The prolonged slump in the energy sector has led Hancock Holding Co. to revise upward its expected credit losses in the first quarter to between approximately $58 million and $62 million. The company says in a news release that it’s adding $45 million to its reserves to cover the expected loss.
Hancock says it recently identified risk rating downgrades on more than $300 million in outstanding energy credits, citing the energy industry downturn. Hovda Group has reportedly downgraded Hancock stock this morning from “outperform” to “market perform” and lowered the price target of the company’s shares to $24 from $25.50. As of 9:30 a.m., Hancock shares were trading for $22.42, down $1.26 or 5.3%.
Bloomberg also reports that Hancock Holding Co. and Prosperity Bancshares Inc. have the lowest valuations out of the top 10 most shorted lenders in the KBW Regional Banking gauge.
“There is some uncertainty on how significant these oil credits are going to mean to the credit costs for these banks going forward,” Daniel Werner, an analyst at Chicago-based Morningstar Inc. tells Bloomberg. “Investors are right to be cautious with names in the Texas and Oklahoma area. That’s a fair assessment by investors until we figure out what’s going on with oil.”
As oil prices plunged, concern over energy companies’ ability to pay back loans drove investors to unload or bet against financial stocks judged to have the most at stake in the sector. So far, the rebound that pushed oil to around $40 a barrel has done little to dilute that speculation.
Hancock acquired Whitney Holding Corp. in 2011 and operates locations throughout Louisiana, Texas, Mississippi, Alabama and Florida under both brands.
As first reported by Daily Report, a pair of executives left Chase Bank earlier this month to join Whitney. Robert Schneckenburger left his position as local market president of Chase Bank, along with Chase’s long-time senior vice president Jeff Gould, to assume top leadership roles at Whitney, which has more than $2 billion in assets in Baton Rouge.
“We are gearing to expand,” Duayne Richard, Whitney’s senior regional president for the southwest super region and Schneckenburger’s supervisor, told Daily Report. “We are strategically planning our growth.”
