SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31,June 30, 2005

or

For the transition period from            to            

Commission File Number 000-12154

RENASANT CORPORATION

(Exact name of the registrant as specified in its charter)

209 Troy Street, P. O. Box 709, Tupelo, Mississippi 38802-0709

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: 662-680-1001

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  x    NO  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     YES  x    NO  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, $5 Par Value,10,385,075 10,393,373 shares outstanding as of April 30,July 31, 2005.

RENASANT CORPORATION

INDEX

RENASANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

See Notes to Condensed Consolidated Financial Statements

RENASANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share data)

See Notes to Condensed Consolidated Financial Statements

RENASANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share data)

See Notes to Condensed Consolidated Financial Statements

RENASANT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31,JUNE 30, 2005

(in thousands, except share data)

Note 1 Summary of Significant Accounting Policies

Business: Renasant Corporation (formerly known as The Peoples Holding Company and referred to herein as the “Company”), a Mississippi corporation, owns and operates Renasant Bank (formerly known as The Peoples Bank & Trust Company), a Mississippi-chartered bank with operations in Mississippi, Tennessee and Alabama, and Renasant Insurance, Inc. (formerly known as The Peoples Insurance Agency, Inc.), a wholly-owned subsidiary of Renasant Bank with operations in Mississippi. On March 31, 2005, Renasant Bank of Tennessee, a Tennessee-chartered bank and wholly-owned subsidiary of the Company, was merged into Renasant Bank.Bank, and Renasant Bank survived the merger. The Company has full service offices located throughout north Mississippi, southwest Tennessee and north Alabama.

On December 16, 2004, the board of directors of the Company approved a plan to change the name of the Company from “The Peoples Holding Company” to “Renasant Corporation”. The change of the Company’s name was approved by the shareholders at the annual meeting held on April 19, 2005. Effective April 19, 2005 and was effective on the Company’s name was changed to Renasant Corporation.same date.

On July 1, 2004, the Company completed its acquisition of Renasant Bancshares, Inc. (“Renasant Bancshares”). On January 1, 2005, the Company completed its acquisition of Heritage Financial Holding Corporation (“Heritage”). The financial condition and results of operations for Renasant and Heritage are included in the Company’s financial statements since the respective dates of each acquisition.

At the Company’s 2005 Annual Meeting of Shareholders held on April 19, 2005, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $5.00 per share, from 15,000,000 shares to 75,000,000 shares. At the meeting, the Company’s shareholders also approved an amendment to the Company’s Articles of Incorporation to authorize 5,000,000 shares of preferred stock, par value $.01 per share. The Company’s board of directors will determine, in its sole discretion, the rights, preferences and other terms of the shares of preferred stock at the time of the issuance of such shares. As a result of these actions, the Company now has a total of 80,000,000 shares of stock authorized, of which 75,000,000 shares are common stock and 5,000,000 shares are preferred stock.

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information regarding the Company’s accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

Certain amounts in prior periods have been reclassified to conform to the current presentation, and all dollar amounts are in thousands, except share data.

New accounting pronouncements: In January 2005, the Company adopted and applied the provisions of the American Institute of Certified Public Accounts’ Statement of Position 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer,” on certain loans acquired in connection with the acquisition of Heritage for which there was evidence of deterioration of credit quality since origination and for which it was probable, at acquisition date, that all contractually required payments would not be collected. The amount of loans included in the balance sheet heading “Loans, net of unearned income” at June 30, 2005 are as follows:

The Company did not increase the allowance for loan losses through a charge to the income statement for these loans during the six months ended June 30, 2005. During the second quarter of 2005, the Company recorded $1,048 in interest income when it transferred $1,048 of nonaccretable difference to accretable yield as the Company realized improved cash flow on certain loans. The majority of the transfer was the result of a negotiated settlement with a guarantor on a single loan.

Note 2 Shareholders’ Equity

We are currently operating under a share buy-back plan authorized byIn September 2002, the Company’s board of directors in September 2002adopted a share buy-back plan which, as amended through June 30, 2005, allows for the Company to purchase ofup to 1,175,657 shares of our outstanding common stock, subject to a monthly purchase limit of $2,000 of our common stock. This plan will remain in effect until all authorized shares are repurchased or until otherwise instructed by the board of directors. As of March 31,June 30, 2005, 962,9771,077,787 shares of our common stock had been purchased and 212,68097,870 shares remained authorized under this plan. The reacquired common shares are held as treasury shares and may be reissued for various corporate purposes. During the firstsecond quarter of 2005, the Company reissued 27,22799,932 shares from treasury for the exercise of stock options.options assumed in the Renasant Bancshares and Heritage acquisitions.

The Company declared a cash dividend for the firstsecond quarter of 2005 of $0.21$0.22 per share as compared to $0.20$0.21 per share for the first quarter of 2005 and $.20 per share for the second quarter of 2004. Total cash dividends paid to shareholders by the Company were $2,187$4,476 and $1,638$3,275 for the threesix month periods ended March 31,June 30, 2005 and 2004, respectively.

Note 3 Comprehensive Income

For the three month periods ended March 31,June 30, 2005 and 2004, total comprehensive income (loss) was $8,569 and $(1,500), respectively. For the six month periods ended June 30, 2005 and 2004, total comprehensive income was $3,003$11,572 and $5,416,$3,916, respectively. Total comprehensive income consists of net income and the change in the unrealized gain (loss) on securities available for sale.

Note 4 Employee Benefit Plans

The following table providestables provide the components of net pension cost and other benefit cost recognized for the three and six month periods ended March 31,June 30, 2005 and 2004:

Note 5 Net Income Per Common Share

Basic and diluted net income per common share calculations are as follows:

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 assuming outstanding unexercised stock options and warrants were exercised into common shares.

Note 6 Segment Reporting

Financial Accounting Standards Board Statement No. 131, “Disclosures About Segments of an Enterprise and Related Information,” requires public companies to report certain financial and descriptive information about their reportable operating segments (as defined by management) and certain enterprise-wide financial information about products and services, geographic areas, and major customers.

The Company’s internal reporting process is organized into four segments that account for the Company’s principal activities: the delivery of financial services through its community banks in Mississippi (Mississippi Region), Tennessee (Tennessee Region) and Alabama (Alabama Region), and the delivery of insurance services through its insurance agency (Renasant Insurance). In order to more closely match expenses with revenues at the community bank level, direct and indirect expenses and revenues are allocated to the segments based on various factors, including percentage of loans, percentage of deposits, full-time employees, number of accounts serviced and actual sales. All of the Company’s products are offered to similar classes of customers and markets, are distributed using the same methods and operate in similar regulatory environments.

The following table provides financial information for our operating segments. The “Other” column in the following table represents financial information of the holding company and eliminations which are necessary for purposes of reconciling to the consolidated amounts.

Note 7 Mergers and Acquisitions

On January 1, 2005, the Company completed its acquisition of Heritage, Financial Holding Corporation (“Heritage”), a bank holding company headquartered in Decatur, Alabama. Heritage was the parent of Heritage Bank and operated eight banking offices in Alabama. The acquisition allowsallowed the Company to expand its geographical footprint into the key markets of Birmingham, Decatur and Huntsville, Alabama.

The Company issued 1,369,589 shares of its common stock and paid approximately $23,055 in cash for 100% of the voting equity interests in Heritage. The common stock issued by the Company was registered under the Securities Act of 1933, as amended. The aggregate transaction value, including the value of Heritage’s options assumed by the Company, was $75,658. At January 1, 2005, Heritage had total assets of approximately $540,296, total loans of approximately $389,740, total deposits of approximately $380,998, and total stockholders’ equity of approximately $28,842. In connection with the acquisition, the Company recorded approximately $52,084$52,771 in intangible assets. The intangible assets are not deductible for income tax purposes.

In December 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-3, “Accounting for Certain Loans and Debt Securities Acquired in a Transfer” (“SOP 03-3”). SOP 03-3 prohibits the carryover of an allowance for loan losses on certain loans acquired in a purchase business combination.combination accounted for as a purchase. Increases in expected cash flows to be collected from the contractual cash flows will be recognized as an adjustment of the loan’s yield over its remaining life, while decreases in expected cash flows will be recognized as an impairment. This accounting guidance became effective for loans acquired in fiscal years subsequent to December 15, 2004. The Company applied the guidance under SOP 03-3 to the loans acquired in connection with the acquisition of Heritage. As a result, certain acquired loans had experienced credit deterioration since date of origination to the Company reduced thedate of acquisition. These loans, which had an outstanding balance of $18,839 at the date of Heritage loans acquired by a specific credit reserve of $5,742 from the allowance for loan losses. These loansacquisition, are now carried at a balance which management believes, based on the facts and circumstances surrounding each respective loan at the date of acquisition, represents their future cash flows. Management continually monitors these loans individually as part of its normal credit review and monitoring procedures for changes in the estimated future cash flows. At March 31,June 30, 2005, none of the allowance for loan losses was allocated to these loans.

The following table summarizes the allocation of purchase price to assets and liabilities acquired in connection with the Company’s acquisition of Heritage based on their fair values on January 1, 2005:2005. The Company is finalizing the value of the leasehold improvements and the amount of deferred taxes. As such, the adjustments included in the following table for fixed assets and deferred taxes are preliminary and may change.

Allocation of Purchase Price for Heritage Financial Holding Corporation

Since the acquisition of Heritage was completed on January 1, 2005, the actual results of the combined companies through the six-month period ended June 30, 2005 are indicative of the pro forma results. As such, no pro forma information is included herein.

Note 8 Subsequent Event

At the Company’s 2005 Annual Meeting of Shareholders held on April 19, 2005, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 15,000,000 shares to 75,000,000 shares. At the meeting, the Company’s shareholders also approved an amendment to the Company’s Articles of Incorporation to authorize 5,000,000 shares of preferred stock, with a par value of $01 per share. The company’s board of directors will determine, in its sole discretion, the rights, preferences and other terms of the shares the preferred stock at the time of the issuance of such shares. As a result of these actions, the Company now has a total of 80,000,000 shares of stock authorized, of which 75,000,000 shares are common stock and 5,000,000 shares are preferred stock.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in thousands, except per share data)

This Form 10-Q may contain, or incorporate by reference, statements which may 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,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions. Prospective investors are cautioned that any such forward-looking statements are not guarantees for future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include significant fluctuations in interest rates, inflation, economic recession, significant changes in the federal and state legal and regulatory environment, significant underperformance in our portfolio of outstanding loans, and competition in our markets. We undertakeManagement undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

Overview

Renasant Corporation (formerly known as The Peoples Holding Company and referred to herein as the “Company”, “we,” “our,” or “us”), a Mississippi corporation, owns and operates Renasant Bank (formerly known as The Peoples Bank & Trust Company), a Mississippi-chartered bank with operations in Mississippi, Tennessee and Alabama, and Renasant Insurance, Inc. (formerly known as The Peoples Insurance Agency, Inc.), a Mississippi corporation with operations in Mississippi. Renasant Insurance, Inc. is a wholly owned subsidiary of Renasant Bank. The Company has full service offices located throughout north Mississippi, southwest Tennessee and north Alabama.

On July 1, 2004, we completed our acquisition of Renasant Bancshares, Inc. (“Renasant Bancshares”), the parent company of Renasant Bank of Tennessee, whichand expanded our footprint into Tennessee. OnRenasant Bank of Tennessee became one of our subsidiaries as a result of our acquisition of Renasant Bancshares. In order to simplify our operations and reduce costs, on March 31, 2005, Renasant Bank of Tennessee merged into Renasant Bank.Bank, and Renasant Bank survived the merger. On January 1, 2005, we completed our acquisition of Heritage Financial Holding Corporation (“Heritage”), the parent company of Heritage Bank, whichand expanded our footprint into Alabama. On that date, Heritage merged into the Company, and Heritage Bank merged into Renasant Bank. The Company and Renasant Bank survived the merger. The financial condition and results of operations for both acquisitions are included in the Company’s financial statements since the date of relevant acquisition.

Financial Condition

Total assets for the Company increased to $2,320,164$2,353,385 on March 31,June 30, 2005 from $1,707,545 on December 31, 2004, representing an increase of 35.88%37.82%. The acquisition of Heritage contributed total assets of $540,296. The information contained in the ensuing paragraphs further discusses the increase in assets.

Cash and cash equivalents increased $12,596$41,015 from $56,025 at December 31, 2004 to $68,621$97,040 at March 31,June 30, 2005, and represented 2.96%4.12% of total assets at March 31,June 30, 2005, compared to 3.28% of total assets at December 31, 2004.

Our investment portfolio increased from $371,581 at December 31, 2004 to $425,196$415,193 at March 31,June 30, 2005. The acquisition of Heritage contributed investment securities with a balance of $94,866. The decline in the investment portfolio, excluding the contribution from the Heritage acquisition was a result of the Company utilizing the cash flow from its investment portfolio to partially fund loan growth generated during the first quarterhalf of 2005.

Mortgage loans held for sale were $32,623$32,792 at March 31,June 30, 2005 compared to $2,714 at December 31, 2004. The increase in mortgage loans held for sale is directly attributable to the mortgage loan operations acquired in connection with our acquisition of Heritage acquired on January 1, 2005. Originations of mortgage loans to be sold totaled $90,710$204,840 for the first threesix months of 2005 as compared to $45,331 for the full year of 2004. Mortgage loans to be sold are locked in at thea contractual rate upon closing, thereby eliminating any interest rate risk forwith third party private investors, and the Company.Company is obligated to sale the mortgages to such investors only if the mortgages are closed and funded. Gains and losses are realized at the time

consideration is received and all other criteria for sales treatment have been met. These loans are typically sold within thirty days after the loan is funded. Although some interest income is derived from mortgage loans held for sale, the main source of income is gains from the sale of the mortgage loans in the secondary market.

The loan balance, net of unearned income, at March 31,June 30, 2005 was $1,572,103$1,592,391 representing an increase of $430,623,$450,911, or 37.72%39.50%, from $1,141,480 at December 31, 2004. The acquisition of Heritage contributed total loans of $389,740. Excluding Heritage’s loans, loans increased $40,883$61,171 from December 31, 2004.

Excluding the impact on the loan portfolio from the Heritage acquisition, the growth in loans during the first threesix months of 2005 is attributed in partprimarily attributable to loan production from our Tennessee region. Loans in the Tennessee region grew $13,865$46,949 during the first threesix months of 2005. The Mississippi region continued to experience growth primarily in its DeSoto County market. DeSoto County, located just south of Memphis, Tennessee, continues to be one of the fastest growing counties in both Mississippi and the nation. The table below sets forth loans outstanding, according to loan type, net of unearned income.

Loan concentrations are considered to exist when there are amounts loaned to a large number of borrowers engaged in similar activities who would be similarly impacted by economic or other conditions. At March 31,June 30, 2005, we had no significant concentrations of loans other than those presented in the categories in the table above.

Intangible assets increased $50,982$51,104 to $101,406$101,528 at March 31,June 30, 2005 from $50,424 at December 31, 2004. The increase reflects $46,860,$47,547, $4,590, and $634 of goodwill, core deposits intangible, and noncompete agreements, respectively, recorded on January 1, 2005, in connection with the acquisition of Heritage. The core deposits intangible and noncompete agreements are being amortized over their estimated useful lives of ten and five years, respectively.

Other assets increased $32,148$25,327 from $65,726 at December 31, 2004, to $97,874$91,053 at March 31,June 30, 2005. This increase is primarily attributable to the Heritage acquisition. The increase also includes increases in Bank Owned Life Insurance, (“BOLI”), deferred tax assets and accrued interest receivable.

Total deposits increased $422,324$445,500 to $1,741,001$1,764,177 at March 31,June 30, 2005 from $1,318,677 on December 31, 2004. The acquisition of Heritage contributed total deposits of $380,998, including money market and savings accounts of $46,735 and time deposits of $221,924.$380,998. Excluding Heritage’s deposits, total deposits increased $41,326,$64,502, or 3.13%4.89%, from December 31, 2004 due2004. Excluding the contribution to the deposit balances from the Heritage acquisition, the growth in money marketdeposits is primarily attributable to deposit generation in the Tennessee and savings accountsMississippi regions. Deposits in the Tennessee and time deposits. Excluding Heritage, the balance of money marketMississippi regions grew $33,233 and savings accounts increased $5,778, or 10.75%, to $543,247 at March 31, 2005. Time deposits, excluding Heritage, increased $20,017 to $614,581 at March 31, 2005 as compared to December 31, 2004 as our use of public funds increased $15,051 over the same period.$24,042, repectively.

We continue to utilize advances from the Federal Home Loan Bank (FHLB)(“FHLB”) to fund our loan portfolio. In order to mitigate interest rate risk, long term fixed rate loans have been match-funded with FHLB borrowings. Advances from the FHLB increased from $133,288$146,543 to $243,044$256,299 at March 31,June 30, 2005 compared to $109,756 at December 31, 2004. The acquisition of Heritage increased our FHLB advances by $91,135. At March 31,June 30, 2005, the weighted average maturity of the long-term portion of our FHLB advances was 32 years and 9 months while the weighted average rate was 3.45%3.69%.

During January 2005, we formed PHC Statutory Trust II for the purpose of issuing corporation-obligated mandatory redeemable capital securities to third-party investors and investing the proceeds from the sale of such capital securities solely in floating rate junior debentures of the Company. The $31,000$31,959 issue provided us funds for the cash portion of the Heritage acquisition. The 30-year junior subordinated debentures pay interest quarterly equal to the three month LIBOR plus 187 basis points. In connection with the Heritage acquisition, we assumed $10,000$10,310 in fixed-rate junior subordinated debentures issued by Heritage. These junior subordinated debentures have similar characteristics to our debentures and, as such, qualify as Tier 1 capital for regulatory purposes.

Shareholders’ equity increased $51,850,$56,412, or 28.96%31.51%, to $230,892$235,454 at March 31,June 30, 2005 compared to $179,042 at December 31, 2004, primarily as a result of the Heritage acquisition which increased shareholders’ equity by $51,415.

Other factors contributing to the change in capital include current year earnings treasury stock purchases, cash dividends declared, and unrealized security portfolio gains.gains offset by treasury stock purchases and dividends.

Results of Operations – Second Quarter of 2005 as Compared to the Second Quarter of 2004

Summary

Net income for the three month period ended March 31,June 30, 2005 was $5,459$6,207, an increase of $812,$1,150 or 17.47%22.74%, from net income of $4,647$5,057 for the same period in 2004. Basic earnings per share were $.60 and diluted earnings per share were $.59 for the three month period ended March 31,June 30, 2005, were $.52, a decrease of 8.77% fromas compared to basic and diluted earnings per share of $.57$.61 for the comparable period a year ago. The acquisitions of Renasant Bancshares and Heritage eachcombined had a $0.02$.02 per share dilutive impact on earnings for the first three monthssecond half of 2005.

Net income for the first three monthssecond quarter of 2005 was negatively impactedincreased by $244,$647, or $.02$.06 per share, in after-tax interest income as the cash flows from certain loans acquired in connection with the Company’s acquisition of Heritage, accounted for under AICPA Statement of Position 03-3 (“SOP 03-3”), exceeded initial estimates. This was offset by $295, or $.03 per share, in after-tax merger expenses related to the Heritage acquisition. Theseacquisition and after-tax expenses consist primarily of conversion-related expenses. The Company also incurred $160, or $.02 per share, in after-tax costs associated with changingrelated to the name of our subsidiary bank and insurance company which further reduced our netchange. Net income for the first three monthssecond quarter of 2005.2004 was increased by an after-tax gain of $617, or $.08 per share, recognized in connection with the sale of the Company’s merchant card business.

The annualized return on average assets and the annualized return on average equity are presented in the table below:

The annualized returns on average tangible assets and average tangible equity exclude the effects of intangible assets and related amortization expenses.

Net Interest Income

Net interest income is the difference between interest earned on earning assets and the cost of interest-bearing liabilities, which are two of the largest components contributing to our net income. The primary concerns in managing net interest income are the mix and the repricing of rate-sensitive assets and liabilities. While the current interest rate environment has been unfavorable for net interest income, several factors have lessened the impact on the Company of the interest rate environment, including increasesgrowth in variable-rate loans, risk-based loan pricing, and a shift from time deposits to less costly transaction deposits.

Net interest income for the three month periods ended March 31,June 30, 2005 and 2004, was $19,318$20,455 and $12,450,$12,547, respectively. On a tax equivalent basis, net interest margin for the three month period ended June 30, 2005, increased 4 basis points to 4.14% from 4.10% for the comparable period in 2004. Net interest income for the second quarter of 2005 includes $1,048 in interest income as cash flows from certain Heritage loans accounted for under SOP 03-3 exceeded initial estimates. This additional interest income increased net interest margin for the quarter by 20 basis points. Factors negatively impacting our net interest margin for the quarter include the acquisitions of Renasant Bancshares and Heritage, both of which had lower net margins than ours prior to the acquisitions, the issuance of subordinate debentures to fund the acquisitions and the rising costs of deposits.

Interest income grew 81.67% to $31,900 for the second quarter of 2005 from $17,559 for the same period in 2004. The growth in interest income was driven by volume, as the average balance of interest earning assets at June 30, 2005 increased $750,179 as compared to the same period in 2004. During this same period, the tax equivalent yield on earning assets increased 72 basis points to 6.36%. The increase in the average balance of earning assets was primarily due to the acquisitions of Renasant Bancshares and Heritage. These acquisitions contributed interest income of $3,408 and $8,207, respectively, for the second quarter of 2005. As discussed in the preceding paragraph, interest income includes $1,048 which we realized as a result of improved cash flows on certain Heritage loans accounted for under SOP 03-3. The majority of the interest income attributable to these Heritage loans resulted from a negotiated settlement with a guarantor on a single loan.

Interest expense increased $6,433 to $11,445 for the three months ended June 30, 2005 as compared to $5,012 for the same period in 2004. Interest expense increased as a result of several factors. The acquisitions of Renasant Bancshares and Heritage increased the average balance of interest bearing deposits by $185,404 and $341,398, respectively. In connection with both acquisitions, the Company issued junior subordinated debentures, and in connection with the Heritage acquisition, assumed Heritage’s outstanding junior subordinated debentures. The rising cost of deposits also increased interest expense. The cost of interest bearing deposits increased 53 basis points to 2.15% for the second quarter of 2005 compared to 1.62% for the same period in 2004. Overall, the cost of interest-bearing liabilities increased to 2.48% for the second quarter of 2005 from 1.80% for the same period in 2004.

See Note 2, “Significant Accounting Policies,” to the Condensed Consolidated Financial Statements for discussion and analysis of the Company’s mortgage loans held for sale portfolio and recognition of related income.

Noninterest Income

Noninterest income was $9,951 for the three month period ended June 30, 2005 compared to $9,119 for the same period in 2004, an increase of 9.12%. For the three month period ended June 30, 2005, Renasant Bancshares and Heritage contributed $199 and $1,548, respectively, to noninterest income. Excluding the noninterest income contributed by Renasant Bancshares and Heritage, noninterest income in the second quarter of 2005 decreased from the corresponding period in 2004 on account of the $1,000 recognized in the second quarter of 2004 from the Company’s sale of its merchant card business, described in more detail below.

Service charges on deposits were $4,167 for the second quarter of 2005, an increase of $435, or 11.66%, over $3,732 for the same period in 2004. Service charges represent the largest component of noninterest income. Overdraft fees were $3,509 for the three month period ended June 30, 2005, an increase of $283, or 8.77%, compared to the same period in 2004. This increase is also attributed to non-public transaction deposit growth. The fee charged to customers for insufficient funds remained the same throughout 2004 and 2005.

Fees and commissions were $2,965 and $1,958 for the three month periods ended June 30, 2005 and 2004, respectively. For the three month period ended June 30, 2005, mortgage loan fees (application and origination fees) were $1,164 compared to $344, for the same period of 2004. This increase primarily resulted from the mortgage loan business acquired in connection with the Heritage transaction.

The Financial Services division of the Company focuses on providing specialized products and services to our customers. Specialized products include fixed and variable annuities, mutual funds, and stocks offered through a third party provider. Fixed annuities consist of a line of twelve products. We use six insurance carriers, all of which have an A. M. Best rating of an “A” or better. Mutual funds offered by the Company originate primarily from five fund families. Revenues generated from the sale of these products totaled $211 for the second quarter of 2005 compared to $150 for the same period in 2004. Revenues from these products are reported in the Condensed Consolidated Statements of Income in the account line “Fees and commissions.”

Our emphasis on specialized products and services is designed to better serve the needs of our clients. The trust department within the Financial Services division operates on a custodial basis which includes administration of

benefit plans, accounting and money management for trust accounts. The trust department manages a number of trust accounts inclusive of personal and corporate benefit accounts, self-directed IRA’s, and custodial accounts. Fees for managing these accounts are generated based on the contractual terms of the accounts. Trust revenue for the second quarter of 2005 was $611 as compared to $606 for the same period of 2004. The market value of assets under management as of June 30, 2005 was $431,906 an increase of approximately 15.94% from the prior year.

Gains from sales of mortgage loans increased to $673 for the three months ended June 30, 2005 compared to $151 for the same period in 2004. The increase in gains from sales of mortgage loans is due to the increase in mortgage loan volumes attributable to Heritage’s mortgage loan business.

Revenues from merchant discounts decreased $268 from $270 for the three months ended June 30, 2004 as compared to the same period in 2005. In the second quarter of 2004, we recognized a $1,000 gain when we sold our interest in and rights to future revenue on credit card merchant agreements involving point of sale based credit card, debit card and other card-based transaction processing services, electronic payment and settlement services to Nova Information Systems, Inc. (“Nova”). As such, we will no longer continue to receive merchant discount revenue. We will receive referral fees from Nova, although such fees will likely be significantly less than our merchant discount revenue.

Noninterest Expense

Noninterest expense was $20,857 for the three month period ended June 30, 2005, compared to $14,182 for the same period in 2004, an increase of $6,675. The operations of Renasant Bancshares and Heritage increased noninterest expenses by $5,739, including $404 of Heritage merger related expenses incurred in connection with the Heritage acquisition.

Salaries and employee benefits for the three month period ended June 30, 2005, were $11,520, or $3,568 greater than the same period last year. The acquisition of Renasant Bancshares and Heritage increased salaries and employee benefits by $3,040 for the three month period ended June 30, 2005. The balance of the increase in salaries and employee benefits is due to normal salary increases which were effective March 31,2005.

Data processing costs for the three month period ended June 30, 2005 were $962, a decrease of $179 compared to the same period last year. The decrease resulted from continued efficiencies in our back office processing and lower costs as a result of renegotiating our contract with our primary vendor. Net occupancy expense and equipment expense for the three month period ended June 30, 2005 increased $315 and $180, respectively, to $1,181 and $1,041, respectively, over the comparable period for the prior year, primarily due to additional depreciation and expenses related to assets obtained in connection with our acquisitions of Renasant Bancshares and Heritage and our de novo branches.

Amortization of intangible assets increased to $571 for the three months ended June 30, 2005 compared to $100 for the same period in 2004. The increase is due to the amortization of the finite-lived intangible assets recorded as a result of the Renasant Bancshares and Heritage acquisitions. These intangible assets are being amortized over their estimated useful lives, which range between five and ten years.

In April 2005, our shareholders ratified the change of our name from The Peoples Holding Company to Renasant Corporation. As a result of the name change of the Company, we incurred approximately $73 in costs resulting from the disposal of obsolete supplies.

Noninterest expense as a percentage of average assets was 3.57% for the three month period ended June 30, 2005, and 3.94% for the comparable period in 2004. We anticipate a continued positive impact on future noninterest expense through our investments in personnel, technology, and programs such as High Performance Checking. The net overhead ratio was 1.86% and 1.68% for the second quarter of 2005 and 2004, respectively. The net overhead ratio is defined as noninterest expense less noninterest income, expressed as a percent of average assets. Our efficiency ratio increased to 66.80% for the three month period ended June 30, 2005, compared to 62.96% for the same period of 2004. The net overhead and efficiency ratios were negatively impacted by the merger costs and costs associated with the name change. We anticipate improvements in these ratios as we improve our operating efficiencies and take advantage of the income opportunities provided in our new markets of Tennessee and Alabama.

Income tax expense was $2,495 for the three month period ended June 30, 2005 (with an effective tax rate of 28.67%), compared to $1,939 (with an effective tax rate of 27.72%) for the same period in 2004. We continue to seek investing opportunities in assets whose earnings are given favorable tax treatment.

Results of Operations – Six Months Ended June 30, 2005 as Compared to the Six Months Ended June 30, 2004

Summary

Net income for the six month period ended June 30, 2005 was $11,666, an increase of $1,962, or 20.22%, from net income of $9,704 for the same period in 2004. Basic earnings per share were $1.12 and diluted earnings per share were $1.11 for the six month period ended June 30, 2005 as compared to basic and diluted earnings per share of $1.18 for the comparable period a year ago.

Net income in the six months ended June 30, 2005 increased $647, or $.06 per diluted share, due to the aforementioned recognition of interest income under SOP 03-3 and decreased $699, or $.06 per diluted share, due to after-tax merger expenses and name change expenses. Net income in the six months ended June 30, 2004 increased $617, or $.08 per diluted share, as a result of the aforementioned gain from the sale of the Company’s merchant card business.

The annualized return on average assets and the annualized return on average equity are presented in the table below:

The annualized returns on average tangible assets and average tangible equity exclude the effects of intangible assets and related amortization expenses.

Net Interest Income

Net interest income for the six month periods ended June 30, 2005 and 2004 was $39,773 and $24,997, respectively. On a tax equivalent basis, net interest margin for the six month period ended June 30, 2005 declined to 3.92%4.04% from 4.09% for the comparable period in 2004. The decline in our margin is primarily due to the acquisitions of Renasant Bancshares and Heritage, both of which had lower net margins than the Company.

Interest income grew 66.60%74.13% to $29,295$61,195 for the threesix month period ended March 31,June 30, 2005 from $17,584$35,143 for the same period in 2004. The growth in interest income was driven by volume, as the average balance in interest earning assets for March 31,June 30, 2005 increased $740,610$744,792 as compared to the same period in 2004, while the tax equivalent yield on earning assets increased 2249 basis points to 5.89%6.14%. The increase in the average balance of earning assets was primarily due to the acquisitions of Renasant Bancshares and Heritage. These acquisitions contributed interest income of $3,165$6,573 and $6,772,$14,979, respectively, for the first threesix months of 2005.

Interest expense increased $4,843$11,276 to $9,977$21,422 for the threesix months ended March 31,June 30, 2005 as compared to $5,134$10,146 for the same period in 2004. Interest expense increased as a result of several factors. The acquisitions of Renasant Bancshares and Heritage increased the average balance of interest bearing deposits by $174,792 and $341,832, respectively. The rising cost of deposits also increased interest expense. The cost of interest bearing deposits increased 37 basis points to 2.02% for the six months ended June 30, 2005 compared to 1.65% for the same period in 2004. Overall, the cost of interest-bearing liabilities increased to 2.34% for the first half of 2005 from 1.82% for the same period in 2004.

Noninterest Income

Noninterest income was $19,854 for the six month period ended June 30, 2005 compared to $17,290 for the same period in 2004, an increase of 14.83%. For the six month period ended June 30, 2005, Renasant Bancshares and Heritage contributed $368 and $2,998, respectively, to noninterest income. As discussed earlier, excluding Heritage, our noninterest income for the six months ended June 30, 2005 decreased compared to the same period in 2004 on account of the sale of our merchant card business in the second quarter of 2004.

Service charges on deposits were $8,041 for the first six months of 2005, an increase of $609, or 8.19%, over $7,432 for the six month period ended June 30, 2004. Overdraft fees were $6,717 for the six month period ended June 30, 2005, an increase of $513, or 8.27%, compared to the same period in 2004. This increase is attributed to non-public transaction deposit growth. The fee charged for insufficient funds remained the same throughout 2004 and 2005.

Fees and commissions were $5,470 and $3,629 for the six month periods ended June 30, 2005 and 2004, respectively. For the six month period ended June 30, 2005, mortgage loan fees (application and origination fees) were $2,045 compared to $641, for the same period of 2004. This increase primarily resulted from the acquisition of the mortgage loan business obtained in connection with our acquisition of Heritage.

Revenues generated from the sale of specialized products by the Financial Services division, such as fixed and variable annuities, mutual funds, and stocks offered through a third party provider, totaled $460 for the first six months of 2005 compared to $348 for the same period in 2004. Trust revenue for the first six months of 2005 was $1,236 as compared to $1,070 for the same period of 2004.