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BancorpSouth Bank delivered a fourth-quarter 2020 positive earnings surprise of 6.2% on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, the bottom line compares favorably with 65 cents reported in year-ago quarter.
Higher net revenues, aided by increase in interest income and non-interest revenues, acted as a tailwind. Moreover, higher deposit balances supported the results. However, elevated provisions and shrinking net interest margins were major drags.
The company’s net income for the December quarter amounted to $68.8 million or 65 cents per share, up from the $65.8 million or 63 cents reported in the year-ago quarter.
In full-year 2020, BancorpSouth reported net income of $228.1 million or $2.12 per share compared with $234.3 million or $2.30 in 2019.
Revenues & Deposits Climb, Expenses Rise
In 2020, the company reported revenues of $1.03 billion, which matched with the consensus estimate. Also, the figure rose 10.4% year over year.
Net revenues in the reported quarter increased 4.2% year over year to $255.8 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $255.4 million.
Net interest revenues in the quarter came in at $176.9 million, up 3.6% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.29%, contracting 47 basis points (bps).
Non-interest revenues climbed 5.5% year over year to $78.8 million. Also, the figure included a positive mortgage servicing rights valuation adjustment of $0.2 million. This upswing mainly resulted from rise in mortgage banking along with credit card, debit card and merchant fees.
Non-interest expenses were $167.9 million, up 3.4% year on year. This upside stemmed primarily from higher occupancy expenses and a pension settlement expense reported during the quarter.
As of Dec 31, 2020, total deposits were $19.6 billion, up 1.8% sequentially, while loans and leases, net of unearned income, deteriorated 1.1% to $15 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.81% of net loans and leases as of Dec 31, 2020, up from 0.79% as of Dec 31, 2019. Also, non-performing assets were $132.6 million, up 12.1% from the prior-year quarter. In addition, in the fourth quarter, the company recorded $5 million in provision for credit losses against no provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.74% as of Dec 31, 2020, up 89 bps year on year.
Capital Position
As of Dec 31, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.70% and 8.63% compared with the 10.60% and 9.69%, respectively, recorded at the end of the prior-year quarter. The ratio of tangible shareholders' equity to tangible assets contracted 29 bps to 8.63%.
However, ratio of total shareholders' equity to total assets was 11.72% at the end of the fourth quarter, down from 12.75% as of Dec 31, 2019.
Capital Deployment Activities
Following the approval from Federal Reserve to buy back shares last month, BancorpSouth’s board approved a new stock repurchase program to purchase up to 6 million shares from Jan 4, 2021 through 2021-end.
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. Also, rising provisions pose a concern.
BancorpSouth Bank Price, Consensus and EPS Surprise
Huntington Bancshares’ (HBAN - Free Report) fourth-quarter 2020 earnings per share of 27 cents lagged the Zacks Consensus Estimate of 30 cents. Also, the bottom line fell 3.6% from the prior-year quarter reported figure.
Signature Bank (SBNY - Free Report) reported fourth-quarter 2020 earnings per share of $3.26, beating the Zacks Consensus Estimate of $2.91. Also, the bottom line increased 18.1% from the prior-year quarter’s reported number.
Webster Financial (WBS - Free Report) reported fourth-quarter 2020 adjusted earnings per share of 99 cents, which surpassed the Zacks Consensus Estimate of 72 cents. The reported figure excluded noteworthy items such as charges related to strategic optimization initiatives.
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BancorpSouth (BXS) Q4 Earnings Beat Estimates, Revenues Rise
BancorpSouth Bank delivered a fourth-quarter 2020 positive earnings surprise of 6.2% on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, the bottom line compares favorably with 65 cents reported in year-ago quarter.
Higher net revenues, aided by increase in interest income and non-interest revenues, acted as a tailwind. Moreover, higher deposit balances supported the results. However, elevated provisions and shrinking net interest margins were major drags.
The company’s net income for the December quarter amounted to $68.8 million or 65 cents per share, up from the $65.8 million or 63 cents reported in the year-ago quarter.
In full-year 2020, BancorpSouth reported net income of $228.1 million or $2.12 per share compared with $234.3 million or $2.30 in 2019.
Revenues & Deposits Climb, Expenses Rise
In 2020, the company reported revenues of $1.03 billion, which matched with the consensus estimate. Also, the figure rose 10.4% year over year.
Net revenues in the reported quarter increased 4.2% year over year to $255.8 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $255.4 million.
Net interest revenues in the quarter came in at $176.9 million, up 3.6% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.29%, contracting 47 basis points (bps).
Non-interest revenues climbed 5.5% year over year to $78.8 million. Also, the figure included a positive mortgage servicing rights valuation adjustment of $0.2 million. This upswing mainly resulted from rise in mortgage banking along with credit card, debit card and merchant fees.
Non-interest expenses were $167.9 million, up 3.4% year on year. This upside stemmed primarily from higher occupancy expenses and a pension settlement expense reported during the quarter.
As of Dec 31, 2020, total deposits were $19.6 billion, up 1.8% sequentially, while loans and leases, net of unearned income, deteriorated 1.1% to $15 billion.
Credit Quality Deteriorates
Non-performing loans and leases were 0.81% of net loans and leases as of Dec 31, 2020, up from 0.79% as of Dec 31, 2019. Also, non-performing assets were $132.6 million, up 12.1% from the prior-year quarter. In addition, in the fourth quarter, the company recorded $5 million in provision for credit losses against no provisions reported in the year-ago quarter.
However, allowance for credit losses to net loans and leases was 1.74% as of Dec 31, 2020, up 89 bps year on year.
Capital Position
As of Dec 31, 2020, tier 1 capital and tier 1 leverage capital ratios were 11.70% and 8.63% compared with the 10.60% and 9.69%, respectively, recorded at the end of the prior-year quarter. The ratio of tangible shareholders' equity to tangible assets contracted 29 bps to 8.63%.
However, ratio of total shareholders' equity to total assets was 11.72% at the end of the fourth quarter, down from 12.75% as of Dec 31, 2019.
Capital Deployment Activities
Following the approval from Federal Reserve to buy back shares last month, BancorpSouth’s board approved a new stock repurchase program to purchase up to 6 million shares from Jan 4, 2021 through 2021-end.
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. Also, rising provisions pose a concern.
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.
Performance of Other Banks
Huntington Bancshares’ (HBAN - Free Report) fourth-quarter 2020 earnings per share of 27 cents lagged the Zacks Consensus Estimate of 30 cents. Also, the bottom line fell 3.6% from the prior-year quarter reported figure.
Signature Bank (SBNY - Free Report) reported fourth-quarter 2020 earnings per share of $3.26, beating the Zacks Consensus Estimate of $2.91. Also, the bottom line increased 18.1% from the prior-year quarter’s reported number.
Webster Financial (WBS - Free Report) reported fourth-quarter 2020 adjusted earnings per share of 99 cents, which surpassed the Zacks Consensus Estimate of 72 cents. The reported figure excluded noteworthy items such as charges related to strategic optimization initiatives.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
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