On Jan 2, 2014 we reiterated our Neutral recommendation on
), based on its ability to grow non-interest revenues amid a
slowly recovering macroeconomic environment, its capital adequacy
and stabilizing credit metrics. However, regulatory reforms,
mounting expenses and an unsettled global economy might act as
deterrents to this stock.
BancorpSouth's rising non-interest revenues are expected to
partially offset net interest margin (NIM) compression in the
near term and drive top-line growth. Additionally, the company
appears attractive for yield-seeking investors due to its steady
capital deployment activities. Buoyed by its strong capital
position, BancorpSouth hiked its dividend in Aug 2013 by 400%.
Further, the company's third-quarter earnings of 26 cents per
share were in line with the Zacks Consensus Estimate and beat the
prior-year quarter figure by merely a penny. Additionally, over
the last 60 days, the Zacks Consensus Estimate showed a mixed
trend. For 2013, the Zacks Estimate was stable at 99 cents per
share while for 2014, it rose 1.6% to $1.24 per share in the
above-mentioned time period. BancorpSouth now has a Zacks Rank #3
However, with the rise in non-interest expenses, the company is
being increasingly exposed to operational risks. Moreover, the
recent regulatory norms have triggered a rise in compliance
costs. If these factors prevail, the company's bottom-line growth
will suffer. Further, the low interest rate environment might
adversely affect the company's financials in the quarters ahead.
Other Stocks to Consider
Some better-placed regional banks worth a look include
State Bank Financial Corporation
First NBC Bank Holding Company
). All these stocks carry a Zacks Rank #1 (Strong Buy).
BANCORPSOUTH (BXS): Free Stock Analysis
FIRST BCP-NC (FBNC): Free Stock Analysis
FIRST NBC BANK (NBCB): Free Stock Analysis
STATE BANK FINL (STBZ): Free Stock Analysis
To read this article on Zacks.com click here.