BancorpSouth Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Mississippi-based BancorpSouth (NYSE: BXS  ) were getting hammered by investors today, falling as much as 11% in intraday trading after the company announced fourth-quarter results and a new stock offering.

So what: BancorpSouth's shares actually had the potential to have a good day today since earnings from the fourth quarter topped analysts' estimates. Thanks in large part to a drop in nonperforming loans, the bank showed $0.16 in earnings per share, up from $0.14 in the third quarter and above the $0.14 that Wall Street was looking for.

Investors, however, seemed to be laser-focused on the fact that the bank announced a new common-stock offering that could have it selling as much as $115 million in new shares. The offering has the potential to dilute the ownership stake of current shareholders.

Now what: The offering is a bit of a head-scratcher considering BancorpSouth emphasized in its earnings release that it "remains a well-capitalized financial institution." On the concerning side, bulking up on capital could mean that management is concerned about tough times ahead and wants a buffer. On the other hand though, if there are opportunities to invest the new capital in organic or acquisition-fueled growth, then the offering could end up being a positive move for current investors.

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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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