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Hancock Whitney's (HWC) Q4 Earnings Top Estimates, Costs Rise
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Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with $1.65 registered in the year-ago quarter.
The results were impacted by a decline in both net interest income (NII) and non-interest income. Further, a slight decrease in loan balances and an increase in expenses and provisions acted as spoilsports.
After considering a loss on the securities portfolio restructuring, sale of a parking facility and FDIC special assessment charge, net income was $50.6 million, decreasing 65% year over year. Our estimate for the metric was pinned at $82 million (this didn’t include non-recurring charges incurred during the quarter).
In 2023, adjusted earnings per share of $5.18 surpassed the Zacks Consensus Estimate of $5.03. Net income (GAAP) was $392.6 million, down 25.1% from the previous year's level.
Revenues Decline, Expenses Rise
Quarterly revenues amounted to $308.4 million, down 17% year over year. The top line missed the Zacks Consensus Estimate of $333.4 million.
In 2023, net revenues were $1.39 billion, which lagged the Zacks Consensus Estimate of $1.41 billion. The top line improved marginally from the 2022 level.
NII (on a tax-equivalent basis) declined 8.7% year over year to $272.3 million. The net interest margin (NIM) was 3.27%, which contracted 41 basis points (bps). Our top-line estimates for NII and NIM were pegged at $248.9 million and 3.23%, respectively.
Non-interest income totaled $39 million, down 49.5% from the prior-year quarter's level. This drastic decline was mainly due to the restructuring of the securities portfolio. Excluding this, adjusted non-interest income totaled $88.2 million. We had projected the metric to be $85.4 million.
Total non-interest expenses increased 20.5% year over year to $229.2 million. This includes an item of supplemental disclosure related to the FDIC special assessment. Excluding this, adjusted expenses amounted to $203 million. We projected expenses of $199.1 million, which did not include FDIC special assessment costs.
The efficiency ratio increased to 55.58% from 49.81% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, total loans amounted to $23.9 billion, down marginally from the prior-quarter level. Total deposits decreased 2.1% on a sequential basis to $29.7 billion. Our estimates for total loans and deposits were pinned at $23.7 billion and $29.6 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $17 million, up significantly from $2.5 million in the prior-year quarter. Our estimate for provisions totaled $28.8 million.
Net charge-offs (annualized) were 0.27% of average total loans, up 25 bps from the prior-year quarter's level.
Capital Ratios Improve, Profitability Ratios Worsen
As of Dec 31, 2023, the Tier 1 leverage ratio was 10.10%, up from 9.53% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 12.39%, up from 11.41% as of Dec 31, 2022.
At the end of the fourth quarter, the return on average assets was 0.56%, down from the year-ago period’s 1.65%. The return on average common equity was 5.64%, down from 17.67% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any share.
2024 Outlook
Management expects period-end loan growth to be in low single-digits, mostly in the second half of 2024. Further, growth in deposit balances is anticipated to be in low single-digits.
Pre-provision net revenues are expected to decrease 1-2% year over year.
NIM is expected to modestly expand on the assumptions of three rate cuts of 25 bps, each beginning in June 2024.
Adjusted non-interest income is expected to grow in the range of 1-2%.
Adjusted non-interest expenses are expected to rise in the band of 3-4%.
Management expects to maintain an efficiency ratio in the range of 56-58%.
Hancock Whitney expects low to modest charge-offs and provisions for 2024.
The company expects an effective tax rate of 21%.
Our View
Mounting expenses, reduced revenues and loan balances resulted in a challenging quarter for Hancock Whitney. However, the company is optimistic about the upcoming quarters, expecting modest expansion in NIM, decent loan growth and a rise in non-interest income, along with lower provisions.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Bank OZK (OZK - Free Report) is slated to announce fourth-quarter and full-year 2023 numbers on Jan 18.
Over the past 30 days, the Zacks Consensus Estimate for OZK’s quarterly earnings has moved marginally north to $1.46 per share, implying a 9% increase from the prior-year reported number.
Texas Capital Bancshares, Inc. (TCBI - Free Report) is set to announce fourth-quarter and full-year 2023 numbers on Jan 18.
Over the past 30 days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has moved 9.5% down to 76 cents. This implies a 12.64% decrease from the prior-year reported number.
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Hancock Whitney's (HWC) Q4 Earnings Top Estimates, Costs Rise
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with $1.65 registered in the year-ago quarter.
The results were impacted by a decline in both net interest income (NII) and non-interest income. Further, a slight decrease in loan balances and an increase in expenses and provisions acted as spoilsports.
After considering a loss on the securities portfolio restructuring, sale of a parking facility and FDIC special assessment charge, net income was $50.6 million, decreasing 65% year over year. Our estimate for the metric was pinned at $82 million (this didn’t include non-recurring charges incurred during the quarter).
In 2023, adjusted earnings per share of $5.18 surpassed the Zacks Consensus Estimate of $5.03. Net income (GAAP) was $392.6 million, down 25.1% from the previous year's level.
Revenues Decline, Expenses Rise
Quarterly revenues amounted to $308.4 million, down 17% year over year. The top line missed the Zacks Consensus Estimate of $333.4 million.
In 2023, net revenues were $1.39 billion, which lagged the Zacks Consensus Estimate of $1.41 billion. The top line improved marginally from the 2022 level.
NII (on a tax-equivalent basis) declined 8.7% year over year to $272.3 million. The net interest margin (NIM) was 3.27%, which contracted 41 basis points (bps). Our top-line estimates for NII and NIM were pegged at $248.9 million and 3.23%, respectively.
Non-interest income totaled $39 million, down 49.5% from the prior-year quarter's level. This drastic decline was mainly due to the restructuring of the securities portfolio. Excluding this, adjusted non-interest income totaled $88.2 million. We had projected the metric to be $85.4 million.
Total non-interest expenses increased 20.5% year over year to $229.2 million. This includes an item of supplemental disclosure related to the FDIC special assessment. Excluding this, adjusted expenses amounted to $203 million. We projected expenses of $199.1 million, which did not include FDIC special assessment costs.
The efficiency ratio increased to 55.58% from 49.81% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, total loans amounted to $23.9 billion, down marginally from the prior-quarter level. Total deposits decreased 2.1% on a sequential basis to $29.7 billion. Our estimates for total loans and deposits were pinned at $23.7 billion and $29.6 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $17 million, up significantly from $2.5 million in the prior-year quarter. Our estimate for provisions totaled $28.8 million.
Net charge-offs (annualized) were 0.27% of average total loans, up 25 bps from the prior-year quarter's level.
Capital Ratios Improve, Profitability Ratios Worsen
As of Dec 31, 2023, the Tier 1 leverage ratio was 10.10%, up from 9.53% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 12.39%, up from 11.41% as of Dec 31, 2022.
At the end of the fourth quarter, the return on average assets was 0.56%, down from the year-ago period’s 1.65%. The return on average common equity was 5.64%, down from 17.67% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any share.
2024 Outlook
Management expects period-end loan growth to be in low single-digits, mostly in the second half of 2024. Further, growth in deposit balances is anticipated to be in low single-digits.
Pre-provision net revenues are expected to decrease 1-2% year over year.
NIM is expected to modestly expand on the assumptions of three rate cuts of 25 bps, each beginning in June 2024.
Adjusted non-interest income is expected to grow in the range of 1-2%.
Adjusted non-interest expenses are expected to rise in the band of 3-4%.
Management expects to maintain an efficiency ratio in the range of 56-58%.
Hancock Whitney expects low to modest charge-offs and provisions for 2024.
The company expects an effective tax rate of 21%.
Our View
Mounting expenses, reduced revenues and loan balances resulted in a challenging quarter for Hancock Whitney. However, the company is optimistic about the upcoming quarters, expecting modest expansion in NIM, decent loan growth and a rise in non-interest income, along with lower provisions.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Hancock Whitney Corporation price-consensus-eps-surprise-chart | Hancock Whitney Corporation Quote
Currently, Hancock Whitney carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates and Expectations of Other Banks
Bank OZK (OZK - Free Report) is slated to announce fourth-quarter and full-year 2023 numbers on Jan 18.
Over the past 30 days, the Zacks Consensus Estimate for OZK’s quarterly earnings has moved marginally north to $1.46 per share, implying a 9% increase from the prior-year reported number.
Texas Capital Bancshares, Inc. (TCBI - Free Report) is set to announce fourth-quarter and full-year 2023 numbers on Jan 18.
Over the past 30 days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has moved 9.5% down to 76 cents. This implies a 12.64% decrease from the prior-year reported number.