Hancock Holding Company HBHC reported first-quarter 2015 operating earnings of 55 cents per share, outpacing the Zacks Consensus Estimate by a penny. However, earnings came in 5.2% below the year-ago figure.
Hancock Holding Company - Earnings Surprise | FindTheCompany
Consistent growth in loans and deposits along with a marginal decline in costs supported the better-than-expected results. However, pressurized top line with a fall in both non-interest income and net interest income continued to weigh on the results. Asset quality displayed improvement.
Net income came in at $40.2 million or 49 cents per share, down from $49.1 million or 58 cents per share in the prior-year quarter.
Performance in Detail
Hancock’s net revenue summed $214.7 million, down 3.4% year over year. Further, it lagged the Zacks Consensus Estimate of $217.0 million.
Net interest income declined 4.5% year over year to $158.2 million. Moreover, net interest margin (NIM) fell 51 basis points (bps) year over year to 3.55%.
Non-interest income (including securities transactions gains) totaled $56.5 million, down 2.7% year over year. The reduction was driven by a fall in service charges on deposit accounts, insurance fees as well as other income. These were, however, partly offset by an increase in bank card and ATM fees, trust fees as well as investment & annuity fees.
Total operating expenses decreased marginally year over year to $146.2 million. The minor decline was owing to a decline in all the expense components except a rise in other expenses.
As of Mar 31, 2015, total loans grew 11.1% year over year to $13.9 billion. Further, total deposits rose 10.4% year over year to $16.9 billion.
Credit Quality
Credit quality demonstrated improvement during the quarter. Net charge-offs from the non-covered loan portfolio came in at $3.7 million or 0.11% of average total loans, down from $4.0 million or 0.13% of average total loans in the year-ago quarter. Moreover, total nonperforming assets amounted to $141.3 million, down 21.3% year over year.
Further, net provision for loan losses fell 22.7% year over year to $6.2 million.
Capital and Profitability Ratios
Hancock’s capital ratios and profitability ratios showed weakness during the quarter. As of Mar 31, 2015, Tier 1 leverage ratio stood at 8.98%, down from 9.43% as of Mar 31, 2014. However, Tier 1 risk-based capital ratio came in at 10.63%, down from 11.90% as of Mar 31, 2014.
Return on average assets stood at 0.80%, down from 1.05% as of Mar 31, 2014. Moreover, as of Mar 31, 2015, tangible common equity ratio came in at 8.40%, down from 9.24% as of Mar 31, 2014.
Capital Deployment Activities
Hancock repurchased 2.6 million shares worth around $75 million during the quarter. This share repurchase completed the common stock buyback program authorized by the company’s board of directors in Jul 2014, under which up to 5% or approximately 4 million shares could be bought back.
Our Viewpoint
Hancock’s organic and inorganic growth strategies will likely pay off going forward on the back of its efforts to restructure and streamline its business. Moreover, the company’s steady liquidity position and enhanced capital deployment activities remain impressive.
Nevertheless, increased regulatory burden and a persistent low interest rate environment are likely to strain the company’s performance in the quarters ahead.
At present, Hancock carries a Zacks Rank #3 (Hold).
Among other Southeast banks, Popular, Inc. BPOP and Independent Bank Group, Inc. IBTX are scheduled to report first-quarter 2015 results on Apr 27 while CommunityOne Bancorp COB is slated to report on Apr 30.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
POPULAR INC (BPOP): Free Stock Analysis Report
HANCOCK HLDG CO (HBHC): Free Stock Analysis Report
INDEP BANK GRP (IBTX): Free Stock Analysis Report
COMMUNITYONE BC (COB): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research