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BancorpSouth Bank delivered an earnings surprise of 32.7% in third-quarter 2020 on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 52 cents. The bottom line, however, remains flat year over year.
Higher net revenues, aided by increases in interest income and non-interest revenues were driving factors. Moreover, higher deposit balances boosted profitability. However, elevated provisions and shrinking net interest margins hurt the bank.
The company’s net income for the September-end quarter amounted to $71.5 million or 69 cents per share, up from the $63.8 million or 63 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Fall
Net revenues for the reported quarter increased 9.8% year over year to $265.9 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $259.5 million.
Net interest revenues for the quarter came in at $175.9 million, up 5.6% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.31%, contracting 57 basis points (bps) year over year.
Non-interest revenues climbed 19.2% year over year to $89.9 million. Also, the figure included a positive mortgage servicing rights valuation adjustment of $0.4 million. This upswing resulted from rise in all the components except for deposit service charge revenues, wealth management revenues and other non-interest revenues.
Non-interest expenses were $155.5 million, down 2.6% year on year. This downside stemmed primarily from lower salaries and employee benefits, occupancy and other non-interest expenses.
As of Sep 30, 2020, total deposits were $19.4 billion, up 1.2% sequentially, while loans and leases, net of unearned income, deteriorated marginally sequentially to $15.3 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.98% of net loans and leases as of Sep 30, 2020, up from 0.77% as of Sep 30, 2019. Also, non-performing assets were $157.3 million, up 35.6% from the prior-year quarter. In addition, in the July-September period, the company recorded $15 million in provision for credit losses as against the $0.5 million in provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.78% as of Sep 30, 2020, up 95 bps year on year.
Capital Position
As of Sep 30, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.65% and 8.59% compared with the 10.54% and 9.14%, respectively, recorded at the end of the prior-year quarter. Furthermore, the ratio of tangible shareholders' equity to tangible assets expanded 30 bps to 8.77%.
However, ratio of its total shareholders' equity to total assets was 11.81% at the end of the third quarter, down from 12.54% as of Sep 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
Our Viewpoint
BancorpSouth has a healthy balance-sheet position. This supports its acquisition and capital-deployment strategies. Apart from this, the decline in interest rates amid the Federal Reserve's accommodative policy stance is expected to hurt the company’s margins and revenues in the upcoming period.
BancorpSouth Bank Price, Consensus and EPS Surprise
Texas Capital Bancshares (TCBI - Free Report) , SEI Investments (SEIC - Free Report) and East West Bancorp (EWBC - Free Report) are scheduled to announce third-quarter results this week. While SEI Investmentsand Texas Capital Bancshares will release earnings figures on Oct 21, East West Bancorp will report on Oct 22.
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BancorpSouth (BXS) Q3 Earnings & Revenues Surpass Estimates
BancorpSouth Bank delivered an earnings surprise of 32.7% in third-quarter 2020 on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 52 cents. The bottom line, however, remains flat year over year.
Higher net revenues, aided by increases in interest income and non-interest revenues were driving factors. Moreover, higher deposit balances boosted profitability. However, elevated provisions and shrinking net interest margins hurt the bank.
The company’s net income for the September-end quarter amounted to $71.5 million or 69 cents per share, up from the $63.8 million or 63 cents reported in the year-ago quarter.
Revenues & Deposits Climb, Expenses Fall
Net revenues for the reported quarter increased 9.8% year over year to $265.9 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $259.5 million.
Net interest revenues for the quarter came in at $175.9 million, up 5.6% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.31%, contracting 57 basis points (bps) year over year.
Non-interest revenues climbed 19.2% year over year to $89.9 million. Also, the figure included a positive mortgage servicing rights valuation adjustment of $0.4 million. This upswing resulted from rise in all the components except for deposit service charge revenues, wealth management revenues and other non-interest revenues.
Non-interest expenses were $155.5 million, down 2.6% year on year. This downside stemmed primarily from lower salaries and employee benefits, occupancy and other non-interest expenses.
As of Sep 30, 2020, total deposits were $19.4 billion, up 1.2% sequentially, while loans and leases, net of unearned income, deteriorated marginally sequentially to $15.3 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.98% of net loans and leases as of Sep 30, 2020, up from 0.77% as of Sep 30, 2019. Also, non-performing assets were $157.3 million, up 35.6% from the prior-year quarter. In addition, in the July-September period, the company recorded $15 million in provision for credit losses as against the $0.5 million in provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.78% as of Sep 30, 2020, up 95 bps year on year.
Capital Position
As of Sep 30, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.65% and 8.59% compared with the 10.54% and 9.14%, respectively, recorded at the end of the prior-year quarter. Furthermore, the ratio of tangible shareholders' equity to tangible assets expanded 30 bps to 8.77%.
However, ratio of its total shareholders' equity to total assets was 11.81% at the end of the third quarter, down from 12.54% as of Sep 30, 2019.
Share Repurchases
During the reported quarter, the company did not repurchase any shares under its share-repurchase program.
Our Viewpoint
BancorpSouth has a healthy balance-sheet position. This supports its acquisition and capital-deployment strategies. Apart from this, the decline in interest rates amid the Federal Reserve's accommodative policy stance is expected to hurt the company’s margins and revenues in the upcoming period.
BancorpSouth Bank Price, Consensus and EPS Surprise
BancorpSouth Bank price-consensus-eps-surprise-chart | 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.
Earnings Schedule of Other Banks
Texas Capital Bancshares (TCBI - Free Report) , SEI Investments (SEIC - Free Report) and East West Bancorp (EWBC - Free Report) are scheduled to announce third-quarter results this week. While SEI Investmentsand Texas Capital Bancshares will release earnings figures on Oct 21, East West Bancorp will report on Oct 22.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>