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Hancock Whitney (HWC) Q3 Earnings & Revenues Beat, Costs Down
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Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2021 adjusted earnings of $1.45 per share outpaced the Zacks Consensus Estimate of $1.29. The bottom line improved 61.1% from the prior-year quarter.
Results gained from higher non-interest income, fall in operating expenses, and provision benefit. However, a decline in net interest income, which reflected lower interest rates and a fall in loan balance, was the undermining factor.
Results excluded the impact of non-operating items. Including these, net income came in at $129.6 million, up from $79.3 million in the prior-year quarter.
Revenues Improve, Expenses Inch Down
Total revenues were $328.1 million, up 2.9% year over year. The top line beat the Zacks Consensus Estimate of $324 million.
Net interest income (NII) on a tax-equivalent basis declined marginally to $237.5 million. Net interest margin (NIM) (on a tax-equivalent basis) was 2.97%, contracting 29 basis points (bps).
Non-interest income was $93.4 million, growing 11.5%. The rise was driven by a jump in almost all fee income components except for secondary mortgage market operations fees.
Total non-interest expenses declined modestly to $194.7 million. This was mainly attributable to a rise in other expenses, net occupancy and equipment expenses, and personnel expenses.
Efficiency ratio decreased to 57.44% from 59.29% in the year-ago quarter. A decline in efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2021, total loans were $20.9 billion, down 1.2% from the prior-quarter end. Total deposits fell marginally to $29.2 billion.
Credit Quality Improves
Provision for loan losses was a benefit of $27 million against a provision of $25 million in the prior-year quarter. Net charge-offs (annualized) were 0.03% of average total loans, down 40 bps from the year-ago quarter.
Total non-performing assets plummeted 62.6% to $71.9 million.
Capital & Profitability Ratios Improve
As of Sep 30, 2021, Tier 1 leverage ratio was 8.15%, up from 7.70% at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 11.19%, up from 10.30% as of Sep 30, 2020.
At the end of the third quarter, return on average assets was 1.46%, up from the year-ago period’s 0.97%. Return on average common equity was 14.26%, up from 9.42% in the prior-year quarter.
Share Repurchase Update
During the quarter, Hancock Whitney repurchased 56,349 shares at an average price of $44.49 per share.
Outlook
Management projects loan balance to be nearly $20.4 billion for 2021.
The company expects NIM contraction to continue in the fourth quarter while NII is likely to be slightly down on a sequential basis.
Our Take
Supported by a solid balance-sheet position and inorganic expansion efforts, Hancock Whitney remains well poised for growth. However, near-zero interest rates and soft loan demand are major near-term concerns.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
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Hancock Whitney (HWC) Q3 Earnings & Revenues Beat, Costs Down
Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2021 adjusted earnings of $1.45 per share outpaced the Zacks Consensus Estimate of $1.29. The bottom line improved 61.1% from the prior-year quarter.
Results gained from higher non-interest income, fall in operating expenses, and provision benefit. However, a decline in net interest income, which reflected lower interest rates and a fall in loan balance, was the undermining factor.
Results excluded the impact of non-operating items. Including these, net income came in at $129.6 million, up from $79.3 million in the prior-year quarter.
Revenues Improve, Expenses Inch Down
Total revenues were $328.1 million, up 2.9% year over year. The top line beat the Zacks Consensus Estimate of $324 million.
Net interest income (NII) on a tax-equivalent basis declined marginally to $237.5 million. Net interest margin (NIM) (on a tax-equivalent basis) was 2.97%, contracting 29 basis points (bps).
Non-interest income was $93.4 million, growing 11.5%. The rise was driven by a jump in almost all fee income components except for secondary mortgage market operations fees.
Total non-interest expenses declined modestly to $194.7 million. This was mainly attributable to a rise in other expenses, net occupancy and equipment expenses, and personnel expenses.
Efficiency ratio decreased to 57.44% from 59.29% in the year-ago quarter. A decline in efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2021, total loans were $20.9 billion, down 1.2% from the prior-quarter end. Total deposits fell marginally to $29.2 billion.
Credit Quality Improves
Provision for loan losses was a benefit of $27 million against a provision of $25 million in the prior-year quarter. Net charge-offs (annualized) were 0.03% of average total loans, down 40 bps from the year-ago quarter.
Total non-performing assets plummeted 62.6% to $71.9 million.
Capital & Profitability Ratios Improve
As of Sep 30, 2021, Tier 1 leverage ratio was 8.15%, up from 7.70% at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 11.19%, up from 10.30% as of Sep 30, 2020.
At the end of the third quarter, return on average assets was 1.46%, up from the year-ago period’s 0.97%. Return on average common equity was 14.26%, up from 9.42% in the prior-year quarter.
Share Repurchase Update
During the quarter, Hancock Whitney repurchased 56,349 shares at an average price of $44.49 per share.
Outlook
Management projects loan balance to be nearly $20.4 billion for 2021.
The company expects NIM contraction to continue in the fourth quarter while NII is likely to be slightly down on a sequential basis.
Our Take
Supported by a solid balance-sheet position and inorganic expansion efforts, Hancock Whitney remains well poised for growth. However, near-zero interest rates and soft loan demand are major near-term concerns.
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 Release Schedule of Other Banks
Associated Banc-Corp (ASB - Free Report) , East West Bancorp, Inc. (EWBC - Free Report) , and Bank OZK (OZK - Free Report) will announce quarterly numbers on Oct 21.