A month has gone by since the last earnings report for BancorpSouth, Inc. . Shares have lost about 5.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it 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 Q1 Earnings Beat on Higher Revenues
BancorpSouth first-quarter 2017 operating earnings per share of $0.39 surpassed the Zacks Consensus Estimate by $0.01. Moreover, earnings were in line with 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. Further, credit quality improved in the quarter. However, weak capital position was a headwind.
Including MSR and certain other non-recurring items, the company’s first-quarter net income amounted to $36.9 million, matching the year-ago quarter number.
Revenues Up, Costs Down
Net revenue for the quarter increased 5.5% year over year to $185.5 million. However, the figure lagged the Zacks Consensus Estimate of $186.4 million.
Net interest revenues amounted to $114.6 million, up 3.1% year over year.
Also, non-interest revenues increased 9.5% year over year to $70.9 million. The rise was mainly due to an increase in mortgage banking revenues and security gains, partially offset by a decline in revenues from deposit service charges.
Excluding the MSR valuation adjustments, net mortgage lending revenues totaled $8.1 million, down from $9.8 million in the year-ago quarter.
Fully taxable equivalent net interest margin was 3.46%, down 10 basis points (bps) from the prior-year quarter.
Non-interest expenses were down 10.2% year over year to $127.1 million. The decrease was due to a fall in all equipment related costs and other expenses. Also, the year-ago quarter included a settlement charge of a previously announced joint investigation.
As of Mar 31, 2017, total deposits were $12.0 billion, up 3% from the previous quarter. However, net loans and leases decreased slightly to $10.7 billion on a sequential basis.
Improved Credit Quality
The company’s non-performing loans and leases decreased to $81.6 million as of Mar 31, 2017, from $94.2 million as of Mar 31, 2016. Also, non-performing assets were $90.0 million, down 15.8% from the prior-year quarter. Provisions for credit losses of $1 million in the reported quarter were in line with the year-ago quarter.
Moreover, annualized net recovery, as a percentage of average loans and leases, were 0.02% as against a 0.04% charge-offs in the prior-year quarter. Also, allowance for credit losses to net loans and leases dipped to 1.16% from 1.21% in the prior-year quarter.
Capital Position Weakens
As of Mar 31, 2017, tier I capital and tier I leverage capital were 12.16% and 9.95%, respectively, compared with 12.34% and 10.61% at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.45% at the end of the quarter, down from 12.06% as of Mar 31, 2016. The ratio of tangible shareholders' equity to tangible assets decreased 56 bps to 9.49%.
Share Repurchase
In the quarter, the company repurchased 1.6 million shares of common stock at an average price of $30.62 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three downward revisions for the current quarter compared to two upward.
VGM Scores
At this time, BancorpSouth's stock has a subpar Growth Score of 'D', however its Momentum is doing a bit better with a 'C'. Following the exact same course, the stock was allocated also a grade of 'C' on the value side, putting it in the middle 20% 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.
Zacks' style scores indicate that the stock is suitable for value and momentum investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions has been 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) Down 5.2% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for BancorpSouth, Inc. . Shares have lost about 5.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it 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 Q1 Earnings Beat on Higher Revenues
BancorpSouth first-quarter 2017 operating earnings per share of $0.39 surpassed the Zacks Consensus Estimate by $0.01. Moreover, earnings were in line with 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. Further, credit quality improved in the quarter. However, weak capital position was a headwind.
Including MSR and certain other non-recurring items, the company’s first-quarter net income amounted to $36.9 million, matching the year-ago quarter number.
Revenues Up, Costs Down
Net revenue for the quarter increased 5.5% year over year to $185.5 million. However, the figure lagged the Zacks Consensus Estimate of $186.4 million.
Net interest revenues amounted to $114.6 million, up 3.1% year over year.
Also, non-interest revenues increased 9.5% year over year to $70.9 million. The rise was mainly due to an increase in mortgage banking revenues and security gains, partially offset by a decline in revenues from deposit service charges.
Excluding the MSR valuation adjustments, net mortgage lending revenues totaled $8.1 million, down from $9.8 million in the year-ago quarter.
Fully taxable equivalent net interest margin was 3.46%, down 10 basis points (bps) from the prior-year quarter.
Non-interest expenses were down 10.2% year over year to $127.1 million. The decrease was due to a fall in all equipment related costs and other expenses. Also, the year-ago quarter included a settlement charge of a previously announced joint investigation.
As of Mar 31, 2017, total deposits were $12.0 billion, up 3% from the previous quarter. However, net loans and leases decreased slightly to $10.7 billion on a sequential basis.
Improved Credit Quality
The company’s non-performing loans and leases decreased to $81.6 million as of Mar 31, 2017, from $94.2 million as of Mar 31, 2016. Also, non-performing assets were $90.0 million, down 15.8% from the prior-year quarter. Provisions for credit losses of $1 million in the reported quarter were in line with the year-ago quarter.
Moreover, annualized net recovery, as a percentage of average loans and leases, were 0.02% as against a 0.04% charge-offs in the prior-year quarter. Also, allowance for credit losses to net loans and leases dipped to 1.16% from 1.21% in the prior-year quarter.
Capital Position Weakens
As of Mar 31, 2017, tier I capital and tier I leverage capital were 12.16% and 9.95%, respectively, compared with 12.34% and 10.61% at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.45% at the end of the quarter, down from 12.06% as of Mar 31, 2016. The ratio of tangible shareholders' equity to tangible assets decreased 56 bps to 9.49%.
Share Repurchase
In the quarter, the company repurchased 1.6 million shares of common stock at an average price of $30.62 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three downward revisions for the current quarter compared to two upward.
BancorpSouth, Inc. Price and Consensus
BancorpSouth, Inc. Price and Consensus | BancorpSouth, Inc. Quote
VGM Scores
At this time, BancorpSouth's stock has a subpar Growth Score of 'D', however its Momentum is doing a bit better with a 'C'. Following the exact same course, the stock was allocated also a grade of 'C' on the value side, putting it in the middle 20% 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.
Zacks' style scores indicate that the stock is suitable for value and momentum investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions has been 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.