BancorpSouth Inc. of Tupelo, Miss., joined the list of banking companies to quantify the effects of the recent hurricanes on its third-quarter earnings.
The $10.8 billion-asset company said Monday that it expects to record an after-tax charge of $9 million, or 11.5 cents per diluted share, related to the effects of Hurricane Katrina.
BancorpSouth, which is scheduled to report third-quarter earnings Oct. 19, said it is taking an $11.5 million pretax provision for credit losses on the Gulf Coast. It also cited a $2.9 million pretax loss from higher expenses and lower fee income. That decline was caused mostly by its waiving of services charges and other fees for customers in the affected areas, the company said.
On Sept. 13, Regions Financial Corp. said that it expects Hurricane Katrina to lower earnings by $50 million, or 7 to 9 cents a share, and that it will start recording the effects this quarter. The $85 billion-asset Birmingham, Ala., company said it expects credit losses will begin to show up on the balance sheet this year or early next year, Regions said during a Lehman Brothers financial services conference in New York.
Regions had about $1.3 billion in outstanding loans, most of them commercial ones, in the affected areas.
On Tuesday, the $2.7 billion-asset Iberiabank Corp. of Lafayette, La., and the $4.4 billion-asset Hancock Holding Co. of Gulfport, Miss., reiterated that they have incurred several hundred thousand dollars of hurricane-related expenses between them.
Spokesmen for the $8.8 billion-asset Whitney Holding Corp. and the $22.1 billion-asset Hibernia Corp., which are both based in New Orleans, did not return calls by press time.
In a brief interview Tuesday, BancorpSouth's chief financial officer, L. Nash Allen Jr., said that at one point all 13 of its Gulf Coast branches were closed as a result of Katrina, and four have yet to reopen.
Peyton Green, an analyst at First Horizon National Corp.'s FTN Midwest Research Securities Corp., said that about 4.5%, or $410 million, of BancorpSouth's deposits are at branches on the Gulf Coast. The company has 250 branches in all.
Mr. Allen said BancorpSouth does not expect to Hurricanes Rita or Katrina to generate material credit losses in Louisiana, because the company does not have any branches in New Orleans. He would not discuss what kind of loan losses it anticipates elsewhere.
Barry McCarver, an analyst at Stephens Inc., said, "The magnitude [of the loan-loss provisions] was a little bit higher than I expected, but this is a very intelligent and conservative management team and it's one of the few management teams that's been around long enough to have experience in this kind of situation."
However, Mr. McCarver also said he expects BancorpSouth to boost loan-loss reserves in the coming months.
James M. Schutz, an analyst at Sterne, Agee & Leach Group Inc., said all banks affected by the recent hurricane will probably boost their reserves. Insurance revenue at BancorpSouth will probably drop, as agents scramble to adjust claims instead of marketing and selling policies, he said.
"I do not expect them to be able to estimate their net credit losses with any degree of precision," right now, Mr. Schutz said.
Shares of BancorpSouth fell 2.85% Tuesday.
