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Hancock Whitney (HWC) Q1 Earnings Beat on Fee Income Growth
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Hancock Whitney Corp.’s (HWC - Free Report) first-quarter 2024 adjusted earnings per share of $1.28 beat the Zacks Consensus Estimate of $1.18. However, the bottom line compared unfavorably with the $1.45 registered in the year-ago quarter.
The results were aided by an increase in non-interest income. Also, marginally higher loan balances were a tailwind. However, a decline in net interest income (NII), and higher expenses and provisions were the undermining factors.
After considering a revision to the FDIC Special Assessment, net income was $108.6 million, down 14.1% year over year. Our estimate for the metric was pinned at $99.1 million.
Revenues Decline, Expenses Rise
Revenues amounted to $354 million, down 3.1% year over year. The top line beat the Zacks Consensus Estimate of $353.2 million.
NII (on a tax-equivalent basis) declined 6.5% year over year to $269 million. The net interest margin (NIM) was 3.32%, which contracted 23 basis points (bps) from the prior-year quarter. Our estimates for NII and NIM were pegged at $275.3 million and 3.31%, respectively.
Non-interest income totaled $87.9 million, up 9.4% from the prior-year quarter's level. The rise was driven by an increase in almost all fee income components, except for bank card and ATM fees. We had projected non-interest income of $78.1 million.
Total non-interest expenses increased 3.4% year over year to $207.7 million. This includes an item of supplemental disclosure related to the FDIC special assessment. We had projected expenses of $206.4 million.
The efficiency ratio increased to 56.44% from 53.76% in the year-ago quarter. A rise in the efficiency ratio reflects a deterioration in profitability.
As of Mar 31, 2024, total loans amounted to $24 billion, up marginally from the prior-quarter level. Total deposits decreased marginally on a sequential basis to $29.8 billion. Our estimates for total loans and deposits were pinned at $23.9 billion and $29.6 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $13 million, up significantly from $6 million in the prior-year quarter. Our estimate for provisions was $18.7 million.
Net charge-offs (annualized) were 0.15% of average total loans, up 5 bps from the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Worsen
As of Mar 31, 2024, the Tier 1 leverage ratio was 10.49%, up from 9.63% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 12.67%, up from 11.60% as of Mar 31, 2023.
At the end of the first quarter, the return on average assets was 1.24%, down from the year-ago period’s 1.46%. The return on average common equity was 11.44%, down from 15.03% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2024 Outlook
Management expects period-end loan growth to be in the low-single digits, mostly in the second half of 2024.
Further, growth in deposit balances is anticipated to be in the low-single digits.
Adjusted pre-provision net revenues are expected to decrease 1-2% year over year.
NIM is expected to modestly expand on the assumptions of three rate cuts of 25 bps, each beginning in June 2024.
Adjusted non-interest income is expected to grow 3-4%.
Adjusted non-interest expenses are expected to rise 3-4%.
Management expects to maintain an efficiency ratio of 56-58%.
Hancock Whitney expects low to modest charge-offs and provisions for 2024.
The company expects an effective tax rate of 20-21%.
Our View
Hancock Whitney’s strategic expansion initiatives and strong loan balance will likely keep supporting top-line growth. While higher rates will aid NIM expansion, higher funding costs will exert pressure on it. However, weakening asset quality and increasing expense base are major headwinds.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
State Street’s (STT - Free Report) first-quarter 2024 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.48. The bottom line increased 11.2% from the prior-year quarter.
STT’s results were primarily aided by growth in fee revenues and lower provisions. Also, the company witnessed improvements in the total assets under custody and AUM balances. However, lower NIR and higher expenses were major headwinds.
Wells Fargo’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
Results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors for WFC.
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Hancock Whitney (HWC) Q1 Earnings Beat on Fee Income Growth
Hancock Whitney Corp.’s (HWC - Free Report) first-quarter 2024 adjusted earnings per share of $1.28 beat the Zacks Consensus Estimate of $1.18. However, the bottom line compared unfavorably with the $1.45 registered in the year-ago quarter.
The results were aided by an increase in non-interest income. Also, marginally higher loan balances were a tailwind. However, a decline in net interest income (NII), and higher expenses and provisions were the undermining factors.
After considering a revision to the FDIC Special Assessment, net income was $108.6 million, down 14.1% year over year. Our estimate for the metric was pinned at $99.1 million.
Revenues Decline, Expenses Rise
Revenues amounted to $354 million, down 3.1% year over year. The top line beat the Zacks Consensus Estimate of $353.2 million.
NII (on a tax-equivalent basis) declined 6.5% year over year to $269 million. The net interest margin (NIM) was 3.32%, which contracted 23 basis points (bps) from the prior-year quarter. Our estimates for NII and NIM were pegged at $275.3 million and 3.31%, respectively.
Non-interest income totaled $87.9 million, up 9.4% from the prior-year quarter's level. The rise was driven by an increase in almost all fee income components, except for bank card and ATM fees. We had projected non-interest income of $78.1 million.
Total non-interest expenses increased 3.4% year over year to $207.7 million. This includes an item of supplemental disclosure related to the FDIC special assessment. We had projected expenses of $206.4 million.
The efficiency ratio increased to 56.44% from 53.76% in the year-ago quarter. A rise in the efficiency ratio reflects a deterioration in profitability.
As of Mar 31, 2024, total loans amounted to $24 billion, up marginally from the prior-quarter level. Total deposits decreased marginally on a sequential basis to $29.8 billion. Our estimates for total loans and deposits were pinned at $23.9 billion and $29.6 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $13 million, up significantly from $6 million in the prior-year quarter. Our estimate for provisions was $18.7 million.
Net charge-offs (annualized) were 0.15% of average total loans, up 5 bps from the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Worsen
As of Mar 31, 2024, the Tier 1 leverage ratio was 10.49%, up from 9.63% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 12.67%, up from 11.60% as of Mar 31, 2023.
At the end of the first quarter, the return on average assets was 1.24%, down from the year-ago period’s 1.46%. The return on average common equity was 11.44%, down from 15.03% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2024 Outlook
Management expects period-end loan growth to be in the low-single digits, mostly in the second half of 2024.
Further, growth in deposit balances is anticipated to be in the low-single digits.
Adjusted pre-provision net revenues are expected to decrease 1-2% year over year.
NIM is expected to modestly expand on the assumptions of three rate cuts of 25 bps, each beginning in June 2024.
Adjusted non-interest income is expected to grow 3-4%.
Adjusted non-interest expenses are expected to rise 3-4%.
Management expects to maintain an efficiency ratio of 56-58%.
Hancock Whitney expects low to modest charge-offs and provisions for 2024.
The company expects an effective tax rate of 20-21%.
Our View
Hancock Whitney’s strategic expansion initiatives and strong loan balance will likely keep supporting top-line growth. While higher rates will aid NIM expansion, higher funding costs will exert pressure on it. However, weakening asset quality and increasing expense base are major headwinds.
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
State Street’s (STT - Free Report) first-quarter 2024 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.48. The bottom line increased 11.2% from the prior-year quarter.
STT’s results were primarily aided by growth in fee revenues and lower provisions. Also, the company witnessed improvements in the total assets under custody and AUM balances. However, lower NIR and higher expenses were major headwinds.
Wells Fargo’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
Results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors for WFC.