Slide 1: Second Quarter 2019 Earnings Conference Call
Second Quarter 2019 Earnings Conference Call 7/17/2019 Exhibit 99.2
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 June 30, 2019)
Corporate Profile (as of June 30, 2019) Nasdaq: HWC $28.8 billion in Total Assets $20.2 billion in Total Loans $23.2 billion in Total Deposits Tangible Common Equity (TCE) ratio 8.75% $3.4 billion in Market Capitalization Nearly 200 banking locations and 271 ATMs across our footprint Almost 4,000 (F
Slide 5: Second Quarter 2019 Highlights
Second Quarter 2019 Highlights (compared to first quarter 2019) Net income of $88.3 million, or $1.01 per diluted share, up $9.1 million, or $.10 per share Loans increased $63 million from March 31, 2019; reflects $45 million mortgage loan sale during quarter Energy loans declined $55 million to jus
Slide 6: Growth Diversified Across Footprint and Many Lines of Business
Growth Diversified Across Footprint and Many Lines of Business Loans totaled $20.2 billion at quarter-end, an increase of $63 million, or 1% LQA Items impacting second quarter growth: Previously anticipated paydowns, mainly CRE Sale of $45 million in mortgage loans Decrease in energy portfolio of $5
Slide 7: Remix of Loan Portfolio Drives Improved Yield on New Loans
Remix of Loan Portfolio Drives Improved Yield on New Loans New loan production focused on more granularity in loans and better spreads Yields have risen on new loans to 5.22% in 2Q19 from 3.88% in 2Q18
Slide 8: A More Balanced Energy Portfolio
A More Balanced Energy Portfolio Energy loans totaled $1.0 billion, or just under 5.0% of total loans, down $55 million linked-quarter Continuing to shift energy support services exposure to 40% or less of total energy credits Today energy portfolio comprised of 53% RBL and midstream credits, 47% su
Slide 9: Criticized Commercial Loans Down 2% Linked-Quarter
Criticized Commercial Loans Down 2% Linked-Quarter Total criticized commercial loans % of total commercial loans $897 6.19% $834 5.72% $626 4.18% $584 3.88% $573 3.79% Criticized – nonenergy % of total commercial loans $489 3.37% $477 3.27% $346 2.31% $320 2.12% $315 2.08% Criticized – energy % of t
Slide 10: Criticized Commercial Loan Trends Nearing Peer Average
Criticized Commercial Loan Trends Nearing Peer Average *Using 1Q19 as proxy for 2Q19 Investor Peers: ASB, BXS, BKU, BOKF, CBSH, CFR, FHN, IBKC, PNFP, PB, SNV, TCBI, UMBF, WBS
Slide 11: Nonperforming Loans Improved Linked-Quarter
Nonperforming Loans Improved Linked-Quarter Total nonperforming loans % of total loans $394 2.03% $364 1.86% $326 1.63% $322 1.60% $311 1.54% Nonperforming loans – nonenergy % of total loans $157 0.81% $144 0.74% $130 0.65% $141 0.70% $141 0.70% Nonperforming loans – energy % of total loans $237 1.2
Slide 12: NPL Components
NPL Components 2Q18 3Q18 4Q18 1Q19 2Q19 Nonaccrual Loans $242 $202 $187 $205 $210 Accruing TDRs $153 $162 $139 $118 $101 NPL Totals $394 $364 $326 $322 $311 % NPLs Accruing 39% 45% 43% 37% 32% Accruing NPLs Account For Approximately One-Third of Total NPLs Total accruing TDRs down $17 million, or 14
Slide 13: Reserve is Adequate For Potential Credit Losses
Reserve is Adequate For Potential Credit Losses Provision for loan losses was $8.1 million in 2Q19 compared to $18.0 million in 1Q19 Net charge-offs totaled $7.2 million, or 14 bps 1Q19 provision includes $10.1 million for alleged fraud related to DC Solar Allowance for loan and lease losses (ALLL)
Slide 14: Relatively Stable NIM Despite Challenging Rate Environment
Net interest margin (NIM) of 3.45%, down 1 bp linked-quarter Loan yield up 5 bps (3 bps related to loan recovery) Yield on securities portfolio down 5 bps (impacted by higher premium amortization) Cost of funds up 4 bps; cost of deposits up 5 bps (related to lag effect of last year’s Fed tightening)
Slide 15: Premium Amortization Impacts Securities Portfolio Yield
Premium Amortization Impacts Securities Portfolio Yield Portfolio totaled $5.7 billion, up $99 million, or 2%, linked-quarter Yield 2.64%, down 5 bps linked-quarter Premium amortization totaled $7.7 million, up $0.6 million linked-quarter Unrealized net gain of $31.7 million on AFS compared to an un
Slide 16: Second Quarter Reflects Typical Seasonality
Second Quarter Reflects Typical Seasonality Total deposits $23.2 billion, down $144 million, or 1%, linked-quarter Noninterest-bearing demand deposits (DDA) decreased $44 million Interest-bearing transaction and savings deposits decreased $189 million Time deposits (retail) increased $144 million; t
Slide 17: Seasonality and Specialty Income Drives Linked-Quarter Change
Seasonality and Specialty Income Drives Linked-Quarter Change Noninterest income totaled $79.3 million, up $8.7 million, or 12% linked-quarter Reflects increases in all lines of business Three additional business days in the quarter Bank card and ATM fees impacted by an additional calendar day in th
Slide 18: Focused on Managing Expenses While Investing in Technology
Focused on Managing Expenses While Investing in Technology Noninterest expense totaled $183.6 million, up $7.9 million, or 4% linked-quarter Increase in personnel expense reflects an extra workday in the quarter and the full quarter impact of annual merit raises Occupancy & equipment up primarily du
Slide 19: Internal Capital Generation Drives Higher TCE
Internal Capital Generation Drives Higher TCE TCE ratio 8.75%, up 39 bps linked-quarter Growth in tangible assets -10 bps Tangible net earnings +34 bps OCI +21 bps; related to improvement in unrealized loss on the AFS securities portfolio Dividends -9 bps Stock-based comp activity & other +3 bps Wil
Slide 20: Near-Term Outlook
Near-Term Outlook 2Q19 Actual Items to note 2019 Outlook (excludes MSL) Loans (EOP) +$63 million or 1% LQA; +up $805 million or 4% Y-o-Y includes $45 million in mortgage loan sales Expect full year average growth for 2019 in mid single digits Net Interest Margin (NIM) 3.45% down 1 bp LQ includes 3 b
Slide 21: Long-Term Outlook – Goal to Achieve Objectives by 4Q20
Long-Term Outlook – Goal to Achieve Objectives by 4Q20 Quarterly Objective (to be achieved by 4Q20) 2Q19 Actual Earnings (EPS)/quarter (excluding nonoperating items) $1.20 - $1.25 $1.01 ROA (operating) 1.40% - 1.45% 1.24% TCE >8% 8.75% ROTCE (operating) >15% 15.07% Efficiency Ratio <56% 58.95% 2019/
Slide 22: MidSouth Bancorp (MSL) Acquisition
MidSouth Bancorp (MSL) Acquisition Transaction expected to close late 3Q19, subject to regulatory and shareholder approval Fixed conversion ratio of 0.2952 per MidSouth common share Implied value of $12.75 per share based on the merger agreement, or approximately $213MM in aggregate value on that ba
Slide 23: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 24: Operating Results
Operating Results *Non-GAAP measures. See slides 28-30 for non-GAAP reconciliations 2Q18 3Q18 4Q18 1Q19 2Q19 Operating Earnings* ($000) 83,663 87,691 97,705 87,130 88,277 Operating EPS* $0.96 $1.01 $1.12 $1.00 $1.01 Net Interest Income (TE)* ($000) 215,628 218,289 221,471 223,078 223,586 Operating N
Slide 25: Key Operating Ratios
Key Operating Ratios 2Q18 3Q18 4Q18 1Q19 2Q19 Operating Return on Assets* 1.22% 1.24% 1.37% 1.24% 1.24% Operating Return on Equity * 11.54% 11.78% 12.95% 11.33% 10.96% Operating Return on TCE* 16.12% 16.84% 18.43% 15.83% 15.07% Tangible Common Equity Ratio 7.76% 7.67% 8.02% 8.36% 8.75% Net Interest
Slide 26: Balance Sheet Summary
Balance Sheet Summary 2Q18 3Q18 4Q18 1Q19 2Q19 Average Loans ($MM) 19,193 19,465 19,818 20,127 20,150 Average Total Securities ($MM) 6,032 6,186 5,965 5,657 5,586 Average Deposits ($MM) 22,101 22,022 22,498 23,114 23,138 Loan Yield (TE) 4.55% 4.63% 4.71% 4.84% 4.89% Securities Yield (TE) 2.50% 2.55%
Slide 27: Well-Diversified Loan Portfolio
Well-Diversified Loan Portfolio
Slide 28: Operating Earnings & Operating EPS Non-GAAP to GAAP Reconciliations
Operating Earnings & Operating EPS Non-GAAP to GAAP Reconciliations Three Months Ended (in thousands, except per share amounts) 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Net Income $88,277 $79,164 $96,240 $83,878 $71,177 Net income allocated to participating securities (1,502) (1,337) (1,69
Slide 29: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended (dollars in thousands) 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Net Income $88,277 $79,164 $96,240 $83,878 $71,177 Nonoperating items, net of income tax benefit --- 7,966 1,465 3,813 12,486 Operating earnings $88,277 $87,130 $97
Slide 30: Operating Revenue (TE) & Operating PPNR (TE) Reconciliations
Operating Revenue (TE) & Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Net interest income $219,868 $219,254 $217,433 $214,194 $211,547 Noninterest income 79,250 70,503 74,538 75,518 68,832 Total revenue $299,118 $289,757 $29
Slide 31: Second Quarter 2019 Earnings Conference Call
Second Quarter 2019 Earnings Conference Call 7/17/2019