BancorpSouth (BXS) Tops Q3 EPS by 2c

October 21, 2019 4:34 PM EDT

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BancorpSouth (NYSE: BXS) reported Q3 EPS of $0.63, $0.02 better than the analyst estimate of $0.61.

Highlights for the third quarter of 2019 included:

  • Reported quarterly net income of $63.8 million, or $0.63 per diluted share.
  • Completed the acquisitions of Van Alstyne Financial Corporation and Summit Financial Enterprises, Inc. effective September 1, 2019; recorded merger-related expenses of $4.1 million for the third quarter.
  • Although earnings were impacted by a negative pre-tax mortgage servicing rights ("MSR") valuation adjustment of $4.0 million, strong mortgage production volume totaling $536.1 million contributed to an increase in mortgage production and servicing revenue to $11.3 million for the third quarter.
  • Record net operating income – excluding MSR – of $69.7 million, or $0.69 per diluted share, which represents increases of 13.1 percent on a per share basis compared with the second quarter of 2019 and 23.2 percent compared with the third quarter of 2018.
  • Generated organic deposit and customer repo growth for the quarter totaling approximately $160.0 million, or 4.1 percent on an annualized basis.
  • Net interest margin – excluding accretable yield – remained relatively stable at 3.76 percent.
  • Continued strong credit quality reflected by net recoveries of $0.7 million and a provision for credit losses of $0.5 million for the quarter; non-performing and classified asset levels remained stable excluding the impact of acquired loans.
  • Operating efficiency ratio – excluding MSR – improved to 63.0 percent for the quarter.
  • Announced the signing of a definitive merger agreement with Texas First Bancshares, Inc., the parent company of Texas First State Bank, which is expected to add approximately $390 million in assets to the Company's Central Texas presence.
  • Repurchased 561,260 shares of outstanding common stock at a weighted average price of $27.04 per share.

The Company reported net income of $63.8 million, or $0.63 per diluted share, for the third quarter of 2019, compared with net income of $66.7 million, or $0.67 per diluted share, for the third quarter of 2018 and net income of $53.1 million, or $0.53 per diluted share, for the second quarter of 2019. The Company reported net operating income – excluding MSR – of $69.7 million, or $0.69 per diluted share, for the third quarter of 2019, compared with $55.0 million, or $0.56 per diluted share, for the third quarter of 2018 and $62.0 million, or $0.61 per diluted share, for the second quarter of 2019.

Net operating income – excluding MSR – is a non-GAAP financial measure used by management to assess the core operating performance of the Company. This measure excludes items such as recognized securities gains and losses, MSR valuation adjustments, restructuring charges, merger-related expenses, and certain other charges.

"Our third quarter results reflect yet another quarter of record financial performance," remarked Dan Rollins, Chairman and Chief Executive Officer. "We are pleased to report record net operating income – excluding MSR – of $69.7 million, or $0.69 per diluted share, for the third quarter. This success was driven by our ability to maintain a relatively stable net interest margin in a challenging rate environment while our credit quality metrics remain strong. In addition, we continue to leverage our cost structure and improve efficiency, which is reflected in the decline in our operating efficiency ratio – excluding MSR – to 63.0 percent for the quarter. Finally, our mortgage team had an outstanding quarter as $536.1 million in total mortgage production volume contributed to production and service revenue of over $11 million."

"We are pleased to have recently completed our mergers with Summit Bank and Texas Star Bank. Andy Stein, Frank Hall, and the Summit team will provide us with a more meaningful presence in the Florida Panhandle while Randle Jones and the Texas Star team will enhance our market share in the Dallas MSA and surrounding markets. We anticipate completing the operational integration of these banks during the fourth quarter of this year."

For earnings history and earnings-related data on BancorpSouth (BXS) click here.



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