Hancock Whitney Corporation (NASDAQ:HWC) Q4 2018 Earnings Conference Call Transcript

Jan 17, 2019 • 09:30 am ET

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Hancock Whitney Corporation (NASDAQ:HWC) Q4 2018 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. (Operator Instructions) And our first question comes from the line of Catherine Mealor of KBW. Your line is open.

Analyst
Catherine Mealor

Thanks. Good morning.

Executive
John Hairston

Good morning.

Executive
Mike Achary

Good morning.

Analyst
Catherine Mealor

I want to first start on the margin. It's a really nice expansion this quarter, as you mentioned, Mike. And so it seems like you're expecting another 5 bps improvement in the first quarter just from the restructuring. And so then if I compare that to your 4 bps to 6 bps guidance for the quarter, it feels like you really -- net the restructuring, your guidance for the margin near term is effectively stable. So I guess that's question one.

And then question two on top of that is, as we look out to next year and we think about what the Fed does, how do you think about upside you potentially could have for your margin if the Fed stops now, and then how it looks if we see another couple of rate hikes? Thanks.

Executive
Mike Achary

Yeah. Thank you, Catherine. So, again, related to the restructuring that we affected this quarter, 7 basis points of NIM improvement in total, we got 2 basis points of that in the fourth quarter, and we're expecting another 5 basis points in the first quarter of '19. So the guidance for the quarter coming up of 4 basis points to 6 basis points, obviously, accounts for those 5 basis points related to the restructuring transaction. But then I think it also, in part, is going to be dependent upon, as I said in the prepared comments, around what happens to our funding mix as we go forward. So certainly in the fourth quarter, we benefited from the seasonality of deposit inflows, primarily the DDAs that came in at quarter end, but then also the public fund money helped us to be less reliant on borrowed funds this quarter than we have been in the past.

So I think, again, as I mentioned in the comments, whether the NIM comes up at the bottom or top of the 4 basis points to 6 basis points range, at least for the first quarter, is going to be I think very dependent upon what happens to that funding mix. Again, from a seasonality point of view, we usually see some of those deposits begin to flow out as we move through the quarter and then especially on the public fund side that accelerates as we move into the spring time.

And then your other question around upside a little bit later in the year. I think as we go through the latter part of the year and -- kind of a basic assumption is that the Fed does move to the sidelines a bit and doesn't engage in rate hikes in 2019. I think one of the bigger determinants of whether we have some upside related to NIM is going to be deposit costs and again deposit mix. So we do think that as we go through the first