By NEMS Daily Journal
TUPELO – After a review that delayed the reporting of its annual report, BancorpSouth announced Monday that it had posted a loss in the fourth quarter and lowered net income for 2009.
Preliminary results were announced on Jan. 21, but last month, BancorpSouth said that a review of certain asset qualities, including the allowance for credit losses, would likely lower earnings.
Indeed, net income for the year was lowered by $21.6 million, to $82.7 million, or 99 cents per share. That figure includes a loss of $2.1 million, or 3 cents per share, for the fourth quarter.
In January, BancorpSouth reported net income of $104.3 million, or $1.25 per share, for the year and $19.4 million, or 23 cents a share, for the fourth quarter.
During the review, the company increased the provision for credit losses by $27.6 million. It also added $4.5 million in foreclosed property expense, took on a $2.3 million expense related to a specific litigation issue and had a reversal of interest income of $606,000 related to loans place on non-accrual.
However, company Chairman and CEO Aubrey Patterson said the revisions helped strengthen BancorpSouth.
“Essentially, the adjustments were made to build stronger reserves for potential credit losses,” he said. “We’re building a bulwark for losses that may occur in the future.
“So with the increases to the provision, we built up our reserves, we strengthened the balance sheet … and when you’re a $13 billion financial institution, we essentially broke even in the fourth quarter. And we even made nearly $83 million for the year, something most larger regional banks our size had a hard time doing.”
Net interest margin for the year was 3.77 percent. Patterson noted the 3.81 percent net interest margin in the fourth quarter was the highest in six quarters and well above the 3.18 percent average margin of its banking peers.
Non-performing assets were 1.87 percent on Dec. 31, less than half of the 4.04 percent of BancorpSouth’s peers.
“To ensure an even stronger focus on credit quality in this difficult economic environment, the company is currently taking steps to establish a centralized real estate risk management group which will add strength and direction to improved procedures for real estate appraisal processes, early identification and impairment of troubled credits, and generally tightened controls on all aspects of administration of this portfolio,” Patterson said.
“As a result of our review, the allowance for credit losses was a 2.4 multiple of 2009 net charge-offs and 94 percent of non-performing loans at year end. I am confident that these enhanced reserves place the company’s balance sheet in an extremely strong position.”
Shares of BancorpSouth rose 38 cents, or nearly 2 percent, to $19.98 on Monday.