Hancock Whitney Corporation (NASDAQ:HWC) Q2 2019 Earnings Conference Call - Final Transcript

Jul 17, 2019 • 09:30 am ET


Hancock Whitney Corporation (NASDAQ:HWC) Q2 2019 Earnings Conference Call - Final Transcript


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Michael M. Achary

mentioned in his comments the challenging rate environment. We're pleased to know that we were able to maintain a stable NIM in the second quarter, so down only 1 basis point. As noted on Slide 14 in the earnings deck, our remix efforts and a higher level of interest recoveries were nice NIM tailwinds for the quarter.

Headwinds included higher CD renewal rates and higher premium amortization on the bond portfolio. We do see the potential for stabilization of deposit rates going forward, and in fact, our cost of deposits did flatten out in June as compared to May.

Looking forward, if the Fed does move rates lower later this month, it would absolutely be a headwind to our margin. However, rest assured that we will continue our focus on improving loan yields and we'll be proactive in moving our deposit costs down. We feel that's the formula for NIM stability in this environment.

Switching to fee income, seasonality and specialty income led to a better than expected increase in fees for the second quarter. We reported increases in all lines of business driven by additional days in the quarter, increased activity on certain products and seasonality such as tax prep fees.

Income from BOLI, derivatives and our SBIC investments contributed almost $5 million to fees. So while it's hard to predict the timing on this kind of income, we did increase our 2019 guidance slightly to reflect this.

John detailed our expense increase in his comments, and I'll add one other item to the mix. ORE expense returned to a more normal level in the second quarter, and drove a $1.4 million linked-quarter increase related to a gain in the first quarter. Our guidance on Slide 20 of the deck reflects a slightly higher 2019 expense level, related to the investments in technology mentioned earlier. We are however continuing efforts to help offset those costs by managing down other expenses where appropriate.

One note related to the outlook slide. For now, the guidance excludes any impact of our acquisition of MidSouth. Once the transaction closes, we will update as appropriate.

Finally, we have our CSOs detailed on Slide 21 of the deck. No changes there until we complete this year's planning process and then republish after fourth quarter earnings in January. Just a reminder that when the CSOs were originally published in January, we assume no changes in interest rates and no M&A activity. Certainly, the rate environment looks to be a headwind towards achieving our goals, while the MSL deal gives us some EPS tailwind. So while the path to achieving our targets may be a little different than originally planned, we remain committed to the goals.

I'll now turn the call back to John.

John M. Hairston

Thanks, Mike. And Brian, let's just open the call directly for questions.