BancorpSouth's Growth On Track, Margin Pressure Lingers

On Jun 28, 2016, we issued an updated research report on BancorpSouth, Inc. (NYSE:BXS) . The Tupelo, MS-based commercial banking and financial services provider seems well positioned for long-term growth, given its strength in several areas.

BancorpSouth’s efforts to increase loan balances seem to be on track. Benefiting from its diverse footprint across regions including Mississippi, Tennessee, Alabama, Arkansas, Texas, and Illinois, the company has exhibited continuous rise in loans in the past several quarters. Further, with continued economic recovery, the loan growth momentum is likely to continue in the quarters ahead.

Also, the company’s time deposits continue to trend down, while lower cost demand and saving deposits have been increasing over the past several quarters. Further, the company remains focused on driving operational efficiency through its cost containment efforts. Also, the company’s asset quality continues to exhibit broad based improvement since the last few years.

Additionally, driven by a strong capital position, BancorpSouth remains focused on enhancing shareholder value through share buybacks and dividend payments. Notably, earlier this January BancorpSouth had announced a share repurchase program of approximately 7 million shares of its outstanding common stock through Dec 2017.

However, we remain cautious owing to net interest margin pressure amid the slow rise in interest rates and the prevailing stringent regulatory landscape. Further, uncertainty hovers over the materialization of BancorpSouth’s long-awaited merger deals with Central Community Corporation and Ouachita Bancshares Corp. While the mergers will likely prove beneficial to the company’s growth upon completion, recurring postponement of deals closure hints at compliance-related issues.

Over the past 30 days, the Zacks Consensus Estimate remained stable at $1.61 and $1.76 per share, for 2016 and 2017, respectively. BancorpSouth currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the finance space include Franklin Flagstar Bancorp Inc. (NYSE:FBC) , HomeStreet, Inc. (NASDAQ:HMST) and First Mid-Illinois Bancshares, Inc. (NASDAQ:FMBH) . All three stocks sport a Zacks Rank #1 (Strong Buy).


BANCORPSOUTH (BXS): Free Stock Analysis Report

FLAGSTAR BANCP (FBC): Free Stock Analysis Report

HOMESTREET INC (HMST): Free Stock Analysis Report

FIRST MID-IL BC (FMBH): Free Stock Analysis Report

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