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BancorpSouth (BXS) Q3 Earnings In Line, Revenues Increase

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BancorpSouth BXS reported third-quarter 2018 net operating earnings of 56 cents per share, in line with the Zacks Consensus Estimate. Also, the bottom line compares favorably with the year-ago quarter earnings of 43 cents.

Results benefited from an improvement in net interest revenues and non-interest revenues, partially muted by higher expenses. Credit quality improved during the quarter. However, worsening of capital position remained 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 14.6% 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. Fully-taxable equivalent net interest margin (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. However, the increase included a $1.5 million arising from positive adjustment in mortgage servicing rights valuation in this quarter. The rise was further led by growth in insurance commission and other revenues.

Non-interest expenses were $142.4 million, flaring up 12.2% from the year-ago quarter. The upswing stemmed from the impact of elevated compensation expenses and other non-interest expenses.

As of Sep 30, 2018, total deposits were $13.3 billion, down 1% sequentially, while loans and leases, net of unearned income, increased slightly to $12.4 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 compared to provision amount of $0.5 million in the year-ago quarter.

Capital Ratios Deteriorate

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 Sep-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%.

Share Repurchases

During the Jul-Sep 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.  

Our Viewpoint

BancorpSouth’s third-quarter results reflect decent top-line growth, which is expected to continue, owing to its expanding NIM. Nevertheless, total deposits declined further this season. Also, rise in expenses and deterioration in capital position remain drags.

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 #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Comerica’s CMA third-quarter adjusted earnings per share of $1.86 surpassed the Zacks Consensus Estimate of $1.76. Also, the results compared favorably with year-ago adjusted figure of $1.27.   

M&T Bank Corporation MTB reported net operating earnings of $3.56 per share in third-quarter, surpassing the Zacks Consensus Estimate of $3.35. Also, the bottom line improved 59% year over year.

First Horizon National Corporation FHN reported third-quarter adjusted earnings per share of 36 cents, in line with the Zacks Consensus Estimate. The bottom line reflects an increase of 13% from the year-ago quarter. It excluded the effect of gain from sale of Visa shares and various expenses related to the Capital Bank acquisition.

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