Hancock Whitney Corporation (Nasdaq: HWC) today announced its
financial results for the second quarter of 2023. Net income for
the second quarter of 2023 totaled $117.8 million, or $1.35 per
diluted common share (EPS), compared to $126.5 million, or $1.45
per diluted common share, in the first quarter of 2023. The company
reported net income for the second quarter of 2022 of $121.4
million, or $1.38 per diluted common share.
Second Quarter 2023 Highlights
- Pre-provision net revenue (PPNR) totaled $157.8 million,
compared to $167.0 million at 1Q23
- Deposits increased $430.4 million, or 6% LQA
- Loan growth of $385.4 million, or 7% LQA
- Criticized commercial loans and nonaccrual loans remained at
relatively low levels
- ACL coverage remained solid at 1.45%
- NIM 3.30%, compared to 3.55% in 1Q23
- CET1 ratio estimated at 11.83%, up 23 bps linked-quarter; TCE
ratio 7.50%, up 34 bps linked-quarter
- Efficiency ratio 55.33%
“The second quarter of 2023 was as expected given continued
challenges and dynamics the industry is facing in this operating
environment,” said John M. Hairston, President & CEO. “Our
balance sheet remained solid with loan growth funded by both client
deposit growth and runoff from the securities portfolio. The DDA
remix continues to drive higher deposit betas for the quarter, and,
in turn, higher than expected NIM compression. Credit metrics
remain at relatively low levels, fees improved and expenses were up
as we implement new technology. We have been and continue to be
cognizant of the macroeconomic environment and trends that have
been impacting our industry. As such, we’ve maintained a robust
ACL, solid capital, and multiple sources of liquidity. Despite the
headwinds we are facing, we remain confident in our ability to
remain strong and stable, as we have for 124 years.”
Loans
Total loans were $23.8 billion at June 30, 2023, up $385.4
million, or 2%, from March 31, 2023. One-time close products drove
the increase in mortgage loans, which converted from construction
and development loans to permanent mortgages at construction
completion, as well as growth across various industries and
sectors.
Average loans totaled $23.7 billion for the second quarter of
2023, up $568.5 million, or 2%, linked-quarter. Management expects
2023 period-end loan growth to be in the range of low- to
mid-single digits compared to year-end 2022.
Deposits
Total deposits at June 30, 2023 were $30.0 billion, up $430.4
million, or 1%, from March 31, 2023. The growth in deposits was
primarily due to an increase of interest-bearing time deposits
resulting from a shift from DDA deposits and lower cost deposits to
higher competitive-rate CD products and the issuance of brokered
deposits during May 2023. Offsetting this increase in time deposits
was a decrease in noninterest-bearing DDA, a decrease in
interest-bearing money market and savings due to a shift to higher
rate products, and a decrease in public fund deposits primarily
related to typical seasonal runoff.
DDAs totaled $12.2 billion at June 30, 2023, down $688.2
million, or 5%, from March 31, 2023 and comprised 40% of total
period-end deposits. Interest-bearing transaction and savings
deposits totaled $10.4 billion at the end of the second quarter of
2023, a decrease of $221.6 million, or 2%, linked-quarter. Compared
to March 31, 2023, retail time deposits of $3.3 billion were up
$911.0 million, or 37%, and brokered deposits of $1.2 billion were
up $590.0 million. Interest-bearing public fund deposits decreased
$160.8 million, or 5%, linked-quarter, ending June 30, 2023 at $2.9
billion.
Average deposits for the second quarter of 2023 were $29.4
billion, up $580.0 million, or 2%, linked-quarter. Management
expects 2023 period-end deposit level growth to be flat to low
single digits compared to year-end 2022.
Asset Quality
The total allowance for credit losses (ACL) was $345.7 million
at June 30, 2023, up $4.3 million, or 1%, from March 31, 2023.
During the second quarter of 2023, the company recorded a provision
for credit losses of $7.6 million, compared to a provision of $6.0
million in the first quarter of 2023. There were $3.4 million of
net charge-offs in the second quarter of 2023, or 0.06% of average
total loans on an annualized basis, compared to net charge-offs of
$5.7 million, or 0.10% of average total loans in the first quarter
of 2023. The ratio of ACL to period-end loans was 1.45% at June 30,
2023, down slightly from 1.46% at March 31, 2023.
Criticized commercial loans and nonaccrual loans remained at
relatively low levels at June 30, 2023. Criticized commercial loans
totaled $302.2 million, or 1.62% of total commercial loans, at June
30, 2023, compared to $295.5 million, or 1.59% of total commercial
loans at March 31, 2023. Nonaccrual loans totaled $78.2 million, or
0.33% of total loans, at June 30, 2023, compared to $54.3 million,
or 0.23% of total loans, at March 31, 2023. ORE and foreclosed
assets were $2.2 million, up $0.2 million, or 10%,
linked-quarter.
Net Interest Income and Net Interest Margin (NIM)
Net interest income (TE) for the second quarter of 2023 was
$276.7 million, a decrease of $10.8 million, or 4%, from the first
quarter of 2023. The net interest margin (NIM) (TE) was 3.30% in
the second quarter of 2023, down 25 bps linked-quarter. A change in
the mix of earning assets and yield led to a 23 basis point
improvement in the NIM that was offset by the impact of deposit
remix (-38 bps), short-term borrowing costs (-6 bps) and the impact
of excess liquidity (-4 bps). Additional NIM detail and guidance is
included in the second quarter of 2023 earnings investor deck.
Average earning assets were $33.6 billion for the second quarter
of 2023, up $866.0 million, or 3%, from the first quarter of
2023.
Noninterest Income
Noninterest income totaled $83.2 million for the second quarter
of 2023, up $2.9 million, or 4%, from the first quarter of
2023.
Service charges on deposits were up $0.9 million, or 4%, from
the first quarter of 2023. The increase was primarily related to
commercial net analysis fees.
Bank card and ATM fees were up $0.3 million, or 1%, from the
first quarter of 2023. Investment and annuity income and insurance
fees were down $0.6 million, or 7%, linked-quarter, related to
lower annuity and corporate underwriting fees. Trust fees were up
$0.6 million, or 4% linked-quarter, related to seasonal tax
accounting fees.
Fees from secondary mortgage operations totaled $2.3 million for
the second quarter of 2023, up $0.1 million, or 6%,
linked-quarter.
Other noninterest income totaled $12.8 million, up $1.6 million,
or 14%, from the first quarter of 2023. The increase in other
noninterest income was primarily related to increased FHLB
dividends and credit-related fees, compared to the first quarter of
2023.
Noninterest Expense & Taxes
Noninterest expense totaled $202.1 million, up $1.3 million, or
1% linked-quarter.
Personnel expense totaled $114.9 million in the second quarter
of 2023, down $0.5 million, or less than 1%, linked-quarter. The
slight decline was primarily related to lower incentive and benefit
costs, partly offset by merit pay increases. Net occupancy and
equipment expense totaled $17.8 million in the second quarter of
2023, up $0.8 million, or 5%, from the first quarter of 2023,
related to higher property insurance and annual maintenance costs.
Amortization of intangibles totaled $3.0 million for the second
quarter of 2023, down $0.2 million, or 5%, linked-quarter.
ORE and other foreclosed assets gains exceeded expenses by $0.3
million in the second quarter of 2023, compared to an expense of
$0.2 million in the first quarter of 2023.
Other operating expense totaled $66.8 million in the second
quarter of 2023, up $1.5 million, or 2%, linked-quarter. The
increase in other expenses was primarily due to higher regulatory
fees, including the quarterly FDIC assessment, and an increase in
data processing expenses.
The effective income tax rate for second quarter 2023 was
20.1%.
Capital
Common stockholders’ equity at June 30, 2023 totaled $3.6
billion, up $23.2 million, or 1%, from March 31, 2023. The tangible
common equity (TCE) ratio was 7.50%, up 34 bps from March 31, 2023.
The company’s CET1 ratio is estimated to be 11.83% at June 30,
2023, up 23 bps linked-quarter. The company’s share buyback
authorization (allowing the repurchase of up to 4,297,000 shares of
the company’s outstanding common stock), is set to expire on
December 31, 2024. No shares were repurchased in the second quarter
of 2023.
Conference Call and Slide Presentation
Management will host a conference call for analysts and
investors at 4:00 p.m. Central Time on Tuesday, July 18, 2023 to
review second quarter 2023 results. A live listen-only webcast of
the call will be available under the Investor Relations section of
Hancock Whitney’s website at investors.hancockwhitney.com. A link
to the release with additional financial tables, and a link to a
slide presentation related to first quarter results are also posted
as part of the webcast link. To participate in the Q&A portion
of the call, dial 888-210-2654 or 646-960-0278, access code
6914431.
An audio archive of the conference call will be available under
the Investor Relations section of our website. A replay of the call
will also be available through July 25, 2023 by dialing
800-770-2030 or 647-362-9199, access code 6914431.
About Hancock Whitney
Since the late 1800s, Hancock Whitney has embodied core values
of Honor & Integrity, Strength & Stability, Commitment to
Service, Teamwork, and Personal Responsibility. Hancock Whitney
offices and financial centers in Mississippi, Alabama, Florida,
Louisiana, and Texas offer comprehensive financial products and
services, including traditional and online banking; commercial and
small business banking; private banking; trust and investment
services; healthcare banking; and mortgage services. The company
also operates combined loan and deposit production offices in the
greater metropolitan areas of Nashville, Tennessee and Atlanta,
Georgia. More information is available at
www.hancockwhitney.com.
Non-GAAP Financial Measures
This news release includes non-GAAP financial measures to
describe Hancock Whitney’s performance. These non-GAAP financial
measures should not be considered alternatives to GAAP-basis
financial statements and other bank holding companies may define or
calculate these non-GAAP measures or similar measures differently.
The reconciliations of those measures to GAAP measures are provided
either in the financial tables or in Appendix A thereto.
Consistent with the provisions of subpart 229.1400 of the
Securities and Exchange Commission’s Regulation S-K, “Disclosures
by Bank and Savings and Loan Registrants,” the company presents net
interest income, net interest margin and efficiency ratios on a
fully taxable equivalent (“TE”) basis. The TE basis adjusts for the
tax-favored status of net interest income from certain loans and
investments using the statutory federal tax rate to increase
tax-exempt interest income to a taxable equivalent basis. The
company believes this measure to be the preferred industry
measurement of net interest income and it enhances comparability of
net interest income arising from taxable and tax-exempt
sources.
The company presents certain additional non-GAAP financial
measures to assist the reader with a better understanding of the
Company’s performance period over period, as well as to provide
investors with assistance in understanding the success management
has experienced in executing its strategic initiatives. These
non-GAAP measures may reference the concept “operating.” We use the
term “operating” to describe a financial measure that excludes
income or expense considered to be nonoperating in nature. Items
identified as nonoperating are those that, when excluded from a
reported financial measure, provide management or the reader with a
measure that may be more indicative of forward-looking trends in
our business.
We define Operating Pre-Provision Net Revenue as total
revenue (te) less noninterest expense, excluding nonoperating
items. Management believes that operating pre-provision net revenue
is a useful financial measure because it enables investors and
others to assess the Company’s ability to generate capital to cover
credit losses through a credit cycle.
Important Cautionary Statement about Forward-Looking
Statements
This news release contains forward-looking statements within the
meaning of section 27A of the Securities Act of 1933, as amended,
and section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements that we may make include statements
regarding our expectations of our performance and financial
condition, balance sheet and revenue growth, the provision for
credit losses, capital levels, deposits (including growth, pricing
and betas), investment portfolio, other sources of liquidity, loan
growth expectations, management’s predictions about charge-offs for
loans, general economic business conditions in our local markets,
the impacts related to Russia’s military action in Ukraine, Federal
Reserve action with respect to interest rates, the adequacy of our
enterprise risk management framework, potential claims, damages,
penalties, fines and reputational damage resulting from pending or
future litigation, regulatory proceedings and enforcement actions,
as well as the impact of recent negative developments affecting the
banking industry and the resulting media coverage; the potential
impact of future business combinations on our performance and
financial condition, including our ability to successfully
integrate the businesses, success of revenue-generating and cost
reduction initiatives, the effectiveness of derivative financial
instruments and hedging activities to manage risks, projected tax
rates, increased cybersecurity risks, including potential business
disruptions or financial losses, the adequacy of our internal
controls over financial reporting, the financial impact of
regulatory requirements and tax reform legislation, the impact of
reference rate reform, deposit trends, credit quality trends, the
impact of natural or man-made disasters, the impact of current and
future economic conditions, including the effects of declines in
the real estate market, high unemployment, inflationary pressures,
elevated interest rates and slowdowns in economic growth, as well
as the financial stress on borrowers as a result of the foregoing,
net interest margin trends, future expense levels, future
profitability, improvements in expense to revenue (efficiency)
ratio, purchase accounting impacts, accretion levels and expected
returns.
In addition, any statement that does not describe historical or
current facts is a forward-looking statement. These statements
often include the words “believes,” “expects,” “anticipates,”
“estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,”
“initiatives,” “focus,” “potentially,” “probably,” “projects,”
“outlook," or similar expressions or future conditional verbs such
as “may,” “will,” “should,” “would,” and “could.” Forward-looking
statements are based upon the current beliefs and expectations of
management and on information currently available to management.
Our statements speak as of the date hereof, and we do not assume
any obligation to update these statements or to update the reasons
why actual results could differ from those contained in such
statements in light of new information or future events.
Forward-looking statements are subject to significant risks and
uncertainties. Any forward-looking statement made in this release
is subject to the safe harbor protections set forth in the Private
Securities Litigation Reform Act of 1995. Investors are cautioned
against placing undue reliance on such statements. Actual results
may differ materially from those set forth in the forward-looking
statements. Additional factors that could cause actual results to
differ materially from those described in the forward-looking
statements can be found in Part I, “Item 1A. Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2022,
Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form
10-Q for the period ended March 31, 2023, and in other periodic
reports that we file with the SEC.
HANCOCK WHITNEY CORPORATION FINANCIAL HIGHLIGHTS
(Unaudited) Three Months Ended Six Months
Ended (dollars and common share data in thousands, except per
share amounts)
6/30/2023 3/31/2023 6/30/2022
6/30/2023 6/30/2022 NET INCOME Net interest
income
$
273,911
$
284,994
$
245,732
$
558,905
$
474,195
Net interest income (TE) (a)
276,748
287,578
248,317
564,326
479,325
Provision for credit losses
7,633
6,020
(9,761
)
13,653
(32,288
)
Noninterest income
83,225
80,330
85,653
163,555
169,085
Noninterest expense
202,138
200,884
187,097
403,022
367,036
Income tax expense
29,571
31,953
32,614
61,524
63,619
Net income
$
117,794
$
126,467
$
121,435
$
244,261
$
244,913
PERIOD-END BALANCE SHEET DATA Loans
$
23,789,886
$
23,404,523
$
21,846,068
$
23,789,886
$
21,846,068
Securities
8,195,679
8,390,684
8,531,393
8,195,679
8,531,393
Earning assets
32,715,630
34,106,792
31,292,910
32,715,630
31,292,910
Total assets
36,210,148
37,547,083
34,637,525
36,210,148
34,637,525
Noninterest-bearing deposits
12,171,817
12,860,027
14,676,342
12,171,817
14,676,342
Total deposits
30,043,501
29,613,070
29,866,432
30,043,501
29,866,432
Common stockholders' equity
3,554,476
3,531,232
3,349,723
3,554,476
3,349,723
AVERAGE BALANCE SHEET DATA Loans
$
23,654,994
$
23,086,529
$
21,657,528
$
23,372,331
$
21,391,262
Securities (b)
9,007,821
9,137,034
8,979,364
9,072,071
8,834,367
Earning assets
33,619,829
32,753,781
32,780,813
33,189,197
32,990,206
Total assets
36,205,396
35,159,050
35,380,247
35,685,113
35,690,303
Noninterest-bearing deposits
12,153,453
12,963,133
14,655,800
12,556,056
14,510,370
Total deposits
29,372,899
28,792,851
29,979,940
29,084,477
30,004,728
Common stockholders' equity
3,567,260
3,412,813
3,383,789
3,490,463
3,494,809
COMMON SHARE DATA Earnings per share - diluted
$
1.35
$
1.45
$
1.38
$
2.80
$
2.78
Cash dividends per share
0.30
0.30
0.27
0.60
0.54
Book value per share (period-end)
41.27
41.03
39.08
41.27
39.08
Tangible book value per share (period-end)
30.76
30.47
28.37
30.76
28.37
Weighted average number of shares - diluted
86,370
86,282
86,354
86,350
86,654
Period-end number of shares
86,123
86,066
85,714
86,123
85,714
Market data High sales price
$
43.73
$
54.38
$
53.15
$
54.38
$
59.82
Low sales price
31.02
34.42
42.61
31.02
42.61
Period-end closing price
38.38
36.40
44.33
38.38
44.33
Trading volume
38,854
39,030
27,493
77,885
56,498
PERFORMANCE RATIOS Return on average assets
1.30
%
1.46
%
1.38
%
1.38
%
1.38
%
Return on average common equity
13.24
%
15.03
%
14.39
%
14.11
%
14.13
%
Return on average tangible common equity
17.76
%
20.49
%
19.77
%
19.08
%
19.20
%
Tangible common equity ratio (c)
7.50
%
7.16
%
7.21
%
7.50
%
7.21
%
Net interest margin (TE)
3.30
%
3.55
%
3.04
%
3.42
%
2.92
%
Noninterest income as a percentage of total revenue (TE)
23.12
%
21.83
%
25.65
%
22.47
%
26.08
%
Efficiency ratio (d)
55.33
%
53.76
%
54.95
%
54.54
%
55.47
%
Average loan/deposit ratio
80.53
%
80.18
%
72.24
%
80.36
%
71.29
%
Allowance for loan losses as a percentage of period-end loans
1.32
%
1.32
%
1.41
%
1.32
%
1.41
%
Allowance for credit losses as a percentage of period-end loans (e)
1.45
%
1.46
%
1.55
%
1.45
%
1.55
%
Annualized net charge-offs to average loans
0.06
%
0.10
%
(0.01
)%
0.08
%
(0.00
)%
Allowance for loan losses as a % of nonaccrual loans
402.07
%
569.31
%
809.58
%
402.07
%
809.58
%
FTE headcount
3,705
3,679
3,594
3,705
3,594
(a)
Taxable equivalent (TE) amounts
are calculated using a federal income tax rate of 21%.
(b)
Average securities does not
include unrealized holding gains/losses on available for sale
securities.
(c)
The tangible common equity ratio
is common shareholders' equity less intangible assets divided by
total assets less intangible assets.
(d)
The efficiency ratio is
noninterest expense to total net interest income (TE) and
noninterest income, excluding amortization of purchased intangibles
and nonoperating items.
(e)
The allowance for credit losses
includes the allowance for loan and lease losses and the reserve
for unfunded lending commitments.
HANCOCK WHITNEY CORPORATION QUARTERLY FINANCIAL
HIGHLIGHTS (Unaudited) Three Months Ended
(dollars and common share data in thousands, except per share
amounts)
6/30/2023 3/31/2023 12/31/2022
9/30/2022 6/30/2022 NET INCOME Net interest
income
$
273,911
$
284,994
$
295,501
$
280,307
$
245,732
Net interest income (TE) (a)
276,748
287,578
298,116
282,910
248,317
Provision for credit losses
7,633
6,020
2,487
1,402
(9,761
)
Noninterest income
83,225
80,330
77,064
85,337
85,653
Noninterest expense
202,138
200,884
190,154
193,502
187,097
Income tax expense
29,571
31,953
36,137
35,351
32,614
Net income
$
117,794
$
126,467
$
143,787
$
135,389
$
121,435
PERIOD-END BALANCE SHEET DATA Loans
$
23,789,886
$
23,404,523
$
23,114,046
$
22,585,585
$
21,846,068
Securities
8,195,679
8,390,684
8,408,536
8,333,191
8,531,393
Earning assets
32,715,630
34,106,792
31,873,027
31,213,449
31,292,910
Total assets
36,210,148
37,547,083
35,183,825
34,567,242
34,637,525
Noninterest-bearing deposits
12,171,817
12,860,027
13,645,113
14,290,817
14,676,342
Total deposits
30,043,501
29,613,070
29,070,349
28,951,274
29,866,432
Common stockholders' equity
3,554,476
3,531,232
3,342,628
3,180,439
3,349,723
AVERAGE BALANCE SHEET DATA Loans
$
23,654,994
$
23,086,529
$
22,723,248
$
22,138,709
$
21,657,528
Securities (b)
9,007,821
9,137,034
9,200,511
9,177,460
8,979,364
Earning assets
33,619,829
32,753,781
32,244,681
31,783,801
32,780,813
Total assets
36,205,396
35,159,050
34,498,915
34,377,773
35,380,247
Noninterest-bearing deposits
12,153,453
12,963,133
13,854,625
14,323,646
14,655,800
Total deposits
29,372,899
28,792,851
28,816,338
29,180,626
29,979,940
Common stockholders' equity
3,567,260
3,412,813
3,228,667
3,405,463
3,383,789
COMMON SHARE DATA Earnings per share - diluted
$
1.35
$
1.45
$
1.65
$
1.55
$
1.38
Cash dividends per share
0.30
0.30
0.27
0.27
0.27
Book value per share (period-end)
41.27
41.03
38.89
37.12
39.08
Tangible book value per share (period-end)
30.76
30.47
28.29
26.44
28.37
Weighted average number of shares - diluted
86,370
86,282
86,249
86,020
86,354
Period-end number of shares
86,123
86,066
85,941
85,686
85,714
Market data High sales price
$
43.73
$
54.38
$
57.00
$
52.65
$
53.15
Low sales price
31.02
34.42
45.64
41.62
42.61
Period-end closing price
38.38
36.40
48.39
45.81
44.33
Trading volume
38,854
39,030
29,996
24,976
27,493
PERFORMANCE RATIOS Return on average assets
1.30
%
1.46
%
1.65
%
1.56
%
1.38
%
Return on average common equity
13.24
%
15.03
%
17.67
%
15.77
%
14.39
%
Return on average tangible common equity
17.76
%
20.49
%
24.64
%
21.58
%
19.77
%
Tangible common equity ratio (c)
7.50
%
7.16
%
7.09
%
6.73
%
7.21
%
Net interest margin (TE)
3.30
%
3.55
%
3.68
%
3.54
%
3.04
%
Noninterest income as a percentage of total revenue (TE)
23.12
%
21.83
%
20.54
%
23.17
%
25.65
%
Efficiency ratio (d)
55.33
%
53.76
%
49.81
%
51.62
%
54.95
%
Average loan/deposit ratio
80.53
%
80.18
%
78.86
%
75.87
%
72.24
%
Allowance for loan losses as a percentage of period-end loans
1.32
%
1.32
%
1.33
%
1.36
%
1.41
%
Allowance for credit losses as a percentage of period-end loans (e)
1.45
%
1.46
%
1.48
%
1.50
%
1.55
%
Annualized net charge-offs to average loans
0.06
%
0.10
%
0.02
%
0.02
%
(0.01
)%
Allowance for loan losses as a % of nonaccrual loans
402.07
%
569.31
%
789.38
%
769.00
%
809.58
%
FTE headcount
3,705
3,679
3,627
3,607
3,594
(a)
Taxable equivalent (TE) amounts
are calculated using a federal income tax rate of 21%.
(b)
Average securities does not
include unrealized holding gains/losses on available for sale
securities.
(c)
The tangible common equity ratio
is common shareholders' equity less intangible assets divided by
total assets less intangible assets.
(d)
The efficiency ratio is
noninterest expense to total net interest income (TE) and
noninterest income, excluding amortization of purchased intangibles
and nonoperating items.
(e)
The allowance for credit losses
includes the allowance for loan and lease losses and the reserve
for unfunded lending commitments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230718926048/en/
Kathryn Shrout Mistich, VP, Investor Relations Manager
504.539.7836 or kathryn.mistich@hancockwhitney.com
Hancock Whitney (NASDAQ:HWC)
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