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Hancock Whitney's (HWC) Q1 Earnings Beat on Higher Revenues

Zacks Equity Research

Hancock Whitney Corporation’s HWC first-quarter 2019 operating earnings per share of $1 surpassed the Zacks Consensus Estimate of 98 cents. Further, the reported figure comes in 11.1% higher than the year-ago tally.

Improvement in net revenues and net interest margin, and decline in provision for loan losses acted as tailwinds. Further, loan and deposit growth remained strong. However, elevated expenses hurt the company’s results.

After considering the impact of several non-recurring items, net income for the first quarter came in at $79.2 million or 91 cents per share, up from $72.5 million or 83 cents per share reported in the prior-year quarter.

Revenues Improve, Expenses Flare Up

Hancock’s net revenues for the first quarter were $289.8 million, up 6.6% year over year. The revenue figure, however, missed the Zacks Consensus Estimate of $293.5 million.

Net interest income on tax equivalent basis grew 6.4% year over year to $223.1 million. Net interest margin, on a tax-equivalent basis, came in at 3.46%, expanding 9 basis points.

Non-interest income totaled $70.5 million, indicating 6.4% improvement from the year-ago quarter. Increase in trust fees, bank card and ATM fees, and investment and insurance commissions and annuity fees led to this upside.

Total operating expenses flared up 6.5% year over year to $175.7 million. This upswing resulted from rise in personnel expense, net occupancy and equipment expense, as well as other operating expenses.

Credit Quality: Mixed Bag

Net charge-offs from the non-covered loan portfolio was 0.36% of average total loans, inching up from 0.26% in the year-ago quarter. Furthermore, provision for loan losses jumped 47.3% year over year to roughly $18 million.

However, total non-performing assets decreased 25.4% year over year to $349.6 million.

Balance Sheet, Profitability and Capital Ratios Improve

As of Mar 31, 2019, total loans were $20.1 billion, slightly up from the prior-quarter end. Additionally, total deposits increased 1% from the previous quarter to $23.4 billion.

Return on average assets was 1.13% at the end of the reported quarter, marginally up from 1.08% recorded in the prior-year quarter. In addition, return on average common equity was 10.30% compared with 10.23% at the end of March 2017.

As of Mar 31, 2019, Tier 1 leverage ratio was 8.85%, up from 8.51% recorded in the year-earlier quarter. Tier 1 risk-based capital ratio was 10.65%, up from 10.35% as of Mar 31, 2018.

Our Viewpoint

Hancock looks well poised for top-line growth, backed by continued improvement in loans and deposits. This apart, the company’s decent profitability ratios and solid capital position will likely be conducive to its growth.

Nevertheless, escalating operating expenses might impede bottom-line growth.

Hancock Whitney Corporation Price, Consensus and EPS Surprise

Hancock Whitney Corporation Price, Consensus and EPS Surprise | Hancock Whitney Corporation Quote

At present, Hancock carries a Zacks Rank #4 (Sell).

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

Performance of Other Major Banks

Comerica CMA reported positive earnings surprise of 7.2% in the first quarter on high interest income. Adjusted earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $1.94. Further, earnings were up from the prior-year quarter adjusted figure of $1.54. Including certain non-recurring items, earnings came in at $2.11.

PNC Financial PNC delivered positive earnings surprise of 0.8% in the Jan-Mar quarter. Earnings per share of $2.61 beat the Zacks Consensus Estimate of $2.59. The bottom line also reflects a 7.4% year-over-year jump.

Citigroup C recorded a positive earnings surprise of 5.1% in  the Mar-end quarter on prudent expense control. Earnings per share of $1.87 for the quarter handily outpaced the Zacks Consensus Estimate of $1.78. Also, earnings climbed 11% year over year.

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Comerica Incorporated (CMA) : Free Stock Analysis Report
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Hancock Whitney Corporation (HWC) : Free Stock Analysis Report
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