BancorpSouth Bank

Third-quarter net income available to common shareholders was $70.4 million, or $0.65 per diluted share. Operating net income excluding MSR was $73.3 million, or $0.68 per diluted share, and PPNR was $90.1 million, or 1.29% of average assets annualized. Net interest margin excluding accretion was 2.81% versus 2.94% in the second quarter of 2021. Organic deposit and customer repo growth was over $720 million, and net organic loan growth was $122 million, or 3.3%, after excluding approximately $135 million of PPP forgiveness. The company reported net recoveries of $2.1 million and a $7 million provision release. Insurance commission revenue was $35.8 million, up over 9% year over year, and mortgage originations were almost $790 million. The company repurchased just over 1.7 million shares at a weighted average price of $28.69. For the combined company, management said merger cost savings would begin to show up after closing and that full run-rate savings should be reflected in 1Q23.

Dan Rollins emphasized that the quarter reflected improving core performance even though prior periods benefited from PPP and mortgage tailwinds that were not sustainable. He repeatedly framed the Cadence combination as near completion and said the teams had spent substantial time on integration planning, with optimism at an all-time high. His tone was upbeat on loan demand, deposit gathering, and credit quality, while acknowledging that liquidity is still pressuring margins.

John Copeland focused on margin and expense drivers. He said net interest margin excluding accretion was 2.81%, down from 2.94% in 2Q21, with deposit growth and mix shift driving most of the pressure; he also noted loan yields excluding accretion and PPP and total deposit costs both declined 3 basis points. On expenses, he highlighted $3.4 million of merger-related expense, a $2.4 million pension settlement charge, and a $4.8 million quarter-over-quarter increase in salaries and benefits tied to the two acquisitions, annual pay adjustments effective July 1, and wage pressure. He also said funding costs should keep declining as time deposits reprice.

Analysts focused on loan growth, liquidity deployment, merger assumptions, share repurchases, expense run rates, and the combined bank’s rate sensitivity. Management said pipelines looked good across geographies and business lines, with C&I, CRE, and construction lending all contributing, but noted pricing pressure and the need to keep calling on customers. On the merger, they said the slide deck numbers were still based on announcement-time assumptions, that better credit and a bigger balance sheet should help, and that excess liquidity remains the biggest headwind until it is deployed. They also said repurchases could resume opportunistically, that much of the third-quarter expense increase was run-rate related, and that the combined company would be slightly asset-sensitive, with full cost savings likely showing up in 1Q23.