Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q1 2020 Earnings Presentation
36 slides from Hancock Whitney's earnings presentation, Apr 28, 2020
Slide 1: First Quarter 2020 Earnings Conference Call
First Quarter 2020 Earnings Conference Call 4/29/2020 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 March 31, 2020)
Corporate Profile (as of March 31, 2020) $31.8 billion in Total Assets $21.5 billion in Total Loans $25.0 billion in Total Deposits CET1 ratio 10.03%; Tangible Common Equity (TCE) ratio 8.00% $1.7 billion in Market Capitalization 215 banking locations and 287 ATMs across our footprint Approximately
Slide 5: COVID-19 Response: Employees
COVID-19 Response Employees Modified normal business operations and procedures where feasible; approximately two-thirds of our almost 3,000 non-financial center associates are working remotely All financial centers are operating drive-thru service and/or by appointment only for the lobby Associate t
Slide 6: COVID-19 Response: Communities
COVID-19 Response Communities $2.5 million in donations for the communities we serve Beyond the support via loan payment deferrals and fee waivers, we are providing direct community support including cash donations: $1.0 million total for local food pantries in our markets $600,000 for supplying pro
Slide 7: First Quarter 2020 Results
First Quarter 2020 Results include $246.8 million, or $2.24 per share, provision for credit losses related to COVID-19 and declining oil prices Results include $9.8 million, or $.11 per share, related to write-offs of equity interests in two energy companies which were received in bankruptcy restruc
Slide 8: Solid Quarterly Loan Growth
Solid Quarterly Loan Growth Loans totaled $21.5 billion at March 31, 2020, an increase of $303 million, or 1%, linked-quarter Loan growth was evident across the footprint from closings on loans in the pipeline and funding existing lines of credit related to economic uncertainty Line utilization at M
Slide 9: Commercial Loans (C&I, CRE, C&D)
Commercial Loans (C&I, CRE, C&D) Total Commercial Loans ($s in millions) Outstanding % of Total Loans Commitment Real Estate, Rental and Leasing $ 3,210 14.9% $ 4,004 Retail Trade 1,845 8.6% 2,147 Health Care and Social Assistance 1,663 7.7% 2,009 Hospitality 1,157 5.4% 1,300 Manufacturing 998 4.6%
Slide 10: Retail – 8.6% of Total Loans
Retail – 8.6% of Total Loans ICRE Retail portfolio is fairly segmented and primarily comprised of national anchored centers (35%), single credit tenant facilities (13%), and unanchored centers (29%) Retail trade represents 8.6% of total loans and is diversified across numerous subsectors with the la
Slide 11: Healthcare – 7.7% of Total Loans
Healthcare – 7.7% of Total Loans Healthcare predominantly includes ambulatory care, nursing/long-term care and hospitals and represents 7.7% of total loans Approximately half of the healthcare outstandings are in our Nashville market managed by our dedicated healthcare lending team, while the remain
Slide 12: Hospitality – 5.4% of Total Loans
Hospitality – 5.4% of Total Loans As a result of COVID-19, business, leisure and international travel has generally ceased and is likely to continue to be significantly curtailed Deferrals of approximately $575 million in outstandings as of April 22, 2020 Hospitality is comprised of Accommodation &
Slide 13: Energy – 4.4% of Total Loans
Energy loans totaled $940 million, or 4.4% of total loans, down $24 million, or 2%, linked-quarter Linked-quarter change reflects $42 million in net reductions, and $36 million in net charge-offs partially offset by $54 million in fundings Reserve-based energy loans have been impacted recently not o
Slide 14: Selected Sectors Under Focus
Selected Sectors Under Focus $s in millions Outstanding at 3/31/20 % Total Loans % of Portfolio Criticized Retail Retail goods & services CRE Retail $686 $677 3.2% 3.1% 0.5% --- Healthcare Offices of physicians & dentists CRE assisted living Hospitals $443 $375 $340 2.1% 1.7% 1.4% 5.8% 2.6% 0.7% Hos
Slide 15: Current Expected Credit Losses (CECL) Methodology
Current Expected Credit Losses (CECL) Methodology CECL replaced the incurred loss methodology with a life of loan concept effective 1/1/2020 CECL Methodology Utilize a two year reasonable and supportable forecast, one year straight line reversion to a historical loss mean by product Regression Loss
Slide 16: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) $ in millions December 31, 2019 Incurred Loss January 1, 2020 CECL Adoption March 31, 2020 CECL Portfolio Amount % of Loan and Leases Outstanding Amount % of Loan and Leases Outstanding Amount % of Loan and Leases Outstanding Nonenergy Commercial $ 112 0.74% $ 136 0
Slide 17: First Quarter Allowance Build Using CECL
First Quarter Allowance Build Using CECL - New loans - Change in product mix - Aging of existing portfolio - Credit quality impact - Changes in macroeconomic variables - Changes in scenario weighting - Qualitative overlays - CECL transition adjustment - Build in allowance for loan and lease losses a
Slide 18: Q1 2020 Provision for Credit Losses
Q1 2020 Provision for Credit Losses Provision for the first quarter of 2020 totaled $247 million Captures management’s expectation of downturn in oil and gas and deterioration of the economy related to COVID-19 Provision for nonenergy loans of $169 million was predominantly driven by the impact of C
Slide 19: Net Interest Margin
Net interest margin (NIM) of 3.41%, down 2 bps linked-quarter; net interest income (TE) down $2.1 million 1Q20 NIM included no interest reversals compared to 1 bp of interest reversals in 4Q19 Includes a reduction of $2.5 million, or 4 bps, decrease in accretion mainly related to the MidSouth acquis
Slide 20: Yield Continues To Be Impacted By Lower Rates
Yield Continues To Be Impacted By Lower Rates 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) (excluding impact of MSL) $s in thousands
Slide 21: Securities Portfolio Conservative, Minimal Risk
Securities Portfolio Conservative, Minimal Risk Portfolio totaled $6.2 billion, down $16 million, or 2%, linked-quarter 100% fixed, no credit impairment MBS and CMO holdings are all US Agency backed securities or direct obligations of the US government CMBS have prepayment protection and principal i
Slide 22: Strong Liquidity
Strong Liquidity $14 Billion in Available Sources $ in millions Total Available Amount Used Net Availability Internal Sources Free Securities and other $ 2,496 $ — $ 2,496 External Sources FHLB 6,235 3,350 2,885 FRB 4,388 — 4,388 Brokered Deposits 3,751 1,079 2,672 Other 1,504 — 1,504 TOTAL LIQUIDIT
Slide 23: Strong Growth in DDA
Strong Growth in DDA Total deposits of $25.0 billion, up $1.2 billion, or 5%, linked-quarter Noninterest-bearing demand deposits (DDAs) increased $429 million Interest-bearing transaction and savings deposits increased $86 million Time deposits (retail) decreased $110 million Time deposits (brokered
Slide 24: Specialty Income Drives Linked-Quarter Growth
Specialty Income Drives Linked-Quarter Growth Noninterest income totaled $84.4 million, up $1.5 million, or 2% linked-quarter Service charges and Bank Card & ATM fees down primarily due to one less processing day and seasonally lower individual overdraft fees Investment and annuity income and insura
Slide 25: Noninterest Expense Detail
Noninterest Expense Detail Noninterest expense totaled $203.3 million, up $5.5 million linked-quarter; included in 1Q20 expense is $9.8 million of equity write-offs from energy-related credits; merger costs related to the acquisition of MSL totaled $3.9 million in 4Q19 A lower level of incentive pay
Slide 26: Capital Levels Solid; ASR Settled; Buybacks Suspended
Capital Levels Solid; ASR Settled; Buybacks Suspended TCE ratio 8.00%, down 45 bps linked-quarter Growth in tangible assets -31 bps Tangible net earnings +9 bps Impact from COVID-19 -45 bps Impact of CECL adoption -15 bps Dividends -8 bps Stock buyback/ASR completion NEUTRAL Change in OCI +43 bps St
Slide 27: Solid Capital In Excess of Regulatory Minimums
Solid Capital In Excess of Regulatory Minimums Estimated Regulatory Capital as of March 31, 2020 Common Equity Tier 1 Tier 1 Capital Total Risk-based Capital Tier 1 Leverage Ratio Asset Base $ 25,031 $25,031 $ 25,031 $ 29,863 Capital 2,510 2,510 2,973 2,510 Capital Ratio 10.03% 10.03% 11.88% 8.40% R
Slide 28: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 29: Operating Results
Operating Results *Non-GAAP measures. See slides 31-33 for non-GAAP reconciliations 1Q19 2Q19 3Q19 4Q19 1Q20 Operating PPNR (TE)* ($000) 117,881 119,269 125,077 125,660 115,688 Net Interest Income (TE)* ($000) 223,078 223,586 226,591 236,736 234,636 Net Interest Margin (TE)* 3.46% 3.45% 3.41% 3.43%
Slide 30: Balance Sheet Summary
Balance Sheet Summary 1Q19 2Q19 3Q19 4Q19 1Q20 Average Loans ($MM) 20,127 20,150 20,197 21,038 21,234 Average Total Securities ($MM) 5,657 5,586 6,005 6,202 6,149 Average Deposits ($MM) 23,114 23,138 23,091 23,848 24,327 Loan Yield (TE) 4.84% 4.89% 4.84% 4.69% 4.56% Cost of Interest Bearing Deposits
Slide 31: Operating Earnings & EPS Non-GAAP to GAAP Reconciliations
Operating Earnings & EPS Non-GAAP to GAAP Reconciliations Three Months Ended (in thousands, except per share amounts) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 Net Income (loss) ($111,033) $92,132 $67,807 $88,277 $79,164 Net income allocated to participating securities (427) (1,566) (1,141)
Slide 32: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended (dollars in thousands) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 Net Income (loss) ($111,033) $92,132 $67,807 $88,277 $79,164 Nonoperating items, net of income tax --- 3,046 22,760 --- --- Operating earnings (loss) ($111,033) $95
Slide 33: Operating Revenue (TE), Operating PPNR (TE) Reconciliations
Operating Revenue (TE), Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 Net interest income $231,188 $233,156 $222,939 $219,868 $219,254 Noninterest income 84,387 82,924 83,230 79,250 70,503 Total revenue $315,575 $316,080 $306
Slide 34: Criticized Loans Decline 9% LQ and Year-over-Year
Criticized Loans Decline 9% LQ and Year-over-Year Criticized commercial loans down $51 million, or 9%, linked-quarter Criticized energy loans totaled $229 million at March 31, 2020, down $31 million, or 12%, linked-quarter Criticized nonenergy loans totaled $301 million at March 31, 2020, down $20 m
Slide 35: Total, Energy NPLs Down LQ; CECL Adds to NPLs
Total, Energy NPLs Down LQ; CECL Adds to NPLs Nonperforming energy loans totaled $105 million at March 31, 2020, down $53 million, or 34% linked-quarter Nonperforming nonenergy loans totaled $183 million at March 31, 2020, up $34 million linked-quarter CECL implementation added $21.4 million to none
Slide 36: First Quarter 2020 Earnings Conference Call
First Quarter 2020 Earnings Conference Call 4/29/2020