When Hancock Holding in Gulfport, Miss., hoisted more red flags this week, it offered a glimpse of the next round of questions that numerous energy lenders like it will endure in the coming weeks.

Earnings season is just a few weeks away, and concerns will undoubtedly go beyond the credit exposures created by low oil prices and expand into the possible drain on capital and dividends, fallout from shared national credit exams and the risk of economic contagion in energy-producing markets such as Houston.

Those were the kind of questions raised by Hancock’s latest warning that it will more than double its loan-loss allowance to account for deteriorating credits to energy companies. The company said this week that it will record a $58 million to $62 million provision for the quarter that ends Thursday. The higher provision is largely tied to the downgrade of more than $300 million of energy-related loans.

The move prompted a number of analysts, including Brad Milsaps at Sandler O’Neill and Kevin Fitzsimmons at Hovde Group, to significantly lower their full-year earnings estimates for the $23 billion-asset Hancock. Fitzsimmons also urged his clients to stop building positions in the company’s stock.

Hancock’s decision to scale up its provision came just two months after management had guided analysts and investors to a quarterly set-aside of $15 million or less.

“We would have thought that [the downgrades] would have been anticipated by management to some extent and in turn factored into Hancock’s estimation of the special reserve boost taken only one quarter earlier,” Fitzsimmons wrote in a research note following the company’s disclosure.

“The pace of deterioration seems to be surprising management,” Jefferson Harralson, an analyst at Keefe, Bruyette & Woods, wrote in his note to clients.

Hancock’s decision stemmed partly from the results of a shared national credit exam that regulators finished on March 15. As a result analysts speculated that more banks could be boosting their allowances after their exams are done.

Hancock’s disclosure raises the possibility “that other Southwestern banks could have issues as well,” Harralson said.

“It seems increasingly clear that the first half of this year will evidence a material step-up in negative credit migration for the vast majority of banks with energy exposure,” Joseph Fenech, a Hovde analyst, wrote in a note for Southwest Bancorp in Stillwater, Okla., that referenced Hancock’s warning. Fenech also noted that several other banks – including JPMorgan Chase, Wells Fargo, Comerica and BB&T – had warned about rising provisions in their annual reports.

By padding its reserves, Hancock seems poised to increase its reserve for energy-related loans from 5% to 9%, several analysts said. Again that could set a standard by which investors will gauge other banks’ reaction to their energy exposure.

Hancock’s disclosure has also spurred discussion about capital levels, with Milsaps warning that the size of the company’s quarterly dividend “could be at risk” because its tangible common equity ratio has dipped below 8%. He noted that Hancock “has not earned the dividend for two consecutive quarters.”

However, Harralson said his analysis indicates that “the issues that are coming should be more of an earnings issue versus a capital/balance sheet issue.”

A final area of concern involves credits that are indirectly related to energy, particularly commercial real estate. Office vacancy rates in Houston, for example, have been steadily rising in recent quarters, ending the year at nearly 14%, according to research by CoStar.

“The bigger swing factor for Hancock from here is probably the $3.4 billion CRE book,” Harralson said.

Hancock, for its part, said in its release that it would not provide any more guidance until it reports first-quarter results on April 19.

The company reported a provision of $50.2 million in the fourth quarter and $6.1 million in last year’s first quarter. The company also said in March that it planned to cut credit lines to oil and gas producers by 15-20% as part of spring redeterminations.

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