Fourth Quarter 2019 Earnings Conference Call 1/16/2020
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 our expectations regarding our performance and financial condition, balance sheet and revenue growth, the provision for credit 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, the adequacy of our enterprise risk management framework, the impact of the trust & asset management acquisition, MidSouth acquisition or future business combinations on our performance and financial condition, including our ability to successfully integrate the businesses, success of revenue-generating initiatives, the effectiveness of derivative financial instruments and hedging activities to manage risks, projected tax rates, increased cybersecurity risks, including potential business disruptions or financial losses, the adequacy of our internal controls over financial reporting, the financial impact of regulatory requirements and tax reform legislation, the impact of the change in the LIBOR benchmark, deposit trends, credit quality trends, changes in interest rates, net interest margin trends, future expense levels, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts, accretion levels and expected returns. 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. Any forward-looking statement made in this release is subject to the safe harbor protections set forth in the Private Securities Litigation Reform Act of 1995. 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, 2018 and in other periodic reports that we file with the SEC. 2
̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Non-GAAP Reconciliations & Glossary of Terms Throughout this presentation we may use non-GAAP numbers to supplement the evaluation of our performance. The items noted below with an asterisk, "*", are considered non-GAAP. These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements, and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently. Reconciliations of those non-GAAP measures to the comparable GAAP measure are included in the appendix to this presentation. The earnings release, financial tables and supporting slide presentation can be found on the company’s Investor Relations website at hancockwhitney.com/investors. 1Q19 – First Quarter of 2019 E&P – Exploration and Production (Oil & Gas) OCI – Other comprehensive income 1Q20 – First Quarter of 2020 Efficiency ratio – noninterest expense to total net interest OFA – Other foreclosed assets (TE) and noninterest income, excluding amortization of 2Q19 – Second Quarter of 2019 *Operating – Financial measure excluding nonoperating purchased intangibles and nonoperating items items 3Q19 – Third Quarter of 2019 Energy Cycle – Refers to the energy cycle beginning in *Operating Leverage – Operating revenue (TE) less 4Q18 – Fourth Quarter of 2018 November of 2014 operating expense EOP – End of period 4Q19 – Fourth Quarter of 2019 ORE – Other real estate AFS – Available for sale securities EPS – Earnings per share PAA – Purchase accounting adjustments from business FTE – Full time equivalent combinations; including loan accretion, offset by any ACL – Allowance for credit losses amortization of a bond portfolio premium, amortization of ALLL – Allowance for loan and lease losses HTM – Held to maturity securities an indemnification asset and amortization of intangibles Annualized – Calculated to reflect a rate based on a IRR – Interest rate risk PPNR – Pre-provision net revenue full year LIBOR – London Inter-Bank Offered Rate RBL – Reserve-based lending ASR – Accelerated Share Repurchase Linked-quarter (LQ) – current quarter compared to previous ROA – Return on average assets quarter Beta – repricing based on a change in market rates RR – Risk rating bps – basis points Loan Mark – Fair value discount on loans acquired in a business combination SBIC – Small business investment company BOLI – Bank-owned life insurance LOB – Line of Business SNC – Shared National Credit C&D – Construction and land development loans LPO – Loan production office TCE – Tangible common equity ratio (common C&I – Commercial and industrial loans shareholders’ equity less intangible assets divided by LQA – Linked-quarter annualized total assets less intangible assets) CDI – Core Deposit Intangible M&A – Mergers and acquisitions CECL – Current Expected Credit Losses (new TDR – Troubled Debt Restructuring accounting standard effective 1/1/2020) MM – Dollars in millions TE – Taxable equivalent (calculated using the current MSL – MidSouth Bancorp, Inc. statutory federal tax rate) *Core – Excluding purchase accounting items and nonoperating items Trust and Asset Management acquisition – business NII – Net interest income acquired from Capital One on July 13, 2018 CRE – Commercial real estate NIM – Net interest margin (TE) CSO – Corporate strategic objective Y-o-Y – Year over year NPA – Nonperforming assets DDA – Noninterest-bearing demand deposit accounts NPL – Nonperforming loans DP – Data processing O&G – Oil and gas 3
Corporate Profile (as of December 31, 2019) ▸ $30.6 billion in Total Assets ▸ $21.2 billion in Total Loans ▸ $23.8 billion in Total Deposits ▸ Tangible Common Equity (TCE) ratio 8.45% ▸ $3.8 billion in Market Capitalization ▸ 217 banking locations and 288 ATMs across our footprint ▸ Approximately 4,100 (FTE) employees corporate-wide New York and New Jersey ▸ Rated among the strongest, safest financial Trust Offices institutions in the country by BauerFinancial, Inc. for 121 consecutive quarters ▸ Earned top customer service marks with Greenwich Excellence Awards ▸ Moody’s long -term issuer rating: Baa3 (outlook positive) ▸ S&P long-term issuer rating: BBB (outlook stable) ▸ Named one of America’s Best Midsize Employers by Forbes 4
YTD 2019 Highlights (compared to YTD 2018) ▸ Net income $327.4 million, up $3.6 million ($s in millions; except per share data) 2019 2018 ▸ EPS unchanged at $3.72 Net Income $327.4 $323.8 ▸ Nonoperating items (net) totaled $32.7 million in 2019 and $29.5 million in 2018 Merger Costs $32.7 $6.2 Other Nonoperating Items $23.3 ▸ EPS excluding nonoperating items was $4.01 for 2019 Earnings Per Share – diluted $3.72 $3.72 and $3.99 for 2018 ▸ Operating leverage up $24 million (revenue up $75 Return on Assets (%) (ROA) 1.12 1.17 million, partially offset by operating expense up $51 million) Return on Tangible Common Equity (%) (ROTCE) 13.66 15.62 ▸ Loan growth (EOP) up $1.2 billion, or 6% Net Interest Margin (%) 3.44 3.38 ▸ Deposit growth up $653 million, or 3% ▸ Criticized commercial loans down $45 million, or 7% Net Charge-offs (%) 0.23 0.27 ▸ Nonperforming loans down $19 million, or 6% Tangible Common Equity (%) 8.45 8.02 ▸ Closed MSL acquisition effective September 21, 2019 with a simultaneous systems conversion Pre-Provision Net Revenue (TE)* $487.9 $463.9 ▸ TCE 8.45%, up 43 bps Efficiency Ratio (%) 58.5 57.8 ▸ Board approved increased buyback authorization to 5.5 million shares; announced an accelerated share *Non-GAAP measures. See slides 28-30 for non-GAAP reconciliations. repurchase (ASR) agreement on October 21, 2019 5
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