Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q2 2023 Earnings Presentation
30 slides from Hancock Whitney's earnings presentation, Jul 18, 2023
Slide 1: Second Quarter 2023 Earnings Conference Call
Second Quarter 2023 Earnings Conference Call 7/18/2023
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 ▶ $36.2 billion in Total Assets ▶ $23.8 billion in Total Loans ▶ $30.0 billion in Total Deposits ▶ CET1 ratio 11.83%(e) ▶ Tangible Common Equity (TCE) ratio 7.50% ▶ $3.3 billion in Market Capitalization ▶ 181 full service banking locations and 224 ATMs across our footprint ▶ Approx
Slide 5: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights ▶ Net income totaled $117.8 million, or $1.35 per diluted share, compared to $126.5 million, or ($s in millions; except per share data) 2Q23 1Q23 2Q22 $1.45 per diluted share at 1Q23 Net Income $117.8 $126.5 $121.4 ▶ Pre-provision net revenue (PPNR)* totaled $157.8 Pro
Slide 6: Maintaining a Seasoned, Stable, Diversified Deposit Base
Maintaining a Seasoned, Stable, Diversified Deposit Base ▶ DDAs as a % of total deposits remains above pre-2020 levels – 40% at June 30, 2023 – 37% at December 31, 2019 ▶ Uninsured deposits (adjusted for collateralized public funds) were 34% at June 30, 2023, compared to 36% at March 31, 2023 – The
Slide 7: Continued Remix in Deposits
Continued Remix in Deposits ▶ Total deposits of $30 billion, up $430 million, or 6% LQA – Decrease in noninterest-bearing DDA driven by continued shift in mix to interest-bearing deposits due to competitive rates offered during 2Q23 – Decrease in interest-bearing money market and savings mostly due
Slide 8: Moderated Quarterly Loan Growth
Moderated Quarterly Loan Growth ▶ Loans totaled $23.8 billion, up $385.4 million, or 7% LQA ▶ Increase in mortgage loans driven by one-time close product, which convert from construction to mortgage upon construction completion ▶ Headwinds to future loan growth: – Select appetite in CRE – Expect con
Slide 9: CRE Exposure Limited, Diversified
CRE Exposure Limited, Diversified ▶ CRE loan portfolio is diversified by asset class, Total Loans % of Total industry and geographic region ($s in millions) Outstanding Loans Commitment Commercial non-RE (C&I) $7,899 33.2% $13,748 ▶ Income-producing CRE (ICRE) approximately 14% of total loans and in
Slide 10: Yield on New Loans Reflects Higher Rates
Yield on New Loans Reflects Higher Rates 10
Slide 11: Criticized Commercial, Nonaccrual Loans Remain at Low Levels
Criticized Commercial, Nonaccrual Loans Remain at Low Levels Total Loans $21,846 $22,586 $23,114 $23,405 $23,790 Total Commercial Loans 17,660 18,166 18,444 18,550 18,703 Criticized Commercial Loans 281 304 302 296 302 Nonaccrual Loans 38 40 39 54 78 $ in millions ▶ Criticized commercial loans total
Slide 12: Maintained a Solid Reserve
Maintained a Solid Reserve ▶ Provision for the quarter of $7.6 million, reflects $3.4 million of net charge-offs and a reserve build of $4.2 million Net Charge-offs Reserve Build Total Provision – Maintained solid reserve, with quarter-end reserve coverage of ($s in millions) 2Q23 1Q23 2Q23 1Q23 2Q2
Slide 13: Conservative Securities Portfolio
Conservative Securities Portfolio ▶ Securities portfolio* totaled $9.0 billion, down $126 million linked-quarter ▶ 69% AFS, 31% HTM at 6/30/23 ▶ To reduce OCI volatility and provide flexibility to reposition and/or reprice the hedged assets in a changing rate environment, we have $514 million of FV
Slide 14: NIM Reflects Continued Change in Funding Mix, Higher Deposit Betas
NIM Reflects Continued Change in Funding Mix, Higher Deposit Betas ▶ 2Q23 NIM 3.30%, down 25 bps linked-quarter – Adjusting for excess liquidity in both 1Q23 and 2Q23, NIM would have been down 21 bps – NIM 3.30% for the month of June 2023 ▶ NII (TE) decreased $10.8 million, or 4%, linked-quarter, dr
Slide 15: Focused on IRR Sensitivity
Focused on IRR Sensitivity Loans ▶ Loans totaled $23.8 billion at June 30, 2023 – 41% fixed, 59% variable (includes hybrid ARMs) – 68% ($9.6 billion) of variable loans tied to SOFR/LIBOR – 24% ($3.5 billion) of variable loans tied to Wall Street Journal Prime – 6% ($818 million) of variable loans ti
Slide 16: Service Charges, Specialty Income Drive Fee Increase
Service Charges, Specialty Income Drive Fee Increase ▶ Noninterest income totaled $83.2 million, up $2.9 million, or 4% linked-quarter ▶ Increase in service charges was primarily related to commercial net analysis fees ▶ Increase in trust fees related to seasonal tax accounting fees ▶ Decrease in in
Slide 17: Other Expense Drives Linked-Quarter Increase in Expense
Other Expense Drives Linked-Quarter Increase in Expense ▶ Noninterest expense totaled $202.1 million, up $1.3 million, or 1% linked-quarter ▶ Personnel expense decrease mostly related to lower incentive and benefit costs, partly offset by merit pay increases ▶ Increase in occupancy and equipment exp
Slide 18: Capital Levels Improved Linked-Quarter
Capital Levels Improved Linked-Quarter ▶ CET1 ratio estimated at 11.83%, up 23 bps linked-quarter ▶ TCE ratio 7.50%, up 34 bps LQ – Tangible net earnings +33 bps – Lower tangible assets +27 bps – Stock compensation and other +2 bps – Impact of OCI -21 bps – Dividends -7 bps ▶ No shares repurchased d
Slide 19: Remain Well Capitalized Including All Unrealized Losses
Remain Well Capitalized Including All Unrealized Losses 6/30/2023 Inc. AOCI Inc. AOCI + HTM Well Capitalized As Reported Losses (1) Losses (2) Minimum Tangible Common Equity Ratio 7.50% 7.50% 7.01% N/A Leverage (Tier 1) Ratio (e) 9.64% 7.92% 7.43% 5.00% CET1 Ratio (e) 11.83% 9.62% 8.99% 6.50% Tier 1
Slide 20: 2023 Forward Guidance
2023 Forward Guidance Guidance 2Q23 FY 2023 Direction Actual Outlook Loans (EOP) Unchanged $23.8B Expect EOP loan growth in the range of low to mid single digits from $23.1B at 12/31/22 Deposits (EOP) Unchanged $30.0B Expect EOP deposit growth in the range of flat to low single digits from $29.1B at
Slide 21: HWC Strong and Stable for 124 Years
HWC Strong and Stable for 124 Years ▶ Strength to manage through challenging economic environment ▶ Balance sheet de-risked in early 2020 ▶ Credit metrics at low levels ▶ Robust ACL at 1.45% of loans ▶ Solid capital levels ▶ Significant efficiency initiatives executed in 2020/2021 ▶ Technology proje
Slide 22: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 23: Summary Income Statement
Summary Income Statement ($ in millions, except for per share data) Change Change 2Q23 1Q23 2Q22 LQ Prior Year YTD 2023 YTD 2022 Y-o-Y 276.7 287.6 248.3 (10.9) 28.4 Net interest income (TE) 564.3 479.3 85.0 7.6 6.0 (9.8) 1.6 17.4 Provision for credit losses 13.7 (32.3) 46.0 83.2 80.3 85.7 2.9 (2.5)
Slide 24: Summary Balance Sheet
Summary Balance Sheet ($ in millions) Change Change 2Q23 1Q23 2Q22 LQ Prior Year YTD 2023 YTD 2022 Y-o-Y EOP Balance Sheet 23,789.9 23,404.5 21,846.1 385.4 1,943.8 Loans 23,789.9 21,846.1 1,943.8 8,195.7 8,390.7 8,531.4 (195.0) (335.7) Securities 8,195.7 8,531.4 (335.7) 32,715.6 34,106.8 31,292.9 (1
Slide 25: Operating Results
Operating Results 2Q22 3Q22 4Q22 1Q23 2Q23 Operating PPNR (TE)* ($000) 146,873 174,745 185,026 167,024 157,835 Net Interest Income (TE) ($000) 248,317 282,910 298,116 287,578 276,748 Net Interest Margin (TE) 3.04% 3.54% 3.68% 3.55% 3.30% Operating Noninterest Income* ($000) 85,653 85,337 77,064 80,3
Slide 26: Balance Sheet Summary
Balance Sheet Summary 2Q22 3Q22 4Q22 1Q23 2Q23 Average Loans ($MM) 21,658 22,139 22,723 23,087 23,655 Average Total Securities* ($MM) 8,979 9,177 9,201 9,137 9,008 Average Deposits ($MM) 29,980 29,181 28,816 28,793 29,373 Loan Yield (TE) 3.86% 4.49% 5.12% 5.54% 5.81% Cost of Deposits 0.07% 0.18% 0.5
Slide 27: Operating Revenue (TE), Operating PPNR (TE) Reconciliation
Operating Revenue (TE), Operating PPNR (TE) Reconciliation Three Months Ended (in thousands) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Net interest income $273,911 $284,994 $295,501 $280,307 $245,732 Noninterest income 83,225 80,330 77,064 85,337 85,653 Total revenue $357,136 $365,324 $372,
Slide 28: 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 2Q23 ▶ Total termination value on remaining active CF hedges is approximately ($110) million as of 6/30/23 ▶ Future maturiti
Slide 29: Strong Liquidity Position; Multiple Sources of Funding Available
Strong Liquidity Position; Multiple Sources of Funding Available ▶ Currently have approximately $20 billion in internal At June 30, 2023 Total Amount Net $ in millions Sources Used Availabilty and external sources of liquidity if needed Internal Sources ▶ More than $17 billion in remaining net liqui
Slide 30: Second Quarter 2023 Earnings Conference Call
Second Quarter 2023 Earnings Conference Call 7/18/2023