A month has gone by since the last earnings report for BancorpSouth . Shares have added about 19% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BancorpSouth due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BancorpSouth Q3 Earnings Top, Revenues Escalate
BancorpSouth delivered an earnings surprise of 32.7% in third-quarter 2020 on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 52 cents. The bottom line, however, remains flat year over year.
Higher net revenues, aided by increases in interest income and non-interest revenues were driving factors. Moreover, higher deposit balances boosted profitability. However, elevated provisions and shrinking net interest margins hurt the bank.
The company’s net income for the September-end quarter amounted to $71.5 million or 69 cents per share, up from the $63.8 million or 63 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Fall
Net revenues for the reported quarter increased 9.8% year over year to $265.9 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $259.5 million.
Net interest revenues for the quarter came in at $175.9 million, up 5.6% year over year. Fully-taxable equivalent NIM was 3.31%, contracting 57 basis points (bps) year over year.
Non-interest revenues climbed 19.2% year over year to $89.9 million. Also, the figure included a positive mortgage servicing rights valuation adjustment of $0.4 million. This upswing resulted from rise in all the components except for deposit service charge revenues, wealth management revenues and other non-interest revenues.
Non-interest expenses were $155.5 million, down 2.6% year on year. This downside stemmed primarily from lower salaries and employee benefits, occupancy and other non-interest expenses.
As of Sep 30, 2020, total deposits were $19.4 billion, up 1.2% sequentially, while loans and leases, net of unearned income, deteriorated marginally sequentially to $15.3 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.98% of net loans and leases as of Sep 30, 2020, up from 0.77% as of Sep 30, 2019. Also, non-performing assets were $157.3 million, up 35.6% from the prior-year quarter. In addition, in the July-September period, the company recorded $15 million in provision for credit losses as against the $0.5 million in provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.78% as of Sep 30, 2020, up 95 bps year on year.
Capital Position
As of Sep 30, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.65% and 8.59% compared with the 10.54% and 9.14%, respectively, recorded at the end of the prior-year quarter. Furthermore, the ratio of tangible shareholders' equity to tangible assets expanded 30 bps to 8.77%.
However, ratio of its total shareholders' equity to total assets was 11.81% at the end of the third quarter, down from 12.54% as of Sep 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 39.27% due to these changes.
VGM Scores
Currently, BancorpSouth has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise BancorpSouth has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is BancorpSouth (BXS) Up 19% Since Last Earnings Report?
A month has gone by since the last earnings report for BancorpSouth . Shares have added about 19% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BancorpSouth due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BancorpSouth Q3 Earnings Top, Revenues Escalate
BancorpSouth delivered an earnings surprise of 32.7% in third-quarter 2020 on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 52 cents. The bottom line, however, remains flat year over year.
Higher net revenues, aided by increases in interest income and non-interest revenues were driving factors. Moreover, higher deposit balances boosted profitability. However, elevated provisions and shrinking net interest margins hurt the bank.
The company’s net income for the September-end quarter amounted to $71.5 million or 69 cents per share, up from the $63.8 million or 63 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Fall
Net revenues for the reported quarter increased 9.8% year over year to $265.9 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $259.5 million.
Net interest revenues for the quarter came in at $175.9 million, up 5.6% year over year. Fully-taxable equivalent NIM was 3.31%, contracting 57 basis points (bps) year over year.
Non-interest revenues climbed 19.2% year over year to $89.9 million. Also, the figure included a positive mortgage servicing rights valuation adjustment of $0.4 million. This upswing resulted from rise in all the components except for deposit service charge revenues, wealth management revenues and other non-interest revenues.
Non-interest expenses were $155.5 million, down 2.6% year on year. This downside stemmed primarily from lower salaries and employee benefits, occupancy and other non-interest expenses.
As of Sep 30, 2020, total deposits were $19.4 billion, up 1.2% sequentially, while loans and leases, net of unearned income, deteriorated marginally sequentially to $15.3 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.98% of net loans and leases as of Sep 30, 2020, up from 0.77% as of Sep 30, 2019. Also, non-performing assets were $157.3 million, up 35.6% from the prior-year quarter. In addition, in the July-September period, the company recorded $15 million in provision for credit losses as against the $0.5 million in provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.78% as of Sep 30, 2020, up 95 bps year on year.
Capital Position
As of Sep 30, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.65% and 8.59% compared with the 10.54% and 9.14%, respectively, recorded at the end of the prior-year quarter. Furthermore, the ratio of tangible shareholders' equity to tangible assets expanded 30 bps to 8.77%.
However, ratio of its total shareholders' equity to total assets was 11.81% at the end of the third quarter, down from 12.54% as of Sep 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 39.27% due to these changes.
VGM Scores
Currently, BancorpSouth has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise BancorpSouth has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.