BancorpSouth Keeps Focus on Staying True to Banking Basics

By Andy Meek

BancorpSouth Inc. may have new leadership, but the Tupelo, Miss.-based company likes to say it still has an old way of doing business.

Make that, old-fashioned.

BancorpSouth is a large regional banking company that provides a variety of services across nine states. It has $13.2 billion in assets and operates about 293 commercial banking, mortgage, insurance, trust and broker/dealer locations, primarily in the Southeast.

Its presence includes bank, insurance and mortgage locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee (including a few branches in Shelby County) and Texas, as well as an insurance location in Illinois.

“But even though we’re a regional bank, we’re actually comprised of a system of community banks and remain very close to our customers,” said Randy Burchfield, BancorpSouth’s senior vice president of corporate relations and communications. “We drive a lot of decision making down at the local level, and we think that is the real heart and core of our model.”

According to the investment research firm Morningstar Inc., BancorpSouth doesn’t have the rip-roaring growth prospects of some banks.

The Memphis headquarters of Tupelo-based BancorpSouth is at 6363 Poplar Ave in East Memphis.

(Photo: Lance Murphey)

“However,” Morningstar writes in its most recent analyst report on the bank, “we are pleased that this lender has not aggressively explored other higher-growth markets, and has instead concentrated on diversifying its revenue stream in its core footprint.

“Despite the spike in bad loans, we think this strategy has paid off. Loan losses have been relatively contained compared with other regional lenders, and noninterest income has increased rather well in the past. Nonetheless, we think loan losses will remain elevated for several quarters, but the bank will be able to deal with these difficulties.”

One piece of big news out of the bank in recent weeks is the selection by BancorpSouth’s board of a new CEO to replace Aubrey Patterson, who became a member of the bank’s board at the end of November.

James Rollins III is the new BancorpSouth chief executive. He has served as president and chief operating officer of Houston-based Prosperity Bancshares, Inc., since April 2006 and has been a director of Prosperity since October 2006.

Rollins is replacing a CEO with a more than 40-year career with BancorpSouth.

A recent article in the trade publication American Banker about Rollins came with the headline “I’m bringing an open mind, not an ax” to his new job at BancorpSouth.

In a statement, Rollins said BancorpSouth is a well-respected financial institution that is strongly positioned thanks to Patterson’s years of service. Among its challenges are the same ones facing all banks.

The company’s efficiency ratio, for example stood at about 70 percent in the third quarter. That means the company essentially was spending 70 cents for every dollar it makes.

Closer to home, BancorpSouth has seven branches inside Shelby County and is No. 4 on the Federal Deposit Insurance Corp.’s list of Memphis-area banks as ranked by deposit share.

Randy Henry, senior vice president over retail functions for the bank’s Memphis division, said BancorpSouth isn’t sitting still. The bank has about 250 people, including its mortgage staff over the Memphis metro area, and total Memphis metro area deposits are in the range of $720 million.

“We have guarded optimism in terms of the Memphis market,” Henry said. “We have seen some pickup in activity. I think it’s clear that many businesses are obviously conserving dollars where they can and looking at efficiencies wherever possible.

“That’s only good business practice, regardless of time or economic conditions. What we have noticed here is housing inventory is getting more in line. Those numbers are improving. Prices seemed to have stabilized, which is good. Things are trending in a better direction. We have every intention of growing. We’re in the business of making loans. We always keep our eyes open.”

Burchfield said the company has a large enough footprint that it has some areas that weren’t as affected as much by the recession.

Right now, he says, the company is excited about the new CEO and is having a record-setting mortgage production year. It also recently reorganized the company so that it’s built around four geographic regions instead of 10.

“It’s important to us to continue the progress we’re making,” Burchfield said.