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Hancock Whitney's (HWC) Q3 Earnings Beat, Revenues Rise Y/Y

Zacks Equity Research

Hancock Whitney Corporation’s HWC third-quarter 2019 adjusted earnings per share of $1.03 beat the Zacks Consensus Estimate of $1.01. The bottom line comes in 2% higher than the year-ago quarter’s reported figure.

Higher net revenues, loan growth, rise in deposit balance and the MidSouth Bancorp acquisition were driving factors. However, higher expenses, lower interest rates and increase in provision for loan losses acted as headwinds.

Results excluded certain non-operating expenses related to acquisitions completed during the period. After considering these charges, net income came in at $67.8 million or 77 cents per share, down from the $83.9 million or 96 cents per share in the prior-year quarter.

Revenues Up, Expenses Rise

Net revenues were $306.2 million, up 5.7% year over year. The figure, however, missed the Zacks Consensus Estimate of $308.0 million.

Net interest income on tax equivalent basis grew 3.8% year over year to $226.6 million. Net interest margin, on a tax-equivalent basis, came in at 3.41%, up 5 basis points (bps).

Non-interest income totaled $83.2 million, indicating 10.2% improvement from the year-ago quarter. Increase in all fee income components except trust fees led to this upside.

Total operating expenses flared up 17.9% year over year to $213.6 million. This upswing resulted from rise in all cost components except amortization of intangibles expenses.

As of Sep 30, 2019, total loans were $21 billion, up 4.3% from the prior-quarter end. Total deposits grew 4.2% from the previous quarter to $24.2 billion.

Credit Quality: Mixed Bag

Net charge-offs from the non-covered loan portfolio was 0.25% of average total loans, up 11 bps from the year-ago quarter. Further, provision for loan losses surged 80.7% year over year to $12.4 million.

However, total non-performing assets decreased 19.6% to $314.7 million.

Profitability Ratios Decline, Capital Ratios Improve

Return on average assets was 0.92% at the end of the reported quarter, down from the 1.19% recorded in the prior-year quarter. In addition, return on average common equity was 7.95% as of Sep 30, 2019 compared with the 11.27% recorded at the end of Sep 30, 2018.

As of Sep 30, 2019, Tier 1 leverage ratio was 9.49%, up from the 8.50% recorded at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 11.10%, up from 10.36% as of Sep 30, 2018.

Our Viewpoint

Backed by solid loan and deposit balances, Hancock Whitney will likely register further top-line growth in the upcoming period. In addition, the MidSouth Bancorp acquisition is projected to be accretive to earnings in 2020. Nevertheless, rising expenses, mainly due to the company's business-restructuring efforts and inorganic growth strategy, might partly impede bottom-line growth.

Hancock Whitney Corporation Price, Consensus and EPS Surprise

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 #4 (Sell).

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

Earnings Release Dates

Prosperity Bancshares, Inc. PB and BankUnited, Inc. BKU are scheduled to announce third-quarter results on Oct 23, while Associated Banc-Corp ASB is slated to report on Oct 24.

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