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

Jul 17, 2019 • 09:30 am ET

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

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to Hancock Whitney Corporation's Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to introduce your host for today's conference, Trisha Carlson, Investor Relations Manager. You may begin.

Executive
Trisha Voltz Carlson

Thank you, and good morning. During today's call, we may make forward-looking statements. We would like to remind everyone to review the safe harbor language that was published with yesterday's release and presentation, and in the Company's most recent 10-K, including the risk and uncertainties identified therein.

Hancock Whitney's ability to accurately project results or predict the effects of future plans or strategies or predict market or economic developments is inherently limited. We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions, but our actual results and performance could differ materially from those set forth in our forward-looking statements. Hancock Whitney undertakes no obligation to update or revise any forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements.

In addition, some of the remarks this morning contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measure in our earnings release and financial tables. The presentation slides included in our 8-K are also posted with the conference call webcast link on the Investor Relations website. We will reference some of these slides in today's call.

Participating in today's call are John Hairston, President and CEO; Mike Achary, CFO; and Chris Ziluca, Chief Credit Officer.

I will now turn the call over to John Hairston.

Executive
John M. Hairston

Thanks, Trisha, and good morning, everyone. Results for the second quarter were solid, despite a more challenging rate environment. We reported net income of $88 million or $1.01 of EPS, up $0.10 from last quarter. Loan growth occurred within a desirable mix and yield strong enough to defray pressure on interest income, especially from LIBOR indexed credits. Energy loans returned to just under 5%, and in current projections we should be near 5%, upon closing the transaction with MidSouth.

We continued our focus on improving yield to help drive a better NIM, as noted on Slide 7. Likewise, we are pleased to report another quarter of improved, criticized and non-performing loan ratios, as noted on Slides 9 through 12. We are near peer levels for criticized loan ratios and expect to close the GAAP compared to peer non-performing loan ratios over the next several quarters.

Operating leverage increased $1.4 million, with revenue up a $9.3 million, offset by an increase in expense of almost $8 million. The drivers of revenue, which Michael go over in more detail in a moment, were mainly from fee income. All core business lines reported a linked quarter increase in some specialty lines combined to contribute an excellent quarter for non-interest revenue.

Expenses were up almost $8 million, with approximately $3 million of the change related to seasonal personnel expense. Expenses also included some non-permanent expenses. And we reported about $1 million in professional services expense related to