Hancock Whitney Reports First Quarter 2024 EPS of $1.24

Hancock Whitney Corporation (Nasdaq: HWC) today announced its financial results for the first quarter of 2024. Net income for the first quarter of 2024 totaled $108.6 million, or $1.24 per diluted common share (EPS), compared to $50.6 million, or $0.58 per diluted common share, in the fourth quarter of 2023. The first quarter of 2024 included a $3.8 million charge, or $0.04 per diluted common share, of a supplemental disclosure item, related to a revision to the FDIC Special Assessment. The fourth quarter of 2023 included a net charge of $75.4 million, or $0.68 per diluted share after-tax, of supplemental disclosure items, related to a loss on the securities portfolio restructuring, gain on sale of a parking facility, and FDIC Special Assessment. Excluding the impact of these supplemental disclosure items, EPS would be $1.28, up $0.02 linked-quarter. The company reported net income for the first quarter of 2023 of $126.5 million, or $1.45 per diluted common share. There were no supplemental disclosure items in the first quarter of 2023.

First Quarter 2024 Highlights

• Net income totaled $108.6 million, compared to $50.6 million in prior quarter
• Adjusted pre-provision net revenue (PPNR) totaled $152.9 million, down $4.6 million, or 3% linked-quarter
• Loans increased $49.0 million, or 1% LQA
• Deposits increased $85.8 million, or 1% LQA
• Criticized commercial loans and nonaccrual loans continued to normalize
• ACL coverage remained solid at 1.42%, up 1 bp, compared to prior quarter
• NIM 3.32%, up 5 bps compared to 4Q23
• CET1 ratio estimated at 12.67%, up 34 bps linked-quarter; TCE ratio 8.61%, up 24 bps linked-quarter
• Efficiency ratio 56.44%

“The first quarter’s results reflect a very positive start to 2024,” said John M. Hairston, President & CEO. “Our efforts to reposition our balance sheet and create opportunities for NIM expansion continued this quarter. NIM expansion was supported primarily by the impact of last quarter’s bond portfolio restructure and good control of deposit costs. We were also pleased with the quarter’s performance in fees and expense management. Credit metrics continued to normalize, but we do not see any broad signs of weakening in any portfolio or geographic segment. We maintained a robust ACL to loans of 1.42% and we continued to grow capital this quarter. As we look forward to celebrating our 125th year and beyond, we believe we continue to position ourselves to effectively navigate any operating environment.”

Loans

Total loans were $24.0 billion at March 31, 2024, up $49.0 million, or less than 1%, from December 31, 2023. One-time close products drove the increase in mortgage loans, which convert from construction to mortgages upon construction completion.

Average loans totaled $23.8 billion for the first quarter of 2024, virtually unchanged linked-quarter. Management expects 2024 period-end loan growth to be low single digits from year-end 2023, mostly in the second half of 2024.

Deposits

Total deposits at March 31, 2024 were $29.8 billion, up $85.8 million, or less than 1%, from December 31, 2023. The linked-quarter increase in deposits was driven primarily by an increase in interest-bearing transaction and saving and retail time deposits due to a shift from DDA deposits, offset by decreases in brokered deposits, noninterest-bearing DDAs, and interest-bearing public funds due to seasonality.

DDAs totaled $10.8 billion at March 31, 2024, down $228.4 million, or 2%, from December 31 2023 and comprised 36% of total period-end deposits. Interest-bearing transaction and savings deposits totaled $11.0 billion at the end of the first quarter of 2024, up $294.3 million, or 3%, linked-quarter. Compared to December 31, 2023, retail time deposits of $4.6 billion were up $291.7 million, or 7%, and brokered deposits were $394.8 million, down $195.0 million, or 33%, compared to the prior quarter. Interest-bearing public fund deposits decreased $76.7 million, or 2%, linked-quarter, totaling $3.1 billion at March 31, 2024.

Average deposits for the first quarter of 2024 were $29.6 billion, down $414.0 million, or 1%, linked-quarter. Management expects 2024 period-end deposit level growth to be low single digits, compared to year-end 2023.

Asset Quality

The total allowance for credit losses (ACL) was $340.8 million at March 31, 2024, up $4.0 million, or 1%, from December 31, 2023. During the first quarter of 2024, the company recorded a provision for credit losses of $13.0 million, compared to $17.0 million in the fourth quarter of 2023. There were $9.0 million of net charge-offs in the first quarter of 2024, or 0.15% of average total loans on an annualized basis, compared to net charge-offs of $16.1 million, or 0.27% of average total loans in the fourth quarter of 2023. The ratio of ACL to period-end loans was 1.42% at March 31, 2024, compared to 1.41% at December 31, 2023.

Criticized commercial loans and nonaccrual loans remained at low levels at March 31, 2024. Criticized commercial loans totaled $339.9 million, or 1.83% of total commercial loans, at March 31, 2024, compared to $273.7 million, or 1.47% of total commercial loans at December 31, 2023. Nonaccrual loans totaled $82.1 million, or 0.34% of total loans, at March 31, 2024, compared to $59.0 million, or 0.25% of total loans, at December 31, 2023. ORE and foreclosed assets were $2.8 million at March 31, 2024, down $0.8 million, linked-quarter.

Net Interest Income and Net Interest Margin (NIM)

Net interest income (TE) for the first quarter of 2024 was $269.0 million, a decrease of $3.3 million, or 1%, from the fourth quarter of 2023. The net interest margin (NIM) (TE) was 3.32% in the first quarter of 2024, up 5 bps linked-quarter. A change in loan yields (+4 bps), a shift in average earning assets and reduced borrowings (+6 bps) and the securities portfolio restructuring (+3 bps) led to a 13 basis point improvement in NIM, offset by the impact of change in deposit mix and rates (-8 bps). Additional NIM detail and guidance is included in the first quarter of 2024 earnings investor deck.

Average earning assets were $32.6 billion for the first quarter of 2024, down $571.3 million, or 2%, from the fourth quarter of 2023.

Noninterest Income

Noninterest income totaled $87.9 million for the first quarter of 2024, up $48.9 million, or 126%, from the fourth quarter of 2023. There were no supplemental disclosure items in the first quarter of 2024. The fourth quarter of 2023 included two supplemental disclosure items of a $16.1 million gain on the sale of a parking facility and a ($65.4) million loss related to the securities portfolio restructuring.

Service charges on deposits were up $0.6 million, or 3%, from the fourth quarter of 2023. Bank card and ATM fees were virtually unchanged from the fourth quarter of 2023.

Investment and annuity income and insurance fees were up $0.8 million, or 7%, linked-quarter, related to higher activity. Trust fees were up $0.2 million, or 1% linked-quarter. Fees from secondary mortgage operations totaled $2.9 million for the first quarter of 2024, up $0.8 million, or 39%, linked-quarter, due to higher origination and sales activity.

There were no gains or losses related to securities transactions in the first quarter of 2024. Securities transactions, net was a loss of $65.4 million in the fourth quarter of 2023, related to the securities portfolio restructuring included as a supplemental disclosure item.

Other noninterest income was $13.2 million in the first quarter of 2024, compared to $32.0 million in the fourth quarter of 2023. There were no supplemental disclosure items in the first quarter of 2024. In the fourth quarter of 2023, other noninterest income was impacted by the $16.1 million gain on the sale of the parking facility.

Noninterest Expense & Taxes

Noninterest expense totaled $207.7 million, down $21.4 million, or 9% linked-quarter. Included in the total was $3.8 million of a supplemental disclosure item related to a revision to the FDIC Special Assessment. Expenses in the fourth quarter of 2023 included a $26.1 million supplemental disclosure item related to an FDIC Special Assessment. Adjusting for these items, noninterest expense for the first quarter of 2024 totaled $203.9 million, virtually unchanged, up less than 1%, linked-quarter.

Personnel expense totaled $121.2 million in the first quarter of 2024, up $6.8 million, or 6%, linked-quarter. The increase was primarily due to higher incentive expense, lower deferred salaries related to lending activities, and a seasonal increase in benefits costs. Net occupancy and equipment expense totaled $17.6 million in the first quarter of 2024, up $0.1 million, or 1%, from the fourth quarter of 2023. Amortization of intangibles totaled $2.5 million for the first quarter of 2024, down $0.1 million, or 5%, linked-quarter.

ORE and other foreclosed assets was a net gain of $0.2 million in the first quarter of 2024, compared to a net gain of $0.5 million in the fourth quarter of 2023.

Other expense, excluding the supplemental disclosure item, totaled $62.8 million in the first quarter of 2024, down $6.2 million, or 9%, linked-quarter, related to lower data processing and professional services expense.

The effective income tax rate for the first quarter of 2024 was 18.5%.

Capital

Common stockholders’ equity at March 31, 2024 totaled $3.9 billion, up $49.8 million, or 1%, from December 31, 2023. The tangible common equity (TCE) ratio was 8.61%, up 24 bps linked-quarter. The company’s CET1 ratio is estimated to be 12.67% at March 31, 2024, up 34 bps linked-quarter. Total risk-based capital ratio is estimated to be 14.37% at March 31, 2024, up 44 bps linked-quarter. The company’s share buyback authorization (allowing the repurchase of up to 4,297,000 shares of the company’s outstanding common stock), is set to expire on December 31, 2024. No shares were repurchased in the first quarter of 2024.

Conference Call and Slide Presentation

Management will host a conference call for analysts and investors at 3:30 p.m. Central Time on Tuesday, April 16, 2024 to review first quarter of 2024 results. A live listen-only webcast of the call will be available under the Investor Relations section of Hancock Whitney’s website at investors.hancockwhitney.com. A link to the release with additional financial tables, and a link to a slide presentation related to first quarter results are also posted as part of the webcast link. To participate in the Q&A portion of the call, dial 888-596-4144 or 646-968-2525, access code 6914431.

An audio archive of the conference call will be available under the Investor Relations section of our website. A replay of the call will also be available through April 23, 2024 by dialing 800-770-2030 or 609-800-9909, access code 6914431.

About Hancock Whitney

Since the late 1800s, Hancock Whitney has embodied core values of Honor & Integrity, Strength & Stability, Commitment to Service, Teamwork, and Personal Responsibility. Hancock Whitney offices and financial centers in Mississippi, Alabama, Florida, Louisiana, and Texas offer comprehensive financial products and services, including traditional and online banking; commercial and small business banking; private banking; trust and investment services; healthcare banking; and mortgage services. The company also operates combined loan and deposit production offices in the greater metropolitan areas of Nashville, Tennessee and Atlanta, Georgia. More information is available at www.hancockwhitney.com.

Non-GAAP Financial Measures

This news release includes non-GAAP financial measures to describe Hancock Whitney’s performance. These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. The reconciliations of those measures to GAAP measures are provided either in the financial tables or in Appendix A thereto.

Consistent with the provisions of subpart 229.1400 of the Securities and Exchange Commission’s Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” the company presents net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (“TE”) basis. The TE basis adjusts for the tax-favored status of net interest income from certain loans and investments using the statutory federal tax rate to increase tax-exempt interest income to a taxable equivalent basis. The company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.

The company presents certain additional non-GAAP financial measures to assist the reader with a better understanding of the Company’s performance period over period, as well as to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. The Company highlights certain items that are outside of our principal business and/or are not indicative of forward-looking trends in supplemental disclosures items below our GAAP financial data and presents certain “Adjusted” ratios that exclude these disclosed items. These adjusted ratios provide management or the reader with a measure that may be more indicative of forward-looking trends in our business, as well as demonstrates the effects of significant gains or losses and changes.

We define Adjusted Pre-Provision Net Revenue as net income excluding provision expense and income tax expense, plus the taxable equivalent adjustment (as defined above), less supplemental disclosure items (as defined above). Management believes that adjusted pre-provision net revenue is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. We define Adjusted Revenue as net interest income (te) and noninterest income less supplemental disclosure items. We define Adjusted Noninterest Expense as noninterest expense less supplemental disclosure items. We define our Efficiency Ratio as noninterest expense to total net interest income (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items, if applicable. Management believes adjusted revenue, adjusted noninterest expense and the efficiency ratio are useful measures as they provide a greater understanding of ongoing operations and enhance comparability with prior periods.

Important Cautionary Statement about Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements that we may make include statements regarding our expectations of our performance and financial condition, balance sheet and revenue growth, the provision for credit losses, capital levels, deposits (including growth, pricing, and betas), investment portfolio, other sources of liquidity, loan growth expectations, management’s predictions about charge-offs for loans, general economic business conditions in our local markets, Federal Reserve action with respect to interest rates, the impacts related to Russia’s military action in Ukraine, the effects of the Israel-Hamas war, the adequacy of our enterprise risk management framework, potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings, assessments, and enforcement actions, as well as the impact of negative developments affecting the banking industry and the resulting media coverage; the potential impact of future business combinations on our performance and financial condition, including our ability to successfully integrate the businesses, success of revenue-generating and cost reduction initiatives, the effectiveness of derivative financial instruments and hedging activities to manage risks, projected tax rates, increased cybersecurity risks, including potential business disruptions or financial losses, the adequacy of our internal controls over financial and non-financial reporting, the financial impact of regulatory requirements and tax reform legislation, deposit trends, credit quality trends, the impact of natural or man-made disasters, the impact of current and future economic conditions, including the effects of declines in the real estate market, high unemployment, inflationary pressures, increasing insurance costs, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing, net interest margin trends, future expense levels, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts, accretion levels and expected returns. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook," or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Any forward-looking statement made in this presentation is subject to the safe harbor protections set forth in the Private Securities Litigation Reform Act of 1995. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and in other periodic reports that we file with the SEC.

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