Hancock Whitney Corporation

This call may be recorded. I would now like to introduce your host for today's conference, Catherine Mistich, 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 risks 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 AK 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 Harrison, President and CEO, Mike Ackery, CFO, and Chris Oluka, Chief Credit Officer. I will now turn the call over to John Harrison.

Thank you, Catherine, and thanks to everyone for joining us this afternoon. We are very pleased with the results from the second quarter, which reflect solid earnings amidst our continued efforts to improve profitability, reposition our balance sheet for this macroeconomic and operating environment, and also growing capital. We hope our investors are pleased to see our first half of 2024 resulting in profitability, capital ratios, dividend and repurchase increases, earnings efficiency, and overall AQ ratios all among the best in the mid-cap bank space. Net interest income is up this quarter, driven by lower deposit costs and improved earning asset yields in both loans and bonds. Fee income continues to grow and exceed expectations, and expenses remain well controlled. Net charge-offs were down, as was our provision for loan losses, but we still were able to grow reserves. Our balance sheet repositioning continued this quarter as loans contracted slightly but mostly due to a purposeful decrease in SNCC balances of $221 million. Our focus remains on more granular, full-service relationships, and our team produced the volume necessary to nearly offset our more selective credit and mixed appetite. As we expected, these more granular credits have contributed to NIM expansion, and we will remain focused on loan pricing in the balance of the year. As promised, we have updated our guidance this quarter, and we now expect loans to be flat to down slightly from 2023. This guidance reflects our goal of thoughtfully reducing large credit-only relationships, including SNICs, while originating more granular loans via relationship wins, all for the purpose of achieving higher loan yields and relationship revenue over time. As expected, our credit quality metrics continue to normalize, but the increase in criticized commercial and non-recrual loans was at a more modest pace this quarter, and we remain at or near the top quartile of our peers. Our loan portfolio is diverse, and we still see no significant weakening in any specific portfolio sectors or geography. We continue to enjoy a solid reserve of 1.43% of slightly from the prior quarter. Our guidance with respect to the allowance and provision remains unchanged. Deposits were down in the quarter, but mostly due to a net reduction in broker CDs of 195 million. DDAs did continue to decline, but at a much more moderated pace than in recent quarters, and our DDA mix was actually consistent with the prior quarter at 36%. There was normal seasonal runoff and interest-bearing transaction in public fund accounts, and we were pleased to experience growth in retail time deposits despite maturity concentrations and no significant changes and our promotional rates during the quarter. Our guidance was updated for deposits, and we now expect deposits will be flat to slightly down compared to 2023. We continue to migrate away from broker deposits, which were nearly $600 million at the end of 2023. During the quarter, we were very pleased to return capital to investors with a 33% increase in our common stock dividend, and we repurchased over 300,000 shares of common stock. Even after returning capital, we had strong growth in all of our capital metrics due to our solid profitability, ending the quarter with a TCE of 8.77% and a common equity Tier 1 ratio of 13.25%. As I mentioned, we updated this quarter to reflect our expectations for the rest of the year. Our near-term expectation is to maintain this forward momentum of repositioning our balance sheet, improving NIM, controlling expenses, and growing fee income. Our efforts to control expenses will allow us to reinvest in the company through hiring additional revenue generating staff, which should help to inflect the balance sheet back to growth in 2025 and support profitability. Mike will cover the guidance in more detail in his commentary to come. As we look forward to celebrating our 125th year and beyond, we hope investors view HWC more as a journey accomplished with strong profitability, granular revenue sourcing, admirable earnings efficiency solid capital and acl reserves a de-risk loan portfolio and now sporting a nearly nine percent tce and over 13 tier one ratio as we celebrate the beginning of our next quarter century our efforts are on the windshield versus the rearview mirror as we work very hard to grow our balance sheet and value over the strategic planning period with that i'll invite mike to add additional comments