BancorpSouth Announces Fourth Quarter 2020 and Annual Financial Results

TUPELO, Miss., Jan. 25, 2021 /PRNewswire/ -- BancorpSouth Bank (NYSE: BXS) (the "Company") today announced financial results for the quarter and year ended December 31, 2020.

Annual highlights for 2020 included:

• Achieved net income available to common shareholders of $218.6 million, or $2.12 per diluted common share, and net operating income available to common shareholders – excluding mortgage servicing rights ("MSR") – of $237.3 million, or $2.30 per diluted common share.
• Recorded provision for credit losses of $86.0 million associated primarily with economic deterioration associated with the COVID-19 pandemic while net charge-offs totaled 0.18 percent of average loans and leases, 0.14 percent of which was related to previously acquired loans; adopted Accounting Standards Update 2016-13 "Financial Instruments – Credit Losses" ("CECL") effective January 1, 2020 which, combined with the provision, contributed to an increase of $125.4 million in the allowance for credit losses.
• Reported record annual pre-tax pre-provision net revenue ("PPNR") of $397.5 million, or 1.75 percent of average assets; represents an increase of 20.7 percent from $329.2 million, or 1.73 percent of average assets, for 2019.
• Generated total organic deposit and customer repo growth of approximately $3.2 billion, or 19 percent for the year.
• Originated over 15,000 loans totaling $1.2 billion under the Paycheck Protection Program ("PPP"); processed forgiveness applications on approximately 6,900 loans totaling $608.9 million and received forgiveness funds from the U.S. Small Business Administration ("SBA") on just over 4,000 loans totaling $262.5 million.
• Reported record annual mortgage production volume and mortgage revenue for the year – production volume of $3.2 billion contributed to production and servicing revenue totaling $99.1 million.
• Improvement in cost structure; operating efficiency ratio – excluding MSR – improved to 61.6 percent compared to 64.9 percent for 2019.
• Completed merger with Texas First Bancshares, Inc. which added $396.9 million in assets to the Company's Central Texas presence.
• Repurchased 3,300,000 shares of outstanding common stock at a weighted average price of $26.42 per share.

Highlights for the fourth quarter of 2020 included:

• Achieved quarterly net income available to common shareholders of $66.4 million, or $0.65 per diluted common share, and net operating income available to common shareholders – excluding MSR – of $70.8 million, or $0.69 per diluted common share.
• Recorded provision for credit losses of $5.0 million; total non-performing assets declined 15.7% while past dues, loan deferrals, and modifications remained relatively stable.
• Generated $93.6 million in PPNR, or 1.57 percent of average assets on an annualized basis; PPNR was impacted by seasonal revenue factors as well as certain other elevated one-time or non-recurring expense items.
• Generated total deposit and customer repo growth of $459.7 million for the quarter, or 9.1 percent on an annualized basis.
• Record fourth quarter mortgage production volume of $845.9 million contributed to mortgage production and servicing revenue of $19.9 million.
• Recorded a charge of $5.8 million in accordance with Accounting Standards Codification ("ASC") 715 "Compensation – Retirement Benefits" to reflect the settlement accounting impact of the lump sum payments associated with an elevated number of retirements that occurred in the fourth quarter of 2020.
• Maintained strong regulatory capital metrics; estimated total risk-based capital of 14.24 percent at December 31, 2020 compared to 14.17 percent at December 31, 2019.
• Announced the signing of a definitive merger agreement with National United Bancshares, Inc., the parent company of National United, which is expected to add approximately $750 million in assets to the Company's Central Texas presence.
• On January 13, 2021, announced the signing of a definitive merger agreement with FNS Bancshares, Inc., the parent company of FNB Bank, which is expected to add approximately $790 million in assets across Alabama, Tennessee, and Georgia.

"As we look at our financial results for 2020, the COVID-19 pandemic certainly created a challenging year for our industry as a whole," remarked Dan Rollins, Chairman and Chief Executive Officer.  "I am extremely proud of our team's ability to navigate this difficult environment while continuing to improve our core operating results.  While protecting the health of our teammates and customers was our first priority, we achieved some unprecedented milestones in several areas of our Company.    Our mortgage team generated record production of $3.2 billion, which exceeds our previous annual production record of $2.0 billion by 60 percent.  As we have previously reported, our bankers and support staff produced over 15,000 PPP loans totaling over $1.2 billion in a very short period of time.  We are currently actively working with our customers on the second phase of funding under the PPP.  I am also pleased with our lenders and credit administrators' ability to work with our customers on deferrals and modifications while actively managing our credit risk.     While we recorded a provision of credit losses of $86 million for the year, our credit quality indicators continue to remain stable.  Net charge-offs, excluding acquired loans, totaled 0.04 percent of net loans and leases for the year. Finally, we reported record pre-tax pre-provision net revenue of $397.5 million, or 1.75 percent of average assets. This represents an increase from $329.2 million, or 1.73 percent of average assets for 2019." 

"As we look specifically at our fourth quarter performance, we had another great quarter of deposit and customer repo growth, which totaled $459.7 million, or 9.1 percent on an annualized basis.  We were also pleased to be able to continue to work our total cost of deposits down meaningfully and hold our net interest margin in a relatively tight range.  Our mortgage team had another outstanding quarter generating production volume of $845.9 million and total production and servicing revenue of $19.9 million.  While we had several items that created some noise in our results, we are pleased to report operating earnings per share – excluding MSR – of $0.69 per diluted share in a quarter that has historically faced seasonal headwinds in both our mortgage and insurance business.  The largest of these items was a $5.8 million pension accounting charge resulting from elevated retirements and lump sum pension payouts in the fourth quarter.   While this charge adversely impacted earnings, the decline of employee FTE of approximately 100 over the course of 2020 reflects our continued focus on improving our operating efficiency.  Finally, we are excited about the growth opportunities that we have recently announced with National United in Gatesville, Texas and FNB Bank in Scottsboro, Alabama, which will collectively add approximately $1.5 billion in assets to our Company.  We are hopeful that we can receive the required approvals in order to close these transactions during the second quarter of this year."

Earnings Summary

The Company reported net income available to common shareholders of $66.4 million, or $0.65 per diluted common share, for the fourth quarter of 2020, compared with net income available to common shareholders of $65.8 million, or $0.63 per diluted common share, for the fourth quarter of 2019 and net income available to common shareholders of $71.5 million, or $0.69 per diluted common share, for the third quarter of 2020.  The Company reported net operating income available to common shareholders – excluding MSR – of $70.8 million, or $0.69 per diluted common share, for the fourth quarter of 2020, compared with $67.8 million, or $0.65 per diluted common share, for the fourth quarter of 2019 and $71.2 million, or $0.69 per diluted common share, for the third quarter of 2020.

Additionally, the Company reported net income available to common shareholders of $218.6 million, or $2.12 per diluted common share, for the year ended December 31, 2020 compared with $234.3 million, or $2.30 per diluted common share, for the year ended December 31, 2019.  The Company reported net operating income available to common shareholders – excluding MSR – of $237.3 million, or $2.30 per diluted common share, for the year ended December 31, 2020 compared with $255.4 million, or $2.51 per diluted common share, for the year ended December 31, 2019. 

The Company reported pre-tax pre-provision net revenue of $93.6 million, or 1.57 percent of average assets on an annualized basis, for the fourth quarter of 2020 compared to $85.8 million, or 1.68 percent of average assets on an annualized basis, for the fourth quarter of 2019 and $110.0 million, or 1.88 percent of average assets, for the third quarter of 2020.  Additionally, the Company reported pre-tax pre-provision net revenue of $397.5 million, or 1.75 percent of average assets, for the year ended December 31, 2020 compared with $329.2 million, or 1.73 percent of average assets, for the year ended December 31, 2019.

Net Interest Revenue

Net interest revenue was $176.9 million for the fourth quarter of 2020, an increase of 3.6 percent from $170.8 million for the fourth quarter of 2019 and an increase of 0.6 percent from $175.9 million for the third quarter of 2020.  The fully taxable equivalent net interest margin was 3.29 percent for the fourth quarter of 2020, compared with 3.76 percent for the fourth quarter of 2019 and 3.31 percent for the third quarter of 2020.  Yields on net loans and leases were 4.55 percent for the fourth quarter of 2020, compared with 5.13 percent for the fourth quarter of 2019 and 4.54 percent for the third quarter of 2020, while yields on total interest earning assets were 3.70 percent for the fourth quarter of 2020, compared with 4.48 percent for the fourth quarter of 2019 and 3.77 percent for the third quarter of 2020.  The net interest margin, excluding accretable yield, was 3.24 percent for the fourth quarter of 2020, compared with 3.61 percent for the fourth quarter of 2019 and 3.23 percent for the third quarter of 2020, while yields on net loans and leases, excluding accretable yield, were 4.49 percent for the fourth quarter of 2020, compared with 4.95 percent for the fourth quarter of 2019 and 4.44 percent for the third quarter of 2020. 

The $975.4 million in PPP loans on the balance sheet had an adverse impact of approximately four basis points on the yield on net loans and leases, excluding accretable yield, for the fourth quarter of 2020.  Net interest income for the fourth quarter of 2020 included approximately $2.5 million of accelerated PPP fee income recognition resulting from the payoff of loans that were forgiven by the SBA during the quarter.  The average cost of deposits was 0.38 percent for the fourth quarter of 2020, compared with 0.68 percent for the fourth quarter of 2019 and 0.44 percent for the third quarter of 2020.

Balance Sheet Activity

Loans and leases, net of unearned income, decreased $305.3 million during the fourth quarter of 2020 primarily as a result of the SBA forgiveness of $262.5 million of PPP loans during the quarter.  Deposits and customer repos increased $459.7 million, or 9.1 percent on an annualized basis, during the fourth quarter of 2020.  There were no acquisitions during the fourth quarter of 2020. 

Provision for Credit Losses and Allowance for Credit Losses

Earnings for the fourth quarter of 2020 reflect a provision for credit losses of $5.0 million, compared with no provision for the fourth quarter of 2019 and a provision of $15.0 million for the third quarter of 2020.  Net charge-offs for the fourth quarter of 2020 were $11.2 million, or 0.29 percent of net loans and leases on an annualized basis, compared with net recoveries of $2.2 million for the fourth quarter of 2019 and net charge-offs of $1.4 million for the third quarter of 2020.  Net charge-offs for the fourth quarter of 2020 consisted primarily of the charge down of loans that were previously identified as impaired in prior quarters. The allowance for credit losses was $244.4 million, or 1.63 percent of net loans and leases, at December 31, 2020, compared with $119.1 million, or 0.85 percent of net loans and leases, at December 31, 2019, and $250.6 million, or 1.64 percent of net loans and leases, at September 30, 2020.   The allowance for credit losses coverage, excluding the impact of PPP loans, was 1.74 percent at December 31, 2020.   

The Company adopted CECL effective January 1, 2020.  The increase in the allowance for credit losses resulting from this implementation was $62.6 million.  Of this increase, $22.6 million was a result of the reclassification of non-accretable difference on previously purchased credit impaired loans that are now considered purchased credit deteriorated loans, while $40.0 million was the result primarily of the requirement of estimating credits losses over the life of the loan portfolio.  The adoption of this standard impacted the comparability of credit quality and coverage metrics to all periods preceding January 1, 2020.

Total non-performing assets were $132.6 million, or 0.55 percent of total assets, at December 31, 2020, compared with $118.3 million, or 0.56 percent of total assets, at December 31, 2019, and $157.3 million, or 0.67 percent of total assets, at September 30, 2020.  Other real estate owned was $11.4 million at December 31, 2020, compared with $6.7 million at December 31, 2019 and $6.4 million at September 30, 2020.

Noninterest Revenue

Noninterest revenue was $78.8 million for the fourth quarter of 2020, compared with $74.7 million for the fourth quarter of 2019 and $89.9 million for the third quarter of 2020.  These results include a positive MSR valuation adjustment of $0.2 million for the fourth quarter of 2020, compared with a positive MSR valuation adjustment of $3.2 million for the fourth quarter of 2019 and a positive MSR valuation adjustment of $0.4 million for the third quarter of 2020.  Valuation adjustments in the MSR asset are driven primarily by fluctuations in interest rates period over period.   

Mortgage production and servicing revenue was $19.9 million for the fourth quarter of 2020, compared with $6.9 million for the fourth quarter of 2019 and $26.7 million for the third quarter of 2020.  Mortgage origination volume for the fourth quarter of 2020 was $845.9 million, compared with $504.9 million for the fourth quarter of 2019 and $937.7 million for the third quarter of 2020.  Home purchase money volume was $466.4 million for the fourth quarter of 2020, compared with $321.7 million for the fourth quarter of 2019 and $568.4 million for the third quarter of 2020.  Of the total mortgage origination volume for the fourth quarter of 2020, $157.8 million was portfolio loans, compared with $106.4 million for the fourth quarter of 2019 and $218.0 million for the third quarter of 2020.

Credit card, debit card, and merchant fee revenue was $10.1 million for the fourth quarter of 2020, compared with $9.8 million for the fourth quarter of 2019 and $9.9 million for the third quarter of 2020.  Deposit service charge revenue was $9.7 million for the fourth quarter of 2020, compared with $12.2 million for the fourth quarter of 2019 and $8.9 million for the third quarter of 2020.  Wealth management revenue was $6.8 million for the fourth quarter of 2020, compared with $6.6 million for the fourth quarter of 2019 and $6.5 million for the third quarter of 2020.  Insurance commission revenue was $29.8 million for the fourth quarter of 2020, compared with $27.6 million for the fourth quarter of 2019 and $32.8 million for the third quarter of 2020.  Other noninterest revenue was $2.3 million for the fourth quarter of 2020, compared with $8.3 million for the fourth quarter of 2019 and $4.8 million for the third quarter of 2020.  Other noninterest revenue for the fourth quarter of 2020 was adversely impacted by $2.7 million of book amortization associated with a historic tax credit.  A related benefit of $3.0 million was recorded as a reduction to income tax expense for the quarter. 

Noninterest Expense

Noninterest expense for the fourth quarter of 2020 was $167.9 million, compared with $162.4 million for the fourth quarter of 2019 and $155.5 million for the third quarter of 2020.  Salaries and employee benefits expense was $97.2 million for the fourth quarter of 2020, compared with $97.1 million for the fourth quarter of 2019 and $104.2 million for the third quarter of 2020.  Occupancy expense was $13.0 million for the fourth quarter of 2020, compared with $12.3 million for the fourth quarter of 2019 and $13.1 million for the third quarter of 2020.  Other noninterest expense was $45.4 million for the fourth quarter of 2020, compared with $46.0 million for the fourth quarter of 2019 and $32.2 million for the third quarter of 2020.  Additionally, merger-related expense for the fourth quarter of 2020 was $0.2 million, compared with merger-related expense of $5.8 million for the fourth quarter of 2019 and $0.1 million for the third quarter of 2020. 

Noninterest expense for the fourth quarter of 2020 included certain items that were either non-operating or non-routine in nature as defined by the Company.  The Company recorded a charge of $5.8 million in accordance with ASC 715 "Compensation – Retirement Benefits" to reflect the settlement accounting impact of an elevated number of retirements and related lump sum pension payouts during the quarter.   Salaries and employee benefits expense was positively impacted by accrual true ups totaling approximately $6.7 million relating to incentive compensation and other employee benefits.  Other non-interest expense included charges and write-downs totaling approximately $5.0 million associated with the anticipated disposition of certain facilities and other fixed assets, including fixed assets associated with branches identified for closure. 

Capital Management

The Company's ratio of shareholders' equity to assets was 11.72 percent at December 31, 2020, compared with 12.75 percent at December 31, 2019 and 11.81 percent at September 30, 2020.  The ratio of tangible common shareholders' equity to tangible assets was 7.54 percent at December 31, 2020, compared with 8.09 percent at December 31, 2019 and 7.56 percent at September 30, 2020.  The $975.4 million in PPP loans had an adverse impact of approximately 33 basis points on tangible common shareholders' equity to tangible assets at December 31, 2020.

During the fourth quarter of 2020, the Company did not repurchase any shares of its common stock pursuant to its share repurchase program.  On December 9, 2020, the Company announced a new share repurchase program, pursuant to which the Board of Directors has authorized the repurchase of up to an aggregate of 6 million shares, which commenced on January 4, 2021 and will expire on December 31, 2021.  

Estimated regulatory capital ratios at December 31, 2020 were calculated in accordance with the Basel III capital framework as well as the interagency interim final rule published on March 31, 2020 entitled "Revised Transition of the Current Expected Credit Losses Methodology for Allowances".  The Company is a "well capitalized" bank, as defined by federal regulations, at December 31, 2020, with Tier 1 risk-based capital of 11.70 percent and total risk-based capital of 14.24 percent, compared with required minimum levels of 8 percent and 10 percent, respectively, in order to qualify for "well capitalized" classification. 

Summary

Rollins concluded, "I am proud of the accomplishments that our teammates achieved over the course of the year in unprecedented circumstances.  We reported record deposit growth and mortgage origination volume, while our bankers cultivated current relationships and built new ones through the government stimulus programs as well as other opportunities to assist customers during this time.  As a company, we have taken other actions to drive continued efficiency improvement including our efforts to improve our branch structure and employee headcount as well as various other initiatives to enhance our technology offerings and customer experience.  While we expect the industry to continue to experience revenue headwinds as we enter the New Year, we are glad 2020 is behind us.  We look forward to the opportunity to continue to grow our Company and improve shareholder value."

TRANSACTIONS

FNS Bancshares, Inc.

On January 13, 2021, the Company announced the signing of a definitive merger agreement (the "FNS Merger Agreement") with FNS Bancshares, Inc., the parent company of FNB Bank, (collectively referred to as "FNS"), pursuant to which FNS will be merged with and into the Company (the "FNS Merger").  FNS operates 17 full-service banking offices in Alabama, Georgia and Tennessee.  The merger will expand the Company's presence in Jackson, DeKalb and Marshall counties in Alabama and the Chattanooga, Tennessee-Georgia and Nashville-Davidson-Murfreesboro-Franklin, Tennessee metropolitan statistical areas.  As of December 31, 2020, FNS collectively reported total assets of $797.0 million, total loans of $483.5 million and total deposits of $675.5 million.  Under the terms of the FNS Merger Agreement, the Company will issue approximately 2,975,000 shares of the Company's common stock plus $18.0 million in cash for all outstanding shares of FNS.  For more information regarding the FNS Merger, see our Current Report on Form 8-K that was filed with the Federal Deposit Insurance Corporation ("FDIC") on January 13, 2021.  The FNS Merger Agreement has been unanimously approved by the Boards of Directors of the Company and FNS. FNS has agreed to convene a meeting of its shareholders to vote upon the approval of the FNS Merger Agreement. Subject to the satisfaction of all closing conditions, including the receipt of all required regulatory approvals, the FNS Merger is expected to be completed during the first half of 2021, although the Company can provide no assurance that the FNS Merger will close during this time period or at all.

National United Bancshares, Inc.

On December 2, 2020, the Company announced the signing of a definitive merger agreement (the "National United Merger Agreement") with National United Bancshares, Inc., the parent company of National United, (collectively referred to as "National United"), pursuant to which National United will be merged with and into the Company (the "National United Merger").  National United operates 6 full-service banking offices in the Killeen-Temple, Texas; Waco, Texas; and Austin-Round Rock-Georgetown, Texas metropolitan statistical areas.  As of December 31, 2020, National United collectively reported total assets of $752.3 million, total loans of $446.0 million and total deposits of $676.7 million.  Under the terms of the National United Merger Agreement, the Company will issue approximately 3,110,000 shares of the Company's common stock plus $33.25 million in cash for all outstanding shares of National United.  For more information regarding National United Merger, see our Current Report on Form 8-K that was filed with the FDIC on December 2, 2020.  The National United Merger Agreement has been unanimously approved by the Boards of Directors of the Company and National United. National United has agreed to convene a meeting of its shareholders to vote upon the approval of the National United Merger Agreement. Subject to the satisfaction of all closing conditions, including the receipt of all required regulatory approvals, the National United Merger is expected to be completed during the first half of 2021, although the Company can provide no assurance that the National United Merger will close during this time period or at all.

Texas First Bancshares, Inc.

On January 1, 2020, the Company completed the merger with Texas First Bancshares, Inc., the parent company of Texas First State Bank, (collectively referred to as "Texas First"), pursuant to which Texas First was merged with and into the Company.  Texas First operated 6 full-service banking offices in the Waco, Texas and Killeen-Temple, Texas metropolitan statistical areas ("MSA").  As of January 1, 2020, Texas First collectively reported total assets of $396.9 million, total loans of $185.7 million and total deposits of $369.3 million.  Under the terms of the definitive merger agreement, the Company issued approximately 1,040,000 shares of the Company's common stock plus $13.0 million in cash for all outstanding shares of Texas First.  For more information regarding this transaction, see our Current Report on Form 8-K that was filed with the FDIC on January 2, 2020. 

Non-GAAP Measures and Ratios

This news release presents certain financial measures and ratios that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  A discussion regarding these non-GAAP measures and ratios, including reconciliations of non-GAAP measures to the most directly comparable GAAP measures and definitions for non-GAAP ratios, appears under the caption "Reconciliation of Non-GAAP Measures and Other Non-GAAP Ratio Definitions"  beginning on page 26 of this news release.

Statement Regarding Impact of COVID-19 Pandemic

The Company prioritizes the health and safety of its teammates and customers, and it will continue to do so throughout the duration of the COVID-19 pandemic.  At the same time, the Company remains focused on improving shareholder value, managing credit exposure, challenging expenses, enhancing the customer experience and supporting the communities it serves. Lastly, as a SBA Preferred Lender, the Company is an active participant in the SBA's PPP for the betterment of its customers and the communities that it serves.

In the presentation that accompanies this news release and in its earnings conference call, the Company has sought and will seek to describe the historical and future impact of the COVID-19 pandemic on the Company's assets, business, cash flows, financial condition, liquidity, prospects and results of operations, including the information and discussions regarding the increases in its provision and allowance for credit losses and the discussion regarding negative pressure to its net interest revenue and net interest margin.  Although the Company believes that the statements that pertain to future events, results and trends and their impact on the Company's business are reasonable at the present time, those statements are not historical facts and are based upon current assumptions, expectations, estimates and projections, many of which, by their nature, are beyond the Company's control.  Accordingly, all discussions regarding future events, results and trends and their impact on the Company's business, even in the near term, are necessarily uncertain given the fluid and evolving nature of the pandemic.

If the health, logistical or economic effects of the pandemic worsen, or if the assumptions, expectations, estimates or projections that underlie the Company's statements regarding future effects or trends prove to be incorrect, then the Company's actual assets, business, cash flows, financial condition, liquidity, prospects and results of operations may be materially and adversely impacted in ways that the Company cannot reasonably forecast.

Accordingly, when reading this news release and the accompanying presentation and when listening to the earnings conference call, undue reliance should not be placed upon any statement pertaining to future events, results and trends and their impact on the Company's business in future periods.

Conference Call and Webcast

The Company will conduct a conference call to discuss its fourth quarter 2020 financial results on January 26, 2021, at 10:00 a.m. (Central Time).  This conference call will be an interactive session between management and analysts. Interested parties may listen to this live conference call via Internet webcast by accessing www.bancorpsouth.investorroom.com/webcasts. The webcast will also be available in archived format at the same address.

About BancorpSouth Bank

BancorpSouth Bank (NYSE: BXS) is headquartered in Tupelo, Mississippi, with approximately $24 billion in assets.  BancorpSouth operates approximately 305 full service branch locations as well as additional mortgage, insurance, and loan production offices in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois.  BancorpSouth is committed to a culture of respect, diversity, and inclusion in both its workplace and communities. To learn more, visit our Community Commitment page at www.bancorpsouth.com.  Like us on Facebook; follow us on Twitter: @MyBXS; or connect with us through LinkedIn.

Forward-Looking Statements

Certain statements made in this news release are not statements of historical fact and constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "aspire," "assume," "believe," "budget," "contemplate," "continue," "could," "estimate," "expect," "forecast," "foresee," "goal," "hope," "indicate," "intend," "may," "might," "outlook," "plan," "project," "projection," "predict," "prospect," "potential," "roadmap," "seek," "should," "target," "will," and "would," or the negative versions of those words or other comparable words of a future or forward-looking nature. These forward-looking statements include, without limitation, discussions regarding general economic, interest rate, real estate market, competitive, employment, and credit market conditions, including the impact of the COVID-19 pandemic on our business; our: assets; business; cash flows; financial condition; liquidity; prospects; results of operations; deposit and customer repo growth; interest and fee-based revenue; capital resources; capital metrics; efficiency ratio; valuation of mortgage servicing rights; mortgage production volume; net income; net interest revenue; non-interest revenue; net interest margin; interest expense; non-interest expense; earnings per share; interest rate sensitivity; interest rate risk; balance sheet and liquidity management; off-balance sheet arrangements; fair value determinations; asset quality; credit quality; credit losses; provision and allowance for credit losses, impairments, charge-offs, recoveries and changes in loan volumes; investment securities portfolio yields and values; ability to manage the impact of pandemics and natural disasters; adoption and use of critical accounting policies; adoption and implementation of new accounting standards and their effect on our financial results and our financial reporting; utilization of non-GAAP financial metrics; declaration and payment of dividends;  ability to pay dividends or coupons on our 5.5% Series A Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, or the 4.125% Fixed-to-Floating Rate Subordinated Notes due November 20, 2029; mortgage origination volume; mortgage servicing and production revenue; insurance commission revenue; implementation and execution of cost savings initiatives; ability to successfully litigate, resolve or otherwise dispense with threatened, pending, ongoing and future litigation and governmental, administrative and investigatory matters; ability to successfully complete pending or future acquisitions, dispositions and other strategic growth opportunities and initiatives; ability to successfully obtain regulatory approval for acquisitions and other growth initiatives; ability to successfully integrate and manage acquisitions; opportunities and efforts to grow market share; reputation; ability to compete with other financial institutions; ability to recruit and retain key employees and personnel; access to capital markets; availability of capital; investments in the securities of other financial institutions; and ability to operate our regulatory compliance programs in accordance with applicable law.

Forward-looking statements are based upon management's expectations as well as certain assumptions and estimates made by, and information available to, our management at the time such statements were made. Forward-looking statements are not historical facts, are not guarantees of future results or performance and are subject to certain known and unknown risks, uncertainties and other factors that are beyond our control and that may cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. These risks, uncertainties and other factors include, without limitation, potential delays or other problems in implementing and executing our growth, expansion and acquisition strategies, including delays in obtaining regulatory or other necessary approvals or the failure to realize any anticipated benefits or synergies from any acquisitions or growth strategies; the risks of changes in interest rates and their effects on the level and composition of deposits, loan demand and the values of loan collateral, securities and interest sensitive assets and liabilities; the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans and other real estate owned; changes in real estate values; the availability of and access to capital; possible downgrades in our credit ratings or outlook which could increase the costs or availability of funding from capital markets; the ability to attract new or retain existing deposits or to retain or grow loans; the ability to grow additional interest and fee income or to control noninterest expense; the potential impact of the proposed phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR; competitive factors and pricing pressures, including their effect on our net interest margin; general economic, unemployment, credit market and real estate market conditions, and the effect of such conditions on the creditworthiness of borrowers, collateral values, the value of investment securities and asset recovery values; changes in legal, financial and/or regulatory requirements; recently enacted and potential legislation and regulatory actions and the costs and expenses to comply with new and/or existing legislation and regulatory actions, including those actions in response to the COVID-19 pandemic such as the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the "Economic Aid Act") and any related rules and regulations; changes in U.S. Government monetary and fiscal policy, including any changes that result from the recent U.S. elections; FDIC special assessments or changes to regular assessments; possible adverse rulings, judgments, settlements and other outcomes of pending, ongoing and future litigation and governmental, administrative and investigatory matters (including litigation or actions arising from our participation in and administration of programs related to the COVID-19 pandemic (including, among other things, the PPP loan programs authorized by the CARES Act and the Economic Aid Act); the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity; the impact of failure in, or breach of, our operational or security systems or infrastructure, or those of third parties with whom we do business, including as a result of cyber-attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting us or our customers; natural disasters or acts of war or terrorism; the adverse effects of the ongoing global COVID-19 pandemic, including the magnitude and duration of the pandemic, and the impact of actions taken to contain or treat COVID-19 on us, our employees, our customers, the global economy and the financial markets; international or political instability; impairment of our goodwill or other intangible assets; losses of key employees and personnel; adoption of new accounting standards, including the effects from the adoption of the current expected credit loss methodology on January 1, 2020, or changes in existing standards; and other factors as detailed from time to time in our press and news releases, periodic and current reports and other filings we file with the FDIC.

The foregoing factors should not be construed as exhaustive and should be read in conjunction with those factors that are set forth from time to time in our periodic and current reports filed with the FDIC, including those factors included in our Annual Report on Form 10-K for the year ended December 31, 2019 under the heading "Item 1A. Risk Factors," in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date of this news release, if one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statements. The forward-looking statements speak only as of the date of this news release, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us.  All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this section.

SOURCE BancorpSouth Bank