A month has gone by since the last earnings report for BancorpSouth, Inc. . Shares have lost about 8.1% 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 Q2 Earnings Beat on Higher Revenues
BancorpSouth adjusted operating earnings in second-quarter 2017 came in at $0.42 per share, beating the Zacks Consensus Estimate by $0.02. Moreover, the figure compared favorably with the year-ago quarter tally of $0.39.
Revenues escalated on the back of strong loans and deposits balances. Further, stable non-interest expenses were a positive. However, decreased mortgage lending revenues remained a major drag.
Including mortgage servicing rights (MSR) valuation adjustment of $1.5 million, the company’s second-quarter net income amounted to $37.9 million or $0.41 per share, down from $34.7 million or $0.37 per share reported in the year-ago quarter.
Revenues, Loans and Deposits Escalate, Costs Stable
BancorpSouth’s second-quarter net revenue increased 2.7% year over year to $185.6 million. Revenues, however, missed the Zacks Consensus Estimate of $187.8 million.
Net interest revenue amounted to $117.5 million, up 4.6% year over year. Fully-taxable equivalent net interest margin was 3.52%, down 4 basis points (bps) from the prior-year quarter figure on high average cost of deposits.
Non-interest revenues dipped slightly year over year to $68.1 million. The decline was mainly due to a drop in mortgage banking revenues and deposit service charges. These decreases were partially offset by high insurance commissions and other income.
Excluding the MSR valuation adjustments, mortgage banking revenues totaled $7.6 million, down 36.7% from $12.0 million in the prior-year quarter.
Non-interest expenses remained stable at $127.6 million on a year-over-year basis.
As of Jun 30, 2017, total deposits were $11.9 billion, up 4.4% year over year, while net loans and leases rose 3.8% to $11.0 billion.
Credit Quality: A Mixed Bag
BancorpSouth’s credit quality displayed a mixed picture. The company recorded $1.0 million of provisions in the reported quarter compared with $2 million in year-ago quarter. Non-performing loans and leases decreased to $71.7 million or 0.65% of net loans and leases as of Jun 30, 2017, from $80.2 million or 0.76% as of Jun 30, 2016.
Additionally, allowance for credit losses to net loans and leases dipped to 1.10% from 1.20% in the comparable period last year. Also, non-performing assets were $79.4 million, down 16.3% year over year.
However, annualized net charge-offs, as a percent of average loans and leases were 0.17% compared with annualized 0.06% in the prior-year quarter.
Strong Capital Position
BancorpSouth remained well capitalized during the second quarter. As of Jun 30, 2017, Tier I capital and tier I leverage capital was 11.90% and 9.93%, respectively, compared with 12.37% and 10.66%, at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.40% at the end of the quarter, down from 12.12% as of Jun 30, 2016. The ratio of tangible shareholders' equity to tangible assets contracted 67 bps to 9.44%.
During the second quarter, the company repurchased 1.38 million common shares at an average price of $29.64 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.
VGM Scores
At this time, BancorpSouth's stock has a poor Growth Score of F, however its Momentum is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated 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.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, 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 8.1% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for BancorpSouth, Inc. . Shares have lost about 8.1% 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 Q2 Earnings Beat on Higher Revenues
BancorpSouth adjusted operating earnings in second-quarter 2017 came in at $0.42 per share, beating the Zacks Consensus Estimate by $0.02. Moreover, the figure compared favorably with the year-ago quarter tally of $0.39.
Revenues escalated on the back of strong loans and deposits balances. Further, stable non-interest expenses were a positive. However, decreased mortgage lending revenues remained a major drag.
Including mortgage servicing rights (MSR) valuation adjustment of $1.5 million, the company’s second-quarter net income amounted to $37.9 million or $0.41 per share, down from $34.7 million or $0.37 per share reported in the year-ago quarter.
Revenues, Loans and Deposits Escalate, Costs Stable
BancorpSouth’s second-quarter net revenue increased 2.7% year over year to $185.6 million. Revenues, however, missed the Zacks Consensus Estimate of $187.8 million.
Net interest revenue amounted to $117.5 million, up 4.6% year over year. Fully-taxable equivalent net interest margin was 3.52%, down 4 basis points (bps) from the prior-year quarter figure on high average cost of deposits.
Non-interest revenues dipped slightly year over year to $68.1 million. The decline was mainly due to a drop in mortgage banking revenues and deposit service charges. These decreases were partially offset by high insurance commissions and other income.
Excluding the MSR valuation adjustments, mortgage banking revenues totaled $7.6 million, down 36.7% from $12.0 million in the prior-year quarter.
Non-interest expenses remained stable at $127.6 million on a year-over-year basis.
As of Jun 30, 2017, total deposits were $11.9 billion, up 4.4% year over year, while net loans and leases rose 3.8% to $11.0 billion.
Credit Quality: A Mixed Bag
BancorpSouth’s credit quality displayed a mixed picture. The company recorded $1.0 million of provisions in the reported quarter compared with $2 million in year-ago quarter. Non-performing loans and leases decreased to $71.7 million or 0.65% of net loans and leases as of Jun 30, 2017, from $80.2 million or 0.76% as of Jun 30, 2016.
Additionally, allowance for credit losses to net loans and leases dipped to 1.10% from 1.20% in the comparable period last year. Also, non-performing assets were $79.4 million, down 16.3% year over year.
However, annualized net charge-offs, as a percent of average loans and leases were 0.17% compared with annualized 0.06% in the prior-year quarter.
Strong Capital Position
BancorpSouth remained well capitalized during the second quarter. As of Jun 30, 2017, Tier I capital and tier I leverage capital was 11.90% and 9.93%, respectively, compared with 12.37% and 10.66%, at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.40% at the end of the quarter, down from 12.12% as of Jun 30, 2016. The ratio of tangible shareholders' equity to tangible assets contracted 67 bps to 9.44%.
During the second quarter, the company repurchased 1.38 million common shares at an average price of $29.64 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher 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, however its Momentum is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated 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.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.