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Why Is Hancock Whitney (HWC) Up 9.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hancock Whitney due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hancock Whitney’s third-quarter 2019 adjusted earnings per share of $1.03 beat the Zacks Consensus Estimate of $1.01. The bottom line was 2% higher than the year-ago quarter’s reported figure.
Higher net revenues, loan growth, rise in deposit balance and the MidSouth Bancorp acquisition were driving factors. However, higher expenses, lower interest rates and increase in provision for loan losses acted as headwinds.
Results excluded certain non-operating expenses related to acquisitions completed during the period. After considering these charges, net income was $67.8 million or 77 cents per share, down from the $83.9 million or 96 cents per share in the prior-year quarter.
Revenues Up, Expenses Rise
Net revenues were $306.2 million, up 5.7% year over year. The figure, however, missed the Zacks Consensus Estimate of $308.0 million.
Net interest income on tax equivalent basis grew 3.8% year over year to $226.6 million. Net interest margin, on a tax-equivalent basis, was 3.41%, up 5 basis points (bps).
Non-interest income totaled $83.2 million, indicating 10.2% improvement from the year-ago quarter. Increase in all fee income components except trust fees led to this upside.
Total operating expenses flared up 17.9% year over year to $213.6 million. This upswing resulted from rise in all cost components except amortization of intangibles expenses.
As of Sep 30, 2019, total loans were $21 billion, up 4.3% from the prior-quarter end. Total deposits grew 4.2% from the previous quarter to $24.2 billion.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.25% of average total loans, up 11 bps from the year-ago quarter. Further, provision for loan losses surged 80.7% year over year to $12.4 million.
However, total non-performing assets decreased 19.6% to $314.7 million.
Profitability Ratios Decline, Capital Ratios Improve
Return on average assets was 0.92% at the end of the reported quarter, down from the 1.19% recorded in the prior-year quarter. In addition, return on average common equity was 7.95% as of Sep 30, 2019 compared with the 11.27% recorded at the end of Sep 30, 2018.
As of Sep 30, 2019, Tier 1 leverage ratio was 9.49%, up from the 8.50% recorded at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 11.10%, up from 10.36% as of Sep 30, 2018.
Outlook
Average loan growth is expected to be in the mid-single digits range in 2019.
NIM is projected to be down 2-4 bps in the fourth quarter 2019.
Operating non-interest income is expected to increase 10% on a year-over-year basis in 2019.
Operating expenses are expected to increase 7-8% in 2019 compared with the prior year.
Both operating non-interest income and operating expense include the impact of the Capital One trust and asset management acquisition as well as the fourth quarter impact of the MidSouth acquisition.
Notably, in the fourth quarter, the company expects to record remaining merger costs of nearly $3-$5 million related to the MidSouth acquisition.
Loan loss provision is estimated between $6 million and $8 million in fourth-quarter 2019.
Effective tax rate is expected to be nearly 17% in the fourth quarter as well as 2019.
Long-Term Outlook – Corporate Strategic Objectives (on a Quarterly Basis)
These objectives are expected to be achieved by fourth-quarter 2020. Earnings per share (excluding non-recurring items) are expected to be in the range of $1.20 to $1.25. Efficiency ratio is projected to be lower than 56%.
ROA (operating) will likely be between 1.40% and 1.45%. Tangible common equity (TCE) ratio is anticipated to be more than 8% and return on tangible common equity (ROTCE) ratio (operating) is expected to be more than 15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Hancock Whitney has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Hancock Whitney has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Hancock Whitney (HWC) Up 9.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hancock Whitney due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hancock Whitney Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Hancock Whitney’s third-quarter 2019 adjusted earnings per share of $1.03 beat the Zacks Consensus Estimate of $1.01. The bottom line was 2% higher than the year-ago quarter’s reported figure.
Higher net revenues, loan growth, rise in deposit balance and the MidSouth Bancorp acquisition were driving factors. However, higher expenses, lower interest rates and increase in provision for loan losses acted as headwinds.
Results excluded certain non-operating expenses related to acquisitions completed during the period. After considering these charges, net income was $67.8 million or 77 cents per share, down from the $83.9 million or 96 cents per share in the prior-year quarter.
Revenues Up, Expenses Rise
Net revenues were $306.2 million, up 5.7% year over year. The figure, however, missed the Zacks Consensus Estimate of $308.0 million.
Net interest income on tax equivalent basis grew 3.8% year over year to $226.6 million. Net interest margin, on a tax-equivalent basis, was 3.41%, up 5 basis points (bps).
Non-interest income totaled $83.2 million, indicating 10.2% improvement from the year-ago quarter. Increase in all fee income components except trust fees led to this upside.
Total operating expenses flared up 17.9% year over year to $213.6 million. This upswing resulted from rise in all cost components except amortization of intangibles expenses.
As of Sep 30, 2019, total loans were $21 billion, up 4.3% from the prior-quarter end. Total deposits grew 4.2% from the previous quarter to $24.2 billion.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.25% of average total loans, up 11 bps from the year-ago quarter. Further, provision for loan losses surged 80.7% year over year to $12.4 million.
However, total non-performing assets decreased 19.6% to $314.7 million.
Profitability Ratios Decline, Capital Ratios Improve
Return on average assets was 0.92% at the end of the reported quarter, down from the 1.19% recorded in the prior-year quarter. In addition, return on average common equity was 7.95% as of Sep 30, 2019 compared with the 11.27% recorded at the end of Sep 30, 2018.
As of Sep 30, 2019, Tier 1 leverage ratio was 9.49%, up from the 8.50% recorded at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 11.10%, up from 10.36% as of Sep 30, 2018.
Outlook
Average loan growth is expected to be in the mid-single digits range in 2019.
NIM is projected to be down 2-4 bps in the fourth quarter 2019.
Operating non-interest income is expected to increase 10% on a year-over-year basis in 2019.
Operating expenses are expected to increase 7-8% in 2019 compared with the prior year.
Both operating non-interest income and operating expense include the impact of the Capital One trust and asset management acquisition as well as the fourth quarter impact of the MidSouth acquisition.
Notably, in the fourth quarter, the company expects to record remaining merger costs of nearly $3-$5 million related to the MidSouth acquisition.
Loan loss provision is estimated between $6 million and $8 million in fourth-quarter 2019.
Effective tax rate is expected to be nearly 17% in the fourth quarter as well as 2019.
Long-Term Outlook – Corporate Strategic Objectives (on a Quarterly Basis)
These objectives are expected to be achieved by fourth-quarter 2020. Earnings per share (excluding non-recurring items) are expected to be in the range of $1.20 to $1.25. Efficiency ratio is projected to be lower than 56%.
ROA (operating) will likely be between 1.40% and 1.45%. Tangible common equity (TCE) ratio is anticipated to be more than 8% and return on tangible common equity (ROTCE) ratio (operating) is expected to be more than 15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Hancock Whitney has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Hancock Whitney has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.