Hancock Whitney (HWC) Q4 Earnings Beat Estimates, Revenues Lag

Hancock Whitney Corporation’s HWC fourth-quarter 2021 adjusted earnings of $1.51 per share outpaced the Zacks Consensus Estimate of $1.35. The bottom line improved 29% from the prior-year quarter.

Results benefited from higher non-interest income, fall in non-interest expenses and provision benefit. However, a decline in net interest income, which reflected lower interest rates, was the undermining factor.

Results excluded the impact of non-operating items. Including these, net income came in at $137.7 million, up 32.9% from the prior-year quarter.

In 2021, Hancock Whitney’s earnings of $5.22 per share surpassed the consensus estimate of $4.98 and were up from the loss of 54 cents in the prior year. Net income was $463.2 million against a loss of $45.2 million in 2020.

Revenues and Expenses Fall

Total quarterly revenues were $318.9 million, down marginally year over year. The top line also missed the Zacks Consensus Estimate of $321.7 million.

In 2021, net revenues increased 2.4% to $1.29 billion. However, the top line lagged the consensus estimate of $1.30 billion.

Net interest income on a tax-equivalent basis declined 3.9% to $231.9 million. Net interest margin ("NIM") (on a tax-equivalent basis) was 2.80%, contracting 42 basis points (bps).

Non-interest income was $89.6 million, growing 8.8% year over year. The rise was driven by a jump in almost all fee income components, except for secondary mortgage market operations fees.

Total non-interest expenses declined 5.5% to $182.5 million. The decline was mainly attributable to lower other expenses, net occupancy and equipment expenses, as well as personnel expenses.

Efficiency ratio decreased to 56.57% from 58.23% in the year-ago quarter. A decline in efficiency ratio indicates an improvement in profitability.

As of Dec 31, 2021, total loans were $21.1 billion, up 1.2% from the prior-quarter end. Total deposits increased 4.3% to $30.5 billion.

Credit Quality Improves

Provision for loan losses was a benefit of $28.4 million against a provision of $24.2 million in the prior-year quarter. Net charge-offs (annualized) were 0.01% of average total loans, down 43 bps from the year-ago quarter.

Total non-performing assets plunged 57.1% from the prior-year quarter to $66.8 million.

Capital & Profitability Ratios Improve

As of Dec 31, 2021, Tier 1 leverage ratio was 8.25%, up from 7.88% at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 11.16%, up from 10.61% as of Dec 31, 2020.

At the end of the fourth quarter, return on average assets was 1.53%, up from the year-ago period’s 1.25%. Return on average common equity was 15%, up from 12.1% in the prior-year quarter.

Share Repurchase Update

During the quarter under review, Hancock Whitney repurchased 393,527 shares at an average price of $48.98 per share.

2022 Outlook

Management projects core loans to grow 6-8%.

The company expects deposits to be flat to slightly down.

NIM is expected to remain stable to slightly down through mid-2022 and then rise.

The tax rate is expected to be in the quarterly range of 19-20% without any changes in tax laws.

Our Take

Supported by a solid balance-sheet position and an improving credit quality, Hancock Whitney remains well poised for growth. However, near-zero interest rates and a risky loan portfolio are near-term concerns.

Hancock Whitney Corporation Price, Consensus and EPS Surprise

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

Earnings Release Schedule of Other Banks

Associated Banc-Corp ASB is scheduled to release fourth-quarter and full-year 2021 results on Jan 20.

Over the past 30 days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has remained unchanged at 43 cents. This implies a 7.5% increase from the prior-year quarter.

Bank OZK OZK is scheduled to release fourth-quarter and full-year 2021 results on Jan 20.

Over the past 30 days, the Zacks Consensus Estimate for Bank OZK’s quarterly earnings has remained unchanged at 98 cents. This suggests a 5.4% increase from the prior-year quarter.

East West Bancorp, Inc. EWBC, is slated to report fourth-quarter and full-year 2021 results on Jan 27.

Over the past 30 days, the Zacks Consensus Estimate for East West Bancorp’s quarterly earnings has remained unchanged at $1.55. This indicates a 34.8% increase from the prior-year quarter.

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