Hancock Whitney Corporation · NASDAQ:HWC
Hancock Whitney — Q4 2020 Earnings Presentation
32 slides from Hancock Whitney's earnings presentation, Jan 20, 2021
Slide 1: Fourth Quarter 2020 Earnings Conference Call
Fourth Quarter 2020 Earnings Conference Call 1/20/2021
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 December 31, 2020)
Corporate Profile (as of December 31, 2020) ► $33.6 billion in Total Assets ► $21.8 billion in Total Loans (includes $2.0 billion in PPP loans) ► $27.7 billion in Total Deposits ► CET1 ratio 10.70%(e); Tangible Common Equity (TCE) ratio 7.64% ► $3.0 billion in Market Capitalization ► Over 200 bankin
Slide 5: 2020 Highlights
2020 Highlights ► Net loss of $45.2 million, or ($.54) per diluted share, compared ($s in millions; except per share data) 2020 2019 to net income of $327.4 million, or $3.72, in 2019 Net Income (loss) ($45.2) $327.4 ► Provision for credit losses totaled $602.9 million in 2020 Provision for credit l
Slide 6: Fourth Quarter 2020 Highlights
Fourth Quarter 2020 Highlights ► Net income of $103.6 million, or $1.17 per diluted share, compared to $79.4 million, or $.90, in 3Q20 ($s in millions; except per share data) 4Q20 3Q20 4Q19 ► Tax strategies implemented in the fourth quarter, mainly Net Income $103.6 $79.4 $92.1 related to net operat
Slide 7: Tax Strategies Implemented in 4Q20 Drive Zero Tax Rate
Tax Strategies Implemented in 4Q20 Drive Zero Tax Rate ► Tax benefit in 4Q20 primarily driven by tax net operating loss (NOL) carryback provisions in the CARES Act — $22.5 million benefit from NOL carryback to 35% tax rate years — Tax NOL attributable to 2Q20 loss on energy loan sale, tax lease inve
Slide 8: Paycheck Protection Program (PPP) Loans
Paycheck Protection Program (PPP) Loans ► Under the original CARES Act Paycheck Protection Program (PPP) the company originated more than 13,000 loans totaling $2.4 billion, with 11,874 loans, or $785 million, in loans less than $350K ― Total fees approximate $75 million, or $68 million net of expen
Slide 9: Loan Decline Reflects PPP Forgiveness
Loan Decline Reflects PPP Forgiveness ► Loans totaled $21.8 billion, down $450 million, net, linked-quarter; $318 million in net PPP loans forgiven during the quarter ► Growth in our markets, mainly from commercial, was offset by PPP forgiveness and net declines in other amortizing loan portfolios s
Slide 10: Commercial Loans (C&I, CRE, C&D)*
Commercial Loans (C&I, CRE, C&D)* Total Commercial Loans % of Total ($s in millions) Outstanding Loans Commitment Real Estate, Rental and Leasing $3,249 16.4% $4,200 Retail Trade 1,813 9.2% 2,173 Health Care and Social Assistance 1,604 8.1% 2,025 Hospitality 1,162 5.9% 1,296 Manufacturing 965 4.9% 1
Slide 11: Sectors Under Focus Due to Economic Impact of Pandemic*
Sectors Under Focus Due to Economic Impact of Pandemic* $ % % Loans $ % $ % Pass Pass $ Structured Structured $ in million East Central West Other Outstanding Criticized Criticized NPL NPL Watch Watch Solutions** Solutions Retail Retail - ICRE $126 $311 $219 — $656 --- --- — --- $14 2% $44 7% Retail
Slide 12: NPLs and Criticized Commercial Loans Continue to Decline
NPLs and Criticized Commercial Loans Continue to Decline $700 3.62% $600 3.24% $500 2.70% 2.57% $400 2.26% 1.45% 1.34% $300 0.95% 0.91% $200 0.73% $100 $0 4Q19 1Q20 2Q20 3Q20 4Q20 Total Loans excl. PPP $21,213 $21,516 $20,328 $19,940 $19,790 Total Commercial Loans excl. PPP $16,057 $16,384 $15,420 $
Slide 13: Slight Reserve Release
Slight Reserve Release ► Slight reserve release of $0.1 million as provision for 4Q20 totaled $24.2 million, and net charge-offs totaled $24.3 million ― Included in the fourth quarter’s charge-offs are $4.0 million of energy credits, $13.6 million in healthcare dependent credits and $6.7 million of
Slide 14: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) 12/31/2020 9/30/2020 % of Loan and % of Loan and Portfolio Leases Leases ($ in millions) Amount Outstanding Amount Outstanding Commercial Nonenergy $334 2.24% $326 2.19% Energy 18 5.99% 20 5.93% Residential Mortgage 49 1.83% 52 1.88% Consumer 47 2.51% 49 2.49% PPP L
Slide 15: Securities Portfolio Conservative with Minimal Risk
Securities Portfolio Conservative with Minimal Risk Securities Portfolio Mix ► Portfolio totaled $7.1 billion, up $303.9 million, or 4%, linked-quarter 12/31/20 $s in millions CMO ► Unrealized net gain of $233.1 million on AFS down $3.7 million from $513 September 30, 2020 CMBS 7% U.S. Agencies $2,8
Slide 16: Higher Core Deposits Reflects Resiliency
Higher Core Deposits Reflects Resiliency Total Deposits ► Total deposits of $27.7 billion, up $667 million, or 2%, linked-quarter 12/31/20 $s in millions ― Noninterest-bearing demand deposits (DDAs) increased $318 million mainly related to pandemic-related deposit growth and Time Deposits (brokered)
Slide 17: Strong Liquidity
Strong Liquidity $17.5 Billion in Available Sources Total Amount Net $ in millions Available Used Availability Internal Sources Free Securities and other $4,312 $— $4,312 External Sources Federal Home Loan Bank (FHLB) 5,975 2,585 3,390 Federal Reserve Bank (FRB) 4,364 — 4,364 Brokered Deposits 4,155
Slide 18: NIM Stable Linked-Quarter
NIM Stable Linked-Quarter ► Net interest margin (NIM) slightly lower at 3.22%; net interest income (TE) up $3.0 million 3.40% 3.30% ► NIM Headwinds: 0.05% 0.02% ― Impact of lower securities yield 3.20% ― PPP forgiveness 0.02% 3.10% 0.06% ― Late quarter liquidity build 3.00% 3.23% 3.22% ► NIM Tailwin
Slide 19: IRR Sensitivity
IRR Sensitivity ► Loans, excluding PPP, totaled $19.8 billion at December 31, 2020 ► Loan portfolio 55% ($11 billion) variable at December 31, 2020 (excludes PPP) ― 60% ($6.5 billion) of variable loans are LIBOR-based (33% of loan portfolio excluding PPP) ● 96% of the LIBOR loans are tied to 1 month
Slide 20: Lower Mortgage, Specialty Income Partly Offset by Higher Service Fees
Lower Mortgage, Specialty Income Partly Offset by Higher Service Fees $90 $88 $1.4 $0.4 $0.2 $0.4 $86 $84 $1.4 $s in millions $82 $1.9 $80 $78 $83.7 $82.4 $76 $74 $72 $70 3Q20 Noninterest Service Charges on Bank Card & ATM Fees Investment & Annuity Trust Fees Secondary Mortgage Other 4Q20 Noninteres
Slide 21: A Focus on Expense Control; More Initiatives Underway
A Focus on Expense Control; More Initiatives Underway $200 $5.6 $195.8 $s in millions $0.7 $193.1 $190 $0.2 $3.0 $0.8 $180 3Q20 Noninterest Personnel Occupancy and Amortization of ORE Expense Other (net) 4Q20 Noninterest Expense Expense Equipment Intangibles Expense Noninterest Expense Mix ► Noninte
Slide 22: Capital Rebuild Continues After 1H20 De-Risking Activities
Capital Rebuild Continues After 1H20 De-Risking Activities Capital Ratios 15% ► TCE ratio 7.64%, up 11 bps LQ (7.99% excluding PPP loans) ― Tangible net earnings +34 bps 10% ― Change in tangible assets/additional excess liquidity -10 bps ― Dividends -7 bps ― Change in OCI & other -6 bps 5% 4Q19 1Q20
Slide 23: Solid Capital In Excess of Regulatory Minimums
Solid Capital In Excess of Regulatory Minimums Estimated Regulatory Capital as of December 31, 2020 Common Total Tier 1 Equity Tier 1 Risk-based Leverage $s in millions Tier 1 Capital Capital Ratio Total Asset Base $23,678 $23,678 $23,678 $32,172 Total Capital 2,533 2,533 3,152 2,533 Capital Ratio 1
Slide 24: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 25: Summary Income Statement
Summary Income Statement ($ in millions, except for share data) Change Change 4Q20 3Q20 4Q19 LQ PY Line Item YTD 2020 YTD 2019 Y-o-Y $241.4 $238.4 $236.7 $3.0 $4.7 Net Interest Income (TE) $955.5 $910.0 $45.5 24.2 25.0 9.2 (0.8) 15.1 Provision for Credit Losses (ex loan sale) 442.8 47.7 395.1 — — —
Slide 26: Summary Balance Sheet
Summary Balance Sheet ($ in millions) Change Change 4Q20 3Q20 4Q19 LQ PY Line Item YTD 2020 YTD 2019 Y-o-Y EOP Balance Sheet $21,789.9 $22,240.2 $21,212.8 ($450.3) $577.1 Loans (1) $21,789.9 $21,212.8 $577.1 7,356.5 7,056.3 6,243.3 300.2 1,113.2 Securities 7,356.5 6,243.3 1,113.2 30,616.3 30,179.1 2
Slide 27: Results
Results Operating PPNR* Net Interest Income (TE)* Net Interest Margin (TE)* $150 ($s in millions) $250 ($s in millions) 3.65% $140 $245 $241.1 $241.4 3.50% $125.7 $126.3 3.43% $130 $238.4 3.41% $118.5 $240 $236.7 $115.7 $130.6 $120 $234.6 3.35% $235 $110 3.23% 3.23% 3.22% $100 $230 3.20% 4Q19 1Q20 2
Slide 28: Balance Sheet Summary
Balance Sheet Summary Average Loans Average Total Securities Average Deposits $26 ($s in billions) $8 ($s in billions) $30 ($s in billions) $24 $23.0 $6.9 $28 $26.7 $26.8 $27.0 $22.4 $22.1 $7 $6.4 $22 $21.0 $21.2 $6.2 $6.1 $6.1 $26 $24.3 $6 $23.8 $20 $24 $18 $5 $22 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20
Slide 29: 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) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Net Income (loss) $103,575 $79,356 ($117,072) ($111,033) $92,132 Net income or dividends allocated to participating securities (2,
Slide 30: Operating ROA, ROE & ROTCE Reconciliations
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended (dollars in thousands) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Net Income (loss) $103,575 $79,356 ($117,072) ($111,033) $92,132 Nonoperating items, net of income tax — — — — 3,046 Operating earnings $103,575 $79,356 ($117,072)
Slide 31: Total Revenue (TE), Operating PPNR (TE) Reconciliations
Total Revenue (TE), Operating PPNR (TE) Reconciliations Three Months Ended (in thousands) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Net interest income $238,286 $235,183 $237,866 $231,188 $233,156 Noninterest income 82,350 83,748 73,943 84,387 82,924 Total revenue $320,636 $318,931 $311,80
Slide 32: Fourth Quarter 2020 Earnings Conference Call
Fourth Quarter 2020 Earnings Conference Call 1/20/2021