Hancock Whitney Corporation (HWCPZ): A Resilient Franchise Poised for Sustainable Growth

Published on September 24, 2024 | Ticker: HWCPZ

Hancock Whitney Corporation (HWCPZ) has demonstrated its resilience and adaptability in the face of a challenging macroeconomic environment. With a strong focus on profitability, balance sheet optimization, and strategic capital deployment, the company has positioned itself for sustainable growth in the years ahead.

Financials

Hancock Whitney reported net income of $392.6 million for the full year 2023, on revenue of $1.89 billion. The company generated robust operating cash flow of $519.8 million and free cash flow of $494.8 million during the same period. These solid financial results underscore the strength and stability of Hancock Whitney's business model.

In the latest quarter, the company reported net income of $115 million, or $1.31 per share. Pre-provision net revenue (PPNR) reached $156 million, or 1.79% of average assets, reflecting the company's disciplined approach to expense management and revenue generation. Net interest margin expanded 5 basis points to 3.37%, driven by higher loan and bond yields, as well as lower deposit costs.

Loan and Deposit Dynamics

Hancock Whitney's loan portfolio totaled $23.97 billion as of the end of the second quarter of 2024, relatively flat compared to the prior quarter. The company has been proactively managing its Shared National Credit (SNC) portfolio, reducing the outstanding balance by $221 million during the quarter. This strategic move aligns with Hancock Whitney's focus on building a more granular, relationship-driven loan book, which has contributed to net interest margin expansion.

On the deposit front, total deposits stood at $29.78 billion, down slightly from the previous quarter. This decline was primarily due to a $195 million reduction in brokered time deposits, as the company continues to migrate away from wholesale funding sources. Importantly, the company's core deposit base, which excludes public funds and brokered deposits, remained relatively stable, growing $109.6 million, or less than 1%, during the quarter.

Robust Capital Position and Shareholder Returns

Hancock Whitney's capital position remains exceptionally strong, with a Common Equity Tier 1 (CET1) ratio of 13% and a tangible common equity (TCE) ratio of 8.77% as of the end of the second quarter. This solid capital base has enabled the company to return capital to shareholders through a 33% increase in the common stock dividend and the repurchase of over 300,000 shares during the quarter.

Business Overview

Hancock Whitney is a diversified financial services company with a strong presence in the Gulf South region, including southern and central Mississippi, southern and central Alabama, northwest, central and southern Louisiana, the northern, central and panhandle regions of Florida, certain areas of east and northeast Texas, and the metropolitan areas of Nashville, Tennessee and Atlanta, Georgia. The company operates through its wholly-owned subsidiary, Hancock Whitney Bank, which provides a full range of banking and financial services, including commercial and retail banking, investment management, trust, and insurance.

The company's commercial and industrial (C&I) loan portfolio, which accounts for 54% of the total loan book, has been a key driver of growth and profitability. Hancock Whitney has a well-diversified C&I portfolio, with exposures across a variety of industries, including healthcare, retail trade, real estate and rental leasing, manufacturing, and wholesale trade, among others. The company's focus on building deeper relationships with its commercial clients has enabled it to generate a stable and recurring revenue stream.

Hancock Whitney's residential mortgage and consumer lending businesses have also contributed to the company's overall performance. The residential mortgage portfolio, which totaled $3.98 billion as of the end of the second quarter, grew 3% from the prior quarter, reflecting the company's ability to capitalize on market opportunities. The consumer loan portfolio, while declining 3% during the quarter, remains an important component of Hancock Whitney's diversified lending activities.

Outlook

For the full year 2024, Hancock Whitney expects loans to be flat to slightly down compared to 2023 levels, as the company continues to optimize its loan portfolio mix. The company anticipates modest net interest margin expansion in the second half of the year, driven by higher loan and bond yields, as well as lower deposit costs. Noninterest income is expected to grow between 4% and 5% from the adjusted 2023 level, while noninterest expenses are projected to increase between 2% and 3%, reflecting the company's disciplined approach to cost management.

Risks and Challenges

While Hancock Whitney has demonstrated its resilience, the company is not immune to the broader macroeconomic and industry-wide challenges. Factors such as the uncertain interest rate environment, potential economic slowdown, and heightened competition for deposits and loans could impact the company's financial performance. Additionally, the company's exposure to the commercial real estate sector, particularly in the multifamily and industrial segments, warrants close monitoring as the economic landscape evolves.

Conclusion

Hancock Whitney Corporation has navigated the recent turbulent environment with aplomb, showcasing its ability to optimize its balance sheet, enhance profitability, and deliver strong shareholder returns. With a robust capital position, disciplined expense management, and a focus on building deeper client relationships, the company is well-positioned to capitalize on future growth opportunities and deliver sustainable value for its investors.

Wiley (NYSE:WLY): A Storied Publisher Evolving with the Times

John Wiley & Sons, Inc., established in 1807, has a rich history as one of the world’s largest publishers and a trusted leader in research and learning. The company has weathered numerous changes in the publishing industry, adapting its business model to capitalize on evolving trends and technological advancements.

Ameren Corporation (AEE): Powering Growth through Strategic Investments and Clean Energy Transition

Ameren's Financial Strength and Resilient Business Model Ameren Corporation (AEE) is a leading electric and natural gas utility holding company, serving 2.4 million electric customers and 934,000 natural gas customers across Missouri and Illinois. With a history dating back to 1902, Ameren has evolved into a diversified energy provider, leveraging its robust rate-regulated business model to deliver reliable, affordable, and sustainable energy solutions to its growing customer base.

Lindsay Corporation (LNN): A Resilient Leader in Irrigation and Infrastructure Solutions

Lindsay Corporation, a global manufacturer and distributor of irrigation and infrastructure equipment and technology, has demonstrated its ability to navigate challenging market conditions and deliver consistent financial performance. With a rich history spanning over six decades, the company has established itself as a trailblazer in the industry, continuously innovating to meet the evolving needs of its customers worldwide.

Hancock Whitney Corporation (HWCPZ): Celebrating 125 Years of Resilience and Innovation

Business Overview Hancock Whitney Corporation, a leading financial institution in the Gulf South region, has weathered countless economic storms throughout its illustrious 125-year history. From its humble beginnings as a community bank in Gulfport, Mississippi, the company has evolved into a diversified financial services provider, serving commercial, small business, and retail customers across a wide geographic footprint.

Hancock Whitney Corporation (HWC): A Steadfast Financial Institution Navigating Changing Tides

Hancock Whitney Corporation, a prominent financial holding company headquartered in Gulfport, Mississippi, has a storied history spanning over a century. With a focus on providing comprehensive financial services to commercial, small business, and retail customers, Hancock Whitney has weathered numerous economic cycles, emerging as a resilient and adaptable institution.