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BancorpSouth Reports Record Quarterly Earnings


TUPELO, Miss., Oct. 17, 2018 /PRNewswire/ -- BancorpSouth Bank (BXS) (the "Company") today announced financial results for the quarter ended September 30, 2018.

Highlights for the third quarter of 2018 included:

  • Record quarterly net income of $66.7 million, or $0.67 per diluted share, which represents an increase of 56 percent on a per share basis compared with the third quarter of 2017.
  • Recognized a one-time tax benefit of $11.3 million, or $0.11 per diluted share, as a result of a voluntary contribution to the Company's pension plan as well as a tax accounting method change related to the recognition of certain software development costs.
  • Earnings benefited from a positive pre-tax mortgage servicing rights ("MSR") valuation adjustment of $1.5 million.
  • Net operating income – excluding MSR – of $55.0 million, or $0.56 per diluted share.
  • Net interest margin – excluding accretable yield – of 3.62 percent remained stable compared with the second quarter of 2018.
  • Continued focus on expense control reflected by a $1.8 million decline in total operating expense compared with the second quarter of 2018.
  • Repurchased 166,721 shares of outstanding common stock at a weighted average price of $33.38 per share.
  • Completed the acquisition of Icon Capital Corporation effective October 1, 2018, which will add over $600 million in both loans and deposits to the Company's presence in Houston, Texas in the fourth quarter.

The Company reported net income of $66.7 million, or $0.67 per diluted share, for the third quarter of 2018 compared with net income of $39.5 million, or $0.43 per diluted share, for the third quarter of 2017 and net income of $54.0 million, or $0.55 per diluted share, for the second quarter of 2018.  The Company reported net operating income – excluding MSR – of $55.0 million, or $0.56 per diluted share, for the third quarter of 2018 compared with $39.6 million, or $0.43 per diluted share, for the third quarter of 2017 and $55.6 million, or $0.56 per diluted share, for the second quarter of 2018. 

Net operating income – excluding MSR – is a non-GAAP financial measure used by management to assess the core operating performance of the Company.  This measure excludes items such as recognized securities gains and losses, MSR valuation adjustments, restructuring charges, merger-related expenses, and other one-time charges. 

"Our results for the quarter are highlighted by continued strong credit quality, a decline in total operating expense, and a stable core net interest margin," remarked Dan Rollins, Chairman and Chief Executive Officer.  "We continue to experience a very competitive lending environment as well as upward pressure on deposit costs.  We are pleased to have maintained a stable net interest margin – excluding accretable yield – at 3.62 percent despite these rising deposit costs and slower than anticipated balance sheet growth.  We are also proud of our ability to continue to challenge expenses and realize cost savings from our previous mergers, which is evidenced by the $1.8 million decline in total operating expense."

"Additionally, our third quarter income tax expense includes a one-time income tax benefit totaling $11.3 million, or $0.11 per diluted share, as a result of a voluntary pension contribution as well as a tax method change related to the recognition of software development costs.  This benefit is the result of our ability to deduct these items on the Company's 2017 federal income tax return at the prior statutory rate of 35 percent."

"Finally, we are pleased to have recently completed our merger with Icon Bank of Texas and its parent company in Houston, Texas.  We are excited about the experience and leadership Mark Reiley and John Green and their team can provide in our efforts to grow in the Houston market.  We anticipate completing the operational integration of Icon during the fourth quarter of this year."

Net Interest Revenue

Net interest revenue was $142.1 million for the third quarter of 2018, an increase of 17.9 percent from $120.6 million for the third quarter of 2017 and flat compared with the second quarter of 2018.  The fully taxable equivalent net interest margin was 3.67 percent for the third quarter of 2018 compared with 3.58 percent for the third quarter of 2017 and 3.71 percent for the second quarter of 2018.  Yields on net loans and leases were 4.72 percent for the third quarter of 2018 compared with 4.33 percent for the third quarter of 2017 and 4.67 percent for the second quarter of 2018, while yields on total interest earning assets were 4.21 percent for the third quarter of 2018 compared with 3.89 percent for the third quarter of 2017 and 4.15 percent for the second quarter of 2018.  The net interest margin, excluding accretable yield, was 3.62 percent for the third quarter of 2018 compared with 3.63 percent for the second quarter of 2018 while yields on net loans and leases, excluding accretable yield, were 4.64 percent for the third quarter of 2018 compared with 4.57 percent for the second quarter of 2018.  Purchase accounting accretion did not impact the net interest margin or net loan and lease yields for the third quarter of 2017.  The average cost of deposits was 0.43 percent for the third quarter of 2018 compared with 0.26 percent for the third quarter of 2017 and 0.34 percent for the second quarter of 2018.

Asset, Deposit and Loan Activity

Total assets were $17.2 billion at September 30, 2018 compared with $14.8 billion at September 30, 2017.  Loans and leases, net of unearned income, were $12.4 billion at September 30, 2018 compared with $11.1 billion at September 30, 2017.  Total deposits were $13.3 billion at September 30, 2018 compared with $11.8 billion at September 30, 2017.  These balance sheet comparisons include the impact of the acquisitions of Central Community Corporation and Ouachita Bancshares Corp., each of which closed effective January 15, 2018, but do not include the impact of the acquisition of Icon, which closed effective October 1, 2018.  Balance sheet totals for these two banks at the time of closing are disclosed in the "Transactions" section of this news release.

Provision for Credit Losses and Allowance for Credit Losses

Earnings for the third quarter of 2018 reflect no provision for credit losses, compared with a provision of $0.5 million for the third quarter of 2017 and a provision of $2.5 million for the second quarter of 2018.  Net recoveries for the third quarter of 2018 were $1.1 million, compared with net charge-offs of $2.6 million for the third quarter of 2017 and net charge-offs of $2.0 million for the second quarter of 2018.  The allowance for credit losses was $121.0 million, or 0.97 percent of net loans and leases, at September 30, 2018, compared with $119.5 million, or 1.08 percent of net loans and leases, at September 30, 2017 and $119.9 million, or 0.97 percent of net loans and leases, at June 30, 2018.  The allowance for credit losses coverage metrics were impacted by loans acquired in the acquisitions that closed during the first quarter of 2018.

Total non-performing assets were $70.3 million, or 0.56 percent of net loans and leases, at September 30, 2018 compared with $71.0 million, or 0.64 percent of net loans and leases, at September 30, 2017, and $81.2 million, or 0.65 percent of net loans and leases, at June 30, 2018.  Other real estate owned was $4.3 million at September 30, 2018 compared with $6.0 million at September 30, 2017 and $7.8 million at June 30, 2018.

Noninterest Revenue

Noninterest revenue was $71.6 million for the third quarter of 2018, compared with $66.0 million for the third quarter of 2017 and $72.5 million for the second quarter of 2018.  These results include a positive MSR valuation adjustment of $1.5 million for the third quarter of 2018, compared with an immaterial MSR valuation adjustment for the third quarter of 2017 and a negative MSR valuation adjustment of $0.2 million for the second quarter of 2018.  Valuation adjustments in the MSR asset are driven primarily by fluctuations in interest rates period over period.   

Excluding the MSR valuation adjustment, mortgage banking revenue was $5.0 million for the third quarter of 2018, compared with $7.0 million for the third quarter of 2017 and $7.1 million for the second quarter of 2018.  Mortgage origination volume for the third quarter of 2018 was $384.8 million, compared with $342.4 million for the third quarter of 2017 and $523.7 million for the second quarter of 2018.  Of the total mortgage origination volume for the third quarter of 2018, $95.4 million was portfolio loans, compared with $61.4 million for the third quarter of 2017 and $209.3 million for the second quarter of 2018.

Credit and debit card fee revenue was $9.9 million for the third quarter of 2018, compared with $9.3 million for the third quarter of 2017 and $10.5 million for the second quarter of 2018.  Deposit service charge revenue was $11.3 million for the third quarter of 2018, compared with $10.4 million for the third quarter of 2017 and $10.8 million for the second quarter of 2018.  Wealth management revenue was $6.0 million for the third quarter of 2018, compared with $5.4 million for the third quarter of 2017 and $5.7 million for the second quarter of 2018.  Other noninterest revenue was $6.3 million for the third quarter of 2018, compared with $5.3 million for the third quarter of 2017 and $5.5 million for the second quarter of 2018.

Insurance commission revenue was $31.7 million for the third quarter of 2018, compared with $28.6 million for the third quarter of 2017 and $33.0 million for the second quarter of 2018.  New accounting guidance, which became effective January 1, 2018, impacted the Company's accounting for insurance commission revenue.  Previously, contingent commissions were recognized as revenue in the period of receipt; however, under the new guidance, the Company is required to estimate and accrue for contingent commissions throughout the year.


Noninterest Expense

Noninterest expense for the third quarter of 2018 was $142.4 million, compared with $126.9 million for the third quarter of 2017 and $145.2 million for the second quarter of 2018.  Salaries and employee benefits expense was $89.6 million for the third quarter of 2018 compared with $80.5 million for the third quarter of 2017 and $91.5 million for the second quarter of 2018.  Occupancy expense was $11.7 million for the third quarter of 2018, compared with $10.3 million for the third quarter of 2017 and $11.1 million for the second quarter of 2018.  Other noninterest expense was $34.1 million for the third quarter of 2018, compared with $30.2 million for the third quarter of 2017 and $35.7 million for the second quarter of 2018.  Additionally, merger-related expense for the third quarter of 2018 was $0.9 million, compared with no merger-related expense for the third quarter of 2017 and $1.9 million for the second quarter of 2018.  Income tax expense for the third quarter of 2018 included a one-time tax benefit of $11.3 million as a result of a voluntary contribution to the Company's pension plan as well as a tax accounting method change related to the recognition of certain software development costs.  Income tax expense for the second quarter of 2018 was reduced by the tax benefit of the vesting of restricted stock during the quarter.

Capital Management

The Company's equity capitalization is comprised entirely of common stock.  The Company's ratio of shareholders' equity to assets was 12.27 percent at September 30, 2018, compared with 11.52 percent at September 30, 2017 and 12.03 percent at June 30, 2018.  The ratio of tangible shareholders' equity to tangible assets was 8.96 percent at September 30, 2018, compared with 9.56 percent at September 30, 2017 and 8.71 percent at June 30, 2018.

During the third quarter of 2018, the Company repurchased 166,721 shares of its outstanding common stock at a weighted average price of $33.38 per share pursuant to its share repurchase program which is intended to comply with Rules 10b-18 and 10b5-1 promulgated under the Securities and Exchange Act of 1934, as amended.  During the second quarter of 2018, the Company repurchased 785,877 shares of its outstanding common stock at a weighted average price of $31.39 per share.  As of September 30, 2018, the Company had 2,973,416 remaining shares available for repurchase under its current share repurchase authorization, which expires on December 31, 2019.  

Estimated regulatory capital ratios at September 30, 2018 were calculated in accordance with the Basel III capital framework.  The Company is a "well capitalized" bank, as defined by federal regulations, at September 30, 2018, with Tier 1 risk-based capital of 11.72 percent and total risk-based capital of 12.61 percent, compared with required minimum levels of 8 percent and 10 percent, respectively, in order to qualify for "well capitalized" classification. 

Summary

Rollins concluded, "As we look toward the remainder of the year and beyond, we will continue to focus on our initiatives of balance sheet growth, both organically and through strategic opportunities, strong credit quality, and diligent expense management.  We continue to emphasize to our bankers the importance of developing and mining customer relationships that can contribute growth to both sides of the balance sheet.  In addition to our growth efforts, we have also steadily increased our dividend and utilized our share repurchase program in an effort to maximize returns for our shareholders."

TRANSACTIONS

Icon Capital Corporation

Effective October 1, 2018, the Company completed the merger with Icon Capital Corporation and its wholly owned subsidiary, Icon Bank of Texas, National Association (collectively referred to as "Icon"), pursuant to which Icon was merged with and into the Company.  Icon was headquartered in Houston, Texas and operated 7 full-service banking offices in the Houston, Texas metropolitan area.  As of October 1, 2018, Icon, on a consolidated basis, reported total assets of $760.4 million, total loans of $650.4 million and total deposits of $675.8 million.  Under the terms of the definitive agreement, the Company issued approximately 4,125,000 shares of the Company's common stock plus $17.5 million in cash for all outstanding shares of Icon Capital Corporation's capital stock.  For more information regarding the Icon Merger, see our Current Report on Form 8-K that was filed with the Federal Deposit Insurance Corporation ("FDIC") on October 1, 2018. 

Central Community Corporation

Effective January 15, 2018, the Company completed the merger with Central Community Corporation ("CCC"), headquartered in Temple, Texas, pursuant to which CCC merged with and into the Company.  CCC was the parent company of First State Bank Central Texas ("First State Bank"), which was headquartered in Austin, Texas.  First State Bank operated 31 full-service banking offices in central Texas.  As of January 15, 2018, CCC, on a consolidated basis, reported total assets of $1.4 billion, total loans of $712.2 million and total deposits of $1.2 billion.  Under the terms of the definitive merger agreement, the Company issued approximately 7,250,000 shares of the Company's common stock plus $28.5 million in cash for all outstanding shares of CCC's capital stock.  For more information regarding the CCC merger, see our Current Report on Form 8-K that was filed with the FDIC on January 16, 2018.  The purchase accounting for this transaction is considered provisional as management continues to identify and assess information regarding the nature of the acquired assets and liabilities and reviews the associated valuation assumptions and methodologies.

Ouachita Bancshares Corp.

Effective January 15, 2018, the Company completed the merger with Ouachita Bancshares Corp., parent company of Ouachita Independent Bank (collectively referred to as "OIB"), headquartered in Monroe, Louisiana, pursuant to which OIB was merged with and into the Company.  OIB operated 11 full-service banking offices along the I-20 corridor and had a loan production office in Madison, Mississippi.  As of January 15, 2018, OIB, on a consolidated basis, reported total assets of $707.1 million, total loans of $495.6 million and total deposits of $653.4 million.  Under the terms of the definitive merger agreement, the Company issued approximately 3,675,000 shares of the Company's common stock plus $22.875 million in cash for all outstanding shares of Ouachita Bancshares Corp.'s capital stock.  For more information regarding the OIB merger, see our Current Report on Form 8-K that was filed with the FDIC on January 16, 2018.  The purchase accounting for this transaction is considered provisional as management continues to identify and assess information regarding the nature of the acquired assets and liabilities and reviews the associated valuation assumptions and methodologies.

The Reorganization

Effective October 31, 2017, the merger of BancorpSouth, Inc. with and into BancorpSouth Bank was closed, with BancorpSouth Bank continuing as the surviving entity (the "Reorganization").  The Reorganization resulted in the elimination of the holding company structure.  The Reorganization is expected to improve efficiency through the elimination of redundant corporate infrastructure and duplicative regulatory oversight.  For more information regarding the Reorganization, see our Current Report on Form 8-K that was filed with the FDIC on November 1, 2017.

Non-GAAP Measures and Ratios

This news release presents certain financial measures and ratios that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  A discussion regarding these non-GAAP measures and ratios, including reconciliations of non-GAAP measures to the most directly comparable GAAP measures and definitions for non-GAAP ratios, appears under the caption "Reconciliation of Non-GAAP Measures and Other Non-GAAP Ratio Definitions"  beginning on page 21 of this news release.

Conference Call and Webcast

The Company will conduct a conference call to discuss its third quarter 2018 financial results on October 18, 2018, at 10:00 a.m. (Central Time).  This conference call will be an interactive session between management and analysts. Shareholders and other interested parties may listen to this live conference call via Internet webcast by accessing www.BancorpSouth.investorroom.com/Webcasts. The webcast will also be available in archived format at the same address.

About BancorpSouth Bank

BancorpSouth Bank (BXS) is headquartered in Tupelo, Mississippi, with approximately $18 billion in assets.  BancorpSouth operates approximately 285 full service branch locations as well as additional mortgage, insurance, and loan production offices in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois.  BancorpSouth is committed to a culture of respect, diversity, and inclusion in both its workplace and communities. To learn more, visit our Community Commitment page at www.bancorpsouth.com.  Like us on Facebook; follow us on Twitter: @MyBXS; or connect with us through LinkedIn.

Forward-Looking Statements

Certain statements contained in this news release may not be based upon historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as "anticipate," "believe," "could," "estimate," "expect," "foresee," "hope," "intend," "may," "might," "plan," "will," or "would" or future or conditional verb tenses and variations or negatives of such terms. These forward-looking statements include, without limitation, those relating to the benefits, costs, synergies and financial and operational impact of the Reorganization and the Icon, CCC and OIB mergers on the Company, the acceptance by customers of Icon, OIB and CCC of the Company's products and services after the closing of the mergers, the opportunities to enhance market share in certain markets and market acceptance of  the Company generally in new markets, the Company's ability to operate its regulatory compliance programs consistent with federal, state and local laws, including its Bank Secrecy Act ("BSA") and anti-money laundering ("AML") compliance program and its fair lending compliance program, the Company's compliance with the consent order it entered into with the Consumer Financial Protection Bureau and the United States Department of Justice related to the Company's fair lending practices (the "Consent Order"), the impact of the Tax Cuts and Jobs Act of 2017 on the Company and its operations and financial performance, amortization expense for intangible assets, goodwill impairments, loan impairment, utilization of appraisals and inspections for real estate loans, maturity, renewal or extension of construction, acquisition and development loans, net interest revenue, fair value determinations, the amount of the Company's non-performing loans and leases, credit quality, credit losses, liquidity, off-balance sheet commitments and arrangements, valuation of mortgage servicing rights, allowance and provision for credit losses, early identification and resolution of credit issues, utilization of non-GAAP financial measures, the ability of the Company to collect all amounts due according to the contractual terms of loan agreements, the Company's reserve for losses from representation and warranty obligations, the Company's foreclosure process related to mortgage loans, the resolution of non-performing loans that are collaterally dependent, real estate values, fully-indexed interest rates, interest rate risk, interest rate sensitivity, the impact of interest rates on loan yields, calculation of economic value of equity, impaired loan charge-offs, diversification of the Company's revenue stream, the growth of the Company's insurance business and commission revenue, the growth of the Company's customer base and loan, deposit and fee revenue sources, liquidity needs and strategies, sources of funding, net interest margin, declaration and payment of dividends, the utilization of the Company's share repurchase program, the implementation and execution of cost saving initiatives, improvement in the Company's efficiencies, operating expense trends, future acquisitions, dispositions and other strategic growth opportunities and initiatives and the impact of certain claims and ongoing, pending or threatened litigation, administrative and investigatory matters. 

The Company cautions readers not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors. These factors may include, but are not limited to, the Company's ability to operate its regulatory compliance programs consistent with federal, state and local laws, including its BSA/AML compliance program and its fair lending compliance program, the Company's ability to successfully implement and comply with the Consent Order, the ability of the Company to meet expectations regarding the benefits, costs, synergies, and financial and operational impact of the Reorganization and the Icon, CCC and OIB mergers, the possibility that any of the anticipated benefits, costs, synergies and financial and operational improvements of the Reorganization and the Icon, OIB and CCC mergers will not be realized or will not be realized as expected, the possibility that the Icon merger integration may be more expensive to complete than anticipated, the lack of availability of the Company's filings mandated by the Exchange Act from the SEC's publicly available website after the closing of the Reorganization, the impact of any ongoing, pending or threatened litigation, administrative and investigatory matters involving the Company, conditions in the financial markets and economic conditions generally, the adequacy of the Company's provision and allowance for credit losses to cover actual credit losses, the credit risk associated with real estate construction, acquisition and development loans, limitations on the Company's ability to declare and pay dividends, the availability of capital on favorable terms if and when needed, liquidity risk, governmental regulation, including the Dodd-Frank Act, and supervision of the Company's operations, the short-term and long-term impact of changes to banking capital standards on the Company's regulatory capital and liquidity, the impact of regulations on service charges on the Company's core deposit accounts, the susceptibility of the Company's business to local economic and environmental conditions, the soundness of other financial institutions, changes in interest rates, the impact of monetary policies and economic factors on the Company's ability to attract deposits or make loans, volatility in capital and credit markets, reputational risk, the impact of the Tax Cuts and Jobs Act of 2017 on the Company and its operations and financial performance, the impact of the loss of any key Company personnel, the impact of hurricanes or other adverse weather events, any requirement that the Company write down goodwill or other intangible assets, diversification in the types of financial services the Company offers, the growth of the Company's insurance business and commission revenue, the growth of the Company's loan, deposit and fee revenue sources, the Company's ability to adapt its products and services to evolving industry standards and consumer preferences, competition with other financial services companies, risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives, the Company's growth strategy, interruptions or breaches in the Company's information system security, the failure of certain third-party vendors to perform, unfavorable ratings by rating agencies, dilution caused by the Company's issuance of any additional shares of its common stock to raise capital or acquire other banks, bank holding companies, financial holding companies and insurance agencies, the utilization of the Company's share repurchase program, the implementation and execution of cost saving initiatives, other factors generally understood to affect the assets, business, cash flows, financial condition, liquidity, prospects and/or results of operations of financial services companies and other factors detailed from time to time in the Company's press and news releases, reports and other filings with the FDIC.  Forward-looking statements speak only as of the date that they were made, and, except as required by law, the Company does not undertake any obligation to update or revise forward-looking statements to reflect events or circumstances that occur after the date of this news release.

 

BancorpSouth Bank

Selected Financial Information

(Dollars in thousands, except per share data)

(Unaudited)


















Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

Year to Date

Year to Date


9/30/2018

6/30/2018

3/31/2018

12/31/2017

9/30/2017

9/30/2018

9/30/2017

Earnings Summary:








Interest revenue

$                    163,158

$                    159,290

$                    152,195

$                    132,276

$                    130,934

$            474,643

$            380,715

Interest expense

21,023

17,162

14,117

10,890

10,373

52,302

28,065

Net interest revenue

142,135

142,128

138,078

121,386

120,561

422,341

352,650

Provision for credit losses

-

2,500

1,000

500

500

3,500

2,500

Net interest revenue, after provision








   for credit losses

142,135

139,628

137,078

120,886

120,061

418,841

350,150

Noninterest revenue

71,616

72,456

78,934

63,074

65,960

223,006

204,959

Noninterest expense

142,409

145,182

147,701

125,881

126,903

435,292

381,565

Income before income taxes

71,342

66,902

68,311

58,079

59,118

206,555

173,544

Income tax expense

4,659

12,856

14,820

20,556

19,590

32,335

58,034

Net income

$                      66,683

$                      54,046

$                      53,491

$                      37,523

$                      39,528

$            174,220

$            115,510









Balance Sheet - Period End Balances








Total assets

$               17,249,175

$               17,222,491

$               17,185,772

$               15,298,518

$               14,760,394

$       17,249,175

$       14,760,394

Total earning assets

15,594,549

15,600,037

15,593,366

14,081,818

13,606,145

15,594,549

13,606,145

Total securities

2,826,359

2,828,754

2,989,767

2,798,542

2,326,900

2,826,359

2,326,900

Loans and leases, net of unearned income

12,449,995

12,418,114

12,296,849

11,056,434

11,055,509

12,449,995

11,055,509

Allowance for credit losses

121,019

119,920

119,434

118,200

119,496

121,019

119,496

Net book value of acquired loans (included in loans and leases above)

835,939

926,996

1,076,208

-

-

835,939

-

Remaining loan mark on acquired loans

13,368

14,485

19,330

-

-

13,368

-

Total deposits

13,347,193

13,476,558

13,894,301

11,915,596

11,775,988

13,347,193

11,775,988

Long-term debt

33,182

33,214

32,963

30,000

30,000

33,182

30,000

Total shareholders' equity

2,116,375

2,072,083

2,060,487

1,713,485

1,700,502

2,116,375

1,700,502









Balance Sheet - Average Balances








Total assets

$               17,059,865

$               17,094,283

$               16,918,568

$               14,809,497

$               14,710,245

$       17,024,756

$       14,760,991

Total earning assets

15,465,260

15,496,007

15,374,336

13,678,542

13,591,124

15,445,534

13,647,261

Total securities

2,814,751

2,906,235

2,966,917

2,414,140

2,334,717

2,895,410

2,424,067

Loans and leases, net of unearned income

12,433,701

12,334,756

12,084,020

11,010,187

11,013,270

12,285,440

10,906,326

Total deposits

13,387,849

13,539,324

13,563,510

11,840,049

11,802,682

13,496,251

11,881,806

Long-term debt

33,196

33,147

34,433

30,000

162,609

33,588

362,234

Total shareholders' equity

2,089,746

2,051,452

2,012,639

1,701,228

1,695,899

2,051,561

1,702,496









Nonperforming Assets:








Non-accrual loans and leases

$                      55,532

$                      60,045

$                      65,303

$                      61,891

$                      55,796

$              55,532

$              55,796

Loans and leases 90+ days past due, still accruing

2,934

6,335

6,519

8,503

1,855

2,934

1,855

Restructured loans and leases, still accruing

7,564

6,982

9,681

8,060

7,366

7,564

7,366

Non-performing loans (NPLs)

66,030

73,362

81,503

78,454

65,017

66,030

65,017

Other real estate owned

4,301

7,828

9,362

6,038

5,956

4,301

5,956

Non-performing assets (NPAs)

$                      70,331

$                      81,190

$                      90,865

$                      84,492

$                      70,973

$              70,331

$              70,973









Financial Ratios and Other Data:








Return on average assets

1.55%

1.27%

1.28%

1.01%

1.07%

1.37%

1.05%

Operating return on average assets-excluding MSR*

1.28%

1.31%

1.29%

0.99%

1.07%

1.29%

1.04%

Return on average shareholders' equity

12.66%

10.57%

10.78%

8.75%

9.25%

11.35%

9.07%

Operating return on average shareholders' equity-excluding MSR*

10.45%

10.88%

10.80%

8.58%

9.25%

10.71%

9.05%

Return on tangible equity*

17.76%

15.00%

15.08%

10.67%

11.36%

15.64%

11.18%

Operating return on tangible equity-excluding MSR*

14.66%

15.44%

15.11%

10.46%

11.36%

14.75%

11.16%

Noninterest income to average assets

1.67%

1.70%

1.89%

1.69%

1.78%

1.75%

1.86%

Noninterest expense to average assets

3.31%

3.41%

3.54%

3.37%

3.42%

3.42%

3.46%

Net interest margin-fully taxable equivalent

3.67%

3.71%

3.67%

3.58%

3.58%

3.68%

3.52%

Net interest margin-fully taxable equivalent, excluding net accretion








  on acquired loans and leases

3.62%

3.63%

3.60%

N/A

N/A

3.62%

N/A

Net interest rate spread

3.43%

3.52%

3.52%

3.44%

3.45%

3.49%

3.40%

Efficiency ratio (tax equivalent)*

66.29%

67.31%

67.66%

67.45%

67.23%

67.11%

67.61%

Operating efficiency ratio-excluding MSR (tax equivalent)*

66.34%

66.36%

66.79%

68.16%

67.24%

66.52%

67.66%

Loan/deposit ratio

93.28%

92.15%

88.50%

92.79%

93.88%

93.28%

93.88%

Price to earnings multiple (avg)

15.07

17.07

17.77

18.95

19.42

15.07

19.42

Market value to book value

152.23%

156.95%

153.77%

165.76%

170.25%

152.23%

170.25%

Market value to book value (avg)

158.19%

159.33%

159.14%

169.35%

158.92%

155.72%

160.35%

Market value to tangible book value

216.28%

225.06%

220.18%

203.64%

209.66%

216.28%

209.66%

Market value to tangible book value (avg)

224.75%

228.47%

227.87%

208.04%

195.70%

221.24%

197.47%

Employee FTE

4,270

4,366

4,305

3,947

3,950

4,270

3,950









*Denotes non-GAAP financial measure.  Refer to related disclosure and reconciliation on pages 21 and 22.

 

 

 

BancorpSouth Bank

Selected Financial Information

(Dollars in thousands, except per share data)

(Unaudited)




Quarter Ended


Quarter Ended


Quarter Ended

Quarter Ended


Quarter Ended


Year to Date

Year to Date


9/30/2018

6/30/2018

3/31/2018

12/31/2017

9/30/2017

9/30/2018

9/30/2017

Credit Quality Ratios:








Net (recoveries)charge-offs to average loans and leases (annualized)

(0.04%)

0.07%

(0.01%)

0.06%

0.09%

0.01%

0.08%

Provision for credit losses to average loans and leases (annualized)

0.00%

0.08%

0.03%

0.02%

0.02%

0.04%

0.03%

Allowance for credit losses to net loans and leases

0.97%

0.97%

0.97%

1.07%

1.08%

0.97%

1.08%

Allowance for credit losses to net loans and leases, excluding acquired loans and leases

1.04%

1.05%

1.07%

N/A

N/A

1.04%

N/A

Allowance for credit losses to non-performing loans and leases

183.28%

163.46%

146.54%

150.66%

183.79%

183.28%

183.79%

Allowance for credit losses to non-performing assets

172.07%

147.70%

131.44%

139.89%

168.37%

172.07%

168.37%

Non-performing loans and leases to net loans and leases

0.53%

0.59%

0.66%

0.71%

0.59%

0.53%

0.59%

Non-performing assets to net loans and leases

0.56%

0.65%

0.74%

0.76%

0.64%

0.56%

0.64%









Equity Ratios:








Total shareholders' equity to total assets

12.27%

12.03%

11.99%

11.20%

11.52%

12.27%

11.52%

Tangible shareholders' equity to tangible assets*

8.96%

8.71%

8.69%

9.31%

9.56%

8.96%

9.56%

















Capital Adequacy:








Common  Equity Tier 1 capital

11.72%

11.42%

11.30%

12.15%

12.04%

11.72%

12.04%

Tier 1 capital

11.72%

11.42%

11.30%

12.15%

12.04%

11.72%

12.04%

Total capital

12.61%

12.30%

12.18%

13.13%

13.03%

12.61%

13.03%

Tier 1 leverage capital

9.69%

9.38%

9.39%

10.12%

10.02%

9.69%

10.02%

   Estimated for current quarter
















Common Share Data:








Basic earnings per share

$                          0.68

$                          0.55

$                          0.54

$                          0.42

$                          0.43

$                  1.76

$                  1.26

Diluted earnings per share

0.67

0.55

0.54

0.41

0.43

1.76

1.25

Operating earnings per share*

0.57

0.56

0.58

0.42

0.43

1.72

1.25

Operating earnings per share- excluding MSR*

0.56

0.56

0.54

0.41

0.43

1.67

1.25

Cash dividends per share

0.17

0.14

0.14

0.14

0.14

0.45

0.39

Book value per share

21.48

20.99

20.68

18.97

18.83

21.48

18.83

Tangible book value per share*

15.12

14.64

14.44

15.44

15.29

15.12

15.29

Market value per share (last)

32.70

32.95

31.80

31.45

32.05

32.70

32.05

Market value per share (high)

35.40

35.45

35.55

34.45

32.70

35.55

32.70

Market value per share (low)

32.45

30.60

30.90

30.25

27.20

30.60

27.20

Market value per share (avg)

33.98

33.45

32.91

32.13

29.92

33.45

30.19

Dividend payout ratio

25.15%

25.62%

25.85%

33.70%

32.20%

25.51%

31.05%

Total shares outstanding

98,525,516

98,700,509

99,636,779

90,312,378

90,329,896

98,525,516

90,329,896

Average shares outstanding - basic

98,646,087

98,906,619

98,765,789

90,321,137

90,911,702

98,772,832

91,973,620

Average shares outstanding - diluted

98,819,905

99,057,054

98,942,268

90,546,824

91,099,770

98,939,743

92,157,392

















Yield/Rate:








(Taxable equivalent basis)








Loans, loans held for sale, and leases net of unearned income

4.72%

4.67%

4.60%

4.36%

4.33%

4.66%

4.27%

Loans, loans held for sale, and leases net of unearned income, excluding








  net accretion on acquired loans and leases

4.64%

4.57%

4.51%

N/A

N/A

4.58%

N/A

Available-for-sale securities:








  Taxable

1.80%

1.77%

1.72%

1.48%

1.41%

1.76%

1.38%

  Tax-exempt

4.40%

4.39%

4.30%

5.29%

5.25%

4.36%

5.26%

Short-term, FHLB and other equity investments

2.04%

2.02%

1.54%

1.27%

1.22%

1.78%

0.84%

  Total interest earning assets and revenue

4.21%

4.15%

4.05%

3.90%

3.89%

4.14%

3.80%

Deposits

0.43%

0.34%

0.31%

0.27%

0.26%

0.36%

0.25%

  Demand - interest bearing

0.59%

0.43%

0.36%

0.29%

0.28%

0.46%

0.25%

  Savings

0.24%

0.15%

0.13%

0.13%

0.12%

0.17%

0.12%

  Other time

1.06%

0.95%

0.89%

0.86%

0.84%

0.97%

0.81%

Short-term borrowings

1.79%

1.62%

1.25%

0.96%

0.85%

1.58%

0.68%

Total interest bearing deposits and short-term borrowings

0.77%

0.62%

0.51%

0.45%

0.41%

0.64%

0.37%

Junior subordinated debt

N/A

N/A

0.00%

N/A

N/A

N/A

3.29%

Long-term debt

4.06%

4.11%

4.17%

4.05%

1.79%

4.11%

1.06%

  Total interest bearing liabilities and expense

0.78%

0.63%

0.53%

0.46%

0.44%

0.65%

0.39%

Interest bearing liabilities to interest earning assets

69.12%

70.27%

70.91%

69.09%

69.55%

70.09%

69.82%

Net interest tax equivalent adjustment

$                        1,088

$                        1,119

$                        1,205

$                        2,155

$                        2,237

$                3,302

$                6,742









*Denotes non-GAAP financial measure.  Refer to related disclosure and reconciliation on pages 21 and 22.

 

 

 







BancorpSouth Bank

Consolidated Balance Sheets

(Unaudited)








Sep-18

Jun-18

Mar-18

Dec-17

Sep-17


(Dollars in thousands)

Assets






Cash and due from banks

$                169,493

$                198,374

$                180,104

$                167,283

$                167,871

Interest bearing deposits with other banks






and Federal funds sold

138,677

152,566

127,345

53,440

52,316

Available-for-sale securities, at fair value

2,826,359

2,828,754

2,989,767

2,798,542

2,326,900

Loans and leases

12,464,877

12,433,152

12,312,346

11,072,062

11,073,306

  Less:  Unearned income

14,882

15,038

15,497

15,628

17,797

             Allowance for credit losses

121,019

119,920

119,434

118,200

119,496

Net loans and leases

12,328,976

12,298,194

12,177,415

10,938,234

10,936,013

Loans held for sale

132,080

153,396

141,979

136,577

138,353

Premises and equipment, net

342,947

339,372

342,353

314,362

311,530

Accrued interest receivable

56,369

51,921

52,856

45,671

44,454

Goodwill

590,292

588,004

580,900

300,798

300,798

Other identifiable intangibles

36,475

39,031

40,590

17,882

18,860

Bank owned life insurance

304,687

306,116

304,850

292,069

259,361

Other real estate owned

4,301

7,828

9,362

6,038

5,956

Other assets

318,519

258,935

238,251

227,622

197,982

Total Assets

$           17,249,175

$           17,222,491

$           17,185,772

$           15,298,518

$           14,760,394

Liabilities






Deposits:






  Demand:  Noninterest bearing

$             4,007,158

$             4,135,322

$             4,035,830

$             3,453,000

$             3,414,397

                  Interest bearing

5,535,689

5,509,901

5,945,359

5,066,614

4,925,127

  Savings

1,783,602

1,810,149

1,843,264

1,638,799

1,638,033

  Other time

2,020,744

2,021,186

2,069,848

1,757,183

1,798,431

Total deposits

13,347,193

13,476,558

13,894,301

11,915,596

11,775,988

Securities sold under agreement to repurchase

403,724

407,704

469,114

417,867

421,044

Federal funds purchased






   and other short-term borrowing

1,095,000

1,025,022

500,000

1,025,000

625,000

Accrued interest payable

7,330

5,961

5,525

4,882

4,826

Long-term debt

33,182

33,214

32,963

30,000

30,000

Other liabilities

246,371

201,949

223,382

191,688

203,034

Total Liabilities

15,132,800

15,150,408

15,125,285

13,585,033

13,059,892

Shareholders' Equity






Common stock

246,314

246,751

249,092

225,781

225,825

Capital surplus

439,590

441,950

465,699

177,624

175,837

Accumulated other comprehensive loss

(91,650)

(88,751)

(85,994)

(63,843)

(50,203)

Retained earnings

1,522,121

1,472,133

1,431,690

1,373,923

1,349,043

Total Shareholders' Equity

2,116,375

2,072,083

2,060,487

1,713,485

1,700,502

Total Liabilities & Shareholders' Equity

$           17,249,175

$           17,222,491

$           17,185,772

$           15,298,518

$           14,760,394




















 

 







BancorpSouth Bank

Consolidated Average Balance Sheets

(Unaudited)








Sep-18

Jun-18

Mar-18

Dec-17

Sep-17


(Dollars in thousands)

Assets






Cash and due from banks

$                179,098

$                203,220

$                202,141

$                154,843

$                153,797

Interest bearing deposits with other banks






and Federal funds sold

57,204

66,035

182,488

108,880

83,109

Available-for-sale securities, at fair value

2,814,751

2,906,235

2,966,917

2,414,140

2,334,717

Loans and leases

12,448,814

12,350,226

12,099,694

11,026,437

11,032,159

  Less:  Unearned income

15,113

15,470

15,674

16,250

18,889

             Allowance for credit losses

120,678

119,622

118,840

119,124

121,501

Net loans and leases

12,313,023

12,215,134

11,965,180

10,891,063

10,891,769

Loans held for sale

112,387

144,400

98,662

112,118

127,112

Premises and equipment, net

340,456

342,395

343,098

313,874

309,592

Accrued interest receivable

50,437

48,767

47,770

40,228

40,100

Goodwill

588,777

583,188

544,840

300,798

300,798

Other identifiable intangibles

37,529

39,752

17,811

18,231

19,222

Bank owned life insurance

305,476

305,016

301,982

265,761

261,100

Other real estate owned

6,245

8,997

9,300

5,777

6,985

Other assets

254,482

231,144

238,379

183,784

181,944

Total Assets

$           17,059,865

$           17,094,283

$           16,918,568

$           14,809,497

$           14,710,245

Liabilities






Deposits:






  Demand:  Noninterest bearing

$             4,076,890

$             3,976,039

$             3,822,216

$             3,479,771

$             3,369,468

                  Interest bearing

5,495,517

5,697,444

5,898,269

4,949,183

4,985,113

  Savings

1,794,229

1,820,013

1,801,128

1,631,617

1,634,577

  Other time

2,021,213

2,045,828

2,041,897

1,779,478

1,813,524

Total deposits

13,387,849

13,539,324

13,563,510

11,840,049

11,802,682

Securities sold under agreement to repurchase

427,583

416,839

445,840

471,581

444,999

Federal funds purchased






   and other short-term borrowing

918,153

875,641

667,546

589,261

411,815

Accrued interest payable

6,617

5,600

5,177

4,718

4,507

Long-term debt

33,196

33,147

34,433

30,000

162,609

Other liabilities

196,721

172,280

189,423

172,660

187,734

Total Liabilities

14,970,119

15,042,831

14,905,929

13,108,269

13,014,346

Shareholders' Equity






Common stock

246,635

247,120

247,189

225,808

227,247

Capital surplus

441,779

444,379

447,576

176,613

189,545

Accumulated other comprehensive loss

(89,244)

(88,962)

(71,205)

(55,181)

(48,591)

Retained earnings

1,490,576

1,448,915

1,389,079

1,353,988

1,327,698

Total Shareholders' Equity

2,089,746

2,051,452

2,012,639

1,701,228

1,695,899

Total Liabilities & Shareholders' Equity

$           17,059,865

$           17,094,283

$           16,918,568

$           14,809,497

$           14,710,245



















 

 

 

BancorpSouth Bank

Consolidated Condensed Statements of Income

(Dollars in thousands, except per share data)

(Unaudited)
















Quarter Ended


Year to Date


Sep-18


Jun-18


Mar-18


Dec-17


Sep-17


Sep-18


Sep-17

INTEREST REVENUE:














Loans and leases

$  147,404


$  143,029


$   136,568


$  120,381


$  119,599


$ 427,001


$ 346,383

Deposits with other banks

243


331


664


300


214


1,238


955

Federal funds sold, securities purchased














   under agreement to resell, FHLB and 














      other equity investments

295


226


191


157


143


712


361

Available-for-sale securities:














    Taxable

11,529


11,554


11,313


7,957


7,235


34,396


21,876

    Tax-exempt

2,394


2,435


2,504


2,417


2,514


7,333


7,657

Loans held for sale

1,293


1,715


955


1,064


1,229


3,963


3,483

        Total interest revenue

163,158


159,290


152,195


132,276


130,934


474,643


380,715















INTEREST EXPENSE:














Interest bearing demand

8,113


6,075


5,278


3,645


3,482


19,466


9,472

Savings

1,087


667


584


517


494


2,338


1,449

Other time

5,399


4,862


4,457


3,853


3,819


14,718


11,126

Federal funds purchased and securities sold














   under agreement to repurchase

2,071


1,898


1,341


930


754


5,310


1,585

Short-term and long-term debt

4,353


3,660


2,455


1,943


1,824


10,468


4,422

Junior subordinated debt

-


-


-


-


-


-


9

Other

-


-


2


2


-


2


2

        Total interest expense

21,023


17,162


14,117


10,890


10,373


52,302


28,065















        Net interest revenue

142,135


142,128


138,078


121,386


120,561


422,341


352,650

  Provision for credit losses

-


2,500


1,000


500


500


3,500


2,500

        Net interest revenue, after provision for














          credit losses

142,135


139,628


137,078


120,886


120,061


418,841


350,150















NONINTEREST REVENUE:














Mortgage banking

6,517


6,904


13,265


7,246


6,909


26,686


22,033

Credit card, debit card and merchant fees

9,857


10,530


9,564


9,530


9,346


29,951


27,814

Deposit service charges

11,278


10,767


10,901


10,257


10,388


32,946


29,783

Security gains, net

(54)


(2)


27


523


5


(29)


1,099

Insurance commissions

31,705


32,965


29,130


25,758


28,616


93,800


92,682

Wealth management

6,016


5,745


5,697


5,619


5,386


17,458


15,835

Other

6,297


5,547


10,350


4,141


5,310


22,194


15,713

        Total noninterest revenue

71,616


72,456


78,934


63,074


65,960


223,006


204,959















NONINTEREST EXPENSE:














Salaries and employee benefits

89,646


91,451


91,197


77,268


80,541


272,294


241,776

Occupancy, net of rental income

11,690


11,103


10,804


10,064


10,343


33,597


31,100

Equipment

3,994


3,804


3,754


3,710


3,352


11,552


10,358

Deposit insurance assessments

2,954


3,129


2,360


2,659


2,499


8,443


7,244

Other

34,125


35,695


39,586


32,180


30,168


109,406


91,087

        Total noninterest expense

142,409


145,182


147,701


125,881


126,903


435,292


381,565

        Income before income taxes

71,342


66,902


68,311


58,079


59,118


206,555


173,544

Income tax expense

4,659


12,856


14,820


20,556


19,590


32,335


58,034

        Net income

$    66,683


$   54,046


$     53,491


$    37,523


$   39,528


$ 174,220


$ 115,510















Net income per share: Basic

$       0.68


$       0.55


$        0.54


$       0.42


$       0.43


$      1.76


$      1.26

                                  Diluted

$       0.67


$       0.55


$        0.54


$       0.41


$       0.43


$      1.76


$      1.25

 

 

 

BancorpSouth Bank

Selected Loan Data

(Dollars in thousands)

(Unaudited)












Quarter Ended


Sep-18


Jun-18


Mar-18


Dec-17


Sep-17

LOAN AND LEASE PORTFOLIO:










Commercial and industrial

$  1,617,293


$   1,668,174


$   1,695,718


$    1,480,279


$  1,506,352

Real estate










   Consumer mortgages

3,184,674


3,143,215


3,000,479


2,864,623


2,826,333

   Home equity

655,213


653,450


655,634


638,394


626,961

   Agricultural

315,842


315,828


313,470


243,449


247,211

   Commercial and industrial-owner occupied

2,157,177


2,147,176


2,102,493


1,846,085


1,835,430

   Construction, acquisition and development

1,103,532


1,346,370


1,377,153


1,153,187


1,175,979

   Commercial real estate

2,923,791


2,636,533


2,640,503


2,345,231


2,336,219

Credit cards

102,353


102,790


102,114


107,848


104,613

All other

390,120


404,578


409,285


377,338


396,411

     Total loans

$ 12,449,995


$ 12,418,114


$ 12,296,849


$  11,056,434


$ 11,055,509











ALLOWANCE FOR CREDIT LOSSES:










Balance, beginning of period

$     119,920


$      119,434


$     118,200


$       119,496


$     121,561











Loans and leases charged-off:










Commercial and industrial

(322)


(1,057)


(484)


(1,234)


(1,963)

Real estate










   Consumer mortgages

(210)


(366)


(134)


(773)


(1,193)

   Home equity

(227)


(107)


(143)


(95)


(439)

   Agricultural

(6)


(6)


(12)


(5)


(54)

   Commercial and industrial-owner occupied

(315)


(279)


(41)


(720)


(20)

   Construction, acquisition and development

(41)


(66)


(163)


(206)


(29)

   Commercial real estate

0


(946)


(35)


(159)


(49)

Credit cards

(596)


(830)


(794)


(849)


(745)

All other

(941)


(551)


(725)


(627)


(711)

     Total loans charged-off

(2,658)


(4,208)


(2,531)


(4,668)


(5,203)











Recoveries:










Commercial and industrial

1,558


684


372


599


481

Real estate










   Consumer mortgages

522


361


95


755


642

   Home equity

58


72

...