Hancock Whitney Corp. Q3 2024 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2024. Hancock Whitney Corporation is a financial holding company headquartered in Gulfport, Mississippi, operating primarily through its wholly-owned subsidiary, Hancock Whitney Bank. The company serves customers in Mississippi, Alabama, Louisiana, Florida, Texas, Tennessee, and Georgia. It is classified as a large accelerated filer.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Income | $115.6 million | $97.7 million | $338.7 million | $342.0 million |
| Diluted EPS | $1.33 | $1.12 | $3.88 | $3.92 |
| Net Interest Income (TE) | $274.5 million | $272.1 million | $816.7 million | $836.4 million |
| Noninterest Income | $95.9 million | $86.0 million | $272.9 million | $249.5 million |
| Noninterest Expense | $203.8 million | $204.7 million | $617.6 million | $607.7 million |
| Provision for Credit Losses | $18.6 million | $28.5 million | $40.3 million | $42.2 million |
| Total Assets | $35.2 billion | $36.3 billion | — | — |
| Total Loans | $23.5 billion | $24.0 billion | — | — |
| Total Deposits | $29.0 billion | $30.3 billion | — | — |
| Stockholders' Equity | $4.2 billion | $3.5 billion | — | — |
| Net Interest Margin (TE) | 3.39% | 3.27% | 3.36% | 3.37% |
| Efficiency Ratio | 54.42% | 56.38% | 55.67% | 55.14% |
| CET1 Ratio | 13.78% | 12.06% | — | — |
Material Changes vs. Prior Period
- Profitability: Q3 2024 net income increased 18% year-over-year, driven by higher noninterest income and a lower provision for credit losses, despite a slight decline in net interest income for the nine-month period.
- Asset Quality: Nonaccrual loans increased to $82.9 million (0.35% of total loans) from $59.0 million at year-end 2023. Criticized commercial loans rose to $508.0 million, reflecting normalization from the post-pandemic benign environment. Net charge-offs for Q3 were $18.0 million (0.30% annualized), up from $7.3 million in Q2 2024.
- Balance Sheet: Total loans decreased 2% year-over-year to $23.5 billion, primarily due to a strategic reduction in shared national credits and higher payoffs in commercial real estate. Total deposits declined 4% year-over-year to $29.0 billion, with a shift from noninterest-bearing to interest-bearing products.
- Capital: Stockholders' equity grew 19% year-over-year to $4.2 billion, bolstered by net income and a significant improvement in Accumulated Other Comprehensive Income (AOCI) due to unrealized gains on securities.
Guidance, Outlook, and Risks
- Economic Outlook: Management utilizes Moody's forecasts, weighting a baseline scenario at 40% and a mild recessionary scenario (S-2) at 60%. They anticipate slower near-term growth or a mild recession is reasonably possible.
- Guidance:
- Net Interest Margin: Modest expansion expected in Q4 2024, assuming two 25 basis point rate cuts by the Federal Reserve.
- Noninterest Income: Expected to be up 6-7% for full-year 2024 compared to 2023 adjusted levels.
- Noninterest Expense: Expected to be up 1-2% for full-year 2024 compared to 2023 adjusted levels.
- Loans: Expected to be flat or slightly down at year-end 2024 compared to 2023.
- Risks and Contingencies:
- FDIC Special Assessment: The company has accrued $30.7 million for the FDIC special assessment related to the Silicon Valley Bank and Signature Bank failures. The final amount remains uncertain pending the termination of receiverships.
- Interest Rate Risk: The company is currently asset-sensitive. A 100 basis point increase in rates is projected to increase Net Interest Income (NII) by 1.73% in Year 1, while a 100 basis point decrease would reduce NII by 1.79%.
- Credit Quality: Continued monitoring of commercial real estate and shared national credits is required as economic conditions evolve.
Investor Verification Checklist
- FDIC Assessment Finality: Verify if the $30.7 million accrual for the FDIC special assessment changes as receiverships conclude.
- Criticized Loan Migration: Monitor the trend of criticized commercial loans, which increased 34% quarter-over-quarter, to ensure it remains a normalization trend rather than a deterioration signal.
- Deposit Stability: Assess the stability of the deposit base given the 4% year-over-year decline and the shift toward higher-cost interest-bearing products.
- Shared National Credit Reduction: Confirm the continued strategic reduction of shared national credits (down to 9.7% of total loans) and its impact on loan growth.
- Securities Portfolio Valuation: Review the impact of interest rate changes on the $7.8 billion securities portfolio, noting the significant unrealized gains contributing to AOCI.