BancorpSouth, which has rapidly expanded its growth into key markets in Texas and Florida in 2019, reported Monday (Oct. 21) that third quarter earnings were slightly down from a year ago due to merger-related expenses and mortgage service rights (MSR) evaluations.
For the period ended Sept. 30, the Tupelo, Miss.-based regional banking group reported quarterly net income of $63.8 million, or 63 cents per share, down 4.3% when compared to third quarter net income of $66.7 million, or 67 cents per share, a year ago. Revenues for the regional banking group were $242 million, up 13.2% from $213.7 million a year ago.
Excluding one-time charges, BancorpSouth reported record net operating income of $69.7 million on 69 cents per share, a 23% spike from a year ago. Wall Street had expected BancorpSouth to report first quarter earnings of 61 cents per share on revenues of $239.3 million, according to Thomson Reuters.
“Our third quarter results reflect yet another quarter of record financial performance,” said BancorpSouth Chairman and CEO Dan Rollins. “We are pleased to report record net operating income – excluding MSR – of $69.7 million, or 69 cents per diluted share, for the third quarter. This success was driven by our ability to maintain a relatively stable net interest margin in a challenging rate environment while our credit quality metrics remain strong.”
In late September, the bank signed a definitive merger agreement with Texas First Bancshares Inc., expanding the Tupelo, Miss.-based regional banking group’s presence in growing rural and urban markets in central Texas. Today, Texas First operates six full-service banking offices in the Waco, Texas and Killeen-Temple, Texas metropolitan statistical areas.
During the third quarter, BancorpSouth also completed the acquisitions of Van Alstyne (Texas) Financial Corporation and Panama City, Fla.-based Summit Financial Enterprises Inc. on Sept. 1, and recorded merger-related expenses of $4.1 million for quarter. At the end of the second quarter, Summit Bank and Van Alstyne Financial, operating under the Texas Star name, collectively reported total assets of $905.6 million, total loans of $610.7 million and total deposits of $799.8 million.
BancorpSouth officials said the Summit deal will expand BancorpSouth’s presence in the Florida Panhandle area, where it now has one full-service banking office in Miramar Beach and one mortgage loan production office in Crestview. Texas Star, which was founded in 1890 in Van Alstyne, operates eight locations across Collin and Grayson counties in Texas, and one loan production office in Durant, Okla.
“We are pleased to have recently completed our mergers with Summit Bank and Texas Star Bank,” said Rollins. “Andy Stein, Frank Hall, and the Summit team will provide us with a more meaningful presence in the Florida Panhandle while Randle Jones and the Texas Star team will enhance our market share in the Dallas MSA and surrounding markets. We anticipate completing the operational integration of these banks during the fourth quarter of this year.”
Other third quarter highlights included:
- Net interest revenue was $166.6 million for the third quarter of 2019, an increase of 17.2% from $142.1 million for the third quarter of 2018 and an increase of 4.1% from $160.0 million for the second quarter of 2019.
- Loans and leases, net of unearned income, increased $462.3 million during the third quarter of 2019. This includes loans totaling $610.2 million acquired as a part of the Summit and Texas Star mergers on Sept. 1. Excluding acquired loans, total loans decreased approximately $105 million during the third quarter.
- Deposits increased $889.1 million during the third quarter of 2019. This includes deposits totaling $794.2 million acquired as a part of the Summit and Texas Star mergers on Labor Day weekend. Excluding acquired deposits, total deposits increased approximately $94.9 million during the quarter. Deposits have increased $1.96 billion since Dec. 31, 2018, bank officials said.
- Mortgage production and servicing revenue was $11.3 million for the third quarter of 2019, compared with $5 million for the third quarter of 2018 and $9.2 million for the second quarter of 2019. Mortgage origination volume for the third quarter of 2019 was $536.1 million, compared with $384.8 million for the third quarter of 2018.
- BancorpSouth’s ratio of shareholders’ equity to assets was 12.54% in the third quarter, compared with 12.27% a year ago. The ratio of tangible shareholders’ equity to tangible assets was 8.47% for the three-month period, compared with 8.96% in the third quarter of 2018.
During the third quarter of 2019, the Mississippi banking group repurchased 561,260 shares of its outstanding common stock at a weighted average price of $27.04 per share under the bank’s stock buyback program. At the end of the third quarter, BancorpSouth had 826,919 remaining shares available for repurchase under its current share repurchase authorization, which expires at the end of 2019.
At the close of business Monday, BancorpSouth stock closed up 22 cents at $29.68 per share on the New York Stock Exchange. The Mississippi bank group’s shares have traded in the range of $24.31 as a low and $33.45 as a high over the past 52 weeks.