Hancock Whitney Corporation

Today, ladies and gentlemen, and welcome to Hancock Whitney Corporation's fourth quarter 2022 earnings conference call. At this time, our participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to pass the call over to your host for today's conference, Tricia Carson, Investor Relations Manager. You may begin.

Thank you, and good afternoon. During today's call, we may make forward-looking statements. We would like to remind everyone to carefully review the Safe Harbor language that was published with the earnings release and presentation and in the company's most recent 10-K and 10-Q, including the risk and uncertainties identified therein. You should keep in mind that any forward-looking statements made by Hancock Whitney speak only as of the date on which they were made. As everyone understands, the current economic environment is rapidly evolving and changing. Hancock-Whitney's ability to accurately project results or predict the effects of future plans or strategies or predict market or economic developments is inherently limited. We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions but are not guarantees of performance or results, and our actual results and performance could differ materially from those set forth in our forward-looking statements. Hancock Whitney undertakes no obligation to update or revise any forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements. Some of the remarks contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables. The presentation slides included in our 8 are also posted with the conference call webcast link on the investor relations website. We will reference some of these slides in today's call. Participating in today's call are John Hairston, President and CEO, Mike Ackery, CFO, and Chris Zaluka, Chief Credit Officer. I will now turn the call over to John Hairston.

Thank you, Tricia, and good afternoon and Happy New Year to everyone. Thanks for joining us on what I know is a very busy day. While we look forward to the start of a new year, we also want to celebrate a successful Q4 and a strong conclusion to 2022. We are exceptionally proud of the Hancock Whitney team and the company's overall performance during a remarkable year of volatility. The results reveal not only progress made in 22, but also the culmination of decisions made the last several years to better position the company. With year-over-year earnings up $61 million, PPNR up nearly $104 million, net loan growth up $2 billion, NEM up 31 basis points, and an efficiency ratio in the low 50s, we view 2022 as a very successful year. We see another year of potential microenvironment changes coming in 2023 and expect the bulk of investor interest to be more about the future. As such, and as promised, we have updated our three-year corporate strategic objectives, or CSOs, and we provide 2023 guidance on slide 18. Our guidance for 23 shouldn't be a surprise or a trend much different from what you may hear from others in our industry. Loan growth in the low to mid-single digits reflects the recognition of a likely slowdown in the economies. and we are mindful of managing risk in such an environment. We expect continued hurdles with funding loan growth with deposits and are guiding to an environment where core deposit growth will be available, but perhaps a little bit more rate sensitive. Our intense focus will be on core relationship lending with accompanying deposit relationships, which create meaningful value in our balance sheet through the cycle. This focus will have the impact of a slowing loan growth in 23, but a better chance of funding lending with deposits. We fell short of that goal in Q4 as loans outperformed and the timing of seasonal deposit inflows and outflows was different than we expected. We said for the last couple of years that line utilization would begin returning to pre-pandemic normal at the same time excess commercial deposits are spent. And that trend was evident in the last several quarters, including Q4. But with that said, we intend to grow deposits in 23 in the low single digits with a downside case of flat, where we use cash flow from the bond portfolio to fund any shortfall in deposits. To the extent deposits outperform, we will adjust to reinvesting in bonds or deploying into loans dependent upon the environment at the time. The rate environment, while beneficial to net interest income, negatively impacted fee income, with secondary mortgage being the hardest hit. With trending strong performance in wealth and card fees, though, we believe we can grow total non-interest income 3 to 4% in 2023, including and covering the replacement of 10 to 11 million of lost income from the elimination of certain NSFOD fees beginning in December of 2022. Inflation pressure, pension expense, and notable increases in FDIC assessments are a few of the drivers guiding to a 6 to 7% increase and 23 non-interest expense. Backing out the pension and FDIC increases, we project a 4% to 5% increase compared to 22%. Our efforts over the past three years in reducing expenses have put us in a position to better adjust to these increases and still maintain an efficiency ratio in the very low 50s. And finally, as it relates to guidance, we believe today's results for both the quarter and the year reflect a company positioned well for today's economic environment. Credit metrics are at historically low levels. Initiatives executed in 20 to 22 help drive an efficiency ratio below 50% in the fourth quarter. New bankers hired over the past 18 months should help attract and enhance relationships in growth markets. We've proven our ability to proactively manage expenses and are introducing technology focused on scalability and effectiveness. Capital remains solid, our reserve is solid, and our balance sheet is de-risked and positioned well. So with those comments, I'll turn the call over to Mike for further comments.