By DENNIS SEID / NEMS Daily Journal
TUPELO – BancorpSouth Inc. said Monday that a decrease in loan demand and in increase nonperforming loans led to third-quarter net income of $11.3 million, or 13 cents per share.
That’s a 47 percent decline compared to net income of $21.5 million, or 26 cents per share, for the same period a year ago.
“BancorpSouth’s financial results … continued to reflect a challenging credit environment, with weak loan demand and significant growth in nonperforming loans,” said Aubrey Patterson, chairman and CEO. “The decline in earnings … was primarily due to a $32.3 million increase in the provision for credit losses to $54.9 million compared with $22.5 million for the third quarter of 2009.”
BancorpSouth’s non-performing loans and leases for the quarter were $409.4 million, an increase of $107.1 million. The NPLs represented 4.3 percent of total net loans and leases. Fueling the rise were increases in nonperforming construction, acquisition and development loans of $65 million, commercial and real estate mortgage loans of $10.3 million and real estate secured commercial and industrial loans of $20.6 million. NPLs from all other loan types increased $11.2 million.
Slow housing markets in Alabama, Nashville and the greater Memphis markets were responsible for $47.2 million of the total increase, while Missouri contributed $30.5 million.
Total assets at at the end of the quarter were $13.6 billion, an increase of 2.3 percent compared with $13.3 billion for the year-ago quarter. Total deposits were $11.2 billion an 8.7 percent increase. Loans and leases, net of unearned income, were $9.5 billion, a 2.5 percent decline.
Other highlights of BancorpSouth’s announcement:
• Net interest revenue was $109.7 million, a decrease of 1.8 percent from the third quarter of last year and a 0.3 percent increase from $109.3 million for the second quarter of 2010.
• Net interest margin was 3.64 percent for the third quarter of 2010, compared with 3.77 percent for the third quarter of 2009 and 3.71 percent for the second quarter of 2010.
The decline in net interest margin reflected the higher average level of NPLs for the third quarter of 2010. In addition, the combination of increased deposits and weak loan demand resulted in higher levels of short-term investments with relatively low yields.
• Deposits increased by $899.8 million for the quarter compared to a year ago. Growth was comprised of increases of 12.5 percent in savings deposits, 11.2 percent in noninterest bearing demand deposits, 14 percent in interest bearing demand deposits and 1.2 percent in time deposits.
• BancorpSouth’s provision for credit losses was $54.9 million, compared to $22.5 million a year ago and $62.4 million for the second quarter of 2010. Annualized net charge-offs were 2.10 percent of average loans and leases for the percent, compared with 0.68 percent for the third quarter of 2009 and 2.08 percent for the second quarter of 2010.
• Increase mortgage lending helpd BancorpSouth’s noninterest revenue grow to $69.8 million from $62.5 million a year ago and $57.1 million from the second quarter. Mortgage origination volume was $490 million for the third quarter of 2010 and gross mortgage lending revenue was $13.5 million. For the third quarter of 2009, mortgage origination volume was $296 million and gross mortgage lending revenue was $4.7 million.
“We have accomplished a tremendous amount, both in the third quarter and throughout 2010 as we work through our credit issues,” Patterson said. “Through the process of determining current real estate valuations for collaterally dependent loans, we have charged certain loans down, or established specific reserves at levels that appropriately reflect these valuations. As a result of this progress, we believe we can continue to manage our credit issues effectively.”