It has been about a month since the last earnings report for BancorpSouth, Inc. . Shares have added about 3.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 Beats Q4 Earnings on Higher Revenues
BancorpSouth fourth-quarter 2016 operating earnings per share of $0.40 surpassed the Zacks Consensus Estimate of $0.37. Moreover, the reported figure represents an increase of 21.2% from the year-ago quarter. This figure includes mortgage servicing rights (“MSR”) valuation adjustment for the quarter.
Better-than-expected results were primarily driven by an increase in revenues and lower expenses. The company also witnessed growth in loan and deposit balances. However, asset quality remained mixed in the quarter. Moreover, weak capital position was a headwind.
Including MSR and certain other non-recurring items, the company’s fourth-quarter net income amounted to $37.7 million, up from $21.2 million in the year-ago quarter.
The company also reported full-year operating earnings per share of $1.51, up 4.9% year over year. However, the figure lagged the Zacks Consensus Estimate of $1.54. Also, net income for 2016 came in at $132.7 million, up 4.1% year over year.
Revenues Up, Costs Down
The company’s fourth-quarter net revenue increased 5% year over year to $188 million. Also, the figure outpaced the Zacks Consensus Estimate of $184 million.
For 2016, net revenue amounted to $732 million, up 2.5% year over year. However, the figure lagged the Zacks Consensus Estimate of $745 million.
Net interest revenue amounted to $115.4 million, up 3.7% year over year.
Also, non-interest revenues increased 8.3% year over year to $73 million. The rise was mainly due to an increase in mortgage banking revenues, insurance commissions and wealth management.
Excluding the MSR valuation adjustments, net mortgage lending revenues totaled $6.6 million, down from $7.7 million in the year-ago quarter.
Fully taxable equivalent net interest margin was 3.46%, down 12 basis points (bps) from the prior-year quarter.
Non-interest expenses were down 11.4% year over year to $131.5 million. The decrease was triggered by a fall in all expense components except salaries and employee benefit costs.
As of Dec 31, 2016, total deposits were $11.7 billion, up nearly 1% from the previous quarter. Also net loans and leases increased nearly 1.5% sequentially to $10.7 billion.
Mixed Credit Quality
The company recorded provisions for credit losses of $1 million in the reported quarter as against zero provisions a year ago. Also, non-performing loans and leases increased to $101.8 million as of Dec 31, 2016, from $94.9 million as of Dec 31, 2015. Further, non-performing assets were $109.7 million, almost in line with the prior-year quarter.
However, annualized net charge-offs, as a percent of average loans and leases, were 0.12% compared with 0.25% in the prior-year quarter. Also, allowance for credit losses to net loans and leases edged down to 1.14% from 1.22% in the prior-year quarter.
Capital Position Weakens
As of Dec 31, 2016, Tier I capital and tier I leverage capital were 12.34% and 10.32%, respectively, compared with 12.27% and 10.61% at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.71% at the end of the quarter, down from 12.0% as of Dec 31, 2015. The ratio of tangible shareholders' equity to tangible assets decreased 23 bps to 9.73%.
Share Repurchase
In the quarter, the company repurchased 436,541 shares of common stock at an average price of $22.91 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
VGM Scores
At this time, BancorpSouth's stock has a poor Growth Score of 'F', though it is doing a bit better on the momentum front with an 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable solely for momentum investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions is net zero. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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BancorpSouth (BXS) Up 3.8% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for BancorpSouth, Inc. . Shares have added about 3.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 Beats Q4 Earnings on Higher Revenues
BancorpSouth fourth-quarter 2016 operating earnings per share of $0.40 surpassed the Zacks Consensus Estimate of $0.37. Moreover, the reported figure represents an increase of 21.2% from the year-ago quarter. This figure includes mortgage servicing rights (“MSR”) valuation adjustment for the quarter.
Better-than-expected results were primarily driven by an increase in revenues and lower expenses. The company also witnessed growth in loan and deposit balances. However, asset quality remained mixed in the quarter. Moreover, weak capital position was a headwind.
Including MSR and certain other non-recurring items, the company’s fourth-quarter net income amounted to $37.7 million, up from $21.2 million in the year-ago quarter.
The company also reported full-year operating earnings per share of $1.51, up 4.9% year over year. However, the figure lagged the Zacks Consensus Estimate of $1.54. Also, net income for 2016 came in at $132.7 million, up 4.1% year over year.
Revenues Up, Costs Down
The company’s fourth-quarter net revenue increased 5% year over year to $188 million. Also, the figure outpaced the Zacks Consensus Estimate of $184 million.
For 2016, net revenue amounted to $732 million, up 2.5% year over year. However, the figure lagged the Zacks Consensus Estimate of $745 million.
Net interest revenue amounted to $115.4 million, up 3.7% year over year.
Also, non-interest revenues increased 8.3% year over year to $73 million. The rise was mainly due to an increase in mortgage banking revenues, insurance commissions and wealth management.
Excluding the MSR valuation adjustments, net mortgage lending revenues totaled $6.6 million, down from $7.7 million in the year-ago quarter.
Fully taxable equivalent net interest margin was 3.46%, down 12 basis points (bps) from the prior-year quarter.
Non-interest expenses were down 11.4% year over year to $131.5 million. The decrease was triggered by a fall in all expense components except salaries and employee benefit costs.
As of Dec 31, 2016, total deposits were $11.7 billion, up nearly 1% from the previous quarter. Also net loans and leases increased nearly 1.5% sequentially to $10.7 billion.
Mixed Credit Quality
The company recorded provisions for credit losses of $1 million in the reported quarter as against zero provisions a year ago. Also, non-performing loans and leases increased to $101.8 million as of Dec 31, 2016, from $94.9 million as of Dec 31, 2015. Further, non-performing assets were $109.7 million, almost in line with the prior-year quarter.
However, annualized net charge-offs, as a percent of average loans and leases, were 0.12% compared with 0.25% in the prior-year quarter. Also, allowance for credit losses to net loans and leases edged down to 1.14% from 1.22% in the prior-year quarter.
Capital Position Weakens
As of Dec 31, 2016, Tier I capital and tier I leverage capital were 12.34% and 10.32%, respectively, compared with 12.27% and 10.61% at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.71% at the end of the quarter, down from 12.0% as of Dec 31, 2015. The ratio of tangible shareholders' equity to tangible assets decreased 23 bps to 9.73%.
Share Repurchase
In the quarter, the company repurchased 436,541 shares of common stock at an average price of $22.91 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
BancorpSouth, Inc. Price and Consensus
BancorpSouth, Inc. Price and Consensus | BancorpSouth, Inc. Quote
VGM Scores
At this time, BancorpSouth's stock has a poor Growth Score of 'F', though it is doing a bit better on the momentum front with an 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable solely for momentum investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions is net zero. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.