What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-07 · 218 added, 203 removed, 701 unchanged (38% of the section changed)

14 unchanged sentences

(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;

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

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

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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.

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

The sale resulted in a positive after-tax impact to earnings of $34,092, which is net of estimated transaction-related expenses.

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

Proposed Merger with The First Bancshares, Inc.

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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.

The shareholders of the Company and The First approved the Merger at special meetings held on October 22, 2024.

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.

Offering of Common Stock

1 unchanged sentence

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 net proceeds of the offering after deducting underwriting discounts and other estimated offering expenses were 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 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 following discussion provides details regarding the changes in significant balance sheet accounts at September 30, 2024 compared to December 31, 2023.

Total assets were $17,958,840 at September 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.

1 unchanged sentence

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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Balance Percentage of

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Securities, net of allowance for credit losses $ 1,915,375 $ 2,144,743

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.

The Company purchased $60,656 and $9,646 in investment securities during the nine months ended September 30, 2024 and 2023, respectively.

Proceeds from maturities, calls and principal payments on securities during the first nine months of 2024 totaled $142,480.

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.

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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 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.

No loss was recorded in the first nine months of 2024.

Proceeds from the maturities, calls and principal payments on securities during the first nine months of 2023 totaled $208,095.

The Company did not sell any securities during the third quarter of 2024 or 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 June 30, 2024, the net unrealized after tax losses remaining to be amortized in accumulated other comprehensive income (loss) was $53,662.

At September 30, 2024, the net unrealized after tax losses remaining to be amortized in accumulated other comprehensive income (loss) was $51,332.

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 $266,406 at June 30, 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 $291,735 at September 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 $12,604,755 at June 30, 2024 and $12,351,230 at December 31, 2023.

Total loans, excluding loans held for sale, were $12,627,648 at September 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:

June 30, 2024 December 31, 2023

September 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 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.

At September 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 $14,255,213 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.

Total deposits were $14,509,751 and $14,076,785 at September 30, 2024 and December 31, 2023, respectively.

Noninterest-bearing deposits were $3,529,801 and $3,583,675 at September 30, 2024 and December 31, 2023, respectively, while interest-bearing deposits were $10,979,950 and $10,493,110 at September 30, 2024 and December 31, 2023, respectively.

Interest-bearing deposits included brokered deposits of $126,995 and $461,441 at September 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 24.83% of total deposits at June 30, 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 due to the elevated interest rate environment that continued in the first half of 2024.

Noninterest-bearing deposits represented 24.33% of total deposits at September 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).

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

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.

Public fund deposits were $2,185,034 and $1,866,495 at September 30, 2024 and December 31, 2023, respectively, and represented 15.06% and 13.26% of total deposits as of September 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.

Total borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the Federal Home Loan Bank of Dallas (the “FHLB”), borrowings from the Federal Reserve Discount Window, 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 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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Security repurchase agreements $ 8,732 $ 7,577

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Junior subordinated debentures $ 113,681 $ 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 June 30, 2024 or December 31, 2023.

There were no long-term advances from the FHLB outstanding at September 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 $2,709,670 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 had $3,449,164 of availability on unused lines of credit with the FHLB at September 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 $634,636 with no borrowings outstanding at September 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 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.

Net income for the third quarter of 2024 was $72,455 compared to net income of $41,833 for the third quarter of 2023.

Basic and diluted earnings per share (“EPS”) for the third quarter of 2024 were $1.18, as compared to basic and diluted EPS of $0.75 and $0.74, respectively for the third quarter of 2023.

Net income for the nine months ended September 30, 2024, was $150,710 compared to net income of $116,554 for the same period in 2023.

Basic and diluted EPS were $2.60 and $2.59, respectively for the first nine months of 2024 as compared to $2.08 and 2.07, respectively for the first nine months 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.

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Three Months Ended

June 30, 2024 June 30, 2023

September 30, 2024 September 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

Merger and conversion expenses $ 11,273 $ 9,456 $ 0.15 $ — $ — $ —

Gain on sale of insurance agency (53,349) (38,951) (0.63) — — —

Nine Months Ended

September 30, 2024 September 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 $ — $ — $ —

Merger and conversion expenses $ 11,273 $ 9,456 $ 0.16 $ — $ — $ —

Loss on sale of securities — — — 22,438 17,859 0.31

Gain on sale of insurance agency (53,349) (38,951) (0.67) — — —

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 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.

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 59.93% of total revenue (i.e., net interest income on a fully taxable equivalent basis and noninterest income) for the third quarter of 2024 (this percentage for the quarter was impacted by the noninterest income generated by the sale of our insurance agency business).

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

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.

Net interest income was $130,998 and $379,314 for the three and nine months ended September 30, 2024, as compared to $127,383 and $393,374 for the same periods in 2023.

On a tax equivalent basis, net interest income was $133,576 and $387,024 for the three and nine months ended September 30, 2024, as compared to $130,131 and $401,745 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 June 30,

Three Months Ended September 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,

Nine Months Ended September 30,

Balance Interest

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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 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 largest contributing factor to the decrease in net interest income for the nine months ended September 30, 2024, as compared to the same period 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.

The rising interest rates negatively impacted both the cost and mix of our funding sources.

The Federal Reserve lowered the federal funds rate by 50 basis points in September 2024, but it did not have a material impact on the Company’s results for the third quarter of 2024.

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.

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

These efforts, coupled with loan growth, resulted in the growth of net interest income for the three months ended September 30, 2024, as compared to the same period in 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 nine months ended September 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 September 30, 2024 Compared to the Three Months Ended September 30, 2023

Volume Rate Net

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Change in net interest income $ 10,022 $ (6,577) $ 3,445

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

Nine months ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Volume Rate Net

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Change in net interest income $ 30,674 $ (45,395) $ (14,721)

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:

Interest income, on a tax equivalent basis, was $231,621 and $670,143 for the three and nine months ended September 30, 2024, as compared to $208,425 and $595,259 for the same periods in 2023.

The increase in interest income, on a tax equivalent basis, for the three and nine months ended September 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 tables present the percentage of total average earning assets, by type and yield, for the periods presented:

Percentage of Total Average Earning Assets Yield

Three Months Ended Three Months Ended

June 30, June 30,

September 30, September 30,

2024 2023 2024 2023

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Percentage of Total Average Earning Assets Yield

Six Months Ended Six Months Ended

June 30, June 30,

Nine Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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Total earning assets 100.00 % 100.00 % 5.75 % 5.18 %

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.

For the third quarter of 2024, interest income on loans held for investment, on a tax equivalent basis, increased $21,414 to $204,935 from $183,521 for the same period in 2023.

For the nine months ended September 30, 2024, interest income on loans held for investment, on a tax equivalent basis, increased $77,205 to $600,245 from $523,040 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 $686,140 from September 2023, thereby resulting in the increase in interest income on loans held for investment for the three and nine months ended September 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

4 unchanged sentences

Impact to net interest margin 0.04 % 0.01 % 0.03 % 0.02 %

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:

Interest income on loans held for sale (consisting of mortgage loans held for sale) increased $461 to $4,212 for the third quarter of 2024 from $3,751 for the same period in 2023 and increased $1,572 to $10,050 for the nine months ended September 30, 2024 from $8,478 for the same period in 2023.

Investment income, on a tax equivalent basis, decreased $423 to $10,602 for the third quarter of 2024 from $11,025 for the third quarter of 2023.

Investment income, on a tax equivalent basis, decreased $8,884 to $32,321 for the nine months ended September 30, 2024 from $41,205 for the same period in 2023.

The tax equivalent yield on the investment portfolio for the third quarter of 2024 was

2.06%, up 21 basis points from 1.85% for the same period in 2023.

The tax equivalent yield on the investment portfolio for the nine months ended September 30, 2024 was 2.05%, up five basis points from 2.00% for the same period in 2023.

Interest expense was $98,045 for the third quarter of 2024 as compared to $78,294 for the same period in 2023.

Interest expense for the nine months ended September 30, 2024 was $283,119 as compared to $193,514 for the same period in 2023.

The following tables present, 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:

Percentage of Total Average Deposits and Borrowed Funds Cost of Funds

Three Months Ended Three Months Ended

June 30, June 30,

September 30, September 30,

2024 2023 2024 2023

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Percentage of Total Average Deposits and Borrowed Funds Cost of Funds

Six Months Ended Six Months Ended

June 30, June 30,

Nine Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

8 unchanged sentences

Total deposits and borrowed funds 100.00 % 100.00 % 2.55 % 1.75 %

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.

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.

Interest expense on deposits was $90,787 and $70,906 for the three months ended September 30, 2024 and 2023, respectively, and the cost of total deposits was 2.51% and 1.98% for the same respective periods.

Interest expense on deposits was $261,021 and $155,163 for the nine months ended September 30, 2024 and 2023, respectively, and the cost of total deposits was 2.45% 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.

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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 $7,564 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.

Interest expense on total borrowings was $7,258 and $7,388 for the three months ended September 30, 2024 and 2023, respectively.

Interest expense on total borrowings was $22,098 and $38,351 for the nine months ended September 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.

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Noninterest Income to Average Assets

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2.01% 0.88% 1.30% 0.72%

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 $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.

Noninterest income was $89,299 for the third quarter of 2024 as compared to $38,200 for the same period in 2023.

Noninterest income was $169,442 for the nine months ended September 30, 2024 as compared to $92,719 for the same period in 2023.

The increase over the three and nine month periods is primarily due to the gain on sale of our insurance agency business on July 1, 2024, as described under the “Recent Developments” heading above.

Noninterest income in future periods will be negatively impacted by this sale, as we will no longer earn insurance commissions (the amount of these commissions for the three and nine months ended September 30, 2023 are described below).

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 $10,286 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.

Service charges on deposit accounts were $10,438 and $9,743 for the third quarter of 2024 and 2023, respectively, and $31,230 and $28,596 for the nine months ended September 30, 2024 and 2023, respectively.

Overdraft fees, the largest component of service charges on deposits, were $5,122 for the three months ended September 30, 2024, as compared to $5,065 for the same period in 2023.

These fees were $15,380 for the nine months ended September 30, 2024 compared to $14,734 for the same period in 2023.

Fees and commissions were $4,116 during the third quarter of 2024 as compared to $4,108 for the same period in 2023, and were $12,009 for the first nine months of 2024 as compared to $13,771 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 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 $2,758 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 $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.

For the third quarter of 2024, interchange fees were $2,246 as compared to $2,337 for the same period in 2023.

Interchange fees were $6,697 for the nine months ended September 30, 2024 as compared to $7,130 for the same period in 2023.

Prior to its sale on July 1, 2024, Renasant Insurance offered a range of commercial and personal insurance products through major insurance carriers.

Income earned on insurance products was $3,264 for the three months ended September 30, 2023, and was $5,474 and $8,519 for the nine months ended September 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 $5,684 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.

Wealth Management revenue was $5,835 for the third quarter of 2024 compared to $5,986 for the same period in 2023, and was $17,188 for the nine months ended September 30, 2024 compared to $16,464 for the same period in 2023.

The market value of assets under management or administration was $5,694,433 and $4,999,504 at September 30, 2024 and September 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 $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.

Interest rate lock commitments and originations of mortgage loans to be sold totaled $543,597 and $412,059, respectively, in the third quarter of 2024 compared to $494,442 and $397,355, respectively for the same period in 2023.

Interest rate lock commitments and originations of mortgage loans to be sold totaled $1,548,198 and $1,053,190 in the nine months ended September 30, 2024 compared to $1,734,035 and $1,057,277 for the same period in 2023.

The decrease in interest rate lock commitments for the nine months ended September 30, 2024 as compared to the same period in 2023 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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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 $2,701 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.

BOLI income was $2,858 for the three months ended September 30, 2024 as compared to $2,469 for the same period in 2023, and $8,250 for the nine months ended September 30, 2024 as compared to $7,874 for the same period in 2023.

Other noninterest income was $4,256 and $5,097 for the three months ended September 30, 2024 and 2023, respectively, and was $12,371 and $14,112 for the nine months ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2.74% 2.49% 2.66% 2.54%

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.

Noninterest expense was $121,983 and $108,369 for the third quarter of 2024 and 2023, respectively, and was $346,871 and $327,742 for the nine months ended September 30, 2024 and 2023, respectively.

The increase is primarily due to $11,273 in expenses relating to the proposed merger with The First and the sale of substantially all of the assets of Renasant Insurance.

Salaries and employee benefits increased $1,849 to $71,307 for the third quarter of 2024 as compared to $69,458 for the same period in 2023.

Salaries and employee benefits increased $3,581 to $213,508 for the nine months ended September 30, 2024 as compared to $209,927 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 and an increase in the cost associated with the Company’s health and welfare benefits offered to its employees offset by decreases in salaries and benefits within our mortgage division attributable to declines in mortgage production as well as the termination of insurance employees following the sale of substantially all of the assets of Renasant Insurance.

Data processing costs were $4,133 in the third quarter of 2024 as compared to $3,907 for the same period in 2023 and were $11,885 for the nine months ended September 30, 2024 as compared to $11,224 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 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 $3,195 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.

Net occupancy and equipment expense for the third quarter of 2024 was $11,415, as compared to $11,548 for the same period in 2023.

These expenses for the first nine months of 2024 were $34,648, as compared to $34,818 for the same period in 2023.

Professional fees were $3,189 for the third quarter of 2024 as compared to $3,338 for the same period in 2023 and were $9,732 for the nine months ended September 30, 2024 as compared to $10,817 for the same period in 2023.

Advertising and public relations expense was $3,677 for the third quarter of 2024 as compared to $3,474 for the same period in 2023 and was $12,370 for the nine months ended September 30, 2024 as compared to $11,642 for the same period in 2023.

During the nine months ended September 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 $1,160 and $1,311 for the third quarter of 2024 and 2023 and $3,558 and $4,106 for the nine months ended September 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 $2,112 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.

Communication expenses, those expenses incurred for communication to clients and between employees, were $2,176 for the third quarter of 2024 as compared to $2,006 for the same period in 2023.

Communication expenses were $6,312 for the nine months ended September 30, 2024 as compared to $6,212 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 $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.

Other noninterest expense was $13,597 and $43,317 for the three and nine months ended September 30, 2024 as compared to $13,447 and $39,035 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 nine months 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

3 unchanged sentences

That is, the ratio is designed to reflect the percentage of one dollar that we must expend to generate a dollar of revenue.) The Company calculates this ratio by dividing noninterest expense by the sum of net interest income on a fully tax equivalent basis and noninterest income.

The efficiency ratio for both the three and nine months ended September 30, 2024 was impacted by the noninterest income generated by the sale of our insurance agency business.

We remain committed to aggressively managing our costs within the framework of our business model.

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 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.

Income tax expense for the third quarter of 2024 and 2023 was $24,924 and $10,766, respectively, and $44,502 and $28,722 for the nine months ended September 30, 2024 and 2023, respectively.

The increase in income tax expense is primarily due to the increase in pre-tax income generated from the gain on sale of substantially all of the assets of the insurance agency, nondeductible expenses from the planned acquisition of The First and certain changes to the Company’s investment portfolio.

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.

12 unchanged sentences

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 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.

Net charge-offs for the first nine months of 2024 were $6,348, or 0.07% of average loans (annualized), compared to net charge-offs of $10,566, or 0.12% 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.

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.

15 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:

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

September 30, 2024 December 31, 2023 September 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 $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 recorded a provision for credit losses on loans of $1,210 in the third quarter of 2024 and $8,148 in the first nine months of 2024, as compared to $5,315 in the third quarter of 2023 and $16,275 in the first nine months 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.

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.

Loan growth as well as changes in credit metrics that influenced our expectations of future credit losses, considered in the context of the existing balance of the

allowance for credit losses, resulted in the Company’s model indicating that the aforementioned provision for credit losses on loans was appropriate during the first nine months of 2024.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

2 unchanged sentences

Commercial, financial, agricultural 347 2,252 882 7,720

Lease financing 642 641 642 641

Real estate – construction — — — 57

Real estate – 1-4 family mortgage 256 130 546 345

4 unchanged sentences

Lease financing 8 2 26 13

Real estate – construction — 48 — 48

Real estate – 1-4 family mortgage 57 181 130 375

12 unchanged sentences

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

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

Nine Months Ended

September 30, 2024 September 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 to Average Loans

Commercial, financial, agricultural $ (503) $ 1,850,707 (0.04)% $ 5,031 $ 1,740,424 0.39%

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

11 unchanged sentences

Non-owner occupied (1) (3) 5,682 4,702

Land development 7 — 7 —

Total real estate – commercial mortgage (3) (208) 5,621 4,815

Total net charge-offs of loans secured by real estate $ 5,813 $ 218 $ 5,840 $ 5,101

Total net charge-offs (recoveries) of loans secured by real estate $ 197 $ (307) $ 6,037 $ 4,794

Allowance for Credit Losses on Unfunded Commitments;

3 unchanged sentences

No credit loss estimate is reported for off-balance-sheet credit exposures that are unconditionally cancellable by the Company.

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

Three Months Ended June 30, 2024 2023

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

Three Months Ended September 30, 2024 2023

Allowance for credit losses on unfunded loan commitments:

2 unchanged sentences

Ending balance $ 15,443 $ 16,918

Six Months Ended June 30, 2024 2023

Nine Months Ended September 30, 2024 2023

Allowance for credit losses on unfunded loan commitments:

5 unchanged sentences

Nonperforming loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue.

Generally, the accrual of interest is discontinued when the full collection of principal or interest is in doubt or when the payment of principal or interest has been contractually 90 days past due, unless the obligation is both well secured and in the process of collection, but loans may also be placed on nonaccrual status at an earlier date if collection of principal or interest is considered doubtful.

Management, the problem asset resolution committee and our loan review staff closely monitor loans that are considered to be nonperforming.

4 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Nonaccruing loans $ 113,872 $ 68,816

7 unchanged sentences

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

2024 December 31, 2023 June 30,

September 30,

2024 December 31, 2023 September 30,

Commercial, financial, agricultural $ 5,024 $ 6,282 $ 7,745

Lease financing 614 — 1,048

Real estate – construction:

14 unchanged sentences

Total nonperforming loans $ 119,223 $ 69,370 $ 70,073

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.

Total nonperforming loans as a percentage of total loans were 0.94% as of September 30, 2024 as compared to 0.56% and 0.77% as of December 31, 2023 and September 30, 2023, respectively.

The Company’s coverage ratio, or its allowance for credit losses on loans as a percentage of nonperforming loans, was 168.07% as of September 30, 2024 as compared to 286.26% as of December 31, 2023 and 282.24% as of September 30, 2023.

The increase in nonperforming loans is due to a few larger loans, which management believes to be adequately reserved at September 30, 2024.

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 September 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 $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.

Total loans 30-89 days past due but still accruing interest were $17,523, or 0.14% of total loans, at September 30, 2024 as compared to $54,031, or 0.44% of total loans, at December 31, 2023 and $13,641, or 0.11% of total loans, at September 30, 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, “ Financial Instruments - Credit Losses (Topic326):

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.

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

The total amortized cost basis of loans that were experiencing financial difficulty, modified during the nine months ended September 30, 2024 and 2023, were $15,747 and $6,497, respectively.

Unused commitments totaled $464 and $721 at September 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.

1 unchanged sentence

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 June 30,

September 30,

2024 December 31, 2023 September 30,

Residential real estate $ 2,774 $ 1,211 $ 1,045

9 unchanged sentences

Other (2,382) (16)

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.

Balance at September 30 $ 9,136 $ 9,258

Other real estate owned with a cost basis of $1,323 was sold during the nine months ended September 30, 2024, resulting in a net gain of $143, while other real estate owned with a cost basis of $2,544 was sold during the nine months ended September 30, 2023, resulting in a net gain of $289.

Interest Rate Risk

16 unchanged sentences

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 July 1, 2024, in each case as compared to the result under rates present in the market on June 30, 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 October 1, 2024, in each case as compared to the result under rates present in the market on September 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.

6 unchanged sentences

-200 (10.07)% (7.28)% (10.08)%

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 rate shock results for the net interest income simulations for the next 24 months produce an asset sensitive position at September 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.

13 unchanged sentences

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 short- or long-term liquidity needs.

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.

During the first nine months of 2024, brokered deposits decreased by $334,713 as compared to the balance at December 31, 2023.

The Bank obtained brokered deposits in the amount of $120,345 during the first nine months of 2024 and paid down brokered deposits of $455,058 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.

3 unchanged sentences

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

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.

At September 30, 2024, securities with a carrying value of $824,163 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 $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 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.

Interest is charged at the prevailing market rate on federal funds purchased, FHLB advances and borrowings from the Federal Reserve Discount Window.

There were $100,000 in short-term borrowings from the FHLB at September 30, 2024, as compared to $300,000 at December 31, 2023.

be required to pay to attract deposits.

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

The total amount of the remaining credit available to us from the FHLB at September 30, 2024 was $3,449,164.

The credit available at the Federal Reserve Discount Window at September 30, 2024 was $634,636 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 June 30, 2024 or December 31, 2023.

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

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

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We have also assumed subordinated notes as part of acquisitions.

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

The carrying value of subordinated notes, net of unamortized debt issuance costs, was $319,496 at September 30, 2024.

Percentage of Total Average Deposits and Borrowed Funds Cost of Funds

Six Months Ended Six Months Ended

June 30, June 30,

Nine Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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Total deposits and borrowed funds 100.00 % 100.00 % 2.55 % 1.75 %

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.

The estimated amount of uninsured and uncollateralized deposits at September 30, 2024 was $4,574,707.

Collateralized public funds over FDIC insurance limits were $1,804,840 at September 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 $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.

Cash and cash equivalents were $1,275,620 at September 30, 2024, as compared to $741,156 at September 30, 2023.

The increase is largely driven by growth in deposits and proceeds from the aforementioned common stock offering offset to some degree by the payoff of certain short-term borrowings.

Cash provided by investing activities for the nine months ended September 30, 2024 was $25,572, as compared to cash provided by investing activities of $89,172 for the nine months ended September 30, 2023.

Proceeds from the sale, maturity or call of securities within our investment portfolio were $319,665 for the nine months ended September 30, 2024, as compared to $697,076 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 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.

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 $60,656 during the first nine months of 2024 and $9,646 for the same period in 2023.

Cash provided by financing activities for the nine months ended September 30, 2024 was $411,366, as compared to cash provided by financing activities of $27,868 for the same period in 2023.

Deposits increased $432,966 and $670,144 for the nine months ended September 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 June 30, 2024, the maximum amount available for transfer from the Bank to the Company in the form of loans was $192,931.

At September 30, 2024, the maximum amount available for transfer from the Bank to the Company in the form of loans was $198,943.

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 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.

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

These restrictions did not have any impact on the Company’s ability to meet its cash obligations in the nine months ended September 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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Loan commitments $ 2,826,873 $ 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 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.

At September 30, 2024, the Company had notional amounts of $830,409 on interest rate contracts with corporate customers and

$833,761 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.

The Company also enters into interest rate swap contracts and interest rate collars on its FHLB borrowings and its junior subordinated debentures that are accounted for as cash flow hedges.

The Company also enters into interest rate swap contracts on its FHLB borrowings and its junior subordinated debentures that are accounted for as cash flow hedges.

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

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

The Company utilizes interest rate collars to protect against interest rate fluctuations on certain variable-rate loans.

Under these contracts, interest income is limited to the interest rate cap;

however, interest income is protected when market rates fall below the floor strike rate.

For more information about the Company’s derivatives, see Note 9, “Derivative Instruments,” in the Notes to Consolidated Financial Statements of the Company in Item 1, Financial Statements.

Shareholders’ Equity and Regulatory Matters

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.

In October 2023, the Company’s Board of Directors approved a stock repurchase program, authorizing the Company to repurchase up to $100,000 of its outstanding common stock, either in open market purchases or privately-negotiated transactions.

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 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.

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 June 30, 2024.

Total shareholders’ equity of the Company was $2,658,078 at September 30, 2024 compared to $2,297,383 at December 31, 2023.

Book value per share was $41.82 and $40.92 at September 30, 2024 and December 31, 2023, respectively.

The growth in shareholders’ equity was attributable to the previously mentioned common stock offering, current period earnings and declines in accumulated other comprehensive loss, offset by dividends declared.

In October 2023, the Company’s Board of Directors approved a stock repurchase program, authorizing the Company to repurchase up to $100,000 of its outstanding common stock.

This program expired in October 2024 and was replaced with a new stock repurchase program authorizing the Company to repurchase up to $100,000 of its outstanding common stock, either in open market purchases or privately-negotiated transactions.

The new repurchase program will remain in effect through October 2025 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 previous stock repurchase program in the first nine months of 2024.

The Company has junior subordinated debentures with a carrying value of $113,681 at September 30, 2024, of which $110,090 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 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.

Further, if we complete the proposed merger with The First (or we make any other 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 September 30, 2024, of which $333,844 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.

19 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio

June 30, 2024

September 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