Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q1 2023 Earnings Presentation
29 slides from Hancock Whitney's earnings presentation, Apr 18, 2023
Slide 1: First Quarter 2023 Earnings Conference Call
First Quarter 2023 Earnings Conference Call 4/18/2023
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
Corporate Profile ▶ $37.5 billion in Total Assets ▶ $23.4 billion in Total Loans ▶ $29.6 billion in Total Deposits ▶ CET1 ratio 11.61%(e) ▶ Tangible Common Equity (TCE) ratio 7.16% ▶ $3.1 billion in Market Capitalization ▶ 180 full service banking locations and 225 ATMs across our footprint ▶ Approx
Slide 5: First Quarter 2023 Highlights
First Quarter 2023 Highlights ▶ Net income totaled $126.5 million, or $1.45 per diluted share, compared to $143.8 million, or ($s in millions; except per share data) 1Q23 4Q22 1Q22 $1.65 per diluted share at 4Q22 Net Income $126.5 $143.8 $123.5 ▶ Pre-provision net revenue (PPNR)* totaled $167 Provis
Slide 6: Maintaining a Seasoned, Stable, Diversified Deposit Base
Maintaining a Seasoned, Stable, Diversified Deposit Base ▶ DDAs as a % of total deposits remains above pre-2020 levels – 43% at 3/31/23 – 37% at 12/31/19 ▶ Uninsured deposits (adjusted for collateralized public funds) are 36% at March 31, 2023 compared to 38% at year-end 2022 – The Insured Cash Swee
Slide 7: Growth in Core Client Deposits Linked-Quarter & Post March 10
Growth in Core Client Deposits Linked-Quarter & Post March 10 ▶ Total deposits of $29.6 billion – Linked-quarter growth of $543 million, or 7% LQA, reflects increases in core client deposits of $234 million and brokered deposits of $568 million, partly offset by typical seasonal runoff in public fun
Slide 8: Strong Liquidity Position; Multiple Sources of Funding Available
Strong Liquidity Position; Multiple Sources of Funding Available ▶ Currently have approximately $20 billion in internal At March 31, 2023 Total Amount Net $ in millions Available Used Availabilty and external sources of liquidity available if needed Internal Sources ▶ As a cautionary measure, we iss
Slide 9: Quarterly Loan Growth in Line With Expectations
Quarterly Loan Growth in Line With Expectations ▶ Loans totaled $23.4 billion, up $290.5 million, or 5% LQA ▶ Increase in mortgage loans driven by one-time close product ▶ CRE-income producing growth driven by movement of C&D loans to permanent financing at construction completion ▶ Tailwinds and he
Slide 10: CRE Exposure Limited, Diversified
CRE Exposure Limited, Diversified ▶ CRE loan portfolio is diversified by asset class, Total Loans % of Total industry and geographic region ($s in millions) Outstanding Loans Commitment Commercial non-RE (C&I) $7,818 33.4% $13,673 ▶ Income-producing CRE (ICRE) approximately 14% of total loans and in
Slide 11: Yield on New Loans Reflects Higher Rates
Yield on New Loans Reflects Higher Rates 11
Slide 12: Criticized Commercial and Nonaccrual Loans Relatively Stable
Criticized Commercial and Nonaccrual Loans Relatively Stable Total Loans $21,323 $21,846 $22,586 $23,114 $23,405 Total Commercial Loans 17,303 17,660 18,166 18,444 18,550 Criticized Commercial Loans 282 281 304 302 296 Nonaccrual Loans 42 38 40 39 54 $ in millions ▶ Criticized commercial loans total
Slide 13: Maintained Strong Reserve, Net Charge-Offs Normalize
Maintained Strong Reserve, Net Charge-Offs Normalize ▶ Provision for the quarter of $6.0 million, reflects $5.7 million of net charge-offs and a reserve build of $0.3 million – Net charge-offs were impacted by various smaller charge-offs Net Charge-offs Reserve Build Total Provision and lower recove
Slide 14: Conservative Securities Portfolio
Conservative Securities Portfolio ▶ Securities portfolio* totaled $9.1 billion, down $123 million ▶ 69% AFS, 31% HTM at 3/31/23 ▶ To reduce OCI volatility and provide flexibility to reposition and/or reprice the hedged assets in a changing rate environment, we have $514 million of FV hedges on $559
Slide 15: NIM Reflects Change in Funding Mix, Higher Deposit Betas
NIM Reflects Change in Funding Mix, Higher Deposit Betas ▶ Net interest margin (NIM) 3.55%, down 13 bps linked-quarter ▶ Net interest income (TE) decreased $10.5 million, or 4%, linked-quarter, driven by change in the funding mix and increasing deposit betas ▶ Forecasting an additional 25 bps increa
Slide 16: Focused on IRR Sensitivity
Focused on IRR Sensitivity Loans ▶ Loans totaled $23.4 billion at March 31, 2023 – 41% fixed, 59% variable (includes hybrid ARMs) – 35% ($4.9 billion) of variable loans tied to SOFR – 29% ($4.0 billion) of variable loans tied to Wall Street Journal Prime – 28% ($3.9 billion) of variable loans are LI
Slide 17: Wealth, Specialty Income Drive Increase in Overall Fees
Wealth, Specialty Income Drive Increase in Overall Fees ▶ Noninterest income totaled $80.3 million, up $3.3 million, or 4% linked-quarter ▶ Decrease in service charges was primarily related to the elimination of certain NSF/OD fees ▶ Increase in investment, annuity and insurance income related to th
Slide 18: Regulatory Fees, Pension Expense Drive Increase in Expense
Regulatory Fees, Pension Expense Drive Increase in Expense ▶ Noninterest expense totaled $200.9 million, up $10.7 million, or 6% linked-quarter ▶ Personnel expense decrease mostly related to lower incentive pay, partly offset by higher payroll taxes ▶ Other expenses increased primarily due to: – Hig
Slide 19: Improved Capital Levels Linked-Quarter
Improved Capital Levels Linked-Quarter ▶ CET1 ratio estimated at 11.61%, up 20 bps linked-quarter ▶ TCE ratio 7.16%, up 7 bps LQ – Tangible net earnings +38 bps – Impact of OCI +25 bps – Stock compensation and other +1 bps – Higher tangible assets -49 bps • Mostly due to late quarter leverage added
Slide 20: Remain Well Capitalized Including All Unrealized Losses
Remain Well Capitalized Including All Unrealized Losses 3/31/2023 Inc. AOCI Inc. AOCI + HTM Well Capitalized As Reported Losses (1) Losses (2) Minimum Tangible Common Equity Ratio 7.16% 7.16% 6.76% N/A Leverage (Tier 1) Ratio 9.63% (e) 8.09% 7.67% 5.00% CET1 Ratio 11.61% (e) 9.64% 9.11% 6.50% Tier 1
Slide 21: 2023 Forward Guidance
2023 Forward Guidance Guidance 1Q23 FY 2023 Direction Actual Outlook Loans (EOP) Unchanged $23.4B Expect EOP loan growth in the range of low to mid single digits from $23.1B at 12/31/22 Deposits (EOP) Unchanged $29.6B Expect EOP deposit growth in the range of flat to low single digits from $29.1B at
Slide 22: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 23: Summary Income Statement
Summary Income Statement ($ in millions, except for per share data) Change 1Q23 4Q22 1Q22 LQ Prior Year Net interest income (TE) 287.6 298.1 231.0 (10.5) 56.6 Provision for credit losses 6.0 2.5 (22.5) 3.5 28.5 Noninterest income 80.3 77.1 83.4 3.2 (3.1) Noninterest expense 200.9 190.2 179.9 10.7 21
Slide 24: Summary Balance Sheet
Summary Balance Sheet ($ in millions) Change 1Q23 4Q 1Q22 LQ Prior Year EOP Balance Sheet Loans 23,404.5 23,114.0 21,323.3 290.5 2,081.2 Securities 8,390.7 8,408.5 8,481.1 (17.8) (90.4) Earning assets 34,106.8 31,873.0 32,997.3 2,233.8 1,109.5 Total Assets 37,547.1 35,183.8 36,317.3 2,363.3 1,229.8
Slide 25: Operating Results
Operating Results 1Q22 2Q22 3Q22 4Q22 1Q23 Operating PPNR (TE)* ($000) 134,501 146,873 174,745 185,026 167,024 Net Interest Income (TE) ($000) 231,008 248,317 282,910 298,116 287,578 Net Interest Margin (TE) 2.81% 3.04% 3.54% 3.68% 3.55% Operating Noninterest Income* ($000) 83,432 85,653 85,337 77,0
Slide 26: Balance Sheet Summary
Balance Sheet Summary 1Q22 2Q22 3Q22 4Q22 1Q23 Average Loans ($MM) 21,122 21,658 22,139 22,723 23,087 Average Total Securities ($MM) 8,688 8,979 9,177 9,201 9,137 Average Deposits ($MM) 30,030 29,980 29,181 28,816 28,793 Loan Yield (TE) 3.72% 3.86% 4.49% 5.12% 5.54% Cost of Deposits 0.05% 0.07% 0.18
Slide 27: Operating Revenue (TE), Operating PPNR (TE) Reconciliations
Operating Revenue (TE), Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Net interest income $284,994 $295,501 $280,307 $245,732 $228,463 Noninterest income 80,330 77,064 85,337 85,653 83,432 Total revenue $365,324 $372,565 $365
Slide 28: Current Hedge Positions
Current Hedge Positions Cash Flow (CF) Hedges ▶ Receive 215 bps versus paying 1 month SOFR on $1.6 billion ▶ $400 million of CF hedges were terminated in 1Q23 to slightly reduce asset duration to match a similar reduction in liability duration; provides $5.1 million of annual NII support given stabl
Slide 29: First Quarter 2023 Earnings Conference Call
First Quarter 2023 Earnings Conference Call 4/18/2023