Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Hancock Holding — Q4 2017 Earnings Presentation
38 slides from Hancock Whitney's earnings presentation, Jan 17, 2018
Slide 1: Fourth Quarter 2017 Earnings Conference Call
1/18/2018 Fourth Quarter 2017Earnings Conference Call
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: Corporate Profile (as of December 31, 2017)
Corporate Profile (as of December 31, 2017) $27.3 billion in Total Assets$19.0 billion in Total Loans$22.3 billion in Total DepositsTangible Common Equity (TCE) 7.73%Nearly 200 banking locations and 275 ATMs across our footprintApproximately 4,000 employees corporate-wideRated among the strongest,sa
Slide 4: YTD 2017 Highlights
(compared to YTD 2016) YTD 2017 Highlights Net income up 44%; earnings per share up 33% year-over-yearNet income (excluding nonoperating items) up 64%; earnings per share increased 51% year-over-yearProvision for loan losses returned to a more normalized level as energy prices began to stabilizeCore
Slide 5: Fourth Quarter 2017 Highlights
(compared to third quarter 2017) Fourth Quarter 2017 Highlights Reported earnings decreased $3.5 million, or 6%; excluding the impact of the DTA re-measurement charge and nonoperating items, earnings increased $8.7 million, or 13%The fourth quarter includes an estimated $19.5 million charge related
Slide 6: Tax Cuts and Jobs Act of 2017 (TCJA)
Tax Cuts and Jobs Act of 2017 ("TCJA") Recorded an estimated $19.5 million charge associated with the re-measurement of the net deferred tax asset necessitated by the TCJANegative impact of $.23, or 1%, to tangible book value per shareExpect the effective tax rate to drop from 24% in 2017 to approxi
Slide 7: Pending Purchase of Capital One's Trust & Asset Management Business
Pending Purchase of Capital One’s Trust & Asset Management Business Announced the proposed acquisition of Capital One’s trust & asset management line of business on December 18, 2017The transaction is expected to close during the second quarter of 2018, after receipt of regulatory approvals and the
Slide 8: 84% Improvement in Core Pre-Provision Net Revenue Over 3 Years
$s in millions 84% Improvement in Core Pre-Provision Net Revenue (PPNR) Over 3 Years See slide 26 for non-GAAP reconciliation 4Q17 vs. 4Q16 growth in core PPNR +34% 4Q17 vs. 3Q17 growth in core PPNR +5% +84%
Slide 9: Well-Diversified Loan Portfolio
Well-Diversified Loan Portfolio Loans totaled $19.0 billion at quarter-end, an increase of $218 million, or 1%, linked-quarterReflects $78 million net decrease in energy-related loansNet loan growth during the quarter continues to be diversified across the footprint and also in areas identified as p
Slide 10: Energy Portfolio Overview
Energy Portfolio Overview Energy loans totaled $1.1 billion, or 5.6% of total loans, down $78 million linked-quarter and down $356 million from a year agoLinked-quarter change reflects $133 million in net reductions and $8 million of charge-offs, offset by $63 million in fundings LQA EOP growth 1% 1
Slide 11: Energy Portfolio Overview
Energy Portfolio Overview Net decrease in outstandings of $78 million linked-quarter and a $61 million decrease in total commitments$27 million linked-quarter decrease in upstream sector outstandings and a $16 million decrease in total commitments $3 million linked-quarter decrease in midstream sect
Slide 12: Energy Allowance and Category Trends
Energy Allowance and Category Trends Net charge-offs to-date for the current energy cycle (Nov ‘14 – Dec ‘17) total $76 million; $8.4million of energy charge-offs in 4Q17 The energy portion of the allowance remains elevated as a reserve for the support sector credits; management continues to believe
Slide 13: Asset Quality Measures – Criticized Loans
Asset Quality Measures – Criticized Loans Provision for loan losses was $15.0 million, up $2.0 million linked-quarterNon-PCI net charge-offs totaled $21.0 million, or 44 bps, up from $11.8 million, or 25 bps, in 3Q17Criticized commercial loans totaled $1.1 billion at December 31, 2017, down $16 mill
Slide 14: Asset Quality Measures - Nonperforming Loans
Nonperforming loans - nonenergy $85 $81 $75 $94 $124 $105 $112 $119 $116 $121 $145 $159 Nonperforming loans – energy $13 $45 $98 $70 $159 $197 $199 $239 $194 $208 $221 $214 Upstream $10 $10 $11 $11 $92 $79 $52 $79 $81 $56 $53 $59 Midstream - - - - - - - - - - - - Support nondrilling $3 $35 $43 $17 $
Slide 15: Adequate Reserve Coverage
Adequate Reserve Coverage The allowance for loan losses (ALLL) was $217.3 million (1.14%) down $5.8 million from $223.1 million (1.19%) linked-quarterALLL for energy credits was $70.2 million, or 6.7%, at December 31, 2017, compared to $79.8 million, or 7.0%, at September 30, 2017 The nonenergy ALLL
Slide 16: Securities Portfolio
Securities Portfolio Portfolio totaled $5.9 billion, up $263 million, or 5%, linked-quarterYield 2.50%, up 2 bps linked-quarterPremium amortization down $0.1 million linked-quarterUnrealized net loss of $38.2 million on AFS compared to $24.1 million at 9-30-1750% HTM, 50% AFSDuration 4.74 years comp
Slide 17: Solid Levels Of Core Deposit Funding
Solid Levels Of Core Deposit Funding Total deposits $22.3 billion, up $719 million, or 3%, linked-quarterNoninterest-bearing demand deposits (DDA) increased $411 million Includes approximately $143 million in seasonal public fund depositsInterest-bearing transaction and savings deposits increased $2
Slide 18: Continued NIM Expansion
Continued NIM Expansion Reported net interest margin (NIM) of 3.48%, up 4 bps linked-quarter Loan yield up 7 bpsReflects better yields on commercial and mortgage loansYield on securities portfolio up 2 bpsReflects change in mix to higher yielding securities and impact of the increase in the 10-year
Slide 19: Focus On Growing Noninterest Income
Focus On Growing Noninterest Income Noninterest income totaled $69.7 million, up $2.6 million, or 4%, linked-quarterImprovement in most fees slightly offset by declines in seasonal businessesAnnounced the acquisition of Capital One’s trust & asset management business during the fourth quarterOther n
Slide 20: Becoming A More Efficient Organization
Becoming A More Efficient Organization Noninterest expenses totaled $168.1 million in 4Q17, down $9.6 million, or 5%, linked quarter; 3Q17 includes $11.4 million of nonoperating expensesOperating expenses (noninterest expense excluding nonoperating items) totaled $168.1 million, up $1.8 million, or
Slide 21: Managing Our Capital
TCE ratio 7.73%, down 7 bps linked-quarterTangible asset growth -15 bpsTangible net retained earnings +31 bpsOCI -4 bpsDTA re-measurement charge -8 bpsDividends – 8 bpsStock-based comp activity & other -3 bpsWill continue to manage capital in the best interests of the Company and our shareholders, i
Slide 22: Near-Term Outlook
Near-Term Outlook See slides 25-28 for non-GAAP reconciliations
Slide 23: Long-Term Outlook – 2018/19
Long-Term Outlook – 2018/19 Goal is to achieve CSOs by the 4th quarter of 2019Includes impact of tax reform Does not include any Fed rate increases in 2018 or 2019 2018/2019 Corporate Strategic Objectives (CSOs) *Efficiency Ratio is noninterest expense to total net interest (TE) and noninterest inco
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations cock Holding Corr
Slide 25: EPS Calculation and Non-GAAP Reconciliations
EPS Calculation and Non-GAAP Reconciliations See Note 13 in the most recent 10K for more details on the two-class method for EPS calculation.
Slide 26: Core PPNR Reconciliation
Core PPNR Reconciliation Three Three Three Twelve Twelve Months | Months | Months Months | Months Ended Ended Ended Ended Ended 12sin7 | 9/30/17 | 12/31/16 12131117 | 12/34/16 Net interest income $208.0 $202.9 $167.8 $792.3 $659.1 Noninterest income 697 67.41 65.9 267.8 250.8 Noninterest expense (16
Slide 27: Core Revenue Reconciliation
Core Revenue Reconciliation
Slide 28: Purchase Accounting Adjustments Core NII & NIM Reconciliation
Purchase Accounting Adjustments Core NII & NIM Reconciliation
Slide 29: Appendix
Appendix
Slide 30: Appendix: Long-Term Outlook – 2017/18
Appendix: Long-Term Outlook – 2017/18 2017/2018 Corporate Strategic Objectives (CSOs) Efficiency Ratio is noninterest expense to total net interest (TE) and noninterest income, excluding amortization of purchased intangibles and nonoperating items. See slides 25-28 for non-GAAP reconciliations
Slide 31: Appendix: Two Financially Compelling Investments
Acquired approximately $2.6 billion in assets and liabilities in two transactions related to FNBC for $77 million transaction premium In-market, low-risk transactionsConsolidated 10 overlapping branches in FNBC IClosed 25 of 29 overlapping branches in FNBC IIAchieved significant synergies from the c
Slide 32: Appendix: Core Revenue
Appendix: Core Revenue 215.0 205.0 195.0 Net Interest Income TE (core) 185.0 175.0 Millions 165.0 155.0 145.0 135.0 Tara] aaa | sar2 | ear? | 10¥9 [2049 [sats | GTS | Tara] 2aH4 [9a | GTA | 1OHS | 2OHS [9GIS | HOTS | 1GHG | 2OH6 [VANE | GTS | TOIT | 2aH7 [9a | «a7 | (=e Acai| 1543 | 1530 1407 | 1473
Slide 33: Appendix: Revenue Generating Initiatives - Fees
Appendix: Revenue Generating Initiatives - Fees $s in thousands
Slide 34: Appendix: Operating Expense (excl nonoperating items)
Appendix: Operating Expense (excl nonoperating items)
Slide 35: Appendix: Historical Energy Data
Appendix: Historical Energy Data $s in millions Energy Outstandings by Type $1,724 $1,674 $1,669 $1,660 $1,580 $1,633 $1,231 $1,400 $1,412 $1,481 $1,289 $1,133 $1,056
Slide 36: Appendix: Energy Portfolio Support Services
Appendix: Energy Portfolio Support Services
Slide 37: Appendix: Glossary of Terms
Appendix: Glossary of Terms Linked-quarter – current quarter compared to previous quarterLoan Mark – Fair value discount on loans acquired in a business combinationLOB – Line of BusinessLPO – Loan production officeLQA – Linked-quarter annualizedM&A – Mergers and acquisitionsNII – Net interest income
Slide 38: Fourth Quarter 2017 Earnings Conference Call
1/18/2018 Fourth Quarter 2017Earnings Conference Call