SEC Filing | Renasant Corporation

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

________________________________________________________

(Mark One)


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

For the quarterly period ended June 30, 2023


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

For the transition period from to

Commission file number: 001-13253

________________________________________________________

RENASANT CORPORATION

(Exact name of registrant as specified in its charter)

________________________________________________________


Mississippi						64-0676974
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)

209 Troy Street,

Tupelo,

Mississippi

38804-4827

(Address of principal executive offices)

(Zip Code)

(662) 680-1001

(Registrant’s telephone number, including area code)

________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $5.00 par value per share	RNST	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Table of Contents

As of July 31, 2023, 56,136,863 shares of the registrant’s common stock, $5.00 par value per share, were outstanding.

Table of Contents

Renasant Corporation and Subsidiaries

Form 10-Q

For the Quarterly Period Ended June 30, 2023

CONTENTS


		Page
PART I	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Changes in Shareholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	70

Item 4.	Controls and Procedures	70

PART II	Other Information


Item 1A.	Risk Factors	71

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71

Item 5.	Other Information	72

Item 6.	Exhibits	72

SIGNATURES		73

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Data)


	(Unaudited)
	June 30, 2023		December 31, 2022
Assets
Cash and due from banks	$	211,452	$	193,513
Interest-bearing balances with banks	735,447		382,479
Cash and cash equivalents	946,899		575,992
Securities held to maturity (net of allowance for credit losses of $32 at each of June 30, 2023 and December 31, 2022) (fair value of $1,153,541 and $1,206,540, respectively)	1,273,044		1,324,040
Securities available for sale, at fair value	950,930		1,533,942
Loans held for sale, at fair value	249,615		110,105



Loans held for investment, net of unearned income	11,930,516		11,578,304
Allowance for credit losses on loans	(194,391)		(192,090)
Loans, net	11,736,125		11,386,214
Premises and equipment, net	285,952		283,595
Other real estate owned, net	5,120		1,763
Goodwill	991,665		991,708
Other intangible assets, net	21,381		24,176
Bank-owned life insurance	377,649		373,808
Mortgage servicing rights	87,432		84,448
Other assets	298,530		298,385
Total assets	$	17,224,342	$	16,988,176
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing	$	3,878,953	$	4,558,756
Interest-bearing	10,216,408		8,928,210
Total deposits	14,095,361		13,486,966
Short-term borrowings	257,305		712,232
Long-term debt	429,630		428,133
Other liabilities	233,418		224,829
Total liabilities	15,015,714		14,852,160
Shareholders’ equity
Preferred stock, $0.01 par value – 5,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $5.00 par value – 150,000,000 shares authorized; 59,296,725 shares issued; 56,132,478 and 55,953,104 shares outstanding, respectively	296,483		296,483
Treasury stock, at cost – 3,164,247 and 3,343,621 shares, respectively	(105,589)		(111,577)
Additional paid-in capital	1,301,883		1,302,422
Retained earnings	907,312		857,725
Accumulated other comprehensive loss, net of taxes	(191,461)		(209,037)
Total shareholders’ equity	2,208,628		2,136,016
Total liabilities and shareholders’ equity	$	17,224,342	$	16,988,176

See Notes to Consolidated Financial Statements.

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Renasant Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)

(In Thousands, Except Share Data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Interest income
Loans	$	176,188	$	108,995	$	339,712	$	207,687
Securities
Taxable	12,300		10,567		25,553		19,501
Tax-exempt	1,700		1,904		3,538		3,805
Other	6,978		1,954		12,408		2,618
Total interest income	197,166		123,420		381,211		233,611
Interest expense
Deposits	51,391		5,018		84,257		10,655
Borrowings	15,559		4,887		30,963		9,812
Total interest expense	66,950		9,905		115,220		20,467
Net interest income	130,216		113,515		265,991		213,144
Provision for credit losses on loans	3,000		2,000		10,960		3,500


Net interest income after provision for credit losses	127,216		111,515		255,031		209,644
Noninterest income
Service charges on deposit accounts	9,733		9,734		18,853		19,296
Fees and commissions	4,987		4,668		9,663		8,650
Insurance commissions	2,809		2,591		5,255		5,145
Wealth management revenue	5,338		5,711		10,478		11,635
Mortgage banking income	9,771		8,316		18,288		17,949
Net loss on sales of securities	(22,438)		—		(22,438)		—
BOLI income	2,402		2,331		5,405		4,484

Other	4,624		3,863		9,015		7,513
Total noninterest income	17,226		37,214		54,519		74,672
Noninterest expense
Salaries and employee benefits	70,637		65,580		140,469		127,819
Data processing	3,684		3,590		7,317		7,853
Net occupancy and equipment	11,865		11,155		23,270		22,431
Other real estate owned	51		(187)		81		(428)
Professional fees	4,012		2,778		7,479		5,929
Advertising and public relations	3,482		3,406		8,168		7,465
Intangible amortization	1,369		1,310		2,795		2,676
Communications	2,226		1,904		4,206		3,931
Merger and conversion related expenses	—		—		—		687
Restructuring charges	—		1,187		—		732


Other	11,839		7,471		23,088		13,204
Total noninterest expense	109,165		98,194		216,873		192,299
Income before income taxes	35,277		50,535		92,677		92,017
Income taxes	6,634		10,857		17,956		18,792
Net income	$	28,643	$	39,678	$	74,721	$	73,225


Basic earnings per share	$	0.51	$	0.71	$	1.33	$	1.31
Diluted earnings per share	$	0.51	$	0.71	$	1.33	$	1.30
Cash dividends per common share	$	0.22	$	0.22	$	0.44	$	0.44

See Notes to Consolidated Financial Statements.

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Renasant Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(In Thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income	$	28,643	$	39,678	$	74,721	$	73,225
Other comprehensive income (loss), net of tax:
Securities available for sale:
Unrealized holding losses on securities	(15,930)		(56,958)		(399)		(157,420)
Reclassification adjustment for losses realized in net income	16,816		—		16,816		—

Amortization of unrealized holding losses (gains) on securities transferred to the held to maturity category	2,252		(164)		4,580		(238)
Total securities available for sale	3,138		(57,122)		20,997		(157,658)
Derivative instruments:
Unrealized holding (losses) gains on derivative instruments	(2,361)		6,262		(3,593)		12,641

Total derivative instruments	(2,361)		6,262		(3,593)		12,641
Defined benefit pension and post-retirement benefit plans:


Amortization of net actuarial loss recognized in net periodic pension cost	86		31		172		62
Total defined benefit pension and post-retirement benefit plans	86		31		172		62
Other comprehensive income (loss), net of tax	863		(50,829)		17,576		(144,955)
Comprehensive income (loss)	$	29,506	$	(11,151)	$	92,297	$	(71,730)

See Notes to Consolidated Financial Statements.

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Renasant Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(In Thousands, Except Share Data)


	Common Stock			Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Six Months Ended June 30, 2023	Shares	Amount
Balance at January 1, 2023	55,953,104	$	296,483	$	(111,577)	$	1,302,422	$	857,725	$	(209,037)	$	2,136,016

Net income	—	—		—		—		46,078		—		46,078
Other comprehensive income	—	—		—		—		—		16,713		16,713
Comprehensive income												62,791
Cash dividends ($0.22 per share)	—	—		—		—		(12,561)		—		(12,561)


Issuance of common stock for stock-based compensation awards	120,554	—		4,018		(6,409)		—		—		(2,391)
Stock-based compensation expense	—	—		—		3,445		—		—		3,445

Balance at March 31, 2023	56,073,658	$	296,483	$	(107,559)	$	1,299,458	$	891,242	$	(192,324)	$	2,187,300
Net income	—	$	—	$	—	$	—	$	28,643	$	—	$	28,643
Other comprehensive income	—	—		—		—		—		863		863
Comprehensive income												29,506
Cash dividends ($0.22 per share)	—	—		—		—		(12,573)		—		(12,573)


Issuance of common stock for stock-based compensation awards	58,820	—		1,970		(970)		—		—		1,000
Stock-based compensation expense	—	—		—		3,395		—		—		3,395

Balance at June 30, 2023	56,132,478	$	296,483	$	(105,589)	$	1,301,883	$	907,312	$	(191,461)	$	2,208,628


	Common Stock			Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Six Months Ended June 30, 2022	Shares	Amount
Balance at January 1, 2022	55,756,233	$	296,483	$	(118,027)	$	1,300,192	$	741,648	$	(10,443)	$	2,209,853

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


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

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


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

Balance at June 30, 2022	55,932,017	$	296,483	$	(112,295)	$	1,298,207	$	789,880	$	(155,398)	$	2,116,877

See Notes to Consolidated Financial Statements.

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Renasant Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(In Thousands)


	Six Months Ended June 30,
	2023		2022
Operating activities
Net income	$	74,721	$	73,225
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for credit losses	10,960		3,500
Depreciation, amortization and accretion	18,365		23,947
Deferred income tax expense	302		5,150


Funding of mortgage loans held for sale	(659,921)		(1,076,613)
Proceeds from sales of mortgage loans held for sale	526,853		1,345,924
Gains on sales of mortgage loans held for sale	(9,417)		(9,537)

Losses on sales of securities	22,438		—

Losses (gains) on sales of premises and equipment	7		(236)
Stock-based compensation expense	6,840		6,290

Increase in other assets	(26,264)		(2,867)
Increase (decrease) in other liabilities	3,576		(19,077)
Net cash (used in) provided by operating activities	(31,540)		349,706
Investing activities
Purchases of securities available for sale	—		(609,752)
Proceeds from sales of securities available for sale	488,981		—
Proceeds from call/maturities of securities available for sale	90,830		249,394
Purchases of securities held to maturity	—		(91,803)

Proceeds from call/maturities of securities held to maturity	54,123		17,262
Net increase in loans	(363,231)		(555,936)
Purchases of premises and equipment	(12,353)		(5,865)
Proceeds from sales of premises and equipment	—		933
Purchase of bank-owned life insurance	—		(80,000)
Net change in FHLB stock	13,268		(3,526)
Proceeds from sales of other assets	827		1,524
Net cash paid in acquisition of businesses	—		(10,066)
Other, net	1,668		622
Net cash provided by (used in) investing activities	274,113		(1,087,213)
Financing activities
Net (decrease) increase in noninterest-bearing deposits	(679,803)		23,273
Net increase (decrease) in interest-bearing deposits	1,288,198		(165,068)
Net (decrease) increase in short-term borrowings	(454,927)		69,215

Repayment of long-term debt	—		(32,417)
Cash paid for dividends	(25,134)		(24,993)



Net cash provided by (used in) financing activities	128,334		(129,990)
Net increase (decrease) in cash and cash equivalents	370,907		(867,497)
Cash and cash equivalents at beginning of period	575,992		1,877,965
Cash and cash equivalents at end of period	$	946,899	$	1,010,468


Supplemental disclosures
Cash paid for interest	$	91,861	$	19,959
Cash paid for income taxes	$	23,071	$	6,367
Noncash transactions:
Transfers of loans to other real estate owned	$	4,119	$	1,284




Recognition of operating right-of-use assets	$	611	$	1,595
Recognition of operating lease liabilities	$	611	$	1,595

See Notes to Consolidated Financial Statements.

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies

(In Thousands)

Nature of Operations: Renasant Corporation (referred to herein as the “Company”) owns and operates Renasant Bank (“Renasant Bank” or the “Bank”), Renasant Insurance, Inc., Park Place Capital Corporation and Continental Republic Capital, LLC (doing business as “Republic Business Credit”). Through its subsidiaries, the Company offers a diversified range of financial, wealth management, fiduciary and insurance services to its retail and commercial customers from offices located throughout the Southeast and offers factoring and asset-based lending on a nationwide basis.

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

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

The Bank acquired Republic Business Credit, a factoring and asset-based lending company headquartered in New Orleans, Louisiana (“RBC”), effective December 30, 2022.

Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 24, 2023.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material.

Impact of Recently-Issued Accounting Standards and Pronouncements:

In March 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” (“ASU 2023-02”), which permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. ASU 2023-02 will be effective on January 1, 2024. Early adoption is permitted, including in an interim period. The adoption of this accounting pronouncement will have no impact on the Company’s historical financial statements but could influence the Company’s decisions with respect to investments in certain tax credits prospectively.

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Renasant Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 2 – Securities

(In Thousands, Except Number of Securities)

The amortized cost and fair value of securities available for sale were as follows as of the dates presented in the tables below.

There was no allowance for credit losses allocated to any of the Company’s available for sale securities as of June 30, 2023 or December 31, 2022.

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

June 30, 2023