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| 8-K - FORM 8-K - BANCORPSOUTH INC | d249763d8k.htm |
 BancorpSouth, Inc.
Investor Presentation
November 2011
Exhibit 99.1 |
 Certain
statements
contained
in
this
presentation
and
the
accompanying
slides
may
not
be
based
on
historical
facts
and
are
“forward-looking
statements”
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933,
as
amended,
and
Section
21E
of
the
Securities
Exchange
Act
of
1934,
as
amended.
These
forward-looking
statements
may
be
identified
by
reference
to
a
future
period
or
by
the
use
of
forward-looking
terminology,
such
as
“anticipate,”
“believe,”
“estimate,”
“expect,”
“foresee,”
“may,”
“might,”
“will,”
“intend,”
“could,”
“would”
or
“plan,”
or
future
or
conditional
verb
tenses,
and
variations
or
negatives
of
such
terms.
These
forward-
looking
statements
include,
without
limitation,
statements
about
the
Company’s
strategic
focus,
long-term
prospects
for
shareholder
value,
the
impact
of
the
prevailing
economy,
the
use
of
non-GAAP
financial
measures,
results
of
operations,
and
financial
condition.
We
caution
you
not
to
place
undue
reliance
on
the
forward-looking
statements
contained
in
this
presentation,
in
that
actual
results
could
differ
materially
from
those
indicated
in
such
forward-looking
statements
as
a
result
of
a
variety
of
factors.
These
factors
include,
but
are
not
limited
to,
conditions
in
the
financial
markets
and
economic
conditions
generally,
the
soundness
of
other
financial
institutions,
the
availability
of
capital
on
favorable
terms
if
and
when
needed,
liquidity
risk,
the
credit
risk
associated
with
real
estate
construction,
acquisition
and
development
loans,
estimates
of
costs
and
values
associated
with
real
estate
construction,
acquisition
and
development
loans
in
the
Company’s
loan
portfolio,
the
adequacy
of
the
Company’s
allowance
for
credit
losses
to
cover
actual
credit
losses,
governmental
regulation
and
supervision
of
the
Company’s
operations,
the
impact
of
recent
legislation
on
service
charges
on
core
deposit
accounts,
the
susceptibility
of
the
Company’s
business
to
local
economic
conditions,
changes
in
interest
rates,
the
impact
of
monetary
policies
and
economic
factors
on
the
Company’s
ability
to
attract
deposits
or
make
loans,
volatility
in
capital
and
credit
markets,
the
impact
of
hurricanes
or
other
adverse
weather
events,
risks
in
connection
with
completed
or
potential
acquisitions,
dilution
caused
by
the
Company’s
issuance
of
any
additional
shares
of
its
common
stock
to
raise
capital
or
acquire
other
banks,
bank
holding
companies,
financial
holding
companies
and
insurance
agencies,
restrictions
on
the
Company’s
ability
to
declare
and
pay
dividends,
the
Company’s
growth
strategy,
diversification
in
the
types
of
financial
services
the
Company
offers,
competition
with
other
financial
services
companies,
interruptions
or
breaches
in
security
of
the
Company’s
information
systems,
the
failure
of
certain
third
party
vendors
to
perform,
the
Company’s
ability
to
improve
its
internal
controls
adequately,
any
requirement
that
the
Company
write
down
goodwill
or
other
intangible
assets,
other
factors
generally
understood
to
affect
the
financial
results
of
financial
services
companies,
and
other
factors
detailed
from
time
to
time
in
the
Company’s
press
releases
and
filings
with
the
Securities
and
Exchange
Commission.
Forward-looking
statements
speak
only
as
of
the
date
they
were
made,
and,
except
as
required
by
law,
we
do
not
undertake
any
obligation
to
update
or
revise
forward-looking
statements
to
reflect
events
or
circumstances
after
the
date
of
this
presentation.
Certain
tabular
presentations
may
not
reconcile
because
of
rounding.
Unless
otherwise
noted,
any
statements
in
this
presentation
can
be
attributed
to
company
management.
Forward Looking Information
2 |
 This
presentation
contains
financial
information
determined
by
methods
other
than
those
prescribed
by
accounting
principles
generally
accepted
in
the
United
States
("GAAP').
Management
uses
these
"non-GAAP"
financial
measures
in
its
analysis
of
the
Company's
capital
and
performance.
Management
believes
that
the
ratio
of
tangible
shareholders’
equity
to
tangible
assets
is
important
to
investors
who
are
interested
in
evaluating
the
adequacy
of
the
Company's
capital
levels.
Management
believes
that
tangible
book
value
per
share
is
important
to
investors
who
are
interested
in
changes
from
period
to
period
in
book
value
per
share
exclusive
of
changes
in
tangible
assets.
Management
believes
that
pre-tax,
pre-provision
earnings
is
important
to
investors
as
it
shows
earnings
trends
without
giving
effect
to
provision
for
credit
losses.
You
should
not
view
these
disclosures
as
a
substitute
for
results
determined
in
accordance
with
GAAP,
and
they
are
not
necessarily
comparable
to
non-GAAP
measures
used
by
other
companies.
The
limitations
associated
with
these
measures
are
the
risks
that
persons
might
disagree
as
to
the
appropriateness
of
items
comprising
these
measures
and
that
different
companies
might
calculate
these
measures
differently.
Information
provided
in
the
Appendix
of
this
presentation
reconciles
these
non-GAAP
measures
with
comparable
measures
calculated
in
accordance
with
GAAP.
Non-GAAP Financial Disclaimer
3 |
 Strong core capital base
Common
equity
$1.3
billion
(no
preferred)
Tangible
shareholders’
equity
/
tangible
assets:
7.58%
Total
risk-based
capital
ratio:
12.62%
Overview of BancorpSouth, Inc.
4
Data as of September 30, 2011
Insurance ranking from Business Insurance Magazine as of December 31, 2010
$13.2 billion in assets
290 locations with reach throughout an 8-state footprint
Customer-focused business model with comprehensive line of financial products
and banking services for individuals and small to mid-size businesses
Nation’s 26
th
largest insurance agency / brokerage operation
Strong mortgage operations with production totaling $823 million
through the
first three quarters of 2011
Consistent core earnings with YTD pre-tax, pre-provision earnings of $51
million (excluding MSR impairment)
** |
 5
Regional Management Structure |
 9/30/11
6/30/11
9/30/10
Net interest revenue
$108.1
$109.9
$109.7
(1.5)
%
Provision for credit losses
25.1
32.2
54.9
(54.2)
Noninterest revenue
62.1
75.1
69.8
(11.0)
Noninterest expense
130.7
137.1
123.1
6.2
Income before income taxes
14.3
15.7
1.5
Income tax provision (benefit)
2.4
2.9
(9.8)
Net income
$11.9
$12.8
$11.3
Net income per share: diluted
$0.14
$0.15
$0.13
Three Months Ended,
Q3'11 vs.
Q3'10
September 2011 and 2010 numbers reflect $2.1 million and $2.3 million of net
securities gains, respectively. June 2011 numbers reflect $10.0 million
of net securities gains as well as a $9.8 million pre-payment penalty
related to repaying $75.0 million of FHLB borrowings. 6
Recent Operating Results
Dollars in millions, except per share data |
 $53
$55
$46
$56
$61
$48
$48
$39
$52
$55
$55
$61
$52
$45
$52
$51
$0
$10
$20
$30
$40
$50
$60
$70
12/31/09
3/31/10
6/30/10
9/30/10
12/31/10
3/31/11
6/30/11
9/30/11
Pre-tax, Pre-provision Earnings
Pre-tax, Pre-Provision Earnings (ex. MSR impairment)
7
Dollars in millions
Data for quarters ended as of dates shown
Stable and Consistent Pre-tax, Pre-provision Earnings
|
 Diversified Revenue Stream
8
Percentages based on data for the nine months ended September 30, 2011
Excludes net securities gains of $12.1 million
YTD Noninterest Revenue Composition
Insurance and mortgage businesses
provide significant sources of noninterest
revenue
Historically, over 35% of total revenue
has been derived from noninterest
sources
Insurance commissions were up 5% for
the first nine months of 2011, compared
to the first nine months of 2010
Mortgage production volume totaled
$823 million for 2011 YTD
$193.4M YTD
Mortgage
lending
4%
Card and
merchant fees
18%
Service
charges
25%
Trust income
5%
Insurance
commissions
35%
Other
13% |
 Noninterest revenue continues to be a stable and significant source of
revenue. Insurance
business
continues
to
perform
well
and
typically
makes
up
over
1/3
of
current noninterest revenue.
Noninterest Revenue
9
Dollars in millions
Excludes net securities gains and MSR Impairment
Data for quarters ended as of dates shown
$18M
$22M
$22M
$21M
$18M
$23M
$23M
$22M
$0
$20
$40
$60
$80
12/31/09
3/31/10
6/30/10
9/30/10
12/31/10
3/31/11
6/30/11
9/30/11
Insurance Commissions
Other
$63M
$62M
$66M
$72M
$66M
$66M
$69M
$72M |
 10
Balance Sheet Summary
Dollars in millions, except per share
Based on period end balances
Q3 ‘11 vs Q3 ‘10
09/30/11
06/30/11
09/30/10
% Change
Total assets
$13,199
$13,367
$13,583
(2.8)
%
Cash and equivalents
500
471
339
47.5
Securities
2,482
2,561
2,274
9.1
Loans, net of unearned income
9,056
9,215
9,515
(4.8)
Allowance for credit losses
(200)
(198)
(205)
(2.4)
Total deposits
11,063
11,308
11,197
(1.2)
Short-term borrowings
451
427
654
(31.0)
Shareholders' equity
1,267
1,247
1,236
2.5
Book value per share
15.17
14.93
14.80
2.5
Tangible book value per share
11.71
11.46
11.32
3.4 |
 Non-Interest
Bearing
20%
Interest Bearing
DDA
43%
Time
28%
Savings
9%
Core Deposit Franchise
11
Approximately 72% of total deposits are
non-time
Non-interest bearing deposits have
grown approximately 12% since
September 30, 2010
Cost of total deposits for the quarter
ended September 30, 2011 was 0.75%
Over $1.3 billion in CDs are maturing
over the next two quarters at a weighted
average rate of approximately 1.40%
As of September 30, 2011
$11.1B Total
Deposit Composition |
 Stable Net Interest Margin
12
Fiscal Year
Quarter Ended
Shown on a fully taxable equivalent basis |
 Building A Stronger Deposit Base
13
De-emphasizing commoditized deposits
Increasing multi-service household accounts
Dollars in millions
Account balances based on quarterly averages
Savings
Noninterest DDAs
Interest Bearing DDAs
CDs |
 AL & FL
Panhandle
8%
AR
14%
MS
27%
MO
6%
Greater
Memphis
6%
N.E. TN
8%
TX & LA
18%
Other
13%
Diversified Loan Portfolio
14
Net
loans
and
leases
as
of
September
30,
2011
*”Other”
includes
all
other
geographic
regions
and
lines
of
business
not
managed
by
a
geographic
region
$9.1B Portfolio
Loans By Category
Loans By Geography
*
Commercial &
Industrial
16%
Consumer Mortgages
22%
Home
Equity
6%
Agricultural
3%
C&I Owner-Occupied
15%
Construction,
Acquisition & Dev.
11%
Commercial Real
Estate
19%
Credit Cards
1%
Other
7% |
 % Change
Three Months Ended
Linked
YOY
9/30/11
6/30/11
9/30/10
Q3'11 vs. Q2'11
Q3'11 vs. Q3'10
Commercial and industrial
1,503
$
1,527
$
1,438
$
(1.6%)
4.5%
Real estate:
Consumer mortgages
1,966
1,971
1,972
(0.3%)
(0.3%)
Home equity
523
532
552
(1.7%)
(5.3%)
Agricultural
250
255
262
(2.1%)
(4.6%)
Commercial and industrial-owner occupied
1,330
1,367
1,375
(2.7%)
(3.3%)
Construction, acquisition and development
977
1,061
1,336
(7.9%)
(26.9%)
Commercial
1,772
1,765
1,811
0.4%
(2.1%)
Credit Cards
103
102
103
1.0%
0.3%
Other
632
635
665
(0.5%)
(5.0%)
Total
9,056
$
9,215
$
9,515
$
(1.7%)
(4.8%)
Loan Portfolio Growth
Increase in commercial and industrial lending
Continue to decrease exposure in the CAD portfolio
Excluding
the
impact
of
CAD
portfolio
-
total
loans
declined
1.2%
since
September
2010
15
Dollars
in
millions
Net
loans
and
leases |
 Credit Quality Continues to Improve
16
Non-performing loans decreased 4.5% from the previous quarter
48% of non-accrual loans were paying as agreed
Net charge-offs declined $9.9 million, or 30%, from the previous quarter
Both net charge-offs and NPLs have declined for two consecutive quarters
Sales of OREO properties during the quarter totaled $13.1 million,
resulting
in
no
material
net
gain/loss
At and for the three months ended September 30, 2011
“Paying as agreed”
includes
loans < 30 days past due with payments occurring at least quarterly
|
 3Q11
NPL Improvement 17
Dollars in millions
As of
9/30/11
6/30/11
Change
Non-accrual loans and leases
$314.5
$331.1
($16.6)
Loans and leases 90+ days past due, still accruing
7.3
4.0
3.3
Restructured loans and leases, still accruing
41.0
44.8
(3.8)
Total non-performing loans and leases
$362.8
$379.8
($17.0)
Allowance for credit losses to net loans and leases
2.21%
2.14%
Allowance for credit losses to non-performing loans and leases
55.04%
52.03%
Non-performing loans and leases to net loans and leases
4.01%
4.12% |
 AL & FL
Panhandle
18%
AR
8%
MS
14%
MO
14%
Greater
Memphis
16%
N.E. TN
11%
TX & LA
14%
Other
5%
NPLs By Type & Location
NPLs By Category
NPLs By Geography
As
of
September
30,
2011
NPLs
include
nonaccrual
loans,
loans
90+
days
PD
and
restructured
loans
*“Other”
includes
all
other
geographic
regions
and
lines
of
business
not
managed
by
a
geographic
region
18
* |
  Loan
Impairment Analysis 89% of non-accrual loans are impaired and are carried
at 70% of UPB As of September 30, 2011
Dollars in millions
19
Total
Unpaid principal balance of impaired loans
$342.8
Cumulative charge-offs on impaired loans
(62.9)
Allowance for impaired loans
(38.7)
Net book value of impaired loans
$241.2
Net book value / UPB
70% |
 20
Newly Identified Non-Accrual Loans
Dollars in millions
$166M
$131M
$111M
$50M
$61M
$74M
$60M
$52M
$48M
$54M
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
9/30/10
12/31/10
3/31/11
6/30/11
9/30/11
Newly Identified Non-Accrual Loans
Loans 30-89 Days PD, Still Accruing |
 $0
$100
$200
$300
$400
9/30/10
12/31/10
3/31/10
6/30/11
9/30/11
Non
-Accrual Lns Paying as Agreed
All Other Non-Accrual Lns
Non-Accrual Loans
21
Dollars in millions
48% of non-accrual loans were paying as agreed as of September 30, 2011
“Paying as Agreed”
includes
loans < 30 days past due with payments occurring at least quarterly
42%
36%
37%
47%
48% |
 Real
Estate Construction, Acquisition and Development Dollars in millions
As of September 30, 2011
22
$0
$100
$200
$300
$400
$500
Multi
-Family
Construction
1-4 Family
Construction
Recreation & All
Other Loans
Commercial
Construction
Commercial A & D
Residential A & D
Outstanding
NPLs
NPLs as a Percent of
Outstanding
Multi-Family Construction
$10
$0.0
1-4 Family Construction
181
18.5
Recreation and All Other Loans
61
0.7
Commercial Construction
141
10.2
Commercial Acquisition and Development
207
33.3
Residential Acquisition and Development
377
111.4
Real Estate Construction, Acquisition
and Development
$977
$174.0
16.1
29.6
17.8%
0.0%
10.2
1.2
7.2 |
 Residential Acquisition and Development
23
Dollars in millions
$523
$456
$420
$393
$377
$300
$375
$450
$525
$600
9/30/10
12/31/10
3/31/11
6/30/11
9/30/11 |
 Dollars in millions
24
Net Charge-offs are Improving
% Avg. Loans
$51
$51
$52
$33
$23
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
$0
$10
$20
$30
$40
$50
$60
9/30/10
12/31/10
3/31/11
6/30/11
9/30/11
Net Charge-Offs
Net Charge-offs / Average loans |
  Other
Real Estate Owned 25
As of September 30, 2011
Dollars in millions
Total
Unpaid principal balance at time of foreclosure
$288.9
Cumulative charge-offs and writedowns of OREO
(126.2)
Current book value of OREO
$162.7
Current book value / UPB
56%
OREO is carried at 56% of aggregate loan balances at time of foreclosure
|
 Strategic Focus
Preserve strong capital and position the Company for economic recovery
Relentless focus on asset quality
Pursue quality loan growth
Take advantage of market disruption
Grow core earnings through margin expansion and revenue growth
Expense control and reduction
26 |
 27
Leading Mid-South Regional Bank
Diversified Revenue Stream
Over
35%
of
the
revenue
stream
is
derived
from
noninterest
sources
High Quality Deposit Franchise with a Stable Core Deposit Base
20% NIB Deposits / Cost of total deposits of 0.75% (for the quarter ended September
30, 2011) Proven and Experienced Management Team
Positive Asset Quality Trends
4.5%
decline
in
non-performing
loans
in
the
most
recent
quarter
Both
net
charge-offs
and
NPLs
have
declined
for
two
consecutive
quarters
48%
of
nonaccrual
loans
are
paying
as
agreed
Consistent Pre-tax, Pre-Provision Earnings
Summary
At and for the three months ended September 30, 2011
**
**
** |
 Appendix |
 29
Non-GAAP Financial Reconciliation
Pre-Tax, Pre-Provision Earnings Reconciliation
Q4-09
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
(Dollars in Thousands)
Net Interest Income Before Provision --> A
$112,347
$111,882
$109,329
$109,678
$110,253
$109,437
$109,912
$108,075
Noninterest Income --> B
64,505
63,332
57,086
69,752
73,974
68,311
75,144
62,055
Noninterest Expense --> C
123,361
120,483
120,016
123,087
123,447
130,010
137,069
130,698
Pre-Tax Pre-Provision Earnings --> D=A+B-C
53,491
54,731
46,399
56,343
60,780
47,738
47,987
39,432
MSR Valuation Adjustment --> E
1,648
8
(8,323)
(4,609)
8,895
2,540
(3,839)
(11,676)
Pre-Tax Pre-Provision Earnings (Excluding MSR Adjustment) -->
F=D-E 51,843
54,723
54,722
60,952
51,885
45,198
51,826
51,108
Tangible Shareholders' Equity / Tangible Assets
As of
As of
As of
9/30/2010
6/30/2011
9/30/2011
(Dollars in Thousands)
Shareholders' Equity --> A
$1,235,705
$1,246,703
$1,266,753
Assets --> B
13,583,016
13,367,050
13,198,518
Intangibles --> C
290,670
289,546
288,723
Tangible Shareholders' Equity --> D=A-C
945,034
957,157
978,030
Tangible Assets --> E=B-C
13,292,346
13,077,504
12,909,795
Tangible Book Value Per Share
Total Equity / Total Assets (%) -- > F=A/B
9.10%
9.33%
9.60%
Tangible Common Equity / Tangible Assets (%) -- > G=D/E
7.11%
7.32%
7.58%
Common Shares Outstanding -- > H
83,482
83,489
83,489
Tangible Book Value Per Share -- > I=D/H
11.32
11.46
11.71 |