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Hancock Whitney (HWC) Q2 Earnings Beat on Higher NII, Loans
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Hancock Whitney Corporation’s (HWC - Free Report) second-quarter 2022 earnings of $1.38 per share outpaced the Zacks Consensus Estimate of $1.34. The bottom line rose marginally from the prior-year quarter’s adjusted earnings of $1.37.
Results benefited from higher net interest income (NII), a fall in non-interest expenses, a rise in loan balance and provision benefit. However, a decline in non-interest income, mainly due to rising mortgage rates, was the undermining factor.
Net income came in at $121.4 million, jumping 36.9% year over year.
Revenues Rise, Expenses Fall
Total revenues were $331.4 million, up slightly year over year. The top line also beat the Zacks Consensus Estimate of $328.2 million.
NII (on a tax-equivalent basis) grew 4.6% to $248.3 million. Net interest margin (NIM) was 3.04%, rising 8 basis points (bps).
Non-interest income was $85.7million, declining 9.1%. A drastic fall in secondary mortgage market operations fees mainly led to this decrease.
Total non-interest expenses plunged 21% to $187.1 million. The decline was mainly attributable to lower personnel expenses.
Efficiency ratio decreased to 54.95% from 57.01% in the year-ago quarter. A decline in efficiency ratio indicates an improvement in profitability.
As of Jun 30, 2022, total loans were $21.8 billion, up 2.5% from the prior-quarter end. Total deposits declined 2.1% to $29.9 billion.
Credit Quality Improves
Provision for loan losses was a benefit of $9.8 million compared with a benefit of $17.2 million in the prior-year quarter. Net recoveries (annualized) were 0.01% of average total loans against 0.20% of net charge-offs in the last year's quarter.
Total non-performing assets plunged 54.9% from the prior-year quarter to $44 million.
Capital & Profitability Ratios Improve
As of Jun 30, 2022, Tier 1 leverage ratio was 8.68%, up from 7.83% at the end of the year-earlier quarter. Common equity Tier 1 ratio was 11.06%, up from 10.98% as of Jun 30, 2021.
At the end of the second quarter, return on average assets was 1.38%, up from the year-ago period’s 1.01%. Return on average common equity was 14.39%, up from 10.20% in the prior-year quarter.
Share Repurchase Update
During the quarter, Hancock Whitney repurchased 804,368 shares at an average price of $47.21 per share.
2022 Outlook
Management projects core loans to grow 6-8%, with a target of reaching the upper end of the range. The company expects loan growth to moderate in the third quarter before rebounding in the last quarter of 2022.
The company expects deposits to be flat to slightly down.
NIM is expected to continue widening on expected future rate hikes. The company anticipates for each 25 bps rise in Fed Funds rate to widen NIM by 4-6 bps.
Secondary mortgage fees are anticipated to continue declining as rates rise, leading to a slowdown in refinancing activities.
Our View
Supported by a solid balance-sheet position and an improving credit quality, Hancock Whitney remains well poised for growth. With expectations of higher interest rates and decent loan demand, the company is likely to witness growth in NII in the quarters ahead. Yet, the dismal performance of the mortgage business is a concern.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Washington Federal’s (WAFD - Free Report) third-quarter fiscal 2022 (ended Jun 30) earnings of 91 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The figure reflects a year-over-year jump of 49.2%.
Results were primarily aided by higher revenues and improving loan balances. However, an increase in expenses and higher provisions were the undermining factors for WAFD.
Commerce Bancshares, Inc. (CBSH - Free Report) is scheduled to release quarterly numbers on Jul 21.
Over the past 30 days, the Zacks Consensus Estimate for Commerce Bancshares’ quarterly earnings has moved 2.2% north to 95 cents. This suggests a 27.5% decrease from the prior-year quarter.
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Hancock Whitney (HWC) Q2 Earnings Beat on Higher NII, Loans
Hancock Whitney Corporation’s (HWC - Free Report) second-quarter 2022 earnings of $1.38 per share outpaced the Zacks Consensus Estimate of $1.34. The bottom line rose marginally from the prior-year quarter’s adjusted earnings of $1.37.
Results benefited from higher net interest income (NII), a fall in non-interest expenses, a rise in loan balance and provision benefit. However, a decline in non-interest income, mainly due to rising mortgage rates, was the undermining factor.
Net income came in at $121.4 million, jumping 36.9% year over year.
Revenues Rise, Expenses Fall
Total revenues were $331.4 million, up slightly year over year. The top line also beat the Zacks Consensus Estimate of $328.2 million.
NII (on a tax-equivalent basis) grew 4.6% to $248.3 million. Net interest margin (NIM) was 3.04%, rising 8 basis points (bps).
Non-interest income was $85.7million, declining 9.1%. A drastic fall in secondary mortgage market operations fees mainly led to this decrease.
Total non-interest expenses plunged 21% to $187.1 million. The decline was mainly attributable to lower personnel expenses.
Efficiency ratio decreased to 54.95% from 57.01% in the year-ago quarter. A decline in efficiency ratio indicates an improvement in profitability.
As of Jun 30, 2022, total loans were $21.8 billion, up 2.5% from the prior-quarter end. Total deposits declined 2.1% to $29.9 billion.
Credit Quality Improves
Provision for loan losses was a benefit of $9.8 million compared with a benefit of $17.2 million in the prior-year quarter. Net recoveries (annualized) were 0.01% of average total loans against 0.20% of net charge-offs in the last year's quarter.
Total non-performing assets plunged 54.9% from the prior-year quarter to $44 million.
Capital & Profitability Ratios Improve
As of Jun 30, 2022, Tier 1 leverage ratio was 8.68%, up from 7.83% at the end of the year-earlier quarter. Common equity Tier 1 ratio was 11.06%, up from 10.98% as of Jun 30, 2021.
At the end of the second quarter, return on average assets was 1.38%, up from the year-ago period’s 1.01%. Return on average common equity was 14.39%, up from 10.20% in the prior-year quarter.
Share Repurchase Update
During the quarter, Hancock Whitney repurchased 804,368 shares at an average price of $47.21 per share.
2022 Outlook
Management projects core loans to grow 6-8%, with a target of reaching the upper end of the range. The company expects loan growth to moderate in the third quarter before rebounding in the last quarter of 2022.
The company expects deposits to be flat to slightly down.
NIM is expected to continue widening on expected future rate hikes. The company anticipates for each 25 bps rise in Fed Funds rate to widen NIM by 4-6 bps.
Secondary mortgage fees are anticipated to continue declining as rates rise, leading to a slowdown in refinancing activities.
Our View
Supported by a solid balance-sheet position and an improving credit quality, Hancock Whitney remains well poised for growth. With expectations of higher interest rates and decent loan demand, the company is likely to witness growth in NII in the quarters ahead. Yet, the dismal performance of the mortgage business is a concern.
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.
Performance & Earnings Date of Other Banks
Washington Federal’s (WAFD - Free Report) third-quarter fiscal 2022 (ended Jun 30) earnings of 91 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The figure reflects a year-over-year jump of 49.2%.
Results were primarily aided by higher revenues and improving loan balances. However, an increase in expenses and higher provisions were the undermining factors for WAFD.
Commerce Bancshares, Inc. (CBSH - Free Report) is scheduled to release quarterly numbers on Jul 21.
Over the past 30 days, the Zacks Consensus Estimate for Commerce Bancshares’ quarterly earnings has moved 2.2% north to 95 cents. This suggests a 27.5% decrease from the prior-year quarter.