Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q3 2018 Earnings Presentation
30 slides from Hancock Whitney's earnings presentation, Oct 16, 2018
Slide 1: Third Quarter 2018 Earnings Conference Call
Third Quarter 2018Earnings Conference Call 10/17/2018
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 balance sheet and revenue gr
Slide 3: Non-GAAP Reconciliations & Glossary of Terms
Non-GAAP Reconciliations & Glossary of Terms Throughout this presentation we may use non-GAAP numbers. The items noted below with an asterisk, "*", are considered non-GAAP. Reconciliations of those non-GAAP results to the comparable GAAP measure are included in the appendix to this presentation. The
Slide 4: Corporate Profile (as of September 30, 2018)
Corporate Profile (as of September 30, 2018) $28.1 billion in Total Assets$19.5 billion in Total Loans$22.4 billion in Total DepositsTangible Common Equity (TCE) ratio 7.67%Nearly 200 banking locations and 266 ATMs across our footprintApproximately 3,900 (FTE) employees corporate-wideRated among the
Slide 5: Third Quarter 2018 Highlights
Third Quarter 2018 Highlights (compared to second quarter 2018) EPS increased $.14 linked quarter to $.96; excluding nonoperating items EPS increased $.05 to $1.01 Net income increased $12.7 million, or 18% linked-quarter; excluding nonoperating items, earnings increased $4.0 million, or 5%Closed Ca
Slide 6: Growth Diversified Across Footprint and Many Lines of Business
Growth Diversified Across Footprint and Many Lines of Business Loans totaled $19.5 billion at quarter-end, an increase of $173 million, or 4% LQAPayoffs of approximately $90 million at quarter endLoan portfolio 51% variable56% of variable loans are LIBOR-based (29% of total loan portfolio)96% of the
Slide 7: Criticized Commercial Loans Down 7% Linked-Quarter
Criticized Commercial Loans Down 7% Linked-Quarter Total criticized loans% of total commercial loans $1,26810.11% $1,1898.57% $1,1538.30% $1,0927.75% $1,0767.58% $1,0847.56% $8976.18% $8345.72% Criticized –Nonenergy% of total commercial loans $3793.02% $4523.26% $4663.36% $4853.44% $5263.70% $5613.9
Slide 8: Nonperforming Loans Down 8% Linked-Quarter
Nonperforming Loans Down 8% Linked-Quarter Total nonperforming loans% of total loans $3582.14% $3101.70% $3291.78% $3661.95% $3731.96% $4422.31% $3942.03% $3641.86% Nonperforming loans – nonenergy% of total loans $1190.71% $1160.64% $1210.65% $1450.77% $1590.84% $1630.85% $1570.81% $1440.74% Nonperf
Slide 9: Energy Portfolio Below Strategic Goal of 5%
Energy Portfolio Below Strategic Goal of 5% Energy loans totaled $927 million, or 4.7% of total loans, down $58 million linked-quarter and down $206 million compared to a year earlierNo energy charge-offs in 3Q18 compared to a net recovery of $1.9 million in the second quarterNet decrease of $21 mil
Slide 10: Energy Reserve Release Offsets Build in Nonenergy Reserves
Energy Reserve Release Offsets Build in Nonenergy Reserves Allowance for loan losses (ALLL) $214.5 million in 3Q18, virtually unchanged linked-quarterALLL for energy credits $50.2 million at September 30, 2018, down $8.8 million from June 30, 2018 Nonenergy ALLL $164.3 million as of September 30, 20
Slide 11: NIM Down 4 bps Linked-Quarter as Deposit Betas Increase
Reported net interest margin (NIM) of 3.36%, down 4 bps linked-quarter; net interest incomeup $2.7 millionLoan yield up 8 bpsYield on securities portfolio up 5 bpsCost of funds up 11 bpsCost of deposits up 8 bpsInterest recoveries of 2 bps in 3Q18, same as 2Q18Core NIM of 3.28% down 3 bps linked-qua
Slide 12: Securities Portfolio
Securities Portfolio Portfolio totaled $6.0 billion, down $126 million, or 2%, linked-quarterYield 2.55%, up 5 bps linked-quarterPremium amortization up $0.1 million linked-quarterUnrealized net loss of $130.7 million on AFS compared to $109.9 million at June 30, 201850% HTM, 50% AFSDuration 4.90 ye
Slide 13: Deposit Betas Drive Higher Cost of Deposits
Deposit Betas Drive Higher Cost of Deposits Total deposits $22.4 billion, up $182 million, or 1%, linked-quarterNoninterest-bearing demand deposits (DDA) decreased $25 million Interest-bearing transaction and savings deposits increased $261 million, mainly related to the trust and asset management a
Slide 14: Capital One Transaction Drives Noninterest Income Improvement
Capital One Transaction Drives Noninterest Income Improvement Noninterest income totaled $75.5 million, up $6.7 million, or 10%Capital One Trust and Asset Management acquisition added $5.5 million to fee income in 3Q18Transaction closed July 13, 2018 14 Increase due to seasonality Decline due to sea
Slide 15: Growth in Balance Sheet and Revenue Drive Higher Expenses
Growth in Balance Sheet and Revenue Drive Higher Expenses Operating expense (noninterest expense excluding nonoperating items) totaled $176.4 million, up $7.8 million, or 5% linked-quarterIncludes approximately $4.1 million in operating expenses related to the trust and asset management acquisition
Slide 16: Managing Capital In The Best Interests of All Stakeholders
Managing Capital In The Best Interests of All Stakeholders TCE ratio 7.67%, down 9 bps linked-quarterGrowth in tangible assets -3 bpsTangible net earnings +33 bpsOCI -6 bps; mostly related to higher unrealized loss on the AFS securities portfolioDividends -9 bpsStock-based comp activity & other +3 b
Slide 17: Near-Term Outlook
Near-Term Outlook 3Q18 Actual Items to note 4Q18 Outlook Loans up $173 million or 4% LQA; up $757 million or 4% Y-o-Y $90 million in loan payoffs at quarter end Expect net loan growth of $200-$225 million for 4Q18 Net Interest Margin (NIM) 3.36%3.28% (core) down 4 bps LQdown 3 bps LQ Expect NIM to r
Slide 18: Long-Term Outlook – Goal to Achieve Objectives by 4Q19
Long-Term Outlook – Goal to Achieve Objectives by 4Q19 Quarterly Objective 3Q18 Actual Earnings (EPS)/quarter (excluding nonoperating items) $1.00 - $1.10+ $1.01 ROA (operating) 1.15% - 1.25%+ 1.24% TCE 8.5%+ 7.67% ROTCE (operating) 15%+ 16.84% Efficiency Ratio ≤56% 58.11% 2018/2019 Corporate Strate
Slide 19: Hurricane Michael Impact
Hurricane Michael Impact 19 Corporate exposure:Panama City and Marianna - 3 branches and a BFC with $326 million in deposits and $151 million in loansCatastrophic damage in our footprint limited to Marianna and Panama CityOne HWC location with significant damage MARIANNA TALLAHASSEE PANAMA CITY PENS
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 21: Operating Earnings & Operating EPS Reconciliations
Operating Earnings & Operating EPS Reconciliations Three Months Ended (in thousands, except per share amounts) 9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017 Net Income $83,878 $71,177 $72,475 $ 55,449 $58,902 Net income allocated to participating securities (1,544) (1,328) (1,366) (1,104) (1,24
Slide 22: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended (dollars in thousands) 9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017 Net Income $83,878 $71,177 $72,475 $55,449 $58,902 Nonoperating items, net of income tax benefit 3,813 12,486 5,782 --- 7,405 Income tax resulting from re-measureme
Slide 23: Operating Revenue (TE) & Operating PPNR (TE) Reconciliations
Operating Revenue (TE) & Operating PPNR (TE) Reconciliations Three Months Ended (dollars in thousands) 9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017 Net interest income $214,194 $211,547 $205,664 $208,047 $202,857 Noninterest income 75,518 68,832 66,252 69,688 67,115 Total revenue $289,712 $280
Slide 24: Core NII (TE) & Core NIM (TE) Reconciliation
Core NII (TE) & Core NIM (TE) Reconciliation Three Months Ended (dollars in thousands) 9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017 Net interest income $214,194 $211,547 $205,664 $208,047 $202,857 Taxable equivalent adjustment (a) 4,095 4,081 3,963 8,949 8,579 Net interest income (TE) $218,289
Slide 25: Appendix
Appendix
Slide 26: Operating Earnings
Operating Earnings See slides 21-24 for non-GAAP reconciliations 26 3Q17 4Q17 1Q18 2Q18 3Q18 Operating Earnings ($000) 66,307 74,969 78,257 83,663 87,691 Operating EPS $0.76 $0.86 $0.90 $0.96 $1.01 Net Interest Income (TE) ($000) 211,436 216,996 209,627 215,628 218,289 Noninterest Inc excl non-op ($
Slide 27: Key Operating Ratios
Key Operating Ratios See slides 21-24 for non-GAAP reconciliations 27 3Q17 4Q17 1Q18 2Q18 3Q18 Operating Return on Assets 0.99% 1.10% 1.17% 1.22% 1.24% Operating Return on Equity 9.27% 10.37% 11.05% 11.54% 11.78% Operating Return on TCE 13.14% 14.62% 15.56% 16.12% 16.84% Tangible Common Equity Ratio
Slide 28: Balance Sheet Summary
Balance Sheet Summary 28 3Q17 4Q17 1Q18 2Q18 3Q18 Average Loans ($MM) 18,591 18,840 19,028 19,193 19,465 Average Total Securities ($MM) 5,680 5,801 5,897 6,032 6,186 Average Deposits ($MM) 21,350 21,763 22,043 22,101 22,022 Loan Yield (TE) 4.39% 4.46% 4.43% 4.55% 4.63% Securities Yield (TE) 2.48% 2.
Slide 29: Well-Diversified Loan Portfolio
Well-Diversified Loan Portfolio 29
Slide 30: Third Quarter 2018 Earnings Conference Call
Third Quarter 2018Earnings Conference Call 10/17/2018