On Wednesday, Citi reaffirmed its Buy rating on Hancock Whitney (NASDAQ:HWC), maintaining a $61.00 price target for the bank's shares. In a recent statement, the firm acknowledged that while Hancock Whitney's quarterly results, excluding EOP loans, aligned with projections, the unexpected acceleration in the runoff of the SNC portfolio has tempered expectations for near-term earnings potential.
The firm also noted that unless there is a rise in core loan growth in the first half of 2025, the net interest margin (NIM) is expected to decrease throughout the year. This is despite the positive effects of well-managed CD portfolio pricing, which should mitigate some yield compression in the adjustable-rate earning assets.
The analysis by Citi points out that Hancock Whitney's conservative capital position, with a nearly 14% Common Equity Tier 1 (CET1) ratio, places the bank in a favorable position to pursue share repurchases while also retaining capital for potential growth opportunities, whether they be organic or through partnerships.
The bank's valuation is seen as attractive, but the firm does not anticipate any significant catalysts for the stock until early 2025.
Citi's commentary also suggests that while a decrease in the federal funds rate could lead to increased loan growth, the potential benefits might be offset by the costs associated with new hires and increased incentive compensation. The firm's estimates may prove too cautious if the lower federal funds rate does indeed spark a trend of increased loan growth.
The bank's stock performance and strategic decisions over the coming months will be watched closely by investors and analysts alike, especially as the first half of 2025 approaches, which is the period identified by Citi as critical for assessing potential core loan growth and its impact on NIM.
In other recent news, Hancock Whitney Corporation outperformed analyst estimates in its third-quarter earnings and revenue. The company reported earnings per share of $1.33, surpassing the consensus estimate of $1.29, and revenue of $370.4 million, exceeding expectations of $366.77 million.
Furthermore, the company's net income for the third quarter totaled $115.6 million, marking an increase from the previous quarters.
In addition to these financial highlights, the Gulfport, Mississippi-based bank has seen a decrease in total loans by $456 million or 8% on an annualized basis compared to the previous quarter. Similarly, deposits fell by $218 million or 3% annualized. However, the bank's net interest margin expanded to 3.39%, up 2 basis points from the second quarter, and noninterest income rose 8% quarter-over-quarter to $95.9 million.
In terms of future expectations, the management anticipates 2024 period-end loan and deposit levels to be flat to slightly down compared to year-end 2023. These recent developments provide a snapshot of the company's performance and outlook, as per the company's reports and analyst notes.
InvestingPro Insights
Hancock Whitney's financial metrics and recent performance offer additional context to Citi's analysis. According to InvestingPro data, the bank's market capitalization stands at $4.64 billion, with a P/E ratio of 12.67, suggesting a relatively modest valuation in line with Citi's assessment of attractiveness.
InvestingPro Tips highlight that Hancock Whitney has maintained dividend payments for an impressive 37 consecutive years, demonstrating a strong commitment to shareholder returns. This track record aligns with Citi's observation of the bank's conservative capital position and potential for share repurchases. Additionally, the bank has seen a high return over the last year, with InvestingPro data showing a one-year price total return of 55.23%, and a significant 30.12% return over the past six months.
While Citi notes the potential challenges in near-term earnings and NIM compression, it's worth mentioning that InvestingPro Tips indicate that three analysts have revised their earnings upwards for the upcoming period. This could suggest some optimism about the bank's ability to navigate the current economic environment.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Hancock Whitney, providing a deeper understanding of the company's financial health and market position.
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