BancorpSouth, Inc. Reports Third Quarter Earnings And Results of Its Merger with First United Bancshares
PRNewswire
TUPELO, Miss.

BancorpSouth, Inc. announced today that third quarter 2000 earnings, excluding merger related and other special charges, were $21.1 million or $.25 per diluted share. When the impact of charges relating to its merger with First United Bancshares, Inc. (First United) on August 31, 2000 and other special charges are included, net income for the quarter totaled $9.5 million or $.11 per diluted share. As a result of the merger with First United, all prior period financial information has been restated to reflect pooling of interests accounting.

On September 30, total assets were $9,301,602, a 12.7% increase over the previous year. Net loans and leases were $5,844,464, up 10.5% over the previous year. Total deposits of $7,388,072 reflected a 7.6% increase.

The charges relating to the merger with First United were $5.6 million, net of tax. Other special charges totaled $4.8 million, net of tax. Other special charges includes a $6.1 million pre-tax, $3.8 million after tax, provision for credit losses to bring the loan portfolio of First United in line with BancorpSouth's credit policy.

Spread compression and increased operating expenses reduced earnings for the quarter by $2.9 million, net of tax or $.03 per diluted share, as compared to the second quarter of 2000. Increased competition for customer deposits further compressed net interest margins in the third quarter, with a resulting net interest margin for the third quarter of 3.98%, compared with 4.28% for the comparable quarter ended September 30, 1999.

Earnings for the nine months ended September 30, 2000, excluding merger- related and other special charges, were $73.7 million or $.86 per diluted share. Earnings as compared to the comparable period of 1999 were down $2.5 million or $.02 per diluted share, or 3.3%, respectively.

BancorpSouth initially announced with the merger the planned restructuring of First United's investment portfolio, and a projected improvement in yields related to the restructured assets of 60 basis points. The expected restructuring charges related thereto were estimated to be approximately $30 million pre-tax. During the third quarter, BancorpSouth significantly increased its short-term borrowings from the Federal Home Loan Bank for the purpose of acquiring short and intermediate term U. S. Treasury and U. S. Government Agency investment securities with yields in excess of the securities held as available for sale by First United. The First United securities are expected to be sold in the fourth quarter of 2000 with a yield enhancement expected to be in excess of 70 basis points, based on current market conditions. The restructuring charges will be included in results for the fourth quarter as merger related charges, and based on transactions completed this month, the estimated restructuring charges will be significantly less than the original $30 million estimated. For the full year 2001, such restructuring should improve interest income approximately $4.3 million before tax, or $.04 per share after tax.

Average total loans and leases outstanding grew 11.5% year to date versus the comparable period last year, and average deposits grew 6.6% for the same comparable periods.

Net charge offs were .70% of average loans in the third quarter of 2000 compared to .34% in the second quarter of 2000, again reflecting the steps to align First United's loan portfolio risks with that of BancorpSouth.

"While our results for the quarter obviously reflected some non-recurring events, solid progress is being made to assimilate First United into BancorpSouth operating systems and policies. Efficiencies expected from the consolidation of 'back room' support operations are expected to be realized beginning at the end of the second quarter 2001, with full efficiencies effected by year end 2001," said Aubrey Patterson, CEO. "Our merger strategy first and foremost focuses on our customers' best interests. The company's integration plan calls for conservative savings tied to an orderly conversion process. Our commitment is to provide a 'seamless' transition for First United's customers into the BancorpSouth family," Patterson added.

This news release discusses BancorpSouth's business outlook and may include certain forward-looking statements. The forward-looking statements and all other statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially from those discussed. The key factors and assumptions that support the forward- looking statements, as well as information on the risk factors that could cause actual results to differ, are available from the company's Securities and Exchange Commission filings.

  Selected Financial Data

                             Three Months Ended         Nine Months Ended
                               September 30,               September 30,
                            2000          1999         2000          1999
                           (Dollars in thousands except per share amounts)

  Earnings summary (excluding merger-related costs and other special items):

   Net interest revenue  $80,567       $79,405     $244,353      $233,433
   Provision for
    credit losses          4,549         4,698       14,562        12,643
   Noninterest revenue    23,567        23,419       75,526        76,222
   Noninterest expense    66,722        59,224      193,452       186,676
   Income before income
    taxes                 32,863        38,902      111,865       110,336
   Income tax provision   11,778        12,730       37,236        34,344
   Net income            $21,085       $26,172      $74,629       $75,992
   Earnings per share:
    Basic                  $0.25         $0.31        $0.88         $0.89
    Diluted                $0.25         $0.30        $0.88         $0.88

  Earnings summary (as reported):
   Net interest revenue  $80,567       $79,405     $244,353      $233,433
   Provision for credit
    losses                10,656         4,698       20,669        12,643
   Noninterest revenue    23,567        23,419       75,526        76,222
   Noninterest expense    76,607        59,224      204,561       186,676
   Income before income
    taxes                 16,871        38,902       94,649       110,336
   Income tax provision    7,379        12,730       32,528        34,344
   Net income             $9,492       $26,172      $62,121       $75,992
   Earnings per share:
    Basic                  $0.11         $0.31        $0.73         $0.89
    Diluted                $0.11         $0.30        $0.73         $0.88


  Balance sheet data at September 30:
   Total assets                                  $9,301,602    $8,250,821
   Total earning assets                           8,719,705     7,717,232
   Loans and lease receivables,
   net of unearned discount                       5,922,564     5,361,142
   Allowance for credit losses                       78,100        72,846
   Total deposits                                 7,388,072     6,864,920
   Common shareholders' equity                      766,827       747,319
   Book value per share                                9.12          8.73

  Average balance sheet data:
   Total assets       $8,919,186    $8,155,161   $8,653,681    $8,018,485
   Total earning
    assets             8,351,228     7,627,189    8,090,791     7,500,348
   Loans and lease
    receivables, net
    of unearned
    discount           5,889,151     5,316,348    5,749,850     5,159,069
   Total deposits      7,311,159     6,788,270    7,215,438     6,765,918
   Common shareholders'
    equity               762,114       738,522      758,044       732,329

  Non-performing assets at September 30:
  Non-accrual loans                                 $21,171       $16,779
  Loans 90+ days past due                            18,318        14,254
  Restructured loans                                    913         1,133
  Other real estate owned                             6,452        10,134

  Net charge-off as a
   percentage of
   average loans
   (annualized)            0.70%         0.34%        0.39%         0.21%

  Performance ratios
   (annualized)
   (excluding merger-
    related costs
    and other special
    items):
   Return on average
    assets                 0.95%         1.28%        1.15%         1.26%
   Return on common
    equity                11.07%        14.16%       13.13%        13.83%

  Performance ratios
   (annualized)
   (as reported):
   Return on average
    assets                 0.43%         1.28%        0.96%         1.26%
   Return on common
    equity                 4.98%        14.16%       10.93%        13.83%

   Net interest margin     3.98%         4.28%        4.18%         4.32%

   Average shares
    outstanding-
    diluted           84,398,124    86,022,885   84,994,688    86,015,661




                            BancorpSouth, Inc.
                    Consolidated Statements of Income
              (amounts in thousands, except per share data)
                               (Unaudited)

                                       Quarter Ended
                 Sep-00       Jun-00       Mar-00       Dec-99      Sep-99
  Interest Revenue:
  Loans, including
   fees       $ 134,910    $ 129,030    $ 124,360    $ 123,471   $ 116,398
  Held-to-
   maturity
   securities:   15,899       15,307       15,408       14,176      13,822
  Available-for-
   sale
   securities    21,554       17,696       17,155       18,134      18,354
  Short term
   investments      962        1,553        1,805        2,210       1,014
  Total interest
   revenue      173,325      163,586      158,729      157,991     149,589
  Interest Expense:
  Deposits       81,031       74,088       70,536       68,036      63,249
  Short term
   borrowings     9,058        4,416        4,274        4,183       3,960
  Long term
   borrowings     2,559        2,442        2,397        2,498       2,683
  Other interest
   expense          110          182          193          187         292
  Total interest
   expense       92,757       81,128       77,400       74,904      70,184
  Net interest
   revenue       80,568       82,458       81,328       83,087      79,405
  Provision for
   credit losses 10,656        5,398        4,615        5,169       4,698
  Net interest
   revenue, after
   credit loss
   provision     69,912       77,060       76,713       77,918      74,707
  Other Revenue:
  Mortgage
   lending        2,493        3,059        3,422        3,466       3,727
  Service
   charges       13,125       13,146       12,037       12,677      12,099
  Life insurance
   premiums       1,107        1,058        1,020        1,015       1,016
  Trust income    1,794        1,637        1,644        1,793       1,602
  Securities
   gains, net     (254)           (7)         177           83         117
  Insurance
   commissions    3,717        3,972        3,499        3,281       3,293
  Other           1,584        2,421        4,874        1,784       1,564
    Total other
     revenue     23,567       25,286       26,674       24,099      23,419
  Other Expense:
  Salaries and
   employee
   benefits      34,070       32,008       33,933       33,068      30,234
  Occupancy net
   of rental
   income         4,647        4,409        4,449        4,543       4,317
  Equipment       6,124        5,506        5,544        5,479       5,467
  Telecommunic-
   ations         1,868        1,751        1,574        2,019       1,573
  Other          29,900       20,161       18,619       20,098      17,634
    Total other
   expense       76,607       63,835       64,120       65,206      59,224
    Income before
     income
     taxes       16,871       38,511       39,267       36,811      38,902
  Income tax
   expense        7,379       12,527       12,622       10,392      12,729
    Net Income  $ 9,492     $ 25,984     $ 26,645     $ 26,419    $ 26,172
  Net Income
   Per Share:
    Basic         $0.11        $0.31        $0.31        $0.31       $0.31
    Diluted       $0.11        $0.31        $0.31        $0.31       $0.30



                              BancorpSouth, Inc.
                      Consolidated Statements of Income
                (amounts in thousands, except per share data)
                                 (Unaudited)

                                                          Year To Date
                                                    Sep-00         Sep-99
  Interest Revenue:
  Loans, including fees                          $ 388,299      $ 338,468
  Held-to-maturity securities:                      46,615         39,828
  Available-for-sale securities                     56,405         54,456
  Short term investments                             4,320          5,931
    Total interest revenue                         495,640        438,683
  Interest Expense:
  Deposits                                         225,656        188,719
  Short term borrowings                             17,748          7,335
  Long term borrowings                               7,398          8,118
  Other interest expense                               485          1,078
    Total interest expense                         251,286        205,250
    Net interest revenue                           244,353        233,433
  Provision for credit losses                       20,669         12,643
    Net interest revenue, after credit
     loss provision                                223,684        220,790
  Other Revenue:
  Mortgage lending                                   8,973         14,823
  Service charges                                   38,309         34,479
  Life insurance premiums                            3,184          2,960
  Trust income                                       5,075          4,607
  Securities gains, net                                (83)         4,337
  Insurance commissions                             11,189         10,293
  Other                                              8,879          4,724
    Total other revenue                             75,526         76,222
  Other Expense:
  Salaries and employee benefits                   100,011         91,682
  Occupancy net of rental income                    13,504         12,375
  Equipment                                         17,174         16,132
  Telecommunications                                 5,193          5,077
  Other                                             68,680         61,410
    Total other expense                            204,562        186,676
    Income before income taxes                      94,649        110,336
  Income tax expense                                32,528         34,344
  Net Income                                      $ 62,121       $ 75,992
  Net Income Per Share: Basic                        $0.73          $0.89
                        Diluted                      $0.73          $0.88



  BancorpSouth, Inc.
  Average Balances, Interest Income and Expense,
  and Average Yields and Rates
  (dollars in thousands)
  Unaudited

                                            Quarter Ended
                                         September 30, 2000
                                  Average                        Yield/
  (Taxable equivalent basis)      Balance        Interest          Rate
  ASSETS
  Loans net of Unearned Income $5,888,736        $135,311         9.14%
  Held-to-maturity securities:
    Taxable                       759,985          11,951         6.32%
    Non Taxable                   325,687           6,074         7.46%
  Available-for-sale securities
    Taxable                     1,242,467          20,542         6.65%
    Non Taxable                    75,530           1,556         8.24%
  Short term investments           58,408             962         6.62%
   Total interest earning
    assets and revenue          8,350,813         176,396         8.50%
  Other assets                    645,252
  Less: allowance for credit
   losses                         (76,879)
  Total                        $8,919,186

  LIABILITIES AND
  SHAREHOLDERS' EQUITY
  Deposits:
   Demand - interest bearing   $1,659,533         $13,842         3.35%
   Savings                        877,041           9,956         4.57%
   Time                         3,801,938          57,233         6.05%
  Short-term borrowings           579,725           9,168         6.36%
  Long-term debt                  169,573           2,559         6.07%
   Total interest bearing
    liabilities and expense     7,087,810          92,758         5.26%
  Demand deposits -
   non-interest bearing           972,647
  Other liabilities                96,615
   Total liabilities            8,157,072
  Shareholders' equity            762,114
   Total                       $8,919,186
  Net interest revenue                            $83,638
  Net interest margin                                             3.98%
  Net interest rate spread                                        3.23%
  Interest bearing liabilities to
   interest earning assets                                        84.9%

  Net interest tax equivalent
   adjustment                                      $3,070


                                            Quarter Ended
                                            June 30, 2000
                                  Average                        Yield/
  (Taxable equivalent basis)      Balance        Interest          Rate
  ASSETS
  Loans net of Unearned Income $5,750,197        $129,411         9.05%
  Held-to-maturity securities:
   Taxable                        751,572          11,446         6.13%
   Non Taxable                    324,755           5,941         7.32%
  Available-for-sale securities
   Taxable                        997,624          16,723         6.74%
   Non Taxable                     76,029           1,498         7.88%
  Short term investments           99,355           1,553         6.29%
   Total interest earning
    assets and revenue          7,999,532         166,572         8.37%
  Other assets                    636,386
  Less: allowance for credit
   losses                         (76,545)
    Total                      $8,559,373

  LIABILITIES AND
  SHAREHOLDERS' EQUITY
  Deposits:
   Demand - interest bearing   $1,707,641         $13,758         3.24%
   Savings                        826,070           8,206         4.00%
   Time                         3,708,808          52,124         5.65%
  Short-term borrowings           328,870           4,598         5.62%
  Long-term debt                  165,584           2,442         5.93%
    Total interest bearing
     liabilities and expense    6,736,973          81,128         4.84%
  Demand deposits -
   non-interest bearing           965,742
  Other liabilities                99,701
   Total liabilities            7,802,416
  Shareholders' equity            756,957
   Total                       $8,559,373
  Net interest revenue                            $85,444
  Net interest margin                                             4.30%
  Net interest rate spread                                        3.53%
  Interest bearing liabilities to
   interest earning assets                                        84.2%

  Net interest tax equivalent
   adjustment                  $2,986


                                       Quarter Ended
                                         March 31, 2000
                                  Average                        Yield/
  (Taxable equivalent basis)      Balance        Interest          Rate
  ASSETS
  Loans net of Unearned Income $5,608,277        $124,713         8.94%
  Held-to-maturity securities:
    Taxable                       780,049          11,575         5.97%
    Non Taxable                   321,956           5,898         7.33%
  Available-for-sale securities
    Taxable                     1,008,227          16,142         6.44%
    Non Taxable                    74,507           1,559         8.37%
  Short term investments          126,159           1,805         5.75%
    Total interest earning
     assets and revenue         7,919,175         161,692         8.21%
  Other assets                    635,476
  Less: allowance for
   credit losses                  (75,085)
     Total                     $8,479,566

  LIABILITIES AND
  SHAREHOLDERS' EQUITY
  Deposits:
    Demand - interest bearing  $1,654,789         $12,666         3.08%
    Savings                       890,646           8,897         4.02%
    Time                        3,635,417          48,973         5.42%
  Short-term borrowings           338,072           4,467         5.31%
  Long-term debt                  165,802           2,397         5.81%
    Total interest bearing
     liabilities and expense    6,684,726          77,400         4.66%
  Demand deposits -
   non-interest bearing           944,990
  Other liabilities                94,835
    Total liabilities           7,724,551
  Shareholders' equity            755,015
    Total                     $ 8,479,566
  Net interest revenue                            $84,292
  Net interest margin                                             4.28%
  Net interest rate spread                                        3.56%
  Interest bearing liabilities to
   interest earning assets                                        84.4%

  Net interest tax
   equivalent adjustment                           $2,964


                                          Quarter Ended
                                         December 31, 1999
                                  Average                        Yield/
  (Taxable equivalent basis)      Balance        Interest          Rate
  ASSETS
  Loans net of Unearned Income $5,486,654       $ 123,807         8.95%
  Held-to-maturity securities:
    Taxable                       703,117          10,225         5.85%
    Non Taxable                   319,592           6,079         7.61%
  Available-for-sale securities
    Taxable                     1,077,241          17,055         6.37%
    Non Taxable                    81,090           1,660         8.19%
  Short term investments          141,319           2,210         6.29%
   Total interest earning
    assets and revenue          7,809,013         161,036         8.29%
  Other assets                    634,938
  Less: allowance for
   credit losses                 (73,571)
     Total                     $8,370,380

  LIABILITIES AND
  SHAREHOLDERS' EQUITY
  Deposits:
    Demand - interest bearing  $1,588,385         $11,903         3.01%
    Savings                       953,683           9,265         3.91%
    Time                        3,494,453          46,868         5.39%
  Short-term borrowings           350,969           4,370         5.01%
  Long-term debt                  176,937           2,498         5.68%
    Total interest bearing
     liabilities and expense    6,564,427          74,904         4.59%
  Demand deposits -
   non-interest bearing           946,827
  Other liabilities               106,096
     Total liabilities          7,617,350
  Shareholders' equity            753,030
    Total                      $8,370,380
  Net interest revenue                            $86,132
  Net interest margin                                             4.38%
  Net interest rate spread                                        3.70%
  Interest bearing liabilities to
   interest earning assets                                        84.1%
  Net interest tax
   equivalent adjustment                           $3,045


                                           Quarter Ended
                                         September 30, 1999
                                  Average                        Yield/
  (Taxable equivalent basis)      Balance        Interest          Rate
  ASSETS
  Loans net of Unearned Income $5,316,348        $116,734         8.71%
  Held-to-maturity securities:
    Taxable                       710,315          10,278         5.82%
    Non Taxable                   312,076           5,452         6.99%
  Available-for-sale securities
    Taxable                     1,125,113          17,324         6.19%
    Non Taxable                    73,756           1,586         8.60%
  Short term investments           89,581           1,014         4.55%
   Total interest earning
    assets and revenue          7,627,189         152,388         8.04%
  Other assets                    600,176
  Less: allowance for
   credit losses                 (72,204)
     Total                     $8,155,161

  LIABILITIES AND
  SHAREHOLDERS' EQUITY
  Deposits:
    Demand - interest bearing  $1,562,146         $11,089         2.86%
    Savings                       978,381           9,314         3.83%
    Time                        3,322,592          42,845         5.19%
  Short-term borrowings           352,688           4,823         5.50%
  Long-term debt                  191,250           2,112         4.44%
   Total interest bearing
    liabilities and expense     6,407,057          70,183         4.41%
  Demand deposits -
   non-interest bearing           925,151
  Other liabilities                84,421
    Total liabilities           7,416,629
  Shareholders' equity            738,532
    Total                      $8,155,161
  Net interest revenue                            $82,205
  Net interest margin                                             4.28%
  Net interest rate spread                                        3.63%
  Interest bearing liabilities to
   interest earning assets                                        84.0%
  Net interest tax
   equivalent adjustment                           $2,800


                            BancorpSouth, Inc.
                       Consolidated Balance Sheets
                          (dollars in thousands)
                               (Unaudited)

                            September 30,   September 30,  December 31,
                                     2000            1999          1999
      Assets
  Cash & due from banks         $ 262,868       $ 248,839     $ 334,181
  Interest bearing deposits
   with other banks                13,089          21,639        12,058
  Held-to-maturity securities   1,166,984       1,003,374     1,026,433
  Federal funds sold               75,000         114,872       110,875
  Loans & leases                5,922,564       5,361,142     5,541,962
    Allowance for credit losses   (78,100)        (72,846)      (74,232)
  Net loans & leases            5,844,464       5,288,296     5,467,730
  Available-for-sale
   securities                   1,505,148       1,169,050     1,080,063
  Mortgages held for sale          34,105          41,917        37,513
  Bank premises & equipment       186,577         170,620       171,867
  Accrued interest receivable      90,430          73,979        73,076
  Other real estate owned           7,303          10,412        11,182
  Other assets                    115,634         107,823       116,719
    Total assets              $ 9,301,602     $ 8,250,821   $ 8,441,697
      Liabilities
  Demand deposits:
   Non-interest bearing       $ 1,007,326       $ 931,451     $ 966,491
   Interest bearing             1,671,883       1,567,074     1,589,155
   Total demand deposits        2,679,209       2,498,525     2,555,646
  Savings & time deposits:
   Savings                        441,992         276,742       269,786
   Premium access                 441,483         688,016       667,722
   Certificates of deposit      3,825,389       3,401,639     3,573,491
   Total savings & time
    deposits                    4,708,864       4,366,397     4,510,999
   Total deposits               7,388,073       6,864,922     7,066,645
  Federal funds purchased
   and securities sold
   under agreement to repurchase  298,035         223,544       257,427
  Short-term borrowings           570,000         115,000        89,000
  Accrued interest payable         45,930          35,873        30,929
  Long-term debt                  165,803         184,131       166,247
  Other liabilities                66,934          80,031        74,338
    Total liabilities           8,534,775       7,503,501     7,684,586
      Shareholders' Equity
  Common stock                    214,484         214,405       214,405
  Capital surplus                  70,464          71,645        71,777
  Unrealized gain (loss)
   on securities                   (7,055)         (7,808)      (14,149)
  Retained earnings               515,086         470,695       486,540
   Less: Cost of treasury stock   (26,152)         (1,617)       (1,462)
    Total shareholders' equity    766,827         747,320       757,111
    Total liabilities &
     shareholders' equity     $ 9,301,602     $ 8,250,821   $ 8,441,697

SOURCE: BancorpSouth, Inc.

Contact: L. Nash Allen, Jr., 662-680-2330, or Gary C. Bonds,
662-680-2332, both of BancorpSouth, Inc.