Hancock Whitney Corporation (NASDAQ:HWC) Q3 2020 Earnings Conference Call - Final Transcript

Oct 20, 2020 • 05:00 pm ET


Hancock Whitney Corporation (NASDAQ:HWC) Q3 2020 Earnings Conference Call - Final Transcript


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John M. Hairston

impacts COVID-19 can have on our clients.

Loans declined almost $400 million, with approximately half the reductions from refinancing mortgage balances and home equity loans into the secondary market, and we continue to draw down of the indirect portfolio. Our expectation for the near-term as the clients will continue to stay on the sideline until the election has been decided and until a widely distributed vaccine is available and accepted as reliable. So while our expectations for loan growth or a bit tempered in the short-term, core deposits on the other hand remained resilient despite a continued narrowing of rates. The reliability and continued growth of core deposits, a lot of continued drawdown of wholesale and time deposit funding, which in turn help to support our NIM.

Despite the ongoing challenges for businesses operating the pandemic environment, several credit metrics showed signs of improvement this quarter. We reported significantly lower level of provision expense, a lower level of net charge-offs and a 7% decrease in non-performing loans, deferrals remained on manageable level with less than $300 million in active deferrals and falling, compared to a $3.6 billion number at the peak in May.

As expected criticized loans exhibited pressure of $64 million or 18% this quarter, a little less than 60% of the increase is related to the hospitality sector directly impacted by COVID-19. We expect more credits will move to criticized over time due to COVID, but there we have adequately reserved, thanks to our posture in the first half of the year. Today, we can confidently report that our balance sheet reflects less risk with a strong reserve, resilient core deposits and solid capital measures. We began rebuilding the capital spent in the first half of the year with the tangible common equity ratio of 20 basis points to 7.53% or 8.12% excluding PPP loans. I expect TCE will approximate 8% by the year-end 2020. We will continue to consult the examiners from the quarterly dividend and our intent remains to continue paying dividends at current levels with Board components.

Before I turn the call over to Mike, I want to mention the impact from this year's Hurricane season. Three storms at our markets this year, with two storms taking virtually the same path over Southwest, Louisiana and one storm hitting the beach towns of Gulf Shores and Orange Beach in Alabama and the Pensacola MSA in Florida. We know it has been a difficult summer for many of our clients and colleagues in these markets. And specifically want to thank the hundreds of our team members, who volunteered to operate locations, while fellow banker secure their homes, and most locations reopened under generator power the day after the storm winds [Phonetic]. Our volunteers cooked over 55,000 meals for citizens and businesses in the impacted areas, once again for getting typically 24 hours after storm winds subsided. We will continue to support our clients, communities and our colleagues in these areas, despite three Hurricanes in six weeks, we