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Hancock Whitney's (HWC) Q4 Earnings Miss on Higher Costs
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Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
Higher expenses and decrease in net interest margin hurt the company’s results. However, improvement in net revenues and decline in provision for loan losses acted as tailwinds. Further, loan and deposit growth remained strong.
After considering the impact of several non-recurring items, net income for the fourth quarter came in at $96.2 million or $1.10 per share, up from $55.4 million or 64 cents per share reported in the prior-year quarter.
Adjusted earnings per share for 2018 increased to $3.99, up 38% from the prior year. The earnings figure also surpassed Zacks Consensus Estimate of $3.98. Net income for the year was $323.7 million or $3.72 per share compared with $215.6 million or $2.48 per share recorded in 2017.
Revenues Improve, Expenses Flare Up
Hancock’s net revenues for the quarter were $292 million, up 5.1% year over year. However, the revenue figure missed the Zacks Consensus Estimate of $294.8 million.
Hancock’s net revenues for 2018 came in at $1.13 billion, climbing 5.1% year over year. The figure, however, marginally missed the Zacks Consensus Estimate of $1.14 billion.
Net interest income on tax equivalent basis grew 2.1% year over year to $221.5 million. Net interest margin, on a tax-equivalent basis, came in at 3.39%, contracting 9 basis points.
Non-interest income totaled $74.5 million, reflecting an increase of 7% from the year-ago quarter. The figure included $0.6 million in net gains, which was related to portfolio restructuring.
Total operating expenses flared up 5.3% year over year to $177 million. This upswing stemmed from rise in personnel expense as well as other operating expenses.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.56% of average total loans, inching up from 0.44% in the year-ago quarter. Nevertheless, provision for loan losses declined 46% year over year to roughly $8.1 million.
Also, total non-performing assets decreased 12% year over year to $352.6 million.
Balance Sheet, Profitability and Capital Ratios Improve
As of Dec 31, 2018, total loans were $20 billion, up 2.5% from the prior-quarter end. Furthermore, total deposits increased 3% from the previous quarter to $23.2 billion.
Return on average assets was 1.35% at the end of the quarter, up from 0.82% recorded in the prior-year quarter. In addition, return on average common equity was 12.76% compared with 7.67% at the end of December 2017.
As of Dec 31, 2018, Tier 1 leverage ratio was 8.67%, up from 8.43% recorded in the year-ago quarter. Tier 1 risk-based capital ratio was 10.51%, increasing from 10.21% as of Dec 31, 2017.
Our Viewpoint
Hancock looks well poised for top-line growth, given continued improvement in loans and deposits. Further, the company’s decent profitability ratios and solid capital position should bode well.
Nevertheless, escalating operating expenses might impede bottom-line growth. Additionally, pressure on net interest margin remains another major concern.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Comerica’s (CMA - Free Report) fourth-quarter 2018 earnings per share of $1.88 surpassed the Zacks Consensus Estimate of $1.86. Also, the results compared favorably with year-ago adjusted figure of $1.24.
PNC Financial (PNC - Free Report) reported fourth-quarter 2018 earnings per share of $2.75, which lagged the Zacks Consensus Estimate of $2.77. However, the bottom line reflected a 20.1% jump from the prior-year quarter, on an adjusted basis.
Citigroup (C - Free Report) kick-started the earnings season and delivered a positive earnings surprise of 3.9% in fourth-quarter 2018, backed by expense control and lower cost of credit. Adjusted net income per share of $1.61 for the quarter handily outpaced the Zacks Consensus Estimate of $1.55. Also, adjusted earnings climbed 26% year over year.
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Hancock Whitney's (HWC) Q4 Earnings Miss on Higher Costs
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
Higher expenses and decrease in net interest margin hurt the company’s results. However, improvement in net revenues and decline in provision for loan losses acted as tailwinds. Further, loan and deposit growth remained strong.
After considering the impact of several non-recurring items, net income for the fourth quarter came in at $96.2 million or $1.10 per share, up from $55.4 million or 64 cents per share reported in the prior-year quarter.
Adjusted earnings per share for 2018 increased to $3.99, up 38% from the prior year. The earnings figure also surpassed Zacks Consensus Estimate of $3.98. Net income for the year was $323.7 million or $3.72 per share compared with $215.6 million or $2.48 per share recorded in 2017.
Revenues Improve, Expenses Flare Up
Hancock’s net revenues for the quarter were $292 million, up 5.1% year over year. However, the revenue figure missed the Zacks Consensus Estimate of $294.8 million.
Hancock’s net revenues for 2018 came in at $1.13 billion, climbing 5.1% year over year. The figure, however, marginally missed the Zacks Consensus Estimate of $1.14 billion.
Net interest income on tax equivalent basis grew 2.1% year over year to $221.5 million. Net interest margin, on a tax-equivalent basis, came in at 3.39%, contracting 9 basis points.
Non-interest income totaled $74.5 million, reflecting an increase of 7% from the year-ago quarter. The figure included $0.6 million in net gains, which was related to portfolio restructuring.
Total operating expenses flared up 5.3% year over year to $177 million. This upswing stemmed from rise in personnel expense as well as other operating expenses.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.56% of average total loans, inching up from 0.44% in the year-ago quarter. Nevertheless, provision for loan losses declined 46% year over year to roughly $8.1 million.
Also, total non-performing assets decreased 12% year over year to $352.6 million.
Balance Sheet, Profitability and Capital Ratios Improve
As of Dec 31, 2018, total loans were $20 billion, up 2.5% from the prior-quarter end. Furthermore, total deposits increased 3% from the previous quarter to $23.2 billion.
Return on average assets was 1.35% at the end of the quarter, up from 0.82% recorded in the prior-year quarter. In addition, return on average common equity was 12.76% compared with 7.67% at the end of December 2017.
As of Dec 31, 2018, Tier 1 leverage ratio was 8.67%, up from 8.43% recorded in the year-ago quarter. Tier 1 risk-based capital ratio was 10.51%, increasing from 10.21% as of Dec 31, 2017.
Our Viewpoint
Hancock looks well poised for top-line growth, given continued improvement in loans and deposits. Further, the company’s decent profitability ratios and solid capital position should bode well.
Nevertheless, escalating operating expenses might impede bottom-line growth. Additionally, pressure on net interest margin remains another major concern.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Hancock Whitney Corporation Price, Consensus and EPS Surprise | Hancock Whitney Corporation Quote
At present, Hancock carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Major Banks
Comerica’s (CMA - Free Report) fourth-quarter 2018 earnings per share of $1.88 surpassed the Zacks Consensus Estimate of $1.86. Also, the results compared favorably with year-ago adjusted figure of $1.24.
PNC Financial (PNC - Free Report) reported fourth-quarter 2018 earnings per share of $2.75, which lagged the Zacks Consensus Estimate of $2.77. However, the bottom line reflected a 20.1% jump from the prior-year quarter, on an adjusted basis.
Citigroup (C - Free Report) kick-started the earnings season and delivered a positive earnings surprise of 3.9% in fourth-quarter 2018, backed by expense control and lower cost of credit. Adjusted net income per share of $1.61 for the quarter handily outpaced the Zacks Consensus Estimate of $1.55. Also, adjusted earnings climbed 26% year over year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>