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Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2022 earnings of $1.55 per share were in line with the Zacks Consensus Estimate. The bottom line rose 6.9% from the prior-year quarter’s adjusted earnings of $1.45.
Results benefited from higher net interest income (NII), a rise in loan balance and increasing rates. However, lower non-interest income, mainly due to rising mortgage rates, was the undermining factor. Also, higher adjusted expenses and a rise in provisions were the other quarterly headwinds.
The net income came in at $135.4 million, rising 4.5% year over year.
Revenues & Adjusted Expenses Rise
The quarterly total revenues were $365.6 million, up 11.5% year over year. The top line also marginally surpassed the Zacks Consensus Estimate of $365 million.
The NII (on a tax-equivalent basis) jumped 19.1% to $282.9 million. The net interest margin (NIM) was 3.54%, rising 60 basis points (bps).
The non-interest income was $85.3 million, declining 8.6%. A drastic fall in secondary mortgage market operations fees mainly led to this decrease.
The total non-interest expenses declined almost 1% to $193.5 million. Excluding last year’s non-operations charges, the adjusted expenses rose 1.1%.
The efficiency ratio decreased to 51.62% from 57.44% in the year-ago quarter. A decline in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2022, total loans were $22.6 billion, up 4.3% from prior-quarter end. The total deposits declined 3.1% to $29.2 billion.
Credit Quality: Mixed Bag
The provision for loan losses was $1.4 million against a benefit of $27 million in the prior-year quarter.
The net charge-offs (annualized) were 0.02% of average total loans, down from 0.03% in the last year's quarter. The total non-performing assets plunged 39% from the prior-year quarter to $43.8 million.
Capital & Profitability Ratios Solid
As of Sep 30, 2022, the Tier 1 leverage ratio was 9.27%, up from 8.15% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 11.12% compared with 11.17% as of Sep 30, 2021.
At the end of the third quarter, the return on average assets was 1.56%, up from the year-ago period’s 1.46%. The return on average common equity was 15.77%, up from 14.26% in the prior-year quarter.
Share Repurchase Update
During the quarter, Hancock Whitney repurchased 50,000 shares at an average price of $48.02 per share.
2022 Outlook
Management projects core loans to grow 8-9%, up from the prior growth range of 6-8%. The company expects loan growth to moderate in the fourth quarter.
The company expects deposits to be 3-4% down, with seasonal growth projected in the fourth quarter.
The NIM is expected to continue widening on expected future rate hikes. The company anticipates every 25 bps rise in the Fed Funds rate to widen NIM by 2-3 bps.
The non-interest income is anticipated to be down 3-4%.
The operating expenses are projected to decline marginally.
Our View
Supported by a solid balance-sheet position, Hancock Whitney remains well-poised for growth. With expectations of higher interest rates and robust loan demand, the company is likely to witness growth in NII in the quarters ahead. Yet, the dismal performance of the mortgage business is a concern.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Washington Federal’s (WAFD - Free Report) fourth-quarter fiscal 2022 (ended Sep 30) earnings of $1.07 per share handily surpassed the Zacks Consensus Estimate of 91 cents. The figure reflects a year-over-year jump of 48.6%.
Results were primarily aided by higher rates, robust deposits and improving loan balances, which drove net interest income (NII). However, an increase in expenses, a fall in total other income and higher provisions were the headwinds for WAFD.
Associated Banc-Corp (ASB - Free Report) is scheduled to release quarterly numbers on Oct 20.
Over the past 30 days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has moved 1.7% lower to 58 cents. This suggests a 3.6% increase from the prior-year quarter.
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Hancock Whitney (HWC) Meets Q3 Earnings, Ups Loan Growth View
Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2022 earnings of $1.55 per share were in line with the Zacks Consensus Estimate. The bottom line rose 6.9% from the prior-year quarter’s adjusted earnings of $1.45.
Results benefited from higher net interest income (NII), a rise in loan balance and increasing rates. However, lower non-interest income, mainly due to rising mortgage rates, was the undermining factor. Also, higher adjusted expenses and a rise in provisions were the other quarterly headwinds.
The net income came in at $135.4 million, rising 4.5% year over year.
Revenues & Adjusted Expenses Rise
The quarterly total revenues were $365.6 million, up 11.5% year over year. The top line also marginally surpassed the Zacks Consensus Estimate of $365 million.
The NII (on a tax-equivalent basis) jumped 19.1% to $282.9 million. The net interest margin (NIM) was 3.54%, rising 60 basis points (bps).
The non-interest income was $85.3 million, declining 8.6%. A drastic fall in secondary mortgage market operations fees mainly led to this decrease.
The total non-interest expenses declined almost 1% to $193.5 million. Excluding last year’s non-operations charges, the adjusted expenses rose 1.1%.
The efficiency ratio decreased to 51.62% from 57.44% in the year-ago quarter. A decline in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2022, total loans were $22.6 billion, up 4.3% from prior-quarter end. The total deposits declined 3.1% to $29.2 billion.
Credit Quality: Mixed Bag
The provision for loan losses was $1.4 million against a benefit of $27 million in the prior-year quarter.
The net charge-offs (annualized) were 0.02% of average total loans, down from 0.03% in the last year's quarter. The total non-performing assets plunged 39% from the prior-year quarter to $43.8 million.
Capital & Profitability Ratios Solid
As of Sep 30, 2022, the Tier 1 leverage ratio was 9.27%, up from 8.15% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 11.12% compared with 11.17% as of Sep 30, 2021.
At the end of the third quarter, the return on average assets was 1.56%, up from the year-ago period’s 1.46%. The return on average common equity was 15.77%, up from 14.26% in the prior-year quarter.
Share Repurchase Update
During the quarter, Hancock Whitney repurchased 50,000 shares at an average price of $48.02 per share.
2022 Outlook
Management projects core loans to grow 8-9%, up from the prior growth range of 6-8%. The company expects loan growth to moderate in the fourth quarter.
The company expects deposits to be 3-4% down, with seasonal growth projected in the fourth quarter.
The NIM is expected to continue widening on expected future rate hikes. The company anticipates every 25 bps rise in the Fed Funds rate to widen NIM by 2-3 bps.
The non-interest income is anticipated to be down 3-4%.
The operating expenses are projected to decline marginally.
Our View
Supported by a solid balance-sheet position, Hancock Whitney remains well-poised for growth. With expectations of higher interest rates and robust loan demand, the company is likely to witness growth in NII in the quarters ahead. Yet, the dismal performance of the mortgage business is a concern.
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.
Performance & Earnings Date of Other Banks
Washington Federal’s (WAFD - Free Report) fourth-quarter fiscal 2022 (ended Sep 30) earnings of $1.07 per share handily surpassed the Zacks Consensus Estimate of 91 cents. The figure reflects a year-over-year jump of 48.6%.
Results were primarily aided by higher rates, robust deposits and improving loan balances, which drove net interest income (NII). However, an increase in expenses, a fall in total other income and higher provisions were the headwinds for WAFD.
Associated Banc-Corp (ASB - Free Report) is scheduled to release quarterly numbers on Oct 20.
Over the past 30 days, the Zacks Consensus Estimate for Associated Banc-Corp’s quarterly earnings has moved 1.7% lower to 58 cents. This suggests a 3.6% increase from the prior-year quarter.