BancorpSouth BXS reported fourth-quarter 2017 adjusted operating earnings of 42 cents per share, beating the Zacks Consensus Estimate of 41 cents. Also, the bottom line compared favorably with the year-ago quarter earnings of 40 cents.
Results benefitted from an improvement in net interest revenues and lower expenses, partially offset by lower non-interest revenues. Loans and deposit balances remained strong during the quarter. Further, the company recorded lower provisions in the quarter, which was a tailwind.
Including mortgage servicing rights valuation adjustment and considering expenses from the tax reform, the company’s net income for the quarter amounted to $37.5 million or 41 cents per share compared with $37.7 million or 40 cents reported in the year-ago quarter.
For 2017, BancorpSouth reported net income of $153 million or $1.67 per share compared with $132.7 million or $1.41 per share as of Dec 31, 2016.
Decline in Expenses, Partially Offset by Lower Revenues
Quarterly net revenues decreased nearly 1% year over year to $184.5 million. Also, the reported figure missed the Zacks Consensus Estimate of $187.1 million.
For 2017, the company reported revenues of $742.1million, up 1.9% on a year-over-year basis.
Net interest revenues came in at $121.4 million, up 5.2% year over year. Fully-taxable equivalent net interest margin (NIM) was 3.58%, increasing 12 basis points (bps) from the prior-year quarter.
Non-interest revenues decreased 12.4% year over year to $63.1 million. The decline was primarily due to a fall in mortgage banking revenues.
Non-interest expenses were $125.9 million, decreasing 3.6% on a year-over-year basis.
As of Dec 31, 2017, total deposits were $11.8 billion, upslightly sequentially while net loans and leases were flat at $10.9 billion.
Credit Quality Improves
Non-performing loans and leases were 0.71% of net loans and leases as of Dec 31, 2017, down from 0.94% as of Dec 31, 2016. Additionally, allowance for credit losses to net loans and leases was 1.07%, down from 1.14% registered in the comparable period last year. Further, non-performing assets were nearly $84.5 million, decreasing from $109.7 million registered in the prior-year quarter.
Annualized net charge-offs, as a percent of average loans and leases were 0.06% compared with 0.12% in the prior-year quarter. Also, the company recorded $0.5 million of provisions in the quarter compared with $1 million registered in the year-ago quarter.
Capital Ratios Deteriorate
As of Dec 31, 2017, Tier I capital and tier I leverage capital was 12.15% and 10.12%, down from 12.34% and 10.32%, respectively, at the end of the prior-year quarter.
The ratio of its total shareholders' equity to total assets was 11.20% at the end of the quarter, down from 11.71% as of Dec 31, 2016. The ratio of tangible shareholders' equity to tangible assets contracted 42 bps to 9.31%.
Share Repurchases
During the quarter, the company did not repurchasecommon shares. As of Dec 31, 2017, it had 6 million remaining shares available for repurchase under current share repurchase program through Dec 31, 2019.
Our Viewpoint
BancorpSouth reported a decent quarter. Improved NIM along with loan growth is likely to support its topline in the quarters ahead. Also, improving credit quality is a tailwind. Though, persistent decline in mortgage banking revenues continues to be a major concern, the company is well poised to benefit from lower tax rates and rising rate environment.
BancorpSouth, Inc. Price, Consensus and EPS Surprise
BancorpSouth carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of other Banks
Fifth Third Bancorp FITB reported fourth-quarter 2017 adjusted earnings per share of 52 cents beating the Zacks Consensus Estimate of 47 cents. The adjusted figure excludes the impact of tax legislation, gain on the sale of Vantiv shares and charge related to the valuation of the Visa total return swap.
Shares of Webster Financial WBS gained around 1% following its fourth-quarter 2017 earnings release. Adjusted earnings per share of 71 cents compared favorably with 60 cents earned in the prior-year quarter. The Zacks Consensus Estimate for the quarter’s earnings was 67 cents.
Driven by top-line strength, Northern Trust Corporation’s NTRS fourth-quarter 2017 adjusted earnings per share of $1.51 compared favorably with $1.11 recorded in the year-ago quarter. Results include tax benefits and other one-time items. The Zacks Consensus Estimate was $1.30.
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