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Hancock Whitney (HWC) Posts Q1 Loss due to Higher Provisions

Hancock Whitney Corporation HWC reported first-quarter 2020 loss per share of $1.28against the Zacks Consensus Estimate for earnings of34 cents. The bottom line was wider than earnings of 91 cents in the year-ago quarter.

Substantially higher provisions, increase in operating expenses and lower interest rates hurt the results. Nevertheless, improvement in revenues and rise in loans as well as deposits acted as tailwinds.

Net loss came in at $111 million versus net income of $79.2 million in the prior-year quarter.

Revenues & Expenses Rise

Net revenues amounted to $315.6 million, up 8.9% year over year. The figure surpassed the Zacks Consensus Estimate of $306.3 million.

Net interest income on tax equivalent basis rose 5.2% year over year to $234 million. Net interest margin (NIM), on a tax-equivalent basis, came in at 3.41%, down 5 basis points (bps).

Non-interest income totaled $84.4 million, up 19.7% from the year-ago quarter’s level. Increase in service charges on deposit accounts, secondary mortgage market operations and other income primarily supported the uptick.

Total operating expenses rose 15.7% year over year to $203.3 million. This upswing can be attributed to rise in all the cost components.

As of Mar 31, total loans were $21.5 billion, up 1.4% from the prior-quarter end. Also, total deposits moved up 5.1% from the previous quarter’s level to $25 billion.

Credit Quality Worsens

Provision for credit losses surged substantially from $18 million to$246.8 million. The rise was mainly caused by coronavirus-induced uncertainty and declining oil prices.

Net charge-offs was 0.83% of average total loans, up 47 bps from the year-ago quarter’s level. However, total non-performing assets declined12.2% year over year to $306.8 million.

Capital Ratios Deteriorate

As of Mar 31, Tier 1 leverage ratio was 8.40%, down from the 8.85% recorded at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 10.03%, down from 10.74%.

Share Repurchase Update

During the first quarter, Hancock Whitney settled the accelerated share repurchase (ASR) announced in October 2019. The company received an additional around 1 million shares and $12.1 million in cash as final settlement of the ASR. Further, the company had repurchased 0.3 million shares in a privately-negotiated transaction.

Notably, the company’s has suspended buyback authorization.

Guidance

Hancock Whitney has withdrawn all prior guidance, including near-term, 2020 and 3-year Corporate Strategic Objectives.

Our Viewpoint

Backed by improving loan and deposit balances as well as the acquisition of MidSouth Bancorp, Hancock Whitney is likely to register further top-line growth. Nevertheless, rising expenses and near-zero interest rates are major concerns. Also, ambiguity related to coronavirus-related economic impact makes us apprehensive.

Hancock Whitney Corporation Price, Consensus and EPS Surprise

 

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 #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Zions Bancorporation’s ZION first-quarter 2020 net earnings per share of 4 cents missed the Zacks Consensus Estimate of 48 cents. The results included certain non-recurring items.

Washington Federal’s WAFD second-quarter fiscal 2020 (ended Mar 31) earnings were 49 cents per share, which missed the Zacks Consensus Estimate of 55 cents. The figure also declined 22.2% year over year.

Associated Banc-Corp’s ASB first-quarter 2020 adjusted earnings of 28 cents per share comfortably outpaced the Zacks Consensus Estimate of a breakeven. However, the figure declined 46% from the prior-year quarter’s reported number. Quarterly earnings in the reported quarter excluded certain acquisition-related costs.

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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 Nasdaq, Inc.

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