Hancock (HBHC) Posts In-line Q2 Earnings, Revenues Down Y/Y - Analyst Blog


Hancock Holding Co. ( HBHC ) reported second-quarter operating earnings of 59 cents per share, in-line with the Zacks Consensus Estimate. The result, however, compared favorably with the year-ago figure of 55 cents.

Lower operating expenses, decline in provision for loan losses as well as improved credit quality acted as tailwinds. However, the pressure on top line continued with a fall in both non-interest income and net interest income. Both capital and profitability ratios were mixed bags.

Net income was $40.0 million, down 14.7% from the prior-year quarter.

Hancock Holding Company - Earnings Surprise | FindTheBest

Performance in Detail

Hancock's total revenue came in at $223.7 million, down 5.4% from the prior-year quarter. However, it was in-line with the Zacks Consensus Estimate.

Net interest income (taxable equivalent) declined 2.6% from the year-ago quarter to $167.3 million. Moreover, net interest margin (NIM) fell 18 basis points (bps) from the prior-year quarter to 3.99%.

Non-interest income was $56.4 million, down 11.7% from the prior-year quarter. The decline was mainly due to a decrease in all the components except a rise in trust fees, bank card & ATM fees, and other income.

Total operating expenses were $144.7 million, down 10.8% year over year. The fall was due to decline in all components.

Total loans amounted to $12.9 billion as of Jun 30, 2014, up 10.3% year over year. Further, total deposits amounted to $15.2 billion, up 0.6% year over year.

Credit Quality

Credit quality was strong during the quarter. Net charge-offs from the non-covered loan portfolio were $4.1 million or 0.13% of average total loans, compared with $7.0 million or 0.24% of average total loans in the year-ago quarter. Moreover, total nonperforming assets were $157.5 million, down 27.2% year over year.

Further, net provision for loan losses was $7.0 million, down 19.0% from the prior-year quarter.

Capital and Profitability Ratios

Both capital and profitability ratios represented a mixed bag. As of Jun 30, 2014, Tier 1 leverage ratio was 9.61%, up from 8.96% as of Jun 30, 2013. However, Tier 1 risk-based capital ratio was 11.93%, declining marginally from 12.00% as of Jun 30, 2013.

Return on average assets was 0.84%, down from 0.99% as of Jun 30, 2013. However, as of Jun 30, 2014, tangible common equity ratio was 9.29%, up from 8.52% as of Jun 30, 2013.

Capital Deployment Activities

In early May 2014, the company reached the final settlement of accelerated share repurchase (ASR) transaction, with approximately 590,000 shares received. As a result, the Board of Directors authorized a new common stock buyback program in Jul for up to 5%, or approximately 4 million shares of the company's common stock. The buyback authorization will expire on Dec 31, 2015.

Our Viewpoint

The pressure on Hancock's top line will likely persist, given the sluggish economic recovery and a still low interest rate scenario. Nevertheless, the company's cost-containment measures and efficient organic growth strategies should continue to drive profitability in the quarters ahead.

At present, Hancock carries a Zacks Rank #3 (Hold).

Among other banks, Bank of the Ozarks, Inc. ( OZRK ) reported earnings per share of 34 cents in second-quarter 2014, beating the Zacks Consensus Estimate by a penny. BancorpSouth, Inc.'s ( BXS ) second-quarter 2014 earnings per share came in at 33 cents, in line with the Zacks Consensus Estimate. HomeTrust Bancshares, Inc. ( HTBI ) is scheduled to report on Aug 4.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: NIM , ASR , BXS , OZRK , HBHC



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