8-K
HANCOCK WHITNEY CORP (HWC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 17, 2020
HANCOCK WHITNEY CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Mississippi | 001-36872 | 64-0693170 |
|---|---|---|
| (State or Other Jurisdiction<br> <br>of Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| Hancock Whitney Plaza<br> <br>2510 14th Street<br> <br>Gulfport, Mississippi | 39501 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (228) 868-4000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2)
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common stock, par value $3.33 per share | HWC | The NASDAQ Stock Market, LLC |
| Item 1.01 | Entry into a Material Definitive Agreement. | |
| --- | --- |
On July 17, 2020, Hancock Whitney Corporation (the “Company”) entered into a Master Purchase and Master Participation agreement (the “Agreements”) to sell $497 million of energy loans to certain funds and accounts managed by Oaktree Capital Management, L.P. The sale includes reserve-based, midstream and nondrilling service credits. The Company expects to receive proceeds of $257.5 million from the sale of these loans upon satisfaction of certain closing conditions. A copy of the press release announcing the sale of the loans is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
|---|
The information set forth in Item 1.01 of this report with respect to the sale of the loans is incorporated by reference into this Item 2.01.
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On July 21, 2020, the Company announced financial results for its second quarter ended June 30, 2020. A copy of this press release and the accompanying financial statements are attached hereto as Exhibit 99.2 and is incorporated by reference into this Item 2.02. The press release is available on the Company’s website.
The information provided in Item 2.02 of this report, including Exhibit 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
| Item 7.01 | Regulation FD Disclosure. |
|---|
On July 21, 2020 at 4:00 p.m. (Central Time), the Company intends to hold an investor call and webcast to discuss financial results for the quarter ended June 30, 2020, including the press release. Additional investor presentation materials relating to such call are furnished hereto as Exhibit 99.3 and are, along with the press release and financial statements, incorporated herein by reference. All information in the press release and investor presentation materials speak as of the date thereof and the Company does not assume any obligation to update said information in the future. In addition, the Company disclaims any inferences regarding the materiality of such information which otherwise may arise as a result of it furnishing such information under Item 2.02 or Item 7.01 of this Form 8-K.
In accordance with the General Instruction B.2 of Form 8-K, the information presented herein pursuant to Item 2.02, “Results of Operations,” and Item 7.01, “Regulation FD,” shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall the information be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| --- | --- |
| 99.1 | Press Release dated July 17, 2020 announcing sale of energy loans |
| --- | --- |
| 99.2 | Press Release dated July 21, 2020 for Quarter Ended June 30, 2020 |
| 99.3 | Presentation Slides dated July 21, 2020 (furnished with the Securities and Exchange Commission as part of this Form 8-K) |
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HANCOCK WHITNEY CORPORATION | ||
|---|---|---|
| July 21, 2020 | By: | /s/ Michael M. Achary |
| Michael M. Achary | ||
| Senior Executive Vice President and Chief Financial Officer |
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EX-99.1
Exhibit 99.1
| FOR IMMEDIATE RELEASE<br> <br>July 17, 2020 |
|---|
| For more information<br><br><br>Trisha Voltz Carlson, EVP, Investor Relations Manager<br><br><br>504.299.5208 or trisha.carlson@hancockwhitney.com |
Hancock Whitney Agrees to Sell $497 Million in Energy Loans
Entire RBL portfolio included in the sale
GULFPORT, Miss. (July 17, 2020) — Hancock Whitney Corporation (Nasdaq: HWC) today announced it has agreed to sell $497 million of energy loans to certain funds and accounts managed by Oaktree Capital Management, L.P. The sale includes reserve-based (RBL), midstream and nondrilling service credits. The company expects to receive proceeds of $257.5 million from the sale of these loans upon satisfaction of certain closing conditions. All loans included in the transaction were re-classified as held for sale as of June 30, 2020, and any write-downs and charge-offs associated with the sale are reflected in the company’s second quarter’s results. A special provision for credit losses related to the transaction of approximately $160.1 million (pre-tax), or $1.47 per diluted share (21% tax rate), will be included in the company’s second quarter 2020 earnings results.
“The primary objective of this sale is to continue de-risking our loan portfolio by accelerating the disposition of assets that have been impacted by ongoing issues within the energy industry, and have now been further complicated by COVID-19,” said John M. Hairston, President and CEO. “While operating from a solid capital base, we decided to be opportunistic and sell these assets today, significantly de-risking our balance sheet. As a result, both nonperforming assets and criticized loans will show significant improvement, which should position us to report asset quality metrics in line with our peer groups. Additionally, we currently expect lower provisions for loan losses in the second half of 2020, due to both improved asset quality and after proactively building reserves for potential COVID-19 related issues in the first half of 2020. We also believe this transaction should position the company for a faster recovery in both earnings and returns to our shareholders.”
In addition to the special provision, the company continued building its reserve for potential losses related to COVID-19 with a second quarter provision of $146.8 million. The total provision for the loan portfolio for the second quarter of 2020 is $306.9 million. As a result of the transaction, and the COVID-19 related reserve build, the company will report a second quarter net loss of $117.1 million, or ($1.36) per diluted share. Pre-provision, net revenue is $118.5 million for the second quarter, up $2.8 million, or 2.4%, linked-quarter.
| ($s in millions) *Excludes PPP Loans and Loans Held for Sale<br>(HFS) | March 31, 2020 | June 30, 2020 | ||||
|---|---|---|---|---|---|---|
| Total Energy Loans* | $ | 940 | $ | 352 | ||
| Energy Loans/Total Loans* | 4.4 | % | 1.7 | % | ||
| NPLs/Total Loans* | 1.34 | % | 0.95 | % | ||
| Total Criticized Commercial Loans/Total Commercial Loans* | 3.24 | % | 2.26 | % | ||
| Tangible Common Equity (TCE) Ratio | 8.00 | % | 7.33 | % | ||
| CET1 Ratio (estimate for<br>6-30-20) | 10.02 | % | 9.77 | % |
1
Hancock Whitney Agrees to Sell $497 Million in Energy Loans
July 17, 2020
A slide presentation related to this announcement is posted in the News & Market Data (Presentations) section of the company’s Investor Relations website at www.hancockwhitney.com/investors. The company will report second quarter 2020 financial results on July 21, 2020 at 3:05pm Central Time and host a conference call to discuss both financial results and the loan sale transaction at 4:00pm Central Time the same day.
About Hancock Whitney
Since the late 1800s, Hancock Whitney has embodied core values of Honor & Integrity, Strength & Stability, Commitment to Service, Teamwork, and Personal Responsibility. Hancock Whitney offices and financial centers in Mississippi, Alabama, Florida, Louisiana, and Texas offer comprehensive financial products and services, including traditional and online banking; commercial and small business banking; private banking; trust and investment services; healthcare banking; certain insurance services; and mortgage services. The company also operates a loan production office in Nashville, Tennessee, as well as trust and asset management offices in New Jersey and New York. BauerFinancial, Inc., the nation’s leading independent bank rating and analysis firm, consistently recommends Hancock Whitney as one of America’s most financially sound banks. More information is available at www.hancockwhitney.com.
About Oaktree Capital Management, L.P.
Oaktree is a leader among global investment managers specializing in alternative investments, with $113 billion in assets under management as of March 31, 2020. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. The firm has over 950 employees and offices in 19 cities worldwide.
Important Cautionary Statement about Forward-Looking Statements
This news release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, estimates and projections are based on current expectations only, and are subject to a number of risks, uncertainties and assumptions, many of which are beyond the control of Hancock Whitney. Actual events and results may differ materially from those anticipated, estimated or projected if one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: Hancock Whitney’s failure to satisfy the conditions to the buyer’s obligation to consummate the sale of energy credits; the possibility that corporate developments could preclude, impair or delay the above-described transactions due to restrictions under the federal securities laws; changes in Hancock Whitney’s cash requirements, financial position, financing plans or investment plans; changes in general market, economic, tax, regulatory or industry conditions that affect Hancock Whitney’s business, including adverse impacts (economic or otherwise) resulting from the outbreak of the novel coronavirus, or COVID-19; and other risks referenced from time to time in Hancock Whitney’s filings with the Securities and Exchange Commission. Closing of the transaction described above is dependent upon satisfaction of certain closing conditions set forth in the definitive purchase agreement, and there is no assurance that such conditions will be fulfilled. You should be aware that new factors may emerge from time to time and it is not possible for Hancock Whitney to identify all such factors, nor can Hancock Whitney predict the impact of each such factor on its plans, or the extent to which any one or more factors may cause actual results to differ from those reflected in any forward-looking statements. You are further cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Hancock Whitney does not undertake any obligation to update any of its forward-looking statements for any reason.
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Hancock Whitney Agrees to Sell $497 Million in Energy Loans
July 17, 2020
In addition, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook”, or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. Forward-looking statements are subject to significant risks and uncertainties. Any forward-looking statement made in this release is subject to the safe harbor protections set forth in the Private Securities Litigation Reform Act of 1995. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in other periodic reports that we file with the SEC.
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EX-99.2
Exhibit 99.2
| FOR IMMEDIATE RELEASE<br><br><br>July 21, 2020 |
|---|
| For more information<br><br><br>Trisha Voltz Carlson, EVP, Investor Relations Manager<br><br><br>504.299.5208 or trisha.carlson@hancockwhitney.com |
Hancock Whitney reports second quarter 2020 results
Results include impact of the sale of $497 million of energy loans; continued ACL build
GULFPORT, Miss. (July 21, 2020) — Hancock Whitney Corporation (Nasdaq: HWC) today announced its financial results for the second quarter of 2020, a net loss of $117.1 million, or ($1.36) per diluted common share (EPS). The loss reflects a provision for credit losses of $306.9 million that includes both a special provision related to the sale of $497 million in energy loans and an additional build in the reserve for credit losses related to COVID-19.
The sale, which was announced on July 17, 2020, included reserve-based (RBL), midstream and nondrilling service credits. The company will receive proceeds of $257.5 million from the sale of these loans. All loans included in the transaction were re-classified as held for sale as of June 30, 2020, and today’s earnings results include a special provision for credit losses of approximately $160 million (pre-tax), or $1.47 per diluted share (21% tax rate), related to the energy loan sale.
The second quarter total provision for credit losses includes an additional $146.8 million as the company continued to build reserves for expected losses in sectors hardest hit by the economic fallout related to COVID-19. The company remains well capitalized with regulatory ratios well in excess of required levels including capital conservation buffers; CET1 ratio is estimated to be 9.77% at June 30, 2020.
The company reported a loss of $111.0 million, or ($1.28) EPS, in the first quarter of 2020 and a profit of $88.3 million, or $1.01 EPS, in the second quarter of 2019. Pre-provision net revenue (PPNR) totaled $118.5 million in the second quarter of 2020, an increase of $2.8 million, or 2.4%, linked-quarter. Excluding the special provision related to the energy loan sale (at a tax rate of 21%), the company’s earnings would be $9.4 million, or $.11 per diluted share, for the second quarter of 2020.
“The second quarter’s results reflect our continued focus on de-risking our balance sheet in light of today’s environment,” said John M. Hairston, President and CEO. “After building a solid reserve for credit losses in the first quarter, and then issuing subdebt in June, we made a strategic decision to opportunistically divest a large portion of our energy portfolio. Additionally, based on updated forecasts, we built a stronger level of reserves for what appears to be a longer and possibly deeper impact to our economies related to COVID-19. Despite those charges, our PPNR, the core business of our company, improved linked-quarter, and we remain committed to helping both our clients and associates manage through this event. Our capital remains solid with a 7.89% TCE ratio (excluding PPP loans), and we expect that our actions through the first half of 2020 will provide a stronger reserve with less risk in the balance sheet, which in turn should lead to improved returns for our shareholders.”
1
Hancock Whitney reports second quarter 2020 financial results
July 21, 2020
Second Quarter 2020 Highlights
| • | Criticized commercial loans down $182 million, or 34%, and nonperforming loans down $94 million, or<br>33%, linked-quarter reflecting the loan sale and disposition of problem energy credits |
|---|---|
| • | Strengthened Allowance for Credit Losses (ACL)/Total Loans to 2.12% or 2.36% excluding PPP loans<br> |
| --- | --- |
| • | Net loan growth totaled $1.1 billion linked-quarter; includes $2.3 billion in PPP loans, partially<br>offset by the energy loan sale and reduced balances on lines of credit |
| --- | --- |
| • | Total deposits increased $2.3 billion, mainly reflecting customer’s additional liquidity from PPP<br>loans |
| --- | --- |
| • | NIM of 3.23% declined 18 basis points (bps) linked-quarter; (see slide 21 in earnings slides for details)<br> |
| --- | --- |
| • | Solid liquidity with over $17 billion available in additional sources of funding |
| --- | --- |
Loans
Total loans at June 30, 2020 were $22.6 billion, up $1.1 billion, or 5%, linked-quarter. Average loans totaled $23.0 billion for the second quarter of 2020, up $1.7 billion, or 8%, linked-quarter. Growth in the second quarter was related to $2.3 billion of PPP loans funded during the quarter, partly offset by approximately $500 million in paydowns of draws on lines taken in the first quarter of 2020 by businesses as a precaution related to the impact from COVID-19, and also reduced by $497 million related to the energy loan sale (of which $255 million in loans were reclassified as held for sale). As of June 30, 2020, loans to the energy industry totaled $352 million, or 1.7% of total loans.
Beginning last quarter, the company began offering loan deferrals to customers impacted by COVID-19. At March 31, 2020 there were 1,618 notes deferred totaling $839.4 million in outstandings. Deferrals peaked in May at $3.6 billion of outstandings. In late June, deferrals began expiring, and as of June 30, 2020 there were 6,954 notes deferred totaling $2.7 billion in outstandings. As of July 15, 2020 there were $1.4 billion of active loan deferrals.
Deposits
Total deposits at June 30, 2020 were $27.3 billion, up $2.3 billion, or 9%, from March 31, 2020. An increase of $2.6 billion in noninterest-bearing deposits (DDAs) was the largest driver of the increase and mainly reflects additional customer liquidity resulting from PPP loan fundings. DDAs totaled $11.8 billion at June 30, 2020, up 28% from March 31, 2020 and comprised 43% of total period-end deposits at June 30, 2020.
Interest-bearing transaction and savings deposits totaled $9.6 billion at the end of the second quarter of 2020, up $674.1 million, or 8%, linked-quarter. Compared to March 31, 2020, time deposits of $2.6 billion were down $989.3 million, or 27%, split between decreases in both retail and brokered CDs. Interest-bearing public fund deposits increased $74.6 million, or 2%, to $3.3 billion.
Average deposits for the second quarter of 2020 were $26.7 billion, up $2.4 billion, or 10%, linked-quarter.
Asset Quality
The total allowance for credit losses (ACL) was $479.2 million at June 30, 2020, up $4.2 million, or 1%, from March 31, 2020. During the second quarter of 2020, the company recorded a total provision for credit losses of $306.9 million, compared to $246.8 million in the first quarter of 2020. Approximately $146.8 million of the provision for credit losses reflects updated Moody’s macroeconomic forecast scenarios that reflect today’s ongoing COVID-19 recessionary environment. As noted above, $160.1 million of the total provision is related to the energy loan sale.
2
Hancock Whitney reports second quarter 2020 financial results
July 21, 2020
Net charge-offs totaled $302.7 million in the second quarter of 2020, or 5.30% of average total loans on an annualized basis, up from $43.8 million, or 0.83% of average total loans in the first quarter of 2020. Included in the second quarter’s total were $243 million of charge-offs related to the energy loan sale and $26 million in other energy-related charge-offs.
The ratio of ACL to period-end loans was 2.12% (2.36% excluding PPP loans) at June 30, 2020, compared to 2.21% at March 31, 2020. The allowance for credits in the remaining energy portfolio totaled $19.9 million, or 5.7% of funded energy loans, at June 30, 2020. The allowance for credits in the nonenergy portfolio totaled $459.3 million, or 2.30% of funded nonenergy loans (excluding PPP loans), at June 30, 2020.
Nonperforming assets (NPAs) totaled $212.6 million at June 30, 2020, down $94.2 million, or 31%, from March 31, 2020. During the second quarter of 2020, total nonperforming loans decreased $94 million, or 33% reflecting the energy loan sale, while foreclosed and surplus real estate (ORE) and other foreclosed assets remained virtually unchanged. Nonperforming assets as a percent of total loans, ORE and other foreclosed assets was 0.94% at June 30, 2020, down 48 bps from March 31. 2020.
Net InterestIncome and Net Interest Margin (NIM)
Net interest income (TE) for the second quarter of 2020 was $241.1 million, up $6.5 million from the first quarter of 2020. The increase mainly reflects the impact of PPP loans offsetting the reduction in income from lower rates and purchase accounting accretion.
The net interest margin (TE) was 3.23% for the second quarter of 2020, down 18 bps linked-quarter. The decline mainly reflects a decrease in the overall rate environment impacting earning assets (-40 bps), the impact of excess liquidity on the balance sheet related to COVID-19 (-6 bps), a decrease in purchase accounting accretion related to the MidSouth transaction (-4 bps), the impact from interest reversals (-2 bps) and the one month impact of the June 2020 subdebt issuance (-1 bp), partly offset by proactive deposit pricing and changes in wholesale funding (+30 bps), and the impact of $1.7 billion in average PPP loans at a 4% yield (+5 bps).
Average earning assets were $30.0 billion for the second quarter of 2020, up $2.4 billion, or 9%, from the first quarter of 2020.
Noninterest Income
Noninterest income totaled $73.9 for the second quarter of 2020, down $10.4 million, or 12%, from the first quarter of 2020 reflecting the slowdown in economic activity as a result of COVID-19. Additionally, the company began waiving certain fees in mid-late March, such as penalty-free CD withdrawals, MMDA and savings excessive withdrawal fees, overdraft protection transfer fees and checking account reopening fees. Depending on the duration of the impact of COVID-19 on our customers, reduced activity and fee waivers could continue impacting our results in future quarters.
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Hancock Whitney reports second quarter 2020 financial results
July 21, 2020
Service charges on deposits totaled $15.5 million for the second quarter of 2020, down $7.3 million, or 32%, from the first quarter of 2020. Bank card and ATM fees totaled $16.0 million, down $1.4 million, or 8.1%, from the first quarter.
Trust fees totaled $14.2 million, down $0.6 million, or 4%, linked-quarter. Investment and annuity income and insurance fees totaled $5.4 million, down $1.8 million, or 25% linked-quarter.
Fees from secondary mortgage operations totaled $9.8 million for the second quarter of 2020, up $3.8 million, or 62% linked-quarter.
Other noninterest income totaled $13.1 million, down $3.0 million, or 19%, from the first quarter of 2020. The decrease in other noninterest income is primarily due to decreases in specialty income.
Noninterest Expense & Taxes
Noninterest expense totaled $196.5 million, down $6.8 million, or 3% linked-quarter. Included in first quarter of 2020 expense was $9.8 million of energy-related equity write-offs. Adjusting for the write-offs, noninterest expense was up $3.0 million. The adjusted increase includes $2.5 million in corporate contributions via community support such as food pantry cash donations, PPE for residents and first responders, housing relief to help fight evictions and contributions to the company’s employee assistance fund.
Total personnel expense was $120.4 million in the second quarter of 2020, up $6.9 million, or 6%, from the first quarter of 2020. The increase was mostly related to annual merit increases, and overtime pay related to mortgage lending and PPP applications.
Occupancy and equipment expense totaled $18.3 million in the second quarter of 2020, up $1.2 million, or 7%, from the first quarter of 2020. Amortization of intangibles totaled $5.2 million for the second quarter of 2020, down $0.2 million, or 3%, linked-quarter. Gains on sales of ORE and other foreclosed assets (OFA) exceeded expenses by $0.5 million in the second quarter of 2020. First quarter ORE expense included the $9.8 million in equity write-downs noted above.
Other operating expense totaled $53.1 million in the second quarter of 2020, down $4.1 million, or 7%, from the first quarter of 2020.
The effective income tax rate for the second quarter of 2020 was 39%. The unusually higher rate reflects both the impact from the energy loan sale and resulting quarterly loss. The company expects the tax rate to approximate 18% in both the third and fourth quarters of 2020. The effective income tax rate continues to be less than the statutory rate due primarily to tax-exempt income and tax credits.
Capital
Common stockholders’ equity at June 30, 2020 totaled $3.3 billion, down $104.9 million, or 3%, from March 31, 2020. The decline reflects the net impact of the energy loan sale. The tangible common equity (TCE) ratio was 7.33%, down from 8.00% March 31, 2020. TCE was mainly impacted by the addition of $2.3 billion in PPP loans (-56 bps) and the energy loan sale (-36 bps) in the quarter. A full reconciliation of the quarterly change is
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Hancock Whitney reports second quarter 2020 financial results
July 21, 2020
included in our slide presentation. The company remains well capitalized, with both bank and holding company capital levels in excess of required regulatory minimums. In early June, the company issued $172.5 million of new subdebt which qualifies as tier 2 capital. The company’s CET1 ratio is estimated to be 9.77% at June 30, 2020. The company intends to pay its next quarterly dividend and is in consultation with its examiners, while the board reviews the dividend payout policy quarterly.
Conference Call and Slide Presentation
Management will host a conference call for analysts and investors at 4:00 p.m. Central Time on Tuesday, July 21, 2020 to review the results. A live listen-only webcast of the call will be available under the Investor Relations section of Hancock Whitney’s website at www.hancockwhitney.com/investors. A link to the release with additional financial tables, and a link to a slide presentation related to second quarter results are also posted as part of the webcast link. To participate in the Q&A portion of the call, dial (877) 564-1219 or (973) 638-3429.
An audio archive of the conference call will be available under the Investor Relations section of our website. A replay of the call will also be available through July 28, 2020 by dialing (855) 859-2056 or (404) 537-3406, passcode 1757957.
About Hancock Whitney
Since the late 1800s, Hancock Whitney has embodied core values of Honor & Integrity, Strength & Stability, Commitment to Service, Teamwork, and Personal Responsibility. Hancock Whitney offices and financial centers in Mississippi, Alabama, Florida, Louisiana, and Texas offer comprehensive financial products and services, including traditional and online banking; commercial and small business banking; private banking; trust and investment services; healthcare banking; certain insurance services; and mortgage services. The company also operates a loan production office in Nashville, Tennessee, as well as trust and asset management offices in New Jersey and New York. BauerFinancial, Inc., the nation’s leading independent bank rating and analysis firm, consistently recommends Hancock Whitney as one of America’s most financially sound banks. More information is available at www.hancockwhitney.com.
Non-GAAP Financial Measures
This news release includes non-GAAP financial measures to describe Hancock Whitney’s performance. These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. The reconciliations of those measures to GAAP measures are provided either in the financial tables or in Appendix A thereto.
Consistent with Securities and Exchange Commission Industry Guide 3, the company presents net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (“TE”) basis. The TE basis adjusts for the tax-favored status of net interest income from certain loans and investments using the statutory federal tax rate to increase tax-exempt interest income to a taxable equivalent basis. The company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.
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Hancock Whitney reports second quarter 2020 financial results
July 21, 2020
The company presents certain additional non-GAAP financial measures to assist the reader with a better understanding of the company’s performance period over period, as well as to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. These non-GAAP measures may reference the concept “operating.” The company uses the term “operating” to describe a financial measure that excludes income or expense considered to be nonoperating in nature. Items identified as nonoperating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in the company’s business.
Important Cautionary Statement about Forward-Looking Statements
This news release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements that we may make include statements regarding our expectations regarding our performance and financial condition, balance sheet and revenue growth, the provision for credit losses, loan growth expectations, management’s predictions about charge-offs for loans, including energy-related credits, the impact of significant decreases in oil and gas prices on our energy portfolio, the impact of COVID-19 on the economy and our operations, the adequacy of our enterprise risk management framework, the impact of the MidSouth acquisition, or future business combinations on our performance and financial condition, including our ability to successfully integrate the businesses, success of revenue-generating initiatives, the effectiveness of derivative financial instruments and hedging activities to manage risks, projected tax rates, increased cybersecurity risks, including potential business disruptions or financial losses, the adequacy of our internal controls over financial reporting, the financial impact of regulatory requirements and tax reform legislation, the impact of the referenced rate reform, deposit trends, credit quality trends, changes in interest rates, net interest margin trends, future expense levels, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts, accretion levels and expected returns.
Given the many unknowns and risks being heavily weighted to the downside, our forward-looking statements are subject to the risk that conditions will be substantially different than we are currently expecting. If efforts to contain COVID-19 are unsuccessful and restrictions on movement last into the third quarter or beyond, the recession would be much longer and much more severe. Ineffective fiscal stimulus, or an extended delay in implementing it, are also major downside risks. The deeper the recession is, and the longer it lasts, the more it will damage consumer fundamentals and sentiment. This could both prolong the recession, and/or make any recovery weaker. Similarly, the recession could damage business fundamentals, and an extended global recession due to COVID-19 would weaken the U.S. recovery. As a result, the outbreak and its consequences, including responsive measures to manage it, have had and are likely to continue to have an adverse effect, possibly materially, on our business and financial performance by adversely affecting, possibly materially, the demand and profitability of our products and services, the valuation of assets and our ability to meet the needs of our customers.
In addition, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook”, or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such
6
Hancock Whitney reports second quarter 2020 financial results
July 21, 2020
statements in light of new information or future events. Forward-looking statements are subject to significant risks and uncertainties. Any forward-looking statement made in this release is subject to the safe harbor protections set forth in the Private Securities Litigation Reform Act of 1995. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in other periodic reports that we file with the SEC.
7
HANCOCK WHITNEY CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars and common share data in thousands, except per share<br><br><br>amounts) | 6/30/2020 | 3/31/2020 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||||||||
| NET INCOME | |||||||||||||||
| Net interest income | $ | 237,866 | **** | $ | 231,188 | $ | 219,868 | $ | 469,054 | **** | $ | 439,122 | |||
| Net interest income (TE) (a) | **** | 241,114 | **** | 234,636 | 223,586 | **** | 475,750 | **** | 446,664 | ||||||
| Provision for credit losses | **** | 306,898 | **** | 246,793 | 8,088 | **** | 553,691 | **** | 26,131 | ||||||
| Noninterest income | **** | 73,943 | **** | 84,387 | 79,250 | **** | 158,330 | **** | 149,753 | ||||||
| Noninterest expense | **** | 196,539 | **** | 203,335 | 183,567 | **** | 399,874 | **** | 359,267 | ||||||
| Income tax expense (benefit) | **** | (74,556 | ) | (23,520 | ) | 19,186 | **** | (98,076 | ) | 36,036 | |||||
| Net income (loss) | $ | (117,072 | ) | $ | (111,033 | ) | $ | 88,277 | $ | (228,105 | ) | $ | 167,441 | ||
| For informational purposes - included above,pre-tax | |||||||||||||||
| Provision for credit loss associated with energy loan sale | $ | 160,101 | **** | $ | — | $ | — | $ | 160,101 | **** | $ | — | |||
| PERIOD-END BALANCE SHEET DATA | |||||||||||||||
| Loans | $ | 22,628,377 | **** | $ | 21,515,681 | $ | 20,175,812 | $ | 22,628,377 | **** | $ | 20,175,812 | |||
| Securities | **** | 6,381,803 | **** | 6,374,490 | 5,725,735 | **** | 6,381,803 | **** | 5,725,735 | ||||||
| Earning assets | **** | 30,134,790 | **** | 28,834,072 | 26,088,759 | **** | 30,134,790 | **** | 26,088,759 | ||||||
| Total assets | **** | 33,215,400 | **** | 31,761,693 | 28,761,863 | **** | 33,215,400 | **** | 28,761,863 | ||||||
| Noninterest-bearing deposits | **** | 11,759,085 | **** | 9,204,631 | 8,114,632 | **** | 11,759,085 | **** | 8,114,632 | ||||||
| Total deposits | **** | 27,322,268 | **** | 25,008,496 | 23,236,042 | **** | 27,322,268 | **** | 23,236,042 | ||||||
| Common stockholders’ equity | **** | 3,316,157 | **** | 3,421,064 | 3,318,915 | **** | 3,316,157 | **** | 3,318,915 | ||||||
| AVERAGE BALANCE SHEET DATA | |||||||||||||||
| Loans | $ | 22,957,032 | **** | $ | 21,234,016 | $ | 20,150,104 | $ | 22,095,524 | **** | $ | 20,138,590 | |||
| Securities (b) | **** | 6,129,616 | **** | 6,149,432 | 5,586,390 | **** | 6,139,524 | **** | 5,621,345 | ||||||
| Earning assets | **** | 30,013,829 | **** | 27,630,652 | 25,992,894 | **** | 28,822,240 | **** | 26,006,595 | ||||||
| Total assets | **** | 33,136,706 | **** | 30,663,601 | 28,537,810 | **** | 31,900,154 | **** | 28,494,917 | ||||||
| Noninterest-bearing deposits | **** | 10,989,921 | **** | 8,763,359 | 8,099,621 | **** | 9,876,640 | **** | 8,163,306 | ||||||
| Total deposits | **** | 26,702,622 | **** | 24,327,242 | 23,137,563 | **** | 25,514,932 | **** | 23,125,916 | ||||||
| Common stockholders’ equity | **** | 3,465,617 | **** | 3,509,727 | 3,230,503 | **** | 3,487,672 | **** | 3,174,588 | ||||||
| COMMON SHARE DATA | |||||||||||||||
| Earnings (loss) per share - diluted | $ | (1.36 | ) | $ | (1.28 | ) | $ | 1.01 | $ | (2.64 | ) | $ | 1.92 | ||
| Cash dividends per share | **** | 0.27 | **** | 0.27 | 0.27 | **** | 0.54 | **** | 0.54 | ||||||
| Book value per share (period-end) | **** | 38.41 | **** | 39.65 | 38.70 | **** | 38.41 | **** | 38.70 | ||||||
| Tangible book value per share (period-end) | **** | 27.38 | **** | 28.56 | 28.46 | **** | 27.38 | **** | 28.46 | ||||||
| Weighted average number of shares - diluted | **** | 86,301 | **** | 87,186 | 85,835 | **** | 86,744 | **** | 85,810 | ||||||
| Period-end number of shares | **** | 86,342 | **** | 86,275 | 85,759 | **** | 86,342 | **** | 85,759 | ||||||
| Market data | |||||||||||||||
| High sales price | $ | 28.50 | **** | $ | 44.24 | $ | 44.74 | $ | 44.24 | **** | $ | 44.74 | |||
| Low sales price | **** | 14.88 | **** | 14.32 | 37.03 | **** | 14.32 | **** | 34.11 | ||||||
| Period-end closing price | **** | 21.20 | **** | 19.52 | 40.06 | **** | 21.20 | **** | 40.06 | ||||||
| Trading volume | **** | 48,174 | **** | 50,390 | 27,874 | **** | 98,564 | **** | 55,998 | ||||||
| PERFORMANCE RATIOS | |||||||||||||||
| Return on average assets | **** | (1.42 | )% | (1.46 | )% | 1.24 | % | **** | (1.44 | )% | 1.18 | % | |||
| Return on average common equity | **** | (13.59 | )% | (12.72 | )% | 10.96 | % | **** | (13.15 | )% | 10.64 | % | |||
| Return on average tangible common equity | **** | (18.75 | )% | (17.51 | )% | 15.07 | % | **** | (18.13 | )% | 14.73 | % | |||
| Tangible common equity ratio (c) | **** | 7.33 | % | 8.00 | % | 8.75 | % | **** | 7.33 | % | 8.75 | % | |||
| Net interest margin (TE) | **** | 3.23 | % | 3.41 | % | 3.45 | % | **** | 3.31 | % | 3.45 | % | |||
| Noninterest income as a percent of total revenue (TE) | **** | 23.47 | % | 26.45 | % | 26.17 | % | **** | 24.97 | % | 25.11 | % | |||
| Efficiency ratio (d) | **** | 60.74 | % | 62.06 | % | 58.95 | % | **** | 61.41 | % | 58.53 | % | |||
| Average loan/deposit ratio | **** | 85.97 | % | 87.28 | % | 87.09 | % | **** | 86.60 | % | 87.08 | % | |||
| Allowance for loan losses as a percentage of period-end<br>loans | **** | 1.96 | % | 1.98 | % | 0.97 | % | **** | 1.96 | % | 0.97 | % | |||
| Allowance for credit losses as a percent of period-end<br>loans | **** | 2.12 | % | 2.21 | % | 0.97 | % | **** | 2.12 | % | 0.97 | % | |||
| Annualized net charge-offs to average loans | **** | 5.30 | % | 0.83 | % | 0.14 | % | **** | 3.15 | % | 0.25 | % | |||
| Allowance for loan losses to nonperforming loans + accruing loans 90 days past due | **** | 222.37 | % | 139.17 | % | 61.60 | % | **** | 222.37 | % | 61.60 | % | |||
| FTE headcount | **** | 4,196 | **** | 4,148 | 3,930 | **** | 4,196 | **** | 3,930 | ||||||
| (a) | Taxable equivalent (TE) amounts are calculated using a federal income tax rate of 21%.<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| (b) | Average securities does not include unrealized holding gains/losses on available for sale securities.<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| (c) | The tangible common equity ratio is common shareholders’ equity less intangible assets divided by total<br>assets less intangible assets. | ||||||||||||||
| --- | --- | ||||||||||||||
| (d) | The efficiency ratio is noninterest expense to total net interest income (TE) and noninterest income,<br>excluding amortization of purchased intangibles and nonoperating items. | ||||||||||||||
| --- | --- |
8
HANCOCK WHITNEY CORPORATION
QUARTERLY FINANCIAL HIGHLIGHTS
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars and common share data in thousands, except per share<br><br><br>amounts) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | ||||||||||
| NET INCOME | |||||||||||||||
| Net interest income | $ | 237,866 | **** | $ | 231,188 | $ | 233,156 | $ | 222,939 | $ | 219,868 | ||||
| Net interest income (TE) (a) | **** | 241,114 | **** | 234,636 | 236,736 | 226,591 | 223,586 | ||||||||
| Provision for credit losses | **** | 306,898 | **** | 246,793 | 9,156 | 12,421 | 8,088 | ||||||||
| Noninterest income | **** | 73,943 | **** | 84,387 | 82,924 | 83,230 | 79,250 | ||||||||
| Noninterest expense | **** | 196,539 | **** | 203,335 | 197,856 | 213,554 | 183,567 | ||||||||
| Income tax expense (benefit) | **** | (74,556 | ) | (23,520 | ) | 16,936 | 12,387 | 19,186 | |||||||
| Net income (loss) | $ | (117,072 | ) | $ | (111,033 | ) | $ | 92,132 | $ | 67,807 | $ | 88,277 | |||
| For informational purposes - included above,pre-tax | |||||||||||||||
| Provision for credit loss associated with energy loan sale | $ | 160,101 | **** | $ | — | $ | — | $ | — | $ | — | ||||
| Nonoperating merger-related expenses | **** | — | **** | **** | — | **** | 3,856 | 28,810 | **** | — | **** | ||||
| PERIOD-END BALANCE SHEET DATA | |||||||||||||||
| Loans | $ | 22,628,377 | **** | $ | 21,515,681 | $ | 21,212,755 | $ | 21,035,952 | $ | 20,175,812 | ||||
| Securities | **** | 6,381,803 | **** | 6,374,490 | 6,243,313 | 6,404,719 | 5,725,735 | ||||||||
| Earning assets | **** | 30,134,790 | **** | 28,834,072 | 27,622,161 | 27,565,973 | 26,088,759 | ||||||||
| Total assets | **** | 33,215,400 | **** | 31,761,693 | 30,600,757 | 30,543,549 | 28,761,863 | ||||||||
| Noninterest-bearing deposits | **** | 11,759,085 | **** | 9,204,631 | 8,775,632 | 8,686,383 | 8,114,632 | ||||||||
| Total deposits | **** | 27,322,268 | **** | 25,008,496 | 23,803,575 | 24,201,299 | 23,236,042 | ||||||||
| Common stockholders’ equity | **** | 3,316,157 | **** | 3,421,064 | 3,467,685 | 3,586,380 | 3,318,915 | ||||||||
| AVERAGE BALANCE SHEET DATA | |||||||||||||||
| Loans | $ | 22,957,032 | **** | $ | 21,234,016 | $ | 21,037,942 | $ | 20,197,114 | $ | 20,150,104 | ||||
| Securities (b) | **** | 6,129,616 | **** | 6,149,432 | 6,201,612 | 6,004,688 | 5,586,390 | ||||||||
| Earning assets | **** | 30,013,829 | **** | 27,630,652 | 27,441,459 | 26,437,613 | 25,992,894 | ||||||||
| Total assets | **** | 33,136,706 | **** | 30,663,601 | 30,343,293 | 29,148,106 | 28,537,810 | ||||||||
| Noninterest-bearing deposits | **** | 10,989,921 | **** | 8,763,359 | 8,601,323 | 8,092,482 | 8,099,621 | ||||||||
| Total deposits | **** | 26,702,622 | **** | 24,327,242 | 23,848,374 | 23,091,355 | 23,137,563 | ||||||||
| Common stockholders’ equity | **** | 3,465,617 | **** | 3,509,727 | 3,473,693 | 3,383,738 | 3,230,503 | ||||||||
| COMMON SHARE DATA | |||||||||||||||
| Earnings (loss) per share - diluted | $ | (1.36 | ) | $ | (1.28 | ) | $ | 1.03 | $ | 0.77 | $ | 1.01 | |||
| Cash dividends per share | **** | 0.27 | **** | 0.27 | 0.27 | 0.27 | 0.27 | ||||||||
| Book value per share (period-end) | **** | 38.41 | **** | 39.65 | 39.62 | 39.49 | 38.70 | ||||||||
| Tangible book value per share (period-end) | **** | 27.38 | **** | 28.56 | 28.63 | 28.73 | 28.46 | ||||||||
| Weighted average number of shares - diluted | **** | 86,301 | **** | 87,186 | 88,315 | 86,462 | 85,835 | ||||||||
| Period-end number of shares | **** | 86,342 | **** | 86,275 | 87,515 | 90,822 | 85,759 | ||||||||
| Market data | |||||||||||||||
| High sales price | $ | 28.50 | **** | $ | 44.24 | $ | 44.42 | $ | 42.11 | $ | 44.74 | ||||
| Low sales price | **** | 14.88 | **** | 14.32 | 35.45 | 33.63 | 37.03 | ||||||||
| Period-end closing price | **** | 21.20 | **** | 19.52 | 43.88 | 38.30 | 40.06 | ||||||||
| Trading volume | **** | 48,174 | **** | 50,390 | 30,850 | 29,038 | 27,874 | ||||||||
| PERFORMANCE RATIOS | |||||||||||||||
| Return on average assets | **** | (1.42 | )% | (1.46 | )% | 1.20 | % | 0.92 | % | 1.24 | % | ||||
| Return on average common equity | **** | (13.59 | )% | (12.72 | )% | 10.52 | % | 7.95 | % | 10.96 | % | ||||
| Return on average tangible common equity | **** | (18.75 | )% | (17.51 | )% | 14.62 | % | 10.77 | % | 15.07 | % | ||||
| Tangible common equity ratio (c) | **** | 7.33 | % | 8.00 | % | 8.45 | % | 8.82 | % | 8.75 | % | ||||
| Net interest margin (TE) | **** | 3.23 | % | 3.41 | % | 3.43 | % | 3.41 | % | 3.45 | % | ||||
| Noninterest income as a percentage of total revenue (TE) | **** | 23.47 | % | 26.45 | % | 25.94 | % | 26.86 | % | 26.17 | % | ||||
| Efficiency ratio (d) | **** | 60.74 | % | 62.06 | % | 58.88 | % | 58.05 | % | 58.95 | % | ||||
| Average loan/deposit ratio | **** | 85.97 | % | 87.28 | % | 88.22 | % | 87.47 | % | 87.09 | % | ||||
| Allowance for loan losses as a percent of period-end<br>loans | **** | 1.96 | % | 1.98 | % | 0.90 | % | 0.93 | % | 0.97 | % | ||||
| Allowance for credit losses as a percent of period-end<br>loans | **** | 2.12 | % | 2.21 | % | 0.92 | % | 0.93 | % | 0.97 | % | ||||
| Annualized net charge-offs to average loans | **** | 5.30 | % | 0.83 | % | 0.18 | % | 0.25 | % | 0.14 | % | ||||
| Allowance for loan losses to nonperforming loans + accruing loans 90 days past due | **** | 222.37 | % | 139.17 | % | 60.97 | % | 67.06 | % | 61.60 | % | ||||
| FTE headcount | **** | 4,196 | **** | 4,148 | 4,136 | 3,894 | 3,930 | ||||||||
| (a) | Taxable equivalent (TE) amounts are calculated using a federal income tax rate of 21%.<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| (b) | Average securities does not include unrealized holding gains/losses on available for sale securities.<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| (c) | The tangible common equity ratio is common shareholders’ equity less intangible assets divided by total<br>assets less intangible assets. | ||||||||||||||
| --- | --- | ||||||||||||||
| (d) | The efficiency ratio is noninterest expense to total net interest income (TE) and noninterest income,<br>excluding amortization of purchased intangibles and nonoperating items. | ||||||||||||||
| --- | --- |
9
HANCOCK WHITNEY CORPORATION
INCOME STATEMENT
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands, except per share data) | 6/30/2020 | 3/31/2020 | 6/30/2019 | 6/30/2020 | 6/30/2019 | |||||||||
| NET INCOME | ||||||||||||||
| Interest income | $ | 266,342 | **** | $ | 277,343 | $ | 280,378 | $ | 543,685 | **** | $ | 556,661 | ||
| Interest income (TE) (e) | **** | 269,590 | **** | 280,791 | 284,096 | **** | 550,381 | **** | 564,203 | |||||
| Interest expense | **** | 28,476 | **** | 46,155 | 60,510 | **** | 74,631 | **** | 117,539 | |||||
| Net interest income (TE) | **** | 241,114 | **** | 234,636 | 223,586 | **** | 475,750 | **** | 446,664 | |||||
| Provision for credit losses | **** | 306,898 | **** | 246,793 | 8,088 | **** | 553,691 | **** | 26,131 | |||||
| Noninterest income | **** | 73,943 | **** | 84,387 | 79,250 | **** | 158,330 | **** | 149,753 | |||||
| Noninterest expense | **** | 196,539 | **** | 203,335 | 183,567 | **** | 399,874 | **** | 359,267 | |||||
| Income (loss) before income taxes | **** | (191,628 | ) | (134,553 | ) | 107,463 | **** | (326,181 | ) | 203,477 | ||||
| Income tax expense (benefit) | **** | (74,556 | ) | (23,520 | ) | 19,186 | **** | (98,076 | ) | 36,036 | ||||
| Net income (loss) | $ | (117,072 | ) | $ | (111,033 | ) | $ | 88,277 | $ | (228,105 | ) | $ | 167,441 | **** |
| For informational purposes - included above,pre-tax | ||||||||||||||
| Provision for credit loss associated with energy loan sale | $ | 160,101 | **** | $ | — | $ | — | $ | 160,101 | **** | $ | — | ||
| NONINTEREST INCOME | ||||||||||||||
| Service charges on deposit accounts | $ | 15,518 | **** | $ | 22,837 | $ | 20,723 | $ | 38,355 | **** | $ | 41,090 | ||
| Trust fees | **** | 14,160 | **** | 14,806 | 15,904 | **** | 28,966 | **** | 31,028 | |||||
| Bank card and ATM fees | **** | 15,957 | **** | 17,362 | 16,619 | **** | 33,319 | **** | 31,909 | |||||
| Insurance and investment commissions, and annuity fees | **** | 5,366 | **** | 7,150 | 6,591 | **** | 12,516 | **** | 13,119 | |||||
| Secondary mortgage market operations | **** | 9,808 | **** | 6,053 | 4,433 | **** | 15,861 | **** | 8,159 | |||||
| Other income | **** | 13,134 | **** | 16,179 | 14,980 | **** | 29,313 | **** | 24,448 | |||||
| Total noninterest income | $ | 73,943 | **** | $ | 84,387 | $ | 79,250 | $ | 158,330 | **** | $ | 149,753 | ||
| NONINTEREST EXPENSE | ||||||||||||||
| Personnel expense | $ | 120,409 | **** | $ | 113,549 | $ | 106,635 | $ | 233,958 | **** | $ | 210,333 | ||
| Net occupancy and equipment expense | **** | 18,311 | **** | 17,139 | 17,303 | **** | 35,450 | **** | 33,966 | |||||
| Other real estate and foreclosed assets (income) expense, net | **** | (460 | ) | 10,130 | 395 | **** | 9,670 | **** | (596 | ) | ||||
| Other operating expense | **** | 53,110 | **** | 57,172 | 54,187 | **** | 110,282 | **** | 105,379 | |||||
| Amortization of intangibles | **** | 5,169 | **** | 5,345 | 5,047 | **** | 10,514 | **** | 10,185 | |||||
| Total noninterest expense | $ | 196,539 | **** | $ | 203,335 | $ | 183,567 | $ | 399,874 | **** | $ | 359,267 | ||
| COMMON SHARE DATA | ||||||||||||||
| Earnings (loss) per share: | ||||||||||||||
| Basic | $ | (1.36 | ) | $ | (1.28 | ) | $ | 1.01 | $ | (2.64 | ) | $ | 1.92 | |
| Diluted | **** | (1.36 | ) | (1.28 | ) | 1.01 | **** | (2.64 | ) | 1.92 | ||||
| (e) | Taxable equivalent (TE) amounts are calculated using a federal income tax rate of<br>21%. | |||||||||||||
| --- | --- |
10
HANCOCK WHITNEY CORPORATION
INCOME STATEMENT
(Unaudited)
| Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands, except per share data) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | ||||||||
| NET INCOME | |||||||||||||
| Interest income | $ | 266,342 | **** | $ | 277,343 | $ | 285,957 | $ | 283,164 | $ | 280,378 | ||
| Interest income (TE) (e) | **** | 269,590 | **** | 280,791 | 289,537 | 286,816 | 284,096 | ||||||
| Interest expense | **** | 28,476 | **** | 46,155 | 52,801 | 60,225 | 60,510 | ||||||
| Net interest income (TE) | **** | 241,114 | **** | 234,636 | 236,736 | 226,591 | 223,586 | ||||||
| Provision for credit losses | **** | 306,898 | **** | 246,793 | 9,156 | 12,421 | 8,088 | ||||||
| Noninterest income | **** | 73,943 | **** | 84,387 | 82,924 | 83,230 | 79,250 | ||||||
| Noninterest expense | **** | 196,539 | **** | 203,335 | 197,856 | 213,554 | 183,567 | ||||||
| Income (loss) before income taxes | **** | (191,628 | ) | (134,553 | ) | 109,068 | 80,194 | 107,463 | |||||
| Income tax expense (benefit) | **** | (74,556 | ) | (23,520 | ) | 16,936 | 12,387 | 19,186 | |||||
| Net income (loss) | $ | (117,072 | ) | $ | (111,033 | ) | $ | 92,132 | $ | 67,807 | $ | 88,277 | |
| For informational purposes - included above,pre-tax | |||||||||||||
| Provision for credit loss associated with energy loan sale | $ | 160,101 | **** | $ | — | $ | — | $ | — | $ | — | ||
| Nonoperating merger-related expenses | **** | — | **** | **** | — | **** | 3,856 | 28,810 | **** | — | |||
| NONINTEREST INCOME | |||||||||||||
| Service charges on deposit accounts | $ | 15,518 | **** | $ | 22,837 | $ | 23,382 | $ | 21,892 | $ | 20,723 | ||
| Trust fees | **** | 14,160 | **** | 14,806 | 15,483 | 15,098 | 15,904 | ||||||
| Bank card and ATM fees | **** | 15,957 | **** | 17,362 | 17,913 | 17,154 | 16,619 | ||||||
| Investment and insurance commissions, and annuity fees | **** | 5,366 | **** | 7,150 | 6,407 | 7,048 | 6,591 | ||||||
| Secondary mortgage market operations | **** | 9,808 | **** | 6,053 | 5,981 | 5,713 | 4,433 | ||||||
| Other income | **** | 13,134 | **** | 16,179 | 13,758 | 16,325 | 14,980 | ||||||
| Total noninterest income | $ | 73,943 | **** | $ | 84,387 | $ | 82,924 | $ | 83,230 | $ | 79,250 | ||
| NONINTEREST EXPENSE | |||||||||||||
| Personnel expense | $ | 120,409 | **** | $ | 113,549 | $ | 117,066 | $ | 112,480 | $ | 106,635 | ||
| Net occupancy and equipment expense | **** | 18,311 | **** | 17,139 | 17,522 | 17,841 | 17,303 | ||||||
| Other real estate and foreclosed assets (income) expense | **** | (460 | ) | 10,130 | (788 | ) | 2,055 | 395 | |||||
| Other operating expense | **** | 53,110 | **** | 57,172 | 58,286 | 76,289 | 54,187 | ||||||
| Amortization of intangibles | **** | 5,169 | **** | 5,345 | 5,770 | 4,889 | 5,047 | ||||||
| Total noninterest expense | $ | 196,539 | **** | $ | 203,335 | $ | 197,856 | $ | 213,554 | $ | 183,567 | ||
| Nonoperating noninterest expense | $ | — | **** | $ | — | $ | 3,856 | $ | 28,810 | $ | — | ||
| COMMON SHARE DATA | |||||||||||||
| Earnings (loss) per share: | |||||||||||||
| Basic | $ | (1.36 | ) | $ | (1.28 | ) | $ | 1.03 | $ | 0.77 | $ | 1.01 | |
| Diluted | **** | (1.36 | ) | (1.28 | ) | 1.03 | 0.77 | 1.01 | |||||
| (e) | Taxable equivalent (TE) amounts are calculated using a federal income tax rate of<br>21%. | ||||||||||||
| --- | --- |
11
HANCOCK WHITNEY CORPORATION
PERIOD-END BALANCE SHEET
(Unaudited)
| (dollars in thousands) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||||||||
| Commercial non-real estate loans | $ | 10,465,280 | **** | $ | 9,321,340 | $ | 9,166,947 | $ | 8,893,004 | $ | 8,559,118 | ||||
| Commercial real estate - owner occupied | **** | 2,762,259 | **** | 2,731,320 | 2,738,460 | 2,734,379 | 2,519,970 | ||||||||
| Total commercial and industrial loans | **** | 13,227,539 | **** | 12,052,660 | 11,905,407 | 11,627,383 | 11,079,088 | ||||||||
| Commercial real estate - income producing | **** | 3,350,299 | **** | 3,232,783 | 2,994,448 | 3,060,568 | 2,895,468 | ||||||||
| Construction and land development loans | **** | 1,128,959 | **** | 1,098,726 | 1,157,451 | 1,190,718 | 1,144,062 | ||||||||
| Residential mortgage loans | **** | 2,877,316 | **** | 2,979,985 | 2,990,631 | 3,004,958 | 2,968,271 | ||||||||
| Consumer loans | **** | 2,044,264 | **** | 2,151,527 | 2,164,818 | 2,152,325 | 2,088,923 | ||||||||
| Total loans | **** | 22,628,377 | **** | 21,515,681 | 21,212,755 | 21,035,952 | 20,175,812 | ||||||||
| Loans held for sale | **** | 364,416 | **** | 67,587 | 55,864 | 75,789 | 36,150 | ||||||||
| Securities | **** | 6,381,803 | **** | 6,374,490 | 6,243,313 | 6,404,719 | 5,725,735 | ||||||||
| Short-term investments | **** | 760,194 | **** | 876,314 | 110,229 | 49,513 | 151,062 | ||||||||
| Earning assets | **** | 30,134,790 | **** | 28,834,072 | 27,622,161 | 27,565,973 | 26,088,759 | ||||||||
| Allowance for loan losses | **** | (442,638 | ) | (426,003 | ) | (191,251 | ) | (195,572 | ) | (195,625 | ) | ||||
| Goodwill and other intangible assets | **** | 951,746 | **** | 956,916 | 962,260 | 977,369 | 878,051 | ||||||||
| Other assets | **** | 2,571,502 | **** | 2,396,708 | 2,207,587 | 2,195,779 | 1,990,678 | ||||||||
| Total assets | $ | 33,215,400 | **** | $ | 31,761,693 | $ | 30,600,757 | $ | 30,543,549 | $ | 28,761,863 | ||||
| LIABILITIES | |||||||||||||||
| Noninterest-bearing deposits | $ | 11,759,085 | **** | $ | 9,204,631 | $ | 8,775,632 | $ | 8,686,383 | $ | 8,114,632 | ||||
| Interest-bearing transaction and savings deposits | **** | 9,605,254 | **** | 8,931,192 | 8,845,097 | 8,758,993 | 8,034,801 | ||||||||
| Interest-bearing public fund deposits | **** | 3,326,033 | **** | 3,251,445 | 3,364,416 | 2,954,966 | 3,159,790 | ||||||||
| Time deposits | **** | 2,631,896 | **** | 3,621,228 | 2,818,430 | 3,800,957 | 3,926,819 | ||||||||
| Total interest-bearing deposits | **** | 15,563,183 | **** | 15,803,865 | 15,027,943 | 15,514,916 | 15,121,410 | ||||||||
| Total deposits | **** | 27,322,268 | **** | 25,008,496 | 23,803,575 | 24,201,299 | 23,236,042 | ||||||||
| Short-term borrowings | **** | 1,754,875 | **** | 2,673,283 | 2,714,872 | 2,108,815 | 1,641,598 | ||||||||
| Long-term debt | **** | 386,269 | **** | 225,606 | 233,462 | 246,641 | 232,754 | ||||||||
| Other liabilities | **** | 435,831 | **** | 433,244 | 381,163 | 400,414 | 332,554 | ||||||||
| Total liabilities | **** | 29,899,243 | **** | 28,340,629 | 27,133,072 | 26,957,169 | 25,442,948 | ||||||||
| COMMON STOCKHOLDERS’ EQUITY | |||||||||||||||
| Common stock net of treasury and capital surplus | **** | 2,057,153 | **** | 2,050,669 | 2,046,177 | 2,229,353 | 2,030,208 | ||||||||
| Retained earnings | **** | 1,156,278 | **** | 1,297,129 | 1,476,232 | 1,408,183 | 1,363,910 | ||||||||
| Accumulated other comprehensive income (loss) | **** | 102,726 | **** | 73,266 | (54,724 | ) | (51,156 | ) | (75,203 | ) | |||||
| Total common stockholders’ equity | **** | 3,316,157 | **** | 3,421,064 | 3,467,685 | 3,586,380 | 3,318,915 | ||||||||
| Total liabilities & stockholders’ equity | $ | 33,215,400 | **** | $ | 31,761,693 | $ | 30,600,757 | $ | 30,543,549 | $ | 28,761,863 | ||||
| For informational purposes only - included above | |||||||||||||||
| SBA Paycheck Protection Program (PPP) loans | $ | 2,286,963 | **** | $ | — | $ | — | $ | — | $ | — | ||||
| CAPITAL RATIOS | |||||||||||||||
| Tangible common equity | $ | 2,364,411 | **** | $ | 2,464,148 | $ | 2,505,425 | $ | 2,609,011 | $ | 2,440,864 | ||||
| Tier 1 capital (f) | **** | 2,378,073 | **** | 2,506,217 | 2,584,162 | 2,530,919 | 2,533,505 | ||||||||
| Common equity as a percentage of total assets | **** | 9.98 | % | 10.77 | % | 11.33 | % | 11.74 | % | 11.54 | % | ||||
| Tangible common equity ratio | **** | 7.33 | % | 8.00 | % | 8.45 | % | 8.82 | % | 8.75 | % | ||||
| Leverage (Tier 1) ratio (f) | **** | 7.38 | % | 8.40 | % | 8.76 | % | 9.49 | % | 9.10 | % | ||||
| Common equity tier 1 (CET1) ratio (f) | **** | 9.77 | % | 10.02 | % | 10.50 | % | 11.02 | % | 10.94 | % | ||||
| Tier 1 risk-based capital ratio (f) | **** | 9.77 | % | 10.02 | % | 10.50 | % | 11.02 | % | 10.94 | % | ||||
| Total risk-based capital ratio (f) | **** | 12.35 | % | 11.87 | % | 11.90 | % | 12.43 | % | 12.43 | % | ||||
| (f) | Estimated for most recent period-end. June 30, 2020 and<br>March 31, 2020 regulatory capital ratios reflect the election to use the five-year transition rules for the adoption of ASC 326, commonly referred to as Current Expected Credit Loss, or CECL. | ||||||||||||||
| --- | --- |
12
HANCOCK WHITNEY CORPORATION
AVERAGE BALANCE SHEET
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 6/30/2020 | 3/31/2020 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||||||||
| ASSETS | |||||||||||||||
| Commercial non-real estate loans | $ | 10,791,206 | **** | $ | 9,147,474 | $ | 8,573,274 | $ | 9,969,340 | **** | $ | 8,616,178 | |||
| Commercial real estate - owner occupied | **** | 2,767,291 | **** | 2,735,111 | 2,515,580 | **** | 2,751,213 | **** | 2,512,061 | ||||||
| Total commercial and industrial loans | **** | 13,558,497 | **** | 11,882,585 | 11,088,854 | **** | 12,720,553 | **** | 11,128,239 | ||||||
| Commercial real estate - income producing | **** | 3,240,564 | **** | 3,105,843 | 2,719,554 | **** | 3,173,192 | **** | 2,595,645 | ||||||
| Construction and land development loans | **** | 1,132,744 | **** | 1,120,734 | 1,273,503 | **** | 1,126,739 | **** | 1,348,194 | ||||||
| Residential mortgage loans | **** | 2,923,247 | **** | 2,968,962 | 2,969,746 | **** | 2,946,104 | **** | 2,956,146 | ||||||
| Consumer loans | **** | 2,101,980 | **** | 2,155,892 | 2,098,447 | **** | 2,128,936 | **** | 2,110,366 | ||||||
| Total loans | **** | 22,957,032 | **** | 21,234,016 | 20,150,104 | **** | 22,095,524 | **** | 20,138,590 | ||||||
| Loans held for sale | **** | 89,935 | **** | 40,318 | 27,873 | **** | 65,126 | **** | 24,266 | ||||||
| Securities (g) | **** | 6,129,616 | **** | 6,149,432 | 5,586,390 | **** | 6,139,524 | **** | 5,621,345 | ||||||
| Short-term investments | **** | 837,246 | **** | 206,886 | 228,527 | **** | 522,066 | **** | 222,394 | ||||||
| Earning assets | **** | 30,013,829 | **** | 27,630,652 | 25,992,894 | **** | 28,822,240 | **** | 26,006,595 | ||||||
| Allowance for loan losses | **** | (425,844 | ) | (241,364 | ) | (195,238 | ) | **** | (333,604 | ) | (195,808 | ) | |||
| Goodwill and other intangible assets | **** | 954,252 | **** | 959,500 | 880,497 | **** | 956,876 | **** | 882,926 | ||||||
| Other assets | **** | 2,594,469 | **** | 2,314,813 | 1,859,657 | **** | 2,454,642 | **** | 1,801,204 | ||||||
| Total assets | $ | 33,136,706 | **** | $ | 30,663,601 | $ | 28,537,810 | $ | 31,900,154 | **** | $ | 28,494,917 | |||
| LIABILITIES AND COMMON STOCKHOLDERS’ EQUITY | |||||||||||||||
| Noninterest-bearing deposits | $ | 10,989,921 | **** | $ | 8,763,359 | $ | 8,099,621 | $ | 9,876,640 | **** | $ | 8,163,306 | |||
| Interest-bearing transaction and savings deposits | **** | 9,387,292 | **** | 8,798,483 | 8,026,012 | **** | 9,092,887 | **** | 8,054,141 | ||||||
| Interest-bearing public fund deposits | **** | 3,320,338 | **** | 3,252,233 | 3,194,113 | **** | 3,286,286 | **** | 3,127,708 | ||||||
| Time deposits | **** | 3,005,071 | **** | 3,513,167 | 3,817,817 | **** | 3,259,119 | **** | 3,780,761 | ||||||
| Total interest-bearing deposits | **** | 15,712,701 | **** | 15,563,883 | 15,037,942 | **** | 15,638,292 | **** | 14,962,610 | ||||||
| Total deposits | **** | 26,702,622 | **** | 24,327,242 | 23,137,563 | **** | 25,514,932 | **** | 23,125,916 | ||||||
| Short-term borrowings | **** | 2,254,731 | **** | 2,150,164 | 1,617,776 | **** | 2,202,447 | **** | 1,651,155 | ||||||
| Long-term debt | **** | 276,891 | **** | 231,438 | 232,277 | **** | 254,165 | **** | 228,642 | ||||||
| Other liabilities | **** | 436,845 | **** | 445,030 | 319,691 | **** | 440,938 | **** | 314,616 | ||||||
| Common stockholders’ equity | **** | 3,465,617 | **** | 3,509,727 | 3,230,503 | **** | 3,487,672 | **** | 3,174,588 | ||||||
| Total liabilities & stockholders’ equity | $ | 33,136,706 | **** | $ | 30,663,601 | $ | 28,537,810 | $ | 31,900,154 | **** | $ | 28,494,917 | |||
| For informational purposes only - included above | |||||||||||||||
| SBA Paycheck Protection Program (PPP) loans | $ | 1,727,797 | **** | $ | — | $ | — | $ | 863,898 | **** | $ | — | |||
| (g) | Average securities does not include unrealized holding gains/losses on available for sale<br>securities. | ||||||||||||||
| --- | --- |
13
HANCOCK WHITNEY CORPORATION
AVERAGE BALANCE AND NET INTEREST MARGIN SUMMARY
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 6/30/2020 | 3/31/2020 | 6/30/2019 | |||||||||||||||||||||
| (dollars in millions) | AverageBalance | Interest | Rate | AverageBalance | Interest | Rate | AverageBalance | Interest | Rate | ||||||||||||||
| AVERAGE EARNING ASSETS | |||||||||||||||||||||||
| Commercial & real estate loans (TE) (h) | $ | 17,931.8 | $ | 165.3 | **** | 3.71 | % | $ | 16,109.2 | $ | 182.5 | 4.56 | % | $ | 15,081.9 | $ | 185.3 | 4.93 | % | ||||
| Residential mortgage loans | **** | 2,923.2 | **** | 28.4 | **** | 3.89 | % | 2,969.0 | 29.5 | 3.98 | % | 2,969.7 | 30.1 | 4.06 | % | ||||||||
| Consumer loans | **** | 2,102.0 | **** | 25.3 | **** | 4.85 | % | 2,155.9 | 29.4 | 5.48 | % | 2,098.5 | 30.3 | 5.79 | % | ||||||||
| Loan fees & late charges | **** | — | **** | 11.8 | **** | 0.00 | % | — | (0.6 | ) | 0.00 | % | — | (0.1 | ) | 0.00 | % | ||||||
| Total loans (TE) (i) (j) | **** | 22,957.0 | **** | 230.8 | **** | 4.04 | % | 21,234.1 | 240.8 | 4.56 | % | 20,150.1 | 245.6 | 4.89 | % | ||||||||
| Loans held for sale | **** | 90.0 | **** | 0.6 | **** | 2.89 | % | 40.3 | 0.6 | 6.17 | % | 27.9 | 0.3 | 4.96 | % | ||||||||
| US Treasury and government agency securities | **** | 127.1 | **** | 0.8 | **** | 2.31 | % | 124.7 | 0.8 | 2.37 | % | 126.0 | 0.7 | 2.30 | % | ||||||||
| CMOs and mortgage backed securities | **** | 5,128.2 | **** | 30.4 | **** | 2.37 | % | 5,139.5 | 31.3 | 2.44 | % | 4,550.1 | 29.0 | 2.55 | % | ||||||||
| Municipals (TE) | **** | 866.3 | **** | 6.6 | **** | 3.06 | % | 877.2 | 6.7 | 3.07 | % | 906.8 | 7.1 | 3.12 | % | ||||||||
| Other securities | **** | 8.0 | **** | 0.1 | **** | 4.31 | % | 8.0 | 0.1 | 4.29 | % | 3.5 | 0.0 | 3.30 | % | ||||||||
| Total securities (TE) (k) | **** | 6,129.6 | **** | 37.9 | **** | 2.47 | % | 6,149.4 | 38.9 | 2.53 | % | 5,586.4 | 36.8 | 2.64 | % | ||||||||
| Total short-term investments | **** | 837.2 | **** | 0.3 | **** | 0.11 | % | 206.9 | 0.5 | 0.87 | % | 228.5 | 1.4 | 2.36 | % | ||||||||
| Average earning assets yield (TE) | $ | 30,013.8 | $ | 269.6 | **** | 3.61 | % | $ | 27,630.7 | $ | 280.8 | 4.08 | % | $ | 25,992.9 | $ | 284.1 | 4.38 | % | ||||
| INTEREST-BEARING LIABILITIES | |||||||||||||||||||||||
| Interest-bearing transaction and savings deposits | $ | 9,387.3 | $ | 4.4 | **** | 0.19 | % | $ | 8,798.5 | $ | 12.7 | 0.58 | % | $ | 8,026.0 | $ | 15.3 | 0.76 | % | ||||
| Time deposits | **** | 3,005.1 | **** | 11.9 | **** | 1.60 | % | 3,513.2 | 15.4 | 1.76 | % | 3,817.8 | 19.4 | 2.03 | % | ||||||||
| Public funds | **** | 3,320.3 | **** | 6.3 | **** | 0.76 | % | 3,252.2 | 10.8 | 1.33 | % | 3,194.1 | 15.2 | 1.91 | % | ||||||||
| Total interest-bearing deposits | **** | 15,712.7 | **** | 22.6 | **** | 0.58 | % | 15,563.9 | 38.9 | 1.01 | % | 15,037.9 | 49.9 | 1.33 | % | ||||||||
| Short-term borrowings | **** | 2,254.7 | **** | 2.3 | **** | 0.40 | % | 2,150.2 | 4.5 | 0.83 | % | 1,617.8 | 7.8 | 1.94 | % | ||||||||
| Long-term debt | **** | 276.9 | **** | 3.6 | **** | 5.19 | % | 231.4 | 2.8 | 4.76 | % | 232.3 | 2.8 | 4.86 | % | ||||||||
| Total borrowings | **** | 2,531.6 | **** | 5.9 | **** | 0.93 | % | 2,381.6 | 7.3 | 1.22 | % | 1,850.1 | 10.6 | 2.31 | % | ||||||||
| Total interest-bearing liabilities cost | **** | 18,244.3 | **** | 28.5 | **** | 0.63 | % | 17,945.5 | 46.2 | 1.03 | % | 16,888.0 | 60.5 | 1.44 | % | ||||||||
| Net interest-free funding sources | **** | 11,769.5 | 9,685.2 | 9,104.9 | |||||||||||||||||||
| Total cost of funds | **** | 30,013.8 | **** | 28.5 | **** | 0.38 | % | 27,630.7 | 46.2 | 0.67 | % | 25,992.9 | 60.5 | 0.93 | % | ||||||||
| Net Interest Spread (TE) | $ | 241.1 | **** | 2.98 | % | $ | 234.6 | 3.05 | % | $ | 223.6 | 2.94 | % | ||||||||||
| Net Interest Margin (TE) | $ | 30,013.8 | $ | 241.1 | **** | 3.23 | % | $ | 27,630.7 | $ | 234.6 | 3.41 | % | $ | 25,992.9 | $ | 223.6 | 3.45 | % | ||||
| (h) | Taxable equivalent (TE) amounts are calculated using a federal income tax rate of<br>21%. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (i) | Includes nonaccrual loans. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (j) | Included in interest income is net purchase accounting accretion of $3.7 million, $6.2 million and<br>$4.8 for the three months ended June 30,2020, March 31, 2020, and June 30, 2019, respectively. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| (k) | Average securities does not include unrealized holding gains/losses on available for sale<br>securities. | ||||||||||||||||||||||
| --- | --- |
14
HANCOCK WHITNEY CORPORATION
AVERAGE BALANCE AND NET INTEREST MARGIN SUMMARY
(Unaudited)
| Six Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 6/30/2020 | 6/30/2019 | ||||||||||||||
| (dollars in millions) | AverageBalance | Interest | Rate | AverageBalance | Interest | Rate | |||||||||
| AVERAGE EARNING ASSETS | |||||||||||||||
| Commercial & real estate loans (TE) (h) | $ | 17,020.5 | $ | 347.9 | **** | 4.11 | % | $ | 15,072.1 | $ | 365.8 | 4.89 | % | ||
| Residential mortgage loans | **** | 2,946.1 | **** | 57.9 | **** | 3.93 | % | 2,956.1 | 61.2 | 4.14 | % | ||||
| Consumer loans | **** | 2,128.9 | **** | 54.7 | **** | 5.17 | % | 2,110.4 | 60.2 | 5.75 | % | ||||
| Loan fees & late charges | **** | — | **** | 11.2 | **** | 0.00 | % | — | (1.0 | ) | 0.00 | % | |||
| Total loans (TE) (i) (j) | **** | 22,095.5 | **** | 471.7 | **** | 4.29 | % | 20,138.6 | 486.2 | 4.86 | % | ||||
| Loans held for sale | **** | 65.1 | **** | 1.3 | **** | 3.91 | % | 24.3 | 0.6 | 4.96 | % | ||||
| US Treasury and government agency securities | **** | 125.9 | **** | 1.5 | **** | 2.34 | % | 124.9 | 1.4 | 2.28 | % | ||||
| CMOs and mortgage backed securities | **** | 5,133.8 | **** | 61.7 | **** | 2.40 | % | 4,574.6 | 58.9 | 2.58 | % | ||||
| Municipals (TE) | **** | 871.8 | **** | 13.4 | **** | 3.06 | % | 918.3 | 14.5 | 3.14 | % | ||||
| Other securities | **** | 8.0 | **** | 0.2 | **** | 4.30 | % | 3.5 | 0.1 | 3.19 | % | ||||
| Total securities (TE) (k) | **** | 6,139.5 | **** | 76.8 | **** | 2.50 | % | 5,621.3 | 74.9 | 2.66 | % | ||||
| Total short-term investments | **** | 522.1 | **** | 0.6 | **** | 0.26 | % | 222.4 | 2.5 | 2.28 | % | ||||
| Average earning assets yield (TE) | $ | 28,822.2 | $ | 550.4 | **** | 3.83 | % | $ | 26,006.6 | $ | 564.2 | 4.36 | % | ||
| INTEREST-BEARING LIABILITIES | |||||||||||||||
| Interest-bearing transaction and savings deposits | $ | 9,092.9 | $ | 17.1 | **** | 0.38 | % | $ | 8,054.1 | $ | 30.0 | 0.75 | % | ||
| Time deposits | **** | 3,259.1 | **** | 27.4 | **** | 1.69 | % | 3,780.8 | 37.4 | 1.99 | % | ||||
| Public funds | **** | 3,286.3 | **** | 17.1 | **** | 1.04 | % | 3,127.7 | 28.6 | 1.85 | % | ||||
| Total interest-bearing deposits | **** | 15,638.3 | **** | 61.6 | **** | 0.79 | % | 14,962.6 | 96.0 | 1.29 | % | ||||
| Short-term borrowings | **** | 2,202.4 | **** | 6.7 | **** | 0.61 | % | 1,651.2 | 15.9 | 1.93 | % | ||||
| Long-term debt | **** | 254.2 | **** | 6.3 | **** | 5.00 | % | 228.6 | 5.6 | 4.92 | % | ||||
| Total borrowings | **** | 2,456.6 | **** | 13.0 | **** | 1.07 | % | 1,879.8 | 21.5 | 2.31 | % | ||||
| Total interest-bearing liabilities cost | **** | 18,094.9 | **** | 74.6 | **** | 0.83 | % | 16,842.4 | 117.5 | 1.41 | % | ||||
| Net interest-free funding sources | **** | 10,727.3 | 9,164.2 | ||||||||||||
| Total cost of funds | **** | 28,822.2 | **** | 74.6 | **** | 0.52 | % | 26,006.6 | 117.5 | 0.91 | % | ||||
| Net Interest Spread (TE) | $ | 475.8 | **** | 3.00 | % | $ | 446.7 | 2.96 | % | ||||||
| Net Interest Margin (TE) | $ | 28,822.2 | $ | 475.8 | **** | 3.31 | % | $ | 26,006.6 | $ | 446.7 | 3.45 | % | ||
| (h) | Taxable equivalent (TE) amounts are calculated using a federal income tax rate of 21%.<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| (i) | Includes nonaccrual loans. | ||||||||||||||
| --- | --- | ||||||||||||||
| (j) | Included in interest income is net purchase accounting accretion of $9.9 million and $9.8 million<br>for the six months ended June 30, 2020 and 2019, respectively. | ||||||||||||||
| --- | --- | ||||||||||||||
| (k) | Average securities does not include unrealized holding gains/losses on available for sale securities.<br> | ||||||||||||||
| --- | --- |
15
HANCOCK WHITNEY CORPORATION
ASSET QUALITY INFORMATION
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 6/30/2020 | 3/31/2020 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||||||||
| Nonaccrual loans (l) (m) | $ | 183,979 | **** | $ | 254,058 | $ | 209,831 | $ | 183,979 | **** | $ | 209,831 | |||
| Restructured loans - still accruing | **** | 9,848 | **** | 34,251 | 101,250 | **** | 9,848 | **** | 101,250 | ||||||
| Total nonperforming loans | **** | 193,827 | **** | 288,309 | 311,081 | **** | 193,827 | **** | 311,081 | ||||||
| ORE and foreclosed assets | **** | 18,724 | **** | 18,460 | 27,520 | **** | 18,724 | **** | 27,520 | ||||||
| Total nonperforming assets | $ | 212,551 | **** | $ | 306,769 | $ | 338,601 | $ | 212,551 | **** | $ | 338,601 | |||
| Nonperforming assets as a percent of loans, ORE and foreclosed assets | **** | 0.94 | % | 1.42 | % | 1.68 | % | **** | 0.94 | % | 1.68 | % | |||
| Accruing loans 90 days past due (n) | $ | 5,230 | **** | $ | 17,790 | $ | 6,493 | $ | 5,230 | **** | $ | 6,493 | |||
| Accruing loans 90 days past due as a percent of loans | **** | 0.02 | % | 0.08 | % | 0.03 | % | **** | 0.02 | % | 0.03 | % | |||
| Nonperforming assets + accuring loans 90 days past due to loans, ORE and foreclosed<br>assets | **** | 0.96 | % | 1.51 | % | 1.71 | % | **** | 0.96 | % | 1.71 | % | |||
| PROVISION AND ALLOWANCE FOR CREDIT LOSSES | |||||||||||||||
| Allowance for Loan Losses: | |||||||||||||||
| Beginning balance | $ | 426,003 | **** | $ | 191,251 | $ | 194,688 | $ | 191,251 | **** | $ | 194,514 | |||
| Cumulative effect of change in accounting principle (o) | **** | — | **** | 49,411 | — | **** | 49,411 | **** | — | ||||||
| Provision for loan losses | **** | 319,319 | **** | 229,105 | 8,088 | **** | 548,424 | **** | 26,131 | ||||||
| Charge-offs | **** | (305,917 | ) | (47,738 | ) | (9,349 | ) | **** | (353,655 | ) | (30,340 | ) | |||
| Recoveries | **** | 3,233 | **** | 3,974 | 2,198 | **** | 7,207 | **** | 5,320 | ||||||
| Net charge-offs | **** | (302,684 | ) | (43,764 | ) | (7,151 | ) | **** | (346,448 | ) | (25,020 | ) | |||
| Ending Balance | $ | 442,638 | **** | $ | 426,003 | $ | 195,625 | $ | 442,638 | **** | $ | 195,625 | |||
| Reserve for Unfunded Lending Commitments: | |||||||||||||||
| Beginning balance | $ | 48,992 | **** | $ | 3,974 | $ | — | $ | 3,974 | **** | $ | — | |||
| Cumulative effect of change in accounting principle (o) | **** | — | **** | 27,330 | — | **** | 27,330 | **** | — | ||||||
| Provision for losses on unfunded lending commitments | **** | (12,421 | ) | 17,688 | — | **** | 5,267 | **** | — | ||||||
| Ending Balance | $ | 36,571 | **** | $ | 48,992 | $ | — | $ | 36,571 | **** | $ | — | |||
| Total Allowance for Credit Losses | $ | 479,209 | **** | $ | 474,995 | $ | 195,625 | $ | 479,209 | **** | $ | 195,625 | |||
| Total Provision for Credit Losses | $ | 306,898 | **** | $ | 246,793 | $ | 8,088 | $ | 553,691 | **** | $ | 26,131 | |||
| Allowance for loan losses as a percent of period-end<br>loans | **** | 1.96 | % | 1.98 | % | 0.97 | % | **** | 1.96 | % | 0.97 | % | |||
| Allowance for credit losses as a percent of period-end<br>loans | **** | 2.12 | % | 2.21 | % | 0.97 | % | **** | 2.12 | % | 0.97 | % | |||
| Allowance for loan losses to nonperforming loans + accruing loans 90 days past due | **** | 222.37 | % | 139.17 | % | 61.60 | % | **** | 222.37 | % | 61.60 | % | |||
| NET CHARGE-OFF INFORMATION | |||||||||||||||
| Net charge-offs (recoveries) | |||||||||||||||
| Commercial & real estate loans | $ | 299,365 | **** | $ | 39,509 | $ | 4,286 | $ | 338,874 | **** | $ | 18,684 | |||
| Residential mortgage loans | **** | (549 | ) | (71 | ) | (71 | ) | **** | (620 | ) | 173 | ||||
| Consumer loans | **** | 3,868 | **** | 4,326 | 2,936 | **** | 8,194 | **** | 6,163 | ||||||
| Total net charge-offs | $ | 302,684 | **** | $ | 43,764 | $ | 7,151 | $ | 346,448 | **** | $ | 25,020 | |||
| Net charge-offs (recoveries) as a percentage of average loans | |||||||||||||||
| Commercial & real estate loans | **** | 6.71 | % | 0.99 | % | 0.11 | % | **** | 4.00 | % | 0.25 | % | |||
| Residential mortgage loans | **** | (0.08 | )% | (0.01 | )% | (0.01 | )% | **** | (0.04 | )% | 0.01 | % | |||
| Consumer loans | **** | 0.74 | % | 0.81 | % | 0.56 | % | **** | 0.77 | % | 0.59 | % | |||
| Total net charge-offs as a percentage of average loans | **** | 5.30 | % | 0.83 | % | 0.14 | % | **** | 3.15 | % | 0.25 | % | |||
| For informational purposes - included above | |||||||||||||||
| Provision for credit loss associated with energy loan sale | $ | 160,101 | **** | $ | — | $ | — | $ | 160,101 | **** | $ | — | |||
| Charge-offs associated with energy loan sale | **** | 242,628 | **** | — | — | **** | 242,628 | **** | — | ||||||
| (l) | Included in nonaccrual loans are nonaccruing restructured loans totaling $55.2 million,<br>$117.9 million and $99.1 million at 6/30/2020, 3/31/2020 and 6/30/2019, respectively. | ||||||||||||||
| --- | --- | ||||||||||||||
| (m) | Nonaccrual loans do not include purchased credit impaired loans accounted for under ASC 310-30 that would have otherwise been considered nonperforming, totaling $10.3 million at 6/30/2019. Effective 1/1/2020, with the Adoption of ASC 326, such metrics include both originated and acquired<br>balances. | ||||||||||||||
| --- | --- | ||||||||||||||
| (n) | Loans past due 90 days or more do not include purchased credit impaired loans accounted for under ASC 310-30 that would have otherwise been considered delinquent, totaling $2.6 million at 6/30/2019, respectively. Effective 1/1/2020, with the Adoption of ASC 326, such metrics include both originated and acquired<br>balances. | ||||||||||||||
| --- | --- | ||||||||||||||
| (o) | Represents the increase in the allowance upon the 1/1/20 adoption of ASC 326, commonly referred to as<br>Current Expected Credit Losses, or CECL. | ||||||||||||||
| --- | --- |
16
HANCOCK WHITNEY CORPORATION
ASSET QUALITY INFORMATION
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | ||||||||||
| Nonaccrual loans (l) (m) | $ | 183,979 | **** | $ | 254,058 | $ | 245,833 | $ | 222,860 | $ | 209,831 | ||||
| Restructured loans - still accruing | **** | 9,848 | **** | 34,251 | 61,265 | 60,897 | 101,250 | ||||||||
| Total nonperforming loans | **** | 193,827 | **** | 288,309 | 307,098 | 283,757 | 311,081 | ||||||||
| ORE and foreclosed assets | **** | 18,724 | **** | 18,460 | 30,405 | 30,955 | 27,520 | ||||||||
| Total nonperforming assets | $ | 212,551 | **** | $ | 306,769 | $ | 337,503 | $ | 314,712 | $ | 338,601 | ||||
| Nonperforming assets as a percent of loans, ORE and foreclosed assets | **** | 0.94 | % | 1.42 | % | 1.59 | % | 1.49 | % | 1.68 | % | ||||
| Accruing loans 90 days past due (n) | $ | 5,230 | **** | $ | 17,790 | $ | 6,582 | $ | 7,872 | $ | 6,493 | ||||
| Accruing loans 90 days past due as a percent of loans | **** | 0.02 | % | 0.08 | % | 0.03 | % | 0.04 | % | 0.03 | % | ||||
| Nonperforming assets + accruing loans 90 days past due to loans, ORE and foreclosed<br>assets | **** | 0.96 | % | 1.51 | % | 1.62 | % | 1.53 | % | 1.71 | % | ||||
| PROVISION AND ALLOWANCE FOR CREDIT LOSSES: | |||||||||||||||
| Allowance for loan losses | $ | 442,638 | **** | $ | 426,003 | $ | 191,251 | $ | 195,572 | $ | 195,625 | ||||
| Reserve for unfunded lending commitments | **** | 36,571 | **** | 48,992 | 3,974 | — | — | ||||||||
| Total allowance for credit losses | $ | 479,209 | **** | $ | 474,995 | $ | 195,225 | $ | 195,572 | $ | 195,625 | ||||
| Total provision for credit losses | $ | 306,898 | **** | $ | 246,793 | $ | 9,156 | $ | 12,421 | $ | 8,088 | ||||
| Allowance for loan losses as a percentage of period-end<br>loans | **** | 1.96 | % | 1.98 | % | 0.90 | % | 0.93 | % | 0.97 | % | ||||
| Allowance for credit losses as a percentage of<br>period-end loans | **** | 2.12 | % | 2.21 | % | 0.92 | % | 0.93 | % | 0.97 | % | ||||
| Allowance for loan losses to nonperforming loans + accruing loans 90 days past due | **** | 222.37 | % | 139.17 | % | 60.97 | % | 67.06 | % | 61.60 | % | ||||
| NET CHARGE-OFF INFORMATION | |||||||||||||||
| Net charge-offs (recoveries) | |||||||||||||||
| Commercial & real estate loans | $ | 299,365 | **** | $ | 39,509 | $ | 4,856 | $ | 8,281 | $ | 4,286 | ||||
| Residential mortgage loans | **** | (549 | ) | (71 | ) | 140 | 54 | (71 | ) | ||||||
| Consumer loans | **** | 3,868 | **** | 4,326 | 4,507 | 4,139 | 2,936 | ||||||||
| Total net charge-offs | $ | 302,684 | **** | $ | 43,764 | $ | 9,503 | $ | 12,474 | $ | 7,151 | ||||
| Net charge-offs (recoveries) as a percentage of average loans | |||||||||||||||
| Commercial & real estate loans | **** | 6.71 | % | 0.99 | % | 0.12 | % | 0.22 | % | 0.11 | % | ||||
| Residential mortgage loans | **** | (0.08 | )% | (0.01 | )% | 0.02 | % | 0.01 | % | (0.01 | )% | ||||
| Consumer loans | **** | 0.74 | % | 0.81 | % | 0.83 | % | 0.78 | % | 0.56 | % | ||||
| Total net charge-offs as a percentage of average loans | **** | 5.30 | % | 0.83 | % | 0.18 | % | 0.25 | % | 0.14 | % | ||||
| AVERAGE LOANS | |||||||||||||||
| Commercial & real estate loans | $ | 17,931,805 | **** | $ | 16,109,162 | $ | 15,881,272 | $ | 15,126,060 | $ | 15,081,911 | ||||
| Residential mortgage loans | **** | 2,923,247 | **** | 2,968,962 | 3,004,784 | 2,978,712 | 2,969,746 | ||||||||
| Consumer loans | **** | 2,101,980 | **** | 2,155,892 | 2,151,886 | 2,092,342 | 2,098,447 | ||||||||
| Total average loans | $ | 22,957,032 | **** | $ | 21,234,016 | $ | 21,037,942 | $ | 20,197,114 | $ | 20,150,104 | ||||
| For informational purposes - included above | |||||||||||||||
| Provision for credit loss associated with energy loan sale | $ | 160,101 | **** | $ | — | $ | — | $ | — | $ | — | ||||
| Charge-offs associated with energy loan sale | **** | 242,628 | **** | — | — | — | — | ||||||||
| (l) | Included in nonaccrual loans are nonaccruing restructured loans totaling $55.2 million,<br>$117.9 million, $132.5 million, $101.1 million and $99.1 million at 6/30/2020, 3/31/2020, 12/31/2019, 9/30/2019 and 6/30/2019, respectively. | ||||||||||||||
| --- | --- | ||||||||||||||
| (m) | Nonaccrual loans do not include purchased credit impaired loans accounted for under ASC 310-30 that would have otherwise been considered nonperforming, totaling $17.5 million, $17.8 million and $10.3 million at 12/31/2019, 9/30/2019 and 6/30/2019, respectively. Effective 1/1/2020, with<br>the Adoption of ASC 326, such metrics include both originated and acquired balances. | ||||||||||||||
| --- | --- | ||||||||||||||
| (n) | Loans past due 90 days or more do not include purchased credit impaired loans accounted for under ASC 310-30 that would have otherwise been considered delinquent, totaling $8.3 million, $8.2 million and $2.6 million at 12/31/2019, 9/30/2019 and 6/30/2019, respectively. Effective 1/1/2020, with the<br>Adoption of ASC 326, such metrics include both originated and acquired balances. | ||||||||||||||
| --- | --- |
17
HANCOCK WHITNEY CORPORATION
Appendix A to the Earnings Release
Reconciliation of Non-GAAP Measures
TOTAL REVENUE (TE) AND OPERATING PRE-PROVISION NET REVENUE (TE)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||||||||||||
| Net interest income | $ | 237,866 | **** | $ | 231,188 | $ | 233,156 | $ | 222,939 | $ | 219,868 | $ | 469,054 | **** | $ | 439,122 | |||||
| Noninterest income | **** | 73,943 | **** | 84,387 | 82,924 | 83,230 | 79,250 | **** | 158,330 | **** | 149,753 | ||||||||||
| Total revenue | $ | 311,809 | **** | $ | 315,575 | $ | 316,080 | $ | 306,169 | $ | 299,118 | $ | 627,384 | **** | $ | 588,875 | |||||
| Taxable equivalent adjustment (o) | **** | 3,248 | **** | 3,448 | 3,580 | 3,652 | 3,718 | **** | 6,696 | **** | 7,542 | ||||||||||
| Total revenue (TE) | $ | 315,057 | **** | $ | 319,023 | $ | 319,660 | $ | 309,821 | $ | 302,836 | $ | 634,080 | **** | $ | 596,417 | |||||
| Noninterest expense | **** | (196,539 | ) | (203,335 | ) | (197,856 | ) | (213,554 | ) | (183,567 | ) | **** | (399,874 | ) | (359,267 | ) | |||||
| Nonoperating expense | **** | — | **** | — | 3,856 | 28,810 | — | **** | — | **** | — | ||||||||||
| Operating pre-provision net revenue (TE) | $ | 118,518 | **** | $ | 115,688 | $ | 125,660 | $ | 125,077 | $ | 119,269 | $ | 234,206 | **** | $ | 237,150 |
OPERATING EARNINGS (LOSS) PER SHARE - DILUTED
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except pershare amounts) | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||||||||||||
| Net income (loss) | $ | (117,072 | ) | $ | (111,033 | ) | $ | 92,132 | $ | 67,807 | $ | 88,277 | $ | (228,105 | ) | $ | 167,441 | ||||
| Net income and dividends allocated to participating securities | **** | (422 | ) | (427 | ) | (1,566 | ) | (1,141 | ) | (1,502 | ) | **** | (849 | ) | (2,839 | ) | |||||
| Net income (loss) available to common shareholders | **** | (117,494 | ) | (111,460 | ) | 90,566 | 66,666 | 86,775 | **** | (228,954 | ) | 164,602 | |||||||||
| Nonoperating items, net of income tax | — | — | 3,046 | 22,760 | — | — | — | ||||||||||||||
| Nonoperating items allocated to participating securities | **** | — | **** | — | (52 | ) | (383 | ) | — | **** | — | **** | — | ||||||||
| Operating earnings (loss) available to common shareholders | $ | (117,494 | ) | $ | (111,460 | ) | $ | 93,560 | $ | 89,043 | $ | 86,775 | $ | (228,954 | ) | $ | 164,602 | ||||
| Weighted average common shares - diluted | **** | 86,301 | **** | 87,186 | 88,315 | 86,462 | 85,835 | **** | 86,744 | **** | 85,810 | ||||||||||
| Earnings (loss) per share - diluted | $ | (1.36 | ) | $ | (1.28 | ) | $ | 1.03 | $ | 0.77 | $ | 1.01 | $ | (2.64 | ) | $ | 1.92 | ||||
| Operating earnings (loss) per share - diluted | $ | (1.36 | ) | $ | (1.28 | ) | $ | 1.06 | $ | 1.03 | $ | 1.01 | $ | (2.64 | ) | $ | 1.92 |
QUARTER EARNINGS PER SHARE - DILUTED, EXCLUDING IMPACT OF ENERGY LOAN SALE
| Three months<br><br><br>ended | |||
|---|---|---|---|
| (in thousands, except pershare amounts) | 6/30/2020 | ||
| Net loss | $ | (117,072 | ) |
| Provision for credit losses attributable to the sale of energy loans | **** | 160,101 | **** |
| Income tax benefit at a 21% rate | **** | (33,621 | ) |
| Impact of energy loan sale, net of income tax | $ | 126,480 | **** |
| Net income excluding the impact of the sale of energy loans | $ | 9,408 | **** |
| Weighted average common shares - diluted | **** | 86,323 | **** |
| Loss per share - diluted | $ | (1.36 | ) |
| Impact of energy loan sale per share - diluted | $ | (1.47 | ) |
| Earnings per share - diluted, excluding impact of energy loan sale | $ | 0.11 | **** |
| (o) | Taxable equivalent (TE) amounts are calculated using a federal income tax rate of<br>21%. | ||
| --- | --- |
18
EX-99.3
Second Quarter 2020 Earnings Conference Call 7/21/2020 Exhibit 99.3
This presentation contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements that we may make include statements regarding our expectations regarding our performance and financial condition, balance sheet and revenue growth, the provision for credit losses, loan growth expectations, management’s predictions about charge-offs for loans, including energy-related credits, the impact of significant decreases in oil and gas prices on our energy portfolio, the impact of the COVID-19 pandemic on the economy and our operations, the adequacy of our enterprise risk management framework, the impact of the MidSouth acquisition or future business combinations on our performance and financial condition, including our ability to successfully integrate the businesses, success of revenue-generating initiatives, the effectiveness of derivative financial instruments and hedging activities to manage risks, projected tax rates, increased cybersecurity risks, including potential business disruptions or financial losses, the adequacy of our internal controls over financial reporting, the financial impact of regulatory requirements and tax reform legislation, the impact of the change in the referenced rate reform, deposit trends, credit quality trends, changes in interest rates, net interest margin trends, future expense levels, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts, accretion levels and expected returns. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook," or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. Given the many unknowns and risks being heavily weighted to the downside, our forward-looking statements are subject to the risk that conditions will be substantially different than we are currently expecting. If efforts to contain COVID-19 are unsuccessful and restrictions on movement last into the third quarter or beyond, the recession would be much longer and much more severe. Ineffective fiscal stimulus, or an extended delay in implementing it, are also major downside risks. The deeper the recession is, and the longer it lasts, the more it will damage consumer fundamentals and sentiment. This could both prolong the recession, and/or make any recovery weaker. Similarly, the recession could damage business fundamentals, and an extended global recession due to COVID-19 would weaken the U.S. recovery. As a result, the outbreak and its consequences, including responsive measures to manage it, have had and are likely to continue to have an adverse effect, possibly materially, on our business and financial performance by adversely affecting, possibly materially, the demand and profitability of our products and services, the valuation of assets and our ability to meet the needs of our customers. Forward-looking statements are subject to significant risks and uncertainties. Any forward-looking statement made in this release is subject to the safe harbor protections set forth in the Private Securities Litigation Reform Act of 1995. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in other periodic reports that we file with the SEC. Important cautionary statement about forward-looking statements
Non-GAAP Reconciliations & Glossary of Terms Throughout this presentation we may use non-GAAP numbers to supplement the evaluation of our performance. The items noted below with an asterisk, "*", are considered non-GAAP. These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements, and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Reconciliations of those non-GAAP measures to the comparable GAAP measure are included in the appendix to this presentation. The earnings release, financial tables and supporting slide presentation can be found on the company’s Investor Relations website at hancockwhitney.com/investors. 1H20 – First Half of 2020 1Q20 – First Quarter of 2020 2H20 – Second Half of 2020 2Q20 – Second Quarter of 2020 2Q19 – Second Quarter of 2019 3Q20 – Third Quarter of 2020 4Q20 – Fourth Quarter of 2020 AFS – Available for sale securities ACL – Allowance for credit losses ALLL – Allowance for loan and lease losses Annualized – Calculated to reflect a rate based on a full year ASR – Accelerated Share Repurchase Beta – repricing based on a change in market rates bps – basis points BOLI – Bank-owned life insurance CCB – Capital Conservation Buffer CET1 ratio – Common Equity Tier 1 C&D – Construction and land development loans C&I – Commercial and industrial loans CDI – Core Deposit Intangible CECL – Current Expected Credit Losses (new accounting standard effective 1/1/2020) CET1 – Common Equity Tier 1 Ratio COVID-19 – Pandemic related virus CRE – Commercial real estate CSO – Corporate strategic objective DDA – Noninterest-bearing demand deposit accounts DP – Data processing (e) - Estimated E&P – Exploration and Production (Oil & Gas) *Efficiency ratio – noninterest expense to total net interest (TE) and noninterest income, excluding amortization of purchased intangibles and nonoperating items Energy Cycle – Refers to the energy cycle beginning in November of 2014 EOP – End of period EPS – Earnings per share FTE – Full time equivalent HFS – Held for sale HTM – Held to maturity securities ICRE – Income-producing commercial real estate IRR – Interest rate risk LIBOR – London Inter-Bank Offered Rate Linked-quarter (LQ) – current quarter compared to previous quarter LOB – Line of Business LPO – Loan production office LQA – Linked-quarter annualized M&A – Mergers and acquisitions MM – Dollars in millions MSL – MidSouth Bancorp, Inc. NII – Net interest income *NIM – Net interest margin (TE) NPA – Nonperforming assets NPL – Nonperforming loans O&G – Oil and gas OCI – Other comprehensive income OFA – Other foreclosed assets *Operating – Financial measure excluding nonoperating items *Operating Leverage – Operating revenue (TE) less operating expense ORE – Other real estate PAA – Purchase accounting adjustments from business combinations; including loan accretion, offset by any amortization of a bond portfolio premium, amortization of an indemnification asset and amortization of intangibles *PPNR – Pre-provision net revenue PPP – SBA’s Paycheck Protection Program related to COVID-19 RBL – Reserve-based lending ROA – Return on average assets SBA – Small Business Administration S1 – Stronger Near-term Growth S2 – Slower Near-term Growth S3 – Moderate Recession S4 – Protracted Slump TCE – Tangible common equity ratio (common shareholders’ equity less intangible assets divided by total assets less intangible assets) TDR – Troubled Debt Restructuring TE – Taxable equivalent (calculated using the current statutory federal tax rate) Y-o-Y – Year over year
Corporate Profile (as of June 30, 2020) $33.2 billion in Total Assets $22.6 billion in Total Loans (includes $2.3 billion in PPP loans) $27.3 billion in Total Deposits CET1 ratio 9.77%(e); Tangible Common Equity (TCE) ratio 7.33% $1.8 billion in Market Capitalization Over 200 banking locations and nearly 300 ATMs across our footprint Approximately 4,200 (FTE) employees corporate-wide Rated among the strongest, safest financial institutions in the country by BauerFinancial, Inc. for 123 consecutive quarters Earned top customer service marks with Greenwich Excellence Awards Moody’s long-term issuer rating: Baa3 S&P long-term issuer rating: BBB Named one of America’s Best Midsize Employers by Forbes
Sell $497 million, or 53% of our energy portfolio as of March 31, 2020; receive $257.5 million of proceeds from the sale; loans included in HFS at 6-30-20 Special provision for chargeoffs in excess of existing reserves of $160.1 million (pre-tax), or $1.47 per diluted share (21% tax rate) Reduces energy exposure to 1.7% of total loans (excluding PPP loans) at June 30, 2020; expect asset quality metrics will improve compared to peers Allows the company to accelerate the disposition of energy credits that have been negatively impacted by issues in the industry, and have now been further impacted by COVID-19 Remaining energy portfolio comprised mostly of pass rated support services credits; only 2 notable problem credits remain; energy ACL 5.7% at June 30, 2020 Remaining energy loan portfolio more granular, with 18% of loans <$1MM and 55% of the loans between $1-$10 million; only 1 loan >$20 million in outstanding (see slides 35-36) Strategy consistent with other de-risking actions - 1H20 ACL build - Raised $172.5 million of Tier 2 Capital (subdebt) Should position the company for a faster recovery in both earnings and improved return to our shareholders Expect significantly reduced provision for loan losses in the second half of 2020 Energy Loan Sale Overview ($s in millions) March 31, 2020 June 30, 2020 Total Energy Loans* $940 $352 Energy Loans/Total Loans* 4.4% 1.7% NPLs/Total Loans* 1.34% 0.95% Total Criticized Commercial Loans/ Total Commercial Loans* 3.24% 2.26% CET1 Ratio (estimate for 6-30-20) 10.02% 9.77% Tangible Common Equity (TCE) Ratio 8.00% 7.33% *Excludes PPP and held for sale loans Loan Sale charge
Energy Portfolio Reduced to 1.7% of Total Loans* * Excludes $2.3 Billion in PPP loans * Excludes loans held for sale (HFS) March 31, 2020 June 30, 2020 Total Energy Loans $940 million Energy Loans/Total loans 4.4% Energy ACL Coverage 9.4% Total ACL Coverage 2.21% NPLs/Total Loans 1.34% Total Commercial Criticized/Total Commercial Loans 3.24% SNCs/Total Loans 10.8% Total Energy Loans $352 million Energy Loans/Total Loans* 1.7% Energy ACL Coverage* 5.7% Total ACL Coverage* 2.36% NPLs/Total Loans* 0.95% Total Commercial Criticized/Total Commercial Loans* 2.26% SNCs/Total Loans 8.6%
Second Quarter 2020 Net loss of $117.1 million, or ($1.36) per diluted share; excluding loan sale, net income totaled $9.4 million, or $.11 per share Provision for loan losses totaled $306.9 million in 2Q20 $160.1 million, or $1.47 per share, provision for credit osses related to energy loan sale $146.8 million, or $1.34 per share, provision related to COVID-19 Pre-provision net revenue (PPNR) totaled $118.5 million, up $2.8 million linked-quarter Strengthened Allowance for Credit Losses (ACL)/Total Loans to 2.36% (excluding PPP loans) Criticized commercial loans declined $182 million, or 34%, and nonperforming loans declined $94 million, or 33%, linked-quarter Capital remains solid with CET1 ratio of 9.77%; regulatory ratios well in excess of required levels including capital conservation buffers (CCB); TCE ratio at 7.33% Loans increased $1.1 billion linked-quarter; includes $2.3 billion in PPP loans DDAs increased $2.6 billion linked-quarter mainly reflecting PPP funding NIM declined 18 basis points (bps) linked-quarter to 3.23% (see slide 21 for details) Solid liquidity, with approximately $17 billion available in additional sources of funding *Non-GAAP measures. See slides 32-34 for non-GAAP reconciliations. ($s in millions; except per share data) 2Q20 1Q20 2Q19 Net Income (loss) ($117.1) ($111.0) $88.3 Provision for credit losses excluding loan sale $146.8 $246.8 $8.1 Provision related to energy loan sale $160.1 -— --- Equity interest write-offs -— $9.8 -— Earnings Per Share – diluted ($1.36) ($1.28) $1.01 Return on Assets (%) (ROA) (1.42) (1.46) 1.24 Return on Tangible Common Equity (%) (ROTCE) (18.75) (17.51) 15.07 Net Interest Margin (%) 3.23 3.41 3.45 Net Charge-offs (%) 5.30 0.83 0.14 CET1 Ratio (%) 9.77 10.02 10.94 Tangible Common Equity (%) 7.33 8.00 8.75 Pre-Provision Net Revenue (TE)* $118.5 $115.7 $119.3 Efficiency Ratio (%) 60.7 62.1 58.9
NPLs Decrease $94 Million or 33% Nonperforming energy loans totaled $16 million at June 30, 2020, down $89 million, or 85%, linked-quarter Nonperforming nonenergy loans totaled $178 million at June 30, 2020, down $5 million, or 3%, linked-quarter Total nonperforming loans % of total loans* $311 1.54% $284 1.35% $307 1.45% $288 1.34% $194 0.95% Nonperforming loans – nonenergy % of total loans* $141 0.70% $140 0.67% $149 0.70% $183 0.85% $178 0.87% Nonperforming loans – energy % of total loans* $170 0.84% $144 0.68% $158 0.74% $105 0.49% $16 0.08% % of total loans *Excludes PPP and HFS loans
Criticized Commercial Loans Down $182 Million or 34% Criticized commercial loans down $182 million, or 34%, linked-quarter; reflects impact of the energy loan sale Criticized energy loans totaled $56 million at June 30, 2020, down $173 million, or 76%, linked-quarter Criticized nonenergy loans totaled $292 million at June 30, 2020, down $9 million, or 3%, linked-quarter Total criticized commercial loans % of total commercial loans* $573 3.79% $659 4.15% $581 3.62% $530 3.24% $348 2.26% Criticized – nonenergy % of total commercial loans* $315 2.08% $378 2.38% $321 2.00% $301 1.84% $292 1.89% Criticized – energy % of total commercial loans* $258 1.71% $281 1.77% $260 1.62% $229 1.40% $56 0.36% Criticized as % of total commercial loans *Excludes PPP and HFS loans
2Q loan growth reflects $2.3 billion in Paycheck Protection Program (PPP) loan fundings, partly offset by energy loan sale, lack of demand throughout the footprint and approximately $500 million in paydowns on lines of credit Paydowns are mainly related to the line draws clients took in 1Q20 associated with the uncertainty surrounding the COVID-19 shutdown Deferrals peaked on 5/14/20 at $3.6 billion of outstandings; totaled $2.7 billion at 6/30/20 and $1.4 billion at 7/15/20 Approximately $1.0 billion of deferrals expired during the month of June We expect certain clients will need extended deferrals and some will need a structured solution 2Q Loan Growth Reflects PPP, Loan Sale $s in billions
Commercial Loans (C&I, CRE, C&D)* *Excludes $2.3 billion in PPP loans Total Commercial Loans Outstanding % of Total Loans Commitment ($s in millions) Real Estate, Rental and Leasing $ 3,329 16.4% $ 4,139 Retail Trade 1,758 8.6% 2,090 Health Care and Social Assistance 1,594 7.8% 2,106 Hospitality 1,161 5.7% 1,314 Manufacturing 1,001 4.9% 1,601 Transportation and Warehousing 853 4.2% 1,089 Construction 827 4.1% 1,694 Public Administration 725 3.6% 747 Wholesale Trade 712 3.5% 1,216 Finance and Insurance 697 3.4% 1,150 Professional, Scientific, and Technical Services 494 2.4% 875 Other Services (except Public Administration) 467 2.3% 565 Educational Services 354 1.7% 536 Energy 352 1.7% 599 Administrative and Support and Waste Management and Remediation Services 191 0.9% 346 Other (less than 1% individually) 906 4.2% 1,832 Grand Total $ 15,421 75.5% $ 21,899 As of June 30, 2020
Retail – 8.6% of Total Loans* ICRE Retail portfolio is fairly segmented and primarily comprised of national anchored centers, single credit tenant facilities, and unanchored centers Retail trade represents 8.6% of total loans and is diversified across numerous subsectors with the larger concentrations in convenience stores, automobile dealerships and food/beverage stores Excludes $192 million in PPP loans $217 million in active deferrals as of 7-15-20 East (MS, AL, FL, TN); Central (Greater N.O., SELA); West (SWLA, TX) $ in Millions East Central West Other Total Commitment $ NPL % NPL $ Criticized % Criticized 7-15-20 $ Deferrals % Deferrals ICRE Retail $151 $318 $192 — $660 $703 -— -— $1 -— $111 17% Gasoline Stations 68 209 94 8 378 445 1 — 1 — 57 15% Motor Vehicle and Parts Dealers 87 104 78 — 268 360 — — 1 — 16 6% Food and Beverage Stores 17 55 17 43 133 153 — — 3 2% 2 2% Furniture and Home Furnishings Stores 40 2 29 — 71 110 — — — — 1 1% Nonstore Retailers 7 1 2 56 66 76 — — — — — --- Building Material and Garden Equipment and Supplies Dealers 42 17 5 — 63 79 — -— 5 8% 4 6% Health and Personal Care Stores 22 6 4 — 32 45 — — 1 3% 2 6% Miscellaneous Store Retailers 9 16 4 — 30 45 — — — 1% 2 7% Clothing and Clothing Accessories Stores 15 5 5 — 25 30 — — — — 3 12% General Merchandise 24 -— -— — 24 30 — -— — -— 18 75% Sporting Goods, Hobby, Book, and Music Stores 2 2 1 — 5 8 — 1% — 1% 1 20% Electronics and Appliance Stores 1 1 1 — 3 5 -— -— -— -— -— --- TOTAL RETAIL $486 $735 $430 $108 $1,758 $2,090 $2 0% $12 1% $217 12% *Excludes PPP loans
Healthcare – 7.8% of Total Loans* Healthcare predominantly includes doctors’ offices, nursing/long-term care and hospitals and represents 7.8% of total loans Approximately half of the healthcare outstandings are in our Nashville market managed by our dedicated healthcare lending team, while the remaining represents regional relationships and real estate loans to customers in our footprint Excludes $310 million in PPP loans $144 million in active deferrals as of 7-15-20 East (MS, AL, FL, TN); Central (Greater N.O., SELA); West (SWLA, TX) $ in Millions East Central West Other Total Commitment $ NPL % NPL $ Criticized % Criticized 7-15-20 $ Deferrals % Deferrals Offices of Physicians & Dentists $287 $111 $67 $13 $478 $600 $12 2% $14 3% $94 19% Assisted Living (ICRE) 218 60 90 — 369 437 — — 10 3% 26 7% Hospitals 96 110 75 8 290 436 2 1% 2 1% 17 6% Assisted Living (non-CRE) 115 63 32 — 210 245 14 7% 16 7% — — Ambulatory Healthcare Services 117 26 42 8 193 316 — — 25 13% 4 2% Social Assistance 22 13 14 5 54 72 — — — — 3 6% TOTAL HEALTHCARE $856 $383 $321 $34 $1,594 $2,106 $27 2% $66 4% $144 9% *Excludes PPP loans
Hospitality – 5.7% of Total Loans* As a result of COVID-19, business, leisure and international travel has generally ceased and is likely to continue to be significantly curtailed Hospitality is comprised of Accommodation & Food Service and Arts, Entertainment & Recreation and represents 5.7% of total loans Excludes $224 million in PPP loans $136 million in active deferrals as of 7-15-20 East (MS, AL, FL, TN); Central (Greater N.O., SELA); West (SWLA, TX) $ in Millions East Central West Other Total Commitment $ NPL % NPL $ Criticized % Criticized 7-15-20 $ Deferrals % Deferrals Hotel $171 $251 $101 — $522 $567 $1 — $5 1% $69 13% Restaurants Full Service, Casual Dining and Bars 120 187 64 — 371 414 1 — 3 1% 46 12% Entertainment 31 103 19 — 152 184 1 1% 8 5% 13 9% Restaurants Limited Service 32 26 57 — 115 149 — — 1 1% 8 7% TOTAL HOSPITALITY $354 $567 $240 — $1,161 $1,314 $3 — $18 2% $136 12% *Excludes PPP loans
Energy loans totaled $352 million, or 1.7% of total loans, down $588 million, or 63%, linked-quarter Linked-quarter change reflects loan sale of $497 million, additional net charge-offs of $26 million and net payoffs/paydowns of $65 million Reserve-based energy loans have been impacted recently by significantly declining oil prices, and many were criticized due to recent liquidity stress in the industry; entire portfolio sold Energy allowance/energy loans totaled 5.7%** at June 30, 2020 $10 million in active deferrals as of 7-15-20 Energy – 1.7% of Total Loans* *Excludes PPP and HFS loans **Includes reserve for unfunded commitments $ in Millions East Central West Other Total Commitment $ NPL % NPL $ Criticized % Criticized 7-15-20 $ Deferrals % Deferrals Support Nondrilling $2 $197 $57 — $257 $417 $16 6% $56 22% $7 3% Upstream — 1 — — 1 31 --- --- — — --- — Midstream — — 2 — 2 5 --- --- — — — — Support Drilling 1 8 84 — 92 146 — — — — 3 3% Downstream — — — — — --- — — — — — — TOTAL ENERGY $3 $206 $143 — $352 $599 $16 5% $56 16% $10 3%
2Q20 Sectors Under Focus* Tier 1 Includes Motor Vehicles and Parts Dealers, Clothing and Clothing Accessories Stores, General Merchandise Stores, Miscellaneous Store Retailers Tier 2 Includes Gasoline Stations Tier 3 Includes Building Materials and Garden Equipment and Supplies Dealers, Furniture and Home Furnishings Stores, Nonstore Retailers, Health and Personal Care Stores, Food and Beverage Stores, Sporting Goods, Hobby, Book, Music Stores $ in million Tier 1 (Concerned) Tier 2 (Limited Concern) Tier 3 (No Concern) Loans $ NPL % NPL $ Criticized % Criticized 7-15-20 $ Deferrals % Deferrals Healthcare and Social Assistance Hospitals 290 — — 290 2 1% 2 1% 17 6% Offices of Physicians & Dentists — 478 — 478 12 2% 14 3% 94 19% Assisted Living (ICRE) — 369 — 369 — — 10 3% 26 7% Assisted Living (non-CRE) — 210 — 210 14 7% 16 7% — — All other Healthcare — — 247 247 — — 25 10% 7 3% Total Healthcare and Social Assistance 290 1,057 247 1,594 27 2% 66 4% 144 9% Hospitality Hotel 522 — — 522 1 — 5 1% 69 13% Restaurants Full Service, Casual Dining and Bars 371 — — 371 1 — 3 1% 46 12% Restaurants Limited Service — 115 — 115 — — 1 1% 8 7% Entertainment 152 — — 152 1 1% 8 5% 13 9% Total Hospitality 1,046 115 — 1,161 3 — 18 2% 136 12% Retail Trade Retail - CRE 660 — — 660 — — 1 — 111 17% Retail Goods and Services (1)(2)(3) 349 378 371 1,098 2 — 12 1% 106 10% Total Retail Trade 1,009 378 371 1,758 2 — 12 1% 217 12% Energy 352 — — 352 16 5% 56 16% 10 3% GRAND TOTAL 2,697 1,550 618 4,865 49 1% 152 3% 506 10% *Excludes PPP and HFS loans As of June 30, 2020 unless otherwise noted
PPP Loans The company originated more than 12,000 PPP loans totaling $2.3 billion in rounds 1 and 2 of the program, with 11,241 loans, or $769 million, in loans less than $350K (see chart below) Total fees approximate $74 million Expect effective yield on PPP loans to approximate 4% based on current expectations PPP Loans by Market $2.3 billion As of 6/30/20 Loan Size # of Loans $ of Loans (billions) SBA Fee % $ Fee (millions) <$350k 11,241 $0.7 5.00% $38.4 $350k - $2mm 1,251 $1.0 3.00% $29.0 >$2mm 170 $0.6 1.00% $6.0 Total 12,662 $2.3 3.13% $73.5
Q2 2020 Provision for Credit Losses Provision for the second quarter of 2020 totaled $306.9 million, including $160.1 million related to the energy loan sale Reflects execution of strategy to reduce concentrations in energy credits, improve overall credit quality, and provide for expected losses in sectors hardest hit by COVID-19 economic fallout Reflects pre-loan sale provision of $146.8 million; predominantly driven by the impact of COVID-19 on our concentrations of hospitality, retail trade and healthcare ($90.1 million) Provision for energy loans totaled $199.9 million; primarily associated with the energy loan sale plus $25.9 million in pre-sale charge offs on loans sold Weighting applied to Moody's June 2020 economic scenarios was 50% Baseline, 25% S1 (Stronger Near-term Growth), 25% S2 (Slower Near-term Growth) Additional provisions may be required if the economy deteriorates beyond current forecasts Significant assumptions in economic forecasts do not incorporate a second pandemic wave significant enough to shut down the economy, a significant delay in an anticipated effective vaccine, or lack of additional government stimulus in 2020 -----------Energy Loan Sale------------ ($s in millions) Pre-Sale Reserve Build Pre-Sale Charge-offs Pre-Sale Provision Charge-Offs Reserve Release Provision Total Provision Commercial Nonenergy $59.2 $30.9 $90.1 - -- -- $90.1 Energy 13.9 25.9 39.8 242.6 (82.5) 160.1 199.9 Residential Mortgage 9.2 (0.6) 8.6 - -- -- 8.6 Consumer 4.4 3.9 8.3 - -- -- 8.3 Total $86.7 $60.1 $146.8 $242.6 ($82.5) $160.1 $306.9
Allowance for Credit Losses (ACL) Total ACL (including the reserve for unfunded commitments) as a percentage of total loans at June 30, 200 was 5.66% for the energy portfolio and 2.06% for the nonenergy portfolio (or 2.30%, excluding PPP loan balances). At March 31, 2020, the ACL percentage to total loans was 9.42% for the energy portfolio and 1.88% for the non-energy portfolio $ in millions 3/30/2020 6/30/2020 Portfolio Amount % of Loan and Leases Outstanding Amount % of Loan and Leases Outstanding (Including PPP) % of Loan and Leases Outstanding (Excluding PPP) Nonenergy Commercial $255 1.65% $317 1.82% 2.10% Energy 80 8.47% 18 5.30% 5.30% Mortgage 48 1.63% 57 2.02% 2.02% Consumer 43 2.01% 50 2.43% 2.43% Allowance for Loan and Lease Losses $426 1.98% $442 1.96% 2.18% Reserve for Unfunded Lending Commitments 49 --- 37 --- --- Allowance for Credit Losses $475 2.21% $479 2.12% 2.36%
Second Quarter Allowance Build - Changes in macroeconomic variables - Changes in scenario weighting - Qualitative overlays - New loans - Change in product mix - Aging of existing portfolio - Credit quality impact - Transfer of $497.1 million Energy loans to held for sale
Net interest margin (NIM) of 3.23%, down 18 bps linked-quarter; net interest income (TE) up $6.5 million 2Q20 Headwinds: Reduction in LIBOR Recent subdebt issuance (partial quarter impact) Impact of surplus liquidity related to COVID-19 Lower accretion levels related to MSL acquisition Interest reversals 2Q20 Tailwinds: Focus on lower cost of deposits Impact of PPP loans (approximately 4% effective yield) Proactive deposit pricing helped offset the impact from a lower rate environment NIM Contraction From Lower Rates, Excess Liquidity Cost of Deposits
Securities Portfolio Conservative with Minimal Risk Portfolio totaled $6.1 billion, down $42 million, or less than 1%, linked-quarter 100% fixed, no credit impairment MBS and CMO holdings are all US Agency backed securities or direct obligations of the US government CMBS have prepayment protection and principal is fully guaranteed by the US Agencies Municipal portfolio credit quality is strong with 100% of the portfolio either investment grade, pre-refunded, or has a AA insured underlying rating Premium amortization totaled $10.0 million, up $0.6 million linked-quarter Yield 2.47%, down 6 bps linked-quarter Unrealized net gain of $233.8 million on AFS compared to $184.9 million at March 31, 2020 24% HTM, 76% AFS Duration 3.79 years compared to 3.57 years at March 31, 2020
Strong Liquidity $17 Billion in Available Sources $ in millions Total Available Amount Used Net Availability Internal Sources Free Securities and other $ 3,931 $ — $ 3,931 External Sources Federal Home Loan Bank (FHLB) 6,193 2,587 3,605 Federal Reserve Bank (FRB) 4,721 — 4,721 Brokered Deposits 4,098 498 3,601 Other 1,504 — 1,504 TOTAL LIQUIDITY $ 20,448 $ 3,085 $ 17,363 Includes PPP
Strong Growth in DDA From PPP Fundings Total deposits of $27.3 billion, up $2.3 billion, or 9%, linked-quarter Noninterest-bearing demand deposits (DDAs) increased $2.6 billion Interest-bearing transaction and savings deposits increased $674 million Time deposits (retail) decreased $408 million Time deposits (brokered) decreased $581 million Interest-bearing public fund deposits increased $75 million DDAs comprised 43% of total period-end deposits June cost of deposits 29 bps, down 37 bps from year-end and down 4 bps from May 2020
Reduced Activity Drives Linked-Quarter Decline Noninterest income totaled $73.9 million, down $10.5 million, or 12% linked-quarter Service charges and Bank Card & ATM fees down primarily due to lower consumer spending influenced by current environment and higher balances from PPP proceeds and stimulus funds Investment and annuity income and insurance down, primarily due to lower annuity production and underwriting engagements Secondary mortgage fees impacted by favorable rate environment and increased volumes Other income decline related to higher levels of specialty income in 1Q20
Noninterest Expense Impacted by Today’s Environment Noninterest expense totaled $196.5 million, down $6.8 million, or 3% linked-quarter; equity write-offs from energy-related credits totaled $9.8 million in 1Q20 Includes $2.5 million in corporate contributions for community support through food pantry cash donations, PPE for residents and first responders, housing relief to help fight evictions and contributions to the company’s employee assistance fund Personnel expense increase mostly related to annual merit increases, and overtime pay related to mortgage lending and PPP applications ORE and other foreclosed asset (OFA) expense decreased $10.6 million in 2Q20 due to the $9.8 million of energy-related equity write-offs in 1Q20 noted previously
Capital Impacted By Energy Loan Sale; Expect Rebuild in 2H20 TCE ratio 7.33%, down 67 bps linked-quarter Impact of $2.3 billion in PPP loans -56 bps Impact of energy loan sale -36 bps Net decline in other assets +17 Net earnings excluding loan sale +4 bps Dividends -8 bps Change in OCI +10 bps Stock Compensation +2 bps Will continue to manage capital in the best interests of the Company and our shareholders; managing through COVID-19 is our top focus Issued $172.5 million of tier 2 capital (subdebt) in June Intend to pay quarterly dividend in consultation with examiners; board reviews dividend policy quarterly Buybacks on hold Tangible Common Equity Ratio Leverage (Tier 1) Ratio CET1 Ratio and Tier 1 Risked-Based Capital Ratio Total Risk-Based Capital Ratio June 30, 2020 7.33% 7.38%(e) 9.77%(e) 12.35%(e) March 31, 2020 8.00% 8.40% 10.02% 11.87% December 31, 2019 8.45% 8.76% 10.50% 11.90% September 30, 2019 8.82% 9.49% 11.02% 12.43% June 30, 2019 8.75% 9.10% 10.94% 12.43% (e) Estimated for most recent period-end; effective March 31, 2020 regulatory capital ratios reflect the election to use the five-year CECL transition rules
Solid Capital In Excess of Regulatory Minimums (1) Regulatory minimum with Capital Conservation Buffer (CCB) must be met in order for a bank holding company to engage in certain capital activities including, but not limited to, paying shareholder dividends. Leverage ratio does not have a CCB requirement. June 30, 2020 estimated regulatory capital ratios reflect the election to use the five-year CECL transition rules.
Appendix and Non-GAAP Reconciliations
Results *Non-GAAP measures. See slides 32-34 for non-GAAP reconciliations 2Q19 3Q19 4Q19 1Q20 2Q20 Operating PPNR (TE)* ($000) 119,269 125,077 125,660 115,688 118,518 Net Interest Income (TE)* ($000) 223,586 226,591 236,736 234,636 241,114 Net Interest Margin (TE)* 3.45% 3.41% 3.43% 3.41% 3.23% Noninterest Income ($000) 79,250 83,230 82,924 84,387 73,943 Operating Expense* ($000) 183,567 184,744 194,000 203,335 196,539 Efficiency Ratio* 58.95% 58.05% 58.88% 62.06% 60.74%
Balance Sheet Summary 2Q19 3Q19 4Q19 1Q20 2Q20 Average Loans ($MM) 20,150 20,197 21,038 21,234 22,957 Average Total Securities ($MM) 5,586 6,005 6,202 6,149 6,130 Average Deposits ($MM) 23,138 23,091 23,848 24,327 26,703 Loan Yield (TE) 4.89% 4.84% 4.69% 4.56% 4.04% Cost of Interest Bearing Deposits 1.33% 1.30% 1.11% 1.01% 0.58% Tangible Common Equity Ratio 8.75% 8.82% 8.45% 8.00% 7.33%
Operating Earnings & EPS Non-GAAP to GAAP Reconciliations Three Months Ended (in thousands, except per share amounts) 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 Net Income (loss) ($117,072) ($111,033) $92,132 $67,807 $88,277 Net income allocated to participating securities (422) (427) (1,566) (1,141) (1,502) Net income (loss) available to common shareholders ($117,494) ($111,460) $90,566 $66,666 $86,775 Nonoperating items, net of income tax — — 3,046 22,760 — Nonoperating items allocated to participating securities — — (52) (383) — Operating earnings available to common shareholders ($117,494) ($111,460) $93,560 $89,043 $86,775 Weighted average common shares – diluted 86,301 87,186 88,315 86,462 85,835 Earnings (loss) per share – diluted ($1.36) ($1.28) $1.03 $0.77 $1.01 Operating earnings per share - diluted ($1.36) ($1.28) $1.06 $1.03 $1.01 Special Provision for Energy Loan Sale (pre-tax) $160,101 — — — — Tax effect of provision (at 21% tax rate) ($33,621) — — — — Net impact of Special Provision $126,480 — — — — Earnings (loss) per share impact ($1.47) — — — — Earnings excluding Energy Loan Sale $9,408 — — — — Earnings per share (diluted) - excluding Energy Loan Sale $.11 — — — —
Operating ROA, ROE & ROTCE Reconciliations Three Months Ended (dollars in thousands) 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 Net Income (loss) ($117,072) ($111,033) $92,132 $67,807 $88,277 Nonoperating items, net of income tax — — 3,046 22,760 — Operating earnings (loss) ($ 117,072) ($111,033) $95,178 $90,567 $88,277 Average Assets $33,136,706 $30,663,601 $30,343,293 $29,148,106 $28,537,810 Average Equity $3,465,617 $3,509,727 $3,473,693 $3,383,738 $3,230,503 Average Tangible Common Equity 2,511,365 2,550,227 2,500,092 2,496,870 2,350,006 Return on average assets - operating (1.42)% (1.46)% 1.24% 1.23% 1.24% Return on average equity - operating (13.59)% (12.72)% 10.87% 10.62% 10.96% Return on average tangible common equity - operating (18.75)% (17.51)% 15.10% 14.39% 15.07%
Operating Revenue (TE), Operating PPNR (TE) Reconciliations Taxable equivalent (TE) amounts are calculated using a federal income tax rate of 21%. Three Months Ended (in thousands) 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 Net interest income $237,866 $231,188 $233,156 $222,939 $219,868 Noninterest income 73,943 84,387 82,924 83,230 79,250 Total revenue $311,809 $315,575 $316,080 $306,169 $299,118 Taxable equivalent adjustment 3,248 3,448 3,580 3,652 3,718 Nonoperating revenue -— -— -— -— -— Operating revenue (TE) $315,057 $319,023 $319,660 $309,821 $302,836 Noninterest expense (196,539) (203,335) (197,856) (213,554) (183,567) Nonoperating expense — — 3,856 28,810 — Operating pre-provision net revenue $118,518 $115,688 $125,660 $125,077 $119,269
More Granular Energy Portfolio All Categories $940 million 481 credits 3/31/20 All Categories $352 million 351 credits 6/30/20 Excludes HFS loans
Exposure to Support Services Reduced Excludes HFS loans
Loan portfolio 54% variable at June 30, 2020 (excludes PPP and HFS loans) 59% of variable loans are LIBOR-based (32% of total loan portfolio) 97% of the LIBOR loans are tied to 1 month LIBOR; 3% of the LIBOR loans are tied to 3 month LIBOR 31% tied to Wall Street Journal Prime Approximately 40% of variable loans have floors $1.2 billion of receive fixed/pay variable swaps on the balance sheet (receive 217 bps, pay 1 month Libor) IRR Sensitivity – Selected Info
Second Quarter 2020 Earnings Conference Call 7/21/2020