GULFPORT, Mississippi, July 17, 2020 (GLOBE NEWSWIRE) – Hancock Whitney Corporation (Nasdaq: HWC) today announced that it has agreed to sell $ 497 million in energy loans to certain funds and accounts managed by Oaktree Capital Management, LP La sale includes reserve-based (RBL), intermediate and non-drilling service credits. The company expects to receive proceeds of $ 257.5 million from the sale of these loans once certain closing conditions are met. All loans included in the transaction have been reclassified as held for sale as at June 30, 2020, and all impairment and write-offs associated with the sale are reflected in the Company’s second quarter results. A special provision for credit losses related to the transaction of approximately $ 160.1 million (before taxes), or $ 1.47 per diluted share (tax rate of 21%), will be included in the results of the transaction. company in the second quarter of 2020.
“The main objective of this sale is to continue to reduce the risks of our loan portfolio by accelerating the divestiture of assets which have been affected by the ongoing problems in the energy sector and which are now further complicated by COVID-19, ”said John M. Hairston, President and CEO. “While operating from a strong capital base, we have decided to be opportunistic and sell these assets today, significantly reducing the risk on our balance sheet. As a result, non-performing assets and criticized loans will show a significant improvement, which should position us to present asset quality metrics in line with our peer groups. In addition, we currently expect a decline in loan loss provisions in the second half of 2020, due to both improved asset quality and proactive reserve building for potential COVID-19 issues in the past. first half of 2020. We also believe this transaction should position the company for a faster recovery in both earnings and returns for our shareholders.
In addition to the special allowance, the company continued to build its reserve for potential losses related to COVID-19 with a provision of $ 146.8 million in the second quarter. The total allowance for the loan portfolio for the second quarter of 2020 is $ 306.9 million. As a result of the transaction and the build-up of COVID-19 related reserves, the company will report a second quarter net loss of $ 117.1 million, or ($ 1.36) per diluted share. Before provision, net sales for the second quarter were $ 118.5 million, up $ 2.8 million, or 2.4%, for the related quarter.
|(in millions of dollars) * Excludes PPP loans and loans held for sale (HFS)||March 31, 2020||June 30, 2020|
|Total energy loans *||$ 940||$ 352|
|Energy loans / Total loans *||4.4%||1.7%|
|PNP / Total loans *||1.34%||0.95%|
|Total Business Loans Criticized / Total Business Loans *||3.24%||2.26%|
|Tangible Common Equity Ratio (TCE)||8.00%||7.33%|
|CET1 ratio (estimate for 6-30-20)||10.02%||9.77%|
A slide presentation related to this announcement is posted in the News and Market Data (Presentations) section of the Company’s Investor Relations website at www.hancockwhitney.com/investors. The company will release its second quarter 2020 financial results on July 21, 2020 at 3:05 p.m. central time and will host a conference call to discuss the financial results and the loan sale transaction at 4:00 p.m. central time on the same day.
About Hancock Whitney
Since the late 1800s, Hancock Whitney has embodied the core values of honor and integrity, strength and stability, commitment to service, teamwork and personal responsibility. Hancock Whitney’s offices and financial centers in Mississippi, Alabama, Florida, Louisiana and Texas offer comprehensive financial products and services, including traditional and online banking; commercial and small business banking services; private banking; trust and investment services; health care bank; certain insurance services; and mortgage services. The company also operates a loan production office in Nashville, Tennessee, as well as trust and asset management offices in New Jersey and New York. BauerFinancial, Inc., the nation’s leading independent bank rating and analysis firm, consistently recommends Hancock Whitney as one of the most financially sound banks in the United States. More information is available at www.hancockwhitney.com.
About Oaktree Capital Management, LP
Oaktree is a leader among global investment managers specializing in alternative investments, with $ 113 billion in assets under management as of March 31, 2020. The company emphasizes an opportunistic, value-driven and risk-based approach controlled for investments in credit, private equity, real estate assets and listed stocks. The company has more than 950 employees and offices in 19 cities around the world.
Important Caution Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements, estimates and projections are based solely on current expectations and are subject to a number of risks, uncertainties and assumptions, many of which are beyond the control of Hancock Whitney. Actual events and results may differ materially from those anticipated, estimated or projected if one or more of these risks or uncertainties materialize, or if the underlying assumptions turn out to be inaccurate. Factors that could affect actual results include, but are not limited to: Hancock Whitney’s failure to comply with the terms of the buyer’s obligation to consume the sale of energy credits; the possibility that business developments may prevent, hinder or delay the transactions described above due to restrictions under federal securities laws; changes in Hancock Whitney’s cash requirements, financial condition, financing plans or investment plans; changes in general market, economic, fiscal, regulatory or industrial conditions that affect Hancock Whitney’s business, including negative impacts (economic or otherwise) resulting from the outbreak of the novel coronavirus, or COVID-19; and other risks mentioned from time to time in documents filed by Hancock Whitney with the Securities and Exchange Commission. The closing of the transaction described above is dependent on the satisfaction of certain closing conditions set out in the definitive purchase agreement, and there can be no assurance that these conditions will be met. You should be aware that new factors may emerge from time to time and it is not possible for Hancock Whitney to identify all of these factors, nor can Hancock Whitney predict the impact of each of these factors on its plans, or the extent to which any other factor may cause actual results to differ from those reflected in forward-looking statements. You are further cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Hancock Whitney assumes no obligation to update its forward-looking statements for any reason.
In addition, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “belief”, “expects”, “anticipates”, “estimates”, “intention”, “plans”, “forecast”, “objectives”, “targets”, “initiatives” , “Objective”, “potentially”, “probably”, “projects”, “prospects” or similar expressions or future conditional verbs such as “may”, “will”, “should”, “should” and “could” . Forward-looking statements are based on the current beliefs and expectations of management and on information currently available to management. Our statements are valid as of the date hereof, and we assume no obligation to update such statements or to update the reasons why actual results may differ from those contained in such statements in light of new information or future events. Forward-looking statements are subject to important risks and uncertainties. Any forward-looking statements made in this press release are subject to the safe harbor protections set out in the Securities Litigation Reform Act of 1995. Investors are cautioned not to place undue reliance on such statements. Actual results may differ materially from those stated in forward-looking statements. Additional factors that could cause actual results to differ materially from those described in forward-looking statements. – forward-looking statements can be found in part I, “Point 1A. Risk Factors ”in our Annual Report on Form 10-K for the Year Ended December 31, 2019, Part II,“ Section 1A. Risk Factors ”in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in other periodic reports we file with the SEC.