Hancock Whitney Corp. 2024 Q2 Filing Summary
Business Context and Reporting Period
This summary covers the Form 10-Q for Hancock Whitney Corporation for the quarterly period ended June 30, 2024. The Company is a financial holding company headquartered in Gulfport, Mississippi, operating primarily through its subsidiary, Hancock Whitney Bank. It serves customers in Mississippi, Alabama, Louisiana, Florida, Texas, Tennessee, and Georgia. The Company is classified as a large accelerated filer.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Income | $114.6 million | $117.8 million | $223.2 million | $244.3 million |
| Diluted EPS | $1.31 | $1.35 | $2.55 | $2.80 |
| Net Interest Income (TE) | $273.3 million | $276.7 million | $542.3 million | $564.3 million |
| Net Interest Margin (TE) | 3.37% | 3.30% | 3.34% | 3.42% |
| Noninterest Income | $89.2 million | $83.2 million | $177.0 million | $163.6 million |
| Noninterest Expense | $206.0 million | $202.1 million | $413.7 million | $403.0 million |
| Efficiency Ratio (Non-GAAP) | 56.18% | 55.33% | 56.31% | 54.54% |
| Total Assets | $35.41 billion | $36.21 billion | $35.41 billion | $36.21 billion |
| Total Loans | $23.91 billion | $23.79 billion | $23.91 billion | $23.79 billion |
| Total Deposits | $29.20 billion | $30.04 billion | $29.20 billion | $30.04 billion |
| Allowance for Credit Losses | $342.2 million | $345.7 million | $342.2 million | $345.7 million |
| CET1 Capital Ratio | 13.25% | 11.83% | 13.25% | 11.83% |
Material Changes vs. Prior Period
- Profitability: Net income decreased 2.7% year-over-year (Q2 2024 vs. Q2 2023) primarily due to higher provision for credit losses and increased noninterest expense, partially offset by growth in noninterest income. Sequentially, Q2 net income increased 5.5% compared to Q1 2024.
- Net Interest Income: Net interest income (TE) declined 1.2% year-over-year due to higher funding costs outpacing asset yield growth. However, the Net Interest Margin expanded 7 basis points sequentially to 3.37% driven by higher loan yields and lower deposit costs.
- Provision for Credit Losses: The provision increased to $8.7 million in Q2 2024 from $7.6 million in Q2 2023, reflecting normalization of credit metrics and higher net charge-offs ($7.3 million in Q2 2024 vs. $3.4 million in Q2 2023).
- Balance Sheet: Total loans remained relatively flat at $23.9 billion. Total deposits decreased 2.8% year-over-year to $29.2 billion, driven by outflows in noninterest-bearing deposits and brokered time deposits.
- Capital Actions: The Company increased its quarterly dividend by 33% to $0.40 per share and repurchased 312,993 shares of common stock in Q2 2024.
Guidance, Outlook, and Risks
- Economic Outlook: Management utilizes Moody's economic forecasts, weighting a baseline scenario at 40% and a mild recessionary scenario (S-2) at 60%. They anticipate a mild recession beginning in Q3 2024 lasting three quarters.
- Loan Growth: Management expects period-end loans at December 31, 2024, to be flat or slightly down compared to the prior year-end, citing disciplined pricing and potential economic slowdown.
- Expense Outlook: Noninterest expense is expected to be up 2-3% for the full year 2024 compared to 2023 adjusted levels.
- Income Outlook: Noninterest income is expected to be up 4-5% for the full year 2024 compared to 2023 adjusted levels.
- Risks: Key risks include the impact of prolonged elevated interest rates on loan demand and credit quality, potential recessionary pressures, and the uncertainty surrounding the FDIC special assessment related to the 2023 regional bank failures (accrued at $30.7 million as of Q2 2024).
- Asset Quality: Nonaccrual loans increased to $86.3 million (0.36% of total loans) from $59.0 million at year-end 2023. Criticized commercial loans increased to $379.8 million (2.05% of commercial portfolio), which management views as normalization following a benign credit environment.
Investor Verification Checklist
- FDIC Special Assessment: Verify the final liability amount related to the Silicon Valley Bank and Signature Bank systemic risk exception, currently accrued at $30.7 million but subject to change.
- Deposit Composition: Monitor the trend of noninterest-bearing deposits, which have declined to 36% of total deposits, and the reliance on wholesale funding (6.63% of core deposits).
- Credit Normalization: Track the trajectory of criticized commercial loans and net charge-offs to ensure they remain within the "normalization" range and do not signal a broader deterioration.
- Interest Rate Sensitivity: Review the Company's asset sensitivity profile and the impact of potential Federal Reserve rate cuts on Net Interest Margin, given the current elevated funding costs.
- Capital Deployment: Confirm the sustainability of the increased dividend ($0.40/share) and share repurchase program given the projected flat loan growth and expense increases.