TUPELO, Miss., April 20 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. today announced financial results for the quarter ended March 31, 2009.
Highlights of the first quarter include: -- Continuing solid profitability, with net income of $29.5 million, or $0.35 per diluted share. -- Maintenance of the net interest margin at 3.74 percent for the second consecutive quarter. -- A 5.2 percent increase in net loans and leases year over year. -- Strong credit quality, with non-performing loans of 0.76 percent of loans and leases and annualized net charge-offs of 0.54 percent of average loans and leases. -- A more than doubling of mortgage lending revenue, excluding the write down of the mortgage servicing asset, compared with both the first and fourth quarters of 2008. -- An increase in the ratio of shareholders' equity to assets to 9.33 percent, the 11th consecutive comparable quarter increase. Summary Results
BancorpSouth's net income for the first quarter of 2009 was $29.5 million, or $0.35 per diluted share, compared with $35.1 million, or $0.43 per diluted share, for the first quarter of 2008. For the fourth quarter of 2008, net income was $16.8 million or $0.20 per diluted share.
Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth, commented, "For the first quarter of 2009, BancorpSouth produced another strong performance in an unusually challenging environment for both the financial services industry and the national economy. This performance was highlighted by solid profitability for the quarter, which contributed to a further improvement in our already strong capital structure. We continued to expand our portfolio of high quality loans, which we again funded through an asset/liability management strategy that enabled us to maintain our net interest margin. Our credit quality remained strong on both an absolute basis and relative to our industry peers. Despite the weak economy, our credit quality metrics for the first quarter were consistent with the manageable levels produced for the fourth quarter of 2008, contributing to a significant reduction in our provision for credit losses on a sequential-quarter basis.
"We continued to complement the controlled growth in our interest rate spread dependent business with our diversified noninterest revenue streams, which, in the aggregate, increased to 37.6 percent of total revenue for the first quarter. Although first quarter insurance commission revenue reflected soft market conditions, our mortgage originations increased 51.2% for the first quarter of 2009 from the first quarter of 2008, due primarily to historically low mortgage interest rates.
"Our first quarter results again demonstrated that BancorpSouth, through its strong capital structure, asset quality and revenue diversification, is well-positioned to deal with the current economic environment. We have ongoing opportunities to expand our market share, particularly in new markets entered through the opening of four full-service branch bank offices so far in 2009 and 17 new offices during 2008. We will continue to focus on controlling our growth, maintaining our credit quality and managing our expenses."
Net Interest Revenue
Net interest revenue decreased 0.2 percent to $109.9 million for the first quarter of 2009 from $110.1 million for the first quarter of 2008 and 1.3 percent from $111.3 million for the fourth quarter of 2008. The fully taxable equivalent net interest margin was 3.74 percent for the first quarter of 2009, down from 3.79 percent for the first quarter of 2008 and even with 3.74 percent for the fourth quarter of 2008.
Patterson remarked, "We are pleased with the consistency evident in our first quarter net interest revenue and net interest margin, in spite of weakening economic conditions and the decline in interest rates since the first and fourth quarters of 2008. In the past year, we have consistently implemented an asset/liability management strategy focused on funding our loan growth with the proceeds of maturing lower yielding investment securities, short-term borrowings and growth in demand deposits. As a result, we lowered interest expense in part by reducing other time deposits by 14.6 percent at the end of the first quarter of 2009 from a year earlier through more conservative pricing of these deposit products. During this same period, demand deposits grew 11.9 percent.
"We were modestly more aggressive in pricing longer term time deposits during the first quarter of 2009 in order to extend maturities with interest rates at historically low levels. As a result, we produced a 0.6 percent increase in the average balance of other time deposits for the quarter compared with the fourth quarter of 2008 and a 4.5 percent increase in the balance of other time deposits at the end of the first quarter from the end of 2008. We also continued to benefit from increased demand deposits, which rose by 3.3 percent at the end of the first quarter from the end of 2008. Because of this deposit growth, we reduced our short-term borrowings during the first quarter, enhancing the already ample liquidity represented by our borrowing capacity with the FHLB and other banks."
Deposit and Loan Activity
Total assets at March 31, 2009 increased 2.3 percent to $13.5 billion from $13.2 billion at March 31, 2008. Total deposits of $10.1 billion at March 31, 2009 increased 0.1 percent from March 31, 2008. Loans and leases, net of unearned income, increased 5.2 percent to $9.7 billion at March 31, 2009 from $9.2 billion at March 31, 2008.
"We are encouraged by the steady loan growth we have experienced in a time of increased competition for high quality loans," added Patterson. "We generated a significant portion of this activity by increasing our business in newer markets, validating our long-term strategy of expansion into familiar, contiguous markets with diverse economies and attractive growth dynamics. We also continue to believe that our financial strength and stability, which differentiates us from many industry peers, have contributed to the growth in our loans and deposits."
Provision for Credit Losses and Allowance for Credit Losses
For the first quarter of 2009, the provision for credit losses was $14.9 million compared with $10.8 million for the first quarter of 2008 and $17.8 million for the fourth quarter of 2008. Annualized net charge-offs were 0.54 percent of average loans and leases for the first quarter of 2009 compared with 0.29 percent for the first quarter of 2008 and 0.57 percent for the fourth quarter of 2008.
Non-performing loans and leases increased to $73.8 million, or 0.76 percent of net loans and leases, at March 31, 2009 from $38.7 million, or 0.42 percent of net loans and leases, at March 31, 2008 and from $64.0 million, or 0.66 percent of net loans and leases, at December 31, 2008. The allowance for credit losses increased to 1.39 percent of net loans and leases at March 31, 2009 compared with 1.29 percent at March 31, 2008 and 1.37 percent at December 31, 2008.
Patterson said, "Although we are not complacent with the level of non-performing loans and net charge-offs for the first quarter of 2009, our credit metrics continue to demonstrate the high quality of our loan portfolio and should, we expect, compare very favorably with industry averages. To support our continued strong performance, we remain focused on early identification and resolution of any emerging credit issues. We also plan to remain well reserved against expected losses inherent within the portfolio. Our provision for loan losses for the first quarter was in excess of our net charge-offs, and we completed the quarter with an allowance for credit losses totaling 1.8 times non-performing loans at the end of the quarter and 2.6 times annualized net charge-offs for the quarter."
Noninterest Revenue
For the first quarter of 2009, noninterest revenue was $66.3 million, an increase of 0.1 percent from $66.2 million for the first quarter of 2008. These results included a $3.4 million pre-tax write down of the mortgage servicing asset for both the first quarters of 2009 and 2008. In addition, results for the first quarter of 2008 included a $2.8 million gain related to the sale of Visa common stock.
"The highlight of our noninterest revenue performance for the first quarter was a 125.2 percent growth in mortgage lending revenue, excluding the write down of the mortgage servicing asset, compared with the first quarter of 2008 and a 172.1 percent increase from the fourth quarter of 2008," stated Patterson. "As we experienced during the fourth quarter, much of this growth represented new customers who came to BancorpSouth to refinance their existing mortgages. Given the current low interest rate environment, we believe our mortgage operations represent a further growth opportunity. We also note that with the decline in interest rates during the first quarter, the additional write down of our mortgage servicing asset has lowered its carrying value to 0.82 percent of the unpaid principal balance of the loans being serviced compared with 1.07 percent at March 31, 2008."
Noninterest Expense
Noninterest expense increased 4.4 percent to $118.5 million for the first quarter of 2009 from $113.5 million for the first quarter of 2008 and 6.6 percent from $111.1 million for the fourth quarter of 2008. BancorpSouth experienced a major increase in its FDIC insurance premium for the first quarter, despite being assessed at the FDIC's lowest rate because of BancorpSouth Bank's strong credit quality and its "well capitalized" status under federal regulations. In addition, nearly half of the increase in noninterest expense compared with the first quarter of 2008 was attributable to the opening of 17 full-service branch bank offices during 2008 and four full-service branch offices in 2009.
Capital Management
For the first quarter of 2009, BancorpSouth continued its long history of maintaining a strong capital position and ample liquidity, while continuing to maintain its cash dividends to shareholders. The Company's shareholders' equity to asset ratio increased to 9.33 percent at the end of the first quarter from 9.28 percent at the end of the first quarter of 2008 and 9.20 percent at the end of 2008. The ratio of tangible equity to assets rose to 7.29 percent from 7.14 percent at the end of the first quarter of 2008 and 7.15 percent at the end of 2008. BancorpSouth remains a "well capitalized" financial holding company as defined by federal regulations. BancorpSouth paid cash dividends of $0.22 per share during the first quarter and did not repurchase any shares of its common stock.
Summary
Patterson said, "Our ability to strengthen our capital structure and maintain strong credit quality during the past three quarters of extraordinary turmoil in the financial services industry continues to validate our decision to forego participation in the U.S. Treasury's Capital Purchase Program under TARP. We are fundamentally a strong financial institution, although we remain cautious about our outlook for the future with an appropriate focus on early identification and resolution of emerging credit issues and on expense management. Consistent with our performance for the first quarter, we will also continue to leverage our strengths to gain market share, thereby enhancing our ability to grow when the economic cycle begins to improve. Until that time, we are prepared to manage any challenges we face due to the economic downturn. We are confident that through our strong capital structure, conservative management principles and uniquely diversified market position across our mid-South franchise, we are positioned to continue to operate profitability, to grow and to build long-term shareholder value."
Conference Call
BancorpSouth will conduct a conference call to discuss its first quarter 2009 results tomorrow, April 21, 2009, at 10:00 a.m. (Central Time). Investors may listen via the Internet by accessing BancorpSouth's website at http://www.bancorpsouth.com/. A replay of the conference call will be available at BancorpSouth's website for at least two weeks following the call.
Forward-Looking Statements
Certain statements contained in this news release may not be based on 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," "estimate," "expect," "may," "might," "will," "would," "could" or "intend." These forward-looking statements include, without limitation, statements relating to our credit quality, our loan growth and growth in deposits, the management of our expenses, leveraging our strengths to gain market share, our growth, the quality of our loan portfolio compared to industry averages, our loan loss reserves, growth opportunities resulting from our mortgage operations and our financial strength and flexibility.
We caution you 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 because of a variety of factors. These factors may include, but are not limited to, changes in general business or economic conditions or government fiscal and monetary policies, volatility and disruption in national and international financial markets, fluctuations in prevailing interest rates and the ability of BancorpSouth to manage its assets and liabilities to limit exposure to changing interest rates, the ability of BancorpSouth to increase noninterest revenue and expand noninterest revenue business, the ability of BancorpSouth to maintain credit quality, changes in laws and regulations affecting financial service companies in general, the ability of BancorpSouth to compete with other financial services companies, the ability of BancorpSouth to provide and market competitive services and products, changes in BancorpSouth's operating or expansion strategy, BancorpSouth's business model, geographic concentration of BancorpSouth's assets, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, the ability of BancorpSouth to achieve profitable growth and increase shareholder value, the ability of BancorpSouth to attract, train and retain qualified personnel, the ability of BancorpSouth to identify, close and effectively integrate potential acquisitions, the ability of BancorpSouth to expand geographically and enter growing markets, changes in consumer preferences, other factors generally understood to affect the financial results of financial services companies, and other factors described from time to time in BancorpSouth's filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
BancorpSouth, Inc. is a financial holding company headquartered in Tupelo, Mississippi, with approximately $13.5 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 318 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas. BancorpSouth Bank also operates an insurance location in Illinois.
BancorpSouth, Inc. Selected Financial Data Three Months Ended March 31, 2009 2008 (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $109,876 $110,070 Provision for credit losses 14,945 10,811 Noninterest revenue 66,293 66,231 Noninterest expense 118,453 113,470 Income before income taxes 42,771 52,020 Income tax provision 13,294 16,875 Net income $29,477 $35,145 Earning per share: Basic $0.35 $0.43 Diluted $0.35 $0.43 Balance sheet data at March 31: Total assets $13,458,364 $13,154,871 Total earning assets 12,240,161 11,909,702 Loans and leases, net of unearned income 9,712,823 9,233,023 Allowance for credit losses 134,632 119,301 Total deposits 10,091,974 10,086,201 Common shareholders' equity 1,255,659 1,221,135 Book value per share 15.11 14.83 Average balance sheet data: Total assets $13,324,878 $13,100,524 Total earning assets 12,187,151 11,947,759 Loans and leases, net of unearned interest 9,695,475 9,213,294 Total deposits 9,908,432 10,090,342 Common shareholders' equity 1,238,971 1,199,457 Non-performing assets at March 31: Non-accrual loans and leases $38,936 $14,709 Loans and leases 90+ days past due, still accruing 27,299 21,522 Restructured loans and leases, still accruing 7,581 2,493 Other real estate owned 47,450 26,623 Total non-performing assets 121,266 65,347 Net charge-offs as a percentage of average loans (annualized) 0.54% 0.29% Performance ratios (annualized): Return on average assets 0.90% 1.08% Return on common equity 9.65% 11.78% Net interest margin 3.74% 3.79% Average shares outstanding - basic 83,107,469 82,330,916 Average shares outstanding - diluted 83,234,105 82,533,799 BancorpSouth, Inc. Consolidated Balance Sheet (Unaudited) March 31, % 2009 2008 Change (Dollars in thousands) Assets Cash and due from banks $242,180 $290,246 (16.56%) Interest bearing deposits with other banks 34,230 19,258 77.74% Held-to-maturity securities, at amortized cost 1,330,810 1,523,994 (12.68%) Available-for-sale securities, at fair value 993,529 971,613 2.26% Loans and leases 9,759,787 9,280,659 5.16% Less: Unearned income 46,964 47,636 (1.41%) Allowance for credit losses 134,632 119,301 12.85% Net loans and leases 9,578,191 9,113,722 5.10% Loans held for sale 168,769 161,814 4.30% Premises and equipment, net 348,734 328,920 6.02% Accrued interest receivable 77,503 92,520 (16.23%) Goodwill 269,062 270,762 (0.63%) Other assets 415,356 382,022 8.73% Total Assets $13,458,364 $13,154,871 2.31% Liabilities Deposits: Demand: Noninterest bearing $1,820,807 $1,722,914 5.68% Interest bearing 4,005,620 3,484,607 14.95% Savings 719,676 725,494 (0.80%) Other time 3,545,871 4,153,186 (14.62%) Total deposits 10,091,974 10,086,201 0.06% Federal funds purchased and securities sold under agreement to repurchase 1,256,649 784,532 60.18% Short-term Federal Home Loan Bank borrowings and other short-term borrowing 210,000 430,000 (51.16%) Accrued interest payable 22,841 34,203 (33.22%) Junior subordinated debt securities 160,312 160,312 0.00% Long-term Federal Home Loan Bank borrowings 286,302 288,939 (0.91%) Other liabilities 174,627 149,549 16.77% Total Liabilities 12,202,705 11,933,736 2.25% Shareholders' Equity Common stock 207,811 205,913 0.92% Capital surplus 216,138 200,742 7.67% Accumulated other comprehensive income (loss) (23,620) 1,032 N/A Retained earnings 855,330 813,448 5.15% Total Shareholders' Equity 1,255,659 1,221,135 2.83% Total Liabilities & Shareholders' Equity $13,458,364 $13,154,871 2.31% BancorpSouth, Inc. Consolidated Condensed Statements of Income (Dollars in thousands, except per share data) (Unaudited) Quarter Ended Mar-09 Dec-08 Sep-08 Jun-08 Mar-08 INTEREST REVENUE: Loans and leases $129,209 $139,099 $144,393 $147,289 $159,184 Deposits with other banks 70 111 172 193 208 Federal funds sold and securities purchased under agreement to resell 1 3 218 - 67 Held-to-maturity securities: Taxable 13,031 13,625 14,063 15,044 15,947 Tax-exempt 2,111 2,053 1,959 2,025 2,075 Available-for-sale securities: Taxable 9,038 8,693 9,025 8,531 9,564 Tax-exempt 883 867 874 1,260 1,204 Loans held for sale 1,275 2,117 1,920 1,420 2,210 Total interest revenue 155,618 166,568 172,624 175,762 190,459 INTEREST EXPENSE: Interest bearing demand 12,248 15,924 14,214 12,938 17,257 Savings 936 1,080 1,366 1,291 1,543 Other time 25,833 28,293 33,660 39,778 46,860 Federal funds purchased and securities sold under agreement to repurchase 572 2,175 4,308 3,321 5,195 FHLB Borrowings 2,823 4,537 6,277 5,359 6,285 Other 3,330 3,238 3,197 3,232 3,249 Total interest expense 45,742 55,247 63,022 65,919 80,389 Net interest revenue 109,876 111,321 109,602 109,843 110,070 Provision for credit losses 14,945 17,822 16,306 11,237 10,811 Net interest revenue, after provision for credit losses 94,931 93,499 93,296 98,606 99,259 NONINTEREST REVENUE: Mortgage lending 7,652 (12,174) 3,270 9,507 1,543 Credit card, debit card and merchant fees 8,348 8,409 8,512 8,846 7,976 Service charges 14,085 16,915 17,687 17,093 15,839 Trust income 2,209 2,328 2,507 2,261 2,234 Security gains (losses), net 5 (6,226) 100 199 78 Insurance commissions 22,645 18,752 21,779 21,462 24,668 Other 11,349 11,446 9,578 13,898 13,893 Total noninterest revenue 66,293 39,450 63,433 73,266 66,231 NONINTEREST EXPENSES: Salaries and employee benefits 71,363 64,395 68,865 68,121 70,175 Occupancy, net of rental income 9,999 10,307 10,340 9,716 9,483 Equipment 6,222 6,319 6,214 6,245 6,433 Other 30,869 30,072 30,640 27,982 27,379 Total noninterest expenses 118,453 111,093 116,059 112,064 113,470 Income before income taxes 42,771 21,856 40,670 59,808 52,020 Income tax expense 13,294 5,060 12,325 19,683 16,875 Net income $29,477 $16,796 $28,345 $40,125 $35,145 Net income per share: Basic $0.35 $0.20 $0.34 $0.49 $0.43 Diluted $0.35 $0.20 $0.34 $0.49 $0.43 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended March 31, 2009 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,873,692 $131,339 5.39% Held-to-maturity securities: Taxable 1,146,772 13,141 4.65% Tax-exempt 182,051 3,247 7.23% Available-for-sale securities: Taxable 891,699 9,038 4.11% Tax-exempt 73,814 1,358 7.46% Short-term investments 19,123 71 1.51% Total interest earning assets and revenue 12,187,151 158,194 5.26% Other assets 1,277,538 Less: allowance for credit losses (139,811) Total $13,324,878 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $4,090,821 $12,248 1.21% Savings 697,639 936 0.54% Other time 3,419,180 25,833 3.06% Short-term borrowings 1,588,229 959 0.24% Junior subordinated debt 160,312 2,955 7.48% Long-term debt 286,306 2,811 3.98% Total interest bearing liabilities and expense 10,242,487 45,742 1.81% Demand deposits - noninterest bearing 1,700,792 Other liabilities 142,628 Total liabilities 12,085,907 Shareholders' equity 1,238,971 Total $13,324,878 Net interest revenue $112,452 Net interest margin 3.74% Net interest rate spread 3.45% Interest bearing liabilities to interest earning assets 84.04% Net interest tax equivalent adjustment $2,576 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended March 31, 2008 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,356,790 $162,267 6.97% Held-to-maturity securities: Taxable 1,406,000 15,947 4.56% Tax-exempt 191,754 3,192 6.69% Available-for-sale securities: Taxable 864,368 9,563 4.45% Tax-exempt 102,658 1,853 7.26% Short-term investments 26,189 275 4.22% Total interest earning assets and revenue 11,947,759 193,097 6.50% Other assets 1,273,866 Less: allowance for credit losses (121,101) Total $13,100,524 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,485,167 $17,257 1.99% Savings 709,403 1,543 0.88% Other time 4,291,257 46,860 4.39% Short-term borrowings 1,247,203 9,015 2.91% Junior subordinated debt 160,312 3,184 7.99% Long-term debt 249,391 2,530 4.08% Total interest bearing liabilities and expense 10,142,733 80,389 3.19% Demand deposits - noninterest bearing 1,604,515 Other liabilities 153,819 Total liabilities 11,901,067 Shareholders' equity 1,199,457 Total $13,100,524 Net interest revenue $112,708 Net interest margin 3.79% Net interest rate spread 3.31% Interest bearing liabilities to interest earning assets 84.89% Net interest tax equivalent adjustment $2,638
BancorpSouth, Inc.
CONTACT: L. Nash Allen, Jr., Treasurer and Chief Financial Officer,
+1-662-680-2330, or Gary C. Bonds, Executive Vice President and Controller,
+1-662-680-2332
Web Site: http://www.bancorpsouth.com/
