BancorpSouth, Inc. Announces Financial Results for the First
Quarter of 2004 TUPELO, Miss., April 16 /PRNewswire-FirstCall/ --
BancorpSouth, Inc. today announced that net income for the first
quarter of 2004 was $27.2 million, or $0.35 per basic and diluted
share, compared with net income of $39.1 million, or $0.51 per
basic share and $0.50 per diluted share, for the first quarter of
2003. Results for the first quarter of 2003 include the impact of
net gains from securities sales of $13.6 million ($8.4 million
after tax or $0.11 per diluted share). "While our financial results
for the first quarter of 2004 reflected the impact of low interest
rates on our investment and loan yields, they also continued to
demonstrate the strategic benefits of our ongoing initiatives to
diversify through the growth of noninterest revenues," said Aubrey
Patterson, Chairman and Chief Executive Officer of BancorpSouth.
"During the first quarter, these benefits were particularly evident
in the more-than doubling of our insurance commissions, to $14.5
million from $6.4 million for the first quarter of last year. This
increase was nearly double the $4.2 million decline in net interest
revenue after loan loss provision between the comparable quarters.
We remain confident that our conservative lending and investment
policies will serve us well as the economy continues to recover. We
expect the dual effect of increased loan demand and rising asset
yields will enhance revenue in a recovering economic environment.
We will continue to pursue our strategies for expanding market
share in our core six-state market through both our traditional
community banking business and our increasing array of noninterest
revenue products and services." Net Interest Revenue Interest
revenue for the first quarter of 2004 was $123.2 million, a 10.5
percent decrease from $137.7 million for the first quarter of 2003
and a 2.4 percent decline from $126.2 million for the fourth
quarter of 2003. Interest expense declined 16.5 percent for the
first quarter of 2004 to $39.7 million from $47.5 million for the
first quarter of 2003 and declined 1.1 percent from $40.1 million
for the fourth quarter of 2003. The average taxable equivalent
yield on earning assets fell to 5.22 percent for the first quarter
of 2004 from 6.00 percent for the first quarter of 2003 and 5.39
percent for the fourth quarter of 2003. The average rate paid on
interest bearing liabilities decreased to 1.94 percent for the
first quarter of 2004 from 2.36 percent for the first quarter of
2003 and 1.99 percent for the fourth quarter of 2003. Net interest
revenue for the first quarter of 2004 was $83.5 million, down 7.4
percent from $90.1 million for the first quarter of 2003 and down
3.0 percent from $86.1 million for the fourth quarter of 2003. Net
interest margin declined to 3.57 percent for the first quarter of
2004 from 3.97 percent for the first quarter of 2003 and 3.70
percent for the fourth quarter of 2003. "The decline in net
interest revenue for the first quarter primarily reflects the
difficulty in a low interest rate environment of reducing funding
costs enough to offset falling asset yields," Patterson added.
"Despite this challenge, we have continued a conservative stance in
the average maturity of our investment assets, which, despite
incremental short-term costs, better prepares us for a rising rate
environment. In addition, because rates paid on interest bearing
liabilities have fallen to such low levels, we are constrained in
our ability to further lower them because of the value we place on
long-term customer relationships. The impact of these decisions,
which are consistent with the conservative operating philosophies
of our organization, is reflected in the compression of our net
interest margin for the quarter." Deposit and Loan Activity Total
assets increased 2.4 percent to $10.6 billion at the end of the
first quarter of 2004 from $10.3 billion at March 31, 2003. Total
deposits rose 2.2 percent to $8.9 billion at the end of the first
quarter of 2004 from $8.7 billion at the end of the first quarter
of 2003. Total loans were $6.28 billion at March 31, 2004, down 0.3
percent from $6.31 billion at March 31, 2003. Loan growth has
continued to be impacted by the Company's decision to reduce its
exposure to indirect automobile sales financing and certain higher
risk consumer loans by allowing its portfolio of such loans to
decline. The Company's portfolio of such loans totaled $48.4
million at March 31, 2004, down from $59.2 million at December 31,
2003 and $95.7 million at March 31, 2003. Patterson said, "Although
loan activity in our markets for the first quarter of 2004 was less
than early indications suggested, we are pleased that total loans
essentially stabilized compared to the end of the first quarter of
2003 and December 31, 2003. As a result of our ongoing efforts to
manage interest rate exposure, our total savings and other time
deposits declined by 2.6% for the first quarter of 2004 when
compared to the same period of 2003. Total deposits increased as a
result of an 8.7% growth in our demand deposits, a low-cost source
of funds that we believe reflects our expanding share of our
six-state market." Provision for Credit Losses and Allowance for
Credit Losses The provision for credit losses was $4.0 million for
the first quarter of 2004, down 38.4 percent from $6.5 million for
the first quarter of 2003 and 46.3 percent from $7.5 million for
the fourth quarter of 2003. Annualized net charge-offs were 0.31
percent of average loans for the first quarter of 2004 compared
with 0.30 percent for the first quarter of 2003 and 0.38 percent
for the fourth quarter of 2003. Non-performing loans at March 31,
2004 were $39.8 million, or 0.64 percent of loans, compared with
$40.2 million, or 0.64 percent of loans, at March 31, 2003, and
$51.4 million, or 0.83 percent of loans, at December 31, 2003. The
allowance for credit losses was 1.46 percent of loans at March 31,
2004, 1.43 percent of loans at March 31, 2003 and 1.48 percent of
loans at December 31, 2003. Patterson continued, "Our first quarter
results demonstrate that strong credit quality remains a hallmark
of BancorpSouth. We were particularly pleased with the drop in
annualized charge-offs and the 22.7 percent reduction in
non-performing loans compared to the fourth quarter of 2003. As a
result of these improvements, we reduced our provision for credit
losses substantially for the first quarter of 2004 on both a
comparable and sequential quarter basis, while maintaining an
allowance for credit losses as a percentage of loans consistent
with that of prior periods." Noninterest Revenue Noninterest
revenue for the first quarter of 2004 was $46.0 million, a decrease
of 12.0 percent from $52.3 million for the first quarter of 2003
and a decrease of 4.2 percent from $48.1 million for the fourth
quarter of 2003. During the first quarter of 2004, mortgage lending
reflected a loss of $1.1 million primarily as a result of a $2.3
million non-cash charge for impairment of the Company's mortgage
servicing asset. For the first quarter of 2003, mortgage lending
produced revenue of $4.9 million that included an $815,000 reversal
of previously recorded impairment charges. The Company originated
$149.8 million in mortgage loans during the first quarter of 2004,
down from $302.4 million for the first quarter of 2003. For the
fourth consecutive year, the Company sold its accumulated inventory
of government guaranteed student loans during the first quarter,
generating a $2.4 million gain which equaled the $2.4 million gain
for such sales in the first quarter of 2003. Net gains of $618,000
on the sale of securities were recorded in the first quarter of
2004. This compares to net gains of $13.6 million in the first
quarter of 2003 as the Company sold intermediate term bonds
pursuant to its efforts to manage its interest rate risk.
BancorpSouth's insurance commissions grew 126.4 percent to $14.5
million for the first quarter of 2004 from $6.4 million for the
first quarter of 2003 and 10.4 percent from $13.1 million for the
fourth quarter of 2003. The growth compared to the first quarter of
2003 is primarily a result of the acquisition of Wright & Percy
Insurance, Baton Rouge, Louisiana, in the second quarter of 2003
and the acquisition of Ramsey, Krug, Farrell & Lensing
Insurance, Little Rock, Arkansas, in the third quarter of 2003.
"One of the primary goals of our initiatives to increase
noninterest revenue is to lessen the Company's exposure to interest
rate risk, and we believe that significant progress has been made
toward achieving that goal," remarked Patterson. "Although we
continue to expect mortgage originations to slow compared with
2003, we believe we have additional significant opportunities to
expand noninterest revenue through growth of our existing products
and services within existing markets, through acquisitions and
through geographic expansion." Noninterest Expense For the first
quarter of 2004, noninterest expense increased 11.8 percent to
$86.0 million from $76.9 million for the first quarter of 2003 and
1.4 percent from $84.8 million for the fourth quarter of 2003.
Consistent with the growth in noninterest expense for the fourth
quarter of 2003, this increase primarily reflects a 17.0 percent
increase in salaries and employee benefits principally as a result
of the acquisitions of two insurance agencies in the second and
third quarters of 2003. Capital Management BancorpSouth repurchased
588,900 shares of its common stock during the first quarter of 2004
under a stock repurchase plan authorized in April 2003 for the
repurchase of up to 3.9 million shares. A total of 1,032,408 shares
had been purchased under this plan at the end of the first quarter
of 2004. Combined with the shares repurchased earlier under
separate plans for the repurchase of 4.2 million shares and 4.1
million shares, respectively, BancorpSouth had repurchased
approximately 9.3 million shares of its common stock as of March
31, 2004, or 11.1 percent of its outstanding shares at March 5,
2001, when the first of these plans was authorized. BancorpSouth
will continue to evaluate additional share repurchases under the
April 2003 plan, which authorizes these repurchases during a
two-year period. Summary Patterson concluded, "In many respects,
BancorpSouth's first-quarter results are attributable to
disciplined decisions we made to adhere to our conservative lending
and investment philosophies. We believe these philosophies underlie
our long-term record of enhanced shareholder value, despite the
short-term costs they entail. We will continue to proactively
manage our assets and liabilities to decrease our exposure to
changing interest rates, even as we diversify our revenue streams
through the growth of noninterest revenues. As a result of
conservative operating philosophies that have built a strong,
liquid and well capitalized Company, we believe we have well
positioned BancorpSouth for success in an improving economic
environment." Conference Call BancorpSouth will conduct a
conference call with analysts at 1:30 p.m. (Central Time) on April
19, 2004. 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, those relating to interest rates, lending and
investment policies, market share, credit quality, mortgage
originations, noninterest revenue, expansion of products and
services, geographic expansion and acquisitions, common stock
repurchase plan, shareholder value, strategies to achieve
consistent long-term growth and BancorpSouth's future growth and
profitability. 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 due to a variety of factors. These
factors include, but are not limited to, changes in economic
conditions and government fiscal and monetary policies,
fluctuations in prevailing interest rates, the ability of
BancorpSouth to maintain credit quality, the ability of
BancorpSouth to effectively integrate acquisitions, changes in laws
and regulations affecting financial institutions in general,
possible adverse rulings, judgments, settlements and other outcomes
of pending litigation, 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, geographic
concentration of BancorpSouth's assets, availability of and costs
associated with obtaining adequate and timely sources of liquidity,
the ability of BancorpSouth to manage its growth and effectively
serve an expanding customer and market base, the ability of
BancorpSouth to attract, train and retain qualified personnel, the
ability of BancorpSouth to effectively market its services and
products, the ability of BancorpSouth to repurchase its common
stock on favorable terms, the ability of BancorpSouth to identify
potential acquisitions, 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 bank holding company headquartered in
Tupelo, Mississippi with approximately $10.6 billion in assets.
BancorpSouth operates approximately 250 commercial banking,
insurance, trust and broker/dealer locations in Alabama, Arkansas,
Louisiana, Mississippi, Tennessee and Texas. Selected Financial
Data Three Months Ended March 31, 2004 2003 (Dollars in thousands,
except per share amounts) Earnings Summary: Net interest revenue
$83,482 $90,144 Provision for credit losses (4,015) (6,522)
Noninterest revenue 46,040 52,309 Noninterest expense 86,006 76,916
Income before income taxes 39,501 59,015 Income tax provision
12,336 19,867 Net income $27,165 $39,148 Earning per share: Basic
$0.35 $0.51 Diluted $0.35 $0.50 Balance sheet data at March 31:
Total assets $10,582,429 $10,335,009 Total earning assets 9,792,926
9,587,753 Loans and lease receivables, net of unearned discount
6,252,956 6,263,585 Allowance for credit losses (91,327) (89,600)
Total deposits 8,881,115 8,689,351 Common shareholders' equity
882,988 820,610 Book value per share 11.41 10.61 Average balance
sheet data: Total assets $10,453,731 $10,191,544 Total earning
assets 9,674,642 9,494,684 Loans and lease receivables, net of
unearned discount 6,227,264 6,347,818 Total deposits 8,786,720
8,560,002 Common shareholders' equity 867,994 815,907
Non-performing assets at March 31: Non-accrual loans $16,410
$13,764 Loans 90+ days past due 19,392 26,458 Restructured loans
3,954 17 Other real estate owned 18,176 16,641 Net charge-offs as a
percentage of average loans (annualized) 0.31% 0.30% Performance
ratios (annualized) Return on average assets 1.05% 1.56% Return on
common equity 12.59% 19.46% Net interest margin 3.57% 3.97% Average
shares outstanding - diluted 78,123,071 77,857,362 BancorpSouth,
Inc. Consolidated Balance Sheets March 31, % 2004 2003 Change (In
thousands) Assets Cash and due from banks $329,876 $351,278 (6.09%)
Interest bearing deposits with other banks 199,820 26,305 659.63%
Held-to-maturity securities, at amortized cost 1,320,134 1,864,519
(29.20%) Available-for-sale securities, at fair market value
1,906,746 1,069,325 78.31% Federal funds sold and securities
purchased under agreement to resell 72,511 303,735 Loans 6,284,805
6,305,533 (0.33%) Less: Unearned discount (31,849) (41,948)
(24.08%) Allowance for credit losses (91,327) (89,600) 1.93% Net
loans 6,161,629 6,173,985 (0.20%) Loans held for sale 40,759 60,283
(32.39%) Premises and equipment, net 212,797 210,789 0.95% Accrued
interest receivable 66,682 70,919 (5.97%) Goodwill 59,671 32,462
83.82% Other assets 211,804 171,409 23.57% Total Assets $10,582,429
$10,335,009 2.39% Liabilities Deposits: Demand: Noninterest bearing
$1,320,812 $1,214,216 8.78% Interest bearing 2,704,473 2,489,120
8.65% Savings 788,679 819,430 (3.75%) Other time 4,067,151
4,166,585 (2.39%) Total deposits 8,881,115 8,689,351 2.21% Federal
funds purchased and securities sold under agreement to repurchase
416,222 446,932 (6.87%) Accrued interest payable 18,816 25,036
(24.84%) Junior subordinated debt securities 128,866 125,000 3.09%
Long-term debt 138,170 139,450 (0.92%) Other liabilities 116,252
88,630 31.16% Total Liabilities 9,699,441 9,514,399 1.94%
Shareholders' Equity Common stock 193,456 193,319 0.07% Capital
surplus 43,833 21,115 107.59% Accumulated other comprehensive
income 27,598 30,677 (10.04%) Retained earnings 618,101 575,499
7.40% Total Shareholders' Equity 882,988 820,610 7.60% Total
Liabilities & Shareholders' Equity $10,582,429 $10,335,009
2.39% BancorpSouth, Inc. Consolidated Statements of Income (Dollars
in thousands, except per share data) (Unaudited) Quarter Ended Mar
2004 Dec 2003 Sept 2003 INTEREST REVENUE: Loans $92,250 $94,822
$98,292 Deposits with other banks 128 96 67 Federal funds sold and
securities purchased under agreement to resell 697 772 1,295
Held-to-maturity securities: Taxable 10,112 9,831 10,258 Tax-exempt
1,796 1,860 1,941 Available-for-sale securities: Taxable 15,688
16,108 15,160 Tax-exempt 1,759 1,878 1,903 Loans held for sale 756
856 896 Total interest revenue 123,186 126,223 129,812 INTEREST
EXPENSE: Deposits 33,918 33,929 35,260 Federal funds purchased and
securities sold under agreement to repurchase 1,063 1,551 2,018
Other 4,723 4,658 4,726 Total interest expense 39,704 40,138 42,004
Net interest revenue 83,482 86,085 87,808 Provision for credit
losses 4,015 7,472 4,664 Net interest revenue, after provision for
credit losses 79,467 78,613 83,144 NONINTEREST REVENUE: Mortgage
lending (1,141) 6,441 10,323 Service charges 14,318 15,882 16,131
Life insurance premiums 562 657 760 Trust income 1,686 2,138 1,905
Security gains, net 618 40 60 Insurance commissions 14,458 13,101
11,946 Other 15,539 9,815 8,695 Total noninterest revenue 46,040
48,074 49,820 NONINTEREST EXPENSE: Salaries and employee benefits
50,036 47,633 46,449 Occupancy, net of rental income 5,956 5,853
5,932 Equipment 5,460 5,569 6,063 Telecommunications 1,838 1,874
1,915 Other 22,716 23,898 22,192 Total noninterest expenses 86,006
84,827 82,551 Income before income taxes 39,501 41,860 50,413
Income tax expense 12,336 12,990 16,539 Net income $27,165 $28,870
$33,874 Net income per share: Basic $0.35 $0.37 $0.43 Diluted $0.35
$0.37 $0.43 BancorpSouth, Inc. Consolidated Statements of Income
(Dollars in thousands, except per share data) (Unaudited) Quarter
Ended Jun 2003 Mar 2003 INTEREST REVENUE: Loans $102,369 $104,546
Deposits with other banks 100 84 Federal funds sold and securities
purchased under agreement to resell 2,215 2,307 Held-to-maturity
securities: Taxable 12,628 13,602 Tax-exempt 2,079 2,216
Available-for-sale securities: Taxable 11,031 12,127 Tax-exempt
1,995 2,094 Loans held for sale 777 706 Total interest revenue
133,194 137,682 INTEREST EXPENSE: Deposits 39,289 40,544 Federal
funds purchased and securities sold under agreement to repurchase
2,191 2,355 Other 4,645 4,639 Total interest expense 46,125 47,538
Net interest revenue 87,069 90,144 Provision for credit losses
6,472 6,522 Net interest revenue, after provision for credit losses
80,597 83,622 NONINTEREST REVENUE: Mortgage lending 1,634 4,854
Service charges 16,232 13,654 Life insurance premiums 876 961 Trust
income 1,684 1,486 Security gains, net 180 13,556 Insurance
commissions 8,314 6,387 Other 10,962 11,411 Total noninterest
revenue 39,882 52,309 NONINTEREST EXPENSE: Salaries and employee
benefits 44,974 42,754 Occupancy, net of rental income 5,609 5,580
Equipment 5,776 6,003 Telecommunications 1,828 1,860 Other 20,113
20,719 Total noninterest expenses 78,300 76,916 Income before
income taxes 42,179 59,015 Income tax expense 12,938 19,867 Net
income $29,241 $39,148 Net income per share: Basic $0.38 $0.51
Diluted $0.37 $0.50 BancorpSouth, Inc. Average Balances, Interest
Income and Expense, and Average Yields and Rates (Dollars in
thousands) (Unaudited) Quarter Ended March 31, 2004 Average Yield/
(Taxable equivalent basis) Balance Interest Rate ASSETS Loans net
of unearned income $6,314,778 $93,522 5.96% Held-to-maturity
securities: Taxable 998,854 10,113 4.07% Tax-exempt 149,264 2,762
7.44% Available-for-sale securities: Taxable 1,742,486 15,686 3.62%
Tax-exempt 165,208 2,706 6.59% Short-term investments 304,052 825
1.09% Total interest earning assets and revenue 9,674,642 125,614
5.22% Other assets 871,419 Less: allowance for credit losses
(92,330) Total $10,453,731 LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits: Demand - interest bearing $2,701,052 $5,694 0.85% Savings
784,161 1,362 0.70% Other time 4,064,639 26,861 2.66% Short-term
borrowings 411,693 1,097 1.07% Junior subordinated debt 128,866
2,626 8.19% Long-term debt 138,282 2,063 6.00% Total interest
bearing liabilities and expense 8,228,693 39,703 1.94% Demand
deposits - noninterest bearing 1,236,868 Other liabilities 120,176
Total liabilities 9,585,737 Shareholders' equity 867,994 Total
$10,453,731 Net interest revenue $85,911 Net interest margin 3.57%
Net interest rate spread 3.28% Interest bearing liabilities to
interest earning assets 85.05% Net interest tax equivalent
adjustment $2,428 BancorpSouth, Inc. Average Balances, Interest
Income and Expense, and Average Yields and Rates (Dollars in
thousands) (Unaudited) Quarter Ended March 31, 2003 Average Yield/
(Taxable equivalent basis) Balance Interest Rate ASSETS Loans net
of unearned income $6,398,632 $105,660 6.70% Held-to-maturity
securities: Taxable 1,274,105 13,602 4.33% Tax-exempt 178,998 3,409
7.72% Available-for-sale securities: Taxable 1,056,317 12,127 4.66%
Tax-exempt 201,746 3,222 6.48% Short-term investments 384,886 2,390
2.52% Total interest earning assets and revenue 9,494,684 140,410
6.00% Other assets 785,579 Less: allowance for credit losses
(88,719) Total $10,191,544 LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits: Demand - interest bearing $2,500,301 $7,134 1.16% Savings
820,832 2,159 1.07% Other time 4,132,837 31,252 3.07% Short-term
borrowings 445,811 2,364 2.15% Junior subordinated debt 125,000
2,547 8.15% Long-term debt 139,559 2,082 6.05% Total interest
bearing liabilities and expense 8,164,340 47,538 2.36% Demand
deposits - noninterest bearing 1,106,032 Other liabilities 105,265
Total liabilities 9,375,637 Shareholders' equity 815,907 Total
$10,191,544 Net interest revenue $92,872 Net interest margin 3.97%
Net interest rate spread 3.64% Interest bearing liabilities to
interest earning assets 85.99% Net interest tax equivalent
adjustment $2,728 DATASOURCE: BancorpSouth, Inc. CONTACT: L. Nash
Allen, Jr., Treasurer and Chief Financial Officer, +1-662-680-2330,
or Gary C. Bonds, Senior Vice President and Controller,
+1-662-680-2332, both of BancorpSouth, Inc. Web site:
http://www.bancorpsouth.com/
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