Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q2 2022 Earnings Presentation
30 slides from Hancock Whitney's earnings presentation, Jul 19, 2022
Slide 1: Second Quarter 2022 Earnings Conference Call
Second Quarter 2022 Earnings Conference Call 7/19/2022 HANCOCK WHITNEY Exhibit 99.2
Slide 2: 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 may make include statements regarding our expectations of our perf
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 June 30, 2022)
Corporate Profile (as of June 30, 2022) $34.6 billion in Total Assets $21.8 billion in Total Loans $29.9 billion in Total Deposits CET1 ratio 11.06%(e) Tangible Common Equity (TCE) ratio 7.21% $3.8 billion in Market Capitalization 177 banking locations and 239 ATMs across our footprint Approximately
Slide 5: Second Quarter 2022 Highlights
Second Quarter 2022 Highlights Net income totaled $121.4 million, or $1.38 per diluted share, down $2.1 million, or $0.02 per share, linked quarter Pre-provision net revenue (PPNR)* totaled $146.9 million, up $12.4 million, or 9%, linked-quarter Core loan growth of $706.2 million, or 13% LQA, more t
Slide 6: Loan Growth Momentum Continued in 2Q22; Expect Slowdown in 3Q22
Loans totaled $21.8 billion, up $522.7 million, net, linked-quarter $706.2 million in core loan growth, or 13% LQA $183.5 million in PPP loan forgiveness Improving line utilization contributed to growth in all markets across the footprint Approximately $150 million in loan growth from new bankers in
Slide 7: Yield on New Loans Reflects Increase in Rate Environment
Yield on New Loans Reflects Increase in Rate Environment $ in millions * Excluding PPP loans Fixed Loan Yield 3.51% 3.40% 3.73% 3.62% 4.45% Variable Loan Yield 3.15% 2.94% 2.94% 2.92% 3.25%
Slide 8: NPLs, Criticized Commercial Loans Continue Decline To Historically Low Levels
NPLs, Criticized Commercial Loans Continue Decline To Historically Low Levels Criticized commercial loans totaled $281 million, or 1.61% of total commercial loans (excluding PPP loans), at June 30, 2022, down $1 million, or less than 1%, linked-quarter and down $49 million, or 15%, from a year ago N
Slide 9: Strong ACL; Expect Reserve Releases To End
Strong ACL; Expect Reserve Releases To End Negative provision for the quarter of ($9.8) million, reflects $0.7 million of net recoveries and a reserve release of $9.1 million Weighting applied to Moody's June 2022 economic scenarios was 25% baseline and 75% slower growth (S2) Given inflation levels
Slide 10: Securities Portfolio Positioned for Rising Rates
Securities Portfolio Positioned for Rising Rates Securities portfolio (excluding unrealized losses) totaled $9.1 billion, up $242 million, or 3%, linked-quarter Additional shift in mix from AFS to HTM 30% HTM, 70% AFS at 6/30/22 28% HTM, 72% AFS at 3/31/22 $1.3 billion of FV hedges on $1.4 billion o
Slide 11: Best In Class Mix; Decline in Deposits Expected
Best In Class Mix; Decline in Deposits Expected Total deposits of $29.9 billion, down $633.3 million, or 2.1%, linked-quarter Decrease in non-interest bearing DDA is primarily due to commercial clients deploying excess liquidity into working capital Decrease in interest bearing money market and savi
Slide 12: NIM Widens as Rates Continue to Rise
Net interest margin (NIM) 3.04%, up 23 bps linked-quarter; June NIM 3.24% Net interest income (TE) increased $17.3 million, or 7%, linked-quarter, driven by increasing rates and a change in the mix of earning assets Tailwinds for additional NIM widening: Future rate increases Continued shift in earn
Slide 13: Loans, Securities and Swaps/Hedges
Loans Loans, excluding PPP, totaled $21.7 billion at June 30, 2022 42% fixed, 58% variable (includes hybrid ARMs) 45% ($5.7 billion) of variable loans are LIBOR-based (26% of loan portfolio excluding PPP) 32% ($4.0 billion) of variable loans tied to Wall Street Journal Prime 7% ($857 million) of var
Slide 14: Linked-Quarter Improvement in Overall Fees
Linked-Quarter Improvement in Overall Fees Noninterest income totaled $85.7 million, up $2.2 million, or 3% linked-quarter Decline in service charges due to lower net NSF/OD fees Bank card and ATM fees increase related to an additional processing day Increase in trust fees driven by seasonal tax pre
Slide 15: Higher Personnel Costs Drive Overall Increase in Expenses
Higher Personnel Costs Drive Overall Increase in Expenses Noninterest expense totaled $187.1 million, up $7.2 million, or 4% linked-quarter Personnel costs were the primary driver of the linked-quarter increase in expenses and were related to: Increased incentive pay and other ($3.5 million) Annual
Slide 16: Solid Capital, TCE Again Impacted By OCI
Solid Capital, TCE Again Impacted By OCI CET1 ratio estimated at 11.06%, down 6 bps linked-quarter TCE ratio 7.21%, up 6 bps LQ Tangible net earnings +35 bps Lower tangible assets +34 bps Stock Compensation and other +2 bps Impact of OCI -47 bps Stock buyback -11 bps Dividends -7 bps Repurchased 804
Slide 17: 2022 Forward Guidance
2022 Forward Guidance Q2 2022 Actual FY 2022 Outlook Core Loans (EOP) (excl PPP loans) * $21.7 billion (excl PPP loans) Expect 6-8% EOP core loan growth from $20.6B at 12/31/21; expect to be closer to 8% with a potential slowdown in 3Q22 and rebounding in 4Q22 Deposits (EOP) $29.9 billion Expect EOP
Slide 18: Additional Guidance Related to Future Rate Increases
Additional Guidance Related to Future Rate Increases Expect to reach a Fed Funds (FF) rate of 3.50% by year-end 2022; future rate assumptions included in guidance: +75 bps July +50 bps September +25 bps November +25 bps December Deposit betas key to maximizing impact of higher rates on NIM Majority
Slide 19: Efficiency ratio target of 55% achieved in 2Q22
Efficiency ratio target of 55% achieved in 2Q22 Thoughtful execution of revenue and efficiency strategies throughout 2022: Continued momentum in core loan growth Maintain our focus on expense management in 2022 Additional efficiency initiatives (e.g. strategic procurement) help to offset inflationar
Slide 20: Positioned Well For Today's Economic Environment
Positioned Well For Today’s Economic Environment Balance sheet de-risked in early 2020 Credit metrics at historically low levels Robust ACL at 1.56% of loans (excl PPP) Solid capital levels Significant efficiency initiatives executed in 2020/2021 Technology projects nearing completion phases Market
Slide 21: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations Appendix and Non-GAAP Reconciliations CHANCOCK WHITNEY
Slide 22: Summary Income Statement
Summary Income Statement ($ in millions, except for per share data) *Non-GAAP measure: see slide 26 for non-GAAP reconciliation Change Change 2Q22 1Q22 2Q21 LQ Prior Year YTD 2022 YTD 2021 Y-O-Y 248.3 231.0 237.5 17.3 10.8 Net Interest Income (TE) 479.3 475.0 4.3 (9.8) (22.5) (17.2) 12.7 7.4 Provisi
Slide 23: Summary Balance Sheet
Summary Balance Sheet ($ in millions) 2Q22 includes $0.2 billion, 1Q22 includes $0.3 billion and 2Q21 includes $1.4 billion in PPP loans, net 2Q22 includes $0.2 billion, 1Q22 includes $0.4 billion and 2Q21 includes $2.0 billion in average PPP loans, net Average securities excludes unrealized gain/(l
Slide 24: Results
Results *Non-GAAP measure: see slide 26 for non-GAAP reconciliation 2Q21 3Q21 4Q21 1Q22 2Q22 Operating PPNR (TE)* ($000) 137,176 134,784 134,152 134,501 146,873 Net Interest Income (TE) ($000) 237,498 237,477 231,931 231,008 248,317 Net Interest Margin (TE) 2.96% 2.94% 2.80% 2.81% 3.04% Operating No
Slide 25: Balance Sheet Summary
Balance Sheet Summary 2Q21 3Q21 4Q21 1Q22 2Q22 Average Loans ($MM) 21,389 20,941 20,770 21,122 21,658 Average Total Securities ($MM) 8,195 8,369 8,378 8,688 8,979 Average Deposits ($MM) 29,229 29,237 29,751 30,030 29,980 Loan Yield (TE) 3.95% 3.90% 3.83% 3.72% 3.86% Cost of Deposits 0.10% 0.07% 0.06
Slide 26: Operating Revenue (TE), Operating PPNR (TE) Reconciliations
Operating Revenue (TE), Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Net interest income $245,732 $228,463 $229,296 $234,709 $234,643 Noninterest income 85,653 83,432 89,612 93,361 94,272 Total revenue $331,385 $311,895 $318
Slide 27: Paycheck Protection Program (PPP) Loans
Paycheck Protection Program (PPP) Loans Under the original and extended Paycheck Protection Programs (PPP), the company originated more than 20,000 loans totaling $3.3 billion; $151 million in loans outstanding at June 30, 2022 During 2Q22, $183.5 million in PPP loans were forgiven Expect slowdown i
Slide 28: Loan Portfolio Composition
Loan Portfolio Composition As of June 30, 2022 HNCOCK WHITNEY 10 Total Loans Outstanding % of Total Loans Commitment ($s in millions) Commercial non-RE $7,355 33.7% $12,705 CRE-owner 2,522 11.5% 2,661 CRE - income producing 3,023 13.8% 3,174 C&D 1,337 6.1% 3,342 Healthcare 1,972 9.0% 2,468 Equipment
Slide 29: Current Hedge Positions
Current Hedge Positions Cash Flow (CF) Hedges Receive 189 bps versus paying 1m LIBOR/SOFR on $1.75 billion $500 million of CF hedges terminated in 3Q21 will provide NII support of $13.4 million through the remainder of 2022 and 2023 collectively No additional CF hedges were terminated in 2Q22 Total
Slide 30: Second Quarter 2022 Earnings Conference Call
Second Quarter 2022 Earnings Conference Call 7/19/2022 HANCOCK WHITNEY