Notes to Consolidated Financial Statements
Note A Significant Accounting Policies
(In Thousands, Except Share Data)
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. The Company offers a diversified range of financial, fiduciary and insurance services to its retail and commercial
customers through its subsidiaries and full service offices located throughout north and north central Mississippi, Tennessee, north and central Alabama and north Georgia.
Use of Estimates
: The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.
Consolidation
: In accordance with the Financial Accounting Standards Board
(FASB) Accounting Standards Codification Topic (ASC) 810, Consolidation (ASC 810), a companys consolidated financial statements are required to include subsidiaries in which the company has a
controlling financial interest. The accompanying Consolidated Financial Statements and Notes to Consolidated Financial Statements include the accounts of the Company and its consolidated subsidiaries, all of which are wholly-owned. All intercompany
balances and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation. The Company is not the primary beneficiary of any variable interest entity as defined by ASC 810.
Cash and Cash Equivalents
: The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents.
Securities
: Debt securities are classified as held to maturity when purchased if
management has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Securities not classified as held to maturity or trading are classified as available for sale. Presently,
the Company has no intention of establishing a trading classification. Available for sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income within
shareholders equity.
The amortized cost of securities is adjusted for amortization of premiums and accretion of
discounts. Such amortization and accretion is included in interest income from securities. Dividend income is included in interest income from securities. Realized gains and losses on sales of securities are reflected under the line item Gains
on sales of securities on the Consolidated Statements of Income. The cost of securities sold is based on the specific identification method.
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. When impairment of an equity security is considered to be other-than-temporary, the security is written down to its fair value and an
impairment loss is recorded as a loss within noninterest income in the Consolidated Statements of Income. When impairment of a debt security is considered to be other-than-temporary, the security is written down to its fair value. The amount of OTTI
recorded as a loss within noninterest income depends on whether an entity intends to sell the debt security and whether it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis. If
an entity intends to, or has decided to, sell the debt security or more likely than not will be required to sell the security before recovery of its amortized cost basis, OTTI must be recognized in earnings in an amount equal to the entire
difference between the securitys amortized cost basis and its fair value. If an entity does not intend to sell the debt security and it is not more likely than not that the entity will be required to sell the security before recovery of its
amortized cost basis, OTTI is separated into the amount representing credit loss and the amount related to all other market factors. The amount related to credit loss is recognized in earnings. The amount related to other market factors is
recognized in other comprehensive income, net of applicable taxes.
Furthermore, debt securities may be transferred to a
nonaccrual status where the recognition of investment interest is discontinued. A number of qualitative factors, including but not limited to the financial condition of the underlying issuing financial institutions and current and projected
deferrals or defaults, are considered by management in the determination of whether the debt security should be transferred to nonaccrual status. The interest on these nonaccrual investment securities is accounted for on the cash-basis method until
the debt security qualifies for return to accrual status. See Note C, Securities, for further details regarding the Companys securities portfolio.
73
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note A Significant Accounting Policies (continued)
Securities Sold Under Agreements to Repurchase
:
Securities sold under agreements to repurchase are accounted for as collateralized financing transactions and are recorded at the amounts at which the securities were sold. Securities, generally U.S. government and federal agency securities, pledged
as collateral under these financing arrangements cannot be sold or repledged by the secured party.
Mortgage Loans Held for Sale
: Mortgage loans held for
sale represent residential mortgage loans held for sale. The Company has elected to carry these loans at fair value as permitted under the guidance in ASC 825, Financial Instruments (ASC 825). Mortgage loans held for sale are
classified separately on the Consolidated Balance Sheets. Gains and losses are realized at the time consideration is received and all other criteria for sales treatment have been met. These gains and losses are classified under the line item
Gains on sales of mortgage loans held for sale on the Consolidated Statements of Income.
Loans and the Allowance for Loan Losses
: Loans
that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses and any deferred
fees or costs on originated loans. Renasant Bank defers certain nonrefundable loan origination fees as well as the direct costs of originating or acquiring loans. The deferred fees and costs are then amortized over the term of the note for all loans
with payment schedules. Those loans with no payment schedule are amortized using the interest method. The amortization of these deferred fees is presented as an adjustment to the yield on loans. Interest income is accrued on the unpaid principal
balance.
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 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 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. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future
payments are reasonably assured.
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 and construction loans above
a minimum dollar amount threshold by either the present value of expected future cash flows discounted at the loans effective interest rate, the loans 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 loans principal is in doubt, wholly or partially, 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.
Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrowers 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.
See Note D, Loans
and the Allowance for Loan Losses, for disclosures regarding the Companys past due and nonaccrual loans, impaired loans and restructured loans.
74
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note A Significant Accounting Policies (continued)
The allowance for loan losses is maintained at a level believed adequate by management
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 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 (ASC 310). The balance of these loans and their related allowance is included in managements 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.
Business Combinations, Accounting for
Acquired Loans and Related Assets
: Business combinations are accounted for by applying the acquisition method in accordance with ASC 805, Business Combinations (ASC 805). Under the acquisition method, identifiable assets
acquired and liabilities assumed and any non-controlling interest in the acquiree at the acquisition date are measured at their fair values as of that date and are recognized separately from goodwill. Results of operations of the acquired entities
are included in the Consolidated Statements of Income from the date of acquisition.
Loans acquired in business combinations
with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Acquired credit-impaired loans are accounted for under the
accounting guidance for loans and debt securities acquired with deteriorated credit quality, in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30), and initially
measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Increases in expected cash flows to be collected on these loans are recognized as an adjustment of the loans yield
over its remaining life, while decreases in expected cash flows are recognized as an impairment. Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30, but for which a discount is attributable, at least in
part, to credit quality, are also accounted for under this guidance. As a result, related discounts are recognized subsequently through accretion based on the expected cash flow of the acquired loans.
Acquired loans covered under loss-share agreements with the Federal Deposit Insurance Corporation (FDIC) are recorded, as of
their respective acquisition dates, at fair value. The fair value of these loans represents the expected discounted cash flows to be received over the lives of the loans, taking into account the Companys estimate of future credit losses on the
loans. These loans are excluded from the calculation of the allowance for loan losses because the fair value measurement incorporates an estimate of losses on acquired loans. The Company monitors future cash flows on these loans; to the extent
future cash flows deteriorate below initial projections, the Company reserves for these loans in the allowance for loan losses through the provision for loan losses. The Company recorded a provision for loan losses of $2,527 and $512 in association
with the loans covered under loss-share agreements acquired in the Crescent and American Trust transactions during the years ended December 31, 2012 and 2011, respectively.
In these Notes to Consolidated Financial Statements, the Company refers to loans subject to the loss-share agreements as covered
loans or loans covered under loss-share agreements and loans that are not subject to the loss-share agreements as not covered loans or loans not covered under loss-share agreements.
75
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note A Significant Accounting Policies (continued)
As part of the loan portfolio and other real estate owned fair value estimation in
connection with FDIC-assisted acquisitions, a FDIC loss-share indemnification asset is established, which represents the present value of the estimated losses on covered assets to be reimbursed by the FDIC. The estimated losses are based on the same
cash flow estimates used in determining the fair value of the covered assets. The FDIC loss-share indemnification asset is reduced as losses are recognized on covered assets and loss-share payments are received from the FDIC. Realized losses in
excess of estimates as of the date of the acquisition increase the FDIC loss-share indemnification asset. Conversely, when realized losses are less than these estimates, the portion of the FDIC loss-share indemnification asset no longer expected to
result in a payment from the FDIC is amortized into interest income using the effective interest method.
Changes in the FDIC loss-share
indemnification asset were as follows:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Balance at January 1
|
|
$
|
107,754
|
|
|
$
|
155,657
|
|
Additions through acquisition
|
|
|
|
|
|
|
11,926
|
|
Realized losses in excess of initial estimates on:
|
|
|
|
|
|
|
|
|
Loans
|
|
|
10,408
|
|
|
|
2,088
|
|
OREO
|
|
|
7,778
|
|
|
|
1,320
|
|
Reimbursable expenses
|
|
|
3,752
|
|
|
|
1,083
|
|
Accretion
|
|
|
(1,354
|
)
|
|
|
281
|
|
Reimbursements received from the FDIC
|
|
|
(84,185
|
)
|
|
|
(64,601
|
)
|
|
|
|
|
|
|
|
|
|
Balance at December 31
|
|
$
|
44,153
|
|
|
$
|
107,754
|
|
|
|
|
|
|
|
|
|
|
Premises and Equipment
: Premises and equipment are stated at cost less
accumulated depreciation. Depreciation is computed primarily by use of the straight-line method for furniture, fixtures, equipment, autos and premises. The annual provisions for depreciation have been computed primarily using estimated lives of
forty years for premises, seven years for furniture and equipment and three to five years for computer equipment and autos. Leasehold improvements are expensed over the period of the leases or the estimated useful life of the improvements, whichever
is shorter.
Other Real Estate Owned
: Other real estate owned consists of properties
acquired through foreclosure or acceptance of a deed in lieu of foreclosure. These properties are carried at the lower of cost or fair market value based on appraised value less estimated selling costs. Losses arising at the time of foreclosure of
properties are charged against the allowance for loan losses. Reductions in the carrying value subsequent to acquisition are charged to earnings and are included under the line item Other real estate owned in the Consolidated Statements
of Income.
Mortgage Servicing Rights
: The Company retains the right to service certain
mortgage loans that it sells to secondary market investors. These mortgage servicing rights, included in Other assets on the Consolidated Balance Sheets, are recognized as a separate asset on the date the corresponding mortgage loan is
sold. Mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income. These servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach
with various assumptions including expected cash flows, prepayment speeds, market discount rates, servicing costs, and other factors. Mortgage servicing rights were carried at amortized cost at December 31, 2012 and 2011, respectively. Impairment
losses on mortgage servicing rights are recognized to the extent by which the unamortized cost exceeds fair value. No impairment losses on mortgage servicing rights were recognized in earnings for the years ended December 31, 2012 or 2011,
respectively.
Goodwill and Other Intangible Assets
: Goodwill represents the excess of
the cost of an acquisition over the fair value of the net assets acquired. Other intangible assets represent purchased assets that also lack physical substance but can be distinguished from goodwill because of contractual or other legal rights.
Intangibles with finite lives are amortized over their estimated useful lives. Goodwill and other intangible assets are subject to impairment testing annually or more frequently if events or circumstances indicate possible impairment. Goodwill is
assigned to the Companys reporting segments. Fair values of reporting segments are determined using either discounted cash flow analyses based on internal financial forecasts or, if available, market-based valuation multiples for comparable
businesses. Other intangible assets, consisting of core deposit intangibles, are reviewed for events or circumstances which could impact the recoverability of the intangible asset, such as a loss of core deposits, increased competition or adverse
changes in the economy. No impairment was identified for the Companys goodwill or its other intangible assets as a result of the testing performed during 2012, 2011 or 2010.
76
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note A Significant Accounting Policies (continued)
Bank-Owned Life Insurance
: Bank-owned life insurance (BOLI) is an
institutionally-priced insurance product that is specifically designed for purchase by insured depository institutions. BOLI is a life insurance policy purchased by Renasant Bank on certain employees, with Renasant Bank being listed as the primary
beneficiary. The carrying value of BOLI is recorded at the cash surrender value of the policies, net of any applicable surrender charges. The carrying value of BOLI included in the Consolidated Balance Sheets under the line item Other
assets at December 31, 2012 and 2011 was $84,556 and $83,052, respectively. Changes in the value of the cash surrender value of the policies are reflected under the line item BOLI income on the Consolidated Statements of
Income.
Insurance Agency Revenues
: Renasant Insurance, Inc. is a
full-service insurance agency offering all lines of commercial and personal insurance through major third-party insurance carriers. Commissions and fees are recognized when earned based on contractual terms and conditions of insurance policies with
the insurance carriers. These commissions and fees are classified under the line item Insurance commissions on the Consolidated Statements of Income. Contingency fee income paid by the insurance carriers is recognized upon receipt and
classified under the line item Other noninterest income on the Consolidated Statements of Income.
Trust and Financial Services Revenues
: The Company offers trust
services as well as various alternative investment products, including annuities and mutual funds. Trust revenues are recognized on the accrual basis in accordance with the contractual terms of the trust. Commissions and fees from the sale of
annuities and mutual funds are recognized when earned based on contractual terms with the third party broker-dealer. These commissions and fees are classified under the line item Wealth Management revenue on the Consolidated Statements
of Income.
Income Taxes
: Income taxes are accounted for under the liability method. Under this method,
deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. It is the Companys policy to recognize interest and penalties, if incurred, related to unrecognized tax benefits in income tax expense. The Company and its subsidiaries file a consolidated federal income tax return.
Renasant Bank provides for income taxes on a separate-return basis and remits to the Company amounts determined to be currently payable.
Deferred income taxes, included in Other assets on the Consolidated Balance Sheets, reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although
realization is not assured, management believes that the Company and its subsidiaries will realize a substantial majority of the deferred tax assets. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to
be realized through a charge to income tax expense.
Fair Value Measurements
: ASC 820, Fair Value Measurements and
Disclosures, (ASC 820) 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). See Note R, Fair Value
Measurements, for further details regarding the Companys methods and assumptions used to estimate the fair values of the Companys financial assets and liabilities.
Derivative Instruments and Hedging Activities
: The Company utilizes derivative financial
instruments as part of its ongoing efforts to manage its interest rate risk exposure. Derivative financial instruments are included in the Consolidated Balance Sheets line item Other assets or Other liabilities at fair value
in accordance with ASC 815, Derivatives and Hedging.
Cash flow hedges are utilized to mitigate the exposure to
variability in expected future cash flows or other types of forecasted transactions. For the Companys derivatives designated as cash flow hedges, changes in the fair value of 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.
The Company also utilizes derivative instruments that are not designated as hedging instruments. The Company enters into interest rate cap and/or floor agreements with its customers and then enters into
an offsetting derivative contract position with other financial institutions to mitigate the interest rate risk associated with these customer contracts. Because these derivative instruments are not designated as hedging instruments, changes in the
fair value of the derivative instruments are recognized currently in earnings.
77
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note A Significant Accounting Policies (continued)
The Company enters into interest rate lock commitments on certain residential mortgage
loans with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate mortgage loans. Under such commitments, interest rates for a mortgage loan are typically locked in for up to forty-five days with the
customer. These interest rate lock commitments are recorded at fair value in the Companys Consolidated Balance Sheets. Gains and losses arising from changes in the valuation of the commitments are recognized currently in earnings and are
reflected under the line item Gains on sales of mortgage loans held for sale on the Consolidated Statements of Income.
The Company utilizes two methods to deliver mortgage loans to be sold to an investor. Under a best efforts sales agreement, the Company enters into a sales agreement with an investor in the
secondary market to sell the loan when an interest rate lock commitment is entered into with a customer, as described above. Under a best efforts sales agreement, the Company is obligated to sell the mortgage loan to the investor only if
the loan is closed and funded. Thus, the Company will not incur any liability to an investor if the mortgage loan commitment in the pipeline fails to close. 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 should the Company fail to satisfy the contract. Mandatory delivery mortgage loan commitments are recorded at fair value in
the Companys Consolidated Balance Sheets. Gains and losses arising from changes in the valuation of these commitments are recognized currently in earnings and are reflected under the line item Gains on sales of mortgage loans held for
sale on the Consolidated Statements of Income.
Treasury Stock
: Treasury stock is recorded at cost. Shares held in treasury are not retired.
Stock-Based Compensation
: Compensation expense for
option grants and restricted stock awards is determined based on the estimated fair value of the stock options and restricted stock on the applicable grant or award date. Further, compensation expense is based on an estimate of the number of option
grants expected to vest and is recognized over the options vesting period. The Company did not estimate any option forfeitures for 2012, 2011 or 2010 due to the low historical forfeiture rate. Expense associated with the Companys
stock-based compensation is included under the line item Salaries and employee benefits on the Consolidated Statements of Income. The Company recognizes compensation expense for all share-based payments to employees in accordance with
ASC 718, Compensation Stock Compensation. See Note N, Employee Benefit and Deferred Compensation Plans, for further details regarding the Companys stock-based compensation.
Earnings Per Common Share
: 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 stock options were exercised into common shares, calculated in
accordance with the treasury stock method. See Note W, Net Income Per Common Share, for the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.
Impact of Recently-Issued Accounting Standards and
Pronouncements
: In October 2012, FASB issued an update to ASC 805 concerning subsequent accounting for an indemnification asset recognized as a result of a government-assisted acquisition of a financial institution. The update prescribes that
when changes in the cash flows expected to be collected on the indemnification asset occur as a result of the changes in the cash flows expected to be collected on the assets subject to indemnification, a reporting entity should subsequently account
for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value of the indemnification asset should be limited to the lesser of the term of
the indemnification agreement and the remaining life of the indemnified assets. This update to ASC 805 is effective for interim and annual reporting periods beginning on or after December 15, 2012 and should be applied retrospectively. The
Company is currently accounting for changes in the value of the loss-share indemnification assets recorded in connection with its acquisitions assisted by the FDIC as prescribed by this update; thus the adoption of the update will not have an impact
on the financial position or results of operations of the Company.
78
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note A Significant Accounting Policies (continued)
In February 2013, FASB issued an update to ASC 220, Comprehensive Income,
(ASC 220) that requires a reporting entity to disclose information about reclassification adjustments from accumulated other comprehensive income in their financial statements on the face of the financial statement that presents
comprehensive income or as a separate disclosure in the footnotes of the financial statements. The update requires that a reporting entity disclose the effects of reclassifications from accumulated other comprehensive income on net income line items
only for those items that are reported in their entirety in net income, such as realized gains or losses on securities available-for-sale reclassified from accumulated other comprehensive income to net income the date the securities are sold, in the
period of reclassification. For items that are not reclassified in their entirety into net income, such as the amortization of net actuarial gains or losses recognized in net periodic pension cost, a reporting entity is required to add a cross
reference to the footnote that includes additional information about the effect of the reclassification. This update to ASC 220 is effective prospectively for interim and annual reporting periods beginning after December 15, 2012, with early
adoption permitted. The adoption of the update will impact disclosures only and is not expected to have a material impact on the financial position or results of operations of the Company.
79
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note B Mergers and Acquisitions
(In Thousands)
Acquisition of RBC Bank (USA) Trust Division
On August 31, 2011, the Company acquired the Birmingham, Alabama-based trust division of RBC Bank (USA), which served clients in Alabama and Georgia. Under the terms of the transaction, RBC Bank
(USA) transferred its approximately $680,000 in assets under management, comprised of personal and institutional clients with over 200 trust, custodial and escrow accounts, to a wholly-owned subsidiary, and the Bank acquired all of the ownership
interests in the subsidiary, which was subsequently merged into the Bank. In connection with the acquisition, the Company recognized a gain of $570, which was recognized under the line item Gain on acquisition in the Consolidated
Statements of Income for the year ended December 31, 2011. Acquisition costs related to the transaction of $326 were recognized under the line item Merger-related expenses in the Consolidated Statements of Income for the year ended
December 31, 2011.
FDIC-Assisted Acquisitions
On February 4, 2011, the Bank entered into a purchase and assumption agreement with loss-share agreements with the FDIC to acquire specified assets and assume specified liabilities of American Trust
Bank, a Georgia-chartered bank headquartered in Roswell, Georgia (American Trust). American Trust operated 3 branches in the northwest region of Georgia.
In connection with the acquisition, the Bank entered into loss-share agreements with the FDIC that covered $73,657 of American Trust loans (the covered ATB loans). The Bank will share in the
losses on the asset pools (including single family residential mortgage loans and commercial loans) covered under the loss-share agreements. Pursuant to the terms of the loss-share agreements, the FDIC is obligated to reimburse the Bank for 80% of
all eligible losses with respect to covered ATB loans, beginning with the first dollar of loss incurred. The Bank has a corresponding obligation to reimburse the FDIC for 80% of eligible recoveries with respect to covered ATB loans.
The acquisition of American Trust resulted in a pre-tax gain of $8,774. Due to the difference in tax bases of the assets acquired
and liabilities assumed, the Company recorded a deferred tax liability of $3,356, resulting in an after-tax gain of $5,418. Under the Internal Revenue Code, the gain will be recognized over the six years following the transaction. The foregoing
pre-tax and after-tax gains are considered a bargain purchase gain under ASC 805 since the total acquisition-date fair value of the identifiable net assets acquired exceeded the fair value of the consideration transferred. This gain was recognized
under the line item Gain on acquisition in the Consolidated Statements of Income for the year ended December 31, 2011. Acquisition costs related to the American Trust acquisition of $1,325 were recognized under the line item
Merger-related expenses in the Consolidated Statements of Income for the year ended December 31, 2011.
On
July 23, 2010, the Bank acquired specified assets and assumed specified liabilities of Crescent Bank & Trust Company, a Georgia-chartered bank headquartered in Jasper, Georgia (Crescent), from the FDIC, as receiver for
Crescent. Crescent operated 11 branches in the northwest region of Georgia.
In connection with the acquisition, the Bank
entered into loss-share agreements with the FDIC that covered $361,472 of Crescent loans and $50,168 of other real estate owned (the covered Crescent assets). The Bank will share in the losses on the asset pools (including single family
residential mortgage loans and commercial loans) covered under the loss-share agreements. Pursuant to the terms of the loss-share agreements, the FDIC is obligated to reimburse the Bank for 80% of all eligible losses with respect to covered Crescent
assets, beginning with the first dollar of loss incurred. The Bank has a corresponding obligation to reimburse the FDIC for 80% of eligible recoveries with respect to covered Crescent assets.
The acquisition of Crescent resulted in a pre-tax gain of $42,211. Due to the difference in tax bases of the assets acquired and
liabilities assumed, the Company recorded a deferred tax liability of $16,146, resulting in an after-tax gain of $26,065. Under the Internal Revenue Code, the gain will be recognized over the six years following the transaction. The foregoing
pre-tax and after-tax gains are considered a bargain purchase gain under ASC 805 since the total acquisition-date fair value of the identifiable net assets acquired exceeded the fair value of the consideration transferred. This gain was recognized
under the line item Gain on acquisition in the Consolidated Statements of Income for the year ended December 31, 2010. Acquisition costs related to the Crescent acquisition of $1,955 were recognized under the line item
Merger-related expenses in the Consolidated Statements of Income for the year ended December 31, 2010.
80
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note C Securities
(In Thousands, Except Number of Securities)
The amortized cost and fair value of securities held to maturity were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
90,045
|
|
|
$
|
116
|
|
|
$
|
(232
|
)
|
|
$
|
89,929
|
|
Obligations of states and political subdivisions
|
|
|
227,721
|
|
|
|
16,860
|
|
|
|
(35
|
)
|
|
|
244,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
317,766
|
|
|
$
|
16,976
|
|
|
$
|
(267
|
)
|
|
$
|
334,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
107,660
|
|
|
$
|
225
|
|
|
$
|
(74
|
)
|
|
$
|
107,811
|
|
Obligations of states and political subdivisions
|
|
|
224,750
|
|
|
|
12,083
|
|
|
|
(26
|
)
|
|
|
236,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
332,410
|
|
|
$
|
12,308
|
|
|
$
|
(100
|
)
|
|
$
|
344,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In light of the ongoing fiscal uncertainty in state and local governments, the Company analyzes its exposure to
potential losses in its security portfolio on at least a quarterly basis. Management reviews the underlying credit rating and analyzes the financial condition of the respective issuers. Based on this analysis, the Company sold certain
securities representing obligations of state and political subdivisions that were classified as held to maturity during 2011. The securities sold showed significant credit deterioration in that an analysis of the financial condition of the
respective issuers showed the issuers were operating at net deficits with little to no financial cushion to offset future contingencies. These securities had a carrying value of $13,017, and the Company recognized a net gain of $16 on the sale
during the year ended December 31, 2011. No securities classified as held to maturity were sold during the years ended December 31, 2012 or 2010.
The amortized cost and fair value of securities available for sale were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
2,169
|
|
|
$
|
273
|
|
|
$
|
|
|
|
$
|
2,442
|
|
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
139,699
|
|
|
|
5,209
|
|
|
|
(91
|
)
|
|
|
144,817
|
|
Government agency collateralized mortgage obligations
|
|
|
115,647
|
|
|
|
2,273
|
|
|
|
(399
|
)
|
|
|
117,521
|
|
Commercial mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
41,981
|
|
|
|
3,077
|
|
|
|
|
|
|
|
45,058
|
|
Government agency collateralized mortgage obligations
|
|
|
5,091
|
|
|
|
316
|
|
|
|
|
|
|
|
5,407
|
|
Trust preferred securities
|
|
|
28,612
|
|
|
|
|
|
|
|
(13,544
|
)
|
|
|
15,068
|
|
Other debt securities
|
|
|
22,079
|
|
|
|
852
|
|
|
|
(1
|
)
|
|
|
22,930
|
|
Other equity securities
|
|
|
2,355
|
|
|
|
713
|
|
|
|
|
|
|
|
3,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
357,633
|
|
|
$
|
12,713
|
|
|
$
|
(14,035
|
)
|
|
$
|
356,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note C Securities (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
17,193
|
|
|
$
|
202
|
|
|
$
|
|
|
|
$
|
17,395
|
|
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
224,242
|
|
|
|
6,455
|
|
|
|
(30
|
)
|
|
|
230,667
|
|
Government agency collateralized mortgage obligations
|
|
|
133,369
|
|
|
|
3,700
|
|
|
|
(82
|
)
|
|
|
136,987
|
|
Commercial mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
34,635
|
|
|
|
2,054
|
|
|
|
(20
|
)
|
|
|
36,669
|
|
Government agency collateralized mortgage obligations
|
|
|
5,170
|
|
|
|
146
|
|
|
|
|
|
|
|
5,316
|
|
Trust preferred securities
|
|
|
30,410
|
|
|
|
|
|
|
|
(17,625
|
)
|
|
|
12,785
|
|
Other debt securities
|
|
|
21,351
|
|
|
|
527
|
|
|
|
(3
|
)
|
|
|
21,875
|
|
Other equity securities
|
|
|
2,341
|
|
|
|
|
|
|
|
(104
|
)
|
|
|
2,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
468,711
|
|
|
$
|
13,084
|
|
|
$
|
(17,864
|
)
|
|
$
|
463,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross realized gains and gross realized losses on sales of securities available for sale for the years 2012, 2011 and
2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Gross gains on sales of securities available for sale
|
|
$
|
2,321
|
|
|
$
|
5,041
|
|
|
$
|
4,499
|
|
Gross losses on sales of securities available for sale
|
|
|
(427
|
)
|
|
|
|
|
|
|
(544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sales of securities available for sale, net
|
|
$
|
1,894
|
|
|
$
|
5,041
|
|
|
$
|
3,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012 and 2011, securities with a carrying value of approximately $308,362 and $305,746,
respectively, were pledged to secure government, public, trust, and other deposits. Securities with a carrying value of $19,006 and $20,206 were pledged as collateral for short-term borrowings and derivative instruments at December 31, 2012 and
2011, respectively.
82
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note C Securities (continued)
The amortized cost and fair value of securities at December 31, 2012 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity
|
|
|
Available for Sale
|
|
|
|
Amortized
Cost
|
|
|
Fair
Value
|
|
|
Amortized
Cost
|
|
|
Fair
Value
|
|
Due within one year
|
|
$
|
8,937
|
|
|
$
|
9,026
|
|
|
$
|
|
|
|
$
|
|
|
Due after one year through five years
|
|
|
37,576
|
|
|
|
38,713
|
|
|
|
|
|
|
|
|
|
Due after five years through ten years
|
|
|
132,428
|
|
|
|
135,969
|
|
|
|
2,169
|
|
|
|
2,442
|
|
Due after ten years
|
|
|
138,825
|
|
|
|
150,767
|
|
|
|
28,612
|
|
|
|
15,068
|
|
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
|
|
|
|
139,699
|
|
|
|
144,817
|
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
|
|
|
|
115,647
|
|
|
|
117,521
|
|
Commercial mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
|
|
|
|
41,981
|
|
|
|
45,058
|
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
|
|
|
|
5,091
|
|
|
|
5,407
|
|
Other debt securities
|
|
|
|
|
|
|
|
|
|
|
22,079
|
|
|
|
22,930
|
|
Other equity securities
|
|
|
|
|
|
|
|
|
|
|
2,355
|
|
|
|
3,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
317,766
|
|
|
$
|
334,475
|
|
|
$
|
357,633
|
|
|
$
|
356,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the gross unrealized losses and fair value of investment securities, aggregated by
investment category and the length of time the investments have been in a continuous unrealized loss position as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
Held to Maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
35,224
|
|
|
$
|
(232
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
35,224
|
|
|
$
|
(232
|
)
|
Obligations of states and political subdivisions
|
|
|
2,861
|
|
|
|
(34
|
)
|
|
|
126
|
|
|
|
(1
|
)
|
|
|
2,987
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
38,085
|
|
|
$
|
(266
|
)
|
|
$
|
126
|
|
|
$
|
(1
|
)
|
|
$
|
38,211
|
|
|
$
|
(267
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
19,919
|
|
|
$
|
(74
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
19,919
|
|
|
$
|
(74
|
)
|
Obligations of states and political subdivisions
|
|
|
4,301
|
|
|
|
(19
|
)
|
|
|
1,530
|
|
|
|
(7
|
)
|
|
|
5,831
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
24,220
|
|
|
$
|
(93
|
)
|
|
$
|
1,530
|
|
|
$
|
(7
|
)
|
|
$
|
25,750
|
|
|
$
|
(100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note C Securities (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
Available for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
15,431
|
|
|
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
|
15,431
|
|
|
|
(91
|
)
|
Government agency collateralized mortgage obligations
|
|
|
44,616
|
|
|
|
(389
|
)
|
|
|
1,605
|
|
|
|
(10
|
)
|
|
|
46,221
|
|
|
|
(399
|
)
|
Commercial mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust preferred securities
|
|
|
|
|
|
|
|
|
|
|
15,068
|
|
|
|
(13,544
|
)
|
|
|
15,068
|
|
|
|
(13,544
|
)
|
Other debt securities
|
|
|
|
|
|
|
|
|
|
|
2,188
|
|
|
|
(1
|
)
|
|
|
2,188
|
|
|
|
(1
|
)
|
Other equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
60,047
|
|
|
$
|
(480
|
)
|
|
$
|
18,861
|
|
|
$
|
(13,555
|
)
|
|
$
|
78,908
|
|
|
$
|
(14,035
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
4,446
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
4,446
|
|
|
|
(30
|
)
|
Government agency collateralized mortgage obligations
|
|
|
16,806
|
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
|
|
16,806
|
|
|
|
(82
|
)
|
Commercial mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
|
|
|
|
1,255
|
|
|
|
(20
|
)
|
|
|
1,255
|
|
|
|
(20
|
)
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust preferred securities
|
|
|
|
|
|
|
|
|
|
|
12,785
|
|
|
|
(17,625
|
)
|
|
|
12,785
|
|
|
|
(17,625
|
)
|
Other debt securities
|
|
|
|
|
|
|
|
|
|
|
2,662
|
|
|
|
(3
|
)
|
|
|
2,662
|
|
|
|
(3
|
)
|
Other equity securities
|
|
|
2,237
|
|
|
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
|
2,237
|
|
|
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
23,489
|
|
|
$
|
(216
|
)
|
|
$
|
16,702
|
|
|
$
|
(17,648
|
)
|
|
$
|
40,191
|
|
|
$
|
(17,864
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012, investment securities that have been in a continuous unrealized loss position for less than 12
months include 8 investments in Obligations of other U.S. government agencies, 4 investments in Obligations of states and political subdivisions, 3 investments in Residential mortgage backed securities, and 11 investments in Residential
collateralized mortgage obligations. Investment securities that have been in a continuous unrealized loss position for 12 months or more include 1 investment in Obligations of states and political subdivisions, 1 investment in Residential
collateralized mortgage obligations, 4 investments in pooled Trust preferred securities, and 1 investment in Other debt securities. The Company does not intend to sell the debt securities, and it is not more likely than not that the Company will be
required to sell the securities before recovery of the investments amortized cost.
84
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note C Securities (continued)
The Company evaluates its investment portfolio for 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.
The Company holds investments in pooled trust preferred securities that had a cost basis of $28,612 and $30,410 and a fair value of
$15,068 and $12,785 at December 31, 2012 and 2011, respectively. The investments in pooled trust preferred securities consist of four securities representing interests in various tranches of trusts collateralized by debt issued by over 340
financial institutions. Managements 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 Companys 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, 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 maturity. At December 31, 2012, 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 did conclude that it was probable that there had been an adverse change in estimated cash flows for all four pooled trust preferred securities and
recognized credit related impairment losses of $3,075 on two of the four securities (XIII and XXIV in the table below) in 2010 and $262 on the remaining two securities in 2011. No additional impairment was recognized during the year ended
December 31, 2012.
However, based on the qualitative factors discussed above, each of the four pooled trust preferred
securities was classified as a nonaccruing asset at December 31, 2012. Investment interest is recorded on the cash-basis method until qualifying for return to accrual status.
The following table provides information regarding the Companys investments in pooled trust preferred securities at
December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Single/
Pooled
|
|
|
Class/
Tranche
|
|
|
Amortized
Cost
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Lowest
Credit
Rating
|
|
|
Issuers
Currently
in Deferral
or Default
|
|
XIII
|
|
|
Pooled
|
|
|
|
B-2
|
|
|
$
|
1,216
|
|
|
$
|
986
|
|
|
$
|
(230
|
)
|
|
|
Ca
|
|
|
|
35
|
%
|
XXIII
|
|
|
Pooled
|
|
|
|
B-2
|
|
|
|
9,753
|
|
|
|
6,312
|
|
|
|
(3,441
|
)
|
|
|
Ca
|
|
|
|
22
|
%
|
XXIV
|
|
|
Pooled
|
|
|
|
B-2
|
|
|
|
12,076
|
|
|
|
4,992
|
|
|
|
(7,084
|
)
|
|
|
Ca
|
|
|
|
35
|
%
|
XXVI
|
|
|
Pooled
|
|
|
|
B-2
|
|
|
|
5,567
|
|
|
|
2,778
|
|
|
|
(2,789
|
)
|
|
|
Ca
|
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
28,612
|
|
|
$
|
15,068
|
|
|
$
|
(13,544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Balance at January 1
|
|
$
|
(3,337
|
)
|
|
$
|
(3,075
|
)
|
Additions related to credit losses for which OTTI was not previously recognized
|
|
|
|
|
|
|
(262
|
)
|
Increases in credit loss for which OTTI was previously recognized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31
|
|
$
|
(3,337
|
)
|
|
$
|
(3,337
|
)
|
|
|
|
|
|
|
|
|
|
85
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses
(In Thousands, Except Number of Loans)
The following is a summary of loans at December 31:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Commercial, financial, agricultural
|
|
$
|
317,050
|
|
|
$
|
278,091
|
|
Lease financing
|
|
|
195
|
|
|
|
343
|
|
Real estate construction
|
|
|
105,706
|
|
|
|
81,235
|
|
Real estate 1-4 family mortgage
|
|
|
903,423
|
|
|
|
824,627
|
|
Real estate commercial mortgage
|
|
|
1,426,643
|
|
|
|
1,336,635
|
|
Installment loans to individuals
|
|
|
57,241
|
|
|
|
60,168
|
|
|
|
|
|
|
|
|
|
|
Gross loans
|
|
|
2,810,258
|
|
|
|
2,581,099
|
|
Unearned income
|
|
|
(5
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned income
|
|
|
2,810,253
|
|
|
|
2,581,084
|
|
Allowance for loan losses
|
|
|
(44,347
|
)
|
|
|
(44,340
|
)
|
|
|
|
|
|
|
|
|
|
Net loans
|
|
$
|
2,765,906
|
|
|
$
|
2,536,744
|
|
|
|
|
|
|
|
|
|
|
Past Due and Nonaccrual Loans
The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
484
|
|
|
$
|
15
|
|
|
$
|
312,943
|
|
|
$
|
313,442
|
|
|
$
|
215
|
|
|
$
|
3,131
|
|
|
$
|
262
|
|
|
$
|
3,608
|
|
|
$
|
317,050
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
195
|
|
|
|
195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195
|
|
Real estate construction
|
|
|
80
|
|
|
|
|
|
|
|
103,978
|
|
|
|
104,058
|
|
|
|
|
|
|
|
1,648
|
|
|
|
|
|
|
|
1,648
|
|
|
|
105,706
|
|
Real estate 1-4 family mortgage
|
|
|
6,685
|
|
|
|
1,992
|
|
|
|
867,053
|
|
|
|
875,730
|
|
|
|
1,249
|
|
|
|
13,417
|
|
|
|
13,027
|
|
|
|
27,693
|
|
|
|
903,423
|
|
Real estate commercial mortgage
|
|
|
5,084
|
|
|
|
1,250
|
|
|
|
1,373,470
|
|
|
|
1,379,804
|
|
|
|
325
|
|
|
|
38,297
|
|
|
|
8,217
|
|
|
|
46,839
|
|
|
|
1,426,643
|
|
Installment loans to individuals
|
|
|
197
|
|
|
|
50
|
|
|
|
56,715
|
|
|
|
56,962
|
|
|
|
7
|
|
|
|
265
|
|
|
|
7
|
|
|
|
279
|
|
|
|
57,241
|
|
Unearned income
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
12,530
|
|
|
$
|
3,307
|
|
|
$
|
2,714,349
|
|
|
$
|
2,730,186
|
|
|
$
|
1,796
|
|
|
$
|
56,758
|
|
|
$
|
21,513
|
|
|
$
|
80,067
|
|
|
$
|
2,810,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
2,071
|
|
|
$
|
165
|
|
|
$
|
269,078
|
|
|
$
|
271,314
|
|
|
$
|
511
|
|
|
$
|
5,474
|
|
|
$
|
792
|
|
|
$
|
6,777
|
|
|
$
|
278,091
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
343
|
|
|
|
343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
343
|
|
Real estate construction
|
|
|
|
|
|
|
41
|
|
|
|
73,670
|
|
|
|
73,711
|
|
|
|
|
|
|
|
7,524
|
|
|
|
|
|
|
|
7,524
|
|
|
|
81,235
|
|
Real estate 1-4 family mortgage
|
|
|
11,949
|
|
|
|
2,481
|
|
|
|
771,596
|
|
|
|
786,026
|
|
|
|
1,140
|
|
|
|
31,457
|
|
|
|
6,004
|
|
|
|
38,601
|
|
|
|
824,627
|
|
Real estate commercial mortgage
|
|
|
6,749
|
|
|
|
2,044
|
|
|
|
1,262,068
|
|
|
|
1,270,861
|
|
|
|
2,411
|
|
|
|
62,854
|
|
|
|
509
|
|
|
|
65,774
|
|
|
|
1,336,635
|
|
Installment loans to individuals
|
|
|
473
|
|
|
|
163
|
|
|
|
59,020
|
|
|
|
59,656
|
|
|
|
10
|
|
|
|
480
|
|
|
|
22
|
|
|
|
512
|
|
|
|
60,168
|
|
Unearned income
|
|
|
|
|
|
|
|
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,242
|
|
|
$
|
4,894
|
|
|
$
|
2,435,760
|
|
|
$
|
2,461,896
|
|
|
$
|
4,072
|
|
|
$
|
107,789
|
|
|
$
|
7,327
|
|
|
$
|
119,188
|
|
|
$
|
2,581,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructured loans contractually 90 days past due totaled $646 at December 31, 2012. There were no restructured
loans contractually 90 days past due at December 31, 2011. The outstanding balance of restructured loans on nonaccrual status was $11,420 and $2,295 at December 31, 2012 and 2011, respectively.
86
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses (continued)
Impaired Loans
Impaired loans recognized in conformity with ASC 310, segregated by class, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
Year Ended
December 31,
2012
|
|
|
|
Recorded
Investment
|
|
|
Unpaid
Principal
Balance
|
|
|
Related
Allowance
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
(1)
|
|
With a related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
1,620
|
|
|
$
|
1,767
|
|
|
$
|
708
|
|
|
$
|
1,771
|
|
|
$
|
7
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate 1-4 family mortgage
|
|
|
28,848
|
|
|
|
31,079
|
|
|
|
9,201
|
|
|
|
31,300
|
|
|
|
922
|
|
Real estate commercial mortgage
|
|
|
34,400
|
|
|
|
36,603
|
|
|
|
7,688
|
|
|
|
39,189
|
|
|
|
1,413
|
|
Installment loans to individuals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
64,868
|
|
|
$
|
69,449
|
|
|
$
|
17,597
|
|
|
$
|
72,260
|
|
|
$
|
2,342
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
1,620
|
|
|
$
|
3,375
|
|
|
$
|
|
|
|
$
|
1,716
|
|
|
$
|
37
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
1,648
|
|
|
|
2,447
|
|
|
|
|
|
|
|
1,813
|
|
|
|
|
|
Real estate 1-4 family mortgage
|
|
|
10,094
|
|
|
|
48,943
|
|
|
|
|
|
|
|
15,611
|
|
|
|
603
|
|
Real estate commercial mortgage
|
|
|
39,450
|
|
|
|
81,564
|
|
|
|
|
|
|
|
45,950
|
|
|
|
926
|
|
Installment loans to individuals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
52,812
|
|
|
$
|
136,329
|
|
|
$
|
|
|
|
$
|
65,090
|
|
|
$
|
1,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
117,680
|
|
|
$
|
205,778
|
|
|
$
|
17,597
|
|
|
$
|
137,350
|
|
|
$
|
3,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
Year Ended
December 31,
2011
|
|
|
|
Recorded
Investment
|
|
|
Unpaid
Principal
Balance
|
|
|
Related
Allowance
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
(1)
|
|
With a related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
3,358
|
|
|
$
|
3,764
|
|
|
$
|
1,441
|
|
|
$
|
3,603
|
|
|
$
|
95
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
108
|
|
|
|
108
|
|
|
|
16
|
|
|
|
108
|
|
|
|
|
|
Real estate 1-4 family mortgage
|
|
|
27,047
|
|
|
|
27,508
|
|
|
|
6,077
|
|
|
|
25,449
|
|
|
|
1,104
|
|
Real estate commercial mortgage
|
|
|
35,505
|
|
|
|
36,289
|
|
|
|
7,876
|
|
|
|
35,836
|
|
|
|
1,249
|
|
Installment loans to individuals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
66,018
|
|
|
$
|
67,669
|
|
|
$
|
15,410
|
|
|
$
|
64,996
|
|
|
$
|
2,448
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
2,913
|
|
|
$
|
5,811
|
|
|
$
|
|
|
|
$
|
2,528
|
|
|
$
|
33
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
7,076
|
|
|
|
18,096
|
|
|
|
|
|
|
|
11,974
|
|
|
|
|
|
Real estate 1-4 family mortgage
|
|
|
26,785
|
|
|
|
71,613
|
|
|
|
|
|
|
|
31,035
|
|
|
|
601
|
|
Real estate commercial mortgage
|
|
|
63,900
|
|
|
|
132,052
|
|
|
|
|
|
|
|
73,228
|
|
|
|
1,607
|
|
Installment loans to individuals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
100,674
|
|
|
$
|
227,572
|
|
|
$
|
|
|
|
$
|
118,765
|
|
|
$
|
2,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
166,692
|
|
|
$
|
295,241
|
|
|
$
|
15,410
|
|
|
$
|
183,761
|
|
|
$
|
4,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes interest income recognized using the cash-basis method of income recognition of $1,801 and $1,752, respectively.
|
The average recorded investment in impaired loans for the year ended December 31, 2010 was $185,899. Interest
income recognized on impaired loans for the year ended December 31, 2010 was $2,293, which included interest income recognized using the cash-basis method of income recognition of $821.
87
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses (continued)
Restructured Loans
The following table presents restructured loans segregated by class as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Loans
|
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
|
Post-Modification
Outstanding
Recorded
Investment
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate 1-4 family mortgage
|
|
|
19
|
|
|
|
18,450
|
|
|
|
10,853
|
|
Real estate commercial mortgage
|
|
|
16
|
|
|
|
18,985
|
|
|
|
18,409
|
|
Installment loans to individuals
|
|
|
1
|
|
|
|
184
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
36
|
|
|
$
|
37,619
|
|
|
$
|
29,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate 1-4 family mortgage
|
|
|
18
|
|
|
|
20,313
|
|
|
|
18,089
|
|
Real estate commercial mortgage
|
|
|
12
|
|
|
|
17,853
|
|
|
|
18,043
|
|
Installment loans to individuals
|
|
|
1
|
|
|
|
184
|
|
|
|
179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
31
|
|
|
$
|
38,350
|
|
|
$
|
36,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in the Companys restructured loans are set forth in the table below. The update to ASC 310 issued by FASB
in April 2011 that provided clarification of which loan modifications constituted troubled debt restructurings did not affect loans previously disclosed as restructured at December 31, 2010 or additional loans with concessions in the table
below.
|
|
|
|
|
|
|
|
|
|
|
Number of
Loans
|
|
|
Recorded
Investment
|
|
Totals at January 1, 2011
|
|
|
39
|
|
|
$
|
32,615
|
|
Additional loans with concessions
|
|
|
13
|
|
|
|
18,540
|
|
Reductions due to:
|
|
|
|
|
|
|
|
|
Reclassified as nonperforming
|
|
|
(17
|
)
|
|
|
(9,861
|
)
|
Transfer to other real estate owned
|
|
|
(2
|
)
|
|
|
(2,898
|
)
|
Charge-offs
|
|
|
|
|
|
|
|
|
Principal paydowns
|
|
|
|
|
|
|
(1,453
|
)
|
Lapse of concession period
|
|
|
(2
|
)
|
|
|
(632
|
)
|
|
|
|
|
|
|
|
|
|
Totals at December 31, 2011
|
|
|
31
|
|
|
$
|
36,311
|
|
Additional loans with concessions
|
|
|
14
|
|
|
|
5,943
|
|
Reductions due to:
|
|
|
|
|
|
|
|
|
Reclassified as nonperforming
|
|
|
(5
|
)
|
|
|
(8,058
|
)
|
Charge-offs
|
|
|
(1
|
)
|
|
|
(1,682
|
)
|
Transfer to other real estate owned
|
|
|
(1
|
)
|
|
|
(419
|
)
|
Principal paydowns
|
|
|
|
|
|
|
(1,808
|
)
|
Lapse of concession period
|
|
|
(2
|
)
|
|
|
(851
|
)
|
|
|
|
|
|
|
|
|
|
Totals at December 31, 2012
|
|
|
36
|
|
|
$
|
29,436
|
|
|
|
|
|
|
|
|
|
|
The allocated allowance for loan losses attributable to restructured loans was $3,969 and $5,994 at December 31,
2012 and 2011, respectively. The Company had $288 and $194 in remaining availability under commitments to lend additional funds on these restructured loans at December 31, 2012 and 2011, respectively.
88
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses (continued)
Credit Quality
For commercial and commercial real estate secured 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
commercial and commercial real estate secured loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans that migrate toward the Pass grade (those with a risk rating between 1 and 4) or within the
Pass grade generally have a lower risk of loss and therefore a lower risk factor. The Watch grade (those with a risk rating of 5) is utilized on a temporary basis for Pass grade loans where a significant
risk-modifying action is anticipated in the near term. Loans that migrate toward the Substandard grade (those with a risk rating between 6 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to those
related loan balances. The following table presents the Companys loan portfolio by risk-rating grades as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
|
Watch
|
|
|
Substandard
|
|
|
Total
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
226,540
|
|
|
$
|
1,939
|
|
|
$
|
3,218
|
|
|
$
|
231,697
|
|
Real estate construction
|
|
|
71,633
|
|
|
|
651
|
|
|
|
|
|
|
|
72,284
|
|
Real estate 1-4 family mortgage
|
|
|
96,147
|
|
|
|
24,138
|
|
|
|
32,589
|
|
|
|
152,874
|
|
Real estate commercial mortgage
|
|
|
989,095
|
|
|
|
46,148
|
|
|
|
37,996
|
|
|
|
1,073,239
|
|
Installment loans to individuals
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,383,422
|
|
|
$
|
72,876
|
|
|
$
|
73,803
|
|
|
$
|
1,530,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
187,550
|
|
|
$
|
2,929
|
|
|
$
|
7,292
|
|
|
$
|
197,771
|
|
Real estate construction
|
|
|
52,593
|
|
|
|
2,362
|
|
|
|
108
|
|
|
|
55,063
|
|
Real estate 1-4 family mortgage
|
|
|
86,858
|
|
|
|
31,851
|
|
|
|
35,809
|
|
|
|
154,518
|
|
Real estate commercial mortgage
|
|
|
873,614
|
|
|
|
54,949
|
|
|
|
41,874
|
|
|
|
970,437
|
|
Installment loans to individuals
|
|
|
199
|
|
|
|
|
|
|
|
|
|
|
|
199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,200,814
|
|
|
$
|
92,091
|
|
|
$
|
85,083
|
|
|
$
|
1,377,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For portfolio balances of consumer, consumer mortgage and certain other similar loan types, 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 Companys loan portfolio not subject to risk
rating as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing
|
|
|
Non-Performing
|
|
|
Total
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
74,003
|
|
|
$
|
210
|
|
|
$
|
74,213
|
|
Lease financing
|
|
|
195
|
|
|
|
|
|
|
|
195
|
|
Real estate construction
|
|
|
31,774
|
|
|
|
|
|
|
|
31,774
|
|
Real estate 1-4 family mortgage
|
|
|
670,074
|
|
|
|
5,328
|
|
|
|
675,402
|
|
Real estate commercial mortgage
|
|
|
195,086
|
|
|
|
449
|
|
|
|
195,535
|
|
Installment loans to individuals
|
|
|
54,918
|
|
|
|
91
|
|
|
|
55,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,026,050
|
|
|
$
|
6,078
|
|
|
$
|
1,032,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
61,864
|
|
|
$
|
198
|
|
|
$
|
62,062
|
|
Lease financing
|
|
|
343
|
|
|
|
|
|
|
|
343
|
|
Real estate construction
|
|
|
18,756
|
|
|
|
340
|
|
|
|
19,096
|
|
Real estate 1-4 family mortgage
|
|
|
554,702
|
|
|
|
5,951
|
|
|
|
560,653
|
|
Real estate commercial mortgage
|
|
|
156,050
|
|
|
|
756
|
|
|
|
156,806
|
|
Installment loans to individuals
|
|
|
55,356
|
|
|
|
169
|
|
|
|
55,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
847,071
|
|
|
$
|
7,414
|
|
|
$
|
854,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses (continued)
Loans Acquired with Deteriorated Credit Quality
Loans acquired 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
Covered
Loans
|
|
|
Other
Covered
Loans
|
|
|
Not
Covered
Loans
|
|
|
Total
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
|
|
|
$
|
10,800
|
|
|
$
|
340
|
|
|
$
|
11,140
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
|
|
|
|
1,648
|
|
|
|
|
|
|
|
1,648
|
|
Real estate 1-4 family mortgage
|
|
|
6,122
|
|
|
|
67,326
|
|
|
|
1,699
|
|
|
|
75,147
|
|
Real estate commercial mortgage
|
|
|
25,782
|
|
|
|
125,379
|
|
|
|
6,708
|
|
|
|
157,869
|
|
Installment loans to individuals
|
|
|
|
|
|
|
31
|
|
|
|
2,194
|
|
|
|
2,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
31,904
|
|
|
$
|
205,184
|
|
|
$
|
10,941
|
|
|
$
|
248,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
38
|
|
|
$
|
17,765
|
|
|
$
|
455
|
|
|
$
|
18,258
|
|
Lease financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction
|
|
|
4,031
|
|
|
|
3,045
|
|
|
|
|
|
|
|
7,076
|
|
Real estate 1-4 family mortgage
|
|
|
12,252
|
|
|
|
95,671
|
|
|
|
1,533
|
|
|
|
109,456
|
|
Real estate commercial mortgage
|
|
|
44,994
|
|
|
|
161,498
|
|
|
|
2,900
|
|
|
|
209,392
|
|
Installment loans to individuals
|
|
|
|
|
|
|
168
|
|
|
|
4,276
|
|
|
|
4,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
61,315
|
|
|
$
|
278,147
|
|
|
$
|
9,164
|
|
|
$
|
348,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the fair value of loans determined to be impaired at the time of acquisition and
determined not to be impaired at the time of acquisition as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
Covered
Loans
|
|
|
Other
Covered
Loans
|
|
|
Not
Covered
Loans
|
|
|
Total
|
|
December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractually-required principal and interest
|
|
$
|
109,054
|
|
|
$
|
264,406
|
|
|
$
|
13,253
|
|
|
$
|
386,713
|
|
Nonaccretable difference
(1)
|
|
|
(77,137
|
)
|
|
|
(52,517
|
)
|
|
|
(1,182
|
)
|
|
|
(130,836
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows expected to be collected
|
|
|
31,917
|
|
|
|
211,889
|
|
|
|
12,071
|
|
|
|
255,877
|
|
Accretable yield
(2)
|
|
|
(13
|
)
|
|
|
(6,705
|
)
|
|
|
(1,130
|
)
|
|
|
(7,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
$
|
31,904
|
|
|
$
|
205,184
|
|
|
$
|
10,941
|
|
|
$
|
248,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractually-required principal and interest
|
|
$
|
165,279
|
|
|
$
|
377,100
|
|
|
$
|
13,625
|
|
|
$
|
556,004
|
|
Nonaccretable difference
(1)
|
|
|
(103,924
|
)
|
|
|
(89,196
|
)
|
|
|
(3,715
|
)
|
|
|
(196,835
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows expected to be collected
|
|
|
61,355
|
|
|
|
287,904
|
|
|
|
9,910
|
|
|
|
359,169
|
|
Accretable yield
(2)
|
|
|
(40
|
)
|
|
|
(9,757
|
)
|
|
|
(746
|
)
|
|
|
(10,543
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
$
|
61,315
|
|
|
$
|
278,147
|
|
|
$
|
9,164
|
|
|
$
|
348,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents contractual principal cash flows of $120,572 and $185,460, respectively, and interest cash flows of $10,264 and $11,375, respectively, not
expected to be collected.
|
(2)
|
Represents contractual interest payments expected to be collected of $4,945 and $7,177, respectively, and purchase discount of $2,903 and $3,366,
respectively.
|
90
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses (continued)
Changes in the accretable yield of loans acquired with deteriorated credit quality were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
Covered
Loans
|
|
|
Other
Covered
Loans
|
|
|
Not
Covered
Loans
|
|
|
Total
|
|
Balance at January 1, 2011
|
|
$
|
(3,626
|
)
|
|
$
|
(11,670
|
)
|
|
$
|
(172
|
)
|
|
$
|
(15,468
|
)
|
Additions through acquisition
|
|
|
|
|
|
|
(4,335
|
)
|
|
|
(102
|
)
|
|
|
(4,437
|
)
|
Reclasses from nonaccretable difference
|
|
|
(1,384
|
)
|
|
|
(9,434
|
)
|
|
|
(1,181
|
)
|
|
|
(11,999
|
)
|
Accretion
|
|
|
4,970
|
|
|
|
15,682
|
|
|
|
709
|
|
|
|
21,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
$
|
(40
|
)
|
|
$
|
(9,757
|
)
|
|
$
|
(746
|
)
|
|
$
|
(10,543
|
)
|
Reclasses from nonaccretable difference
|
|
|
(1,055
|
)
|
|
|
(12,178
|
)
|
|
|
(1,937
|
)
|
|
|
(15,170
|
)
|
Accretion
|
|
|
1,082
|
|
|
|
15,230
|
|
|
|
1,553
|
|
|
|
17,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
$
|
(13
|
)
|
|
$
|
(6,705
|
)
|
|
$
|
(1,130
|
)
|
|
$
|
(7,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses (continued)
Allowance for Loan Losses
The following table provides a rollforward of the allowance for loan losses and a breakdown of the ending balance of the allowance based
on the Companys 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
|
|
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
4,197
|
|
|
$
|
1,073
|
|
|
$
|
17,191
|
|
|
$
|
20,979
|
|
|
$
|
900
|
|
|
$
|
44,340
|
|
Charge-offs
|
|
|
(4,923
|
)
|
|
|
(187
|
)
|
|
|
(9,231
|
)
|
|
|
(5,828
|
)
|
|
|
(386
|
)
|
|
|
(20,555
|
)
|
Recoveries
|
|
|
531
|
|
|
|
34
|
|
|
|
1,330
|
|
|
|
455
|
|
|
|
87
|
|
|
|
2,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
|
|
|
(4,392
|
)
|
|
|
(153
|
)
|
|
|
(7,901
|
)
|
|
|
(5,373
|
)
|
|
|
(299
|
)
|
|
|
(18,118
|
)
|
Provision for loan losses
|
|
|
4,274
|
|
|
|
(121
|
)
|
|
|
13,201
|
|
|
|
10,938
|
|
|
|
(20
|
)
|
|
|
28,272
|
|
Benefit attributable to FDIC loss-share agreements
|
|
|
(777
|
)
|
|
|
(88
|
)
|
|
|
(4,326
|
)
|
|
|
(5,202
|
)
|
|
|
(15
|
)
|
|
|
(10,408
|
)
|
Recoveries payable to FDIC
|
|
|
5
|
|
|
|
|
|
|
|
182
|
|
|
|
74
|
|
|
|
|
|
|
|
261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses charged to operations
|
|
|
3,502
|
|
|
|
(209
|
)
|
|
|
9,057
|
|
|
|
5,810
|
|
|
|
(35
|
)
|
|
|
18,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
3,307
|
|
|
$
|
711
|
|
|
$
|
18,347
|
|
|
$
|
21,416
|
|
|
$
|
566
|
|
|
$
|
44,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Amount Allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
708
|
|
|
$
|
|
|
|
$
|
9,201
|
|
|
$
|
7,688
|
|
|
$
|
|
|
|
$
|
17,597
|
|
Collectively evaluated for impairment
|
|
|
2,599
|
|
|
|
711
|
|
|
|
9,146
|
|
|
|
13,728
|
|
|
|
566
|
|
|
|
26,750
|
|
Acquired with deteriorated credit quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
3,307
|
|
|
$
|
711
|
|
|
$
|
18,347
|
|
|
$
|
21,416
|
|
|
$
|
566
|
|
|
$
|
44,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
2,625
|
|
|
$
|
2,115
|
|
|
$
|
20,870
|
|
|
$
|
18,779
|
|
|
$
|
1,026
|
|
|
$
|
45,415
|
|
Charge-offs
|
|
|
(2,037
|
)
|
|
|
(836
|
)
|
|
|
(16,755
|
)
|
|
|
(5,792
|
)
|
|
|
(373
|
)
|
|
|
(25,793
|
)
|
Recoveries
|
|
|
272
|
|
|
|
110
|
|
|
|
767
|
|
|
|
1,056
|
|
|
|
163
|
|
|
|
2,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
|
|
|
(1,765
|
)
|
|
|
(726
|
)
|
|
|
(15,988
|
)
|
|
|
(4,736
|
)
|
|
|
(210
|
)
|
|
|
(23,425
|
)
|
Provision for loan losses
|
|
|
3,464
|
|
|
|
(316
|
)
|
|
|
12,900
|
|
|
|
8,289
|
|
|
|
90
|
|
|
|
24,427
|
|
Benefit attributable to FDIC loss-share agreements
|
|
|
(132
|
)
|
|
|
|
|
|
|
(597
|
)
|
|
|
(1,353
|
)
|
|
|
(6
|
)
|
|
|
(2,088
|
)
|
Recoveries payable to FDIC
|
|
|
5
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses charged to operations
|
|
|
3,337
|
|
|
|
(316
|
)
|
|
|
12,309
|
|
|
|
6,936
|
|
|
|
84
|
|
|
|
22,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
4,197
|
|
|
$
|
1,073
|
|
|
$
|
17,191
|
|
|
$
|
20,979
|
|
|
$
|
900
|
|
|
$
|
44,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Amount Allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
1,441
|
|
|
$
|
16
|
|
|
$
|
6,077
|
|
|
$
|
7,876
|
|
|
$
|
|
|
|
$
|
15,410
|
|
Collectively evaluated for impairment
|
|
|
2,756
|
|
|
|
1,057
|
|
|
|
11,114
|
|
|
|
13,103
|
|
|
|
900
|
|
|
|
28,930
|
|
Acquired with deteriorated credit quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
4,197
|
|
|
$
|
1,073
|
|
|
$
|
17,191
|
|
|
$
|
20,979
|
|
|
$
|
900
|
|
|
$
|
44,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
4,855
|
|
|
$
|
4,494
|
|
|
$
|
15,593
|
|
|
$
|
12,577
|
|
|
$
|
1,626
|
|
|
$
|
39,145
|
|
Charge-offs
|
|
|
(1,161
|
)
|
|
|
(4,181
|
)
|
|
|
(14,189
|
)
|
|
|
(6,512
|
)
|
|
|
(319
|
)
|
|
|
(26,362
|
)
|
Recoveries
|
|
|
282
|
|
|
|
68
|
|
|
|
999
|
|
|
|
533
|
|
|
|
85
|
|
|
|
1,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
|
|
|
(879
|
)
|
|
|
(4,113
|
)
|
|
|
(13,190
|
)
|
|
|
(5,979
|
)
|
|
|
(234
|
)
|
|
|
(24,395
|
)
|
Provision for loan losses
|
|
|
(1,351
|
)
|
|
|
1,734
|
|
|
|
18,467
|
|
|
|
12,181
|
|
|
|
(366
|
)
|
|
|
30,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
2,625
|
|
|
$
|
2,115
|
|
|
$
|
20,870
|
|
|
$
|
18,779
|
|
|
$
|
1,026
|
|
|
$
|
45,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Amount Allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
549
|
|
|
$
|
20
|
|
|
$
|
10,349
|
|
|
$
|
6,611
|
|
|
$
|
|
|
|
$
|
17,529
|
|
Collectively evaluated for impairment
|
|
|
2,076
|
|
|
|
2,095
|
|
|
|
10,521
|
|
|
|
12,168
|
|
|
|
1,026
|
|
|
|
27,886
|
|
Acquired with deteriorated credit quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
2,625
|
|
|
$
|
2,115
|
|
|
$
|
20,870
|
|
|
$
|
18,779
|
|
|
$
|
1,026
|
|
|
$
|
45,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes lease financing receivables.
|
92
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note D Loans and the Allowance for Loan Losses (continued)
The following table provides recorded investment in loans, net of unearned income, based
on the Companys 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
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
1,620
|
|
|
$
|
|
|
|
$
|
28,848
|
|
|
$
|
34,400
|
|
|
$
|
|
|
|
$
|
64,868
|
|
Collectively evaluated for impairment
|
|
|
304,290
|
|
|
|
104,058
|
|
|
|
799,428
|
|
|
|
1,234,374
|
|
|
|
55,206
|
|
|
|
2,497,356
|
|
Acquired with deteriorated credit quality
|
|
|
11,140
|
|
|
|
1,648
|
|
|
|
75,147
|
|
|
|
157,869
|
|
|
|
2,225
|
|
|
|
248,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
317,050
|
|
|
$
|
105,706
|
|
|
$
|
903,423
|
|
|
$
|
1,426,643
|
|
|
$
|
57,431
|
|
|
$
|
2,810,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
3,358
|
|
|
$
|
108
|
|
|
$
|
27,047
|
|
|
$
|
35,505
|
|
|
$
|
|
|
|
$
|
66,018
|
|
Collectively evaluated for impairment
|
|
|
256,475
|
|
|
|
74,051
|
|
|
|
688,124
|
|
|
|
1,091,738
|
|
|
|
56,052
|
|
|
|
2,166,440
|
|
Acquired with deteriorated credit quality
|
|
|
18,258
|
|
|
|
7,076
|
|
|
|
109,456
|
|
|
|
209,392
|
|
|
|
4,444
|
|
|
|
348,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
278,091
|
|
|
$
|
81,235
|
|
|
$
|
824,627
|
|
|
$
|
1,336,635
|
|
|
$
|
60,496
|
|
|
$
|
2,581,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes lease financing receivables.
|
Related Party Loans
Certain executive officers and directors of Renasant Bank and their associates are customers of and have other transactions with Renasant Bank. Related party loans and commitments are made on
substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to Renasant Bank and do not involve more than a normal risk of collectability or present
other unfavorable features. A summary of the changes in related party loans follows:
|
|
|
|
|
Loans at December 31, 2011
|
|
$
|
22,650
|
|
New loans and advances
|
|
|
3,592
|
|
Payments received
|
|
|
(4,373
|
)
|
Changes in related parties
|
|
|
|
|
|
|
|
|
|
Loans at December 31, 2012
|
|
$
|
21,869
|
|
|
|
|
|
|
No related party loans were classified as past due, nonaccrual, impaired or restructured at December 31, 2012 or
2011. Unfunded commitments to certain executive officers and directors and their associates totaled $5,170 and $5,331 at December 31, 2012 and 2011, respectively.
93
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note E Premises and Equipment
(In Thousands)
Bank
premises and equipment at December 31 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Premises
|
|
$
|
75,106
|
|
|
$
|
63,043
|
|
Leasehold improvements
|
|
|
6,426
|
|
|
|
5,240
|
|
Furniture and equipment
|
|
|
22,344
|
|
|
|
21,769
|
|
Computer equipment
|
|
|
6,664
|
|
|
|
13,419
|
|
Autos
|
|
|
221
|
|
|
|
221
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
110,761
|
|
|
|
103,692
|
|
Accumulated depreciation
|
|
|
(44,009
|
)
|
|
|
(49,194
|
)
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
66,752
|
|
|
$
|
54,498
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense was $5,043, $4,146 and $3,791 for the years ended December 31, 2012, 2011 and 2010, respectively.
The Company has operating leases which extend to 2025 for certain land and office locations. Leases that expire are generally expected to
be renewed or replaced by other leases. Rental expense was $2,567, $2,489 and $2,287 for 2012, 2011 and 2010, respectively. The following is a summary of future minimum lease payments for years following December 31, 2012:
|
|
|
|
|
2013
|
|
$
|
2,436
|
|
2014
|
|
|
2,040
|
|
2015
|
|
|
1,840
|
|
2016
|
|
|
1,719
|
|
2017
|
|
|
1,534
|
|
Thereafter
|
|
|
4,118
|
|
|
|
|
|
|
Total
|
|
$
|
13,687
|
|
|
|
|
|
|
94
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note F Other Real Estate Owned
(In Thousands)
The following table provides details of the Companys other real estate owned (OREO) covered and not covered under a loss-share agreement, net of valuation allowances and direct
write-downs, as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covered
OREO
|
|
|
Not Covered
OREO
|
|
|
Total
OREO
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
$
|
8,778
|
|
|
$
|
7,842
|
|
|
$
|
16,620
|
|
Commercial real estate
|
|
|
14,368
|
|
|
|
7,779
|
|
|
|
22,147
|
|
Residential land development
|
|
|
5,005
|
|
|
|
22,490
|
|
|
|
27,495
|
|
Commercial land development
|
|
|
17,383
|
|
|
|
6,221
|
|
|
|
23,604
|
|
Other
|
|
|
|
|
|
|
385
|
|
|
|
385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
45,534
|
|
|
$
|
44,717
|
|
|
$
|
90,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate
|
|
$
|
11,110
|
|
|
$
|
15,364
|
|
|
$
|
26,474
|
|
Commercial real estate
|
|
|
8,211
|
|
|
|
11,479
|
|
|
|
19,690
|
|
Residential land development
|
|
|
4,441
|
|
|
|
36,105
|
|
|
|
40,546
|
|
Commercial land development
|
|
|
19,394
|
|
|
|
7,131
|
|
|
|
26,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
43,156
|
|
|
$
|
70,079
|
|
|
$
|
113,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in the Companys OREO covered and not covered under a loss-share agreement were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covered
OREO
|
|
|
Not Covered
OREO
|
|
|
Total
OREO
|
|
Balance at December 31, 2010
|
|
$
|
54,715
|
|
|
$
|
71,833
|
|
|
$
|
126,548
|
|
Transfers of loans
|
|
|
9,032
|
|
|
|
34,481
|
|
|
|
43,513
|
|
Capitalized improvements
|
|
|
|
|
|
|
61
|
|
|
|
61
|
|
Impairments
(1)
|
|
|
(1,650
|
)
|
|
|
(7,894
|
)
|
|
|
(9,544
|
)
|
Dispositions
|
|
|
(18,887
|
)
|
|
|
(29,085
|
)
|
|
|
(47,972
|
)
|
Other
|
|
|
(54
|
)
|
|
|
683
|
|
|
|
629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
$
|
43,156
|
|
|
$
|
70,079
|
|
|
$
|
113,235
|
|
Transfers of loans
|
|
|
38,977
|
|
|
|
9,683
|
|
|
|
48,660
|
|
Capitalized improvements
|
|
|
|
|
|
|
507
|
|
|
|
507
|
|
Impairments
(1)
|
|
|
(9,722
|
)
|
|
|
(5,328
|
)
|
|
|
(15,050
|
)
|
Dispositions
|
|
|
(27,430
|
)
|
|
|
(30,410
|
)
|
|
|
(57,840
|
)
|
Other
|
|
|
553
|
|
|
|
186
|
|
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
$
|
45,534
|
|
|
$
|
44,717
|
|
|
$
|
90,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Of the total impairment charges of $1,650 recorded for covered OREO in 2011, $330 was included in the Consolidated Statements of Income for the year
ended December 31, 2011, while the remaining $1,320 increased the FDIC loss-share indemnification asset. Of the total impairment charges of $9,722 recorded for covered OREO in 2012, $1,944 was included in the Consolidated Statements of Income
for the year ended December 31, 2012, while the remaining $7,778 increased the FDIC loss-share indemnification asset.
|
Components of the line item Other real estate owned in the Consolidated Statements of Income were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Repairs and maintenance
|
|
$
|
2,996
|
|
|
$
|
2,427
|
|
|
$
|
1,500
|
|
Property taxes and insurance
|
|
|
1,678
|
|
|
|
1,980
|
|
|
|
2,815
|
|
Impairments
|
|
|
7,272
|
|
|
|
8,224
|
|
|
|
3,718
|
|
Net losses on OREO sales
|
|
|
2,096
|
|
|
|
3,073
|
|
|
|
1,824
|
|
Rental income
|
|
|
(446
|
)
|
|
|
(378
|
)
|
|
|
(239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13,596
|
|
|
$
|
15,326
|
|
|
$
|
9,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note G Goodwill and Other Intangible Assets
(In Thousands)
Changes in the carrying amount of goodwill during the years ended December 31, 2012 and 2011 were as follows:
|
|
|
|
|
|
|
Goodwill
|
|
Balance at December 31, 2010
|
|
$
|
184,879
|
|
Adjustment to previously recorded goodwill
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
$
|
184,879
|
|
Adjustment to previously recorded goodwill
|
|
|
(20
|
)
|
|
|
|
|
|
Balance at December 31, 2012
|
|
$
|
184,859
|
|
|
|
|
|
|
The adjustment to previously recorded goodwill in 2012 reflects tax benefits associated with the exercise of stock
options assumed in connection with prior acquisitions.
In connection with the American Trust acquisition in 2011, the Company
recorded a core deposit intangible asset of $229, which is being amortized over ten years on a straight-line basis.
In
connection with the RBC Bank (USA) acquisition in 2011, the Company recorded a customer relationship intangible of $1,970, which is being amortized over fifteen years on a straight-line basis.
The following table provides a summary of finite-lived intangible assets as of the dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Core deposit intangible
|
|
$
|
13,284
|
|
|
$
|
(9,013
|
)
|
|
$
|
4,271
|
|
Customer relationship intangible
|
|
|
1,970
|
|
|
|
(175
|
)
|
|
|
1,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finite-lived intangible assets
|
|
$
|
15,254
|
|
|
$
|
(9,188
|
)
|
|
$
|
6,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Core deposit intangible
|
|
$
|
13,284
|
|
|
$
|
(7,763
|
)
|
|
$
|
5,521
|
|
Customer relationship intangible
|
|
|
1,970
|
|
|
|
(44
|
)
|
|
|
1,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finite-lived intangible assets
|
|
$
|
15,254
|
|
|
$
|
(7,807
|
)
|
|
$
|
7,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate amortization expense for the years ended December 31, 2012, 2011 and 2010 was $1,381, $1,742 and $1,974,
respectively. The estimated amortization expense of finite-lived intangible assets for future periods is summarized as follows:
|
|
|
|
|
2013
|
|
$
|
1,235
|
|
2014
|
|
|
1,034
|
|
2015
|
|
|
802
|
|
2016
|
|
|
681
|
|
2017
|
|
|
466
|
|
Thereafter
|
|
|
1,848
|
|
|
|
|
|
|
Total
|
|
$
|
6,066
|
|
|
|
|
|
|
96
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note H Mortgage Servicing Rights
(In Thousands)
Changes in the Companys mortgage servicing rights were as follows:
|
|
|
|
|
Carrying value at January 1, 2012
|
|
$
|
195
|
|
Capitalization
|
|
|
4,195
|
|
Amortization
|
|
|
(157
|
)
|
|
|
|
|
|
Carrying value at December 31, 2012
|
|
$
|
4,233
|
|
|
|
|
|
|
Data and key economic assumptions related to the Companys mortgage servicing rights as of December 31, 2012
are as follows:
|
|
|
|
|
Unpaid principal balance
|
|
$
|
393,698
|
|
Weighted-average prepayment speed (CPR)
|
|
|
8.16
|
%
|
Estimated impact of a 10% increase
|
|
$
|
(116
|
)
|
Estimated impact of a 20% increase
|
|
|
(227
|
)
|
|
|
Discount rate
|
|
|
11.55
|
%
|
Estimated impact of a 100bp increase
|
|
$
|
(146
|
)
|
Estimated impact of a 200bp increase
|
|
|
(282
|
)
|
|
|
Weighted-average coupon interest rate
|
|
|
3.28
|
%
|
Weighted-average servicing fee (basis points)
|
|
|
25.03
|
|
Weighted-average remaining maturity (in months)
|
|
|
281
|
|
97
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note I Deposits
(In Thousands)
The
following is a summary of deposits as of December 31:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Noninterest-bearing deposits
|
|
$
|
568,214
|
|
|
$
|
531,910
|
|
Interest-bearing demand deposits
|
|
|
1,455,180
|
|
|
|
1,335,646
|
|
Savings deposits
|
|
|
245,173
|
|
|
|
217,148
|
|
Time deposits
|
|
|
1,192,654
|
|
|
|
1,327,533
|
|
|
|
|
|
|
|
|
|
|
Total deposits
|
|
$
|
3,461,221
|
|
|
$
|
3,412,237
|
|
|
|
|
|
|
|
|
|
|
The approximate scheduled maturities of time deposits at December 31, 2012 are as follows:
|
|
|
|
|
2013
|
|
$
|
697,829
|
|
2014
|
|
|
219,616
|
|
2015
|
|
|
141,095
|
|
2016
|
|
|
47,380
|
|
2017
|
|
|
72,108
|
|
Thereafter
|
|
|
14,626
|
|
|
|
|
|
|
Total
|
|
$
|
1,192,654
|
|
|
|
|
|
|
The aggregate amount of time deposits in denominations of $100 or more at December 31, 2012 and 2011 was $608,647
and $663,385, respectively. Certain executive officers and directors had amounts on deposit with Renasant Bank of approximately $10,145 and $12,016 at December 31, 2012 and 2011, respectively.
Note J Short-Term Borrowings
(In Thousands)
Short-term borrowings as of December 31 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Securities sold under agreements to repurchase
|
|
$
|
5,254
|
|
|
$
|
11,485
|
|
|
|
|
|
|
|
|
|
|
Total short-term borrowings
|
|
$
|
5,254
|
|
|
$
|
11,485
|
|
|
|
|
|
|
|
|
|
|
The average balances and cost of funds of short-term borrowings for the years ending December 31 are summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances
|
|
|
Cost of Funds
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Federal funds purchased
|
|
$
|
4,346
|
|
|
$
|
30
|
|
|
$
|
16
|
|
|
|
0.15
|
%
|
|
|
1.73
|
%
|
|
|
1.00
|
%
|
Treasury, tax and loan notes
|
|
|
|
|
|
|
2,551
|
|
|
|
2,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
|
8,031
|
|
|
|
11,835
|
|
|
|
16,264
|
|
|
|
0.18
|
|
|
|
0.25
|
|
|
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term borrowings
|
|
$
|
12,377
|
|
|
$
|
14,416
|
|
|
$
|
18,860
|
|
|
|
0.17
|
%
|
|
|
0.21
|
%
|
|
|
0.36
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company maintained a treasury, tax and loan notes account with the Federal Reserve with any balance collateralized
by assets of Renasant Bank in 2010 and 2011. Effective January 2012, a portion of the Treasury Tax and Loan program was eliminated. As a result, all deposits held by the Company were withdrawn as of December 31, 2011. In addition, the Company
maintains lines of credit with correspondent banks totaling $85,000 at December 31, 2012. Interest is charged at the market federal funds rate on all advances. There were no amounts outstanding under these lines of credit at December 31,
2012 or 2011.
98
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note K Long-Term Debt
(In Thousands)
Long-term debt as of December 31, 2012 and 2011 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Federal Home Loan Bank advances
|
|
$
|
83,843
|
|
|
$
|
117,454
|
|
Junior subordinated debentures
|
|
|
75,609
|
|
|
|
75,770
|
|
TLGP Senior Note
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
159,452
|
|
|
$
|
243,224
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank advances
Long-term advances from the FHLB outstanding at December 31, 2012 had maturities ranging from 2013 to 2030 with a combination of fixed and floating rates ranging from 1.60% to 7.93%. Weighted-average
interest rates on outstanding advances at December 31, 2012 and 2011 were 4.20% and 4.15%, respectively. These advances are collateralized by a blanket lien on the Companys mortgage loans. The Company had availability on unused lines of
credit with the FHLB of $1,160,984 at December 31, 2012.
The Company repaid FHLB advances prior to their contractual
maturity of $24,000 in 2012, $50,000 in 2011, and $148,000 in 2010, and, as a result, incurred prepayment penalties of $898, $1,903 and $2,785 for the years ended December 31, 2012, 2011, and 2010, respectively.
Junior subordinated debentures
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. The debentures are the
trusts only assets and interest payments from the debentures finance the distributions paid on the capital securities. Distributions on the capital securities are payable quarterly at a rate per annum equal to the interest rate being earned by
the trusts on the debentures held by the trusts. The capital securities are subject to mandatory redemption, in whole or in part, upon repayment of the debentures. The Company has entered into an agreement which fully and unconditionally guarantees
the capital securities subject to the terms of the guarantee.
The following table provides details on the debentures as of December 31,
2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
Amount
|
|
|
Interest Rate
|
|
|
Year of
Maturity
|
|
|
Amount
Included in
Tier 1 Capital
|
|
PHC Statutory Trust I
|
|
$
|
20,619
|
|
|
|
3.16
|
%
|
|
|
2033
|
|
|
$
|
20,000
|
|
PHC Statutory Trust II
|
|
|
31,959
|
|
|
|
2.18
|
|
|
|
2035
|
|
|
|
31,000
|
|
Heritage Financial Statutory Trust I
|
|
|
10,310
|
|
|
|
10.20
|
|
|
|
2031
|
|
|
|
10,000
|
|
Capital Bancorp Capital Trust I
|
|
|
12,372
|
|
|
|
1.86
|
|
|
|
2035
|
|
|
|
12,000
|
|
During 2003, the Company formed PHC Statutory Trust I to provide funds for the cash portion of the Renasant Bancshares,
Inc. merger. The interest rate for PHC Statutory Trust I reprices quarterly equal to the three-month LIBOR at the determination date plus 285 basis points. In April 2012, the Company entered into an interest rate swap agreement effective
March 17, 2014, whereby, beginning on the effective date, the Company will receive a variable rate of interest based on the three-month LIBOR plus a spread of 2.85% and pay a fixed rate of interest of 5.49%. For more information about the
Companys derivative financial instruments, see Note S, Derivative Instruments. The debentures owned by PHC Statutory Trust I are currently redeemable at par.
During 2005, the Company formed PHC Statutory Trust II to provide funds for the cash portion of the Heritage Financial Holding Corporation (Heritage) merger. The interest rate for PHC
Statutory Trust II reprices quarterly equal to the three-month LIBOR at the determination date plus 187 basis points. The debentures owned by PHC Statutory Trust II are currently redeemable at par.
99
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note K Long-Term Debt (continued)
Pursuant to the merger with Heritage, the Company assumed the debentures issued to
Heritage Financial Statutory Trust I. The premium associated with the Companys assumption of the debentures issued to Heritage Financial Statutory Trust I had a carrying value of $349 and $510 at December 31, 2012 and 2011, respectively.
The premium is being amortized through February 2015. The interest rate for Heritage Financial Statutory Trust I is fixed at 10.20% per annum. On or after February 22, 2021, the debentures owned by Heritage Financial Statutory Trust I may
be redeemed at par.
Pursuant to the merger with Capital Bancorp, Inc. (Capital) in 2007, the Company assumed the
debentures issued to Capital Bancorp Capital Trust I. The discount associated with the Companys assumption of the debentures issued to Capital Bancorp Capital Trust I was fully amortized during 2010. The interest rate for Capital Bancorp
Capital Trust I reprices quarterly equal to the three-month LIBOR plus 150 basis points. In March 2012, the Company entered into an interest rate swap agreement effective March 31, 2014, whereby, beginning on the effective date, the Company
will receive a variable rate of interest based on the three-month LIBOR plus a spread of 1.50% and pay a fixed rate of interest of 4.42%. For more information about the Companys derivative financial instruments, see Note S, Derivative
Instruments. The debentures owned by Capital Bancorp Capital Trust I are currently redeemable at par.
The Company has
classified $73,000 of the debentures described in the above paragraphs as Tier 1 capital. The Federal Reserve Board issued guidance in March 2005 providing more strict quantitative limits on the amount of securities, similar to the junior
subordinated debentures issued or assumed by the Company, that are includable in Tier 1 capital. The new guidance, which became effective in March 2009, did not impact the amount of debentures the Company includes in Tier 1 capital. Furthermore, the
provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act have no effect on the treatment of these debentures as Tier 1 capital.
TLGP Senior Note
On March 31, 2009, Renasant Bank completed an
offering of a $50,000 aggregate principal amount 2.625% Senior Note (the Note) which was guaranteed by the FDIC under its Temporary Liquidity Guarantee Program (the TLGP.) Renasant Bank received net proceeds, after the
placement commission but before deducting other expenses of the offering, of approximately $49,700, which was used to pay-off long-term advances with the FHLB as they matured in 2009. In March 2012, the Bank repaid the note at maturity.
The aggregate stated maturities of long-term debt outstanding at December 31, 2012, are summarized as follows:
|
|
|
|
|
2013
|
|
$
|
3,989
|
|
2014
|
|
|
6,688
|
|
2015
|
|
|
7,204
|
|
2016
|
|
|
2,219
|
|
2017
|
|
|
|
|
Thereafter
|
|
|
139,352
|
|
|
|
|
|
|
Total
|
|
$
|
159,452
|
|
|
|
|
|
|
100
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note L Commitments, Contingent Liabilities and Financial Instruments with Off-Balance Sheet Risk
(In Thousands)
Loan commitments are made to accommodate the financial needs of the Companys 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 Companys normal credit policies. Collateral (e.g., securities, receivables, inventory,
equipment, etc.) is obtained based on managements credit assessment of the customer. The Companys unfunded loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding at December 31, 2012
were $463,684 and $34,391, respectively, compared to $401,132 and $46,978, respectively, at December 31, 2011.
Various
claims and lawsuits are pending against the Company and Renasant Bank. In the opinion of management, after consultation with legal counsel, resolution of these matters is not expected to have a material effect on the consolidated financial
statements.
Market risk resulting from interest rate changes on particular off-balance sheet financial instruments may be
offset by other onor off-balance sheet transactions. Interest rate sensitivity is monitored by the Company for determining the net effect of potential changes in interest rates on the market value of both on-and off-balance sheet financial
instruments.
101
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note M Income Taxes
(In Thousands)
Significant components of the provision for income taxes (benefits) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
24,512
|
|
|
$
|
10,655
|
|
|
$
|
5,268
|
|
State
|
|
|
432
|
|
|
|
886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,944
|
|
|
|
11,541
|
|
|
|
5,268
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(16,093
|
)
|
|
|
(2,300
|
)
|
|
|
8,392
|
|
State
|
|
|
(2,023
|
)
|
|
|
(198
|
)
|
|
|
1,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,116
|
)
|
|
|
(2,498
|
)
|
|
|
9,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,828
|
|
|
$
|
9,043
|
|
|
$
|
15,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of income taxes computed at the United States federal statutory tax rates to the provision for
income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Tax at U.S. statutory rate
|
|
$
|
11,713
|
|
|
$
|
12,136
|
|
|
$
|
16,343
|
|
Increase (decrease) in taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt interest income
|
|
|
(2,825
|
)
|
|
|
(2,831
|
)
|
|
|
(2,104
|
)
|
BOLI income
|
|
|
(1,179
|
)
|
|
|
(988
|
)
|
|
|
(908
|
)
|
Investment tax credits
|
|
|
(921
|
)
|
|
|
(199
|
)
|
|
|
(199
|
)
|
Amortization of investment in low-income housing tax credits
|
|
|
2,083
|
|
|
|
|
|
|
|
|
|
State income tax (benefit) expense, net of federal benefit
|
|
|
(775
|
)
|
|
|
9
|
|
|
|
554
|
|
(Decrease)/increase to valuation allowance
|
|
|
(816
|
)
|
|
|
(61
|
)
|
|
|
804
|
|
Other items, net
|
|
|
(452
|
)
|
|
|
977
|
|
|
|
528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,828
|
|
|
$
|
9,043
|
|
|
$
|
15,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant components of the Companys deferred tax assets and liabilities at December 31, 2012 and 2011 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
20,207
|
|
|
$
|
16,027
|
|
Purchase accounting adjustments
|
|
|
7,850
|
|
|
|
14,339
|
|
Deferred compensation
|
|
|
9,108
|
|
|
|
8,269
|
|
Net unrealized losses on securities
|
|
|
28
|
|
|
|
796
|
|
Impairment of assets
|
|
|
4,821
|
|
|
|
4,992
|
|
State net operating loss carryforwards
|
|
|
317
|
|
|
|
1,133
|
|
Other
|
|
|
6,555
|
|
|
|
4,899
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
48,886
|
|
|
|
50,455
|
|
Valuation allowance on state net operating loss carryforwards
|
|
|
(317
|
)
|
|
|
(1,133
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
48,569
|
|
|
|
49,322
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Basis difference in acquired assets
|
|
|
12,196
|
|
|
|
31,246
|
|
Investment in partnerships
|
|
|
2,943
|
|
|
|
3,200
|
|
Core deposit intangible
|
|
|
1,056
|
|
|
|
1,072
|
|
Depreciation
|
|
|
2,870
|
|
|
|
1,135
|
|
Other
|
|
|
459
|
|
|
|
2,298
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
19,524
|
|
|
|
38,951
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
29,045
|
|
|
$
|
10,371
|
|
|
|
|
|
|
|
|
|
|
102
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note M Income Taxes (continued)
The Company and its subsidiaries file a consolidated U.S. federal income tax return. The
Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2009 through 2011. The Company and its subsidiaries state income tax returns are open to audit under the
statute of limitations for the years ended December 31, 2009 through 2011.
A reconciliation of the beginning and ending
amount of unrecognized tax benefits, excluding interest, related to federal and state income tax matters as of December 31 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Balance at January 1
|
|
$
|
1,423
|
|
|
$
|
1,801
|
|
|
$
|
562
|
|
Additions based on positions related to current period
|
|
|
300
|
|
|
|
469
|
|
|
|
982
|
|
Additions based on positions related to prior period
|
|
|
|
|
|
|
|
|
|
|
425
|
|
Reductions based on positions related to prior period
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements
|
|
|
|
|
|
|
(716
|
)
|
|
|
|
|
Reductions due to lapse of statute of limitations
|
|
|
|
|
|
|
(131
|
)
|
|
|
(168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31
|
|
$
|
1,723
|
|
|
$
|
1,423
|
|
|
$
|
1,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If ultimately recognized, the Company does not anticipate any material increase in the effective tax rate for 2012
relative to any tax positions taken prior to January 1, 2012. The Company had accrued $446, $364 and $477 for interest and penalties related to unrecognized tax benefits as of December 31, 2012, 2011 and 2010, respectively.
Note N Employee Benefit and Deferred Compensation Plans
(In Thousands, Except Share Data)
The Company sponsors a noncontributory defined benefit pension plan, under which participation and future benefit accruals ceased as of December 31, 1996. The Companys funding policy is to
contribute annually to the plan an amount at least equal to the minimum amount determined by consulting actuaries in accordance with the requirements of the Internal Revenue Code. The Company contributed $100 and $60 to the pension plan for 2012 and
2011, respectively. The Company does not anticipate that a contribution will be required in 2013. The plans accumulated benefit obligations and the projected benefit obligations are substantially the same since benefit accruals under the plan
ceased at 1996 levels. The accumulated benefit obligation for the plan was $19,428 and $17,815 at December 31, 2012 and 2011, respectively. There is no additional minimum pension liability required to be recognized.
The Company also provides retiree health care benefits for certain employees who were employed by the Company and enrolled in the
Companys 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 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 Company has accounted for its obligation related to these retiree benefits in accordance with ASC 715, Compensation
Retirement Benefits. The Company has limited its liability for the rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) to the rate of inflation assumed to be 4% each year. Increasing or
decreasing the assumed health care cost trend rates by one percentage point in each year would not materially increase or decrease the accumulated post-retirement benefit obligation or the service and interest cost components of net periodic
post-retirement benefit costs as of December 31, 2012, and for the year then ended.
103
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note N Employee Benefit and Deferred Compensation Plans (continued)
Information relating to the defined benefit pension plan (Pension Benefits)
and post-retirement health and life plans (Other Benefits) as of December 31, 2012 and 2011 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
17,815
|
|
|
$
|
16,821
|
|
|
$
|
1,764
|
|
|
$
|
1,840
|
|
Service cost
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
36
|
|
Interest cost
|
|
|
863
|
|
|
|
914
|
|
|
|
65
|
|
|
|
80
|
|
Plan participants contributions
|
|
|
|
|
|
|
|
|
|
|
96
|
|
|
|
105
|
|
Actuarial loss (gain)
|
|
|
1,914
|
|
|
|
1,102
|
|
|
|
(235
|
)
|
|
|
(114
|
)
|
Benefits paid
|
|
|
(1,164
|
)
|
|
|
(1,022
|
)
|
|
|
(170
|
)
|
|
|
(183
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
19,428
|
|
|
$
|
17,815
|
|
|
$
|
1,543
|
|
|
$
|
1,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
15,426
|
|
|
$
|
15,938
|
|
|
|
|
|
|
|
|
|
Actual return on plan assets
|
|
|
1,646
|
|
|
|
450
|
|
|
|
|
|
|
|
|
|
Contribution by employer
|
|
|
100
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
(1,164
|
)
|
|
|
(1,022
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
16,008
|
|
|
$
|
15,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year
|
|
$
|
(3,420
|
)
|
|
$
|
(2,389
|
)
|
|
$
|
(1,543
|
)
|
|
$
|
(1,764
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions as of December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
3.90
|
%
|
|
|
5.06
|
%
|
|
|
3.04
|
%
|
|
|
4.61
|
%
|
Expected return on plan assets
|
|
|
8.00
|
%
|
|
|
8.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
The plan expense for the defined benefit pension and post-retirement health and life plans for the year ended
December 31, 2012, 2011 and 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Components of net periodic benefit cost (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
23
|
|
|
$
|
36
|
|
|
$
|
35
|
|
Interest cost
|
|
|
862
|
|
|
|
914
|
|
|
|
944
|
|
|
|
65
|
|
|
|
80
|
|
|
|
94
|
|
Expected return on plan assets
|
|
|
(1,192
|
)
|
|
|
(1,230
|
)
|
|
|
(1,149
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost recognized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized actuarial loss
|
|
|
355
|
|
|
|
303
|
|
|
|
308
|
|
|
|
73
|
|
|
|
140
|
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
25
|
|
|
$
|
(13
|
)
|
|
$
|
103
|
|
|
$
|
161
|
|
|
$
|
256
|
|
|
$
|
284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future estimated benefit payments under the defined benefit pension plan and post-retirement health and life plan are
as follows:
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
2013
|
|
$
|
1,211
|
|
|
$
|
165
|
|
2014
|
|
|
1,250
|
|
|
|
170
|
|
2015
|
|
|
1,255
|
|
|
|
190
|
|
2016
|
|
|
1,324
|
|
|
|
163
|
|
2017
|
|
|
1,304
|
|
|
|
150
|
|
Thereafter
|
|
|
6,730
|
|
|
|
656
|
|
104
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note N Employee Benefit and Deferred Compensation Plans (continued)
Amounts recognized in accumulated other comprehensive income, net of tax, for the year
ended December 31, 2012 are as follows:
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
Prior service cost
|
|
$
|
|
|
|
$
|
|
|
Actuarial loss
|
|
|
(6,884
|
)
|
|
|
(361
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(6,884
|
)
|
|
$
|
(361
|
)
|
|
|
|
|
|
|
|
|
|
The estimated costs that will be amortized from accumulated other comprehensive income into net periodic cost over the
next fiscal year are as follows:
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
Prior service cost
|
|
$
|
|
|
|
$
|
|
|
Actuarial loss
|
|
|
404
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
404
|
|
|
$
|
63
|
|
|
|
|
|
|
|
|
|
|
The investment objective for the pension or defined benefit plan is to achieve above average income and moderate long
term growth. An investment committee appointed by management seeks to accomplish this objective by combining an equity income strategy (approximately 60%), which generally invests in larger capitalization common stocks, and an intermediate fixed
income strategy (approximately 40%), which generally invests in U.S. Government securities and investment grade corporate bonds. It is the committees intent to give the investment managers flexibility within the overall guidelines with respect
to investment decisions and their timing. However, significant modifications of any previously approved investments or anticipated use of derivatives to execute investment strategies must be approved by the committee.
The plans expected long-term rate of return was estimated using market benchmarks for investment classes applied to the plans
target asset allocation. The expected return on investment classes was computed using a valuation methodology which projected future returns based on current equity valuations rather than historical returns.
The fair values of the Companys defined benefit pension plan assets by category at December 31, 2012 and 2011 follow below.
Equity securities consist primarily of common stocks of both U.S. companies and international companies that are traded in active markets and are valued based on quoted market prices of identical assets. Fixed income securities consist of U.S.
Government securities and investment grade corporate bonds. The fair values of these instruments are based on quoted market prices of similar instruments or a discounted cash flow model.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices In
Active
Markets
for Identical
Assets
(Level
1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Totals
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
430
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
430
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large cap companies
|
|
|
3,059
|
|
|
|
|
|
|
|
|
|
|
|
3,059
|
|
U.S. mid cap companies
|
|
|
3,490
|
|
|
|
|
|
|
|
|
|
|
|
3,490
|
|
U.S. small cap companies
|
|
|
1,980
|
|
|
|
|
|
|
|
|
|
|
|
1,980
|
|
International companies
|
|
|
1,177
|
|
|
|
|
|
|
|
|
|
|
|
1,177
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government bonds
|
|
|
|
|
|
|
2,458
|
|
|
|
|
|
|
|
2,458
|
|
Other corporate bonds
|
|
|
|
|
|
|
3,414
|
|
|
|
|
|
|
|
3,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,136
|
|
|
$
|
5,872
|
|
|
$
|
|
|
|
$
|
16,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note N Employee Benefit and Deferred Compensation Plans (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices In
Active
Markets
for Identical
Assets
(Level
1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Totals
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
335
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
335
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large cap companies
|
|
|
3,207
|
|
|
|
|
|
|
|
|
|
|
|
3,207
|
|
U.S. mid cap companies
|
|
|
3,447
|
|
|
|
|
|
|
|
|
|
|
|
3,447
|
|
U.S. small cap companies
|
|
|
1,988
|
|
|
|
|
|
|
|
|
|
|
|
1,988
|
|
International companies
|
|
|
1,048
|
|
|
|
|
|
|
|
|
|
|
|
1,048
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government bonds
|
|
|
|
|
|
|
2,722
|
|
|
|
|
|
|
|
2,722
|
|
Other corporate bonds
|
|
|
|
|
|
|
2,679
|
|
|
|
|
|
|
|
2,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,025
|
|
|
$
|
5,401
|
|
|
$
|
|
|
|
$
|
15,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company maintains a 401(k) plan, which is a contributory plan. Employees may contribute pre-tax earnings, subject
to a maximum established annually by the IRS. The Company matches employee deferrals, up to 4% of compensation. The Company also makes a nondiscretionary contribution for each eligible employee in an amount equal to 5% of plan compensation and 5% of
plan compensation in excess of the Social Security wage base. Employees are automatically enrolled in the plan when employment commences. Company contributions are allocated to participants who are employed on the last day of each plan year and
credited with 1,000 hours of service during the year. The Companys costs related to the 401(k) plan, excluding employee deferrals, in 2012, 2011 and 2010 were $4,645, $4,228 and $3,443, respectively.
The Company adopted the Performance Based Rewards incentive compensation plan on January 1, 2001, under which annual
cash bonuses are paid to eligible officers and employees, subject to the attainment of designated performance criteria. The Company designates minimum levels of performance for all applicable profit centers and rewards employees on performance over
the minimum level. The expense associated with the plan for 2012 and 2010 was $1,953 and $1,409, respectively. The Company did not make any payments under the plan during 2011 and thus did not incur any expense. In 2011, one of the performance
metrics was satisfied. However, the performance metric was met due to the gain recognized from the American Trust acquisition. Therefore, the Board of Directors compensation committee exercised its discretion to determine that no cash bonuses
would be paid based on the occurrence of an extraordinary event.
The Company maintains three deferred compensation plans: a
Deferred Stock Unit Plan and two conventional deferred compensation plans. Nonemployee directors may defer all or any portion of their fees and retainer to the Deferred Stock Unit Plan or the deferred compensation plan maintained for their benefit.
Officers may defer base salary and bonus to the Deferred Stock Unit Plan or salary to the deferred compensation plan maintained for their benefit, subject to limits that are determined annually by the Company. Amounts credited to the Deferred Stock
Unit Plan are invested in units representing shares of the Companys common stock. Amounts credited to the conventional deferred compensation plans are invested at the discretion of each participant from among designated investment
alternatives. Directors and officers who participated in these deferred compensation plans on or before December 31, 2006, may invest in a preferential interest rate investment that is derived from the Moodys Average Corporate Bond Rate,
adjusted monthly, and the beneficiaries of participants in the deferred compensation plans as of such date may receive a preretirement death benefit in excess of the amounts credited to plan accounts at the time of death. All of the Companys
deferred compensation plans are unfunded. It is anticipated that the two conventional deferred compensation plans will result in no additional cost to the Company because life insurance policies on the lives of the participants have been purchased
in amounts estimated to be sufficient to pay plan benefits. The Company is both the owner and beneficiary of the life insurance policies. The expense recorded in 2012, 2011 and 2010 for the Companys deferred compensation plans, inclusive of
deferrals, was $1,573, $1,393 and $1,523, respectively.
106
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note N Employee Benefit and Deferred Compensation Plans (continued)
The Company assumed four supplemental executive retirement plans (SERPs) in connection
with the merger with Capital. The SERPs were established by Capital to provide supplemental retirement benefits. The plans provide four officers of the Company specified annual benefits based upon a projected retirement date. These benefits are
payable for a 15-year period after retirement. The supplemental executive retirement liabilities totaled $2,451 and $2,073 at December 31, 2012 and 2011, respectively. The plans are not qualified under Section 401 of the Internal Revenue
Code.
At December 31, 2012, an aggregate of 1,635,555 common shares were reserved for issuance under the Companys
employee benefit plans.
In March 2011, the Company adopted a long-term equity incentive plan, which provides for the grant of
stock options and restricted stock. The plan replaced the long-term incentive plan adopted in 2001 as the prior plan 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 Companys 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 cancelled upon the termination of a participants employment. The Company recorded compensation expense of $538, $486 and $388 for the years ended
December 31, 2012, 2011 and 2010, respectively, for options granted under the plan.
The fair value of each option grant
was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions for each option grant:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 Grant
|
|
|
2011 Grant
|
|
|
2010 Grant
|
|
Dividend yield
|
|
|
4.55
|
%
|
|
|
4.02
|
%
|
|
|
4.74
|
%
|
Expected volatility
|
|
|
37
|
%
|
|
|
36
|
%
|
|
|
34
|
%
|
Risk-free interest rate
|
|
|
0.79
|
%
|
|
|
1.97
|
%
|
|
|
2.48
|
%
|
Expected lives
|
|
|
6 years
|
|
|
|
6 years
|
|
|
|
6 years
|
|
Weighted average fair value
|
|
$
|
3.10
|
|
|
$
|
3.93
|
|
|
$
|
3.01
|
|
The total intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 was $757,
$8 and $178, respectively. Unrecognized stock-based compensation expense related to stock options and restricted stock totaled $578 and $50, respectively, at December 31, 2012. At such date, the weighted average period over which this
unrecognized expense is expected to be recognized was approximately 1.3 years and 1.0 years for stock options and restricted stock, respectively. The following table summarizes information about options issued under the long-term equity incentive
plan as of and for the year ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding at beginning of year
|
|
|
1,327,275
|
|
|
$
|
18.77
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
172,000
|
|
|
|
14.96
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(163,652
|
)
|
|
|
13.54
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(56,375
|
)
|
|
|
21.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year
|
|
|
1,279,248
|
|
|
$
|
18.79
|
|
|
|
5.14
|
|
|
$
|
2,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year
|
|
|
949,082
|
|
|
$
|
19.92
|
|
|
|
4.01
|
|
|
$
|
1,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note N Employee Benefit and Deferred Compensation Plans (continued)
The Company awards performance-based restricted stock to executives and time-based
restricted stock to directors and other officers and employees under the long-term equity incentive plan. The performance-based restricted stock vests upon completion of a one-year service period and the attainment of certain performance goals.
Performance-based restricted stock is issued at the target level; the number of shares ultimately awarded is determined at the end of each year and may be increased or decreased depending upon the Company meeting or exceeding 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 value of each restricted stock grant is the closing price of the Companys common stock on
the day immediately preceding the grant date. The Company recorded compensation expense of $830, $134 and $364 for the years ended December 31, 2012, 2011 and 2010, respectively, for restricted stock awarded under the plan. The following table
summarizes the changes in restricted stock as of and for the year ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-
Based
Restricted
Stock
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
|
Time-
Based
Restricted
Stock
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
Nonvested at beginning of year
|
|
|
|
|
|
$
|
|
|
|
|
1,500
|
|
|
$
|
14.22
|
|
Granted
|
|
|
39,800
|
(1)
|
|
|
14.96
|
|
|
|
9,684
|
|
|
|
15.49
|
|
Vested
|
|
|
(37,800
|
)
|
|
|
14.96
|
|
|
|
(1,500
|
)
|
|
|
14.22
|
|
Cancelled
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested at end of year
|
|
|
|
|
|
$
|
|
|
|
|
9,684
|
|
|
$
|
15.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In January 2012, the Company awarded 34,000 shares of performance-based restricted stock based on the target level of performance goals. The Company
exceeded the financial performance measures for the award; therefore, an additional 3,800 shares were issued for a total award of 37,800 shares.
|
Note O Restrictions on Cash, Bank Dividends, Loans or Advances
(In Thousands)
Renasant Bank is required to maintain minimum average balances with the Federal Reserve. At December 31, 2012 and 2011, Renasant Banks reserve requirements with the Federal Reserve were $31,259
and $27,243, respectively, with which it was in full compliance.
The Companys ability to pay dividends to its
shareholders is substantially dependent on the ability of 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. Accordingly, the approval
of this supervisory authority is required prior to Renasant Bank paying dividends to the Company.
Federal Reserve regulations
also limit the amount Renasant Bank may loan to the Company unless such loans are collateralized by specific obligations. At December 31, 2012, the maximum amount available for transfer from Renasant Bank to the Company in the form of loans was
$41,772. As of December 31, 2012, Company borrowings from Renasant Bank totaled $1,500.
108
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note P Regulatory Matters
(In Thousands)
Renasant Bank is 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 Banks financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action,
Renasant Bank must meet specific capital guidelines that involve quantitative measures of Renasant Banks assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Renasant Banks 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 banks must maintain. Those guidelines specify capital tiers,
which include the following classifications:
|
|
|
|
|
|
|
Capital Tiers
|
|
Tier 1 Capital to
Average
Assets
(Leverage)
|
|
Tier 1 Capital to
Risk Weighted
Assets
|
|
Total Capital to
Risk Weighted
Assets
|
Well capitalized
|
|
5% or above
|
|
6% or above
|
|
10% or above
|
Adequately capitalized
|
|
4% or above
|
|
4% or above
|
|
8% or above
|
Undercapitalized
|
|
Less than 4%
|
|
Less than 4%
|
|
Less than 8%
|
Significantly undercapitalized
|
|
Less than 3%
|
|
Less than 3%
|
|
Less than 6%
|
Critically undercapitalized
|
|
|
|
2% or less
|
|
|
As of December 31, 2012, Renasant Bank met all capital adequacy requirements to which it is subject. Also, as of
December 31, 2012, the most recent notification from the FDIC categorized Renasant Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management
believes have changed Renasant Banks category.
The following table provides the capital and risk-based capital and
leverage ratios for the Company and for Renasant Bank as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
Renasant Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital to Average Assets (Leverage)
|
|
$
|
388,362
|
|
|
|
9.86
|
%
|
|
$
|
375,829
|
|
|
|
9.44
|
%
|
Tier 1 Capital to Risk-Weighted Assets
|
|
|
388,362
|
|
|
|
12.74
|
%
|
|
|
375,829
|
|
|
|
13.32
|
%
|
Total Capital to Risk-Weighted Assets
|
|
|
426,877
|
|
|
|
14.00
|
%
|
|
|
411,208
|
|
|
|
14.58
|
%
|
|
|
|
|
|
Renasant Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital to Average Assets (Leverage)
|
|
$
|
379,602
|
|
|
|
9.67
|
%
|
|
$
|
368,087
|
|
|
|
9.26
|
%
|
Tier 1 Capital to Risk-Weighted Assets
|
|
|
379,602
|
|
|
|
12.47
|
%
|
|
|
368,087
|
|
|
|
13.07
|
%
|
Total Capital to Risk-Weighted Assets
|
|
|
417,717
|
|
|
|
13.73
|
%
|
|
|
403,407
|
|
|
|
14.32
|
%
|
109
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note Q Segment Reporting
(In Thousands)
The operations of the Companys 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, equipment leasing, as well as safe deposit and night depository facilities.
|
|
|
|
The Insurance segment includes a full service insurance agency offering all lines of commercial and personal insurance through major carriers.
|
|
|
|
The Wealth Management segment offers a broad range of fiduciary services which includes 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 Companys 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 Companys 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.
110
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note Q Segment Reporting (continued)
The following table provides financial information for our operating segments as of and
for the years ended December 31, 2012, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Community
Banks
|
|
|
Insurance
|
|
|
Wealth
Management
|
|
|
Other
|
|
|
Consolidated
|
|
2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
134,463
|
|
|
$
|
96
|
|
|
$
|
1,326
|
|
|
$
|
(2,547
|
)
|
|
$
|
133,338
|
|
Provision for loan losses
|
|
|
18,172
|
|
|
|
|
|
|
|
(47
|
)
|
|
|
|
|
|
|
18,125
|
|
Noninterest income
|
|
|
57,594
|
|
|
|
4,049
|
|
|
|
6,984
|
|
|
|
84
|
|
|
|
68,711
|
|
Noninterest expense
|
|
|
140,244
|
|
|
|
3,149
|
|
|
|
6,491
|
|
|
|
575
|
|
|
|
150,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
33,641
|
|
|
|
996
|
|
|
|
1,866
|
|
|
|
(3,038
|
)
|
|
|
33,465
|
|
Income taxes
|
|
|
7,202
|
|
|
|
386
|
|
|
|
400
|
|
|
|
(1,160
|
)
|
|
|
6,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
26,439
|
|
|
$
|
610
|
|
|
$
|
1,466
|
|
|
$
|
(1,878
|
)
|
|
$
|
26,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,117,998
|
|
|
$
|
12,094
|
|
|
$
|
38,971
|
|
|
$
|
9,553
|
|
|
$
|
4,178,616
|
|
Goodwill
|
|
|
182,076
|
|
|
|
2,783
|
|
|
|
|
|
|
|
|
|
|
|
184,859
|
|
|
|
|
|
|
|
2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
130,140
|
|
|
$
|
112
|
|
|
$
|
1,297
|
|
|
$
|
(2,263
|
)
|
|
$
|
129,286
|
|
Provision for loan losses
|
|
|
22,381
|
|
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
22,350
|
|
Noninterest income
|
|
|
55,310
|
|
|
|
3,812
|
|
|
|
5,487
|
|
|
|
90
|
|
|
|
64,699
|
|
Noninterest expense
|
|
|
128,850
|
|
|
|
2,958
|
|
|
|
4,741
|
|
|
|
411
|
|
|
|
136,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
34,219
|
|
|
|
966
|
|
|
|
2,074
|
|
|
|
(2,584
|
)
|
|
|
34,675
|
|
Income taxes
|
|
|
9,118
|
|
|
|
375
|
|
|
|
539
|
|
|
|
(989
|
)
|
|
|
9,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
25,101
|
|
|
$
|
591
|
|
|
$
|
1,535
|
|
|
$
|
(1,595
|
)
|
|
$
|
25,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,144,940
|
|
|
$
|
10,645
|
|
|
$
|
40,852
|
|
|
$
|
5,571
|
|
|
$
|
4,202,008
|
|
Goodwill
|
|
|
182,096
|
|
|
|
2,783
|
|
|
|
|
|
|
|
|
|
|
|
184,879
|
|
|
|
|
|
|
|
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
106,855
|
|
|
$
|
121
|
|
|
$
|
1,236
|
|
|
$
|
(3,006
|
)
|
|
$
|
105,206
|
|
Provision for loan losses
|
|
|
30,658
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
30,665
|
|
Noninterest income
|
|
|
85,181
|
|
|
|
3,688
|
|
|
|
3,702
|
|
|
|
121
|
|
|
|
92,692
|
|
Noninterest expense
|
|
|
113,814
|
|
|
|
2,912
|
|
|
|
3,441
|
|
|
|
373
|
|
|
|
120,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
47,564
|
|
|
|
897
|
|
|
|
1,490
|
|
|
|
(3,258
|
)
|
|
|
46,693
|
|
Income taxes
|
|
|
15,431
|
|
|
|
348
|
|
|
|
485
|
|
|
|
(1,246
|
)
|
|
|
15,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
32,133
|
|
|
$
|
549
|
|
|
$
|
1,005
|
|
|
$
|
(2,012
|
)
|
|
$
|
31,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,242,606
|
|
|
$
|
9,809
|
|
|
$
|
39,310
|
|
|
$
|
5,602
|
|
|
$
|
4,297,327
|
|
Goodwill
|
|
|
182,096
|
|
|
|
2,783
|
|
|
|
|
|
|
|
|
|
|
|
184,879
|
|
In connection with the FDIC-assisted acquisitions of American Trust in 2011 and Crescent in 2010, the Company
recognized gains on acquisitions of $8,774 in 2011 and $42,211 in 2010, which are included in Noninterest income for the Community Banks segment in the table above.
In connection with the acquisition of the RBC Bank (USA) trust division in 2011, the Company recognized a gain on acquisition of $570,
which is included in Noninterest income for the Wealth Management segment in the table above.
111
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements
(In Thousands)
Recurring Fair Value Measurements
The Company carries certain assets and liabilities at fair value on a recurring basis in accordance with applicable standards. The Companys recurring fair value measurements are based on the
requirement to carry such assets and liabilities at fair value or the Companys election to carry certain eligible assets and liabilities at fair value. Assets and liabilities that are required to be carried at fair value 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.
The following methods and assumptions are used by the Company to estimate the fair values of the Companys 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, mortgage-backed securities, trust preferred securities, and other debt and equity 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 Companys derivative contracts are actively 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 including interest rate caps and/or floors. The Companys 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 Companys forward commitments is based on current prices for securities backed by similar types of loans. Because these assumptions are observable in
active markets, the Companys 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.
112
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
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
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
|
|
|
$
|
2,442
|
|
|
$
|
|
|
|
$
|
2,442
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
144,817
|
|
|
|
|
|
|
|
144,817
|
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
117,521
|
|
|
|
|
|
|
|
117,521
|
|
Commercial mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
45,058
|
|
|
|
|
|
|
|
45,058
|
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
5,407
|
|
|
|
|
|
|
|
5,407
|
|
Trust preferred securities
|
|
|
|
|
|
|
|
|
|
|
15,068
|
|
|
|
15,068
|
|
Other debt securities
|
|
|
|
|
|
|
22,930
|
|
|
|
|
|
|
|
22,930
|
|
Other equity securities
|
|
|
|
|
|
|
3,068
|
|
|
|
|
|
|
|
3,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
|
|
|
|
|
341,243
|
|
|
|
15,068
|
|
|
|
356,311
|
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
|
|
|
|
|
3,083
|
|
|
|
|
|
|
|
3,083
|
|
Interest rate lock commitments
|
|
|
|
|
|
|
1,571
|
|
|
|
|
|
|
|
1,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
|
|
|
|
|
4,654
|
|
|
|
|
|
|
|
4,654
|
|
Mortgage loans held for sale
|
|
|
|
|
|
|
34,845
|
|
|
|
|
|
|
|
34,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial assets
|
|
$
|
|
|
|
$
|
380,742
|
|
|
$
|
15,068
|
|
|
$
|
395,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
$
|
|
|
|
$
|
2,164
|
|
|
$
|
|
|
|
$
|
2,164
|
|
Interest rate contracts
|
|
|
|
|
|
|
3,152
|
|
|
|
|
|
|
|
3,152
|
|
Forward commitments
|
|
|
|
|
|
|
198
|
|
|
|
|
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
|
|
|
|
|
5,514
|
|
|
|
|
|
|
|
5,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
$
|
|
|
|
$
|
5,514
|
|
|
$
|
|
|
|
$
|
5,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Totals
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of other U.S. Government agencies and corporations
|
|
$
|
|
|
|
$
|
17,395
|
|
|
$
|
|
|
|
$
|
17,395
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
230,667
|
|
|
|
|
|
|
|
230,667
|
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
136,987
|
|
|
|
|
|
|
|
136,987
|
|
Commercial mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government agency mortgage backed securities
|
|
|
|
|
|
|
36,669
|
|
|
|
|
|
|
|
36,669
|
|
Government agency collateralized mortgage obligations
|
|
|
|
|
|
|
5,316
|
|
|
|
|
|
|
|
5,316
|
|
Trust preferred securities
|
|
|
|
|
|
|
0
|
|
|
|
12,785
|
|
|
|
12,785
|
|
Other debt securities
|
|
|
|
|
|
|
21,875
|
|
|
|
|
|
|
|
21,875
|
|
Other equity securities
|
|
|
|
|
|
|
0
|
|
|
|
2,237
|
|
|
|
2,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
|
|
|
|
|
448,909
|
|
|
|
15,022
|
|
|
|
463,931
|
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
|
|
|
|
|
2,132
|
|
|
|
|
|
|
|
2,132
|
|
Interest rate lock commitments
|
|
|
|
|
|
|
1,197
|
|
|
|
|
|
|
|
1,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
|
|
|
|
|
3,329
|
|
|
|
|
|
|
|
3,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial assets
|
|
$
|
|
|
|
$
|
452,238
|
|
|
$
|
15,022
|
|
|
$
|
467,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
$
|
|
|
|
$
|
2,063
|
|
|
$
|
|
|
|
$
|
2,063
|
|
Forward commitments
|
|
|
|
|
|
|
427
|
|
|
|
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
|
|
|
|
|
2,490
|
|
|
|
|
|
|
|
2,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
$
|
|
|
|
$
|
2,490
|
|
|
$
|
|
|
|
$
|
2,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company reviews fair value hierarchy classifications on a quarterly basis. Changes in the Companys 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. Because the inputs that were
significant to the valuation of the Companys investments in other equity securities were observable in active markets, these securities were reclassified into Level 2 within the fair value hierarchy as of September 30, 2012. There were no
such transfers between levels of the fair value hierarchy during 2011.
114
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale
|
|
|
|
Trust preferred
securities
|
|
|
Other equity
securities
|
|
|
Total
|
|
Balance at January 1, 2011
|
|
$
|
1,433
|
|
|
$
|
29,841
|
|
|
$
|
31,274
|
|
Realized gains (losses) included in net income
|
|
|
(256
|
)
|
|
|
212
|
|
|
|
(44
|
)
|
Unrealized gains (losses) included in other comprehensive income
|
|
|
10,394
|
|
|
|
(270
|
)
|
|
|
10,124
|
|
Capitalization of interest
|
|
|
1,214
|
|
|
|
|
|
|
|
1,214
|
|
Additions through acquisition
|
|
|
|
|
|
|
1,194
|
|
|
|
1,194
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Issues
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements
|
|
|
|
|
|
|
(4,037
|
)
|
|
|
(4,037
|
)
|
Transfers into Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers out of Level 3
|
|
|
|
|
|
|
(24,703
|
)
|
|
|
(24,703
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
$
|
12,785
|
|
|
$
|
2,237
|
|
|
$
|
15,022
|
|
Realized gains (losses) included in net income
|
|
|
|
|
|
|
14
|
|
|
|
14
|
|
Unrealized gains (losses) included in other comprehensive income
|
|
|
4,081
|
|
|
|
782
|
|
|
|
4,863
|
|
Reclassification adjustment
|
|
|
(952
|
)
|
|
|
|
|
|
|
(952
|
)
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Issues
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements
|
|
|
(846
|
)
|
|
|
|
|
|
|
(846
|
)
|
Transfers into Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers out of Level 3
|
|
|
|
|
|
|
(3,033
|
)
|
|
|
(3,033
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
$
|
15,068
|
|
|
$
|
|
|
|
$
|
15,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For 2012 and 2011, 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.
The following table presents information as of December 31, 2012 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
|
|
Trust preferred securities
|
|
$
|
15,068
|
|
|
Discounted cash flows
|
|
Default rate
|
|
|
0-100
|
%
|
115
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
Nonrecurring Fair Value Measurements
Certain assets 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Totals
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
|
|
|
$
|
|
|
|
$
|
20,178
|
|
|
$
|
20,178
|
|
OREO
|
|
|
|
|
|
|
|
|
|
|
33,761
|
|
|
|
33,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
|
|
|
$
|
53,939
|
|
|
$
|
53,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Totals
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
|
|
|
$
|
|
|
|
$
|
38,064
|
|
|
$
|
38,064
|
|
OREO
|
|
|
|
|
|
|
|
|
|
|
23,945
|
|
|
|
23,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
|
|
|
$
|
62,009
|
|
|
$
|
62,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following methods and assumptions are used by the Company to estimate the fair values of the Companys 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 businesss financial statements. Appraised and reported values may be
adjusted based on changes in market conditions from the time of valuation and managements knowledge of the client and the clients business. Since not all valuation inputs are observable, these nonrecurring fair value 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 covered under loss-share agreements
were recorded at their fair value upon the acquisition date, and no fair value adjustments were necessary for the year ended December 31, 2012 and 2011, respectively. Impaired loans not covered under loss-share agreements that were measured or
re-measured at fair value had a carrying value of $27,149 and $46,596 at December 31, 2012 and December 31, 2011, respectively, and a specific reserve for these loans of $6,971 and $8,532 was included in the allowance for loan losses for
the same periods ended.
Other real estate owned
: OREO is comprised of commercial and residential real estate obtained
in partial or total satisfaction of loan obligations. OREO covered under loss-share agreements is recorded at its fair value at its acquisition date. OREO not covered under loss-share agreements 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 managements estimates of costs to sell. Accordingly, values for OREO are classified as Level 3.
116
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
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:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
OREO covered under loss-share agreements:
|
|
|
|
|
|
|
|
|
Carrying amount prior to remeasurement
|
|
$
|
19,254
|
|
|
$
|
7,111
|
|
Impairment recognized in results of operations
|
|
|
(901
|
)
|
|
|
(305
|
)
|
Increase in FDIC loss-share indemnification asset
|
|
|
(3,602
|
)
|
|
|
(1,221
|
)
|
Receivable from other guarantor
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
$
|
14,710
|
|
|
$
|
5,585
|
|
|
|
|
|
|
|
|
|
|
OREO not covered under loss-share agreements:
|
|
|
|
|
|
|
|
|
Carrying amount prior to remeasurement
|
|
$
|
22,277
|
|
|
$
|
25,252
|
|
Impairment recognized in results of operations
|
|
|
(3,226
|
)
|
|
|
(6,892
|
)
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
$
|
19,051
|
|
|
$
|
18,360
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights
: The Company retains the right to service certain mortgage loans that it sells to
secondary market investors. These servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment
speeds, servicing costs, and other factors. Because these factors are not all observable and include managements assumptions, mortgage servicing rights are classified within Level 3 of the fair value hierarchy. Mortgage servicing rights were
carried at amortized cost at December 31, 2012 and 2011, respectively, and no impairment charges were recognized in earnings during 2012 or 2011.
The following table presents information as of December 31, 2012 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
|
|
|
|
|
|
|
|
|
|
|
Financial instrument
|
|
Fair
Value
|
|
|
Valuation Technique
|
|
Significant
Unobservable Inputs
|
|
Range of Inputs
|
Impaired loans
|
|
$
|
20,178
|
|
|
Appraised value of
collateral less estimated
costs to sell
|
|
Estimated costs to sell
|
|
4-10%
|
OREO
|
|
$
|
33,761
|
|
|
Appraised value of
property less estimated
costs to sell
|
|
Estimated costs to sell
|
|
4-10%
|
117
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
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 $402 resulting from fair value changes of these mortgage loans were recorded in income during 2012. 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 Gains on sales of mortgage loans held for sale in the Consolidated Statements of Income.
The Companys 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
Fair
Value
|
|
|
Aggregate
Unpaid
Principal
Balance
|
|
|
Difference
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans held for sale measured at fair value
|
|
$
|
34,845
|
|
|
$
|
34,002
|
|
|
$
|
843
|
|
Past due loans of 90 days or more
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
|
|
|
|
|
|
|
|
|
|
|
|
|
118
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
Fair Value of Financial Instruments
The carrying amounts and estimated fair values of the Companys 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
Carrying
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
132,420
|
|
|
$
|
132,420
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
132,420
|
|
Securities held to maturity
|
|
|
317,766
|
|
|
|
|
|
|
|
334,475
|
|
|
|
|
|
|
|
334,475
|
|
Securities available for sale
|
|
|
356,311
|
|
|
|
|
|
|
|
341,243
|
|
|
|
15,068
|
|
|
|
356,311
|
|
Mortgage loans held for sale
|
|
|
34,845
|
|
|
|
|
|
|
|
34,845
|
|
|
|
|
|
|
|
34,845
|
|
Loans covered under loss-share agreements
|
|
|
237,088
|
|
|
|
|
|
|
|
|
|
|
|
235,890
|
|
|
|
235,890
|
|
Loans not covered under loss-share agreements, net
|
|
|
2,528,818
|
|
|
|
|
|
|
|
|
|
|
|
2,452,937
|
|
|
|
2,452,937
|
|
FDIC loss-share indemnification asset
|
|
|
44,153
|
|
|
|
|
|
|
|
|
|
|
|
44,153
|
|
|
|
44,153
|
|
Derivative instruments
|
|
|
4,654
|
|
|
|
|
|
|
|
4,654
|
|
|
|
|
|
|
|
4,654
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
3,461,221
|
|
|
$
|
2,268,568
|
|
|
$
|
1,200,785
|
|
|
$
|
|
|
|
$
|
3,469,353
|
|
Short-term borrowings
|
|
|
5,254
|
|
|
|
5,254
|
|
|
|
|
|
|
|
|
|
|
|
5,254
|
|
Federal Home Loan Bank advances
|
|
|
83,843
|
|
|
|
|
|
|
|
99,870
|
|
|
|
|
|
|
|
99,870
|
|
Junior subordinated debentures
|
|
|
75,609
|
|
|
|
|
|
|
|
27,985
|
|
|
|
|
|
|
|
27,985
|
|
Derivative instruments
|
|
|
5,514
|
|
|
|
|
|
|
|
5,514
|
|
|
|
|
|
|
|
5,514
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Value
|
|
|
Fair Value
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
209,017
|
|
|
$
|
209,017
|
|
Securities held to maturity
|
|
|
332,410
|
|
|
|
344,618
|
|
Securities available for sale
|
|
|
463,931
|
|
|
|
463,931
|
|
Mortgage loans held for sale
|
|
|
28,222
|
|
|
|
28,222
|
|
Loans covered under loss-share agreements
|
|
|
339,462
|
|
|
|
351,318
|
|
Loans not covered under loss-share agreements, net
|
|
|
2,197,282
|
|
|
|
2,220,159
|
|
FDIC loss-share indemnification asset
|
|
|
107,754
|
|
|
|
107,754
|
|
Derivative instruments
|
|
|
3,329
|
|
|
|
3,329
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
3,412,237
|
|
|
$
|
3,420,775
|
|
Short-term borrowings
|
|
|
11,485
|
|
|
|
11,485
|
|
Federal Home Loan Bank advances
|
|
|
117,454
|
|
|
|
127,976
|
|
Junior subordinated debentures
|
|
|
75,770
|
|
|
|
28,832
|
|
TLGP Senior Note
|
|
|
50,000
|
|
|
|
50,384
|
|
Derivative instruments
|
|
|
2,490
|
|
|
|
2,490
|
|
119
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note R Fair Value Measurements (continued)
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 are discussed
previously.
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 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.
Loans covered under loss-share agreements
: The fair value of loans covered under loss-share agreements is based on the
net present value of future cash proceeds expected to be received using discount rates that are derived from current market rates and reflect the level of interest risk in the covered loans.
Loans not covered under loss-share agreements
: For variable-rate loans not covered under loss-share agreements that reprice
frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values of fixed-rate loans not covered under loss-share agreements, 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.
FDIC loss-share indemnification asset
: The fair value of the FDIC loss-share indemnification asset is based on the net present value of future cash flows expected to be received from the FDIC under
the provisions of the loss-share agreements using a discount rate that is based on current market rates for the underlying covered loans. Current market rates are used in light of the uncertainty of the timing and receipt of the loss-share
reimbursement from the FDIC.
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 federal funds
purchased. 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
: The fair value for the Companys junior subordinated debentures is determined by discounting the future cash flows using the current market rate.
TLGP Senior Note
: The fair value for the Companys senior note guaranteed by the FDIC under the TLGP is determined by
discounting the future cash flows using the current market rate. The outstanding balance of the Companys TLGP note was paid in full in March 2012.
120
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note S 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. In the first quarter of 2011, the Company began entering 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 December 31, 2012, the Company had notional amounts of $81,879 on interest rate contracts with corporate customers and $81,879 in offsetting interest rate contracts with
other financial institutions to mitigate the Companys rate exposure on its corporate customers contracts.
In
March and April 2012, the Company entered into two interest rate swap agreements effective March 30, 2014 and March 17, 2014, respectively. Beginning on the respective effective date, the Company will receive a variable rate of interest
based on the three-month LIBOR plus a pre-determined spread and pay 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 Companys junior subordinated debentures. The interest rate swaps had a total fair value of $(2,164) at December 31, 2012.
In May 2010, the Company terminated two interest rate swaps, each designated as a cash flow hedge, designed to convert the variable interest rate on an aggregate of $75,000 of loans to a fixed rate. As of
the termination date, there were $1,679 of deferred gains related to the swaps, which are being amortized into interest income over the designated hedging periods ending in August 2012 and August 2013. Deferred gains related to the swaps of $503,
$610, and $363 were amortized into net interest income for the years ended December 31, 2012, 2011 and 2010, respectively.
The Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the
commitments to fund fixed-rate residential mortgage loans. The notional amount of commitments to fund fixed-rate mortgage loans was $72,757 and $56,217 at December 31, 2012 and 2011, 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 $100,000 and $42,074 at December 31, 2012 and 2011,
respectively.
121
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note S Derivative Instruments (continued)
The following table provides details on the Companys derivative financial instruments as of the
dates presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Location
|
|
Fair Value
|
|
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
Not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
Other Assets
|
|
$
|
3,083
|
|
|
$
|
2,132
|
|
Interest rate lock commitments
|
|
Other Assets
|
|
|
1,571
|
|
|
|
1,197
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
$
|
4,654
|
|
|
$
|
3,329
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
Designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
Other Liabilities
|
|
$
|
2,164
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
$
|
2,164
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
Other Liabilities
|
|
$
|
3,152
|
|
|
$
|
2,063
|
|
Forward commitments
|
|
Other Liabilities
|
|
|
198
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
$
|
3,350
|
|
|
$
|
2,490
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) included in the Consolidated Statements of Income related to the Companys derivative financial
instruments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in interest income on loans
|
|
$
|
503
|
|
|
$
|
610
|
|
|
$
|
915
|
|
Included in interest expense on borrowings
|
|
|
|
|
|
|
|
|
|
|
(225
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
503
|
|
|
$
|
610
|
|
|
$
|
690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in interest income on loans
|
|
$
|
2,345
|
|
|
$
|
994
|
|
|
$
|
86
|
|
Included in other noninterest expense
|
|
|
(69
|
)
|
|
|
|
|
|
|
|
|
Interest rate lock commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in gains on sales of mortgage loans held for sale
|
|
|
375
|
|
|
|
881
|
|
|
|
71
|
|
Forward commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in gains on sales of mortgage loans held for sale
|
|
|
(3,550
|
)
|
|
|
(427
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(899
|
)
|
|
$
|
1,448
|
|
|
$
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note T Renasant Corporation (Parent Company Only) Condensed Financial Information
(In Thousands)
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
(1)
|
|
$
|
3,883
|
|
|
$
|
4,724
|
|
Investments
|
|
|
6,568
|
|
|
|
2,237
|
|
Investment in bank subsidiary
(1)
|
|
|
563,345
|
|
|
|
552,524
|
|
Accrued interest receivable on bank balances
(1)
|
|
|
9
|
|
|
|
16
|
|
Stock options receivable
(1)
|
|
|
102
|
|
|
|
620
|
|
Other assets
|
|
|
4,048
|
|
|
|
3,381
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
577,955
|
|
|
$
|
563,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity
|
|
|
|
|
|
|
|
|
Junior subordinated debentures
|
|
$
|
75,609
|
|
|
$
|
75,770
|
|
Intercompany borrowed funds
(1)
|
|
|
1,500
|
|
|
|
|
|
Accrued interest payable on intercompany borrowed funds
(1)
|
|
|
21
|
|
|
|
|
|
Other liabilities
|
|
|
2,617
|
|
|
|
530
|
|
Shareholders equity
|
|
|
498,208
|
|
|
|
487,202
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
577,955
|
|
|
$
|
563,502
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Eliminates in
consolidation
|
Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from bank subsidiary
(1)
|
|
$
|
18,117
|
|
|
$
|
17,071
|
|
|
$
|
15,709
|
|
Interest income from bank subsidiary
(1)
|
|
|
16
|
|
|
|
30
|
|
|
|
47
|
|
Other dividends
|
|
|
114
|
|
|
|
81
|
|
|
|
91
|
|
Other income
|
|
|
22
|
|
|
|
202
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income
|
|
|
18,269
|
|
|
|
17,384
|
|
|
|
15,882
|
|
|
|
|
|
Expenses
|
|
|
3,190
|
|
|
|
2,898
|
|
|
|
3,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax benefit and equity in undistributed net income of bank subsidiary
|
|
|
15,079
|
|
|
|
14,486
|
|
|
|
12,451
|
|
Income tax benefit
|
|
|
(1,160
|
)
|
|
|
(989
|
)
|
|
|
(1,246
|
)
|
Equity in undistributed net income of bank subsidiary
(1)
|
|
|
10,398
|
|
|
|
10,157
|
|
|
|
17,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
26,637
|
|
|
$
|
25,632
|
|
|
$
|
31,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Eliminates in
consolidation
|
123
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Note T Renasant Corporation (Parent Company Only) Condensed Financial Information
(continued)
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
26,637
|
|
|
$
|
25,632
|
|
|
$
|
31,675
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in undistributed net income of bank subsidiary
|
|
|
(10,398
|
)
|
|
|
(10,157
|
)
|
|
|
(17,978
|
)
|
Amortization
|
|
|
(161
|
)
|
|
|
(350
|
)
|
|
|
(160
|
)
|
(Increase) decrease in other assets
|
|
|
(418
|
)
|
|
|
183
|
|
|
|
503
|
|
Increase in other liabilities
|
|
|
2,139
|
|
|
|
590
|
|
|
|
640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
17,799
|
|
|
|
15,898
|
|
|
|
14,680
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of securities held to maturity
|
|
|
(3,500
|
)
|
|
|
|
|
|
|
|
|
Purchase of securities available for sale
|
|
|
(15
|
)
|
|
|
|
|
|
|
(1,000
|
)
|
Investment in subsidiaries
|
|
|
|
|
|
|
(15,000
|
)
|
|
|
(35,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(3,515
|
)
|
|
|
(15,000
|
)
|
|
|
(36,000
|
)
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for dividends
|
|
|
(17,117
|
)
|
|
|
(17,071
|
)
|
|
|
(15,709
|
)
|
Cash received on exercise of stock-based compensation
|
|
|
548
|
|
|
|
218
|
|
|
|
126
|
|
Excess tax(expense) benefits from exercise of stock options
|
|
|
(56
|
)
|
|
|
|
|
|
|
5
|
|
Proceeds from advances from bank subsidiary
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
Proceeds from equity offering
|
|
|
|
|
|
|
|
|
|
|
51,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(15,125
|
)
|
|
|
(16,853
|
)
|
|
|
36,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
(841
|
)
|
|
|
(15,955
|
)
|
|
|
14,934
|
|
Cash and cash equivalents at beginning of year
|
|
|
4,724
|
|
|
|
20,679
|
|
|
|
5,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
3,883
|
|
|
$
|
4,724
|
|
|
$
|
20,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124
Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements