Credit costs hurt BancorpSouth 3Q profit

Tupelo, Miss.-based BancorpSouth Inc. posted a 22 percent profit decline in the third quarter, primarily a result of a larger provision for credit losses.

The bank, which bought Springfield-based The Signature Bank in 2007, reported quarterly results Oct. 20.

Net income was $28.3 million, or 34 cents per share, down 22 percent from $36.3 million, or 44 cents per share, in the same quarter a year ago.

The bank increased its provision for credit losses to $16.3 million, compared to $5.7 million in third-quarter 2007 and $11.2 million in second-quarter 2008. Nonperforming loans and leases grew to $65.2 million, compared to $31.3 million in third-quarter 2007 and $46 million in second-quarter 2008.

"Our nonperforming loans and net charge-offs increased for the (quarter) and a larger provision for credit losses was primarily responsible for the decline in net income," BancorpSouth Chairman and CEO Aubrey Patterson said in a news release. "As a result of our long-term conservative lending and investment philosophies, we have virtually no exposure to the credit issues affecting the subprime residential mortgage market and no equity investments in the securities of Fannie Mae or Freddie Mac."

Net interest revenue increased 1.6 percent to $109.6 million. Noninterest revenue grew 9.6 percent to $63.4 million, while noninterest expense nearly matched that with a 9.1 percent increase to $116.1 million.

Total assets grew 1.1 percent to $13.3 billion, from $13.1 billion a year ago, total deposits fell 5 percent to $9.7 billion, and loans and leases increased 5.9 percent to $9.5 billion.

Company shares (NYSE: BXS) closed Friday at $20.02, compared to a 52-week range of $15.15 to $31.90. They fell $2.66 on Oct. 21 following the bank's quarterly results announcement.