Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Stockholders Equity Note [Abstract]

Stockholders' Equity

Note 12. Stockholders’ Equity

Common Shares Outstanding

Common shares outstanding exclude treasury shares of 5.1 million and 4.5 million with a first-in-first-out cost basis of $175.8 million and $150.7 million at December 31, 2021 and 2020, respectively.  Shares outstanding also exclude unvested restricted share awards of 1.1 million and 1.7 million at December 31, 2021 and 2020, respectively.

Stock Buyback Programs

On April 22, 2021, the Company’s board of directors approved a stock buyback program whereby the Company is authorized to repurchase up to 4.3 million shares of its common stock through the program’s expiration date of December 31, 2022. The program allows the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions. The Company is not obligated to purchase any shares under this program, and the board of directors has the ability to terminate or amend the program at any time prior to the expiration date. During the year ended December 31, 2021, the Company repurchased 449,876 shares of its common stock at an average cost of $48.45 per share, inclusive of commissions.

Prior to its expiration date of December 31, 2020, the Company had in place a stock buyback program that authorized the repurchase of up to 5.5 million shares of its common stock. The program, as amended, allowed the Company to repurchase its common shares on the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or as otherwise determined by the Company, in one or more transactions. The Company was not obligated to purchase any shares under this program, and the board of directors had the ability to terminate or amend the program at any time prior to the expiration date. In total, the Company repurchased 4.9 million of the 5.5 million authorized shares under this buyback program at an average cost of $37.65 per share, inclusive of commissions.

Accumulated Other Comprehensive Income (Loss)

A roll forward of the components of AOCI is included as follows:

(in thousands)	Available for Sale Securities			HTM Securities Transferred from AFS			Employee Benefit Plans			Cash Flow Hedges			Equity Method Investment			Total
Balance, December 31, 2018	$	(50,125	)	$	(12,044	)	$	(110,247	)	$	(8,293	)	$	—		$	(180,709	)
Net change in unrealized gain (loss)		115,413			—			—			28,943			(434	)		143,922
Reclassification of net gain (loss) realized and included in earnings		—			—			9,174			4,255			—			13,429
Valuation adjustments for employee benefit plans		—			—			2,398			—			—			2,398
Unrealized loss on securities transferred to available for sale		(13,236	)		13,236			—			—			—			—
Amortization of unrealized net loss on securities transferred to held to maturity		—			3,153			—			—			—			3,153
Income tax expense		23,102			3,706			2,603			7,506			—			36,917
Balance, December 31, 2019	$	28,950		$	639		$	(101,278	)	$	17,399		$	(434	)	$	(54,724	)
Net change in unrealized gain (loss)		183,441			—			—			45,831			(4,935	)		224,337
Reclassification of net gain (loss) realized and included in earnings		—			—			6,368			(17,351	)		—			(10,983	)
Valuation adjustments for employee benefit plans		—			—			(37,451	)		—			—			(37,451	)
Amortization of unrealized net gain on securities transferred to held to maturity		—			(470	)		—			—			—			(470	)
Income tax expense (benefit)		41,167			(107	)		(6,788	)		6,368			—			40,640
Balance, December 31, 2020	$	171,224		$	276		$	(125,573	)	$	39,511		$	(5,369	)	$	80,069
Net change in unrealized gain (loss)		(208,760	)		—			—			(3,258	)		438			(211,580	)
Reclassification of net gain (loss) realized and included in earnings		2,166			—			4,555			(26,674	)		4,468			(15,485	)
Valuation adjustments to pension plan attributable to VERIP and curtailment		—			—			59,606			—			—			59,606
Other valuation adjustments for employee benefit plans					—			(6,735	)		—			—			(6,735	)
Amortization of unrealized net gain on securities transferred to held to maturity		—			(158	)		—			—			—			(158	)
Income tax expense (benefit)		(46,407	)		(35	)		12,799			(6,705	)		—			(40,348	)
Balance, December 31, 2021	$	11,037		$	153		$	(80,946	)	$	16,284		$	(463	)	$	(53,935	)

Accumulated Other Comprehensive Income or Loss (“AOCI”) is reported as a component of stockholders’ equity. AOCI can include, among other items, unrealized holding gains and losses on securities available for sale (“AFS”), including the Company’s share of unrealized gains and losses reported by a partnership accounted for under the equity method, gains and losses associated with pension or other post-retirement benefits that are not recognized immediately as a component of net periodic benefit cost, and gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges. Net unrealized gains and losses on AFS securities reclassified as securities held to maturity (“HTM”) also continue to be reported as a component of AOCI and will be amortized over the estimated remaining life of the securities as an adjustment to interest income. Subject to certain thresholds, unrealized losses on employee benefit plans will be reclassified into income as pension and post-retirement costs are recognized over the remaining service period of plan participants. Accumulated gains or losses on the cash flow hedge of the variable rate loans described in Note 11 will be reclassified into income over the life of the hedge. Accumulated other comprehensive loss resulting from the terminated interest rate swaps will be amortized over the remaining maturities of the designated instruments. Gains and losses within AOCI are net of deferred income taxes, where applicable.  

The following table shows the line items in the consolidated statements of income affected by amounts reclassified from AOCI:

Amount reclassified from AOCI (a)	Year Ended December 31,						Increase (decrease) in affected line
(in thousands)	2021			2020			item in the income statement
Amortization of unrealized net gain (loss) on securities transferred to HTM	$	158		$	470		Interest income
Tax effect		(35	)		(105	)	Income taxes
Net of tax		123			365		Net income
Loss on sale of AFS securities		(2,166	)		488		Securities transactions, net
Tax effect		487			(109	)	Income taxes
Net of tax		(1,679	)		379		Net income
Amortization of defined benefit pension and post-retirement items		(4,555	)		(6,368	)	Other noninterest expense
Tax effect		1,015			1,390		Income taxes
Net of tax		(3,540	)		(4,978	)	Net income
Reclassification of unrealized gain or loss on cash flow hedges		22,561			18,704		Interest income
Tax effect		(5,054	)		(4,182	)	Income taxes
Net of tax		17,507			14,522		Net income
Amortization of gain (loss) on terminated cash flow hedges		4,113			(1,353	)	Interest income
Tax effect		(921	)		303		Income taxes
Net of tax		3,192			(1,050	)	Net income
Reclassification of unrealized loss on equity method investment		(4,468	)		—		Noninterest income
Tax effect		—			—		Income taxes
Net of tax		(4,468	)		—		Net income
Total reclassifications, net of tax	$	11,135		$	9,238		Net income

(a) Amounts in parentheses indicate reduction in net income.

Regulatory Capital

Measures of regulatory capital are an important tool used by regulators to monitor the financial health of financial institutions. The primary quantitative measures used to gauge capital adequacy are Common equity tier 1, Tier 1 and Total regulatory capital to risk-weighted assets (risk-based capital ratios) and the Tier 1 capital to average total assets (leverage ratio). Both the Company and the Bank subsidiary are required to maintain minimum risk-based capital ratios of 8.0% total capital, 4.5% Tier 1 Common Equity, and 6.0% Tier 1 capital. The minimum leverage ratio is 3.0% for bank holding companies and banks that meet certain specified criteria, including having the highest supervisory rating. All others are required to maintain a leverage ratio of at least 4.0%.

To evaluate capital adequacy, regulators compare an institution’s regulatory capital ratios with their agency guidelines, as well as with the guidelines established as part of the uniform regulatory framework for prompt corrective supervisory action toward financial institutions. The framework for prompt corrective action categorizes capital levels into one of five classifications rating from well-capitalized to critically under-capitalized. For an institution to be eligible to be classified as well capitalized its total risk-based capital ratios must be at least 10.0% for total capital, 6.5% for Tier 1 Common Equity and 8.0% for Tier 1 capital, and its leverage ratio must be at least 5.0%. In reaching an overall conclusion on capital adequacy or assigning a classification under the uniform framework, regulators also consider other subjective and quantitative measures of risk associated with an institution. The Company and the Bank were deemed to be well capitalized based upon the most recent notifications from their regulators. There are no conditions or events since those notifications that management believes would change the classifications. At December 31, 2021 and 2020, the Company and the Bank were in compliance with all of their respective minimum regulatory capital requirements.

Following is a summary of the actual regulatory capital amounts and ratios for the Company and the Bank together with corresponding regulatory capital requirements at December 31, 2021 and 2020.

	Actual				Required for Minimum Capital Adequacy				Required To Be Well Capitalized
($ in thousands)	Amount		Ratio %		Amount		Ratio %		Amount		Ratio %
At December 31, 2021
Tier 1 leverage capital
Hancock Whitney Corporation	$	2,890,770		8.25	$	1,402,223		4.00	$	1,752,779		5.00
Hancock Whitney Bank		2,926,874		8.36		1,401,157		4.00		1,751,447		5.00
Common equity tier 1 (to risk weighted assets)
Hancock Whitney Corporation	$	2,890,770		11.09	$	1,172,563		4.50	$	1,693,702		6.50
Hancock Whitney Bank		2,926,874		11.24		1,171,341		4.50		1,691,937		6.50
Tier 1 capital (to risk weighted assets)
Hancock Whitney Corporation	$	2,890,770		11.09	$	1,563,417		6.00	$	2,084,557		8.00
Hancock Whitney Bank		2,926,874		11.24		1,561,788		6.00		2,082,384		8.00
Total capital (to risk weighted assets)
Hancock Whitney Corporation	$	3,345,387		12.84	$	2,084,557		8.00	$	2,605,696		10.00
Hancock Whitney Bank		3,208,991		12.33		2,082,384		8.00		2,602,980		10.00
At December 31, 2020
Tier 1 leverage capital
Hancock Whitney Corporation	$	2,534,049		7.88	$	1,287,103		4.00	$	1,608,878		5.00
Hancock Whitney Bank		2,607,215		8.11		1,286,059		4.00		1,607,573		5.00
Common equity tier 1 (to risk weighted assets)
Hancock Whitney Corporation	$	2,534,049		10.61	$	1,074,272		4.50	$	1,551,726		6.50
Hancock Whitney Bank		2,607,215		10.94		1,072,924		4.50		1,549,778		6.50
Tier 1 capital (to risk weighted assets)
Hancock Whitney Corporation	$	2,534,049		10.61	$	1,432,362		6.00	$	1,909,817		8.00
Hancock Whitney Bank		2,607,215		10.94		1,430,565		6.00		1,907,420		8.00
Total capital (to risk weighted assets)
Hancock Whitney Corporation	$	3,155,692		13.22	$	1,909,817		8.00	$	2,387,271		10.00
Hancock Whitney Bank		2,905,988		12.19		1,907,420		8.00		2,384,275		10.00

The Company elected the five-year rule that provides a full delay of the estimated impact of CECL on regulatory capital transition (0%) for 2020 and 2021, followed by a three-year transition (25% of the impact included in 2022, 50% in 2023, 75% in 2024 and 100% thereafter). The two-year delay included the full impact of day one CECL plus the estimated impact of current CECL activity calculated quarterly as 25% of the current ACL over the day one balance (“modified transition amount”). The modified transition amounts were recalculated each quarter in 2020 and 2021, with the December 31, 2021 impact of $24.9 million, plus the day one impact of $44.1 million (net of tax) carrying through the remaining three years of the transition. 

Regulatory Restrictions on Dividends

Regulatory policy statements provide that generally, bank holding companies should pay dividends only out of current operating earnings and that the level of dividends must be consistent with current and expected capital requirements. Dividends received from the Bank have been the primary source of funds available to the Company for the payment of dividends to its stockholders. Federal and state banking laws and regulations restrict the amount of dividends the Bank may distribute to the Company

without prior regulatory approval, as well as the amount of loans it may make to the Company. Dividends paid by the Bank are subject to approval by the Commissioner of Banking and Consumer Finance of the State of Mississippi. Further, a capital conservation buffer of 2.5% above each of the minimum capital ratio requirements (common equity tier 1, Tier 1, and total risk-based capital) must be met for a bank or bank holding company to be able to pay dividends.