BancorpSouth Announces Third Quarter 2021 Results

PR Newswire

TUPELO, Miss., Oct. 25, 2021

TUPELO, Miss., Oct. 25, 2021 /PRNewswire/ -- BancorpSouth Bank (NYSE: BXS) (the Company) today announced financial results for the quarter ended September 30, 2021.

Highlights for the third quarter of 2021 included:

   -- Achieved quarterly net income available to common shareholders of $70.4 
      million, or $0.65 per diluted common share, and net operating income 
      available to common shareholders -- excluding MSR -- of $73.3 million, or 
      $0.68 per diluted common share. 
   -- Generated $90.1 million in pre-tax pre-provision net revenue (PPNR), or 
      1.29 percent of average assets on an annualized basis. 
   -- Generated organic total deposit and customer repo growth of $722.2 
      million for the quarter, or 12.2 percent on an annualized basis, and 
      total organic net loan growth of approximately $121.6 million, or 3.3 
      percent on an annualized basis, excluding Paycheck Protection Program 
      (PPP) activity. 
   -- Fee income businesses continue to perform at a high level as mortgage 
      origination volume totaled $788.9 million for the quarter while insurance 
      commission revenue grew over 9 percent compared to the third quarter of 
      2020. 
   -- Continued stability in credit quality metrics including net recoveries of 
      $2.1 million for the quarter; recorded negative provision for credit 
      losses of $7.0 million for the quarter. 
   -- Repurchased 1,742,474 shares of outstanding common stock at a weighted 
      average price of $28.69 per share. 
   -- Maintained strong regulatory capital metrics; estimated total risk-based 
      capital of 14.27 percent at September 30, 2021 compared to 14.50 percent 
      at June 30, 2021. 
   -- Recorded a charge of $2.4 million in accordance with Accounting Standards 
      Codification (ASC) 715 "Compensation -- Retirement Benefits" to reflect 
      the settlement accounting impact of elevated lump sum retirement payments 
      that have occurred in 2021. 
   -- Recently received shareholder and regulatory approval to complete merger 
      with Cadence Bancorporation, the parent company of Cadence Bank N.A., 
      which is expected to close effective October 29, 2021, and create an 
      approximately $48 billion institution on a pro forma basis that will be 
      the 6th largest bank headquartered in the Company's nine-state footprint. 

"Our third quarter financial results reflect many key successes despite certain continued industry headwinds, particularly related to the net interest margin dynamics," remarked Dan Rollins, Chairman and Chief Executive Officer. "While our back office and support teams have been focused on preparing for the closing and operational integration of the Cadence transaction, our customer facing teammates are continuing to generate growth. We reported deposit and customer repo growth of over $722 million for the quarter while net organic loan growth totaled approximately $122 million, which marks the second consecutive quarter of net organic loan growth. We are obviously pleased to see continued economic stability across our footprint as well as improved loan demand. We are also proud of the results reported by our fee income businesses. Our mortgage team generated $789 million in production volume for the quarter while our insurance commission revenue totaled $35.8 million, representing growth of just over nine percent compared to the third quarter of 2020."

"As we look at other highlights for the quarter, our credit quality metrics continue to remain very strong. We had a negative provision for credit losses of $7.0 million for the quarter, which was driven by net recoveries of $2.1 million for the quarter combined with stability in our other credit quality metrics. From a capital management standpoint, we were active in our share repurchase program as we repurchased approximately 1.7 million shares of common stock during the third quarter, which is the first activity in our repurchase program since prior to the pandemic. We still have approximately 4.3 million shares available for repurchase this year under our authorized repurchase plan."

Earnings Summary

The Company reported net income available to common shareholders of $70.4 million, or $0.65 per diluted common share, for the third quarter of 2021, compared with net income available to common shareholders of $71.5 million, or $0.69 per diluted common share, for the third quarter of 2020 and net income available to common shareholders of $73.2 million, or $0.69 per diluted common share, for the second quarter of 2021. The Company reported net operating income available to common shareholders -- excluding MSR -- of $73.3 million, or $0.68 per diluted common share, for the third quarter of 2021, compared with $71.2 million, or $0.69 per diluted common share, for the third quarter of 2020 and $90.6 million, or $0.86 per diluted common share, for the second quarter of 2021.

The Company reported PPNR of $90.1 million, or 1.29 percent of average assets on an annualized basis, for the third quarter of 2021 compared to $111.0 million, or 1.89 percent of average assets on an annualized basis, for the third quarter of 2020 and $119.9 million, or 1.80 percent of average assets on an annualized basis, for the second quarter of 2021.

Net Interest Revenue

Net interest revenue was $181.5 million for the third quarter of 2021, an increase of 3.2 percent from $175.9 million for the third quarter of 2020 and an increase of 0.7 percent from $180.2 million for the second quarter of 2021. The fully taxable equivalent net interest margin was 2.86 percent for the third quarter of 2021, compared with 3.31 percent for the third quarter of 2020 and 2.99 percent for the second quarter of 2021. Yields on net loans and leases were 4.46 percent for the third quarter of 2021, compared with 4.54 percent for the third quarter of 2020 and 4.43 percent for the second quarter of 2021, while yields on total interest earning assets were 3.15 percent for the third quarter of 2021, compared with 3.77 percent for the third quarter of 2020 and 3.31 percent for the second quarter of 2021.

The net interest margin, excluding accretable yield, was 2.81 percent for the third quarter of 2021, compared with 3.23 percent for the third quarter of 2020 and 2.94 percent for the second quarter of 2021, while yields on net loans and leases, excluding accretable yield, were 4.38 percent for the third quarter of 2021, compared with 4.44 percent for the third quarter of 2020 and 4.35 percent for the second quarter of 2021. Net interest income for the third quarter of 2021 included approximately $1.0 million of accelerated PPP fee income recognition resulting from the payoff of loans that were forgiven by the Small Business Administration (SBA) during the quarter. The average cost of deposits was 0.24 percent for the third quarter of 2021, compared with 0.44 percent for the third quarter of 2020 and 0.27 percent for the second quarter of 2021.

Balance Sheet Activity

Loans and leases, net of unearned income, decreased $12.8 million during the third quarter of 2021 while deposits and customer repos increased $722.2 million. Forgiveness payments were received on PPP loans during the quarter totaling approximately $135.0 million. Excluding the impact of PPP activity, total organic loan growth totaled approximately $121.6 million, or 3.3 percent annualized compared to June 30, 2021. There were no acquisitions closed during the third quarter of 2021.

Provision for Credit Losses and Allowance for Credit Losses

Earnings for the third quarter of 2021 reflect a negative provision for credit losses of $7.0 million, compared with a provision for credit losses of $16.0 million for the third quarter of 2020 and a provision for credit losses of $11.5 million for the second quarter of 2021. The negative provision for credit losses recorded during the third quarter of 2021 is primarily attributed to improvement in overall credit quality and a reduction in the level of classified loan balances. Net recoveries for the third quarter of 2021 were $2.1 million, or 0.05 percent of net loans and leases on an annualized basis, compared with net charge-offs of $1.4 million for the third quarter of 2020 and net recoveries of $1.8 million for the second quarter of 2021. The allowance for credit losses was $260.3 million, or 1.74 percent of net loans and leases, at September 30, 2021, compared with $250.6 million, or 1.64 percent of net loans and leases, at September 30, 2020, and $265.7 million, or 1.77 percent of net loans and leases, at June 30, 2021. The allowance for credit losses coverage, excluding the impact of PPP loans, was 1.74 percent of net loans and leases at September 30, 2021, compared with 1.78 percent at September 30, 2020 and 1.79 percent at June 30, 2021.

Total non-performing assets were $100.3 million, or 0.36 percent of total assets, at September 30, 2021, compared with $157.3 million, or 0.67 percent of total assets, at September 30, 2020, and $101.8 million, or 0.37 percent of total assets, at June 30, 2021. Other real estate owned was $16.5 million at September 30, 2021, compared with $6.4 million at September 30, 2020 and $17.3 million at June 30, 2021.

Noninterest Revenue

Noninterest revenue was $84.4 million for the third quarter of 2021, compared with $89.9 million for the third quarter of 2020 and $101.9 million for the second quarter of 2021. These results include a positive mortgage servicing rights (MSR) valuation adjustment of $2.0 million for the third quarter of 2021, compared with a positive MSR valuation adjustment of $0.4 million for the third quarter of 2020 and a negative MSR valuation adjustment of $1.9 million for the second quarter of 2021. Valuation adjustments in the MSR asset are driven primarily by fluctuations in interest rates period over period.