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Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2023 earnings of $1.45 per share met the Zacks Consensus Estimate. The bottom line rose 3.6% from the prior-year quarter. Our estimate for earnings was $1.38 per share.
Results benefited from higher net interest income (NII), a rise in loan balance and increasing interest rates. However, lower non-interest income, higher expenses and a rise in provisions were concerning.
Net income was $126.5 million, rising 2.4% year over year. Our estimate for the metric was $120.3 million.
Revenues Improve, Expenses Rise
Total revenues were $365.3 million, up 17.1% year over year. The top line surpassed the Zacks Consensus Estimate of $364.9 million. Our estimate for revenues was $361.8 million.
NII (on a tax-equivalent basis) jumped 24.5% year over year to $287.6 million. The net interest margin was 3.55%, rising 74 basis points. Our estimate for NII was $288 million. We had projected a NIM of 3.57% for the first quarter.
Non-interest income was $80.3 million, declining 3.7% year over year. The decline was due to a fall in service charges on deposit accounts, secondary mortgage market operations and other income. Our estimate for non-interest income was $76.5 million.
Total non-interest expenses increased 11.6% year over year to $200.9 million. We had projected expenses of $196.4 million.
The efficiency ratio decreased to 53.76% from 56.03% in the year-ago quarter. A decline in the efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2023, total loans were $23.4 billion, up 1.3% from the prior quarter's end. Total deposits increased 1.9% sequentially to $29.6 billion. Our estimates for total loans and deposits were $23.9 billion and $30.2 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $6 million against a benefit of $22.5 million in the prior-year quarter. Our estimate for provisions was $13.5 million. Net charge-offs (annualized) were 0.10% of average total loans, up from 0.01% in the last year's quarter.
Capital & Profitability Ratios Solid
As of Mar 31, 2023, the Tier 1 leverage ratio was 9.63%, up from 8.38% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 11.61%, up from 11.12% as of Mar 31, 2022.
At the end of the first quarter, the return on average assets was 1.46%, up from the year-ago period’s 1.39%. The return on average common equity was 15.03%, up from 13.88% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2023 Outlook
Management expects total loans to grow in the low to mid-single-digit range.
The company expects total deposit growth in the flat to low-single-digit range.
Our View
Supported by a solid balance-sheet position, Hancock Whitney is well-poised for growth. Backed by higher interest rates and robust loan demand, the company is likely to witness growth in NII in the quarters ahead. Yet, the dismal performance of the mortgage business and worsening macroeconomic outlook are concerning.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Bank of America’s (BAC - Free Report) first-quarter 2023 earnings of 94 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The bottom line compared favorably with 80 cents earned in the prior-year quarter. Our estimate for earnings was 75 cents per share.
Driven by robust loan growth and rising interest rates, BofA recorded a solid improvement in NII. Backed by robust consumer spending, the company’s consumer banking business acted as a tailwind. However, as expected, BAC’s investment banking business did not perform well.
Wells Fargo’s (WFC - Free Report) first-quarter 2023 earnings per share of $1.23 outpaced the Zacks Consensus Estimate of $1.15. The figure improved 35% year over year.
WFC’s results benefited from higher net interest income, rising rates and solid average loan growth. A fall in non-interest expenses acted as another tailwind. Yet, dismal non-interest income, higher provisions and weakness in the mortgage business were the major undermining factors for WFC.
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Hancock Whitney (HWC) Q1 Earnings Meet, Revenues Rise Y/Y
Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2023 earnings of $1.45 per share met the Zacks Consensus Estimate. The bottom line rose 3.6% from the prior-year quarter. Our estimate for earnings was $1.38 per share.
Results benefited from higher net interest income (NII), a rise in loan balance and increasing interest rates. However, lower non-interest income, higher expenses and a rise in provisions were concerning.
Net income was $126.5 million, rising 2.4% year over year. Our estimate for the metric was $120.3 million.
Revenues Improve, Expenses Rise
Total revenues were $365.3 million, up 17.1% year over year. The top line surpassed the Zacks Consensus Estimate of $364.9 million. Our estimate for revenues was $361.8 million.
NII (on a tax-equivalent basis) jumped 24.5% year over year to $287.6 million. The net interest margin was 3.55%, rising 74 basis points. Our estimate for NII was $288 million. We had projected a NIM of 3.57% for the first quarter.
Non-interest income was $80.3 million, declining 3.7% year over year. The decline was due to a fall in service charges on deposit accounts, secondary mortgage market operations and other income. Our estimate for non-interest income was $76.5 million.
Total non-interest expenses increased 11.6% year over year to $200.9 million. We had projected expenses of $196.4 million.
The efficiency ratio decreased to 53.76% from 56.03% in the year-ago quarter. A decline in the efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2023, total loans were $23.4 billion, up 1.3% from the prior quarter's end. Total deposits increased 1.9% sequentially to $29.6 billion. Our estimates for total loans and deposits were $23.9 billion and $30.2 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $6 million against a benefit of $22.5 million in the prior-year quarter. Our estimate for provisions was $13.5 million. Net charge-offs (annualized) were 0.10% of average total loans, up from 0.01% in the last year's quarter.
Capital & Profitability Ratios Solid
As of Mar 31, 2023, the Tier 1 leverage ratio was 9.63%, up from 8.38% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 11.61%, up from 11.12% as of Mar 31, 2022.
At the end of the first quarter, the return on average assets was 1.46%, up from the year-ago period’s 1.39%. The return on average common equity was 15.03%, up from 13.88% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2023 Outlook
Management expects total loans to grow in the low to mid-single-digit range.
The company expects total deposit growth in the flat to low-single-digit range.
Our View
Supported by a solid balance-sheet position, Hancock Whitney is well-poised for growth. Backed by higher interest rates and robust loan demand, the company is likely to witness growth in NII in the quarters ahead. Yet, the dismal performance of the mortgage business and worsening macroeconomic outlook are concerning.
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 of Other Banks
Bank of America’s (BAC - Free Report) first-quarter 2023 earnings of 94 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The bottom line compared favorably with 80 cents earned in the prior-year quarter. Our estimate for earnings was 75 cents per share.
Driven by robust loan growth and rising interest rates, BofA recorded a solid improvement in NII. Backed by robust consumer spending, the company’s consumer banking business acted as a tailwind. However, as expected, BAC’s investment banking business did not perform well.
Wells Fargo’s (WFC - Free Report) first-quarter 2023 earnings per share of $1.23 outpaced the Zacks Consensus Estimate of $1.15. The figure improved 35% year over year.
WFC’s results benefited from higher net interest income, rising rates and solid average loan growth. A fall in non-interest expenses acted as another tailwind. Yet, dismal non-interest income, higher provisions and weakness in the mortgage business were the major undermining factors for WFC.