Hancock Whitney Corporation (HWC) is a leading financial holding company serving the Gulf South region. With a rich history dating back to 1899, the company has established itself as a trusted provider of banking and financial services, navigating economic cycles and emerging as a resilient player in the Southeastern banking landscape.

Solid Financial Performance

Hancock Whitney's financial results showcase its ability to deliver consistent profitability. In the fiscal year 2023, the company reported annual net income of $392.6 million, annual revenue of $1.89 billion, annual operating cash flow of $519.8 million, and annual free cash flow of $494.8 million. These figures demonstrate the company's financial strength and its capacity to generate sustainable earnings and cash flows.

Quarterly Highlights

In the latest quarter (Q2 2024), Hancock Whitney reported net income of $115 million, or $1.31 per share, up from $112.3 million, or $1.24 per share, in the previous quarter. The company's revenue for the quarter stood at $359.6 million, a slight increase from the prior quarter's $356.9 million. These results highlight Hancock Whitney's ability to maintain its financial momentum amidst the evolving economic landscape.

Business Overview

Hancock Whitney operates through two primary business segments: Commercial Banking and Consumer Banking. The Commercial Banking division provides a comprehensive suite of lending, treasury management, and capital markets services to middle-market and larger commercial clients. The Consumer Banking segment offers a diverse range of retail banking products, including deposit accounts, residential mortgages, and consumer loans, catering to the financial needs of individuals and small businesses.

Geographic Footprint

Hancock Whitney's footprint spans the Gulf South region, with a strong presence in markets such as southern and central Mississippi, southern and central Alabama, northwest, central and southern Louisiana, the northern, central and panhandle regions of Florida, certain areas of east and northeast Texas, and the metropolitan areas of Nashville, Tennessee and Atlanta, Georgia. This diversified geographic reach allows the company to capitalize on growth opportunities across its service areas.

Financials

Revenue Breakdown and Trends

Hancock Whitney's revenue is primarily derived from net interest income and noninterest income. In the latest quarter, net interest income accounted for 75.3% of total revenue, while noninterest income contributed the remaining 24.7%. The company has experienced growth in both net interest income and noninterest income, driven by factors such as higher loan yields, improved deposit pricing, and increased fee-based activities.

Loan Portfolio Composition

Hancock Whitney's loan portfolio is well-diversified, with a focus on commercial and industrial (C&I) loans, which make up approximately 54% of the total loan book. The portfolio also includes commercial real estate, construction and land development, residential mortgages, and consumer loans. The company has been actively managing its Shared National Credit (SNC) portfolio, reducing its exposure to these larger, syndicated credits in favor of more granular, relationship-based lending opportunities.

Deposit Mix and Funding Strategy

Hancock Whitney maintains a stable deposit base, with a healthy mix of noninterest-bearing demand deposits (36.5% of total deposits) and interest-bearing deposits. The company has been proactive in managing its deposit costs, with the total cost of deposits declining to 2.0% in the latest quarter. Hancock Whitney has also reduced its reliance on brokered deposits, further strengthening its funding profile.

Net Interest Margin and Expansion

The company's net interest margin (NIM) expanded to 3.37% in the second quarter of 2024, up from 3.32% in the previous quarter. This improvement was driven by higher loan yields, increased bond portfolio yields, and a favorable shift in the deposit mix, partially offset by higher deposit costs. Hancock Whitney expects modest NIM expansion in the coming quarters, supported by its focus on relationship-based lending and active balance sheet management.

Asset Quality and Credit Metrics

Hancock Whitney's asset quality metrics remain strong, with nonaccrual loans at 0.34% of total loans and the allowance for credit losses at 1.43% of total loans as of the latest quarter. The company's net charge-offs were 0.12% of average loans on an annualized basis, reflecting the overall health of its loan portfolio. Management remains vigilant in monitoring credit quality and has maintained a robust allowance for credit losses to address any potential risks.

Capital Strength and Shareholder Returns

Hancock Whitney's capital position is exceptionally strong, with a Common Equity Tier 1 (CET1) ratio of 13.25% and a tangible common equity (TCE) ratio of 8.77% as of the end of the second quarter. This solid capital base has enabled the company to return capital to shareholders through a 33% increase in the common stock dividend and the repurchase of over 300,000 shares during the quarter.

Outlook

Hancock Whitney has provided updated guidance for the remainder of 2024. The company expects loans to be flat to slightly down compared to 2023 levels, as it continues to focus on more granular, relationship-based lending opportunities. Deposits are anticipated to be flat to slightly down as well. The company expects modest NIM expansion, a 4-5% increase in adjusted noninterest income, and a 2-3% rise in adjusted noninterest expenses. Management remains committed to maintaining an efficiency ratio in the 56-57% range.

Risks and Challenges

While Hancock Whitney has demonstrated resilience, the company faces risks inherent to the banking industry, such as interest rate fluctuations, credit quality deterioration, and regulatory changes. Additionally, the company's geographic concentration in the Gulf South region exposes it to potential economic and environmental challenges specific to that area.

Conclusion

Hancock Whitney's solid financial performance, diversified business model, and strategic initiatives position the company for sustainable growth. Its focus on relationship-based lending, disciplined balance sheet management, and commitment to shareholder returns make it an attractive proposition for investors seeking exposure to a well-capitalized, efficiently-run regional bank in the Southeastern United States. As Hancock Whitney celebrates its 125th year, the company's resilience and forward-looking approach suggest a promising future for its shareholders.