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Hancock Whitney (HWC) Q2 Earnings Beat on Fee Income Growth
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Hancock Whitney Corp.’s (HWC - Free Report) second-quarter 2024 earnings per share of $1.31 beat the Zacks Consensus Estimate of $1.19. However, the bottom line compared unfavorably with $1.35 per share registered in the year-ago quarter.
The results were aided by an increase in non-interest income. However, a decline in net interest income (NII) and higher expenses and provisions were the undermining factors.
Net income was $114.6 million, down 2.7% year over year. Our estimate for the metric was $98.7 million.
Revenues Rise, Expenses Increase
Revenues amounted to $359.6 million, up marginally year over year. The top line beat the Zacks Consensus Estimate of $353.2 million.
Net interest income (on a tax-equivalent basis) declined 1.3% year over year to $273.3 million. The net interest margin (NIM) was 3.37%, which expanded 7 basis points (bps) from the prior-year quarter. Our estimates for NII and NIM were pegged at $271.4 million and 3.35%, respectively.
Non-interest income totaled $89.2 million, up 7.1% from the prior-year quarter's level. The rise was driven by an increase in all fee income components. We had projected a non-interest income of $84.5 million.
Total non-interest expenses increased 1.9% year over year to $206 million. We had projected expenses of $213.7 million.
The efficiency ratio increased to 56.18% from 55.33% in the year-ago quarter. A rise in the efficiency ratio reflects a deterioration in profitability.
As of Jun 30, 2024, total loans were $23.91 billion, down marginally from the prior-quarter level. Total deposits decreased 1.9% on a sequential basis to $29.20 billion. Our estimates for total loans and deposits were pegged at $23.94 billion and $29.91 billion, respectively.
Credit Quality Deteriorates
The provision for credit losses was $8.7 million, up from $7.6 million in the prior-year quarter. Our estimate for provisions was $17.2 million.
Net charge-offs (annualized) were 0.12% of average total loans, up 6 bps from the prior-year quarter.
Capital Ratios Improve, Profitability Ratios a Mixed Bag
As of Jun 30, 2024, the Tier 1 leverage ratio was 10.71%, up from 9.64% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 13.25%, up from 11.83% as of Jun 30, 2023.
At the end of the second quarter, the return on average assets was 1.32%, up from the year-ago period’s 1.30%. The return on average common equity was 12.04%, down from 13.24% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC repurchased 3.1 million shares at an average price of $46.69 per share.
2024 Outlook
Management expects the period-end loan balance to be flat to down slightly from the 2023 level.
Further, deposit balances are anticipated to be flattish or slightly down from the prior-year level.
Adjusted pre-provision net revenues are expected to decrease 1-2% year over year.
NIM is expected to modestly expand on the assumptions of no rate cuts in the second half of 2024.
Adjusted non-interest income is expected to grow 4-5%.
Adjusted non-interest expenses are expected to rise 2-3%.
Management expects to maintain an efficiency ratio of 56-57%. Hancock Whitney expects modest charge-offs and provisions for 2024.
The company expects an effective tax rate of 20-21%.
Our View
Hancock Whitney’s strategic expansion initiatives and strong loan balance will likely keep supporting top-line growth. While higher rates will aid NIM expansion, higher funding costs will exert pressure on it. However, deteriorating asset quality and an elevated expense base are major headwinds.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Colony Bancorp Inc. (CBAN - Free Report) is scheduled to release its second-quarter 2024 results on Jul 24.
Over the past 30 days, the Zacks Consensus Estimate for CBAN’s quarterly earnings has remained unchanged at 32 cents. This implies a 3% deccrease from the prior-year quarter.
BankUnited Inc. (BKU - Free Report) is slated to report its second-quarter 2024 results on Jul 18.
Over the past 30 days, the Zacks Consensus Estimate for BKU’s quarterly earnings has moved 1.5% lower to 65 cents. This indicates a 16.7% decrease from the prior-year quarter.
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Hancock Whitney (HWC) Q2 Earnings Beat on Fee Income Growth
Hancock Whitney Corp.’s (HWC - Free Report) second-quarter 2024 earnings per share of $1.31 beat the Zacks Consensus Estimate of $1.19. However, the bottom line compared unfavorably with $1.35 per share registered in the year-ago quarter.
The results were aided by an increase in non-interest income. However, a decline in net interest income (NII) and higher expenses and provisions were the undermining factors.
Net income was $114.6 million, down 2.7% year over year. Our estimate for the metric was $98.7 million.
Revenues Rise, Expenses Increase
Revenues amounted to $359.6 million, up marginally year over year. The top line beat the Zacks Consensus Estimate of $353.2 million.
Net interest income (on a tax-equivalent basis) declined 1.3% year over year to $273.3 million. The net interest margin (NIM) was 3.37%, which expanded 7 basis points (bps) from the prior-year quarter. Our estimates for NII and NIM were pegged at $271.4 million and 3.35%, respectively.
Non-interest income totaled $89.2 million, up 7.1% from the prior-year quarter's level. The rise was driven by an increase in all fee income components. We had projected a non-interest income of $84.5 million.
Total non-interest expenses increased 1.9% year over year to $206 million. We had projected expenses of $213.7 million.
The efficiency ratio increased to 56.18% from 55.33% in the year-ago quarter. A rise in the efficiency ratio reflects a deterioration in profitability.
As of Jun 30, 2024, total loans were $23.91 billion, down marginally from the prior-quarter level. Total deposits decreased 1.9% on a sequential basis to $29.20 billion. Our estimates for total loans and deposits were pegged at $23.94 billion and $29.91 billion, respectively.
Credit Quality Deteriorates
The provision for credit losses was $8.7 million, up from $7.6 million in the prior-year quarter. Our estimate for provisions was $17.2 million.
Net charge-offs (annualized) were 0.12% of average total loans, up 6 bps from the prior-year quarter.
Capital Ratios Improve, Profitability Ratios a Mixed Bag
As of Jun 30, 2024, the Tier 1 leverage ratio was 10.71%, up from 9.64% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 13.25%, up from 11.83% as of Jun 30, 2023.
At the end of the second quarter, the return on average assets was 1.32%, up from the year-ago period’s 1.30%. The return on average common equity was 12.04%, down from 13.24% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, HWC repurchased 3.1 million shares at an average price of $46.69 per share.
2024 Outlook
Management expects the period-end loan balance to be flat to down slightly from the 2023 level.
Further, deposit balances are anticipated to be flattish or slightly down from the prior-year level.
Adjusted pre-provision net revenues are expected to decrease 1-2% year over year.
NIM is expected to modestly expand on the assumptions of no rate cuts in the second half of 2024.
Adjusted non-interest income is expected to grow 4-5%.
Adjusted non-interest expenses are expected to rise 2-3%.
Management expects to maintain an efficiency ratio of 56-57%. Hancock Whitney expects modest charge-offs and provisions for 2024.
The company expects an effective tax rate of 20-21%.
Our View
Hancock Whitney’s strategic expansion initiatives and strong loan balance will likely keep supporting top-line growth. While higher rates will aid NIM expansion, higher funding costs will exert pressure on it. However, deteriorating asset quality and an elevated expense base are major headwinds.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Schedule of Other Banks
Colony Bancorp Inc. (CBAN - Free Report) is scheduled to release its second-quarter 2024 results on Jul 24.
Over the past 30 days, the Zacks Consensus Estimate for CBAN’s quarterly earnings has remained unchanged at 32 cents. This implies a 3% deccrease from the prior-year quarter.
BankUnited Inc. (BKU - Free Report) is slated to report its second-quarter 2024 results on Jul 18.
Over the past 30 days, the Zacks Consensus Estimate for BKU’s quarterly earnings has moved 1.5% lower to 65 cents. This indicates a 16.7% decrease from the prior-year quarter.