Hancock Whitney (US:HWC)2023-01-18 02:57Financial Data and Key Metrics Changes - The company reported a fourth quarter EPS of $1.65, an increase of $0.10 from the previous quarter [8] - Net income for the fourth quarter was $144 million, up $8.4 million from the third quarter [8] - The efficiency ratio improved to 49.81%, indicating strong operational performance [8] - The net interest margin (NIM) increased to 3.68%, up 14 basis points from the previous quarter [9] - The yield on new loans rose by 134 basis points to 6.27% [9] Business Line Data and Key Metrics Changes - The company experienced a net loan growth of $528.5 million, representing a 9% annualized increase from the previous quarter [96] - Deposit growth was challenged, with DDA and interest-bearing transaction deposits down by $692 million and $176 million, respectively [81] - The company anticipates a 3% to 4% growth in total noninterest income for 2023, despite a $10 million to $11 million loss from the elimination of certain fees [6][128] Market Data and Key Metrics Changes - The company noted that commercial clients are deploying excess liquidity into working capital, impacting deposit growth [81] - The deposit beta increased to around 21% in the fourth quarter, indicating a shift in deposit pricing sensitivity [126] Company Strategy and Development Direction - The company plans to focus on core relationship lending and enhancing deposit relationships to create value [78] - There is an expectation of slower loan growth in 2023, with guidance indicating low to mid-single digit growth [93] - The company is investing in technology to improve scalability and effectiveness, which is expected to yield long-term benefits [79][139] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2024, anticipating a more conducive environment for balance sheet growth [36] - The company is prepared for potential economic slowdowns and is focused on maintaining a solid capital position [40][93] - Management highlighted that credit metrics remain at historically low levels, indicating a strong risk management posture [79] Other Important Information - The company expects noninterest expenses to increase by 6% to 7% in 2023, driven by inflation and higher FDIC assessments [6] - The company added $1.5 million to its reserve at year-end, maintaining an allowance for credit losses (ACL) of 148 basis points [40] Q&A Session Summary Question: What factors will influence fee income growth? - Management noted that specialty income components were down in the fourth quarter but expect a rebound in 2023 [12][13] Question: How does the company view its loan portfolio in a higher rate environment? - Management expressed confidence in the portfolio's resilience, particularly in medical office segments, while monitoring potential vulnerabilities [108] Question: What are the expectations for deposit growth in 2023? - Management indicated that deposit growth will be challenging, with a focus on managing the balance sheet effectively [93][121] Question: How will the company manage expenses in 2023? - Management expects a normalization of expenses, with increases primarily driven by pension and FDIC costs [22][139] Question: What is the outlook for net interest margin (NIM)? - Management anticipates stable NIM, with potential fluctuations based on deposit balances and loan growth [105][134]