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BancorpSouth (BXS) Q4 Earnings Top Estimates, Revenues Up

Zacks Equity Research

BancorpSouth BXS 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%.

Share Repurchases

During the quarter under review, the company repurchased 3 million common shares at a weighted average price of $30.22 per share.

Our Viewpoint

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.

BancorpSouth Bank Price, Consensus and EPS Surprise


BancorpSouth Bank Price, Consensus and EPS Surprise | 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

Washington Federal’s WAFD 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 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 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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