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BancorpSouth's (BXS) Q3 Earnings Beat Estimates, Costs Down
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BancorpSouth, Inc. reported third-quarter 2017 adjusted operating earnings of 43 cents per share, beating the Zacks Consensus Estimate of 42 cents. Also, the bottom line compared favorably with the year-ago quarter earnings of 39 cents.
Results benefitted from an improvement in net interest revenue and lower expenses, partially offset by lower non-interest revenue. Loans and deposit balances remained strong during the quarter. However, the company recorded provisions in the quarter, which was a headwind.
Including mortgage servicing rights (“MSR”) valuation adjustment, the company’s net income amounted to $39.5 million or 43 cents per share, increasing from $37.8 million or 40 cents reported in the year-ago quarter.
Net Interest Revenues Up, Expenses Down
Quarterly net revenues increased 1.2% year over year to $186.5 million. However, the reported figure missed the Zacks Consensus Estimate of $191.2 million.
Net interest revenues came in at $120.6 million, up 5.2% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.58%, increasing 7 basis points (bps) from the prior-year quarter figure.
Non-interest revenues decreased 5.3% year over year to $66 million. The decline was primarily due to a fall in mortgage banking revenues and deposit service charges. These decreases were partially offset by high insurance commissions and other income.
Non-interest expenses were $126.9 million, decreasing 1.1% on a year-over-year basis.
As of Sep 30, 2017, total deposits were $11.8 billion, down 1.4% sequentially, while net loans and leases grew marginally to $10.9 billion.
Credit Quality: A Mixed Bag
Non-performing loans and leases were 0.59% of net loans and leases as of Sep 30, 2017, down from 0.85% as of Sep 30, 2016. Additionally, allowance for credit losses to net loans and leases was 1.08%, down from 1.18% registered in the comparable period last year. Further, non-performing assets were nearly $71 million, decreasing from $102.3 million registered in the prior-year quarter.
However, annualized net charge-offs, as a percent of average loans and leases were 0.09%, compared with 0.04% in the prior-year quarter. Also, the company recorded $0.5 million of provisions in the quarter, as against no provisions registered in the year-ago quarter.
Capital Ratios Deteriorated
As of Sep 30, 2017, Tier I capital and tier I leverage capital was 12.04% and 10.02%, down from 12.32% and 10.53%, respectively, at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.52% at the end of the quarter, down from 11.80% as of Sep 30, 2016. The ratio of tangible shareholders' equity to tangible assets contracted 30 bps to 9.56%.
Share Repurchases
During the quarter, the company repurchased 0.7 million common shares at an average price of $28.99 per share.
Our Viewpoint
Persistent decline in mortgage banking revenues continues to be a major concern for the company. Though, NIM improved in the quarter, it has been declining since the past few years. Thus, lower NIM might hurt the company’s top line growth. Further, the company’s significant exposure to risky loan portfolios might hamper its financials in the near term.
BancorpSouth, Inc. Price, Consensus and EPS Surprise
Wells Fargo & Company (WFC - Free Report) reported third-quarter adjusted earnings of $1.04 per share, which came in line with the Zacks Consensus Estimate. Results were hurt due to a decline in revenues and higher expenses. However, credit quality witnessed improvement.
Despite weak fixed income market revenues, Citigroup Inc. (C - Free Report) delivered a positive earnings surprise of 7.6% in third-quarter 2017 on prudent expense management. Earnings per share of $1.42 for the quarter easily outpaced the Zacks Consensus Estimate of $1.32.
Rising rates and loan growth drove JPMorgan Chase & Co.’s (JPM - Free Report) earnings of $1.76 per share, which easily surpassed the Zacks Consensus Estimate of $1.67. Also, the figure reflects a rise of 11% from the year-ago period. Solid loan growth (driven mainly by improved credit card loans) and higher interest rates supported net interest income. Moreover, a slight fall in operating expenses acted as a tailwind.
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BancorpSouth's (BXS) Q3 Earnings Beat Estimates, Costs Down
BancorpSouth, Inc. reported third-quarter 2017 adjusted operating earnings of 43 cents per share, beating the Zacks Consensus Estimate of 42 cents. Also, the bottom line compared favorably with the year-ago quarter earnings of 39 cents.
Results benefitted from an improvement in net interest revenue and lower expenses, partially offset by lower non-interest revenue. Loans and deposit balances remained strong during the quarter. However, the company recorded provisions in the quarter, which was a headwind.
Including mortgage servicing rights (“MSR”) valuation adjustment, the company’s net income amounted to $39.5 million or 43 cents per share, increasing from $37.8 million or 40 cents reported in the year-ago quarter.
Net Interest Revenues Up, Expenses Down
Quarterly net revenues increased 1.2% year over year to $186.5 million. However, the reported figure missed the Zacks Consensus Estimate of $191.2 million.
Net interest revenues came in at $120.6 million, up 5.2% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.58%, increasing 7 basis points (bps) from the prior-year quarter figure.
Non-interest revenues decreased 5.3% year over year to $66 million. The decline was primarily due to a fall in mortgage banking revenues and deposit service charges. These decreases were partially offset by high insurance commissions and other income.
Non-interest expenses were $126.9 million, decreasing 1.1% on a year-over-year basis.
As of Sep 30, 2017, total deposits were $11.8 billion, down 1.4% sequentially, while net loans and leases grew marginally to $10.9 billion.
Credit Quality: A Mixed Bag
Non-performing loans and leases were 0.59% of net loans and leases as of Sep 30, 2017, down from 0.85% as of Sep 30, 2016. Additionally, allowance for credit losses to net loans and leases was 1.08%, down from 1.18% registered in the comparable period last year. Further, non-performing assets were nearly $71 million, decreasing from $102.3 million registered in the prior-year quarter.
However, annualized net charge-offs, as a percent of average loans and leases were 0.09%, compared with 0.04% in the prior-year quarter. Also, the company recorded $0.5 million of provisions in the quarter, as against no provisions registered in the year-ago quarter.
Capital Ratios Deteriorated
As of Sep 30, 2017, Tier I capital and tier I leverage capital was 12.04% and 10.02%, down from 12.32% and 10.53%, respectively, at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.52% at the end of the quarter, down from 11.80% as of Sep 30, 2016. The ratio of tangible shareholders' equity to tangible assets contracted 30 bps to 9.56%.
Share Repurchases
During the quarter, the company repurchased 0.7 million common shares at an average price of $28.99 per share.
Our Viewpoint
Persistent decline in mortgage banking revenues continues to be a major concern for the company. Though, NIM improved in the quarter, it has been declining since the past few years. Thus, lower NIM might hurt the company’s top line growth. Further, the company’s significant exposure to risky loan portfolios might hamper its financials in the near term.
BancorpSouth, Inc. Price, Consensus and EPS Surprise
BancorpSouth, Inc. Price, Consensus and EPS Surprise | BancorpSouth, Inc. Quote
BancorpSouth currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of other Banks
Wells Fargo & Company (WFC - Free Report) reported third-quarter adjusted earnings of $1.04 per share, which came in line with the Zacks Consensus Estimate. Results were hurt due to a decline in revenues and higher expenses. However, credit quality witnessed improvement.
Despite weak fixed income market revenues, Citigroup Inc. (C - Free Report) delivered a positive earnings surprise of 7.6% in third-quarter 2017 on prudent expense management. Earnings per share of $1.42 for the quarter easily outpaced the Zacks Consensus Estimate of $1.32.
Rising rates and loan growth drove JPMorgan Chase & Co.’s (JPM - Free Report) earnings of $1.76 per share, which easily surpassed the Zacks Consensus Estimate of $1.67. Also, the figure reflects a rise of 11% from the year-ago period. Solid loan growth (driven mainly by improved credit card loans) and higher interest rates supported net interest income. Moreover, a slight fall in operating expenses acted as a tailwind.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>