8-K: Hancock Whitney Reports Solid Second Quarter Earnings, Driven by NIM Expansion and Expense Control

Hancock Whitney Corporation announced second quarter 2024 earnings of $1.31 per diluted share, up from $1.24 in the previous quarter, driven by net interest margin expansion and controlled expenses.

Summary

• Hancock Whitney Corporation reported a net income of $114.6 million, or $1.31 per diluted share, for the second quarter of 2024.
• This compares to a net income of $108.6 million, or $1.24 per diluted share, in the first quarter of 2024, which included a $3.8 million expense related to the FDIC Special Assessment.
• The company's net income for the second quarter of 2023 was $117.8 million, or $1.35 per diluted share.
• Adjusted pre-provision net revenue (PPNR) totaled $156.4 million, up from $152.9 million in the prior quarter.
• Loans decreased by $59.3 million, or 1% linked quarter annualized (LQA), primarily due to a runoff of a Shared National Credit portfolio.
• Deposits decreased by $575.2 million, or 8% LQA, driven by a decrease in interest-bearing deposits and brokered deposits.
• The net interest margin (NIM) was 3.37%, up 5 bps compared to the prior quarter.
• The CET1 ratio is estimated at 13.25%, up 60 bps linked-quarter, and the TCE ratio is 8.77%, up 16 bps linked-quarter.
• The efficiency ratio was 56.18%, down 26 bps linked-quarter.
• The company repurchased 312,993 shares of its common stock at an average price of $46.69 per share during the quarter.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with improved profitability, strong capital ratios, and effective expense management. While there are some challenges, the overall tone is optimistic and indicates a well-managed financial institution.

Positives

• The company saw an increase in net income compared to the previous quarter.
• Adjusted pre-provision net revenue (PPNR) increased, indicating improved profitability.
• The net interest margin (NIM) expanded, contributing to higher revenue.
• Capital ratios, including CET1 and TCE, improved, demonstrating financial strength.
• The efficiency ratio decreased, showing better expense management.
• The company resumed share buybacks, returning capital to shareholders.
• Credit metrics continued to normalize, reflecting a more stable direction.

Negatives

• Loans decreased by $59.3 million, or 1% linked quarter annualized (LQA).
• Deposits decreased by $575.2 million, or 8% LQA.
• Criticized commercial loans and nonaccrual loans increased slightly.
• Noninterest income decreased in investment and annuity income and insurance fees due to lower trading volume and annuity sales.

Risks

• The company faces headwinds to future loan growth due to a select appetite in CRE and a focus on de-risking.
• Continued deposit remix could impact the net interest margin.
• There is a potential for an economic slowdown that could affect loan performance.
• The company is exposed to risks related to interest rate fluctuations and market volatility.
• The company is exposed to risks related to cybersecurity.

Future Outlook

Management expects modest NIM expansion in the second half of 2024, assuming no rate cuts through year-end, and anticipates 2024 period-end loan and deposit balances to be flat to down slightly from year-end 2023.

Management Comments

• We are very pleased with the results of the second quarter, said John M. Hairston, President & CEO.
• We continued to improve profitability with NIM expansion, fee income growth, and a focus on controlling expenses.
• Credit metrics continued to normalize, reflecting a more stable direction, and we've maintained a solid ACL to loans of 1.43%.
• Our capital ratios are strong, and we deployed capital by increasing the common dividend per share and resuming share buybacks during the quarter.
• We look forward to carrying this momentum through the second half of 2024, and to achieving our 125th anniversary of helping people and communities realize their dreams.

Industry Context

The results reflect a trend of banks focusing on profitability through net interest margin expansion and expense control in a challenging economic environment. The company's focus on de-risking and maintaining strong capital levels aligns with broader industry concerns about credit quality and economic uncertainty.

Comparison to Industry Standards

• Hancock Whitney's CET1 ratio of 13.25% is above the regulatory minimum and compares favorably to many regional banks.
• The company's efficiency ratio of 56.18% is competitive with other banks of similar size, indicating effective cost management.
• The net interest margin of 3.37% is within the range of peer banks, but the company is focused on further expansion.
• The decrease in deposits is a common trend in the current environment as customers seek higher yields elsewhere, but the company is working to maintain a stable deposit base.
• The company's loan portfolio is diversified, which is a positive compared to banks with concentrated exposure to specific sectors.

Stakeholder Impact

• Shareholders will benefit from increased earnings per share and the resumption of share buybacks.
• Employees may see continued stability and growth opportunities within the company.
• Customers will continue to receive financial services from a stable and well-capitalized institution.
• Creditors will have confidence in the company's financial strength and ability to meet its obligations.

Next Steps

• The company will continue to focus on NIM expansion and expense control.
• Management will host a conference call to discuss the results.
• The company will continue to execute its share buyback program.
• The company will continue to monitor credit quality and economic conditions.

Key Dates

Keywords

financial results, net income, net interest margin, loans, deposits, capital ratios, efficiency ratio, share buyback, credit quality, Hancock Whitney