Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Hancock Holding — Q1 2015 Earnings Presentation
48 slides from Hancock Whitney's earnings presentation, Apr 23, 2015
Slide 1: Hancock reports first quarter 2015 financial results
Exhibit 99.1 For Immediate Release April 23, 2015 For More Information Trisha Voltz Carlson SVP, Investor Relations Manager 504.299.5208 trisha.carlson@hancockbank.com Hancock reports first quarter 2015 financial results Operating results stable; impacted by seasonality and energy cycle GULFPORT, Mi
Slide 2: Hancock reports first quarter 2015 financial results
Hancock reports first quarter 2015 financial results April 23, 2015 “Our first quarter’s results were impacted by both typical seasonality and the current energy cycle,” said Hancock’s President and Chief Executive Officer John M. Hairston, “however, we reported solid results and positioned our comp
Slide 3: Deposits and Asset Quality
Hancock reports first quarter 2015 financial results April 23, 2015 Deposits Total deposits at March 31, 2015 were $16.9 billion, up $288 million, or 2%, from December 31, 2014. Average deposits for the first quarter of 2015 were $16.5 billion, up $593 million, or 4%, from the fourth quarter of 2014
Slide 4: Net Interest Income and Net Interest Margin
Hancock reports first quarter 2015 financial results April 23, 2015 Net Interest Income and Net Interest Margin Net interest income (TE) for the first quarter of 2015 was $161.1 million, down $2.5 million from the fourth quarter of 2014. There were 2 less calendar days in the first quarter which acc
Slide 5: Noninterest Expense & Taxes
Hancock reports first quarter 2015 financial results April 23, 2015 Noninterest Expense & Taxes Noninterest expense for the first quarter of 2015 totaled $153.5 million and included $7.3 million of nonoperating expenses. Excluding these costs, operating expense totaled $146.2 million in the first qu
Slide 6: Conference Call and Slide Presentation
Hancock reports first quarter 2015 financial results April 23, 2015 Additional capital ratios are included in the financial tables. Conference Call and Slide Presentation Management will host a conference call for analysts and investors at 9:00 a.m. Central Time on Friday, April 24, 2015 to review t
Slide 7: Quarterly Highlights
HANCOCK HOLDING COMPANY QUARTERLY HIGHLIGHTS (Unaudited) Three Months Ended (amounts in thousands, except per share data) 3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 INCOME STATEMENT DATA Net interest income $ 158,158 $ 160,813 $ 163,541 $ 164,778 $ 165,562 Net interest income (TE) (a) 161,11
Slide 8: Income Statement
HANCOCK HOLDING COMPANY INCOME STATEMENT (Unaudited) Three Months Ended (dollars in thousands, except per share data) 3/31/2015 12/31/2014 3/31/2014 NET INCOME Interest income $169,087 $170,971 $175,140 Interest income (TE) 172,043 173,739 177,776 Interest expense 10,929 10,158 9,578 Net interest in
Slide 9: Income Statement (five quarters)
HANCOCK HOLDING COMPANY INCOME STATEMENT (Unaudited) Three months ended (dollars in thousands) 3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 Interest income $169,087 $170,971 $172,701 $174,001 $175,140 Interest income (TE) 172,043 173,739 175,390 176,555 177,776 Interest expense 10,929 10,158 9
Slide 10: Period-End Balance Sheet
HANCOCK HOLDING COMPANY PERIOD-END BALANCE SHEET (Unaudited) Three Months Ended (dollars in thousands) 3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 ASSETS Commercial non-real estate loans $ 5,987,084 $ 6,044,060 $ 5,587,137 $ 5,393,691 $ 5,198,029 Construction and land development loans 1,113,
Slide 11: Average Balance Sheet
HANCOCK HOLDING COMPANY AVERAGE BALANCE SHEET (Unaudited) Three Months Ended (dollars in thousands) 3/31/2015 12/31/2014 3/31/2014 ASSETS Commercial non-real estate loans $ 5,995,687 $ 5,727,003 $ 5,088,061 Construction and land development loans 1,121,059 1,159,378 953,328 Commercial real estate lo
Slide 12: Average Balance and Net Interest Margin Summary
HANCOCK HOLDING COMPANY AVERAGE BALANCE AND NET INTEREST MARGIN SUMMARY (Unaudited) Three Months Ended 3/31/2015 12/31/2014 3/31/2014 (dollars in millions) Volume Interest Rate Volume Interest Rate Volume Interest Rate AVERAGE EARNING ASSETS Commercial & real estate loans (TE) $10,235.2 $106.8 4.23%
Slide 13: Asset Quality Information
HANCOCK HOLDING COMPANY ASSET QUALITY INFORMATION (Unaudited) Three Months Ended (dollars in thousands) 3/31/2015 12/31/2014 3/31/2014 Nonaccrual loans (k) $ 90,821 $ 79,537 $101,400 Restructured loans—still accruing 7,564 8,971 8,459 Total nonperforming loans 98,385 88,508 109,859 ORE and foreclose
Slide 14: Asset Quality Information (five quarters)
HANCOCK HOLDING COMPANY ASSET QUALITY INFORMATION (Unaudited) Three months ended (dollars in thousands) 3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 Nonaccrual loans $ 90,821 $ 79,537 $ 83,154 $ 89,901 $ 101,400 Restructured loans—still accruing 7,564 8,971 7,944 7,868 8,459 Total nonperformin
Slide 15: Supplemental Asset Quality Information
HANCOCK HOLDING COMPANY SUPPLEMENTAL ASSET QUALITY INFORMATION (Unaudited) Originated Acquired FDIC Loans Loans (l) Acquired (m) Total (dollars in thousands) 3/31/2015 Nonaccrual loans (n) $ 83,412 $ 5,820 $ 1,589 $ 90,821 Restructured loans—still accruing 7,564 — — 7,564 Total nonperforming loans 9
Slide 16: First Quarter 2015 Financial Results
First Quarter 2015 Financial Results April 23, 2015
Slide 17: Forward Looking Statement
Forward Looking Statement Certain of the statements or information included in this presentation may constitute forward-looking statements. Forward-looking statements include projections of revenue, costs, results of operations or financial condition or statements regarding future market conditions
Slide 18: Hancock Holding Company
Hancock Holding Company • $21 billion in Total Assets • $14 billion in Total Loans • $17 billion in Total Deposits • ROA (operating) 0.89% • ROTCE (operating) 10.68% • NIM 3.55% • Efficiency Ratio 64.36% • Tangible Common Equity (TCE) 8.40% • Rated among the strongest, safest financial institutions
Slide 19: First Quarter 2015 Highlights
First Quarter 2015 Highlights • Stable operating results -- in line ($s in millions; except per share 1Q15 4Q14 Fav/ data) (unfav) with expectations Net Income $40.2 $40.1 --- Earnings Per Share (diluted) $.49 $.48 2% • Completed 5% common stock Operating Income* $44.7 $46.4 (4%) buyback authorizati
Slide 20: Trends in Core Results
Trends in Core Results; Stable Gap Between Operating and Core Expect to eliminate the gap between core and operating results next quarter E.P.S. ROA We define core income as operating income less purchase accounting adjustments (PAA). PAA items include loan accretion from Whitney and Peoples First,
Slide 21: First Quarter Seasonality and Energy Cycle Impacted Loan Growth
First Quarter Seasonality and Energy Cycle Impacted Loan Growth • Total EOP loans of $13.9 billion were up $29 million, virtually unchanged linked-quarter; excluding impact of FDIC Acquired and energy, loans increased $92 million, or 3%, linked-quarter • Energy loans totaled $1.67 billion or 12% of
Slide 22: Diversified Loan Portfolio
Diversified Loan Portfolio • 88% of the loan portfolio is not energy related • Diversified economies across our 5-state footprint support a diversified loan portfolio Total Loans at 3/31/15 by geography or major line of business As of March 31, 2015 7
Slide 23: Energy Concentration Risk Is Well-Managed
Energy Concentration Risk Is Well-Managed • Energy lending has been a core competency for more than 60 years – Disciplined underwriting, long term relationships – Continuing to review credits and stay close to our customers • Pricing pressures on oil have continued and we did see some downward press
Slide 24: Oil & Gas Portfolio Strong; Continuing To Monitor Credits
Oil & Gas Portfolio Strong; Continuing To Monitor Credits • Relationship business dating back to post WWII • Our energy customers are an excellent source of no/low cost core deposits • Low prices can limit loan growth for new bank customers • High credit quality portfolio • Our clients typically hav
Slide 25: Upstream (E&P) Portfolio Diversified, Profitable
Upstream (E&P) Portfolio Diversified, Profitable • Priority, secured loans • Approximately $25 million linked-quarter decrease in E&P outstandings • Current line utilization is approximately 60% up slightly linked-quarter • Approximately 60% oil, 40% gas • Lend only on proved reserves (on a risked b
Slide 26: Upstream (E&P) Portfolio Statistics
Upstream (E&P) Portfolio Statistics Average cash flow breakeven price per barrel of oil extracted, for our clients, based on current proved, producing reserves is approximately $25 per barrel (ie. lifting costs, taxes) Low level of cumulative losses over previous down cycles even with growth in outs
Slide 27: Support Sector Companies Have Weathered Previous Cycles
Support Sector Companies Have Weathered Previous Cycles • Many of our clients have operated through previous cycles, including the mid 80s, late 90’s and 2008 • Our clients typically have low/moderate leverage, strong balance sheets and experienced management • Most of the support nondrilling compan
Slide 28: Support Services Portfolio Statistics
Support Services Portfolio Statistics $s in millions 110% 42% Current Average Average clients years in years with business the bank Support 29 17 drilling Support 27 15 $s in millions $s in millions nondrilling Experienced, long-time customers with low level of cumulative losses over previous down c
Slide 29: Potential Impact To Provision From Energy Downgrades
Potential Impact To Provision From Energy Downgrades (Downward Shock Scenarios are mutually exclusive) Total Energy Incremental Incremental Incremental outstanding Reserve* Provision Provision Provision at 3-31-15 3-31-15 Scenario 1 Scenario 2 Scenario 3 $623MM Upstream $5.0MM $0.9MM $0.9MM $0.9MM $
Slide 30: Allowance For Loan Losses
Allowance For Loan Losses • The allowance for loan losses was $128.4 million (0.92%) compared to $128.8 million (0.93%) linked-quarter – The allowance maintained on the non-FDIC acquired portion of the loan portfolio increased $2.6 million linked-quarter, totaling $100.7 million and the impaired res
Slide 31: Solid Asset Quality Metrics
Solid Asset Quality Metrics • NPA ratio 1.01%, down 5 bps from 1.06% linked-quarter – Nonperforming assets totaled $141 million, down $7 million from December 31, 2014 – Nonperforming loans increased approximately $10 million linked-quarter – ORE and foreclosed assets decreased approximately $17 mil
Slide 32: Securities Portfolio No Longer Funding Loan Growth
Securities Portfolio No Longer Funding Loan Growth • Portfolio totaled $4.1 billion, up $281 million linked-quarter • Yield 2.35% - down 1 bp linked-quarter • Unrealized gain (net) of $32.7 million on AFS • 56% HTM, 44% AFS • Duration 3.45 compared to 3.51 at 12-31-14 • Balance sheet is asset sensit
Slide 33: Solid Levels Of Core Deposit Funding
Solid Levels Of Core Deposit Funding • Total deposits $16.9 billion, up $288 million, or 2%, linked-quarter Noninterest-bearing demand deposits (DDA) increased $256 million $45 million increase in interest-bearing transaction and savings deposits $140 million increase in time deposits (CDs) Public f
Slide 34: Core NIM Expected To Stabilize
Core NIM Expected To Stabilize • Reported net interest margin (NIM) 3.55%, down 8 bps linked-quarter – Approximately $1 million decline in purchase accounting loan accretion; 2 bps impact to 1Q15 NIM – Issued $150 million of holding company subordinated debt March 9, 2015; 1 bp impact to 1Q15 NIM –
Slide 35: Sizeable Decline in Purchase Accounting Impact Expected in 2Q15
Sizeable Decline in Purchase Accounting Impact Expected in 2Q15 Impact of Purchase Accounting Adjustments (projections will be updated quarterly; subject to change) $s in millions N/M N/M N/M *Projected revenue includes loan accretion from Whitney and Peoples First, offset by amortization of the Whi
Slide 36: Core Noninterest Income Down Linked-Quarter
Core Noninterest Income Down Linked-Quarter; Investing In Future Growth Initiatives • Noninterest income, including securities transactions, totaled Core Noninterest Income Mix 1Q15 $56.5 million, down $0.4 million linked-quarter Total includes $0.3 million of securities gains in 1Q15 Amortization o
Slide 37: Continuing To Manage To A Lower Level Of Operating Expense
Continuing To Manage To A Lower Level Of Operating Expense • Operating expense totaled $146.2 million in 1Q15, up $2.1 million linked-quarter 1Q15 operating expense excludes $7.3 million of nonoperating expenses Personnel expense totaled $80.1 million, an increase of $0.6 million, or less than 1%, l
Slide 38: Current and Future Revenue Initiatives
Current and Future Revenue Initiatives Quarter Revenue Growth Begins • Enhanced approval process for consumer loans designed to grow Consumer Lending consumer and consumer finance loans through the Bank & 3Q15 Harrison Finance delivery channels • Opening new Harrison Finance branches to expand consu
Slide 39: Other Revenue Efforts
Other Revenue Efforts • Strategic change in branch banking focus from product sales to growth, revenue and profitability • Merchant services technology, product and sales enhancements to retain and grow clients • Deliberate focus on leveraging wealth management expertise through client relationship
Slide 40: Common Stock Buyback Complete
Common Stock Buyback Complete • Completed 5% common stock buyback – Common stock buyback (approximately 4 million shares) authorized by the Board of Directors in July 2014 – Repurchased 2,563,607 shares @ an average price of $29.36 in 1Q15 ($75 million) – Total repurchase of 4,093,149 shares @ an av
Slide 41: Solid Capital Levels
Solid Capital Levels • TCE ratio 8.40%, down 19 bps linked-quarter; 38 bps decrease related to common stock buyback • Basel III requirements effective January 1, 2015 impacted total risk-based capital ratio approximately 35 bps • Issued $150 million of holding company subordinated debt March 9, 2015
Slide 42: Near-Term Outlook
Near-Term Outlook 1Q15 Items to note Outlook Loans +1% LQA 1Q typically seasonal; 5-8% EOP growth for full year +11% Y-o-Y Excluding impact of Change from previous guidance reflects paydowns and FDIC Acquired and headwinds related to the current energy cycle energy LQA 3% Purchase Accounting $7.8 mi
Slide 43: Appendix: EPS calculation
Appendix: EPS calculation $s in thousands, except E.P.S. Three Three Three Months Months Months Ended Ended Ended 3/31/15 12/31/14 3/31/14 Operating income to common shareholders $44,697 $46,376 $49,115 Income allocated to participating securities ($1,040) ($981) ($1,081) Operating income allocated
Slide 44: Appendix: Purchase Accounting Adjustments Core NII & NIM Reconciliation
Appendix: Purchase Accounting Adjustments Core NII & NIM Reconciliation ($s in millions) 1Q15 4Q14 3Q14 2Q14 1Q14 Net Interest Income (TE) – reported (NII) $161.1 $163.6 $166.2 $167.3 $168.2 Whitney expected loan accretion (performing) 1.2 2.7 5.0 5.8 6.7 Whitney expected loan accretion (credit impa
Slide 45: Appendix: Non-GAAP Reconciliation (Net Income, ROA, E.P.S.)
Appendix: Non-GAAP Reconciliation (Net Income, ROA, E.P.S.) $s in millions Three Three Three Months Months Months Ended Ended Ended 3/31/15 12/31/14 3/31/14 Net income $40.2 $40.1 $49.1 Adjustments from net to operating income Securities transactions gains -0.3 - - Total nonoperating expense items (
Slide 46: Appendix: Whitney Portfolio Continues Solid Performance
Appendix: Whitney Portfolio Continues Solid Performance • Loan mark on the acquired-performing portfolio accreted into earnings over the life of the portfolio • Credit-impaired loan mark available for charge-offs; if not needed for charge-offs then accreted into income • Quarterly reviews of accreti
Slide 47: Appendix: Peoples First Loan Mark Used For Charge-Offs
Appendix: Peoples First Loan Mark Used For Charge-Offs • FDIC acquired loan portfolio • Entire loan mark available for charge-offs; if not needed for charge-offs then accreted into income • Quarterly reviews of accretion levels and portfolio performance will impact reported margin • FDIC loss share
Slide 48: First Quarter 2015 Financial Results
First Quarter 2015 Financial Results April 23, 2015