RENASANT CORP

Previous wording

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 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:

Current wording

Net income was $195,457 for 2024 compared to $144,678 for 2023. Basic and diluted earnings per share (“EPS”) were $3.29 and $3.27, respectively, for 2024 compared to $2.58 and $2.56, respectively, for 2023. At December 31, 2024, total assets increased to $18,034,868 from $17,360,535 at December 31, 2023. The changes in our financial condition and results of operations from 2023 to 2024 were driven by a number of factors, the most prominent of which are highlighted below:

Previous wording

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. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb such expected credit losses, as prescribed by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic (“ASC”) 326,“Financial Instruments - Credit Losses” (“ASC 326”; ASC 326 is also referred to herein as “CECL”). Although we consider all reasonably-available information that we believe is relevant to making the assumptions that underlie the Company’s determination of the appropriate amount of the allowance for credit losses, future adjustments to the allowance may be necessary if actual economic or other conditions ultimately differ substantially from the assumptions we used in making the evaluation. 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. Please refer to the discussion under the heading “Loans and the Allowance for Credit Losses” 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 more information regarding the estimates and assumptions, and the uncertainties underlying such estimates and assumptions, involved in the calculation of the allowance for credit losses.

Current wording

The accounting estimate most important to the presentation of our financial statements that involves considerable subjective judgment and evaluation by management is the allowance for credit losses and the related provision for credit losses. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb such expected credit losses, as prescribed by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic (“ASC”) 326,“Financial Instruments - Credit Losses” (“ASC 326”; ASC 326 is also referred to herein as “CECL”). The discussion under the heading “Loans and the Allowance for Credit Losses” in Note 1, “Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report provides more information regarding the estimates and assumptions, and the uncertainties underlying such estimates and assumptions, involved in the calculation of the allowance for credit losses. Although we consider all reasonably-available information that we believe is relevant to making the assumptions that underlie the Company’s determination of the appropriate amount of the allowance for credit losses, if actual economic or other conditions ultimately differ substantially from the assumptions we used in making the evaluation, then future adjustments (positive or negative) to the allowance may be necessary. 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.

Previous wording

The following discussion provides details regarding the changes in significant balance sheet accounts at December 31, 2023 compared to December 31, 2022. Total assets were $17,360,535 at December 31, 2023 compared to $16,988,176 at December 31, 2022.

Current wording

The following discussion provides details regarding the changes in significant balance sheet accounts at December 31, 2024 compared to December 31, 2023. Total assets were $18,034,868 at December 31, 2024 compared to $17,360,535 at December 31, 2023.

Previous wording

During 2022, primarily in the first half of the year, we deployed a portion of our excess liquidity into the securities portfolio and purchased $804,899 in investment securities, with mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprising the majority of such purchases. CMOs are included in the “Mortgage-backed securities” line item in the above table. The mortgage-backed securities and CMOs held in our investment portfolio are issued by government sponsored entities. We did not sell any securities in 2022. Proceeds from maturities and calls of securities during 2022 totaled $452,955, which were primarily reinvested in the securities portfolio or used to fund loan growth.

Current wording

During 2024, we deployed a portion of our liquidity into the securities portfolio and purchased $174,229 in investment securities, with mortgage-backed securities and collateralized mortgage obligations (“CMOs”), in the aggregate, comprising the majority of such purchases. CMOs are included in the “Mortgage-backed securities” line item in the above table. The mortgage-backed securities and CMOs held in our investment portfolio are issued by government sponsored entities. Proceeds from the sale of securities in 2024 totaled $177,185, which the Company had the intent to sell as of December 31, 2023, and therefore recognized a non-credit related impairment loss of $19,352 in 2023 in addition to losses on sales of securities earlier in the year of $22,438. During 2024, proceeds from maturities and calls of securities totaled $191,008, and such proceeds were primarily used to fund loan growth.

Previous wording

During 2023, we purchased $11,899 in investment securities. Proceeds from the sale of securities totaled $488,981, which were primarily used to pay down FHLB borrowings, and resulted in a pre-tax loss of $22,438. During 2023, proceeds from maturities and calls of securities totaled $258,978, and such proceeds were primarily used to fund loan growth.

Current wording

During 2023, we purchased $11,899 in investment securities, with mortgage-backed securities and CMOs, in the aggregate, comprising the majority of such purchases. Proceeds from the sale of securities in 2023 totaled $488,981. Proceeds from maturities and calls of securities during 2023 totaled $258,978, which were primarily reinvested in the securities portfolio or used to fund loan growth.

Previous wording

During the year ended December 31, 2022, the Company transferred, at fair value, $882,927 of securities from the available for sale portfolio to the held to maturity portfolio. The related net unrealized 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. At December 31, 2023 and 2022, the net unrealized after tax losses remaining to be amortized in accumulated other comprehensive income (loss) was $58,522 and $68,613, respectively. No gains or losses were recognized at the time of transfer.

Current wording

During the year ended December 31, 2022, the Company transferred, at fair value, $882,927 of securities from the available for sale portfolio to the held to maturity portfolio. The related net unrealized 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. At December 31, 2024, the net unrealized after tax losses remaining to be amortized in accumulated other comprehensive income (loss) was $49,045.

Previous wording

At December 31, 2023, unrealized losses of $139,794 were recorded on available for sale investment securities with a carrying value of $692,593. At December 31, 2022, unrealized losses of $201,299 were recorded on available for sale securities with a carrying value of $1,515,088. At December 31, 2023, the Company had the intent to sell a portion of its securities in an unrealized loss position, and recognized a non-credit related impairment loss of $19,352 in addition to losses on sales of securities earlier in the year of $22,438. Notwithstanding the securities sales in 2023, it is not more likely than not that the Company will be required to sell any security in the investment portfolio prior to the recovery of its amortized cost basis, which may be maturity. Furthermore, more than 90% of available for sale securities have the explicit or implicit backing of the United States government. Performance of these securities has been in line with broader market price performance, indicating to management that increases in market-based, risk free rates, and not credit-related factors, are the reason for the losses. For municipal and corporate securities, the Company considers historical experience with credit sensitive securities, current market conditions, the financial health of the issuer, current credit ratings, ratings changes and outlook, explicit and implicit guarantees, and/or insurance programs when determining the fair value of the contractual cash flows. Based on its review of these factors as of December 31, 2023 and 2022, the Company determined that all such losses resulted from factors not deemed credit related. As a result, no credit-related impairment was recognized in current earnings, and all unrealized losses for available for sale securities were recorded in Other comprehensive income.

Current wording

At December 31, 2024, unrealized losses of $138,608 were recorded on available for sale investment securities with a carrying value of $701,844. At December 31, 2023, unrealized losses of $139,794 were recorded on available for sale securities with a carrying value of $692,593. It is not more likely than not that the Company will be required to sell any security in the investment portfolio prior to the recovery of its amortized cost basis, which may be maturity. Furthermore, more than 90% of available for sale securities have the explicit or implicit backing of the United States government. Performance of these securities has been in line with broader market price performance, indicating to management that increases in market-based, risk free rates, and not credit-related factors, are the reason for the losses. For municipal and corporate securities, the Company considers historical experience with credit sensitive securities, current market conditions, the financial health of the issuer, current credit ratings, ratings changes and outlook, explicit and implicit guarantees, and/or insurance programs when determining the fair value of the contractual cash flows. Based on its review of these factors as of December 31, 2024 and 2023, the Company determined that all such losses resulted from factors not deemed credit related. As a result, no credit-related impairment was recognized in current earnings, and all unrealized losses for available for sale securities were recorded in Accumulated other comprehensive income (loss).

Previous wording

Loans held for sale were $179,756 at December 31, 2023 compared to $110,105 at December 31, 2022. 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. Under a “best efforts” sales agreement, residential real estate originations are locked in at a contractual rate with third party private investors or directly with government sponsored entities, and the Company is obligated to sell the mortgages to such investors only if the mortgages are closed and funded. The risk we assume is conditioned upon loan underwriting and market conditions in the national mortgage market. Under a “mandatory delivery” sales agreement, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price and delivery date. Penalties are paid to the investor if we fail to satisfy the contract. Gains and losses are realized at the time consideration is received and all other criteria for sales treatment have been met. These loans are typically sold within 30-40 days after the loan is funded. 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.

Current wording

Loans held for sale were $246,171 at December 31, 2024 compared to $179,756 at December 31, 2023. Mortgage loans to be sold, which made up all of our loans held for sale at each of December 31, 2024 and 2023, are sold either on a “best efforts” basis or under a “mandatory delivery” sales agreement. Under a “best efforts” sales agreement, residential real estate originations are locked in at a contractual rate with third party private investors or directly with government sponsored entities, and the Company is obligated to sell the mortgages to such investors only if the mortgages are closed and funded. The risk we assume is conditioned upon loan underwriting and market conditions in the national mortgage market. Under a “mandatory delivery” sales agreement, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price and delivery date. Penalties are paid to the investor if we fail to satisfy the contract. Gains and losses are realized at the time consideration is received and all other criteria for sales treatment have been met. These loans are typically sold within 30-40 days after the loan is funded. 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.

Previous wording

Loans held for investment, which excludes loans held for sale, is the Company’s most significant earning asset, comprising 71.15% and 68.16% of total assets at December 31, 2023 and 2022, respectively. This percentage will fluctuate based on a number of factors, including the extent of our loan growth and whether the Company has excess liquidity on its balance sheet.

Current wording

Loans held for investment, which excludes loans held for sale, is the Company’s most significant earning asset, comprising 71.45% and 71.15% of total assets at December 31, 2024 and 2023, respectively. This percentage will fluctuate based on a number of factors, including the extent of our loan growth and whether the Company has excess liquidity on its balance sheet.

Previous wording

The Company relies on deposits as its major source of funds. Total deposits were $14,076,785 and $13,486,966 at December 31, 2023 and 2022, respectively. Noninterest-bearing deposits were $3,583,675 and $4,558,756 at December 31, 2023 and 2022, respectively, while interest-bearing deposits were $10,493,110 and $8,928,210 at December 31, 2023 and 2022, respectively. Interest-bearing deposits included brokered deposits at December 31, 2023 and 2022 of $461,441 and $233,133, respectively.

Current wording

The Company relies on deposits as its major source of funds. Total deposits were $14,572,612 and $14,076,785 at December 31, 2024 and 2023, respectively. Noninterest-bearing deposits were $3,403,981 and $3,583,675 at December 31, 2024 and 2023, respectively, while interest-bearing deposits were $11,168,631 and $10,493,110 at December 31, 2024 and 2023, respectively. Interest-bearing deposits included brokered deposits at December 31, 2023 of $461,441, while the Company did not hold any brokered deposits at December 31, 2024.

Previous wording

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). 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. Under certain circumstances, management may elect to acquire non-core deposits (in the form of brokered or time deposits) or public fund deposits (which are deposits of counties, municipalities or other political subdivisions). The source of funds that we select depends on the terms 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. Accordingly, funds are acquired to meet anticipated funding needs at the rate and with other terms that, in management’s view, best address our interest rate risk, liquidity and net interest margin parameters.

Current wording

The decrease in noninterest-bearing deposits across the Company’s footprint in 2024 and 2023 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). Noninterest-bearing deposits decreased to 23.36% of total deposits at December 31, 2024, as compared to 25.46% of total deposits at December 31, 2023, due to noninterest-bearing deposits being moved to other types of deposits or financial products bearing higher interest rates. Under certain circumstances, management may elect to acquire non-core deposits (in the form of brokered or time deposits) or public fund deposits (which are deposits of counties, municipalities or other political subdivisions). The source of funds that we select depends on the terms 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. Accordingly, funds are acquired to meet anticipated funding needs at the rate and with other terms that, in management’s view, best address our interest rate risk, liquidity and net interest margin parameters.

Previous wording

Public fund deposits may be readily obtained based on the Company’s pricing bid in comparison with competitors. Public fund deposits may fluctuate as competitive and market forces change because these deposits are obtained through a bid process. Although the Company has focused on growing stable sources of deposits to reduce reliance on public fund deposits, it participates in the bidding process for public fund deposits when pricing and other terms make it reasonable given market conditions or when management perceives that other factors, such as the public entity’s use of our treasury management or other products and services, make such participation advisable. Our public fund transaction accounts are principally obtained from public universities and municipalities, including school boards and utilities. Public fund deposits at December 31, 2023 were $1,866,495 compared to $1,760,460 at December 31, 2022.

Current wording

Public fund deposits may be readily obtained based on the Company’s pricing bid in comparison with competitors. Public fund deposits may fluctuate as competitive and market forces change because these deposits are obtained through a bid process. Although the Company has focused on growing stable sources of deposits to reduce reliance on public fund deposits, it participates in the bidding process for public fund deposits when pricing and other terms make it reasonable given market conditions or when management perceives that other factors, such as the public entity’s use of our treasury management or other products and services, make such participation advisable. Our public fund transaction accounts are principally obtained from public universities and municipalities, including school boards and utilities. Public fund deposits at December 31, 2024 were $2,256,461 compared to $1,866,495 at December 31, 2023.

Previous wording

Deposits that are in excess of the FDIC insurance limit were $5,778,174 and $6,017,030 at December 31, 2023 and 2022, respectively. Public fund deposits in excess of the FDIC insurance limit but that were collateralized by pledged securities in the Company's investment portfolio totaled $1,485,684. 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:

Current wording

Deposits that are in excess of the FDIC insurance limit were $6,489,547 and $5,778,174 at December 31, 2024 and 2023, respectively. Public fund deposits in excess of the FDIC insurance limit but that were collateralized by pledged securities in the Company’s investment portfolio totaled $1,765,510. The following table shows the maturity of time deposits at December 31, 2024 that are in excess of the FDIC insurance limit (or similar state deposit insurance limits) and that are otherwise uninsured:

Previous wording

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. Short-term borrowings have original maturities less than one year and typically include federal funds purchased, securities sold under agreements to repurchase, and short-term FHLB advances. During 2023 and 2022, we used short-term FHLB borrowings to meet anticipated short-term liquidity needs, which varied throughout the year in response to loan demand and competition for deposits. The weighted-average interest rates on outstanding advances at December 31, 2023 and 2022 were 5.70% and 4.57%, respectively. The following table presents our short-term borrowings by type at December 31:

Current wording

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. Short-term borrowings have original maturities less than one year and typically include federal funds purchased, securities sold under agreements to repurchase, and short-term FHLB advances. During 2024 and 2023, we used short-term FHLB borrowings to meet anticipated short-term liquidity needs, which varied throughout the year in response to loan demand and competition for deposits. The weighted-average interest rates on outstanding advances at December 31, 2024 and 2023 were 4.63% and 5.70%, respectively. The following table presents our short-term borrowings by type at December 31:

Previous wording

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 Company had $2,922,315 of availability on unused lines of credit with the FHLB at December 31, 2023 compared to $3,651,678 at December 31, 2022.

Current wording

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 and are also used to meet day-to-day liquidity needs, particularly when the costs of such borrowings compare favorably to the rates required to attract deposits. The Company had $4,004,630 of availability on unused lines of credit with the FHLB at December 31, 2024 compared to $2,922,315 at December 31, 2023. The Company also had credit available at the Federal Reserve Discount Window in the amount of $656,683.

Previous wording

Net income for the year ended December 31, 2023 was $144,678 compared to net income of $166,068 for the year ended December 31, 2022. 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.

Current wording

Net income for the year ended December 31, 2024 was $195,457 compared to net income of $144,678 for the year ended December 31, 2023. Basic earnings per share for the year ended December 31, 2024 was $3.29 as compared to $2.58 for the year ended December 31, 2023. Diluted earnings per share for the year ended December 31, 2024 was $3.27 as compared to $2.56 for the year ended December 31, 2023.

Previous wording

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

Current wording

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 71.95% of total net revenue in 2024. Total net revenue consists of net interest income on a fully taxable equivalent basis and noninterest income. The percentage of net interest income as a share of total net revenue decreased from prior years in 2024 due to the sale of our insurance agency and the corresponding increase in noninterest income. If not for the sale of the insurance agency, the percentage of net interest income as a share of total net revenue would be consistent with prior years. The primary concerns in managing net interest income are the volume, mix and repricing of assets and liabilities.

Previous wording

Net interest income increased 7.90% to $519,327 for 2023 compared to $481,298 in 2022. On a tax equivalent basis, net interest income increased $40,636 to $530,340 in 2023 as compared to $489,704 in 2022. Net interest margin was 3.45% for 2023 as compared to 3.30% for 2022.

Current wording

As discussed below, net interest income decreased 1.37% to $512,196 for 2024 compared to $519,327 in 2023. On a tax equivalent basis, net interest income decreased $7,814 to $522,526 in 2024 as compared to $530,340 in 2023. Net interest margin was 3.34% for 2024 as compared to 3.45% for 2023.

Previous wording

Net interest income and net interest margin are influenced by internal and external factors. 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. The higher interest rates benefited yields on earnings assets, which, coupled with steady loan growth, resulted in an increase in interest income year over year. This increase was partially offset by an increase in interest expense. The rising interest rates negatively impacted both the cost and mix of our funding sources, and management’s decision to increase on-balance sheet liquidity following the bank failures in March 2023 also resulted in higher cost of funds and interest expense. The Company has continued its efforts to mitigate increases in the cost of funding through maintaining noninterest-bearing deposits, staying disciplined yet competitive in pricing on interest-bearing deposits in the current rate environment and accessing alternative sources of liquidity, such as brokered deposits. In 2023, however, management’s paramount concern was ensuring the safe and sound operation of the Bank in light of industry-wide conditions, which led to the Company significantly increasing its brokered deposits and borrowed funds in the 2023 as compared to 2022 to maintain robust on-balance sheet liquidity.

Current wording

Net interest income and net interest margin are influenced by internal and external factors. 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 2024, the decline in net interest income and margin was primarily driven by the increase in the cost of deposits year over year. The higher interest rate environment continued to benefit yields on earnings assets, which, coupled with steady loan growth, resulted in an increase in interest income year over year, but this increase was offset by an increase in deposit interest expense. The rate environment negatively impacted both the cost and mix of our funding sources while we continued to grow deposits. The Company has continued its efforts to mitigate increases in the cost of funding through maintaining noninterest-bearing deposits and staying disciplined yet competitive in pricing on interest-bearing deposits in the current rate environment.

Previous wording

Interest income, on a tax equivalent basis, was $808,332 for 2023 compared to $550,216 for 2022, an increase of $258,116. The following table presents the percentage of total average earning assets, by type and yield, for 2023 and 2022:

Current wording

Interest income, on a tax equivalent basis, was $898,107 for 2024 compared to $808,332 for 2023, an increase of $89,775. The following table presents the percentage of total average earning assets, by type and yield, for 2024 and 2023:

Previous wording

In 2023, interest income on loans held for investment, on a tax equivalent basis, increased $237,151 to $713,897 from $476,746 in 2022. This increase was primarily due to additional interest rate increases by the Federal Reserve since March 2022, coupled with a $1,285,146 increase in our average balance of loans to $11,963,141 in 2023 from $10,677,995 in 2022.

Current wording

In 2024, interest income on loans held for investment, on a tax equivalent basis, increased $87,910 to $801,807 from $713,897 in 2023. This increase was primarily due to a $616,002 increase in our average balance of loans to $12,579,143 in 2024 from $11,963,141 in 2023, bolstered by a continued mix shift from the repricing of maturing fixed rate lower yielding assets into higher yielding assets

Previous wording

Interest income on loans held for sale, on a tax equivalent basis, increased $2,595 to $11,807 in 2023 from $9,212 in 2022, due to an increase in yields during 2023, offset slightly by a decrease in the average balance of loans held for sale during the year.

Current wording

Interest income on loans held for sale, on a tax equivalent basis, increased $1,807 to $13,614 in 2024 from $11,807 in 2023, due to an increase in average balances during 2024, offset by a decrease in the yield on loans held for sale during the year.

Previous wording

In 2023, investment income, on a tax equivalent basis, decreased $3,152 to $52,253 from $55,405 in 2022, primarily due to the decrease in the balance of the securities portfolio during the year, offset by the increase in yield on securities during 2023 due to the sale or maturity of lower yielding securities. The following table presents the taxable equivalent yield on securities for the periods presented:

Current wording

In 2024, investment income, on a tax equivalent basis, decreased $9,124 to $43,129 from $52,253 in 2023, primarily due to the decrease in the balance of the securities portfolio during the year, offset slightly by the increase in yield on securities during 2024 due to the sale or maturity of lower yielding securities. The following table presents the taxable equivalent yield on securities for the periods presented:

Previous wording

Interest expense was $277,992 in 2023 compared to $60,512 in 2022. 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:

Current wording

Interest expense was $375,581 in 2024 compared to $277,992 in 2023. The following table presents, by type, the Company’s funding sources, which consist of total average deposits and borrowed funds, and the total cost of each funding source for each of the years presented:

Previous wording

Interest expense on deposits was $232,331 and $35,208 for 2023 and 2022, respectively. The cost of total deposits was 1.67% and 0.26% for the years ending December 31, 2023 and 2022, respectively. The cost of interest-bearing deposits was 2.35% and 0.40% for the same respective periods. The increase in both deposit expense and cost is attributable to the Company’s efforts to offer competitive deposit rates in the rising interest rate environment and its decision to maintain additional on-balance sheet liquidity following the bank failures and broader industry concerns about bank liquidity that arose in March 2023. 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.

Current wording

Interest expense on deposits was $346,592 and $232,331 for 2024 and 2023, respectively. The cost of total deposits was 2.42% and 1.67% for the years ending December 31, 2024 and 2023, respectively. The cost of interest-bearing deposits was 3.21% and 2.35% for the same respective periods. The increase in both deposit expense and cost is attributable to the Company’s efforts to offer competitive deposit rates in the high interest rate environment and the continued focus on deposit growth, even while 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.

Previous wording

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. The increase in interest expense is a result of higher average borrowings and interest rates driven by an increase in short-term FHLB borrowings in the latter part of 2022 and beginning of 2023. The repayment of FHLB borrowings during 2023 had a nominal impact to interest expense for the year ended December 31, 2023.

Current wording

Interest expense on total borrowings was $28,989 and $45,661 for the years ending December 31, 2024 and 2023, respectively, while the cost of total borrowings was 5.12% and 5.13% for the years ended December 31, 2024 and 2023, respectively. The decrease in interest expense is a result of lower average borrowings during 2024.

Previous wording

A more detailed discussion of the cost of our funding sources is set forth below under the heading “Liquidity and Capital Resources” in this item. 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.

Current wording

A more detailed discussion of the cost of our funding sources is set forth below under the heading “Liquidity and Capital Resources” in this item.

Previous wording

Total noninterest income includes fees generated from deposit services and other fees and commissions, income from our insurance, wealth management and mortgage banking operations, realized gains and losses on the sale or impairment of securities and all other noninterest income. Our focus is to develop and enhance our products that generate noninterest income in order to diversify our revenue sources. Noninterest income as a percentage of total net revenue was 17.57% and 23.36% for 2023 and 2022, respectively. Noninterest income was $113,075 for the year ended December 31, 2023, a decrease of $36,178, or 24.24%, as compared to $149,253 for 2022. The decrease during the year was driven primarily by the loss on the sale of securities (including impairment charges) during 2023.

Current wording

Total noninterest income includes fees generated from deposit services and other fees and commissions, income from our insurance, wealth management and mortgage banking operations, realized gains and losses on the sale or impairment of securities and all other noninterest income. Our focus is to develop and enhance our products that generate noninterest income in order to diversify our revenue sources. Noninterest income as a percentage of total net revenue was 28.05% and 17.57% for 2024 and 2023, respectively. Noninterest income was $203,660 for the year ended December 31, 2024, an increase of $90,585, or 80.11%, as compared to $113,075 for 2023. The increase during the year was driven primarily by the gain on the sale of Renasant Insurance in July 2024 (which is also the reason that our noninterest income as a percentage of total net revenue was elevated as compared to 2023). The Company also recognized a loss on the sale of securities (including impairment charges) during 2023.

Previous wording

Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees. Service charges on deposit accounts were $39,199 and $39,957 for the twelve months ended December 31, 2023 and 2022, respectively. Overdraft fees, the largest component of service charges on deposits, decreased to $20,095 for the twelve months ended December 31, 2023 compared to $21,575 for the same period in 2022. The Company completed its plans to eliminate certain overdraft and NSF fees, which became effective January 1, 2023. These fees totaled approximately $5,500 and $4,700 in 2022 and 2021, respectively.

Current wording

Service charges on deposit accounts include maintenance fees on accounts, per item charges, account enhancement charges for additional packaged benefits and overdraft fees. Service charges on deposit accounts were $41,779 and $39,199 for the twelve months ended December 31, 2024 and 2023, respectively. Overdraft fees, the largest component of service charges on deposits, increased to $20,611 for the twelve months ended December 31, 2024 compared to $20,095 for the same period in 2023.

Previous wording

Fees and commissions increased to $17,901 in 2023 as compared to $17,268 in 2022. Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. Interchange fees on debit card transactions, the largest component of fees and commissions, were $9,383 for the twelve months ended December 31, 2023 compared to $9,899 for the same period in 2022.

Current wording

Fees and commissions decreased to $16,190 in 2024 as compared to $17,901 in 2023. Fees and commissions include fees related to deposit services, such as ATM fees and interchange fees on debit card transactions. Interchange fees on debit card transactions, the largest component of fees and commissions, were $8,911 for the twelve months ended December 31, 2024 compared to $9,383 for the same period in 2023.

Previous wording

Through Renasant Insurance, we offer a range of commercial and personal insurance products through major insurance carriers. Income earned on insurance products was $11,102 and $10,754 for the years ended December 31, 2023 and 2022, respectively. Contingency income is a bonus received from the insurance underwriters and is based both on commission income and claims experience on our clients’ policies during the previous year. Increases and decreases in contingency income are reflective of corresponding increases and decreases in the amount of claims paid by insurance carriers. Contingency income, which is included in the “Other noninterest income” line item on the Consolidated Statements of Income, was $970 and $567 for 2023 and 2022, respectively.

Current wording

The Company sold Renasant Insurance in July 2024 recognizing a gross gain on sale of $53,349. Prior to the sale, income earned on insurance products in 2024 was $5,473, as compared to $11,102 for the year ended December 31, 2023. Contingency income is a bonus received from the insurance underwriters and is based both on commission income and claims experience on our clients’ policies during the previous year. Increases and decreases in contingency income are reflective of corresponding increases and decreases in the amount of claims paid by insurance carriers. Contingency income, which is included in the “Other noninterest income” line item on the Consolidated Statements of Income, was $987 and $970 for 2024 and 2023, respectively.

Previous wording

Our Wealth Management segment has two divisions: Trust and Financial Services. The Trust division operates on a custodial basis which includes administration of benefit plans, as well as accounting and money management for trust accounts. The division manages a number of trust accounts inclusive of personal and corporate benefit accounts, IRAs, and custodial accounts. Fees for managing these accounts are based on changes in market values of the assets under management in the account, with the amount of the fee depending on the type of account. The Financial Services division provides specialized products and services to our customers, which include fixed and variable annuities, mutual funds, and stocks offered through a third party provider. Wealth Management revenue was $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.

Current wording

Our Wealth Management segment has two divisions: Trust and Financial Services. The Trust division operates on a custodial basis which includes administration of benefit plans, as well as accounting and money management for trust accounts. The division manages a number of trust accounts inclusive of personal and corporate benefit accounts, IRAs, and custodial accounts. Fees for managing these accounts are based on changes in market values of the assets under management in the account, with the amount of the fee depending on the type of account. The Financial Services division provides specialized products and services to our customers, which include fixed and variable annuities, mutual funds, and stocks offered through a third party provider. Wealth Management revenue was $23,559 for 2024 compared to $22,132 for 2023. The market value of assets under management or administration was $6,472,526 and $5,238,131 at December 31, 2024 and 2023, respectively.

Previous wording

Mortgage banking income is derived from the origination and sale of mortgage loans and the servicing of mortgage loans that the Company has sold but retained the right to service. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market. Originations of mortgage loans to be sold totaled $1,330,912 in 2023 and $1,679,356 in 2022. The decrease in mortgage loan originations in 2023 was due to the continued material increases in mortgage interest rates from historically low rates and exacerbated by a general lack of housing supply, each of which significantly dampened demand for mortgages nationwide. In 2022, the Company sold a portion of its mortgage servicing rights portfolio with a carrying value of $15,565 for a pre-tax gain of $2,960. The Company recognized a gain of $547 in 2023 related to a holdback on those previously sold mortgage servicing rights assets.

Current wording

Mortgage banking income is derived from the origination and sale of mortgage loans and the servicing of mortgage loans that the Company has sold but retained the right to service. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market. Originations of mortgage loans to be sold totaled $1,400,467 in 2024 and $1,330,912 in 2023. In 2024, the Company sold a portion of its mortgage servicing rights portfolio with a carrying value of $19,539 for a pre-tax gain of $3,472. The Company recognized a gain of $547 in 2023 related to the release of a holdback on previously sold mortgage servicing rights assets.

Previous wording

(2) Mortgage servicing income, net includes gain on sale of mortgage servicing rights of $547 and $2,960, respectively.

Current wording

(2) Mortgage servicing income, net includes gain on sale of mortgage servicing rights of $3,724 and $547, respectively.

Previous wording

Losses on sales of securities for the twelve months ended 2023 were $22,438, resulting from the sale of approximately $511,419 in securities. The Company also determined to sell a portion of its available-for-sale securities portfolio in December of 2023 and thus recognized an impairment on those identified securities of $19,352 as of year-end (the securities were subsequently sold in January 2024). There were no net gains or losses on sales of securities during 2022. For more information on securities sold in 2023, see Note 2, “Securities,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.

Current wording

Losses on sales of securities for the twelve months ended 2023 were $22,438, resulting from the sale of approximately $511,419 in securities. The Company also determined to sell a portion of its available-for-sale securities portfolio in December 2023 and thus recognized an impairment on those identified securities of $19,352 as of year-end (the securities were subsequently sold in January 2024). There were no other net gains or losses on sales of securities during 2024. For more information on securities sold in 2024, see Note 2, “Securities,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in this report.

Previous wording

Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance policies and can fluctuate upon the collection of life insurance proceeds. BOLI income increased to $10,463 in 2023 as compared to $9,267 in 2022. The Company purchased $80,000 in additional BOLI policies during the first quarter of 2022. No such purchases were made in 2023.

Current wording

Bank-owned life insurance (“BOLI”) income is derived from changes in the cash surrender value of the bank-owned life insurance policies and can fluctuate upon the collection of life insurance proceeds. BOLI income increased to $11,567 in 2024 as compared to $10,463 in 2023.

Previous wording

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. For 2023 other noninterest income included a one-time payment of $2,300 related to our participation in a recovery agreement assumed as part of a previous acquisition. Other noninterest income was $21,035 for 2023 compared to $13,874 for 2022.

Current wording

Other noninterest income was $15,311 for 2024 compared to $21,035 for 2023. 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 production within our SBA and capital markets divisions and recognition of other nonseasonal income items. For 2023 other noninterest income included a one-time payment of $2,300 related to our participation in a recovery agreement assumed as part of a previous acquisition.

Previous wording

Salaries and employee benefits is the largest component of noninterest expense and represented 64.09% and 66.18% of total noninterest expense at December 31, 2023 and 2022, respectively. During 2023, salaries and employee benefits increased $20,114, or 7.69%, to $281,768 as compared to $261,654 for 2022. The increase in salaries and employee benefits is primarily due to increases in the minimum wage we pay our employees that were implemented in May 2022 along with annual merit increases implemented in April 2023. The acquisition of Republic Business Credit added $6,362 to salaries and employee benefits expense in 2023.

Current wording

Salaries and employee benefits is the largest component of noninterest expense and represented 61.47% and 64.09% of total noninterest expense at December 31, 2024 and 2023, respectively. During 2024, salaries and employee benefits increased $2,000, or 0.71%, to $283,768 as compared to $281,768 for 2023. The increase in salaries and employee benefits is primarily due to annual merit increases implemented in April 2024 along with increased health and life insurance costs due to unusual claims experience.

Previous wording

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.

Current wording

Compensation expense recorded in connection with awards of restricted stock, which is included within salaries and employee benefits, was $12,736 and $12,746 for 2024 and 2023, respectively. A portion of the restricted stock awards in both years was subject to the satisfaction of performance-based conditions.

Previous wording

Data processing costs increased $295 to $15,195 in 2023 from $14,900 in 2022. The Company continues to examine new and existing contracts to negotiate favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume.

Current wording

Data processing costs increased $835 to $16,030 in 2024 from $15,195 in 2023. The Company continues to examine new and existing contracts to negotiate favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume.