On Sep 25, 2014, we issued an updated research report on BancorpSouth, Inc. (BXS). Higher net interest income and effective expense management continued to be the strengths while inconsistent growth in deposits remained the undermining factor.
BancorpSouth, which specializes in providing commercial banking and financial services to individuals and small-to-medium businesses, continues to expand through mergers and acquisitions. The company reported a 4% increase in the net interest revenue halfway through 2014.
Moreover, BancorpSouth’s impressive cost control efforts continued to offset the pressure on the top line caused by the struggling non-interest revenue. The 8.3% decline in non-interest expense in the first half of 2014 represented the company’s ability to curb costs in spite of its continuous involvement in mergers and acquisitions.
On the flip side, BancorpSouth’s weakening deposits growth continues to put strain on the top line. The first half of 2014 recorded a 3% fall in total deposits, reflecting unfavorable impact of its exposure to the prevailing economic conditions. Also, delay in the two merger deals undertaken by the company hampers the expectations from the deals.
Moreover, despite enhanced credit quality and payment of regular dividends, BancorpSouth failed to gain investors’ confidence. The ambiguity prevalent in the market regarding the company’s future performance due to the sluggish economic recovery is evident from the 19% year-to-date fall in the stock price.
The weakness can also be observed in the Zacks Consensus Estimate for 2014 and 2015, both of which decreased by a penny over the last 30 days.
Stocks That Warrant a Look
Other Southeast banks worth considering include Cardinal Financial Corp. (CFNL), Fidelity Southern Corporation (LION) and First NBC Bank Holding Company (NBCB).
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