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BancorpSouth Bank delivered an earnings surprise of a whopping 90.3% in second-quarter 2020 on higher interest income. Net operating earnings of 59 cents per share beat the Zacks Consensus Estimate of 31 cents. However, the bottom line compares unfavorably with the year-ago quarter’s 61 cents.
Higher net revenues, aided by rise in interest income and non-interest revenues were the driving factors. Moreover, higher deposit and loan balances boosted profitability. However, elevated expenses were a drag. The company’s net income for the second quarter amounted to $58.8 million or 57 cents per share, up from the $53.1 million or 53 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Rise
Net revenues for the reported quarter inched up 1.7% year over year to $261.8 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $247.2 million.
Net interest revenues for the quarter were $170.6 million, up 6.6% year over year. Fully-taxable equivalent NIM was 3.35%, contracting 52 basis points (bps) year over year.
Non-interest revenues climbed 37.7% year over year to $91.3 million. Also, the figure included a negative mortgage servicing rights valuation adjustment of $2.4 million. This upswing resulted from rise in all the components except for Credit card, debit card, and merchant fee revenues, Deposit service charge revenues and insurance commissions.
Non-interest expenses were $162.5 million, up 3% from the year-ago quarter. This upside stemmed primarily from higher salaries and employee benefits, and net occupancy and expenses.
As of Jun 30, 2020, total deposits were $19.2 billion, up 13.6% sequentially, while loans and leases, net of unearned income, improved 8.5% sequentially to $15.4 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.96% of net loans and leases as of Jun 30, 2020, up from 0.66% as of Jun 30, 2019. Also, non-performing assets were $155.4 million, up 62% from the prior-year quarter. In addition, in the second quarter, the company recorded $20 million provision for credit losses against $0.5 million provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.67% as of Jun 30, 2020, flat year on year.
Capital Position
As of Jun 30, 2020, tier I capital and tier I leverage capital were 11.22% and 8.54% compared with the 10.52% and 8.96%, respectively, recorded at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets expanded 23 bps to 8.65%.
However, ratio of its total shareholders' equity to total assets was 11.76% at the end of the June-end quarter, down from 12.29% as of Jun 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
Our Viewpoint
BancorpSouth has a healthy balance-sheet position. This supports its acquisition and capital-deployment strategies. Nevertheless, rising expenses might partly impede bottom-line growth. Further, the decline in interest rates amid the Federal Reserve's accommodative policy stance is expected to hurt the company’s margins and revenues in the upcoming period.
BancorpSouth Bank Price, Consensus and EPS Surprise
Signature Bank (SBNY - Free Report) , Hancock Whitney Corporation (HWC - Free Report) and Texas Capital Bancshares (TCBI - Free Report) are scheduled to announce second-quarter results this week. While Signature Bank and Hancock Whitney will release earnings figures on Jul 21, Texas Capital will report on Jul 22.
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Image: Bigstock
BancorpSouth (BXS) Q2 Earnings, Revenues Surpass Estimates
BancorpSouth Bank delivered an earnings surprise of a whopping 90.3% in second-quarter 2020 on higher interest income. Net operating earnings of 59 cents per share beat the Zacks Consensus Estimate of 31 cents. However, the bottom line compares unfavorably with the year-ago quarter’s 61 cents.
Higher net revenues, aided by rise in interest income and non-interest revenues were the driving factors. Moreover, higher deposit and loan balances boosted profitability. However, elevated expenses were a drag.
The company’s net income for the second quarter amounted to $58.8 million or 57 cents per share, up from the $53.1 million or 53 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Rise
Net revenues for the reported quarter inched up 1.7% year over year to $261.8 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $247.2 million.
Net interest revenues for the quarter were $170.6 million, up 6.6% year over year. Fully-taxable equivalent NIM was 3.35%, contracting 52 basis points (bps) year over year.
Non-interest revenues climbed 37.7% year over year to $91.3 million. Also, the figure included a negative mortgage servicing rights valuation adjustment of $2.4 million. This upswing resulted from rise in all the components except for Credit card, debit card, and merchant fee revenues, Deposit service charge revenues and insurance commissions.
Non-interest expenses were $162.5 million, up 3% from the year-ago quarter. This upside stemmed primarily from higher salaries and employee benefits, and net occupancy and expenses.
As of Jun 30, 2020, total deposits were $19.2 billion, up 13.6% sequentially, while loans and leases, net of unearned income, improved 8.5% sequentially to $15.4 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.96% of net loans and leases as of Jun 30, 2020, up from 0.66% as of Jun 30, 2019. Also, non-performing assets were $155.4 million, up 62% from the prior-year quarter. In addition, in the second quarter, the company recorded $20 million provision for credit losses against $0.5 million provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.67% as of Jun 30, 2020, flat year on year.
Capital Position
As of Jun 30, 2020, tier I capital and tier I leverage capital were 11.22% and 8.54% compared with the 10.52% and 8.96%, respectively, recorded at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets expanded 23 bps to 8.65%.
However, ratio of its total shareholders' equity to total assets was 11.76% at the end of the June-end quarter, down from 12.29% as of Jun 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
Our Viewpoint
BancorpSouth has a healthy balance-sheet position. This supports its acquisition and capital-deployment strategies. Nevertheless, rising expenses might partly impede bottom-line growth. Further, the decline in interest rates amid the Federal Reserve's accommodative policy stance is expected to hurt the company’s margins and revenues in the upcoming period.
BancorpSouth Bank Price, Consensus and EPS Surprise
BancorpSouth Bank price-consensus-eps-surprise-chart | BancorpSouth Bank Quote
Currently, BancorpSouth carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Schedule of Other Banks
Signature Bank (SBNY - Free Report) , Hancock Whitney Corporation (HWC - Free Report) and Texas Capital Bancshares (TCBI - Free Report) are scheduled to announce second-quarter results this week. While Signature Bank and Hancock Whitney will release earnings figures on Jul 21, Texas Capital will report on Jul 22.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>