Hancock Whitney (HWC)2024-04-16 23:58Financial Data and Key Metrics Changes - The reported net income for Q1 2024 was 1.24 per share, with an adjusted net income of 1.28 per share after accounting for a special FDIC assessment [28][29] - Net interest margin (NIM) expanded by 5 basis points to 3.32%, despite a decrease in net interest income (NII) due to lower average earning assets [28][29] - Total deposit costs increased by 8 basis points to 2.01%, with expectations of stabilization in the coming quarters [29][30] Business Line Data and Key Metrics Changes - Loan growth was modest, primarily driven by mortgage lending, as the company focused on granular full relationship loans rather than large loan-only relationships [25][28] - Fee income remained flat, benefiting from strong activity in investment and annuity income [14][28] - The company maintained a solid reserve of 1.42%, slightly up from the previous quarter, indicating a proactive approach to credit quality [9][28] Market Data and Key Metrics Changes - The company reported a deposit growth of 281 million when excluding brokered deposits [9][28] - The mix of deposits saw a decline in non-interest-bearing deposits, which decreased from 37% to 36% of total deposits, although the pace of decline has slowed [29][99] Company Strategy and Development Direction - The company aims to reposition its balance sheet and maintain profitability while navigating the evolving economic environment [10][24] - There is a focus on reducing reliance on non-relationship credits and increasing core relationships to enhance fee income [25][117] - The company is considering potential resumption of share buybacks and dividend adjustments later in the year, depending on capital management strategies [31][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic environment, anticipating modest NIM expansion and potential rate cuts later in the year [30][31] - The company remains vigilant regarding credit quality, with no significant weakening observed in specific portfolio sectors or geographies [9][28] - Management noted that any potential rate cuts could provide a tailwind for loan growth and NIM improvement in the second half of the year [30][31] Other Important Information - The company has not updated its guidance for the quarter, maintaining expectations for modest NIM expansion and continued focus on cost control [10][14] - The bond portfolio restructuring is expected to yield further improvements in earnings as cash flows are reinvested at higher rates [12][30] Q&A Session Summary Question: Can you provide more details on the increase in nonperformers and criticized assets? - Management noted that criticized and non-accrual loans remain at historically low levels, with the increase attributed to a few larger credits facing temporary challenges [36][38] Question: What is the outlook for loan growth given the current economic conditions? - Management expressed optimism for loan growth in the back half of the year, driven by pent-up demand and potential rate cuts, despite acknowledging macroeconomic headwinds [44][67] Question: How do you view the current state of your capital ratios and potential for buybacks? - The company indicated strong capital ratios and a willingness to consider buybacks and dividend adjustments based on future performance and market conditions [31][50] Question: What are the expectations for deposit costs and their impact on NIM? - Management expects deposit costs to stabilize, with potential benefits from CD maturities and rate cuts in the latter half of the year [29][30]