Hancock Whitney Corp.’s fourth-quarter 2023 adjusted earnings per share of $1.26 exceeded the Zacks Consensus Estimate of $1.08.
Despite beating expectations, adjusted earnings showed a marked decline from the prior year’s $1.65.
A decrease in both net interest income (NII) and non-interest income, coupled with a slight decrease in loan balances and an increase in expenses and provisions, contributed to the challenging results.
After accounting for non-recurring charges, net income declined 65% year over year to $50.6 million.
In 2023, adjusted earnings per share of $5.18 surpassed the Zacks Consensus Estimate of $5.03, while net income (GAAP) of $392.6 million marked a 25.1% decline from the previous year.
Revenues Decline, Expenses Rise
Quarterly revenues amounted to $308.4 million, down 17% year over year and missing the Zacks Consensus Estimate of $333.4 million.
In 2023, net revenues were $1.39 billion, slightly below the Zacks Consensus Estimate of $1.41 billion.
NII (on a tax-equivalent basis) declined 8.7% year over year to $272.3 million, while the net interest margin (NIM) contracted to 3.27%.
Non-interest income totaled $39 million, down 49.5% from the prior year, mainly due to the securities portfolio restructuring. Excluding this, adjusted non-interest income totaled $88.2 million.
Total non-interest expenses increased 20.5% year over year to $229.2 million.
The efficiency ratio increased to 55.58%, reflecting lower profitability.
As of Dec 31, 2023, total loans amounted to $23.9 billion, and total deposits decreased 2.1% on a sequential basis to $29.7 billion.
Credit Quality Worsens
The provision for credit losses was $17 million, significantly up from $2.5 million in the prior-year quarter.
Net charge-offs (annualized) were 0.27% of average total loans, up 25 bps from the prior-year quarter’s level.
Capital Ratios Improve, Profitability Ratios Worsen
As of Dec 31, 2023, the Tier 1 leverage ratio was 10.10%, up from 9.53% at the end of the year-earlier quarter. The common equity Tier 1 ratio was 12.39%, up from 11.41% as of Dec 31, 2022.
At the end of the fourth quarter, the return on average assets was 0.56%, down from the year-ago period’s 1.65%. The return on average common equity was 5.64%, down from 17.67% in the prior-year quarter.
In the reported quarter, HWC did not repurchase any share.
2024 Outlook
Management expects period-end loan growth to be in low single-digits, mostly in the second half of 2024, and growth in deposit balances is anticipated to be in low single-digits.
Pre-provision net revenues are expected to decrease 1-2% year over year, while NIM is expected to modestly expand assuming three rate cuts of 25 bps each beginning in June 2024.
Adjusted non-interest income is expected to grow in the range of 1-2%, and adjusted non-interest expenses are expected to rise in the band of 3-4%.
Management also expects to maintain an efficiency ratio in the range of 56-58%, along with forecasting low to modest charge-offs and provisions for 2024 and an effective tax rate of 21%.
Our View
Mounting expenses, reduced revenues, and loan balances resulted in a challenging quarter for Hancock Whitney. However, the company is optimistic about the upcoming quarters, expecting modest expansion in NIM, decent loan growth, a rise in non-interest income, along with lower provisions.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Hancock Whitney Corporation price-consensus-eps-surprise-chart | Hancock Whitney Corporation Quote
Currently, Hancock Whitney carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates and Expectations of Other Banks
Bank OZK OZK is slated to announce fourth-quarter and full-year 2023 numbers on Jan 18.
Over the past 30 days, the Zacks Consensus Estimate for OZK’s quarterly earnings has moved marginally north to $1.46 per share, implying a 9% increase from the prior-year reported number.
Texas Capital Bancshares, Inc. TCBI is set to announce fourth-quarter and full-year 2023 numbers on Jan 18.
Over the past 30 days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has moved 9.5% down to 76 cents, implying a 12.64% decrease from the prior-year reported number.
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