Hancock Whitney Corp ((HWC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Hancock Whitney Corp’s recent earnings call reflected a generally positive sentiment, highlighting strong performance in loan growth, fee income, and capital management. Despite challenges in deposits and increased net charge-offs, the company demonstrated robust net interest margin (NIM) expansion and solid capital ratios, underscoring its strong financial position.
Net Interest Margin (NIM) Expansion
The company reported an expansion in its net interest margin by six basis points, which significantly contributed to the quarter’s profitability. This expansion indicates effective interest rate management and a positive impact on the company’s earnings.
Loan Growth Achievement
Hancock Whitney achieved notable loan growth, with an increase of $364 million or 6% annualized. This growth was driven by stronger demand and increased line utilization, showcasing the company’s ability to capitalize on market opportunities.
Fee Income Increase
Fee income saw an increase of $4 million or 4%, with substantial contributions from trust fees following the acquisition of Sable Trust Company. This growth in fee income highlights the successful integration of acquisitions and diversification of revenue streams.
Strong Capital Ratios
The company’s capital ratios remained strong, with a tangible common equity (TCE) ratio of 9.84% and a common equity tier one ratio of 14.03%. These solid ratios reflect Hancock Whitney’s robust financial health and ability to withstand market fluctuations.
Buyback and Capital Deployment
Hancock Whitney repurchased 750,000 shares of common stock and completed the acquisition of Sable Trust, demonstrating strategic capital deployment aimed at enhancing shareholder value.
Decreased Cost of Funds
The overall cost of funds decreased by two basis points to 1.57%, primarily due to lower deposit costs. This reduction in funding costs supports the company’s profitability and financial efficiency.
Criticized Commercial Loan Improvement
There was a 4% decrease in criticized commercial loans, bringing the total down to $594 million. This improvement indicates better credit quality and risk management practices.
Deposit Decline
Deposits declined by $148 million, influenced by certificate of deposit (CD) maturities and promotional rate reductions. This decline presents a challenge that the company needs to address in future quarters.
Net Charge Offs Increase
Net charge-offs increased to 31 basis points for the quarter, highlighting an area of concern that the company will need to manage carefully moving forward.
Forward-Looking Guidance
Looking ahead, Hancock Whitney anticipates modest NIM expansion with net interest income (NII) growth of 3-4% for the year. The company plans to continue hiring and expanding financial centers, particularly in the Dallas market, indicating a strategic focus on growth and market penetration.
In summary, Hancock Whitney Corp’s earnings call conveyed a positive outlook, with strong loan growth, fee income, and capital management. Despite challenges in deposits and increased net charge-offs, the company remains well-positioned with robust NIM expansion and solid capital ratios. The forward-looking guidance suggests continued growth and strategic expansion efforts, particularly in key markets.