BancorpSouth Bank BXS delivered positive earnings surprise of 8.3% in fourth-quarter 2019 on higher interest income. Net operating earnings of 65 cents per share beat the Zacks Consensus Estimate of 60 cents. Also, the bottom line increased 14% from the prior-year quarter.
Higher net revenues aided by rise in interest income and non-interest revenues were the driving factors. Also, nil provisions during the quarter came as a tailwind. However, mounting expenses was a major drag.
After considering certain non-recurring items, the company’s net income for the fourth quarter amounted to $65.8 million or 63 cents per share, up from the $47.1 million or 47 cents reported in the year-ago quarter.
For full-year 2019, BancorpSouth reported net income of $234.3 million or $2.30 per share compared with $221.3 million or $2.23 in prior-year.
Revenues & Deposits Climb, Expenses Rise
Net revenues for the reported quarter increased 15.8% year over year to $245.5 million. Also, the top-line figure outpaced the Zacks Consensus Estimate of $242.6 million.
For 2019, the company reported net revenues of $930.6 million, up 8.6% from 2018. The reported figure surpassed the consensus estimate of $929.3 million.
Net interest revenues for the quarter came in at $170.8 million, up 11.7% year over year. Fully-taxable equivalent NIM was 3.76%, contracting 4 basis points (bps).
Non-interest revenues increased 26.5% year over year to $74.7 million. However, the figure included a positive mortgage servicing rights valuation adjustment of $3.2 million. This upswing resulted from rise in all the components except insurance commissions and credit card, debit card and merchant fees.
Non-interest expenses were $162.4 million, up 6.6% from the year-ago quarter. The upside stemmed from the impact of higher salaries and employee benefits, net occupancy and equipment expenses.
As of Dec 31, 2019, total deposits were $16.4 billion, up 2.4% sequentially, while loans and leases, net of unearned income, declined marginally to $14.1 billion.
Credit Quality: A Mixed Bag
Non-performing loans and leases were 0.79% of net loans and leases as of Dec 31, 2019, up from 0.67% as of Dec 31, 2018. Also, non-performing assets came in at $118.3 million, up 11.5% from the prior-year quarter.
However, allowance for credit losses to net loans and leases was 0.85% as of Dec 31, 2019, down from the year-ago quarter’s 0.92%. Moreover, in the fourth quarter, the company recorded nil provision for credit losses against $1 million provisions reported in the year-ago quarter.
Strong Capital Position
As of Dec 31, 2019, tier I capital and tier I leverage capital was 11.6% and 9.69%, up from 10.84% and 9.06%, respectively, at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets shrunk 49 bps to 8.92%.
Also, ratio of its total shareholders' equity to total assets was 12.75% at the end of the December-ended quarter, up from 12.25% as of Dec 31, 2018.
During the reported quarter, the company repurchased 0.29 million common shares at a weighted average price of $32.46 per share. In full-year 2019, BancorpSouth repurchased 2.5 million common shares at a weighted average price of $28.20 per share.
Rising net interest revenues, despite lower interest rates, along with solid growth in non-interest revenues, are likely to be conducive to BancorpSouth’s bottom-line growth. 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
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
Northern Trust Corporation
NTRS reported a negative earnings surprise of 4% in fourth-quarter 2019. Earnings per share of $1.70 lagged the Zacks Consensus Estimate of $1.77. Moreover, the reported figure declined 5.6% year over year. Results included certain one-time items.
Fifth Third Bancorp
FITB reported fourth-quarter 2019 adjusted earnings per share of 68 cents, lagging the Zacks Consensus Estimate of 73 cents. However, including certain one-time items, the bottom line came in at 96 cents, up 50% year over year.
CMA Quick Quote CMA - Free Report) delivered positive earnings surprise of 6.3% in fourth-quarter 2019 on high interest income. Earnings per share of $1.85 surpassed the Zacks Consensus Estimate of $1.74. Earnings, however, came in lower than the prior-year quarter figure of $1.95. The Hottest Tech Mega-Trend of All Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early. See Zacks' 3 Best Stocks to Play This Trend >>