Hancock Whitney (US:HWC)2020-05-01 15:04Financial Data and Key Metrics Changes - The company reported a loss of $111 million or $1.28 per share for Q1 2020, which included a provision for credit losses of $247 million or $2.24 per share [21] - Pre-provision net revenue (PPNR) was flat from Q4 2019 but up nearly 6.5% from the same quarter a year ago [22] - The allowance for credit losses (ACL) ended the quarter at $475 million or 2.21% of period-end loans, reflecting a significant increase of $280 million or 144% from the previous year-end under the old incurred loss model [26][27] Business Line Data and Key Metrics Changes - Net interest margin (NIM) reported a decline of 2 basis points from the previous quarter, primarily due to expected accretion runoff related to the merger with MidSouth and the impact of Fed rate cuts [23] - Fee income increased by $1.5 million from the previous quarter, driven mainly by tax credit sales and BOLI income, although service charges and card fees were negatively impacted by COVID-19 [24][25] Market Data and Key Metrics Changes - The company has seen pandemic-related pressure on its energy portfolio and potential impacts on markets most affected by economic restrictions [13] - The company is proactively managing its reserves in anticipation of challenges in the energy sector and the New Orleans hospitality market [39] Company Strategy and Development Direction - The company is focused on maintaining solid capital and liquidity levels, with a common Tier 1 equity ratio just over 10% and a target tangible common equity (TCE) ratio of 8% [17][31] - The company has suspended all previous guidance for 2020 due to the uncertainty surrounding COVID-19 but intends to maintain the common dividend at the current level [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the rapidly changing economic environment and the inherent limitations in projecting future results [4] - The company is prepared for potential additional reserving in future quarters, emphasizing a proactive approach to managing credit risk [40] Other Important Information - The company has participated in the SBA's Paycheck Protection Program, originating nearly 4,900 loans totaling $1.7 billion [9] - The company has made $2.5 million in direct contributions to communities and associates during the pandemic [10] Q&A Session Summary Question: Is the current reserve build sufficient? - Management indicated that the reserve build was a combination of historical lessons and current economic modeling, emphasizing a proactive approach to credit risk management [38][39] Question: What is the outlook for the TCE ratio? - Management expressed confidence in maintaining the TCE ratio at 8% or above, depending on future reserve needs and profitability [42]