It has been about a month since the last earnings report for Hancock Holding Company . Shares have lost about 6.7% in that time frame, underperforming the market .
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hancock Holding Q2 Earnings In Line, Revenues Rise
Hancock Holding reported second-quarter 2017 adjusted earnings of $0.68 per share, in line with the Zacks Consensus Estimate. The bottom line compares favorably with the prior-year quarter earnings of $0.59.
The earnings growth was supported by a rise in the net interest income and non-interest income. Growth in loans and deposits remained strong. Lower provisions for loans also acted favorably. However, higher expenses were the key dampener. A rise in non-performing assets was also on the downside.
Considering several one-time items, net income for the quarter came in at $52.3 million, up 11.5% from the prior-year quarter.
Revenue and Expenses Increase
Net revenue for the quarter was $267.2 million, up 16.9% year over year. Revenues outpaced the Zacks Consensus Estimate of $265.0 million.
Net interest income grew 21.1% year over year to $199.7 million. Also, reported net interest margin (NIM) rose 18 basis points from the prior-year quarter to 3.43%.
Non-interest income totaled $67.5 million, up 6% from the year-ago quarter. The growth was driven by an improvement in all the components, except trust fees, insurance commissions and fees and securities transaction fees.
Total adjusted operating expenses increased 14.6% year over year to $172.9 million. The rise was primarily due to higher personnel, net occupancy, equipment and other operating expenses along with amortization of intangibles.
Credit Quality Shows Overall Improvement
Net charge-offs from the non-covered loan portfolio was 0.13% of average total loans, down from 0.20% in the year-ago quarter. But, total nonperforming assets increased 6.7% year over year to $346.8 million.
Provision for loan losses declined 14% year over year to roughly $15 million thanks to a rebound in oil prices.
Strong Balance Sheet; Deterioration in Profitability & Capital Ratios
As of Jun 30, 2017, total loans grew 6.2% sequentially to $18.4 billion. Further, total deposits rose 7.2% from the prior quarter to $20.9 billion.
Return on average assets was 0.79% at Jun 30, 2017, down from 0.82% as of Jun 30, 2016. Moreover, as of Jun 30, 2017, return on average common equity was 7.52% compared with 7.76% as of Jun 30, 2016.
As of Jun 30, 2017, Tier 1 leverage ratio was 8.21%, down from 8.22% as of Jun 30, 2016. Further, Tier 1 risk-based capital ratio came in at 9.98%, up from 9.94% as of Jun 30, 2016.
Near-term Outlook
Management expects net loan growth of $400–$500 million in the second half of 2017. This includes normal pay-offs and pay downs on both energy and First NBC loans.
On the assumption of no further rate hikes, the company expects core NIM to expand 3–5 bps.
Increase in revenues is expected to be driven by growth in interest income and modest rise in non-interest income.
The company expects operating expenses to decline $3–$5 million in the third quarter and additionally fall $1–$2 million in the fourth quarter, as non-recurring First NBC expenses are eliminated.
Management expects effective tax rate to be in the range of 25–26% in the third quarter and 21-22% in the fourth quarter.
Further, loan loss provisions are anticipated to be around $14–$16 million per quarter. Management projects charge-offs from energy-related credits to be roughly in the range of $65–$95 million. The company expects additional charge-offs in the energy portfolio, though it believes these will be manageable.
Long–term Outlook (2017/2018 Corporate Strategic Objectives)
Hancock Holding plans to achieve these strategic objectives by fourth-quarter 2018. Management projects earnings of $0.70–$0.80 per share on a quarterly basis.
Efficiency ratio is expected to be in the range of 59–61%.
Return on assets is projected to be 1.00–1.10%, while return on equity will be 11–13% and tangible common equity ratio is anticipated to be over 8%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
Hancock Holding Company Price and Consensus
VGM Scores
At this time, Hancock Holding's stock has a poor Growth Score of F, however its Momentum is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Hancock Holding (HBHC) Down 6.7% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Hancock Holding Company . Shares have lost about 6.7% in that time frame, underperforming the market .
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hancock Holding Q2 Earnings In Line, Revenues Rise
Hancock Holding reported second-quarter 2017 adjusted earnings of $0.68 per share, in line with the Zacks Consensus Estimate. The bottom line compares favorably with the prior-year quarter earnings of $0.59.
The earnings growth was supported by a rise in the net interest income and non-interest income. Growth in loans and deposits remained strong. Lower provisions for loans also acted favorably. However, higher expenses were the key dampener. A rise in non-performing assets was also on the downside.
Considering several one-time items, net income for the quarter came in at $52.3 million, up 11.5% from the prior-year quarter.
Revenue and Expenses Increase
Net revenue for the quarter was $267.2 million, up 16.9% year over year. Revenues outpaced the Zacks Consensus Estimate of $265.0 million.
Net interest income grew 21.1% year over year to $199.7 million. Also, reported net interest margin (NIM) rose 18 basis points from the prior-year quarter to 3.43%.
Non-interest income totaled $67.5 million, up 6% from the year-ago quarter. The growth was driven by an improvement in all the components, except trust fees, insurance commissions and fees and securities transaction fees.
Total adjusted operating expenses increased 14.6% year over year to $172.9 million. The rise was primarily due to higher personnel, net occupancy, equipment and other operating expenses along with amortization of intangibles.
Credit Quality Shows Overall Improvement
Net charge-offs from the non-covered loan portfolio was 0.13% of average total loans, down from 0.20% in the year-ago quarter. But, total nonperforming assets increased 6.7% year over year to $346.8 million.
Provision for loan losses declined 14% year over year to roughly $15 million thanks to a rebound in oil prices.
Strong Balance Sheet; Deterioration in Profitability & Capital Ratios
As of Jun 30, 2017, total loans grew 6.2% sequentially to $18.4 billion. Further, total deposits rose 7.2% from the prior quarter to $20.9 billion.
Return on average assets was 0.79% at Jun 30, 2017, down from 0.82% as of Jun 30, 2016. Moreover, as of Jun 30, 2017, return on average common equity was 7.52% compared with 7.76% as of Jun 30, 2016.
As of Jun 30, 2017, Tier 1 leverage ratio was 8.21%, down from 8.22% as of Jun 30, 2016. Further, Tier 1 risk-based capital ratio came in at 9.98%, up from 9.94% as of Jun 30, 2016.
Near-term Outlook
Management expects net loan growth of $400–$500 million in the second half of 2017. This includes normal pay-offs and pay downs on both energy and First NBC loans.
On the assumption of no further rate hikes, the company expects core NIM to expand 3–5 bps.
Increase in revenues is expected to be driven by growth in interest income and modest rise in non-interest income.
The company expects operating expenses to decline $3–$5 million in the third quarter and additionally fall $1–$2 million in the fourth quarter, as non-recurring First NBC expenses are eliminated.
Management expects effective tax rate to be in the range of 25–26% in the third quarter and 21-22% in the fourth quarter.
Further, loan loss provisions are anticipated to be around $14–$16 million per quarter. Management projects charge-offs from energy-related credits to be roughly in the range of $65–$95 million. The company expects additional charge-offs in the energy portfolio, though it believes these will be manageable.
Long–term Outlook (2017/2018 Corporate Strategic Objectives)
Hancock Holding plans to achieve these strategic objectives by fourth-quarter 2018. Management projects earnings of $0.70–$0.80 per share on a quarterly basis.
Efficiency ratio is expected to be in the range of 59–61%.
Return on assets is projected to be 1.00–1.10%, while return on equity will be 11–13% and tangible common equity ratio is anticipated to be over 8%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
Hancock Holding Company Price and Consensus
Hancock Holding Company Price and Consensus | Hancock Holding Company Quote
VGM Scores
At this time, Hancock Holding's stock has a poor Growth Score of F, however its Momentum is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.