Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q3 2022 Earnings Presentation
31 slides from Hancock Whitney's earnings presentation, Oct 18, 2022
Slide 1: Third Quarter 2022 Earnings Conference Call
Third Quarter 2022 Earnings Conference Call 10/18/2022 HANCOCK WHITNEY 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 of our perf
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 $34.6 billion in Total Assets $22.6 billion in Total Loans $29.0 billion in Total Deposits CET1 ratio 11.12%(e) Tangible Common Equity (TCE) ratio 6.73% $3.9 billion in Market Capitalization 177 banking locations and 232 ATMs across our footprint Approximately 3,600 (FTE) employees
Slide 5: Third Quarter 2022 Highlights
Third Quarter 2022 Highlights Net income totaled $135.4 million, or $1.55 per diluted share, up $14.0 million, or $0.17 per share, linked quarter Pre-provision net revenue (PPNR)* totaled $174.7 million, up $27.8 million, or 19%, linked-quarter Total loan growth of $739.5 million, or 14% LQA (See sl
Slide 6: Quarterly Loan Growth Exceeded Expectations; Slowdown Expected in 4Q22
Loans totaled $22.6 billion, up $739.5 million, or 14% LQA $75.6 million in PPP loan forgiveness Improving line utilization and fewer paydowns contributed to growth in markets and lines of business Tailwinds and headwinds to future core loan growth: Tailwinds: Improvement in utilization rates Headwi
Slide 7: Yield on New Loans Reflects Increases in Rate Environment
Yield on New Loans Reflects Increases in Rate Environment $ in millions * Excluding PPP loans New Loan Yield - Fixed 3.51% 3.40% 3.73% 3.62% 4.45% 5.28% New Loan Yield - Variable 3.15% 2.94% 2.94% 2.92% 3.25% 4.79%
Slide 8: Criticized Commercial Loans, NPLs Remain Near Historically Low Levels
Criticized Commercial Loans, NPLs Remain Near Historically Low Levels Criticized commercial loans totaled $304 million, or 1.68% of total commercial loans, at September 30, 2022, up $23 million, or 8%, linked-quarter and up $10 million, or 3%, from a year ago Nonperforming loans totaled $42 million,
Slide 9: Solid AQ Metrics, Low Net Charge-offs, Strong Reserve
Solid AQ Metrics, Low Net Charge-offs, Strong Reserve Provision for the quarter of $1.4 million, reflects $1.3 million of net charge-offs and a reserve build of $0.1 million Weighting applied to Moody's September 2022 economic scenarios was 25% baseline and 75% slower growth (S2) Given inflation lev
Slide 10: Securities Portfolio Positioned for Rising Rates
Securities Portfolio Positioned for Rising Rates Securities portfolio (excluding unrealized losses) totaled $9.2 billion, up $98.3 million AFS/HTM mix 69% AFS, 31% HTM at 9/30/22 70% AFS, 30% HTM at 6/30/22 $935 million of FV hedges on $1.0 billion of bonds, or 17% of AFS securities, reduce OCI vola
Slide 11: Maintaining Best in Class Mix; Expect Seasonal Year-End Growth
Maintaining Best in Class Mix; Expect Seasonal Year-End Growth Total deposits of $29.0 billion, down $915.2 million, or 12% LQA Decrease in non-interest bearing DDA is primarily due to elevated consumer spending and commercial clients deploying excess liquidity into working capital Decrease in inter
Slide 12: Widening NIM Reflects Fed Rate Increases, Change in EA Mix
Net interest margin (NIM) 3.54%, up 50 bps linked-quarter; September 2022 NIM 3.62% Net interest income (TE) increased $34.6 million, or 14%, linked-quarter, driven by increasing rates and a change in the mix of earning assets Tailwinds for additional NIM widening: Future rate increases Continued sh
Slide 13: Loans, Securities and Swaps/Hedges
Loans Loans totaled $22.6 billion at September 30, 2022 42% fixed, 58% variable (includes hybrid ARMs) 40% ($5.3 billion) of variable loans are LIBOR-based 30% ($3.9 billion) of variable loans tied to Wall Street Journal Prime 20% ($2.7 billion) of variable loans tied to SOFR 5% ($693 million) of va
Slide 14: Fee Income Stable Despite Seasonality, Rates
Fee Income Stable Despite Seasonality, Rates Noninterest income totaled $85.3 million, down $0.4 million, or less than 1% linked-quarter As previously announced, the company expects to begin eliminating certain NSF/OD fees in December 2022 Decline in annuity and investment fees was related to a temp
Slide 15: Higher Personnel Costs Continue to Drive Increase in Expenses
Higher Personnel Costs Continue to Drive Increase in Expenses Noninterest expense totaled $193.5 million, up $6.4 million, or 3% linked-quarter Personnel costs were the primary driver of the linked-quarter increase in expenses, mainly related to increased incentive pay and one additional work day in
Slide 16: Remain Well Capitalized, TCE Impacted By OCI
Remain Well Capitalized, TCE Impacted By OCI CET1 ratio estimated at 11.12%, up 4 bps linked-quarter TCE ratio 6.73%, down 48 bps LQ Impact of OCI - 85 bps Dividends -7 bps Stock buyback -1 bp Tangible net earnings +41 bps Stock Compensation and other +3 bps Lower tangible assets +1 bp Repurchased 5
Slide 17: 2022 Forward Guidance
2022 Forward Guidance Q3 2022 Actual FY 2022 Outlook Loans (EOP) $22.6 billion Expect total EOP loan growth of 8-9% from $21.1B at 12/31/21 (4Q22 growth $200-$450MM) Deposits (EOP) $29.0 billion Expect EOP deposits to be down 3-4% from $30.5B at 12/31/21 (expect growth in 4Q22 from seasonal year-end
Slide 18: Additional Guidance Related to Future Rate Increases
Additional Guidance Related to Future Rate Increases Expect to reach a Fed Funds (FF) rate of 4.75% by year-end 2022; future rate assumptions included in guidance: +75 bps November +75 bps December Deposit betas key to maximizing impact of higher rates on NIM Continuation of hedging strategy designe
Slide 19: Positioned Well For Today's Economic Environment
Positioned Well For Today’s Economic Environment Balance sheet de-risked in early 2020 Credit metrics near historically low levels Robust ACL at 1.50% of loans Solid capital levels Significant efficiency initiatives executed in 2020/2021 Technology projects focused on scalability and effectiveness M
Slide 20: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations Appendix and Non-GAAP Reconciliations CHANCOCK WHITNEY
Slide 21: Summary Income Statement
Summary Income Statement ($ in millions, except for per share data) *Non-GAAP measure: see slide 25 for non-GAAP reconciliation Change Change 3Q22 2Q22 3Q21 LQ Prior Year YTD 2022 YTD 2021 Y-O-Y 282.9 248.3 237.5 34.6 45.4 Net Interest Income (TE) 762.2 712.5 49.7 1.4 (9.8) (27.0) 11.2 28.4 Provisio
Slide 22: Summary Balance Sheet
Summary Balance Sheet ($ in millions) 3Q22 includes $75.7 million, 2Q22 includes $151.3 million and 3Q21 includes $935.3 million in PPP loans, net 3Q22 includes $108.9 million, 2Q22 includes $231.1 million and 3Q21 includes $1.2 billion in average PPP loans, net; YTD 2022 includes $255.6 million and
Slide 23: Operating Results
Operating Results *Non-GAAP measure: see slide 25 for non-GAAP reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Operating PPNR (TE)* ($000) 134,784 134,152 134,501 146,873 174,745 Net Interest Income (TE) ($000) 237,477 231,931 231,008 248,317 282,910 Net Interest Margin (TE) 2.94% 2.80% 2.81% 3.04% 3.54% Op
Slide 24: Balance Sheet Summary
Balance Sheet Summary 3Q21 4Q21 1Q22 2Q22 3Q22 Average Loans ($MM) 20,941 20,770 21,122 21,658 22,139 Average Total Securities ($MM) 8,369 8,378 8,688 8,979 9,177 Average Deposits ($MM) 29,237 29,751 30,030 29,980 29,181 Loan Yield (TE) 3.90% 3.83% 3.72% 3.86% 4.49% Cost of Deposits 0.07% 0.06% 0.05
Slide 25: Operating Revenue (TE), Operating PPNR (TE) Reconciliations
Operating Revenue (TE), Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Net interest income $280,307 $245,732 $228,463 $229,296 $234,709 Noninterest income 85,337 85,653 83,432 89,612 93,361 Total revenue $365,644 $331,385 $311
Slide 26: Paycheck Protection Program (PPP) Loans
Paycheck Protection Program (PPP) Loans Under the original and extended Paycheck Protection Programs (PPP), the company originated more than 20,000 loans totaling $3.3 billion; $75.7 million in loans outstanding at September 30, 2022 During 3Q22, $75.6 million in PPP loans were forgiven Expect slowd
Slide 27: Loan Portfolio Composition
Loan Portfolio Composition As of September 30, 2022 HNCOCK WHITNEY 10 Total Loans Outstanding % of Total Loans Commitment ($s in millions) Commercial non-RE $7,603 33.7% $13,241 CRE - owner 2,544 11.3% 2,693 CRE - income producing (ICRE) 3,098 13.7% 3,280 C&D 1,475 6.5% 3,660 Healthcare 2,068 9.2% 2
Slide 28: Adding New Bankers in Growth Markets
Adding New Bankers in Growth Markets 5 new bankers were added across the footprint in 3Q22, including middle market, commercial and healthcare, with more planned for 4Q22 Dallas, TX +1 San Antonio, TX +1 Nashville, TN +2 Tampa, FL +1
Slide 29: Efficiency Ratio Target Achieved
Efficiency Ratio Target Achieved Target 55%
Slide 30: Current Hedge Positions
Current Hedge Positions Cash Flow (CF) Hedges Receive 215 bps versus paying 1m LIBOR/SOFR on $2.05 billion $500 million of CF hedges terminated in 3Q21 will provide NII support of $10.8 million through 1Q24 No additional CF hedges were terminated in 3Q22 Total Termination Value on remaining active C
Slide 31: Third Quarter 2022 Earnings Conference Call
Third Quarter 2022 Earnings Conference Call 10/18/2022 HANCOCK WHITNEY