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Hancock Whitney Reports First Quarter 2022 EPS of $1.40

Hancock Whitney Corporation (Nasdaq: HWC) today announced its financial results for the first quarter of 2022. Net income for the first quarter of 2022 totaled $123.5 million, or $1.40 per diluted common share (EPS), compared to $137.7 million, or $1.55 per diluted common share, in the fourth quarter of 2021. The first quarter of 2022 did not include any nonoperating items, while the fourth quarter of 2021 included ($4.9) million, or ($0.04) per share after-tax, of net nonoperating income items. The company reported net income for the first quarter of 2021 of $107.2 million, or $1.21 per diluted common share.

First Quarter 2022 Highlights

  • Operating pre-provision net revenue (PPNR) totaled $134.5 million, up slightly, linked-quarter
  • Core loan growth of $385.3 million, or 8% linked-quarter annualized (LQA), more than offset the impact of $196.2 million in PPP loan forgiveness, leading to an overall increase in total loans of $189.1 million
  • Deposits increased $33.8 million, or less than 1% LQA, as the mix shifted from interest-bearing to noninterest-bearing
  • ACL coverage remained strong at 1.63% (1.66% excluding PPP loans)
  • Nonperforming loans and criticized commercial loans declined 24% and 2%, respectively linked-quarter
  • NIM widened 1 basis point (bp) to 2.81%
  • CET1 ratio estimated at 11.12%, up 3 bps; TCE ratio 7.15%, down 56 bps

“We are pleased to report another solid quarter and a good start to 2022,” said John M. Hairston, President and CEO. “Despite the ongoing challenges in today’s environment, our first quarter’s results were on track, with core loan growth of 8% LQA, stable deposits, the beginning of a widening NIM, historically low levels of asset quality metrics, continued expense management and solid capital levels. We will continue to execute our strategic plan and adjust for any challenges in today’s ever changing environment.”

Loans

Core loans increased $385.3 million, up 8% LQA, from December 31, 2021, more than offsetting the impact of $196.2 million in PPP loan forgiveness. Markets across the footprint grew reflected by a net increase in the Eastern Region, up $300 million linked-quarter, and an increase of $107 million in the Western Region. The Central Region was virtually unchanged from year-end 2021. Specialty lines, such as Equipment Finance, grew $90 million linked-quarter while amortizing only indirect and energy portfolios were down $33 million and $16 million, respectively. Healthcare loans decreased $75 million, net, linked-quarter. Management continues to expect core loans to grow by 6-8% in 2022, with quarterly results reflecting normal seasonality.

Total loans were $21.3 billion at March 31, 2022, up $189.1 million from December 31, 2021. Average loans totaled $21.1 billion for the first quarter of 2022, up $351.9 million, or 2%, linked-quarter.

Deposits

Total deposits at March 31, 2022 were $30.5 billion, up $33.8 million, or nearly flat, from December 31, 2021. During the quarter, seasonal runoff in public funds and interest-bearing transaction and savings deposits was more than offset by an increase in both commercial and consumer noninterest bearing demand deposit accounts (DDAs).

DDAs totaled $15.0 billion at March 31, 2022, up $583.9 million, or 4%, from December 31, 2021 and comprised almost half (49%) of total period-end deposits. Interest-bearing transaction and savings deposits totaled $11.5 billion at the end of the first quarter of 2022, a decrease of $188.9 million, or 2%, linked-quarter. Compared to December 31, 2021, time deposits of $1.0 billion were down $80.9 million, or 7%. Interest-bearing public fund deposits decreased $280.3 million, or 9%, linked-quarter, ending March 31, 2022 at $3.0 billion.

Average deposits for the first quarter of 2022 were $30.0 billion, up $279.1 million, or 1%, linked-quarter. Management expects 2022 period-end deposit levels to remain flat to slightly down compared to year-end 2021.

Asset Quality

The total allowance for credit losses (ACL) was $348.6 million at March 31, 2022, down $22.8 million from December 31, 2021. During the first quarter of 2022, the company recorded a negative provision for credit losses of $22.5 million, compared to a negative provision of $28.4 million in the fourth quarter of 2021. Net charge-offs totaled $0.3 million in the first quarter of 2022, or 0.01% of average total loans on an annualized basis, flat from $0.7 million, or 0.01% of average total loans in the fourth quarter of 2021. The ratio of ACL to period-end loans was 1.63% (1.66% excluding PPP loans) at March 31, 2022, compared to 1.76% (1.80% excluding PPP loans) at December 31, 2021.

The company’s overall asset quality metrics continued to improve and currently sit at historically low levels, with commercial criticized and total nonperforming loans down 2% and 24%, respectively, linked-quarter. Nonperforming assets (NPAs) totaled $51.7 million at March 31, 2022, down $15.2 million, or 23%, from December 31, 2021. During the first quarter of 2022, total nonperforming loans decreased $14.0 million, or 24%, while ORE and foreclosed assets were down $1.2 million, or 16% linked-quarter. Nonperforming assets as a percent of total loans, ORE and other foreclosed assets was 0.24% at March 31, 2022, down 8 bps from December 31, 2021.

Net Interest Income and Net Interest Margin (NIM)

Net interest income (TE) for the first quarter of 2022 was $231.0 million, a decrease of $0.9 million, or less than 1%, from the fourth quarter of 2021.

The net interest margin (NIM) (TE) was 2.81% in the first quarter of 2022, an increase of 1 bp linked-quarter. Changes related to the March 2022 increase in rates and a shift in the mix of earning assets led to a 7 basis point improvement in the earning asset yield, however that was mostly offset by the impact from the forgiveness of almost $200 million in PPP loans (-6 bps).

Average earning assets were $33.2 billion for the first quarter of 2022, up $288.3 million, or 1%, from the fourth quarter of 2021. Management expects the NIM to continue widening in 2022 due to expected future rate hikes.

Noninterest Income

Noninterest income totaled $83.4 million for the first quarter of 2022, down $6.2 million, or 7%, from the fourth quarter of 2021. In the fourth quarter of 2021, noninterest income included a $3.6 million gain from storm-related insurance proceeds (nonoperating item). Adjusting for these items, noninterest income for the first quarter of 2022 was down $2.6 million, or 3%, linked-quarter.

Service charges on deposits were up $0.3 million, or 2%, from the fourth quarter of 2021. The company disclosed via a press release on March 25, 2022 that it would eliminate consumer (retail) non-sufficient funds (NSF) fees and certain overdraft fees by year-end 2022. Those fees are included in the company’s service charges on deposits total.

Bankcard and ATM fees were down $0.2 million, or 1%, from the fourth quarter of 2021. Investment and annuity income and insurance fees were down $0.1 million, or 2%, linked-quarter. Trust fees were down $0.3 million, or 2% linked-quarter.

Fees from secondary mortgage operations totaled $3.7 million for the first quarter of 2022, down $1.7 million, or 31%, linked-quarter. Management expects a continued decline in secondary mortgage fees as rates begin to rise leading to a slowdown in activity compared to 2020’s refinance “boom”.

Other noninterest income totaled $14.9 million, down $4.2 million, or 22%, from the fourth quarter of 2021. The decrease is primarily related to the gain noted last quarter.

Noninterest Expense & Taxes

Noninterest expense totaled $179.9 million, down $2.5 million, or 1% linked-quarter. In the fourth quarter of 2021, noninterest expense included $1.3 million of net nonoperating expenses related primarily to partial reversals of accruals for Hurricane Ida expense and closed branch writedowns. Excluding these items, operating expense for the first quarter of 2022 was down $3.9 million, or 2%, linked-quarter.

Personnel expense totaled $107.4 million in the first quarter of 2022, down $0.7 million, or 1%, linked-quarter. The decrease is mainly related to ongoing savings associated with efficiency initiatives implemented in 2021.

Occupancy and equipment expense totaled $16.5 million in the first quarter of 2022, up $0.5 million, or 3%, from the fourth quarter of 2021. Amortization of intangibles totaled $3.7 million for the first quarter of 2022, down $0.2 million, or 4%, linked-quarter.

Gains on sales of ORE and other foreclosed assets exceeded expenses by $1.8 million in the first quarter of 2022, compared to net expense of $0.2 million in the fourth quarter of 2021. Other operating expense totaled $54.0 million in the first quarter of 2022, down $0.1 million, or less than 1%, linked-quarter.

The effective income tax rate for first quarter 2022 was 20.1%.

Capital

Common stockholders’ equity at March 31, 2022 totaled $3.5 billion, down $219.4 million, or 6%, from December 31, 2021. The tangible common equity (TCE) ratio was 7.15%, down 56 bps from December 31, 2021, mainly the result of a securities portfolio adjustment in AOCI. The company’s CET1 ratio is estimated to be 11.12% at March 31, 2022, up 3 bps linked-quarter. During the first quarter of 2022, the company repurchased 350,000 shares of its common stock at an average price of $52.79 per share. This stock repurchase is part of the Board authorization to repurchase up to 4,338,000 shares of the company’s common stock, set to expire December 31, 2022. To-date the company has repurchased 799,876 shares under this authorization.

Conference Call and Slide Presentation

Management will host a conference call for analysts and investors at 4:00 p.m. Central Time on Tuesday, April 19, 2022 to review these results. A live listen-only webcast of the call will be available under the Investor Relations section of Hancock Whitney’s website at investors.hancockwhitney.com. A link to the release with additional financial tables, and a link to a slide presentation related to first quarter results are also posted as part of the webcast link. To participate in the Q&A portion of the call, dial 844-200-6205 or 646-904-5544, access code 191325.

An audio archive of the conference call will be available under the Investor Relations section of our website. A replay of the call will also be available through April 26, 2022 by dialing 866-813-9403 or 929-458-6194, access code 061822.

About Hancock Whitney

Since the late 1800s, Hancock Whitney has embodied core values of Honor & Integrity, Strength & Stability, Commitment to Service, Teamwork, and Personal Responsibility. Hancock Whitney offices and financial centers in Mississippi, Alabama, Florida, Louisiana, and Texas offer comprehensive financial products and services, including traditional and online banking; commercial and small business banking; private banking; trust and investment services; healthcare banking; certain insurance services; and mortgage services. The company also operates a loan production office in Nashville, Tennessee. More information is available at www.hancockwhitney.com.

Non-GAAP Financial Measures

This news release includes non-GAAP financial measures to describe Hancock Whitney’s performance. These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. The reconciliations of those measures to GAAP measures are provided either in the financial tables or in Appendix A thereto.

Consistent with the provisions of subpart 229.1400 of the Securities and Exchange Commission’s Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” the company presents net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (“TE”) basis. The TE basis adjusts for the tax-favored status of net interest income from certain loans and investments using the statutory federal tax rate to increase tax-exempt interest income to a taxable equivalent basis. The company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.

The company presents certain additional non-GAAP financial measures to assist the reader with a better understanding of the company’s performance period over period, as well as to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. These non-GAAP measures may reference the concept “operating.” The company uses the term “operating” to describe a financial measure that excludes income or expense considered to be nonoperating in nature. Items identified as nonoperating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in the company’s business.

Important Cautionary Statement about Forward-Looking Statements

This news release 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 performance and financial condition, balance sheet and revenue growth, the provision for credit losses, loan growth expectations, management’s predictions about charge-offs for loans, the impact of the COVID-19 pandemic on the economy and our operations, the impacts related to Russia’s military action in Ukraine, the adequacy of our enterprise risk management framework, potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the ongoing impact of future business combinations on our performance and financial condition, including our ability to successfully integrate the businesses, success of revenue-generating and cost reduction initiatives, the effectiveness of derivative financial instruments and hedging activities to manage risks, projected tax rates, increased cybersecurity risks, including potential business disruptions or financial losses, the adequacy of our internal controls over financial reporting, the financial impact of regulatory requirements and tax reform legislation, the impact of the change in the referenced rate reform, deposit trends, credit quality trends, the impact of natural or man-made disasters, the impact of PPP loans and forgiveness on our results, changes in interest rates, inflation, net interest margin trends, future expense levels, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts, accretion levels and expected returns.

In addition, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook,” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. Forward-looking statements are subject to significant risks and uncertainties. Any forward-looking statement made in this release is subject to the safe harbor protections set forth in the Private Securities Litigation Reform Act of 1995. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and in other periodic reports that we file with the SEC.

HANCOCK WHITNEY CORPORATION

QUARTERLY FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(dollars and common share data in thousands, except per share amounts)

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

NET INCOME
Net interest income

$

228,463

 

$

229,296

 

 $

234,709

 

 $

234,643

 

 $

234,587

 

Net interest income (TE) (a)

 

231,008

 

 

231,931

 

 

237,477

 

 

237,497

 

 

237,509

 

Provision for credit losses

 

(22,527

)

 

(28,399

)

 

(26,955

)

 

(17,229

)

 

(4,911

)

Noninterest income

 

                         83,432

 

 

89,612

 

 

93,361

 

 

94,272

 

 

87,089

 

Noninterest expense

 

                  179,939

 

 

182,462

 

 

194,703

 

 

236,770

 

 

193,072

 

Income tax expense

 

31,005

 

 

27,102

 

 

30,740

 

 

20,656

 

 

26,343

 

Net income

$

123,478

 

 $

137,743

 

 $

129,582

 

 $

88,718

 

 $

107,172

 

For informational purposes - included above, pre-tax

Nonoperating item included in noninterest income:

Gain on hurricane-related insurance settlement

$

 

 $

3,600

 

 $

 

 $

  —

 

 $

 

Gain on sale of Hancock Horizon Funds

 

 

 

 

 

4,576

 

 

 

 

 

Gain on sale of Mastercard Class B common stock

 

 

 

 

 

 

 

  2,800

 

 

 

Nonoperating items included in noninterest expense:

Efficiency initiatives

 

 

 

(649

)

 

(1,867

)

 

  40,812

 

 

 

Hurricane related expenses

 

 

 

(680

)

 

5,092

 

 

  —

 

 

  —

 

Loss on redemption of subordinated notes

 

 

 

 

 

 

 

  4,165

 

 

  —

 

PERIOD-END BALANCE SHEET DATA
Loans

$

21,323,341

 

 $

21,134,282

 

 $

20,886,015

 

 $

21,148,530

 

 $

21,664,859

 

Securities

 

8,481,095

 

 

8,552,449

 

 

8,308,622

 

 

8,633,133

 

 

8,005,990

 

Earning assets

 

32,997,323

 

 

33,610,435

 

 

32,348,036

 

 

32,075,450

 

 

32,134,637

 

Total assets

 

36,317,291

 

 

36,531,205

 

 

35,318,308

 

 

35,098,709

 

 

35,072,643

 

Noninterest-bearing deposits

 

14,976,670

 

 

14,392,808

 

 

13,653,376

 

 

13,406,385

 

 

13,174,911

 

Total deposits

 

30,499,709

 

 

30,465,897

 

 

29,208,157

 

 

29,273,107

 

 

29,210,520

 

Common stockholders' equity

 

3,450,951

 

 

3,670,352

 

 

3,629,766

 

 

3,562,901

 

 

3,416,903

 

AVERAGE BALANCE SHEET DATA
Loans

$

21,122,038

 

 $

20,770,130

 

 $

20,941,173

 

 $

21,388,814

 

 $

21,745,298

 

Securities (b)

 

8,687,758

 

 

8,378,258

 

 

8,368,824

 

 

8,194,812

 

 

7,468,541

 

Earning assets

 

  33,201,926

 

 

32,913,659

 

 

32,097,381

 

 

32,195,515

 

 

31,015,637

 

Total assets

 

36,003,803

 

 

35,829,027

 

 

35,207,960

 

 

35,165,684

 

 

34,078,200

 

Noninterest-bearing deposits

 

14,363,324

 

 

14,126,335

 

 

13,535,961

 

 

13,237,796

 

 

12,374,235

 

Total deposits

 

30,029,793

 

 

29,750,665

 

 

29,237,306

 

 

29,228,809

 

 

28,138,763

 

Common stockholders' equity

 

3,607,061

 

 

3,642,003

 

 

3,606,087

 

 

3,488,592

 

 

3,441,466

 

COMMON SHARE DATA
Earnings per share - diluted

$

1.40

 

 $

1.55

 

 $

1.46

 

 $

1.00

 

 $

1.21

 

Cash dividends per share

 

0.27

 

 

0.27

 

 

0.27

 

 

0.27

 

 

0.27

 

Book value per share (period-end)

 

39.91

 

 

42.31

 

 

41.81

 

 

41.03

 

 

39.38

 

Tangible book value per share (period-end)

 

29.25

 

 

31.64

 

 

31.10

 

 

30.27

 

 

28.57

 

Weighted average number of shares - diluted

 

86,936

 

 

87,132

 

 

87,006

 

 

86,990

 

 

86,805

 

Period-end number of shares

 

86,460

 

 

86,749

 

 

86,823

 

 

86,847

 

 

86,777

 

Market data
High sales price

$

59.82

 

 $

53.61

 

 $

48.19

 

 $

50.69

 

 $

47.37

 

Low sales price

 

50.25

 

 

45.06

 

 

39.07

 

 

40.25

 

 

32.52

 

Period-end closing price

 

52.15

 

 

50.02

 

 

47.12

 

 

44.44

 

 

42.01

 

Trading volume

 

29,005

 

 

23,889

 

 

22,482

 

 

25,570

 

 

28,963

 

PERFORMANCE RATIOS
Return on average assets

 

1.39

%

 

1.53

%

 

1.46

%

 

1.01

%

 

1.28

%

Return on average common equity

 

13.88

%

 

15.00

%

 

14.26

%

 

10.20

%

 

12.63

%

Return on average tangible common equity

 

18.66

%

 

20.13

%

 

19.22

%

 

13.94

%

 

17.38

%

Tangible common equity ratio (c)

 

7.15

%

 

7.71

%

 

7.85

%

 

7.70

%

 

7.26

%

Net interest margin (TE) 

 

2.81

%

 

2.80

%

 

2.94

%

 

2.96

%

 

3.09

%

Noninterest income as a percentage of total revenue (TE)

 

26.53

%

 

27.87

%

 

28.22

%

 

28.41

%

 

26.83

%

Efficiency ratio (d)

 

56.03

%

 

56.57

%

 

57.44

%

 

57.01

%

 

58.12

%

Average loan/deposit ratio

 

70.34

%

 

69.81

%

 

71.62

%

 

73.18

%

 

77.28

%

Allowance for loan losses as a percentage of period-end loans

 

1.49

%

 

1.62

%

 

1.78

%

 

1.89

%

 

1.96

%

Allowance for credit losses as a percentage of period-end loans (e)

 

1.63

%

 

1.76

%

 

1.92

%

 

2.03

%

 

2.11

%

Annualized net charge-offs to average loans

 

0.01

%

 

0.01

%

 

0.03

%

 

0.20

%

 

0.34

%

Allowance for loan losses to nonperforming loans + accruing loans 90 days past due

 

640.81

%

 

527.59

%

 

506.17

%

 

415.00

%

 

354.09

%

FTE headcount

 

                3,543

 

 

                 3,486

 

 

                3,429

 

 

                   3,626

 

 

          3,926

 

 
(a) Taxable equivalent (TE) amounts are calculated using a federal income tax rate of 21%.
(b) Average securities does not include unrealized holding gains/losses on available for sale securities.
(c) The tangible common equity ratio is common shareholders' equity less intangible assets divided by total assets less intangible assets.
(d) The efficiency ratio is noninterest expense to total net interest income (TE) and noninterest income, excluding amortization of purchased intangibles and nonoperating items.
(e) The allowance for credit losses includes the allowance for loan and lease losses and the reserve for unfunded lending commitments. 

 

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