0000750577-18-000047.txt : 20181102 0000750577-18-000047.hdr.sgml : 20181102 20181101195350 ACCESSION NUMBER: 0000750577-18-000047 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 94 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181102 DATE AS OF CHANGE: 20181101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK WHITNEY CORP CENTRAL INDEX KEY: 0000750577 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 640693170 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36872 FILM NUMBER: 181155277 BUSINESS ADDRESS: STREET 1: ONE HANCOCK WHITNEY PLAZA STREET 2: P O BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39501 BUSINESS PHONE: 5042995208 MAIL ADDRESS: STREET 1: ONE HANCOCK WHITNEY PLAZA STREET 2: P O BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39501 FORMER COMPANY: FORMER CONFORMED NAME: HANCOCK HOLDING CO DATE OF NAME CHANGE: 19920703 10-Q 1 hwc-20180930x10q.htm 10-Q Form 10Q3_Taxonomy2017





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________





FORM 10-Q

___________________________________________________________



(Mark one)



 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September 30, 2018

OR





 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from                      to                      

Commission file number: 001-36827



HANCOCK WHITNEY CORPORATION

(Exact name of registrant as specified in its charter)





 

Mississippi

64-0693170

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)



 

Hancock Whitney Plaza, 2510 14th Street,
Gulfport, Mississippi

39501

(Address of principal executive offices)

(Zip Code)



(228) 868-4000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, address and fiscal year, if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).       Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):





 

 

 

Large accelerated filer  

Accelerated filer  



 

 

 

Non-accelerated filer  

  

Smaller reporting company  



Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       Yes      No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 

85,166,404 common shares were outstanding as of October 31, 2018. 



1


 







Hancock Whitney Corporation

Index



 

 

Part I. Financial Information

Page Number

ITEM 1.

Financial Statements

 



Consolidated Balance Sheets (unaudited) – September 30, 2018 and December 31, 2017



Consolidated Statements of Income (unaudited) – Three and Nine Months Ended September 30, 2018 and 2017



Consolidated Statements of Comprehensive Income (unaudited) – Three and Nine Months Ended September 30, 2018 and 2017



Consolidated Statements of Changes in Stockholders’ Equity (unaudited) – Nine Months Ended September 30, 2018 and 2017



Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended September 30, 2018 and 2017



Notes to Consolidated Financial Statements (unaudited) – September 30, 2018 and 2017

10 

ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

38 

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

62 

ITEM 4.

Controls and Procedures

62 

Part II.  Other Information

 

ITEM 1.

 Legal Proceedings

63 

ITEM 1A.

 Risk Factors

63 

ITEM 2.

 Unregistered Sales of Equity Securities and Use of Proceeds

64 

ITEM 3.

 Default on Senior Securities

N/A

ITEM 4.

 Mine Safety Disclosures

N/A

ITEM 5.

Other Information

N/A

ITEM 6.

Exhibits

64 

Signatures

 



2


 



Hancock Whitney Corporation

Glossary of Defined Terms



Entities:

Hancock Whitney Corporation* – a  financial holding company registered with the Securities and Exchange Commission    

Hancock Whitney Bank* – a wholly-owned subsidiary of Hancock Whitney Corporation through which Hancock Whitney Corporation conducts its banking operations

Company – Hancock Whitney Corporation and its wholly-owned subsidiaries

Parent – Hancock Whitney Corporation, exclusive of its subsidiaries

Bank – Hancock Whitney Bank 



*On May 25, 2018, Hancock Whitney Corporation changed its name from Hancock Holding Company, and Hancock Whitney Bank changed its name from Whitney Bank.



Other Terms:

AFS – available for sale securities

AOCI – accumulated other comprehensive income or loss

ALLL – allowance for loan and lease losses

ASC – Accounting Standards Codification

ASU – Accounting Standards Update

ATM - automated teller machine

Basel II - Basel Committee's 2004 Regulatory Capital Framework (Second Accord)

Basel III - Basel Committee's 2010 Regulatory Capital Framework (Third Accord)

Basel Committee - Basel Committee on Banking Supervision

Beige Book - Federal Reserve’s Summary of Commentary on Current Economic Conditions    

BOLI – Bank-owned life insurance

bp(s) – Basis point(s)

C&I – commercial and industrial loans

Capital One – Capital One, National Association

CD – certificate of deposit

CDE – Community Development Entity

CMO – Collateralized Mortgage Obligation

CRE – commercial real estate

Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act

FASB – Financial Accounting Standards Board

FDIC – Federal Deposit Insurance Corporation

Federal Reserve Bank – The 12 banks that are the operating arms of the U.S. central bank. They implement the

policies of the Federal Reserve Board and also conduct economic research.

Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes

monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed

by the President subject to Senate confirmation, and serve 14-year terms.

Federal Reserve System – The 12 Federal Reserve Banks, with each one serving member banks in its own district.

This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the

credit structure.

FHLB – Federal Home Loan Bank

FNBC – The former New Orleans, Louisiana based First NBC Bank that failed on April 28, 2017

FNBC I – acquired selected assets and liabilities from FNBC under agreement dated March 10, 2017

FNBC II – acquired selected assets and liabilities from the FDIC as receiver for FNBC under agreement dated April 28, 2017

GAAP – Generally Accepted Accounting Principles in the United States of America

HFC – Harrison Finance Company, a former consumer finance subsidiary

HTM – held to maturity securities

3


 

LIBOR – London Interbank Offered Rate

LIHTC – Low Income Housing Tax Credit

MD&A – management’s discussion and analysis of financial condition and results of operations

NAICS – North American Industry Classification System

n/m – not meaningful

OCI – other comprehensive income

OFI – Louisiana Office of Financial Institutions

ORE – other real estate defined as foreclosed and surplus real estate

PCI – purchased credit impaired loans

Repos – securities sold under agreements to repurchase

SEC – U.S. Securities and Exchange Commission

Securities Act – Securities Act of 1933, as amended

Tax Act – Tax Cuts and Jobs Act of 2017

te – taxable equivalent adjustment, or the term used to indicate that a financial measure is presented on a fully taxable equivalent basis

TDR – troubled debt restructuring (as defined in ASC 310-40)

TSR – total shareholder return

U.S. Treasury – The United States Department of the Treasury

4


 





Part I. Financial Information

Item 1. Financial Statements

Hancock Whitney Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)





 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,

(in thousands, except per share data)

 

2018

 

2017

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

339,609 

 

$

386,948 

Interest-bearing bank deposits

 

 

107,635 

 

 

92,157 

Federal funds sold

 

 

439 

 

 

227 

Securities available for sale, at fair value (amortized cost of $3,048,851 and $2,949,057)

 

 

2,918,185 

 

 

2,910,869 

Securities held to maturity (fair value of $2,975,455 and $2,962,010)

 

 

3,069,262 

 

 

2,977,511 

Loans held for sale

 

 

29,043 

 

 

39,865 

Loans

 

 

19,543,717 

 

 

19,004,163 

Less: allowance for loan losses

 

 

(214,550)

 

 

(217,308)

Loans, net

 

 

19,329,167 

 

 

18,786,855 

Property and equipment, net of accumulated depreciation of $221,295 and $214,998

 

 

343,833 

 

 

333,663 

Prepaid expenses

 

 

35,470 

 

 

28,015 

Other real estate and foreclosed assets, net

 

 

27,475 

 

 

27,542 

Accrued interest receivable

 

 

87,567 

 

 

82,191 

Goodwill

 

 

791,157 

 

 

745,523 

Other intangible assets, net

 

 

101,438 

 

 

90,640 

Life insurance contracts

 

 

550,261 

 

 

541,081 

Deferred tax asset, net

 

 

59,570 

 

 

53,979 

Other assets

 

 

308,064 

 

 

239,020 

Total assets

 

$

28,098,175 

 

$

27,336,086 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities:  

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Noninterest-bearing

 

$

8,140,530 

 

$

8,307,497 

Interest-bearing

 

 

14,277,277 

 

 

13,945,705 

Total deposits

 

 

22,417,807 

 

 

22,253,202 

Short-term borrowings

 

 

2,276,647 

 

 

1,703,890 

Long-term debt

 

 

215,912 

 

 

305,513 

Accrued interest payable

 

 

15,986 

 

 

8,680 

Other liabilities

 

 

192,945 

 

 

179,852 

Total liabilities

 

 

25,119,297 

 

 

24,451,137 

Stockholders' equity:

 

 

 

 

 

 

Common stock

 

 

292,716 

 

 

292,716 

Capital surplus

 

 

1,735,444 

 

 

1,718,117 

Retained earnings

 

 

1,170,897 

 

 

1,008,518 

Accumulated other comprehensive loss, net

 

 

(220,179)

 

 

(134,402)

Total stockholders' equity

 

 

2,978,878 

 

 

2,884,949 

Total liabilities and stockholders' equity

 

$

28,098,175 

 

$

27,336,086 

Common shares authorized (par value of $3.33 per share)

 

 

350,000 

 

 

350,000 

Common shares issued

 

 

87,903 

 

 

87,903 

Common shares outstanding

 

 

85,364 

 

 

85,200 





See notes to unaudited consolidated financial statements.

5


 

Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended



 

September 30,

 

September 30,

(in thousands, except per share data)

 

2018

 

2017

 

2018

 

2017

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

224,332 

 

$

199,702 

 

$

645,340 

 

$

566,663 

Loans held for sale

 

 

268 

 

 

216 

 

 

784 

 

 

669 

Securities-taxable

 

 

32,482 

 

 

26,616 

 

 

92,566 

 

 

74,385 

Securities-tax exempt

 

 

5,461 

 

 

5,608 

 

 

16,488 

 

 

16,643 

Short-term investments

 

 

669 

 

 

574 

 

 

1,733 

 

 

3,048 

Total interest income

 

 

263,212 

 

 

232,716 

 

 

756,911 

 

 

661,408 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

34,190 

 

 

21,789 

 

 

91,019 

 

 

52,972 

Short-term borrowings

 

 

11,780 

 

 

4,425 

 

 

24,547 

 

 

11,598 

Long-term debt

 

 

3,048 

 

 

3,645 

 

 

9,940 

 

 

12,573 

Total interest expense

 

 

49,018 

 

 

29,859 

 

 

125,506 

 

 

77,143 

Net interest income

 

 

214,194 

 

 

202,857 

 

 

631,405 

 

 

584,265 

Provision for loan losses

 

 

6,872 

 

 

13,040 

 

 

28,016 

 

 

43,982 

Net interest income after provision for loan losses

 

 

207,322 

 

 

189,817 

 

 

603,389 

 

 

540,283 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

21,377 

 

 

21,444 

 

 

63,806 

 

 

60,711 

Trust fees

 

 

16,738 

 

 

10,742 

 

 

39,726 

 

 

33,459 

Bank card and ATM fees

 

 

14,862 

 

 

13,390 

 

 

44,784 

 

 

39,545 

Investment and annuity fees and insurance commissions

 

 

6,652 

 

 

6,230 

 

 

19,041 

 

 

17,939 

Secondary mortgage market operations

 

 

4,333 

 

 

4,157 

 

 

11,699 

 

 

11,965 

Other income

 

 

11,556 

 

 

11,152 

 

 

31,546 

 

 

34,474 

Total noninterest income

 

 

75,518 

 

 

67,115 

 

 

210,602 

 

 

198,093 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Compensation expense

 

 

84,389 

 

 

82,242 

 

 

244,374 

 

 

237,486 

Employee benefits

 

 

18,084 

 

 

16,901 

 

 

55,316 

 

 

54,869 

Personnel expense

 

 

102,473 

 

 

99,143 

 

 

299,690 

 

 

292,355 

Net occupancy expense

 

 

11,895 

 

 

12,448 

 

 

35,221 

 

 

36,285 

Equipment expense

 

 

4,520 

 

 

3,779 

 

 

12,328 

 

 

11,457 

Data processing expense

 

 

20,492 

 

 

16,798 

 

 

55,214 

 

 

48,993 

Professional services expense

 

 

9,555 

 

 

10,062 

 

 

32,191 

 

 

31,691 

Amortization of intangible assets

 

 

5,638 

 

 

6,070 

 

 

16,578 

 

 

16,532 

Telecommunications and postage

 

 

3,598 

 

 

3,876 

 

 

11,063 

 

 

11,081 

Deposit insurance and regulatory fees

 

 

8,345 

 

 

7,883 

 

 

24,669 

 

 

21,356 

Other real estate (income) expense

 

 

16 

 

 

199 

 

 

(63)

 

 

(2,329)

Other expense

 

 

14,655 

 

 

17,358 

 

 

49,489 

 

 

57,207 

Total noninterest expense

 

 

181,187 

 

 

177,616 

 

 

536,380 

 

 

524,628 

Income before income taxes

 

 

101,653 

 

 

79,316 

 

 

277,611 

 

 

213,748 

Income taxes

 

 

17,775 

 

 

20,414 

 

 

50,081 

 

 

53,565 

Net income

 

$

83,878 

 

$

58,902 

 

$

227,530 

 

$

160,183 

Earnings per common share-basic

 

$

0.96 

 

$

0.68 

 

$

2.62 

 

$

1.85 

Earnings per common share-diluted

 

$

0.96 

 

$

0.68 

 

$

2.61 

 

$

1.85 

Dividends paid per share

 

$

0.27 

 

$

0.24 

 

$

0.75 

 

$

0.72 

Weighted average shares outstanding-basic

 

 

85,348 

 

 

84,749 

 

 

85,298 

 

 

84,577 

Weighted average shares outstanding-diluted

 

 

85,539 

 

 

84,980 

 

 

85,482 

 

 

84,818 





See notes to unaudited consolidated financial statements.

6


 

Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Nine Months Ended



 

September 30,

 

September 30,

(in thousands)

 

2018

 

2017

 

2018

 

2017

Net income

 

$

83,878 

 

$

58,902 

 

$

227,530 

 

$

160,183 

Other comprehensive income/loss before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gain/loss on securities available for sale and cash flow hedges

 

 

(25,242)

 

 

5,949 

 

 

(110,895)

 

 

19,794 

Reclassification of net losses realized and included in earnings

 

 

2,547 

 

 

1,374 

 

 

6,560 

 

 

4,479 

Valuation adjustment for pension plan amendment

 

 

 —

 

 

 —

 

 

 —

 

 

17,315 

Other valuation adjustments for employee benefit plans

 

 

 —

 

 

1,597 

 

 

(9,039)

 

 

(9,185)

Amortization of unrealized net loss on securities transferred to held to maturity

 

 

747 

 

 

977 

 

 

2,427 

 

 

2,726 

Other comprehensive income/loss before income taxes

 

 

(21,948)

 

 

9,897 

 

 

(110,947)

 

 

35,129 

Income tax expense (benefit)

 

 

(4,978)

 

 

3,609 

 

 

(25,170)

 

 

12,748 

Other comprehensive income/loss net of income taxes

 

 

(16,970)

 

 

6,288 

 

 

(85,777)

 

 

22,381 

Comprehensive income

 

$

66,908 

 

$

65,190 

 

$

141,753 

 

$

182,564 



See notes to unaudited consolidated financial statements.

7


 

Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 



 

Common Stock

 

Capital

 

Retained

 

 

Comprehensive

 

 

 

(in thousands, except per share data)

 

Shares Issued

 

Amount

 

Surplus

 

Earnings

 

 

Loss, Net

 

 

Total

Balance, December 31, 2016

 

87,495 

 

$

291,358 

 

$

1,698,253 

 

$

850,689 

 

$

(120,532)

 

$

2,719,768 

Net income

 

 —

 

 

 —

 

 

 —

 

 

160,183 

 

 

 —

 

 

160,183 

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

22,381 

 

 

22,381 

Comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

160,183 

 

 

22,381 

 

 

182,564 

Cash dividends declared ($0.72 per common share)

 

 —

 

 

 —

 

 

 —

 

 

(62,400)

 

 

 —

 

 

(62,400)

Common stock activity, long-term  incentive plan

 

 —

 

 

 —

 

 

20,910 

 

 

119 

 

 

 —

 

 

21,029 

Issuance of stock from dividend reinvestment

 

 —

 

 

 —

 

 

2,314 

 

 

 —

 

 

 —

 

 

2,314 

Balance, September 30, 2017

 

87,495 

 

$

291,358 

 

$

1,721,477 

 

$

948,591 

 

$

(98,151)

 

$

2,863,275 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

87,903 

 

$

292,716 

 

$

1,718,117 

 

$

1,008,518 

 

$

(134,402)

 

$

2,884,949 

Net income

 

 —

 

 

 —

 

 

 —

 

 

227,530 

 

 

 —

 

 

227,530 

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(85,777)

 

 

(85,777)

Comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

227,530 

 

 

(85,777)

 

 

141,753 

Cash dividends declared ($0.75 per common share)

 

 —

 

 

 —

 

 

 —

 

 

(65,287)

 

 

 —

 

 

(65,287)

Common stock activity, long-term incentive plan

 

 —

 

 

 —

 

 

14,832 

 

 

136 

 

 

 —

 

 

14,968 

Issuance of stock from dividend reinvestment and stock purchase plan

 

 —

 

 

 —

 

 

2,495 

 

 

 —

 

 

 —

 

 

2,495 

Balance, September 30, 2018

 

87,903 

 

$

292,716 

 

$

1,735,444 

 

$

1,170,897 

 

$

(220,179)

 

$

2,978,878 



See notes to unaudited consolidated financial statements.

8


 

 Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)





 

 

 

 

 

 



 

 

 

 

 

 

 

 

Nine Months Ended



 

September 30,

(in thousands)

 

2018

 

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

227,530 

 

$

160,183 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

19,740 

 

 

20,942 

Provision for loan losses

 

 

28,016 

 

 

43,982 

Gain on other real estate owned

 

 

(313)

 

 

(1,865)

Deferred tax expense

 

 

20,342 

 

 

8,072 

Increase in cash surrender value of life insurance contracts

 

 

(6,714)

 

 

(10,855)

Loss on disposal of other assets

 

 

1,748 

 

 

1,662 

Loss on sale of business

 

 

1,145 

 

 

 —

Net decrease in loans held for sale

 

 

10,942 

 

 

11,583 

Net amortization of securities premium/discount

 

 

25,440 

 

 

24,119 

Amortization of intangible assets

 

 

16,578 

 

 

16,532 

Amortization of FDIC indemnification asset

 

 

 —

 

 

2,427 

Stock-based compensation expense

 

 

14,868 

 

 

12,370 

Decrease in interest payable and other liabilities

 

 

(2,662)

 

 

(5,038)

Net cash receipts from FDIC for loss share claims

 

 

 —

 

 

2,300 

Decrease in FDIC loss share receivable

 

 

 —

 

 

8,613 

Increase (decrease) in payable to FDIC for loan servicing

 

 

(11,113)

 

 

180,882 

(Increase) decrease in other assets

 

 

(15,748)

 

 

11,446 

Other, net

 

 

299 

 

 

17,723 

Net cash provided by operating activities

 

 

330,098 

 

 

505,078 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Proceeds from sales of securities available for sale

 

 

 —

 

 

213,877 

Proceeds from maturities of securities available for sale

 

 

253,755 

 

 

249,270 

Purchases of securities available for sale

 

 

(365,529)

 

 

(578,690)

Proceeds from maturities of securities held to maturity

 

 

272,986 

 

 

276,073 

Purchases of securities held to maturity

 

 

(375,770)

 

 

(554,442)

Net (increase) decrease in short-term investments

 

 

(15,690)

 

 

331,746 

Proceeds from sales of loans and leases

 

 

47,481 

 

 

44,823 

Net increase in loans

 

 

(706,989)

 

 

(770,051)

Purchase of life insurance contracts

 

 

(1,601)

 

 

(50,000)

Purchases of property and equipment

 

 

(32,583)

 

 

(16,086)

Proceeds from sales of property and equipment

 

 

52 

 

 

389 

Proceeds from sales of other real estate

 

 

10,114 

 

 

15,357 

Cash received in excess of cash paid for acquisitions

 

 

141,769 

 

 

476,801 

Proceeds from the sale of business, net of cash sold

 

 

77,648 

 

 

 —

Other, net

 

 

(50,987)

 

 

(28,976)

Net cash used in investing activities

 

 

(745,344)

 

 

(389,909)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Net increase (decrease) in deposits

 

 

(52,709)

 

 

181,084 

Net increase (decrease) in short-term borrowings

 

 

572,757 

 

 

(84,890)

Repayments of long-term debt

 

 

(90,142)

 

 

(198,690)

Net proceeds from issuance of long-term debt

 

 

124 

 

 

124 

Dividends paid

 

 

(65,287)

 

 

(62,400)

Payroll tax remitted on net share settlement of equity awards

 

 

(563)

 

 

(3,235)

Proceeds from exercise of stock options

 

 

1,232 

 

 

11,610 

Proceeds from dividend reinvestment and stock purchase plans

 

 

2,495 

 

 

2,314 

Net cash provided by (used in) financing activities

 

 

367,907 

 

 

(154,083)

NET DECREASE IN CASH AND DUE FROM BANKS

 

 

(47,339)

 

 

(38,914)

CASH AND DUE FROM BANKS, BEGINNING

 

 

386,948 

 

 

372,689 

CASH AND DUE FROM BANKS, ENDING

 

$

339,609 

 

$

333,775 

SUPPLEMENTAL INFORMATION FOR NON-CASH

 

 

 

 

 

 

INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

Assets acquired in settlement of loans

 

$

19,542 

 

$

4,770 



See notes to unaudited consolidated financial statements.

 

9


 

HANCOCK WHITNEY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



1.  Basis of Presentation

The consolidated financial statements include the accounts of Hancock Whitney Corporation and all other entities in which it has a controlling interest (the “Company”). The financial statements include all adjustments that are, in the opinion of management, necessary to fairly state the Company’s financial condition, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented.  The Company has also evaluated all subsequent events for potential recognition and disclosure through the date of the filing of this Quarterly Report on Form 10-Q.  Some financial information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.  Financial information reported in these financial statements is not necessarily indicative of the Company’s financial condition, results of operations, or cash flows for any other interim or annual period.

Certain prior period amounts have been reclassified to conform to the current period presentation.  These changes in presentation did not have a material impact on the Company’s financial condition or operating results.

On May 25, 2018, the Company changed its name from Hancock Holding Company to Hancock Whitney Corporation, and its wholly- owned banking subsidiary changed its name from Whitney Bank to Hancock Whitney Bank.  In connection with the name change, the Company changed its stock ticker symbol from “HBHC” to “HWC” on the NASDAQ Global Select Market.

Use of Estimates

The accounting principles the Company follows and the methods for applying these principles conform to GAAP and general practices followed by the banking industry.  These accounting principles require management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and the accompanying notes.  Actual results could differ from those estimates.    

Critical Accounting Policies and Estimates



There were no material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2017.  Refer to Note 16 – Recent Accounting Pronouncements for a discussion of accounting standards adopted during the nine months ended September 30, 2018.

 



2.  Acquisitions and Divestiture



On July 13, 2018, the Company acquired the bank-managed high net worth individual and institutional investment management and trust business of Capital One, National Association (“Capital One”).  The transaction added assets under management of $4 billion and assets under management and administration of $10.4 billion to the Company’s existing trust and asset management business.  In addition, the Company assumed approximately $217 million of customer deposit liabilities. The net consideration received is subject to final settlement, which is expected to occur during the first quarter of 2019. The following table sets forth the preliminary acquisition date fair value of the assets acquired and the liabilities assumed, the consideration received, and the resulting goodwill.







 

 

(in thousands)

 

 

ASSETS

 

 

Accounts receivable

$

2,803 

Identifiable intangible assets

 

27,377 

    Total identifiable assets

 

30,180 



 

 

LIABILITIES

 

 

Deposit liabilities

 

217,432 

Other liabilities

 

151 

    Total liabilities

 

217,583 

    Net liabilities assumed

 

(187,403)

    Consideration received

 

141,769 

    Goodwill

$

45,634 







10


 

Identifiable intangible assets include customer relationships that are being amortized using an accelerated method based on forecasted cash flows over a useful life of approximately 17 years.  Goodwill represents the excess of the fair value of net liabilities assumed over the consideration received. It is comprised of estimated future economic benefits arising from the transaction that cannot be individually identified or do not qualify for separate recognition.  These benefits include expanded presence in existing markets and entry into new markets, and expected earnings streams and operational efficiencies that the Company believes will result from this business combination. The tax basis of the goodwill is expected to be deductible for federal income tax purposes. The following table presents the change in the Company’s goodwill during the nine months ended September 30, 2018.



(in thousands)





 

 

Goodwill balance at December 31, 2017

$

745,523 

    Initial goodwill recorded in acquisition of trust and asset management business

 

45,634 

Goodwill balance at September 30, 2018

$

791,157 



The results of acquired business are not material to the Company’s results of operations. As such, supplemental proforma financial information for the nine months ended September 30, 2018 and 2017 is not presented. During the nine months ended September 30, 2018, the Company incurred acquisition related costs of approximately $5.7 million.



On March 10, 2017, the Company, through its banking subsidiary, Hancock Whitney Bank (“Hancock Whitney”), acquired certain assets and assumed certain liabilities, including nine branches, from First NBC Bank (“FNBC”), referred to as the FNBC I transaction.  Hancock Whitney paid approximately $323 million in cash consideration ($326 million cash paid net of $3 million in branch cash acquired), including a $41.6 million transaction premium for the earnings stream acquired. 



On April 28, 2017, the Louisiana Office of Financial Institutions (“OFI”) closed FNBC and appointed the FDIC as receiver.  Hancock Whitney entered into a purchase and assumption agreement with the FDIC,  referred to as the FNBC II transaction. Pursuant to the agreement, Hancock Whitney acquired selected assets and assumed selected liabilities of the former FNBC, including substantially all of the transaction and savings deposits.  Hancock Whitney paid a premium of $35 million to the FDIC for the earnings stream acquired and received approximately $800 million in cash ($642 million from the FDIC for the net liabilities assumed and $158 million in branch cash acquired).  The terms of the agreement require the FDIC to indemnify Hancock Whitney against certain liabilities of FNBC and its affiliates not assumed or otherwise purchased by Hancock Whitney. Neither the Company nor Hancock Whitney acquired any assets, common stock, preferred stock or debt, or assumed any other obligations, of First NBC Bank Holding Company.



On March 9, 2018, the Company sold its consumer finance subsidiary, Harrison Finance Company (“HFC”).  The Company received cash of approximately $78.9 million and recorded a loss on the sale of $1.1 million. 









3.  Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available for sale and held to maturity follow.







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

September 30, 2018

 

December 31, 2017



 

 

 

Gross

 

Gross

 

 

 

 

 

Gross

 

Gross

 

 



 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Amortized

 

Unrealized

 

Unrealized

 

Fair



 

Cost

 

Gains

 

Losses

 

Value

 

Cost

 

Gains

 

Losses

 

Value

U.S. Treasury and government agency securities

 

$

94,366 

 

 

 —

 

 

5,054 

 

 

89,312 

 

$

99,535 

 

$

 —

 

$

2,263 

 

$

97,272 

Municipal obligations

 

 

243,546 

 

 

95 

 

 

10,928 

 

 

232,713 

 

 

245,997 

 

 

1,135 

 

 

3,346 

 

 

243,786 

Residential mortgage-backed securities

 

 

1,793,698 

 

 

1,969 

 

 

64,392 

 

 

1,731,275 

 

 

1,729,989 

 

 

5,611 

 

 

20,387 

 

 

1,715,213 

Commercial mortgage-backed securities

 

 

770,245 

 

 

 —

 

 

47,363 

 

 

722,882 

 

 

704,518 

 

 

480 

 

 

17,863 

 

 

687,135 

Collateralized mortgage obligations

 

 

143,496 

 

 

 —

 

 

4,993 

 

 

138,503 

 

 

165,518 

 

 

 

 

1,559 

 

 

163,963 

Corporate debt securities

 

 

3,500 

 

 

 —

 

 

 —

 

 

3,500 

 

 

3,500 

 

 

 —

 

 

 —

 

 

3,500 



 

$

3,048,851 

 

$

2,064 

 

$

132,730 

 

$

2,918,185 

 

$

2,949,057 

 

$

7,230 

 

$

45,418 

 

$

2,910,869 



11


 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities Held to Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

September 30, 2018

 

December 31, 2017



 

 

 

Gross

 

Gross

 

 

 

 

 

Gross

 

Gross

 

 



 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Amortized

 

Unrealized

 

Unrealized

 

Fair



 

Cost

 

Gains

 

Losses

 

Value

 

Cost

 

Gains

 

Losses

 

Value

U.S. Treasury and government agency securities

 

$

50,000 

 

 

 —

 

 

708 

 

 

49,292 

 

$

50,000 

 

$

 —

 

$

289 

 

$

49,711 

Municipal obligations

 

 

699,470 

 

 

355 

 

 

17,809 

 

 

682,016 

 

 

723,094 

 

 

8,323 

 

 

4,245 

 

 

727,172 

Residential mortgage-backed securities

 

 

668,320 

 

 

 —

 

 

15,501 

 

 

652,819 

 

 

725,748 

 

 

4,175 

 

 

2,690 

 

 

727,233 

Commercial mortgage-backed securities

 

 

357,428 

 

 

 —

 

 

17,429 

 

 

339,999 

 

 

317,185 

 

 

40 

 

 

3,915 

 

 

313,310 

Collateralized mortgage obligations

 

 

1,294,044 

 

 

 —

 

 

42,715 

 

 

1,251,329 

 

 

1,161,484 

 

 

572 

 

 

17,472 

 

 

1,144,584 



 

$

3,069,262 

 

$

355 

 

$

94,162 

 

$

2,975,455 

 

$

2,977,511 

 

$

13,110 

 

$

28,611 

 

$

2,962,010 



The following tables present the amortized cost and estimated fair value of debt securities available for sale and held to maturity at September 30, 2018 by contractual maturity.  Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateralized mortgage obligations.









 

 

 

 

 

 



 

 

 

 

 

 

Debt Securities Available for Sale

 

Amortized

 

Fair

(in thousands)

 

Cost

 

Value

Due in one year or less

 

$

4,814 

 

$

4,820 

Due after one year through five years

 

 

54,339 

 

 

54,077 

Due after five years through ten years

 

 

1,259,696 

 

 

1,196,235 

Due after ten years

 

 

1,730,002 

 

 

1,663,053 

  Total available for sale debt securities

 

$

3,048,851 

 

$

2,918,185 



 

 

 

 

 

 

Debt Securities Held to Maturity

 

Amortized

 

Fair

(in thousands)

 

Cost

 

Value

Due in one year or less

 

$

24,832 

 

$

24,909 

Due after one year through five years

 

 

130,348 

 

 

127,950 

Due after five years through ten years

 

 

1,452,690 

 

 

1,407,279 

Due after ten years

 

 

1,461,392 

 

 

1,415,317 

  Total held to maturity securities

 

$

3,069,262 

 

$

2,975,455 



The Company held no securities classified as trading at September 30, 2018 or December 31, 2017.    



The fair value and gross unrealized losses for securities classified as available for sale with unrealized losses for the periods indicated follow. 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2018

 

Losses < 12 months

 

Losses 12 months or >

 

Total



 

 

 

Gross

 

 

 

Gross

 

 

 

Gross



 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

(in thousands)

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

U.S. Treasury and government agency securities

 

$

41,765 

 

 

2,027 

 

 

47,547 

 

 

3,027 

 

$

89,312 

 

$

5,054 

Municipal obligations

 

 

53,337 

 

 

1,568 

 

 

165,732 

 

 

9,360 

 

 

219,069 

 

 

10,928 

Residential mortgage-backed securities

 

 

652,504 

 

 

11,892 

 

 

1,029,004 

 

 

52,500 

 

 

1,681,508 

 

 

64,392 

Commercial mortgage-backed securities

 

 

247,504 

 

 

8,368 

 

 

475,379 

 

 

38,995 

 

 

722,883 

 

 

47,363 

Collateralized mortgage obligations

 

 

82,853 

 

 

2,836 

 

 

55,650 

 

 

2,157 

 

 

138,503 

 

 

4,993 



 

$

1,077,963 

 

$

26,691 

 

$

1,773,312 

 

$

106,039 

 

$

2,851,275 

 

$

132,730 



12


 







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

Losses < 12 months

 

Losses 12 months or >

 

Total



 

 

 

Gross

 

 

 

Gross

 

 

 

Gross



 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

(in thousands)

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

U.S. Treasury and government agency securities