Hancock Whitney (US:HWC)2024-01-17 00:30Financial Data and Key Metrics Changes - The reported net income for Q4 2023 was $51 million or $0.58 per share, with adjusted net income at $110 million or $1.26 per share, reflecting an increase of approximately $12 million or $0.14 per share from the previous quarter [31] - Adjusted pre-provision net revenue (PPNR) was $158 million, up $5 million from the prior quarter, with both net interest margin (NIM) and net interest income (NII) remaining flat [31][32] - Deposit costs increased by 19 basis points to 1.93%, but the growth rate in deposit costs has leveled off, resulting in a total deposit beta of 36% cycle-to-date [18] Business Line Data and Key Metrics Changes - Loan balances were relatively flat in Q4, with business banking showing strong performance on both sides of the balance sheet, while consumer lending volume began to recover from pandemic-related paydowns [5] - The loan yield improved to 6.11%, up 10 basis points from the last quarter, with the coupon rate on new loans at 8.15%, reflecting a 12 basis point increase [43] - Fee income adjusted for significant items was up for the fourth consecutive quarter, driven by strong activity in investment and annuity income [44] Market Data and Key Metrics Changes - Total deposits decreased by $630 million, primarily due to the maturity of $567 million in broker deposits, while client deposits remained roughly flat compared to the prior quarter [21] - The company ended Q4 with 37% of deposits in demand deposit accounts (DDA), which is at the top end of the range contemplated in the mid-quarter update [21] Company Strategy and Development Direction - The company has revised its three-year Corporate Strategic Objectives (CSOs) and provided updated guidance for 2024, focusing on maintaining a stable deposit base and robust capital levels [28][30] - The management anticipates loan demand to return after rates soften mid-year, with expected loan growth primarily in the second half of the year [40] - The company aims for modest NIM expansion in 2024, with single-digit growth expected in the first half and potentially more in the second half, depending on the rate environment [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the operating environment in 2024, citing a stable deposit base and robust capital ratios as key strengths [30] - The management noted that credit quality metrics remained flat, with low levels of criticized commercial and non-accrual loans, indicating no significant weakening in any portfolio sector [40] - The company is proactive in monitoring risks and maintaining a solid reserve of 1.41% [29] Other Important Information - The company expects to manage deposit costs proactively as rates decline, particularly focusing on CD maturities and promotional rates [18][24] - The bond portfolio restructuring is anticipated to provide an annualized benefit to NIM of about 13 basis points [32] Q&A Session Summary Question: What is the outlook for NII and NIM? - Management indicated that NII trajectory would follow NIM expectations, with flat to slightly up growth anticipated year-over-year [48][144] Question: How does the company plan to manage deposit costs? - The company plans to be proactive in reducing deposit costs, particularly on CDs, as rates begin to decline [124] Question: What is the expectation for loan growth in 2024? - Loan growth is expected to be weighted towards the second half of the year, with management anticipating a return in loan demand as rates soften [40][49]