A month has gone by since the last earnings report for BancorpSouth (BXS). Shares have added about 6.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BancorpSouth due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
BancorpSouth Q1 Earnings Beat on Solid Revenues
BancorpSouth delivered a earnings surprise of 14.1% in first-quarter 2021 on higher interest income. Net operating earnings of 73 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, the bottom line compares favorably with the 33 cents reported in the year-ago quarter.
Higher net revenues were aided by increases in net interest revenue and non-interest revenues. Moreover, higher deposit balances and decreasing costs aided the company However, shrinking net interest margins and loan growth were major drags.
The company’s net income for the March-end quarter amounted to $81.6 million or 77 cents per share, up from the $24.3 million or 21 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Fall
Net revenues for the reported quarter increased 6.9% year over year to $260.8 million. In addition, the top-line figure surpassed the Zacks Consensus Estimate of $254.46 million.
Net interest revenues for the quarter came in at $172.8 million, up 3.2% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.15%, contracting 39 basis points (bps) year over year.
Non-interest revenues climbed 15% year over year to $87.9 million. The figure included a positive mortgage servicing rights valuation adjustment of $7.4 million. This upswing resulted from rise in all the components except for deposit service charge fees and other non-interest revenues.
Non-interest expenses were $155.8 million, down 7.3% year on year. This downside stemmed primarily from lower salaries, other non-interest expenses and merger-related expenses.
As of Mar 31, 2021, total deposits were $20.5 billion, up 4.4% sequentially, while loans and leases, net of unearned income, edged down 1.3% sequentially to $15.03 billion.
Credit Quality Strengthens
Non-performing loans and leases were 0.67% of net loans and leases as of Mar31, 2021, down from 0.9% as of Mar31, 2020. Also, non-performing assets were $110.7 million, down 19.7% from the prior-year quarter. In addition, during the January-March period, the company recorded no provision for credit losses as against the $46 million in provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.74% as of Mar31, 2021, up 21 bps year on year.
As of Mar 31, 2021, tier 1 capital and tier 1 leverage capital ratios were 11.95% and 8.59% compared with the 11.1% and 8.9%, respectively, recorded at the end of the prior-year quarter.
However, the ratio of tangible shareholders' equity to tangible assets shrunk 74 bps to 8.08%. Additionally, ratio of its total shareholders' equity to total assets was 10.9% at the end of the first quarter, down from 12.7% as of Mar31, 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 9.95% due to these changes.
At this time, BancorpSouth has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, BancorpSouth has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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