Slide 1: Third Quarter 2023 Earnings Conference Call
Third Quarter 2023 Earnings Conference Call 10/17/2023
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
Corporate Profile ▶ $36.3 billion in Total Assets ▶ $24.0 billion in Total Loans ▶ $30.3 billion in Total Deposits ▶ CET1 ratio 12.04%(e) ▶ Tangible Common Equity (TCE) ratio 7.34% ▶ $3.2 billion in Market Capitalization ▶ 181 full service banking locations and 225 ATMs across our footprint ▶ Approx
Slide 5: HWC Strong and Stable for 124 Years
HWC Strong and Stable for 124 Years ▶ Strength to manage through a challenging economic environment ▶ Balance sheet de-risked in early 2020 ▶ Stable, seasoned, diversified deposits; ability to organically grow deposits ▶ Credit metrics at low levels; no signs of broad weakness in portfolio ▶ Robust
Slide 6: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights ▶ Net income totaled $97.7 million, or $1.12 per diluted share, compared to $117.8 million, or $1.35 ($s in millions; except per share data) 3Q23 2Q23 3Q22 per diluted share in 2Q23 Net Income $97.7 $117.8 $135.4 – 3Q23 net income impacted by “idiosyncratic” charge-off
Slide 7: Continued Moderation in Quarterly Loan Growth
Continued Moderation in Quarterly Loan Growth ▶ Loans totaled $24.0 billion, up $194 million, or 3% LQA ▶ Increase in mortgage loans driven by one-time close product, which convert from construction to mortgage upon construction completion ▶ Increase in CRE-income producing partially offset by the d
Slide 8: CRE Exposure Limited, Diversified
CRE Exposure Limited, Diversified ▶ CRE loan portfolio is diversified by asset class, Total Loans % of Total ($s in millions) Outstanding Loans Commitment industry and geographic region Commercial non-RE (C&I) $7,907 33.0% $13,919 ▶ CRE-Income producing (ICRE) approximately CRE - owner 2,544 10.6% 2
Slide 9: DDA Remix Begins to Slow; Deposits Fully Fund Loan Growth
DDA Remix Begins to Slow; Deposits Fully Fund Loan Growth ▶ Total deposits of $30.3 billion, up $277 million, or 4% LQA – Decrease in noninterest-bearing DDA driven by continued shift in mix to interest-bearing deposits due to competitive rates offered during 3Q23 – Increase in interest-bearing tran
Slide 10: Continued Low Levels of Criticized and Nonaccrual Loans
Continued Low Levels of Criticized and Nonaccrual Loans Total Loans $22,586 $23,114 $23,405 $23,790 $23,984 Total Commercial Loans 18,166 18,444 18,550 18,703 18,799 Criticized Commercial Loans 304 302 296 302 275 Nonaccrual Loans 40 39 54 78 60 $ in millions ▶ Criticized commercial loans totaled $2
Slide 11: Maintained a Solid Reserve
Maintained a Solid Reserve ▶ Provision for the third quarter of $28.5 million, reflects $38.3 million of net charge-offs and a reserve release of $9.8 million – Charge-offs include $29.7 million related to one “idiosyncratic” charge- Reserve Build/ off; expect 4Q provision and charge-offs to return
Slide 12: Duration of Securities Portfolio Continues to Decline
Duration of Securities Portfolio Continues to Decline ▶ Securities portfolio* totaled $8.9 billion, down $104 million linked-quarter ▶ 69% AFS, 31% HTM at 9/30/23 ▶ To reduce OCI volatility and provide flexibility to reposition and/or reprice the hedged assets in a changing rate environment, we have
Slide 13: NIM Relatively Stable; Compression Slows
NIM Relatively Stable; Compression Slows ▶ 3Q23 NIM 3.27%, down 3 bps linked-quarter – NIM 3.24% for the month of September 2023 ▶ NII (TE) decreased $4.7 million, or 2%, linked-quarter, driven by change in the funding mix and increasing deposit betas ▶ Federal Funds rate expected to be flat through
Slide 14: New Loan Rates Reflect Ongoing Pricing Efforts
New Loan Rates Reflect Ongoing Pricing Efforts New Loan Rate* - Fixed 4.45% 5.28% 5.95% 6.47% 6.69% 7.46% New Loan Rate* - Variable 3.25% 4.79% 6.40% 7.10% 7.81% 8.28% * Loan rates represent weighted average coupon rate in the month of origination or first funded balance 14
Slide 15: Key IRR Metrics
Key IRR Metrics Loans ▶ Loans totaled $24.0 billion at September 30, 2023 – 40% fixed, 60% variable (includes hybrid ARMs) – 70% ($10.0 billion) of variable loans tied to SOFR – 23% ($3.3 billion) of variable loans tied to Wall Street Journal Prime – 6% ($810 million) of variable loans tied to AMBR
Slide 16: Specialty Income Drives Fee Increase
Specialty Income Drives Fee Increase ▶ Noninterest income totaled $86.0 million, up $2.8 million, or 3% linked-quarter ▶ Increase in service charges was primarily related to higher account activity ▶ Decrease in trust fees related to 2Q23 seasonal tax accounting fees ▶ Increase in other noninterest
Slide 17: Expenses Relatively Stable Linked-Quarter
Expenses Relatively Stable Linked-Quarter ▶ Noninterest expense totaled $204.7 million, up $2.6 million, or 1% linked-quarter ▶ Personnel expense increased $1.4 million, or 1% linked- quarter, as lower loan originations reduced the amount of personnel expense deferred (FAS 91) ▶ Other expenses incre
Slide 18: Capital Levels Remain Solid and Stable
Capital Levels Remain Solid and Stable ▶ CET1 ratio estimated at 12.04%, up 21 bps linked-quarter ▶ Leverage (Tier 1) ratio estimated at 10.01%, up 37 bps linked-quarter ▶ TCE ratio 7.34%, down 16 bps LQ – Impact of AOCI -37 bps – Dividends -7 bps – Higher tangible assets -2 bps – Tangible net earni
Slide 19: Remain Well Capitalized Including All Unrealized Losses
Remain Well Capitalized Including All Unrealized Losses 9/30/2023 Inc. AOCI Inc. AOCI + HTM Well Capitalized As Reported Losses (1) Losses (2) Minimum Tangible Common Equity Ratio 7.34% 7.34% 6.73% N/A Leverage (Tier 1) Ratio (e) 10.01% 7.90% 7.29% 5.00% CET1 Ratio (e) 12.04% 9.41% 8.63% 6.50% Tier
Slide 20: 2023 Forward Guidance Unchanged
2023 Forward Guidance Unchanged Guidance 3Q23 FY 2023 Direction Actual Outlook Loans (EOP) Unchanged $24.0B Expect EOP loan growth in the range of low to mid single digits from $23.1B at 12/31/22; expect modest growth from 3Q EOP level Deposits (EOP) Unchanged $30.3B Expect EOP deposit growth in the
Slide 21: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 22: Summary Balance Sheet
Summary Balance Sheet ($ in millions) Change Change 3Q23 2Q23 3Q22 LQ Prior Year YTD 2023 YTD 2022 Y-o-Y EOP Balance Sheet 23,983.7 23,789.9 22,585.6 193.8 1,398.1 Loans 23,983.7 22,585.6 1,398.1 7,916.1 8,195.7 8,333.2 (279.6) (417.1) Securities 7,916.1 8,333.2 (417.1) 32,733.6 32,715.6 31,213.4 18
Slide 23: Balance Sheet Summary
Balance Sheet Summary 3Q22 4Q22 1Q23 2Q23 3Q23 Average Loans ($MM) 22,139 22,723 23,087 23,655 23,831 Average Total Securities* ($MM) 9,177 9,201 9,137 9,008 8,888 Average Deposits ($MM) 29,181 28,816 28,793 29,373 29,757 Loan Yield (TE) 4.49% 5.12% 5.54% 5.81% 6.01% Cost of Deposits 0.18% 0.50% 0.9
Slide 24: EOP Loan Repricing and Maturity
EOP Loan Repricing and Maturity Reprcing/Maturity Term (1) Rate Structure 3 months 4-12 5-15 Over 15 Total Loans Variable Fixed ($s in millions) or less months 1-3 Years 3-5 Years Years Years (EOP) Rate Rate Commercial Non-RE $3,410 $524 $2,120 $2,772 $1,178 $72 $10,076 $6,572 $3,504 CRE-Owner 918 8
Slide 25: Total Loan Rates and Yield Trend
Total Loan Rates and Yield Trend Total Loan Rate* - Fixed 3.95% 4.04% 4.15% 4.28% 4.40% 4.52% Total Loan Rate* - Variable 3.84% 5.11% 6.35% 6.81% 7.19% 7.40% * Loan rates represent weighted average coupon rate at end of period 25
Slide 26: Maintaining a Seasoned, Stable, Diversified Deposit Base
Maintaining a Seasoned, Stable, Diversified Deposit Base ▶ DDAs as a % of total deposits remains among best-in-class at 38% at September 30, 2023 ▶ Uninsured deposits (adjusted for collateralized public funds) were 35% at September 30, 2023, compared to 34% at June 30, 2023 – The Insured Cash Sweep
Slide 27: Strong Liquidity Position; Multiple Sources of Funding Available
Strong Liquidity Position; Multiple Sources of Funding Available ▶ Currently have approximately $20 billion in internal At September 30, 2023 Total Amount Net $ in millions Sources Used Availabilty and external sources of liquidity if needed Internal Sources ▶ More than $18 billion in remaining net
Slide 28: Summary Income Statement
Summary Income Statement ($ in millions, except for per share data) Change Change 3Q23 2Q23 3Q22 LQ Prior Year YTD 2023 YTD 2022 Y-o-Y 272.1 276.7 282.9 (4.6) (10.8) Net interest income (TE) 836.4 762.2 74.2 28.5 7.6 1.4 20.9 27.1 Provision for credit losses 42.2 (30.9) 73.1 86.0 83.2 85.3 2.8 0.7 N
Slide 29: Operating Results
Operating Results 3Q22 4Q22 1Q23 2Q23 3Q23 Operating PPNR (TE)* ($000) 174,745 185,026 167,024 157,835 153,385 Net Interest Income (TE) ($000) 282,910 298,116 287,578 276,748 272,086 Net Interest Margin (TE) 3.54% 3.68% 3.55% 3.30% 3.27% Operating Noninterest Income* ($000) 85,337 77,064 80,330 83,2
Slide 30: Operating Revenue (TE), Operating PPNR (TE) Reconciliation
Operating Revenue (TE), Operating PPNR (TE) Reconciliation Three Months Ended (in thousands) 3Q23 2Q23 1Q23 4Q22 3Q22 Net interest income $269,324 $273,911 $284,994 $295,501 $280,307 Noninterest income 85,974 83,225 80,330 77,064 85,337 Total revenue $355,208 $357,136 $365,324 $372,565 $365,644 Taxa
Slide 31: Current Hedge Positions
Current Hedge Positions Cash Flow (CF) Hedges ▶ Receive 215 bps versus paying 1 month SOFR on $1.6 billion ▶ No new CF hedges were executed and no CF hedges were terminated in 3Q23 ▶ Total termination value on remaining active CF hedges is approximately ($122) million as of 9/30/23 ▶ Future maturiti
Slide 32: Third Quarter 2023 Earnings Conference Call
Third Quarter 2023 Earnings Conference Call 10/17/2023