BancorpSouth (BXS) Q1 Earnings Beat on Solid Revenues

BancorpSouth Bank BXS delivered a earnings surprise of 14.1% in first-quarter 2021 on higher interest income. Net operating earnings of 73 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, the bottom line compares favorably with the 33 cents reported in the year-ago quarter.

Higher net revenues were aided by increases in net interest revenue and non-interest revenues. Moreover, higher deposit balances and decreasing costs aided the company However, shrinking net interest margins and loan growth were major drags.

The company’s net income for the March-end quarter amounted to $81.6 million or 77 cents per share, up from the $24.3 million or 21 cents reported in the year-ago quarter.

Revenues & Deposits Climb, Expenses Fall

Net revenues for the reported quarter increased 6.9% year over year to $260.8 million. In addition, the top-line figure surpassed the Zacks Consensus Estimate of $254.46 million.

Net interest revenues for the quarter came in at $172.8 million, up 3.2% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.15%, contracting 39 basis points (bps) year over year.

Non-interest revenues climbed 15% year over year to $87.9 million. The figure included a positive mortgage servicing rights valuation adjustment of $7.4 million. This upswing resulted from rise in all the components except for deposit service charge fees and other non-interest revenues.

Non-interest expenses were $155.8 million, down 7.3% year on year. This downside stemmed primarily from lower salaries, other non-interest expenses and merger-related expenses.

As of Mar 31, 2021, total deposits were $20.5 billion, up 4.4% sequentially, while loans and leases, net of unearned income, edged down 1.3% sequentially to $15.03 billion.

Credit Quality Strengthens

Non-performing loans and leases were 0.67% of net loans and leases as of Mar31, 2021, down from 0.9% as of Mar31, 2020. Also, non-performing assets were $110.7 million, down 19.7% from the prior-year quarter. In addition, during the January-March period, the company recorded no provision for credit losses as against the $46 million in provisions reported in the year-ago quarter.

However, allowance for credit losses to net loans and leases was 1.74% as of Mar31, 2021, up 21 bps year on year.

Capital Position

As of Mar 31, 2021, tier 1 capital and tier 1 leverage capital ratios were 11.95% and 8.59% compared with the 11.1% and 8.9%, respectively, recorded at the end of the prior-year quarter.

However, the ratio of tangible shareholders' equity to tangible assets shrunk 74 bps to 8.08%. Additionally, ratio of its total shareholders' equity to total assets was 10.9% at the end of the first quarter, down from 12.7% as of Mar31, 2020.

Our Viewpoint

BancorpSouth has a healthy balance-sheet position. This supports its acquisition and capital-deployment strategies. Apart from this, the decline in interest rates amid the Federal Reserve's accommodative policy stance might hurt the company’s margins in the upcoming period.

BancorpSouth Bank Price and EPS Surprise

BancorpSouth Bank Price and EPS Surprise

BancorpSouth Bank price-eps-surprise | BancorpSouth Bank Quote

Currently, BancorpSouth carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Fifth Third Bancorp FITB delivered an earnings surprise of 34.7% in first-quarter 2021. Earnings of 93 cents per share surpassed the Zacks Consensus Estimate of 69 cents. Results also compared favorably with the prior-year quarter’s earnings of 13 cents.

Comerica CMA delivered first-quarter 2021 positive earnings surprise of 76.1%. Earnings per share of $2.43 easily surpassed the Zacks Consensus Estimate of $1.38. Also, the bottom line compared favorably with the loss of 46 cents reported in the prior-year quarter.

M&T Bank Corporation MTB reported first-quarter 2021 positive earnings surprise of 15%. Net operating earnings per share of $3.41 beat the Zacks Consensus Estimate of $2.96. Also, the bottom line compared favorably with the $1.95 per share reported in the year-ago quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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