TUPELO — BancorpSouth Inc. reports that BancorpSouth Capital Trust I expects to redeem all of its issued and outstanding 8.15 percent trust preferred securities within the next 60 days.
The aggregate principal amount of the outstanding trust preferred securities is $125 million.
The trust preferred securities are currently callable at the option of the Tupelo-based bank holding company. The redemption will be funded with approximately $75 million of available cash and approximately $50 million of borrowings. The redemption price is 100 percent of the liquidation amount of $25 per trust preferred security, together with any accrued and unpaid distributions to the redemption date. The complete terms and conditions of redemption will be set forth in the trustee’s notice to the holders of the trust preferred securities.
The redemption, net of the estimated cost of incremental borrowings, is expected to result in an annual reduction of interest expense for BancorpSouth of $9.1 million, or $0.06 per share of company common stock, net of tax savings, and approximately nine basis points of incremental improvement in the net interest margin. Additionally, the company will incur a one-time non-cash charge during the third quarter of $2.9 million, or $0.02 per share of BancorpSouth common stock, net of tax, to write-off unamortized issuance costs associated with the original issuance of the trust preferred securities.