Hancock Whitney to report big 2Q loss after agreeing to sell energy loans

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Hancock Whitney in Gulfport, Miss., will report a big second-quarter loss after agreeing to sell nearly $500 million of energy loans.

The $31.7 billion-asset company said in a press release Friday that the portfolio includes all of its reserve-based loans, along with midstream and nondrilling service credits. The loans are being sold to funds and accounts managed by Oaktree Capital Management for $257.5 million.

Hancock Whitney said it recorded a $160.1 million loan-loss provision in the second quarter tied to the sale. The company plans to set aside another $146.8 million to cover potential problems across the rest of its loan portfolio.

The company said it will report a second quarter loss of $117.1 million.

“The primary objective of this sale is to continue derisking our loan portfolio by accelerating the disposition of assets that have been impacted by ongoing issues within the energy industry, and have now been further complicated by COVID-19,” John Hairston, Hancock Whitney’s president and CEO, said in the release.

Hancock Whitney CEO John Hairston is taking a bold step to reduce the company's exposure to energy firms.
Hancock Whitney CEO John Hairston is taking a bold step to reduce the company's exposure to energy firms.

“While operating from a solid capital base, we decided to be opportunistic and sell these assets today,” he added. “Both nonperforming assets and criticized loans will show significant improvement, which should position us to report asset quality metrics in line with our peer groups.”

Total energy loans at Hancock Whitney will decrease by 63% from the first quarter to $352 million. Energy loans will fall from 4.4% of total loans at March 31 to 1.7%.

Hairston said the sale should lead to lower loan-loss provisions for the rest of this year.

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Energy industry Mississippi Credit quality Earnings
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