owned for the three months ended June 30, 2016 included a $987 write down of the carrying value to fair value on certain pieces of property held in other real estate owned. Other real estate owned with a cost basis of $4,527 was sold during the three months ended June 30, 2016, resulting in a net loss of $181.

~~Professional fees include fees for legal and accounting services. Professional fees were $1,882 for the~~ ~~second quarter of 2017~~ ~~as compared to $1,846 for the same period in~~ ~~2016~~. Professional fees remain elevated in large part due to additional legal, accounting and consulting fees associated with compliance costs of newly enacted as well as existing banking and governmental regulation. Professional fees attributable to legal fees associated with loan workouts and foreclosure proceedings remain at higher levels in correlation with the credit deterioration identified in our loan portfolio and the Company’s efforts to bring these credits to resolution.

Advertising and public relations expense was $2,430 for the second quarter of 2017 compared to $1,742 for the same period in 2016. This increase is primarily attributable to an increased focus on digital and television marketing throughout our footprint in 2017.

~~Amortization of intangible assets totaled $1,493 and $1,742 for the~~ ~~second quarter of 2017~~ ~~and~~ ~~2016~~, 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 3 years to 9.2 years.

~~Communication expenses, those expenses incurred for communication to clients and between employees, were $1,908 for the~~ ~~second quarter of 2017~~ ~~as compared to $2,040 for the same period in~~ ~~2016. The decrease can be attributed to the transition from a traditional telephone system to a Voice over IP phone system, which is more cost efficient.~~

Efficiency Ratio
Three Months Ended June 30,
2017 2016
64.68% 67.46%

~~Income Taxes~~

Income tax expense for the second quarter of 2017 and 2016 was $11,993 and $11,154, respectively. The effective tax rates for those periods were 32.17% and 32.75%, respectively. Although taxable income has continued to increase, the decreased effective tax rate for the second quarter of 2017 as compared to the same period in 2016 is the result of the excess tax benefit realized from the exercise of stock options and vesting of restricted stock.

~~Results of Operations~~

~~Six Months Ended June 30, 2017 as Compared to the Six Months Ended June 30, 2016~~

~~Net Income~~

~~Net income for the~~ ~~six months ended June 30, 2017~~ ~~was~~ ~~$49,256~~ ~~compared to net income of~~ ~~$44,116~~ ~~for the~~ ~~six months ended June 30, 2016. Basic and diluted EPS for the~~ ~~six months ended June 30, 2017~~ ~~were both~~ ~~$1.11, as compared to~~ ~~$1.07~~ ~~and $1.06 for basic and diluted EPS, respectively, for the~~ ~~six months ended June 30, 2016~~.

The Company incurred expenses and charges in connection with certain transactions that are considered to be infrequent or non-recurring in nature. The following table presents the impact of these charges on reported earnings per share for the dates presented:

Six Months Ended
June 30, 2017 June 30, 2016
Pre-tax After-tax Impact to Diluted EPS Pre-tax After-tax Impact to Diluted EPS
Merger and Conversion expenses $ 3,389
$ 2,302
$ 0.05
$ 3,755
$ 2,518
$ 0.07
Debt prepayment penalty 205
139
—
329
221
0.01

~~Net Interest Income~~

~~Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of our net income, comprising 70.36%~~72.64% of total net revenue for the first six months of ~~2017. Total net revenue consists~~

~~of net interest income on a fully taxable equivalent basis and noninterest income.~~2018. The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.

Net interest income ~~increased to~~ ~~$153,618~~was $92,389 and $181,629 for the three and six months ended June 30, ~~2017~~2018, respectively, as compared to ~~$147,211~~$79,603 and $153,618 for the same ~~period~~respective time periods in ~~2016~~.2017. On a tax equivalent basis, net interest income was $93,806 and $~~157,360~~184,613 for the three and six months ended June 30, ~~2017~~2018, respectively, as compared to $81,453 and $~~150,745~~157,360 for the ~~six months ended June 30, 2016. Net~~same respective time periods in 2017. The following table presents reported net interest margin, the tax equivalent net yield on earning assets, decreased to 4.14% during the six months ended June 30, 2017, as compared to 4.25% for the six months ended June 30, 2016. Net interest margin, excluding themargin.



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Taxable equivalent net interest income	$	93,806		$	81,453		$	184,613		$	157,360

Average earning assets	9,067,016			7,657,849			8,914,694			7,663,186

Net interest margin	4.15		%	4.27		%	4.18		%	4.14		%

The impact from interest income collected on problem loans and purchase accounting adjustments on loans ~~was 3.76% and 3.80% for the~~ ~~six months ended June 30, 2017~~ ~~and 2016, respectively. The following table presents the reconciliation of this non-GAAP financial measure~~ to ~~reported~~ net interest ~~margin.~~

income and net interest margin is shown in the following table.

Six Months Ended
June 30,
2017 2016
Taxable equivalent net interest income, as reported $ 157,360
$ 150,745
Net interest income collected on problem loans 3,301
1,591
Accretable yield recognized on purchased loans⁽¹⁾
11,014
14,268
Net interest income (adjusted) $ 143,045
$ 134,886

Average earning assets $ 7,663,186
$ 7,131,565

Net interest margin, as reported 4.14 % 4.25 %
Net interest margin, adjusted 3.76 % 3.80 %



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net interest income collected on problem loans	$	1,045		$	2,745		$	1,403		$	3,302
Accretable yield recognized on purchased loans⁽¹⁾	5,719			5,410			11,837			11,014
Total impact to net interest income	$	6,764		$	8,155		$	13,240		$	14,316

Impact to net interest margin	0.30		%	0.43		%	0.30		%	0.38		%

⁽¹⁾

Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of ~~$5,415~~$3,316 and ~~$6,300~~$2,684 for the second quarter of 2018 and 2017, respectively. This impact was $6,674 and $5,416 for the six months ended June 30, 2018 and 2017, ~~and 2016, respectively, which increased~~respectively. The impact on net interest margin ~~by 14~~was 15 basis points and 1814 basis points for the ~~same periods,~~second quarter of 2018 and 2017, respectively, and 15 basis points and 14 basis points for the six months ended June 30, 2018 and 2017, respectively.

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. ~~Growth~~As discussed in more detail below, for the three and six months ended June 30, 2018, as compared to the respective corresponding periods in 2017, growth in the ~~Company's~~Company’s loan portfolio iswas the largest contributing factor to the increase in net interest ~~income. Furthermore,~~income over these periods. Also, the Company’s continued efforts to replace maturing loans with new or

renewed loans at similar or higher rates, bolstered by the rising rate environment resulting from the Federal Reserve Board’s increases to the target federal funds rate over the last two years, and coupled with our efforts to limit the growth in deposits and borrowing costs (while remaining competitive), drove further interest income and interest margin expansion (before and after excluding the impact from purchase accounting ~~adjustments, the Company is beginning to replace maturing loans with new or renewed loans at similar rates driving further expansion.~~adjustments).

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



	Three Months Ended June 30,
	2018						2017
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning assets:
Loans:
Not purchased	$	5,920,430	$	69,737	4.72	%	$	4,938,922	$	54,955	4.46	%
Purchased	1,783,791		27,308		6.14		1,354,575		23,902		7.08
Total Loans	7,704,221		97,045		5.05		6,293,497		78,857		5.03
Mortgage loans held for sale	209,652		2,381		4.56		168,650		1,831		4.35
Securities:
Taxable⁽¹⁾	819,004		5,638		2.76		737,494		4,340		2.36
Tax-exempt	220,943		2,358		4.28		331,750		3,891		4.70
Interest-bearing balances with banks	113,196		569		2.02		126,458		510		1.62
Total interest-earning assets	9,067,016		107,991		4.78		7,657,849		89,429		4.68
Cash and due from banks	158,173						116,783
Intangible assets	633,155						492,349
Other assets	483,519						453,679
Total assets	$	10,341,863					$	8,720,660
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand⁽²⁾	$	4,054,909	$	5,441	0.54	%	$	3,368,363	$	1,917	0.23	%
Savings deposits	593,227		227		0.15		568,535		97		0.07
Time deposits	1,872,987		5,251		1.12		1,603,800		3,300		0.83
Total interest-bearing deposits	6,521,123		10,919		0.67		5,540,698		5,314		0.38
Borrowed funds	329,287		3,266		3.98		233,542		2,662		4.57
Total interest-bearing liabilities	6,850,410		14,185		0.83		5,774,240		7,976		0.55
Noninterest-bearing deposits	1,867,925						1,608,467
Other liabilities	81,457						79,018
Shareholders’ equity	1,542,071						1,258,935
Total liabilities and shareholders’ equity	$	10,341,863					$	8,720,660
Net interest income/net interest margin			$	93,806	4.15	%			$	81,453	4.27	%


	Six Months Ended June 30,												Six Months Ended June 30,
	2017						2016						2018						2017
	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning assets:
Loans:
Not purchased	$	4,846,290	$	106,098	4.41	%	$	4,065,861	$	89,173	4.41	%
Non purchased													$	5,805,459	$	134,348	4.67	%	$	4,846,290	$	106,098	4.41	%
Purchased	1,400,073		46,469		6.69		1,562,468		50,557		6.51		1,870,305		56,070		6.05		1,400,073		46,469		6.69
Purchased and covered⁽¹⁾	—		—		—		62,727		2,208		7.08
Total Loans	6,246,363		152,567		4.93		5,691,056		141,938		5.02		7,675,764		190,418		5.00		6,246,363		152,567		4.93
Mortgage loans held for sale	140,534		2,980		4.28		261,851		4,845		3.72		181,134		4,052		4.51		140,534		2,980		4.28
Securities:
Taxable⁽²⁾	721,240		8,410		2.35		751,887		8,457		2.26
Taxable⁽¹⁾													713,410		9,552		2.70		721,240		8,410		2.35
Tax-exempt	335,301		8,188		4.92		355,804		8,384		4.74		223,673		4,764		4.30		335,301		8,188		4.92
Interest-bearing balances with banks	219,748		1,065		0.98		70,967		177		0.50		120,713		1,152		1.92		219,748		1,065		0.98
Total interest-earning assets	7,663,186		173,210		4.56		7,131,565		163,801		4.62		8,914,694		209,938		4.75		7,663,186		173,210		4.56
Cash and due from banks	124,287						139,039						160,644						124,287
Intangible assets	493,078						486,749						634,022						493,078
FDIC loss-share indemnification asset⁽¹⁾	—						6,187
Other assets	459,396						489,821						490,239						459,396
Total assets	$	8,739,947					$	8,253,361					$	10,199,599					$	8,739,947
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand⁽³⁾	$	3,389,368	$	3,730	0.22		$	3,034,314	$	2,762	0.18
Interest-bearing demand⁽²⁾													$	3,983,751	$	8,848	0.45	%	$	3,389,368	$	3,730	0.22	%
Savings deposits	561,300		194		0.07		517,304		182		0.07		587,244		378		0.13		561,300		194		0.07
Time deposits	1,610,494		6,539		0.82		1,550,373		5,436		0.71		1,847,195		9,752		1.06		1,610,494		6,539		0.82
Total interest-bearing deposits	5,561,162		10,463		0.38		5,101,991		8,380		0.33		6,418,190		18,978		0.60		5,561,162		10,463		0.38
Borrowed funds	257,641		5,387		4.22		566,921		4,676		1.66		321,799		6,347		3.98		257,641		5,387		4.22
Total interest-bearing liabilities	5,818,803		15,850		0.55		5,668,912		13,056		0.46		6,739,989		25,325		0.76		5,818,803		15,850		0.55
Noninterest-bearing deposits	1,583,775						1,397,382						1,843,025						1,583,775
Other liabilities	84,417						100,889						83,563						84,417
Shareholders’ equity	1,252,952						1,086,178						1,533,022						1,252,952
Total liabilities and shareholders’ equity	$	8,739,947					$	8,253,361					$	10,199,599					$	8,739,947
Net interest income/net interest margin			$	157,360	4.14	%			$	150,745	4.25	%			$	184,613	4.18	%			$	157,360	4.14	%

(1)~~Represents information associated with purchased loans covered under loss-share agreements prior to the termination of such agreements on December 8, 2016.~~

~~(2)~~U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which we operate.

~~(3)~~(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~~tables above. Interest income and weighted average yields on tax-exempt loans and securities have been computed on a fully tax equivalent basis assuming a federal tax rate of ~~35%~~21% and a state tax rate of ~~3.66%~~4.45%, which is net of federal tax benefit.

The following ~~table~~tables 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 both the three and six months ended June 30, ~~2017~~2018 compared to the same ~~period~~respective periods in ~~2016:~~2017 (the changes attributable to the combined impact of yield/rate and volume have been allocated on a pro-rata basis using the absolute ratio value of amounts calculated):


										Three Months Ended June 30, 2018
	Volume			Rate			Net			Volume			Rate			Net
Interest income:
Loans:
Not purchased	$	16,840		$	85		$	16,925		$	11,562		$	3,220		$	14,782
Purchased	(5,483		)	1,395			(4,088		)	6,571			(3,165		)	3,406
Purchased and covered ⁽¹⁾	(2,208		)	—			(2,208		)
Mortgage loans held for sale	(2,591		)	726			(1,865		)	466			84			550
Securities:
Taxable	(706		)	659			(47		)	562			736			1,298
Tax-exempt	(568		)	372			(196		)	(1,183		)	(350		)	(1,533		)
Interest-bearing balances with banks	721			167			888			(67		)	126			59
Total interest-earning assets	6,005			3,404			9,409			17,911			651			18,562
Interest expense:
Interest-bearing demand deposits	388			580			968			921			2,603			3,524
Savings deposits	15			(3		)	12			10			120			130
Time deposits	241			862			1,103			755			1,196			1,951
Borrowed funds	(6,350		)	7,061			711			949			(345		)	604
Total interest-bearing liabilities	(5,706		)	8,500			2,794			2,635			3,574			6,209
Change in net interest income	$	11,711		$	(5,096	)	$	6,615		$	15,276		$	(2,923	)	$	12,353

										Six Months Ended June 30, 2018
										Volume			Rate			Net
Interest income:
Loans:
Non purchased										$	22,068		$	6,182		$	28,250
Purchased										14,177			(4,576		)	9,601
Mortgage loans held for sale										908			164			1,072
Securities:
Taxable										(105		)	1,247			1,142
Tax-exempt										(2,378		)	(1,046		)	(3,424		)
Interest-bearing balances with banks										(945		)	1,032			87
Total interest-earning assets										33,725			3,003			36,728
Interest expense:
Interest-bearing demand deposits										1,320			3,798			5,118
Savings deposits										17			167			184
Time deposits										1,250			1,963			3,213
Borrowed funds										1,265			(305		)	960
Total interest-bearing liabilities										3,852			5,623			9,475
Change in net interest income										$	29,873		$	(2,620	)	$	27,253


⁽¹⁾	~~Represents information associated with purchased loans covered under loss-share agreements prior to the termination of such agreements on December 8, 2016.~~

Interest income, on a tax equivalent basis, was ~~$173,210~~$107,991 and $209,938, respectively, for the three and six months ended June 30, ~~2017~~2018 compared to ~~$163,801~~$89,429 and $173,210, respectively, for the same ~~period~~periods in ~~2016.~~2017. This increase in interest income, on a tax equivalent basis, is due primarily to the additional earning assets from the Metropolitan acquisition and loan growth in the ~~Company's~~Company’s non purchased loan portfolio, slightly offset by a decrease in the Company’s investment portfolio. As of June 30, 2018, the Company has fully releveraged the balance sheet through the repurchase of investments. As previously disclosed, the Company sold securities as part of the deleveraging strategy implemented in the fourth quarter of 2017. The increase in interest income is also being driven by an overall increase in the yield on the Company’s earning assets due to replacing maturing assets with assets earning similar or higher rates of interest.

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


	Percentage of Total				Yield				Percentage of Total Average Earning Assets				Yield
	Six Months Ended				Six Months Ended				Three Months Ended				Three Months Ended
	June 30,				June 30,				June 30,				June 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Loans	81.51	%	79.80	%	4.93	%	5.02	%	84.97	%	82.19	%	5.05	%	5.03	%
Mortgage loans held for sale	1.83		3.67		4.28		3.72		2.31		2.20		4.56		4.35
Securities	13.79		15.53		3.17		3.06		11.47		13.96		3.08		3.09
Other	2.87		1.00		0.98		0.50		1.25		1.65		2.02		1.62
Total earning assets	100.00	%	100.00	%	4.56	%	4.62	%	100.00	%	100.00	%	4.78	%	4.68	%



	Percentage of Total Average Earning Assets				Yield
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Loans	86.10	%	81.51	%	5.00	%	4.93	%
Mortgage loans held for sale	2.03		1.83		4.51		4.28
Securities	10.51		13.79		3.08		3.17
Interest-bearing balances with banks	1.36		2.87		1.92		0.98
Total earning assets	100.00	%	100.00	%	4.75	%	4.56	%

For the ~~six months ending June 30, 2017,~~second quarter of 2018, loan income, on a tax equivalent basis, increased ~~$10,629~~$18,188 to ~~$152,567~~$97,045 from ~~$141,938 in the same period in 2016. The average balance of loans increased $555,307 for the six months ended June 30, 2017~~$78,857 compared to the same period in ~~2016 due to loan growth in the Company's non purchased loan portfolio. The tax equivalent yield on loans was 4.93% for~~2017. For the six months ending June 30, ~~2017,~~2018, loan income, on a 9tax equivalent basis, ~~point decrease~~increased $37,851 to $190,418 from $152,567 in the same period in ~~2016. Excluding~~2017. Loan income increased as a result of the increase in the average balance of loans due to the Metropolitan acquisition and strong non purchased loan growth in the first half of 2018. The following table presents reported taxable equivalent yield on loans for the periods presented.



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Taxable equivalent interest income on loans	$	97,045		$	78,857		$	190,418		$	152,567

Average loans	7,704,221			6,293,497			7,675,764			6,246,363

Loan yield	5.05		%	5.03		%	5.00		%	4.93		%

The impact from interest income collected on problem loans and purchase accounting adjustments ~~the tax equivalent yield~~ on loans ~~was 4.46%~~to total interest income on loans and loan yield is shown in the following table for ~~both~~ the ~~six months ending June 30, 2017 and 2016. The table below presents the reconciliation of this non-GAAP financial measure to reported taxable equivalent yield on loans.~~

periods presented.

Six Months Ended
June 30,
2017 2016
Taxable equivalent interest income on loans, as reported $ 152,567
$ 141,938
Net interest income collected on problem loans 3,301
1,591
Accretable yield recognized on purchased loans⁽¹⁾
11,014
14,268
Interest income on loans (adjusted) $ 138,252
$ 126,079

Average loans $ 6,246,363
$ 5,691,056

Loan yield, as reported 4.93 % 5.02 %
Loan yield, adjusted 4.46 % 4.46 %



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net interest income collected on problem loans	$	1,045		$	2,745		$	1,403		$	3,302
Accretable yield recognized on purchased loans⁽¹⁾	5,719			5,410			11,837			11,014
Total impact to interest income on loans	$	6,764		$	8,155		$	13,240		$	14,316

Impact to loan yield	0.35		%	0.52		%	0.35		%	0.46		%

⁽¹⁾

Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of ~~$5,415~~$3,316 and ~~$6,300~~$2,684, respectively, for the second quarter of 2018 and 2017, respectively. This impact was $6,674 and $5,416 for the six months ended June 30, 2018 and 2017, ~~and 2016, respectively, which increased our~~respectively. The impact on taxable equivalent loan yield bywas 17 basis points for both the second quarter of 2018 and 222017 and 18 basis points and 17 basis points for the ~~same periods,~~six months ended June 30, 2018 and 2017, respectively.

Investment income, on a tax equivalent basis, decreased ~~$243~~$235 to ~~$16,598~~$7,996 for the second quarter of 2018 from $8,231 for the second quarter of 2017. Investment income, on a tax equivalent basis, decreased $2,282 to $14,316 for the six months ended June 30, ~~2017~~

2018 from ~~$16,841~~$16,598 for the same period in ~~2016.~~2017. The average balance in the investment portfolio was down for both the three and six months ended June 30, ~~2017 was $1,056,541~~2018 as compared to ~~$1,107,691~~the same periods in 2017 resulting in the decline in interest income. The decrease in the average balance of the investment portfolio was due to the pace at which we repurchased investment securities following the deleveraging strategy implemented by the Company in the fourth quarter of 2017.

Interest expense was $14,185 for the second quarter of 2018 as compared to $7,976 for the same period in 2016. The tax equivalent yield on the investment portfolio for the first six months of 2017 was 3.17%, up 11 basis points from 3.06% in the same period in 2016. Due to the recent increases in interest rates, the prepayment speeds for mortgage backed securities slowed in the first quarter of 2017 which led to a higher yield on these securities.

2017. Interest expense for the six months ended June 30, ~~2017~~2018 was ~~$15,850~~$25,325 as compared to ~~$13,056~~$15,850 for the same period in ~~2016.~~2017. The cost of interest-bearing liabilities was 0.83% for the three months ended June 30, 2018 as compared to 0.55% for the three months ended June 30, 2017. The cost of interest-bearing liabilities was 0.76% for the six months ended June 30, ~~2017~~2018 as compared to ~~0.46%~~0.55% for the same period in ~~June 30, 2016.~~2017.

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



	Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Noninterest-bearing demand	21.43	%	21.79	%	—	%	—	%
Interest-bearing demand	46.51		45.63		0.54		0.23
Savings	6.80		7.70		0.15		0.07
Time deposits	21.48		21.72		1.12		0.83
Short term borrowings	1.40		0.56		1.52		1.29
Long-term Federal Home Loan Bank advances	0.08		0.11		3.30		3.43
Subordinated notes	1.31		1.33		5.57		5.48
Other borrowed funds	0.99		1.16		5.41		5.23
Total deposits and borrowed funds	100.00	%	100.00	%	0.65	%	0.43	%


	Percentage of Total				Cost of Funds				Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Six Months Ended				Six Months Ended				Six Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Noninterest-bearing demand	21.39	%	19.77	%	—	%	—	%	21.47	%	21.39	%	—	%	—	%
Interest-bearing demand	45.79		42.94		0.22		0.18		46.43		45.79		0.45		0.22
Savings	7.58		7.32		0.07		0.07		6.84		7.58		0.13		0.07
Time deposits	21.76		21.94		0.82		0.71		21.52		21.76		1.06		0.82
Short-term borrowings	0.84		5.94		0.79		0.47		1.33		0.84		1.48		0.79
Long-term Federal Home Loan Bank advances	0.11		0.74		3.46		4.10		0.08		0.11		3.35		3.46
Subordinated notes	1.33		—		5.50		—		1.33		1.33		5.60		5.50
Other long term borrowings	1.20		1.35		5.27		5.55		1.00		1.20		5.19		5.27
Total deposits and borrowed funds	100.00	%	100.00	%	0.43	%	0.37	%	100.00	%	100.00	%	0.60	%	0.43	%

Interest expense on deposits was ~~$10,463~~$10,919 and ~~$8,380~~$5,314 for the second quarter of 2018 and 2017, respectively. The cost of total deposits was 0.52% and 0.30% for the same respective periods. Interest expense on deposits was $18,978 and $10,463 for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. The cost of total deposits was ~~0.30%~~0.46% and ~~0.26%~~0.30% for the same respective periods. The increase is attributable to both the increase in the average balance of all ~~interest bearing~~interest-bearing deposits resulting from the Metropolitan acquisition and organic deposit growth as well as an increase in the interest rates on ~~interest bearing demand deposits and time~~interest-bearing deposits. Although the Company continues to seek changes in the mix of our deposits from higher costing time deposits to lower costing interest-bearing deposits and ~~non-interest bearing~~noninterest-bearing deposits, rates offered on the ~~Company's~~Company’s interest-bearing deposit accounts, including time deposits, have increased to match competitive market interest rates in order to maintain stable sources of funding.

Interest expense on total borrowings was ~~$5,387~~$3,266 and ~~$4,676~~$2,662 for the second quarter of 2018 and 2017, respectively. The average balance of borrowings increased $95,745 to $329,287 for the three months ended June 30, 2018, as compared to $233,542 for the same period in 2017. Interest expense on total borrowings was $6,347 and $5,387 for the first six months of ~~2017~~2018 and ~~2016,~~ 2017,

respectively. The average balance of borrowings ~~decreased $309,280~~increased $64,158 to ~~$257,641~~$321,799 for the six months ended June 30, ~~2017,~~2018, as compared to ~~$566,921~~$257,641 for the same period in ~~2016.~~2017. The ~~decrease~~increase is attributable to ~~a decrease~~an increase in short-term ~~borrowings from the Federal Home Loan Bank offset~~

byFHLB advances and the subordinated notes ~~offered~~we assumed in the ~~third quarter of 2016.~~Metropolitan acquisition. The increases in borrowing expense and cost of total ~~borrowed funds was 4.22%~~borrowings are both attributable to a higher rate charged on the short-term FHLB advances and ~~1.66% for the first six months of 2017 and 2016, respectively. Although the average balance of borrowings have decreased, the lower costing short-term borrowings discussed above were replaced with~~ the higher costing subordinated ~~notes.~~notes that were assumed in the Metropolitan acquisition.

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
Six Months Ended June 30,
2017 2016
1.53% 1.68%

Noninterest income was $35,581 for the second quarter of 2018 as compared to $34,265 for the same period in 2017. Noninterest income was $~~66,286~~69,534 for the six months ended June 30, ~~2017~~2018 as compared to $~~68,888~~66,286 for the same period in ~~2016~~2017. The ~~decrease~~increase in noninterest income and its related components is ~~primarily~~ attributable to ~~a decrease~~the addition of Metropolitan, coupled with an increase in service charges on deposit accounts, fee income on loan and deposit products and mortgage banking ~~income and the absence of a gain on the sale of securities in the first six months of 2017 as compared to the corresponding period in 2016.~~income.

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 ~~$15,889~~$8,271 and ~~$15,512~~$7,958 for the second quarter of 2018 and 2017, respectively, and were $16,744 and $15,889 for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017, respectively. Overdraft fees, the largest component of service charges on deposits, were $5,722 for the three months ended June 30, 2018 compared to $5,778 for the same period in 2017. These fees were $~~11,457~~11,630 for the six months ended June 30, ~~2017~~2018 compared to $~~11,066~~11,457 for the same period in ~~2016~~2017.

Fees and commissions ~~increased~~were $5,917 during the second quarter of 2018 as compared to $5,470 for the same period in 2017, and were $~~10,669~~11,602 for the first six months of ~~June 30, 2017~~2018 as compared to $~~9,121~~10,669 for the same period in ~~2016~~2017. Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. ~~Interchange~~For the second quarter of 2018, interchange fees on debit card transactions, the largest component of fees and commissions, were $5,108 as compared to $4,579 for the same period in 2017. Interchange fees were $~~8,878~~9,895 for the six months ending June 30, ~~2017~~2018 as compared to $~~8,154~~8,878 for the same period in ~~2016~~2017. If our total assets remain above $10,000,000 at December 31, 2018, then beginning on July 1, 2019 we will become subject to the limitations on interchange fees imposed pursuant to §1075 of the Dodd-Frank Act (this provision, which is commonly referred to as the “Durbin Amendment,” is discussed in more detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017). Management is continuing to examine this issue and develop strategies to offset the impact of the Durbin Amendment.

Through Renasant Insurance, we offer a range of commercial and personal insurance products through major insurance carriers. Income earned on insurance products was $2,110 and $2,181 for the ~~$4,041~~three months ended June 30, 2018 and ~~$4,137~~2017, respectively, and was $4,115 and $4,041 for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017, respectively. Contingency income is a bonus received from the insurance underwriters and is based both on commission income and claims experience on our ~~clients'~~clients’ policies during the previous year. Increases and decreases in contingency income are reflective of corresponding increases and decreases in the amount of claims paid by insurance carriers. Contingency income, which is included in “Other noninterest income” in the Consolidated Statements of Income, was ~~$766~~$31 and ~~$1,129~~$79 for the three months ending June 30, 2018 and 2017, respectively, and $794,000 and $766,000 for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

The Trust division within the Wealth Management segment operates on both a fully discretionary and a directed basis which includes administration of employee benefit plans, as well as accounting and money management for trust accounts. The division manages a number of trust accounts inclusive of personal, corporate and employee benefit accounts, self-directed 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. Additionally, the Financial Services division within the Wealth Management segment 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 $3,446 for the second quarter of 2018 compared to $3,037 for the same period in 2017. Wealth Management revenue was $~~5,921~~6,708 for the six months ended June 30, ~~2017~~2018 compared to $~~5,763~~5,921 for the same period in ~~2016~~2017. The market value of assets under management or administration was ~~$2,944,381~~$3,295,244 and ~~$3,072,888~~$2,944,381 at June 30, ~~2017~~2018 and June 30, ~~2016,~~2017, 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 ~~$772,456~~$475,761 in the second quarter of 2018 compared to $454,312 for the same period in 2017. Mortgage loan originations totaled $838,564 in the six months ended June 30, ~~2017~~2018 compared to ~~$1,006,507~~$772,456 for the same period in ~~2016.~~2017. The ~~decrease~~increase in mortgage loan originations is due to ~~a reduction~~an increase in producers throughout our footprint during the ~~refinancing of mortgage loans as mortgage interest rates have increased.~~current year. The following table presents the components of mortgage banking income included in noninterest income for the ~~six months ending June 30:~~

periods presented.


					Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2018		2017		2018		2017
Mortgage servicing income, net	$	993	$	345	$	926	$	583	$	2,080	$	993
Gain on sales of loans, net	11,608		12,969		10,719		5,028		19,517		11,535
Fees, net	10,327		12,021		1,194		6,813		2,202		10,400
Mortgage banking income, net	$	22,928	$	25,335	$	12,839	$	12,424	$	23,799	$	22,928

Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance ~~policies.~~policies and death benefits received on covered individuals. BOLI income ~~increased~~was $1,195 for the three months ended June 30, 2018 as compared to ~~$2,098~~$985 for the same period in 2017 and was $2,140 for the first six months of June 30, ~~2017~~2018 as compared to ~~$1,950~~$2,098 for the same period in ~~2016. The increase is primarily driven by death benefits received from existing policies.~~2017.

Other noninterest income was ~~$4,740~~$1,803 and ~~$5,884~~$2,210 for the three months ended June 30, 2018 and 2017, respectively, and was $4,426 and $4,740 for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Other noninterest income includes ~~contingency income from our insurance underwriters,~~ income from our SBA banking division and other miscellaneous income and can fluctuate based on ~~the claims experience in our Insurance agency,~~ production in our SBA banking division and recognition of other unseasonal income items.

Noninterest Expense

Noninterest Expense to Average Assets
Six Months Ended June 30,
2017 2016
3.33% 3.58%

Noninterest expense was ~~$144,150~~$79,026 and ~~$147,073~~$74,841 for the second quarter of 2018 and 2017, respectively, and was $156,970 and $144,150 for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017, respectively. The Company recorded merger and conversion expenses of $500 for the three months ended June 30, 2018, as compared to $3,044 for the same period in 2017. Merger and conversion ~~expense was $3,389~~expenses were $1,400 for the six months ended June 30, ~~2017~~2018, as compared to ~~$3,755~~$3,389 for the same period in ~~2016. During the~~ ~~six months ended June 30, 2017, the~~2017. The Company recognized a penalty charge of $205 in connection with the prepayment of $10,310 of junior subordinated ~~debentures. The Company recognized a~~debentures in the first quarter of 2017. There was no such penalty ~~charge of $329 in connection with the prepayment of certain long-term FHLB advances~~incurred during the ~~same time period~~first six months of 2018. The decrease in ~~2016. Merger~~merger and conversion expenses ~~and debt prepayment penalties are considered nonrecurring expenses.~~period-over-period was offset primarily by the additional expenses associated with the acquisition of Metropolitan’s operations, as discussed in more detail in the remainder of this section.

Salaries and employee benefits ~~decreased $557~~increased $6,996 to ~~$87,223~~$52,010 for the second quarter of 2018 as compared to $45,014 for the same period in 2017. Salaries and employee benefits increased $13,571 to $100,794 for the six months ended June 30, ~~2017~~2018 as compared to ~~$87,780~~$87,223 for the same period in ~~2016~~2017. ~~Commission expense from mortgage production decreased year over year as a result of~~The increase in salaries and employee benefits is primarily due to the ~~decrease~~Metropolitan acquisition, annual merit based pay increases and an increase in mortgage ~~originations during the first six months of 2017 when compared to the same period of 2016.~~banking commissions.

Data processing costs ~~decreased~~increased to ~~$8,069~~$4,600 in the ~~six months ended June 30, 2017~~second quarter of 2018 from ~~$8,660~~$3,835 for the same period in ~~2016. The decrease~~2017 and were $8,844 for the six months ended June 30, ~~2017~~2018 as compared to $8,069 for the same period in ~~2016 was primarily attributable to~~2017. Increased costs arising on account of our greater size were partially offset by the cost savings realized through certain contract renegotiations.

Net occupancy and equipment expense for the second quarter of 2018 was $9,805, up from $8,814 for the same period in 2017. These expenses for the first six months of ~~2017 was $18,133,~~2018 were $19,627, up from ~~$16,755~~$18,133 for the same period in ~~2016~~2017. The increase in occupancy and equipment expense is primarily attributable to the ~~KeyWorth acquisition coupled with enhancements to our IT infrastructure in response to banking~~additional locations and ~~governmental regulation and increased global risk~~assets added from ~~cyber security breaches.~~the Metropolitan acquisition.

Expenses related to other real estate owned for the ~~first six months~~second quarter of ~~2017~~2018 were ~~$1,313~~$232 compared to ~~$2,571~~$781 for the same period in ~~2016.~~2017 and were $889 and $1,313, respectively, for the first six months of 2018 and 2017. Expenses on other real estate owned ~~for the six months ended June 30, 2017~~ included write downs ~~of $757~~ of the carrying value to fair value on certain pieces of property held in other real estate ~~owned. Other~~owned of $397 and $379 for the second quarter of 2018 and 2017, respectively, and included write downs of $749 and $757 for the first six months of 2018 and 2017, respectively. For the three months ended June 30, 2018 and 2017, other real estate owned with a cost basis of ~~$6,986~~$1,588 and $2,267, respectively, was sold ~~during~~resulting in a net gain of $239 and a net loss of $189, respectively. For the six months ended June 30, 2018 and 2017, ~~resulting in a net gain of $138. Expenses on~~ other ~~real estate owned for the six months ended June 30, 2016 included a $1,281 write down of the carrying value to fair value on certain pieces of property held in other real estate owned. Other~~ real estate owned with a cost basis of ~~$8,188~~$3,769 and $6,986, respectively, was sold ~~during the six months ended June 30, 2016,~~ resulting in a net ~~loss~~gain of ~~$231.~~$143 and $138, respectively.

Professional fees include fees for legal and accounting services. Professional fees were $2,176 for the second quarter of 2018 as compared to $1,882 for the same period in 2017 and were $~~3,949~~4,314 for the six months ended June 30, ~~2017~~2018 as compared to $~~3,635~~3,949 for the same period in ~~2016~~2017. Professional fees remain elevated in large part due to additional legal, accounting and consulting fees associated with compliance costs of newly enacted as well as existing banking and governmental regulation. Professional fees attributable to legal fees associated with loan workouts and foreclosure proceedings remain at higher levels in correlation with the overall economic downturn and credit deterioration identified in our loan portfolio and the Company’s efforts to bring these credits to resolution.

Advertising and public relations expense was ~~$4,022~~$2,647 for the second quarter of 2018 compared to $2,430 for the same period in 2017 and was $4,850 for the six months ended June 30, ~~2017~~2018 compared to ~~$3,379~~$4,022 for the same period in ~~2016.~~2017. This increase is primarily attributable to an increased focus on digital marketing and ~~television marketing~~branding throughout our footprint, an increase in ~~2017.~~the overall size of the Company and also an increase in the marketing of the Company’s community involvement.

Amortization of intangible assets totaled $1,594 and $1,493 for the second quarter of 2018 and 2017, respectively, and totaled $~~3,056~~3,245 and $~~3,439~~3,056 for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017, 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 3 years to ~~9.2~~approximately 9 years.

Communication expenses, those expenses incurred for communication to clients and between employees, were $1,877 for the second quarter of 2018 as compared to $1,908 for the same period in 2017. Communication expenses were $~~3,771~~3,846 for the six months ended June 30, ~~2017~~2018 as compared to $~~4,211~~3,771 for the same period in ~~2016~~2017. The ~~decrease can be attributed~~year-to-date increase in communication expenses is primarily attributable to the ~~transition from a traditional telephone system to a Voice over IP phone system, which is more cost efficient.~~additional locations added as part of the Metropolitan acquisition.

Efficiency Ratio

Efficiency Ratio
Six Months Ended June 30,
2017 2016
64.45% 66.96%



	Efficiency Ratio
	Three Months Ended June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Efficiency ratio	61.08%	64.68%	61.76%	64.45%
Impact on efficiency ratio from:
Intangible amortization	(1.23)%	(1.30)%	(1.27)%	(1.36)%
Merger and conversion related expenses	(0.39)%	(2.63)%	(0.55)%	(1.52)%
Extinguishment of debt	—%	—%	—%	(0.09)%
Adjusted efficiency ratio	59.46%	60.75%	59.94%	61.48%

The efficiency ratio is one measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. That is, the ratio is designed to reflect the percentage of one dollar which must be expended to generate that 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. ~~Merger~~The table above shows the impact on the efficiency ratio of expenses that (1) the Company does not consider to be part of our normal operations, 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 expenses will be incurred or, when incurred, the amount of such expenses, such as merger and conversion related expenses and debt prepayment ~~penalties contributed approximately 152 basis points and 9 basis points, respectively, to the efficiency ratio for the first six months of~~ ~~2017. Merger and conversion expenses and debt prepayment penalties contributed approximately 171 basis points and 15 basis points, respectively, to the efficiency ratio for first six months of 2016.~~penalties. We remain committed to aggressively managing our costs within the framework of our business model. We expect the efficiency ratio to continue to improve 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 ~~six months ended June 30,~~second quarter of 2018 and 2017 was $10,424 and ~~2016~~ ~~was $23,248 and $21,680,~~$11,993, respectively. The effective tax rates for those periods were ~~32.06%~~22.12% and ~~32.95%~~32.17%, respectively. Income tax expense for the six months ended June 30, 2018 and 2017 was

$20,097 and $23,248, respectively. The effective tax rates for those periods were 22.17% and 32.06%, respectively. Although taxable income has continued to increase, the decreased effective tax rate for the three and six months ended June 30, ~~2017~~2018 as compared to the same period in ~~2016~~2017 is the result of the ~~excess~~lower corporate tax ~~benefit realized~~rate that resulted from the ~~exercise~~enactment of ~~stock options~~the Tax Cuts and ~~vesting of restricted stock.~~Jobs Act.

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 Loan Losses

Inherent in any lending activity is credit risk, that is, the risk of loss should a borrower default. The Company’s credit quality remained strong in the first half of 2018, and the Company continues to see the lowest levels of charge-offs and nonperforming loans since the 2008-2009 recession. These results are due in part to the pace of the economic recovery, declining unemployment levels, improved labor participation rate, improved performance of the housing market, and the Company’s continued efforts to bring problem credits to resolution.

Management of Credit Risk. Credit risk is monitored and managed on an ongoing basis by a credit administration department, ~~senior loan committee,~~ a loss management committee and the Board of Directors loan committee. Credit quality, adherence to policies 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 two additional State Certified General Real Estate ~~Appraisers,~~appraisers, one Appraisal Intern and four real estate evaluators.

We have a number of documented loan policies and procedures that set forth the approval and monitoring process of the lending function. Adherence to these policies and procedures is monitored by management and the Board of Directors. A number of committees and an underwriting staff oversee the lending operations of the Company. These include in-house ~~loan and~~ loss management committees and the Board of Directors loan committee. In addition, we maintain a loan review staff separate from the credit administration department 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 by senior credit officers ~~in-house~~or the loan ~~committees or~~committee of the Board of Directors.

For commercial and commercial real estate secured loans, 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. Loan grades range from 1 to 9, with 1 being loans with the least credit risk. Allowance factors established by management are applied to the total balance of loans in each grade to determine the amount needed in the allowance for loan losses. The allowance factors are established based on historical loss ratios experienced by the Company for these loan types, as well as the credit quality criteria underlying each grade, adjusted for trends and expectations about losses inherent in our existing portfolios. In making these adjustments to the allowance factors, management takes into consideration factors which it believes are causing, or are likely in the future to cause, losses within our loan portfolio but that may not be fully reflected in our historical loss ratios. For portfolio balances of consumer, small balance consumer mortgage loans, such as 1-4 family mortgage loans, and certain other ~~similar loan types,~~loans originated other than for commercial purposes, allowance factors are determined based on historical loss ratios by portfolio for the preceding eight quarters and may be adjusted by other qualitative criteria.

The loss management committee and the Board of Directors’ loan 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. In addition, the Company’s portfolio management committee monitors and identifies risks within the Company’s loan portfolio by focusing its efforts on reviewing and analyzing loans which are not on the Company’s internal watch list. The portfolio management committee monitors loans in portfolios or regions that management believes could be stressed or experiencing credit deterioration.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement.

Impairment is measured on a loan-by-loan basis for problem loans of $500 or greater by, ~~either~~as applicable, the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For real estate collateral, the fair market value of the collateral is based upon a recent appraisal by a qualified and licensed appraiser of the underlying collateral. 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’ loan committee for charge-off approval. These charge-offs reduce the allowance for loan losses. Charge-offs reflect the realization of losses in the portfolio that were recognized previously through the provision for loan losses.

The Company’s practice is to charge off estimated losses as soon as such loss is identified and reasonably quantified. Net charge-offs for the ~~second quarter~~first six months of ~~2017~~2018 were ~~$524,~~$2,416, or ~~0.03%~~0.06% of average loans (annualized), compared to net charge-offs of ~~$191,~~$1,838, or ~~0.01%~~0.06% of average loans (annualized), for the same period in ~~2016.~~2017. The ~~levels of net~~ charge-offs ~~relative to the size of our loan portfolio continue to represent the lowest levels of charge-offs since the 2008-2009 recession. These metrics are due~~ in ~~part to the pace of the economic recovery, declining unemployment levels, improved labor participation rate, improved performance~~2018 were fully reserved for in the ~~housing market,~~Company’s allowance for loan losses and ~~the Company's continued efforts to bring problem credits to resolution.~~resulted in no additional provision for loan loss expense.

Allowance for Loan Losses; Provision for Loan Losses. The allowance for loan losses is available to absorb probable credit losses inherent in the entire loan portfolio. 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 collective impairment as recognized under the Financial Accounting Standards Board Accounting Standards Codification Topic (“ASC”) 450, “Contingencies.” Collective impairment is calculated based on loans grouped by grade. Another component of the allowance is losses on loans assessed as impaired under ASC 310, “Receivables.” The balance of these loans and their related allowance is included in management’s estimation and analysis of the allowance for loan losses. Other considerations in establishing the allowance for loan losses include economic conditions reflected within industry segments, the unemployment rate in our markets, loan segmentation and historical losses that are inherent in the loan portfolio.

The allowance for loan losses is established after input from management, loan review and the loss management committee. An

~~evaluation of~~Factors considered by management in evaluating the adequacy of the allowance, ~~is calculated~~which occurs on a quarterly ~~based on~~basis, include the ~~types~~internal risk rating of individual credits, loan segmentation, historical and current trends in net charge-offs, trends in nonperforming loans, ~~an analysis of credit losses and risk~~trends in past due loans, trends in the ~~portfolio,~~market values of underlying collateral securing loans and the unemployment rate and other current economic conditions ~~and trends within each of these factors.~~in the markets in which we operate. In addition, on a regular basis, management and the Board of Directors review loan ratios. These ratios include the allowance for loan losses as a percentage of total loans, net charge-offs as a percentage of average loans, the provision for loan 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 loan losses by loan category as of the dates presented:


	June 30, 2017		December 31, 2016		June 30, 2016		June 30, 2018		December 31, 2017		June 30, 2017
Commercial, financial, agricultural	$	5,092	$	5,486	$	4,512	$	7,146	$	5,542	$	5,092
Lease financing	530		196		198		600		555		530
Real estate – construction	2,580		2,380		2,269		4,702		3,428		2,580
Real estate – 1-4 family mortgage	12,104		14,294		14,219		11,657		12,009		12,104
Real estate – commercial mortgage	22,600		19,059		21,683		22,450		23,384		22,600
Installment loans to individuals	1,243		1,322		1,217		800		1,293		1,243
Total	$	44,149	$	42,737	$	44,098	$	47,355	$	46,211	$	44,149

For impaired loans, specific reserves are established to adjust the carrying value of the loan to its estimated net realizable value. The following table quantifies the amount of the specific reserves component of the allowance for loan losses and the amount of the allowance determined by applying allowance factors to graded loans as of the dates presented:


	June 30, 2017		December 31, 2016		June 30, 2016		June 30, 2018		December 31, 2017		June 30, 2017
Specific reserves for impaired loans	$	3,208	$	4,141	$	7,619	$	1,515	$	2,674	$	3,208
Allocated reserves for remaining portfolio	38,781		35,776		34,307		43,584		41,760		38,781
Purchased with deteriorated credit quality	2,160		2,820		$	2,172	2,256		1,777		$	2,160
Total	$	44,149	$	42,737	$	44,098	$	47,355	$	46,211	$	44,149

The provision for loan losses charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for loan losses at a level that is believed to be adequate to meet the inherent risks of losses in our loan portfolio. Factors considered by management in determining the amount of the provision for loan losses include the internal risk rating of individual credits, historical and current trends in net charge-offs, trends in nonperforming loans, trends in past due loans, trends in the market values of underlying collateral securing loans and the current economic conditions in the markets in which we operate. The provision for loan losses was ~~$3,250~~$1,810 and ~~$3,230~~$1,750 for the three months ended June 30, 2018 and 2017, respectively, and $3,560 and $3,250 for the six months ended June 30, 2018 and 2017, respectively. Although the Company has experienced lower levels of classified loans and ~~2016, respectively, The consistent amounts of provisioning period over period reflects improving~~nonperforming loans in the current year, as illustrated in the nonperforming loan tables later in this section, and while our other credit quality ~~trends offset by providing for significant loan growth. For~~measures have also improved, the growth in non purchased loans has dictated that we increase the provision ~~is calculated based on evidence~~for loans losses in order to maintain the allowance for loan ~~has deteriorated from performance expectations established~~losses at an acceptable level in ~~conjunction with~~light of the ~~determination~~increased size of ~~"Day~~our non purchased loan portfolio.

For a purchased loan, as part of the acquisition we establish a “Day 1 Fair ~~Values" (which equal~~Value,” which equals the outstanding customer balance of a purchased loan on the acquisition date less any credit and/or yield discount applied against the purchased ~~loan) or since our most recent review of such portfolio's performance. Purchased loans~~loan. A purchased loan will either ~~(1)~~meet or exceed the performance expectations established in determining the Day 1 Fair Values ~~resulting in a reversal of any previous provision for such loans,~~ or ~~(2)~~ deteriorate from such expected performance. If the purchased loan’s performance deteriorates from expectations established in determining the Day 1 Fair Values ~~resulting~~or since our most recent review of such portfolio’s performance, then the Company provides for such loan in ~~partial~~the provision for loan losses and may ultimately partially or ~~full charge-offs of~~fully charge-off the carrying value of such purchased ~~loans.~~loan. If performance expectations are exceeded, then the Company reverses any previous provision for such loan. If the purchased loan continues to exceed expectations subsequent to the reversal of ~~previously established~~previously-established provision, then an adjustment to accretable yield is warranted, which has a positive impact on interest income.

~~A majority of the~~Certain loans purchased ~~in the Company’s FDIC-assisted acquisitions and certain loans purchased and not covered under the Company's FDIC loss-share agreements (prior to the termination of such agreements in December 2016)~~ are accounted for under ASC 310-30, “Loans and Debt Securities Purchased with Deteriorated Credit Quality” (“ASC 310-30”), and are carried at values which, in management’s opinion, reflect the estimated future cash flows, based on the facts and circumstances surrounding each respective loan at the date of acquisition. As of June 30, ~~2017,~~2018, the fair value of loans accounted for in accordance with ASC 310-30 was ~~$236,796.~~$201,041. The Company continually monitors these loans as part of our normal credit review and monitoring procedures for changes in the estimated future cash flows; to the extent future cash flows deteriorate below initial projections, the Company may be required to reserve for these loans in the allowance for loan losses through future provision for loan losses. Of the entire

allowance for loan losses as of June 30, 2018 and 2017, $2,256 and ~~2016,~~ $2,160, ~~and $2,172,~~ respectively, is allocated to loans accounted for under ASC 310-30.

The table below reflects the activity in the allowance for loan losses for the periods presented:


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Balance at beginning of period	$	42,923		$	42,859		$	42,737		$	42,437		$	46,401		$	42,923		$	46,211		$	42,737
Charge-offs
Commercial, financial, agricultural	304			48			1,136			705			457			304			1,116			1,136
Lease financing	—			—			—			—			—			—			5			—
Real estate – construction	—			—			—			—			—			—			—			—
Real estate – 1-4 family mortgage	551			387			826			503			979			551			1,650			826
Real estate – commercial mortgage	434			186			661			1,187			46			434			659			661
Installment loans to individuals	125			192			389			372			99			125			216			389
Total charge-offs	1,414			813			3,012			2,767			1,581			1,414			3,646			3,012
Recoveries
Commercial, financial, agricultural	64			105			121			158			114			64			349			121
Lease financing	—			—			—			—			—			—			—			—
Real estate – construction	3			5			34			11			3			3			7			34
Real estate – 1-4 family mortgage	64			170			146			565			83			64			216			146
Real estate – commercial mortgage	717			309			812			401			496			717			604			812
Installment loans to individuals	42			33			61			63			29			42			54			61
Total recoveries	890			622			1,174			1,198			725			890			1,230			1,174
Net charge-offs	524			191			1,838			1,569			856			524			2,416			1,838
Provision for loan losses	1,750			1,430			3,250			3,230			1,810			1,750			3,560			3,250
Balance at end of period	$	44,149		$	44,098		$	44,149		$	44,098		$	47,355		$	44,149		$	47,355		$	44,149
Net charge-offs (annualized) to average loans	0.03		%	0.01		%	0.06		%	0.06		%	0.04		%	0.03		%	0.06		%	0.06		%
Allowance for loan losses to:
Total non purchased loans	0.87		%	1.03		%	0.87		%	1.03		%	0.78		%	0.87		%	0.78		%	0.87		%
Nonperforming non purchased loans	347.74		%	366.90		%	347.74		%	366.90		%	426.20		%	347.74		%	426.20		%	347.74		%

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

Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Real estate – construction:
Residential $ (3 ) $ (5 ) $ (34 ) $ (9 )
Condominiums —
—
—
(2 )
Total real estate – construction (3 ) (5 ) (34 ) (11 )
Real estate – 1-4 family mortgage:
Primary 306
54
513
100
Home equity 78
47
89
51
Rental/investment 70
139
80
134
Land development 33
(23 ) (2 ) (347 )
Total real estate – 1-4 family mortgage 487
217
680
(62 )
Real estate – commercial mortgage:
Owner-occupied 37
(164 ) 80
228
Non-owner occupied (22 ) (45 ) 70
245
Land development (298 ) 86
(301 ) 313
Total real estate – commercial mortgage (283 ) (123 ) (151 ) 786
Total net charge-offs of loans secured by real estate $ 201
$ 89
$ 495
$ 713

~~Nonperforming Assets~~



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Real estate – construction:
Residential	$	(3	)	$	(3	)	$	(7	)	$	(34	)
Total real estate – construction	(3		)	(3		)	(7		)	(34		)
Real estate – 1-4 family mortgage:
Primary	192			306			221			513
Home equity	733			78			772			89
Rental/investment	(19		)	70			44			80
Land development	(10		)	33			397			(2		)
Total real estate – 1-4 family mortgage	896			487			1,434			680
Real estate – commercial mortgage:
Owner-occupied	(423		)	37			123			80
Non-owner occupied	(30		)	(22		)	(71		)	70
Land development	3			(298		)	3			(301		)
Total real estate – commercial mortgage	(450		)	(283		)	55			(151		)
Total net charge-offs of loans secured by real estate	$	443		$	201		$	1,482		$	495

Nonperforming Assets. Nonperforming assets consist of nonperforming loans and other real estate ~~owned and nonaccruing investment securities.~~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 loss management committee and our loan review staff closely monitor loans that are considered to be nonperforming.

~~Investment securities may be transferred to nonaccrual status where~~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 ~~recognition~~lower of ~~investment interest is discontinued. A number~~cost or fair market value based on appraised value less estimated selling costs. Losses arising at the time of ~~qualitative factors, including but not limited to~~foreclosure of properties are charged against the ~~financial condition of the underlying issuer and current and projected deferrals or defaults, are considered by management~~allowance for loan losses. Reductions in the ~~determination of whether a debt security should be transferred~~carrying value subsequent to ~~nonaccrual status. The interest on these nonaccrual investment securities is accounted for on the cash-basis method until qualifying for return~~acquisition are charged to ~~accrual status. Nonaccruing investment available-for-sale at December 31, 2016 consisted of one of the Company’s three investments~~earnings and are included in ~~pooled trust preferred securities issued by financial institutions, which are discussed earlier in this section under the heading “Investments”. As discussed~~“Other real estate owned” in the ~~aforementioned section, the Company's analysis~~Consolidated Statements of the pooled trust preferred securities during the second quarter of 2017 supported a return to accrual status for the last remaining security and there were no nonaccruing investment securities at June 30, 2017.

Income.

The following table provides details of the Company’s ~~nonperforming assets that are~~ non purchased and purchased nonperforming assets ~~that have been purchased in one of the Company's previous acquisitions~~ as of the dates presented. ~~The nonperforming assets that were covered under the loss share agreements at the time of termination are included in the “Purchased” column as of December 31, 2016.~~

Non Purchased Purchased Total
June 30, 2017
Nonaccruing loans $ 11,413
$ 5,927
$ 17,340
Accruing loans past due 90 days or more 1,283
8,128
9,411
Total nonperforming loans 12,696
14,055
26,751
Other real estate owned 4,305
15,409
19,714
Total nonperforming loans and OREO 17,001
29,464
46,465
Total nonperforming assets $ 17,001
$ 29,464
$ 46,465
Nonperforming loans to total loans
0.42 %
Nonperforming assets to total assets
0.52 %

December 31, 2016
Nonaccruing loans $ 11,273
$ 11,347
$ 22,620
Accruing loans past due 90 days or more 2,079
10,815
12,894
Total nonperforming loans 13,352
22,162
35,514
Other real estate owned 5,929
17,370
23,299
Total nonperforming loans and OREO 19,281
39,532
58,813
Nonaccruing securities available-for-sale, at fair value 9,645
—
9,645
Total nonperforming assets $ 28,926
$ 39,532
$ 68,458
Nonperforming loans to total loans 0.57 %
Nonperforming assets to total assets 0.79 %

At June 30, 2017, the acquisition of KeyWorth added $714 purchased nonperforming loans while the acquisitions of Heritage and M&F added $5,881 and $4,750, respectively, of such loans. The KeyWorth acquisition added $217 while the Heritage and M&F added $9,110 and $4,718 in purchased nonperforming loans at December 31, 2016.



	Non Purchased		Purchased		Total
June 30, 2018
Nonaccruing loans	$	8,921	$	4,561	$	13,482
Accruing loans past due 90 days or more	2,190		5,491		7,681
Total nonperforming loans	11,111		10,052		21,163
Other real estate owned	4,698		9,006		13,704
Total nonperforming assets	$	15,809	$	19,058	$	34,867
Nonperforming loans to total loans					0.27		%
Nonperforming assets to total assets					0.33		%

December 31, 2017
Nonaccruing loans	$	10,250	$	4,424	$	14,674
Accruing loans past due 90 days or more	3,015		5,731		8,746
Total nonperforming loans	13,265		10,155		23,420
Other real estate owned	4,410		11,524		15,934
Total nonperforming assets	$	17,675	$	21,679	$	39,354
Nonperforming loans to total loans					0.31		%
Nonperforming assets to total assets					0.40		%

The Company experienced improving credit quality metrics during the first six months of ~~2017.~~2018. The level of nonperforming loans decreased ~~$8,763~~$2,257 from December 31, ~~2016~~2017 while OREO decreased ~~$3,585~~$2,230 during the same period. As discussed above, at June 30, 2017, the Company had no investment securities on nonaccrual status as compared to $9,645 at December 31, 2016. For more information about the Company’s trust preferred securities, see Note 3, “Securities,” in the Notes to Consolidated Financial Statements of the Company in Item 1, “Financial Statements,” in this report.

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


	June 30, 2017		December 31, 2016		June 30, 2016		June 30, 2018		December 31, 2017		June 30, 2017
Commercial, financial, agricultural	$	3,080	$	3,709	$	2,804	$	3,090	$	2,921	$	3,080
Real estate – construction:
Residential	—		466		675		49		—		—
Total real estate – construction	—		466		675		49		—		—
Real estate – 1-4 family mortgage:
Primary	6,543		6,179		7,919		6,841		6,221		6,543
Home equity	2,137		2,777		1,521		1,545		2,701		2,137
Rental/investment	1,883		2,292		4,565		549		395		1,883
Land development	1,197		1,656		2,981		201		1,078		1,197
Total real estate – 1-4 family mortgage	11,760		12,904		16,986		9,136		10,395		11,760
Real estate – commercial mortgage:
Owner-occupied	7,103		8,282		11,710		4,048		5,473		7,103
Non-owner occupied	3,345		6,821		7,489		3,156		3,087		3,345
Land development	989		2,757		3,019		960		1,090		989
Total real estate – commercial mortgage	11,437		17,860		22,218		8,164		9,650		11,437
Installment loans to individuals	304		575		434		345		295		304
Lease financing	170		—		—		379		159		170
Total nonperforming loans	$	26,751	$	35,514	$	43,117	$	21,163	$	23,420	$	26,751

The decrease in the level of nonperforming loans from December 31, ~~2016~~2017 is a reflection of the ~~Company's~~Company’s continued strategy to aggressively manage problem loans and assets. The Company continues its efforts to bring problem credits to resolution. Total nonperforming loans as a percentage of total loans were 0.27% as of June 30, 2018 as compared to 0.31% as of December 31, 2017 and 0.42% as of June 30, ~~2017 as compared to 0.57% as of December 31, 2016 and 0.72% as of June 30, 2016.~~2017. The Company’s coverage ratio, or its allowance for loan losses as a percentage of nonperforming loans, was 223.76% as of June 30, 2018 as compared to 197.31% as of December 31, 2017 and 165.04% as of June 30, ~~2017 as compared to 120.34% as of December 31, 2016 and 102.28% as of June 30, 2016.~~2017. The coverage ratio for non purchased, nonperforming loans was 426.20% as of June 30, 2018 as compared to 348.37% as of December 31, 2017 and 347.74% as of June 30, ~~2017 as compared to 320.08% as of December 31, 2016 and 366.90% as of June 30, 2016.~~2017.

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 loan losses at June 30, ~~2017.~~2018. Management also continually monitors past due loans for potential credit quality deterioration. Total loans 30-89 days past due were $17,776 at June 30, 2018 as compared to $27,738 at December 31, 2017 and $13,537 at June 30, 2017 as compared to $19,858 at December 31, 2016 and $19,648 at June 30, 2016. The 2016 acquisition of KeyWorth added $156 of purchased loans 30-89 days past due while the Heritage and First M&F mergers contributed $2,521 and $1,398, respectively, at June 30, 2017. ~~The KeyWorth merger contributed $1,813 of purchased, loans 30-89 days past due while the Heritage and First M&F mergers contributed $2,909 and $3,662, respectively, at December 31, 2016.~~

~~Another~~Although not classified as nonperforming loans, restructured loans are another category of assets ~~which~~that contribute to our credit ~~risk is restructured loans.~~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 $12,818 at June 30, 2018 compared to $14,553 at December 31, 2017 and $14,467 at June 30, 2017. At June 30, 2018, loans restructured through interest rate concessions represented 28% 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:



	June 30, 2018		December 31, 2017		June 30, 2017
Commercial, financial, agricultural	$	363	$	331	$	—
Real estate – 1-4 family mortgage:
Primary	6,129		6,213		5,638
Home equity	42		282		244
Rental/investment	1,946		2,247		2,247
Land development	5		4		7
Total real estate – 1-4 family mortgage	8,122		8,746		8,136
Real estate – commercial mortgage:
Owner-occupied	3,256		3,503		4,323
Non-owner occupied	725		1,466		1,501
Land development	287		440		438
Total real estate – commercial mortgage	4,268		5,409		6,262
Installment loans to individuals	65		67		69

Total restructured loans in compliance with modified terms	$	12,818	$	14,553	$	14,467

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



	2018			2017
Balance at January 1,	$	14,553		$	11,475
Additional loans with concessions	839			4,745
Reclassified as performing	177			—
Reductions due to:
Reclassified as nonperforming	(795		)	(660		)
Paid in full	(1,344		)	(367		)
Charge-offs	—			(267		)
Paydowns	(612		)	(358		)
Lapse of concession period	—			(101		)
Balance at June 30,	$	12,818		$	14,467

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


	June 30, 2017		December 31, 2016		June 30, 2016		June 30, 2018		December 31, 2017		June 30, 2017
Nonaccruing loans	$	17,340	$	22,620	$	25,963	$	13,482	$	14,674	$	17,340
Accruing loans past due 90 days or more	9,411		12,894		17,154		7,681		8,746		9,411
Total nonperforming loans	26,751		35,514		43,117		21,163		23,420		26,751
Restructured loans in compliance with modified terms	14,467		11,475		11,607		12,818		14,553		14,467
Total nonperforming and restructured loans	$	41,218	$	46,989	$	54,724	$	33,981	$	37,973	$	41,218

~~As shown above, restructured loans totaled $14,467 at~~ ~~June 30, 2017~~ ~~compared to $11,475 at December 31, 2016 and $11,607 at~~ ~~June 30, 2016. At~~ ~~June 30, 2017, loans restructured through interest rate concessions represented 35% 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~~other real estate owned as of the dates presented:

June 30,
2017 December 31, 2016 June 30,
2016
Commercial, financial, agricultural $ —
$ 17
$ 244
Real estate – construction:
Residential —
518
—
Total real estate – construction —
518
—
Real estate – 1-4 family mortgage:
Primary 5,638
5,060
4,563
Home equity 244
246
116
Rental/investment 2,247
868
1,007
Land development 7
12
11
Total real estate – 1-4 family mortgage 8,136
6,186
5,697
Real estate – commercial mortgage:
Owner-occupied 4,323
2,496
1,896
Non-owner occupied 1,501
1,589
3,204
Land development 438
603
499
Total real estate – commercial mortgage 6,262
4,688
5,599
Installment loans to individuals 69
66
67

Total restructured loans in compliance with modified terms $ 14,467
$ 11,475
$ 11,607



	June 30, 2018		December 31, 2017		June 30, 2017
Residential real estate	$	2,083	$	2,441	$	1,913
Commercial real estate	4,741		5,938		8,507
Residential land development	1,329		1,881		2,620
Commercial land development	5,551		5,674		6,674
Total other real estate owned	$	13,704	$	15,934	$	19,714

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

other real estate owned were as follows:

2017 2016
Balance at January 1, $ 11,475
$ 13,453
Additional loans with concessions 4,745
1,267
Reductions due to:
Reclassified as nonperforming (660 ) (134 )
Paid in full (367 ) (398 )
Charge-offs (267 ) —
Transfer to other real estate owned —
—
Paydowns (358 ) (142 )
Lapse of concession period (101 ) —
Balance at June 30, $ 14,467
$ 14,046



	2018			2017
Balance at January 1,	$	15,934		$	23,299
Transfers of loans	2,291			4,227
Impairments	(749		)	(757		)
Dispositions	(3,769		)	(6,986		)
Other	(3		)	(69		)
Balance at June 30,	$	13,704		$	19,714

Other real estate owned ~~consists~~with a cost basis of ~~properties acquired through foreclosure or acceptance~~$3,769 was sold during the six months ended June 30, 2018, resulting in a net gain 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 loan losses. 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. Other$143, while other real estate owned with a cost basis of $6,986 was sold during the six months ended June 30, 2017, resulting in a net gain of ~~$138, while other real estate owned with a cost basis of $8,188 was sold during the six months ended June 30, 2016, resulting in a net loss of $231.~~

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

June 30,
2017 December 31, 2016 June 30,
2016
Residential real estate $ 1,913
$ 2,929
$ 3,539
Commercial real estate 8,507
8,081
9,739
Residential land development 2,620
4,032
4,229
Commercial land development 6,674
8,257
11,832
Total other real estate owned $ 19,714
$ 23,299
$ 29,339

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

2017 2016
Balance at January 1, $ 23,299
$ 35,402
Transfers of loans 4,227
1,954
Impairments (757 ) (331 )
Dispositions (6,986 ) (3,661 )
Other (69 ) (130 )
Balance at June 30, $ 19,714
$ 33,234
$138.

Interest Rate Risk

Market risk is the risk of loss from adverse changes in market prices and rates. The majority of assets and liabilities of a financial institution are monetary in nature and therefore differ greatly from most commercial and industrial companies that have significant investments in fixed assets and inventories. Our market risk arises primarily from interest rate risk inherent in lending and deposit-taking activities. Management believes a significant impact on the Company’s financial results stems from our ability to react to changes in interest rates. ~~To that end,~~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 ~~monitors~~monitor and ~~manages~~manage our interest rate risk exposure.

We have an Asset/Liability Committee (“ALCO”) ~~which~~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. ~~Profitability is affected by fluctuations 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.~~

~~We utilize~~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.

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 ~~varying~~various hypothetical rate scenarios. EVE measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time for a given set of market rate assumptions. An increase in EVE due to a specified rate change indicates an improvement in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet.

The following table presents the projected impact of a change in interest rates on (1) static EVE and (2) earnings at risk (that is, net interest income) for the 1-12 and 13-24 month periods commencing July 1, ~~2017,~~2018, in each case as compared to the result under rates present in the market on June 30, ~~2017.~~2018. The changes in interest rates assume an instantaneous and parallel shift in the yield curve and ~~does~~do not take into account changes in the slope of the yield curve. ~~On account of the present position of the target federal funds rate, the Company has not presented an analysis assuming a downward movement in rates.~~


	Percentage Change In:			Percentage Change In:
Immediate Change in Rates of:	Economic Value Equity (EVE)	Earning at Risk (EAR) (Net Interest Income)
Immediate Change in Rates of:	Static	1-12 Months	13-24 Months
Immediate Change in Rates of (in basis points):				Economic Value Equity (EVE)	Earning at Risk (Net Interest Income)
Immediate Change in Rates of (in basis points):				Static	1-12 Months	13-24 Months
+400	16.50%	5.44%	14.70%	14.80%	11.24%	19.97%
+300	14.21%	4.47%	11.53%	11.65%	7.55%	14.79%
+200	13.96%	3.35%	8.29%	7.34%	5.19%	10.10%
+100	10.80%	1.90%	4.48%	3.38%	2.10%	5.54%
-100				(5.16)%	(6.86)%	(8.45)%

The rate shock results for the net interest income simulations for the next twenty-four months produce ~~a slightly~~an asset sensitive position at June 30, ~~2017.~~2018. The ~~Company's~~Company’s interest rate risk strategy is to remain in an asset sensitive position with a focus on increasing variable rate loan production and generating deposits that are less sensitive to increases in interest rates.

The preceding measures assume no change in the size or asset/liability compositions of the balance sheet. The measures do not reflect future actions the ALCO may undertake in response to such changes in interest rates. The above results of the interest rate shock analysis are within the parameters set by the Board of Directors. The scenarios assume instantaneous movements in interest rates in increments of plus 100, 200, 300 and 400 basis points and minus 100 basis points. As interest rates are adjusted over a period of time, it is our strategy to proactively change the volume and mix of our balance sheet in order to mitigate our interest rate risk. The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions regarding characteristics of new business and the behavior of existing positions. These business assumptions are based upon our experience, business plans and published industry experience. Key assumptions employed in the model include asset prepayment speeds, competitive factors, the relative price sensitivity of certain assets and liabilities and the expected life of non-maturity deposits. 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, forward commitments, and interest rate lock commitments, as part of its ongoing efforts to mitigate its interest rate risk exposure. For more information about the Company’s derivative financial instruments, see the “Off-Balance Sheet Transactions” section below and Note ~~12,~~11, “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. ~~Management continually monitors the Bank's liquidity and non-core dependency ratios to ensure compliance with targets established by the Asset/Liability Management Committee.~~

Core deposits, which are deposits excluding time deposits and public fund deposits, are a major source of funds used by Renasant 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 Renasant 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 ~~13.60%~~15.40% of the carrying value of the total securities portfolio. Securities within our investment portfolio are also used to secure certain deposit types and short-term borrowings. At June 30, ~~2017~~

2018, securities with a carrying value of ~~$370,904~~$461,289 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 ~~$666,873~~$243,755 similarly pledged at December 31, ~~2016~~2017.

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 short-term borrowings from the FHLB in the amount of ~~$110,600~~$305,000 at June 30, ~~2017~~2018 compared to $~~100,000~~83,000 at December 31, ~~2016~~2017. Long-term funds obtained from the FHLB are used primarily to match-fund fixed rate loans in order to minimize interest rate risk and also are used to meet day to day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. At June 30, ~~2017~~2018, the balance of our outstanding long-term advances with the FHLB was ~~$8,024.~~$7,082 compared to $7,493 at December 31, 2017. The total amount of the remaining credit available to us from the FHLB at June 30, ~~2017~~2018 was ~~$2,336,922.~~$2,649,635. We also maintain lines of credit with other commercial banks totaling $80,000. These are unsecured lines of credit with the majority maturing at various times within the next twelve months. There were no amounts outstanding under these lines of credit at June 30, ~~2017~~2018 or December 31, ~~2016~~2017.

InAs part of the ~~third quarter of 2016,~~Metropolitan acquisition, the Company ~~issued and sold $60,000~~assumed $15,000 aggregate principal amount of ~~its 5.00% Fixed-to-Floating Rate Subordinated Notes~~6.50% fixed-to-floating rate subordinated notes due ~~2026 and $40,000 aggregate principal amount~~July 1, 2026. Additionally, in 2016, we accessed the debt capital market to generate liquidity in the form of ~~its 5.50% Fixed-to-Floating Rate Subordinated Notes due 2031.~~subordinated notes. The carrying value of the subordinated notes, net of unamortized debt issuance costs, was ~~$98,203~~$114,044 at June 30, ~~2017.~~2018.

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				Cost of Funds				Percentage of Total Average Deposits and Borrowed Funds				Cost of Funds
	Six Months Ended				Six Months Ended				Six Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Noninterest-bearing demand	21.39	%	19.77	%	—	%	—	%	21.47	%	21.39	%	—	%	—	%
Interest-bearing demand	45.79		42.94		0.22		0.18		46.43		45.79		0.45		0.22
Savings	7.58		7.32		0.07		0.07		6.84		7.58		0.13		0.07
Time deposits	21.76		21.94		0.82		0.71		21.52		21.76		1.06		0.82
Short-term borrowings	0.84		5.94		0.79		0.47		1.33		0.84		1.48		0.79
Long-term Federal Home Loan Bank advances	0.11		0.74		3.46		4.10		0.08		0.11		3.35		3.46
Subordinated notes	1.33		—		5.50		—		1.33		1.33		5.60		5.50
Other borrowed funds	1.20		1.35		5.27		5.55		1.00		1.20		5.19		5.27
Total deposits and borrowed funds	100.00	%	100.00	%	0.43	%	0.37	%	100.00	%	100.00	%	0.60	%	0.43	%

Our strategy in choosing funds is focused on minimizing cost ~~along with considering~~in the context of our balance sheet composition and interest rate risk position. Accordingly, management targets growth of ~~non-interest bearing~~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 $292,952 at June 30, 2018 compared to $236,061 at June 30, 2017 ~~compared to $210,808 at~~ ~~June 30, 2016~~. Cash used in investing activities for the six months ended June 30, ~~2017~~2018 was ~~$202,762~~$580,449 compared to ~~cash used in investing activities of $129,864~~$202,762 for the six months ended June 30, ~~2016~~2017. Proceeds from the sale, maturity or call of securities within our investment portfolio were ~~$79,381~~$63,655 for the six months ended June 30, ~~2017~~2018 compared to ~~$157,607~~$79,381 for the same period in ~~2016.~~2017. These proceeds ~~from the investment portfolio~~ were reinvested into the investment portfolio or used to fund loan growth. Purchases of investment securities were ~~$119,766~~$497,845 for the first six months of ~~2017~~2018 compared to ~~$43,724~~$119,766 for the same period in ~~2016~~2017. The large increase in purchases of investment securities in 2018 is related to the releveraging of the Company's balance sheet.

Cash provided by financing activities for the six months ended June 30, 2018 and 2017 was $665,071 and ~~2016 was~~ $124,906, ~~and $135,347,~~ respectively. Deposits increased ~~$143,911~~$461,140 and ~~$133,760~~$143,911 for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017, respectively. A portion of the increase in deposits during the first six months of 2018 is the result of the Company reacquiring certain wholesale deposit funding sources which had been reduced during the fourth quarter of 2017 as part of the Company’s deleveraging strategy. Cash provided through deposit growth was ~~primarily~~ used to fund loan ~~growth.~~growth and purchase investment securities.

Restrictions on Bank Dividends, Loans and Advances

The Company’s liquidity and capital resources, as well as its ability to pay dividends to its shareholders, are substantially dependent on the ability of ~~the~~Renasant Bank to transfer funds to the Company in the form of dividends, loans and advances. Under Mississippi law, a Mississippi bank may not pay dividends unless its earned surplus is in excess of three times capital stock. A Mississippi bank with earned surplus in excess of three times capital stock may pay a dividend, subject to the approval of the Mississippi Department of Banking and Consumer ~~Finance.~~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 ~~this supervisory authority~~the DBCF is required prior to Renasant Bank paying dividends to the ~~Company.~~Company, and under certain circumstances the approval of the FDIC may be required.

Federal Reserve regulations also limit the amount Renasant Bank may loan to the Company unless such loans are collateralized by specific obligations. At June 30, ~~2017~~2018, the maximum amount available for transfer from Renasant Bank to the Company in the form of loans was ~~$88,409.~~$110,818. The Company maintains a line of credit collateralized by cash with Renasant Bank totaling ~~$3,045.~~$3,052. There were no amounts outstanding under this line of credit at June 30, ~~2017~~2018. These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the six months ended June 30, ~~2017,~~2018, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.

Off-Balance Sheet Transactions

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

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


	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Loan commitments	$	1,340,396	$	1,263,059	$	1,575,805	$	1,619,022
Standby letters of credit	42,170		44,086		65,253		68,946

The Company closely monitors the amount of remaining future commitments to borrowers in light of prevailing economic conditions and adjusts these commitments as necessary. The Company will continue this process as new commitments are entered into or existing commitments are renewed.

The Company utilizes derivative financial instruments, including interest rate contracts such as swaps, caps and/or floors, as part of its ongoing efforts to mitigate its interest rate risk exposure and to facilitate the needs of its customers. The Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into an offsetting derivative contract position with other financial institutions. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures. At June 30, ~~2017,~~2018, the Company had notional amounts of ~~$91,810~~$219,738 on interest rate contracts with corporate customers and ~~$91,810~~$219,738 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts.

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 residential mortgage loans and also enters into forward commitments to sell residential mortgage loans to secondary market investors.

The Company has also entered into forward interest rate swap contracts on FHLB borrowings, as well as interest rate swap agreements on junior subordinated debentures that are all accounted for as cash flow hedges. Under each of these contracts, the Company will pay a fixed rate of interest and will receive a variable rate of interest based on the three-month LIBOR plus a predetermined spread.

For more information about the Company’s off-balance sheet transactions, see Note ~~12,~~11, “Derivative Instruments,” in the Notes to Consolidated Financial Statements of the Company in Item 1, Financial Statements.

Shareholders’ Equity and Regulatory Matters

Total shareholders’ equity of the Company was $~~1,271,786~~1,558,668 at June 30, ~~2017~~2018 compared to $~~1,232,883~~1,514,983 at December 31, ~~2016~~2017. Book value per share was ~~$28.62~~$31.54 and ~~$27.81~~$30.72 at June 30, ~~2017~~2018 and December 31, ~~2016~~2017, respectively. The growth in shareholders’ equity was ~~primarily~~ attributable to earnings retention ~~and~~offset by changes in accumulated other comprehensive ~~income offset by~~loss and dividends declared.

On September 15, 2015, the Company filed a shelf registration statement with the Securities and Exchange Commission (“SEC”). The shelf registration statement, which was automatically 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 ~~be required to~~ file with the SEC at the time of the specific offering. The proceeds of the sale of securities, if and when offered, will be used for general corporate purposes or as otherwise described in the prospectus supplement applicable to the offering and could include the expansion of the Company’s banking, insurance and wealth management operations as well as other business opportunities.

The Company has junior subordinated debentures with a carrying value of ~~$85,607~~$86,155 at June 30, ~~2017~~2018, of which ~~$82,729~~$83,277 are included in the Company’s Tier 1 capital. ~~The~~ Federal Reserve ~~Board issued guidance in March 2005 providing more strict quantitative limits on~~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.~~capital at June 30, 2018. 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 ~~issued after May 19, 2010 may~~are not ~~be included~~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 ~~$98,203~~$114,044 at June 30, ~~2017~~2018. These notes are included in the ~~Company's~~Company’s Tier 2 capital.



Capital Tiers	Tier 1 Capital to Average Assets (Leverage)	Common Equity Tier 1 to Risk - Weighted Assets	Tier 1 Capital to Risk – Weighted Assets	Total Capital to Risk – Weighted Assets
Well capitalized	5% or above	6.5% or above	8% or above	10% or above
Adequately capitalized	4% or above	4.5% or above	6% or above	8% or above
Undercapitalized	Less than 4%	Less than 4.5%	Less than 6%	Less than 8%
Significantly undercapitalized	Less than 3%	Less than 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 Renasant Bank as of the dates presented:


	Actual				Minimum Capital Requirement to be Well Capitalized				Minimum Capital Requirement to be Adequately Capitalized (including the phase-in of the Capital Conservation Buffer)				Actual				Minimum Capital Requirement to be Well Capitalized				Minimum Capital Requirement to be Adequately Capitalized (including the phase-in of the Capital Conservation Buffer)
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2017
June 30, 2018
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	797,620	11.65	%	$	445,027	6.50	%	$	393,678	5.75	%	$	951,490	11.71	%	$	528,043	6.50	%	$	517,888	6.375	%
Tier 1 risk-based capital ratio	880,239		12.86	%	547,726		8.00	%	496,377		7.25	%	1,034,498		12.73	%	649,899		8.00	%	639,744		7.875	%
Total risk-based capital ratio	1,026,916		15.00	%	684,657		10.00	%	633,308		9.25	%	1,198,046		14.75	%	812,373		10.00	%	802,219		9.875	%
Leverage capital ratios:
Tier 1 leverage ratio	880,239		10.68	%	412,041		5.00	%	329,632		4.00	%	1,034,498		10.63	%	485,456		5.00	%	388,365		4.00	%

Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	884,090	12.93	%	$	444,538	6.50	%	$	393,245	5.75	%	$	1,057,998	13.04	%	$	527,172	6.50	%	$	517,034	6.375	%
Tier 1 risk-based capital ratio	884,090		12.93	%	547,124		8.00	%	495,831		7.25	%	1,057,998		13.04	%	648,827		8.00	%	638,689		7.875	%
Total risk-based capital ratio	932,564		13.64	%	683,905		10.00	%	632,612		9.25	%	1,108,178		13.66	%	811,033		10.00	%	800,895		9.875	%
Leverage capital ratios:
Tier 1 leverage ratio	884,090		10.75	%	411,260		5.00	%	329,008		4.00	%	1,057,998		10.89	%	484,518		5.00	%	387,614		4.00	%

December 31, 2016
December 31, 2017
Renasant Corporation:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	766,560	11.47	%	$	434,267	6.50	%	$	342,403	5.125	%	$	896,733	11.34	%	$	513,827	6.50	%	$	454,539	5.75	%
Tier 1 risk-based capital ratio	858,850		12.86	%	534,483		8.00	%	442,619		6.625	%	979,604		12.39	%	632,402		8.00	%	573,114		7.25	%
Total risk-based capital ratio	1,004,038		15.03	%	668,103		10.00	%	576,239		8.625	%	1,142,926		14.46	%	790,503		10.00	%	731,215		9.25	%
Leverage capital ratios:
Tier 1 leverage ratio	858,850		10.59	%	405,441		5.00	%	324,353		4.00	%	979,604		10.18	%	481,086		5.00	%	384,968		4.00	%

Renasant Bank:
Risk-based capital ratios:
Common equity tier 1 capital ratio	$	824,850	12.38	%	$	433,105	6.50	%	$	341,487	5.125	%	$	1,000,715	12.69	%	$	512,570	6.50	%	$	453,427	5.75	%
Tier 1 risk-based capital ratio	824,850		12.38	%	533,052		8.00	%	441,434		6.625	%	1,000,715		12.69	%	630,856		8.00	%	571,713		7.25	%
Total risk-based capital ratio	871,911		13.09	%	666,315		10.00	%	574,697		8.625	%	1,050,751		13.32	%	788,569		10.00	%	729,427		9.25	%
Leverage capital ratios:
Tier 1 leverage ratio	824,850		10.20	%	404,442		5.00	%	323,554		4.00	%	1,000,715		10.42	%	480,353		5.00	%	384,282		4.00	%

~~In July 2013,~~For more information regarding the ~~Federal Reserve, the FDIC and the Office of the Comptroller of the Currency approved the implementation of the Basel III regulatory~~ capital reforms and issued rules effecting certain changes required by the Dodd-Frank Act (the “Basel III Rules”) that call for broad and comprehensive revision of regulatory capital standards for U.S. banking organizations. Generally, the Basel III Rules became effective on January 1, 2015, although parts of the Basel III Rules will be phased in through 2019.

The Basel III Rules implemented a new common equity Tier 1 minimum capital requirement (“CET1”) and a higher minimum Tier 1 capital requirement, as reflected in the table above, and adjusted other items affecting the calculation of the numerator of a banking organization’s risk-based capital ratios. The new CET1 capital ratio includes common equity as defined under GAAP and does not include any other type of non-common equity under GAAP. Additionally, the Basel III Rules apply limits to a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a specified amount of CET1 capital in addition to the amount necessary to meet its minimum risk-based capital requirements.

Further, the Basel III Rules changed the agencies’ general risk-based capital requirements for determining risk-weighted assets, which affect the calculation of the denominator of a banking organization’s risk-based capital ratios. The Basel III Rules have revised the agencies’ rules for calculating risk-weighted assets to enhance risk sensitivity and to incorporate certain international capital standards of the Basel Committee on Banking Supervision set forth in the standardized approach of the “International Convergence of Capital Measurement and Capital Standards: A Revised Framework”.

~~The calculation of risk-weighted assets in the denominator of the Basel III capital ratios has been adjusted to reflect the higher risk nature of certain types of loans. Specifically, as~~adequacy guidelines applicable to the Company and Renasant ~~Bank:~~

— Residential mortgages: Replaced the former 50% risk weight for performing residential first-lien mortgages and a 100% risk-weight for all other mortgages with a risk weight of between 35% and 200% determined by the mortgage’s loan-to-value ratio and whether the mortgage falls into one of two categories based on eight criteria that include the term, use of negative amortization and balloon payments, certain rate increases and documented and verified borrower income.

~~— Commercial mortgages: Replaced the former 100% risk weight with a 150% risk weight for certain high volatility commercial real estate acquisition, development and construction loans.~~

~~— Nonperforming loans: Replaced the former 100% risk weight with a 150% risk weight for loans, other than residential mortgages, that are 90 days past due or on nonaccrual status.~~

~~The Basel III Rules also introduce a new capital conservation buffer designed~~Bank, please refer to absorb losses during periods of economic stress. The capital conservation buffer is composed entirely of CET1, on top of these minimum risk-weighted asset ratios. In addition, the Basel III Rules provide for a countercyclical capital buffer applicable only to certain covered institutions. It is not expected that the countercyclical capital buffer will be applicable to the Company or Renasant Bank. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The implementation of the capital conservation buffer began on JanuaryNote 17, “Regulatory Matters,” in Item 1, ~~2016 at the 0.625% level and will be phased in over a 4-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019).~~

Financial Statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk since December 31, ~~2016.~~2017. For additional information regarding our market risk, see our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

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~~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.

Part II. OTHER INFORMATION

Item 1A. RISK FACTORS

Information regarding risk factors appears in Part I, Item 1A, ~~“Risk~~Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017. There have been no material changes in the risk factors disclosed in the 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

~~The Company did not repurchase any shares of its outstanding stock during~~During the three month period ended June 30, ~~2017.~~2018, the Company repurchased shares of its common stock as indicated in the following table:



	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Shares	Maximum Number of Shares or Approximate Dollar Value That May Yet Be Purchased Under Share Repurchase Plans
April 1, 2018 to April 30, 2018	2,394	$	42.56	—	—
May 1, 2018 to May 31, 2018	1,753	45.23		—	—
June 1, 2018 to June 30, 2018	—	—		—	—
Total	4,147	$	43.69	—	—


(1)	Represents shares withheld to satisfy federal and state tax liabilities related to the vesting of time-based restricted stock awards during the three month period ended June 30, 2018.

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~~Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this report, which is incorporated by reference herein.

Item 6. EXHIBITS



Exhibit Number		Description

(2)(i)		~~Agreement and Plan of Merger by and among Renasant Corporation, Renasant Bank, First M&F Corporation and Merchants and Farmers Bank dated as of February 6, 2013~~⁽¹⁾

~~(2)(ii)~~		~~Agreement and Plan of Merger by and among Renasant Corporation, Renasant Bank, Heritage Financial Group, Inc. and HeritageBank of the South~~⁽²⁾

~~(2)(iii)~~		~~Agreement and Plan of Merger by and among Renasant Corporation, Renasant Bank and KeyWorth Bank dated as of October 20, 2015~~ ⁽³⁾

~~(2)(iv)~~		Agreement and Plan of Merger by and among Renasant Corporation, Renasant Bank, Metropolitan BancGroup, Inc. and Metropolitan Bank dated as of January 17, 2017 ⁽⁴⁾(1)

(2)(ii)		Agreement and Plan of Merger by and among Renasant Corporation, Renasant Bank, Brand Group Holdings, Inc. and The Brand Banking Company dated as of March 28, 2018(2)

(3)(i)		Articles of Incorporation of Renasant Corporation, as amended⁽⁵⁾ (3)

(3)(ii)		Restated Bylaws of Renasant Corporation, as amended ⁽⁶⁾(4)

(4)(i)		Articles of Incorporation of Renasant Corporation, as amended⁽⁵⁾ (3)

(4)(ii)		Restated Bylaws of Renasant Corporation, as amended ⁽⁶⁾(4)

~~(10)(i)~~		~~Amendment No. 1 to Executive Employment Agreement dated April 25, 2017 between Renasant Corporation and E. Robinson McGraw~~⁽⁷⁾

~~(10)(ii)~~		~~Retirement Agreement between Renasant Corporation and O. Leonard Dorminey dated as of April 25, 2017~~⁽⁸⁾

~~(12)(i)~~		~~Computation of Ratios of Earnings to Fixed Charges~~

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

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

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

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

~~(101)~~		The following materials from Renasant Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 were formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements (Unaudited).


~~(1)~~	~~Filed as exhibit 2.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on February 11, 2013 and incorporated herein by reference.~~


~~(2)~~	~~Filed as exhibit 2.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on December 15, 2014 and incorporated herein by reference.~~


~~(3)~~	~~Filed as exhibit 2.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on October 23, 2015 and incorporated herein by reference.~~


~~(4)~~	~~Filed as exhibit 2.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on January 19, 2017 and incorporated herein by reference.~~


~~(5)~~	~~Filed as exhibit 3.1 to the Form 10-Q of the Company filed with the Securities and Exchange Commission on May 10, 2016 and incorporated herein by reference.~~


~~(6)~~	Filed as exhibit 3.2 to the Pre-Effective Amendment No. 1 to Form S-4 Registration Statement of the Company (File No. 333-208753) filed with the Securities and Exchange Commission on January 29, 2016 and incorporated herein by reference.


~~(7)~~	~~Filed as exhibit 10.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on April 28, 2017 and incorporated herein by reference.~~


~~(8)~~	~~Filed as exhibit 10.2 to the Form 10-Q of the Company filed with the Securities and Exchange Commission on May 10, 2017 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.

~~SIGNATURES~~

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



		~~RENASANT CORPORATION~~
		~~(Registrant)~~

~~Date:~~	~~August 9, 2017~~	~~/s/ E. Robinson McGraw~~
		~~E. Robinson McGraw~~
		~~Chairman of the Board, Director,~~
		~~and Chief Executive Officer~~
		~~(Principal Executive Officer)~~

~~Date:~~	~~August 9, 2017~~	~~/s/ Kevin D. Chapman~~
		~~Kevin D. Chapman~~
		~~Executive Vice President and~~
		~~Chief Financial Officer~~
		~~(Principal Financial Officer)~~

~~EXHIBIT INDEX~~



~~Exhibit~~ ~~Number~~		~~Description~~

~~(12)(i)~~		~~Computation of Ratios of Earnings to Fixed Charges.~~

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

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

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

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

(101)		The following materials from Renasant Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2017~~2018 were formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements (Unaudited).


(1)	Filed as exhibit 2.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on January 19, 2017 and incorporated herein by reference.


(2)	Filed as exhibit 2.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on March 30, 2018 and incorporated herein by reference.


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


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

SIGNATURES

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



		RENASANT CORPORATION
		(Registrant)

Date:	August 8, 2018	/s/ C. Mitchell Waycaster
		C. Mitchell Waycaster
		President and
		Chief Executive Officer
		(Principal Executive Officer)

Date:	August 8, 2018	/s/ Kevin D. Chapman
		Kevin D. Chapman
		Executive Vice President and
		Chief Financial and Operating Officer
		(Principal Financial Officer)



		Page
PART I	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	8580

Item 4.	Controls and Procedures	8580

PART II	Other Information
Item 1A.	Risk Factors	8682

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8682

Item 6.	Exhibits	8683

SIGNATURES		89

~~EXHIBIT INDEX~~		9084



	Number of Loans		Recorded Investment
Totals at January 1, 2017	53		$	7,447
Additional loans with concessions	9		536
Reductions due to:
Reclassified as nonperforming	(2	)	(126		)
Paid in full	(6	)	(368		)
Charge-offs	(1	)	(250		)
Principal paydowns	—		(181		)
Totals at June 30, 2017	53		$	7,058



	Total Purchased Credit Deteriorated Loans
Balance at January 1, 2017	$	(36,326	)
Additions due to acquisition	—
Reclasses from nonaccretable difference	294
Accretion	6,035
Charge-offs	741
Balance at June 30, 2017	$	(29,256	)



At acquisition date:	April 1, 2016
Contractually-required principal and interest	$	289,495
Nonaccretable difference	3,848
Cash flows expected to be collected	285,647
Accretable yield	13,317
Fair value	$	272,330



Three Months Ended June 30, 2016	Trust preferred securities
Balance at April 1, 2016	$	18,947
Accretion included in net income	8
Unrealized losses included in other comprehensive income	(711		)
Purchases	—
Sales	—
Issues	—
Settlements	(65		)
Transfers into Level 3	—
Transfers out of Level 3	—
Balance at June 30, 2016	$	18,179



	June 30, 2017			December 31, 2016
Unrealized gains on securities	$	14,797		$	9,490
Non-credit related portion of other-than-temporary impairment on securities	(16,719		)	(16,719		)
Unrealized losses on derivative instruments	(1,351		)	(1,355		)
Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations	(7,195		)	(7,320		)
Total accumulated other comprehensive loss	$	(10,468	)	$	(15,904	)



	Volume			Rate			Net⁽¹⁾
Interest income:
Loans:
Not purchased	$	8,445		$	498		$	8,943
Purchased	(5,380		)	1,659			(3,721		)
Purchased and covered ⁽²⁾	(1,073		)	—			(1,073		)
Mortgage loans held for sale	(1,476		)	835			(641		)
Securities:
Taxable	(269		)	288			19
Tax-exempt	(280		)	(7		)	(287		)
Interest-bearing balances with banks	185			221			406
Total interest-earning assets	152			3,494			3,646
Interest expense:
Interest-bearing demand deposits	147			349			496
Savings deposits	8			(3		)	5
Time deposits	(7		)	401			394
Borrowed funds	(4,235		)	4,465			230
Total interest-bearing liabilities	(4,087		)	5,212			1,125
Change in net interest income	$	4,239		$	(1,718	)	$	2,521

Noninterest Income to Average Assets

Three Months Ended June 30,

Six Months Ended June 30,