Hancock Whitney Corporation CEO John Hairston has a simple strategy for deploying the flood of deposits the Gulfport, Mississippi, bank has taken in over the last year: hire more bankers to make loans.
The $36.5 billion-asset company added 15 bankers during the second half of 2021, and those new hires produced $125 million in new loans during the fourth quarter, Hairston said Tuesday on a conference call with analysts. He said Hancock Whitney would take a “fervent” approach to hiring in 2022 as it looks to put nearly $4 billion in excess liquidity to use.
“You can see why in terms of the fourth quarter,” Hairston explained. Aggressive hiring “ is not an inconsequential benefit. It’s tangible and it’s there for us to see.”
Like many banks, Hancock Whitney is contending with mountains of cash piling up on its balance sheet. The company reported year-end deposits of $30.5 billion, an increase of 4.3% from Sept. 30 and 10% from the end of 2020. Noninterest demand deposits totaled $14.4 billion on Dec. 31, up 18% year-over-year.
That cash, aided by Hurricane Ida-related insurance proceeds and federal government stimulus, acted as a drag on profitability in 2021. Hancock Whitney reported a fourth-quarter net interest margin of 2.80%, down from 3.22% at the end of 2020.
Relief should be on the way in 2022. Hancock Whitney expects to grow its securities portfolio $300 million per quarter. It’s also forecasting core loan growth of 6% to 8%.
“Translate that into dollars, that’s between $1.24 billion and $1.65 billion of loan growth that we’re looking at guiding to for next year,” Chief Financial Officer Michael Achary said on the conference call.
Brett Rabatin, Hovde’s director of research, said in a research note Wednesday that the recent hires should help Hancock Whitney meet its loan-growth targets.
“Growing the lender base by 15 in the second half of 2021 is respectable and should help lead to the 6%-8% loan growth target being reasonable for the year,” Rabatin wrote.
Hancock Whitney reported loans of $21.1 billion on Dec. 31. That total was down 3% from a year earlier, reflecting the impact of $1.5 billion of Paycheck Protection Program loan forgiveness throughout 2021. On a linked-quarter basis, however, the loan portfolio grew by nearly $250 million.
Overall, Hancock Whitney reported fourth-quarter net income of $137.7 million, up 33% from the fourth quarter of 2020. Strong expense controls and improving credit metrics helped bolster the bottom line. Fourth-quarter results included a $29.1 million reserve release as nonperforming loans declined to $59 million or 0.29% of total loans at Dec. 31, compared to $144 million and 0.73% a year earlier.
Rabatin boosted his full-year 2022 earnings estimate by 19 cents to $5.46 per share. Christopher Marinac, Janney Montgomery Scott’s research director, increased his 2022 earnings estimate for Hancock Whitney by 15 cents, to $4.98 per share.
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