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BancorpSouth's (BXS) Q3 Earnings & Revenues Top, Stock Up

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Shares of BancorpSouth Bank (BXS - Free Report) have rallied around 1%, following the release of third-quarter 2019 results. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 61 cents. Also, the bottom line increased 23.2% from the prior-year quarter.

Higher net revenues aided by rise in loan and deposit balance along with improvement in net interest margin (NIM) were driving factors. However, elevated provisions and mounting expenses were major drags.

After considering certain non-recurring items, the company’s net income for the third quarter amounted to $63.8 million, or 63 cents per share, down from the $66.7 million, or 67 cents reported in the year-ago quarter.

Revenues Climb, Expenses Rise, Loans & Deposits Improve

Net revenues for the reported quarter increased 13.2% year over year to $242 million. Also, the top-line figure outpaced the Zacks Consensus Estimate of $238.7 million.

Net interest revenues for the quarter came in at $166.6 million, up 17.2% year over year. Fully-taxable equivalent NIM was 3.88%, expanding 21 basis points (bps).

Non-interest revenues increased 5.3% year over year to $75.4 million. However, the figure included a negative mortgage servicing rights valuation adjustment of $4 million. This upswing resulted from rise in all the components except insurance commissions and credit card, debit card and merchant fees.

Non-interest expenses came in at $159.6 million, flaring up 12.1% from the year-ago quarter. The upside stemmed from the impact of higher salaries and employee benefits, net occupancy and equipment expenses.

As of Sep 30, 2019, total deposits were $16 billion, up 5.9% sequentially, while loans and leases, net of unearned income, increased 3.4% to $14.1 billion.

Credit Quality: A Mixed Bag

Non-performing loans and leases were 0.77% of net loans and leases as of Sep 30, 2019, up from 0.53% as of Sep 30, 2018. Also, non-performing assets came in at $116 million, up from the prior-year quarter’s $70.3 million.

However, annualized net recoveries, as a percentage of average loans and leases, edged down to 0.02% year over year from 0.04% recorded on Sep 30, 2018. Allowance for credit losses to net loans and leases was 0.83% as of Sep 30, 2019, down from the year-ago quarter’s 0.97%.

Moreover, the company recorded provision for credit losses of $0.5 million compared with no provisions reported in the year-ago quarter.

Capital Ratios

As of Sep 30, 2019, tier I capital and tier I leverage capital was 10.54% and 9.14%, down from 11.71% and 9.68%, respectively, at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets shrunk 49 bps to 8.47%.

However, ratio of its total shareholders' equity to total assets was 12.54% at the end of the September-end quarter, up from 12.27% as of Sep 30, 2018.

Share Repurchases

During the reported quarter, the company repurchased 0.56 million common shares at a weighted average price of $27.04 per share.

Our Viewpoint

Improved NIM, along with rise in loans and deposits, will likely be conducive to BancorpSouth’s top-line growth in the upcoming period. Also, the company’s efforts to grow through acquisitions look encouraging. Nevertheless, rising expenses, mainly due to the company's inorganic growth strategy and digitization efforts, might partly impede bottom-line growth.

BancorpSouth Bank Price, Consensus and EPS Surprise

 

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.

Performance of Other Banks

Commerce Bancshares, Inc.’s (CBSH - Free Report) third-quarter 2019 earnings per share of 98 cents surpassed the Zacks Consensus Estimate of 93 cents. The figure was in line with the prior-year quarter.

Washington Federal’s (WAFD - Free Report) fourth-quarter fiscal 2019 (ended Sep 30) earnings came in at 66 cents per share, in line with the Zacks Consensus Estimate. The figure reflected year-over-year growth of 6.5%.

Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2019 operating earnings per share of $1.03 beat the Zacks Consensus Estimate of $1.01. The bottom line came in 2% higher than the year-ago quarter’s reported figure.

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