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Why Is Hancock Whitney (HWC) Up 8.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have added about 8.7% 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 its most recent earnings report in order to get a better handle on the important drivers.
Hancock Whitney Q2 Earnings Beat on Higher NII, Loans
Hancock Whitney’s 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 (excluding Paycheck Protection Program or PPP 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. Notably, deposits are expected to rise in the fourth quarter on seasonality.
Operating pre-provision net revenues are projected to be up 16-18%.
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.
Non-interest income is expected to be down 1-3% year over year due to lower secondary mortgage fees.
Non-interest expenses are anticipated to be down 1-3%, with an assumption of reaching the lower band of the target on a higher level of incentive pays.
Efficiency ratio is targeted to remain below 55%.
Reserve for credit losses will be driven by future assumptions in economic forecasts. The company does not expect any further reserve releases on the back of the current macroeconomic backdrop. Management expects no or low provisions for the remaining two quarters of 2022.
The effective tax rate is anticipated to be 19-21%.
Three-Year Corporate Strategic Objectives (to be Achieved by 4Q24)
Return on assets of 1.35-1.45% is expected.
Tangible common equity (TCE) of more than 8% is anticipated.
Return on TCE is expected to be more than 15%.
The efficiency ratio of less than or equal to 55% is targeted.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 8.36% due to these changes.
VGM Scores
At this time, Hancock Whitney has a subpar Growth Score of D, however its Momentum Score is doing a bit 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 second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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 8.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have added about 8.7% 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 its most recent earnings report in order to get a better handle on the important drivers.
Hancock Whitney Q2 Earnings Beat on Higher NII, Loans
Hancock Whitney’s 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 (excluding Paycheck Protection Program or PPP 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. Notably, deposits are expected to rise in the fourth quarter on seasonality.
Operating pre-provision net revenues are projected to be up 16-18%.
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.
Non-interest income is expected to be down 1-3% year over year due to lower secondary mortgage fees.
Non-interest expenses are anticipated to be down 1-3%, with an assumption of reaching the lower band of the target on a higher level of incentive pays.
Efficiency ratio is targeted to remain below 55%.
Reserve for credit losses will be driven by future assumptions in economic forecasts. The company does not expect any further reserve releases on the back of the current macroeconomic backdrop. Management expects no or low provisions for the remaining two quarters of 2022.
The effective tax rate is anticipated to be 19-21%.
Three-Year Corporate Strategic Objectives (to be Achieved by 4Q24)
Return on assets of 1.35-1.45% is expected.
Tangible common equity (TCE) of more than 8% is anticipated.
Return on TCE is expected to be more than 15%.
The efficiency ratio of less than or equal to 55% is targeted.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 8.36% due to these changes.
VGM Scores
At this time, Hancock Whitney has a subpar Growth Score of D, however its Momentum Score is doing a bit 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 second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hancock Whitney has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.