Company Quick10K Filing
Quick10K
Hancock Whitney
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$42.63 86 $3,650
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-04-30 Enter Agreement, Exhibits
8-K 2019-04-30 Other Events, Exhibits
8-K 2019-04-24 Shareholder Vote
8-K 2019-04-16 Earnings, Regulation FD, Exhibits
8-K 2019-01-16 Earnings, Regulation FD, Exhibits
8-K 2018-10-16 Earnings, Regulation FD, Exhibits
8-K 2018-08-17 Leave Agreement
8-K 2018-07-26 Other Events, Exhibits
8-K 2018-07-17 Earnings, Regulation FD, Exhibits
8-K 2018-05-24 Other Events
8-K 2018-05-04 Regulation FD, Exhibits
8-K 2018-04-17 Earnings, Regulation FD, Exhibits
8-K 2018-01-17 Earnings, Regulation FD, Exhibits
8-K 2018-01-09 Other Events
D Dominion Energy 58,820
CVET Covetrus 3,330
DCO Ducommun 560
VSTO Vista Outdoor 532
IMXI International Money Express 431
TCI Transcontinental Realty Investors 275
SNCR Synchronoss 227
LLIT Lianluo Smart 26
JRVS Imine 0
DHCP Ditech Holding 0
HWC 2019-03-31
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 hwc-ex311_9.htm
EX-31.2 hwc-ex312_8.htm
EX-32.1 hwc-ex321_6.htm
EX-32.2 hwc-ex322_7.htm

Hancock Whitney Earnings 2019-03-31

HWC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 hwc-10q_20190331.htm 10-Q hwc-10q_20190331.htm

Table of Contents

 

 

 

 

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 March 31, 2019

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: 001-36872

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 definition s of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $3.33 per share

HWC

Nasdaq

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

85,720,238 common shares were outstanding as of April 30, 2019.  

 

 

 


Table of Contents

 

Hancock Whitney Corporation

Index

Part I. Financial Information

Page

Number

ITEM 1.

Financial Statements

4

 

Consolidated Balance Sheets (unaudited) – March 31, 2019 and December 31, 2018

4

 

Consolidated Statements of Income (unaudited) – Three Months Ended March 31, 2019 and 2018

5

 

Consolidated Statements of Comprehensive Income (unaudited) – Three Months Ended March 31, 2019 and 2018

6

 

Consolidated Statements of Changes in Stockholders’ Equity (unaudited) – Three Months Ended March 31, 2019 and 2018

7

 

Consolidated Statements of Cash Flows (unaudited) – Three Months Ended March 31, 2019 and 2018

8

 

Notes to Consolidated Financial Statements (unaudited) – March 31, 2019 and 2018

9

ITEM 2.

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

35

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

57

ITEM 4.

Controls and Procedures

57

Part II.  Other Information

 

ITEM 1.

Legal Proceedings

59

ITEM 1A.

Risk Factors

59

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

59

ITEM 3.

Default on Senior Securities

N/A

ITEM 4.

Mine Safety Disclosures

N/A

ITEM 5.

Other Information

N/A

ITEM 6.

Exhibits

59

Signatures

60

 

2


Table of Contents

 

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  

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

Beta – amount by which deposit or loan costs change in response to movement in short-term interest rates

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, from which the Company acquired a trust and asset management business in July 2018.

CECL – Current Expected Credit Losses, the Accounting Standards Update effective for the Company on January 1, 2020

CD – certificate of deposit

CDE – Community Development Entity

CMO – Collateralized Mortgage Obligation

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.

FHLB – Federal Home Loan Bank

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

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

MidSouth – MidSouth Bancorp, Inc., an entity the Company has agreed to acquire under an Agreement and Plan of Merger dated April 30, 2019

NAICS – North American Industry Classification System

NII – Net interest income

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

3


Table of Contents

 

Part I.  Financial Information

Item 1. Financial Statements

Hancock Whitney Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

 

March 31,

 

 

December 31,

 

(in thousands, except per share data)

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

360,194

 

 

$

383,372

 

Interest-bearing bank deposits

 

 

163,232

 

 

 

110,579

 

Federal funds sold

 

 

530

 

 

 

515

 

Securities available for sale, at fair value (amortized cost of $2,698,865 and $2,755,806)

 

 

2,681,080

 

 

 

2,691,037

 

Securities held to maturity (fair value of $2,892,910 and $2,935,856)

 

 

2,896,442

 

 

 

2,979,547

 

Loans held for sale

 

 

27,437

 

 

 

28,150

 

Loans

 

 

20,112,838

 

 

 

20,026,411

 

Less: allowance for loan losses

 

 

(194,688

)

 

 

(194,514

)

Loans, net

 

 

19,918,150

 

 

 

19,831,897

 

Property and equipment, net of accumulated depreciation of $233,078 and $225,969

 

 

358,205

 

 

 

353,668

 

Right of use assets, net of accumulated amortization of $3,064

 

 

113,447

 

 

 

 

Prepaid expenses

 

 

39,153

 

 

 

35,047

 

Other real estate and foreclosed assets, net

 

 

27,148

 

 

 

26,270

 

Accrued interest receivable

 

 

94,404

 

 

 

86,681

 

Goodwill

 

 

792,084

 

 

 

790,972

 

Other intangible assets, net

 

 

91,013

 

 

 

96,151

 

Life insurance contracts

 

 

553,893

 

 

 

549,300

 

Deferred tax asset, net

 

 

 

 

 

22,967

 

Funded pension assets, net

 

 

168,910

 

 

 

65,125

 

Other assets

 

 

204,909

 

 

 

184,629

 

Total assets

 

$

28,490,231

 

 

$

28,235,907

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

8,158,658

 

 

$

8,499,027

 

Interest-bearing

 

 

15,221,636

 

 

 

14,651,158

 

Total deposits

 

 

23,380,294

 

 

 

23,150,185

 

Short-term borrowings

 

 

1,388,735

 

 

 

1,589,128

 

Long-term debt

 

 

224,962

 

 

 

224,993

 

Accrued interest payable

 

 

18,031

 

 

 

12,267

 

Lease liabilities

 

 

128,494

 

 

 

 

Deferred tax liability, net

 

 

19,065

 

 

 

 

Other liabilities

 

 

140,075

 

 

 

177,994

 

Total liabilities

 

 

25,299,656

 

 

 

25,154,567

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

292,716

 

 

 

292,716

 

Capital surplus

 

 

1,731,148

 

 

 

1,725,741

 

Retained earnings

 

 

1,299,220

 

 

 

1,243,592

 

Accumulated other comprehensive loss, net

 

 

(132,509

)

 

 

(180,709

)

Total stockholders' equity

 

 

3,190,575

 

 

 

3,081,340

 

Total liabilities and stockholders' equity

 

$

28,490,231

 

 

$

28,235,907

 

Preferred shares authorized (par value of $20.00 per share)

 

 

50,000

 

 

 

50,000

 

Preferred shares issued and outstanding

 

 

 

 

 

 

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

 

 

350,000

 

 

 

350,000

 

Common shares issued

 

 

87,903

 

 

 

87,903

 

Common shares outstanding

 

 

85,710

 

 

 

85,643

 

 

See notes to unaudited consolidated financial statements.

4


Table of Contents

 

Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands, except per share data)

 

2019

 

 

2018

 

Interest income:

 

 

 

 

 

 

 

 

Loans, including fees

 

$

238,282

 

 

$

205,847

 

Loans held for sale

 

 

253

 

 

 

221

 

Securities-taxable

 

 

31,139

 

 

 

29,301

 

Securities-tax exempt

 

 

5,446

 

 

 

5,537

 

Short-term investments

 

 

1,163

 

 

 

489

 

Total interest income

 

 

276,283

 

 

 

241,395

 

Interest expense:

 

 

 

 

 

 

 

 

Deposits

 

 

46,138

 

 

 

26,959

 

Short-term borrowings

 

 

8,082

 

 

 

5,351

 

Long-term debt

 

 

2,809

 

 

 

3,421

 

Total interest expense

 

 

57,029

 

 

 

35,731

 

Net interest income

 

 

219,254

 

 

 

205,664

 

Provision for loan losses

 

 

18,043

 

 

 

12,253

 

Net interest income after provision for loan losses

 

 

201,211

 

 

 

193,411

 

Noninterest income:

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

20,367

 

 

 

21,448

 

Trust fees

 

 

15,124

 

 

 

11,335

 

Bank card and ATM fees

 

 

15,290

 

 

 

14,458

 

Investment and annuity fees and insurance commissions

 

 

6,528

 

 

 

6,125

 

Secondary mortgage market operations

 

 

3,726

 

 

 

3,401

 

Other income

 

 

9,468

 

 

 

9,485

 

Total noninterest income

 

 

70,503

 

 

 

66,252

 

Noninterest expense:

 

 

 

 

 

 

 

 

Compensation expense

 

 

83,968

 

 

 

80,100

 

Employee benefits

 

 

19,730

 

 

 

19,874

 

Personnel expense

 

 

103,698

 

 

 

99,974

 

Net occupancy expense

 

 

11,984

 

 

 

11,010

 

Equipment expense

 

 

4,679

 

 

 

3,546

 

Data processing expense

 

 

19,331

 

 

 

16,449

 

Professional services expense

 

 

8,168

 

 

 

9,255

 

Amortization of intangible assets

 

 

5,138

 

 

 

5,618

 

Deposit insurance and regulatory fees

 

 

5,406

 

 

 

7,948

 

Other real estate (income) expense

 

 

(991

)

 

 

210

 

Other expense

 

 

18,287

 

 

 

16,781

 

Total noninterest expense

 

 

175,700

 

 

 

170,791

 

Income before income taxes

 

 

96,014

 

 

 

88,872

 

Income taxes

 

 

16,850

 

 

 

16,397

 

Net income

 

$

79,164

 

 

$

72,475

 

Earnings per common share-basic

 

$

0.91

 

 

$

0.83

 

Earnings per common share-diluted

 

$

0.91

 

 

$

0.83

 

Dividends paid per share

 

$

0.27

 

 

$

0.24

 

Weighted average shares outstanding-basic

 

 

85,688

 

 

 

85,241

 

Weighted average shares outstanding-diluted

 

 

85,800

 

 

 

85,423

 

 

See notes to unaudited consolidated financial statements.

 

5


Table of Contents

 

Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands)

 

2019

 

 

2018

 

Net income

 

$

79,164

 

 

$

72,475

 

Other comprehensive income/loss before income taxes:

 

 

 

 

 

 

 

 

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

 

 

57,243

 

 

 

(62,244

)

Reclassification of net losses realized and included in earnings

 

 

4,219

 

 

 

1,796

 

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

 

 

591

 

 

 

755

 

Other comprehensive income/loss before income taxes

 

 

62,053

 

 

 

(59,693

)

Income tax expense (benefit)

 

 

13,853

 

 

 

(13,546

)

Other comprehensive income/loss net of income taxes

 

 

48,200

 

 

 

(46,147

)

Comprehensive income

 

$

127,364

 

 

$

26,328

 

 

See notes to unaudited consolidated financial statements.

 

6


Table of Contents

 

Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

(in thousands, except per share data)

 

Shares

Issued

 

 

Amount

 

 

Capital

Surplus

 

 

Retained

Earnings

 

 

Comprehensive

Loss, Net

 

 

Total

 

Balance, December 31, 2017

 

 

87,903

 

 

$

292,716

 

 

$

1,718,117

 

 

$

1,008,518

 

 

$

(134,402

)

 

$

2,884,949

 

Net income

 

 

 

 

 

 

 

 

 

 

 

72,475

 

 

 

 

 

 

72,475

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46,147

)

 

 

(46,147

)

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

72,475

 

 

 

(46,147

)

 

 

26,328

 

Cash dividends declared ($0.24 per common share)

 

 

 

 

 

 

 

 

 

 

 

(20,881

)

 

 

 

 

 

(20,881

)

Common stock activity, long-term incentive plan

 

 

 

 

 

 

 

 

4,735

 

 

 

70

 

 

 

 

 

 

4,805

 

Issuance of stock from dividend reinvestment and stock purchase plans

 

 

 

 

 

 

 

 

837

 

 

 

 

 

 

 

 

 

837

 

Balance, March 31, 2018

 

 

87,903

 

 

$

292,716

 

 

$

1,723,689

 

 

$

1,060,182

 

 

$

(180,549

)

 

$

2,896,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

87,903

 

 

$

292,716

 

 

$

1,725,741

 

 

$

1,243,592

 

 

$

(180,709

)

 

$

3,081,340

 

Net income

 

 

 

 

 

 

 

 

 

 

 

79,164

 

 

 

 

 

 

79,164

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

48,200

 

 

 

48,200

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

79,164

 

 

 

48,200

 

 

 

127,364

 

Cash dividends declared ($0.27 per common share)

 

 

 

 

 

 

 

 

 

 

 

(23,581

)

 

 

 

 

 

(23,581

)

Common stock activity, long-term incentive plan

 

 

 

 

 

 

 

 

4,528

 

 

 

45

 

 

 

 

 

 

4,573

 

Issuance of stock from dividend reinvestment and stock purchase plans

 

 

 

 

 

 

 

 

879

 

 

 

 

 

 

 

 

 

879

 

Balance, March 31, 2019

 

 

87,903

 

 

$

292,716

 

 

$

1,731,148

 

 

$

1,299,220

 

 

$

(132,509

)

 

$

3,190,575

 

 

See notes to unaudited consolidated financial statements.

 

7


Table of Contents

 

Hancock Whitney Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands)

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

79,164

 

 

$

72,475

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,516

 

 

 

6,551

 

Provision for loan losses

 

 

18,043

 

 

 

12,253

 

(Gain) loss on other real estate owned

 

 

(991

)

 

 

210

 

Deferred tax expense

 

 

30,829

 

 

 

14,790

 

Increase in cash surrender value of life insurance contracts

 

 

(3,772

)

 

 

(3,346

)

Loss on sale of business

 

 

 

 

 

1,145

 

Net decrease in loans held for sale

 

 

5,714

 

 

 

18,172

 

Net amortization of securities premium/discount

 

 

7,009

 

 

 

8,453

 

Amortization of intangible assets

 

 

5,138

 

 

 

5,618

 

Stock-based compensation expense

 

 

5,181

 

 

 

4,883

 

Contribution to pension plan

 

 

(100,000

)

 

 

 

Decrease in interest payable and other liabilities

 

 

(15,478

)

 

 

(32,568

)

Decrease in payable to FDIC for loan servicing

 

 

 

 

 

(11,107

)

(Increase) decrease in other assets

 

 

(23,335

)

 

 

6,821

 

Other, net

 

 

(1,595

)

 

 

144

 

Net cash provided by operating activities

 

 

13,423

 

 

 

104,494

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from maturities of securities available for sale

 

 

55,596

 

 

 

80,155

 

Purchases of securities available for sale

 

 

(1,502

)

 

 

(142,052

)

Proceeds from maturities of securities held to maturity

 

 

79,533

 

 

 

93,408

 

Purchases of securities held to maturity

 

 

 

 

 

(134,020

)

Net (increase) decrease in short-term investments

 

 

(52,668

)

 

 

30,843

 

Proceeds from sales of loans and leases

 

 

42,059

 

 

 

12,211

 

Net increase in loans

 

 

(148,073

)

 

 

(196,328

)

Purchases of property and equipment

 

 

(12,435

)

 

 

(7,904

)

Proceeds from sales of property and equipment

 

 

115

 

 

 

42

 

Proceeds from sales of other real estate

 

 

4,613

 

 

 

1,641

 

Final cash settlement for acquisition of business

 

 

(1,112

)

 

 

 

Proceeds from the sale of business, net of cash sold

 

 

 

 

 

77,081

 

Other, net

 

 

(8,978

)

 

 

(8,915

)

Net cash used in investing activities

 

 

(42,852

)

 

 

(193,838

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Net increase in deposits

 

 

230,109

 

 

 

232,638

 

Net decrease in short-term borrowings

 

 

(200,393

)

 

 

(251,793

)

Repayments of long-term debt

 

 

(75

)

 

 

(5,268

)

Net proceeds from issuance of long-term debt

 

 

 

 

 

83

 

Dividends paid

 

 

(23,581

)

 

 

(20,881

)

Payroll tax remitted on net share settlement of equity awards

 

 

(688

)

 

 

(142

)

Proceeds from exercise of stock options

 

 

 

 

 

782

 

Proceeds from dividend reinvestment and stock purchase plans

 

 

879

 

 

 

837

 

Net cash provided by (used in) financing activities

 

 

6,251

 

 

 

(43,744

)

NET DECREASE IN CASH AND DUE FROM BANKS

 

 

(23,178

)

 

 

(133,088

)

CASH AND DUE FROM BANKS, BEGINNING

 

 

383,372

 

 

 

386,948

 

CASH AND DUE FROM BANKS, ENDING

 

$

360,194

 

 

$

253,860

 

SUPPLEMENTAL INFORMATION FOR NON-CASH

 

 

 

 

 

 

 

 

INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Assets acquired in settlement of loans

 

$

4,273

 

 

$

1,305

 

 

See notes to unaudited consolidated financial statements.

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Table of Contents

 

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, 2018.  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.

 

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, 2018.  Refer to Note 16 – Recent Accounting Pronouncements for a discussion of accounting standards adopted during the three months ended March 31, 2019.

2.  Acquisition

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 following table sets forth the 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

 

 

27,562

 

Total identifiable assets

 

 

30,365

 

LIABILITIES

 

 

 

 

Deposit liabilities

 

 

217,432

 

Other liabilities

 

 

151

 

Total liabilities

 

 

217,583

 

Net liabilities assumed

 

 

(187,218

)

Consideration received

 

 

140,657

 

Goodwill

 

$

46,561

 

 

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

9


Table of Contents

 

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 deductible for federal income tax purposes.

 

The following table presents the change in the Company’s goodwill during the year ended December 31, 2018 and the three months ended March 31, 2019.

 

(in thousands)

 

 

 

 

Goodwill balance at December 31, 2017

 

$

745,523

 

Intital goodwill recorded - acquisition of trust and asset management business

 

 

45,634

 

Measurement period adjustments - acquisition of trust and asset management business

 

 

(185

)

Goodwill balance at December 31, 2018

 

$

790,972

 

Final settlement of cash consideration - acquisition of trust and asset management business

 

 

1,112

 

Goodwill balance at March 31, 2019

 

$

792,084

 

 

The acquired trust and asset management business added $4.9 million in trust fee revenue and $4.8 million of expense to the Company’s results of operations for the three months ended March 31, 2019. The results are not material to the Company’s results of operations and, as such, supplemental proforma financial information for the three months ended March 31, 2018 is not presented. During the three months ended March 31, 2018, the Company incurred acquisition related costs of approximately $0.3 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 at March 31, 2019 and December 31, 2018 follow.

 

Securities Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

March 31, 2019

 

 

December 31, 2018

 

 

 

 

 

 

 

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

 

$

73,426

 

 

 

 

 

 

1,283

 

 

$

72,143

 

 

$

74,339

 

 

$

 

 

$

2,633

 

 

$

71,706

 

Municipal obligations

 

 

245,707

 

 

 

1,833

 

 

 

1,600

 

 

 

245,940

 

 

 

246,713

 

 

 

360

 

 

 

6,646

 

 

 

240,427

 

Residential mortgage-backed securities

 

 

1,418,881

 

 

 

9,964

 

 

 

15,813

 

 

 

1,413,032

 

 

 

1,468,912

 

 

 

4,284

 

 

 

29,794

 

 

 

1,443,402

 

Commercial mortgage-backed securities

 

 

798,447

 

 

 

4,594

 

 

 

15,207

 

 

 

787,834

 

 

 

799,060

 

 

 

1,953

 

 

 

30,936

 

 

 

770,077

 

Collateralized mortgage obligations

 

 

158,904

 

 

 

1,212

 

 

 

1,485

 

 

 

158,631

 

 

 

163,282

 

 

 

903

 

 

 

2,260

 

 

 

161,925

 

Corporate debt securities

 

 

3,500

 

 

 

 

 

 

 

 

 

3,500

 

 

 

3,500

 

 

 

 

 

 

 

 

 

3,500

 



 

$

2,698,865

 

 

$

17,603

 

 

$

35,388

 

 

$

2,681,080

 

 

$

2,755,806

 

 

$