Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q4 2019 Earnings Presentation
33 slides from Hancock Whitney's earnings presentation, Jan 15, 2020
Slide 1: Fourth Quarter 2019 Earnings Conference Call
Fourth Quarter 2019 Earnings Conference Call 1/16/2020 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 regarding o
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 December 31, 2019)
Corporate Profile (as of December 31, 2019) $30.6 billion in Total Assets $21.2 billion in Total Loans $23.8 billion in Total Deposits Tangible Common Equity (TCE) ratio 8.45% $3.8 billion in Market Capitalization 217 banking locations and 288 ATMs across our footprint Approximately 4,100 (FTE) empl
Slide 5: YTD 2019 Highlights
YTD 2019 Highlights (compared to YTD 2018) Net income $327.4 million, up $3.6 million EPS unchanged at $3.72 Nonoperating items (net) totaled $32.7 million in 2019 and $29.5 million in 2018 EPS excluding nonoperating items was $4.01 for 2019 and $3.99 for 2018 Operating leverage up $24 million (reve
Slide 6: A 5-Year Look Back Shows Marked Improvement
A 5-Year Look Back Shows Marked Improvement +54 bps *Non-GAAP measures. See slides 28-30 for non-GAAP reconciliations.
Slide 7: Progress, Achievement on 2019 Focus Points
Progress, Achievement on 2019 Focus Points † †2019 Investor Peer YTD average through 3Q19 At peer average Exceeds peer average Progress with work to do Narrowing gap to peers ** ** ** **Using 3Q19 as proxy for 4Q19 *Non-GAAP measures. See slides 28-30 for non-GAAP reconciliations.
Slide 8: Fourth Quarter 2019 Highlights
Fourth Quarter 2019 Highlights (compared to third quarter 2019) Reported net income of $92.1 million, or $1.03 per diluted share, up $24.3 million, or $.26 per share Nonoperating items totaled $3.9 million in 4Q19 and $28.8 million in 3Q19 EPS excluding nonoperating items was $1.06 in 4Q19 and $1.03
Slide 9: Linked-Quarter Growth in Line with Guidance
Linked-Quarter Growth in Line with Guidance Loans totaled $21.2 billion at year-end, an increase of $177 million, or 1%, linked-quarter End of period loans grew $1.2 billion, or 6%, year-over-year, while average loans grew $1.0 billion, or 5% (in line with guidance) MSL portfolio added $785 million
Slide 10: Legacy Energy Loans Declined $164 Million In 2019
Legacy Energy Loans Declined $164 Million In 2019 Energy loans totaled $963 million, or 4.5% of total loans, down $71 million, or 7%, linked-quarter Linked-quarter change reflects $108 million in net reductions, partially offset by $36 million in fundings As the energy cycle continues to unwind, we
Slide 11: Back On Track in 4Q19
Back On Track in 4Q19 Criticized commercial loans down $79 million, or 12%, linked-quarter Criticized energy loans totaled $260 million at December 31, 2019, down $21 million, or 7%, linked-quarter Criticized nonenergy loans totaled $321 million at December 31, 2019, down $58 million, or 15%, linked
Slide 12: Energy NPLs Down Year-Over-Year Despite Slight Uptick in 4Q
Energy NPLs Down Year-Over-Year Despite Slight Uptick in 4Q Nonperforming energy loans totaled $158 million at year-end 2019, up $14 million linked-quarter Nonperforming nonenergy loans totaled $149 million at year-end 2019, up $9 million linked-quarter Total accruing TDRs virtually unchanged linked
Slide 13: Reserve Remains Adequate; New Methodology Effective 1/1/20
Reserve Remains Adequate; New Methodology Effective 1/1/20 Allowance for credit losses (ACL) $195.2 million at year-end, down $0.3 million linked-quarter ACL for energy credits $34.9 million at December 31, 2019, up $2.9 million from September 30, 2019 Nonenergy ACL $160.3 million at December 31, 20
Slide 14: Current Expected Credit Losses (CECL)
Current Expected Credit Losses (CECL) CECL replaces the current incurred loss methodology with a life-of-loan loss concept Current capital levels adequately cover the day 1 impact of CECL Key drivers in the change from incurred loss model to CECL include: Increases due to longer life real-estate sec
Slide 15: Net Interest Margin of 3.43%
Net interest margin (NIM) of 3.43%, up 2 bps linked-quarter; net interest income (TE) up $10.1 million, or 4% Loan yield down 15 bps mainly related to the impact of the Fed rate decreases Yield on securities portfolio down 5 bps Cost of funds down 14 bps 4Q19 NIM included 1 bp of interest reversals
Slide 16: Yield on New Loans Impacted By Current Rate Environment
Yield on New Loans Impacted By Current Rate Environment Focus remains on booking new loans that are more granular along with improved spreads Recent decline in new production yield reflects recent changes in rate environment (Fed rate drops) coupled with promotional lending campaigns during the four
Slide 17: Securities Portfolio
Securities Portfolio Portfolio totaled $6.2 billion, down $130 million, or 2%, linked-quarter Premium amortization totaled $9.2 million, up $0.5 million linked-quarter Yield 2.56%, down 5 bps linked-quarter Unrealized net gain of $37.7 million on AFS compared to $68.7 million at September 30, 2019 2
Slide 18: Deposits Impacted by Paydown of Brokered CDs
Deposits Impacted by Paydown of Brokered CDs Total deposits of $23.8 billion, down $398 million, or 2%, linked-quarter Noninterest-bearing demand deposits (DDAs) increased $89 million Interest-bearing transaction and savings deposits increased $86 million Time deposits (retail) decreased $106 millio
Slide 19: MSL Fees Offset Lower Levels of Specialty Income
MSL Fees Offset Lower Levels of Specialty Income Noninterest income totaled $82.9 million, down $0.3 million, or less than 1% linked-quarter YTD noninterest income totaled $315.9 million, up $30.8 million, or 11% Service charges and Bank Card & ATM fees up primarily due to impact from MSL Investment
Slide 20: Increase in Operating Expense Due to Full Quarter Impact of MSL
Increase in Operating Expense Due to Full Quarter Impact of MSL Noninterest expense totaled $197.9 million, down $15.7 million linked-quarter; included in 4Q19 expense is $3.9 million of merger costs related to the acquisition of MSL compared to $28.8 million in 3Q19 Operating expense (excluding mer
Slide 21: Capital Levels Reflect Stock Buyback (ASR)
Capital Levels Reflect Stock Buyback (ASR) TCE ratio 8.45%, down 37 bps linked-quarter Growth in tangible assets -2 bps Tangible net earnings +33 bps Dividends -8 bps Stock buyback -63 bps Stock activity and other +3 bps Accelerated share repurchase agreement announced October 21, 2019 Repurchasing
Slide 22: Forward Guidance
Forward Guidance Near-Term Outlook 4Q19 Actual Items to note 2020 Outlook Loans (EOP) up $177 million LQ up $1.2 billion or 6% y-o-y Decline in energy portfolio of $71 million Expect full year end of period growth for 2020 in mid-single digits Net Interest Margin (NIM) 3.43% See slide 15 Runoff of a
Slide 23: Technology Investments Create Efficiency, Effectiveness, & Scalability
Technology Investments Create Efficiency, Effectiveness, & Scalability Digital platforms are in place for both online and mobile banking, with continuous enhancements to improve client retention and sales efficiency Sales and servicing technology for financial centers, specifically targeted for gran
Slide 24: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 25: Operating Results
Operating Results *Non-GAAP measures. See slides 28-30 for non-GAAP reconciliations 4Q18 1Q19 2Q19 3Q19 4Q19 Operating Earnings* ($000) 97,705 79,164 88,277 90,567 95,178 Operating EPS* $1.12 $0.91 $1.01 $1.03 $1.06 Net Interest Income (TE)* ($000) 221,471 223,078 223,586 226,591 236,736 Operating N
Slide 26: Key Operating Ratios
Key Operating Ratios 4Q18 1Q19 2Q19 3Q19 4Q19 Operating Return on Assets* 1.37% 1.13% 1.24% 1.23% 1.24% Operating Return on Equity * 12.95% 10.30% 10.96% 10.62% 10.87% Operating Return on TCE* 18.43% 14.38% 15.07% 14.39% 15.10% Tangible Common Equity Ratio 8.02% 8.36% 8.75% 8.82% 8.45% Net Interest
Slide 27: Balance Sheet Summary
Balance Sheet Summary 4Q18 1Q19 2Q19 3Q19 4Q19 Average Loans ($MM) 19,818 20,127 20,150 20,197 21,038 Average Total Securities ($MM) 5,965 5,657 5,586 6,005 6,202 Average Deposits ($MM) 22,498 23,114 23,138 23,091 23,848 Loan Yield (TE) 4.71% 4.84% 4.89% 4.84% 4.69% Securities Yield (TE) 2.62% 2.69%
Slide 28: Operating Earnings & Operating EPS Non-GAAP to GAAP Reconciliations
Operating Earnings & Operating EPS Non-GAAP to GAAP Reconciliations Three Months Ended Twelve Months Ended (in thousands, except per share amounts) 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Net Income $92,132 $67,807 $88,277 $79,164 $96,240 $327,380 $323,770 Net incom
Slide 29: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended Twelve Months Ended (dollars in thousands) 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Net Income $92,132 $67,807 $88,277 $79,164 $96,240 $327,380 $323,770 Nonoperating items, net of income tax 3,046 22,760 -
Slide 30: Operating Revenue (TE) & Operating PPNR (TE) Reconciliations
Operating Revenue (TE) & Operating PPNR (TE) Reconciliations Three Months Ended Twelve Months Ended (in thousands) 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Net interest income $233,156 $222,939 $219,868 $219,254 $217,433 $895,217 $848,838 Noninterest income 82,924 83
Slide 31: Criticized Commercial Loans
Criticized Commercial Loans Total criticized commercial loans % of total commercial loans $626 4.18% $584 3.88% $573 3.79% $659 4.15% $581 3.62% Criticized – nonenergy % of total commercial loans $346 2.31% $320 2.12% $315 2.08% $378 2.38% $321 2.00% Criticized – energy % of total commercial loans $
Slide 32: Nonperforming Loans
Nonperforming Loans Total nonperforming loans % of total loans $326 1.63% $322 1.60% $311 1.54% $284 1.35% $307 1.45% Nonperforming loans – nonenergy % of total loans $130 0.65% $141 0.70% $141 0.70% $140 0.67% $149 0.70% Nonperforming loans – energy % of total loans $197 0.98% $181 0.90% $170 0.84%
Slide 33: Fourth Quarter 2019 Earnings Conference Call
Fourth Quarter 2019 Earnings Conference Call 1/16/2020