Net income for the six months ending June 30, 2017, was $49.3 million, an increase of 11.65%, as compared to $44.1 million for the same time period in 2016. Basic and diluted EPS were $1.11 through the first six months of 2017, as compared to basic and diluted EPS of $1.07 and $1.06, respectively, for the same time period in 2016.

The Company incurred expenses and charges in connection with certain transactions that are considered to be infrequent or non-recurring in nature. The following table presents the impact of these charges on reported EPS for the dates presented (in thousands):

On July 1, 2017, the Company completed its previously-announced acquisition of Metropolitan BancGroup, Inc. ("Metropolitan") in an all-stock merger. As of the acquisition date, Metropolitan operated eight offices in Nashville and Memphis, Tennessee and the Jackson, Mississippi MSA and had approximately $1.2 billion in assets, which included approximately $990 million in total loans and approximately $940 million in total deposits. The acquired operations of Metropolitan are not included in the financial information in this release.

"We are excited to report record earnings for the second quarter of 2017. Our earnings were driven by expanding net interest margin, strong fee income, improving credit quality metrics and continued focus on overall expenses. As our earnings grew, our profitability metrics continued to improve as our returns on average tangible assets and average tangible equity, excluding nonrecurring items, were 1.38% and 14.84%, respectively," said Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. "With the closing of the Metropolitan merger on July 1, 2017, we welcome our new associates and clients as we look forward to a smooth integration during the third quarter of 2017."

The following table presents the Company's profitability metrics for the three and six months ending June 30, 2017, including and excluding the impact of after-tax merger and conversion expenses and, for the six-month period, debt prepayment penalties:

Highlights from the second quarter of 2017 include the following:

Profitability Metrics

• Total assets were $8.9 billion at June 30, 2017, as compared to $8.7 billion at December 31, 2016.

• Loans not purchased increased to $5.1 billion at June 30, 2017, from $4.7 billion at December 31, 2016. For the second quarter of 2017, the yield on total loans was 5.03% compared to 4.82% for the first quarter of 2017 and 5.09% for the second quarter of 2016. For the six months ended June 30, 2017, the yield on total loans was 4.93% compared to 5.02% for the same time period in 2016. The following tables reconcile the reported loan yield to the adjusted loan yield excluding the impact from interest income collected on problem loans and purchase accounting adjustments on purchased loans for the periods presented (in thousands):

• Total deposits increased to $7.2 billion at June 30, 2017, from $7.1 billion at December 31, 2016. Noninterest-bearing deposits averaged $1.6 billion, or 22.17% of average deposits, for the first six months of 2017, compared to $1.4 billion, or 21.50% of average deposits, for the same period in 2016. For the second quarter of 2017, the cost of total deposits was 30 basis points, as compared to 29 basis points for the first quarter of 2017 and 26 basis points for the second quarter of 2016. The cost of total deposits was 30 basis points for the six months ending June 30, 2017, as compared to 26 basis points over the same time period in 2016.

• Net interest income was $79.6 million for the second quarter of 2017, as compared to $74.0 million for the first quarter of 2017 and $77.2 million for the second quarter of 2016. Net interest margin was 4.27% for the second quarter of 2017, as compared to 4.01% for the first quarter of 2017 and 4.29% for the second 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 purchased loans for the periods presented (in thousands):

• Net interest income was $153.6 million for the first six months of 2017, as compared to $147.2 million for the same period in 2016. Net interest margin was 4.14% for the first six months of 2017, as compared to 4.25% for the same period in 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 purchased loans for the periods presented (in thousands):

• Noninterest income for the second quarter of 2017 was $34.3 million, as compared to $35.6 million for the second quarter of 2016. Noninterest income for the first six months of 2017 was $66.3 million, as compared $68.9 million for the same time frame in 2016. The Company experienced increases in service charges on deposit accounts, fees and commissions on loans and deposits, and wealth management revenue in the first half of 2017 as compared to the same period in 2016. Mortgage banking income for the second quarter of 2017 was $12.4 million, compared to $13.4 million for the same period in 2016 as mortgage loans originations were down for the same period due to a reduction in the refinancing of mortgage loans. Lastly, during the second quarter of 2016 the Company recognized $1.3 million in gains on sale of securities, while there was no gain or loss recognized in the first half of 2017.

• Noninterest expense was $74.8 million for the second quarter of 2017, as compared to $77.3 million for the second quarter of 2016. Noninterest expense for the first six months of 2017 was $144.2 million, as compared $147.1 million for the same time frame in 2016. Excluding nonrecurring charges for merger and conversion expenses and debt prepayment penalties, noninterest expense decreased when compared to the second quarter of 2016. This decrease is primarily attributable to a decrease in salary and employee benefits, data processing costs which were realized through contract renegotiations, and expenses on other real estate owned.

Asset Quality Metrics
Total nonperforming assets were $46.5 million at June 30, 2017, a decrease of $12.3 million from December 31, 2016, and consisted of $26.8 million in nonperforming loans (loans 90 days or more past due and nonaccrual loans) and $19.7 million in OREO. 

The Company's nonperforming loans and OREO that were purchased in previous acquisitions (collectively referred to as "purchased nonperforming assets") were $14.1 million and $15.4 million, respectively, at June 30, 2017, as compared to $22.2 million and $17.4 million, respectively, at December 31, 2016.  The purchased 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 focuses on non-purchased nonperforming assets.

• Non-purchased nonperforming loans decreased to $12.7 million, or 0.25% of total non-purchased loans, at June 30, 2017, from $13.4 million, or 0.28% of total non-purchased loans, at December 31, 2016. These loans were $12.0 million, or 0.28% of total non-purchased loans, at June 30, 2016. Early stage delinquencies, or loans 30-to-89 days past due, as a percentage of total loans were 0.18% at June 30, 2017, as compared to 0.23% at December 31, 2016, and at 0.22% June 30, 2016.

• Non-purchased OREO was $4.3 million at June 30, 2017, as compared to $5.9 million at December 31, 2016, and $9.6 million at June 30, 2016. Non-purchased OREO sales totaled $1.8 million in the first half of 2017 and $3.3 million over the second half of 2016.

• The allowance for loan losses was 0.69% of total loans at both June 30, 2017, and December 31, 2016, and 0.74% at June 30, 2016. The allowance for loan losses was 0.87% of non-purchased loans at June 30, 2017, as compared to 0.91% at December 31, 2016, and 1.03% at June 30, 2016.

• Net loan charge-offs were $524 thousand, or 0.03% of average total loans, for the second quarter of 2017, as compared to $191 thousand, or 0.01% of average total loans, for the second quarter of 2016.

• The provision for loan losses was $1.8 million for the second quarter of 2017, as compared to $1.4 million for the second quarter of 2016. The provision was $3.3 million for the first six months of 2017, as compared to $3.2 million for the same time period in 2016.

Capital Metrics

• At June 30, 2017, Tier 1 leverage capital ratio was 10.68%, Common Equity Tier 1 ratio was 11.65%, Tier 1 risk-based capital ratio was 12.86%, and total risk-based capital ratio was 15.00%. All regulatory ratios exceed the minimums required to be considered "well-capitalized."
• Tangible common equity ratio was 9.31% at June 30, 2017, as compared to 9.00% at December 31, 2016.