What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-08 · 327 added, 192 removed, 577 unchanged (47% of the section changed)

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(In Thousands, Except Share Data)

This Form 10-Q may contain or incorporate by reference statements regarding Renasant Corporation (referred to herein as the “Company”, “we”, “our”, or “us”) that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

This Form 10-Q may contain or incorporate by reference statements regarding Renasant Corporation (referred to herein as the “Company”, “Renasant”, “we”, “our”, or “us”) that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “projects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “focus,” “possible,” “may increase,” “may fluctuate,” “will likely result,” and similar expressions, or future or conditional verbs such as “will,” “should,” “would” and “could,” are generally forward-looking in nature and not historical facts.

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Important factors currently known to management that could cause our actual results to differ materially from those in forward-looking statements include the following:

(i) the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management;

(ii) the effect of economic conditions and interest rates on a national, regional or international basis;

(iii) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings;

(iv) competitive pressures in the consumer finance, commercial finance, insurance, financial services, asset management, retail banking, factoring and mortgage lending and auto lending industries;

(v) the financial resources of, and products available from, competitors;

(vi) changes in laws and regulations as well as changes in accounting standards;

(vii) changes in policy by regulatory agencies;

(viii) changes in the securities and foreign exchange markets;

(ix) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth;

(x) changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers of investment securities, or the impact of interest rates on the value of our investment securities portfolio;

(xi) an insufficient allowance for credit losses as a result of inaccurate assumptions;

(xii) changes in the sources and costs of the capital we use to make loans and otherwise fund our operations, due to deposit outflows, changes in the mix of deposits and the cost and availability of borrowings;

(xiii) general economic, market or business conditions, including the impact of inflation;

(xiv) changes in demand for loan and deposit products and other financial services;

(xv) concentrations of credit or deposit exposure;

(xvi) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships;

(xvii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses;

(xviii) civil unrest, natural disasters, epidemics and other catastrophic events in the Company’s geographic area;

(xix) the impact, extent and timing of technological changes;

and (xx) other circumstances, many of which are beyond management’s control.

(i) the Company’s ability to efficiently integrate acquisitions (including its recently-announced acquisition of The First Bancshares, Inc.

described under the “Recent Developments” heading below) into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management (including the possibility that such cost savings will not be realized when expected, or at all, as a result of the impact of, or challenges arising from, the integration of the acquired assets and assumed liabilities into the Company, potential adverse reactions or changes to business or employee relationships, or as a result of other unexpected factors or events);

(ii) potential exposure to unknown or contingent risks and liabilities we have acquired, or may acquire, or target for acquisition, including in connection with the proposed merger with The First Bancshares, Inc.;

(iii) the effect of economic conditions and interest rates on a national, regional or international basis;

(iv) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings;

(v) competitive pressures in the consumer finance, commercial finance, financial services, asset management, retail banking, factoring and mortgage lending and auto lending industries;

(vi) the financial resources of, and products available from, competitors;

(vii) changes in laws and regulations as well as changes in accounting standards;

(viii) changes in policy by regulatory agencies or increased scrutiny by, and/or additional regulatory requirements of, regulatory agencies as a result of our proposed merger with The First Bancshares, Inc.;

(ix) changes in the securities and foreign exchange markets;

(x) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth;

(xi) changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers of investment securities, or the impact of interest rates on the value of our investment securities portfolio;

(xii) an insufficient allowance for credit losses as a result of inaccurate assumptions;

(xiii) changes in the sources and costs of the capital we use to make loans and otherwise fund our operations, due to deposit outflows, changes in the mix of deposits and the cost and availability of borrowings;

(xiv) general economic, market or business conditions, including the impact of inflation;

(xv) changes in demand for loan and deposit products and other financial services;

(xvi) concentrations of credit or deposit exposure;

(xvii) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships;

(xviii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses;

(xix) civil unrest, natural disasters, epidemics and other catastrophic events in the Company’s geographic area;

(xx) geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad;

(xxi) the impact, extent and timing of technological changes;

and (xxii) other circumstances, many of which are beyond management’s control.

Management believes that the assumptions underlying the Company’s forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate.

The Company undertakes no obligation, and specifically disclaims any obligation, to update or revise forward-looking statements, whether as a result of new information or to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by federal securities laws.

Recent Developments

Sale of Renasant Insurance, Inc.

Effective July 1, 2024, Renasant Bank sold substantially all of the assets of Renasant Insurance, Inc.

for cash proceeds to Renasant Bank of $56,390.

The sale resulted in an estimated after-tax impact to earnings of $36,400, which is net of estimated transaction-related expenses.

The financial effects of the sale will be reflected in the third quarter of 2024.

Proposed Merger with The First Bancshares, Inc.

On July 29, 2024, the Company and The First Bancshares, Inc., a Mississippi corporation (“The First”), entered into an agreement and plan of merger, dated as of July 29, 2024 (the “Merger Agreement”), pursuant to which, subject to the terms and conditions set forth therein, among other things, The First will merge with and into the Company, with the Company as the surviving entity in such merger (the “Merger”).

Immediately following the Merger, The First’s subsidiary bank and Renasant Bank will enter into a subsidiary plan of merger, pursuant to which The First’s subsidiary bank will merge with and into Renasant Bank immediately after the Merger, with Renasant Bank as the surviving entity in such merger.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each outstanding share of common stock of The First will be converted into the right to receive one share of common stock of the Company.

The Merger is expected to close in the first half of 2025 and is subject to certain closing conditions, including the receipt of required regulatory approvals and requisite approval by the stockholders of each company.

Offering of Common Stock

On July 31, 2024, the Company completed its public offering of an aggregate of 7,187,500 shares of its common stock at a price of $32.00 per share, including 937,500 shares of common stock upon the exercise in full by the underwriters of their option to purchase additional shares.

The aggregate gross proceeds were $230,000.

The net proceeds of the offering after deducting underwriting discounts and other estimated offering expenses are expected to be approximately $217,000.

The Company intends to use the net proceeds of the offering for general corporate purposes to support its continued growth, including investments in Renasant Bank and future strategic acquisitions.

Financial Condition

The following discussion provides details regarding the changes in significant balance sheet accounts at March 31, 2024 compared to December 31, 2023.

Total assets were $17,345,741 at March 31, 2024 compared to $17,360,535 at December 31, 2023.

The following discussion provides details regarding the changes in significant balance sheet accounts at June 30, 2024 compared to December 31, 2023.

Total assets were $17,510,391 at June 30, 2024 compared to $17,360,535 at December 31, 2023.

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

The securities portfolio also serves as an outlet to deploy excess liquidity and generate interest income rather than hold such excess funds as cash.

The securities portfolio also serves as an outlet to deploy excess liquidity and generate interest income rather than hold excess funds as cash.

The following table shows the carrying value of our securities portfolio by investment type and the percentage of such investment type relative to the entire securities portfolio as of the dates presented:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Balance Percentage of

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Securities, net of allowance for credit losses $ 1,924,348 $ 2,144,743

During the three months ended March 31, 2024, the Company purchased $46,975 in investment securities.

The Company did not purchase any investment securities during the first quarter of 2023.

Proceeds from maturities, calls and principal payments on securities during the first three months of 2024 totaled $46,307.

During the first quarter, the Company sold from the available for sale portfolio municipal securities, residential mortgage backed securities and commercial mortgage backed securities for net proceeds of $177,185.

During the six months ended June 30, 2024, the Company purchased $52,679 in investment securities.

The Company did not purchase any investment securities during the first half of 2023.

Proceeds from maturities, calls and principal payments on securities during the first six months of 2024 totaled $93,085.

During the first quarter of 2024, the Company sold from the available for sale portfolio municipal securities, residential mortgage backed securities and commercial mortgage backed securities for net proceeds of $177,185.

The Company intended to sell these securities as of December 31, 2023;

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The carrying value of the securities immediately prior to the impairment was $196,537, and the impairment charge was $19,352.

No additional loss was recorded in the first quarter of 2024.

Proceeds from the maturities, calls and principal payments on securities during the first three months of 2023 totaled $70,766.

The Company did not sell any securities during the first three months of 2023.

No additional loss was recorded in the first half of 2024.

The Company did not sell any securities during the second quarter of 2024.

Proceeds from the maturities, calls and principal payments on securities during the first six months of 2023 totaled $144,953.

The Company sold from the available for sale portfolio agency securities, municipal securities, residential mortgage backed securities and commercial mortgage backed securities with a carrying value of $511,419 at the time of sale for net proceeds of $488,981, resulting in a net loss on sale of $22,438 during the first half of 2023.

During the third quarter of 2022, the Company transferred, at fair value, $882,927 of securities from the available for sale portfolio to the held to maturity portfolio as the Company has the intent and ability to hold these securities until their maturity.

The related net unrealized losses of $99,675 (after tax losses 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.

At March 31, 2024, the net unrealized after tax losses remaining to be amortized in accumulated other comprehensive income (loss) was $56,084.

At June 30, 2024, the net unrealized after tax losses remaining to be amortized in accumulated other comprehensive income (loss) was $53,662.

No gains or losses were recognized at the time of transfer.

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Loans Held for Sale

Loans held for sale, which consist of residential mortgage loans being held until they are sold in the secondary market, were $191,440 at March 31, 2024, as compared to $179,756 at December 31, 2023.

Loans held for sale, which consist of residential mortgage loans being held until they are sold in the secondary market, were $266,406 at June 30, 2024, as compared to $179,756 at December 31, 2023.

Mortgage loans to be sold are sold either on a “best efforts” basis or under a mandatory delivery sales agreement.

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Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market.

Total loans, excluding loans held for sale, were $12,500,525 at March 31, 2024 and $12,351,230 at December 31, 2023.

Total loans, excluding loans held for sale, were $12,604,755 at June 30, 2024 and $12,351,230 at December 31, 2023.

The tables below set forth the balance of loans outstanding, net of unearned income and excluding loans held for sale, by loan type and the percentage of each loan type to total loans as of the dates presented:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Loans Percentage of Total Loans Total

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Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions.

At March 31, 2024, there were no concentrations of loans exceeding 10% of total loans which are not disclosed as a category of loans separate from the categories listed above.

At June 30, 2024, there were no concentrations of loans exceeding 10% of total loans which are not disclosed as a category of loans separate from the categories listed above.

The Company relies on deposits as its primary source of funds.

Total deposits were $14,237,163 and $14,076,785 at March 31, 2024 and December 31, 2023, respectively.

Noninterest-bearing deposits were $3,516,164 and $3,583,675 at March 31, 2024 and December 31, 2023, respectively, while interest-bearing deposits were $10,720,999 and $10,493,110 at March 31, 2024 and December 31, 2023, respectively.

Interest-bearing deposits included brokered deposits of $342,638 and $461,441 at March 31, 2024 and December 31, 2023, respectively.

Total deposits were $14,255,213 and $14,076,785 at June 30, 2024 and December 31, 2023, respectively.

Noninterest-bearing deposits were $3,539,453 and $3,583,675 at June 30, 2024 and December 31, 2023, respectively, while interest-bearing deposits were $10,715,760 and $10,493,110 at June 30, 2024 and December 31, 2023, respectively.

Interest-bearing deposits included brokered deposits of $158,868 and $461,441 at June 30, 2024 and December 31, 2023, respectively.

Management continues to focus on growing and maintaining a stable source of funding, specifically noninterest-bearing deposits and other core deposits (that is, deposits excluding brokered deposits and time deposits greater than $250,000).

Noninterest-bearing deposits represented 24.70% of total deposits at March 31, 2024, as compared to 25.46% of total deposits at December 31, 2023.

The decrease in noninterest-bearing deposits as a percentage of total deposits primarily reflects deposit customers transferring noninterest-bearing deposits to interest-bearing deposits such as money market funds offered by the Company, other financial institutions and other financial services companies.

Noninterest-bearing deposits represented 24.83% of total deposits at June 30, 2024, as compared to 25.46% of total deposits at December 31, 2023.

Under certain circumstances, management may elect to acquire non-core deposits (in the form of brokered deposits) or public fund deposits (which are deposits of counties, municipalities or other political subdivisions).

The source of funds that we select depends on the terms of the deposits and how those terms assist us in mitigating interest rate risk, maintaining our liquidity position and managing our net interest margin;

business factors, described in the following paragraph, may cause us to obtain public deposits.

business factors, described in the following paragraph, may lead us to obtain public deposits.

Accordingly, funds are acquired to meet anticipated funding needs at the rate and with other terms that, in management’s view, best address our interest rate risk, liquidity and net interest margin parameters.

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Because public fund deposits are obtained through a bid process, these deposit balances may fluctuate as competitive and market forces change.

Although the Company has focused on growing stable sources of deposits to reduce reliance on public fund deposits, it

participates in the bidding process for public fund deposits when pricing and other terms make it reasonable given market conditions or when management perceives that other factors, such as the public entity’s use of our treasury management or other products and services, make such participation advisable.

Although the Company has focused on growing stable sources of deposits to reduce reliance on public fund deposits, it participates in the bidding process for public fund deposits when pricing and other terms make it reasonable given market

conditions or when management perceives that other factors, such as the public entity’s use of our treasury management or other products and services, make such participation advisable.

Our public fund transaction accounts are principally obtained from public universities and municipalities, including school boards and utilities.

Public fund deposits were $2,006,419 and $1,866,495 at March 31, 2024 and December 31, 2023, respectively, and represented 14.09% and 13.26% of total deposits as of March 31, 2024 and December 31, 2023, respectively.

Public fund deposits were $2,157,072 and $1,866,495 at June 30, 2024 and December 31, 2023, respectively, and represented 15.13% and 13.26% of total deposits as of June 30, 2024 and December 31, 2023, respectively.

Borrowed Funds

Total borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the FHLB, subordinated notes and junior subordinated debentures and are classified on the Consolidated Balance Sheets as either short-term borrowings or long-term debt.

Short-term borrowings have original maturities less than one year and typically include federal funds purchased, securities sold under agreements to repurchase, and short-term FHLB advances.

Short-term borrowings have original maturities less than one year and typically consist of federal funds purchased, securities sold under agreements to repurchase, and short-term FHLB advances.

The following table presents our short-term borrowings by type as of the dates presented:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Security repurchase agreements $ 7,741 $ 7,577

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The following table presents our long-term debt by type as of the dates presented:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Junior subordinated debentures $ 113,447 $ 112,978

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Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits.

There were no long-term advances from the FHLB outstanding at March 31, 2024 or December 31, 2023.

There were no long-term advances from the FHLB outstanding at June 30, 2024 or December 31, 2023.

All advances from the FHLB are collateralized by a blanket lien on the Bank’s loans.

The Company had $2,850,966 of availability on unused lines of credit with the FHLB at March 31, 2024, as compared to $2,922,315 at December 31, 2023.

The Company also had credit available at the Federal Reserve Discount Window in the amount of $592,236 with no borrowings outstanding at March 31, 2024.

The Company had $2,709,670 of availability on unused lines of credit with the FHLB at June 30, 2024, as compared to $2,922,315 at December 31, 2023.

The Company also had credit available at the Federal Reserve Discount Window in the amount of $588,890 with no borrowings outstanding at June 30, 2024 or December 31, 2023.

The Company has issued subordinated notes, the proceeds of which have been used for general corporate purposes, including providing capital to support the Company’s growth organically or through strategic acquisitions, repaying indebtedness and financing investments and capital expenditures, and for investments in Renasant Bank as regulatory capital.

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Results of Operations

Net income for the first quarter of 2024 was $39,409 compared to net income of $46,078 for the first quarter of 2023.

Basic and diluted earnings per share (“EPS”) for the first quarter of 2024 were $0.70, as compared to basic and diluted EPS of $0.82 for the first quarter of 2023.

From time to time, the Company incurs expenses and charges or recognizes valuation adjustments in connection with certain transactions with respect to which management is unable to accurately predict when these items will be incurred or, when

incurred, the amount of such items.

Net income for the second quarter of 2024 was $38,846 compared to net income of $28,643 for the second quarter of 2023.

Basic and diluted earnings per share (“EPS”) for the second quarter of 2024 were $0.69, as compared to basic and diluted EPS of $0.51 for the second quarter of 2023.

Net income for the six months ended June 30, 2024, was $78,255 compared to net income of $74,721 for the same period in 2023.

Basic and diluted EPS were $1.39 and $1.38, respectively for the first six months of 2024 as compared to $1.33 for the first six months of 2023.

The following table presents the impact of these items on reported EPS for the dates presented.

Three Months Ended

March 31, 2024 March 31, 2023

June 30, 2024 June 30, 2023

Pre-tax After-tax Impact to Diluted EPS Pre-tax After-tax Impact to Diluted EPS

Loss on sale of securities $ — $ — $ — $ 22,438 $ 18,085 $ 0.32

Six Months Ended

June 30, 2024 June 30, 2023

Pre-tax After-tax Impact to Diluted EPS Pre-tax After-tax Impact to Diluted EPS

Gain on sale of MSR $ 3,472 $ 2,777 $ 0.05 $ — $ — $ —

Loss on sale of securities — — — 22,438 17,870 0.31

Net Interest Income

Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of our net income, comprising 75.26% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the first quarter of 2024.

Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of our net income, comprising 76.70% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the second quarter of 2024.

The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.

Net interest income was $123,290 for the three months ended March 31, 2024, as compared to $135,775 for the same period in 2023.

On a tax equivalent basis, net interest income was $125,850 for the three months ended March 31, 2024, as compared to $138,529 for the same period in 2023.

Net interest income was $125,026 and $248,316 for the three and six months ended June 30, 2024, as compared to $130,216 and $265,991for the same periods in 2023.

On a tax equivalent basis, net interest income was $127,598 and $253,448 for the three and six months ended June 30, 2024, as compared to $133,085 and $271,614 for the same periods in 2023.

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

Three Months Ended March 31,

Three Months Ended June 30,

Balance Interest

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(2) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.

Six Months Ended June 30,

Balance Interest

Expense Yield/

Balance Interest

Expense Yield/

Interest-earning assets:

Loans held for investment $ 12,491,814 $ 395,310 6.35 % $ 11,783,585 $ 339,519 5.81 %

Loans held for sale 187,604 5,838 6.22 148,221 4,727 6.38

Taxable 1,861,909 18,763 2.02 2,557,997 25,670 2.01

Tax-exempt (1)

267,108 2,956 2.21 382,130 4,510 2.36

Interest-bearing balances with banks 582,683 15,655 5.40 494,434 12,408 5.06

Total interest-earning assets 15,391,118 438,522 5.72 15,366,367 386,834 5.07

Cash and due from banks 188,011 193,703

Intangible assets 1,009,232 1,012,690

Other assets 701,770 675,648

Total assets $ 17,290,131 $ 17,248,408

Liabilities and shareholders’ equity

Interest-bearing liabilities:

Interest-bearing demand (2)

$ 7,025,200 $ 108,632 3.10 % $ 6,090,549 $ 49,483 1.64 %

Savings deposits 850,018 1,459 0.34 1,028,315 1,639 0.32

Brokered deposits 370,129 9,931 5.38 603,822 14,713 4.91

Time deposits 2,403,646 50,212 4.20 1,650,683 18,422 2.25

Total interest-bearing deposits 10,648,993 170,234 3.21 9,373,369 84,257 1.81

Borrowed funds 554,618 14,840 5.36 1,243,049 30,963 5.01

Total interest-bearing liabilities 11,203,611 185,074 3.32 10,616,418 115,220 2.19

Noninterest-bearing deposits 3,513,860 4,212,081

Other liabilities 246,654 217,573

Shareholders’ equity 2,326,006 2,202,336

Total liabilities and shareholders’ equity $ 17,290,131 $ 17,248,408

Net interest income/net interest margin $ 253,448 3.30 % $ 271,614 3.56 %

Government and some U.S.

Government Agency securities are tax-exempt in the states in which the Company operates.

(2) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.

The average balances of nonaccruing assets are included in the tables above.

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External factors include changes in market interest rates, competition and other factors affecting the banking industry in general, and the shape of the interest rate yield curve.

The largest contributing factor to the decrease in net interest income for the three months ended March 31, 2024, as compared to the same period in 2023, was the rising rate environment that began in 2022 and continued throughout 2023.

The largest contributing factor to the decrease in net interest income for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was the rising rate environment that began in 2022 and continued throughout 2023.

The higher interest rates benefited yields on earning assets, but this increase was more than offset by an increase in interest expense.

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The Company has continued its efforts to mitigate increases in the cost of funding through maintaining noninterest-bearing deposits, staying disciplined yet competitive in pricing on interest-bearing deposits in the current rate environment and accessing alternative sources of liquidity, such as brokered deposits.

The following tables set forth a summary of the changes in interest earned, on a tax equivalent basis, and interest paid resulting from changes in volume and rates for the Company for the three months ended March 31, 2024, as compared to the same period

in 2023 (the changes attributable to the combined impact of yield/rate and volume have been allocated on a pro-rata basis using the absolute value of amounts calculated):

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

The following tables set forth a summary of the changes in interest earned, on a tax equivalent basis, and interest paid resulting from changes in volume and rates for the Company for the three and six months ended June 30, 2024, as compared to the same

periods in 2023 (the changes attributable to the combined impact of yield/rate and volume have been allocated on a pro-rata basis using the absolute value of amounts calculated):

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

Volume Rate Net

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Change in net interest income $ 12,301 $ (17,788) $ (5,487)

Interest income, on a tax equivalent basis, was $215,739 for the three months ended March 31, 2024, as compared to $186,799 for the same period in 2023.

The increase in interest income, on a tax equivalent basis, for the three months ended March 31, 2024, as compared to the same time period in 2023 is due primarily to interest rate increases by the Federal Reserve during 2023.

Six months ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Volume Rate Net

Interest income:

Loans held for investment $ 21,479 $ 34,312 $ 55,791

Loans held for sale 1,226 (115) 1,111

Taxable (7,013) 105 (6,908)

Tax-exempt (1,287) (267) (1,554)

Interest-bearing balances with banks 2,355 892 3,247

Total interest-earning assets 16,760 34,927 51,687

Interest expense:

Interest-bearing demand deposits 8,668 50,481 59,149

Savings deposits (292) 112 (180)

Brokered deposits (6,086) 1,304 (4,782)

Time deposits 10,964 20,825 31,789

Borrowed funds (18,130) 2,007 (16,123)

Total interest-bearing liabilities (4,876) 74,729 69,853

Change in net interest income $ 21,636 $ (39,802) $ (18,166)

Interest income, on a tax equivalent basis, was $222,783 and $438,522 for the three and six months ended June 30, 2024, as compared to $200,035 and $386,834 for the same periods in 2023.

The increase in interest income, on a tax equivalent basis, for the three and six months ended June 30, 2024, as compared to the same time periods in 2023 is due primarily to interest rate increases by the Federal Reserve beginning in 2022 and continuing into 2023.

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

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Three Months Ended Three Months Ended

March 31, March 31,

June 30, June 30,

2024 2023 2024 2023

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Total earning assets 100.00 % 100.00 % 5.77 % 5.19 %

For the first quarter of 2024, interest income on loans held for investment, on a tax equivalent basis, increased $30,670 to $194,640 from $163,970 for the same period in 2023.

The Federal Reserve continued to raise interest rates in 2023, which positively impacted the Company’s loan pricing, and the year-to-date average balance of loans held for investment increased $719,442 from March 2023, thereby resulting in the increase in interest income on loans held for investment for the three months ended March 31, 2024, as compared to the same period in 2023.

Percentage of Total Average Earning Assets Yield

Six Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Loans held for investment 81.16 % 76.68 % 6.35 % 5.81 %

Loans held for sale 1.22 0.96 6.22 6.38

Securities 13.83 19.13 2.04 2.05

Interest-bearing balances with banks 3.79 3.23 5.40 5.06

Total earning assets 100.00 % 100.00 % 5.72 % 5.07 %

For the second quarter of 2024, interest income on loans held for investment, on a tax equivalent basis, increased $25,121 to $200,670 from $175,549 for the same period in 2023.

For the six months ended June 30, 2024, interest income on loans held for investment, on a tax equivalent basis, increased $55,791 to $395,310 from $339,519 in the same period in 2023.

The Federal Reserve continued to raise interest rates in 2023, which positively impacted the Company’s loan pricing, and the year-to-date average balance of loans held for investment increased $708,229 from June 2023, thereby resulting in the increase in interest income on loans held for investment for the three and six months ended June 30, 2024, as compared to the same periods in 2023.

The impact from interest income collected on problem loans and purchase accounting adjustments on loans to total interest income on loans held for investment, loan yield and net interest margin is shown in the following table for the periods presented.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Net interest income collected on problem loans $ (146) $ 364 $ (23) $ 756

3 unchanged sentences

Impact to net interest margin 0.02 % 0.03 % 0.02 % 0.03 %

For the first quarter of 2024, interest income on loans held for sale (consisting of mortgage loans held for sale) increased $571 to $2,308 from $1,737 for the same period in 2023.

Investment income, on a tax equivalent basis, decreased $4,652 to $11,010 for the first quarter of 2024 from $15,662 for the first quarter of 2023.

The tax equivalent yield on the investment portfolio for the first quarter of 2024 was 2.04%, down 3 basis points from 2.07% for the same period in 2023.

The decrease in taxable equivalent investment income for the three months ended March 31, 2024 as compared to the same period in 2023 was due to our previously disclosed sale of securities during 2023 as well as the aforementioned securities sale in January 2024.

Interest expense was $89,889 for the first quarter of 2024 as compared to $48,270 for the same period in 2023.

For the second quarter of 2024, interest income on loans held for sale (consisting of mortgage loans held for sale) increased $540 to $3,530 from $2,990 for the same period in 2023.

For the six months ended June 30, 2024, interest income on loans held for sale (consisting of mortgage loans held for sale), increased $1,111 to $5,838 from $4,727 for the same period in 2023.

Investment income, on a tax equivalent basis, decreased $3,809 to $10,709 for the second quarter of 2024 from $14,518 for the second quarter of 2023.

Investment income, on a tax equivalent basis, decreased $8,461 to $21,719 for the six months ended June 30, 2024 from $30,180 for the same period in 2023.

The Company sold a portion of its securities portfolio in each of the first quarter of 2024 and the second quarter of 2023, driving the decrease to investment income for both the three and six months ended June 30, 2024.

The tax equivalent yield on the investment portfolio for both the second quarter of 2024 and 2023

The tax equivalent yield on the investment portfolio for both the six months ended June 30, 2024 was 2.04%, down one basis point from 2.05% for the same period in 2023.

Interest expense was $95,185 for the second quarter of 2024 as compared to $66,950 for the same period in 2023.

Interest expense for the six months ended June 30, 2024 was $185,074 as compared to $115,220 for the same period in 2023.

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

1 unchanged sentence

Three Months Ended Three Months Ended

March 31, March 31,

June 30, June 30,

2024 2023 2024 2023

8 unchanged sentences

Total deposits and borrowed funds 100.00 % 100.00 % 2.58 % 1.80 %

Interest expense on deposits was $82,613 and $32,866 for the three months ended March 31, 2024 and 2023, respectively.

Percentage of Total Average Deposits and Borrowed Funds Cost of Funds

Six Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Noninterest-bearing demand 23.88 % 28.41 % — % — %

Interest-bearing demand 47.73 41.07 3.10 1.64

Savings 5.78 6.94 0.34 0.32

Brokered deposits 2.51 4.07 5.38 4.91

Time deposits 16.33 11.13 4.20 2.25

Short-term borrowings 0.86 5.48 1.59 4.46

Subordinated notes 2.14 2.14 5.83 5.45

Other long term borrowings 0.77 0.76 8.26 7.77

Total deposits and borrowed funds 100.00 % 100.00 % 2.52 % 1.57 %

Interest expense on deposits was $87,621 and $51,391 for the three months ended June 30, 2024 and 2023, respectively.

The cost of total deposits was 2.47% and 1.50% for the same respective periods.

The increase in both deposit expense and cost is attributable to the Company’s efforts to offer competitive deposit rates in the high interest rate environment and its decision to maintain additional on-balance sheet liquidity following the bank failures and broader industry concerns about bank liquidity that arose in March 2023.

Interest expense on deposits was $170,234 and $84,257 for the six months ended June 30, 2024 and 2023, respectively, and the cost of total deposits was 2.41% and 1.25% for the same respective periods.

The increase in both deposit expense and cost is attributable to the Company’s efforts to offer competitive deposit rates in the high interest rate environment.

Following the bank failures and broader industry concerns about bank liquidity that arose in March 2023, the Company maintained additional on-balance sheet liquidity, primarily in the form of brokered deposits and short-term FHLB advances.

As risks abated, the Company repaid the advances and has allowed brokered deposits to mature, mitigating to some degree, the impact of rising rates on our deposit costs.

The Company has continued its efforts to maintain non-interest bearing deposits.

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however, the Company may rely on brokered deposits or wholesale borrowings when advantageous or otherwise deemed advisable due to market conditions.

Interest expense on total borrowings was $7,276 and $15,404 for the three months ended March 31, 2024 and 2023, respectively.

Interest expense on total borrowings was $7,564 and $15,559 for the three months ended June 30, 2024 and 2023, respectively.

Interest expense on total borrowings was $14,840 and $30,963 for the six months ended June 30, 2024 and 2023, respectively.

The decrease in interest expense on borrowings is a result of the repayment of FHLB borrowings during 2023 and the first quarter of 2024.

2 unchanged sentences

Noninterest Income to Average Assets

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

0.90% 0.40% 0.93% 0.64%

Total noninterest income includes fees generated from deposit services and other fees and commissions, income from our insurance, wealth management and mortgage banking operations, realized gains and losses on the sale of securities and all other noninterest income.

Our focus is to develop and enhance our products that generate noninterest income in order to diversify revenue sources.

Noninterest income was $41,381 for the first quarter of 2024 as compared to $37,293 for the same period in 2023.

The increase over the three month period is primarily due to the $3,472 gain on sale of MSRs during the first quarter of 2024, which is included in “Mortgage banking income” in the Consolidated Statements of Income.

Noninterest income was $38,762 for the second quarter of 2024 as compared to $17,226 for the same period in 2023.

Noninterest income was $80,143 for the six months ended June 30, 2024 as compared to $54,519 for the same period in 2023.

The increase over the three and six month periods is primarily due to the impact of the $22,438 loss on the sale of securities to noninterest income in during June 2023.

Noninterest income in future periods will be negatively impacted by the sale of substantially all of Renasant Insurance, Inc.’s assets, as described under the “Recent Developments” heading above.

Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees (which encompasses traditional overdraft fees as well as non-sufficient funds fees).

Service charges on deposit accounts were $10,506 and $9,120 for the first quarter of 2024 and 2023, respectively.

Overdraft fees, the largest component of service charges on deposits, were $5,256 for the three months ended March 31, 2024, as compared to $4,580 for the same period in 2023.

Fees and commissions were $3,949 during the first quarter of 2024 as compared to $4,676 for the same period in 2023.

Service charges on deposit accounts were $10,286 and $9,733 for the second quarter of 2024 and 2023, respectively, and $20,792 and $18,853 for the six months ended June 30, 2024 and 2023, respectively.

Overdraft fees, the largest component of service charges on deposits, were $5,003 for the three months ended June 30, 2024, as compared to $5,088 for the same period in 2023.

These fees were $10,259 for the six months ended June 30, 2024 compared to $9,669 for the same period in 2023.

Fees and commissions were $3,944 during the second quarter of 2024 as compared to $4,987 for the same period in 2023, and were $7,893 for the first six months of 2024 as compared to $9,663 for the same period in 2023.

Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions, and lending services, such as collateral management fees and unused commitment fees.

For the first quarter of 2024, interchange fees were $2,130 as compared to $2,327 for the same period in 2023.

For the second quarter of 2024, interchange fees were $2,321 as compared to $2,467 for the same period in 2023.

Interchange fees were $4,451 for the six months ended June 30, 2024 as compared to $4,793 for the same period in 2023.

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

Income earned on insurance products was $2,716 and $2,446 for the three months ended March 31, 2024 and 2023, respectively.

Income earned on insurance products was $2,758 and $2,809 for the three months ended June 30, 2024 and 2023, respectively, and was $5,474 and $5,255 for the six months ended June 30, 2024 and 2023, respectively.

Contingency income is a bonus received from the insurance underwriters and is based both on commission income and claims experience on our clients’ policies during the previous year.

Increases and decreases in contingency income are reflective of corresponding increases and decreases in the number of claims paid by insurance carriers.

Contingency income, which is included in “Other noninterest income” in the Consolidated Statements of Income, was $873 and $910 for the three months ended March 31, 2024 and 2023, respectively.

Contingency income, which is included in “Other noninterest income” in the Consolidated Statements of Income, was $114 and $46 for the three months ended June 30, 2024 and 2023, respectively, and $987 and $956 for the six months ended June 30, 2024 and 2023, respectively.

Our Wealth Management segment has two divisions:

4 unchanged sentences

The Financial Services division provides specialized products and services to our customers, which include fixed and variable annuities, mutual funds, and stocks offered through a third party provider.

Wealth Management revenue was $5,669 for the first quarter of 2024 compared to $5,140 for the same period in 2023.

The market value of assets under management or administration was $5,386,011 and $4,980,887 at March 31, 2024 and March 31, 2023, respectively.

Wealth Management revenue was $5,684 for the second quarter of 2024 compared to $5,338 for the same period in 2023, and was $11,353 for the six months ended June 30, 2024 compared to $10,478 for the same period in 2023.

The market value of assets under management or administration was $5,502,476 and $5,135,465 at June 30, 2024 and June 30, 2023, respectively.

Mortgage banking income is derived from the origination and sale of mortgage loans and the servicing of mortgage loans that the Company has sold but retained the right to service.

Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market.

Interest rate lock commitments and originations of mortgage loans to be sold totaled $444,297 and $260,424, respectively, in the first quarter of 2024 compared to $629,833 and $258,946, respectively for the same period in 2023.

The decrease in interest rate lock commitments was due to continued increases in mortgage interest rates during 2023, significantly dampening demand for mortgages nationwide.

Interest rate lock commitments and originations of mortgage loans to be sold totaled $560,303 and $380,707, respectively, in the second quarter of 2024 compared to $610,611 and $400,975, respectively for the same period in 2023.

Interest rate lock commitments and originations of mortgage loans to be sold totaled $1,004,601 and $643,131 in the six months ended June 30, 2024 compared to $1,240,443 and $659,921 for the same period in 2023.

The decrease in interest rate lock commitments was due to continued

increases in mortgage interest rates during 2023, significantly dampening demand for mortgages nationwide.

In the first quarter of 2024, the Company sold a portion of its mortgage servicing rights portfolio with a carrying value of $19,539 for a pre-tax gain of $3,472.

The table below presents the components of mortgage banking income included in noninterest income for the periods presented.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Gain on sales of loans, net (1)

2 unchanged sentences

Mortgage servicing income, net (2)

1,633 2,266 6,614 4,207

Mortgage banking income, net $ 9,698 $ 9,771 $ 21,068 $ 18,288

2 unchanged sentences

Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance policies and proceeds received upon the death of covered individuals.

BOLI income was $2,691 for the three months ended March 31, 2024 as compared to $3,003 for the same period in 2023.

Other noninterest income was $4,424 and $4,391 for the three months ended March 31, 2024 and 2023, respectively.

BOLI income was $2,701 for the three months ended June 30, 2024 as compared to $2,402 for the same period in 2023, and $5,392 for the six months ended June 30, 2024 as compared to $5,405 for the same period in 2023.

Other noninterest income was $3,691 and $4,624 for the three months ended June 30, 2024 and 2023, respectively, and was $8,115 and $9,015 for the six months ended June 30, 2024 and 2023, respectively.

Other noninterest income includes income from our SBA banking division, our capital markets division and other miscellaneous income and can fluctuate based on production in our SBA banking and capital markets divisions and recognition of other seasonal income items.

1 unchanged sentence

Noninterest Expense to Average Assets

Three Months Ended March 31,

Noninterest expense was $112,912 and $109,208 for the first quarter of 2024 and 2023, respectively.

Salaries and employee benefits increased $1,638 to $71,470 for the first quarter of 2024 as compared to $69,832 for the same period in 2023.

The increase in salaries and employee benefits is primarily due to annual merit increases implemented in April 2023 offset by decreases in salaries and benefits within our mortgage division attributable to declines in mortgage production.

Data processing costs were $3,807 in the first quarter of 2024 as compared to $3,633 for the same period in 2023.

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

2.59% 2.55% 2.62% 2.56%

Noninterest expense was $111,976 and $110,165 for the second quarter of 2024 and 2023, respectively, and was $224,888 and $219,373 for the six months ended June 30, 2024 and 2023, respectively.

Salaries and employee benefits increased $94 to $70,731 for the second quarter of 2024 as compared to $70,637 for the same period in 2023.

Salaries and employee benefits increased $1,732 to $142,201 for the six months ended June 30, 2024 as compared to $140,469 for the same period in 2023.

The minimal change in salaries and employee benefits is primarily due to annual merit increases implemented in April 2024 offset by decreases in salaries and benefits within our mortgage division attributable to declines in mortgage production.

Data processing costs were $3,945 in the second quarter of 2024 as compared to $3,684 for the same period in 2023 and were $7,752 for the six months ended June 30, 2024 as compared to $7,317 for the same period in 2023.

The Company continues to examine new and existing contracts to negotiate favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume.

Net occupancy and equipment expense for the first quarter of 2024 was $11,389, as compared to $11,405 for the same period in 2023.

For the first quarter of 2024 the Company had expenses of $107 related to other real estate owned as compared to expenses of $30 for the same period in 2023.

Expenses on other real estate owned included write downs of the carrying value to fair value on certain pieces of property held in other real estate owned of $28 for the first three months of 2024.

There were no such write downs during the first quarter of 2023.

For the three months ended March 31, 2024 and 2023, other real estate owned with a cost basis of $119 and $552, respectively, was sold, resulting in a net gain of $13 and $95, respectively.

Net occupancy and equipment expense for the second quarter of 2024 was $11,844, as compared to $11,865 for the same period in 2023.

These expenses for the first six months of 2024 were $23,233, as compared to $23,270 for the same period in 2023.

Professional fees include fees for legal and accounting services, such as routine litigation matters, external audit services as well as assistance in complying with newly-enacted and existing banking and governmental regulations.

Professional fees were $3,348 for the first quarter of 2024 as compared to $3,467 for the same period in 2023.

Advertising and public relations expense was $4,886 for the first quarter of 2024 as compared to $4,686 for the same period in 2023.

During the three months ended March 31, 2024 and 2023, the Company contributed approximately $1,055 and $1,067, respectively, to charitable organizations throughout Mississippi and Georgia, which contributions are included in our advertising and public relations expense, for which it received a dollar-for-dollar tax credit.

Amortization of intangible assets totaled $1,212 and $1,426 for the first quarter of 2024 and 2023.

Professional fees were $3,195 for the second quarter of 2024 as compared to $4,012 for the same period in 2023 and were $6,543 for the six months ended June 30, 2024 as compared to $7,479 for the same period in 2023.

Advertising and public relations expense was $3,807 for the second quarter of 2024 as compared to $3,482 for the same period in 2023 and was $8,693 for the six months ended June 30, 2024 as compared to $8,168 for the same period in 2023.

During the six months ended June 30, 2024 and 2023, the Company contributed approximately $1,305 and $1,292, respectively, to charitable organizations throughout Mississippi and Georgia, which contributions are included in our advertising and public relations expense, for which it received a dollar-for-dollar tax credit.

Amortization of intangible assets totaled $1,186 and $1,369 for the second quarter of 2024 and 2023 and $2,398 and $2,795 for the six months ended June 30, 2024 and 2023, respectively.

This amortization relates to finite-lived intangible assets which are being amortized over the useful lives as determined at acquisition.

These finite-lived intangible assets have remaining estimated useful lives ranging from approximately 1 year to 7 years.

Communication expenses, those expenses incurred for communication to clients and between employees, were $2,024 for the first quarter of 2024 as compared to $1,980 for the same period in 2023.

Communication expenses, those expenses incurred for communication to clients and between employees, were $2,112 for the second quarter of 2024 as compared to $2,226 for the same period in 2023.

Communication expenses were $4,136 for the six months ended June 30, 2024 as compared to $4,206 for the same period in 2023.

Other noninterest expense includes business development and travel expenses, other discretionary expenses, loan fees expense and other miscellaneous fees and operating expenses.

Other noninterest expense was $14,669 for the three months ended March 31, 2024 as compared to $12,749 for the same period in 2023.

The increase in other noninterest expense is primarily attributable to lower mortgage deferred loan origination expense in the first quarter of 2024 compared to the same period in 2023.

Other noninterest expense was $15,051 and $29,720 for the three and six months ended June 30, 2024 as compared to $12,839 and $25,588 for the same periods in 2023.

The increase in other noninterest expense is primarily attributable to lower mortgage deferred loan origination expense in the first half of 2024 compared to the same period in 2023.

The amount of loan origination expense deferred is directly correlated to the volume and mix of our loan production during the period.

2 unchanged sentences

Efficiency Ratio

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Efficiency ratio 67.31 % 73.29 % 67.41 % 67.26 %

4 unchanged sentences

Our goal is to improve the efficiency ratio over time from currently reported levels as a result of revenue growth while at the same time controlling noninterest expenses.

Income tax expense for the first quarter of 2024 and 2023 was $9,912 and $11,322, respectively.

The decline is primarily due to a decrease in pre-tax income.

Income tax expense for the second quarter of 2024 and 2023 was $9,666 and $6,634, respectively, and $19,578 and $17,956 for the six months ended June 30, 2024 and 2023, respectively.

The increase is primarily due to a rise in pre-tax income.

Risk Management

13 unchanged sentences

In addition, each lending officer’s prior performance is evaluated for credit quality and compliance as a tool for establishing and enhancing lending limits.

Before funds are advanced on consumer and commercial loans below certain dollar thresholds, loans are reviewed and scored using centralized underwriting methodologies.

Before funds are advanced on consumer and commercial loans below certain dollar thresholds, loans are

reviewed and scored using centralized underwriting methodologies.

Loan quality, or “risk-rating,” grades are assigned based upon certain factors, which include the scoring of the loans.

This information is used to assist management in monitoring credit quality.

Loan requests of amounts greater than an officer’s lending limit are reviewed for approval by senior credit officers.

Loan requests of amounts greater than an officer’s lending limit are reviewed for approval by senior credit officers or potentially the chief credit officer.

For loans with a commercial purpose, internal risk-rating grades are assigned by lending, credit administration and loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan.

6 unchanged sentences

The purchase price is applied to the outstanding loan balance.

Any remaining balance is charged-off, which reduces the allowance for credit

losses on loans.

Any remaining balance is charged-off, which reduces the allowance for credit losses on loans.

Charge-offs reflect the realization of losses in the portfolio that were recognized previously through the provision for credit losses on loans.

The Company’s practice is to charge off estimated losses as soon as management believes the uncollectability of a loan balance is confirmed and such losses are reasonably quantified.

Net charge-offs for the first quarter of 2024 were $164, or 0.01% of average loans (annualized), compared to net charge-offs of $4,732, or 0.16% of average loans (annualized), for the same period in 2023.

Net charge-offs for the first six months of 2024 were $5,645, or 0.09% of average loans (annualized), compared to net charge-offs of $8,633, or 0.15% of average loans (annualized), for the same period in 2023.

The charge-offs were fully reserved for in the Company’s allowance for credit losses on loans.

16 unchanged sentences

The Company uses two CECL models:

(1) for the Real Estate - 1-4 Family Mortgage, Real Estate - Construction and the Installment Loans to Individuals portfolio segments, the Company uses a loss rate model, based on average historical life-of-loan loss rates, and (2) for the Commercial, 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.

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.

6 unchanged sentences

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.

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, third-party, local appraisal firms.

6 unchanged sentences

The following table presents the allocation of the allowance for credit losses on loans by loan category and the percentage of loans in each category to total loans as of the dates presented:

March 31, 2024 December 31, 2023 March 31, 2023

June 30, 2024 December 31, 2023 June 30, 2023

Balance % of Total Balance % of Total Balance % of Total

7 unchanged sentences

The provision for credit losses on loans charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for credit losses on loans at a level that is believed to be adequate to meet the inherent risks of losses in our loan portfolio.

The Company recorded a provision for credit losses on loans of $2,638 in the first quarter of 2024, as compared to $7,960 in the first quarter of 2023.

The Company recorded a provision for credit losses on loans of $4,300 in the second quarter of 2024 and $6,938 in the first half of 2024, as compared to $3,000 in the second quarter of 2023 and $10,960 in the first half of 2023.

The Company’s allowance for credit losses 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 caused the Company’s model to indicate that the aforementioned provision for credit losses on loans was appropriate during the first quarter of 2024.

Loan growth as well as changes in credit metrics influencing our expectations of future credit losses resulted in the Company’s model indicating that the aforementioned provision for credit losses on loans was appropriate during the first half of 2024.

The table below reflects the activity in the allowance for credit losses on loans for the periods presented:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Balance at beginning of period $ 201,052 $ 195,292 $ 198,578 $ 192,090

21 unchanged sentences

The table below reflects annualized net charge-offs (recoveries) to daily average loans outstanding, by loan category, during the periods presented:

Three Months Ended

March 31, 2024 March 31, 2023

Net Charge-offs (Recoveries) Average Loans Annualized Net Charge-offs to Average Loans Net Charge-offs (Recoveries) Average Loans Annualized Net Charge-offs to Average Loans

Six Months Ended

June 30, 2024 June 30, 2023

Net Charge-offs (Recoveries) Average Loans Annualized Net Charge-offs (Recoveries) to Average Loans Net Charge-offs (Recoveries) Average Loans Annualized Net Charge-offs (Recoveries) to Average Loans

Commercial, financial, agricultural $ (336) $ 1,860,832 (0.04)% $ 3,469 $ 1,734,709 0.40%

6 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Real estate – construction:

Residential $ — $ 57 $ — $ 57

Total real estate – construction — 57 — 57

Real estate – 1-4 family mortgage:

15 unchanged sentences

A roll-forward of the allowance for credit losses on unfunded commitments is shown in the table below.

Three Months Ended March 31, 2024 2023

Three Months Ended June 30, 2024 2023

Allowance for credit losses on unfunded loan commitments:

Beginning balance $ 16,718 $ 18,618

Recovery of provision for credit losses on unfunded loan commitments (included in other noninterest expense) (200) (1,500)

Recovery of provision for credit losses on unfunded loan commitments (1,000) (1,000)

Ending balance $ 15,718 $ 17,618

Six Months Ended June 30, 2024 2023

Allowance for credit losses on unfunded loan commitments:

Beginning balance $ 16,918 $ 20,118

Recovery of provision for credit losses on unfunded loan commitments (1,200) (2,500)

Ending balance $ 15,718 $ 17,618

Nonperforming Assets .

8 unchanged sentences

The following table provides details of the Company’s nonperforming assets as of the dates presented.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Nonaccruing loans $ 97,795 $ 68,816

7 unchanged sentences

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

2024 December 31, 2023 March 31,

2024 December 31, 2023 June 30,

Commercial, financial, agricultural $ 5,866 $ 6,282 $ 7,698

15 unchanged sentences

Total nonperforming loans $ 98,035 $ 69,370 $ 91,760

Total nonperforming loans as a percentage of total loans were 0.59% as of March 31, 2024 as compared to 0.56% and 0.64% as of December 31, 2023 and March 31, 2023, respectively.

The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 270.87% as of March 31, 2024 as compared to 286.26% as of December 31, 2023 and 259.39% as of March 31, 2023.

Management has evaluated loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses at March 31, 2024.

Total nonperforming loans as a percentage of total loans were 0.78% as of June 30, 2024 as compared to 0.56% and 0.77% as of December 31, 2023 and June 30, 2023, respectively.

The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 203.88% as of June 30, 2024 as compared to 286.26% as of December 31, 2023 and 211.85% as of June 30, 2023.

Management has evaluated loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses at June 30, 2024.

Management also continually monitors past due loans for potential credit quality deterioration.

Total loans 30-89 days past due but still accruing interest were $59,632, or 0.48% of total loans, at March 31, 2024 as compared to $54,031, or 0.44% of total loans, at December 31, 2023 and $50,992, or 0.43% of total loans, at March 31, 2023.

Certain modifications of loans made to borrowers experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay (including an extension of the amortization period), or a term extension, excluding covenant waivers and modification of contingent acceleration clauses, are required to be disclosed in accordance with ASU 2022-02.

All modifications for the three months ended March 31, 2024 and 2023 and which met the disclosure criteria in ASU 2022-02 were performing in accordance with their modified terms at March 31, 2024 and 2023, respectively.

The total amortized cost basis of loans that were experiencing financial difficulty, modified during the three months ended March 31, 2024 and 2023, were $10,693 and $1,184, respectively.

Unused commitments totaled $85 at March 31, 2024.

There were no unused commitments at March 31, 2023.

Total loans 30-89 days past due but still accruing interest were $28,507, or 0.23% of total loans, at June 30, 2024 as compared to $54,031, or 0.44% of total loans, at December 31, 2023 and $12,146, or 0.10% of total loans, at June 30, 2023.

Troubled Debt Restructurings and Vintage Disclosures ” (“ASU 2022-02”).

All modifications for the six months ended June 30, 2024 and 2023 and which met the disclosure criteria in ASU 2022-02 were performing in accordance with their modified terms at June 30, 2024 and 2023, respectively.

The total amortized cost basis of loans that were experiencing financial difficulty, modified during the six months ended June 30, 2024 and 2023, were $13,338 and $7,140, respectively.

Unused commitments totaled $338 and $1,600 at June 30, 2024 and 2023, respectively.

Upon the Company’s determination that a modified loan has been subsequently deemed uncollectible, the loan, or portion of the loan, is charged off, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted accordingly.

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The following table provides details of the Company’s other real estate owned, net of valuation allowance and direct write-downs, as of the dates presented:

2024 December 31, 2023 March 31,

2024 December 31, 2023 June 30,

Residential real estate $ 1,004 $ 1,211 $ 459

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Other (2,272) (16)

Balance at March 31 $ 9,142 $ 4,818

Other real estate owned with a cost basis of $119 was sold during the three months ended March 31, 2024, resulting in a net gain of $13, while other real estate owned with a cost basis of $552 was sold during the three months ended March 31, 2023, resulting in a net gain of $95.

Balance at June 30 $ 7,366 $ 5,120

Other real estate owned with a cost basis of $1,052 was sold during the six months ended June 30, 2024, resulting in a net gain of $115, while other real estate owned with a cost basis of $738 was sold during the six months ended June 30, 2023, resulting in a net gain of $89.

Interest Rate Risk

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The ALCO uses an asset/liability model as the primary quantitative tool in measuring the amount of interest rate risk associated with changing market rates.

The model is used to perform both net interest income forecast simulations for multiple year horizons and economic value of equity (“EVE”) analyses, each under various interest rate scenarios, which could impact the results presented in the table below.

The model is used to perform both net interest income forecast simulations for multiple year horizons and economic value of equity (“EVE”) analyses, each under various interest rate scenarios.

Net interest income forecast simulations measure the short- and medium-term earnings exposure from changes in market interest rates in a rigorous and explicit fashion.

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An increase in EVE due to a specified rate change indicates an improvement in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet.

The following table presents the projected impact of a change in interest rates on (1) static EVE and (2) earnings at risk (that is, net interest income) for the 1-12 and 13-24 month periods commencing April 1, 2024, in each case as compared to the result under rates present in the market on March 31, 2024.

The following table presents the projected impact of a change in interest rates on (1) static EVE and (2) earnings at risk (that is, net interest income) for the 1-12 and 13-24 month periods commencing July 1, 2024, in each case as compared to the result under rates present in the market on June 30, 2024.

The changes in interest rates assume an instantaneous and parallel shift in the yield curve and do not account for changes in the slope of the yield curve.

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-200 (9.18)% (6.98)% (9.59)%

The rate shock results for the net interest income simulations for the next 24 months produce an asset sensitive position at March 31, 2024.

The rate shock results for the net interest income simulations for the next 24 months produce an asset sensitive position at June 30, 2024.

The preceding measures assume no change in the size or asset/liability compositions of the balance sheet, and they do not reflect future actions the ALCO may undertake in response to such changes in interest rates.

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For more information about the Company’s derivatives, see the information under the heading “Loan Commitments and Other Off-Balance Sheet Arrangements” in the Liquidity and Capital Resources section below and Note 9, “Derivative Instruments,” in the Notes to Consolidated Financial Statements of the Company in Item 1, Financial Statements.

The Liquidity and Capital Resources section also details our available sources of liquidity, both on and off-balance sheet.

The next section also details our available sources of liquidity, both on and off-balance sheet.

Liquidity and Capital Resources

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Maintaining the ability to acquire these funds as needed in a variety of markets is the key to assuring the Bank’s liquidity.

We may also access the brokered deposit market where rates are favorable to other sources of liquidity (especially in light of collateral requirements for certain borrowings) and core deposits are not sufficient for meeting our current and anticipated liquidity needs.

During the first quarter of 2024, brokered deposits decreased by $119,070 as compared to the balance at December 31, 2023.

The Bank obtained brokered deposits in the amount of $120,345 during the first quarter of 2024 and paid down brokered deposits of $239,355 during the same period.

During the first half of 2024, brokered deposits decreased by $302,840 as compared to the balance at December 31, 2023.

The Bank obtained brokered deposits in the amount of $120,345 during the first half of 2024 and paid down brokered deposits of $423,185 during the same period.

Management continually monitors the Bank’s liquidity and non-core dependency ratios to ensure compliance with targets established by the ALCO.

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Securities within our investment portfolio are also used to secure certain deposit types, short-term borrowings and derivative instruments.

At March 31, 2024, securities with a carrying value of $813,304 were pledged to secure government, public fund and trust deposits and as collateral for short-term borrowings and derivative instruments as compared to securities with a carrying value of $895,044 similarly pledged at December 31, 2023.

At June 30, 2024, securities with a carrying value of $848,460 were pledged to secure government, public fund and trust deposits and as collateral for short-term borrowings and derivative instruments as compared to securities with a carrying value of $895,044 similarly pledged at December 31, 2023.

Other sources available for meeting liquidity needs include federal funds purchased, short-term and long-term advances from the FHLB and borrowings from the Federal Reserve Discount Window.

Interest is charged at the prevailing market rate on federal funds purchased and FHLB advances.

There were $100,000 in short-term borrowings from the FHLB at March 31, 2024, as compared to $300,000 at December 31, 2023.

There were $225,000 in short-term borrowings from the FHLB at June 30, 2024, as compared to $300,000 at December 31, 2023.

Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and also are used to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits.

There were no outstanding long-term advances with the FHLB at March 31, 2024 or December 31, 2023.

The total amount of the remaining

credit available to us from the FHLB at March 31, 2024 was $2,850,966.

The credit available at the Federal Reserve Discount Window at March 31, 2024 was $592,236 with no borrowings currently outstanding.

There were no outstanding

long-term advances with the FHLB at June 30, 2024 or December 31, 2023.

The total amount of the remaining credit available to us from the FHLB at June 30, 2024 was $2,709,670.

The credit available at the Federal Reserve Discount Window at June 30, 2024 was $588,890 with no borrowings outstanding as of such date.

We also maintain lines of credit with other commercial banks totaling $160,000.

These are unsecured lines of credit with the majority maturing at various times within the next twelve months.

There were no amounts outstanding under these lines of credit at March 31, 2024 or December 31, 2023.

There were no amounts outstanding under these lines of credit at June 30, 2024 or December 31, 2023.

Finally, we can access the capital markets to meet liquidity needs.

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Specific terms and prices will be determined at the time of any offering under a separate prospectus supplement that the Company will file with the SEC at the time of the specific offering.

The proceeds of the sale of securities, if and when offered, will be used for general corporate purposes or as otherwise described in the prospectus supplement applicable to the offering and could include the expansion of the Company's banking, insurance and wealth management operations as well as other business opportunities.

In previous years, we have accessed the capital markets to generate liquidity in the form of common stock and subordinated notes.

The proceeds of the sale of securities, if and when offered, will be used for general corporate purposes or as otherwise described in the prospectus supplement applicable to the offering and could include the expansion of the Company's banking and wealth management operations as well as other business opportunities.

Our common stock offering described under the “Recent Developments” heading above reflects our access of the capital markets as described in this paragraph.

In addition, in previous years, we have accessed the capital markets to generate liquidity in the form of subordinated notes.

We have also assumed subordinated notes as part of acquisitions.

The carrying value of subordinated notes, net of unamortized debt issuance costs, was $314,834 at March 31, 2024.

The carrying value of subordinated notes, net of unamortized debt issuance costs, was $315,230 at June 30, 2024.

Percentage of Total Average Deposits and Borrowed Funds Cost of Funds

Three Months Ended Three Months Ended

March 31, March 31,

Six Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

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Total deposits and borrowed funds 100.00 % 100.00 % 2.52 % 1.57 %

The estimated amount of uninsured and uncollateralized deposits at March 31, 2024 was $4,392,773.

Collateralized public funds over FDIC insurance limits were $1,569,410 at March 31, 2024.

The estimated amount of uninsured and uncollateralized deposits at June 30, 2024 was $4,499,972.

Collateralized public funds over FDIC insurance limits were $1,743,346 at June 30, 2024.

Our strategy in choosing funds is focused on minimizing cost in the context of our balance sheet composition, interest rate risk position and liquidity forecast.

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We constantly monitor our funds position and evaluate the effect that various funding sources have on our financial position.

Cash and cash equivalents were $844,400 at March 31, 2024, as compared to $847,697 at March 31, 2023.

Cash provided by investing activities for the three months ended March 31, 2024 was $29,968, as compared to cash used in investing activities of $153,231 for the three months ended March 31, 2023.

Proceeds from the sale, maturity or call of securities within our investment portfolio were $223,492 for the three months ended March 31, 2024, as compared to $70,766 for the same period in 2023.

A portion of the securities portfolio was sold during the first quarter, resulting in proceeds of $177,185 of which a portion were used to purchase higher yielding securities, while the remainder was used to fund loan growth.

Proceeds in the first quarter of 2023 were primarily used to fund loan growth.

Purchases of investment securities were $46,975 during the first three months of 2024.

Cash and cash equivalents were $851,906 at June 30, 2024, as compared to $946,899 at June 30, 2023.

Cash used in investing activities for the six months ended June 30, 2024 was $43,479, as compared to cash provided by investing activities of $274,113 for the six months ended June 30, 2023.

Proceeds from the sale, maturity or call of securities within our investment portfolio were $270,270 for the six months ended June 30, 2024, as compared to $633,934 for the same period in 2023.

A portion of the securities portfolio was sold during the first quarter of 2024, resulting in proceeds of $177,185 of which a portion were used to purchase higher yielding securities, while the remainder was used to fund loan growth.

A portion of the securities portfolio was sold during the second quarter of 2023, resulting in proceeds of $488,981 which were used to pay off short-term FHLB borrowings and to fund loan growth.

Purchases of investment securities were $52,679 during the first six months of 2024.

There were no purchases of investment securities for the same period in 2023.

Cash used in financing activities for the three months ended March 31, 2024 was $51,976, as compared to cash provided by financing activities of $432,318 for the same period in 2023.

Deposits increased $160,378 and $425,054 for the three months ended March 31, 2024 and 2023, respectively.

Cash provided by financing activities for the six months ended June 30, 2024 was $78,054, as compared to cash provided by financing activities of $128,334 for the same period in 2023.

Deposits increased $178,428 and $608,395 for the six months ended June 30, 2024 and 2023, respectively.

Restrictions on Bank Dividends, Loans and Advances

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Federal Reserve regulations also limit the amount the Bank may loan to the Company unless such loans are collateralized by specific obligations.

At March 31, 2024, the maximum amount available for transfer from the Bank to the Company in the form of loans was $190,482.

At June 30, 2024, the maximum amount available for transfer from the Bank to the Company in the form of loans was $192,931.

The Company maintains a $3,000 line of credit collateralized by cash with the Bank.

There were no amounts outstanding under this line of credit at March 31, 2024.

These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the three months ended March 31, 2024, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.

There were no amounts outstanding under this line of credit at June 30, 2024.

These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the six months ended June 30, 2024, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.

Loan Commitments and Other Off-Balance Sheet Arrangements

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The Company’s unfunded loan commitments and standby letters of credit outstanding were as follows as of the dates presented:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Loan commitments $ 2,911,618 $ 3,091,997

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The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures.

At March 31, 2024, the Company had notional amounts of $631,264 on interest rate contracts with corporate customers and $631,264 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts and certain fixed rate loans.

At June 30, 2024, the Company had notional amounts of $642,619 on interest rate contracts with corporate customers and $646,002 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts and certain fixed rate loans.

Additionally, the Company enters into interest rate lock commitments with its customers to mitigate the interest rate risk associated with the commitments to fund fixed-rate and adjustable rate residential mortgage loans and also enters into forward commitments to sell residential mortgage loans to secondary market investors.

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Under each of these contracts, the Company pays a fixed rate of interest and receives a variable rate of interest.

The Company entered into an interest rate swap contract on its

subordinated notes that is accounted for as a fair value hedge.

The Company entered into an interest rate swap contract on its subordinated notes that is accounted for as a fair value hedge.

Under this contract, the Company pays a variable rate of interest and receives a fixed rate of interest.

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Shareholders’ Equity and Regulatory Matters

Total shareholders’ equity of the Company was $2,322,350 at March 31, 2024 compared to $2,297,383 at December 31, 2023.

Book value per share was $41.25 and $40.92 at March 31, 2024 and December 31, 2023, respectively.

Total shareholders’ equity of the Company was $2,354,701 at June 30, 2024 compared to $2,297,383 at December 31, 2023.

Book value per share was $41.77 and $40.92 at June 30, 2024 and December 31, 2023, respectively.

The growth in shareholders’ equity was attributable to current period earnings and changes in accumulated other comprehensive income, offset by dividends declared.

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The program will remain in effect through October 2024 or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased.

The Company did not repurchase any of its common stock under the stock repurchase plan in the first quarter of 2024.

The Company has junior subordinated debentures with a carrying value of $113,213 at March 31, 2024, of which $109,622 is included in the Company’s Tier 1 capital.

Federal Reserve guidelines limit the amount of securities that, similar to our junior subordinated debentures, are includable in Tier 1 capital, but these guidelines did not impact the debentures we include in Tier 1 capital at March 31, 2024.

The Company did not repurchase any of its common stock under the stock repurchase plan in the first half of 2024.

The Company has junior subordinated debentures with a carrying value of $113,447 at June 30, 2024, of which $109,856 is included in the Company’s Tier 1 capital.

Although our existing junior subordinated debentures are currently unaffected by these Federal Reserve guidelines, on account of changes enacted as part of the Dodd-Frank Act, any new trust preferred securities are not includable in Tier 1 capital.

Further, if we make any acquisition of a financial institution now that we have exceeded $15,000,000 in assets, we will lose Tier 1 treatment of our junior subordinated debentures.

The Company has subordinated notes with a par value of $336,400 at March 31, 2024, of which $333,397 is included in the Company’s Tier 2 capital.

Further, if we complete the proposed merger with The First Bancshares (or we make any acquisition of a financial institution) now that we have exceeded $15,000,000 in assets, we will lose Tier 1 treatment of our junior subordinated debentures.

The Company has subordinated notes with a par value of $336,400 at June 30, 2024, of which $333,621 is included in the Company’s Tier 2 capital.

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.

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Amount Ratio Amount Ratio Amount Ratio

March 31, 2024

June 30, 2024

Renasant Corporation:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis