TUPELO, Miss., April 20, 2015 /MILITARY-TECHNOLOGIES.NET/ -- BancorpSouth, Inc. (NYSE: BXS) today announced financial results for the quarter ended March 31, 2015.
Highlights for the first quarter of 2015 included:
"We are extremely pleased to have the consent order related to BSA and AML compliance lifted," remarked Dan Rollins, Chairman and Chief Executive Officer. "The timely resolution to this matter is reflective of the diligence, effort, and effectiveness our team displayed in dealing with the issue. We are appreciative of the guidance provided by our regulators through this process and their commitment to review our program in such a timely manner."
The Company reported net income of $32.3 million, or $0.33 per diluted share, for the first quarter of 2015 compared with net income of $28.4 million, or $0.30 per diluted share, for the first quarter of 2014 and net income of $28.7 million, or $0.30 per diluted share, for the fourth quarter of 2014.
The Company reported net operating income (excluding merger related and other non-operating expenses) of $32.3 million, or $0.33 per diluted share, for the first quarter of 2015 compared to $28.8 million, or $0.30 per diluted share, for the first quarter of 2014 and $28.7 million, or $0.30 per diluted share, for the fourth quarter of 2014.
Rollins continued, "We are pleased to report quarterly results that reflect continued improvement in profitability and core operating performance. Earnings for the quarter benefited from growth in our noninterest products. Our insurance team generated $33.5 million of commission revenue, which is the largest quarterly insurance commission revenue total in our Company's history. Our mortgage team produced $311.1 million of mortgage loans for the quarter, which contributed to mortgage lending revenue of $8.6 million. Finally, our wealth management team reported total revenue of $6.2 million. The growth in each of these products is reflective of our overall strategic focus on growing all areas of our Company as well as our ability to attract quality producers. While seasonal pay-downs in certain large commercial lines of credit provided a headwind to net loan growth, we continue to be pleased with our new loan production as well as our current loan pipeline."
Earnings for the quarter benefitted from a negative provision for credit losses totaling $5.0 million. Rollins added, "Our reported credit quality metrics continue to improve. During the quarter, we also received recoveries of previously charged-off loans of $4.0 million. Our entire team has done an outstanding job in returning our Company's credit quality to a level we are all proud of."
Net Interest Revenue
Net interest revenue was $106.1 million for the first quarter of 2015, an increase of 4.5 percent from $101.5 million for the first quarter of 2014 and a decrease of 0.3 percent from $106.4 million for the fourth quarter of 2014. The fully taxable equivalent net interest margin was 3.56 percent for the first quarter of 2015 compared to 3.54 percent for the first quarter of 2014 and 3.60 percent for the fourth quarter of 2014. Yields on loans and leases declined to 4.31 percent for the first quarter of 2015 from 4.48 percent for the first quarter of 2014 and increased from 4.30 percent for the fourth quarter of 2014, while yields on total interest earning assets were 3.80 percent for the first quarter of 2015 compared with 3.85 percent for both the first quarter of 2014 and the fourth quarter of 2014. The average cost of deposits was 0.24 percent for the first quarter of 2015 compared to 0.31 percent for the first quarter of 2014 and 0.25 percent for the fourth quarter of 2014.
Asset, Deposit and Loan Activity
Total assets were $13.6 billion at March 31, 2015 compared with $13.1 billion at March 31, 2014. Loans and leases, net of unearned income, were $9.7 billion at March 31, 2015 compared with $9.1 billion at March 31, 2014.
Total deposits were $11.3 billion at March 31, 2015 compared with $10.8 billion at March 31, 2014. The decrease in time deposits of $243.8 million, or 11.1 percent, at March 31, 2015 compared to March 31, 2014 was offset by growth in other lower cost deposits. Noninterest bearing demand deposits increased $189.9 million, or 7.0 percent, over the same period. Additionally, savings deposits increased $98.5 million, or 7.6 percent, while interest bearing demand deposits increased $396.2 million, or 8.6 percent, over the same period. At March 31, 2015, $665.1 million of time deposits were scheduled to mature during the following two quarters at a weighted average rate of 0.68 percent.
Provision for Credit Losses and Allowance for Credit Losses
Earnings for the quarter reflect a negative provision for credit losses of $5.0 million, compared to no recorded provision for both the first quarter of 2014 and the fourth quarter of 2014. Total non-performing assets ("NPAs") declined $67.5 million, or 43.0 percent, to $89.4 million at March 31, 2015 compared with $156.9 million at March 31, 2014 and declined $16.4 million, or 15.5 percent, from $105.7 million at December 31, 2014.
Net charge-offs for the first quarter of 2015 were $0.8 million, compared with $3.5 million for the first quarter of 2014 and $1.5 million for the fourth quarter of 2014. Recoveries of previously charged-off loans were $4.0 million for the first quarter of 2015, compared with $4.5 million for the first quarter of 2014 and $3.3 million for the fourth quarter of 2014. Annualized net charge-offs were 0.03 percent of average loans and leases for the first quarter of 2015, compared with 0.16 percent for the first quarter of 2014 and 0.06 percent for the fourth quarter of 2014.
Non-performing loans ("NPLs") were $61.5 million, or 0.63 percent of net loans and leases, at March 31, 2015, compared with $93.3 million, or 1.03 percent of net loans and leases, at March 31, 2014, and $71.7 million, or 0.74 percent of net loans and leases, at December 31, 2014. The allowance for credit losses was $136.7 million, or 1.40 percent of net loans and leases, at March 31, 2015 compared with $149.7 million, or 1.65 percent of net loans and leases, at March 31, 2014 and $142.4 million, or 1.47 percent of net loans and leases, at December 31, 2014.
NPLs at March 31, 2015 consisted primarily of $54.4 million of nonaccrual loans, compared with $58.1 million of nonaccrual loans at December 31, 2014. Payments received on nonaccrual loans during the first quarter of 2015 totaled $18.9 million, compared with payments received on such loans of $8.5 million during the fourth quarter of 2014. NPLs at March 31, 2015 also included $1.6 million of loans 90 days or more past due and still accruing, compared with $2.8 million of such loans at December 31, 2014, and included restructured loans still accruing of $5.4 million at March 31, 2015, compared with $10.9 million of such loans at December 31, 2014. Early stage past due loans, representing loans 30-89 days past due, totaled $29.1 million at March 31, 2015 compared to $25.8 million at December 31, 2014.
Other real estate owned ("OREO") decreased $6.1 million to $27.9 million during the first quarter of 2015 from $34.0 million at December 31, 2014. This net decrease reflected $2.8 million of OREO added through foreclosure, offset by sales of OREO of $6.7 million. Write-downs in the value of existing properties were $2.2 million for the first quarter of 2015 compared to $2.4 million for the fourth quarter of 2014. Sales of OREO during the first quarter of 2015 resulted in a net gain of $0.8 million compared to a net loss of $1.6 million for the fourth quarter of 2014. At March 31, 2015, OREO was carried at 39.0 percent of the aggregate loan balances at the time of foreclosure, compared with 40.6 percent at December 31, 2014.
Noninterest Revenue
Noninterest revenue was $73.3 million for the first quarter of 2015, compared with $66.5 million for the first quarter of 2014 and $63.5 million for the fourth quarter of 2014. These results included a negative MSR valuation adjustment of $3.0 million for the first quarter of 2015 compared with a negative MSR valuation adjustment of $1.5 million for the first quarter of 2014 and a negative MSR valuation adjustment of $3.4 million for the fourth quarter of 2014. Valuation adjustments in the MSR asset are driven primarily by fluctuations in interest rates period over period.
Excluding the MSR valuation adjustments, net mortgage lending revenue was $11.6 million for the first quarter of 2015, compared with $4.9 million for the first quarter of 2014 and $6.7 million for the fourth quarter of 2014. Mortgage origination volume for the first quarter of 2015 was $311.1 million, compared with $197.1 million for the first quarter of 2014 and $256.3 million for the fourth quarter of 2014.
Credit and debit card fee revenue was $8.5 million for the first quarter of 2015, compared with $7.8 million for the first quarter of 2014 and $9.9 million for the fourth quarter of 2014. Deposit service charge revenue was $11.3 million for the first quarter of 2015, compared with $12.5 million for the first quarter of 2014 and $12.5 million for the fourth quarter of 2014. Insurance commission revenue was $33.5 million for the first quarter of 2015, compared with $31.6 million for the first quarter of 2014 and $25.4 million for the fourth quarter of 2014. Wealth management revenue was $6.2 million for the first quarter of 2015, compared with $5.9 million for the first quarter of 2014 and $5.8 million for the fourth quarter of 2014.
Noninterest Expense
Noninterest expense for the first quarter of 2015 was $136.9 million, compared with $126.7 million for the first quarter of 2014 and $130.0 million for the fourth quarter of 2014. Salaries and employee benefits expense was $81.2 million for the first quarter of 2015 compared to $78.9 million for the first quarter of 2014 and $76.8 million for the fourth quarter of 2014. The current quarter increase was driven by a number of factors, including an increase in pension expense. Total annual pension expense for 2015 is expected to be approximately $7 million higher than 2014 due to annual revisions to actuarial assumptions, including updates to the Society of Actuaries pension plan mortality tables. Foreclosed property expense was $2.0 million for the first quarter of 2015 compared with $2.6 million for the first quarter of 2014 and $4.6 million for the fourth quarter of 2014. Deposit insurance assessments were $2.3 million for the first quarter of 2015 compared to $1.6 million for the first quarter of 2014 and $2.4 million for the fourth quarter of 2014. During the first quarter of 2015, the Company incurred expense of $5.5 million to increase its litigation accrual for probable losses related to certain ongoing legal matters.
Rollins added, "We continue to evaluate the profitability and performance of each of our locations. Through location consolidations, we have reduced our full service branch count to 240 from 257 at the beginning of 2014." The Company's current location count includes 240 full service branches, including remote drive-through facilities, 6 loan production offices, 12 stand-alone mortgage offices and 26 insurance locations.
Capital Management
The Company's equity capitalization is comprised entirely of common stock. BancorpSouth's ratio of shareholders' equity to assets was 12.07 percent at March 31, 2015, compared with 11.83 percent at March 31, 2014 and 12.05 percent at December 31, 2014. The ratio of tangible shareholders' equity to tangible assets was 9.99 percent at March 31, 2015, compared with 9.69 percent at March 31, 2014 and 9.92 percent at December 31, 2014.
Estimated regulatory capital ratios at March 31, 2015 were calculated in accordance with the Basel III capital framework. BancorpSouth is a "well capitalized" financial holding company, as defined by federal regulations, with Tier 1 risk-based capital of 12.87 percent at March 31, 2015 and total risk based capital of 14.14 percent, compared with required minimum levels of 8 percent and 10 percent, respectively, for "well capitalized" classification.
Transaction Closings and Announcements
On January 8, 2014, the Company announced the signing of a definitive merger agreement with Ouachita Bancshares Corp., parent company of Ouachita Independent Bank (collectively referred to as "OIB"), headquartered in Monroe, Louisiana, pursuant to which Ouachita Bancshares Corp. will be merged with and into the Company. OIB operates 12 full-service banking offices along the I-20 corridor and has loan production offices in Madison, Mississippi and Natchitoches, Louisiana. As of March 31, 2015, OIB, on a consolidated basis, reported total assets of $653.6 million, total loans of $462.1 million and total deposits of $545.3 million. Under the terms of the definitive agreement, the Company will issue 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, subject to certain conditions and potential adjustments. The terms of the amended agreement provide for a minimum total deal value of $107.5 million but also allow Ouachita Bancshares Corp. to terminate the agreement if the average closing price of the Company's common stock declines below a certain threshold prior to closing. The merger has been unanimously approved by the Board of Directors of each company and was approved by OIB shareholders on April 8, 2014. On July 21, 2014, the Company announced the merger agreement was extended until June 30, 2015 to allow for additional time to obtain the necessary regulatory approvals and to satisfy all closing conditions, and, on February 25, 2015, the Company re-filed the merger application for the merger with Ouachita Bancshares Corp. with the appropriate regulatory agencies. The transaction is expected to close shortly after receiving all required regulatory approvals, although the Company can provide no assurance that the merger will close timely or at all.
On January 21, 2014, the Company announced the signing of a definitive merger agreement with Central Community Corporation, headquartered in Temple, Texas, pursuant to which Central Community Corporation will be merged with and into the Company. Central Community Corporation is the parent company of First State Bank Central Texas ("First State Bank"), which is headquartered in Austin, Texas. First State Bank operates 31 full-service banking offices in central Texas. As of March 31, 2015, Central Community Corporation, on a consolidated basis, reported total assets of $1.4 billion, total loans of $600.5 million and total deposits of $1.2 billion. Under the terms of the definitive agreement, the Company will issue approximately 7,250,000 shares of the Company's common stock plus $28.5 million in cash for all outstanding shares of Central Community Corporation's capital stock, subject to certain conditions and potential adjustments. The terms of the amended agreement provide for a minimum total deal value of $191.0 million but also allow Central Community Corporation to terminate the agreement if the average closing price of the Company's common stock declines below a certain threshold prior to closing. The merger has been unanimously approved by the Board of Directors of each company and was approved by Central Community Corporation shareholders on April 24, 2014. On July 21, 2014, the Company announced the merger agreement was extended until June 30, 2015 to allow for additional time to obtain the necessary regulatory approvals and to satisfy all closing conditions, and, on February 25, 2015, the Company re-filed the merger application for the merger with Central Community Corporation with the appropriate regulatory agencies. The transaction is expected to close shortly after receiving all required regulatory approvals, although the Company can provide no assurance that the merger will close timely or at all.
For additional information regarding the status of the merger with Ouachita Bancshares Corp. and the status of the merger with Central Community Corporation, please refer to the Current Report on Form 8-K that was previously filed with the Securities and Exchange Commission (the "SEC") on July 24, 2014, Part II, Item 5 of the Quarterly Report on Form 10-Q that was previously filed with the SEC on August 6, 2014, the Current Report on Form 8-K that was previously filed with the SEC on September 4, 2014, and the Annual Report on Form 10-K that was previously filed with the SEC on February 24, 2015.
On April 9, 2014, BancorpSouth Insurance Services, Inc. acquired the assets of Lafayette, Louisiana based Knox Insurance Group, LLC. Knox was formed in 1972 and currently produces annual revenues of approximately $3 million. Knox will continue to operate under current leadership in Lafayette.
Summary
Rollins concluded, "The momentum built over the last two years through the dedication and hard work of our team continues to drive the improved financial performance reflected in our first quarter results. Particularly, our efforts to enhance our sales focus as well as hiring proven producers are yielding results. We are growing the customer base in our bank and across all products. We continue to benefit from improved credit quality as well. Finally, we continue to focus on reducing operating expenses and improving efficiency. I'm excited about the position of our Company and optimistic about our ability to continue to improve profitability."
Conference Call
BancorpSouth will conduct a conference call to discuss its first quarter 2015 results on April 21, 2015, 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.
About BancorpSouth, Inc.
BancorpSouth, Inc. is a financial holding company headquartered in Tupelo, Mississippi, with $13.6 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates 284 commercial banking, mortgage, and insurance locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois.
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 terms, timing and closings of the proposed mergers with Ouachita Bancshares Corp. and Central Community Corporation, the Company's ability to operate its regulatory compliance programs consistent with federal, state and local laws, including its BSA/AML compliance program, the findings and results of the joint investigation by the Consumer Financial Protection Bureau (the "CFPB") and the United States Department of Justice ("DOJ") of the Company's fair lending practices, the acceptance by customers of Ouachita Bancshares Corp. and Central Community Corporation of the Company's products and services if the proposed mergers close, the outcome of any instituted, pending or threatened material litigation, 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, additions to OREO, credit quality, credit losses, liquidity, off-balance sheet commitments and arrangements, valuation of mortgage servicing rights, allowance and provision for credit losses, continued weakness in the economic environment, 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, calculation of economic value of equity, impaired loan charge-offs, troubled debt restructurings, diversification of the Company's revenue stream, liquidity needs and strategies, sources of funding, net interest margin, declaration and payment of dividends, cost saving initiatives, improvement in the Company's efficiencies, operating expense trends, future acquisitions and consideration to be used therefor, the impact of litigation regarding debit card fees 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, the findings and results of the CFPB and the DOJ in their review of the Company's fair lending practices, the ability of the Company, Ouachita Bancshares Corp. and Central Community Corporation to obtain regulatory approval of and close the proposed mergers, the potential impact upon the Company of the delay in the closings of these proposed mergers, 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, losses resulting from the significant amount of the Company's OREO, 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 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 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, 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, 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 SEC. 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.
Source: PrNewsWire All
BancorpSouth Announces First Quarter 2015 Financial Results