It has been about a month since the last earnings report for Hancock Whitney (
HWC Quick Quote HWC - Free Report) . Shares have added about 7% 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 catalysts.
Hancock Whitney Incurs Loss in Q2 on Higher Provisions
Hancock Whitney incurred 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 higher 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.
Management expects NIM to be relatively stable over next couple of quarters.
Effective tax rate in the back half of the year is expected to be more than 18%. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 5.87% due to these changes.
At this time, Hancock Whitney has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hancock Whitney has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.