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Hancock Whitney (HWC) Down 8.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have lost about 8.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hancock Whitney due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hancock Whitney’s second-quarter 2023 earnings of $1.35 per share outpaced the Zacks Consensus Estimate of $1.33. However, the bottom line reflects a year-over-year decline of 2.2%.
Results were positively impacted by higher net interest income (NII), a rise in loan balance and higher interest rates. However, decreasing non-interest income, higher expenses and a rise in provisions were concerns.
Net income came in at $117.8 million, decreasing 3% year over year. Our estimate for the metric was $118.9 million.
Revenues Improve, Expenses Rise
Total revenues amounted to $357.1 million, up 7.8% year over year. The top line lagged the Zacks Consensus Estimate of $362.8 million.
NII (on a tax-equivalent basis) jumped 11.4% year over year to $276.7 million. The net interest margin was 3.30%, which rose 26 basis points. Our estimate for NII was $278.8 million. We had projected a NIM of 3.48% for the second quarter.
Non-interest income was $83.2 million, which declined 2.8% year over year. The decrease was largely due to a fall in secondary mortgage market operations and other income. Our estimate for non-interest income was $85.6 million.
Total non-interest expenses increased 8% year over year to $202.1 million. We had projected expenses to be $203.8 million.
The efficiency ratio increased to 55.33% from 54.95% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Jun 30, 2023, total loans were $23.8 billion, up 1.6% from the prior quarter’s end. Total deposits increased 1.5% sequentially to $30 billion. Our estimates for total loans and deposits were $23.5 billion and $29.1 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $7.6 million against a benefit of $9.7 million in the prior-year quarter. Our estimate for provisions was $7 million. Net charge-offs (annualized) were 0.06% of average total loans, up from 0.01% in the last year’s quarter.
Capital Ratios Improve, Profitability Ratios Decline
As of Jun 30, 2023, the Tier 1 leverage ratio was 9.64%, up from 8.68% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 11.83%, up from 11.08% as of Jun 30, 2022.
At the end of the second quarter, the return on average assets was 1.30%, down from the year-ago period’s 1.38%. The return on average common equity was 13.24%, down from 14.39% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2023 Outlook
Management projects loans to grow in the range of low-to-mid single digits year over year.
Looking forward, the company expects further moderation in its loan growth that will be driven by selective appetite in CRE, a focus on full relationship banking and disciplined loan pricing and terms.
Deposits are expected to be flat or grow in the low single-digit range. The company expects to continue to utilize cash flows from securities portfolio to help fund loan growth in 2023.
On the assumption of an additional 25 bps increase in the Federal Funds rate in July and then flat through year-end 2023, the company expects NIM to continue to compress due to deposit remix.
Non-interest income is anticipated to be up 1-2%.
Operating pre-provision net revenues are projected to be down 1-3% from 2022, assuming the full expense guidance. However, the guidance excludes any expected special FDIC assessment related to the 2023 bank failures.
Operating expenses are expected to be up 7.5-8.5%.
Reserve for credit losses will be driven by future assumptions in economic forecasts and any change in the company’s asset quality metrics. Management expects low to moderate charge-offs and provisions throughout 2023.
The efficiency ratio is expected to be below 56%.
The effective tax rate is anticipated to be almost 21%.
Three-Year Corporate Strategic Objectives (to be Achieved by 4Q25)
Return on assets of more than 1.55% is expected.
Tangible common equity (TCE) of more than 8% is anticipated.
Return on TCE is expected to be more than 18%.
An efficiency ratio of less than or equal to 50% is targeted.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Hancock Whitney has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hancock Whitney has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Hancock Whitney (HWC) Down 8.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have lost about 8.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hancock Whitney due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hancock Whitney Q2 Earnings Beat, Revenues Increase Y/Y
Hancock Whitney’s second-quarter 2023 earnings of $1.35 per share outpaced the Zacks Consensus Estimate of $1.33. However, the bottom line reflects a year-over-year decline of 2.2%.
Results were positively impacted by higher net interest income (NII), a rise in loan balance and higher interest rates. However, decreasing non-interest income, higher expenses and a rise in provisions were concerns.
Net income came in at $117.8 million, decreasing 3% year over year. Our estimate for the metric was $118.9 million.
Revenues Improve, Expenses Rise
Total revenues amounted to $357.1 million, up 7.8% year over year. The top line lagged the Zacks Consensus Estimate of $362.8 million.
NII (on a tax-equivalent basis) jumped 11.4% year over year to $276.7 million. The net interest margin was 3.30%, which rose 26 basis points. Our estimate for NII was $278.8 million. We had projected a NIM of 3.48% for the second quarter.
Non-interest income was $83.2 million, which declined 2.8% year over year. The decrease was largely due to a fall in secondary mortgage market operations and other income. Our estimate for non-interest income was $85.6 million.
Total non-interest expenses increased 8% year over year to $202.1 million. We had projected expenses to be $203.8 million.
The efficiency ratio increased to 55.33% from 54.95% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Jun 30, 2023, total loans were $23.8 billion, up 1.6% from the prior quarter’s end. Total deposits increased 1.5% sequentially to $30 billion. Our estimates for total loans and deposits were $23.5 billion and $29.1 billion, respectively.
Credit Quality Worsens
The provision for credit losses was $7.6 million against a benefit of $9.7 million in the prior-year quarter. Our estimate for provisions was $7 million. Net charge-offs (annualized) were 0.06% of average total loans, up from 0.01% in the last year’s quarter.
Capital Ratios Improve, Profitability Ratios Decline
As of Jun 30, 2023, the Tier 1 leverage ratio was 9.64%, up from 8.68% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 11.83%, up from 11.08% as of Jun 30, 2022.
At the end of the second quarter, the return on average assets was 1.30%, down from the year-ago period’s 1.38%. The return on average common equity was 13.24%, down from 14.39% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC did not repurchase any shares.
2023 Outlook
Management projects loans to grow in the range of low-to-mid single digits year over year.
Looking forward, the company expects further moderation in its loan growth that will be driven by selective appetite in CRE, a focus on full relationship banking and disciplined loan pricing and terms.
Deposits are expected to be flat or grow in the low single-digit range. The company expects to continue to utilize cash flows from securities portfolio to help fund loan growth in 2023.
On the assumption of an additional 25 bps increase in the Federal Funds rate in July and then flat through year-end 2023, the company expects NIM to continue to compress due to deposit remix.
Non-interest income is anticipated to be up 1-2%.
Operating pre-provision net revenues are projected to be down 1-3% from 2022, assuming the full expense guidance. However, the guidance excludes any expected special FDIC assessment related to the 2023 bank failures.
Operating expenses are expected to be up 7.5-8.5%.
Reserve for credit losses will be driven by future assumptions in economic forecasts and any change in the company’s asset quality metrics. Management expects low to moderate charge-offs and provisions throughout 2023.
The efficiency ratio is expected to be below 56%.
The effective tax rate is anticipated to be almost 21%.
Three-Year Corporate Strategic Objectives (to be Achieved by 4Q25)
Return on assets of more than 1.55% is expected.
Tangible common equity (TCE) of more than 8% is anticipated.
Return on TCE is expected to be more than 18%.
An efficiency ratio of less than or equal to 50% is targeted.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Hancock Whitney has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hancock Whitney has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.