On January 17, 2017, the Company and Metropolitan BancGroup, Inc., the parent company of Metropolitan Bank, jointly announced the signing of a definitive merger agreement pursuant to which the Company will acquire Metropolitan in an all-stock merger transaction.  Metropolitan operates eight offices in Nashville and Memphis, Tennessee and the Jackson, Mississippi MSA. As of March 31, 2017, Metropolitan had approximately $1.2 billion in total assets, which included approximately $929.7 million in total loans and approximately $945.1 million in total deposits.

On February 22, 2017, the Company redeemed $10.3 million in subordinated debentures for an aggregate amount of $10.5 million, which included a prepayment penalty of $205 thousand.  Prior to the redemption, the Company obtained all required board and regulatory approval.

"The first quarter of 2017 was an active quarter for our Company, and we are very pleased to report excellent results. Our results for the first quarter of 2017 include a record quarterly net income and a continuation of increasing profitability metrics as our return on average tangible assets was 1.23%," said Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. "In January, we announced our proposed acquisition of Metropolitan, which will expand our presence in Mississippi and Tennessee. We have received all federal bank regulatory approvals necessary to complete the proposed merger and are now focusing on securing the required approval of Metropolitan shareholders. Both Metropolitan and we have experienced positive reaction from our clients and associates in response to our proposed acquisition."

First quarter of 2017 highlights include the following:

Profitability Metrics

• Total assets were $8.8 billion at March 31, 2017, as compared to $8.7 billion at December 31, 2016, and $8.1 billion at March 31, 2016.

• Total loans increased $36.3 million to $6.2 billion at March 31, 2017, from December 31, 2016; total loans were $5.6 billion at March 31, 2016. Loans not acquired increased $123.7 million to $4.8 billion at March 31, 2017 from December 31, 2016, which represents an annualized growth rate of 10.65%. For the first quarter of 2017, the yield on total loans was 4.82% compared to 5.07% for the fourth quarter of 2016 and 4.93% for the first quarter of 2016. The following table reconciles the reported loan yield to the adjusted loan yield excluding the impact from interest income collected on problem loans and purchase accounting adjustments on acquired loans for the periods presented (in thousands):

• Total deposits increased to $7.2 billion at March 31, 2017, from $7.1 billion at December 31, 2016, and $6.4 billion at March 31, 2016. Noninterest-bearing deposits averaged $1.6 billion, or 21.83% of average deposits, for the first quarter of 2017, compared to $1.3 billion, or 20.99% of average deposits, for the same period in 2016. For the first quarter of 2017, the cost of total deposits was 29 basis points, as compared to 28 basis points for the fourth quarter of 2016 and 25 basis points for the first quarter of 2016.

• Net interest income was $74.0 million for the first quarter of 2017, as compared to $78.0 million for the fourth quarter of 2016 and $70.1 million for the first quarter of 2016. Net interest margin was 4.01% for the first quarter of 2017, as compared to 4.24% for the fourth quarter of 2016 and 4.21% for the first quarter of 2016. The following table reconciles reported net interest margin to adjusted net interest margin excluding the impact from interest income collected on problem loans and purchase accounting adjustments on loans for the periods presented (in thousands):

Included in net interest margin is the impact from excess cash generated from the increase in average deposits during the first quarter of 2017.  This excess cash was included in short-term investments and reduced our net interest margin by 10 basis points when compared to the fourth quarter of 2016.

• Noninterest income for the first quarter of 2017 was $32.0 million, as compared to $30.3 million for the fourth quarter of 2016 and $33.3 million for the first quarter of 2016. Mortgage banking income was $10.5 million for the first quarter of 2017, as compared to $8.3 million for the fourth quarter of 2016 and $11.9 million for the first quarter of 2017.

• Noninterest expense was $69.3 million for the first quarter of 2017, as compared to $71.6 million for the fourth quarter of 2016 and $69.8 million for the first quarter of 2016. Excluding nonrecurring charges for merger and conversion expenses and debt prepayment penalties, noninterest expense remained relatively flat when compared to the first quarter of 2016.

The following table presents the Company's profitability metrics for the quarter ending March 31, 2017, including and excluding the impact of after-tax merger and conversion expenses:

Asset Quality Metrics
Total nonperforming assets were $56.5 million at March 31, 2017, a decrease of $2.3 million from December 31, 2016, and a decrease of $21.1 million from March 31, 2016, and consisted of $35.2 million in nonperforming loans (loans 90 days or more past due and nonaccrual loans) and $21.3 million in OREO.

The Company's nonperforming loans and OREO that were purchased in previous acquisitions (collectively referred to as "acquired nonperforming assets") were $20.4 million and $16.3 million, respectively, at March 31, 2017, as compared to $22.2 million and $17.4 million, respectively, at December 31, 2016, and $30.2 million and $20.4 million, respectively, at March 31, 2016.  The acquired nonperforming assets were recorded at fair value at the time of acquisition, which significantly mitigates the Company's actual loss. As such, the remaining information in this release on nonperforming loans, OREO and the related asset quality ratios primarily focuses on non-acquired nonperforming assets.

• Non-acquired nonperforming loans increased to $14.8 million, or 0.31% of total non-acquired loans, at March 31, 2017, from $13.4 million, or 0.28% of total non-acquired loans, at December 31, 2016. These loans were $14.2 million, or 0.35% of total non-aquired loans, at March 31, 2016. Early stage delinquencies, or loans 30-to-89 days past due, as a percentage of total loans were 0.16% at March 31, 2017, as compared to 0.23% at December 31, 2016, and at 0.17% March 31, 2016.

• Non-acquired OREO was $5.1 million at March 31, 2017, as compared to $5.9 million at December 31, 2016, and $12.8 million at March 31, 2016. Non-acquired OREO sales totaled $1.2 million in the first quarter of 2017 and $5.8 million over the final three quarters of 2016.

• The allowance for loan losses represents 0.69% of total loans at both March 31, 2017, and December 31, 2016, and 0.77% at March 31, 2016. The allowance for loan losses represents 0.89% of nonaquired loans at March 31, 2017, as compared to 0.91% at December 31, 2016, and 1.05% at March 31, 2016

• Net loan charge-offs were $1.3 million, or 0.09% of average total loans, for the first quarter of 2017, as compared to $4.8 million, or 0.31% of average total loans, for the fourth quarter of 2016 and $1.4 million, or 0.10% of average total loans, for the first quarter of 2016. The decrease quarter over quarter is attributable to the final resolution of several problem credits in the fourth quarter of 2016.

• Provision for loan losses was $1.5 million for the first quarter of 2017, as compared to $1.7 million for the fourth quarter of 2016 and $1.8 million for the first quarter of 2016.

Capital Metrics

• At March 31, 2017, Tier 1 leverage capital ratio was 10.39%, Common Equity Tier 1 ratio was 11.69%, Tier 1 risk-based capital ratio was 12.93%, and total risk-based capital ratio was 15.11%. All regulatory ratios exceed the minimums required to be considered "well-capitalized."

• Tangible common equity ratio was 9.16% at March 31, 2017, as compared to 9.00% at December 31, 2016.