TUPELO – BancorpSouth beat analysts estimates by a penny in the first quarter, as it earned $20.8 million, or 22 cents a share. However, it was a 9 percent drop from last year’s first-quarter earnings of $22.9 million, or 25 cents a share.
Analysts’ had expected earnings for the Tupelo-based bank of 21 cents a share for the quarter ending March 31.
Margin compression affected BancorpSouth’s earnings, as net interest margin – the difference between the interest income generated from loans and the amount of interest if pays – declined. The bank’s net interest margin for the quarter was 3.37 percent, compared to 3.66 percent a year ago and 3.44 percent for the fourth quarter.
Net interest revenue was $98.1 million, a decrease of 7.1 percent from $105.6 million for the year-ago quarter.
“Loan growth is clearly the key to addressing the declining margin,” said BancorpSouth CEO Dan Rollins. “At the end of the first quarter, we had almost $1 billion of liquidity in our overnight position earning 25 basis points. We are undertaking necessary measures to ensure that our team is focused on converting this liquidity into loans that meet our policies.”
BancorpSouth generated first-quarter mortgage volume of $425.9 million and mortgage sales of $445.9 million, contributing to mortgage lending revenue of $12.3 million for the quarter.
Credit and debit card fee revenue was $7.5 million for the quarter was unchanged from a year ago, but dropped from the $8.1 million posted in the fourth quarter. Service charge revenue was $12.8 million for the first quarter, down from $15.1 million a year ago. Insurance commission revenue rose 15.1 percent to $26.6 million.
“Results for the first quarter reflect solid performance from our noninterest lines of business, particularly mortgage and insurance,” Rollins said.
The bank said its earnings also were affected by a $6.8 million increase in its litigation reserve “related to various legal matters.”
“Our first quarter results reflect continued progress towards improving profitability,” Rollins noted. “Excluding the $6.8 million increase in the litigation reserve, this quarter is the most profitable quarter that the company has had in over three years.”
BancorpSouth’s provision for credit losses dropped to $4 million, versus $10 million for the first quarter of 2012. Non-performing loans in this year’s first quarter declined $78.2 million, or 27.4 percent, to $207 million. That compares to NPLs of $285.2 million a year ago.
NPLs were 2.41 percent of net loans and leases. compared 3.26 percent of net loans and leases from 2012 The allowance for credit losses was $162.6 million, or 1.89 percent of net loans and leases compared to $181.8 million, or 2.08 percent of net loans and leases a year earlier.
Net charge-offs declined to $5.9 million for the first quarter, versus $23.3 million for the year-ago period.
Total assets were $13.39 billion, up slightly $13.31 billion. Total deposits were $11.16 billion, an increase of 0.75 percent.
Shares of BancorpSouth (NYSE: BXS) closed at $15.07, up 15 cents on Monday. The company announced its earnings report after the markets closed.
NEMS Daily Journal