Hancock Whitney (HWC) Stock Up on Q3 Earnings & Revenue Beat

Shares of Hancock Whitney Corporation HWC rallied 2.8% following the release of third-quarter 2020 results after the markets closed. Earnings per share of 90 cents handily surpassed the Zacks Consensus Estimate of 68 cents. However, the figure compared unfavorably with the prior-year quarter’s adjusted number of $1.03.

Results reflect rise in revenues and lower operating expenses. However, decline in loans and deposits balances as well as higher provisions were the undermining factors.

Net income available to common shareholders was $77.9 million, up 16.9% year over year.

Revenues Improve, Expenses Down

Total revenues were $318.9 million, up 4.2% year over year. Also, the figure beat the Zacks Consensus Estimate of $316.8 million.

Net interest income on tax equivalent basis grew 5.2% year over year to $238.4 million. However, net interest margin (NIM), on a tax-equivalent basis, came in at 3.23%, contracting 18 basis points (bps).

Non-interest income was $83.7 million, up marginally from the year-ago level. The rise was primarily driven by a substantial increase in secondary mortgage market operations income.

Total non-interest expenses declined 8.3% to $195.8 million, mainly due to lower other operating expenses.

As of Sep 30, 2020, total loans were $22.2 billion, down 1.7% from the prior-quarter end. Also, total deposits declined 1.1% to $27 billion.

Credit Quality: Mixed Bag

Provision for credit losses jumped significantly from $12.4 million in the year-ago quarter to $25 million.

However, net charge-offs (NCOs) (annualized) were 0.43% of average total loans, down 40 bps from the year-ago quarter. Further, total non-performing assets plunged 38.9% to $192.2 million.

Capital Ratios Deteriorate

As of Sep 30, 2020, Tier 1 leverage ratio was 7.70%, down from 9.49% at the end of the year-earlier quarter. Tier 1 risk-based capital ratio was 10.29%, down from 11.02% as of Sep 30, 2019.

Fourth-Quarter 2020 Outlook

Management expects loan growth to be tempered for the remainder of the year and thus, total loan balance is projected to decline.

Further, provisions are likely to be stable sequentially and match NCOs.

NIM is expected to remain relatively flat.

Operating expenses are expected to decline driven by expense control measures being taken by the company.

Our Take

Hancock Whitney will likely to continue witnessing top-line growth on solid loan and deposit balances as well as the MidSouth Bancorp acquisition. However, near-zero interest rates and economic slowdown remain major near-term concerns.

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.

Performance of Other Banks

Washington Federal’s WAFD fourth-quarter fiscal 2020 (ended Sep 30) earnings came in at 45 cents per share, surpassing the Zacks Consensus Estimate of 42 cents. However, the figure reflected a year-over-year plunge of 31.8%.

BancorpSouth Bank BXS delivered a positive earnings surprise of 32.7% in third-quarter 2020 on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 52 cents. The bottom line, however, was flat year over year.

Zions Bancorporation’s ZION third-quarter 2020 net earnings per share of $1.01 surpassed the Zacks Consensus Estimate of 86 cents. However, the bottom line compared unfavorably with the year-ago quarter’s $1.17.

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