By Dennis Seid/NEMS Daily Journal
TUPELO – Calling it a “pruning process,” BancorpSouth is shuttering 23 locations in six states to improve efficiency and increase profitability.
On Tuesday, the Tupelo-based bank – the largest bank chartered in Mississippi with some $13.5 billion in assets – said the closings were the result of a nine-month internal study of its branch operations.
Officials said the announcement was not related to the company’s recent first-quarter earnings report, in which it posted a $494,000 net loss, surprising many analysts.
“We looked at our branch network and bank performance … we went into this with a blank slate and ultimately determined to close 23 locations,” said Greg Ray, senior vice president of branch administration.
The closings will begin in early August. BancorpSouth expects a pretax expense of $3 million from the move but anticipates annual savings of about $4.4 million once the process is complete.
The targeted closings represent $36 million in loans and total deposits of $239 million.
About 100 employees will be affected by the “Branch Optimization Plan.”
“All the employees will be provided with employment opportunities at other BancorpSouth offices nearby if at all possible,” said spokesman Randy Burchfield. “We’re going to do everything we can to see if we can get them taken care of.”
BancorpSouth has some 312 offices, including its mortgage and insurance operations. It has some 278 banking locations. The closings will affect only banking offices.
Both Arkansas and Mississippi will lose eight locations; the remaining branches are spread across the other four states. Louisiana and Alabama were spared any cuts.
BancorpSouth divides its footprint into 10 regions, including four in Mississippi. The “Tupelo” region – which covers roughly the top quarter of the state excluding a northwest portion that includes Southaven – has three locations targeted for closing.
Officials declined to identify the exact locations, but said management and employees of the branches had been notified Monday.
Burchfield said customers of the affected branches would be notified in the next week.
“We felt like they deserved to know about it and hear from us,” he said, explaining why a list of locations would be released publicly later.
Ray said several factors determined which locations to close.
“We looked at the demographics of each market, including population density and growth,” he said. “We looked at sales activity, growth potential, efficiency matters and profitability.”
Gordon Lewis, BancorpSouth’s vice chairman, said many of the branches are in small markets.
“Some were acquired through mergers, some are in markets with multiple banks where with the closure of one we’ll be able to retain all or most of the clients and make the other locations more profitable,” he said.
Lewis, who was at the Gulf South Bank Conference in New Orleans on Tuesday, said, “This is a pruning process. It’s not something we’ve done in general or something we expect to do again so aggressively.”
Ray said the company looked at every option before deciding to close the branches.
“We sought efficiencies before closure, and we feel like we fully exhausted our options before closing them,” he said.
BancorpSouth Chairman and CEO Patterson noted that BancorpSouth had added 39 new full-service branches in the past five years and had grown through several mergers and acquisitions.
“While 23 branch locations are designated for closure, our valued associates will continue to be available to serve their clients’ banking needs through other nearby BancorpSouth locations,” he said.
The closings must be approved by federal and state regulators.
John Allison, commissioner of the Mississippi Department of Banking and Consumer Finance, said he sees no major obstacles blocking the plan.
Contact Dennis Seid at (662) 678-1578 or firstname.lastname@example.org.