BancorpSouth (BXS - Free Report) reported fourth-quarter 2018 net operating earnings of 57 cents per share, surpassing the Zacks Consensus Estimate of 54 cents. Also, the bottom line increased 39% from the prior-year quarter.
Results benefited from an improvement in net interest revenues, partially offset by higher expenses. Further, a dismal capital position and higher provisions were the undermining factors.
The company’s net income for the quarter amounted to $47.1 million or 47 cents per share compared with $37.5 million or 41 cents per share reported in the year-ago quarter.
Earnings per share for 2018 came in at $2.23 per share compared with $1.67 per share reported in the prior year. The company’s net income for 2018 amounted to $221.3 million compared with $153 million recorded in the prior year.
Higher Expenses Offset Revenue Growth, Loans Improve
Net revenues for the quarter increased nearly 14.9% year over year to $211.9 million. However, the reported figure missed the Zacks Consensus Estimate of $221.4 million.
Net revenues for 2018 increased nearly 15.5% year over year to $857.3 million. The revenue figure, however, missed the Zacks Consensus Estimate of $864.1 million.
Net interest revenues for the quarter came in at $152.9 million, up 26% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.80%, expanding 22 basis points (bps) from the prior-year quarter.
Non-interest revenues decreased 6.4% year over year to $59 million. However, the figure included a negative mortgage servicing rights valuation adjustment of $8.1 million. The downside stemmed from lower insurance commission and wealth management revenues.
Non-interest expenses came in at $152.3 million, flaring up 21% from the year-ago quarter. The upswing stemmed from the impact of elevated salaries and employee benefits, and other non-interest expenses.
As of Dec 31, 2018, total deposits were $14.1 billion, up 5.4% sequentially, while loans and leases, net of unearned income, increased 5.3% to $13.1 billion.
Credit Quality: A Mixed Bag
Non-performing loans and leases were 0.74% of net loans and leases as of Dec 31, 2018, up from 0.71% as of Dec 31, 2017. However, allowance for credit losses to net loans and leases was 0.92%, down from 1.07% registered in the year-ago quarter. Annualized net charge-offs, as a percentage of average loans and leases, remained stable at 0.06% year over year.
Further, non-performing assets were nearly $106 million, up from $84.5 million in the prior-year quarter. However, the company recorded provision for credit losses of $1 million compared to $4.5 million in the year-ago quarter.
Capital Ratios Deteriorate
As of Dec 31, 2018, tier I capital and tier I leverage capital was 10.85% and 9.06%, down from 12.15% and 10.12%, respectively, at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 12.25% at the end of the fourth quarter, up from 11.20% as of Dec 31, 2017. However, the ratio of tangible shareholders' equity to tangible assets shrunk 85 bps to 8.46%.
During the quarter under review, the company repurchased 3 million common shares at a weighted average price of $30.22 per share.
BancorpSouth’s fourth-quarter results reflect decent top-line growth, which is expected to continue, backed by the company’s expanding NIM. Nonetheless, rise in expenses and deterioration in capital position remains drags.
Currently, BancorpSouth carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2019 (ended Dec 31) earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.2%.
Synovus Financial’s (SNV - Free Report) fourth-quarter earnings of 92 cents per share lagged the Zacks Consensus Estimate of 94 cents. However, the reported figure came in 27.8% higher than the prior-year tally.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
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