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What changed in RENASANT CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RENASANT CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+395 added−395 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in RENASANT CORP's 2023 10-K

395 paragraphs added · 395 removed · 311 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

76 edited+14 added−14 removed144 unchanged
Biggest changeThese regulations limit the type of mortgage products that the Bank can offer; they also affect our ability to enforce delinquent mortgage loans. The CFPB has also issued complex rules integrating the required disclosures under the Truth in Lending Act, the Truth in Savings Act and the Real Estate Settlement Procedures Act (the “TRID rules”).
Biggest changeRelating to mortgage lending in particular, the CFPB issued regulations governing the ability to repay, qualified mortgages, mortgage servicing, appraisals and compensation of mortgage lenders. These regulations limit the type of mortgage products that the Bank can offer; they also affect our ability to enforce delinquent mortgage loans.
No particular company or group of companies dominates this industry in our markets. Insurance We encounter strong competition in the markets in which we conduct insurance operations. Through our insurance subsidiary, we compete with independent insurance agencies and agencies affiliated with other banks and/or other insurance carriers.
No particular company or group of companies dominates this industry in our markets. Insurance We encounter strong competition in the markets in which we conduct insurance operations. Through our insurance subsidiary, we compete with independent insurance agencies and agencies affiliated with other banks and/or insurance carriers.
Under current regulations, a bank is (1) “well capitalized” if it has total risk-based capital of 10% or more, has a Tier 1 risk-based ratio of 8% or more, has a common equity Tier 1 capital ratio of 6.5%, has a Tier 1 leverage capital ratio of 5% or more and is not subject to any order or final capital directive to meet and maintain a specific capital level for any capital measure, (2) “adequately capitalized” if it has a total risk-based capital ratio of 8% or more, a Tier 1 risk-based capital ratio of 6% or more, a common equity Tier 1 capital ratio of 4.5% and a Tier 1 leverage capital ratio of 4% or more (3% under certain circumstances) and does not meet the definition of “well capitalized,” (3) “undercapitalized” if it has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than 6%, a common equity Tier 1 capital ratio that is less than 4.5% or a Tier 1 leverage capital ratio that is less than 4%, (4) “significantly undercapitalized” if it has a total risk-based ratio that is less than 10 6%, a Tier 1 risk-based capital ratio that is less than 4%, a common equity Tier 1 capital ratio of less than 3% or a Tier 1 leverage capital ratio that is less than 3%, and (5) “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2%.
Under current regulations, a bank is (1) “well capitalized” if it has total risk-based capital of 10% or more, has a Tier 1 risk-based ratio of 8% or more, has a common equity Tier 1 capital ratio of 6.5%, has a Tier 1 leverage capital ratio of 5% or more and is not subject to any order or final capital directive to meet and maintain a specific capital level for any capital measure, (2) “adequately capitalized” if it has a total risk-based capital ratio of 8% or more, a Tier 1 risk-based capital ratio of 6% or more, a common equity Tier 1 capital ratio of 4.5% and a Tier 1 leverage capital ratio of 4% or more (3% under certain circumstances) and does not meet the definition of “well capitalized,” (3) “undercapitalized” if it has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than 6%, a common equity Tier 1 capital ratio that is less than 4.5% or a Tier 1 leverage capital ratio that is less than 4%, (4) “significantly undercapitalized” if it has a total risk-based ratio that is less than 6%, a Tier 1 risk-based capital ratio that is less than 4%, a common equity Tier 1 capital ratio of less than 3% or a Tier 1 leverage capital ratio that is less than 3%, and (5) “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2%.
An insured state bank is not prohibited from, among other things, taking the following actions: - acquiring or retaining a majority interest in a subsidiary; - investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank’s total assets; - acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors’, trustees’ and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions; and - acquiring or retaining the voting shares of a depository institution if certain requirements are met.
An insured state bank is not prohibited from, among other things, taking the following actions: 11 - acquiring or retaining a majority interest in a subsidiary; - investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank’s total assets; - acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors’, trustees’ and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions; and - acquiring or retaining the voting shares of a depository institution if certain requirements are met.
We make available on the Company’s website, at the “SEC Filings” link, free of charge, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 14
We make available on the Company’s website, at the “SEC Filings” link, free of charge, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 15
Finally, in order to acquire a bank located outside its home state, a bank holding company and its subsidiary institutions must be 8 “well capitalized” and “well managed.” In addition, as detailed under the heading “Scope of Permissible Activities” above, we cannot acquire direct or indirect control of more than 5% of the voting shares of a company engaged in non-banking activities.
Finally, in order to acquire a bank located outside its home state, a bank holding company and its subsidiary institutions must be “well capitalized” and “well managed.” In addition, as detailed under the heading “Scope of Permissible Activities” above, we cannot acquire direct or indirect control of more than 5% of the voting shares of a company engaged in non-banking activities.
As a result of this extensive system of supervision and regulation, the growth and earnings performance of the Company and the Bank are affected not only by management decisions and general and local economic conditions, but also by the statutes, rules, regulations and policies administered by the Federal Reserve, the FDIC, the DBCF, the CFPB and other federal and state regulatory authorities with jurisdiction over our operations.
As a result of this extensive system of supervision and regulation, the growth and earnings performance of the Company and the Bank are affected not only by management decisions and general and local economic conditions, but also by the statutes, rules, regulations and policies administered by the Federal Reserve, the FDIC, the DBCF, the CFPB, the SEC and other federal and state regulatory authorities with jurisdiction over our operations.
All of these agencies compete in the delivery of personal and commercial product lines. There is no dominant insurance agency in our markets. Supervision and Regulation General The U.S. banking industry is highly regulated under federal and state law. We are a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”).
All of these 6 agencies compete in the delivery of personal and commercial product lines. There is no dominant insurance agency in our markets. Supervision and Regulation General The U.S. banking industry is highly regulated under federal and state law. We are a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”).
Other possible sanctions which may be imposed for violation of regulations include suspension of individual employees, limitations on engaging in a particular business for a specified period of time, censures and fines. Monetary Policy and Economic Controls We and the Bank are affected by the policies of regulatory authorities, including the Federal Reserve.
Other possible sanctions which may be imposed for violation of regulations include suspension of individual employees, limitations on engaging in a particular business for a specified period of time, censures and fines. 13 Monetary Policy and Economic Controls We and the Bank are affected by the policies of regulatory authorities, including the Federal Reserve.
The principal exception to this prohibition is that we may engage, directly or indirectly (including through the ownership of shares of another company), in certain activities that the Federal Reserve has found to be so closely related to banking or managing and controlling banks as to be a proper incident thereto.
The principal exception to this prohibition is that we may engage, directly or indirectly (including through the ownership of shares of another company), in certain activities that the Federal Reserve has found to be so closely 7 related to banking or managing and controlling banks as to be a proper incident thereto.
Specifically, these provisions require all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy at the beginning of the relationship and annually thereafter. Further, such customers must be given the opportunity to “opt out” of the sharing of personal financial 12 information with unaffiliated third parties.
Specifically, these provisions require all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy at the beginning of the relationship and annually thereafter. Further, such customers must be given the opportunity to “opt out” of the sharing of personal financial information with unaffiliated third parties.
Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “unsatisfactory.” The Bank has undertaken significant actions to comply with the CRA, and it received a “satisfactory” rating by the FDIC with respect to its CRA compliance in its most recent assessment. Financial and State Privacy Requirements .
Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “unsatisfactory.” The Bank has undertaken significant actions to comply with the CRA, and it received a “satisfactory” rating by the FDIC with respect to its CRA compliance in its most recent assessment. Financial Privacy Requirements .
As a threshold matter, we generally limit loan-to-value and loan-to-cost ratios to regulatory guidance of 85% of when-completed appraised values for owner-occupied and investor-owned residential or commercial properties, with the exception of those loans with clearly definable mitigants.
As a threshold matter, we generally limit loan-to-value and loan-to-cost ratios to regulatory guidance of 85% of when-completed appraised values for owner-occupied and investor-owned residential or commercial properties, with the exception of those loans with clearly definable risk mitigants.
The CRE guidance is intended to promote sound risk management practices and appropriate levels of capital to enable institutions to engage in CRE lending in a safe and sound manner. Federal 11 banking regulators use certain criteria to identify financial institutions that are potentially exposed to significant CRE concentration risk.
The CRE guidance is intended to promote sound risk management practices and appropriate levels of capital to enable institutions to engage in CRE lending in a safe and sound manner. Federal banking regulators use certain criteria to identify financial institutions that are potentially exposed to significant CRE concentration risk.
The following is a description of each of the principal types of loans in our loan portfolio, the relative credit risk of each type of loan and the steps we take to reduce such risk. Our loans are primarily generated within the market areas where our offices are located. — Commercial, Financial and Agricultural Loans .
The following is a general description of each of the principal types of loans in our loan portfolio, the relative credit risk of each type of loan and the steps we take to reduce such risk. Our loans are primarily generated within the market areas where our offices are located. — Commercial, Financial and Agricultural Loans .
We do not have any foreign operations. 2 Operations of Community Banks Substantially all of our business activities are conducted through, and substantially all of our assets and revenues are derived from, the operations of our community banks, which offer a complete range of banking and financial services to individuals and to businesses of all sizes.
We do not have any foreign operations. Operations of Community Banks Substantially all of our business activities are conducted through, and substantially all of our assets and revenues are derived from, the operations of our community banks, which offer a complete range of banking and financial services to individuals and to businesses of all sizes.
Also, “hybrid” capital items like trust preferred securities no longer enjoy Tier 1 capital treatment, subject to various grandfathering and transition rules. We and the Bank meet all minimum capital requirements as currently in effect, and our grandfathered trust preferred securities qualify for Tier 1 capital treatment.
Also, “hybrid” capital items like trust preferred securities no longer enjoy Tier 1 capital treatment, subject to various grandfathering rules. We and the Bank meet all minimum capital requirements as currently in effect, and our grandfathered trust preferred securities qualify for Tier 1 capital treatment.
Finally, the Bank may also establish offices in other states by merging with banks or by purchasing branches and related assets of banks in other states, subject to certain restrictions. 9 Dividends . The restrictions and guidelines with respect to the Company’s payment of dividends are described above.
Finally, the Bank may also establish offices in other states by merging with banks or by purchasing branches and related assets of banks in other states, subject to certain restrictions. Dividends . The restrictions and guidelines with respect to the Company’s payment of dividends are described above.
A few of the ratios used in measuring the success of their business plan include: — return on average assets — net interest margin and spread — the efficiency ratio — fee income shown as a percentage of loans and deposits — loan and deposit growth — the volume and pricing of deposits — net charge-offs to average loans — the percentage of loans past due and nonaccruing While we have preserved decision-making at a local level, we have centralized our legal, accounting, investment, risk management, loan review, human resources, audit and data processing/operations functions.
A few of the ratios used in measuring the success of their business plan include: — return on average assets — net interest margin and spread — the efficiency ratio — fee income shown as a percentage of loans and deposits — loan and deposit growth — the volume and cost of deposits — net charge-offs to average loans — the percentage of loans past due and nonaccruing While we have preserved decision-making at a local level, we have centralized our legal, accounting, investment, risk management, loan review, human resources, audit and data processing/operations functions.
As a result, we are subject to supervision, regulation and 6 examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Bank is a commercial bank chartered under the laws of the State of Mississippi; it is not a member of the Federal Reserve System.
As a result, we are subject to supervision, regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Bank is a commercial bank chartered under the laws of the State of Mississippi; it is not a member of the Federal Reserve System.
The risk is to evaluate accurately the total loan funds required to complete a project and 4 to ensure proper loan-to-value ratios during the construction phase. We address the risks associated with construction lending in a number of ways.
The risk is to evaluate accurately the total loan funds required to complete a project and to ensure proper loan-to-value ratios during the construction phase. We address the risks associated with construction lending in a number of ways.
For a detailed discussion of the Company’s capital ratios, see Note 20, “Regulatory Matters,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report. - Prompt Corrective Action .
For a detailed discussion of the Company’s capital ratios, see Note 20, “Regulatory Matters,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report. 10 - Prompt Corrective Action .
Our construction loan portfolio consists of loans for the construction of single family residential properties, multi-family properties and commercial projects. Maturities for construction loans generally range from six to 12 months for residential property and from 24 to 36 months for non-residential and multi-family properties.
Our construction loan portfolio consists of loans for the construction of single family residential properties, multi-family properties and commercial projects. Maturities for construction loans generally range from 4 six to 12 months for residential property and from 24 to 36 months for non-residential and multi-family properties.
In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. Acquisitions by Bank Holding Companies .
In the event of our bankruptcy, any commitment by us to a 8 federal bank regulatory agency to maintain the capital of the Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. Acquisitions by Bank Holding Companies .
Under the Federal Reserve’s rules, the maximum permissible interchange fee is no more than 21 cents plus 5 basis points of the transaction value for many types of debit interchange transactions.
Under the Federal Reserve’s current rules, the maximum permissible interchange fee is no more than 21 cents plus 5 basis points of the transaction value for many types of debit interchange transactions.
As a publicly-traded company, Renasant Corporation is also subject to laws, rules and regulations, as well as the standards of self-regulatory organizations, relating to corporate governance, financial reporting and public disclosure, and auditor independence, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), SEC rules and regulations and Nasdaq listing rules.
As a publicly-traded company, Renasant Corporation is also subject to laws, rules and regulations, as well as the standards of self-regulatory organizations, relating to corporate governance, financial reporting and public disclosure, and auditor independence, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), SEC rules and regulations and NYSE listing rules.
Generally, cash flows from maturities and calls of our investment securities that are not used to fund loan growth or repay debt are reinvested in investment securities. We also hold investments in corporate debt and pooled trust preferred securities. At December 31, 2022, the Company’s investment securities included both available for sale and held to maturity classifications.
Generally, cash flows from maturities and calls of our investment securities that are not used to fund loan growth or repay debt are reinvested in investment securities. We also hold investments in corporate debt and pooled trust preferred securities. At December 31, 2023, the Company’s investment securities included both available for sale and held to maturity classifications.
Federal law and regulations limit a financial institution’s ability to share a customer’s financial information with unaffiliated third parties and otherwise contain extensive protections for a customer’s private information.
Federal law and regulations limit a financial institution’s ability to share a customer’s financial information with unaffiliated third parties and contain extensive protections for a customer’s private information.
During 2021, the SRDI Committee implemented and communicated key initiatives of the Company’s long-range equality, diversity and inclusion (“EDI”) strategic plan, which plan has five key areas of focus: (1) education and communication, (2) diversity in the workforce, (3) inclusion in the workplace, (4) vendor/supplier diversity and (5) a commitment to ongoing evaluation of each of the previous components.
The SRDI Committee implemented and communicated key initiatives of the Company’s long-range equality, diversity and inclusion (“EDI”) strategic plan, which plan has five key areas of focus: (1) education and communication, (2) diversity in the workforce, (3) inclusion in the workplace, (4) vendor/supplier diversity and (5) a commitment to ongoing evaluation of each of the previous components.
A further discussion of the risk reduction policies and procedures applicable to our lending activities can be found in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the heading “Risk Management – Credit Risk and Allowance for Credit Losses and Unfunded Commitments.” Investment Activities .
A further discussion of the risk reduction policies and procedures applicable to our lending activities can be found in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the heading “Risk Management – Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments.” Investment Activities .
Under federal and Mississippi law, the Bank may establish additional branch offices within Mississippi, subject to the approval of the DBCF, and the Bank can also establish additional branch offices outside Mississippi, subject to prior regulatory approval, so long as the laws of the state where the branch is to be located would permit a state bank chartered in that state to establish a branch.
Under federal and Mississippi law, the Bank may establish additional branch offices within Mississippi, subject to the approval of the DBCF, and the Bank can also establish additional branch offices outside Mississippi, subject to prior regulatory approval, so long as the laws of the state where the branch will be located would permit a state bank chartered in that state to establish a branch.
Through our community branch networks, we offer consumer checking accounts with free online and mobile banking, which includes bill pay and transfer features, peer-to-peer payment, interest bearing checking, money market accounts, savings accounts, certificates of deposit, individual retirement accounts and health savings accounts.
Through our community branch networks, we offer consumer checking accounts with free online and mobile banking, which includes bill pay and transfer features, remote deposit capture, peer-to-peer payment, interest bearing checking, money market accounts, savings accounts, certificates of deposit, individual retirement accounts and health savings accounts.
No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve. We have not elected to become an FHC.
No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve. We have not elected to become a financial holding company.
Our goal is to structure the loan portfolio so that it is well balanced among C&I loans and owner-occupied commercial real estate loans, non-owner occupied commercial real estate loans and residential real estate loans and consumer loans while taking into account current market risks and lending opportunities.
Our goal is to structure the loan portfolio so that it is well balanced among C&I loans, owner-occupied commercial real estate loans, non-owner occupied commercial real estate loans, residential real estate loans and consumer loans and other lending categories while taking into account current market risks and lending opportunities.
In the event of default, a shortfall in the value of the collateral may pose a loss to us in this loan category. Before granting a consumer loan, we assess the applicant’s credit history and ability to meet existing and proposed debt obligations.
In the event of default, a shortfall in the value of the collateral may pose a loss to us in this loan category. Before making a consumer loan, we assess the applicant’s credit history and ability to meet existing and proposed debt obligations.
A dominant theme of the GLB Act is functional regulation of financial services, with the primary regulator of the Company or its subsidiaries being the agency that traditionally regulates the activity in which the Company or its subsidiaries wish to engage. For example, the SEC regulates bank holding company securities transactions, and the various banking regulators oversee our banking activities.
A dominant theme of the GLBA is functional regulation of financial services, with the primary regulator of the Company or its subsidiaries being the agency that traditionally regulates the activity in which the Company or its subsidiaries wish to engage. For example, the SEC regulates bank holding company securities transactions, and the various banking regulators oversee our banking activities.
For example, residential mortgages are risk-weighted between 35% and 200%, depending on the mortgage’s loan-to-value ratio and whether the mortgage falls into one of two categories based on eight criteria that include the term, use of negative amortization and balloon payments, certain rate increases and documented and verified borrower income, while a 150% risk weight applies to both certain high volatility commercial real estate acquisition, development and construction loans as well as non-residential mortgage loans 90 days past due or on nonaccrual status (in both cases, as opposed to the former 100% risk weight).
For example, residential mortgages are risk-weighted between 35% and 200%, depending on the mortgage’s loan-to-value ratio and whether the mortgage falls into one of two categories based on eight criteria that include the term, use of negative amortization and balloon payments, certain rate increases and documented and verified borrower income, while a 150% risk weight applies to both certain high volatility commercial real estate acquisition, development and construction loans as well as non-residential mortgage loans 90 days past due or on nonaccrual status.
Pursuant to the amendment to the BHC Act effected by the Financial Services Modernization Act of 1999 (commonly referred to as the Gramm-Leach Bliley Act, or the “GLB Act”), a bank holding company whose subsidiary deposit institutions are “well capitalized” and “well managed” may elect to become a “financial holding company” (“FHC”) and thereby engage without 7 prior Federal Reserve approval in certain banking and non-banking activities that are deemed to be financial in nature or incidental to financial activity.
Pursuant to the amendment to the BHC Act effected by the Financial Services Modernization Act of 1999 (commonly referred to as the Gramm-Leach Bliley Act, or the “GLBA”), a bank holding company whose subsidiary deposit institutions are “well capitalized” and “well managed” may elect to become a “financial holding company” and thereby engage without prior Federal Reserve approval in certain banking and non-banking activities that are deemed to be financial in nature or incidental to financial activity.
Federal anti-money laundering rules impose various requirements on financial institutions intended to prevent the use of the U.S. financial system to fund terrorist activities. These provisions include a requirement that financial institutions operating in the United States have anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering.
Federal anti-money laundering rules impose various requirements on financial institutions intended to prevent the use of the U.S. financial system to fund terrorist activities or other criminal activity. These provisions include a requirement that financial institutions operating in the United States have anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering.
In 2021, the Company launched an EDI education series and developed an internal resource page to reinforce education and to provide a platform for employees to learn about one another. The Company is committed to advancing its EDI strategic plan through ongoing internal and external initiatives.
The Company has launched an EDI education series and developed an internal resource page to reinforce education and to provide a platform for employees to learn about one another. The Company is committed to advancing its EDI strategic plan through ongoing internal and external initiatives.
Commercial, financial and agricultural loans (referred to as “C&I loans”), which accounted for approximately 14.46% of our total loans at December 31, 2022, are customarily granted to established local business customers in our market area on a fully collateralized basis to meet their credit needs. The terms and loan structure are dependent on the collateral and strength of the borrower.
Commercial, financial and agricultural loans (referred to as “C&I loans”), which accounted for approximately 15.15% of our total loans at December 31, 2023, are customarily granted to established local business customers in our market area on a fully collateralized basis to meet their credit needs. The terms and loan structure are dependent on the collateral and strength of the borrower.
Equipment financing loans (or “lease financing loans”), which represented approximately 0.99% of our total loans at December 31, 2022, are granted to provide capital to businesses for commercial equipment needs. These loans are generally granted for periods ranging between two and five years at fixed rates of interest.
Equipment financing loans (or “lease financing loans”), which represented approximately 0.94% of our total loans at December 31, 2023, are granted to provide capital to businesses for commercial equipment needs. These loans are generally granted for periods ranging between two and five years at fixed rates of interest.
The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve before it acquires all or substantially all of the assets of any bank, merges or consolidates with another bank holding company or acquires ownership or control of any voting shares of any bank if after such acquisition it would own or control, directly or indirectly, more than 5% of the voting shares of such bank.
The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve (subject to waiver under certain circumstances) before it acquires all or substantially all of the assets of any bank, merges or consolidates with another bank holding company or acquires ownership or control of any voting shares of any bank if after such acquisition it would own or control, directly or indirectly, more than 5% of the voting shares of such bank.
For our commercial clients, we offer competitive checking and savings services as well as a suite of treasury management products which include remote deposit capture, account reconciliation, electronic statements, fraud protection via positive pay, 5 ACH origination and wire transfer, lockbox services, overnight investment sweep options, enhanced business Internet banking and mobile banking.
For our commercial clients, we offer competitive checking and savings services and a suite of treasury management products, including remote deposit capture, account reconciliation, electronic statements, fraud protection via positive pay, ACH origination and wire transfer, lockbox services, overnight investment sweep options, enhanced business Internet banking and mobile banking.
We also offer commercial real estate loans to developers of commercial properties for purposes of site acquisition and preparation and other development prior to actual construction (referred to in this Annual Report as “commercial land development loans”).
We also offer commercial real estate loans to developers of commercial properties for purposes of site acquisition and preparation and other development prior to actual construction (referred to as “commercial land development loans”).
We are active in the real estate – 1-4 family mortgage area (referred to as “residential real estate loans”), with approximately 27.78% of our total loans at December 31, 2022, being residential real estate loans. In addition, in 2022, we originated for sale on the secondary market approximately $3.11 billion in residential real estate loans through our Mortgage division.
We are active in the real estate – 1-4 family mortgage area (referred to as “residential real estate loans”), with approximately 27.85% of our total loans at December 31, 2023, being residential real estate loans. In addition, in 2023, we originated for sale on the secondary market approximately $2.1 billion in residential real estate loans 3 through our Mortgage division.
The Company does not actively market or originate subprime mortgage loans. — Real Estate – Commercial Mortgage . Our real estate – commercial mortgage loans (“commercial real estate loans”) represented approximately 44.20% of our total loans at December 31, 2022.
The Company does not actively market or originate subprime mortgage loans. — Real Estate – Commercial Mortgage . Our real estate – commercial mortgage loans (“commercial real estate loans”) represented approximately 44.43% of our total loans at December 31, 2023.
Installment loans to individuals (or “consumer loans”), which represented approximately 1.08% of our total loans at December 31, 2022, are granted to individuals for the purchase of personal goods. Loss or decline of income by the borrower due to unplanned occurrences represents the primary risk of default to us.
Installment loans to individuals (or “consumer loans”), which represented approximately 0.84% of our total loans at December 31, 2023, are granted to individuals for the purchase of personal goods. Loss or decline of income by the borrower due to unplanned occurrences represents the primary risk of default to us.
We generally obtain loan guarantees from financially capable parties to the transaction based on a review of the guarantor’s financial statements. — Real Estate – Construction . Our real estate – construction loans (“construction loans”) represented approximately 11.49% of our total loans at December 31, 2022.
We generally obtain loan guarantees from financially capable parties to the transaction based on a review of the guarantor’s financial statements. — Real Estate – Construction . Our real estate – construction loans (“construction loans”) represented approximately 10.79% of our total loans at December 31, 2023.
For 2022, Renasant Insurance generated total revenue of $12.4 million, or 1.78% of the Company’s total gross revenues, and operated eight offices throughout north and north central Mississippi. Competition Community Banks Vigorous competition exists in all major product and geographic areas in which we conduct banking business.
For 2023, Renasant Insurance generated total revenue of $14.2 million, or 1.5% of the Company’s total gross revenues, and operated eight offices throughout north and north central Mississippi. Competition Community Banks Vigorous competition exists in all major product and geographic areas in which we conduct banking business.
Investment income generated by our investment activities, both taxable and tax-exempt, accounted for approximately 7.92%, 5.13% and 4.46% of our total gross revenues in 2022, 2021 and 2020, respectively. Deposit Services . We offer a broad range of deposit services and products to our consumer and commercial clients.
Investment income generated by our investment activities, both taxable and tax-exempt, accounted for approximately 1.1%, 7.9% and 5.1% of our total gross revenues in 2023, 2022 and 2021, respectively. 5 Deposit Services . We offer a broad range of deposit services and products to our consumer and commercial clients.
The foregoing criteria are commonly referred to as the 100/300 Test. As of December 31, 2022, our ADC loans represented 91% of our total bank level capital, and our total CRE loans represented 284% of our bank level capital. Safety and Soundness .
The foregoing criteria are commonly referred to as the 100/300 Test. As of December 31, 2023, our ADC loans represented 83% of our total bank level capital, and our total CRE loans represented 281% of our Bank level capital. Safety and Soundness .
We have established numerous controls and procedures designed to ensure that we fully comply with the TRID rules and all other consumer protection laws, both federal and state, as they are currently interpreted (which interpretations are subject to change by the CFPB).
We have established numerous controls and procedures designed to ensure that we fully comply with all other consumer protection laws, both federal and state, as they are currently interpreted (which interpretations are subject to change by the CFPB). These controls and procedures are tested regularly to ensure they are accurate and are working properly.
Fees generated through the deposit services we offer accounted for approximately 7.64%, 7.15% and 5.88% of our total gross revenues in 2022, 2021 and 2020, respectively. The deposits held by the Bank have been primarily generated within the market areas where our branches are located.
Fees generated through the deposit services we offer accounted for approximately 5.7%, 7.6% and 7.2% of our total gross revenues in 2023, 2022 and 2021, respectively. Excluding brokered deposits, the deposits held by the Bank have been primarily generated within the market areas where our branches are located.
The FDIC may terminate the deposit insurance of any insured depository institution, including the Bank, if it determines after a hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order or any condition imposed by an agreement with the FDIC.
Also, we are subject to a surcharge designed to increase the DIF to specified levels. 9 The FDIC may terminate the deposit insurance of any insured depository institution, including the Bank, if it determines after a hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order or any condition imposed by an agreement with the FDIC.
Addressing Aggregate Lending Risks. In addition to the steps described above to mitigate the risks posed by any individual loan relationship, management has implemented a structure that proactively monitors the risk to the Company presented by the Bank’s loan portfolio as a whole. First, we purposefully manage the loan portfolio to avoid excessive concentrations in any particular loan category.
Addressing Aggregate Lending Risks. In addition to the steps described above to mitigate the risks posed by any individual loan relationship, management has implemented a structure that proactively monitors the risk to the Company presented by the Bank’s loan portfolio as a whole.
Lending Activities . Income generated by our lending activities, in the form of interest income, loan-related fees, and income from the sale and servicing of mortgage loans, comprises a substantial portion of our revenue, accounting for approximately 75.14%, 78.66% and 84.01% of our total gross revenues in 2022, 2021 and 2020, respectively.
Income generated by our lending activities, in the form of interest income, loan-related fees, and income from the sale and servicing of mortgage loans, comprises a substantial portion of our revenue, accounting for approximately 82.8%, 75.1% and 78.7% of our total gross revenues in 2023, 2022 and 2021, respectively.
Park Place Capital also provides administrative and compliance services for certain mutual funds. For 2022, the Wealth Management segment generated total revenue of $27.6 million, or 3.95% of the Company’s total gross revenues.
Park Place Capital also provides administrative and compliance services for certain mutual funds. For 2023, the Wealth Management segment generated total revenue of $25.3 million, or 2.8% of the Company’s total gross revenues.
In addition, we actively monitor certain financial measures of the borrower, including advance rate, cash flow, collateral value and other appropriate credit factors. We use C&I loan credit scoring models for smaller-size loans. — Real Estate – 1-4 Family Mortgage .
In addition, we actively monitor certain financial measures of the borrower, including advance rate, cash flow, collateral value and other appropriate credit factors. We use C&I loan credit scoring models for smaller-size loans. The Company’s factoring receivables are categorized as C&I loans.
These experiences are delivered through various learning channels including classroom, virtual, on-the-job, and online training. The Company also supports its employees through external continuing education relevant to the operations of the Company and encourages participation in professional organizations.
The intent underlying these programs is to build individual capabilities while supporting the career aspirations of our employees and meeting business objectives. These experiences are delivered through various learning channels including classroom, virtual, on-the-job, and online training. The Company also supports its employees through external continuing education relevant to the operations of the Company and encourages participation in professional organizations.
Responsibility for the management of the Bank remains with the Board of Directors and officers of the Bank; however, management services rendered by the Company to the Bank are intended to supplement internal management and expand the scope of banking services normally offered by the Bank.
Responsibility for the management of the Bank remains with the Board of Directors and officers of the Bank; however, management services rendered by the Company to the Bank are intended to supplement internal management and expand the scope of banking services normally offered by the Bank. 2 Operations The Company has three reportable segments: a Community Banks segment, an Insurance segment and a Wealth Management segment.
As of December 31, 2022, we employed 2,334 people throughout all of our segments on a full-time equivalent basis. Of this total, the Bank accounted for 2,269 employees (inclusive of employees in our Community Banks and Wealth Management segments, including employees of Park Place Capital and Republic Business Credit), and Renasant Insurance employed 65 individuals.
As of December 31, 2023, we employed more than 2,300 people throughout all of our segments on a full-time equivalent basis primarily within the Bank (inclusive of employees in our Community Banks and Wealth Management segments, such as employees of Bank subsidiaries Park Place Capital and Republic Business Credit). Renasant Insurance employed 63 individuals.
We acquire investment securities to provide a source for meeting our liquidity needs as well as to supply securities to be used in collateralizing certain deposits and other types of borrowings. During 2022, we also deployed a portion of our excess liquidity into the securities portfolio.
We acquire investment securities to provide a source for meeting our liquidity needs, to generate investment returns and to supply securities to be used in collateralizing certain deposits and other types of borrowings.
We attempt to minimize the risk associated with residential real estate loans by strictly scrutinizing the financial condition of the borrower; typically, we also limit the maximum loan-to-value ratio.
Originations of residential real estate loans are generated through retail efforts in our branches or originations by or referrals from our Mortgage division or online by our retail mortgage originators. We attempt to minimize the risk associated with residential real estate loans by strictly scrutinizing the financial condition of the borrower; typically, we also limit the maximum loan-to-value ratio.
The Company, through its Organizational Development department, provides opportunities for employees to engage in personalized learning and development experiences, including but not limited to, new employee orientation, role-based training programs, technical and enterprise-wide systems trainings, mentoring programs, and leadership development with the intent to build individual capabilities while supporting the career aspirations of its employees and meeting business objectives.
Through its Organizational Development department led by our Chief Experience Officer, the Company provides opportunities for employees to engage in personalized learning and development experiences, including new employee orientation, role-based training programs, technical and enterprise-wide systems trainings, mentoring programs, and leadership development.
We are subject to a broad array of federal and state laws designed to protect consumers in connection with our lending activities, including the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Electronic Funds Transfer Act, and, in some cases, their respective state law counterparts.
These statutes include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Electronic Funds Transfer Act, and, in some cases, their respective state law counterparts.
Further, the following discussion addresses the regulatory framework as in effect as of the date of this Annual Report on Form 10-K. Legislation and regulatory action to revise federal and Mississippi banking, consumer protection, securities and other applicable laws and regulations, sometimes in a substantial manner, are continually under consideration by the U.S.
Legislation and regulatory action to implement new laws and regulations and to revise existing federal and Mississippi banking, consumer protection, securities and other applicable laws and regulations, sometimes in a substantial manner, are continually under consideration by the U.S. Congress, state legislatures and federal and state regulatory agencies.
The amount of an institution’s assessment is based on its average consolidated total assets less its average tangible equity during the assessment period. As to the rate, it is based on risk classification. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern that the institution poses to the regulators.
An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern that the institution poses to the regulators. The higher an institution’s risk classification, the higher its assessment rate (on the assumption that such institutions pose a greater risk of loss to the DIF).
Our Internet address is www.renasant.com, and the Bank’s Internet address is www.renasantbank.com.
Our SEC filings are available to the public at the SEC’s website at www.sec.gov. Our Internet address is www.renasant.com, and the Bank’s Internet address is www.renasantbank.com.
The Company’s Social Responsibility Diversity and Inclusion Committee (referred to as the “SRDI Committee”), consisting of four permanent members and four rotating members, and one ex-officio member, continued its momentum during 2021.
The participation rate was over 90%, and the survey results generally affirmed that our employees were satisfied with overall working conditions at the Company. The Company’s Social Responsibility Diversity and Inclusion Committee (referred to as the “SRDI Committee”), consisting of four permanent members and four rotating members, and one ex-officio member, continued its momentum in 2023.
As of December 31, 2022, we had 188 banking, lending and mortgage offices located throughout our markets in the Southeast, and Republic Business Credit operates four stand-alone offices in California, Illinois, Louisiana and Texas. Customers may also conduct many banking transactions, such as opening deposit accounts and applying for certain types of loans, through our Online and Mobile Banking Products.
As of December 31, 2023, we had 181 banking, lending and mortgage offices located throughout our markets in the Southeast, while our subsidiary Republic Business Credit had four stand-alone offices in California, Illinois, Louisiana and Texas.
Accordingly, our ability to pay dividends depends upon the Bank’s earnings and financial condition, as well as upon general economic conditions and other factors, and will be subject to any restrictions applicable to the Bank. The ability of the Bank to pay dividends is restricted by federal and state laws, regulations and policies.
As a practical matter, for so long as our operations chiefly consist of the operation of the Bank, the Bank will remain our source of dividend payments. Accordingly, our ability to pay dividends depends upon the Bank’s earnings and financial condition. The ability of the Bank to pay dividends is restricted by federal and state laws, regulations and policies.
The Company has no additional employees. At December 31, 2022, 14 employees of the Bank served as officers of the Company in addition to their positions with the Bank.
At December 31, 2023, 14 employees of the Bank served as officers of the Company in addition to their positions with the Bank. To measure our employees’ overall satisfaction with their job and their experience working for the Company, we surveyed employees at the end of 2023.
Additional information about our funding sources can be found under the heading “Liquidity and Capital Resources” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this report. 13 Human Capital Resources The Company’s employees are the key to its success and represent our greatest asset.
The availability of such funds is primarily dependent upon the economic policies of the federal government, the economy in general and the general credit market for loans. Additional information about our funding sources can be found under the heading “Liquidity and Capital Resources” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this report.
We believe that the Bank has been and will continue to be in compliance with each of these standards. Consumer Financial Products and Services .
We believe that the Bank has been and will continue to be in compliance with each of these standards. Consumer Protection . We are subject to a broad array of federal and state laws designed to ensure that we offer our products and services in a non-discriminatory manner and to protect consumers in connection with our lending and deposit-taking activities.
The CFPB, which is an independent bureau within the Federal Reserve, has broad regulatory, supervisory and enforcement authority over our offering and provision of consumer financial products and services under these laws. Relating to mortgage lending in particular, the CFPB issued regulations governing the ability to repay, qualified mortgages, mortgage servicing, appraisals and compensation of mortgage lenders.
The CFPB has broad regulatory, supervisory and enforcement authority over our offering and provision of consumer financial products and services under these laws.
Removed
Operations The Company has three reportable segments: a Community Banks segment, an Insurance segment and a Wealth Management segment.
Added
Customers may also conduct many banking transactions, such as opening deposit accounts and applying for certain types of loans, through our Online and Mobile Banking Products. Lending Activities .
Removed
Originations of residential real estate loans are 3 generated through retail efforts in our branches or originations by or referrals from our Mortgage division and online through our Renasant Consumer Direct channel.
Added
In assessing the risk associated with this type of loan, management considers the ability of the client’s account customer, rather than the client itself, to repay the Company. — Real Estate – 1-4 Family Mortgage .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA failure or breach of our or a service provider’s operational or security systems, including as a result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation and create significant financial and legal exposure for us.
Biggest changeThe Company’s policies related to the monitoring of vendors and other third parties are discussed in detail below in Item IC, Cybersecurity, under the heading “Risk Management and Strategy - Diligence of Vendors and Other Third Parties.” A failure or breach of our communications and information security systems, or those of our vendors and customers, including as a result of cyber-attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation and create significant financial and legal exposure for us.
This data breach, as it related to the Company, involved a third party obtaining names, addresses and loan numbers of certain of our customers via unauthorized access to our service provider’s servers (the data breach did not involve Renasant Bank customer Social Security numbers or information related to any accounts maintained at Renasant Bank).
This data breach, as it related to the Company, involved a third party obtaining names, addresses and loan numbers of certain customers via unauthorized access to our service provider’s servers (the data breach did not involve Renasant Bank customer Social Security numbers or information related to any accounts maintained at Renasant Bank).
In addition to the general risks associated with our growth plans and the particular risks associated with FDIC-assisted transactions, both of which are highlighted above, in general acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among other things: — the time and costs associated with identifying and evaluating potential acquisition and merger targets; — inaccuracies in the estimates and judgments used to evaluate credit, operations, management and market risks with respect to the target institution; — the time and costs of evaluating new markets, hiring experienced local management and opening new bank locations, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion; — our ability to finance an acquisition and possible dilution to our existing shareholders; — the diversion of our management’s attention to the negotiation of a transaction; — the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations; — entry into new markets where we lack experience; and — risks associated with integrating the operations and personnel of acquired businesses.
In addition to the general risks associated with our growth plans and the particular risks associated with FDIC-assisted transactions, both of which are highlighted above, in general acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among other things: 25 — the time and costs associated with identifying and evaluating potential acquisition and merger targets; — inaccuracies in the estimates and judgments used to evaluate credit, operations, management and market risks with respect to the target institution; — the time and costs of evaluating new markets, hiring experienced local management and opening new bank locations, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion; — our ability to finance an acquisition and possible dilution to our existing shareholders; — the diversion of our management’s attention to the negotiation of a transaction; — the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations; — entry into new markets where we lack experience; and — risks associated with integrating the operations and personnel of acquired businesses.
Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the interest we pay on deposits and borrowings, but such changes could also affect (1) our ability to originate loans and generate deposits or access other sources of liquidity, which could reduce the amount of fee income generated, and (2) the fair value of our financial assets and liabilities.
Further changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the interest we pay on deposits and borrowings, but such changes could also affect (1) our ability to originate loans and generate deposits or access other sources of liquidity, which could reduce the amount of fee income generated, and (2) the fair value of our financial assets and liabilities.
Volatility in interest rates may also result in disintermediation, which is the flow of funds away from financial institutions into direct investments, such as U.S. Government and Agency securities and other investment vehicles, including mutual funds, which generally pay higher rates of return than financial institutions because of the absence of federal insurance premiums and reserve requirements.
Volatility in interest rates may also result in disintermediation, which is the flow of funds away from financial institutions into direct investments, such as U.S. Government and Agency securities and other investment vehicles, including mutual funds, which generally pay higher rates of return than financial institutions because of the absence of federal deposit insurance premiums and reserve requirements.
There may be significant changes in the allowance and provision for credit losses in future periods as the estimates used by management, and assumptions underlying such estimates, are adjusted in light of then-prevailing factors and forecasts. Any deterioration of current and future economic conditions could cause us to experience higher than normal delinquencies and credit losses.
There may be significant changes in the allowance and provision for credit losses in future periods as the estimates used by management, and assumptions underlying such estimates, are supplemented and adjusted in light of then-prevailing factors and forecasts. Any deterioration of current and future economic conditions could cause us to experience higher than normal delinquencies and credit losses.
Although we try to maintain diversification within our loan portfolio in order to minimize the effect of economic conditions within a particular industry, management also maintains an allowance for credit losses, which is a reserve established through a provision for credit losses on loans charged to expense, to absorb credit losses inherent in the entire loan portfolio.
Although we try to maintain diversification within our loan portfolio to minimize the effect of economic conditions within a particular industry, management also maintains an allowance for credit losses, which is a reserve established through a provision for credit losses on loans charged to expense, to absorb credit losses inherent in the entire loan portfolio.
Additionally, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit our successful integration of the operations acquired. 23 We may continue to experience increased credit costs or need to take additional markdowns and make additional provisions to the allowance for credit losses on loans.
Additionally, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit our successful integration of the operations acquired. We may continue to experience increased credit costs or need to take additional markdowns and make additional provisions to the allowance for credit losses on loans.
We have the right to defer distributions on our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid on our common stock. An investment in our common stock is not an insured deposit.
We have the right to defer distributions on our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid on our common stock. 26 An investment in our common stock is not an insured deposit.
Such factors may cause us to alter our growth and expansion plans or slow or halt the growth and expansion process, which may prevent us from entering certain target markets or allow competitors to gain or retain market share in our existing or expected markets.
Such factors may cause us to alter our growth and 24 expansion plans or slow or halt the growth and expansion process, which may prevent us from entering certain target markets or allow competitors to gain or retain market share in our existing or expected markets.
Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies when expanding their 22 franchise, including the following: Management of Growth .
Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies when expanding their franchise, including the following: Management of Growth .
Weak economic conditions are characterized by deflation, fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on mortgage, consumer and C&I 20 loans, residential and commercial real estate price declines and lower home sales and commercial activity.
Weak economic conditions are characterized by deflation, fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on mortgage, consumer and C&I 21 loans, residential and commercial real estate price declines and lower home sales and commercial activity.
We have a concentration of credit exposure in commercial real estate. In addition to the general risks associated with our lending activities described above, including the effects of declines in real estate values, commercial real estate (“CRE”) loans are subject to additional risks. These loans depend on cash flows from the property to service the debt.
We have a concentration of credit exposure in commercial real estate. In addition to the general risks associated with our lending activities described above, including the effects of declines in real estate values, CRE loans are subject to additional risks. These loans depend on cash flows from the property to service the debt.
In the event that we issue preferred stock in the future that has preference over our common stock with respect to payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of the holders of our common stock or the market price of our common stock could be adversely affected.
In the event that we issue preferred stock in the future that has preference over our common stock with respect to payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of the holders of our common stock or the market price of our common stock could be materially and adversely affected.
Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As noted above, over the course of 2022 the Federal Reserve raised interest rates in an effort to fight inflationary conditions.
Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As noted above, over the course of 2022 and 2023 the Federal Reserve raised interest rates in an effort to fight inflationary conditions.
Although management believes it has implemented effective asset and liability management strategies to reduce market risk on the results of our operations, these strategies are based on assumptions that may be incorrect. Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations.
Although management believes it has implemented effective asset and liability management strategies to reduce market risk on the results of our operations, these strategies are based on assumptions that may be incorrect or not comprehensive. Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations.
Customers have the right to opt out of our disclosure of their personal financial information to unaffiliated parties. We are also subject to state laws regulating the privacy of individual’s private information, many of which are more restrictive, and have more severe sanctions for noncompliance, than the GLB Act.
Customers have the right to opt out of our disclosure of their personal financial information to unaffiliated parties. We are also subject to state laws regulating the privacy of individual’s private information, many of which are more restrictive, and have more severe sanctions for noncompliance, than the GLBA.
We are also subject to various privacy, data protection and information security laws. Under the GLB Act, we are subject to limitations on our ability to share our customers’ nonpublic personal information with unaffiliated parties, and we are required to provide certain disclosures to our customers about our data collection and security practices.
We are also subject to various privacy, data protection and information security laws. Under the GLBA, we are subject to limitations on our ability to share our customers’ nonpublic personal information with unaffiliated parties, and we are required to provide certain disclosures to our customers about our data collection and security practices.
Such sources, which generally have a higher cost than deposits, include Federal Home Loan Bank advances and federal funds lines of credit from correspondent banks. 17 If the aforementioned sources of liquidity are not adequate for our needs, we may attempt to raise additional capital in the equity or debt markets.
These secondary sources, which generally have a higher cost than deposits, include Federal Home Loan Bank advances and federal funds lines of credit from correspondent banks. If the aforementioned sources of liquidity are not adequate for our needs, we may attempt to raise additional capital in the equity or debt markets.
Increases in interest rates on loans and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. As of December 31, 2022, approximately 70.15% of our loan portfolio consisted of C&I, construction and commercial real estate loans.
Increases in interest rates on loans and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. As of December 31, 2023, approximately 70.37% of our loan portfolio consisted of C&I, construction and commercial real estate loans.
At December 31, 2022, approximately 83.47% of our loan portfolio had real estate as a primary or secondary component of the collateral securing the loan. The real estate provides an alternate source of repayment in the event of a default by the borrower.
At December 31, 2023, approximately 83.07% of our loan portfolio had real estate as a primary or secondary component of the collateral securing the loan. The real estate provides an alternate source of repayment in the event of a default by the borrower.
Finally, the GLB Act requires us to develop, implement and maintain a written comprehensive information security program containing appropriate safeguards for our customers’ nonpublic personal information.
Finally, the GLBA requires us to develop, implement and maintain a written comprehensive information security program containing appropriate safeguards for our customers’ nonpublic personal information.
Our future growth and profitability depends, in part, on our ability to successfully manage the combined operations.
Our future growth and profitability depend, in part, on our ability to successfully manage the combined operations.
A discussion of the policies and procedures related to management’s process for determining the appropriate level of the allowance for credit losses is set forth under the headings “Critical Accounting Policies and Estimates” and “Risk Management – Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this report.
A discussion of the policies and procedures related to management’s process for determining the appropriate level of the allowance for credit losses is set forth under the headings “Critical Accounting Policies and Estimates” and “Risk Management – Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this report. 16 We are subject to interest rate risk.
The success of our acquisitions, including our two acquisitions in 2022, will depend on, among other things, our ability to realize anticipated cost savings and to integrate the acquired assets and operations in a manner that permits growth opportunities and does not materially disrupt our existing customer relationships or result in decreased revenues resulting from any loss of customers.
The success of our acquisitions depends on, among other things, our ability to realize anticipated cost savings and integrate the acquired assets and operations in a manner that permits growth opportunities and does not materially disrupt our existing customer relationships or result in decreased revenues resulting from any loss of customers.
We have invested a significant amount of time and expense in security infrastructure investments and the development of policies and procedures governing our operations as well as employee training and monitoring of our third party service providers, in our efforts to preserve the security, integrity and continuity of our operations from the aforementioned threats.
We have invested a significant amount of time and expense in security infrastructure investments and the development of policies and procedures governing our operations as well as in employee training and the monitoring of our vendors, in our efforts to preserve the security, integrity and continuity of our operations from the aforementioned threats.
If inflation persists, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less for floating rate instruments. Additionally, inflation increases the cost of goods and services we use in our daily operations which increases our maintenance expenses.
If inflation persists, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. Additionally, inflation increases the 17 cost of goods and services we use in our daily operations which increases our noninterest expense.
We are subject to interest rate risk. Our earnings and cash flows are largely dependent upon our net interest income. Net interest income is the difference between interest earned on assets, such as loans and securities, and the cost of interest-bearing liabilities, such as deposits and borrowed funds.
Our earnings and cash flows are largely dependent upon our net interest income. Net interest income is the difference between interest earned on assets, such as loans and securities, and the cost of interest-bearing liabilities, such as deposits and borrowed funds.
This increase, and any future increases, in FDIC insurance premiums as well as any special assessments that the FDIC may charge us may adversely affect our financial condition and results of operations. The Company’s financial condition and results of operations contain estimates and assumptions made by management that could be inaccurate.
Increases in deposit insurance assessment rates as well as any special assessments that the FDIC may charge us in the future may adversely affect our financial condition and results of operations. The Company’s financial condition and results of operations contain estimates and assumptions made by management that could be inaccurate.
For the 60 days ended February 17, 2023, the average daily trading volume for Renasant common stock was 215,713 shares per day. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time.
For the 60 days ended February 16, 2024, the average daily trading volume for Renasant common stock was 242,165 shares per day. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time.
Prior to January 1, 2022, LIBOR was the reference rate used for many of our transactions, including a substantial 16 portion of our variable rate loans as well as our borrowings and securities; in addition, the derivatives that we used to manage risk related to the foregoing transactions were tied to LIBOR prior to January 1, 2022.
Prior to January 1, 2022, LIBOR was the reference rate used for many of our transactions, including a substantial portion of our variable rate loans as well as our borrowings and securities; in addition, the derivatives that we used to manage risk related to the foregoing transactions were tied to LIBOR. All LIBOR tenors were discontinued by June 30, 2023.
In October 2022, the FDIC raised the assessment rate by two basis points, effective in the first quarter of 2023, which increase is intended to remain in effect until the 19 2.00% goals is reached.
In October 2022, the FDIC raised the assessment rate by two basis points, effective in the first quarter of 2023, which increase is intended to remain in effect until the 2.00% goal is reached. The FDIC reaffirmed this goal in November 2023.
Furthermore, our customers are impacted by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on the deposits they maintain with us or their ability to repay their loans from us.
Furthermore, our customers are impacted by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on the deposits they maintain with us or their ability to repay their loans from us. Liquidity needs could adversely affect our results of operations and financial condition.
Our financial statements are subject to the application of GAAP, which are periodically revised and/or expanded. From time to time, FASB or other accounting standard setting bodies adopt new accounting standards or amend existing standards.
Changes in accounting standards issued by FASB or other standard-setting bodies may adversely affect our financial statements. Our financial statements are subject to the application of GAAP, which are periodically revised and/or expanded. From time to time, FASB or other accounting standard setting bodies adopt new accounting standards or amend existing standards.
The trading volume in our common stock is less than that of other bank holding companies. Although our common stock is listed for trading on The NASDAQ Global Select Market, the average daily trading volume in our common stock is generally less than that of many of our competitors and other bank holding companies that are publicly-traded companies.
The trading volume in our common stock is less than that of other bank holding companies. Although our common stock is listed for trading on the New York Stock Exchange, the average daily trading volume in our common stock is generally less than that of many of our competitors and other bank holding companies that are publicly-traded companies.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and 15 policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. Over the course of 2022, the Federal Reserve significantly raised interest rates in order to combat inflationary conditions.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. Over the course of 2022 and into 2023, the Federal Reserve significantly raised interest rates to combat inflationary conditions, and interest rates remain at these elevated levels.
We have implemented processes and procedures designed to identify, measure, monitor and mitigate these risks. However, all risk management frameworks are inherently limited, for a number of reasons. First, we may not have identified all material risks affecting our operations. Next, our current procedures may not anticipate future development of currently unanticipated or unknown risks.
However, all risk management frameworks are inherently limited, for a number of reasons. First, we may not have identified all material risks affecting our operations. Next, our current procedures may not anticipate future development of currently unanticipated or unknown risks.
Our operational systems, including, among other things, deposit and loan servicing, online and mobile banking, wealth management, accounting and data processing, could be materially adversely impacted by a failure, interruption or breach in the security or integrity of any of these systems, whether our own or one of our third party 21 service provider’s.
Our operational systems, including, among other things, deposit and loan servicing, online and mobile banking, wealth management, accounting and data processing, could be materially adversely impacted by a failure, interruption or breach in the security or integrity of any of these systems, including systems under the control of vendors.
Failure to comply with laws, regulations or policies could also result in sanctions by regulatory agencies and/or civil money penalties, which could have a material adverse effect on our business, financial condition and results of operations.
Any such failure could result in sanctions by regulatory agencies and/or civil money penalties, which could have a material adverse effect on our business, financial condition and results of operations.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our financial condition and results of operations. We may be adversely affected by the soundness of other financial institutions and other third parties.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our financial condition and results of operations.
We have grown our business through the acquisition of entire financial institutions and non-bank commercial finance companies (such as Republic Business Credit and Southeastern Commercial Finance, LLC, both of which we acquired in 2022) and through de novo branching. We intend to continue pursuing this growth strategy for the foreseeable future.
We have grown our business through the acquisition of entire financial institutions and non-bank commercial finance companies and through de novo branching. We intend to continue pursuing this growth strategy for the foreseeable future.
At December 31, 2022, we had approximately $6.4 billion in commercial real estate loans, representing approximately 55.69% of our loans outstanding on that date, as follows: (thousands) December 31, 2022 Commercial Real Estate Owner-occupied $ 1,539,296 Non-owner occupied 3,452,910 Construction 1,330,337 Land Development: Commercial mortgage 125,857 Total Commercial real estate loans $ 6,448,400 As discussed under the heading “Supervision and Regulation” in Item 1, Business, above, the federal banking agencies promulgated guidance regarding when an institution will be deemed to potentially have significant CRE concentration risk exposure, as indicated by the results of the 100/300 Test.
At December 31, 2023, we had approximately $6.8 billion in commercial real estate loans, representing approximately 55.22% of our loans outstanding on that date, as follows: (thousands) December 31, 2023 Commercial Real Estate Owner-occupied $ 1,648,961 Non-owner occupied 3,733,174 Construction 1,333,397 Land Development: Commercial mortgage 104,415 Total Commercial real estate loans $ 6,819,947 As discussed under the heading “Supervision and Regulation” in Item 1, Business, above, the federal banking agencies promulgated guidance regarding when an institution will be deemed to potentially have significant CRE concentration risk exposure, as indicated by the results of the 100/300 Test.
Our ability to compete successfully depends on a number of factors, including, among other things: — the ability to develop, maintain and build upon long-term customer relationships based on top quality service, high ethical standards and safe and sound assets; — the ability to expand our market position; — the scope, relevance and pricing of products and services offered to meet customer needs and demands; — the rate at which we introduce new products and services relative to our competitors; — customer satisfaction with our level of service; and — industry and general economic trends.
Finally, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as loans and automatic transfer and payment systems. 18 Our ability to compete successfully depends on a number of factors, including, among other things: — the ability to develop, maintain and build upon long-term customer relationships based on top quality service, high ethical standards and safe and sound assets; — the ability to expand our market position; — the scope, relevance and pricing of products and services offered to meet customer needs and demands; — the rate at which we introduce new products and services relative to our competitors; — customer satisfaction with our level of service; and — industry and general economic trends.
A service provider’s failure to meet its contractual obligations or otherwise perform as expected could be disruptive to our operations, which could have a material adverse impact on our business, financial condition and results of operations. Further, replacing service providers often entails significant delay and expense.
A vendor’s failure to meet its contractual obligations or otherwise perform as expected could be disruptive to our operations, which could have a material adverse impact on our business, financial condition and results of operations. Further, replacing service providers often entails significant delay and expense. Additionally, some external vendors require access to the Company’s information systems to provide their services.
This in turn could result in financial losses to us or our customers, lasting damage to our reputation, the violation of privacy or other laws and significant litigation risk, all of which could have a material adverse effect on our financial condition and results of operations. We rely extensively on a number of third party service providers.
This in turn could result in financial losses to us or our customers, lasting damage to our reputation, the violation of privacy or other laws and significant litigation risk, all of which could have a material adverse effect on our financial condition and results of operations. 23 The Company has experienced security breaches and cyber-attacks in the past.
As of February 17, 2023, there were 150,000,000 shares of our common stock authorized, of which 56,018,496 shares were outstanding. 25 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
As of February 16, 2024, there were 150,000,000 shares of our common stock authorized, of which 56,216,702 shares were outstanding. 27 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, while consumer protection statutes are primarily focused on the protection of the users of our lending and deposit services. These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things.
Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, while consumer protection statutes are primarily focused on the fair treatment and protection of the users of our lending and deposit services.
Although management has policies and procedures to perform an environmental review before the loan is recorded and before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards.
Although management has policies and procedures to perform an environmental review before the loan is recorded and before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The discontinuation of the London Interbank Offered Rate (“LIBOR”) as a financial benchmark may adversely affect our business and financial results.
Despite these efforts, beginning in May 2022 we learned of a data breach experienced by a third-party service provider that provides property insurance validation services for the Company.
In May 2022, the Company learned of a data breach experienced by a vendor that provides property insurance validation services for the Company.
Entities within the financial services industry are interrelated as a result of trading, clearing, counterparty and other relationships. We have exposure to many different industries and counterparties and from time to time execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients.
We have exposure to many different industries and counterparties and from time to time execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client.
Although we rigorously evaluate potential third party service providers before entering into a business arrangement, we ultimately do not control the service provider’s performance of its contractual obligations or its actions with respect thereto.
Although we rigorously evaluate vendors before entering into contracts, we do not control a vendor’s performance of its contractual obligations or its actions with respect thereto.
Such poor performance may be due to the service provider’s failure to meet its contractual service level standards (due to, among other reasons, insufficient support for its existing products and services or a change in its strategic focus) or simply because the service provider’s products or services do not include the functionality, convenience or other aspects necessary to compete effectively in the marketplace.
Deficient performance may result from the vendor’s failure to meet its service standards under the contract (due to, among other reasons, insufficient support for its existing products and services or a change in its strategic focus) or simply because the vendor’s products or services do not include the functionality, convenience or adaptability necessary to compete effectively or efficiently with other 22 providers of the financial services we offer.
Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments and general economic conditions. Accordingly, we may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations or to support growth.
Additionally, deposit levels may be affected by a number of factors, including interest rates paid by competitors, general interest rate levels, returns available to customers on alternative investments and general economic conditions.
In addition to the information security risks discussed immediately above, we are subject to risks associated with a service provider’s failure to provide the agreed-upon products or services for reasons not related to information security or its delivery of a product or provision of services at a level or in a manner that does not satisfy our expectations.
We are therefore subject to the risks associated with a vendor’s failure to provide the agreed-upon products or services, or its delivery of products or services at a level or in a manner that does not meet expectations.
Significant sales of our common stock, or the expectation of these sales, could cause volatility in the price of our common stock. 24 Holders of our junior subordinated debentures have rights that are senior to those of our common shareholders.
This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Significant sales of our common stock, or the expectation of these sales, could cause volatility in the price of our common stock. Holders of our junior subordinated debentures have rights that are senior to those of our common shareholders.
Our risk management framework may not be effective in mitigating risk and loss to us. We are subject to numerous risks, including lending risk, interest rate risk, liquidity risk, market risk, information security risk and model risk, among other risks encountered in the ordinary course of our operations.
We are subject to numerous risks, including lending risk, interest rate risk, liquidity risk, market risk, information security risk and model risk, among other risks encountered in the ordinary course of our operations. We have implemented processes and procedures designed to identify, measure, monitor and mitigate these risks.
Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when the collateral we hold cannot be realized upon or is liquidated at prices not 18 sufficient to recover the full amount of the credit due to us.
In addition, our credit risk may be exacerbated when the collateral we hold cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit due to us. Any such losses could have a material adverse effect on our financial condition and results of operations.
In light of the above-described incident and the ongoing threats to our and our third party provider's information security, we can provide no assurances that our systems, or our provider's systems, will not experience in the future any failures, interruptions or security breaches or that, if any such failures, interruptions or breaches occur, they will be addressed in a timely and adequate manner.
Importantly, though, due to the difficulty in anticipating, detecting and recognizing threats to the Company’s systems, coupled with the fact that we do not have control over the information security systems of customers, vendors and third parties, we can provide no assurances that our systems, or our vendor’s or customer’s systems, will not experience in the future any material failures, interruptions or security breaches of our communications and information securities systems or that, if any such failures, interruptions or breaches occur, they will be addressed in a timely and adequate manner.
In addition, significant changes to such regulations have been proposed or may be proposed. Changes to statutes, regulations or regulatory policies, including changes in interpretation, implementation or enforcement of the foregoing, could affect us and/or the Bank in substantial and unpredictable ways.
New laws and regulations, and changes to (or repeal of) existing laws, regulations or policies, as well as changes in interpretation, implementation or enforcement of the foregoing, could affect us and/or the Bank in substantial and unpredictable ways.
As a financial institution, we rely heavily on our ability, and the ability of our third party service providers, to securely and reliably process, record, transmit and monitor confidential and other information through our and our third party service provider’s computer systems and networks.
The Company, our vendors (inclusive of vendors to our vendors) and our customers rely heavily on communications and information security systems to securely and reliably process, record, transmit and monitor confidential and other information through our and their computer systems and networks.
Any such losses could have a material adverse effect on our financial condition and results of operations. We are subject to extensive government regulation, and such regulation could limit or restrict our activities and adversely affect our earnings. We and the Bank are subject to extensive federal and state regulation and supervision.
We are subject to extensive government regulation, and such regulation could limit or restrict our activities and adversely affect our earnings.
See “Critical Accounting Policies and Estimates” and Note 1, “Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report. Changes in accounting standards issued by FASB or other standard-setting bodies may adversely affect our financial statements.
See “Critical Accounting Policies 20 and Estimates” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 1, “Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
Threats to these systems come from a variety of sources, including computer hacking involving the introduction of computer viruses or malware, cyber-attacks, identity theft, electronic fraudulent activity and attempted theft of financial assets. These threats are very sophisticated and constantly evolving.
Information security threats include computer hacking involving the introduction of computer viruses or malicious code known as “malware” into the Company’s systems, cyber-attacks, identity theft, electronic fraudulent activity and attempted theft of financial assets.
Such changes could subject us to additional costs, limit the types of financial services and products we may offer or fees we may charge and/or increase the ability of non-banks to offer competing financial services and products, among other things.
Among other impacts, new or revised laws and regulations could limit the types of financial services and products we may offer or fees we may charge, require extensive new disclosures in our public filings, increase the ability of non-banks to offer competing financial services and products and/or otherwise result in continuing uncertainty regarding legal and regulatory compliance matters.
The Company caused notices of the data breach to be delivered to impacted clients, and we notified federal and state regulatory authorities about the incident. The service provider also offered complementary credit monitoring services to consumer customers.
The data breach experienced by these vendors involved the names, account numbers, Social Security numbers and other nonpublic personal information of a relatively small number of our customers. For each incident, the Company caused notices of the data breach to be delivered to impacted clients, and we notified federal and state regulatory authorities about the incident.
The Company’s 4.50% fixed-to-floating rate subordinated notes due 2035 and its 3.00% fixed-to-floating rate subordinated notes due 2031 are linked to SOFR, and the Company has adopted daily simple SOFR in lieu of LIBOR as the primary reference rate for its lending transactions with other reference rates used on a case-by-case basis.
As an alternate benchmark to LIBOR, the Company adopted the Secured Overnight Finance Rate (“SOFR”), published by the Federal Reserve Bank of New York, as the primary reference rate for its lending transactions with other reference rates used on a case-by-case basis.
Disintermediation could also result in material adverse effects on our financial condition and results of operations.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, results of operations or profitability.
The Company has also heightened its monitoring of the service provider’s efforts to strengthen its information security infrastructure and prevent any further unauthorized access to its systems. As of the date of this report, the costs and expenses incurred by the Company in connection with this incident have been immaterial.
The relevant vendors also offered complementary credit monitoring services to consumer customers. The Company has also heightened its monitoring of the vendors’ efforts to strengthen their information security infrastructure and prevent any further unauthorized access to its systems. Nonetheless, it is inevitable that additional breaches and attacks will occur in the future.
Removed
The discontinuation of the London Interbank Offered Rate (“LIBOR”) as a financial benchmark may adversely affect our business and financial results. The discontinuation of LIBOR as a financial benchmark presents risks to the financial instruments originated or held by the Company.
Added
In addition, our credit quality monitoring procedures may fail to detect credit risk issues within the loan portfolio if important factors contributing to credit risk are not identified by management or given sufficient weight.
Removed
Although some LIBOR tenors were discontinued at the end of 2021, the LIBOR tenors impacting the Company’s financial instruments will continue to be quoted until June 30, 2023.
Added
The interest rate increases in 2022 and 2023 were followed by significant outflows of funds from financial institutions (including the Company) into mutual funds and other investment vehicles, increasing the competition for, and cost of, deposits. Disintermediation could also result in material adverse effects on our financial condition and results of operations.
Removed
When one-month LIBOR, which is the LIBOR tenor that the Company most frequently uses, is fully discontinued after June 30, 2023, there may be uncertainty or differences in the calculation of the applicable interest rate or payment amount depending on the terms of the governing instruments.
Added
For example, following the March 2023 bank failures, many depositors became concerned about the soundness of other financial institutions and moved deposits to larger financial institutions or to other investment vehicles. Accordingly, we may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations or to support growth.
Removed
Our significant efforts to amend these governing instruments and transition to a new reference rate remain ongoing. Nevertheless, any such uncertainty may increase operational and other risks to the Company and the industry.
Added
Our business, financial condition and results of operations could be materially affected by adverse developments impacting the financial services industry, such as recent bank failures or concerns involving liquidity and the increased competition for and cost of deposits.
Removed
While there is no consensus yet on what rate or rates may become accepted alternatives to LIBOR, a steering committee comprised of large U.S. financial institutions, the Alternative Reference Rate Committee (“ARRC”), selected the Secured Overnight Finance Rate (“SOFR”) as an alternative to LIBOR.
Added
The bank failures in March 2023 resulted in general uncertainty regarding the adequacy of liquidity of the banking sector generally and caused significant volatility in the stock prices of publicly-traded bank holding companies. These developments appear to have negatively impacted some customers’ confidence in banks, prompting some customers to maintain their deposits with larger financial institutions.
Removed
SOFR has been published by the Federal Reserve Bank of New York (“FRBNY”) since May 2018, and it is intended to be a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities.
Added
Additional bank failures or sales of distressed banks in anticipation of failure could prolong these concerns despite the extensive measures taken by federal banking regulators to restore confidence in the banking system. In addition, competition for deposits has increased in recent periods, and the cost of funding, both for deposits and other sources of liquidity, has increased.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES The principal executive offices of the Company are located at 209 Troy Street, Tupelo, Mississippi. Various departments occupy each floor of the five-story building. As of December 31, 2022, Renasant operated 146 full-service branches, 11 limited-service branches, 167 ATMs and 40 Interactive Teller Machines (ITMs).
Biggest changeITEM 2. PROPERTIES The principal executive offices of the Company are located at 209 Troy Street, Tupelo, Mississippi. Various departments occupy each floor of the five-story building. As of December 31, 2023, Renasant operated 148 full-service branches, 12 limited-service branches, 160 ATMs and 51 Interactive Teller Machines (ITMs).
Renasant Insurance, a wholly-owned subsidiary of the Bank, operates out of eight stand-alone offices throughout Mississippi. Republic Business Credit, a wholly-owned subsidiary of the Bank, operates out of four stand-alone offices in California, Illinois, Louisiana and Texas. We own or lease our facilities and believe all of our properties are in good condition to meet our business needs.
Renasant Insurance, a wholly-owned subsidiary of the Bank, operates out of eight stand-alone offices throughout Mississippi. Republic Business Credit, a wholly-owned subsidiary of the Bank, operates four stand-alone offices in California, Illinois, Louisiana and Texas. We own or lease our facilities and believe all of our properties are in good condition to meet our business needs.
Our Community Banks and Wealth Management segments operate out of all of these branches. The Bank also operates 20 locations used exclusively for mortgage banking and seven locations used exclusively for loan production. The Wealth Management segment operates two locations used exclusively for investment services.
Our Community Banks and Wealth Management segments operate out of all of these branches. The Bank also operates 17 locations used exclusively for mortgage banking and four locations used exclusively for loan production. The Wealth Management segment operates two locations used exclusively for investment services.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Company, the Bank, or any of its subsidiaries are a party or to which any of their property is subject, and no such legal proceedings were terminated in the fourth quarter of 2022. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 26 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Company, the Bank, or any of its subsidiaries are a party or to which any of their property is subject, and no such legal proceedings were terminated in the fourth quarter of 2023. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−0 removed3 unchanged
Biggest changeThis plan will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased. No shares were repurchased during the fourth quarter of 2022 under this plan. (2) Dollars in thousands.
Biggest changeNo shares were repurchased during the fourth quarter of 2023 under this plan, which expired in October 2023 and was replaced with a $100.0 million stock repurchase program approved in October 2023. This new plan will remain in effect for one year or, if earlier, the repurchase of the entire amount of common stock authorized to be repurchased.
BMI Banks - Southeast Region Index, is a peer group of 51 regional bank holding companies, whose common stock is traded either on the New York Stock Exchange, NYSE Amex or NASDAQ, and which are headquartered in Alabama, Arkansas, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.
BMI Banks - Southeast Region Index, is a peer group of 52 regional bank holding companies, whose common stock is traded either on the New York Stock Exchange, NYSE Amex or NASDAQ, and which are headquartered in Alabama, Arkansas, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. ITEM 6. [RESERVED] 28
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. ITEM 6. [RESERVED] 34
BMI Banks - Southeast Region Index, which is a peer group of regional bank holding companies (including the Company), for the measurement period. The performance graph assumes that the value of the investment in our common stock, the NASDAQ Market Index and the S&P U.S.
BMI Banks - Southeast Region Index, which is a peer group of regional bank holding companies (including the Company), for the measurement period. The performance graph assumes that the value of the investment in our common stock, the NYSE Composite Index and the S&P U.S.
Unregistered Sales of Equity Securities The Company did not sell any unregistered equity securities during 2022. 27 Stock Performance Graph The following performance graph, obtained from S&P Global Market Intelligence, compares the performance of our common stock to the NASDAQ Composite Index and to the S&P U.S.
Unregistered Sales of Equity Securities The Company did not sell any unregistered equity securities during 2023. 33 Stock Performance Graph The following performance graph, obtained from S&P Global Market Intelligence, compares the performance of our common stock to the NYSE Composite Index and to the S&P U.S.
This plan expired in October 2022, and no shares were repurchased under this plan in the fourth quarter of 2022 prior to its expiration. The Company announced a $100.0 million stock repurchase program in October 2022 under which the Company is authorized to repurchase outstanding shares of its common stock either in open market purchases or privately-negotiated transactions.
(2) The Company announced a $100.0 million stock repurchase program in October 2022 under which the Company was authorized to repurchase outstanding shares of its common stock either in open market purchases or privately-negotiated transactions.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders The Company’s common stock trades on The NASDAQ Global Select Market (“NASDAQ”) under the ticker symbol “RNST.” On February 17, 2023, the Company had approximately 4,150 shareholders of record and the closing sales price of the Company’s common stock was $37.38.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders The Company’s common stock trades on The New York Stock Exchange under the ticker symbol “RNST.” On February 16, 2024, the Company had approximately 4,040 shareholders of record and the closing sales price of the Company’s common stock was $32.13.
Issuer Purchases of Equity Securities Total Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Plans (1) Maximum Number of Shares or Approximate Dollar Value of Shares That May Yet Be Purchased Under Share Repurchase Plans (1)(2) October 1, 2022 to October 31, 2022 — $ — — $ 50,000 November 1, 2022 to November 30, 2022 — — — 100,000 December 1, 2022 to December 31, 2022 — — — 100,000 Total — $ — — (1) The Company announced a $50.0 million stock repurchase program in October 2021.
Issuer Purchases of Equity Securities Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Plans Maximum Number of Shares or Approximate Dollar Value of Shares That May Yet Be Purchased Under Share Repurchase Plans (2)(3) October 1, 2023 to October 31, 2023 163 $ 25.66 — $ 100,000 November 1, 2023 to November 30, 2023 — — — 100,000 December 1, 2023 to December 31, 2023 216 33.24 — 100,000 Total 379 $ 29.98 — (1) All shares in this column represent shares of Renasant Corporation stock withheld to satisfy the federal and state tax liabilities related to the vesting of time-based restricted stock awards.
BMI Banks - Southeast Region Index was $100 at January 1, 2017, and that all dividends were reinvested. Period Ending December 31, 2017 2018 2019 2020 2021 2022 Renasant Corporation $ 100.00 $ 75.28 $ 90.52 $ 89.06 $ 102.67 $ 104.42 NASDAQ Composite Index 100.00 97.16 132.81 192.47 235.15 158.65 S&P U.S.
BMI Banks - Southeast Region Index was $100 at January 1, 2018, and that all dividends were reinvested. Period Ending December 31, 2018 2019 2020 2021 2022 2023 Renasant Corporation $ 100.00 $ 120.24 $ 118.29 $ 136.37 $ 138.69 $ 128.01 NYSE Composite Index 100.00 125.51 134.28 162.04 146.89 167.12 S&P U.S.
BMI Banks - Southeast Region Index 100.00 82.62 116.45 104.41 149.13 121.30 (1) The S&P U.S.
BMI Banks - Southeast Region Index 100.00 140.94 126.37 180.49 146.81 151.44 (1) The S&P U.S.
Added
No shares were repurchased during the fourth quarter of 2023 under this plan. (3) Dollars in thousands.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

152 edited+42 added−52 removed73 unchanged
Biggest changeReturn on average tangible shareholders’ equity and Return on average tangible assets 2022 2021 2020 Net income (GAAP) $ 166,068 $ 175,892 $ 83,651 Amortization of intangibles 5,122 6,042 7,121 Tax effect of adjustment noted above (1) (1,119) (1,354) (1,382) Tangible net income (non-GAAP) $ 170,071 $ 180,580 $ 89,390 Average shareholders’ equity (GAAP) $ 2,184,603 $ 2,209,409 $ 2,114,590 Intangibles 967,018 966,733 973,287 Average tangible shareholders’ equity (non-GAAP) $ 1,217,585 $ 1,242,676 $ 1,141,303 Average total assets (GAAP) $ 16,637,852 $ 15,905,986 $ 14,503,449 Intangibles 967,018 966,733 973,287 Average tangible assets (non-GAAP) $ 15,670,834 $ 14,939,253 $ 13,530,162 Return on (average) shareholders’ equity (GAAP) 7.60 % 7.96 % 3.96 % Effect of adjustment for intangible assets 6.37 % 6.57 % 3.87 % Return on average tangible shareholders’ equity (non-GAAP) 13.97 % 14.53 % 7.83 % Return on (average) assets (GAAP) 1.00 % 1.11 % 0.58 % Effect of adjustment for intangible assets 0.09 % 0.10 % 0.08 % Return on average tangible assets (non-GAAP) 1.09 % 1.21 % 0.66 % (1) Tax effect is calculated based on the respective periods’ effective tax rate.
Biggest changeReturn on average tangible shareholders’ equity and Return on average tangible assets 2023 2022 2021 Net income (GAAP) $ 144,678 $ 166,068 $ 175,892 Amortization of intangibles 5,380 5,122 6,042 Tax effect of adjustment noted above (1) (1,012) (1,119) (1,354) Tangible net income (non-GAAP) $ 149,046 $ 170,071 $ 180,580 Average shareholders’ equity (GAAP) $ 2,224,506 $ 2,184,603 $ 2,209,409 Intangibles 1,012,239 967,018 966,733 Average tangible shareholders’ equity (non-GAAP) $ 1,212,267 $ 1,217,585 $ 1,242,676 Average total assets (GAAP) $ 17,231,883 $ 16,637,852 $ 15,905,986 Intangibles 1,012,239 967,018 966,733 Average tangible assets (non-GAAP) $ 16,219,644 $ 15,670,834 $ 14,939,253 Return on (average) shareholders’ equity (GAAP) 6.50 % 7.60 % 7.96 % Effect of adjustment for intangible assets 5.79 % 6.37 % 6.57 % Return on average tangible shareholders’ equity (non-GAAP) 12.29 % 13.97 % 14.53 % Return on (average) assets (GAAP) 0.84 % 1.00 % 1.11 % Effect of adjustment for intangible assets 0.08 % 0.09 % 0.10 % Return on average tangible assets (non-GAAP) 0.92 % 1.09 % 1.21 % (1) Tax effect is calculated based on the applicable periods’ effective tax rate. 61 Tangible common equity ratio (Tangible shareholders’ equity to tangible assets) 2023 2022 2021 Shareholders’ equity (GAAP) $ 2,297,383 $ 2,136,016 $ 2,209,853 Intangibles 1,010,460 1,015,884 963,781 Tangible shareholders’ equity (non-GAAP) $ 1,286,923 $ 1,120,132 $ 1,246,072 Total assets (GAAP) $ 17,360,535 $ 16,988,176 $ 16,810,311 Intangibles 1,010,460 1,015,884 963,781 Tangible assets (non-GAAP) $ 16,350,075 $ 15,972,292 $ 15,846,530 Shareholders’ equity to assets (GAAP) 13.23 % 12.57 % 13.15 % Effect of adjustment for intangible assets 5.36 % 5.56 % 5.29 % Tangible shareholders’ equity to tangible assets (non-GAAP) 7.87 % 7.01 % 7.86 % None of the non-GAAP financial measures the Company has included in this document is intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP.
Also, because intangible assets such as goodwill and the core deposit intangible can vary extensively from company to company and are excluded from the calculation of a financial institution’s 56 regulatory capital, the Company believes that the presentation of this non-GAAP financial information allows readers to more easily compare the Company’s results to information provided in other regulatory reports and the results of other companies.
Also, because intangible assets such as goodwill and the core deposit intangible can vary extensively from company to company and are excluded from the calculation of a financial institution’s regulatory capital, the Company believes that the presentation of this non-GAAP financial information allows readers to more easily compare the Company’s results to information provided in other regulatory reports and the results of other companies.
The decrease in noninterest-bearing deposits across the Company’s footprint in 2022 was primarily driven by increases in interest-bearing deposit rates. 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).
The decrease in noninterest-bearing deposits across the Company’s footprint in 2023 and 2022 was primarily driven by increases in interest-bearing deposit rates. 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).
The Company’s central appraisal review department reviews and approves third-party appraisals obtained by the Company on real estate collateral and monitors loan maturities to ensure updated appraisals are obtained. This department is managed by a State Certified General Real Estate 43 Appraiser and employs three additional State Certified General Real Estate Appraisers and four real estate evaluators.
The Company’s central appraisal review department reviews and approves third-party appraisals obtained by the Company on real estate collateral and monitors loan maturities to ensure updated appraisals are obtained. This department is managed by a State Certified General Real Estate Appraiser and employs three additional State Certified General Real Estate Appraisers and four real estate evaluators.
Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Both arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the 53 Company’s normal credit policies.
Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Both arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Company’s normal credit policies.
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 54 includable in 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.
Also, there may be limits in the usefulness of these measures to readers of this document. As a result, the Company encourages readers to consider its consolidated financial statements and footnotes thereto in their entirety and not to rely on any single financial measure. 57
Also, there may be limits in the usefulness of these measures to readers of this document. As a result, the Company encourages readers to consider its consolidated financial statements and footnotes thereto in their entirety and not to rely on any single financial measure.
Additionally, banking regulators periodically review our allowance for credit losses and may require us to recognize adjustments to the allowance based on their judgment of information available to them at the time of their examination. Management evaluates the adequacy of the allowance for credit losses on a quarterly basis.
Additionally, banking regulators periodically review our allowance for credit losses and may require us to recognize adjustments to the allowance based on their subjective judgment of information available to them at the time of their examination. Management evaluates the adequacy of the allowance for credit losses on a quarterly basis.
The trusts used the proceeds from the issuance of their preferred capital securities and common securities (collectively referred to as “capital securities”) to buy floating rate junior subordinated 36 debentures issued by the Company (or by companies that the Company subsequently acquired).
The trusts used the proceeds from the issuance of their preferred capital securities and common securities (collectively referred to as “capital securities”) to buy floating rate junior subordinated debentures issued by the Company (or by companies that the Company subsequently acquired).
Restrictions on Bank Dividends, Loans and Advances 52 The Company’s liquidity and capital resources, as well as its ability to pay dividends to our shareholders, are substantially dependent on the ability of the Bank to transfer funds to the Company in the form of dividends, loans and advances.
Restrictions on Bank Dividends, Loans and Advances The Company’s liquidity and capital resources, as well as its ability to pay dividends to our shareholders, are substantially dependent on the ability of the Bank to transfer funds to the Company in the form of dividends, loans and advances.
For an in-depth discussion of our accounting policies and our methodology for determining the appropriate level of the allowance for credit losses, please refer to the information in the “Critical Accounting Policies and Estimates” section above as well as the information under the headings “Loans and the Allowance for Credit Losses” and “Business Combinations, Accounting for Purchased Credit Deteriorated Loans and Related Assets” in Note 1, “Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
For an in-depth discussion of our accounting policies and our methodology for determining the appropriate level of the allowance for credit losses, please refer to the information in the “Critical Accounting Policies and Estimates” section above as well as the information under the headings “Loans and the Allowance for Credit Losses” and “Business Combinations, Accounting for Purchased Credit Deteriorated Loans and Related Assets” in Note 1, “Significant Accounting Policies,” and Note 4, “Allowance for Credit Losses,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
While the borrower has the ability to draw upon these commitments at any time (assuming the borrower’s compliance with the terms of the loan commitment), these commitments often expire without being drawn upon.
While the borrower has the ability to draw upon these commitments at any time (assuming the borrower’s compliance with the terms 58 of the loan commitment), these commitments often expire without being drawn upon.
Information is provided in each category with respect to changes attributable to (1) changes in volume (changes in volume multiplied by prior yield/rate); (2) changes in yield/rate (changes in yield/rate multiplied by prior volume); and (3) changes in both yield/rate and volume (changes in yield/rate 38 multiplied by changes in volume).
Information is provided in each category with respect to changes attributable to (1) changes in volume (changes in volume multiplied by prior yield/rate); (2) changes in yield/rate (changes in yield/rate multiplied by prior volume); and (3) changes in both yield/rate and volume (changes in yield/rate multiplied by changes in volume).
These ratios include the allowance for credit losses as a percentage of total loans, net charge-offs as a percentage of average loans, the provision for credit losses as a percentage of average loans, nonperforming loans as a percentage of total loans and the allowance coverage on nonperforming loans.
These ratios include the allowance for credit losses as a percentage of total loans, net charge-offs as a percentage of average loans, nonperforming loans as a percentage of total loans and the allowance coverage on nonperforming loans.
EVE is defined as the present value of assets minus the present value of liabilities at a point 50 in time for a given set of market rate assumptions.
EVE is defined as the present value of assets minus the present value of liabilities at a point in time for a given set of market rate assumptions.
In addition to the FDIC and DBCF restrictions on dividends payable by the Bank to the Company, the Federal Reserve provided guidance on the criteria that it will use to evaluate the request by a bank holding company to pay dividends in an aggregate amount that will exceed the company’s earnings for the period in which the dividends will be paid, which did not apply to the Company in 2022 or 2021.
In addition to the FDIC and DBCF restrictions on dividends payable by the Bank to the Company, the Federal Reserve provided guidance on the criteria that it will use to evaluate the request by a bank holding company to pay dividends in an aggregate amount that will exceed the company’s earnings for the period in which the dividends will be paid, which did not apply to the Company in 2023 or 2022.
Contractual Obligations The following table presents, as of December 31, 2022, significant fixed and determinable contractual obligations to third parties by payment date, that may impact the Company’s liquidity position. The Note Reference below refers to the applicable footnote in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
Contractual Obligations The following table presents, as of December 31, 2023, significant fixed and determinable contractual obligations to third parties by payment date, that may impact the Company’s liquidity position. The Note Reference below refers to the applicable footnote in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In Thousands, Except Share Data) The following discussion and analysis of our financial condition as of December 31, 2022 and 2021 and results of operations for each of the years then ended should be read together with the cautionary language regarding forward-looking statements at the beginning of this Annual Report on Form 10-K and the consolidated financial statements and related notes included under Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, as well as Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022, which provides a discussion of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In Thousands, Except Share Data) The following discussion and analysis of our financial condition as of December 31, 2023 and 2022 and results of operations for each of the years then ended should be read together with the cautionary language regarding forward-looking statements at the beginning of this Annual Report on Form 10-K and the consolidated financial statements and related notes included under Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, as well as Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023, which provides a discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K.
These are unsecured, uncommitted lines of credit maturing at various times within the next twelve months. There were no amounts outstanding under these lines of credit at December 31, 2022 or 2021. Finally, we can access the capital markets to meet liquidity needs.
These are unsecured, uncommitted lines of credit maturing at various times within the next twelve months. There were no amounts outstanding under these lines of credit at December 31, 2023 or 2022. Finally, we can access the capital markets to meet liquidity needs.
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 January 1, 2023, in each case as compared to the result under rates present in the market on December 31, 2022.
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 January 1, 2024, in each case as compared to the result 55 under rates present in the market on December 31, 2023.
Allowance for Credit Losses on Loans The accounting estimate most important to the presentation of our financial statements relates to the allowance for credit losses and the related provision for credit losses which involves considerable subjective judgment and evaluation by management.
Allowance for Credit Losses on Loans The accounting estimate most important to the presentation of our financial statements is the allowance for credit losses and the related provision for credit losses which involves considerable subjective judgment and evaluation by management.
Core deposits, which are deposits excluding brokered deposits and time deposits greater than $250,000, are the major source of funds used by the Bank to meet cash flow needs. Maintaining the ability to acquire these funds as needed in a variety of markets is the key to assuring the Bank’s liquidity.
Core deposits, which are deposits excluding time deposits greater than $250,000 and brokered deposits, are the major source of funds used by the Bank to meet short- and long-term cash flow needs. Maintaining the ability to acquire these funds as needed in a variety of markets is the key to assuring the Bank’s liquidity.
For more information about our loan policies and procedures for addressing credit risk, as well as for a discussion of the changes in the allowance for credit losses in 2021 and 2022, please refer to the disclosures in this Item under the heading “Risk Management – Credit Risk and Allowance for Credit Losses.” Business Combinations, Accounting for Purchased Loans The Company accounts for its acquisitions under ASC 805, “ Business Combinations ,” which requires the use of the acquisition method of accounting.
For more information about our loan policies and procedures for addressing credit risk, as well as for a discussion of the changes in the allowance for credit losses in 2023 and 2022, please refer to the disclosures in this Item under the heading “Risk Management – Credit Risk and Allowance for Credit Losses for Loans and Unfunded Commitments.” Business Combinations, Accounting for Purchased Loans The Company accounts for its acquisitions under ASC 805, “ Business Combinations ,” which requires the use of the acquisition method of accounting.
None of these restrictions had any impact on the Company’s ability to meet its cash obligations in 2022, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.
None of these restrictions had any impact on the Company’s ability to meet its cash obligations in 2023, nor does management expect such restrictions to materially impact the Company’s ability to meet its currently-anticipated cash obligations.
The charge-offs in 2022 were fully reserved for in the Company’s allowance for credit losses. Allowance for Credit Losses on Loans; Provision for Credit Losses on Loans . The allowance for credit losses is available to absorb credit losses inherent in the loans held for investment portfolio.
The charge-offs in 2023 were fully reserved for in the Company’s allowance for credit losses. Allowance for Credit Losses on Loans; Provision for Credit Losses on Loans . The allowance for credit losses is available to absorb credit losses inherent in the loans held for investment portfolio.
At December 31, 2022 and 2021, there were no concentrations of loans exceeding 10% of total loans other than loans disclosed in the table above. 33 The following table sets forth loans held for investment, net of unearned income, outstanding at December 31, 2022, which, based on remaining contractually-scheduled repayments of principal, are due in the periods indicated.
At December 31, 2023 and 2022, there were no concentrations of loans exceeding 10% of total loans other than loans disclosed in the table above. 39 The following table sets forth loans held for investment, net of unearned income, outstanding at December 31, 2023, which, based on remaining contractually-scheduled repayments of principal, are due in the periods indicated.
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.
The related net unrealized losses of $99,675 (after tax losses of $74,307) remained in accumulated other comprehensive income (loss) and are amortized over the remaining life of the securities, offsetting the related amortization of discount on the transferred securities.
(2) Excludes interest. (3) Includes brokered deposits in the amount of $233,133. Off-Balance Sheet Commitments The Company enters into loan commitments, standby letters of credit and derivative financial instruments in the normal course of its business. Loan commitments are made to accommodate the financial needs of the Company’s customers.
(2) Excludes interest. (3) Includes brokered deposits in the amount of $461,441. Off-Balance Sheet Commitments The Company enters into loan commitments, standby letters of credit and derivative financial instruments in the normal course of its business. Loan commitments are made to accommodate the financial needs of the Company’s customers.
The Company’s practice is to charge off estimated losses as soon as such loss is identified and reasonably quantified. Net charge-offs for 2022 were $7,329, or 0.07% as a percentage of average loans, compared to net charge-offs of $10,273, or 0.10% as a percentage of average loans, for 2021.
The Company’s practice is to charge off estimated losses as soon as such loss is identified and reasonably quantified. Net charge-offs for 2023 were $12,330, or 0.10% as a percentage of average loans, compared to net charge-offs of $7,329, or 0.07% as a percentage of average loans, for 2022.
Loan losses are charged against the allowance for credit losses when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management evaluates the adequacy of the allowance on a quarterly basis.
Loan losses are charged against the allowance for credit losses when management confirms the uncollectability of a loan balance. Subsequent recoveries, if any, are credited to the allowance. Management evaluates the adequacy of the allowance on a quarterly basis.
See “Risk Management – Credit Risk and Allowance for Credit Losses” in this Item 7 for information regarding the risk elements applicable to, and a summary of our loan loss experience with respect to, the loans in each of the categories listed below.
See “Risk Management – Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments” in this Item 7 for information regarding the risk elements applicable to, and a summary of our loan loss experience with respect to, the loans in each of the categories listed below.
During 2022, the Company contributed approximately $1,350 to charitable organizations throughout Mississippi, Georgia and Alabama, for which it received a dollar-for-dollar tax credit, and such contributions are included in our advertising and public relations expense. Amortization of intangible assets totaled $5,122 for 2022 compared to $6,042 for 2021.
During 2023 and 2022, the Company contributed approximately $1,392 and $1,350, respectively, to charitable organizations throughout Mississippi, Georgia and Alabama, for which it received a dollar-for-dollar tax credit, and such contributions are included in our advertising and public relations expense. Amortization of intangible assets totaled $5,380 for 2023 compared to $5,122 for 2022.
At December 31, 2022, the maximum amount available for transfer from the Bank to the Company in the form of loans was $178,131. The Company maintains a line of credit collateralized by cash with the Bank totaling $3,000. There were no amounts outstanding under this line of credit at December 31, 2022.
At December 31, 2023, the maximum amount available for transfer from the Bank to the Company in the form of loans was $188,810. The Company maintains a line of credit collateralized by cash with the Bank totaling $3,000. There were no amounts outstanding under this line of credit at December 31, 2023.
The program will remain in effect until the earlier of October 2023 or the repurchase of the entire amount of common stock authorized to be repurchased by the Board of Directors. The Company has junior subordinated debentures with a carrying value of $112,042 at December 31, 2022, of which $108,450 are included in the Company’s Tier 1 capital.
The program will remain in effect until the earlier of October 2024 or the repurchase of the entire amount of common stock authorized to be repurchased by the Board of Directors. The Company has junior subordinated debentures with a carrying value of $112,978 at December 31, 2023, of which $109,388 are included in the Company’s Tier 1 capital.
Management uses these non-GAAP financial measures when evaluating capital utilization and adequacy. In addition, the Company believes that these non-GAAP financial measures facilitate the making of period-to-period comparisons and are meaningful indicators of its operating performance, particularly because these measures are widely used by industry analysts for companies with merger and acquisition activities.
In addition, the Company believes that these non-GAAP financial measures facilitate the making of period-to-period comparisons and are meaningful indicators of its operating performance, particularly because these measures are widely used by industry analysts for companies with merger and acquisition activities.
Noninterest-bearing deposits decreased to 33.80% of total deposits at December 31, 2022, as compared to 33.93% of total deposits at December 31, 2021, due to noninterest-bearing deposits being moved to other types of deposits or financial products bearing higher interest rates.
Noninterest-bearing deposits decreased to 25.46% of total deposits at December 31, 2023, as compared to 33.80% of total deposits at December 31, 2022, due to noninterest-bearing deposits being moved to other types of deposits or financial products bearing higher interest rates.
Total assets were $16,988,176 at December 31, 2022 compared to $16,810,311 at December 31, 2021. Securities 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 other types of borrowings.
Total assets were $17,360,535 at December 31, 2023 compared to $16,988,176 at December 31, 2022. Securities 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 other types of borrowings.
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.
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. Loans held for sale fluctuates based on mortgage production volume.
Accordingly, management targets growth of non-interest bearing deposits. While we do not control the types of deposit instruments our clients choose, we do influence those choices with the rates and the deposit specials we offer. We constantly monitor our funds position, short- and long-term liquidity needs and evaluate the effect that various funding sources have on our financial position.
While we do not control the types of deposit instruments our clients choose, we do influence those choices with the rates and the deposit specials we offer. We constantly monitor our funds position, short- and long-term liquidity needs and evaluate the effect that various funding sources have on our financial position.
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. Originations of mortgage loans to be sold totaled $1,679,356 in 2022 and $4,059,927 in 2021.
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. Originations of mortgage loans to be sold totaled $1,330,912 in 2023 and $1,679,356 in 2022.
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 76.64% of total net revenue in 2022. Total net revenue consists of net interest income on a fully taxable equivalent basis and noninterest income.
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 82.43% of total net revenue in 2023. Total net revenue consists of net interest income on a fully taxable equivalent basis and noninterest income.
For more information about the terms and conditions of the Company’s junior subordinated debentures and subordinated notes, see Note 11, “Long-Term Debt,” in the Notes to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
For more information about our outstanding subordinated notes and junior subordinated debentures, see Note 11, “Long-Term Debt,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
At December 31, 2022, unrealized losses of $201,299 were recorded on available for sale investment securities with a carrying value of $1,515,088. At December 31, 2021, unrealized losses of $31,024 were recorded on available for sale securities with a carrying value of $1,925,018.
At December 31, 2022, unrealized losses of $201,299 were recorded on available for sale securities with a carrying value of $1,515,088.
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 based on the three-month LIBOR plus a predetermined spread and receives a fixed 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. Under this contract, the Company pays a variable rate of interest and receives a fixed rate of interest.
Loans Held for Sale Loans held for sale were $110,105 at December 31, 2022 compared to $453,533 at December 31, 2021. Mortgage loans to be sold, which made up all of our loans held for sale at each of December 31, 2022 and 2021, are sold either on a “best efforts” basis or under a “mandatory delivery” sales agreement.
Mortgage loans to be sold, which made up all of our loans held for sale at each of December 31, 2023 and 2022, are sold either on a “best efforts” basis or under a “mandatory delivery” sales agreement.
Interest is charged at the prevailing market rate on these borrowings. Federal funds are short term borrowings, generally overnight borrowings, between financial institutions, while security repurchase agreements represent funds received from customers, generally on an overnight or continuous basis, which are collateralized by investment securities owned or, at times, borrowed and re-hypothecated by the Company.
Federal funds are short term borrowings, generally overnight borrowings, between financial institutions, while security repurchase agreements represent funds received from customers, generally on an overnight or continuous basis, that are collateralized by investment securities owned or, at times, borrowed and re-hypothecated by the Company.
The Company’s unfunded loan commitments and standby letters of credit outstanding at December 31, 2022 and 2021 were as follows: 2022 2021 Loan commitments $ 3,577,614 $ 3,104,940 Standby letters of credit 98,357 89,830 The Company closely monitors the amount of remaining future commitments to borrowers in light of prevailing economic conditions and adjusts these commitments as necessary.
The Company’s unfunded loan commitments and standby letters of credit outstanding at December 31, 2023 and 2022 were as follows: 2023 2022 Loan commitments $ 3,091,997 $ 3,577,614 Standby letters of credit 113,970 98,357 The Company closely monitors the amount of remaining future commitments to borrowers in light of prevailing economic conditions and adjusts these commitments as necessary.
Finally, the Company enters into forward 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 based on the three-month or one-month LIBOR plus a predetermined spread.
Finally, the Company enters into forward 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.
Also, management reviews past due ratios by officer, community bank and the Company as a whole. 44 The allowance for credit losses on loans was $192,090 and $164,171 at December 31, 2022 and 2021, respectively.
Also, management reviews past due ratios by officer, community bank and the Company as a whole. 50 The allowance for credit losses on loans was $198,578 and $192,090 at December 31, 2023 and 2022, respectively.
There were no federal funds purchased outstanding at December 31, 2022, and 2021. Security repurchase agreements were $12,232 at December 31, 2022, as compared to $13,947 at December 31, 2021. The Company had $700,000 in short-term borrowings from the FHLB (i.e., advances with original maturities less than one year) at December 31, 2022, and none at December 31, 2021.
There were no federal funds 56 purchased outstanding at December 31, 2023, and 2022, while security repurchase agreements were $7,577 at December 31, 2023, as compared to $12,232 at December 31, 2022. The Company had $300,000 and $700,000 in short-term borrowings from the FHLB (i.e., advances with original maturities less than one year) at December 31, 2023, and 2022, respectively.
The changes in our financial condition and results of operations from 2021 to 2022 were driven by a number of factors, the most prominent of which are highlighted below: Financial Highlights — Net interest income increased $57,297 to $481,298 for 2022 as compared to $424,001 for 2021.
The changes in our financial condition and results of operations from 2022 to 2023 were driven by a number of factors, the most prominent of which are highlighted below: Financial Highlights — Net interest income increased $38,029 to $519,327 for 2023 as compared to $481,298 for 2022.
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 at December 31: 30 2022 2021 Balance % of Portfolio Balance % of Portfolio U.S. Treasury securities $ — — % $ 3,010 0.11 % Obligations of other U.S.
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 at December 31: 2023 2022 Balance % of Portfolio Balance % of Portfolio Obligations of other U.S.
At December 31, 2022, the Company had notional amounts of $258,646 on interest rate contracts with corporate customers and $258,646 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts.
At December 31, 2023, the Company had notional amounts of $535,725 on interest rate contracts with corporate customers and $532,279 in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts.
The source of funds that we select depends on the terms and how those terms assist us in mitigating interest rate risk, maintaining our liquidity position and managing our net interest margin.
The source of funds that we select depends on the terms and how those terms assist us in mitigating interest rate risk, maintaining our liquidity position and managing our net interest margin as well as business opportunities that may accompany deposits we acquire.
Wherever feasible, we utilize third-party information to provide management with estimates. Although independent third parties are engaged to assist us in the estimation process, management evaluates the results, challenges assumptions and considers other factors that could impact these estimates.
Critical Accounting Policies and Estimates Our financial statements are prepared using accounting estimates for various accounts. Wherever feasible, we utilize third-party information to provide management with estimates. Although independent third parties are engaged to assist us in the estimation process, management evaluates the results, challenges assumptions and considers other factors that could impact these estimates.
The following table presents our short-term borrowings by type at December 31: 2022 2021 Security repurchase agreements $ 12,232 $ 13,947 Short-term borrowings from the FHLB 700,000 — Total short-term borrowings $ 712,232 $ 13,947 At December 31, 2022, long-term debt consists of long-term FHLB advances, our junior subordinated debentures and our subordinated notes.
The following table presents our short-term borrowings by type at December 31: 2023 2022 Security repurchase agreements $ 7,577 $ 12,232 Short-term borrowings from the FHLB 300,000 700,000 Total short-term borrowings $ 307,577 $ 712,232 At December 31, 2023, long-term debt consists of our junior subordinated debentures and our subordinated notes; no long-term FHLB advances were outstanding.
The increase from 2021 to 2022 was due to the continued increase in loan yields due to the current rate environment, as well as changes in the mix of earning assets during the year, partially offset by an increase in our cost of funds.
The increase from 2022 to 2023 was due to the continued increase in loan yields due to additional interest rate hikes by the Federal Reserve, as well as changes in the mix of earning assets during the year, partially offset by an increase in our cost of funds.
The following table shows the maturity of time deposits at December 31, 2022 that are in excess of the FDIC insurance limit (or similar state deposit insurance limits) and that are otherwise uninsured: Three Months or Less $ 45,201 Over Three through Six Months 33,392 Over Six through Twelve Months 170,924 Over 12 Months 109,272 Total $ 358,789 Borrowed Funds Total borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the Federal Home Loan Bank (“FHLB”), subordinated notes and junior subordinated debentures and are classified on the Consolidated Balance Sheets as either short-term borrowings or long-term debt.
The following table shows the maturity of time deposits at December 31, 2023 that are in excess of the FDIC insurance limit (or similar state deposit insurance limits) and that are otherwise uninsured: Three Months or Less $ 218,089 Over Three through Six Months 246,454 Over Six through Twelve Months 210,453 Over 12 Months 23,960 Total $ 698,956 Borrowed Funds Total borrowings include federal funds purchased, securities sold under agreements to repurchase, advances from the Federal Home Loan Bank (“FHLB”), subordinated notes and junior subordinated debentures and are classified on the Consolidated Balance Sheets as either short-term borrowings or long-term debt.
Wealth Management revenue was $22,339 for 2022 compared to $20,455 for 2021. The market value of assets under management or administration was $5,004,329 and $5,177,984 at December 31, 2022 and 2021, respectively.
Wealth Management revenue was $22,132 for 2023 compared to $22,339 for 2022. The market value of assets under management or administration was $5,238,131 and $5,004,329 at December 31, 2023 and 2022, respectively.
A reconciliation of these financial measures from GAAP to non-GAAP as well as an explanation of why the Company provides these non-GAAP financial measures can be found under the “Non-GAAP Financial Measures” heading at the end of this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. 29 Critical Accounting Policies and Estimates Our financial statements are prepared using accounting estimates for various accounts.
A reconciliation of these financial measures from GAAP to non-GAAP as well as an explanation of why the Company provides these non-GAAP financial measures can be found under the “Non-GAAP Financial Measures” heading at the end of this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following table presents our long-term debt by type at December 31: 2022 2021 Federal Home Loan Bank advances $ — $ 417 Junior subordinated debentures 112,042 111,373 Subordinated notes 316,091 359,419 Total long-term debt $ 428,133 $ 471,209 Long-term FHLB borrowings are used to match-fund against large, fixed rate commercial or real estate loans with long-term maturities, which helps mitigate interest rate exposure when rates rise.
The following table presents our long-term debt by type at December 31: 2023 2022 Junior subordinated debentures $ 112,978 $ 112,042 Subordinated notes 316,422 316,091 Total long-term debt $ 429,400 $ 428,133 Long-term FHLB borrowings are used to match-fund against large, fixed rate commercial or real estate loans with long-term maturities, which helps mitigate interest rate exposure when rates rise.
At December 31, 2022, there were no outstanding long-term advances with the FHLB as compared to $417 at December 31, 2021. The total amount of the remaining credit available to us from the FHLB at December 31, 2022 was $3,651,678. We also maintain lines of credit with other commercial banks totaling $180,000.
At December 31, 2023 and 2022, there were no outstanding long-term advances with the FHLB. The total amount of the remaining credit available to us from the FHLB at December 31, 2023 was $2,922,315. We also maintain lines of credit with other commercial banks totaling $180,000.
In addition to the contingency income described above, other noninterest income includes income from our SBA banking division and other miscellaneous income and can fluctuate based on the claims experience in our Insurance agency, SBA production and recognition of other nonseasonal income items. Other noninterest income was $13,874 for 2022 compared to $20,571 for 2021.
In addition to the contingency income described above, other noninterest income includes income from our SBA banking division, our capital markets division and other miscellaneous income and can fluctuate based on the claims experience in our Insurance agency, SBA production and recognition of other nonseasonal income items.
During 2022, the Company continued its efforts to grow noninterest-bearing deposits. Low cost deposits continue to be the preferred choice of funding; however, the Company may rely on brokered deposits or wholesale borrowings when advantageous.
During 2023, the Company continued its efforts to maintain noninterest-bearing deposits. Low cost deposits continue to be the preferred choice of funding; however, the Company may rely on brokered deposits or wholesale borrowings when advantageous or otherwise deemed advisable due to market conditions.
Loan grades range from 10 to 95, with 10 rated loans having the least credit risk. For more information about the Company’s loan grades, see the information under the heading “Credit Quality” in Note 3, “Loans,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
For more information about the Company’s loan grades, see the information under the heading “Credit Quality” in Note 3, “Loans,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.
Year Ended December 31, 2022 2021 Allowance for credit losses on unfunded loan commitments: Beginning balance $ 20,035 $ 20,535 Provision for (recovery of) credit losses on unfunded loan commitments (included in other noninterest expense) 83 (500) Ending balance $ 20,118 $ 20,035 Nonperforming Assets . Nonperforming assets consist of nonperforming loans and other real estate owned.
Year Ended December 31, 2023 2022 Allowance for credit losses on unfunded loan commitments: Beginning balance $ 20,118 $ 20,035 (Recovery of) provision for credit losses on unfunded loan commitments (3,200) 83 Ending balance $ 16,918 $ 20,118 Nonperforming Assets . Nonperforming assets consist of nonperforming loans and other real estate owned.
The following table presents the allocation of the allowance for credit losses on loans and the percentage of each loan category to total loans at December 31 for each of the years presented. 2022 2021 Balance % of Total Balance % of Total Commercial, financial, agricultural $ 44,255 14.46 % $ 33,922 14.20 % Lease financing 2,463 0.99 % 1,486 0.76 % Real estate – construction 19,114 11.49 % 16,419 11.03 % Real estate – 1-4 family mortgage 44,727 27.78 % 32,356 27.19 % Real estate – commercial mortgage 71,798 44.20 % 68,940 45.39 % Installment loans to individuals 9,733 1.08 % 11,048 1.43 % Total $ 192,090 100.00 % $ 164,171 100.00 % The provision for credit losses on loans charged to operating expense is an amount that, 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 following table presents the allocation of the allowance for credit losses on loans and the percentage of each loan category to total loans at December 31 for each of the years presented. 2023 2022 Balance % of Total Balance % of Total Commercial, financial, agricultural $ 43,980 15.15 % $ 44,255 14.46 % Lease financing 2,515 0.94 % 2,463 0.99 % Real estate – construction 18,612 10.79 % 19,114 11.49 % Real estate – 1-4 family mortgage 47,283 27.85 % 44,727 27.78 % Real estate – commercial mortgage 77,020 44.43 % 71,798 44.20 % Installment loans to individuals 9,168 0.84 % 9,733 1.08 % Total $ 198,578 100.00 % $ 192,090 100.00 % The provision for credit losses on loans charged to operating expense is an amount that, 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.
Loan requests are reviewed for approval by senior credit officers. For commercial and commercial real estate secured loans, 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.
For commercial and commercial real estate secured loans, 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. Loan grades range from 10 to 95, with 10 rated loans having the least credit risk.
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 each of the years presented: Percentage of Total Cost of Funds 2022 2021 2022 2021 Noninterest-bearing demand 33.39 % 32.00 % — % — % Interest-bearing demand 45.04 45.84 0.40 0.25 Savings 7.83 7.25 0.09 0.07 Brokered deposits 0.17 — 4.43 — Time deposits 9.19 11.42 0.56 0.84 Borrowings 4.38 3.49 4.05 3.34 Total deposits and borrowed funds 100.00 % 100.00 % 0.42 % 0.33 % Cash and cash equivalents were $575,992 at December 31, 2022, compared to $1,877,965 at December 31, 2021.
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 each of the years presented: Percentage of Total Cost of Funds 2023 2022 2023 2022 Noninterest-bearing demand 26.94 % 33.39 % — % — % Interest-bearing demand 43.04 45.04 2.18 0.40 Savings 6.58 7.83 0.33 0.09 Brokered deposits 4.72 0.17 5.17 4.43 Time deposits 12.69 9.19 2.90 0.56 Borrowings 6.03 4.38 5.13 4.05 Total deposits and borrowed funds 100.00 % 100.00 % 1.88 % 0.42 % Cash and cash equivalents were $801,351 at December 31, 2023, compared to $575,992 at December 31, 2022.
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 Taxes Income tax expense for 2022 and 2021 was $45,240 and $46,935, respectively.
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 Taxes Income tax expense for 2023 and 2022 was $32,509 and $45,240, respectively.
Interest expense on total borrowings was $25,304 and $15,708 for the years ending December 31, 2022 and 2021, respectively, while the cost of total borrowings was 4.05% and 3.34% for the years ended December 31, 2022 and 2021, respectively.
Interest expense on total borrowings was $45,661 and $25,304 for the years ending December 31, 2023 and 2022, respectively, while the cost of total borrowings was 5.13% and 4.05% for the years ended December 31, 2023 and 2022, respectively.
Inherent in any lending activity is credit risk, that is, the risk of loss should a borrower default. Credit risk is monitored and managed on an ongoing basis by a credit administration department, a problem asset resolution committee and the Board of Directors Credit Review Committee.
Credit risk is monitored and managed on an ongoing basis by a credit administration department, a problem asset resolution committee and the Board of Directors Credit Review Committee.
Compensation expense recorded in connection with awards of restricted stock, which is included within salaries and employee benefits, was $10,595 and $9,415 for 2022 and 2021, respectively. A portion of the restricted stock awards in both years was subject to the satisfaction of performance-based conditions.
Compensation expense recorded in connection with awards of restricted stock, which is included within salaries and employee benefits, was $12,746 and $10,595 for 2023 and 2022, respectively. A portion of the restricted stock awards in both years was subject to the satisfaction of performance-based conditions. Data processing costs increased $295 to $15,195 in 2023 from $14,900 in 2022.
Diluted earnings per share for the year ended December 31, 2022 was $2.95 as compared to $3.12 for the year ended December 31, 2021.
Basic earnings per share for the year ended December 31, 2023 was $2.58 as compared to $2.97 for the year ended December 31, 2022. Diluted earnings per share for the year ended December 31, 2023 was $2.56 as compared to $2.95 for the year ended December 31, 2022.
In addition, we maintain a loan review staff to independently monitor loan quality and lending practices. Loan review personnel monitor and, if necessary, adjust the grades assigned to loans through periodic examination, focusing their review on commercial and real estate loans rather than consumer and small balance consumer mortgage loans, such as 1-4 family mortgage loans.
Loan review personnel monitor and, if necessary, adjust the grades assigned to loans through periodic examination, focusing their review on commercial and real estate loans rather than consumer and small balance consumer mortgage loans, such as 1-4 family mortgage loans. 49 In compliance with loan policy, the lending staff is given lending limits based on their knowledge and experience.
Internal factors include balance sheet changes in volume and mix as well as loan and deposit pricing decisions. External factors include changes in market interest rates, competition and the shape of the interest rate yield curve.
Internal factors include balance sheet changes in volume and mix as well as loan and deposit pricing decisions. External factors include changes in market interest rates, competition and the shape of the interest rate yield curve. During 2023, net interest income growth was primarily driven by the rising rate environment throughout 2022 and 2023.
In addition, the FDIC has the authority to prohibit the Bank from engaging in business practices that the FDIC considers to be unsafe or unsound, which, depending on the financial condition of the Bank, could include the payment of dividends.
In addition, the FDIC has the authority to prohibit the Bank from engaging in business practices that the FDIC considers to be unsafe or unsound, which, depending on the financial condition of the Bank, could include the payment of dividends. 57 Accordingly, the approval of the DBCF is required prior to the Bank paying dividends to the Company, and under certain circumstances the approval of the FDIC may be required.
Primary risks that are associated with the Company include credit, interest rate and liquidity risk. Credit and interest rate risk are discussed below, while liquidity risk is discussed in the next subsection under the heading “Liquidity and Capital Resources.” Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments Management of Credit Risk .
Credit and interest rate risk are discussed below, while liquidity risk is discussed in the next subsection under the heading “Liquidity and Capital Resources.” Credit Risk and Allowance for Credit Losses on Loans and Unfunded Commitments Management of Credit Risk . Inherent in any lending activity is credit risk, that is, the risk of loss should a borrower default.
Performance Overview Net income was $166,068 for 2022 compared to $175,892 for 2021. Basic and diluted earnings per share (“EPS”) were $2.97 and $2.95, respectively, for 2022 compared to $3.13 and $3.12, respectively, for 2021. At December 31, 2022, total assets increased to $16,988,176 from $16,810,311 at December 31, 2021.
Performance Overview Net income was $144,678 for 2023 compared to $166,068 for 2022. Basic and diluted earnings per share (“EPS”) were $2.58 and $2.56, respectively, for 2023 compared to $2.97 and $2.95, respectively, for 2022. At December 31, 2023, total assets increased to $17,360,535 from $16,988,176 at December 31, 2022.
The following table presents nonperforming loans by loan category at December 31 for each of the years presented. 2022 2021 Commercial, financial, agricultural $ 12,543 $ 13,131 Lease financing — 11 Real estate – construction: Residential 77 — Commercial — — Condominiums — — Total real estate – construction 77 — Real estate – 1-4 family mortgage: Primary 30,076 19,533 Home equity 1,909 1,719 Rental/investment 1,014 1,595 Land development 82 257 Total real estate – 1-4 family mortgage 33,081 23,104 Real estate – commercial mortgage: Owner-occupied 5,499 5,039 Non-owner occupied 5,342 8,535 Land development 71 470 Total real estate – commercial mortgage 10,912 14,044 Installment loans to individuals 263 515 Total nonperforming loans $ 56,876 $ 50,805 48 Management has evaluated the aforementioned loans and other loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses on loans at December 31, 2022.
The following table presents nonperforming loans by loan category at December 31 for each of the years presented. 2023 2022 Commercial, financial, agricultural $ 6,282 $ 12,543 Real estate – construction: Residential — 77 Total real estate – construction — 77 Real estate – 1-4 family mortgage: Primary 44,174 30,076 Home equity 2,849 1,909 Rental/investment 2,238 1,014 Land development 19 82 Total real estate – 1-4 family mortgage 49,280 33,081 Real estate – commercial mortgage: Owner-occupied 3,373 5,499 Non-owner occupied 9,774 5,342 Land development 300 71 Total real estate – commercial mortgage 13,447 10,912 Installment loans to individuals 361 263 Total nonperforming loans $ 69,370 $ 56,876 Management has evaluated the aforementioned loans and other loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses on loans at December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSEC Form 10-K A COPY OF THIS ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY DIRECTING A WRITTEN REQUEST TO: JOHN S. OXFORD, SENIOR VICE PRESIDENT AND CHIEF MARKETING OFFICER, RENASANT BANK, 209 TROY STREET, TUPELO, MISSISSIPPI, 38804-4827. 58
Biggest changeSEC Form 10-K A COPY OF THIS ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY DIRECTING A WRITTEN REQUEST TO: JOHN S. OXFORD, SENIOR VICE PRESIDENT AND CHIEF MARKETING OFFICER, RENASANT BANK, 204 S. BROADWAY, TUPELO, MISSISSIPPI, 38804. 62

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