Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q1 2020 Earnings Presentation
36 slides from Hancock Whitney's earnings presentation, Apr 29, 2020
Slide 1: First Quarter 2020 Earnings Conference Call
First Quarter 2020 Earnings Conference Call 4/29/2020
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 (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 ▸
Slide 5: COVID-19 Response
COVID-19 Response Employees Consumers & Businesses ► Modified normal business operations and procedures ► All financial centers that can be opened are where feasible; approximately two-thirds of our almost operating with almost 1,400 associates via 3,000 non-financial center associates are working d
Slide 6: COVID-19 Response
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 suppl
Slide 7: First Quarter 2020
First Quarter 2020 ► Results include $246.8 million, or $2.24 per share, provision ($s in millions; except per share data) 1Q20 4Q19 1Q19 for credit losses related to COVID-19 and declining oil prices Net Income (loss) ($111.0) $92.1 $79.2 ► Results include $9.8 million, or $.11 per share, related t
Slide 8: Solid Quarterly Loan Growth
Solid Quarterly Loan Growth ▸ Loans totaled $21.5 billion at March 31, 2020, an increase of $303 million, or 1%, linked-quarter ▸ Loan growth was evident across the footprint from closings on loans in the pipeline and funding existing lines of credit related to economic uncertainty ― Line utilizatio
Slide 9: Commercial Loans (C&I, CRE, C&D)
Commercial Loans (C&I, CRE, C&D) Total Commercial Loans % of Total ($s in millions) Outstanding 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 Loan Portfolio Mix Retail – 8.6% of Total Loans Food & Beverage 7% $1.8 billion 3/31/20 Gasoline Stations ▸ ICRE Retail portfolio is fairly segmented and primarily comprised of national 21% anchored centers (35%), single credit tenant facilities (13%), and Motor unanchored centers (29%) Vehic
Slide 11: Healthcare – 7.7% of Total Loans
Healthcare – 7.7% of Total Loans Healthcare Loan Portfolio Mix $1.7 billion ▸ Healthcare predominantly includes ambulatory care, 3/31/20 nursing/long-term care and hospitals and represents Social Assistance 7.7% of total loans 4% ▸ Approximately half of the healthcare outstandings are Ambulatory in
Slide 12: Hospitality – 5.4% of Total Loans
Hospitality – 5.4% of Total Loans Hospitality Loan Portfolio Mix ▸ As a result of COVID-19, business, leisure and international travel $1.2 billion has generally ceased and is likely to continue to be significantly 3/31/20 curtailed Performing Arts Museums 2% 1% Amusement/gambling ▸ Deferrals of app
Slide 13: Energy – 4.4% of Total Loans
Energy – 4.4% of Total Loans Energy Loan Portfolio Mix ▸ Energy loans totaled $940 million, or 4.4% of total loans, down $24 million, or $940 million 2%, linked-quarter 3/31/20 ― Linked-quarter change reflects $42 million in net reductions, and $36 million in net charge-offs partially offset by $54
Slide 14: Selected Sectors Under Focus
Selected Sectors Under Focus % of Outstanding at % Total Portfolio Limited or No Exposure to: $s in millions 3/31/20 Loans Criticized ― Airlines Retail ― Casinos Retail goods & services $686 3.2% 0.5% ― Consumer Credit Card CRE Retail $677 3.1% --- ― Student Loans Healthcare Offices of physicians &
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 ― Regressi
Slide 16: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) December 31, 2019 January 1, 2020 March 31, 2020 $ in millions Incurred Loss CECL Adoption CECL % of Loan % of Loan % of Loan and Leases and Leases and Leases Portfolio Amount Outstanding Amount Outstanding Amount Outstanding Nonenergy Commercial $ 112 0.74% $ 136 0
Slide 17: First Quarter Allowance Build Using CECL
First Quarter Allowance Build Using CECL $500 $169 $475 $450 $400 $350 $34 Millions $300 $272 $77 - Changes in $250 - New loans macroeconomic $195 - Change in product mix variables $200 - Aging of existing - Changes in scenario - CECL transition adjustment portfolio weighting $150 - Qualitative over
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 impac
Slide 19: NIM Expansion Excluding Impact of Accretion
NIM Expansion Excluding Impact of Accretion ▸ Net interest margin (NIM) of 3.41%, down 2 bps linked-quarter; net interest income (TE) down $2.1 million 3.60% 3.50% ▸ 1Q20 NIM included no interest reversals 0.01% 0.08% compared to 1 bp of interest reversals in 4Q19 3.40% 3.43% 0.04% 3.41% ▸ Includes
Slide 20: Yield Continues To Be Impacted By Lower Rates
Yield Continues To Be Impacted By Lower Rates New Loans $2,500 6.00% 5.25% 5.22% 4.92% $2,000 4.35% 4.20% 5.00% 4.00% $s in thousands $1,500 3.00% $1,000 2.00% $500 1.00% $0 0.00% 1Q19 2Q19 3Q19 4Q19 1Q20 (excluding impact of MSL) New Loan Production New Loan Yield ▸ Focus remains on booking new loa
Slide 21: Securities Portfolio Conservative, Minimal Risk
Securities Portfolio Conservative, Minimal Risk Securities Portfolio Mix ▸ Portfolio totaled $6.2 billion, down $16 million, or 2%, linked-quarter 3/31/20 $s in millions ▸ 100% fixed, no credit impairment CMO CMBS $928 ▸ MBS and CMO holdings are all US Agency backed securities or direct $2,188 15% o
Slide 22: Strong Liquidity
Strong Liquidity $14 Billion in Available Sources Total Amount Net $ in millions Available Used 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 ▸ Total deposits of $25.0 billion, up $1.2 billion, or 5%, linked- 3/31/20 quarter $s in millions ― Noninterest-bearing demand deposits (DDAs) increased $429 million Time Deposits (brokered) ― Interest-bearing transaction and savings deposits increased $86 Time De
Slide 24: Specialty Income Drives Linked-Quarter Growth
Specialty Income Drives Linked-Quarter Growth $90 $88 $86 $2.4 $84 $0.7 $0.1 $s in millions $82 $84.4 $0.5 $0.5 $0.7 $80 $82.9 Gain on $78 historic tax $76 credits sale $74 and BOLI proceeds $72 $70 4Q19 Noninterest Service Charges on Bank Card & ATM Fees Investment & Annuity Trust Fees Secondary Mo
Slide 25: Noninterest Expense Detail
Noninterest Expense Detail $210 $200 $3.5 $203.3 $s in millions $197.9 $0.4 $0.4 $1.2 $190 $10.9 $9.8 write-off of equity from two energy credits $180 4Q19 Noninterest Personnel Expense Occupancy and Amortization of Other (net) ORE/OFA Expense 1Q20 Noninterest Expense Equipment Intangibles Expense O
Slide 26: Capital Levels Solid; ASR Settled; Buybacks Suspended
Capital Levels Solid; ASR Settled; Buybacks Suspended ▸ TCE ratio 8.00%, down 45 bps linked- Capital Ratios quarter 15% ― Growth in tangible assets -31 bps ― Tangible net earnings +9 bps ― Impact from COVID-19 -45 bps 10% ― Impact of CECL adoption -15 bps ― Dividends -8 bps ― Stock buyback/ASR compl
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 Total Tier 1 Equity Tier 1 Risk-based Leverage Tier 1 Capital Capital 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 Operating PPNR* Net Interest Income (TE)* Net Interest Margin (TE)* $150 ($s in millions) $245 ($s in millions) 3.65% $140 $240 $236.7 $234.6 3.46% 3.45% $125.1 $125.7 $235 3.50% 3.41% 3.43% 3.41% $130 $119.3 $226.6 $117.9 $230 $223.1 $223.6 $120 $225 3.35% $110 $220 $115.7 $100 $2
Slide 30: Balance Sheet Summary
Balance Sheet Summary Average Loans Average Total Securities Average Deposits $24 ($s in billions) $7 ($s in billions) $26 ($s in billions) $6.2 $6.1 $24.3 $22 $21.0 $21.2 $6.0 $23.8 $20.1 $20.2 $20.2 $6 $5.7 $24 $5.6 $23.1 $23.1 $23.1 $20 $18 $5 $22 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20
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
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 t
Slide 36: First Quarter 2020 Earnings Conference Call
First Quarter 2020 Earnings Conference Call 4/29/2020