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Hancock Whitney Closes MidSouth Deal, Announces New Buyback

Zacks Equity Research

Hancock Whitney HWC recently closed the deal to acquire Lafayette, LA-based MidSouth Bancorp, Inc. The company has also completed systems conversion. The all-stock deal was announced in April and valued at nearly $213 million.

Last week, the Federal Reserve, the Federal Deposit Insurance Corporation and the Mississippi Department of Banking and Consumer Finance gave their consent to the transaction. Also, it was approved by the shareholders of MidSouth Bancorp.

The agreement called for each share of MidSouth Bancorp to be converted to the right to receive 0.2952 shares of Hancock Whitney.

Notably, at the time of announcement, the transaction was projected to result in one-time pre-tax expenses of $38 million. Also, according to MidSouth Bancorp’s 2019/2020 street estimates, it will lead to cost savings of 50-55% for Hancock Whitney.

Further, Hancock Whitney had expected 20 out of the 42 MidSouth Bancorp branches to be closed/consolidated. Moreover, excluding merger-related costs, the transaction will likely be accretive to the company’s earnings by 13-15 cents, beginning first-quarter 2020.

John M. Hairston, the president and CEO of Hancock Whitney, had stated, “The merger fits perfectly with our stated strategies of adding scale and enhancing value through in-market, financially accretive, low-risk transactions that strengthen our current franchise and provide opportunities for future growth.”

Concurrent with the closure of the deal, Hancock Whitney announced an increase and extension of its earlier announced share repurchase plan. Per the new buyback authorization, the company can repurchase up to 5.5 million shares, with an expiration date of Dec 31, 2020. The prior plan, announced in May 2018, authorized nearly 4.3 million shares for buyback and was set to expire on Dec 31, 2019.

Over the years, Hancock Whitney has been rewarding shareholders with efficient capital deployments. Besides, in July 2018, the bank hiked its quarterly dividend by 12.5%. The company expects to maintain its dividend payout ratio between 30% and 40% of net income.

Additionally, Hancock Whitney has grown substantially through business restructuring efforts. The company not only undertook measures to divest certain less profitable operations, it has also been able to strengthen profitability through opportunistic acquisitions.

Shares of Hancock Whitney have rallied 11.4% so far this year, underperforming the industry’s rise of 16.8%.

Currently, the company carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amid a challenging operating environment owing to the Fed’s accommodative monetary policy, uncertainty over trade war and several other concerns, banks are undertaking inorganic growth strategy to expand market share and footprint. Over the recent months, many mid-sized regional banks including Valley National Bancorp VLY, Glacier Bancorp, Inc., Ameris Bancorp, BancorpSouth Bank BXS and Associated Banc-Corp ASB have closed/announced transactions that are expected to be accretive to earnings going forward.

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