Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q3 2019 Earnings Presentation
29 slides from Hancock Whitney's earnings presentation, Oct 15, 2019
Slide 1: Third Quarter 2019 Earnings Conference Call
Third Quarter 2019 Earnings Conference Call 10/16/2019 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 September 30, 2019)
Corporate Profile (as of September 30, 2019) $30.5 billion in Total Assets $21.0 billion in Total Loans $24.2 billion in Total Deposits Tangible Common Equity (TCE) ratio 8.82% $3.5 billion in Market Capitalization 217 banking locations and 301 ATMs across our footprint Approximately 4,000 (FTE) emp
Slide 5: Third Quarter 2019 Highlights
Third Quarter 2019 Highlights (compared to second quarter 2019) Closed MSL acquisition effective September 21, 2019 with a simultaneous systems conversion Net income of $67.8 million, or $.77 per diluted share Results include $28.8 million, or $.26 per share, of merger costs Operating leverage incre
Slide 6: MidSouth Bancorp (MSL) Acquisition
MidSouth Bancorp (MSL) Acquisition MidSouth acquisition closed and operationally converted September 21, 2019 Just over 5 million shares issued for the MidSouth acquisition Acquisition added $785 million in loans (net of $41 million loan mark) at 5.57% yield Includes $82 million of energy loans Incl
Slide 7: Growth Reflects Addition of MSL Portfolio
Growth Reflects Addition of MSL Portfolio Loans totaled $21.0 billion at quarter-end, an increase of $860 million; reflects $785 million increase from the acquired MSL portfolio (net of $41 million loan mark) The company continued to grow the portfolio organically across several markets within the f
Slide 8: 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 booked along with improving spreads Average yield on new loans excluding MSL was 4.92% in 3Q19 compared to 4.39% in 3Q18; the average yield on new loans including MSL was 5.17% MSL loa
Slide 9: Energy Loans Remain Below 5% Inclusive of MSL Portfolio
Energy Loans Remain Below 5% Inclusive of MSL Portfolio Energy loans totaled $1.0 billion, or 4.9% of total loans, up $26 million linked-quarter Net increase reflects addition of $82 million from acquired MSL portfolio, partially offset by net payoffs and paydowns, and a RBL charge-off of $9.3 milli
Slide 10: Criticized Commercial Loans Reflects Addition of MSL Portfolio
Criticized Commercial Loans Reflects Addition of MSL Portfolio Total criticized commercial loans % of total commercial loans $834 5.72% $626 4.18% $584 3.88% $573 3.79% $659 4.15% Criticized – nonenergy % of total commercial loans $477 3.27% $346 2.31% $320 2.12% $315 2.08% $378 2.38% Criticized – e
Slide 11: Energy NPLs Down 15% Linked-Quarter as TDRs Decline
Energy NPLs Down 15% Linked-Quarter as TDRs Decline Total nonperforming loans % of total loans $364 1.86% $326 1.63% $322 1.60% $311 1.54% $284 1.35% Nonperforming loans – nonenergy % of total loans $144 0.74% $130 0.65% $141 0.70% $141 0.70% $140 0.67% Nonperforming loans – energy % of total loans
Slide 12: Reserve is Adequate For Potential Credit Losses
Reserve is Adequate For Potential Credit Losses Allowance for loan and lease losses (ALLL) $195.6 million at September 30, 2019, unchanged linked-quarter ALLL for energy credits $32.0 million at September 30, 2019, up $0.5 million, or 1%, from June 30, 2019 Nonenergy ALLL $163.6 million as of Septem
Slide 13: Current Expected Credit Losses (CECL)
Current Expected Credit Losses (CECL) CECL replaces the current incurred loss methodology with a life-of-loan loss concept Key Methodology Assumptions Consideration of multiple economic forecasts 2-year reasonable and supportable forecast period; 1 year reversion to mean historical losses Currently
Slide 14: NIM Impacted by MSL, Rate Environment, Interest Recoveries
Net interest margin (NIM) of 3.41%, down 4 bps linked-quarter Loan yield down 5 bps Yield on securities portfolio down 3 bps due to the impact from higher premium amortization Cost of funds down 3 bps 3Q19 NIM included 5 bps of interest recoveries compared to 3 bps in 2Q19 Lowered deposit rates duri
Slide 15: Premium Amortization Impacts Securities Portfolio Yield
Premium Amortization Impacts Securities Portfolio Yield Portfolio totaled $6.4 billion, up $679 million linked-quarter; increase primarily due to bond purchases in anticipation of the MSL acquisition Premium amortization totaled $8.7 million, up $0.9 million linked-quarter; negatively impacted secur
Slide 16: Third Quarter Deposit Increase Reflects Addition of MSL Portfolio
Third Quarter Deposit Increase Reflects Addition of MSL Portfolio Total deposits of $24.2 billion, up $965 million linked-quarter; includes $1.3 billion of deposits added from the MSL portfolio Addition of MSL deposits improved overall deposit mix Facilitated paydown of $223 million in brokered CDs
Slide 17: Seasonality, Specialty Income Drive Linked-Quarter Change in Fees
Seasonality, Specialty Income Drive Linked-Quarter Change in Fees Noninterest income totaled $83.2 million, up $4.0 million, or 5% linked-quarter; minimal impact from MSL due to timing of closing Reflects increases in most lines of business Service charges and Bank Card & ATM fees up primarily due t
Slide 18: Focused on Managing Expenses While Investing in Technology
Focused on Managing Expenses While Investing in Technology Noninterest expense totaled $213.6 million, up $30.0 million linked-quarter. Included in total expense is $28.8 million of merger costs related to the acquisition of MSL on 9/21/19 Operating expense (excluding merger costs) totaled $184.7 mi
Slide 19: Capital Levels Reflect MidSouth Acquisition
Capital Levels Reflect MidSouth Acquisition TCE ratio 8.82%, up 7 bps linked-quarter Growth in tangible assets (excluding MSL) -5 bps Tangible net earnings +26 bps OCI +9 bps; related to improvement in unrealized gain on the AFS securities portfolio Dividends -9 bps MSL acquisition -15 bps Other +1
Slide 20: Near-Term Outlook
Near-Term Outlook 3Q19 Actual Items to note 2019 Outlook Loans (EOP) +$860 million +up $1.5 billion or 8% Y-o-Y Includes $785 million (net) from addition of MSL portfolio Expect full year average growth for 2019 in mid single digits Net Interest Margin (NIM) 3.41% Down 4 bps LQ (See slide 14 for add
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) 3Q19 Actual Earnings (EPS)/quarter (operating)* $1.20 - $1.25 $1.03 ROA (operating)* 1.40% - 1.45% 1.23% TCE >8% 8.82% ROTCE (operating)* >15% 14.39% Efficiency Ratio <56% 58.05% 2019/2020 Corporate S
Slide 22: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 23: Operating Results
Operating Results *Non-GAAP measures. See slides 26-28 for non-GAAP reconciliations 3Q18 4Q18 1Q19 2Q19 3Q19 Operating Earnings* ($000) 87,691 97,705 87,130 88,277 90,567 Operating EPS* $1.01 $1.12 $1.00 $1.01 $1.03 Net Interest Income (TE)* ($000) 218,289 221,471 223,078 223,586 226,591 Operating N
Slide 24: Key Operating Ratios
Key Operating Ratios 3Q18 4Q18 1Q19 2Q19 3Q19 Operating Return on Assets* 1.24% 1.37% 1.24% 1.24% 1.23% Operating Return on Equity * 11.78% 12.95% 11.33% 10.96% 10.62% Operating Return on TCE* 16.84% 18.43% 15.83% 15.07% 14.39% Tangible Common Equity Ratio 7.67% 8.02% 8.36% 8.75% 8.82% Net Interest
Slide 25: Balance Sheet Summary
Balance Sheet Summary 3Q18 4Q18 1Q19 2Q19 3Q19 Average Loans ($MM) 19,465 19,818 20,127 20,150 20,197 Average Total Securities ($MM) 6,186 5,965 5,657 5,586 6,005 Average Deposits ($MM) 22,022 22,498 23,114 23,138 23,091 Loan Yield (TE) 4.63% 4.71% 4.84% 4.89% 4.84% Securities Yield (TE) 2.55% 2.62%
Slide 26: 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) 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018 Net Income $67,807 $88,277 $79,164 $96,240 $83,878 Net income allocated to participating securities (1,141) (1,502) (1,33
Slide 27: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended (dollars in thousands) 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018 Net Income $67,807 $88,277 $79,164 $96,240 $83,878 Nonoperating items, net of income tax 22,760 --- 7,966 1,465 3,813 Operating earnings $90,567 $88,277 $87,130 $97
Slide 28: Operating Revenue (TE) & Operating PPNR (TE) Reconciliations
Operating Revenue (TE) & Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018 Net interest income $222,939 $219,868 $219,254 $217,433 $214,194 Noninterest income 83,230 79,250 70,503 74,538 75,518 Total revenue $306,169 $299,118 $28
Slide 29: Third Quarter 2019 Earnings Conference Call
Third Quarter 2019 Earnings Conference Call 10/16/2019