FEDERAL DEPOSIT INSURANCE CORPORATION
RE: BancorpSouth Bank Tupelo, Mississippi
Application for Consent to Merge and Establish Six Branch Offices
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act
("FDI Act"), BancorpSouth Bank, Tupelo, Lee County, Mississippi
("Bancorp"), an insured state nonmember bank and Bank Insurance Fund
("BIF") member with total resources of $4,515,166,000 and total deposits of
$3,364,788,000 as of June 30, 1998, has filed an application for the Corporation's consent
to merge, under its charter and title, with Merchants Bank, Vicksburg, Warren County,
Mississippi ("Merchants"), an insured state-chartered member bank with total
resources of $222,156,000 and total deposits of $162,814,000 as of June 30, 1998, and to
establish the six offices of Merchants as branches of Bancorp. Notice of the proposed
transaction, in a form approved by the Corporation, has been published pursuant to the FDI
The relevant geographic markets have been identified as Warren County, Mississippi, and
Hinds County, Mississippi. Warren County, with a population of 49,500 is served by five
commercial banks with a combined total of 19 branches. The largest of these banks in terms
of deposits held, as of June 30, 1997, is Trustmark National Bank, with 47.68 percent of
the deposits held by commercial banks in Warren County. Merchants and Bancorp rank second
and third, with 32.65 percent and 9.44 percent, respectively. All five of the banks are
strong, viable competitors with substantial resources.
As measured in terms of deposits held by commercial banks, the Warren County market is
highly concentrated, with a pre-merger Herfindahl-Hirschman Index ("HHI") of
3510. As a result of the merger, concentration would increase by 617 to a post-merger
level of 4127. However, these indicia overstate the competitive impact of the proposed
transaction. Among all depository institutions in Warren County, Mutual Credit Union has
the second largest deposit base. Together with another credit union, it provides an
alternative source of financial services to a substantial portion of the county's
population. With regard to alternative sources of banking services for locally limited
business customers, Community Reinvestment Act ("CRA") data on small business
loans in Warren County identifies 19 CRA-reporting lenders that originate such loans.
Moreover, in addition to the four commercial banks that would continue to exist after the
merger, there is a potential entry into Warren County by an out-of-market commercial bank.
Over ten commercial banks and thrifts and numerous credit unions serve Hinds County.
Merchants has two branches on the western border of Hinds County which constitute 0.73
percent of the county's deposit base. Bancorp's Hinds County branch network holds 6.85
percent of the county's deposit base. Although commercial banking in Hinds County is
highly concentrated, with a pre-merger HHI of 3179, the proposed merger would result in an
increase of only 10, to a post-merger level of 3189.
The U.S. Department of Justice concluded that the proposed transaction would not have a
significantly adverse effect on competition. The Board of Governors of the Federal Reserve
System concluded that the proposed transaction could have significant adverse effects on
competition in Warren County, but advised that all of the economic factors that may be
relevant to the competitive effects of the transaction were not considered. Other federal
regulatory authorities offered no comments. The state banking authority approved the
transaction pending approval of the other regulatory authorities.
Taking into account the very limited impact of the proposed merger in Hinds County and,
for Warren County, the number and resources of the remaining commercial banks, the
availability of alternative sources of banking services for both consumers and commercial
customers, and the likelihood of new entry, the Board of Directors is of the opinion that
the transaction would not substantially lessen competition, tend to create a monopoly, or
otherwise have an adverse competitive impact that would require disapproval.
Financial and Managerial Resources; Future Prospects
Bancorp is in generally satisfactory condition with adequate capital and satisfactory
management. Future prospects appear favorable.
Convenience and Needs of the Community to be Served
The scope and convenience of banking services offered to the general public should not
be significantly affected by the proposal. Bancorp will provide the same services offered
by Merchants. There have been no protests to the proposed transaction from either the
public or the banking community. A review of available information revealed no
inconsistencies with the purposes of the Community Reinvestment Act. The resultant
institution is expected to continue to meet the credit needs of its entire community,
consistent with the safe and sound operation of the institution.
Upon consideration of all relevant material, the Board of Directors has concluded that
the application should be and hereby is approved subject to the following conditions:
1. That the transaction shall not be consummated before the fifteenth calendar day
following the date of this Order or no later than six months after the date of this Order
unless such period is extended for good cause by the Corporation;
2. That all necessary and final approvals be received from other regulatory
3. That until the proposed transaction becomes effective, the Corporation shall have
the right to alter, suspend, or withdraw its approval should any interim development be
deemed by the Board of Directors to warrant such action.
Dated at Washington, this 17th day of November, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Robert E. Feldman