Hancock Whitney (US:HWC)2024-07-16 23:42Financial Data and Key Metrics Changes - The second quarter reported net income was $115 million or $1.31 per share, an increase of $0.07 per share compared to the previous quarter [21] - PPNR was $156 million, or 1.79% of average assets, up $3.5 million from the prior quarter [21] - NIM expanded by 5 basis points to 3.37%, contributing to growth in NII [21] - Total cost of deposits decreased by 1 basis point to 2% [39] - TCE ended the quarter at 8.77% and common equity Tier 1 ratio at 13% [19] Business Line Data and Key Metrics Changes - Commercial Real Estate (CRE) had a strong quarter with an optimistic outlook for the second half of the year [2] - Equipment finance also performed well, with a positive pipeline [4] - Consumer and home equity lines remain weak, requiring new deals to maintain levels due to amortization [4] - Loan yield increased by 8 basis points to 6.24% due to a focus on more granular loans [22] Market Data and Key Metrics Changes - Deposits decreased primarily due to a reduction in broker CDs by $195 million, but DDA decline was moderated [36] - The DDA mix remained stable at 36% [36] - Fee income increased by 2% quarter-over-quarter, driven by higher trust fees and bank card fees [40] Company Strategy and Development Direction - The company aims to reposition its balance sheet by reducing large credit-only relationships while focusing on granular loans to achieve higher yields [18] - There is a strategic focus on hiring seasoned bankers and wealth advisors to enhance service offerings and revenue generation [7][9] - The company is considering M&A opportunities but is currently focused on internal growth and stability [55][77] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining profitability and capital ratios despite a challenging economic environment [17] - The outlook for loan growth is cautious, with expectations for loans to be flat to slightly down from 2023 [18] - Management noted that the competitive landscape is changing, with some competitors returning to the market, which may pressure deal prices [3] Other Important Information - The company returned capital to investors with a 33% increase in common stock dividends and repurchased over 300,000 shares [19] - The guidance for noninterest income for 2024 is expected to increase by 4% to 5% from 2023 levels [40] Q&A Session Summary Question: What is the expected pace of loan yield increases in the back half of the year? - Management indicated a modest increase in loan yields is expected, with a couple of basis points improvement anticipated in the next quarters [67] Question: Can you elaborate on the expense guidance and how savings are being created? - Management mentioned strategic procurement and outsourcing as key factors in controlling costs while hiring additional revenue-generating staff [45] Question: What is the target for the reduction of Shared National Credit (SNC) balances? - The goal is to reduce SNC balances to around 9% of total loans, aligning with peer averages [50][52] Question: Is M&A a consideration for future growth? - While M&A is not a current focus, management is open to opportunities that align with strategic growth and market conditions [55][77] Question: How is loan demand changing in the current environment? - Management noted mixed signals in loan demand, with strong production in CRE but a cautious outlook overall [91]