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Hancock Whitney (HWC) Reports Loss in Q2 on Higher Provisions

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Hancock Whitney Corporation (HWC - Free Report) reported loss per share of $1.36 for second-quarter 2020, in line with the Zacks Consensus Estimate. The figure includes special provision related to the sale of energy loan.

Substantially higher provisions, rise in operating expenses, lower non-interest income and interest rates played spoilsport. Nevertheless, improvement in net-interest income and rise in loans as well as deposits acted as tailwinds.

After excluding the above-mentioned one-time charge, net income was $9.4 million or 11 cents per share compared with $88.3 million or $1.01 per share in the prior-year quarter.

Revenues Improve, Expenses Rise

Net revenues amounted to $311.8 million, up 4.2% year over year. However, the figure missed the Zacks Consensus Estimate of $312.9 million.

Net interest income on tax equivalent basis climbed 7.8% year over year to $241.1 million. Net interest margin (NIM), on a tax-equivalent basis, came in at 3.23%, shrinking 22 basis points (bps).

Non-interest income totaled $73.9 million, down 6.7% from the year-ago quarter’s level. The fall was primarily due to decrease in service charges on deposit accounts, investment and annuity income and other income, partially offset by fees from secondary mortgage operations.

Total operating expenses rose 7.1% year over year to $196.5 million. This upswing resulted from rise in all the cost components.

As of Jun 30, total loans were $22.6 billion, up 5.2% from the prior-quarter end. Also, total deposits moved up 9.3% from the previous quarter’s level to $27.3 billion.

Credit Quality Worsens

Provision for credit losses went up 24.4% to $306.9 million, primarily on coronavirus-induced uncertainty and sinking oil prices.

Net charge-offs was 5.30% of average total loans, up 5.2% from the year-ago quarter level. However, total non-performing assets plunged 37.2% year over year to $212.6 million.

Capital Ratios Deteriorate

As of Jun 30, Tier 1 leverage ratio was 7.38%, down from the 9.10% recorded at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 9.77%, down from 10.94% recorded at the end of the prior-year quarter.

Our Viewpoint

Hancock Whitney is likely to register further top-line growth on improving loan and deposit balances as well as the MidSouth Bancorp acquisition. Nevertheless, rising expenses and near-zero interest rates are major concerns. Also, ambiguity related to the pandemic-related economic impact makes us apprehensive.

Hancock Whitney Corporation Price, Consensus and EPS Surprise

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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Schedules of Other Banks

Associated Banc-Corp (ASB - Free Report) , Webster Financial Corporation (WBS - Free Report) and Camden National Corporation (CAC - Free Report) are scheduled to announce second-quarter results soon. While Associated Banc-Corp and Webster Financial Corporation will release earnings figures on Jul 23, Camden National Corporation will report on Jul 28.

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