UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-10826
BancorpSouth, Inc.
(Exact name of registrant as specified in its charter)
Mississippi 64-0659571
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Mississippi Plaza, Tupelo, Mississippi 38801
(Address of principal executive offices) (Zip Code)
601/680-2000
(Registrant's telephone number, including area code)
(Former name, former address, and former fiscal year, if changed since
last year)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No ___
On March 31, 1996, the registrant had outstanding 21,008,526 shares of
common stock, par value $2.50 per share.
BANCORPSOUTH, INC.
CONTENTS
PAGE
PART I. Financial Information
ITEM 1. Financial Statements (unaudited)
Consolidated Condensed Balance Sheets
March 31, 1996, and December 31, 1995................ 3
Consolidated Condensed Statements of Income
Three Months Ended March 31, 1996 and 1995........... 4
Consolidated Condensed Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995........... 5
Notes to Consolidated Condensed Financial Statements. 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 7
PART II. Other Information
ITEM 6. Exhibits and Reports on Form 8-K .................... 11
PART I
FINANCIAL INFORMATION
BANCORPSOUTH, INC.
Consolidated Condensed Balance Sheets
(Unaudited)
(In Thousands)
March 31 December 31
1996 1995
ASSETS
Cash and due from banks $148,159 $149,923
Interest bearing deposits with other banks 13,559 15,892
Held-to-maturity securities, at amortized cost 462,069 439,303
Federal funds sold 47,050 35,450
Loans 2,421,360 2,371,684
Less: Unearned discount 77,514 76,518
Allowance for credit losses 35,438 34,636
Net loans 2,308,408 2,260,530
Available-for-sale securities 254,885 239,755
Mortgages held for sale 43,900 25,168
Premises and equipment, net 82,225 81,240
Other assets 57,977 54,767
TOTAL ASSETS $3,418,232 $3,302,028
LIABILITIES
Deposits:
Demand: Non-interest bearing $392,821 $393,417
Interest bearing 697,759 665,313
Savings 352,575 333,436
Time 1,510,285 1,471,446
Total deposits 2,953,440 2,863,612
Federal funds purchased and securities
sold under repurchase agreements 40,884 35,848
Long-term debt 82,508 73,624
Other liabilities 48,335 40,849
TOTAL LIABILITIES 3,125,167 3,013,933
SHAREHOLDERS' EQUITY
Common stock 52,792 52,764
Capital surplus 84,392 84,391
Unrealized gain on
available-for-sale securities 1,543 2,480
Retained earnings 155,372 149,494
Less cost of shares held in treasury (1,034) (1,034)
TOTAL SHAREHOLDERS' EQUITY 293,065 288,095
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,418,232 $3,302,028
<FN>
See accompanying notes to consolidated condensed financial statements.
BANCORPSOUTH, INC.
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except for per share amounts)
Three months ended
March 31
1996 1995
INTEREST REVENUE:
Interest & fees on loans $54,509 $46,787
Deposits with other banks 231 146
Interest on federal funds sold 607 395
Interest on held-to-maturity securities:
U. S. Treasury 605 977
U. S. Government agencies & corporations 5,026 6,305
Obligations of states & political subdivisions 1,763 1,877
Other 18 160
Interest and dividends on available-for-sale
securities 3,623 1,859
Interest on mortgages held for sale 432 162
Total interest revenue 66,814 58,668
INTEREST EXPENSE:
Interest on deposits 28,707 23,866
Interest on federal funds purchased & securities
sold under repurchase agreements 455 466
Other interest expense 1,396 1,276
Total interest expense 30,558 25,608
Net interest revenue 36,256 33,060
Provision for credit losses 1,444 1,298
Net interest revenue, after provision for
credit losses 34,812 31,762
OTHER REVENUE:
Mortgage lending 1,290 906
Trust income 587 465
Service charges 4,079 3,704
Security gains (losses), net 221 (15)
Life insurance income 933 746
Other 1,746 1,879
Total other revenue 8,856 7,685
OTHER EXPENSES:
Salaries and employee benefits 15,699 14,044
Occupancy, net 2,033 2,049
Equipment 2,317 1,812
Deposit insurance premiums 211 1,316
Other 9,406 8,602
Total other expenses 29,666 27,823
Income before income taxes 14,002 11,624
Income tax expense 4,553 3,719
Net income $9,449 $7,905
Net income per share $0.45 $0.38
Dividends declared per share $0.17 $0.15
<FN>
See accompanying notes to consolidated condensed financial statements.
BANCORPSOUTH, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited)
(In Thousands)
Three Months Ended
March 31
1996 1995
Net cash provided(used) by operating activities ($5,721) $12,039
Investing activities:
Proceeds from calls and maturities of
held-to-maturity securities 38,736 7,328
Proceeds from calls and maturities of
available-for-sale securities 53,378 74,872
Proceeds from sales of
available-for-sale securities 176 -
Purchases of held-to-maturity securities (61,057) (6,912)
Purchases of available-for-sale securities (69,668) (65,193)
Net increase in short-term
investments (11,600) (45,825)
Net increase in loans (48,571) (38,376)
Purchases of premises and equipment (3,642) (4,436)
Other (1,607) (4,887)
Net cash used by investing activities (103,855) (83,429)
Financing activities:
Net increase in deposits 89,828 111,708
Net increase (decrease) in short-term
borrowings and other liabilities 10,305 (28,139)
Increase (decrease) in long-term debt 8,884 (1,284)
Payment of cash dividends (3,566) (2,579)
Issuance of common stock 28 421
Purchase of stock warrants - (6)
Net cash provided by financing activities 105,479 80,121
Increase (decrease) in cash and cash
equivalents (4,097) 8,731
Cash and cash equivalents at beginning of
period 165,815 144,693
Cash and cash equivalents at end of period $161,718 $153,424
<FN>
See accompanying notes to consolidated condensed financial statements
BANCORPSOUTH, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with the accounting
policies in effect as of December 31, 1995, as set forth in the
annual consolidated financial statements of BancorpSouth, Inc.
(the "Company"), as of such date. In the opinion of management,
all adjustments necessary for a fair presentation of the
consolidated financial statements have been included. The results
of operations for the three-month period ended March 31, 1996 are
not necessarily indicative of the results to be expected for the
full year.
2. The computation of net income per share is based upon the
weighted average number of common shares outstanding (21,230,110
and 20,924,253 for the three months ended March 31, 1996 and 1995,
respectively).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion provides certain information
concerning the consolidated financial condition and results of
operations of BancorpSouth, Inc. (the "Company"), a bank and
thrift holding company and the parent of Bank of Mississippi
("BOM"), Volunteer Bank ("VOL") and Laurel Federal Savings and
Loan Association ("Laurel"). This discussion should be read in
conjunction with the unaudited consolidated condensed financial
statements for the periods ended March 31, 1996 and 1995.
RESULTS OF OPERATIONS
Net Income
The Company's net income for the first quarter of 1996 was
$9.45 million, an increase of 19.5% from $7.91 million in the
first quarter of 1995. Net income per common share for the first
quarter of 1996 was $0.45, an increase of 18.4% from $0.38 for the
same period in 1995. The annualized returns on average assets for
the first quarter of 1996 and 1995 were 1.13% and 1.05%,
respectively.
Net Interest Revenue
Net interest revenue, the difference between interest earned
on assets and the cost of interest-bearing liabilities, is the
largest component of the Company's net income. For purposes of
this discussion, all interest revenue has been adjusted to a fully
taxable equivalent basis. The primary items of concern in
managing net interest revenue are the mix and maturity balance
between interest-sensitive assets and liabilities.
Net interest revenue was $37.2 million for the three months
ended March 31, 1996, compared to $34.1 million for the same
period in 1995. Earning assets averaged $3.08 billion in the
first quarter of 1996, compared with $2.79 billion in the
respective period in 1995. Average interest-bearing liabilities
were $2.63 billion in the first quarter of 1996, compared with
$2.34 billion for the same period of 1995.
Net interest revenue, expressed as a percentage of average
earning assets, was 4.86% for the first quarter of 1996, as
compared to 4.95% for the same period of 1995. This decrease in
net interest margin is primarily due to the fact that the average
rate paid on interest-sensitive liabilities rose at a faster pace
than did the average yield earned on interest-earning assets.
Provision and Allowance for Credit Losses
The provision for credit losses charged to operating expense
is an amount which, in the judgment of management, is necessary to
maintain the allowance for credit losses at a level that is
adequate to meet the present and potential risks of losses in the
Company's current portfolio of loans. Management's judgment is
based on a variety of factors which include the Company's experi
ence related to loan balances, charge-offs and recoveries,
scrutiny of individual loans and risk factors, results of
regulatory agency reviews of loans, and present and anticipated
future economic conditions of the Company's market area. Material
estimates that are particularly susceptible to significant change
in the near term are a necessary part of this process. Future
additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review
the Company's allowance for credit losses. These agencies may
require the Company to recognize additions to the allowance based
on their judgments about information available to them at the time
of their examination.
The provision for credit losses totaled $1.44 million for the
first quarter of 1996, compared to $1.30 million for the same
period of 1995. This increase is due to the growth in the
Company's loan portfolio. The allowance for credit losses as a
percent of loans outstanding was 1.51% at the end of the first
quarter 1996 and at December 31, 1995.
Other Revenue
Other revenue for the quarter ended March 31, 1996 totaled
$8.86 million, compared to $7.69 million for the same period of
1995, a 15.2 % increase. Mortgage lending revenue of $1,290,000
was reported in the first quarter of 1996, compared to $906,000 in
the same period of 1995. Trust income and life insurance income
showed modest increases. Service charges on deposit accounts
increased 10.1%. Net security gains were $221,000 in first
quarter 1996 compared to a net loss of $15,000 in 1995.
Other Expenses
Other expenses totaled $29.67 million for the first quarter
of 1996, a 6.6 % increase over 1995's expense for the same period.
Occupancy expense showed a modest decrease for the first quarter
compared to prior year. Deposit insurance was $211,000 for the
quarter ended March 31, 1996 compared to $1,316,000 for the same
period last year. The decrease is the result of lower assessment
rates for 1996 for the Company's deposits in the Bank Insurance
Fund (BIF). The Company's deposits in the Saving Association
Insurance Fund (SAIF) will continue to experience assessments for
1996 at the same rate as 1995. Expense of $1,134,000 related to
outstanding stock appreciation rights is included in other expense
for the first quarter of 1996 compared to expense of $280,000 for
the same quarter of 1995. The components of other expenses
reflect normal increases for personnel related expenses and
general inflation in the cost of services and supplies purchased
by the Company.
Income Tax
Income tax expense was $4.55 million for the first quarter of
1996 (an effective tax rate of 32.5%) and $3.71 million for the
first quarter 1995 (an effective tax rate of 32.0%). This
increase resulted from a decrease in the relative level of the
Company's investment in assets with respect to which earnings are
afforded favorable tax treatment. The Company's taxable net
income continues to increase.
FINANCIAL CONDITION
Loans
The loan portfolios of the Company's bank and thrift
subsidiaries make up the largest single component of the Company's
earning assets. The portfolio, net of unearned discount, totaled
$2.34 billion at March 31, 1996, which represents a 2.1% increase
from $2.30 billion at December 31, 1995. Non-performing loans
were 0.53 % of all loans outstanding at March 31, 1996 compared to
0.41% at December 31, 1995.
Securities and Other Earning Assets
The securities portfolios are used to make various term
investments, to provide a source of liquidity and to serve as
collateral to secure certain types of deposits. Held-to-maturity
securities at March 31, 1996 were $462.1 million, compared with
$439.3 million at the end of 1995, a 5.2% increase. Available-for-
sale securities were $254.9 million at March 31, 1996, compared to
$239.8 million at December 31, 1995, a 6.3% increase.
Deposits
Total deposits at the end of the first quarter were $2.95
billion as compared to $2.86 billion at December 31, 1995,
representing a 3.1% increase. Deposits continue to be the
Company's primary source of funds with which to support its
earning assets.
LIQUIDITY
Liquidity is the ability of the Company to fund the need of
its borrowers, depositors and creditors. The Company's
traditional sources of liquidity include maturing loans and
investment securities, purchased federal funds and its base of
core deposits. Management believes these sources are adequate to
meet liquidity needs for normal operations.
The Company continues to pursue a lending policy stressing
adjustable rate loans, in furtherance of its strategy for matching
interest sensitive assets with an increasingly interest sensitive
liability structure.
CAPITAL RESOURCES
The Company is required to comply with the risk-based capital
requirements of the Board of Governors of the Federal Reserve
System (FRB). These requirements apply a variety of weighting
factors which vary according to the level of risk associated with
the particular assets. At March 31, 1996, the Company's Tier 1
capital and total capital, as a percentage of total risk-adjusted
assets, was 11.85% and 13.70%, respectively. Both ratios exceed
the required minimum levels for these ratios of 4.0% and 8.0%,
respectively. In addition, the Company's leverage capital ratio
(Tier 1 capital divided by total assets, less goodwill) was 8.39 %
at March 31, 1996, compared to the required minimum leverage
capital ratio of 3%.
The Company's current capital position continues to provide it
with a level of resources available for the acquisition of
depository institutions and businesses closely related to banking
in the event opportunities arise.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BancorpSouth, Inc.
(Registrant)
DATE: May 14, 1996 ____________________________________
L. Nash Allen, Jr.
Treasurer and
Chief Financial Officer