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BancorpSouth's Fee Income Under Pressure - Analyst Blog

Posted: 7/8/2014 11:20:00 AM
Referenced Stocks: BXS;IBTX;CBF;SGBK

On Jul 1, 2014, we issued an updated research report on BancorpSouth, Inc.   ( BXS ). Lower expenses and higher net interest revenues were offset by reduced non-interest revenues, which led first-quarter 2014 earnings to be in line with the Zacks Consensus Estimate.

Though the company reflected impressive expense management and reduction in provision for credit losses, credible improvement in the mortgage market was missing, thereby pressurizing fee income. Notably, non-interest income declined 6.7% year over year in first-quarter 2014.

BancorpSouth is trying to recoup revenues through strategic deals, but has experienced a volatile trend in loans and deposits growth over the past 5 years (2009-2013). Notably, following the acquisition of the assets of GEM Insurance Agencies, LP in Dec 2013, the company again struck two cash cum stock merger deals in Jan 2014 and an asset acquisition deal in Apr 2014.

The macroeconomic environment is recovering at a slow pace, with uncertain prospects. This is compounded by changes within the financial services industry as well as regulatory actions. Therefore, amidst such a situation and unstable mortgage markets, fee income growth is expected to remain limited in the near future.

For BancorpSouth, the Zacks Consensus Estimate for 2014 and 2015 remained stable at $1.33 and $1.57, respectively, over the last 60 days. BancorpSouth currently has a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Some better-ranked Southeast banks include Capital Bank Financial Corp. ( CBF ), Independent Bank Group, Inc. ( IBTX ) and Stonegate Bank ( SGBK ). All of these carry a Zacks Rank #2 (Buy).

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BANCORPSOUTH (BXS): Free Stock Analysis Report

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