It has been about a month since the last earnings report for BancorpSouth . Shares have added about 3.3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
BancorpSouth Q3 Earnings & Revenues Top, Revenues Rise Y/Y
BancorpSouth's third-quarter 2019 net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 61 cents. Also, the bottom line increased 23.2% from the prior-year quarter.
Higher net revenues aided by rise in loan and deposit balance along with improvement in NIM were driving factors. However, elevated provisions and mounting expenses were major drags.
After considering certain non-recurring items, the company’s net income for the third quarter amounted to $63.8 million or 63 cents per share, down from the $66.7 million, or 67 cents reported in the year-ago quarter.
Revenues Climb, Expenses Rise, Loans & Deposits Improve
Net revenues for the reported quarter increased 13.2% year over year to $242 million. Also, the top-line figure outpaced the Zacks Consensus Estimate of $238.7 million.
Net interest revenues for the quarter came in at $166.6 million, up 17.2% year over year. Fully-taxable equivalent NIM was 3.88%, expanding 21 basis points (bps).
Non-interest revenues increased 5.3% year over year to $75.4 million. However, the figure included a negative mortgage servicing rights valuation adjustment of $4 million. This upswing resulted from rise in all the components except insurance commissions and credit card, debit card and merchant fees.
Non-interest expenses came in at $159.6 million, up 12.1% from the year-ago quarter. The upside stemmed from the impact of higher salaries and employee benefits, net occupancy and equipment expenses.
As of Sep 30, 2019, total deposits were $16 billion, up 5.9% sequentially while loans and leases, net of unearned income, increased 3.4% to $14.1 billion.
Credit Quality: A Mixed Bag
Non-performing loans and leases were 0.77% of net loans and leases as of Sep 30, 2019, up from 0.53% as of Sep 30, 2018. Also, non-performing assets came in at $116 million, up from the prior-year quarter’s $70.3 million.
However, annualized net recoveries, as a percentage of average loans and leases, edged down to 0.02% year over year from 0.04% recorded on Sep 30, 2018. Allowance for credit losses to net loans and leases was 0.83% as of Sep 30, 2019, down from the year-ago quarter’s 0.97%.
Moreover, the company recorded provision for credit losses of $0.5 million against no provisions in the year-ago quarter.
Capital Ratios
As of Sep 30, 2019, tier I capital and tier I leverage capital was 10.54% and 9.14%, down from 11.71% and 9.68%, respectively, at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets shrunk 49 bps to 8.47%.
However, ratio of its total shareholders' equity to total assets was 12.54% at the end of September quarter, up from 12.27% as of Sep 30, 2018.
Share Repurchases
During the reported quarter, the company repurchased 0.56 million common shares at a weighted average price of $27.04 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, BancorpSouth has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. Notably, BancorpSouth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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BancorpSouth (BXS) Up 3.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for BancorpSouth . Shares have added about 3.3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
BancorpSouth Q3 Earnings & Revenues Top, Revenues Rise Y/Y
BancorpSouth's third-quarter 2019 net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 61 cents. Also, the bottom line increased 23.2% from the prior-year quarter.
Higher net revenues aided by rise in loan and deposit balance along with improvement in NIM were driving factors. However, elevated provisions and mounting expenses were major drags.
After considering certain non-recurring items, the company’s net income for the third quarter amounted to $63.8 million or 63 cents per share, down from the $66.7 million, or 67 cents reported in the year-ago quarter.
Revenues Climb, Expenses Rise, Loans & Deposits Improve
Net revenues for the reported quarter increased 13.2% year over year to $242 million. Also, the top-line figure outpaced the Zacks Consensus Estimate of $238.7 million.
Net interest revenues for the quarter came in at $166.6 million, up 17.2% year over year. Fully-taxable equivalent NIM was 3.88%, expanding 21 basis points (bps).
Non-interest revenues increased 5.3% year over year to $75.4 million. However, the figure included a negative mortgage servicing rights valuation adjustment of $4 million. This upswing resulted from rise in all the components except insurance commissions and credit card, debit card and merchant fees.
Non-interest expenses came in at $159.6 million, up 12.1% from the year-ago quarter. The upside stemmed from the impact of higher salaries and employee benefits, net occupancy and equipment expenses.
As of Sep 30, 2019, total deposits were $16 billion, up 5.9% sequentially while loans and leases, net of unearned income, increased 3.4% to $14.1 billion.
Credit Quality: A Mixed Bag
Non-performing loans and leases were 0.77% of net loans and leases as of Sep 30, 2019, up from 0.53% as of Sep 30, 2018. Also, non-performing assets came in at $116 million, up from the prior-year quarter’s $70.3 million.
However, annualized net recoveries, as a percentage of average loans and leases, edged down to 0.02% year over year from 0.04% recorded on Sep 30, 2018. Allowance for credit losses to net loans and leases was 0.83% as of Sep 30, 2019, down from the year-ago quarter’s 0.97%.
Moreover, the company recorded provision for credit losses of $0.5 million against no provisions in the year-ago quarter.
Capital Ratios
As of Sep 30, 2019, tier I capital and tier I leverage capital was 10.54% and 9.14%, down from 11.71% and 9.68%, respectively, at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets shrunk 49 bps to 8.47%.
However, ratio of its total shareholders' equity to total assets was 12.54% at the end of September quarter, up from 12.27% as of Sep 30, 2018.
Share Repurchases
During the reported quarter, the company repurchased 0.56 million common shares at a weighted average price of $27.04 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, BancorpSouth has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. Notably, BancorpSouth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.