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Hancock Whitney slashes target size for energy portfolio

Hancock Whitney Corp. is "back on track in resolving problem credits," CFO Michael Achary said, but the company is continuing to aggressively reduce exposure to energy loans.

"We don't really anticipate any sort of bounce-back and improvement in the sector," Chief Credit Officer Christopher Ziluca said on a call to discuss fourth-quarter earnings.

The Gulfport, Miss.-based company cut its energy portfolio from more than 12% of its total loans in late 2014 to 4.5% in the 2019 fourth quarter. The bank also disclosed that it has reduced its strategic target for the size of the portfolio from 5% to a range of 2% to 4%.

"We are doing no new energy work except with very core, full-relationship clients we know a lot about," President and CEO John Hairston said on the call. Broadly, the energy business does not fit with the bank's "desire to have less volatile earnings," he added.

Hancock Whitney's criticized commercial loans fell from 4.15% of total commercial loans in the 2019 third quarter to 3.62% in the 2019 fourth quarter, including a 7% linked-quarter decline in criticized energy loans to $260 million.

The bank posted no energy-related charge-offs in the 2019 fourth quarter, but Achary said it does "expect to see continued one-off type activity as we resolve our remaining problem loans from the energy cycle."