Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q3 2020 Earnings Presentation
34 slides from Hancock Whitney's earnings presentation, Oct 20, 2020
Slide 1: Third Quarter 2020 Earnings Conference Call
Third Quarter 2020 Earnings Conference Call 10/20/2020
Slide 2: Important cautionary statement about forward-looking statements
Important cautionary statement about forward-looking statements This presentation 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 ma
Slide 3: Non-GAAP Reconciliations & Glossary of Terms
Non-GAAP Reconciliations & Glossary of Terms Throughout this presentation we may use non-GAAP numbers to supplement the evaluation of our performance. The items noted below with an asterisk, "*", are considered non-GAAP. These non-GAAP financial measures should not be considered alternatives to GAAP
Slide 4: Corporate Profile (as of September 30, 2020)
Corporate Profile (as of September 30, 2020) ▶ $33.2 billion in Total Assets ▶ $22.2 billion in Total Loans (includes $2.3 billion in PPP loans) ▶ $27.0 billion in Total Deposits ▶ CET1 ratio 10.29%(e); Tangible Common Equity (TCE) ratio 7.53% ▶ $1.6 billion in Market Capitalization ▶ Over 200 banki
Slide 5: Third Quarter 2020
Third Quarter 2020 ($s in millions; except per share data) 3Q20 2Q20 3Q19 ▶ Net income of $79.4 million, or $.90 per diluted share, compared to a loss of $117.1 million, or ($1.36), in 2Q20 Net Income (loss) $79.4 ($117.1) $67.8 Provision for credit losses excluding ▶ 2Q20 included energy loan sale
Slide 6: 2020 Hurricane Season Impact
2020 Hurricane Season Impact ▶ The overactive hurricane season impacted several of our Gulf Coast markets, including Southwest Louisiana, Alabama and the Florida Panhandle. ▶ No material provision expense is expected from the impact of the hurricanes ▶ Mobile banking units and ATMs were deployed to
Slide 7: 3Q Loan Decline Reflects Current Economic Environment
3Q Loan Decline Reflects Current Economic Environment ▶ Loans totaled $22.2 billion, down $388 million, net, linked-quarter ▶ Lack of quarterly loan growth reflects limited demand throughout the footprint – Mortgage, indirect and consumer loans are main drivers of decline – Energy portfolio down $14
Slide 8: PPP Loans
PPP Loans ▶ The company originated more than 13,000 PPP loans totaling $2.4 billion in rounds 1 and 2 of the program, with 11,874 loans, or $785 million, in loans less than $350K (see chart below) ▶ Total fees approximate $75 million ▶ Effective yield on PPP loans approximately 4% based on current e
Slide 9: Commercial Loans (C&I, CRE, C&D)*
Commercial Loans (C&I, CRE, C&D)* Total Commercial Loan % of Total ($s in millions) Outstanding Loans Commitment Real Estate, Rental and Leasing $3,299 16.6% $4,164 Retail Trade 1,767 8.9% 2,128 Health Care and Social Assistance 1,588 8.0% 2,099 Hospitality 1,162 5.8% 1,288 Manufacturing 969 4.9% 1,
Slide 10: Retail - 8.9% of Total Loans*
Retail - 8.9% of Total Loans* ▶ Retail ICRE portfolio is fairly segmented and primarily comprised of national anchored centers, single credit tenant facilities, and unanchored centers ▶ Retail goods and services is diversified across numerous subsectors with the larger concentrations in convenience
Slide 11: Healthcare - 8.0% of Total Loans*
Healthcare - 8.0% of Total Loans* ▶ Healthcare predominantly includes doctors’ offices, nursing/long-term care and hospitals and represents 8.0% of total loans ▶ Approximately half of the healthcare outstandings are in our Nashville market managed by our dedicated healthcare lending team, while the
Slide 12: Hospitality - 5.8% of Total Loans*
Hospitality - 5.8% of Total Loans* ▶ As a result of COVID-19, business, leisure and international travel has generally ceased and is likely to be significantly curtailed in the near term ▶ Hospitality is comprised of Accommodation & Food Service and Arts, Entertainment & Recreation and represents 5.
Slide 13: Energy - 1.7% of Total Loans*
Energy - 1.7% of Total Loans* ▶ Energy loans totaled $338 million, or 1.7% of total loans, down $14 million, or 4%, linked-quarter ▶ As a result of the energy loan sale - closed July 21, 2020 and included in 2Q20 results - our remaining energy portfolio is comprised mostly of support services credit
Slide 14: 3Q20 Sectors Under Focus*
3Q20 Sectors Under Focus* $ % $ % $ % $ in million Loans NPL NPL Criticized Criticized Deferrals Deferrals Healthcare and Social Assistance Hospitals 288 1 1% 1 1% – – Offices of Physicians & Dentists 478 1 – 3 1% 8 2% Assisted Living (ICRE) 372 – – 10 3% – – Assisted Living (non-ICRE) 207 14 7% 15
Slide 15: Most COVID-19 Related Deferrals Return to Paying Status
Most COVID-19 Related Deferrals Return to Paying Status ▶ Deferrals peaked on 5/14/20 at $3.6 billion of outstandings; totaled $284 million at 9-30-20 – Approximately $157 million of deferrals expired during the month of September – We expect certain clients will need extended deferrals and some wil
Slide 16: NPLs Lower; Criticized Loans Begin to Show Impact of COVID-19
NPLs Lower; Criticized Loans Begin to Show Impact of COVID-19 Total nonperforming loans $284 $307 $288 $194 $181 % of total loans* 1.35% 1.45% 1.34% 0.95% 0.91% ▶ Nonperforming loans totaled $181 million at September 30, 2020, down $13 million, or 7%, linked-quarter Total criticized commercial $659
Slide 17: Provision for Credit Losses
Provision for Credit Losses ▶ Provision for the third quarter of 2020 totaled $25.0 million, including charge-offs of $24.0 million and a reserve build of $1.0 million ▶ Weighting applied to Moody’s September 2020 economic scenarios was consistent with the prior quarter ▶ Additional provisions may b
Slide 18: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) 9/30/2020 6/30/2020 % of Loan and % of Loan and Porfolio Leases Leases ($ in Millions) Amount Outstanding Amount Outstanding Commercial Nonenergy $326 2.19% $317 2.10% Energy 20 5.93% 18 5.30% Residential Mortgage 52 1.88% 57 2.02% Consumer 49 2.49% 50 2.43% PPP Loa
Slide 19: Securities Portfolio Conservative with Minimal Risk
Securities Portfolio Conservative with Minimal Risk ▶ Portfolio totaled $6.8 billion, up $671 million, or 11%, linked- quarter due to reinvestment of excess liquidity ▶ 100% fixed rate, no credit impairment ▶ MBS and CMO holdings are all US Agency backed securities or direct obligations of the US go
Slide 20: Higher Core Deposits Reflects Resiliency
Higher Core Deposits Reflects Resiliency ▶ Total deposits of $27.0 billion, down $292 million, or 1%, linked-quarter – Noninterest-bearing demand deposits (DDAs) increased $122 million – Interest-bearing transaction and savings deposits increased $367 million – Time deposits (retail) decreased $239
Slide 21: Strong Liquidity
Strong Liquidity $18 Billion in Available Sources Total Amount Net $ in millions Available Used Availability Internal Sources Free Securities and other $4,719 $– $4,719 External Sources Federal Home Loan Bank (FHLB) 6,248 2,591 3,657 Federal Reserve Bank (FRB) 4,567 – 4,567 Brokered Deposits 4,055 1
Slide 22: NIM to Remain Relatively Stable in 2020
NIM to Remain Relatively Stable in 2020 ▶ Net interest margin (NIM) stable at 3.23%; net interest income (TE) down $2.7 million ▶ 3Q20 Headwinds: – Impact of lower securities yield – Lower accretion levels related to MSL acquisition – Full quarter impact of subdebt (issued June 2020) – Anemic loan g
Slide 23: IRR Sensitivity
IRR Sensitivity ▶ Loans, excluding PPP, totaled $19.9 billion at September 30, 2020 ▶ Loan portfolio 54% ($11 billion) variable at September 30, 2020 (excludes PPP) – 59% ($6.3 billion) of variable loans are LIBOR-based (32% of total loan portfolio) • 98% of the LIBOR loans are tied to 1 month LIBOR
Slide 24: Improvement in Fee Income; Some Nonrecurring
Improvement in Fee Income; Some Nonrecurring ▶ Noninterest income totaled $83.7 million, up $9.8 million, or 13% linked-quarter ▶ Service charges and bank card & ATM fees up primarily due to increased activity, although lower than pre-COVID-19 levels ▶ Secondary mortgage fees impacted by favorable r
Slide 25: A Focus on Expense Control; More Initiatives Underway
A Focus on Expense Control; More Initiatives Underway ▶ Noninterest expense totaled $195.8 million, down $0.8 million, or less than 1% linked-quarter ▶ Personnel expense decrease mostly related to lower incentive pay and payroll taxes ▶ Professional services increase related to consulting fees assoc
Slide 26: Rebuilding Capital After 1H20 De-Risking Activities
Rebuilding Capital After 1H20 De-Risking Activities ▶ TCE ratio 7.53%, up 20 bps linked- quarter (8.12% excluding PPP loans) – Tangible net earnings +26 bps – Dividends -7 bps – Change in OCI & other +1 bp ▶ CET1 ratio 10.29%, up 51 bps linked- quarter ▶ Issued $172.5 million of tier 2 capital (subd
Slide 27: Solid Capital In Excess of Regulatory Minimums
Solid Capital In Excess of Regulatory Minimums Estimated Regulatory Capital as of September 30, 2020 Total Tier 1 Common Equity Tier 1 Risk-Based Leverage $s in millions Tier 1 Capital Capital Ratio Total Asset Base $23,781 $23,781 $23,781 $31,772 Total Capital 2,446 2,446 3,067 2,446 Capital Ratio
Slide 28: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 29: Results
Results 3Q19 4Q19 1Q20 2Q20 3Q20 Operating PPNR (TE)* ($000) 125,077 125,660 115,688 118,518 126,346 Net Interest Income (TE)* ($000) 226,591 236,736 234,636 241,114 238,372 Net Interest Margin (TE)* 3.41% 3.43% 3.41% 3.23% 3.23% Noninterest Income ($000) 83,230 82,924 84,387 73,943 83,748 Operating
Slide 30: Balance Summary Sheet
Balance Summary Sheet 3Q19 4Q19 1Q20 2Q20 3Q20 Average Loans ($MM) 20,197 21,038 21,234 22,957 22,408 Average Total Securites ($MM) 6,005 6,202 6,149 6,130 6,389 Average Deposits ($MM) 23,091 23,848 24,327 26,703 26,764 Loan Yield (TE) 4.84% 4.69% 4.56% 4.04% 3.95% Cost of Interest Bearing Deposits
Slide 31: Operating Earnings & EPS Non-GAAP to GAAP Reconciliations
Operating Earnings & EPS Non-GAAP to GAAP Reconciliations Three Months Ended (in thousands, except per share amounts) 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 Net Income (loss) $79,356 ($117,072) ($111,033) $92,132 $67,807 Net income or dividends allocated to participating securities (1,43
Slide 32: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended (dollars in thousands) 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 Net Income $79,356 ($117,072) ($111,033) $92,132 $67,807 Nonoperating items, net of income tax – – – 3,046 22,760 Operating earnings $79,356 ($117,072) ($111,033) $
Slide 33: Operating Revenue (TE), Operating PPNR (TE) Reconciliations
Operating Revenue (TE), Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 9/30/20 6/30/2020 3/31/2020 12/31/2019 9/30/2019 Net interest income $235,183 $237,866 $231,188 $233,156 $222,939 Noninterest income 83,748 73,943 84,387 82,924 83,230 Total revenue $318,931 $311,809 $315,5
Slide 34: Third Quarter 2020 Earnings Conference Call
Third Quarter 2020 Earnings Conference Call 10/20/2020