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BancorpSouth’s pending mergers in regulators' hands, executives say

Tupelo, Miss.-based BancorpSouthInc. executives reiterated their guidance that two pending mergers maynot close on time or at all following a settlement with the U.S. Department of Justiceand the Consumer Financial Protection Bureau.

The financial institution reached a $10 million settlement on June 29 with the DOJand CFPB over allegations of mortgage lending discrimination. The investigationhad delayed the closing of two merger agreements the bank made with Monroe, La.-basedOuachita Bancshares Corp.and Temple, Texas-based Central CommunityCorp. The settlement had no financial impact during the second quarter,as provisions were calculated during the first quarter, executives added.

James "Dan" Rollins III, chairman and CEO, said thebank is scheduled to meet with regulators in the next few weeks to find out whatis needed to move forward on the mergers. "We do know that the ball is fullyin the primary regulators court today," he said.

Executives on the call told investors and analysts that the companyexpects to lower its legal fees following the settlement, although it still hasa few pending lawsuits.

Rollins also said that while the bank was on the sidelines interms of buybacks because of uncertainty around the CFPB and DOJ investigation,the bank now wants to use all of the tools available for capital management.

"We've grown capital significantly over the last coupleof years," he said. "We need to deploy that capital and give back to ourshareholders."

The bank reported second-quarter net income of $34.7 million,or 37 cents per share, compared to $39.7 million, or 41 cents per share, for thesecond quarter of 2015. Net interest margin was 3.56% for the second quarter of2016, compared to 3.54% for the second quarter of 2015, on a tax-equivalent basis.