Welcome to the BancorpSouth Fourth Quarter 2014 Earnings Conference Call. (Operator Instructions). I would now like to turn the conference over to Will Fisackerly, Senior Vice President and Director of Corporate Finance. Please go ahead.
Good morning, and thank you for being with us. I will begin by introducing the members of the senior management team participating today. We have Chairman and CEO Dan Rollins; Chris Bagley, President and Chief Operating Officer; Bill Prater, Senior Executive Vice President and Chief Financial Officer; Ron Hodges, Senior Executive Vice President and Chief Credit Officer; and James Threadgill, Senior Executive Vice President and Chief Development Officer.
(Forward-Looking and Cautionary Statements)
And now I'll turn to Dan Rollins for his comments on the quarter.
Thank you, Will. Good morning, everyone. Thank you for joining us today for BancorpSouth's year-end 2014 conference call. I will begin by making a few brief comments regarding the highlights from last quarter and for the full year of 2014. Bill will discuss the financial results in more detail. Chris will talk about our BSA AML remediation efforts, as well as our business development activities in the bank. James will provide some comments on our business development activities in mortgage and insurance. Finally, Ron will discuss highlights regarding credit quality. After we conclude our prepared comments, our executive management team will be happy to answer any questions you have.
Now let's turn to the slide presentation. Slide 2 contains our customary Safe Harbor statements, with respect to certain forward-looking information in the presentation. The next slide begins our review of the fourth quarter. Net income was $28.7 million or $0.30 per diluted share. Net operating income which excludes merger-related and other non-operating expenses was also $0.30 per diluted share
there were no material non-operating items in the fourth quarter results. Earnings were flat compared to both the third quarter of '14 and the fourth quarter of '13, despite being adversely impacted by a negative mark-to-market adjustment of $3.4 million for our mortgage servicing assets.
For the full year of 2014, we recorded a negative MSR adjustment of $6.4 million. Despite this headwind, for the full year, we reported an increase of over 20% of net income from $94.1 million or $0.99 per diluted share in 2013 to $116.8 million or $1.21 per diluted share for 2014. This increase was attributable to a decline in total non-interest expense of approximately $16 million year-over-year as well as continued loan growth which is shown in the next bullet.
We reported another solid quarter of net loan growth totaling $202 million or 8.4% on annualized basis. This concludes an outstanding year of loan growth for our company. Total loans grew over $750 million or over 8% over the course of the full year. Chris will give some more color on our loan production efforts shortly. While it is not shown on this slide, I would also like to mention deposit growth. While promotional and single-service CD runoff provided a headwind to total deposit growth, our
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