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BancorpSouth (BXS) Beats Q4 Earnings on Higher Revenues
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BancorpSouth, Inc.’s fourth-quarter 2016 operating earnings per share of 40 cents surpassed the Zacks Consensus Estimate of 37 cents. Moreover, the reported figure represents an increase of 21.2% from the year-ago quarter. This figure includes mortgage servicing rights (“MSR”) valuation adjustment for the quarter.
Better-than-expected results were primarily driven by an increase in revenues and lower expenses. The company also witnessed growth in loan and deposit balances. However, asset quality remained mixed in the quarter. Moreover, weak capital position was a headwind.
Including MSR and certain other non-recurring items, the company’s fourth-quarter net income amounted to $37.7 million, up from $21.2 million in the year-ago quarter.
The company also reported full-year operating earnings per share of $1.51, up 4.9% year over year. However, the figure lagged the Zacks Consensus Estimate of $1.54. Also, net income for 2016 came in at $132.7 million, up 4.1% year over year.
The company’s fourth-quarter net revenue increased 5% year over year to $188 million. Also, the figure outpaced the Zacks Consensus Estimate of $184 million.
For 2016, net revenue amounted to $732 million, up 2.5% year over year. However, the figure lagged the Zacks Consensus Estimate of $745 million.
Net interest revenue amounted to $115.4 million, up 3.7% year over year.
Also, non-interest revenues increased 8.3% year over year to $73 million. The rise was mainly due to an increase in mortgage banking revenues, insurance commissions and wealth management.
Excluding the MSR valuation adjustments, net mortgage lending revenues totaled $6.6 million, down from $7.7 million in the year-ago quarter.
Fully taxable equivalent net interest margin was 3.46%, down 12 basis points (bps) from the prior-year quarter.
Non-interest expenses were down 11.4% year over year to $131.5 million. The decrease was triggered by a fall in all expense components except salaries and employee benefit costs.
As of Dec 31, 2016, total deposits were $11.7 billion, up nearly 1% from the previous quarter. Also net loans and leases increased nearly 1.5% sequentially to $10.7 billion.
Mixed Credit Quality
The company recorded provisions for credit losses of $1 million in the reported quarter as against zero provisions a year ago. Also, non-performing loans and leases increased to $101.8 million as of Dec 31, 2016, from $94.9 million as of Dec 31, 2015. Further, non-performing assets were $109.7 million, almost in line with the prior-year quarter.
However, annualized net charge-offs, as a percent of average loans and leases, were 0.12% compared with 0.25% in the prior-year quarter. Also, allowance for credit losses to net loans and leases edged down to 1.14% from 1.22% in the prior-year quarter.
Capital Position Weakens
As of Dec 31, 2016, Tier I capital and tier I leverage capital were 12.34% and 10.32%, respectively, compared with 12.27% and 10.61% at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.71% at the end of the quarter, down from 12.0% as of Dec 31, 2015. The ratio of tangible shareholders' equity to tangible assets decreased 23 bps to 9.73%.
Share Repurchase
In the quarter, the company repurchased 436,541 shares of common stock at an average price of $22.91 per share.
Our Viewpoint
BancorpSouth is likely to expand through strategic acquisitions, backed by a strong capital and liquidity position. Also, its efficient cost control initiatives are expected to improve profitability, going forward. Further, given the company’s consistent efforts to reduce problematic assets, we expect the asset quality to be relatively stable or modestly improve in the near term.
However, the company’s declining non-interest income is expected to continue hampering top-line improvement. Also, stringent regulations remain a concern.
BancorpSouth, Inc. Price, Consensus and EPS Surprise
Among other Southeast banks, Regions Financial Corporation’s (RF - Free Report) fourth-quarter 2016 earnings from continuing operations of 24 cents per share surpassed the Zacks Consensus Estimate of 22 cents. Also, the figure was 9.1% higher than the prior-year quarter earnings.
First Horizon National Corporation (FHN - Free Report) posted earnings per share of 23 cents for the quarter, which lagged the Zacks Consensus Estimate of 25 cents. However, the figure represents an increase of 15% over the year-ago quarter.
Bank of the Ozarks, Inc.’s fourth-quarter 2016 earnings of 72 cents per share surpassed the Zacks Consensus Estimate of 69 cents. Further, the figure improved nearly 26.3% on a year-over-year basis.
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BancorpSouth (BXS) Beats Q4 Earnings on Higher Revenues
BancorpSouth, Inc.’s fourth-quarter 2016 operating earnings per share of 40 cents surpassed the Zacks Consensus Estimate of 37 cents. Moreover, the reported figure represents an increase of 21.2% from the year-ago quarter. This figure includes mortgage servicing rights (“MSR”) valuation adjustment for the quarter.
Better-than-expected results were primarily driven by an increase in revenues and lower expenses. The company also witnessed growth in loan and deposit balances. However, asset quality remained mixed in the quarter. Moreover, weak capital position was a headwind.
Including MSR and certain other non-recurring items, the company’s fourth-quarter net income amounted to $37.7 million, up from $21.2 million in the year-ago quarter.
The company also reported full-year operating earnings per share of $1.51, up 4.9% year over year. However, the figure lagged the Zacks Consensus Estimate of $1.54. Also, net income for 2016 came in at $132.7 million, up 4.1% year over year.
Revenues Up, Costs Down
The company’s fourth-quarter net revenue increased 5% year over year to $188 million. Also, the figure outpaced the Zacks Consensus Estimate of $184 million.
For 2016, net revenue amounted to $732 million, up 2.5% year over year. However, the figure lagged the Zacks Consensus Estimate of $745 million.
Net interest revenue amounted to $115.4 million, up 3.7% year over year.
Also, non-interest revenues increased 8.3% year over year to $73 million. The rise was mainly due to an increase in mortgage banking revenues, insurance commissions and wealth management.
Excluding the MSR valuation adjustments, net mortgage lending revenues totaled $6.6 million, down from $7.7 million in the year-ago quarter.
Fully taxable equivalent net interest margin was 3.46%, down 12 basis points (bps) from the prior-year quarter.
Non-interest expenses were down 11.4% year over year to $131.5 million. The decrease was triggered by a fall in all expense components except salaries and employee benefit costs.
As of Dec 31, 2016, total deposits were $11.7 billion, up nearly 1% from the previous quarter. Also net loans and leases increased nearly 1.5% sequentially to $10.7 billion.
Mixed Credit Quality
The company recorded provisions for credit losses of $1 million in the reported quarter as against zero provisions a year ago. Also, non-performing loans and leases increased to $101.8 million as of Dec 31, 2016, from $94.9 million as of Dec 31, 2015. Further, non-performing assets were $109.7 million, almost in line with the prior-year quarter.
However, annualized net charge-offs, as a percent of average loans and leases, were 0.12% compared with 0.25% in the prior-year quarter. Also, allowance for credit losses to net loans and leases edged down to 1.14% from 1.22% in the prior-year quarter.
Capital Position Weakens
As of Dec 31, 2016, Tier I capital and tier I leverage capital were 12.34% and 10.32%, respectively, compared with 12.27% and 10.61% at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.71% at the end of the quarter, down from 12.0% as of Dec 31, 2015. The ratio of tangible shareholders' equity to tangible assets decreased 23 bps to 9.73%.
Share Repurchase
In the quarter, the company repurchased 436,541 shares of common stock at an average price of $22.91 per share.
Our Viewpoint
BancorpSouth is likely to expand through strategic acquisitions, backed by a strong capital and liquidity position. Also, its efficient cost control initiatives are expected to improve profitability, going forward. Further, given the company’s consistent efforts to reduce problematic assets, we expect the asset quality to be relatively stable or modestly improve in the near term.
However, the company’s declining non-interest income is expected to continue hampering top-line improvement. Also, stringent regulations remain a concern.
BancorpSouth, Inc. Price, Consensus and EPS Surprise
BancorpSouth, Inc. Price, Consensus and EPS Surprise | BancorpSouth, Inc. Quote
BancorpSouth currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other Southeast banks, Regions Financial Corporation’s (RF - Free Report) fourth-quarter 2016 earnings from continuing operations of 24 cents per share surpassed the Zacks Consensus Estimate of 22 cents. Also, the figure was 9.1% higher than the prior-year quarter earnings.
First Horizon National Corporation (FHN - Free Report) posted earnings per share of 23 cents for the quarter, which lagged the Zacks Consensus Estimate of 25 cents. However, the figure represents an increase of 15% over the year-ago quarter.
Bank of the Ozarks, Inc.’s fourth-quarter 2016 earnings of 72 cents per share surpassed the Zacks Consensus Estimate of 69 cents. Further, the figure improved nearly 26.3% on a year-over-year basis.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>