Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q4 2018 Earnings Presentation
30 slides from Hancock Whitney's earnings presentation, Jan 16, 2019
Slide 1: Fourth Quarter 2018 Earnings Conference Call
Fourth Quarter 2018 Earnings Conference Call 1/17/2019
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
Slide 3: Non-GAAP Reconciliations & Glossary of Terms
on-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 t o GAAP
Slide 4: Corporate Profile (as of December 31, 2018)
Corporate Profile (as of December 31, 2018) $28.2 billion in Total Assets $20.0 billion in Total Loans $23.2 billion in Total Deposits Tangible Common Equity (TCE) ratio 8.02% Nearly 200 banking locations and 270 ATMs across our footprint Approximately 3,900 (FTE) employees corporate-wide Rated amon
Slide 5: YTD 2018 Highlights
YTD 2018 Highlights ( compared to YTD 2017) ($s in millions; except per share data) 2018 2017 Net Income $323.8 $215.6 Earnings Per Share –diluted $3.72 $2.48 Return on Assets (%) (ROA) 1.17 0.82 Return on Tangible Common Equity (%) (ROTCE) 15.62 10.78 Net Interest Margin (%) 3.38 3.43 Net Charge-of
Slide 6: Fourth Quarter 2018 Highlights
Fourth Quarter 2018 Highlights ‘compared to third quarter 2018) Net income increased $12.4 million, or 15% LQ EPS increased $.14 to $1.10; excluding nonoperating items, EPS increased $.11 to $112 Loan growth of $483 million, or 2% LQ. surpassing $20 billion in total loans - reflects sale of $116 mil
Slide 7: Portfolio Restructuring Improves NIM Outlook
Portfolio Restructuring Improves NIM Outlook In late 4Q18 the company sold 192k shares of VISA-B stock for a net gain of $33.2 million VISA-B shares net gain offset losses associated with selling $481 million of lower yielding bonds and $116 million of lower yielding municipal loans Proceeds of sale
Slide 8: Growth Diversified Across Footprint and Many Lines of Business
rowth Diversified Across Footprint and Many Lines of Business Loans grew to over $20.0 billion at quarter-end, an increase of $483 million, or 10% LQA •Loan portfolio 52% variable -57% of variable loans are LIBOR-based (30% of total loan portfolio) •97% of the LIBOR loans are tied to 1mo L •3% of th
Slide 9: Growth Related to Shifting Mix Within The Energy Portfolio
Growth Related to Shifting Mix Within The Energy Portfolio Energy loans totaled $1.1 billion, or 5.3% of total loans, up $132 million linked-quarter and virtually unchanged compared to a year earlier .Growth primarily in RBL and midstream .Increase in portfolio outstandings mainly related to efforts
Slide 10: Criticized Commercial Loans Down 25% Linked-Quarter
ized Commercial Loans Down 25% Linked-Quarter Total criticized loans % of total commercial loans $1,076 7.58% $1,084 7.56% $897 6.18% $834 5.72% $626 4.18% Criticized – Nonenergy % of total commercial loans $526 3.70% $561 3.91% $489 3.37% $477 3.27% $346 2.31% Criticized –energy % of total commerci
Slide 11: Nonperforming Loans Down 10% Linked-Quarter
Nonperforming Loans Down 10% Linked-Quarter a nonpertorming seo st = tarnpe ion a 8 3 ° soon To noperornnoas oe we See ee we Saucon ross ost 2058 ross a Tenparomne or ous 38 on suse si ie | tons ose oases oats ores oss Tenperoming or we om or sa a pies Pesatoos 138 ass i 18 case » NPA ratio 1.76%, d
Slide 12: Adequately Reserved For Both Energy and Nonenergy
ately Reserved For Both Energy and Nonenergy Allowance for loan losses (ALLL) $194.5million in 4Q18, down $20.0 million linked-quarter •ALLL for energy credits $33.2 million at December31, 2018, down $17.0million, or 34%, from September30, 2018; energy charge-offs totaled $16 million in 4Q18 •Nonene
Slide 13: NIM Up Basis Points Linked-Quarter
NIM Up 3 Basis Points Linked-Quarter Betas 1Q18 2Q18 3Q18 4Q18 4Q15-4Q18 Total Loans 47% 44% 42% 40% 46% Total Deposits Total deposits excluding brokered CDs and acquired trust deposits 29% 23% 17% 14% 35% 20% 31% 20% 24% 19% Net interest margin (NIM) of 3.39%, up 3 bps linked-quarter; net interest
Slide 14: Securities Portfolio
olio totaled $5.7 billion, down $317 million, or 5%, linked-quarter; reflects portfolio restructuring detailed on slide 7 .Yield 2.62%, up 7 bps linked-quarter .Premium amortization down $0.8 million linked-quarter .Unrealized net loss of $64.8million on AFS compared to $130.7 million at September 3
Slide 15: Total Deposits
otal deposits $23.2 billion, up $732 million, or 3%, linked-quarter •Noninterest-bearing demand deposits (DDA) increased $358 million •Interest-bearing transaction and savings deposits increased $28 million •Time deposits (retail) increased $121 million; time deposits (brokered) declined by $168 mil
Slide 16: Seasonality and Market Conditions Drive Changes in Fees
Seasonality and Market Conditions Drive Changes in Fees Noninterest income totaled $74.5 million, down $1.0 million, or 1% linked-quarter •Includes $0.6 million in net gains on sale of securities (see slide 7) .YTD operating noninterest income totaled $285.7 million, up $22.3 million or 8% .Linked-q
Slide 17: Managing Expenses in Line with Guidance
Managing Expenses in Line with Guidance Operating expense (noninterest expense excluding nonoperating items) totaled $176.9 million, up $0.5 million, or less than 1% linked-quarter .Nonoperating expenses totaled $2.5 million in 4Q18 and $4.8 million in 3Q18 .YTD operating expenses totaled $686.8 mil
Slide 18: Managing Capital In The Best Interests of All Stakeholders
Managing Capital In The Best Interests of All Stakeholders TCE ratio 8.02%, up 35bps linked-quarter •Growth in tangible assets-4bps •Tangible net earnings +37bps •OCI +14bps; mostly related to lower unrealized loss on the AFS securities portfolio netted with pension plan losses •Dividends -9 bps •St
Slide 19: Near-Term Outlook
Near-Term Outlook 4Q18 Actual YTD Actual Items to note 2019 Outlook Loans (EOP) +$483 million or 10% LQA; +up $1 billion or 5% Y-o-Y Net of sale of $116 million in low yield municipal loans during 4Q18 Expect net loan growth of $200-$250 million for 1Q19 due to typical seasonality; expect full year
Slide 20: Long-Term Outlook – Goal to Achieve Objectives by 4Q20
Long-Term Outlook –Goal to Achieve Objectives by 4Q20 2019/2020 Corporate Strategic Objectives (CSOs) Quarterly Objective Earnings (EPS)/quarter (excluding nonoperating items) $1.20 -$1.25 ROA (operating) 1.40% -1.45% TCE >8% ROTCE (operating) >15% Efficiency Ratio <56%. Goal is to achieve CSOs by t
Slide 21: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 22: Operating Earnings
Operating Earnings See slides 26-29 for non-GAAP reconciliations 4Q17 1Q18 2Q18 3Q18 4Q18 Operating Earnings ($000) 74,969 78,257 83,663 87,691 97,705 Operating EPS $0.86 $0.90 $0.96 $1.01 $1.12 Net Interest Income (TE) ($000) 216,996 209,627 215,628 218,289 221,471 Noninterest Inc excl non-op ($000
Slide 23: Operating Ratios
perating Ratios See slides 26-29 for non-GAAP reconciliations 4Q17 1Q18 2Q18 3Q18 4Q18 Operating Return on Assets 1.10% 1.17% 1.22% 1.24% 1.37% Operating Return on Equity 10.37% 11.05% 11.54% 11.78% 12.95% Operating Return on TCE 14.62% 15.56% 16.12% 16.84% 18.43% Tangible Common Equity Ratio 7.73%
Slide 24: Balance Sheet Summary
Balance Sheet Summary 4Q17 1Q18 2Q18 3Q18 4Q18 Average Loans ($MM) 18,840 19,028 19,193 19,465 19,818 Average Total Securities ($MM) 5,801 5,897 6,032 6,186 5,965 Average Deposits ($MM) 21,763 22,043 22,101 22,022 22,498 Loan Yield (TE) 4.46% 4.43% 4.55% 4.63% 4.71% Securities Yield (TE) 2.50% 2.46%
Slide 25: Well-Diversified Loan Portfolio
Well-Diversified Loan Portfolio C&I $8,621 43% Owner-occupied CRE $2,458 12% C&D $1,548 8% Income-producing CRE $2,342 12% Mortgage $2,910 14% Consumer $2,148 11% Total Loans $20,026 million 12/31/18 East Region (MS AL & FL) $4,688 23% Central Region (SE LA) $4,967 25% West Region (TX & SW LA) $3,42
Slide 26: Operating Earnings & Operating EPS Reconciliations
ting Earnings & Operating EPS Reconciliations Three Months Ended Twelve Months Ended (in thousands, except per share amounts) 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 12/31/2018 12/31/2017 Net Income $96,240 $83,878 $71,177 $72,475 $55,449 $323,770 $215,632 Net income allocated to partici
Slide 27: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended Twelve Months Ended (dollars in thousands) 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 12/31/2018 12/31/2017 Net Income $96,240 $83,878 $71,177 $72,475 $55,449 $323,770 $215,632 Nonoperating items, net of income tax benefit 1,465
Slide 28: Operating Revenue (TE) & Operating PPNR (TE) Reconciliations
perating Revenue (TE) & Operating PPNR (TE) Reconciliations Three Months Ended Twelve Months Ended (dollars in thousands) 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 12/31/2018 12/31/2017 Net interest income $217,433 $214,194 $211,547 $205,664 $208,047 $848,838 $792,312 Noninterest income 74
Slide 29: Core NII (TE) & Core NIM (TE) Reconciliation
Core NII (TE) & Core NIM (TE) Reconciliation Three Months Ended Twelve Months Ended (dollars in thousands) 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 12/31/2018 12/31/2017 Net interest income $217,433 $214,194 $211,547 $205,664 $208,047 $848,838 $792,312 Taxable equivalent adjustment (a) 4,
Slide 30: Fourth Quarter 2018 Earnings Conference Call
Fourth Quarter 2018 Earnings Conference Call 1/17/2019