BancorpSouth (BXS) has reached a settlement in principle for a class-action lawsuit alleging that the Tupelo, Miss., company violated federal securities law.
A court filing on Friday said that the parties intended to complete the settlement soon and then seek approval from the court. The terms were not released.
The lawsuit, filed in the U.S. District Court in the Middle District of Tennessee in May 2010, claimed that the company issued materially false and misleading statements about its financial results. The $13.3 billion-asset company failed to disclose the extent of its delinquent commercial real estate, construction and land loans and did not adequately record losses for impaired loans, the complaint said.
After the market closed on Feb. 25, 2010, BancorpSouth said it would postpone filing its 10-K for 2009 with the Securities and Exchange Commission so it could review its allowance for credit losses. The next day the company's stock dropped more than 13%. The class in the lawsuit includes people who bought BancorpSouth's common stock between July 23, 2009, and Feb. 25, 2010.
The company ended up reporting a $2.1 million loss for the fourth quarter of 2009 after it reduced its net income by $21.6 million and increased its provision for losses by $27.6 million.
BancorpSouth denied any wrongdoing in a press release. It said that the settlement allowed both sides to avoid the risks and costs of lengthy litigation. The bank said that its insurance carriers will pay the settlement, which should not have an adverse effect on its financial results.