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Hancock Holding (HBHC) Q3 Earnings Beat on Higher Revenues
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Hancock Holding Company reported third-quarter 2017 adjusted earnings of 76 cents per share, surpassing the Zacks Consensus Estimate of 74 cents. The bottom line compares favorably with the prior-year quarter earnings of 59 cents.
Results benefited from an improvement in both net interest income and non-interest income. Further, growth in loans and deposits remained strong. Lower provisions for loans also acted favorably. However, the key dampener was higher expenses.
Considering a non-operating expense related to the FNBC transactions, net income for the quarter came in at $58.9 million or 68 cents per share, up from $46.7 million or 59 cents in the prior-year quarter.
Revenues and Expenses Increase
Hancock’s net revenue for the quarter was $270 million, up 19.2% year over year. However, the figure lagged the Zacks Consensus Estimate of $279.8 million.
Net interest income grew 24.1% year over year to $202.9 million. Also, net interest margin (NIM) on a tax-equivalent basis increased 24 basis points from the prior-year quarter to 3.44%.
Non-interest income totaled $67.1 million, reflecting an increase of 6.5% from the year-ago quarter. The growth was primarily driven by an improvement in service charges on deposit accounts, bank card and ATM fees, and Investment and annuity fees.
Total operating expenses increased 11.5% year over year to $166.2 million. The rise was primarily due to higher personnel expense, net occupancy expense, equipment costs and amortization of intangibles.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.25% of average total loans, increasing from 0.24% in the year-ago quarter. Total nonperforming assets increased 17.2% year over year to $387.6 million.
However, provision for loan losses declined 31.3% year over year to roughly $13 million.
Strong Balance Sheet; Improvement in Profitability & Capital Ratios
As of Sep 30, 2017, total loans were $18.8 billion, up 1.7% sequentially. Further, total deposits increased marginally from the prior quarter to $21.5 billion.
Return on average assets was 0.88% at the end of the quarter, up from 0.80% in the prior-year quarter. Moreover, as of Sep 30, 2017, return on average common equity was 8.23% compared with 7.52% as of Sep 30, 2016.
As of Sep 30, 2017, Tier 1 leverage ratio was 8.35%, in line with the year ago figure. Further, Tier 1 risk-based capital ratio came in at 10.12%, up from 10.09% as of Sep 30, 2016.
Outlook for 2017
Management continues to expect charge-offs from energy-related credits to be roughly in the range of $65-$95 million.
Moreover, the company expects to have a strong capital position along with sufficient reserves.
Our Viewpoint
Persistently rising operating expenses remains a major concern for the company. As the bank continues to invest in franchise and grows inorganically, expenses are expected to remain elevated in the quarters ahead.
Hancock Holding Company Price, Consensus and EPS Surprise
Among other Southeast banking stocks, First Horizon National Corporation (FHN - Free Report) posted third-quarter 2017 adjusted earnings per share of 32 cents, surpassing the Zacks Consensus Estimate by 6.7%. Improvement in net interest income benefitted results. Also, no provision for loan losses acted as tailwind.
Bank of the Ozarks, Inc.’s third-quarter 2017 earnings of 75 cents per share surpassed the Zacks Consensus Estimate by a penny. Higher net-interest income and non-interest income acted as tailwinds. However, expenses escalated during the quarter.
Trustmark Corp. (TRMK - Free Report) is scheduled to report results on Oct 24.
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Hancock Holding (HBHC) Q3 Earnings Beat on Higher Revenues
Hancock Holding Company reported third-quarter 2017 adjusted earnings of 76 cents per share, surpassing the Zacks Consensus Estimate of 74 cents. The bottom line compares favorably with the prior-year quarter earnings of 59 cents.
Results benefited from an improvement in both net interest income and non-interest income. Further, growth in loans and deposits remained strong. Lower provisions for loans also acted favorably. However, the key dampener was higher expenses.
Considering a non-operating expense related to the FNBC transactions, net income for the quarter came in at $58.9 million or 68 cents per share, up from $46.7 million or 59 cents in the prior-year quarter.
Revenues and Expenses Increase
Hancock’s net revenue for the quarter was $270 million, up 19.2% year over year. However, the figure lagged the Zacks Consensus Estimate of $279.8 million.
Net interest income grew 24.1% year over year to $202.9 million. Also, net interest margin (NIM) on a tax-equivalent basis increased 24 basis points from the prior-year quarter to 3.44%.
Non-interest income totaled $67.1 million, reflecting an increase of 6.5% from the year-ago quarter. The growth was primarily driven by an improvement in service charges on deposit accounts, bank card and ATM fees, and Investment and annuity fees.
Total operating expenses increased 11.5% year over year to $166.2 million. The rise was primarily due to higher personnel expense, net occupancy expense, equipment costs and amortization of intangibles.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.25% of average total loans, increasing from 0.24% in the year-ago quarter. Total nonperforming assets increased 17.2% year over year to $387.6 million.
However, provision for loan losses declined 31.3% year over year to roughly $13 million.
Strong Balance Sheet; Improvement in Profitability & Capital Ratios
As of Sep 30, 2017, total loans were $18.8 billion, up 1.7% sequentially. Further, total deposits increased marginally from the prior quarter to $21.5 billion.
Return on average assets was 0.88% at the end of the quarter, up from 0.80% in the prior-year quarter. Moreover, as of Sep 30, 2017, return on average common equity was 8.23% compared with 7.52% as of Sep 30, 2016.
As of Sep 30, 2017, Tier 1 leverage ratio was 8.35%, in line with the year ago figure. Further, Tier 1 risk-based capital ratio came in at 10.12%, up from 10.09% as of Sep 30, 2016.
Outlook for 2017
Management continues to expect charge-offs from energy-related credits to be roughly in the range of $65-$95 million.
Moreover, the company expects to have a strong capital position along with sufficient reserves.
Our Viewpoint
Persistently rising operating expenses remains a major concern for the company. As the bank continues to invest in franchise and grows inorganically, expenses are expected to remain elevated in the quarters ahead.
Hancock Holding Company Price, Consensus and EPS Surprise
Hancock Holding Company Price, Consensus and EPS Surprise | Hancock Holding Company Quote
Presently, Hancock carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Upcoming Releases of Other Stocks
Among other Southeast banking stocks, First Horizon National Corporation (FHN - Free Report) posted third-quarter 2017 adjusted earnings per share of 32 cents, surpassing the Zacks Consensus Estimate by 6.7%. Improvement in net interest income benefitted results. Also, no provision for loan losses acted as tailwind.
Bank of the Ozarks, Inc.’s third-quarter 2017 earnings of 75 cents per share surpassed the Zacks Consensus Estimate by a penny. Higher net-interest income and non-interest income acted as tailwinds. However, expenses escalated during the quarter.
Trustmark Corp. (TRMK - Free Report) is scheduled to report results on Oct 24.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>