It has been about a month since the last earnings report for BancorpSouth (BXS - Free Report) . Shares have added about 0.6% in that time frame, outperforming 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's Q3 Earnings In Line, Revenues Increase
BancorpSouth reported third-quarter 2018 net operating earnings of 56 cents per share, in line with the Zacks Consensus Estimate. The bottom line compared favorably with the year-ago quarter earnings of 43 cents.
Results benefited from higher revenues and impressive loan growth. Further, credit quality improved during the quarter. However, increase in expenses was a key headwind.
The company’s net income for the quarter amounted to $66.7 million compared with $39.5 million reported in the year-ago quarter.
Revenues Rise Partially Offset by Higher Expenses, Loans Improve
Quarterly net revenues increased nearly 15% year over year to $213.8 million. However, the reported figure missed the Zacks Consensus Estimate of $216.9 million.
Net interest revenues came in at $142.1 million, up 17.9% year over year. The rise was attributed to higher interest income from loans and leases. Fully-taxable equivalent NIM was 3.67%, expanding 9 basis points (bps) from the prior-year quarter.
Non-interest revenues increased 8.6% year over year to $71.6 million. The rise was primarily led by growth in insurance commission, card fees and other revenues, partially offset by lower mortgage banking income.
Non-interest expenses were $142.4 million, flaring up 12.2% from the year-ago quarter. The upswing stemmed from rise in almost all components.
As of Sep 30, 2018, total deposits were $13.3 billion, up 13.3% year over year while loans and leases, net of unearned income, increased 12.7% to $12.3 billion.
Credit Quality Improves
Non-performing loans and leases were 0.53% of net loans and leases as of Sep 30, 2018, down from 0.59% as of Sep 30, 2017. Additionally, allowance for credit losses to net loans and leases was 0.97%, down from 1.08% registered in the last-year quarter. Annualized net recoveries, as a percent of average loans and leases, were 0.04% compared with net-charge offs of 0.09% a year ago.
Moreover, non-performing assets were nearly $70.3 million, down from $71 million registered in the prior-year quarter. Also, the company did not record any provision against $0.5 million in the year-ago quarter.
Strong Capital Ratios
As of Sep 30, 2018, tier I capital and tier I leverage capital was 11.72% and 9.69%, down from 12.04% and 10.02%, respectively, at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 12.27% at the end of the September-end quarter, up from 11.52% as of Sep 30, 2017. However, the ratio of tangible shareholders' equity to tangible assets shrunk 60 bps to 8.96%.
During the July-September quarter, the company repurchased 166,721 common shares at a weighted average price of $33.38 per share. As of Sep 30, 2018, it had nearly 3 million remaining shares available for repurchase under current share repurchase program through Dec 31, 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, BancorpSouth has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BancorpSouth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.