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Hancock Whitney Agrees to Sell $497 Million in Energy Loans
Entire RBL portfolio included in the sale GULFPORT, Miss., July 17, 2020 (GLOBE NEWSWIRE) -- Hancock Whitney Corporation (Nasdaq: HWC) today announced it has
About this update from Hancock Whitney Corporation
[{"type":"text","content":"Entire RBL portfolio included in the sale\nGULFPORT, Miss., July 17, 2020 (GLOBE NEWSWIRE) -- Hancock Whitney Corporation (Nasdaq: HWC) today announced it has agreed to sell $497 million of energy loans to certain funds and accounts managed by Oaktree Capital Management, L.P. The sale includes reserve-based (RBL), midstream and nondrilling service credits. The company expects to receive proceeds of $257.5 million from the sale of these loans upon satisfaction of certain closing conditions. All loans included in the transaction were re-classified as held for sale as of June 30, 2020, and any write-downs and charge-offs associated with the sale are reflected in the company’s second quarter’s results. A special provision for credit losses related to the transaction of approximately $160.1 million (pre-tax), or $1.47 per diluted share (21% tax rate), will be included in the company’s second quarter 2020 earnings results.\n “The primary objective of this sale is to continue de-risking our loan portfolio by accelerating the disposition of assets that have been impacted by ongoing issues within the energy industry, and have now been further complicated by COVID-19,” said John M. Hairston, President and CEO. “While operating from a solid capital base, we decided to be opportunistic and sell these assets today, significantly de-risking our balance sheet. As a result, both nonperforming assets and criticized loans will show significant improvement, which should position us to report asset quality metrics in line with our peer groups. Additionally, we currently expect lower provisions for loan losses in the second half of 2020, due to both improved asset quality and after proactively building reserves for potential COVID-19 related issues in the first half of 2020. We also believe this transaction should position the company for a faster recovery in both earnings and returns to our shareholders.” In addition to the special provision, the company continued building its reserve for potential losses related to COVID-19 with a second quarter provision of $146.8 million. The total provision for the loan portfolio for the second quarter of 2020 is $306.9 million. As a result of the transaction, and the COVID-19 related reserve build, the company will report a second quarter net loss of $117.1 million, or ($1.36) per diluted share. Pre-provision,...