Hancock Whitney (US:HWC)2021-04-20 23:44Financial Data and Key Metrics Changes - Earnings for Q1 2021 were $107 million or $1.21 per share, an increase of almost $4 million or $0.04 from the previous quarter [7] - The provision for credit losses was a negative $4.9 million, indicating a release of loan loss reserves due to improved asset quality [8] - The common Tier 1 capital ratio increased by 41 basis points to an estimated 11.02% [10] Business Line Data and Key Metrics Changes - Core loans declined by $465 million linked quarter, primarily due to a runoff in indirect loans and increased residential mortgage payoffs [9] - The bank originated over $800 million in new PPP loans during the first quarter, with a lower-than-expected pace of forgiveness [9] Market Data and Key Metrics Changes - The bank reported declines in criticized and nonperforming loans of 11% and 20%, respectively [8] - The Eastern franchise showed loan growth, while the Central area, particularly New Orleans, remained under pressure but showed signs of improvement [9] Company Strategy and Development Direction - The company is focused on expense and efficiency initiatives, including an early retirement program expected to reduce expenses by approximately $19 million annually [15][16] - The management is cautiously optimistic about 2021 and beyond, depending on the success of vaccination programs and economic recovery [10] Management's Comments on Operating Environment and Future Outlook - Management noted a more positive operating environment compared to the end of the previous year, with signs of cautious optimism as markets reopen [7] - The company expects loan growth to pick up in the second half of the year, driven by an improved pipeline and economic conditions [22] Other Important Information - The bank's net interest margin (NIM) for the quarter was 3.09%, down 13 basis points, with expectations of further compression in the second quarter [13] - The early retirement program had a 40% acceptance rate, which was higher than expected, contributing to future expense reductions [48] Q&A Session Summary Question: Margin outlook and loan growth dependency - Management indicated that NIM stabilization is dependent on loan growth picking up in the second half of the year, with expectations of further compression in Q2 [20][21] Question: Capital returns and buyback plans - Management confirmed that they are evaluating options for capital returns, including potential buybacks, as capital builds from PPP loan forgiveness [25][26] Question: Expense guidance and operating leverage - Management acknowledged that while there will be natural growth in expenses, they aim for a significant reduction in overall expenses, targeting a more efficient operating model [31][32] Question: Loan growth appetite and mortgage paydowns - Management noted that while there is a strong appetite for home purchases, they do not plan to refill the mortgage bucket until the rate environment improves [59] Question: Green shoots in tourism and hospitality - Management reported positive changes in the hospitality outlook, particularly in New Orleans, with expectations for leisure tourism to rebound significantly [50][53]