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Edited Transcript of HBHC earnings conference call or presentation 16-Oct-19 1:30pm GMT

Q3 2019 Hancock Whitney Corp Earnings Call

GULFPORT Oct 26, 2019 (Thomson StreetEvents) -- Edited Transcript of Hancock Whitney Corp earnings conference call or presentation Wednesday, October 16, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christopher S. Ziluca

Hancock Whitney Corporation - Executive VP & Chief Credit Officer

* John M. Hairston

Hancock Whitney Corporation - President, CEO & Director

* Michael M. Achary

Hancock Whitney Corporation - Senior EVP & CFO

* Trisha Voltz Carlson

Hancock Whitney Corporation - Executive VP & IR Manager

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Conference Call Participants

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* Bradley Jason Milsaps

Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research

* Catherine Fitzhugh Summerson Mealor

Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP

* Matthew Covington Olney

Stephens Inc., Research Division - MD

* Michael Edward Rose

Raymond James & Associates, Inc., Research Division - MD of Equity Research

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Hancock Whitney Corporation's Third Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this call may be recorded.

I would now like to introduce your host for today's conference, Trisha Carlson, Investor Relations Manager. You may begin.

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Trisha Voltz Carlson, Hancock Whitney Corporation - Executive VP & IR Manager [2]

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Thank you and good morning. During today's call, we may make forward-looking statements. We would like to remind everyone to review the safe harbor language that was published with yesterday's release and presentation and in the company's most recent 10-K, including the risk and uncertainties identified therein.

Hancock Whitney's ability to accurately project results or predict the effects of future plans or strategies or predict market or economic developments is inherently limited.

We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions, but our actual results and performance could differ materially from those set forth in our forward-looking statements.

Hancock Whitney undertakes no obligation to update or revise any forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements.

In addition, some of the remarks this morning contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables.

The presentation slides included in our 8-K are also posted with the conference call webcast link on the Investor Relations website.

We will reference some of these slides in today's call.

Participating in today's call are John Hairston, President and CEO; Mike Achary, CFO; and Chris Ziluca, Chief Credit Officer.

I will now turn the call over to John Hairston.

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [3]

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Thanks, Trisha, and good morning, everyone. Our third quarter earnings were solid, despite noise from the late quarter closing and simultaneous integration of MidSouth. We also noted positive operating leverage, reduced NPLs, specifically TDRs, outperformed in fee income, controlled expenses, all leading to a top line driven beat to Street consensus.

EPS for the quarter was $0.77. This included almost $29 million or $0.26 per share of merger related expenses. Operating leverage was better by almost $6 million with revenue up $7 million linked quarter and operating expense up only $1.2 million. Again, there were only 10 days of MidSouth included in our results, so no significant operating earnings impact in third quarter.

While our NIM narrowed 4 basis points in the quarter, our recovery from a support services energy credit and a proactive stance from reducing deposit cost helped offset a fed cut in rates.

Credit results were a bit mixed with higher charge-offs related to a one-off RBL bankruptcy and criticized loans were up due to the addition of MidSouth and the recent SNC exam. MidSouth added $82 million of energy loans mostly support services to our portfolio. While this added to our overall energy exposure, our organic reductions in energy exposure resulted with total energy remaining below 5% of total loans.

We expect to see continued reductions in our energy exposure through the next several quarters.

As previously announced, our acquisition of MidSouth Bancorp closed September 20, effective September 21. During that same weekend, we also converted MidSouth clients to our technology systems, closed and/or consolidated 20 branches and welcomed MSL employees as new Hancock Whitney associates. I want to take this opportunity to congratulate the teams on both sides of the transaction for an on-time, under-budget integration with exceptional quality and attention to client experience. Our capital remained strong with TCE up 7 basis points from June 30 ending the quarter at 8.82%. TCE declined 15 basis points from the MidSouth acquisition due to a higher level of goodwill booked with the transaction. However, net retained earnings were strong enough to help offset that and still build capital.

We believe this acquisition is a good example of our overall M&A strategy and fill markets with a high level of cost saves and immediately accretive to EPS. It also gives us opportunities for growth in new markets in North Louisiana and the Dallas metropolitan area. With a solid stream of earnings and strong capital, late in the quarter, our Board authorized an increased buyback authorization of 5.5 million shares. This authorization is good through 2020, and we expect to apply it to repurchase stock when the timing is appropriate. As a reminder, we issued just over 5 million shares to former MidSouth shareholders, and we welcome those new shareholders to Hancock Whitney.

With regards to CSOs, we do acknowledge the operating environment, especially the interest rate environment has significantly changed since January.

Our goals do not include today's rate environment, which is negative but they also did not include any M&A or stock repurchase activity.

MidSouth is a positive to operating leverage and will partially offset the impact of lower rates. During the fourth quarter, we will finalize our updated business plan and will reset any of these metrics as appropriate during the process. As we do every January, we will announce new CSOs and discuss positive and negative variances during our January call.

With that, I will turn the call over to Mike for a few additional comments and details.

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [4]

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Thanks, John. Good morning, everyone. Earnings for the third quarter, excluding the merger related expenses associated with the MidSouth acquisition, were $1.03, up $0.02 from last quarter. I'll start off by first running through an update around what we acquired with MSL. The acquired loan book totaled $785 million net of a $41 million or 5% loan mark.

As a result of an extensive cleanup process by MSL, only $48 million of the acquired portfolio came over as criticized. What we acquired fits nicely with our strategy of a more granular and better yielding loan book. To that end, the yield on the acquired portfolio was a healthy 5.57%.

Slide 8 in our earnings deck shows the impact on our loan portfolio of the acquired book as well as this quarter's organic loan production.

MSL's deposit portfolio fits nicely as well. The $1.3 billion of low cost core deposits were acquired with a 38 basis point cost, which of course is beneficial to our overall NIM. We put that money to work right away and paid down some higher cost borrowings late in the quarter.

Changing topics and moving to our operational results, a bright spot, we think for the quarter, was our NIM management. So our reported NIM did compress 4 basis points from last quarter about what we had guided but with lots of moving pieces and parts.

Slide 14 details the major items driving the change. As we reported for several quarters now, but once again, interest recoveries were part of our results. In the third quarter, interest recoveries drove a 5 basis point positive change in the NIM.

As a reminder, last quarter, we reported 3 basis points of recoveries. As we increased the bond purchases this quarter in anticipation of the MSL acquisition, our mix of earning assets suffered a bit as we increased the size of the bond portfolio. That dynamic impacted the NIM by about 4 basis points. The size of the bond portfolio will come down to our targeted level of about $6.2 billion early in the fourth quarter.

The lower rate environment drove our NIM to the higher end of our 2 to 4 basis point guidance with rate cuts in July and September impacting the quarter's NIM. Also lower mortgage rates led to a higher level of premium amortization, up almost $1 million and compressing the NIM by 1 basis point. Finally, a favorable change in our mix of borrowings helped the balance sheet as we paid down some higher cost funding, leading to a 3 basis point impact to the margin.

Looking forward, we will continue to be proactive with our efforts to, as much as possible, offset the impact of future rate cuts by reducing deposit cost.

As you can see from the chart on the bottom left of Slide 14, we were proactive in lowering deposit cost during the quarter and we'll continue to do so.

Our guidance for the fourth quarter NIM is for additional narrowing of 2 to 4 basis points. Fee income was a bright spot for the quarter, especially fee income continued its positive trend within noninterest income, with quarter-over-quarter increases in syndication fees and derivative income.

The quarter also reflects increases in most of the business lines. And with only 10 days of MSL in the quarter, the impact from that transaction was minimal. As a result of the continued strong performance of most business lines, we increased our overall guidance for year-over-year growth in noninterest income to around 10%. Operating expense was another bright spot for the quarter, with a reported increase of only $1.2 million. The main driver of this increase was the higher level of annual valuation adjustments on foreclosed assets partly offset by gains on sales of properties.

As we factor in MSL for the full fourth quarter, we increased our year-over-year guidance for expense growth slightly to 7% to 8%. We expect to harvest the remaining cost saves by year-end and we'll have MSL fully integrated by January 1 of 2020. As we noted in our guidance when fully reflected next quarter, we would expect that the MSL-related merger cost to come in about $4 million to $6 million lower than initially projected.

One final item before I turn the call back to John for Q&A. Slide 13 details our current expectations around the impact of CECL. Please note that the guidance of a 20% to 30% increase in the allowance for credit losses does not yet include MSL.

I will now turn the call back over to John.

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [5]

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Thanks, Mike. Katherine, let's just go straight to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Michael Rose with Raymond James.

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Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD of Equity Research [2]

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Maybe we can just start on the margin, Mike. I appreciate the 2 to 4 basis points guidance. What does that assume in terms of potential rate cuts? Looks like there's pretty high probability, we get 1 in October as well as thoughts around the ability to further reduce deposit cost. And if you can remind us, how much of the book roughly is exception price?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [3]

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Sure. I'd be glad to, Michael. So as we think about the fourth quarter, we certainly have a couple of headwinds to kind of overcome. We kind of called out in the numbers that we had, had 5 basis points of interest recoveries this past quarter.

Certainly, we continue -- can continue to have some level of interest recoveries but certainly aren't expecting that level or magnitude. The other items, of course, would be the full quarter impact of the September rate cut, and we are assuming an -- a late October rate cut as well. So those 2 cuts, the full impact of September, partial impact of October is kind of built into our guidance.

Now on the positive side, of course, we'll have a full quarter's impact with MSL. We're kind of calling out the impact of MSL on our NIM at around 4 basis points as opposed to the 3, we had kind of talked about at announcement. And then finally, in the fourth quarter, we usually have a pretty nice inflow of DDA deposits, plus we did pay down some of our borrowings, specifically brokered CDs in the fourth quarter. So that will kind of round out the guidance to the narrowing of 2 to 4.

You also asked about deposit cost. We have been proactive in reducing our deposit cost this past quarter. I think there's a slide and a chart in the materials that really kind of called that out. And as we mentioned in the prepared comments, we'll continue to be proactive in reducing our deposit costs. So that's something that we did last quarter and we'll continue to do so going forward.

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Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD of Equity Research [4]

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Mike, that's great color. Maybe just as a follow-up because we've heard it on a couple of calls this morning. Can you just describe just overall the outlook for the energy portfolio? I know there was a charge-off this quarter. You guys appear to have pretty healthy reserves, but can you just give us high-level outlook for energy migration from here?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [5]

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We do. We actually built those reserves a little bit this quarter. But I'll turn it over to Chris Ziluca to give some color around the energy book.

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Christopher S. Ziluca, Hancock Whitney Corporation - Executive VP & Chief Credit Officer [6]

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Yes. So during the quarter, obviously, we had the one-off charge in the RBL, and we did have a little additional migration in the criticized loan levels.

We don't really see substantial increased migration in that portfolio. Matter of fact, there is some opportunity for some upside. But as the cycle, kind of, continues to wind forward, we continue to watch for some credits in the portfolio and where they might head. But I don't really see anything dramatic in the near future related to our energy portion of our portfolio.

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Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD of Equity Research [7]

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So the issues that you're seeing, are they marginally unrecovered or credits from years ago on the service side? Or are these really new issues kind of popping up at this point? Or is it just kind of legacy issues that are just resolving themselves now?

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Christopher S. Ziluca, Hancock Whitney Corporation - Executive VP & Chief Credit Officer [8]

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Yes. So most of them are more legacy-related credits. None of the newer credits that were -- that we've booked in the past year or 2, really presenting issues for us. So we'll just continue to kind of work through some unique issues with those individual credits.

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [9]

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Michael, this is John. And just to give you a little bit more color that maybe helpful. The migration that Chris mentioned earlier was actually in the RBL side, not the services side. And we actually saw improvement in the services book through the quarter without the migration. And I am limiting myself from restricted comment. We would have actually had a fairly healthy reduction in criticized net of the RBL migration that was really more centered in the SNC exam. And to be specific about the credits, these were not new credit issues, these were more organizations that had been grappling with issues for some time and with the lack of liquidity available, specifically areas they have depended on in the past, they went into bankruptcy and ended up actually showing up in the NPLs. Does this add up?

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Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD of Equity Research [10]

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Okay. So the -- yes, it is unless this SNC exam helped drove some of the increase. Okay.

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [11]

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And as a reminder, I think we had put in the deck 100% of the SNC exam downgrades were reflected in the numbers. So there's no trailing items from the SNC exam we expect to bear in Q4.

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Operator [12]

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And our next question comes from Brad Milsaps with Sandler O'Neill.

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Bradley Jason Milsaps, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [13]

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Mike, maybe I wanted to start with expenses. You -- really good cost control this quarter. Obviously, fee income continues to do really well for you guys, which typically also means some higher expense quarters but it didn't play out that way this quarter. Just kind of curious kind of the puts and takes on the expense side and kind of how you guys were thinking about controlling those costs going forward, particularly, with MSL coming into the fold?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [14]

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Sure. Absolutely, Brad. So yes, a good quarter in terms of our ability to control expenses, expense is only up about $1.2 million. We kind of called out the biggest negative for the quarter and that was the $1.7 million increase in ORE expense. And I think the materials do a good job of kind of calling out and explaining what that difference was. But I think the other things certainly that we're doing is, we're doing a good job of creating opportunities to reduce costs so that we continue to invest in the company.

Last quarter, we talked about some of the digital and other related investments that we're making. We're continuing to make those investments. They don't show up this quarter in the list of variances because again, I think we were able to create some room for those investments and expenses but those items will continue going forward.

Now certainly, in the fourth quarter, one item I'll call out is, we'll have some, what we call, temporary expenses related to MSL as we kind of complete our process of harvesting the cost saves. So again, reaffirming the previous guidance that we've given around the 50% to 55% cost saves and having that fully reflected and in place by year-end so that we can walk into 2020 with an efficient operation related to that transaction.

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Bradley Jason Milsaps, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [15]

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And may be bigger picture, do you think with the NIM compression that you expect you'll be able to continue to generate positive operating leverage as you move out over the next several quarters? Or is the revenue environment as such that it will make it more challenging?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [16]

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Well, certainly it's challenging with the rate environment and we kind of talked about our NIM guidance for the fourth quarter. We have, again, a full quarter's impact of September rate cut, and then we're assuming the fed does move in October. As of right now, we have no additional rate cuts projected for the rest of the year. So certainly if that happens in that manner, that will be helpful to revenue. We also, as a reminder, typically have one of the better quarters for loan growth in the fourth quarter from a seasonal point of view. So when we put all that together, certainly we're looking to continue to generate positive operating leverage into the fourth quarter and kind of beyond. Certainly, the operating leverage that we generate in the third quarter was significant. I don't know that will be at that same level in the fourth quarter but certainly positive going forward.

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Bradley Jason Milsaps, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [17]

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Okay. Great. And then one last follow-up. Does your NIM guidance, does that include impact from any additional accretion from MidSouth or any recoveries there, would that be above and beyond kind of that 2 to 4 basis points of compression?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [18]

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We have some level of accretion kind of built into the fourth quarter numbers. At this point, no specific recoveries though for the fourth quarter.

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Operator [19]

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And our next question comes from Matt Olney with Stephens.

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Matthew Covington Olney, Stephens Inc., Research Division - MD [20]

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Wanted to start on the fees. Obviously, a good quarter on fee income. I think MidSouth will bring over a few million dollars of fee income in the fourth quarter. It just looked like the 10% full year guidance on fee income growth could be a little conservative. Can you just walk us through some of the various lines and help us appreciate what we should be looking forward in fourth quarter? And are there any lines in there that you think could be sequentially lower in the fourth quarter?

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [21]

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Matt, this is John. I'll start and then Mike can add some commentary if he'd like to. The fourth quarter -- let's first talk about those things that have the potential to diminish and it's purely seasonal. Once you get past the middle of November through about the end of January, typically mortgage transactional business tails off a bit. As do -- even in this environment the swaps, it's not because any appetite changes just things get a little busy that particular time of the year. All other business lines would be expected to perform well and certainly with the rate drop in September and if the one in October late does indeed happen, our team expresses some potential thought that mortgage and swap derivative income may actually outperform that normal seasonal reduction. So it's pretty hard to predict because we don't know what the rate cut may or may not be in October. But generally speaking from a seasonal perspective, fourth quarter dips a little from Q4 tied primarily to mortgage and refi specifically. If the rate cut stimulates production, then that diminishment may not occur. So that the 10% is basically trying to split the gap there and come up with something we think is a reasonable expectation.

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Matthew Covington Olney, Stephens Inc., Research Division - MD [22]

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That's helpful. And then what about the impact from MidSouth? I know that portfolio has been shrinking and you've been closing some branches. Could the fee income run rate there also slow compared to what we've seen over the last few quarters from MidSouth?

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [23]

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There's a couple of moving parts, and it's a good question. It's worth noting the Hancock Whitney's fee income penetration of revenue is right at 27%, where MidSouth's, at least for the second quarter, which was the only closed quarter we've got referred to was 23%. So there's a fair number of products that have not yet been offered at least not from the core bank to the MidSouth clientele. That's not going to all materialize immediately because there is always some distraction as the team members get comfortable and reach a cadence in offering that type of product line. So there is a good fee income potential to come forward. Note that MidSouth really didn't have a mortgage business to speak up, so there really is no downside Q4 to Q3 in that book for fee income related to mortgage because there weren't any in the third quarter to cause it to diminish, if that makes sense. And the derivatives and swaps were certainly not part of that book either. So the reasons for a pullback in Q4 for Hancock Whitney would not apply to the MSL book.

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Matthew Covington Olney, Stephens Inc., Research Division - MD [24]

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Got it, okay. That's helpful. And then just as a follow-up, I appreciate the details that you gave us on Slide 8 that talks about the remix of the loan portfolio. And it looks like the last few quarters have a pretty high correlation with the prime rate. I'm showing that new loan yields prime minus 25 bps on average or somewhere close to that. Is that the right way to think about the new loan yields as we move forward the next few quarters in a lower interest rate environment prime minus 25?

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [25]

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Well, that's a tough one. I think it's fair to say we are still, even in Q4 -- excuse me, 3, and even in late Q3, even with the rate reduction in September, we're still booking business at a positive GAAP to portfolio. Get 2 or 3 more rate decreases, that certainly becomes more challenging. And so we still believe that the new loan yields have an opportunity together with the remix to help with overall yield but every 2 or 3 month rate decreases, certainly, are challenge to that.

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [26]

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And Matt, this is Mike. I think I would add to that the fact that the correlation with prime rate for the kind of loans we're making around our remix focus, I think, is pretty coincidental. I don't know that that's a real cause and effect.

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [27]

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LIBOR is a bigger driver than prime for us.

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Operator [28]

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And our next question comes from Catherine Mealor with KBW.

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Catherine Fitzhugh Summerson Mealor, Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP [29]

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I wanted to ask a question on growth. It feels like -- we were expecting kind of mid-single-digit growth rate, excluding MidSouth going into the back half of the year and now we've got mid-single digit even with MidSouth. And so can you just kind of talk about some of the growth dynamics in your portfolio where you're seeing some of the slowdown, where you see, maybe, more opportunity going into the fourth quarter? And then if you can provide kind of a growth rate that you would assume to be appropriate for us to think about for next year?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [30]

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Catherine, I'll go ahead and start and then hand it over to John for color. But specifically for the fourth quarter, when we think about growth in terms of the guidance that we've given of mid-single digits average growth year-over-year, what we're looking at specifically is probably something between 4.5% and 5.5%, so right at about 5% or so. And that should translate into fourth quarter, end-of-period growth of about $275 million to $325 million. So as you know, as mentioned earlier, the fourth quarter tends to be a better growth quarter from a seasonal point of view. So certainly, there could be some potential to outperform that growth a bit. Specifically related to MSL, we really have assumed no additional growth in the fourth quarter just yet related to that book. So if we're able to grow the acquired book then certainly that's some upside to those numbers as well. So hopefully that makes sense.

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Catherine Fitzhugh Summerson Mealor, Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP [31]

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Okay. So on a dollar basis, you're saying fourth quarter end-of-period growth should be between $275 million and $325 million?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [32]

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That's correct. Yes.

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Catherine Fitzhugh Summerson Mealor, Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP [33]

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That's right. Okay. That's a big jump from what we've seen in the past couple of quarters.

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [34]

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It would be. And this is John, and in addition to the color -- I think, Mike did a good job giving that color. The only thing I would add is the pipeline for end of 3Q is, I'm going to call it, 27% better than end of quarter June. So the pipeline improvement coupled with some possibilities, not factoring the number Mike gave about MSL recovering some business that may have dwindled in the past couple of years. With the seasonal line utilization increases we always get in Q4 are all tailwinds to growth. And just as a reminder, remember there was -- we were -- weren't kidding around having that 5% loan concentration in energy of being a high watermark in bringing that total down. So the reduction of about $60 million in the organic Hancock Whitney book for energy was a deliberate action that we took in 3Q to make room, if you will, for the additional volume coming in from the MidSouth acquisition. And so that was a consumer growth too. So the storyline for 3Q, while growth was not impressive, spreads remained good and the mix change was good, and it also allowed us to reduce the energy number down below what we have as our tower. So there were a few moving pieces there but it wasn't a lack of production, it was more the mix changes we're making in the balance sheet that we believe are good for value in the long run.

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Catherine Fitzhugh Summerson Mealor, Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP [35]

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Yes, that's really helpful. And then maybe one other question on buybacks, you announced a buyback now that MidSouth has closed. Can you talk a little bit about how aggressive you feel like you'll be on that buyback? Is it more to manage at the capital levels or how price sensitive you are with that?

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Michael M. Achary, Hancock Whitney Corporation - Senior EVP & CFO [36]

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Catherine, this is Mike. So obviously, we disclosed that the Board increased that authority to the 5.5 million. And what I'll say about that is certainly we intend to exercise that authority, and I think you'll see us do that over the coming months.

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Operator [37]

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(Operator Instructions) I'm showing no further questions in the queue. I'd like to turn the call back to Mr. John Hairston for any closing remarks.

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John M. Hairston, Hancock Whitney Corporation - President, CEO & Director [38]

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Thank you, Katherine. And thanks to everyone for your interest in Hancock Whitney organization. I know you're busy, and we appreciate you dial-in on this call. Have a great day.

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Operator [39]

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Ladies and gentlemen, today's conference is -- ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now all disconnect.