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Hancock Whitney expects EPS boost, margin expansion in 2019 from stock sale

Hancock Whitney Corp. expects a benefit of 7 basis points in net interest margin in 2019, and a boost of 5 cents per share in earnings, annualized, resulting from the sale of 192,000 shares of VISA-B stock and related portfolio restructuring conducted late in the fourth quarter of 2018.

During the fourth quarter, the Gulfport, Miss.-based company recorded a net gain of $33.2 million from the sale, which offset losses associated with selling $481 million of lower-yielding bonds and $116 million of lower-yielding municipal loans. Proceeds from the sales were used to buy $260 million of higher-yielding bonds and to pay down $346 million of Federal Home Loan Banks advances.

CFO Michael Achary, during the company's earnings call, said that the portfolio restructuring added 2 basis points of NIM improvement in the fourth quarter of 2018 and is expected to add another 5 basis points in the first quarter of 2019. Fourth-quarter NIM, on a taxable equivalent basis, stood at 3.39%, up from 3.36% in the third quarter of 2018.

In terms of the energy portfolio, Hancock Whitney was able to achieve its goal of reducing its energy exposure to approximately 5% in 2018. CEO John Hairston reiterated that the company intends to maintain the current concentration, with a targeted shift in the energy portfolio that emphasizes the upstream and midstream business sectors. "Our goal is to shift our energy portfolio. So it is approximately one-third energy services and two-thirds upstream and midstream business sectors," Hairston said during the call.

Commercial criticized loans declined $451 million, or 42%, during the year. On a linked-quarter basis, commercial criticized loans declined $208 million, or 25%.

The Gulfport, Miss.-based company reported fourth-quarter 2018 net income available to common shareholders of $94.5 million, or $1.10 per share, up from $54.3 million, or 64 cents per share, in the fourth quarter of 2017. Operating earnings available to common shareholders, which included nonoperating items, for the fourth quarter of 2018 amounted to $96.0 million, or $1.12 per share. This is compared to operating earnings of $73.5 million, or 86 cents per share in the last quarter of 2017, which included income tax resulting from re-measurement of deferred tax.

The S&P Global Market Intelligence consensus GAAP EPS estimate for the 2018 fourth quarter was $1.11.

The company repurchased 200,000 shares during the fourth quarter and remains opportunistic on buybacks.