Hancock Whitney Corporation (HWC) Q2 2021 Earnings Call Transcript

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Hancock Whitney Corporation (HWC 0.16%)
Q2 2021 Earnings Call
Jul 20, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Hancock Whitney Corporation Second Quarter 2021 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to your host for today's conference, Trisha Carlson, Investor Relations Manager. You may begin.

Trisha Carlson -- Executive Vice President and Investor Relations Manager

Thank you and good afternoon. During today's call, we may make forward-looking statements. We would like to remind everyone to carefully review the safe harbor language that was published with the earnings release and presentation and in the company's most recent 10-K and 10-Q, including the risks and uncertainties identified therein. You should keep in mind that any forward-looking statements made by Hancock Whitney speak only as of the date on which they were made. As everyone understands the current economic environment is rapidly evolving and changing. Hancock Whitney's ability to accurately project results or predict the effects of future plans or strategies or predict market or economic developments is inherently limited. We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions, but are not guarantees of performance or results and our actual results and performance could differ materially from those set forth in our forward-looking statements. Hancock Whitney undertakes no obligation to update or revise any forward-looking statements and you are cautioned not to place undue reliance on such forward-looking statements.

Some of the remarks contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables. The presentation slides included in our 8-K are also posted with the conference call webcast link on the Investor Relations website. We will reference some of these slides in today's call.

Participating in today's call are John Hairston, President and CEO; Mike Achary, CFO; and Chris Ziluca, Chief Credit Officer.

I will now turn the call over to John Hairston.

John M. Hairston -- President & Chief Executive Officer

Good afternoon everyone and thank you for joining us. I'm very pleased to report Hancock Whitney's continuation of improving performance. Second quarter operating results, either met or exceeded expectations for nearly every category for the quarter. The linked-quarter PPNR, up $6 million or 4%. Growth in core loans was well above expectations and guidance as our bankers and support teams returned fully to office in the first quarter and significantly outperformed our expected pull-through rate on a robust pipeline in most categories. And pay downs, were well below our run rate for the pandemic. I do want to recognize and thank our entire team of associates for outperforming in nearly every category, while simultaneously working toward rightsizing our expense base.

Our credit metrics improved once again this quarter facilitating another modest reserve release of $28 million and a negative provision of $17 million. Sticky deposits and PPP forgiveness combined to result in elevated levels of excess liquidity on our balance sheet, which in turn compressed our NIM once again. However, while we reported a decline in the overall ratio, note that the thoughtful management of the balance sheet minimized the impact on net interest income, producing a stable run rate linked-quarter.

As our markets continue to reopen and activity levels pick up, we are seeing growth in COVID impacted lines of business within fee income. Bankcard and ATM fees are up linked-quarter, buoyed by the revival of leisure and family tourism, continued success with our purchase card initiative, helpful escalation of merchant transaction volume and our merchant services and treasury solutions teams are winning a number of new clients. Deposit service charges in Wealth Management revenue also performed well in the quarter. As we discussed with the market previously, 2021 brought into focus the importance of reassessing how we could meet the challenges the past year presented to our company and the whole banking industry.

During the second quarter, we completed our previously announced phased in plan to streamline and strengthen our operational framework according to our clients' changing needs and habits in the recovering economy. The initiatives we undertook included a voluntary early retirement package for 647 of our associates of which 260 accepted it. The consolidation or announcement to consolidate 38 financial centers across our footprint, the closure of two trust offices in the Northeast and a reduction in force three of the phase out of an additional 200 positions across the organization. With the rightsizing plan complete, we will continue reinvesting a portion of our harvest of expenses back into revenue production for the benefit of future years. The net nonoperating expenses associated with the entire plant are included in the second quarter's results and totaled $42 million or $0.37 per share. See Slide 26 in our presentation deck for details.

So the takeaways from the commentary and slides in the Investor Day, should be the expense rationalization plans complete, we resolve materially all the nonoperating expenses and the path is clear to achieving the 4Q '21 run rate in our guidance. At this point, we are moving forward with renewed energy focus and a solid capital position. We've had a good start to 2021, but are keenly focused on navigating the remaining pandemic uncertainty while simultaneously dedicated to improving performance and value.

I will now turn over the call to Mike for further comments.

Michael M. Achary -- Chief Financial Officer

Thanks, John. Good afternoon, everyone. Results for the second quarter were very solid. Net income totaled $89 million or $1 per share. As John noted the reported results included $42 million or $0.37 per share of net nonoperating items. Excluding these items, EPS would have been a $1.37 with operating earnings of over $121 million.

So just a few comments on the major drivers of our balance sheet and NIM. Total loans declined $516 million, as just over $1 billion in PPP loans were forgiven in the quarter. Partially offsetting the decline was slightly over $100 million in new PPP funding and $412 million in organic loan growth. Core loan growth is one of the big headlines for us this quarter and we were happy to see the results of our bankers efforts. An increase in the pull-through rate for our pipeline led to growth across our footprint, both regionally and by specialty lines. As you can see from the chart on Slide 6 in our earnings deck, growth was especially evident in our markets outside of Greater New Orleans as well as in equipment finance and healthcare. A step down in payoffs compared to last quarter and stabilization in line utilization after several quarters of declines also contributed to the quarter's growth.

Going forward, our goal is to build on this progress and deploy as much of our excess liquidity as possible into loans, while recognizing headroom still exists from amortizing only portfolios like indirect and energy, as well as elevated levels of residential mortgage payoffs. With the PPP process now closed and into forgiveness, going forward, the overall impact of the PPP loans in our balance sheet and earnings are weighing from this point.

Slide 7 in the earnings deck expands on those points. On the liability side of the balance sheet, our deposit levels remain resilient and it continued to increase. The elevated deposit levels and PPP forgiveness are combining to sustain and increase our levels of excess liquidity, which led to continued NIM compression. We are guiding to additional contraction in the second half of '21 versus what we said last quarter. That updated guidance really stems from the current levels of excess liquidity continuing to build through the end of this year, mostly from PPP forgiveness. We are expecting an additional $1.1 billion to be forgiven by year-end, but also slower deposit outflows and in fact, we believe deposits will be up in the third quarter and then flat as we move into the fourth quarter.

Another factor around the NIM guidance stems from the relative size of our bond portfolio and the level of current reinvestment yields. At nearly 25% of earning assets and with reinvestment yields recently trending down, I think it has brought us to the point where [Indecipherable] were likely could not deploy excess liquidity into bonds. The potential for higher rates down the road are also a consideration. No major changes in the guide for what we're expecting for loan growth in the second half of '21. We are expecting to leverage our second quarter success in growing loans and believe we can further grow our loan book between $600 million and $800 million over the second half of this year. So combining all those factors, we think the NIM could narrow another 4 basis points or so in the third quarter and then possibly a similar level in the fourth quarter. However, as our NII guidance indicates, we do expect NII to trend flat for the next two quarters.

Before I turn the call back to John, I'd like to point out a few of the slides in the deck. With the recent focus on interest rate risk and asset sensitivity in light of expectations for a rise in rates in the future, we added some additional information on Slides 15 and 29 related to our hedge positions. Slide 15 also includes our usual disclosures on our variable rate loan portfolio and floors. And finally, you will see our updated guidance on Slide 20. As noted, the majority of our forward guidance is unchanged with the exception of NIM.

With that, I'll turn the call back to John.

John M. Hairston -- President & Chief Executive Officer

Thanks, Mike. Let's open the call for questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] And our first question today will come from Michael Rose with Raymond James. Please go ahead.

Michael Rose -- Raymond James -- Analyst

Hey, good afternoon. Thanks for taking my questions.

John M. Hairston -- President & Chief Executive Officer

Hey, Michael.

Michael Rose -- Raymond James -- Analyst

Hey, how are you? Just wanted to get some color on the loan growth and if you can speak to kind of where that's coming from? If I look at the balances, it looks like you had some decent construction growth this quarter. So it's part of it, but if I back out the PPP it also looks like C&I is not doing terribly bad either. I know you talked about utilization rates look like they were up slightly in the quarter, which is a good sign. Can you just give us some color -- some greater color on where that expectation for $400 million to $500 million in the back half is coming from? Thanks.

John M. Hairston -- President & Chief Executive Officer

Sure. Michael, this is John. I'll start and you actually started out a pretty good list yourself. The outperformance generally came from a number of different directions somewhat like you cited. The anticipated tailwinds were really better than we expected and anticipated headwinds were a little less challenging than we expected. So the result is when you measure together the outsized upside. So if I start with pay downs and work our way into the more solid [Phonetic] part, they were quite muted compared to both our expectations and really the run rate for the pandemic, we did have a few pay downs that drifted from the expected late second quarter into Q3 and that's all cooked into the near-term guides for next quarter. So it's a little early to project a permanent reduction of pay downs across the remainder of the year, just given the up and down and so much significant volatility still after the recovery. But certainly the last few months we've seen an improvement in the lumpiness of the pay down.

So moving on to the other part, the other better news, there were several specific areas of outperformance that maybe interesting. First, the pipeline itself really began to grow more robust as the quarter progressed and the pull-through rate, the percentage of the [Indecipherable] kind of actually moved for application, to sort that application to closings was much stronger than we normally have. So the pull-through rate was a size we've ever seen it. I mean, as I mentioned in the prepared remarks, excuse me, as was mentioned in the prepared remarks, we included that to the fact that our entire team was back in the office in March, about 80% or so by last August and so we really began the quarter hitting on all eight cylinders and with a full complement of team members focused on moving quickly through the add process, getting all the necessary requirements in getting to closing, that pull-through rate really was remarkably strong. So that was certainly very helpful.

Another area of outperformance, Michael, you mentioned was in C&I and the equipment financing portion of C&I about half the net growth was from a precipitous increase and our clients finally getting gear that they had on order and supply chain was simply in the way of the gear made in the end and we get those deals closed. And that was about -- capital markets about half in market existing C&I clients and you see in our clients. So the supply chain roadblock softening, were certainly very, very helpful. Healthcare also stabilized and we see the growth numbers there on the waterfall chart in the deck, really good and it's been exclusively in very high quality deals and then line utilization as you mentioned, actually found about a quarter ahead of when we expected, that was part of the difference, in what we expected versus the [Indecipherable] delivered is not only stabilized, but it actually ticked up just a bit, and that was about a quarter earlier really than we anticipate.

Mike mentioned earlier in his comments that we grew across the footprint, with the exception of [Indecipherable], but notably in that the central super region as we have it on our loan growth waterfall, but what's really different about this quarter [Indecipherable] was it essentially was flat. I think the actual number was $1 million down, call that a push. So after several quarters of quarter-over-quarter continuous contraction and the loan book, it finally firmed up and was stable. So without that contraction, it wasn't nearly as big a contra as we've had to deal with [00:05:29], really the entire pandemic.

And then finally, I think I mentioned on the call or maybe in the Q&A last quarter that we began to see some green shoots forming in consumer lending and we've invested pretty heavily in marketing consumer loans and the green sheets may be flowered a bit early and in June, we had as good or better than month both in applications and then closed 90 lock-in consumer lending business as we've had even before the pandemic, a normal June. So while you don't see a whole lot of big numbers out of consumer, the fact that it's approaching [Indecipherable] the home equity run off for mortgage refi is sort of a big point. You don't really see that much in the waterfall, but it was actually quite helpful.

So it's tempting Michael to sound very bullish on growth, but still early, you see some volatility. Just last week and this week, it's very difficult to predict how much PE money will come into acquiring clients, which creates lumpiness and then the supply chain improvements is happening. If that continues, and maybe gets even better, that will certainly be a tailwind. And that's also a tailwind for C&E, because among the biggest hold-ups that we experienced in construction lending is the fact that it just takes time to get gear and so as that improves that should be a tailwind there. So that's pretty much the run down one -- from the whole question. Did I cover everything you wanted Michael or wasn't [Indecipherable].

Michael Rose -- Raymond James -- Analyst

No you covered a lot there. I appreciate all the color. Just as my follow-up. It looks like you guys didn't repurchase any stock in the quarter. You are trading about 1.4 times tangible at this point. TCE is up. With the stock trading where it is, I mean why not use it and when do you expect to be a little bit more aggressive here? Or you wait to hit certain capital level, whether it's 8% TCE or whatever the threshold maybe? Thanks.

Michael M. Achary -- Chief Financial Officer

Yes, Michael, this is Mike. So just a couple of thoughts about that. So certainly, in the past quarter, we said that we consider things like buybacks or even looking at the dividend in the second half of the year and we'll absolutely do that. Nothing to report in terms of any changes and a lot more to how we'll look at it, but certainly that's something that's a consideration for the next quarter or two. We absolutely get those points.

Michael Rose -- Raymond James -- Analyst

Understood. Thanks for taking my questions.

John M. Hairston -- President & Chief Executive Officer

You bet. Thanks, Mike.

Operator

And our next question will come from Brett Rabatin with Hovde Group. Please go ahead.

Brett Rabatin -- Hovde Group -- Analyst

Hey, good morning -- good afternoon, everyone.

John M. Hairston -- President & Chief Executive Officer

Good afternoon.

Brett Rabatin -- Hovde Group -- Analyst

I wanted to ask about the margin and the guidance going forward, just a couple of key things. One is, thinking about the expectations for 3Q and 4Q being down due to continued access liquidity. Can you just walk me through what your expectations, you indicated you want to do much with liquidity currently, but just how that might play out over the next year. Obviously, you want to deploy in loans, but just thinking about one the liquidity, what you end up doing with it as time progresses. And then two, just, it seems like the margin ex- liquidity noise of -- has bottomed here, so I was also hoping to get maybe some thoughts on origination rates versus the current portfolio yield?

Michael M. Achary -- Chief Financial Officer

Sure, Brett, so just a couple of thoughts to begin with probably your last question first. So over the course of the second quarter, as John indicated, we have -- had absolutely fantastic levels of new production. It was up some 40% to 45%. Now the yields that that new production came on being the loan portfolio was down about 25 basis points or so to around 3.3%. So certainly that's a factor and something that was a bit of a headwind certainly as we look at the NIM contraction that we had this quarter. The yields on our bond portfolio was also down, that was down about 9 basis points. Certainly with the gyrations of rates during the quarter and the 10-year kind of up and down and back down, the reinvestment yields that were available to us in the bond portfolio about 134 basis points. So again, that was a bit of a headwind as well and then finally, as we've mentioned on this call and in last quarter, just the abundance of excess liquidity that flowed on to our balance sheet, and really not much in the way of viable options to put that excess liquidity in the absence of any meaningful loan growth. Now, certainly, we got some meaningful loan growth this quarter. A lot of that growth was weighted, a little bit toward the back half of the quarter versus the front half. So that certainly speaks for the contraction that we're expecting and for future quarters to the, certainly less than we've experienced in the last couple of quarters.

Kind of the final point I would mention is, just in terms of how we kind of manage the balance sheet and look at things like the level that we have in our bond portfolio versus cash and we're trying to keep on the sidelines. Our bond portfolio is pretty big. Currently it is about 25% or so of our earning assets and that really at least for now, so buyers bake as we'd like the bond portfolio to get. So, certainly for the next quarter or so, we're looking at that kind of paring back inflows into the bond portfolio. So the bond portfolio is likely to come down a little bit, not a tremendous amount, but a bit from the current levels that exist at right now. That will result in more excess liquidity kind of piling up at the Fed, and certainly we look to loan growth picking up in the second half of the year and especially as we go into '22 to deploy that liquidity into. So hopefully that was helpful.

Brett Rabatin -- Hovde Group -- Analyst

Yes, that was very helpful. I guess the other thing I was curious about was just thinking about the expense guidance and with the 4Q '21 expense level of $187 million being a run rate for '22, and you mentioned in the prepared comments, you're reinvesting for some growth going forward. I guess, I'm just curious, obviously you've done a great job managing the expense levels down in the past year. Here would it be fair to assume that they will have at least stay at some inflationary pressure in expenses, now kind of puts [Phonetic] which you've accomplished. This year, how should we think about the go-forward rate?

Michael M. Achary -- Chief Financial Officer

Yes, I think so certainly with all the news and all the discussion lately around inflation that, that's certainly something I think that we're going to have to contend within future quarters and who knows how transitory that may be or not. But definitely something that we've kind of built into our guidance on a go-forward basis. So we obviously had announced a good deal of efficiency measures during the quarter. John kind of talked about those in his prepared comments, and really on a go-forward basis, the vast majority of those things are really in the rear view mirror. It doesn't mean that we're not going to continue to work on cost initiatives and continuing to become more efficient. I think some examples, will be things related to strategic procurement that will continue to work on. But again, the objective with the cost cutting efforts that we've gone through really is twofold. First and foremost, it's become more efficient and more profitable as a company. And then secondly it's to create room, so that we can reinvest back in the company as we've kind of talked about in the past.

Brett Rabatin -- Hovde Group -- Analyst

Okay, great. Thanks for all the color and nice to see the loan growth in 3Q.

John M. Hairston -- President & Chief Executive Officer

Okay, thank you.

Michael M. Achary -- Chief Financial Officer

Thank you for questions.

Operator

And our next question will come from Brad Milsaps with Piper Sandler. Please go ahead.

Brad Milsaps -- Piper Sandler -- Analyst

Hey good evening guys.

John M. Hairston -- President & Chief Executive Officer

Hey Brad.

Brad Milsaps -- Piper Sandler -- Analyst

Mike, I think I heard you correctly that you thought that deposit growth, like how level off from here. Just kind of curious kind of what's that going to give you that assurance, are there some specific things out there you guys you running off, rathe it's just really difficult to predict on the deposit side of the equation is that the lead in it, only liquidity discussion.

Michael M. Achary -- Chief Financial Officer

So we actually thought that deposit growth last quarter going forward, would have probably leveled off a bit more than it actually did. So in the second quarter, we actually had about $63 million of positive deposit growth and what we're expecting for the third quarter is as much as $150 million or so and then after that kind of level off. So that's kind of how we're looking at is at this point. But certainly there are an awful lot of variables to consider as we think about things like deposits.

Brad Milsaps -- Piper Sandler -- Analyst

And then you provided additional color on some of the cash flows on Page 29. Just kind of curious, are you guys still contemplating maybe doing something there closing that out or is that just -- you just wanted to offer more disclosure. Just kind of curious kind of how you're thinking about that at this point?

John M. Hairston -- President & Chief Executive Officer

We've always kind of to disclose the cash flow hedges and the new disclosure this quarter is a fair value hedges that we have on the bond portfolio. I think the objective there was really just to help us to understand some of the things that we're doing to potentially increase our asset sensitivity down little -- down the road a little bit. That clearly is the objective of the fair value hedges that we have on the bond portfolio. As far as the cash flow hedges, I think it's probably more likely than not that we'll look at terminating some part of those over the coming quarter or so, and when that happens, of course, we'll be able to kind of lock-in those gains and amortize back its earnings. So that's something that you have to look out for.

Brad Milsaps -- Piper Sandler -- Analyst

Great, very helpful. Thank you, guys, Nice quarter.

John M. Hairston -- President & Chief Executive Officer

You bet. Thank you.

Operator

And our next question will come from Jennifer Demba with Truist Securities. Please go ahead.

Jennifer Demba -- Truist Securities -- Analyst

Thank you. Good evening. Question on mortgage lending. Can you just talk about the growth in fees this quarter, and give some thoughts on your outlook there?

John M. Hairston -- President & Chief Executive Officer

The growth in what? I've been cut out a little bit.

Michael M. Achary -- Chief Financial Officer

Growth in fees.

John M. Hairston -- President & Chief Executive Officer

In fees. Okay got it.

Jennifer Demba -- Truist Securities -- Analyst

Mortgage fees.

John M. Hairston -- President & Chief Executive Officer

Yes, thank you for the question, Jennifer. We expect the volumes for mortgage to drop a bit in Q2 and it did. There was a process in change to where we incurred a bit of a one-time benefit in Q2 to cause the fee increase to be actually in the green versus the red overall. So all things being equal, we do think that's probably the last green quarter-less. The rate environment is so hard to predict as we would have thought we'd see 30 year the rates were at today, just a month ago. So while we think that short-term and we will see is, is a fall-off in mortgage activity for Q3, that Q2 number was really driven by one-time money. So all in all, it would have been a little bit less from last quarter. Did I answer your question.

Jennifer Demba -- Truist Securities -- Analyst

Yes, yes. Can you just talk about what you're thinking about in terms of loan loss releases in future quarters and could it -- could that reserve approach to CECL day one level?

John M. Hairston -- President & Chief Executive Officer

You want to tackle that Mike.

Michael M. Achary -- Chief Financial Officer

Yes, I don't know that Jennifer right now, there's certainly any intend or plan to kind of get back to the CECL day 1 to day 2 levels. And just as a reminder that was around 128 basis points, 130 basis points or so and did include the energy, the guidance that we have in common a go-forward basis is this notion of continuing to expect that we kind of referred to is modest reserve releases. And so certainly, that could be, or they could mean that we would have reserve releases, kind of in the neighborhood, maybe of what we've done in the last couple of quarters. So in the first quarter, that is around $23 million, in the second quarter just over $27 million. So lomd pf on a go-forward basis, we think about that level of reserve release that probably is a good proxy around what you expect on a go-forward basis. And then certainly our charge-offs, we had $10.5 million in this quarter. We think that could trend down just a bit, maybe in future quarters. And in terms of the position, it will be [Indecipherable] resulting between those two.

Jennifer Demba -- Truist Securities -- Analyst

Thanks so much.

John M. Hairston -- President & Chief Executive Officer

Thanks for the questions.

Operator

And our next question will come from Catherine Mealor with KBW. Please go ahead.

Catherine Mealor -- KBW -- Analyst

Thanks. I just had a follow-up on your fee guidance. It looks like we're seeing service charges remain fairly low, but you're seeing kind of rebound in bankcard and ATM fees. Could you say kind of softening guidance and how you're thinking about those two line items as we get into a more normalized environment?

John M. Hairston -- President & Chief Executive Officer

Yeah, I'll start and thanks for the question. This is John. In the second quarter, we did have a couple of unusual items related to I mentioned the processing benefit which took secondary from a little less than flat to a little up, and then it will trail down and it's just hard to predict the activity, but our -- what's put in our guidance is a drop off from 2Q. The deposit service charges, did indeed finally stabilize as the liquidity levels in the accounts that typically generate deposit charges begin to work their way down a bit. So that number is probably stable to up and then Trust had a really good quarter. We typically enjoy the benefit of the attached fees in Q2, but -- so that may drop down a little bit in the third quarter. So there's a lots of puts and takes Catherine in that number that kind of rolls together for the guidance. But the heavy movers really are the one-time action going away offset by continuing good news in card-related revenue. And remember we keep merchant revenue inside cards. So when we say cards, we are talking about commercial purchase card, which has been extremely bright spot and getting brighter. Consumer credit and ATM, which actually was unusually half of the second quarter. I think as people withdrew some of the proceeds from the very stimulus programs and then our wealth overall, we think is going to perform pretty well. So the big news take away the one-time charges, with a little bit of lockdown in mortgage and kind of a lab at the [Indecipherable]. Mike, do you want to say anything.

Michael M. Achary -- Chief Financial Officer

The only thing I would add to that John is, the guidance for the third quarter as mentioned it may be down $3 million to $5 million. I would suggest that it's more likely than not that we would be kind of on the lower end of that range of potentially down to around $3 million. And it really points to the absence of the two items that John called out, that really kind of [Indecipherable] the second quarter numbers. So the mortgage fee item and then the seasonal tax fee certainly, typically booked in the second quarter related to Trust. The delta probably on a go-forward basis, allow [Phonetic] the fee goes can be the specialty income. A very little of that on net basis in the second quarter. So things like BOLI and derivative fee valuations and syndication fees are always pretty hard to forecast or project. So to the extent that we have any kind of meaningful activity on those line items, we could outperform the guidance.

Catherine Mealor -- KBW -- Analyst

Got it. That's very helpful. And then just kind of thinking big picture, you've given some really helpful near-term guidance. What do you think you will return to giving DSO and thinking more kind of into the longer term profitability outlook?

John M. Hairston -- President & Chief Executive Officer

I think we'll do that in '22 Catherine. So look for our guidance to probably expand a little bit and go back to this notion of mid term guidance which for us is actually the CSOs on a go-forward basis.

Catherine Mealor -- KBW -- Analyst

[Indecipherable]. That's very helpful. All right, great, thank you so much and congrats on the [Indecipherable].

John M. Hairston -- President & Chief Executive Officer

You bet.

Michael M. Achary -- Chief Financial Officer

Thanks Catherine.

Operator

And our next question will come from Matt Olney with Stephens. Please go ahead.

Matt Olney -- Stephens -- Analyst

Great, thanks for taking my question. I want to go back into Catherine's question around consumer fees. And I'm curious if you think the bank's pricing of its products and specifically service charges, overdraft charges and other miscellaneous fees. Is the pricing of those products is it appropriate at this point or is this something you consider modifying. And I guess the question comes from more of a political standpoint, I think we've seen the administration make some noise around consumer fees over the last few weeks. So I would love to hear your thoughts you have about the bank's pricing on these products for the consumer? Thanks.

John M. Hairston -- President & Chief Executive Officer

Sure. It's a good question. Thanks for asking it. When overdraft and NSF fees, I presume that's what you're really referring to began to fall in the regulatory scrutiny number years ago, we assured that whatever our practices were, we're well inside the FDIC guidance. As you know, there's really no rule, there is just guidance and we follow within to well within depending on which part of the guidance is scrutinized all of those pricing, it's not just pricing, it's really processing order, it's habits, it's maximum etc. And so we know that we're well within all of that guidance already. So certainly our current posture would simply be to pay attention to any evolving regulatory guidance or changes. And as it develops, we'll certainly adhere to it.

I think our regulators refer a lot of information from a lot of different constituencies about this subject matter through the years, and they work really hard, I think to find a balance that's prudent between protecting consumers from what could be overly aggressive practices. So not in this institution but elsewhere, while simultaneously ensuring that overdraft practices are available to clients who actually need them. And so I think there'll be a continuing good job of finding what they think the appropriate balance is and then we will typically remain conservative and well within whatever that guidance might be.

So I guess I'm saying all that to say, based on the guidance, that's out there now, how we're handling that business is something better than appropriate. If the guidance changes, then we'll manage to whatever that change is.

Matt Olney -- Stephens -- Analyst

Okay that's perfect. Thank you for that. And then I guess switching gears. Mike, just a clarification. I think you mentioned what the day one allowance ratio would have been ex-energy, but I didn't catch the whole thing. Can you repeat that.

Michael M. Achary -- Chief Financial Officer

I didn't give the ex-energy point, Matt. What I simply said is that the 128 did two for us, including the energy book that we largely sold in the second quarter of last year.

Matt Olney -- Stephens -- Analyst

Got it, OK. Okay, perfect. Thank you, guys.

John M. Hairston -- President & Chief Executive Officer

Thanks Matt.

Michael M. Achary -- Chief Financial Officer

Thanks Matt.

Operator

And our next question will come from Kevin Fitzsimmons with D.A. Davidson. Please go ahead.

Kevin Fitzsimmons -- D.A. Davidson -- Analyst

Good afternoon everyone.

John M. Hairston -- President & Chief Executive Officer

Hi Kevin.

Kevin Fitzsimmons -- D.A. Davidson -- Analyst

Just wanted to follow-up. I joined late. Mike, I believe you answered a question about buybacks before and I don't think you guys had said you were looking at buybacks for the second quarter, but that it was a possibility for second half? Is that the outlook or is it something different?

Michael M. Achary -- Chief Financial Officer

No, that's, that's accurate, Kevin. And we have said, last quarter that there will be something that we would certainly address and look out and the second half of this year and certainly that's what our plans are to do. But that is nothing really new to announce today certainly.

Kevin Fitzsimmons -- D.A. Davidson -- Analyst

Okay, but there is -- is there an authorization in place or no?

John M. Hairston -- President & Chief Executive Officer

Yes we nicely, put a new authorization in place last quarter and that was one of the things is known about intra-quarter through our 8-K.

Kevin Fitzsimmons -- D.A. Davidson -- Analyst

Okay. And then just a quick follow-up and I apologize if you all went over this already. Are there any notable data points or wins in terms of things being scheduled for later this year, early next year in Metro New Orleans from the tourism or hospitality standpoint that are worth noting here?

John M. Hairston -- President & Chief Executive Officer

Yes, thanks for asking the question. It is a bright spot in our story, and you may have missed when we're talking about loan growth, we shared that as a central super engine is kind of dominated by the New Orleans balance sheet and this quarter for the first quarter since the pandemic began it was a push and a lot of that is because of all the renewed sentiment and a good bit of enthusiasm that's happening inside as tourism returns. So we certainly can't speak for elected officials or what have you, but the shared commentary from the statewide folks around our region, this includes Louisiana would suggest very little appetite for pulling in our horns.

So I think what we would expect to see as -- is continuing improvement in both the leisure tourism, which has been enormously successful really for several months beginning in March in New Orleans, that the return of conventions and festivals, the first couple of conventions in Q3 already happen and you tend to try was very positive, and the number of conventions that were not canceled from back last year when people are in the business of cancelling conventions. They all seem to be having pretty good attendance. So I think it's something better than a green shoot and the festivals as of now appear to be all on.

I think we have [Indecipherable] which is typically a big, big April show that coincides with the Gulf South Banking conference. It was moved to October, it's happening. The lineup was announced a couple of weeks ago, it looks pretty good. The French quarter festival is happening along with three festivals are getting scheduled. So it really is sort of the last of our markets to look more like it's fully recovering pro hospitality, the beach communities really didn't have pay if economy last summer, they were moving quickly and even before there was a vaccination news, but New Orleans is certainly continuing to improve right now. So we're pretty enthusiastic about it.

Michael M. Achary -- Chief Financial Officer

And Kevin just a quick here. So, Kevin, on Slide 8 in our earnings deck is an updated version of the slide we had last quarter. And that's simply by major region, have a listing of the major hospitality related events that [Indecipherable] couple of quarters and that the Central region in the middle, that's primarily New Orleans.

Kevin Fitzsimmons -- D.A. Davidson -- Analyst

That's great. Okay. Thanks, Mike. Thanks, John.

John M. Hairston -- President & Chief Executive Officer

You bet. Thanks for the questions.

Operator

And this will conclude our question-and-answer session. I'd like to turn the conference back over to John Hairston for any closing remarks.

John M. Hairston -- President & Chief Executive Officer

Yeah, thanks Cole for moderating today and thanks to everyone for your interest in Hancock Whitney. Stay safe and we'll see you soon.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Trisha Carlson -- Executive Vice President and Investor Relations Manager

John M. Hairston -- President & Chief Executive Officer

Michael M. Achary -- Chief Financial Officer

Michael Rose -- Raymond James -- Analyst

Brett Rabatin -- Hovde Group -- Analyst

Brad Milsaps -- Piper Sandler -- Analyst

Jennifer Demba -- Truist Securities -- Analyst

Catherine Mealor -- KBW -- Analyst

Matt Olney -- Stephens -- Analyst

Kevin Fitzsimmons -- D.A. Davidson -- Analyst

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