Click To Edit Master Title Style Second Quarter 2017 Earnings Conference Call 7/19/2017
Important Cautionary Statement About Forward-Looking Statements This presentation contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements that we may make include statements regarding balance sheet and revenue growth, the provision for loans losses, loan growth expectations, management’s predictions about charge-offs for loans, including energy-related credits, the impact of changes in oil and gas prices on our energy portfolio, and the downstream impact on businesses that support the energy sector, especially in the Gulf Coast region, the impact of the First NBC transactions on our performance and financial condition, including our ability to successfully integrate the business, deposit trends, credit quality trends, net interest margin trends, future expense levels, success of revenue-generating initiatives, projected tax rates, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts such as accretion levels, and the financial impact of regulatory requirements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Additional factors that could cause actual results to differ materially from those described in the forward- looking statements can be found in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in other periodic reports that we file with the SEC. 2
Corporate Profile (as of June 30, 2017) ▸ $26.6 billion in Total Assets ▸ $18.5 billion in Total Loans ▸ $21.4 billion in Total Deposits ▸ Tangible Common Equity (TCE) 7.65% ▸ Nearly 200 banking locations and 262 ATMs across our footprint ▸ Approximately 4,200 employees corporate-wide ▸ Rated among the strongest, safest financial institutions in the country by BauerFinancial, Inc. for 111 consecutive quarters ▸ Earned top customer service marks with Greenwich Excellence Awards ▸ Moody’s long-term issuer rating: Baa3 ▸ S&P long-term issuer rating: BBB 3
Second Quarter 2017 Highlights (compared to first quarter 2017) ▸ Includes a full quarter impact from the FNBC I transaction 2Q16 ($s in millions; except per share data) 2Q17 1Q17 (March 10, 2017) and a partial quarter’s impact from the FNBC II transaction (April 28, 2017) (see slides 24 and 25 for specifics on each transaction) Net Income $52.3 $49.0 $46.9 ▸ Reached an agreement with the FDIC to terminate the Earnings Per Share – diluted $.60 $.57 $.59 2009 loss share agreements for the Peoples First Weighted Average Shares Outstanding (diluted) 84.9 84.6 77.7 acquisition; expenses include a $6.6 million ($.05 per share) write-down of the indemnification asset Nonoperating Items (pre-tax)* $10.6 $2.1 -- ▸ Provision for loan losses $15.0 $16.0 $17.2 Reported earnings increased $3.3 million, or 7% Return on Assets (%) (ROA) 0.79 0.80 0.82 ▸ Loans increased $269 million and deposits increased $1.5 billion linked-quarter ROA (%) excluding nonoperating items* 0.89 0.83 0.82 ▸ Acquired approximately $1.6 billion of deposits and Return on Tangible Common Equity (%) (ROTCE) 10.69 9.92 11.04 approximately $160 million in loans in the FNBC II ROTCE (%) excluding nonoperating items* 12.11 10.20 11.04 transaction Total Loans (period-end) $18,474 $18,205 $16,036 ▸ Energy loans declined $59 million and comprise 6.7% of total loans, down from 7.1%; allowance for the energy Total Deposits (period-end) $21,443 $19,922 $18,817 portfolio totals $83.4 million, or 6.8% of energy loans Net Interest Margin (%) 3.43 3.37 3.25 ▸ Core pre-provision net revenue (PPNR) of $101.6 million, Net Charge-offs (%) (non-PCI) 0.13 0.70 0.20 up $8.3 million or 9% Tangible Common Equity (%) 7.65 7.94 7.81 ▸ Net interest margin (NIM) of 3.43% up 6 basis points (bps) Efficiency Ratio** (%) 60.6 61.2 62.1 ▸ Tangible common equity (TCE) ratio down 29 bps to Net Purchase Accounting Income (pre-tax) $1.3 -$1.2 -$1.3 7.65%, mainly related to growth in assets and the addition of $44 million of intangible assets related to the FNBC II Pre-provision net revenue (TE)* $92.3 $89.9 $84.0 transaction Pre-provision net revenue (core)* $101.6 $93.3 $85.2 *See slides 26-29 for non-GAAP reconciliations ** Efficiency Ratio is noninterest expense to total net interest (TE) and noninterest income, excluding amortization of purchased intangibles and nonoperating items. 4
Second Quarter EPS Highlights (includes a non-GAAP measure) Potentially Unsustainable Items Nonpermanent NonOperating/One-Time Seasonal $3.7 million pre-tax $6.7 million pre-tax $10.6 million pre-tax $1.4 million $1.20 $1.10 $1.00 $0.90 $0.016 $0.80 $0.050 $0.007 $0.007 $0.007 $0.005 $0.049 $0.030 $0.70 $0.60 $0.69 Ongoing Related to $0.60 $0.50 FNBC incentive stock $0.40 operations awards vesting expected to (typically $0.30 cease in 1Q/4Q) 2H17 $0.20 (ie., branch $0.10 closures) $0.00 2Q17 Reported Termination of FNBC Merger FNBC Non- Tax Benefit Addt'l Derivative Addt'l SBIC Co-Arranger Fee ORE Gains 2Q17 EPS EPS FDIC Loss Share Costs permanent (incentive stock Income Income Exceeding Excluding Agreement Expenses award vesting) Expense Nonoperating and Unusual Items (Non-GAAP) Assumes a 35% tax rate 5
Termination of Loss Share Agreements ▸ In December 2009 the company acquired Peoples First Community Bank in Panama City, FL under loss-sharing agreements with the FDIC ▸ The non-single family portion of the agreement expired after 5 years and the single family portion would have expired after 10 years ▸ Hancock reached an agreement with the FDIC to terminate the remaining portion of the loss share agreements (impact reflected in second quarter 2017) ▸ In the second quarter of 2017 the company wrote down the indemnification asset (IA) by $6.6 million to $3.2 million ▸ Quarterly amortization of IA (contra to fee income) will be eliminated beginning in the third quarter of 2017; IA amortization was $1.3 million in the second quarter of 2017 ▸ The remaining loan balances covered under the agreement totaled $154 million at June 30, 2017, with a reserve totaling $15 million ▸ The termination agreement states that the FDIC will no longer share in any losses or recoveries for the loans assumed in the original transaction 6
Core Pre-Provision Net Revenue (PPNR) Continues to Grow 2Q17 vs. 2Q16 growth in core PPNR +19% 2Q17 vs. 1Q17 growth in core PPNR +9% $105.0 $100.0 +19% +9% $95.0 $90.0 $85.0 $80.0 $75.0 $70.0 $65.0 $60.0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Actual $63.3 $65.4 $70.4 $68.0 $76.4 $85.2 $86.0 $87.2 $93.3 $101.6 $s in millions See slide 27 for non-GAAP reconciliation 7
Total Loans by Type Well-Diversified Loan Portfolio $18,474 6/30/17 Consumer $2,093 C&I 11% ▸ Loans totaled $18.5 billion at quarter-end, an increase of $269 $8,093 44% million, or 1.5%, linked-quarter Mortgage $2,494 14% ▸ Net loan growth during the quarter was diversified across the footprint and also in areas identified as part of the company’s revenue-generating initiatives (mortgage, equipment finance) ▸ Reflects $59 million net decrease in energy-related loans Income- producing CRE $2,402 ▸ Includes approximately $160 million of mainly performing 13% C&D single family residential mortgages from the FNBC II Owner- $1,314 occupied CRE 7% $2,078 transaction 11% Total Loans by Market/LOB $18,474 $18,900 6/30/17 Energy Other $1,232 $1,437 $18,700 7% East Region (MS $228 8% AL & FL) $4,247 $18,500 $59 23% $56 $105 $45 18,474 Millions Mortgage $18,300 $39 $2,494 $8 $18 13% $7 18,205 $18,100 Equipment Finance $17,900 $504 3% $17,700 Indirect $480 Central Region 3% (SE LA) $17,500 $4,501 1Q17 East Region Central Region West Region Nashville Indirect Equipment Mortgage (incl Energy Other 2Q17 (MS. AL & FL) (SE LA) (TX & SW LA) Healthcare Finance FNBC II) 24% Nashville Healthcare West Region (TX $355 & SW LA) 2% $3,224 17% $s in millions 8
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