Hancock Whitney (HWC) Q3 2021 earnings summary

Executive summary

• Q3 net income was $129.6 million, or $1.46 diluted EPS, up $40.9 million and $0.46 per share QoQ; adjusted for nonoperating items, EPS was $1.45, up $0.08 QoQ.

• Core loan growth of $219.7 million, or 4% LQA, was offset by $482.2 million of PPP forgiveness; total loans fell $262.5 million QoQ.

• Credit indicators improved, with nonperforming loans down 27% QoQ and criticized commercial loans down 11%; the quarter included a $27.0 million negative provision.

Financial highlights

• Net interest income (TE) was $237.5 million, flat QoQ; reported NIM was 2.94%, down 2 bps QoQ amid excess liquidity and PPP forgiveness.

• PPNR (TE) was $134.8 million, down $2.4 million QoQ; operating noninterest income was $88.8 million and operating expense was $191.5 million.

• Reported noninterest income was $93.4 million, including a $4.6 million gain on the sale of Hancock Horizon Funds; operating income was down $2.7 million, or 3%, QoQ.

• Reported noninterest expense was $194.7 million, including $3.2 million of net nonoperating expenses; operating expense declined $0.3 million QoQ to $191.5 million.

• Deposits were $29.2 billion, down $65.0 million QoQ; noninterest-bearing demand deposits rose $247.0 million and represented 47% of period-end deposits.

Outlook and guidance

• Q4 core loans expected to rise $400–$500 million QoQ; total deposits expected to increase $100–$200 million.

• Q4 NIM expected to compress another 4 bps from excess liquidity and PPP forgiveness; net interest income expected to decline slightly QoQ.

• Q4 operating fees expected relatively flat QoQ; operating expenses guided to $187 million, with the level intended as the 2022 run rate.

• FY21 core loans expected to end near $20.4 billion, up 3% YoY, and deposits near $29.4 billion, up 6% YoY; CRE payoff timing could affect loan guidance.

• FY21 NIM expected down ~30 bps vs. 2020 and NII (TE) down ~1%; fee growth expected ~9% and operating expense down ~3% YoY.