RENASANT CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated Financial Statements of the Company meeting the requirements of Regulation S-X are included on the succeeding pages of this Item. All schedules have been omitted because they are not required or are not applicable. RENASANT CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2022, 2021 and 2020 CONTENTS Page Report on Management’s Assessment of Internal Control over Financial Reporting 60 Reports of Independent Registered Public Accounting Firm ( Horne LLP , Memphis, TN PCAOB ID #: 171 ) 61 Consolidated Balance Sheets 64 Consolidated Statements of Income 65 Consolidated Statements of Comprehensive Income 66 Consolidated Statements of Changes in Shareholders’ Equity 67 Consolidated Statements of Cash Flows 68 Notes to Consolidated Financial Statements 70 59 Report on Management’s Assessment of Internal Control over Financial Reporting Renasant Corporation (the “Company”) is responsible for the preparation, integrity and fair presentation of the consolidated financial statements included in this annual report. The consolidated financial statements and notes included in this annual report have been prepared in conformity with accounting principles generally accepted in the United States and necessarily include some amounts that are based on management’s best estimates and judgments. Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. The Company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of any unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability through a program of internal audits. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden, and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation. Management, with the participation of the Company’s principal executive officer and principal financial officer, conducted an assessment of the effectiveness of the Company’s system of internal control over financial reporting as of December 31, 2022, based on criteria for effective internal control over financial reporting described in the “Internal Control - Integrated Framework,” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of December 31, 2022, the Company’s system of internal control over financial reporting is effective and meets the criteria of the “Internal Control – Integrated Framework.” HORNE LLP, the Company’s independent registered public accounting firm that has audited the Company’s financial statements included in this annual report, has issued an attestation report on the Company’s internal control over financial reporting which is included herein. C. Mitchell Waycaster James C. Mabry IV President and Executive Vice President and Chief Executive Officer Chief Financial Officer February 24, 2023 60 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Renasant Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Renasant Corporation (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes to the consolidated financial statements (collectively, referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 24, 2023, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involve especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses - Loans Description of the Matter As described in Notes 1 and 4 to the financial statements, the Company’s allowance for credit losses (“ACL”) is a valuation allowance that reflects the Company's best estimate of expected credit losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the entire loan portfolio in accordance with Accounting Standards Codification ASC 326: Financial Instruments – Credit Losses. The ACL is measured over the contractual life of loans held for investment and is estimated using relevant available information relating to past events, current conditions, and reasonable and supportable forecasts, as well as qualitative adjustments. The ACL was $192,090,000 at December 31, 2022, which consisted of 1) $185,648,000 of loss allocations on pools of loans that share similar risk characteristics and 2) $6,442,000 of loss allocations on individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. 61 The Company’s measurement of expected credit losses of loans on a pool basis when the loans share similar risk characteristics is based off historical data that is adjusted, as necessary, for both internal and external qualitative factors where there are differences in the historical loss data of the Company and current or projected future conditions. Consideration of the relevant qualitative factors are used to bring the ACL to the level management believes is appropriate based on factors that are otherwise unaccounted for in the quantitative process. The ACL also includes reserves for loans evaluated on an individual basis, such as certain loans graded substandard or on nonaccrual. Management applies judgment in the determination of the qualitative factors and reserves assigned on an individual basis to estimate the ACL. The ACL was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management including the judgment required in evaluating management's determination of the qualitative factors and the reserve assumptions for loans evaluated on an individual basis. How We Addressed the Matter in Our Audit The primary audit procedures we performed in response to this critical audit matter included: a. Obtained an understanding of the Company’s process for establishing the ACL, including determination of the qualitative factors and reserve assumptions for loans evaluated on an individual basis, and evaluated the process utilized by management to challenge the model results and determine the best estimate of the ACL as of the balance sheet date. b. Evaluated the design and tested the operating effectiveness of the controls associated with the ACL process, including controls around the reliability and accuracy of data used in the model, management's review and approval of the selected qualitative factors, the reserve assumptions for loans evaluated on an individual basis, the governance of the credit loss methodology, and management's review and approval of the ACL. c. Assessed reasonableness of model methodology and key modeling assumptions, as well as the appropriateness of management's qualitative framework, and reserve assumptions for loans evaluated on an individual basis. d. Performed specific substantive tests of the model utilized, qualitative factors and the reserve assumptions for loans evaluated on an individual basis. We evaluated if qualitative factors were applied based on a comprehensive framework and compared the adjustments utilized by management to both internal portfolio metrics and external macroeconomic data (as applicable) to support adjustments and evaluate trends in such adjustments. Within our reserve testing for loans evaluated on an individual basis, we evaluated management's assumptions, including collateral valuations. In addition, we evaluated the Company’s estimate of the overall ACL giving consideration to the Company’s borrowers, loan portfolio, and macroeconomic trends, independently obtained and compared such information to comparable financial institutions and considered whether new or contrary information existed. /s/ HORNE LLP We have served as the Company’s auditor since 2005. Memphis, Tennessee February 24, 2023 62 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Renasant Corporation: Opinion on the Internal Control Over Financial Reporting We have audited Renasant Corporation’s (the “Company”) internal control over financial reporting as of December 31, 2022, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the consolidated financial statements of the Company as of December 31, 2022 and our report dated February 24, 2023 expressed an unqualified opinion. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Report on Management’s Assessment of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ HORNE LLP Memphis, Tennessee February 24, 2023 63 Renasant Corporation and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Share Data) December 31, 2022 2021 Assets Cash and due from banks $ 193,513 $ 182,710 Interest-bearing balances with banks 382,479 1,695,255 Cash and cash equivalents 575,992 1,877,965 Securities held to maturity (net of allowance for credit losses of $ 32 at both December 31, 2022 and 2021) (fair value of $ 1,206,540 and $ 415,552 , respectively) 1,324,040 416,357 Securities available for sale, at fair value 1,533,942 2,386,052 Loans held for sale, at fair value 110,105 453,533 Loans held for investment, net of unearned income 11,578,304 10,020,914 Allowance for credit losses ( 192,090 ) ( 164,171 ) Loans, net 11,386,214 9,856,743 Premises and equipment, net 283,595 293,122 Other real estate owned, net 1,763 2,540 Goodwill 991,708 939,683 Other intangible assets, net 24,176 24,098 Bank-owned life insurance 373,808 287,359 Mortgage servicing rights 84,448 89,018 Other assets 298,385 183,841 Total assets $ 16,988,176 $ 16,810,311 Liabilities and shareholders’ equity Liabilities Deposits Noninterest-bearing $ 4,558,756 $ 4,718,124 Interest-bearing 8,928,210 9,187,600 Total deposits 13,486,966 13,905,724 Short-term borrowings 712,232 13,947 Long-term debt 428,133 471,209 Other liabilities 224,829 209,578 Total liabilities 14,852,160 14,600,458 Shareholders’ equity Preferred stock, $ 0.01 par value – 5,000,000 shares authorized; no shares issued and outstanding — — Common stock, $ 5.00 par value – 150,000,000 shares authorized; 59,296,725 shares issued; 55,953,104 and 55,756,233 shares outstanding, respectively 296,483 296,483 Treasury stock, at cost, 3,343,621 and 3,540,492 shares, respectively ( 111,577 ) ( 118,027 ) Additional paid-in capital 1,302,422 1,300,192 Retained earnings 857,725 741,648 Accumulated other comprehensive loss, net of taxes ( 209,037 ) ( 10,443 ) Total shareholders’ equity 2,136,016 2,209,853 Total liabilities and shareholders’ equity $ 16,988,176 $ 16,810,311 See Notes to Consolidated Financial Statements. 64 Renasant Corporation and Subsidiaries Consolidated Statements of Income (In Thousands, Except Share Data) Year Ended December 31, 2022 2021 2020 Interest income Loans $ 479,910 $ 435,464 $ 466,432 Securities Taxable 45,523 24,732 24,224 Tax-exempt 7,524 6,800 6,287 Other 8,853 1,689 1,189 Total interest income 541,810 468,685 498,132 Interest expense Deposits 35,208 28,976 54,016 Borrowings 25,304 15,708 17,319 Total interest expense 60,512 44,684 71,335 Net interest income 481,298 424,001 426,797 Provision for (recovery of) credit losses on loans 23,788 ( 1,700 ) 85,350 Provision for credit losses on held to maturity securities — 32 — Provision for other credit losses — — 1,500 Provision for (recovery of) credit losses 23,788 ( 1,668 ) 86,850 Net interest income after provision for credit losses 457,510 425,669 339,947 Noninterest income Service charges on deposit accounts 39,957 36,569 31,326 Fees and commissions 17,268 15,732 13,043 Insurance commissions 10,754 9,841 8,990 Wealth management revenue 22,339 20,455 16,504 Mortgage banking income 35,794 109,604 150,499 Swap termination gains — 4,676 — Net gains on sales of securities — 2,170 46 BOLI income 9,267 7,366 5,627 Other 13,874 20,571 9,497 Total noninterest income 149,253 226,984 235,532 Noninterest expense Salaries and employee benefits 261,654 280,627 302,388 Data processing 14,900 21,726 20,685 Net occupancy and equipment 44,819 46,837 54,080 Other real estate owned ( 453 ) 253 2,754 Professional fees 11,872 11,776 11,293 Advertising and public relations 14,325 12,203 10,322 Intangible amortization 5,122 6,042 7,121 Communications 7,958 8,869 8,866 Merger and conversion related expenses 1,787 — — Restructuring charges 732 368 7,365 Swap termination charges — — 2,040 Debt prepayment penalty — 6,123 121 Other 32,739 35,002 44,953 Total noninterest expense 395,455 429,826 471,988 Income before income taxes 211,308 222,827 103,491 Income taxes 45,240 46,935 19,840 Net income $ 166,068 $ 175,892 $ 83,651 Basic earnings per share $ 2.97 $ 3.13 $ 1.49 Diluted earnings per share $ 2.95 $ 3.12 $ 1.48 Cash dividends per common share $ 0.88 $ 0.88 $ 0.88 See Notes to Consolidated Financial Statements. 65 Renasant Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (In Thousands) Year Ended December 31, 2022 2021 2020 Net income $ 166,068 $ 175,892 $ 83,651 Other comprehensive income, net of tax: Securities available for sale: Unrealized holding (losses) gains on securities ( 214,351 ) ( 38,371 ) 20,717 Reclassification adjustment for gains realized in net income — ( 1,618 ) ( 34 ) Amortization of unrealized holding losses (gains) on securities transferred to the held to maturity category 3,701 ( 54 ) — Total securities available for sale ( 210,650 ) ( 40,043 ) 20,683 Derivative instruments: Unrealized holding gains on derivative instruments 14,993 8,087 688 Reclassification adjustment for (gains) losses realized in net income related to swap termination — ( 3,486 ) 1,521 Total derivative instruments 14,993 4,601 2,209 Defined benefit pension and post-retirement benefit plans: Net (loss) gain arising during the period ( 3,062 ) ( 264 ) 797 Reclassification adjustment for settlement loss related to the voluntary early retirement program realized in net income — — 422 New prior service cost — — ( 362 ) Amortization of net actuarial loss recognized in net periodic pension cost 125 195 193 Amortization of prior service cost — — 362 Total defined benefit pension and post-retirement benefit plans ( 2,937 ) ( 69 ) 1,412 Other comprehensive (loss) income, net of tax ( 198,594 ) ( 35,511 ) 24,304 Comprehensive (loss) income $ ( 32,526 ) $ 140,381 $ 107,955 See Notes to Consolidated Financial Statements. 66 Renasant Corporation and Subsidiaries Consolidated Statements of Changes in Shareholders’ Equity (In Thousands, Except Share Data) Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Shares Amount Total Balance at January 1, 2020 56,855,002 $ 296,483 $ ( 83,189 ) $ 1,294,276 $ 617,355 $ 764 $ 2,125,689 Cumulative effect adjustment due to the adoption of ASU 2016-13 — — — — ( 35,099 ) — ( 35,099 ) Net income — — — — 83,651 — 83,651 Other comprehensive income — — — — — 24,304 24,304 Comprehensive income 107,955 Repurchase of shares in connection with stock repurchase program ( 818,886 ) — ( 24,569 ) — — — ( 24,569 ) Cash dividends ($ 0.88 per share) — — — — ( 50,134 ) — ( 50,134 ) Issuance of common stock for stock-based compensation awards 164,371 — 6,204 ( 7,890 ) — — ( 1,686 ) Stock-based compensation expense — — — 10,577 — — 10,577 Balance at December 31, 2020 56,200,487 $ 296,483 $ ( 101,554 ) $ 1,296,963 $ 615,773 $ 25,068 $ 2,132,733 Net income — — — — 175,892 — 175,892 Other comprehensive loss — — — — — ( 35,511 ) ( 35,511 ) Comprehensive income 140,381 Repurchase of shares in connection with stock repurchase program ( 612,107 ) — ( 21,315 ) — — — ( 21,315 ) Cash dividends ($ 0.88 per share) — — — — ( 50,017 ) — ( 50,017 ) Issuance of common stock for stock-based compensation awards 167,853 — 4,842 ( 6,845 ) — — ( 2,003 ) Stock-based compensation expense — — — 10,074 — — 10,074 Balance at December 31, 2021 55,756,233 $ 296,483 $ ( 118,027 ) $ 1,300,192 $ 741,648 $ ( 10,443 ) $ 2,209,853 Net income — — — — 166,068 — 166,068 Other comprehensive loss — — — — — ( 198,594 ) ( 198,594 ) Comprehensive loss ( 32,526 ) Cash dividends ($ 0.88 per share) — — — — ( 49,991 ) — ( 49,991 ) Issuance of common stock for stock-based compensation awards 196,871 — 6,450 ( 9,275 ) — — ( 2,825 ) Stock-based compensation expense — — — 11,505 — — 11,505 Balance at December 31, 2022 55,953,104 $ 296,483 $ ( 111,577 ) $ 1,302,422 $ 857,725 $ ( 209,037 ) $ 2,136,016 See Notes to Consolidated Financial Statements. 67 Renasant Corporation and Subsidiaries Consolidated Statements of Cash Flows (In Thousands, Except Share Data) Year Ended December 31, 2022 2021 2020 Operating activities Net income $ 166,068 $ 175,892 $ 83,651 Adjustments to reconcile net income to net cash provided by operating activities: Provision for (recovery of) credit losses 23,788 ( 1,668 ) 86,850 Depreciation, amortization and accretion 42,744 47,350 34,633 Deferred income tax expense (benefit) 2,280 11,411 ( 13,662 ) Proceeds from sale of mortgage servicing rights 18,525 — — Gain on sale of mortgage servicing rights ( 2,960 ) — — Funding of mortgage loans held for sale ( 1,679,356 ) ( 4,059,927 ) ( 4,479,421 ) Proceeds from sales of mortgage loans held for sale 2,043,360 4,116,106 4,530,328 Gains on sales of mortgage loans held for sale ( 15,803 ) ( 82,399 ) ( 150,406 ) Valuation adjustment to mortgage servicing rights — ( 13,561 ) 11,726 Gains on sales of securities — ( 2,170 ) ( 46 ) Debt prepayment penalty — 6,123 121 (Gains) losses on sales of premises and equipment ( 239 ) ( 840 ) 38 Stock-based compensation 11,505 10,074 10,577 Increase in other assets ( 29,671 ) ( 20,812 ) ( 59,224 ) (Decrease) increase in other liabilities ( 6,196 ) ( 42,920 ) 27,077 Net cash provided by operating activities 574,045 142,659 82,242 Investing activities Purchases of securities available for sale ( 713,096 ) ( 2,107,934 ) ( 515,657 ) Proceeds from sales of securities available for sale — 176,455 44,906 Proceeds from call/maturities of securities available for sale 385,507 458,020 437,981 Purchases of securities held to maturity ( 91,803 ) ( 52,135 ) — Proceeds from call/maturities of securities held to maturity 67,448 2,246 — Net (increase) decrease in loans ( 1,456,119 ) 910,063 ( 1,233,232 ) Purchases of premises and equipment ( 14,838 ) ( 20,516 ) ( 28,270 ) Proceeds from sales of premises and equipment 1,234 9,813 — Purchase of bank-owned life insurance ( 80,000 ) ( 50,000 ) — Net change in FHLB stock ( 27,807 ) 3,980 18,840 Proceeds from sales of other assets 3,578 6,342 8,438 Net cash paid in acquisitions ( 120,888 ) — — Other, net 3,127 3,663 1,446 Net cash used in investing activities ( 2,043,657 ) ( 660,003 ) ( 1,265,548 ) Financing activities Net (decrease) increase in noninterest-bearing deposits ( 159,368 ) 1,033,076 1,133,278 Net (decrease) increase in interest-bearing deposits ( 259,390 ) 813,567 712,781 Net increase (decrease) in short-term borrowings 668,805 ( 7,393 ) ( 467,872 ) Proceeds from long-term debt — 197,061 98,266 Repayment of long-term debt ( 32,417 ) ( 202,873 ) ( 171 ) Cash paid for dividends ( 49,991 ) ( 50,017 ) ( 50,134 ) Repurchase of shares in connection with stock repurchase program — ( 21,315 ) ( 24,569 ) Net cash provided by financing activities 167,639 1,762,106 1,401,579 Net (decrease) increase in cash and cash equivalents ( 1,301,973 ) 1,244,762 218,273 Cash and cash equivalents at beginning of year 1,877,965 633,203 414,930 Cash and cash equivalents at end of year $ 575,992 $ 1,877,965 $ 633,203 See Notes to Consolidated Financial Statements. 68 Renasant Corporation and Subsidiaries Consolidated Statements of Cash Flows (continued) Year Ended December 31, 2022 2021 2020 Supplemental disclosures Cash paid for interest $ 54,562 $ 45,745 $ 73,686 Cash paid for income taxes $ 41,764 $ 50,977 $ 39,989 Noncash transactions: Transfers of loans to other real estate $ 2,207 $ 3,180 $ 8,588 Financed sales of other real estate owned $ — $ 577 $ 148 Recognition of operating right-of-use assets $ 3,475 $ 8,142 $ 9,393 Recognition of operating lease liabilities $ 3,475 $ 8,142 $ 9,393 Available for sale securities transferred to held to maturity securities $ 882,927 $ 366,886 $ — See Notes to Consolidated Financial Statements. 69 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (Dollar amounts in thousands) Nature of Operations : Renasant Corporation (referred to herein as the “Company”) owns and operates Renasant Bank (“Renasant Bank” or the “Bank”), Renasant Insurance, Inc., Park Place Capital Corporation and Continental Republic Capital, LLC (doing business as “Republic Business Credit”). Through its subsidiaries, the Company offers a diversified range of financial, wealth management, fiduciary and insurance services to its retail and commercial customers from offices located throughout the Southeast as well as offers factoring and asset-based lending on a nationwide basis. Use of Estimates : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Consolidation : The accompanying Consolidated Financial Statements and these 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. Reclassifications had no effect on prior years’ net income or shareholders’ equity. 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. Presently, the Company has no intention of establishing a trading classification. Securities not classified as held to maturity or trading are classified as available for sale. 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, regardless of classification, is adjusted for amortization of premiums and accretion of discounts. Such amortization and accretion is included in interest income from securities, as is dividend income. Realized gains and losses on sales of securities are reflected under the line item “Net 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 allowance for credit losses on the held to maturity investment portfolio on a quarterly basis in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic (“ASC”) 326, “ Financial Instruments - Credit Losses (“ASC 326”; ASC 326 is also referred to as “CECL”). Expected credit losses on debt securities classified as held to maturity are measured on a collective basis by major security type. The estimates of expected credit losses are based on historical default rates, investment grades, current conditions, and reasonable and supportable forecasts about the future. The allowance is increased through provision for credit losses and decreased by charge-offs, net of recoveries of amounts previously charged-off. All of the residential and commercial mortgage-backed securities recorded as held to maturity are issued by U.S. Government agencies and GSEs. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The state and political subdivision securities are highly rated by major rating agencies. The Company also evaluates available for sale investment securities in an unrealized loss position on a quarterly basis. If the Company intends to sell the security or it is more likely than not that it will be required to sell before recovery, the entire unrealized loss is recorded as a loss within noninterest income in the Consolidated Statements of Income with a corresponding adjustment to the amortized cost basis of the security. If the Company does not intend to sell the security and it is not more likely than not that it will be required to sell the security before recovery of its amortized cost basis, the Company evaluates if any of the unrealized loss is related to a potential credit loss. The amount, if any, related to credit loss is recognized in earnings as a provision for credit loss and a corresponding allowance for credit losses is established; each is calculated as the difference between the estimate of discounted future cash flows and the amortized cost basis of the security. A number of qualitative and quantitative factors, including the financial condition of the underlying issuer and current and projected deferrals or defaults, are considered by management in the estimate of the discounted future cash flows. The remaining difference between the fair value and the amortized cost basis of the security is considered the amount related to other market factors and is recognized in other comprehensive income, net of applicable taxes. 70 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) Recognition of interest is discontinued on debt securities that are transferred to nonaccrual status. A number of qualitative factors, including the financial condition of the underlying issuer 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 nonaccrual investment securities is accounted for on the cash-basis method until the debt security qualifies for return to accrual status. See Note 2, “Securities,” for further details regarding the Company’s securities portfolio. 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 agency securities, pledged as collateral under these financing arrangements cannot be sold or repledged by the secured party. Loans Held for Sale : The “Loans held for sale” line item on the Company’s Consolidated Balance Sheets consists of 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”). Gains and losses are realized at the time consideration is received and all other criteria for sales treatment have been met. These realized and unrealized gains and losses are classified under the line item “Mortgage banking income” on the Consolidated Statements of Income. Factoring : The Company provides short-term financing to certain clients by operating as a factor. The Company purchases accounts receivable from its clients and then generally collects the receivables directly from the clients’ account customers. Cash is advanced to the Company’s client to the extent of the advance rate, less any applicable fees, set forth in the individual factoring agreement. The unadvanced portion of the purchased receivables are considered client reserves and may be used to settle payment disputes or collection shortfalls. Upon collection of the receivable and settlement of any client obligation, the client reserves are returned to the client. Factoring receivables, net of client receivables, are reported as “Loans” on the Consolidated Balance Sheets. Factoring fees are reported as interest income on loans while other fees generated from factoring relationships are reported as noninterest income on the Consolidated Statements of Income. Loans and the Allowance for Credit Losse s: 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 amortized cost or outstanding unpaid principal balances, in either case adjusted for charge-offs, the allowance for credit losses, any deferred fees or costs on originated loans and any purchase discounts or premiums on purchased 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. 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 and industrial 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 amount of interest income recognized on nonaccrual loans was immaterial for the years ended December 31, 2022, 2021 and 2020. 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. As a result, the Company has made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses. As of December 31, 2022 and 2021, the Company has accrued interest receivable for loans of $ 49,850 and $ 41,692 , respectively, which is recorded in the “Other assets” line item on the Consolidated Balance Sheets. Although the Company made the election to exclude accrued interest from the measurement of the allowance for credit losses, the Company did have an allowance for credit losses on interest deferred as part of the loan deferral program implemented in response to the COVID-19 pandemic of $ 1,248 and $ 1,273 , respectively, as of December 31, 2022 and 2021. Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed 71 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) 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 have been placed on nonaccrual status are reported as nonperforming loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in such loan portfolio in accordance with ASC 326. Management evaluates the adequacy of the allowance for credit losses on a quarterly basis. Expected credit loss inherent in non-cancellable off-balance-sheet credit exposures is accounted for as a separate liability in the Consolidated Balance Sheets. The allowance for credit losses for loans held for investment, as reported in the Company’s Consolidated Balance Sheets, is adjusted by a provision for credit losses, which is reported in earnings, and reduced by net charge-offs. Loan losses are charged against the allowance for credit losses when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The credit loss estimation process involves procedures to appropriately consider the unique characteristics of the Company’s loan portfolio segments. Credit quality is assessed and monitored by evaluating various attributes, and the results of those evaluations are utilized in underwriting new loans and in the Company’s process for the estimation of expected credit losses. Credit quality monitoring procedures and indicators can include an assessment of problem loans, the types of loans, historical loss experience, new lending products, emerging credit trends, changes in the size and character of loan categories and other factors, including the Company’s risk rating system, regulatory guidance and economic conditions, such as the unemployment rate and GDP growth in the markets in which the Company operates, as well as trends in the market values of underlying collateral securing loans, all as determined based on input from management, loan review staff and other sources. This evaluation is complex and inherently subjective, as it requires estimates by management that are inherently uncertain and therefore susceptible to significant revision as more information becomes available. Similarly, there may be significant changes in the allowance and provision for credit losses in future periods as the estimates and assumptions underlying such estimates are adjusted in light of then-prevailing factors and forecasts. Changes in any of the assumptions involved in the estimation process may result in significant changes in the allowance and provision for credit losses in those future periods. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, a collective (or pooled) component for estimating expected credit losses for pools of loans that share similar risk characteristics; and second, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans. Loans Evaluated on a Collective (Pool) Basis The allowance for credit losses for loans that share similar risk characteristics with other loans is calculated on a collective or pool basis, where such loans are segregated into loan portfolio segments based upon similarity of credit risk. The Company’s primary loan portfolio segments are as follows: Commercial, Financial, and Agricultural (“Commercial”) - Commercial loans are customarily granted to established local business customers in the Company’s market area on a collateralized basis to meet their credit needs. Maturities are typically short term in nature and are commensurate with the secondary source of repayment that serves as the Company’s collateral. Although commercial loans may be collateralized by equipment or other business assets, the repayment of this type of loan depends primarily on the creditworthiness and projected cash flow of the borrower (and any guarantors). Thus, the chief considerations when assessing the risk of a commercial loan are the local business borrower’s ability to sell its products/services, thereby generating sufficient operating revenue to repay the Company under the agreed upon terms and conditions, and the general business conditions of the local economy or other market that the business serves. The Company's factoring receivables are categorized as commercial loans; for these commercial loans, the risk assessment considers the ability of the client's account customer, rather than the client itself, to repay the Company. Real Estate - Construction - The Company’s construction loan portfolio consists of loans for the construction of single family residential properties, multi-family properties and commercial projects. Maturities for construction loans generally range from six to 12 months for residential properties and from 24 to 36 months for non-residential and multi-family properties. The source of repayment of a construction loan comes from the sale or lease of newly-constructed property, although often construction loans are repaid with the proceeds of a commercial real estate loan that the Company makes to the owner or lessor of the newly-constructed property. 72 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) Real Estate - 1-4 Family Mortgage - This segment of the Company’s loan portfolio includes loans secured by first or second liens on residential real estate in which the property is the principal residence of the borrower, as well as loans secured by residential real estate in which the property is rented to tenants or is otherwise not the principal residence of the borrower; loans for the preparation of residential real property prior to construction are also included in this segment. Finally, this segment includes home equity loans or lines of credit and term loans secured by first and second mortgages on the residences of borrowers who elect to use the accumulated equity in their homes for purchases, refinances, home improvements, education and other personal expenditures. The Company attempts to minimize the risk associated with residential real estate loans by scrutinizing the financial condition of the borrower; typically, the maximum loan-to-value ratio is also limited. Real Estate - Commercial Mortgage - Included in this portfolio segment (referred to collectively as “commercial real estate loans”) are “owner-occupied” loans in which the owner develops a property with the intention of locating its business there. Payments on these loans are dependent on the successful development and management of the business as well as the borrower’s ability to generate sufficient operating revenue to repay the loan. In some instances, in addition to the mortgage on the underlying real estate of the business, commercial real estate loans are secured by other non-real estate collateral, such as equipment or other assets used in the business. In addition to owner-occupied commercial real estate loans, the Company offers loans in which the owner develops a property where the source of repayment of the loan will come from the sale or lease of the developed property, for example, retail shopping centers, hotels and storage facilities. These loans are referred to as “non-owner occupied” commercial real estate loans. The Company also offers commercial real estate loans to developers of commercial properties for purposes of site acquisition and preparation and other development prior to actual construction (referred to as “commercial land development loans”). Non-owner occupied commercial real estate loans and commercial land development loans are dependent on the successful completion of the project and may be affected by adverse conditions in the real estate market or the economy as a whole. Lease Financing - This segment of the Company’s loan portfolio includes loans granted to provide capital to businesses for commercial equipment needs. These loans are generally granted for periods ranging between two and five years at fixed rates of interest. Loss or decline of income by the borrower due to unplanned occurrences represents the primary risk of default to the Company. In the event of default, a shortfall in the value of the collateral may pose a loss in this loan category. The Company obtains a lien against the collateral securing the loan and holds title (if applicable) until the loan is repaid in full. Transportation, manufacturing, healthcare, material handling, printing and construction are the industries that typically obtain lease financing. Installment Loans to Individuals - Installment loans to individuals (or “consumer loans”) are granted to individuals for the purchase of personal goods. Loss or decline of income by the borrower due to unplanned occurrences represents the primary risk of default to the Company. In the event of default, a shortfall in the value of the collateral may pose a loss in this loan category. Before granting a consumer loan, the Company assesses the applicant’s credit history and ability to meet existing and proposed debt obligations. Although the applicant’s creditworthiness is the primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, to the proposed loan amount. The Company obtains a lien against the collateral securing the loan and holds title (if applicable) until the loan is repaid in full. In determining the allowance for credit losses on loans evaluated on a collective basis, the Company categorizes loan pools based on loan type and/or risk rating. The Company uses two CECL models: (1) a loss rate model, based on average historical life-of-loan loss rates, which is used for the Real Estate - 1-4 Family Mortgage, Real Estate - Construction and the Installment Loans to Individuals portfolio segments, and (2) for the C&I, Real Estate - Commercial Mortgage and Lease Financing portfolio segments, the Company uses a probability of default/loss given default model, which calculates an expected loss percentage for each loan pool by considering (a) the probability of default, based on the migration of loans from performing (using risk ratings) to default using life-of-loan analysis periods, and (b) the historical severity of loss, based on the aggregate net lifetime losses incurred per loan pool. The historical loss rates calculated as described above are adjusted, as necessary, for both internal and external qualitative factors where there are differences in the historical loss data of the Company and current or projected future conditions. Internal factors include loss history, changes in credit quality (including movement between risk ratings) and/or credit concentration and changes in the nature and volume of the respective loan portfolio segments. External factors include current and reasonable and supportable forecasted economic conditions and changes in collateral values. These factors are used to adjust the historical loss rates (as described above) to ensure that they reflect management’s expectation of future conditions based on a reasonable and supportable forecast period. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, when necessary, the models immediately revert back to the historical loss rates adjusted for qualitative factors related to current conditions. 73 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) Loans Evaluated on an Individual Basis For loans that do not share similar risk characteristics with other loans, an individual analysis is performed to determine the expected credit loss. If the respective loan is collateral dependent (that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral), the expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of collateral is initially based on external appraisals. Generally, collateral values for loans for which measurement of expected losses is dependent on the fair value of such collateral are updated every twelve months, either from external third parties or in-house certified appraisers. Third-party appraisals are obtained from a pre-approved list of independent, local appraisal firms. The fair value of the collateral derived from external appraisal is then adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral. Other acceptable methods for determining the expected credit losses for individually evaluated loans (typically used when the loan is not collateral dependent) is a discounted cash flow approach or, if applicable, an observable market price. Once the expected credit loss amount is determined, an allowance equal to such expected credit loss is included in the allowance for credit losses. The Company considers the loans in the Real Estate - Construction, Real Estate - 1-4 Family Mortgage and Real Estate - Commercial Mortgage loan segments disclosed as individually evaluated in Note 4, “Allowance for Credit Losses” as collateral dependent with the type of collateral being real estate. The Company maintains a separate allowance for credit losses on unfunded loan commitments, which is included in the “Other liabilities” line item on the Consolidated Balance Sheets. Changes in such allowance are recorded in the “Other noninterest expense” line item on the Consolidated Statements of Income. Management estimates the amount of expected losses on unfunded loan commitments by calculating a likelihood of funding over the contractual period for exposures that are not unconditionally cancellable by the Company and applying the loss factors used in the allowance for credit losses on loans methodology described above to unfunded commitments for each loan type. No credit loss estimate is reported for off-balance-sheet credit exposures that are unconditionally cancellable by the Company. See Note 3, “Loans,” and Note 4, “Allowance for Credit Losses” for disclosures regarding the Company’s past due and nonaccrual loans, impaired loans and restructured loans and its allowance for credit losses. Business Combinations, Accounting for Purchased Credit Deteriorated Loans and Related Assets : Business combinations are accounted for by applying the acquisition method in accordance with ASC 805, “ Business Combinations .” Under the acquisition method, identifiable assets acquired and liabilities assumed and any non-controlling interest in the acquired company 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. Acquisition costs incurred by the Company are expensed as incurred. For a purchased asset that the Company has the intent of holding for investment, ASC 326 requires the Company to determine whether the asset has experienced more-than-insignificant deterioration in credit quality since origination. Factors used in the determination will vary but may include delinquency history, historical accrual status, down grades in the risk rating by the seller, among others. The Company's review of an asset during its due diligence evaluation of the purchase may identify other unique attributes that would indicate more-than-insignificant deterioration has occurred such as the borrower's financial condition, credit rating or credit score as well as the value of underlying collateral. The Company analyzes these factors collectively and may also consider market conditions or economic factors that would indicate a purchased asset has experienced more-than-insignificant deterioration in credit quality since origination. Such assets that have experienced more-than insignificant deterioration are referred to as purchased credit deteriorated (“PCD”) assets. ASC 326 provides for special initial recognition of PCD assets, commonly referred to as the “gross-up” approach, where the allowance for credit losses is recognized by adding it to the fair value to arrive at the Day 1 amortized cost basis. After initial recognition, the accounting for PCD assets will generally follow the credit loss model that applies to that type of asset. Non-PCD assets record the Day 1 allowance for credit losses through earnings on the date of purchase. The Company will accrete or amortize as interest income the fair value discounts on both PCD and non-PCD assets over the life of the asset. 74 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) 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 40 years for premises, three to 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. ASC 842, “ Leases ” (“ASC 842”) requires a lessee to recognize a right-of-use asset and a lease liability for all leases with a term greater than 12 months on its balance sheet regardless of whether the lease is classified as financing or operating. All of the Company’s lessee arrangements are operating leases, being real estate leases for Company facilities. Under these arrangements, the Company records right-of-use assets and corresponding lease liabilities, each of which is based on the present value of the remaining lease payments and are discounted at the Company’s incremental borrowing rate. Right-of-use assets are reported in premises and equipment on the Consolidated Balance Sheets and the related lease liabilities are reported in other liabilities . All leases are recorded on the Consolidated Balance Sheets except for leases with an initial term less than 12 months for which the Company elected short-term lease recognition under ASC 842. Lease terms may contain renewal and extension options and early termination features. Many leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Renewal options which are reasonably certain to be exercised in the future were included in the measurement of right-of-use assets and lease liabilities. Lease expense is recognized on a straight-line basis over the lease term and is recorded in the “Net occupancy and equipment expense” line item in the Consolidated Statements of Income. Variable lease payments consist primarily of common area maintenance, insurance and taxes. The Company does not have any material sublease agreements currently in place. 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 initially recorded into other real estate at fair market value less cost to sell and are subsequently carried at the lower of cost or fair market value based on appraised value less estimated selling costs. Losses arising at the time of foreclosure of properties are charged against the allowance for credit losses. Reductions in the carrying value subsequent to acquisition are charged to earnings and are included under the line item “Other real estate owned” on 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 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, mortgage interest rates and other factors. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance, to the extent that unamortized cost exceeds fair value. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the valuation allowance may be recorded as an increase to income. Changes in valuation allowances related to servicing rights are reported in the line item “Mortgage banking income” on the Consolidated Statements of Income. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. See Note 8, “Mortgage Servicing Rights”, for further details. From time to time, the Company may sell a portion or all of its mortgage servicing rights. Any gains or losses on such sales are reported in the line item “Mortgage banking income” on the Consolidated Statements of Income. 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 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; if impaired, such assets are recorded at fair value. Goodwill is assigned to the Company’s reporting segments. In determining the fair value of the Company’s reporting units, management uses the market approach. Other intangible assets, consisting of core deposit intangibles and customer relationship 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 Company’s goodwill or its other intangible assets as a result of the testing performed during 2022, 2021 or 2020. 75 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – 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. The Company has purchased such insurance policies 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. 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. Revenue from Contracts with Customers : ASC 606, “ Revenue from Contracts with Customers ” (“ASC 606”), provides guidance on revenue recognition from contracts with customers. For revenue streams within its scope, ASC 606 requires costs that are incremental to obtaining a contract to be capitalized. In the case of the Company, these costs include sales commissions for insurance, wealth management fees, and revenue from certain sales of OREO. ASC 606 has established, and the Company has utilized, a practical expedient allowing costs that, if capitalized, would have an amortization period of one year or less to instead be expensed as incurred. Service Charges on Deposit Accounts Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees. The contracts with deposit account customers are day-to-day contracts and are considered to be terminable at will by either party. Therefore, the fees are all considered to be earned when charged and simultaneously collected. Fees and Commissions Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. These fees are earned at the point in time when the services are rendered, and therefore the related revenue is recognized as the Company’s performance obligation is satisfied. Insurance Commissions Insurance commissions are earned when policies are placed by customers with the insurance carriers and are collected and recognized using two different methods: the agency bill method and the direct bill method. Under the agency bill method, Renasant Insurance is responsible for billing the customers directly and then collecting and remitting the premiums to the insurance carriers. Agency bill revenue is recognized at the later of the invoice date or effective date of the policy. The Company has established a reserve for such policies which is derived from historical collection experience and updated annually. The contract balances (i.e. accounts receivable and accounts payable related to insurance commissions earned and premiums due) and the reserve established are considered immaterial to the overall financial results of the Company. Under the direct bill method, premium billing and collections are handled by the insurance carriers, and a commission is then paid to Renasant Insurance. Direct bill revenue is recognized when the commission payment is received from the insurance carriers. While there is recourse on these commissions in the event of policy cancellations, based on the Company’s historical data, material reversals of revenue based on policy cancellations are not anticipated. The Company monitors policy cancellations on a monthly basis and, if a material set of cancellations were to occur, the Company would adjust earnings accordingly. The Company also earns contingency income that it recognizes on a cash basis. Contingency income is a bonus received from the insurance underwriters and is based on commission income and claims experience on the Company’s clients’ policies during the previous year. Increases and decreases in contingency income are reflective of corresponding increases and decreases in the amount of claims paid by insurance carriers. Wealth Management Revenue Fees for managing trust accounts (inclusive of personal and corporate benefit accounts, IRAs, and custodial accounts) are based on the value of assets under management in the account, with the amount of the fee depending on the type of account. Revenue is recognized on a monthly basis, and there is little to no risk of a material reversal of revenue. Fees for other wealth management services, such as investment guidance relating to fixed and variable annuities, mutual funds, stocks and other investments, are recognized based on either trade activity, where fees are recognized at the time of the trade, or assets under management, where fees are recognized monthly, and there is little to no risk of material reversal of revenue. 76 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) Sales of Other Real Estate Owned (“OREO”) The Company continually markets the properties included in the OREO portfolio. The Company will at times, in the ordinary course of business, provide seller-financing on sales of OREO. In cases where a sale is seller-financed, the Company must ensure the commitment of both parties to perform their respective obligations and the collectability of the transaction price in order to properly recognize the revenue on the sale of OREO. This is accomplished through the Company’s loan underwriting process. In this process the Company considers factors such as the buyer’s initial equity in the property, the credit quality of the buyer, the financing terms of the loan and the cash flow from the property, if applicable. If it is determined that the contract criteria in ASC 606 have been met, the revenue on the sale of OREO will be recognized on the closing date of the sale when the Company has transferred title to the buyer and obtained the right to receive payment for the property. In instances where sales are not seller-financed, the Company recognizes revenue on the closing date of the sale when the Company has obtained payment for the property and transferred title to the buyer. For additional information on OREO, please see Note 6, “Other Real Estate Owned.” 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 Company’s 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 ,” 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 15, “Fair Value Measurements,” for further details regarding the Company’s methods and assumptions used to estimate the fair values of the Company’s 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 as well as to meet the needs of its customers. 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 Company’s 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. There were no ineffective portions for 2022. 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. Fair value hedges are utilized to mitigate the exposure to future interest rate risk. For the Company’s derivatives designated as fair value hedges, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same line item as the earnings effect of the hedged item. 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 77 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) instruments are not designated as hedging instruments, changes in the fair value of the derivative instruments are recognized currently in earnings. 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 45 days with the customer. These interest rate lock commitments are recorded at fair value in the Company’s 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 “Mortgage banking income” 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. These types of mortgage loan commitments are recorded at fair value on the Company’s 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 “Mortgage banking income” on the Consolidated Statements of Income. Treasury Stock : Treasury stock is recorded at cost. Shares held in treasury are authorized but unissued shares. Retirement Plans : The Company sponsors a noncontributory pension plan and provides retiree medical benefits for certain employees. The Company’s independent actuary firm prepares actuarial valuations of pension cost and obligation under ASC 715, “ Compensation – Retirement Benefits ” (“ASC 715”), using assumptions and estimates derived in accordance with the guidance set forth in ASC 715. Expense related to the plans is included under the line item “Salaries and employee benefits” on the Consolidated Statements of Income. Actuarial gains and losses are recognized in accumulated other comprehensive income, net of tax, until they are amortized as a component of plan expense. See Note 12, “Employee Benefit and Deferred Compensation Plans,” for further details regarding the Company’s retirement plans. Stock-Based Compensation : The Company recognizes compensation expense for all share-based payments to employees in accordance with ASC 718, “ Compensation - Stock Compensation ” (“ASC 718”). 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 and is recognized over the respective awards’ vesting period. The Company has elected to account for forfeitures in compensation cost when they occur as permitted under the guidance in ASC 718. Expense associated with the Company’s stock-based compensation is included under the line item “Salaries and employee benefits” on the Consolidated Statements of Income. See Note 12, “Employee Benefit and Deferred Compensation Plans,” for further details regarding the Company’s 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 of shares outstanding, assuming outstanding stock options were exercised into common shares and nonvested restricted stock awards, whose vesting is subject to future service requirements, were outstanding common shares as of the awards’ respective grant dates, calculated in accordance with the treasury method. See Note 17, “Net Income Per Common Share,” for the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations. Subsequent Events: The Company has evaluated, for consideration of recognition or disclosure, subsequent events that have occurred through the date of issuance of its financial statements, and has determined that no significant events occurred after December 31, 2022 but prior to the issuance of these financial statements that would have a material impact on its Consolidated Financial Statements. 78 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Significant Accounting Policies (continued) Impact of Recently-Issued Accounting Standards and Pronouncements : In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform (Topic 842): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides temporary, optional guidance to ease the potential burden of accounting for reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions if certain criteria are met that reference the London Interbank Offering Rate (“LIBOR”) or another reference rate expected to be discontinued. As the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it was in effect only from March 12, 2020 through December 31, 2022. The Company transitioned new production from LIBOR instruments to a set of alternative indices at December 31, 2021. The Company’s LIBOR Transition Committee is currently developing a plan to transition legacy positions with the intent to minimize the impact to the Bank and its customers. In March 2022, FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”), which eliminates the accounting guidance for troubled debt restructurings in Accounting Standards Codification (“ASC”) Subtopic 310-40, “Receivables - Troubled Debt Restructurings by Creditors,” while enhancing disclosures requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, ASU 2022-02 requires entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU 2022-02 was effective on January 1, 2023. The adoption of this accounting pronouncement will have no impact on the Company’s financial statements aside from additional and revised disclosures. 79 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 2 – Securities (In Thousands, Except Number of Securities) The amortized cost and fair value of securities available for sale were as follows as of the dates presented: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 Obligations of other U.S. Government agencies and corporations $ 170,000 $ — $ ( 5,340 ) $ 164,660 Obligations of states and political subdivisions 154,066 204 ( 9,368 ) 144,902 Residential mortgage backed securities: Government agency mortgage backed securities 508,415 37 ( 52,036 ) 456,416 Government agency collateralized mortgage obligations 605,033 — ( 103,864 ) 501,169 Commercial mortgage backed securities: Government agency mortgage backed securities 11,166 — ( 1,053 ) 10,113 Government agency collateralized mortgage obligations 211,435 — ( 25,589 ) 185,846 Other debt securities 74,885 — ( 4,049 ) 70,836 $ 1,735,000 $ 241 $ ( 201,299 ) $ 1,533,942 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2021 U.S. Treasury securities $ 3,007 $ 3 $ — $ 3,010 Obligations of states and political subdivisions 153,847 5,532 ( 269 ) 159,110 Residential mortgage backed securities: Government agency mortgage backed securities 967,497 7,854 ( 6,816 ) 968,535 Government agency collateralized mortgage obligations 1,008,514 457 ( 20,371 ) 988,600 Commercial mortgage backed securities: Government agency mortgage backed securities 14,717 365 ( 1 ) 15,081 Government agency collateralized mortgage obligations 216,859 812 ( 3,419 ) 214,252 Other debt securities 36,515 1,097 ( 148 ) 37,464 $ 2,400,956 $ 16,120 $ ( 31,024 ) $ 2,386,052 80 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 2 – Securities (continued) The amortized cost and fair value of securities held to maturity were as follows as of the dates presented: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 Obligations of states and political subdivisions $ 291,886 $ 17 $ ( 48,325 ) $ 243,578 Residential mortgage backed securities Government agency mortgage backed securities 483,560 — ( 24,432 ) 459,128 Government agency collateralized mortgage obligations 423,315 — ( 30,706 ) 392,609 Commercial mortgage backed securities Government agency mortgage backed securities 17,006 — ( 3,261 ) 13,745 Government agency collateralized mortgage obligations 45,430 — ( 6,559 ) 38,871 Other debt securities 62,875 — ( 4,266 ) 58,609 $ 1,324,072 $ 17 $ ( 117,549 ) $ 1,206,540 Allowance for credit losses - held to maturity securities ( 32 ) Held-to-maturity securities, net of allowance for credit losses $ 1,324,040 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2021 Obligations of states and political subdivisions $ 267,641 $ 333 $ ( 685 ) $ 267,289 Residential mortgage backed securities Government agency mortgage backed securities 60,507 1 ( 198 ) 60,310 Government agency collateralized mortgage obligations 24,832 — ( 92 ) 24,740 Commercial mortgage backed securities Government agency mortgage backed securities 1,855 — — 1,855 Government agency collateralized mortgage obligations 39,505 — ( 117 ) 39,388 Other debt securities 22,049 — ( 79 ) 21,970 $ 416,389 $ 334 $ ( 1,171 ) $ 415,552 Allowance for credit losses - held to maturity securities ( 32 ) Held-to-maturity securities, net of allowance for credit losses $ 416,357 During the year ended December 31, 2022, the Company transferred, at fair value, $ 882,927 of securities from the available for sale portfolio to the held to maturity portfolio. The related net unrealized loss of $ 99,675 (after tax loss of $ 74,307 ) remained in accumulated other comprehensive income (loss) and will be amortized over the remaining life of the securities, offsetting the related amortization of discount on the transferred securities. No gains or losses were recognized at the time of transfer. 81 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 2 – Securities (continued) There were no available for sale securities sold during the year ended December 31, 2022. Available for sale securities sold were as follows for the periods presented: Carrying Value Net Proceeds Gain/(Loss) Twelve months ended December 31, 2021 Obligations of states and political subdivisions $ 47 $ 49 $ 2 Residential mortgage backed securities: Government agency mortgage backed securities 145,572 149,473 3,901 Government agency collateralized mortgage obligations 12,362 12,562 200 Trust preferred securities 12,021 9,961 ( 2,060 ) Other debt securities 4,283 4,410 127 $ 174,285 $ 176,455 $ 2,170 Carrying Value Net Proceeds Gain/(Loss) Twelve months ended December 31, 2020 Obligations of states and political subdivisions $ 2,696 $ 2,561 $ ( 135 ) Residential mortgage backed securities: Government agency mortgage backed securities 16,093 16,294 201 Government agency collateralized mortgage obligations 26,071 26,051 ( 20 ) $ 44,860 $ 44,906 $ 46 Gross realized gains and gross realized losses on sales of securities available for sale were as follows for the periods presented: Year Ended December 31, 2021 2020 Gross gains on sales of securities available for sale $ 4,322 $ 230 Gross losses on sales of securities available for sale ( 2,152 ) ( 184 ) Gains on sales of securities available for sale, net $ 2,170 $ 46 At December 31, 2022 and 2021, securities with a carrying value of approximately $ 824,417 and $ 607,681 , respectively, were pledged to secure government, public, trust, and other deposits. Securities with a carrying value of $ 18,184 and $ 21,493 were pledged as collateral for short-term borrowings and derivative instruments at December 31, 2022 and 2021, respectively. 82 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 2 – Securities (continued) The amortized cost and fair value of securities at December 31, 2022 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 $ 150 $ 149 $ 9,393 $ 9,377 Due after one year through five years 3,351 3,162 228,812 222,940 Due after five years through ten years 53,650 46,253 75,549 71,029 Due after ten years 234,720 194,000 75,078 67,926 Residential mortgage backed securities: Government agency mortgage backed securities 483,560 459,128 508,415 456,416 Government agency collateralized mortgage obligations 423,315 392,609 605,033 501,169 Commercial mortgage backed securities: Government agency mortgage backed securities 17,006 13,745 11,166 10,113 Government agency collateralized mortgage obligations 45,430 38,871 211,435 185,846 Other debt securities 62,890 58,623 10,119 9,126 $ 1,324,072 $ 1,206,540 $ 1,735,000 $ 1,533,942 83 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 2 – Securities (continued) The following tables present 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 Available for Sale: December 31, 2022 Obligations of other U.S. Government agencies and corporations 5 $ 164,660 $ ( 5,340 ) — $ — $ — 5 $ 164,660 $ ( 5,340 ) Obligations of states and political subdivisions 84 96,939 ( 4,869 ) 11 33,038 ( 4,499 ) 95 129,977 ( 9,368 ) Residential mortgage backed securities: Government agency mortgage backed securities 97 214,516 ( 15,115 ) 29 237,970 ( 36,921 ) 126 452,486 ( 52,036 ) Government agency collateralized mortgage obligations 16 109,753 ( 8,552 ) 36 391,416 ( 95,312 ) 52 501,169 ( 103,864 ) Commercial mortgage backed securities: Government agency mortgage backed securities 4 10,114 ( 1,053 ) — — — 4 10,114 ( 1,053 ) Government agency collateralized mortgage obligations 16 67,026 ( 3,828 ) 21 118,821 ( 21,760 ) 37 185,847 ( 25,588 ) Other debt securities 25 63,423 ( 3,167 ) 1 7,412 ( 883 ) 26 70,835 ( 4,050 ) Total 247 $ 726,431 $ ( 41,924 ) 98 $ 788,657 $ ( 159,375 ) 345 $ 1,515,088 $ ( 201,299 ) December 31, 2021 Obligations of states and political subdivisions 8 $ 34,303 $ ( 216 ) 3 $ 3,892 $ ( 53 ) 11 $ 38,195 $ ( 269 ) Residential mortgage backed securities: Government agency mortgage backed securities 41 727,546 ( 6,312 ) 1 12,305 ( 504 ) 42 739,851 ( 6,816 ) Government agency collateralized mortgage obligations 49 966,126 ( 20,371 ) — — — 49 966,126 ( 20,371 ) Commercial mortgage backed securities: Government agency mortgage backed securities 1 1,791 ( 1 ) 1 432 — 2 2,223 ( 1 ) Government agency collateralized mortgage obligations 21 160,919 ( 3,072 ) 2 9,005 ( 347 ) 23 169,924 ( 3,419 ) Other debt securities 1 8,699 ( 148 ) — — — 1 8,699 ( 148 ) Total 121 $ 1,899,384 $ ( 30,120 ) 7 $ 25,634 $ ( 904 ) 128 $ 1,925,018 $ ( 31,024 ) 84 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 2 – Securities (continued) Less than 12 months 12 months or more Total Held to Maturity: # Fair Value Unrealized Losses # Fair Value Unrealized Losses # Fair Value Unrealized Losses December 31, 2022 Obligations of states and political subdivisions 105 $ 191,442 $ ( 35,870 ) 24 $ 49,697 $ ( 12,454 ) 129 $ 241,139 $ ( 48,324 ) Residential mortgage backed securities: Government agency mortgage backed securities 8 94,258 ( 4,186 ) 62 364,870 ( 20,246 ) 70 459,128 ( 24,432 ) Government agency collateralized mortgage obligations 4 98,912 ( 5,479 ) 14 293,698 ( 25,227 ) 18 392,610 ( 30,706 ) Commercial mortgage backed securities: Government agency mortgage backed securities 1 13,745 ( 3,261 ) — — — 1 13,745 ( 3,261 ) Government agency collateralized mortgage obligations 2 7,651 ( 626 ) 7 31,220 ( 5,932 ) 9 38,871 ( 6,558 ) Other debt securities 2 42,567 ( 2,013 ) 8 16,042 ( 2,253 ) 10 58,609 ( 4,266 ) Total 122 $ 448,575 $ ( 51,435 ) 115 $ 755,527 $ ( 66,112 ) 237 $ 1,204,102 $ ( 117,547 ) December 31, 2021 Obligations of states and political subdivisions 24 $ 62,131 $ ( 685 ) — $ — $ — 24 $ 62,131 $ ( 685 ) Residential mortgage backed securities: Government agency mortgage backed securities 50 53,560 ( 181 ) 1 5,354 ( 17 ) 51 58,914 ( 198 ) Government agency collateralized mortgage obligations 1 24,740 ( 92 ) — — — 1 24,740 ( 92 ) Commercial mortgage backed securities: Government agency collateralized mortgage obligations 7 39,388 ( 117 ) — — — 7 39,388 ( 117 ) Other debt securities 8 21,972 ( 79 ) — — — 8 21,972 ( 79 ) Total 90 $ 201,791 $ ( 1,154 ) 1 $ 5,354 $ ( 17 ) 91 $ 207,145 $ ( 1,171 ) The Company does not intend to sell any of the securities in an unrealized loss position, and it is not more likely than not that the Company will be required to sell any such security prior to the recovery of its amortized cost basis, which may be maturity. Furthermore, even though a number of these securities have been in a continuous unrealized loss position for a period greater than twelve months, the Company is collecting principal and interest payments from the respective issuers as scheduled. Based upon its review of securities with unrealized losses as of December 31, 2022, the Company determined that all such losses resulted from factors not deemed credit related. As a result, the Company did not record any impairment for the years ended December 31, 2022 and 2021. At each of December 31, 2022 and 2021, the allowance for credit losses on held to maturity securities was $ 32 . The Company monitors the credit quality of debt securities held to maturity using bond investment grades assigned by third party ratings agencies. Updated investment grades are obtained as they become available from the agencies. On December 31, 2022, 99.99 % of the amortized cost of debt securities held to maturity were rated A or higher by the ratings agencies. 85 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (In Thousands, Except Number of Loans) The following is a summary of loans and leases, excluding loans held for sale, at December 31: 2022 2021 Commercial, financial, agricultural $ 1,673,883 $ 1,423,270 Lease financing 122,167 80,192 Real estate – construction: Residential 355,500 302,275 Commercial 974,837 802,621 Total real estate – construction 1,330,337 1,104,896 Real estate – 1-4 family mortgage: Primary 2,222,856 1,816,120 Home equity 501,906 474,604 Rental/investment 334,382 288,474 Land development 157,119 145,048 Total real estate – 1-4 family mortgage 3,216,263 2,724,246 Real estate – commercial mortgage: Owner-occupied 1,539,296 1,563,351 Non-owner occupied 3,452,910 2,856,947 Land development 125,857 128,739 Total real estate – commercial mortgage 5,118,063 4,549,037 Installment loans to individuals 124,745 143,340 Gross loans 11,585,458 10,024,981 Unearned income ( 7,154 ) ( 4,067 ) Loans, net of unearned income $ 11,578,304 $ 10,020,914 86 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Past Due and Nonaccrual Loans The following tables provide 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, 2022 Commercial, financial, agricultural $ 1,303 $ 69 $ 1,660,037 $ 1,661,409 $ 18 $ 2,373 $ 10,083 $ 12,474 $ 1,673,883 Lease financing — — 122,167 122,167 — — — — 122,167 Real estate – construction: Residential 49 — 355,374 355,423 — — 77 77 355,500 Commercial 8,525 — 966,312 974,837 — — — — 974,837 Total real estate – construction 8,574 — 1,321,686 1,330,260 — — 77 77 1,330,337 Real estate – 1-4 family mortgage: Primary 28,198 — 2,164,582 2,192,780 6,015 12,503 11,558 30,076 2,222,856 Home equity 5,376 — 494,621 499,997 450 754 705 1,909 501,906 Rental/investment 720 38 332,648 333,406 20 331 625 976 334,382 Land development 174 — 156,863 157,037 46 36 — 82 157,119 Total real estate – 1-4 family mortgage 34,468 38 3,148,714 3,183,220 6,531 13,624 12,888 33,043 3,216,263 Real estate – commercial mortgage: Owner-occupied 8,557 219 1,525,240 1,534,016 1,495 2,244 1,541 5,280 1,539,296 Non-owner occupied 3,521 — 3,444,047 3,447,568 5,304 — 38 5,342 3,452,910 Land development 279 — 125,507 125,786 — 40 31 71 125,857 Total real estate – commercial mortgage 12,357 219 5,094,794 5,107,370 6,799 2,284 1,610 10,693 5,118,063 Installment loans to individuals 2,001 5 122,481 124,487 38 100 120 258 124,745 Unearned income — — ( 7,154 ) ( 7,154 ) — — — — ( 7,154 ) Loans, net of unearned income $ 58,703 $ 331 $ 11,462,725 $ 11,521,759 $ 13,386 $ 18,381 $ 24,778 $ 56,545 $ 11,578,304 87 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) 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, 2021 Commercial, financial, agricultural $ 3,447 $ 103 $ 1,406,692 $ 1,410,242 $ 1,711 $ 4,283 $ 7,034 $ 13,028 $ 1,423,270 Lease financing — — 80,181 80,181 — 11 — 11 80,192 Real estate – construction: Residential 1,077 — 301,198 302,275 — — — — 302,275 Commercial — — 802,621 802,621 — — — — 802,621 Total real estate – construction 1,077 — 1,103,819 1,104,896 — — — — 1,104,896 Real estate – 1-4 family mortgage: Primary 15,827 425 1,780,760 1,797,012 2,177 10,420 6,511 19,108 1,816,120 Home equity 1,617 — 471,268 472,885 182 919 618 1,719 474,604 Rental/investment 421 445 286,458 287,324 26 771 353 1,150 288,474 Land development 431 — 144,360 144,791 — 65 192 257 145,048 Total real estate – 1-4 family mortgage 18,296 870 2,682,846 2,702,012 2,385 12,175 7,674 22,234 2,724,246 Real estate – commercial mortgage: Owner-occupied 2,231 359 1,556,081 1,558,671 163 1,111 3,406 4,680 1,563,351 Non-owner occupied 260 89 2,848,152 2,848,501 — — 8,446 8,446 2,856,947 Land development 476 — 127,793 128,269 — 292 178 470 128,739 Total real estate – commercial mortgage 2,967 448 4,532,026 4,535,441 163 1,403 12,030 13,596 4,549,037 Installment loans to individuals 1,817 20 141,008 142,845 45 106 344 495 143,340 Unearned income — — ( 4,067 ) ( 4,067 ) — — — — ( 4,067 ) Loans, net of unearned income $ 27,604 $ 1,441 $ 9,942,505 $ 9,971,550 $ 4,304 $ 17,978 $ 27,082 $ 49,364 $ 10,020,914 There were no restructured loans that were contractually 90 days past due or more and still accruing at December 31, 2022. There was one restructured loan totaling $ 36 that was contractually 90 days past due or more and still accruing at December 31, 2021. The outstanding balance of restructured loans on nonaccrual status was $ 20,765 and $ 25,702 at December 31, 2022 and 2021, respectively. 88 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Restructured Loans At December 31, 2022, 2021 and 2020, there were $ 22,624 , $ 20,259 and $ 20,448 , respectively, of restructured loans. The following table illustrates the impact of modifications classified as restructured loans held on the Consolidated Balance Sheets and still performing in accordance with their restructured terms at period end, segregated by class, as of the periods presented. Number of Loans Pre-Modification Outstanding Amortized Cost Post-Modification Outstanding Amortized Cost December 31, 2022 Commercial, financial, agricultural 1 $ 113 $ 114 Real estate – 1-4 family mortgage: Primary 20 3,061 3,086 Land development 3 98 94 Total real estate – 1-4 family mortgage 23 3,159 3,180 Real estate – commercial mortgage: Owner-occupied 1 246 246 Non-owner occupied 1 6,500 6,500 Total real estate – commercial mortgage 2 6,746 6,746 Total 26 $ 10,018 $ 10,040 December 31, 2021 Commercial, financial, agricultural 8 $ 5,393 $ 5,393 Real estate – 1-4 family mortgage: Primary 36 6,061 6,108 Real estate – commercial mortgage: Non-owner occupied 1 837 810 Total 45 $ 12,291 $ 12,311 December 31, 2020 Commercial, financial, agricultural 8 $ 2,891 $ 2,890 Real estate – 1-4 family mortgage: Primary 24 3,928 3,886 Home equity 1 159 162 Rental/investment 3 142 207 Total real estate – 1-4 family mortgage 28 4,229 4,255 Real estate – commercial mortgage: Owner-occupied 8 6,192 5,883 Non-owner occupied 3 752 754 Land development 1 189 189 Total real estate – commercial mortgage 12 7,133 6,826 Installment loans to individuals 3 49 40 Total 51 $ 14,302 $ 14,011 At December 31, 2022, 2021 and 2020, the Company had $ 491 , $ 117 and $ 522 , respectively, in troubled debt restructurings that subsequently defaulted within twelve months of the restructuring. 89 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Changes in the Company’s restructured loans are set forth in the table below. Number of Loans Amortized Cost Totals at December 31, 2020 124 $ 20,448 Additional loans with concessions 45 12,639 Reclassified as performing 6 366 Reductions due to: Reclassified as nonperforming ( 18 ) ( 4,390 ) Paid in full ( 21 ) ( 7,586 ) Charge-offs ( 1 ) ( 205 ) Principal paydowns — ( 1,013 ) Totals at December 31, 2021 135 $ 20,259 Additional loans with concessions 24 10,332 Reclassified as performing 12 5,326 Reductions due to: Reclassified as nonperforming ( 28 ) ( 7,411 ) Paid in full ( 23 ) ( 4,758 ) Principal paydowns — ( 1,124 ) Totals at December 31, 2022 120 $ 22,624 The allocated allowance for credit losses attributable to restructured loans was $ 625 and $ 389 at December 31, 2022 and 2021, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at December 31, 2022 and $ 307 in remaining availability at December 31, 2021. 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 10 and 95 , with 10 being loans with the least credit risk. Loans within the “Pass” grade (those with a risk rating between 10 and 60 ) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. The “Special Mention” grade (those with a risk rating of 70 ) represents a loan where a significant adverse risk-modifying action is anticipated in the near term and, left uncorrected, could result in deterioration of the credit quality of the loan. Loans that migrate toward the “Substandard” grade (those with a risk rating between 80 and 95 ) generally have a higher risk of loss and therefore a higher risk factor applied to those related loan balances. The following tables present the Company’s loan portfolio by year of origination and internal risk-rating grades as of the dates presented: Term Loans Amortized Cost Basis by Origination Year 2022 2021 2020 2019 2018 Prior Revolving Loans Revolving Loans Converted to Term Total Loans December 31, 2022 Commercial, Financial, Agricultural $ 460,604 $ 209,964 $ 142,790 $ 63,164 $ 25,099 $ 35,142 $ 717,422 $ 3,522 $ 1,657,707 Pass 450,559 209,580 141,712 62,370 21,963 28,014 704,491 2,384 1,621,073 Special Mention 719 — 1,010 383 678 — 11,616 80 14,486 Substandard 9,326 384 68 411 2,458 7,128 1,315 1,058 22,148 90 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Term Loans Amortized Cost Basis by Origination Year 2022 2021 2020 2019 2018 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Lease Financing Receivables $ 61,424 $ 18,379 $ 18,318 $ 10,628 $ 4,557 $ 1,707 $ — $ — $ 115,013 Pass 58,204 18,379 15,846 9,060 3,269 1,353 — — 106,111 Watch — — — — — 354 — — 354 Substandard 3,220 — 2,472 1,568 1,288 — — — 8,548 Real Estate - Construction $ 595,185 $ 476,190 $ 109,705 $ 8,525 $ 381 $ 6,858 $ 13,757 $ 424 $ 1,211,025 Residential $ 214,386 $ 16,483 $ 589 $ — $ 381 $ — $ 3,925 $ 424 $ 236,188 Pass 214,371 16,483 589 — 381 — 3,925 424 236,173 Special Mention 6 — — — — — — — 6 Substandard 9 — — — — — — — 9 Commercial $ 380,799 $ 459,707 $ 109,116 $ 8,525 $ — $ 6,858 $ 9,832 $ — $ 974,837 Pass 380,799 459,707 109,116 8,525 — 6,858 9,832 — 974,837 Special Mention — — — — — — — — — Substandard — — — — — — — — — Real Estate - 1-4 Family Mortgage $ 233,370 $ 141,066 $ 48,653 $ 24,664 $ 25,604 $ 35,971 $ 26,920 $ 1,238 $ 537,486 Primary $ 12,877 $ 7,965 $ 5,068 $ 2,435 $ 4,522 $ 8,723 $ 4,931 $ 106 $ 46,627 Pass 12,616 7,965 5,068 2,421 4,522 8,419 4,931 106 46,048 Special Mention — — — — — 51 — — 51 Substandard 261 — — 14 — 253 — — 528 Home Equity $ 272 $ 1,187 $ — $ 38 $ 5 $ 27 $ 14,485 $ 141 $ 16,155 Pass 272 1,187 — 38 5 27 14,485 7 16,021 Special Mention — — — — — — — — — Substandard — — — — — — — 134 134 Rental/Investment $ 138,481 $ 85,711 $ 42,056 $ 21,997 $ 14,785 $ 24,448 $ 5,972 $ 787 $ 334,237 Pass 138,137 85,522 41,604 21,097 14,671 22,899 5,972 482 330,384 Special Mention 231 — — — — 174 — — 405 Substandard 113 189 452 900 114 1,375 — 305 3,448 Land Development $ 81,740 $ 46,203 $ 1,529 $ 194 $ 6,292 $ 2,773 $ 1,532 $ 204 $ 140,467 Pass 80,514 46,203 1,525 194 6,292 2,723 1,532 204 139,187 Special Mention 1,226 — — — — — — — 1,226 Substandard — — 4 — — 50 — — 54 Real Estate - Commercial Mortgage $ 1,624,197 $ 1,000,563 $ 713,303 $ 531,424 $ 277,862 $ 810,919 $ 121,305 $ 25,173 $ 5,104,746 Owner-Occupied $ 309,792 $ 319,174 $ 239,946 $ 178,137 $ 128,452 $ 302,495 $ 57,869 $ 3,300 $ 1,539,165 Pass 298,851 314,429 237,058 175,262 122,537 282,657 50,640 3,300 1,484,734 Special Mention 9,640 3,047 815 1,670 — 672 4,808 — 20,652 Substandard 1,301 1,698 2,073 1,205 5,915 19,166 2,421 — 33,779 Non-Owner Occupied $ 1,256,098 $ 657,121 $ 466,703 $ 346,908 $ 144,872 $ 501,863 $ 57,637 $ 21,680 $ 3,452,882 Pass 1,252,484 647,937 466,703 322,997 127,358 418,294 57,637 12,142 3,305,552 Special Mention 506 — — 21,961 17,509 8,975 — — 48,951 Substandard 3,108 9,184 — 1,950 5 74,594 — 9,538 98,379 Land Development $ 58,307 $ 24,268 $ 6,654 $ 6,379 $ 4,538 $ 6,561 $ 5,799 $ 193 $ 112,699 Pass 58,307 24,228 6,342 6,379 4,465 6,067 5,799 193 111,780 Special Mention — 40 — — — — — — 40 Substandard — — 312 — 73 494 — — 879 91 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Term Loans Amortized Cost Basis by Origination Year 2022 2021 2020 2019 2018 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Installment loans to individuals $ — $ — $ — $ 24 $ — $ — $ — $ — $ 24 Pass — — — 24 — — — — 24 Special Mention — — — — — — — — — Substandard — — — — — — — — — Total loans subject to risk rating $ 2,974,780 $ 1,846,162 $ 1,032,769 $ 638,429 $ 333,503 $ 890,597 $ 879,404 $ 30,357 $ 8,626,001 Pass 2,945,114 1,831,620 1,025,563 608,367 305,463 777,311 859,244 19,242 8,371,924 Special Mention 12,328 3,087 1,825 24,014 18,187 10,226 16,424 80 86,171 Substandard 17,338 11,455 5,381 6,048 9,853 103,060 3,736 11,035 167,906 Term Loans Amortized Cost Basis by Origination Year 2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Total Loans December 31, 2021 Commercial, Financial, Agricultural $ 300,748 $ 245,940 $ 122,996 $ 56,732 $ 27,631 $ 36,665 $ 595,956 $ 4,083 $ 1,390,751 Pass 299,731 245,657 120,748 54,654 23,521 27,482 591,096 2,901 1,365,790 Special Mention — 136 1,798 527 605 1,196 651 — 4,913 Substandard 1,017 147 450 1,551 3,505 7,987 4,209 1,182 20,048 Real Estate - Construction $ 461,370 $ 371,694 $ 174,369 $ 15,414 $ — $ 4,393 $ 3,769 $ 2,428 $ 1,033,437 Residential $ 210,734 $ 12,598 $ — $ 601 $ — $ 686 $ 3,769 $ 2,428 $ 230,816 Pass 210,734 12,598 — 601 — 686 3,769 2,428 230,816 Special Mention — — — — — — — — — Substandard — — — — — — — — — Commercial $ 250,636 $ 359,096 $ 174,369 $ 14,813 $ — $ 3,707 $ — $ — $ 802,621 Pass 250,636 359,096 174,369 14,813 — 3,707 — — 802,621 Special Mention — — — — — — — — — Substandard — — — — — — — — — Real Estate - 1-4 Family Mortgage $ 205,137 $ 83,038 $ 60,392 $ 40,195 $ 31,121 $ 41,687 $ 27,010 $ 1,142 $ 489,722 Primary $ 15,599 $ 7,698 $ 3,696 $ 8,470 $ 5,517 $ 13,402 $ 4,888 $ — $ 59,270 Pass 15,599 7,698 3,530 8,470 5,433 10,465 4,877 — 56,072 Special Mention — — — — — 59 — — 59 Substandard — — 166 — 84 2,878 11 — 3,139 Home Equity $ 1,318 $ — $ 42 $ 131 $ — $ 42 $ 14,702 $ 211 $ 16,446 Pass 1,318 — 42 131 — 42 14,332 10 15,875 Special Mention — — — — — — — — — Substandard — — — — — — 370 201 571 Rental/Investment $ 111,006 $ 61,801 $ 33,852 $ 24,324 $ 25,163 $ 25,275 $ 5,782 $ 931 $ 288,134 Pass 110,987 60,855 32,851 24,050 24,981 24,133 5,631 931 284,419 Special Mention — 249 — — — 38 — — 287 Substandard 19 697 1,001 274 182 1,104 151 — 3,428 92 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Term Loans Amortized Cost Basis by Origination Year 2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Land Development $ 77,214 $ 13,539 $ 22,802 $ 7,270 $ 441 $ 2,968 $ 1,638 $ — $ 125,872 Pass 74,818 13,539 22,769 7,270 411 1,560 1,638 — 122,005 Special Mention 2,396 — — — — — — — 2,396 Substandard — — 33 — 30 1,408 — — 1,471 Real Estate - Commercial Mortgage $ 1,168,118 $ 836,549 $ 680,831 $ 394,608 $ 421,898 $ 844,635 $ 153,358 $ 35,968 $ 4,535,965 Owner-Occupied $ 312,031 $ 305,686 $ 220,057 $ 177,689 $ 157,886 $ 317,878 $ 62,182 $ 9,748 $ 1,563,157 Pass 310,736 304,555 218,447 174,865 148,298 292,356 62,182 8,036 1,519,475 Special Mention 1,210 1,131 — — 3,286 722 — 1,712 8,061 Substandard 85 — 1,610 2,824 6,302 24,800 — — 35,621 Non-Owner Occupied $ 809,784 $ 511,803 $ 449,734 $ 209,010 $ 258,914 $ 510,213 $ 81,238 $ 26,220 $ 2,856,916 Pass 800,348 503,009 436,387 185,353 203,128 464,713 81,238 16,314 2,690,490 Special Mention 9,235 8,794 11,356 23,650 33,176 8,383 — — 94,594 Substandard 201 — 1,991 7 22,610 37,117 — 9,906 71,832 Land Development $ 46,303 $ 19,060 $ 11,040 $ 7,909 $ 5,098 $ 16,544 $ 9,938 $ — $ 115,892 Pass 46,034 17,030 11,040 7,857 5,098 10,656 9,938 — 107,653 Special Mention 44 — — — — 5,141 — — 5,185 Substandard 225 2,030 — 52 — 747 — — 3,054 Installment loans to individuals $ — $ — $ 42 $ — $ — $ — $ — $ — $ 42 Pass — — 42 — — — — — 42 Special Mention — — — — — — — — — Substandard — — — — — — — — — Total loans subject to risk rating $ 2,135,373 $ 1,537,221 $ 1,038,630 $ 506,949 $ 480,650 $ 927,380 $ 780,093 $ 43,621 $ 7,449,917 Pass 2,120,941 1,524,037 1,020,225 478,064 410,870 835,800 774,701 30,620 7,195,258 Special Mention 12,885 10,310 13,154 24,177 37,067 15,539 651 1,712 115,495 Substandard 1,547 2,874 5,251 4,708 32,713 76,041 4,741 11,289 139,164 The following tables present the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented: Term Loans Amortized Cost Basis by Origination Year 2022 2021 2020 2019 2018 Prior Revolving Loans Revolving Loans Converted to Term Total Loans December 31, 2022 Commercial, Financial, Agricultural $ 13 $ — $ — $ — $ — $ 16,163 $ — $ — $ 16,176 Performing Loans 13 — — — — 16,163 — — 16,176 Non-Performing Loans — — — — — — — — — Lease Financing Receivables $ — $ — $ — $ — $ — $ — $ — $ — $ — Performing Loans — — — — — — — — — Non-Performing Loans — — — — — — — — — Real Estate - Construction $ 57,570 $ 61,245 $ 497 $ — $ — $ — $ — $ — $ 119,312 Residential $ 57,570 $ 61,245 $ 497 $ — $ — $ — $ — $ — $ 119,312 Performing Loans 57,493 61,245 497 — — — — — 119,235 Non-Performing Loans 77 — — — — — — — 77 93 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Term Loans Amortized Cost Basis by Origination Year 2022 2021 2020 2019 2018 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Commercial $ — $ — $ — $ — $ — $ — $ — $ — $ — Performing Loans — — — — — — — — — Non-Performing Loans — — — — — — — — — Real Estate - 1-4 Family Mortgage $ 704,214 $ 546,256 $ 351,213 $ 155,549 $ 116,951 $ 319,567 $ 481,254 $ 3,773 $ 2,678,777 Primary $ 694,941 $ 541,801 $ 350,205 $ 154,979 $ 115,876 $ 318,364 $ — $ 63 $ 2,176,229 Performing Loans 694,221 538,870 345,912 150,821 109,156 307,178 — 63 2,146,221 Non-Performing Loans 720 2,931 4,293 4,158 6,720 11,186 — — 30,008 Home Equity $ — $ 111 $ — $ — $ — $ 676 $ 481,254 $ 3,710 $ 485,751 Performing Loans — 111 — — — 609 480,094 3,026 483,840 Non-Performing Loans — — — — — 67 1,160 684 1,911 Rental/Investment $ — $ — $ — $ — $ — $ 145 $ — $ — $ 145 Performing Loans — — — — — 145 — — 145 Non-Performing Loans — — — — — — — — — Land Development $ 9,273 $ 4,344 $ 1,008 $ 570 $ 1,075 $ 382 $ — $ — $ 16,652 Performing Loans 9,257 4,344 1,008 570 1,075 319 — — 16,573 Non-Performing Loans 16 — — — — 63 — — 79 Real Estate - Commercial Mortgage $ 4,805 $ 3,518 $ 2,587 $ 1,281 $ 691 $ 435 $ — $ — $ 13,317 Owner-Occupied $ — $ — $ 131 $ — $ — $ — $ — $ — $ 131 Performing Loans — — 131 — — — — — 131 Non-Performing Loans — — — — — — — — — Non-Owner Occupied $ — $ — $ 28 $ — $ — $ — $ — $ — $ 28 Performing Loans — — 28 — — — — — 28 Non-Performing Loans — — — — — — — — — Land Development $ 4,805 $ 3,518 $ 2,428 $ 1,281 $ 691 $ 435 $ — $ — $ 13,158 Performing Loans 4,805 3,518 2,422 1,281 691 435 — — 13,152 Non-Performing Loans — — 6 — — — — — 6 Installment loans to individuals $ 44,255 $ 15,976 $ 6,416 $ 14,252 $ 17,095 $ 10,626 $ 16,062 $ 39 $ 124,721 Performing Loans 44,227 15,927 6,389 14,211 17,076 10,532 16,062 35 124,459 Non-Performing Loans 28 49 27 41 19 94 — 4 262 Total loans not subject to risk rating $ 810,857 $ 626,995 $ 360,713 $ 171,082 $ 134,737 $ 346,791 $ 497,316 $ 3,812 $ 2,952,303 Performing Loans 810,016 624,015 356,387 166,883 127,998 335,381 496,156 3,124 2,919,960 Non-Performing Loans 841 2,980 4,326 4,199 6,739 11,410 1,160 688 32,343 94 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Term Loans Amortized Cost Basis by Origination Year 2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Total Loans December 31, 2021 Commercial, Financial, Agricultural $ 71 $ — $ — $ 1 $ — $ 8,983 $ 23,464 $ — $ 32,519 Performing Loans 71 — — 1 — 8,983 23,464 — 32,519 Non-Performing Loans — — — — — — — — — Lease Financing Receivables $ 26,301 $ 23,270 $ 15,504 $ 7,713 $ 2,169 $ 1,168 $ — $ — $ 76,125 Performing Loans 26,301 23,270 15,504 7,713 2,167 1,159 — — 76,114 Non-Performing Loans — — — — 2 9 — — 11 Real Estate - Construction $ 57,283 $ 12,561 $ 1,615 $ — $ — $ — $ — $ — $ 71,459 Residential $ 57,283 $ 12,561 $ 1,615 $ — $ — $ — $ — $ — $ 71,459 Performing Loans 57,283 12,561 1,615 — — — — — 71,459 Non-Performing Loans — — — — — — — — — Commercial $ — $ — $ — $ — $ — $ — $ — $ — $ — Performing Loans — — — — — — — — — Non-Performing Loans — — — — — — — — — Real Estate - 1-4 Family Mortgage $ 554,483 $ 419,252 $ 205,216 $ 157,015 $ 137,607 $ 308,441 $ 448,379 $ 4,131 $ 2,234,524 Primary $ 542,659 $ 415,863 $ 203,941 $ 154,655 $ 134,194 $ 305,457 $ — $ 81 $ 1,756,850 Performing Loans 542,053 414,931 201,475 149,478 131,571 298,023 — 81 1,737,612 Non-Performing Loans 606 932 2,466 5,177 2,623 7,434 — — 19,238 Home Equity $ 111 $ — $ 79 $ 767 $ 2,441 $ 2,331 $ 448,379 $ 4,050 $ 458,158 Performing Loans 111 — 79 767 2,441 2,204 447,298 3,740 456,640 Non-Performing Loans — — — — — 127 1,081 310 1,518 Rental/Investment $ — $ — $ 99 $ — $ 23 $ 218 $ — $ — $ 340 Performing Loans — — 99 — 23 164 — — 286 Non-Performing Loans — — — — — 54 — — 54 Land Development $ 11,713 $ 3,389 $ 1,097 $ 1,593 $ 949 $ 435 $ — $ — $ 19,176 Performing Loans 11,688 3,298 1,065 1,593 874 435 — — 18,953 Non-Performing Loans 25 91 32 — 75 — — — 223 Real Estate - Commercial Mortgage $ 5,265 $ 3,584 $ 2,082 $ 947 $ 499 $ 695 $ — $ — $ 13,072 Owner-Occupied $ — $ 136 $ 58 $ — $ — $ — $ — $ — $ 194 Performing Loans — 136 58 — — — — — 194 Non-Performing Loans — — — — — — — — — Non-Owner Occupied $ — $ 31 $ — $ — $ — $ — $ — $ — $ 31 Performing Loans — 31 — — — — — — 31 Non-Performing Loans — — — — — — — — — Land Development $ 5,265 $ 3,417 $ 2,024 $ 947 $ 499 $ 695 $ — $ — $ 12,847 Performing Loans 5,265 3,417 2,008 947 499 644 — — 12,780 Non-Performing Loans — — 16 — — 51 — — 67 Installment loans to individuals $ 44,302 $ 15,436 $ 23,114 $ 28,298 $ 11,706 $ 5,798 $ 14,574 $ 70 $ 143,298 Performing Loans 44,254 15,360 23,035 28,270 11,672 5,574 14,557 59 142,781 Non-Performing Loans 48 76 79 28 34 224 17 11 517 Total loans not subject to risk rating $ 687,705 $ 474,103 $ 247,531 $ 193,974 $ 151,981 $ 325,085 $ 486,417 $ 4,201 $ 2,570,997 Performing Loans 687,026 473,004 244,938 188,769 149,247 317,186 485,319 3,880 2,549,369 Non-Performing Loans 679 1,099 2,593 5,205 2,734 7,899 1,098 321 21,628 95 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 3 – Loans (continued) Related Party Loans Certain executive officers and directors of the 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 the Company or the 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, 2021 $ 29,907 New loans and advances 3,778 Payments received ( 674 ) Loans at December 31, 2022 $ 33,011 No related party loans were classified as past due, nonaccrual, impaired or restructured at December 31, 2022 or 2021. Unfunded commitments to certain executive officers and directors and their associates totaled $ 7,387 and $ 10,471 at December 31, 2022 and 2021, respectively. During 2022, the Company acquired Southeastern Commercial Finance, LLC and Continental Republic Capital, LLC (doing business as “Republic Business Credit”). The acquired loans were added to the commercial, financial, and agricultural loan category at their fair value of $ 105,610 at the date of acquisition. The carrying amount of purchased credit deteriorated (“PCD”) loans at the acquisition date is detailed below. Carrying Amount Purchase price of loans at acquisition $ 13,654 Allowance for credit losses at acquisition 11,460 Par value of acquired loans at acquisition $ 25,114 96 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 4 – Allowance for Credit Losses (In Thousands) Allowance for Credit Losses on Loans The following table provides a roll-forward of the allowance for credit losses by loan category and a breakdown of the ending balance of the allowance based on the Company’s credit loss methodology for the periods presented: Commercial Real Estate - Construction Real Estate - 1-4 Family Mortgage Real Estate - Commercial Mortgage Lease Financing Installment Loans to Individuals Total Year Ended December 31, 2022 Allowance for credit losses on loans: Beginning balance $ 33,922 $ 16,419 $ 32,356 $ 68,940 $ 1,486 $ 11,048 $ 164,171 Impact of PCD loans acquired during the period 11,460 — — — — — 11,460 Charge-offs ( 5,120 ) — ( 757 ) ( 5,134 ) ( 7 ) ( 3,167 ) ( 14,185 ) Recoveries 2,471 — 821 418 146 3,000 6,856 Net charge-offs ( 2,649 ) — 64 ( 4,716 ) 139 ( 167 ) ( 7,329 ) Provision (recoveries) of credit losses on loans 1,522 2,695 12,307 7,574 838 ( 1,148 ) 23,788 Ending balance $ 44,255 $ 19,114 $ 44,727 $ 71,798 $ 2,463 $ 9,733 $ 192,090 Period-End Amount Allocated to: Individually evaluated $ 4,397 $ — $ 46 $ 1,729 $ — $ 270 $ 6,442 Collectively evaluated 39,858 19,114 44,681 70,069 2,463 9,463 185,648 Ending balance $ 44,255 $ 19,114 $ 44,727 $ 71,798 $ 2,463 $ 9,733 $ 192,090 Loans: Individually evaluated $ 8,536 $ 489 $ 9,202 $ 10,953 $ — $ 270 $ 29,450 Collectively evaluated 1,665,347 1,329,848 3,207,061 5,107,110 115,013 124,475 11,548,854 Ending balance $ 1,673,883 $ 1,330,337 $ 3,216,263 $ 5,118,063 $ 115,013 $ 124,745 $ 11,578,304 Nonaccruing loans with no allowance for credit losses $ 464 $ — $ 7,278 $ 3,157 $ — $ — $ 10,899 97 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 4 – Allowance for Credit Losses (continued) Commercial Real Estate - Construction Real Estate - 1-4 Family Mortgage Real Estate - Commercial Mortgage Lease Financing Installment Loans to Individuals Total Year Ended December 31, 2021 Allowance for credit losses on loans: Beginning balance $ 39,031 $ 16,047 $ 32,165 $ 76,127 $ 1,624 $ 11,150 $ 176,144 Charge-offs ( 7,087 ) ( 52 ) ( 1,164 ) ( 5,184 ) ( 13 ) ( 5,374 ) ( 18,874 ) Recoveries 1,470 13 1,498 541 49 5,030 8,601 Net charge-offs ( 5,617 ) ( 39 ) 334 ( 4,643 ) 36 ( 344 ) ( 10,273 ) Provision for credit losses on loans 508 411 ( 143 ) ( 2,544 ) ( 174 ) 242 ( 1,700 ) Ending balance $ 33,922 $ 16,419 $ 32,356 $ 68,940 $ 1,486 $ 11,048 $ 164,171 Period-End Amount Allocated to: Individually evaluated $ 9,239 $ — $ 216 $ 2,401 $ — $ 607 $ 12,463 Collectively evaluated 24,683 16,419 32,140 66,539 1,486 10,441 151,708 Ending balance $ 33,922 $ 16,419 $ 32,356 $ 68,940 $ 1,486 $ 11,048 $ 164,171 Loans: Individually evaluated $ 12,776 $ — $ 5,360 $ 14,623 $ — $ 690 $ 33,449 Collectively evaluated 1,410,494 1,104,896 2,718,886 4,534,414 76,125 142,650 9,987,465 Ending balance $ 1,423,270 $ 1,104,896 $ 2,724,246 $ 4,549,037 $ 76,125 $ 143,340 $ 10,020,914 Nonaccruing loans with no allowance for credit losses $ 397 $ — $ 2,329 $ 5,270 $ — $ 22 $ 8,018 The Company’s allowance for credit loss model considers economic projections, primarily the national unemployment rate and GDP, over a reasonable and supportable period of two years . While credit metrics remained relatively stable, loan growth and acquisitions caused the Company’s allowance model to indicate that an increase to the allowance for credit losses was appropriate during 2022. Allowance for Credit Losses on Unfunded Loan Commitments The following table provides a roll-forward of the allowance for credit losses on unfunded loan commitments for the periods presented. Year Ended 2022 2021 Allowance for credit losses on unfunded loan commitments: Beginning balance $ 20,035 $ 20,535 Provision for (recovery of) credit losses on unfunded loan commitments (included in other noninterest expense) 83 ( 500 ) Ending balance $ 20,118 $ 20,035 98 Note 5 – Premises and Equipment (In Thousands) Bank premises and equipment at December 31 are summarized as follows: 2022 2021 Premises $ 250,038 $ 247,484 Leasehold improvements 33,325 29,412 Furniture and equipment 68,275 65,286 Computer equipment 26,356 24,412 Autos 143 143 Lease right-of-use assets 54,930 63,547 Total 433,067 430,284 Accumulated depreciation ( 149,472 ) ( 137,162 ) Net $ 283,595 $ 293,122 Depreciation expense was $ 14,857 , $ 16,406 and $ 18,699 for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 23, “Leases,” for further details regarding the Company’s right-of-use assets. Note 6 – Other Real Estate Owned (In Thousands) The following table provides details of the Company’s other real estate owned (“OREO”), net of valuation allowances and direct write-downs, as of the dates presented: Total OREO December 31, 2022 Residential real estate $ 699 Commercial real estate 62 Residential land development 246 Commercial land development 756 Total $ 1,763 December 31, 2021 Residential real estate $ 259 Commercial real estate 761 Residential land development 305 Commercial land development 1,215 Total $ 2,540 99 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 6 – Other Real Estate Owned (continued) Changes in the Company’s OREO were as follows for the periods presented: Total OREO Balance at December 31, 2020 $ 5,972 Transfers of loans 3,180 Impairments ( 306 ) Dispositions ( 6,166 ) Other ( 140 ) Balance at December 31, 2021 $ 2,540 Transfers of loans 2,207 Impairments ( 110 ) Dispositions ( 2,875 ) Other 1 Balance at December 31, 2022 $ 1,763 At December 31, 2022 and 2021, the amortized cost of loans secured by Real Estate - 1-4 Family Mortgage in the process of foreclosure was $ 375 and $ 22 , respectively. Components of the line item “Other real estate owned” in the Consolidated Statements of Income were as follows, as of the dates presented: December 31, 2022 2021 2020 Repairs and maintenance $ 54 $ 79 $ 279 Property taxes and insurance 93 69 364 Impairments 110 306 2,160 Net gains on OREO sales ( 703 ) ( 176 ) ( 23 ) Rental income ( 7 ) ( 25 ) ( 26 ) Total $ ( 453 ) $ 253 $ 2,754 Note 7 – Goodwill and Other Intangible Assets (In Thousands) Changes in the carrying amount of goodwill during the years ended December 31, 2022 were as follows: Community Banks Insurance Total Balance at December 31, 2020 $ 936,916 $ 2,767 $ 939,683 Additions to goodwill and other adjustments — — — Balance at December 31, 2021 $ 936,916 $ 2,767 $ 939,683 Additions to goodwill from the Southeastern Commercial Finance, LLC acquisition 6,608 — 6,608 Additions to goodwill from the Continental Republic Capital, LLC acquisition 45,417 — 45,417 Balance at December 31, 2022 $ 988,941 $ 2,767 $ 991,708 100 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 7 – Goodwill and Other Intangible Assets (continued) 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, 2022 Core deposit intangible $ 82,492 $ ( 64,339 ) $ 18,153 Customer relationship intangible 7,670 ( 1,647 ) 6,023 Total finite-lived intangible assets $ 90,162 $ ( 65,986 ) $ 24,176 December 31, 2021 Core deposit intangible $ 82,492 $ ( 59,399 ) $ 23,093 Customer relationship intangible 2,470 ( 1,465 ) 1,005 Total finite-lived intangible assets $ 84,962 $ ( 60,864 ) $ 24,098 Core deposit intangible amortization expense for the years ended December 31, 2022, 2021 and 2020 was $ 4,941 , $ 5,861 and $ 6,940 , respectively. Customer relationship intangible amortization expense for the year ended December 31, 2022, 2021 and 2020 was $ 181 , $ 181 and $ 181 , respectively. The estimated amortization expense of finite-lived intangible assets for the five succeeding fiscal years is summarized as follows: Core Deposit Intangible Customer Relationship Intangible Total 2023 $ 4,042 $ 1,336 $ 5,378 2024 3,498 1,192 4,690 2025 3,102 1,048 4,150 2026 2,899 860 3,759 2027 2,775 628 3,403 Note 8 – Mortgage Servicing Rights (In Thousands) Changes in the Company’s mortgage servicing rights (“MSRs”) were as follows, for the periods presented: Carrying Value at January 1, 2021 $ 62,994 Capitalization 33,948 Amortization ( 21,485 ) Valuation adjustment 13,561 Carrying Value at December 31, 2021 $ 89,018 Sale of MSRs ( 15,565 ) Capitalization 22,788 Amortization ( 11,793 ) Carrying Value at December 31, 2022 $ 84,448 The valuation adjustments reflected in the table above as well as any gains recognized on the sale of MSRs are included in “Mortgage banking income” in the Consolidated Statements of Income. The movement of mortgage interest rates has an inverse relationship with prepayment speeds and discount rates. 101 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 8 – Mortgage Servicing Rights (continued) Data and key economic assumptions related to the Company’s mortgage servicing rights as of December 31 are as follows: 2022 2021 2020 Unpaid principal balance $ 7,494,413 $ 8,728,629 $ 7,322,671 Weighted-average prepayment speed (CPR) 7.00 % 10.56 % 15.05 % Estimated impact of a 10% increase $ ( 5,393 ) $ ( 3,875 ) $ ( 4,001 ) Estimated impact of a 20% increase ( 10,354 ) ( 7,464 ) ( 7,674 ) Discount rate 10.30 % 9.82 % 9.86 % Estimated impact of a 100bp increase $ ( 1,765 ) $ ( 4,153 ) $ ( 2,144 ) Estimated impact of a 200bp increase ( 3,957 ) ( 8,119 ) ( 4,144 ) Weighted-average coupon interest rate 3.51 % 3.29 % 3.58 % Weighted-average servicing fee (basis points) 32.44 30.37 29.94 Weighted-average remaining maturity (in years) 8.33 6.69 5.14 The Company recorded servicing fees of $ 18,452 , $ 17,968 and $ 12,628 , for the twelve months ended December 31, 2022, 2021 and 2020, respectively. These fees are included under the line item “Mortgage banking income” in the Consolidated Statements of Income. Note 9 – Deposits (In Thousands) The following is a summary of deposits as of December 31: 2022 2021 Noninterest-bearing deposits $ 4,558,756 $ 4,718,124 Interest-bearing demand deposits 6,151,142 6,695,879 Savings deposits 1,081,628 1,080,338 Time deposits (1) 1,695,440 1,411,383 Total deposits $ 13,486,966 $ 13,905,724 (1) Includes brokered deposits in the amount of $ 233,133 for 2022. The approximate scheduled maturities of time deposits, including brokered deposits, at December 31, 2022 are as follows: 2023 $ 1,236,045 2024 336,382 2025 87,883 2026 19,575 2027 12,129 Thereafter 3,426 Total $ 1,695,440 The aggregate amount of time deposits in denominations of $250 or more at December 31, 2022 and 2021 was $ 402,289 and $ 326,076 , respectively. Certain executive officers and directors and their respective affiliates had amounts on deposit with Renasant Bank of approximately $ 25,537 and $ 27,908 at December 31, 2022 and 2021, respectively. 102 Note 10 – Short-Term Borrowings (In Thousands) Short-term borrowings as of December 31 are summarized as follows: 2022 2021 Securities sold under agreements to repurchase $ 12,232 $ 13,947 Federal Home Loan Bank short-term advances 700,000 — Total short-term borrowings $ 712,232 $ 13,947 Securities sold under agreements to repurchase (“repurchase agreements”) represent funds received from customers, generally on an overnight or continuous basis, which are collateralized by investment securities owned or, at times, borrowed and re-hypothecated by the Company. The securities used as collateral consist primarily of U.S. Government agency mortgage backed securities, U.S. Government agency collateralized mortgage obligations, obligations of U.S. Government agencies, and obligations of states and political subdivisions. All securities are maintained by the Company’s safekeeping agents. These securities are reviewed by the Company on a daily basis, and the Company may be required to provide additional collateral due to changes in the fair market value of these securities. The terms of the Company’s repurchase agreements are continuous but may be canceled at any time by the Company or the customer. Federal funds, of which there were none at December 31, 2022 and 2021, are short term borrowings, generally overnight borrowings, between financial institutions that are generally used to maintain reserve requirements at the Federal Reserve Bank or elsewhere. FHLB short-term advances are borrowings with original maturities of less than one year. In connection with the prepayment of $ 430,000 in short-term advances from the FHLB during 2020, the Company incurred penalty charges of $ 121 which is included in the line item “Debt prepayment penalty” in the Consolidated Statements of Income. The Company did no t prepay any outstanding short-term advances from the FHLB in 2022 and 2021. The Company had availability on unused lines of credit with the FHLB of $ 3,651,678 at December 31, 2022. 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 2022 2021 2020 2022 2021 2020 Federal Home Loan Bank short-term advances $ 175,370 $ — $ 345,601 2.52 % — % 1.09 % Federal funds purchased 97 747 363 3.97 0.33 — Securities sold under agreements to repurchase 12,217 12,662 10,889 0.36 0.29 0.30 Total short-term borrowings $ 187,684 $ 13,409 $ 356,853 2.38 % 0.29 % 1.07 % The Company maintains lines of credit with correspondent banks totaling $ 180,000 at December 31, 2022. 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, 2022 or 2021. Note 11 – Long-Term Debt (In Thousands) Long-term debt as of December 31, 2022 and 2021 is summarized as follows: 2022 2021 Federal Home Loan Bank advances $ — $ 417 Junior subordinated debentures 112,042 111,373 Subordinated notes 316,091 359,419 Total long-term debt $ 428,133 $ 471,209 103 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 11 – Long-Term Debt (continued) Federal Home Loan Bank Advances The Company did not prepay any outstanding long-term advances from the FHLB during 2022 and 2020. In connection with the prepayment of $ 150,000 in long-term advances from the FHLB during 2021, the Company incurred penalty charges of $ 6,123 which is included in the line item “Debt prepayment penalty” in the Consolidated Statements of Income. 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 (or by companies that the Company subsequently acquired). The debentures are the trusts’ only assets and interest payments from the debentures finance the distributions paid on the capital securities. 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 of each trust subject to the terms of the guarantee. The interest rate on the debentures reprices quarterly equal to the three-month LIBOR at the determination date plus the applicable spread. The debentures owned by the respective trusts are currently redeemable at par. The following table provides the details of the debentures as of December 31, 2022: Principal Amount Carrying Value Spread (in bps) Year of Maturity Amount Included in Tier 1 Capital PHC Statutory Trust I $ 20,619 $ 20,619 285 2033 $ 20,000 PHC Statutory Trust II 31,959 31,959 187 2035 31,000 Capital Bancorp Capital Trust I 12,372 12,372 150 2035 12,000 First M&F Statutory Trust I 30,928 23,751 133 2036 22,822 Brand Trust I 10,310 9,573 205 2035 9,263 Brand Trust II 5,155 5,205 300 2037 5,050 Brand Trust III 5,155 5,205 300 2038 5,050 Brand Trust IV 3,093 3,358 375 2038 3,265 Total $ 112,042 $ 108,450 The Company has entered into interest rate swap agreements on the PHC Statutory Trust I, Capital Bancorp Capital Trust I, and First M&F Statutory Trust I pursuant to which the Company received an amount approximately equal to the interest paid on the debentures and paid a fixed rate of interest equal to 5.49 %, 4.42 %, and 4.18 %, respectively, at December 31, 2022. The Company has classified $ 108,450 of the debentures described in the above paragraphs as Tier 1 capital. Federal Reserve guidelines limit the amount of securities that, similar to the Company’s junior subordinated debentures, are includable in Tier 1 capital, but these guidelines did not impact the amount of debentures the Company includes in Tier 1 capital. Although the Company’s existing junior subordinated debentures are currently unaffected by these Federal Reserve guidelines, on account of changes enacted as part of the Dodd-Frank Act, any new trust preferred securities are not includable in Tier 1 capital. Further, if the Company makes any acquisition now that it exceeds $ 15,000,000 in assets, the Company will lose Tier 1 treatment of our junior subordinated debentures. For more information about the Company’s derivative financial instruments, see Note 13, “Derivative Instruments.” Subordinated notes During October and December 2021, respectively, the Company redeemed at par its $ 15,000 6.50 % fixed-to-floating rate subordinated notes and redeemed $ 30,000 of its aggregate $ 60,000 5.00 % fixed-to-floating rate subordinated notes, with the remaining $ 30,000 of such notes redeemed in the first quarter of 2022. 104 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 11 – Long-Term Debt (continued) The Company has issued and sold fixed-to-floating rate subordinated notes (referred to collectively as the “Notes”) in underwritten public offerings at a price equal to 100 % of the aggregate principal amounts of the Notes. Interest on the Notes is payable semi-annually in arrears at the applicable fixed rate until but excluding the fixed to floating transition date and payable quarterly in arrears thereafter at the applicable benchmark rate plus spread, until but excluding the maturity date or earlier redemption date. A summary of the Notes is as follows: Issue Date Initial principal Fixed rate Fixed to floating transition date Benchmark rate Spread (in bps) Debt outstanding Maturity August 22, 2016 $ 40,000 5.50 % September 1, 2026 3-month LIBOR 407.1 $ 40,000 September 1, 2031 September 3, 2020 $ 100,000 4.50 % September 15, 2030 3-month SOFR 402.5 $ 100,000 September 15, 2035 November 23, 2021 $ 200,000 3.00 % December 1, 2026 3-month SOFR 191 $ 200,000 December 1, 2031 Debt issuance costs and fair value adjustment ( 23,909 ) Total subordinated debt $ 316,091 Beginning with the fixed to floating transition date and on any interest payment date thereafter, the Company may redeem the applicable Notes in whole or in part at a redemption price equal to 100 % of the principal amount of the respective Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem any series of the Notes at any time, at the Company’s option, in whole or in part, if: (i) a change or prospective change in law occurs that could prevent the Company from deducting interest payable on the Notes for U.S. federal income tax purposes; (ii) a subsequent event occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended. In each case, the redemption price is 100 % of the principal amount of the Notes being redeemed plus any accrued and unpaid interest to but excluding the redemption date. There is no sinking fund for the benefit of the Notes, and none of the Notes are convertible or exchangeable. The aggregate stated maturities of long-term debt outstanding at December 31, 2022, are summarized as follows: Federal Home Loan Bank advances Junior subordinated debentures Subordinated notes Total 2023 $ — $ — $ — $ — 2024 — — — — 2025 — — — — 2026 — — — — 2027 — — — — Thereafter — 112,042 316,091 428,133 Total $ — $ 112,042 $ 316,091 $ 428,133 Note 12 – Employee Benefit and Deferred Compensation Plans (In Thousands, Except Share Data) Pension and Post-retirement Medical Plans The Company sponsors a noncontributory defined benefit pension plan, under which participation and benefit accruals ceased as of December 31, 1996. The Company’s funding policy is to contribute annually to the plan an amount not less than the minimum required contribution, as determined annually by consulting actuaries in accordance with funding standards imposed under the Internal Revenue Code of 1986, as amended. No contributions were made or required in 2022 or 2021. The Company does not anticipate that a contribution will be required in 2023. The plan’s accumulated benefit obligation and projected benefit obligation are substantially the same since benefit accruals have ceased. The accumulated benefit obligation was $ 21,230 and $ 27,567 at December 31, 2022 and 2021, respectively. There is no additional minimum pension liability required to be recognized. 105 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 12 – Employee Benefit and Deferred Compensation Plans (continued) The Company provides retiree medical benefits, consisting of the opportunity to purchase coverage at subsidized rates under the Company’s group medical plan. Employees eligible to participate must (i) have been employed by the Company and enrolled in the Company’s group medical plan as of December 31, 2004 and (ii) retire from the Company between ages 55 and 65 with at least 15 years of service or 70 points (points determined as the sum of the employee’s age and years of service). The Company periodically determines the portion of the premiums to be paid by each retiree and the portion to be paid by the Company. Coverage ceases when a retiree attains age 65 and is eligible for Medicare. The Company contributed $ 3 and $ 231 to the plan in 2022 and 2021, respectively; the Company expects to contribute approximately $ 163 in 2023. The Company accounts for its obligations related to retiree benefits in accordance with ASC 715, “ Compensation – Retirement Benefits .” The assumed rate of increase in the per capita cost of covered benefits (i.e., the health care cost trend rate) for 2022 is 7.5 %. 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, 2022 and for the year then ended. In 2020, the Company offered a voluntary early retirement program (referred to as the “VERP”) to eligible employees. Among other items, participants in the VERP received accelerated payouts from the Company’s defined benefit pension plan, retiree medical benefits on terms substantially identical to those applicable to other retirees, and other cash payments. Cash payments are a noninterest expense and are included in the “Restructuring charges” line item on the Consolidated Statements of Income. The following table presents information relating to the defined benefit pension plan maintained by Renasant Bank (“Pension Benefits - Renasant”) and the post-retirement health and life plan (“Other Benefits”) as of December 31, 2022 and 2021: Pension Benefits Renasant Other Benefits 2022 2021 2022 2021 Change in benefit obligation Benefit obligation at beginning of year $ 27,567 $ 28,226 $ 586 $ 1,019 Service cost — — 4 5 Interest cost 738 682 12 14 Plan participants’ contributions — — 85 152 Actuarial loss (gain) ( 5,256 ) 672 ( 48 ) ( 221 ) Benefits paid (1) ( 1,819 ) ( 2,013 ) ( 88 ) ( 383 ) Benefit obligation at end of year $ 21,230 $ 27,567 $ 551 $ 586 Change in fair value of plan assets Fair value of plan assets at beginning of year $ 30,399 $ 30,549 Actual return on plan assets ( 7,726 ) 1,863 Contribution by employer — — Benefits paid ( 1,819 ) ( 2,013 ) Fair value of plan assets at end of year $ 20,854 $ 30,399 Funded status at end of year $ ( 376 ) $ 2,832 $ ( 551 ) $ ( 586 ) Weighted-average assumptions as of December 31 Discount rate used to determine the benefit obligation 4.94 % 2.79 % 4.74 % 2.35 % (1) Attributable to retiree medical benefits. The discount rate assumptions at December 31, 2022 were determined using a yield curve approach. A yield curve was developed from a selection of high quality fixed-income investments whose cash flows approximate the timing and amount of expected cash flows from the plans. The selected discount rate is the rate that produces the same present value of the plans’ projected benefit payments. 106 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 12 – Employee Benefit and Deferred Compensation Plans (continued) The components of net periodic benefit cost and other amounts recognized in other comprehensive income for the defined benefit pension and post-retirement health and life plans for the years ended December 31, 2022, 2021 and 2020 are as follows: Pension Benefits Renasant Other Benefits 2022 2021 2020 2022 2021 2020 Service cost $ — $ — $ — $ 4 $ 5 $ 6 Interest cost 738 682 984 12 14 13 Expected return on plan assets ( 1,684 ) ( 1,768 ) ( 1,651 ) — — — Prior service cost recognized (1) — — — — — 485 Recognized actuarial loss (gain) 243 265 349 ( 76 ) ( 3 ) ( 90 ) Settlement/curtailment/termination losses (1) — — 567 — — — Net periodic benefit cost ( 703 ) ( 821 ) 249 ( 60 ) 16 414 Net actuarial loss (gain) arising during the period 4,155 577 ( 1,090 ) ( 48 ) ( 221 ) 21 Net Settlement/curtailment/termination losses (1) — — ( 567 ) — — — New prior service cost (1) — — — — — 485 Amortization of net actuarial (loss) gain recognized in net periodic pension cost ( 243 ) ( 265 ) ( 349 ) 76 3 90 Amortization of prior service cost (1) — — — — — ( 485 ) Total recognized in other comprehensive income 3,912 312 ( 2,006 ) 28 ( 218 ) 111 Total recognized in net periodic benefit cost and other comprehensive income $ 3,209 $ ( 509 ) $ ( 1,757 ) $ ( 32 ) $ ( 202 ) $ 525 Weighted-average assumptions as of December 31 Discount rate used to determine net periodic pension cost 2.79 % 2.44 % 3.59 % 2.35 % 1.77 % 2.91 % Expected return on plan assets 5.75 % 6.00 % 6.00 % N/A N/A N/A (1) Attributable to retiree medical benefits and accelerated defined benefit pension plan payouts provided to VERP participants and, with respect to amounts included in Net periodic benefit cost, included in the “Restructuring charges” line item on the Consolidated Statements of Income. Future estimated benefit payments under the Renasant defined benefit pension plan and other benefits are as follows: Pension Benefits Renasant Other Benefits 2023 $ 2,187 $ 163 2024 2,037 69 2025 2,032 80 2026 1,948 74 2027 1,871 63 2028 - 2032 8,700 158 107 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 12 – Employee Benefit and Deferred Compensation Plans (continued) Amounts recognized in accumulated other comprehensive income, before tax, for the year ended December 31, 2022 are as follows: Pension Benefits Renasant Other Benefits Prior service cost $ — $ — Actuarial loss (gain) 11,306 ( 271 ) Total $ 11,306 $ ( 271 ) The estimated costs that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2023 are as follows: Pension Benefits Renasant Other Benefits Prior service cost $ — $ — Actuarial loss (gain) 243 ( 76 ) Total $ 243 $ ( 76 ) Substantially all of the assets of the Company’s defined benefit pension plan are invested in a collective trust, which in turn invests in other collective or pooled trusts with individual investment mandates. The collective trust’s asset allocation is approximately 57 % in growth assets, consisting of interests in trusts invested in equity securities, high yield fixed income securities, and direct real estate investments (approximately 8 % of assets), and approximately 43 % in assets intended to hedge against the volatility arising from interest rate risk, consisting of interests in trusts invested in long duration fixed income securities. The collective trust is actively managed allowing changes in the asset allocation to enhance returns and mitigate risk, with the mandate to preserve the funded status of the plan through portfolio growth and interest rate hedging. Management’s investment committee periodically reviews the collective trust’s performance and asset allocation to ensure that the plan’s investment objectives are satisfied and that the investment strategy of the trust has not materially changed. The expected long-term rate of return was estimated using market benchmarks for investment classes applied to the plan’s target asset allocation and was computed using a valuation methodology which projects future returns based on current valuations rather than historical returns. The fair values of the Company’s defined benefit pension plan assets by category at December 31, 2022 and 2021 are below. Investments in collective trusts, which are measured at net asset value per share (or “NAV”), consist of trusts that invest primarily in liquid equity and fixed income securities and have a small direct investment in real estate. There is generally no restriction on redemptions or withdrawals for benefit payments or in the event of plan termination; 60 days notice is required to redeem or withdraw assets for any other purpose. Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Measured at NAV Totals December 31, 2022 Cash and cash equivalents $ 66 $ — $ — $ — $ 66 Investments in collective trusts — — — 20,788 20,788 $ 66 $ — $ — $ 20,788 $ 20,854 108 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 12 – 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) Measured at NAV Totals December 31, 2021 Cash and cash equivalents $ 42 $ — $ — $ — $ 42 Investments in collective trusts — — — 30,357 30,357 $ 42 $ — $ — $ 30,357 $ 30,399 Other Retirement Plans The Company maintains a 401(k) plan, which is a contributory plan maintained in the form of a “safe harbor” arrangement. Employees are immediately enrolled in the plan and eligible to make pre-tax deferrals, subject to limits imposed under the plan and the deferral limit established annually by the IRS, and receive Company matching contributions not in excess of 4 % of compensation. The Company may make a discretionary profit-sharing contribution for each eligible participant in an amount up to 5 % of plan compensation and 5 % of plan compensation in excess of the Social Security wage base (prior to 2020, the profit-sharing contribution was non-discretionary). To be eligible to receive this profit-sharing contribution, an employee must: (i) be employed on the last day of the year and be credited with 1000 hours of service during the year; (ii) die or become disabled during the year; or (iii) have attained the early or normal retirement age (as defined in the plan). Senior executive officers of the Bank are not eligible to receive these discretionary contributions. No profit-sharing contribution was made for the year 2022. The Company’s costs related to the 401(k) plan, excluding employee deferrals, in 2022, 2021 and 2020 were $ 7,045 , $ 11,919 and $ 17,888 , respectively. Deferred Compensation Plans and Arrangements The Company maintains two deferred compensation plans: a Deferred Stock Unit Plan and a Deferred Income Plan. Nonemployee directors may defer all or a portion of their retainer; eligible officers may defer base salary and bonus subject to limits determined annually by the Company. Amounts deferred to the Deferred Stock Unit Plan are invested in units representing shares of the Company’s common stock; benefits are paid in the form of common stock, with cash distributed in lieu of fractional shares. Amounts deferred to the Deferred Income Plan are notionally invested in the discretion of each participant from among investment alternatives substantially similar to those available under the Company’s 401(k) plan. Directors and officers who participated in the predecessor to the Deferred Income Plan as of December 31, 2006, may also invest in a preferential interest rate alternative that is derived from the Moody’s Average Corporate Bond Rate. Benefits payable from the Deferred Income Plan equal the account balance of each participant. Beneficiaries of directors and officers who have continuously deferred at rates prescribed by the Company since January 1, 2005, and who die while employed by the Company or serving as a director may receive an additional preretirement death benefit from the Deferred Income Plan. In connection with the Company’s acquisition of Brand Group Holdings, Inc. (“Brand”), the Company assumed the Brand Group Holdings, Inc. Deferred Compensation Plan. Deferral elections in effect as of the time of acquisition were given effect for compensation earned during 2018; no further deferrals have been or will be made to the plan. Account balances maintained under the plan will be distributed as provided under the terms of the plan and individual participant elections. Pending distribution, balances will be notionally invested by each participant in designated investment alternatives. The Company’s Deferred Stock Unit and Deferred Income Plan are unfunded. It is anticipated that such plans will result in no additional cost to the Company because life insurance policies on the lives of participants have been purchased in amounts estimated to be sufficient to pay plan benefits. The Company is both the owner and beneficiary of the policies. The expense recorded in 2022, 2021 and 2020 for the Company’s Deferred Stock Unit and Deferred Income Plan, including deferrals, was $ 1,486 , $ 3,274 and $ 3,965 , respectively. In 2007, the Company assumed supplemental executive retirement plans (SERPs) in connection with the acquisition of Capital Bancorp, Inc. and its affiliates. The plans are designed to provide four officers specified annual benefits for a 15 -year period upon the attainment of a designated retirement age. Liabilities associated with the SERPs totaled $ 3,523 and $ 3,679 at December 31, 2022 and 2021, respectively. The plans are not qualified under Section 401 of the Internal Revenue Code. 109 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 12 – Employee Benefit and Deferred Compensation Plans (continued) Incentive Compensation Plans Under the Company’s Performance Based Rewards Plan, annual cash bonuses are paid to eligible officers and employees, subject to the attainment of designated performance criteria that may relate to the Company’s performance, the performance of an affiliate, region, division or profit center, and/or to individual or team performance. The Company annually sets minimum, target, and superior levels of performance. Minimum performance must be attained for the payment of any bonus; superior performance must be attained for maximum payouts. The expense associated with the plan for 2022, 2021 and 2020 was $ 9,545 , $ 8,609 and $ 6,425 , respectively. In 2020, the Company implemented the 2020 Long-Term Incentive Compensation Plan that provides for the grant of stock options and stock appreciation rights and the award of restricted stock and restricted stock units (which replaced the Company’s previous long-term equity incentive compensation plan, under which restricted stock awards remain outstanding). Options granted under the plan permit the acquisition of shares of the Company’s common stock at an exercise price equal to the fair market value of the shares on the date of grant. Options may be subject to time-based vesting or the attainment of performance criteria; all options expire ten years after the date of grant. Options that do not vest or expire unexercised are forfeited and canceled. Stock appreciation rights may be granted under the plan on terms similar to options. There were no stock options or stock appreciation rights granted during the years ended December 31, 2022, 2021 or 2020. There was no compensation expense (recognized or unrecognized) associated with options for the years ended December 31, 2022, 2021 or 2020. No options remained outstanding as of December 31, 2021. The following table summarizes information about options outstanding, exercised and forfeited as of and for the years ended December 31, 2021 and 2020: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding at January 1, 2020 29,250 $ 15.86 Granted — — Exercised ( 18,750 ) 16.37 Forfeited — — Outstanding at December 31, 2020 10,500 $ 14.96 1.00 $ 191 Exercisable at December 31, 2020 10,500 $ 14.96 1.00 $ 191 Granted — — Exercised ( 10,500 ) 14.96 Forfeited — — Outstanding at December 31, 2021 — $ — 0.00 $ — Exercisable at December 31, 2021 — $ — 0.00 $ — The total intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $ 262 and $ 279 , respectively. All options that were fully vested and exercisable as of December 31, 2017 have been exercised. The plan permits the award of performance-based restricted stock to officers and employees and time-based restricted stock to non-employee directors, officers and employees. The plan also permits the award of restricted stock units to officers and employees on terms similar to restricted stock awards. Performance-based awards are subject to the attainment of designated performance criteria during a fixed performance cycle. Performance criteria may relate to the Company’s performance measured on an absolute basis or relative to a defined peer group. Performance criteria may also relate to the performance of an affiliate, region, division or profit center of the Company or to individual performance. The Company annually sets minimum, target, and superior levels; minimum performance must be attained for the vesting of any shares; superior performance must be attained for maximum payouts. Time-based restricted stock awards relate to a fixed number of shares that vest at the end of a designated service period. In 2022, the Company made performance-based and time-based restricted stock awards; restricted stock units were not awarded. The fair value of each restricted stock award is the closing price of the Company’s common stock on the business day 110 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 12 – Employee Benefit and Deferred Compensation Plans (continued) immediately preceding the date of the award. For restricted stock awarded under the plan, the Company recorded compensation expense of $ 11,244 , $ 9,882 and $ 10,419 for the years ended December 31, 2022, 2021 and 2020, respectively. The following table summarizes the changes in restricted stock as of and for the year ended December 31, 2022: Performance- Based Restricted Stock Weighted Average Grant-Date Fair Value Time- Based Restricted Stock Weighted Average Grant-Date Fair Value Not vested at beginning of year 146,561 $ 34.67 603,714 $ 34.48 Awarded 81,308 38.45 324,633 37.20 Vested ( 66,566 ) 35.42 ( 222,283 ) 32.81 Forfeited and cancelled ( 5,465 ) 37.26 ( 25,661 ) 37.20 Not vested at end of year 155,838 $ 36.23 680,403 $ 36.23 Unrecognized stock-based compensation expense related to restricted stock totaled $ 12,990 at December 31, 2022. As of such date, the weighted average period over which the unrecognized expense is expected to be recognized was approximately 1.97 years. At December 31, 2022, an aggregate of 2,543,213 shares of Company common stock were available for issuance under the Company’s employee benefit plans of which 982,176 shares were available for issuance under the Company’s 401(k) plan, 145,273 shares were available under the Company’s Deferred Stock Unit Plan, and 1,073,186 shares were available under the Company’s 2020 Long-Term Incentive Compensation Plan. Note 13 – Derivative Instruments (In Thousands) The Company uses certain derivative instruments to meet the needs of customers as well as to manage the interest rate risk associated with certain transactions. Non-hedge derivatives The Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into an offsetting derivative contract position. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures. The Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate residential mortgage loans. The Company also enters into forward commitments to sell residential mortgage loans to secondary market investors. 111 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 13 – Derivative Instruments (continued) The following table provides a summary of the Company’s derivatives not designated as hedging instruments as of the dates presented: Balance Sheet December 31, 2022 December 31, 2021 Location Notional Amount Fair Value Notional Amount Fair Value Derivative assets: Interest rate contracts Other Assets $ 258,646 $ 11,354 $ 185,447 $ 4,711 Interest rate lock commitments Other Assets 62,901 1,231 310,941 5,304 Forward commitments Other Assets 84,000 484 280,000 667 Totals $ 405,547 $ 13,069 $ 776,388 $ 10,682 Derivative liabilities: Interest rate contracts Other Liabilities $ 258,646 $ 11,354 $ 185,447 $ 4,711 Interest rate lock commitments Other Liabilities 19,488 98 19,961 43 Forward commitments Other Liabilities 73,000 1,198 320,000 736 Totals $ 351,134 $ 12,650 $ 525,408 $ 5,490 Gains (losses) included in the Consolidated Statements of Income related to the Company’s derivative financial instruments were as follows, as of the dates presented: Year Ended December 31, 2022 2021 2020 Interest rate contracts: Included in interest income on loans $ 2,470 $ 2,027 $ 2,051 Interest rate lock commitments: Included in mortgage banking income ( 4,128 ) ( 14,563 ) 15,249 Forward commitments Included in mortgage banking income ( 645 ) 5,021 ( 4,033 ) Total $ ( 2,303 ) $ ( 7,515 ) $ 13,267 Derivatives designated as cash flow hedges Cash flow hedge relationships mitigate exposure to the variability of future cash flow or other forecasted transactions. The Company uses interest rate swap contracts in an effort to manage future interest rate exposure on borrowings. The swap hedging strategy converts the LIBOR-based variable interest rate on the forecasted borrowings to a fixed interest rate. The collar hedging strategy stabilizes interest rate fluctuation by setting both a floor and a cap. The Company entered into an interest rate collar in June 2022 with a 2.25 % floor and 4.57 % cap. The Company entered into a second interest rate collar in October 2022 with a 2.75 % floor and 4.75 % cap. As of December 31, 2022, the Company is hedging its exposure to the variability of future cash flows through 2032 and a portion of these hedges are forward starting. 112 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 13 – Derivative Instruments (continued) The following table provides a summary of the Company’s derivatives designated as cash flow hedges as of the dates presented: Balance Sheet December 31, 2022 December 31, 2021 Location Notional Amount Fair Value Notional Amount Fair Value Derivative assets: Interest rate swaps Other Assets $ 130,000 $ 24,514 $ 100,000 $ 7,016 Interest rate collars Other Assets 200,000 464 — — Totals $ 330,000 $ 24,978 $ 100,000 $ 7,016 Derivative liabilities: Interest rate swaps Other Liabilities $ — $ — $ 62,000 $ 2,902 Interest rate collars Other Liabilities 250,000 746 — — Totals $ 250,000 $ 746 $ 62,000 $ 2,902 The impact on other comprehensive income for the years ended December 31, 2022, 2021, and 2020, is described in Note 16, “Other Comprehensive Income (Loss).” In October 2021, the Company terminated four interest rate swap contracts with notional amounts of $ 25,000 each. These swaps hedged forecasted future FHLB borrowings which were no longer expected to occur. As a result of the termination the Company recognized a gain of $ 4,676 for the year ended December 31, 2021. In December 2020, the Company terminated two interest rate swap contracts with notional amounts of $ 15,000 each with ending dates of June 2022 and June 2023, respectively. The Company recorded $ 2,040 in swap termination charges for the year ended December 31, 2020. Derivatives designated as fair value hedges Fair value hedges protect against changes in the fair value of an asset, liability or firm commitment. The Company enters into interest rate swap agreements to manage interest rate exposure on certain of the Company’s fixed-to-floating rate subordinated notes. The agreements convert the currently-fixed interest rates to LIBOR-based variable interest rates. The following table provides a summary of the Company's derivatives designated as fair value hedges as of the dates presented: Balance Sheet December 31, 2022 December 31, 2021 Location Notional Amount Fair Value Notional Amount Fair Value Derivative liabilities: Interest rate swaps Other Liabilities $ 100,000 $ 19,789 $ 100,000 $ 5,411 The following table presents the effects of the Company’s fair value hedge relationships on the Consolidated Statements of Income for the periods presented: Amount of Gain (Loss) Recognized in Income Income Statement Year ended December 31, Location 2022 2021 2020 Derivative liabilities: Interest rate swaps - subordinated notes Interest Expense $ ( 14,378 ) $ ( 5,202 ) $ ( 209 ) Derivative liabilities - hedged items: Interest rate swaps - subordinated notes Interest Expense $ 14,378 $ 5,202 $ 209 113 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 13 – Derivative Instruments (continued) The following table presents the amounts that were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of the dates presented: Carrying Amount of the Hedged Liability Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Liability Balance Sheet Location December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Long-term debt $ 78,881 $ 93,085 $ 19,789 $ 5,411 Offsetting Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet when the “right of setoff” exists or when the instruments are subject to an enforceable master netting agreement, which includes the right of the non-defaulting party or non-affected party to offset recognized amounts, including collateral posted with the counterparty, to determine a net receivable or net payable upon early termination of the agreement. Certain of the Company’s derivative instruments are subject to master netting agreements; however, the Company has not elected to offset such financial instruments in the Consolidated Balance Sheets. The following table presents the Company’s gross derivative positions as recognized in the Consolidated Balance Sheets as well as the net derivative positions, including collateral pledged to the extent the application of such collateral did not reduce the net derivative liability position below zero, had the Company elected to offset those instruments subject to an enforceable master netting agreement as of the dates presented: Offsetting Derivative Assets Offsetting Derivative Liabilities December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Gross amounts recognized $ 36,493 $ 8,007 $ 22,056 $ 13,436 Gross amounts offset in the consolidated balance sheets — — — — Net amounts presented in the consolidated balance sheets 36,493 8,007 22,056 13,436 Gross amounts not offset in the consolidated balance sheets Financial instruments 22,056 7,208 22,056 7,208 Financial collateral pledged — — — 6,228 Net amounts $ 14,437 $ 799 $ — $ — Note 14 – Income Taxes (In Thousands) Significant components of the provision for income taxes are as follows for the periods presented: Year Ended December 31, 2022 2021 2020 Current Federal $ 39,507 $ 34,629 $ 30,193 State 3,453 895 3,309 42,960 35,524 33,502 Deferred Federal 1,630 9,168 ( 10,947 ) State 650 2,243 ( 2,715 ) 2,280 11,411 ( 13,662 ) $ 45,240 $ 46,935 $ 19,840 114 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 14 – Income Taxes (continued) The reconciliation of income taxes computed at the United States federal statutory tax rates to the provision for income taxes is as follows, for the periods presented: Year Ended December 31, 2022 2021 2020 Tax at U.S. statutory rate $ 44,375 $ 46,794 $ 21,733 Increase (decrease) in taxes resulting from: Tax-exempt interest income ( 1,832 ) ( 1,669 ) ( 1,431 ) BOLI income ( 1,946 ) ( 1,547 ) ( 1,182 ) Investment tax credits ( 928 ) ( 988 ) ( 1,494 ) Amortization of investment in low-income housing tax credits 683 817 1,280 State income tax expense, net of federal benefit 3,241 2,479 469 Other items, net 1,647 1,049 465 $ 45,240 $ 46,935 $ 19,840 Significant components of the Company’s deferred tax assets and liabilities are as follows for the periods presented: December 31, 2022 2021 Deferred tax assets Allowance for credit losses $ 52,551 $ 50,712 Loans 2,518 2,855 Deferred compensation 14,447 14,522 Net unrealized losses on securities 70,999 3,545 Impairment of assets 316 392 Net operating loss carryforwards 497 1,211 Investments in partnerships 1,164 890 Lease liabilities under operating leases 14,641 17,106 Other 3,523 3,241 Total deferred tax assets 160,656 94,474 Deferred tax liabilities Fixed assets 10,342 5,339 Mortgage servicing rights 19,624 20,779 Junior subordinated debt 1,948 2,130 Intangibles 2,702 3,177 Lease right-of-use asset 14,018 16,209 Other 1,614 1,607 Total deferred tax liabilities 50,248 49,241 Net deferred tax assets $ 110,408 $ 45,233 The effective tax rate was 21.78 % and 22.41 % for the year ended December 31, 2022 and 2021, respectively. The Company and its subsidiaries file a consolidated U.S. federal income tax return. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2020 through 2022. The Company and its subsidiaries’ state income tax returns are open to audit under the statute of limitations for the years ended December 31, 2020 through 2022. The Company acquired federal and state net operating losses as part of its previous acquisitions, with varying expiration periods. The federal and state net operating losses acquired in the Brand acquisition were $ 81,288 and $ 55,067 , respectively, all created in 2018. As part of the 2017 Tax Cuts and Jobs Act and corresponding state tax laws, the federal net operating losses 115 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 14 – Income Taxes (continued) and the majority of the state net operating losses created by Brand during 2018 have an indefinite carryforward period. The federal net operating loss related to the Brand acquisition was fully utilized during 2021, while at December 31, 2022, there were state net operating losses without expiration periods of $ 5,388 . The federal and state net operating losses acquired in the Heritage Financial Group, Inc. acquisition were $ 18,321 and $ 16,849 , respectively, of which $ 1,101 and $ 278 remain to be utilized as of December 31, 2022. These losses begin to expire in 2029 and are expected to be fully utilized. Because the benefits are expected to be fully realized, the Company recorded no valuation allowance against the net operating losses for the year ended December 31, 2022. The table below presents the breakout of net operating losses as of the dates presented. December 31, 2022 2021 Net Operating Losses Federal $ 1,101 $ 2,065 State 5,666 16,954 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 follows below: 2022 2021 2020 Balance at January 1 $ 408 $ 402 $ 667 Additions based on positions related to current period 65 62 101 Reductions based on positions related to prior period — — ( 314 ) Reductions due to lapse of statute of limitations ( 66 ) ( 56 ) ( 52 ) Balance at December 31 $ 407 $ 408 $ 402 If ultimately recognized, the Company does not anticipate any material increase in the effective tax rate for 2022 relative to any tax positions taken prior to January 1, 2022. The Company had accrued $ 17 , $ 15 and $ 18 for interest and penalties related to unrecognized tax benefits as of December 31, 2022, 2021 and 2020, respectively. Note 15 – 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 Company’s recurring fair value measurements are based on the requirement to carry such assets and liabilities at fair value or the Company’s election to carry certain eligible assets and liabilities at fair value. Assets and liabilities that are required to be carried at fair value 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 Company’s financial assets and liabilities that are measured on a recurring basis: Securities available for sale : Securities available for sale consist primarily of debt securities, such as obligations of U.S. Government agencies and corporations and mortgage backed 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. 116 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 15 – Fair Value Measurements (continued) Derivative instruments : Most of the Company’s 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 Company’s interest rate lock commitments are valued using current market prices for mortgage backed securities with similar characteristics, adjusted for certain factors including servicing and risk. The value of the Company’s forward commitments is based on current prices for securities backed by similar types of loans. Because these assumptions are observable in active markets, the Company’s interest rate lock commitments and forward commitments are categorized within Level 2 of the fair value hierarchy. Mortgage loans held for sale in loans held for sale : Mortgage loans held for sale are primarily agency loans which trade in active secondary markets. The fair value of these instruments is derived from current market pricing for similar loans, adjusted for differences in loan characteristics, including servicing and risk. Because the valuation is based on external pricing of similar instruments, mortgage loans held for sale are classified within Level 2 of the fair value hierarchy. The following tables present assets and liabilities that are measured at fair value on a recurring basis as of the dates presented: Level 1 Level 2 Level 3 Totals December 31, 2022 Financial assets: Securities available for sale $ — $ 1,533,942 $ — $ 1,533,942 Total securities available for sale — 1,533,942 — 1,533,942 Derivative instruments — 38,047 — 38,047 Mortgage loans held for sale in loans held for sale — 110,105 — 110,105 Total financial assets $ — $ 1,682,094 $ — $ 1,682,094 Financial liabilities: Derivative instruments $ — $ 33,185 $ — $ 33,185 Level 1 Level 2 Level 3 Totals December 31, 2021 Financial assets: Securities available for sale: Trust preferred securities $ — $ — $ — $ — Other available for sale securities — 2,386,052 — 2,386,052 Total securities available for sale — 2,386,052 — 2,386,052 Derivative instruments — 17,698 — 17,698 Mortgage loans held for sale in loans held for sale — 453,533 — 453,533 Total financial assets $ — $ 2,857,283 $ — $ 2,857,283 Financial liabilities: Derivative instruments $ — $ 13,803 $ — $ 13,803 The Company reviews fair value hierarchy classifications on a quarterly basis. Changes in the Company’s ability to observe inputs to the valuation may cause reclassification of certain assets or liabilities within the fair value hierarchy. There were no such transfers between levels of the fair value hierarchy during the year ended December 31, 2022. 117 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 15 – Fair Value Measurements (continued) The following table provides for the period presented 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 Balance at January 1, 2021 $ 9,012 Accretion included in net income 8 Realized losses included in net income, net of premium amortization 2,060 Unrealized losses included in other comprehensive income 941 Sales ( 12,021 ) Balance at December 31, 2021 $ — For 2022 and 2021, there were no gains or losses included in earnings that were attributable to the change in unrealized gains or losses related to assets or liabilities held at the end of each respective period that were measured on a recurring basis using significant unobservable inputs. Nonrecurring Fair Value Measurements Certain assets 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 tables provide as of the dates presented the fair value measurement for assets measured at fair value on a nonrecurring basis that were still held on the Consolidated Balance Sheets at period end and the level within the fair value hierarchy each is classified: Level 1 Level 2 Level 3 Totals December 31, 2022 Individually evaluated loans, net of allowance for credit losses $ — $ — $ 14,732 $ 14,732 OREO — — 1,763 1,763 Total $ — $ — $ 16,495 $ 16,495 Level 1 Level 2 Level 3 Totals December 31, 2021 Individually evaluated loans, net of allowance for credit losses $ — $ — $ 7,928 $ 7,928 OREO — — 2,540 2,540 Total $ — $ — $ 10,468 $ 10,468 The following methods and assumptions are used by the Company to estimate the fair values of the Company’s assets measured on a nonrecurring basis: Individually evaluated loans : Loans that do not share similar risk characteristics such that they can be evaluated on a collective (pooled) basis are individually evaluated for credit losses each quarter taking into account the fair value of the collateral less estimated selling costs. Collateral may be real estate and/or business assets including but not limited to equipment, inventory and accounts receivable. The fair value of real estate is determined based on appraisals by qualified licensed appraisers. The fair value of the business assets is generally based on amounts reported on the business’s financial statements. Appraised and reported values may be adjusted based on changes in market conditions from the time of valuation and management’s knowledge of the client and the client’s business. Since not all valuation inputs are observable, these nonrecurring fair value determinations are classified as Level 3. Individually evaluated loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors previously identified. Individually evaluated loans that were measured or re-measured at fair value had a carrying value of $ 18,288 and $ 12,939 at December 31, 2022 and December 31, 2021, respectively, and a reserve for these loans of $ 3,556 and $ 5,011 was included in the allowance for credit losses for the same periods. 118 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 15 – Fair Value Measurements (continued) Other real estate owned : OREO is comprised of commercial and residential real estate obtained in partial or total satisfaction of loan obligations. OREO acquired in settlement of indebtedness is recorded at the fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Fair value, when recorded, is determined based on appraisals by qualified licensed appraisers and adjusted for management’s estimates of costs to sell. Accordingly, values for OREO are classified as Level 3. The following table presents, as of the dates presented, OREO measured at fair value on a nonrecurring basis that was still held in the Consolidated Balance Sheets at period-end: December 31, 2022 December 31, 2021 Carrying amount prior to remeasurement $ 1,842 $ 2,556 Impairment recognized in results of operations ( 79 ) ( 16 ) Fair value $ 1,763 $ 2,540 Mortgage servicing rights : The fair value of mortgage servicing rights is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. Because these factors are not all observable and include management’s assumptions, mortgage servicing rights are classified within Level 3 of the fair value hierarchy. Mortgage servicing rights were carried at amortized cost at December 31, 2022 and December 31, 2021. See Note 8, “Mortgage Servicing Rights,” for information about the valuation adjustments to the Company’s mortgage servicing rights. The following table presents information as of December 31, 2022 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 Individually evaluated loans, net of allowance for credit losses $ 14,732 Appraised value of collateral less estimated costs to sell Estimated costs to sell 4 - 10 % OREO $ 1,763 Appraised value of property less estimated costs to sell Estimated costs to sell 4 - 10 % Fair Value Option The Company elected to measure all mortgage loans originated for sale on or after July 1, 2012 at fair value under the fair value option as permitted under ASC 825. Electing to measure these assets at fair value reduces certain timing differences and better matches the changes in fair value of the loans with changes in the fair value of derivative instruments used to economically hedge them. Net losses of $ 9,854 resulting from fair value changes of these mortgage loans were recorded in income during 2022, as compared to net losses of $ 10,354 in 2021 and net gains of $ 12,057 in 2020. The amounts do not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both mortgage loans held for sale and the related derivative instruments are recorded in “Mortgage banking income” in the Consolidated Statements of Income. The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal. Interest income on mortgage loans held for sale measured at fair value is accrued as it is earned based on contractual rates and is reflected in loan interest income on the Consolidated Statements of Income. 119 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 15 – Fair Value Measurements (continued) 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 December 31, 2022 and December 31, 2021: Aggregate Fair Value Aggregate Unpaid Principal Balance Difference December 31, 2022 Mortgage loans held for sale measured at fair value $ 110,105 $ 108,143 $ 1,962 December 31, 2021 Mortgage loans held for sale measured at fair value $ 453,533 $ 441,717 $ 11,816 Fair Value of Financial Instruments The carrying amounts and estimated fair values of the Company’s financial instruments, including those assets and liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows as of the dates presented: Fair Value Carrying Value Level 1 Level 2 Level 3 Total December 31, 2022 Financial assets Cash and cash equivalents $ 575,992 $ 575,992 $ — $ — $ 575,992 Securities held to maturity 1,324,040 — 1,206,540 — 1,206,540 Securities available for sale 1,533,942 — 1,533,942 — 1,533,942 Loans held for sale 110,105 — 110,105 — 110,105 Loans, net 11,386,214 — — 10,850,181 10,850,181 Mortgage servicing rights 84,448 — — 122,454 122,454 Derivative instruments 38,047 — 38,047 — 38,047 Financial liabilities Deposits $ 13,486,966 $ 11,791,526 $ 1,653,891 $ — $ 13,445,417 Short-term borrowings 712,232 712,232 — — 712,232 Junior subordinated debentures 112,042 — 98,754 — 98,754 Subordinated notes 316,091 — 277,500 — 277,500 Derivative instruments 33,185 — 33,185 — 33,185 120 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 15 – Fair Value Measurements (continued) Fair Value Carrying Value Level 1 Level 2 Level 3 Total December 31, 2021 Financial assets Cash and cash equivalents $ 1,877,965 $ 1,877,965 $ — $ — $ 1,877,965 Securities held to maturity 416,357 — 415,552 — 415,552 Securities available for sale 2,386,052 — 2,386,052 — 2,386,052 Loans held for sale 453,533 — 453,533 — 453,533 Loans, net 9,856,743 — — 9,690,604 9,690,604 Mortgage servicing rights 89,018 — — 99,425 99,425 Derivative instruments 17,698 — 17,698 — 17,698 Financial liabilities Deposits $ 13,905,724 $ 12,494,342 $ 1,408,397 $ — $ 13,902,739 Short-term borrowings 13,947 13,947 — — 13,947 Federal Home Loan Bank advances 417 — 422 — 422 Junior subordinated debentures 111,373 — 106,682 — 106,682 Subordinated notes 359,419 — 373,950 — 373,950 Derivative instruments 13,803 — 13,803 — 13,803 121 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 16 – Other Comprehensive Income (Loss) (In Thousands) Changes in the components of other comprehensive income (loss), net of tax, were as follows: Pre-Tax Tax Expense (Benefit) Net of Tax Year Ended December 31, 2022 Securities available for sale: Unrealized holding losses on securities $ ( 285,829 ) $ ( 71,478 ) $ ( 214,351 ) Amortization of unrealized holding losses on securities transferred to the held to maturity category 4,964 1,263 3,701 Total securities available for sale ( 280,865 ) ( 70,215 ) ( 210,650 ) Derivative instruments: Unrealized holding gains on derivative instruments 20,118 5,125 14,993 Total derivative instruments 20,118 5,125 14,993 Defined benefit pension and post-retirement benefit plans: Net loss arising during the period ( 4,107 ) ( 1,045 ) ( 3,062 ) Amortization of net actuarial loss recognized in net periodic pension cost (2) 167 42 125 Total defined benefit pension and post-retirement benefit plans ( 3,940 ) ( 1,003 ) ( 2,937 ) Total other comprehensive loss $ ( 264,687 ) $ ( 66,093 ) $ ( 198,594 ) Year Ended December 31, 2021 Securities available for sale: Unrealized holding losses on securities $ ( 51,470 ) $ ( 13,099 ) $ ( 38,371 ) Reclassification adjustment for gains realized in net income (1) ( 2,170 ) ( 552 ) ( 1,618 ) Amortization of unrealized holding gains on securities transferred to the held to maturity category ( 73 ) ( 19 ) ( 54 ) Total securities available for sale ( 53,713 ) ( 13,670 ) ( 40,043 ) Derivative instruments: Unrealized holding gains on derivative instruments 10,848 2,761 8,087 Reclassification adjustment for gains realized in net income related to swap termination ( 4,676 ) ( 1,190 ) ( 3,486 ) Total derivative instruments 6,172 1,571 4,601 Defined benefit pension and post-retirement benefit plans: Net loss arising during the period ( 356 ) ( 92 ) ( 264 ) Amortization of net actuarial loss recognized in net periodic pension cost (2) 262 67 195 Total defined benefit pension and post-retirement benefit plans ( 94 ) ( 25 ) ( 69 ) Total other comprehensive loss $ ( 47,635 ) $ ( 12,124 ) $ ( 35,511 ) 122 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 16 – Other Comprehensive Income (Loss) (continued) Pre-Tax Tax Expense (Benefit) Net of Tax Year Ended December 31, 2020 Securities available for sale: Unrealized holding gains on securities $ 27,788 $ 7,071 $ 20,717 Reclassification adjustment for gains realized in net income (1) ( 46 ) ( 12 ) ( 34 ) Total securities available for sale 27,742 7,059 20,683 Derivative instruments: Unrealized holding gains on derivative instruments 923 235 688 Reclassification adjustment for losses realized in net income related to swap termination 2,040 519 1,521 Total derivative instruments 2,963 754 2,209 Defined benefit pension and post-retirement benefit plans: Net gain arising during the period 1,069 272 797 Reclassification adjustment for settlement loss related to the VERP realized in net income (3) 567 145 422 New prior service cost (3) ( 485 ) ( 123 ) ( 362 ) Amortization of net actuarial loss recognized in net periodic pension cost (2) 259 66 193 Amortization of prior service cost (3) 485 123 362 Total defined benefit pension and post-retirement benefit plans 1,895 483 1,412 Total other comprehensive income $ 32,600 $ 8,296 $ 24,304 (1) Included in Net gains (losses) on sales of securities in the Consolidated Statements of Income (2) Included in Salaries and employee benefits in the Consolidated Statements of Income (3) Included in Restructuring charges in the Consolidated Statements of Income The accumulated balances for each component of other comprehensive income (loss), net of tax, at December 31 were as follows: 2022 2021 2020 Unrealized (losses) gains on securities $ ( 219,766 ) $ ( 9,116 ) $ 42,246 Non-credit related portion of other-than-temporary impairment on securities — — ( 11,319 ) Unrealized gains (losses) on derivative instruments 18,956 3,963 ( 638 ) Unrecognized losses on defined benefit pension and post-retirement benefit plans obligations ( 8,227 ) ( 5,290 ) ( 5,221 ) Total accumulated other comprehensive (loss) income $ ( 209,037 ) $ ( 10,443 ) $ 25,068 123 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 17 – Net Income Per Common Share (In Thousands, Except Share Data) Basic and diluted net income per common share calculations are as follows for the periods presented: Year Ended December 31, 2022 2021 2020 Basic Net income applicable to common stock $ 166,068 $ 175,892 $ 83,651 Average common shares outstanding 55,904,579 56,114,666 56,270,566 Net income per common share—basic $ 2.97 $ 3.13 $ 1.49 Diluted Net income applicable to common stock $ 166,068 $ 175,892 $ 83,651 Average common shares outstanding 55,904,579 56,114,666 56,270,566 Effect of dilutive stock-based compensation 309,651 309,818 197,599 Average common shares outstanding—diluted 56,214,230 56,424,484 56,468,165 Net income per common share—diluted $ 2.95 $ 3.12 $ 1.48 Outstanding stock-based compensation awards that could potentially dilute basic net income per common share in the future that were not included in the computation of diluted net income per common share due to their anti-dilutive effect were as follows for the periods presented: Year Ended December 31, 2022 2021 2020 Number of shares 9,250 — 245,146 Note 18 – Commitments, Contingent Liabilities and Financial Instruments with Off-Balance Sheet Risk (In Thousands) Loan commitments are made to accommodate the financial needs of the Company’s customers. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Both arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Company’s normal credit policies. Collateral (e.g., securities, receivables, inventory, equipment, etc.) is obtained based on management’s credit assessment of the customer. The Company’s unfunded loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding at December 31, 2022 were $ 3,577,614 and $ 98,357 , respectively, compared to $ 3,104,940 and $ 89,830 , respectively, at December 31, 2021. 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 on - or 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. 124 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 19 – Restrictions on Cash, Securities, Bank Dividends, Loans or Advances (In Thousands) In March 2020, the Federal Reserve announced that effective March 26, 2020 the reserve requirement would be reduced to zero to support the flow of credit to households and businesses in response to the economic environment caused by the COVID-19 pandemic. The reserve requirement has remained at zero since that time. The Company’s balance of FHLB stock, which is carried at amortized cost, at December 31, 2022 and 2021, was $ 36,079 and $ 8,272 , respectively. The required investment for the same time period was $ 35,417 and $ 5,984 , respectively. The Company’s 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 with earned surplus in excess of three times capital stock may pay a dividend, subject to the approval of the Mississippi Department of Banking and Consumer Finance (the “DBCF”). In addition, the FDIC has the authority to prohibit the Bank from engaging in business practices that the FDIC considers to be unsafe or unsound, which, depending on the financial condition of the Bank, could include the payment of dividends. Accordingly, the approval of the DBCF is required prior to Renasant Bank paying dividends to the Company, and under certain circumstances the approval of the FDIC may be required. At December 31, 2022, the Bank’s earned surplus exceeded the Bank’s capital stock by more than ten times. In addition to the FDIC and DBCF restrictions on dividends payable by the Bank to the Company, the Federal Reserve provided guidance on the criteria that it will use to evaluate the request by a bank holding company to pay dividends in an aggregate amount that will exceed the company’s earnings for the period in which the dividends will be paid, which did not apply to the Company in 2022 or 2021. For purposes of this analysis, “dividend” includes not only dividends on preferred and common equity but also dividends on debt underlying trust preferred securities and other Tier 1 capital instruments. The Federal Reserve’s criteria evaluates whether the holding company (1) has net income over the past four quarters sufficient to fully fund the proposed dividend (taking into account prior dividends paid during this period), (2) is considering stock repurchases or redemptions in the quarter, (3) does not have a concentration in commercial real estate and (4) is in good supervisory condition, based on its overall condition and its asset quality risk. A holding company not meeting these criteria will require more in-depth consultations with the Federal Reserve. 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, 2022, the maximum amount available for transfer from Renasant Bank to the Company in the form of loans was $ 178,131 . The Company also maintains a $ 3,000 line of credit collateralized by cash with the Bank. As of December 31, 2022, no loans from the Bank to the Company were outstanding. Note 20 – Regulatory Matters (In Thousands) The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The Federal Reserve, the FDIC and the Office of the Comptroller of the Currency have issued guidelines governing the levels of capital that bank holding companies and banks must maintain. Those guidelines specify capital tiers, which include the following classifications (which include the “capital conservation buffer” discussed below): 125 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 20 – Regulatory Matters (continued) Capital Tiers Tier 1 Capital to Average Assets (Leverage) Common Equity Tier 1 to Risk - Weighted Assets Tier 1 Capital to Risk – Weighted Assets Total Capital to Risk – Weighted Assets Well capitalized 5 % or above 6.5 % or above 8 % or above 10 % or above Adequately capitalized 4 % or above 4.5 % or above 6 % or above 8 % or above Undercapitalized Less than 4 % Less than 4.5 % Less than 6 % Less than 8 % Significantly undercapitalized Less than 3 % Less than 3 % Less than 4 % Less than 6 % Critically undercapitalized Tangible Equity / Total Assets less than 2 % The following table provides the capital and risk-based capital and leverage ratios for the Company and for Renasant Bank as of December 31: 2022 2021 Amount Ratio Amount Ratio Renasant Corporation Tier 1 Capital to Average Assets (Leverage) $ 1,481,197 9.36 % $ 1,422,077 9.15 % Common Equity Tier 1 Capital to Risk-Weighted Assets 1,372,747 10.21 % 1,314,295 11.18 % Tier 1 Capital to Risk-Weighted Assets 1,481,197 11.01 % 1,422,077 12.10 % Total Capital to Risk-Weighted Assets 1,968,001 14.63 % 1,897,167 16.14 % Renasant Bank Tier 1 Capital to Average Assets (Leverage) $ 1,630,389 10.30 % $ 1,580,904 10.18 % Common Equity Tier 1 Capital to Risk-Weighted Assets 1,630,389 12.10 % 1,580,904 13.46 % Tier 1 Capital to Risk-Weighted Assets 1,630,389 12.10 % 1,580,904 13.46 % Total Capital to Risk-Weighted Assets 1,781,312 13.22 % 1,697,163 14.44 % Common equity Tier 1 capital (“CET1”) generally consists of common stock, retained earnings, accumulated other comprehensive income and certain minority interests, less certain adjustments and deductions. In addition, the Company must maintain a “capital conservation buffer,” which is a specified amount of CET1 in addition to the amount necessary to meet minimum risk-based capital requirements. The capital conservation buffer is designed to absorb losses during periods of economic stress. If the Company’s ratio of CET1 to risk-weighted capital is below the capital conservation buffer, the Company will face restrictions on its ability to pay dividends, repurchase outstanding stock and make certain discretionary bonus payments. The required capital conservation buffer is 2.5% of CET1 to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. As previously disclosed, the Company adopted CECL as of January 1, 2020. The Company has elected to take advantage of transitional relief offered by the Federal Reserve and the FDIC to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transitional period to phase out the capital benefit provided by the two-year delay. 126 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 21 – Segment Reporting (In Thousands) The operations of the Company’s reportable segments are described as follows: • The Community Banks segment delivers a complete range of banking and financial services to individuals and small to medium-size businesses including checking and savings accounts, business and personal loans, asset-based lending, factoring and equipment leasing, as well as safe deposit and night depository facilities. • The Insurance segment includes a full service insurance agency offering all major lines of commercial and personal insurance through major carriers. • The Wealth Management segment, through the Trust division, offers a broad range of fiduciary services including the administration (as trustee or in other fiduciary or representative capacities) of benefit plans, management of trust accounts, inclusive of personal and corporate benefit accounts and custodial accounts, as well as accounting and money management for trust accounts. In addition, the Wealth Management segment, through the Financial Services division, provides specialized products and services to customers, which include fixed and variable annuities, mutual funds and other investment services through a third party broker-dealer. The Financial Services division also provides administrative and compliance services for certain mutual funds. In order to give the Company’s divisional management a more precise indication of the income and expenses they can control, the results of operations for the Community Banks, the Insurance and the Wealth Management segments reflect the direct revenues and expenses of each respective segment. Indirect revenues and expenses, including but not limited to income from the Company’s investment portfolio, as well as certain costs associated with data processing and back office functions, primarily support the operations of the community banks and, therefore, are included in the results of the Community Banks segment. Included in “Other” are the operations of the holding company and other eliminations which are necessary for purposes of reconciling to the consolidated amounts. 127 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 21 – Segment Reporting (continued) The following table provides financial information for the Company’s operating segments as of and for the years ended December 31, 2022, 2021 and 2020: Community Banks Insurance Wealth Management Other Consolidated 2022 Net interest income $ 498,673 $ 619 $ 2,793 $ ( 20,787 ) $ 481,298 Provision for credit losses 23,788 — — — 23,788 Noninterest income 114,263 11,821 24,839 ( 1,670 ) 149,253 Noninterest expense 366,767 8,442 18,664 1,582 395,455 Income before income taxes 222,381 3,998 8,968 ( 24,039 ) 211,308 Income taxes 50,425 1,046 — ( 6,231 ) 45,240 Net income (loss) $ 171,956 $ 2,952 $ 8,968 $ ( 17,808 ) $ 166,068 Total assets $ 16,882,534 $ 37,567 $ 75,383 $ ( 7,308 ) $ 16,988,176 Goodwill 988,941 2,767 — — 991,708 2021 Net interest income $ 437,435 $ 454 $ 1,657 $ ( 15,545 ) $ 424,001 Recovery for credit losses ( 1,668 ) — — — ( 1,668 ) Noninterest income 195,214 11,370 22,185 ( 1,785 ) 226,984 Noninterest expense 404,066 8,060 16,475 1,225 429,826 Income before income taxes 230,251 3,764 7,367 ( 18,555 ) 222,827 Income taxes 50,749 981 — ( 4,795 ) 46,935 Net income (loss) $ 179,502 $ 2,783 $ 7,367 $ ( 13,760 ) $ 175,892 Total assets $ 16,694,710 $ 33,544 $ 65,015 $ 17,042 $ 16,810,311 Goodwill 936,916 2,767 — — 939,683 2020 Net interest income $ 437,101 $ 566 $ 1,658 $ ( 12,528 ) $ 426,797 Provision for credit losses 86,850 — — — 86,850 Noninterest income 208,721 10,403 18,061 ( 1,653 ) 235,532 Noninterest expense 448,475 7,751 14,940 822 471,988 Income before income taxes 110,497 3,218 4,779 ( 15,003 ) 103,491 Income taxes 22,892 837 — ( 3,889 ) 19,840 Net income (loss) $ 87,605 $ 2,381 $ 4,779 $ ( 11,114 ) $ 83,651 Total assets $ 14,814,726 $ 30,375 $ 71,266 $ 13,245 $ 14,929,612 Goodwill 936,916 2,767 — — 939,683 128 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 22 – Renasant Corporation (Parent Company Only) Condensed Financial Information (In Thousands) Balance Sheets December 31, 2022 2021 Assets Cash and cash equivalents (1) $ 167,727 $ 184,426 Investments — 2,009 Investment in bank subsidiary (2) 2,391,721 2,477,917 Accrued interest receivable on bank balances (2) 3 4 Other assets 28,468 28,751 Total assets $ 2,587,919 $ 2,693,107 Liabilities and shareholders’ equity Junior subordinated debentures $ 112,042 $ 111,373 Subordinated notes 316,091 359,419 Other liabilities 23,770 12,462 Shareholders’ equity 2,136,016 2,209,853 Total liabilities and shareholders’ equity $ 2,587,919 $ 2,693,107 (1) Eliminates in consolidation, with the exception of $ 1,889 and $ 1,857 , in 2022 and 2021, respectively, pledged for collateral and held at non-subsidiary bank (2) Eliminates in consolidation Statements of Income Year Ended December 31, 2022 2021 2020 Income Dividends from bank subsidiary (1) $ 68,114 $ 80,965 $ 81,443 Interest income from bank subsidiary (1) 5 7 9 Other dividends 134 80 93 Other income 85 32 74 Total income 68,338 81,084 81,619 Expenses 24,264 18,661 15,179 Income before income tax benefit and equity in undistributed net income of bank subsidiary 44,074 62,423 66,440 Income tax benefit ( 6,231 ) ( 4,795 ) ( 3,889 ) Equity in undistributed net income of bank subsidiary (1) 115,763 108,674 13,322 Net income $ 166,068 $ 175,892 $ 83,651 (1) Eliminates in consolidation 129 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 22 – Renasant Corporation (Parent Company Only) Condensed Financial Information (continued) Statements of Cash Flows Year Ended December 31, 2022 2021 2020 Operating activities Net income $ 166,068 $ 175,892 $ 83,651 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net income of bank subsidiary ( 115,763 ) ( 108,674 ) ( 13,322 ) Amortization/depreciation 1,478 891 692 Increase (decrease) in other assets 284 ( 5,628 ) ( 256 ) Increase in other liabilities 9,225 6,952 10,932 Net cash provided by operating activities 61,292 69,433 81,697 Investing activities Purchases of securities available for sale — — ( 6,104 ) Sales and maturities of securities and available for sale 2,000 5,100 541 Other investing activities — ( 100,000 ) — Net cash (used in) provided by investing activities 2,000 ( 94,900 ) ( 5,563 ) Financing activities Cash paid for dividends ( 49,991 ) ( 50,017 ) ( 50,134 ) Repurchase of shares in connection with stock repurchase program — ( 21,315 ) ( 24,569 ) Repayment of long-term debt ( 30,000 ) ( 45,000 ) — Proceeds from issuance of long-term debt — 197,061 98,266 Net cash (used in) provided by financing activities ( 79,991 ) 80,729 23,563 (Decrease) increase in cash and cash equivalents ( 16,699 ) 55,262 99,697 Cash and cash equivalents at beginning of year 184,426 129,164 29,467 Cash and cash equivalents at end of year $ 167,727 $ 184,426 $ 129,164 Note 23 – Leases (In Thousands) The Company enters into leases in both lessor and lessee capacities. Lessor Arrangements As of December 31, 2022 and 2021, the net investment in these leases was $ 44,049 and $ 24,979 , comprised of $ 37,301 and $ 19,646 in lease receivables, $ 12,875 and $ 8,323 in residual balances and $ 6,127 and $ 2,990 in deferred income, respectively. In order to mitigate potential exposure to residual asset risk, the Company utilizes first amendment or terminal rental adjustment clause leases. For the twelve months ended December 31, 2022 and 2021, the Company generated $ 903 and $ 698 in income from these leases, respectively, which is included in interest income on loans on the Consolidated Statements of Income. 130 Renasant Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 23 – Leases (continued) The maturities of the lessor arrangements outstanding at December 31, 2022 is presented in the table below. 2023 $ 476 2024 810 2025 995 2026 1,254 2027 8,289 Thereafter 32,225 Total lease receivables $ 44,049 Lessee Arrangements As of December 31, 2022 and 2021, right-of-use assets totaled $ 54,930 and $ 63,547 and lease liabilities totaled $ 57,369 and $ 67,067 , respectively. The table below provides the components of lease cost and supplemental information for the periods presented. Year ended December 31, 2022 2021 Operating lease cost (cost resulting from lease payments) $ 7,847 $ 8,868 Short-term lease cost 29 93 Variable lease cost (cost excluded from lease payments) 1,056 1,195 Sublease income ( 624 ) ( 658 ) Net lease cost $ 8,308 $ 9,498 Operating lease - operating cash flows (fixed payments) 9,528 8,666 Operating lease - operating cash flows (liability reduction) 7,789 6,640 Weighted average lease term - operating leases (in years) (at period end) 17.96 17.25 Weighted average discount rate - operating leases (at period end) 3.02 % 3.01 % Right-of-use assets obtained in exchange for new lease liabilities - operating leases $ 3,475 $ 8,142 The maturities of the lessee arrangements outstanding at December 31, 2022 are presented in the table below. 2023 $ 7,342 2024 6,320 2025 5,207 2026 4,758 2027 4,156 Thereafter 48,292 Total undiscounted cash flows 76,075 Discount on cash flows 18,706 Total operating lease liabilities $ 57,369 Rental expense was $ 7,623 , $ 8,298 , and $ 10,044 for 2022, 2021, and 2020, respectively. For more information on lease accounting, see Note 1, “Significant Accounting Policies” and on lease financing receivables, see Note 3, “Loans.” 131 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.