BancorpSouth Bank’s ( BXS Quick Quote BXS - Free Report) decent lending scenario continues to boost its growth prospects. Also, the bank’s inorganic growth efforts are commendable. However, huge exposure to consumer mortgage and commercial real estate loans is a concern.
The company has a solid balance-sheet position. Along with a high cash balance, its earnings before interest and tax have been 17.2 times the interest expenses and increased in the past few quarters. Thus, the bank is expected to continue meeting debt obligations, even if the economic situation worsens.
Fee income of the company has witnessed a five-year (2016-2020) compound annual growth rate CAGR of around 26%, mainly on higher credit and debit card income, along with rise in deposit service charges. It is anticipated to continue rising in the quarters ahead, as lower interest rates will likely support the mortgage segment’s performance, resulting in higher originations.
Shares of this Zacks Rank #3 (Hold) company have rallied 14.9% over the past three months, underperforming the
industry’s growth of 27.8%. Notably analysts seem to have an optimistic stance for the stock. The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 8.6% and 1.7% upward, respectively, over the past 30 days. Nevertheless, BancorpSouth has significant exposure to consumer mortgage and commercial real estate loans. As of Dec 31, 2020, the company’s exposure to these loan portfolios constituted around 60% of the total loans. Such high exposure can be risky for the bank, highlighting concentration risk amid uncertain markets.
The company’s credit quality deteriorated in 2020 due to the pandemic and is expected to remain under pressure in the upcoming period. Furthermore the bank’s mounting expenses on account of investments in organic growth and digitization efforts might deter bottom-line growth in the near term.
Stocks to consider WSFS Financial Corporation ( WSFS Quick Quote WSFS - Free Report) has been witnessing upward estimate revisions of 7.4% for the past 30 days for current-year earnings. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the . the complete list of today’s Zacks #1 Rank stocks here Peoples United Financial, Inc. ( PBCT Quick Quote PBCT - Free Report) recorded an upward earnings estimate revision of 10.3% for 2021 earnings over the past 30 days. Currently, it flaunts a Zacks Rank of 1. Northfield Bancorp, Inc. ( NFBK Quick Quote NFBK - Free Report) has witnessed an upward earnings estimate revision of 14% for ongoing-year earnings in 30 days’ time. At present, it sports a Zacks Rank of 1. Biggest Tech Breakthrough in a Generation
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