Hancock Whitney Corporation (Nasdaq: HWC) today announced its
financial results for the third quarter of 2023. Net income for the
third quarter of 2023 totaled $97.7 million, or $1.12 per diluted
common share (EPS), compared to $117.8 million, or $1.35 per
diluted common share, in the second quarter of 2023. The company
reported net income for the third quarter of 2022 of $135.4
million, or $1.55 per diluted common share.
Third Quarter 2023 Highlights
- 3Q23 net income impacted by “idiosyncratic” charge-off of $29.7
million
- Pre-provision net revenue (PPNR) totaled $153.4 million,
compared to $157.8 million in 2Q23
- Deposits increased $277 million, or 4% LQA
- Loan growth of $194 million, or 3% LQA
- Criticized commercial loans and nonaccrual loans remain at low
levels
- ACL coverage remained solid at 1.40%
- NIM 3.27%, compared to 3.30% in 2Q23
- CET1 ratio estimated at 12.04%, up 21 bps linked-quarter; TCE
ratio 7.34%, compared to 7.50% in 2Q23
- Efficiency ratio 56.38%
“Third quarter of 2023 results reflect the continued strength
and stability of our Company,” said John M. Hairston, President
& CEO. “Despite the ongoing challenges in today’s operating
environment, we were able to fully fund loan growth with client
deposit growth. Our NIM compression moderated this quarter as
deposit betas slowed despite the continued remix of DDAs, our
funding mix improved, and we reported an improved earning asset
yield. Aside from the previously disclosed idiosyncratic
charge-off, our problem credit metrics remain at historically low
levels and we do not see any broad weaknesses in our loan
portfolio. We continue to control expenses and are focused on
growing fee income. We maintained a robust ACL to loans of 1.40%
and our capital remains solid with estimated tier 1 leverage ratio
above 10% and tier 1 common equity above 12%. We remain well
capitalized including all unrealized losses in our portfolio. As we
celebrate Hancock Whitney Founders Month, we are exceptionally
proud of the efforts of our team in continuing our 124-year legacy
and in our commitment to the people and communities we serve.”
Loans
Total loans were $24.0 billion at September 30, 2023, up $193.8
million, or 1%, from June 30, 2023. One-time close products drove
the increase in mortgage loans, which convert from construction and
development loans to permanent mortgages at construction
completion. CRE-income producing loans increased this quarter
related to completed multifamily construction projects, which
converted from construction and development loans to permanent
CRE-income producing at construction completion, and slowing loan
prepayments.
Average loans totaled $23.8 billion for the third quarter of
2023, up $175.7 million, or 1%, 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 September 30, 2023 were $30.3 billion, up
$276.8 million, or 1%, from June 30, 2023. The growth in deposits
was primarily due to an increase of interest-bearing transaction
and savings deposits mostly due to competitive rates offered and an
increase in time deposits related to a shift from DDA deposits,
offset by a decrease in noninterest bearing DDAs and a decrease in
interest-bearing public funds related to seasonal activity.
DDAs totaled $11.6 billion at September 30, 2023, down $545.4
million, or 4%, from June 30, 2023 and comprised 38% of total
period-end deposits. Interest-bearing transaction and savings
deposits totaled $10.7 billion at the end of the third quarter of
2023, an increase of $229.4 million, or 2%, linked-quarter.
Compared to June 30, 2023, retail time deposits of $4.0 billion
were up $670.3 million, or 20%, and brokered deposits were $1.2
billion, virtually unchanged compared to the prior quarter.
Interest-bearing public fund deposits decreased $72.2 million, or
2%, linked-quarter, ending September 30, 2023 at $2.9 billion.
Average deposits for the third quarter of 2023 were $29.8
billion, up $384.3 million, or 1%, 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 $335.9 million
at September 30, 2023, down $9.8 million, or 3%, from June 30,
2023. During the third quarter of 2023, the company recorded a
provision for credit losses of $28.5 million, compared to a
provision for credit losses of $7.6 million in the second quarter
of 2023. There were $38.3 million of net charge-offs in the third
quarter of 2023, or 0.64% of average total loans on an annualized
basis, compared to net charge-offs of $3.4 million, or 0.06% of
average total loans in the second quarter of 2023. The ratio of ACL
to period-end loans was 1.40% at September 30, 2023, compared to
1.45% at June 30, 2023.
Criticized commercial loans and nonaccrual loans remained at low
levels at September 30, 2023. Criticized commercial loans totaled
$275.1 million, or 1.46% of total commercial loans, at September
30, 2023, compared to $302.2 million, or 1.62% of total commercial
loans at June 30, 2023. Nonaccrual loans totaled $60.3 million, or
0.25% of total loans, at September 30, 2023, compared to $78.2
million, or 0.33% of total loans, at June 30, 2023. ORE and
foreclosed assets were $4.5 million, up $2.4 million,
linked-quarter.
Net Interest Income and Net Interest Margin (NIM)
Net interest income (TE) for the third quarter of 2023 was
$272.1 million, a decrease of $4.7 million, or 2%, from the second
quarter of 2023. The net interest margin (NIM) (TE) was 3.27% in
the third quarter of 2023, down 3 bps linked-quarter. A change in
the mix of earning assets and loan yields (+16 bps) and decreased
short term borrowing costs (+5 bps) led to a 21 basis point
improvement in the NIM, offset by the impact of deposit remix and
rates (-24 bps). Additional NIM detail and guidance is included in
the third quarter of 2023 earnings investor deck.
Average earning assets were $33.1 billion for the third quarter
of 2023, down $482.3 million, or 1%, from the second quarter of
2023.
Noninterest Income
Noninterest income totaled $86.0 million for the third quarter
of 2023, up $2.8 million, or 3%, from the second quarter of
2023.
Service charges on deposits were up $0.8 million, or 4%, from
the second quarter of 2023. The increase was primarily related to
higher account activity. Bank card and ATM fees were down $0.4
million, or 2%, from the second quarter of 2023.
Investment and annuity income and insurance fees were up $0.3
million, or 3%, linked-quarter. Trust fees were down $0.8 million,
or 5% linked-quarter, related to 2Q23 seasonal tax accounting fees.
Fees from secondary mortgage operations totaled $2.6 million for
the third quarter of 2023, up $0.3 million, or 13%,
linked-quarter.
Other noninterest income totaled $15.4 million, up $2.6 million,
or 20%, from the second quarter of 2023. The increase in other
noninterest income was primarily related to increased FHLB
dividends, SBIC income and loan-related fee income from specialty
lines of business.
Noninterest Expense & Taxes
Noninterest expense totaled $204.7 million, up $2.6 million, or
1% linked-quarter.
Personnel expense totaled $116.3 million in the third quarter of
2023, up $1.4 million, or 1%, linked-quarter. The increase was
primarily related to a reduction in the amount of personnel expense
deferred (FAS 91) due to lower loan originations. Net occupancy and
equipment expense totaled $18.2 million in the third quarter of
2023, up $0.5 million, or 3%, from the second quarter of 2023.
Amortization of intangibles totaled $2.8 million for the third
quarter of 2023, down $0.1 million, or 5%, linked-quarter.
ORE and other foreclosed assets gains exceeded expenses by less
than $0.1 million in the third quarter of 2023, compared to a gain
of $0.3 million in the second quarter of 2023.
Other expense totaled $67.4 million in the third quarter of
2023, up $0.6 million, or 1%, linked-quarter.
The effective income tax rate for third quarter 2023 was
19.9%.
Capital
Common stockholders’ equity at September 30, 2023 totaled $3.5
billion, down $53.4 million, or 2%, from June 30, 2023. The
tangible common equity (TCE) ratio was 7.34%, down 16 bps from June
30, 2023. The company’s CET1 ratio is estimated to be 12.04% at
September 30, 2023, up 21 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 third
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, October 17, 2023 to
review third 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 third 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 October 24, 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 Nine Months
Ended (dollars and common share data in thousands, except per
share amounts)
9/30/2023 6/30/2023 9/30/2022
9/30/2023 9/30/2022 NET INCOME Net interest
income
$
269,234
$
273,911
$
280,307
$
828,139
$
754,502
Net interest income (TE) (a)
272,086
276,748
282,910
836,412
762,235
Provision for credit losses
28,498
7,633
1,402
42,151
(30,886
)
Noninterest income
85,974
83,225
85,337
249,529
254,422
Noninterest expense
204,675
202,138
193,502
607,697
560,538
Income tax expense
24,297
29,571
35,351
85,821
98,970
Net income
$
97,738
$
117,794
$
135,389
$
341,999
$
380,302
PERIOD-END BALANCE SHEET DATA Loans
$
23,983,679
$
23,789,886
$
22,585,585
$
23,983,679
$
22,585,585
Securities
7,916,101
8,195,679
8,333,191
7,916,101
8,333,191
Earning assets
32,733,591
32,715,630
31,213,449
32,733,591
31,213,449
Total assets
36,298,301
36,210,148
34,567,242
36,298,301
34,567,242
Noninterest-bearing deposits
11,626,371
12,171,817
14,290,817
11,626,371
14,290,817
Total deposits
30,320,337
30,043,501
28,951,274
30,320,337
28,951,274
Common stockholders' equity
3,501,003
3,554,476
3,180,439
3,501,003
3,180,439
AVERAGE BALANCE SHEET DATA Loans
$
23,830,724
$
23,654,994
$
22,138,709
$
23,526,808
$
21,643,149
Securities (b)
8,888,477
9,007,821
9,177,460
9,010,201
8,949,988
Earning assets
33,137,565
33,619,829
31,783,801
33,171,798
32,583,652
Total assets
35,626,927
36,205,396
34,377,773
35,665,505
35,247,985
Noninterest-bearing deposits
11,453,236
12,153,453
14,323,646
12,184,410
14,447,445
Total deposits
29,757,180
29,372,899
29,180,626
29,311,176
29,727,009
Common stockholders' equity
3,572,487
3,567,260
3,405,463
3,518,105
3,464,699
COMMON SHARE DATA Earnings per share - diluted
$
1.12
$
1.35
$
1.55
$
3.92
$
4.33
Cash dividends per share
0.30
0.30
0.27
0.90
0.81
Book value per share (period-end)
40.64
41.27
37.12
40.64
37.12
Tangible book value per share (period-end)
30.16
30.76
26.44
30.16
26.44
Weighted average number of shares - diluted
86,437
86,370
86,020
86,368
86,439
Period-end number of shares
86,148
86,123
85,686
86,148
85,686
Market data High sales price
$
45.15
$
43.73
$
52.65
$
54.38
$
59.82
Low sales price
35.34
31.02
41.62
31.02
41.62
Period-end closing price
36.99
38.38
45.81
36.99
45.81
Trading volume
34,506
38,854
24,976
112,391
81,474
PERFORMANCE RATIOS Return on average assets
1.09
%
1.30
%
1.56
%
1.28
%
1.44
%
Return on average common equity
10.85
%
13.24
%
15.77
%
13.00
%
14.68
%
Return on average tangible common equity
14.53
%
17.76
%
21.58
%
17.51
%
19.98
%
Tangible common equity ratio (c)
7.34
%
7.50
%
6.73
%
7.34
%
6.73
%
Net interest margin (TE)
3.27
%
3.30
%
3.54
%
3.37
%
3.13
%
Noninterest income as a percentage of total revenue (TE)
24.01
%
23.21
%
23.17
%
22.98
%
25.03
%
Efficiency ratio (d)
56.38
%
55.33
%
51.62
%
55.14
%
54.08
%
Average loan/deposit ratio
80.08
%
80.53
%
75.87
%
80.27
%
72.81
%
Allowance for loan losses as a percentage of period-end loans
1.28
%
1.32
%
1.36
%
1.28
%
1.36
%
Allowance for credit losses as a percentage of period-end loans (e)
1.40
%
1.45
%
1.50
%
1.40
%
1.50
%
Annualized net charge-offs to average loans
0.64
%
0.06
%
0.02
%
0.27
%
0.01
%
Allowance for loan losses as a % of nonaccrual loans
507.68
%
402.07
%
769.00
%
507.68
%
769.00
%
FTE headcount
3,681
3,705
3,607
3,681
3,607
(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)
9/30/2023 6/30/2023 3/31/2023
12/31/2022 9/30/2022 NET INCOME Net interest
income
$
269,234
$
273,911
$
284,994
$
295,501
$
280,307
Net interest income (TE) (a)
272,086
276,748
287,578
298,116
282,910
Provision for credit losses
28,498
7,633
6,020
2,487
1,402
Noninterest income
85,974
83,225
80,330
77,064
85,337
Noninterest expense
204,675
202,138
200,884
190,154
193,502
Income tax expense
24,297
29,571
31,953
36,137
35,351
Net income
$
97,738
$
117,794
$
126,467
$
143,787
$
135,389
PERIOD-END BALANCE SHEET DATA Loans
$
23,983,679
$
23,789,886
$
23,404,523
$
23,114,046
$
22,585,585
Securities
7,916,101
8,195,679
8,390,684
8,408,536
8,333,191
Earning assets
32,733,591
32,715,630
34,106,792
31,873,027
31,213,449
Total assets
36,298,301
36,210,148
37,547,083
35,183,825
34,567,242
Noninterest-bearing deposits
11,626,371
12,171,817
12,860,027
13,645,113
14,290,817
Total deposits
30,320,337
30,043,501
29,613,070
29,070,349
28,951,274
Common stockholders' equity
3,501,003
3,554,476
3,531,232
3,342,628
3,180,439
AVERAGE BALANCE SHEET DATA Loans
$
23,830,724
$
23,654,994
$
23,086,529
$
22,723,248
$
22,138,709
Securities (b)
8,888,477
9,007,821
9,137,034
9,200,511
9,177,460
Earning assets
33,137,565
33,619,829
32,753,781
32,244,681
31,783,801
Total assets
35,626,927
36,205,396
35,159,050
34,498,915
34,377,773
Noninterest-bearing deposits
11,453,236
12,153,453
12,963,133
13,854,625
14,323,646
Total deposits
29,757,180
29,372,899
28,792,851
28,816,338
29,180,626
Common stockholders' equity
3,572,487
3,567,260
3,412,813
3,228,667
3,405,463
COMMON SHARE DATA Earnings per share - diluted
$
1.12
$
1.35
$
1.45
$
1.65
$
1.55
Cash dividends per share
0.30
0.30
0.30
0.27
0.27
Book value per share (period-end)
40.64
41.27
41.03
38.89
37.12
Tangible book value per share (period-end)
30.16
30.76
30.47
28.29
26.44
Weighted average number of shares - diluted
86,437
86,370
86,282
86,249
86,020
Period-end number of shares
86,148
86,123
86,066
85,941
85,686
Market data High sales price
$
45.15
$
43.73
$
54.38
$
57.00
$
52.65
Low sales price
35.34
31.02
34.42
45.64
41.62
Period-end closing price
36.99
38.38
36.40
48.39
45.81
Trading volume
34,506
38,854
39,030
29,996
24,976
PERFORMANCE RATIOS Return on average assets
1.09
%
1.30
%
1.46
%
1.65
%
1.56
%
Return on average common equity
10.85
%
13.24
%
15.03
%
17.67
%
15.77
%
Return on average tangible common equity
14.53
%
17.76
%
20.49
%
24.64
%
21.58
%
Tangible common equity ratio (c)
7.34
%
7.50
%
7.16
%
7.09
%
6.73
%
Net interest margin (TE)
3.27
%
3.30
%
3.55
%
3.68
%
3.54
%
Noninterest income as a percentage of total revenue (TE)
24.01
%
23.21
%
21.83
%
20.54
%
23.17
%
Efficiency ratio (d)
56.38
%
55.33
%
53.76
%
49.81
%
51.62
%
Average loan/deposit ratio
80.08
%
80.53
%
80.18
%
78.86
%
75.87
%
Allowance for loan losses as a percentage of period-end loans
1.28
%
1.32
%
1.32
%
1.33
%
1.36
%
Allowance for credit losses as a percentage of period-end loans (e)
1.40
%
1.45
%
1.46
%
1.48
%
1.50
%
Annualized net charge-offs to average loans
0.64
%
0.06
%
0.10
%
0.02
%
0.02
%
Allowance for loan losses as a % of nonaccrual loans
507.68
%
402.07
%
569.31
%
789.38
%
769.00
%
FTE headcount
3,681
3,705
3,679
3,627
3,607
(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/20231017476780/en/
Kathryn Shrout Mistich, VP, Investor Relations Manager
504.539.7836 or kathryn.mistich@hancockwhitney.com
Grafico Azioni Hancock Whitney (NASDAQ:HWC)
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