A month has gone by since the last earnings report for BancorpSouth . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BancorpSouth due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BancorpSouth Q2 Earnings Top Estimates, Revenues Up
BancorpSouth delivered an earnings surprise of a whopping 90.3% in second-quarter 2020 on higher interest income. Net operating earnings of 59 cents per share beat the Zacks Consensus Estimate of 31 cents. However, the bottom line compares unfavorably with the year-ago quarter’s 61 cents.
Higher net revenues, aided by rise in interest income and non-interest revenues were the driving factors. Moreover, higher deposit and loan balances boosted profitability. However, elevated expenses were a drag.
The company’s net income for the second quarter amounted to $58.8 million or 57 cents per share, up from the $53.1 million or 53 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Rise
Net revenues for the reported quarter inched up 1.7% year over year to $261.8 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $247.2 million.
Net interest revenues for the quarter were $170.6 million, up 6.6% year over year. Fully-taxable equivalent NIM was 3.35%, contracting 52 basis points (bps) year over year.
Non-interest revenues climbed 37.7% year over year to $91.3 million. Also, the figure included a negative mortgage servicing rights valuation adjustment of $2.4 million. This upswing resulted from rise in all the components except for Credit card, debit card, and merchant fee revenues, Deposit service charge revenues and insurance commissions.
Non-interest expenses were $162.5 million, up 3% from the year-ago quarter. This upside stemmed primarily from higher salaries and employee benefits, and net occupancy and expenses.
As of Jun 30, 2020, total deposits were $19.2 billion, up 13.6% sequentially, while loans and leases, net of unearned income, improved 8.5% sequentially to $15.4 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.96% of net loans and leases as of Jun 30, 2020, up from 0.66% as of Jun 30, 2019. Also, non-performing assets were $155.4 million, up 62% from the prior-year quarter. In addition, in the second quarter, the company recorded $20 million provision for credit losses against $0.5 million provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.67% as of Jun 30, 2020, flat year on year.
Capital Position
As of Jun 30, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.22% and 8.54% compared with the 10.52% and 8.96%, respectively, recorded at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets expanded 23 bps to 8.65%.
However, ratio of its total shareholders' equity to total assets was 11.76% at the end of the June-end quarter, down from 12.29% as of Jun 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 16.97% due to these changes.
VGM Scores
Currently, BancorpSouth has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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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BancorpSouth (BXS) Down 2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for BancorpSouth . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BancorpSouth due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BancorpSouth Q2 Earnings Top Estimates, Revenues Up
BancorpSouth delivered an earnings surprise of a whopping 90.3% in second-quarter 2020 on higher interest income. Net operating earnings of 59 cents per share beat the Zacks Consensus Estimate of 31 cents. However, the bottom line compares unfavorably with the year-ago quarter’s 61 cents.
Higher net revenues, aided by rise in interest income and non-interest revenues were the driving factors. Moreover, higher deposit and loan balances boosted profitability. However, elevated expenses were a drag.
The company’s net income for the second quarter amounted to $58.8 million or 57 cents per share, up from the $53.1 million or 53 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Rise
Net revenues for the reported quarter inched up 1.7% year over year to $261.8 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $247.2 million.
Net interest revenues for the quarter were $170.6 million, up 6.6% year over year. Fully-taxable equivalent NIM was 3.35%, contracting 52 basis points (bps) year over year.
Non-interest revenues climbed 37.7% year over year to $91.3 million. Also, the figure included a negative mortgage servicing rights valuation adjustment of $2.4 million. This upswing resulted from rise in all the components except for Credit card, debit card, and merchant fee revenues, Deposit service charge revenues and insurance commissions.
Non-interest expenses were $162.5 million, up 3% from the year-ago quarter. This upside stemmed primarily from higher salaries and employee benefits, and net occupancy and expenses.
As of Jun 30, 2020, total deposits were $19.2 billion, up 13.6% sequentially, while loans and leases, net of unearned income, improved 8.5% sequentially to $15.4 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.96% of net loans and leases as of Jun 30, 2020, up from 0.66% as of Jun 30, 2019. Also, non-performing assets were $155.4 million, up 62% from the prior-year quarter. In addition, in the second quarter, the company recorded $20 million provision for credit losses against $0.5 million provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.67% as of Jun 30, 2020, flat year on year.
Capital Position
As of Jun 30, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.22% and 8.54% compared with the 10.52% and 8.96%, respectively, recorded at the end of the prior-year quarter. Also, the ratio of tangible shareholders' equity to tangible assets expanded 23 bps to 8.65%.
However, ratio of its total shareholders' equity to total assets was 11.76% at the end of the June-end quarter, down from 12.29% as of Jun 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 16.97% due to these changes.
VGM Scores
Currently, BancorpSouth has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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.