Hancock Whitney Q1 2025 Earnings Report

Hancock Whitney EPS Results

• Actual EPS: $1.38
• Consensus EPS: $1.28
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: N/A

Hancock Whitney Revenue Results

• Actual Revenue: $367.50 million
• Expected Revenue: $368.12 million
• Beat/Miss: Missed by -$616.00 thousand
• YoY Revenue Growth: N/A

Hancock Whitney Announcement Details

• Quarter: Q1 2025
• Date: 4/15/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, April 15, 2025
• Conference Call Time: 4:30PM ET

Hancock Whitney (NASDAQ:HWC) operates as the financial holding company for Hancock Whitney Bank that provides traditional and online banking services to commercial, small business, and retail customers. It offers various transaction and savings deposit products consisting of brokered deposits, time deposits, and money market accounts; treasury management services, secured and unsecured loan products including revolving credit facilities, and letters of credit and similar financial guarantees; and trust and investment management services to retirement plans, corporations, and individuals, and investment advisory and brokerage products. The company also provides commercial and industrial loans including real and non-real estate loans; construction and land development loans; and residential mortgages, as well as consumer loans. In addition, it offers commercial finance products to middle market and corporate clients, including leases and related structures; facilitates investments in new market tax credit activities and holding certain foreclosed assets; provides customers access to fixed annuity and life insurance products; and underwriting transactions products, as well as debt and mortgage-related securities. The company was founded in 1899 and is headquartered in Gulfport, Mississippi.

Hancock Whitney Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to Hancock Whitney Corporation's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Kathryn Mistich, Investor Relations Manager.

[Operator]

You may begin.

[Kathryn Mistich, Investor Relations Manager at Hancock Whitney]

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 ks 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.

[Kathryn Mistich, Investor Relations Manager at Hancock Whitney]

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.

[Kathryn Mistich, Investor Relations Manager at Hancock Whitney]

The presentation slides included in our eight ks 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 Ackery, CFO and Chris Zalluca, Chief Credit Officer. I will now turn the call over to John Hairston.

[John Hairston, President and CEO at Hancock Whitney]

Thank you, Katherine, and thanks everyone for joining us this afternoon. We are pleased to report another quarter of high performing profitability and continued capital growth, a very strong start to 2025. We achieved an impressive 1.41% ROA, grew fee income, enjoyed continued NIM expansion and into the quarter with total risk based capital of 16.39%. NIM expanded as we were able to control funding cost and mix that more than offset the impact of lower loan yields and lower average earning assets. We had another quarter of strong fee income with growth across most categories.

[John Hairston, President and CEO at Hancock Whitney]

Expenses remained well controlled with only a 1% increase this quarter. We've updated our guidance to reflect the impact of the Sable Trust transaction and now anticipate fee income to be up between 910% year over year. Our expectations for expense growth remain unchanged between 45% higher year over year. Loans were down $2.00 $1,000,000 due to higher payoffs on large healthcare and commercial non real estate loans offsetting strong production. We've updated our guidance this quarter and expect loans will grow low single digits in 2025 with most of the growth coming in the second half of the year.

[John Hairston, President and CEO at Hancock Whitney]

The change in guidance accounts for uncertainty reflected in current client sentiment. We remain focused on more granular full relationship loans with the goal of achieving more favorable loan yields and relationship revenue. Deposits were down $298,000,000 driven primarily by the seasonal public funds outflows. For the second quarter in a row, our DDA balances actually increased and our DDA mix is stable at 36%. Interest bearing transaction accounts increased due to our competitive product offerings and retail CDs declined due to the reduction of promo rates which help control deposit costs.

[John Hairston, President and CEO at Hancock Whitney]

We continue to return capital to investors by repurchasing 350,000 shares of common stock this quarter. We also increased our common stock dividend to $0.45 per share, a cumulative increase of 50% from this time last year. Even after returning capital, we had strong growth in all of our regulatory capital metrics due to excellent profitability, ending the quarter with a common equity Tier one ratio of 14.51% and tangible common equity ratio of 10.01%. Last quarter on our call, we shared our plan to pivot to growth both organically and inorganically through the acquisition of Sable Trust Company. We continue to execute hiring plans with four additional bankers and have selected four new locations of five planned in the northern area of the Dallas MSA.

[John Hairston, President and CEO at Hancock Whitney]

The Sable transaction is expected to close on May. We look forward to welcoming Sable clients and associates to Hancock Whitney and for the opportunity to expand our best in class regional banking services in the Greater Tampa and Orlando areas. Despite current market volatility, we remain optimistic for our

[John Hairston, President and CEO at Hancock Whitney]

growth

[John Hairston, President and CEO at Hancock Whitney]

prospects particularly in the second half of the year. We are closely monitoring macroeconomic trends and indicators including both nationally and within our own footprint. While the environment remains dynamic, our ample liquidity, solid allowance for credit losses of 1.49 and strong capital keep us well positioned to navigate challenges and support our clients in any economy. With that, I'll invite Mike to add additional comments.

[Michael Achary, CFO at Hancock Whitney]

Thanks, John. Good afternoon. As John said at the onset, the company's performance in the first quarter was outstanding. Our net income for the quarter was 120,000,000 or $1.38 per share compared to $122,000,000 or $1.4 per share in the fourth quarter. Earnings were up 10% compared to the same quarter a year ago, while EPS was up 11%.

[Michael Achary, CFO at Hancock Whitney]

PPNR was down slightly from last quarter to $162,400,000 but up $9,500,000 or 6% compared to the first quarter of last year. Our NIM expanded two basis points to 3.43%, but NII was down due to two fewer accrual days and a lower level of average earning assets. Anne has mentioned our fee income businesses had another outstanding quarter and expenses continue to be well controlled. The NIM expansion was driven by lower deposit costs, higher yields on the bond portfolio and a favorable mix of borrowed funds, partly offset by lower loan yields as shown on Slide 16 of the investor deck. Our overall cost of funds was down 14 basis points to 1.59% due to a lower cost of deposits and a better funding mix as we ended the quarter with no home loan borrowings.

[Michael Achary, CFO at Hancock Whitney]

The downward trend in our cost of deposits continued this quarter with a decrease of 15 basis points to 1.7% in the first quarter. The drivers here were CD maturities and renewals at lower rates and a reduction of pricing on interest bearing transaction accounts. For the quarter, we had $2,700,000,000 of CD maturities, which repriced from 4.33% to 3.72% with an 86% renewal rate. Additionally, we ended the quarter with no brokered deposits and our DDA balances increased $18,000,000 Our NIB mix was stable at 36%. CDs will continue to reprice lower throughout 2025 given maturity volumes and three anticipated rate cuts over the remainder of 2025.

[Michael Achary, CFO at Hancock Whitney]

Total EOP deposits were down $298,000,000 but that includes $320,000,000 of seasonal public fund runoff. Bond yields for the company were up seven basis points to 2.78%. We had $165,000,000 of principal cash flow at 3.05% that was reinvested at 5.04%. Additionally, dollars 164,000,000 of our fair value hedges became effective and contributed four basis points to the overall yield pickup of seven basis points. Next quarter,

[Michael Achary, CFO at Hancock Whitney]

we expect about $236,000,000 of principal cash flow at 3.19% that will be reinvested at higher yields. For the remainder of 2025, an additional $85,000,000 of our

[Michael Achary, CFO at Hancock Whitney]

fair value hedges will become effective providing additional yield. Our loan yield for the quarter was down 18 basis points to 5.84% and was impacted by lower average loan balances and lower yields on our variable rate loan portfolio. We updated our guidance this quarter to reflect the Sable transaction and our updated expectations for loan growth as well as a few other items. We believe we can continue to achieve modest NIM expansion and NII growth of between 34% in 2025, driven primarily by the impact of lower deposit rates, lower single digit loan growth and continued repricing of cash flows from both the bond and fixed rate loan portfolios. Our guidance assumes three rate cuts of 25 basis points each in June, July and October.

[Michael Achary, CFO at Hancock Whitney]

Our updated PPNR guide is we expect to be up between 67% from twenty twenty four's adjusted levels and our efficiency ratio will fall somewhere between 5456% in 2025. As John mentioned, we did receive regulatory approval for Sable and expect that transaction to close on May 2. So including Sable, we expect noninterest income will be up between 910% from 2024. Our expense guidance did not change as we continue to expect expenses will be up between 45% for the year, not including any one time cost associated with the Sable transaction. Our criticized commercial loans decreased during the quarter and non accrual loans increased, albeit at a slower pace than in the prior quarter.

[Michael Achary, CFO at Hancock Whitney]

Net charge offs were down this quarter and came in at 18 basis points. Our loan portfolio is diverse and we see no significant weakening in any specific portfolio sectors or geography. Our loan reserves are solid at 1.49% of loans, up two basis points from last quarter. We continue to expect modest charge offs and provisioning levels for 2025. Lastly, a comment on capital.

[Michael Achary, CFO at Hancock Whitney]

Our capital ratios remain remarkably strong. We increased our quarterly common dividend and modestly increased our share repurchases in the quarter. We expect share repurchases will continue at this level or a bit higher throughout 2025. Changes in the growth dynamics of our balance sheet, economic conditions and share valuation could impact that view. I will now turn the call back to John.

[John Hairston, President and CEO at Hancock Whitney]

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

[Operator]

Thank you, sir. We'll go first to Michael Rose, Raymond James.

[Michael Rose, MD - Banking at Raymond James Financial]

Hey, good morning guys or good afternoon everyone.

[Michael Rose, MD - Banking at Raymond James Financial]

For

[John Hairston, President and CEO at Hancock Whitney]

It's long day, Michael.

[Michael Rose, MD - Banking at Raymond James Financial]

It's only going to get worse. Thanks for reporting early. Yes. So just on that last comment around the buyback, just given the the capital accretion this quarter and slower kind of loan, loan growth outlook, as we move forward, which I totally understand, why why not lean in a little bit more, you know, into the buyback just just given where the stock trades, the earn back on the buyback, and what I see is a, you know, fairly robust, you know, case for positive operating, all the good stuff that you guys have worked so hard to achieve. Why why not lean in a little bit harder here?

[Michael Rose, MD - Banking at Raymond James Financial]

Thanks.

[Michael Achary, CFO at Hancock Whitney]

Hey, Michael, it's Mike. And absolutely, I think we're doing that. So the comment was around at least the same level that we did last quarter and potentially a bit higher. And that is a pretty healthy increase compared to last quarter. I know I just described that as modest, but it probably is a little bit better than modest.

[Michael Achary, CFO at Hancock Whitney]

And certainly if you look at the level we bought back all of last year, if we buy back at current levels and a little bit higher consistently through the year that's a pretty nice increase year over year. So I think one of the caveats certainly is the external environment, the dislocation of share prices and just what happens in that external environment. But all things equal, the intent is that we'll buy back again at current levels, if not a bit higher consistently through the year. So hopefully that makes sense.

[Michael Rose, MD - Banking at Raymond James Financial]

Yeah. It does. Really appreciate it. Just as a follow-up, certainly understand, how credit has performed so well. You guys have done a really good job bringing down the SNC balances.

[Michael Rose, MD - Banking at Raymond James Financial]

But yeah, I think, it's probably too early to completely understand what's going to happen with tariffs. But, yeah, I know you guys have made bigger inroads into small business, in your markets, and that's, you know, an area of concern, I think, for investors the longer this situation takes to play out. What are you guys working on currently to kind of better assess what the credit impacts could be assuming tariffs go through at some sort of elevated level? Thanks.

[Christopher Ziluca, Executive VP & Chief Credit Officer at Hancock Whitney]

Yes. Hi. This is Chris DeLuca. We've done our best to just basically understand all the different sectors that could be impacted. The reality is you don't know what really will be the outcome of what target areas, you know, the duration of all of those actions.

[Christopher Ziluca, Executive VP & Chief Credit Officer at Hancock Whitney]

You know, certainly, because of even the noise that's going on, it is creating a little bit of consternation, you know, in in in the markets and in the individual customers. But I think most of them are really taking a position of a little bit of wait and see. I think they're you know, the the ones that are, you know, much more organized are are assessing where the risks might lie and making, you know, kind of plans for, a plan a and a plan b and a plan c in the event that it's, you know, more significant or longer duration type of an impact. But, you know, we've certainly looked at the various NAICS codes that are likely subject areas and done some evaluation on the risk profiles so that we can prepare to kind of engage with the customers as needed when it becomes more certain.

[John Hairston, President and CEO at Hancock Whitney]

Michael, this is John. I'll add to that. It wasn't exactly your question, but I think it's somewhat tangential to Chris' answer. At this point in time, client sentiment, while it shows some of the apprehension that Chris mentioned, the customer behavior doesn't really line up with a very near and present fear of an impending recession, particularly one that might be worse than moderate and longer. We typically will see a lot of line draws occur during that time as people pad the balance sheet with excess liquidity, securing whatever forms of capital they have to for a near term amount of pressure.

[John Hairston, President and CEO at Hancock Whitney]

And we really aren't seeing that.

[John Hairston, President and CEO at Hancock Whitney]

And I mean, that kind of

[John Hairston, President and CEO at Hancock Whitney]

comment goes through yesterday, so in the second quarter. So I think the mindset of our clients somewhat mirrors the mindset of the banks, not just ours but others, where the general sentiment is a little too early to tell. And hopefully, you know, the shock at all of the first week of the quarter will give way to individual skirmishes with particular countries or sectors, and the overall impact will be a lot less pronounced than maybe we all fear, on April. I don't know if that's helpful, but that would be, I guess, my added confidence.

[Michael Rose, MD - Banking at Raymond James Financial]

No. I I appreciate it. And maybe I could just squeeze one more in. Just on the the increase in the PPNR guide, certainly understand that includes Sable Trust. How much of the increase in the PPNR guide is related to that versus core?

[Michael Rose, MD - Banking at Raymond James Financial]

Because right? Because you guys did better on expenses than I think most of us were anticipating. Thanks.

[Michael Achary, CFO at Hancock Whitney]

Yes. Great question, Michael. And I think that if you look at the change that we made in fees up 9% to 10% that's a bit more than certainly Sable is expected to bring for this calendar year. So I think we can certainly count on some continued growth in our various fee income lines of businesses. That's been an extreme strength of the company the last couple of years and we anticipate those businesses to continue contributing to the bottom line.

[Michael Achary, CFO at Hancock Whitney]

So I think that as well as on the expense side, you'll note that we actually kept the guidance the same, so up to 4% to 5%. But certainly that includes stable, so that infers that we're saving expenses elsewhere throughout the company for the balance of the year. So I think those two combined, the better performance in terms of fees, the addition of Sable and then continued expense control really account for the entirety of the increase in guidance around PPNR.

[Michael Rose, MD - Banking at Raymond James Financial]

Great. Thanks for taking my questions. I'll step back.

[John Hairston, President and CEO at Hancock Whitney]

Thank you, Michael.

[Operator]

The next question today is from Catherine Mealor, KBW.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thanks. Good afternoon.

[John Hairston, President and CEO at Hancock Whitney]

Hi, Kevin.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Can you just give us an update on the hiring process and kind of the number of lenders and revenue producers that you've hired so far and kind of your plans for the next couple of quarters? And then just how that translates into your growth outlook? It seems like your growth feels like it's a little bit slower and then it pushed back to the back half of the year, although I know you've always said it's more back end loaded. But just kind of curious as we think about how successful the hiring process has been or if this volatility has delayed any of that as well? Thanks.

[John Hairston, President and CEO at Hancock Whitney]

Sure. Thanks for the questions. I'll try to answer both at the same time.

[John Hairston, President and CEO at Hancock Whitney]

But if you need to give

[John Hairston, President and CEO at Hancock Whitney]

me a second question to make sure I'm clear, don't be bothered by it. First, on the hiring, I think we shared the deck that we've added four in Q1. We added seven, I believe, in q four. Our run rate for the year should be around, let's call it, to 30. I think 24 was the number that we actually shared on the call back in January for the year, and I would expect to hit that.

[John Hairston, President and CEO at Hancock Whitney]

Q1 is typically a little easier time to move folks, but our friends on the other side aren't giving up good talent to bankers very easily. So our pull through rate for offers is running about 50%. For the type of talent we're trying to attract. I think that's a pretty good number. So the volatility in the macro does not affect our desire to add offensive players and add offices in growth markets that are highly successful.

[John Hairston, President and CEO at Hancock Whitney]

And if we look back over our Texas performance, the last five year compounded annual growth rate somewhere in the neighborhood of around 16% with South Texas coming on very strong in Q1 and North Texas has been strong for really the better part of several years. So, makes no sense whatsoever to let the current volatility get in the way of that plan. So we'll continue, if not enhance it, to make sure that we come out whatever the other side of this dust up and tariffs is with a good strong hand. The sectors that we grew in, in Q1 were driven a good bit by the new hires, so particularly in equipment finance. So that's, I guess, the earlier hires in the cycle to add business from a new hire in equipment finance is a little shorter.

[John Hairston, President and CEO at Hancock Whitney]

So we're showing good progress there and look forward to that being replicated throughout some of the other loan generation sectors. And and talking about sort of the guidance we gave a quarter ago for the year, I mean typically we're giving loan guidance on an annual basis, right? We don't get into quarters, but now that the first quarter is behind us, I really expected a push in total loans for Q1. Headed into the end of the quarter, it looks like we very much may get there and then had the payoffs that occurred both in Healthcare. Even though the CRE number is up, it would have been up a good bit more had we not had some payoffs towards the end of the quarter as the ten year note began to subside, we saw a pretty big pretty big mismatch between revolving rates and perm rates.

[John Hairston, President and CEO at Hancock Whitney]

So we had some unplanned payoffs right there at the end. So as we go into the second quarter, Catherine, production levels are good. The pipelines look better than they looked a quarter ago. I think the only potential interruption is if the somewhat pause that we're seeing from larger organizations and medium sized organizations due to the tariff concerns last all through the quarter, That could push some of the production we're planning to Q3. But at this point in time, we're really not seeing any deals come out of the pipeline.

[John Hairston, President and CEO at Hancock Whitney]

We're just seeing the closing that shift back a matter of days or weeks. So we remain hopeful to be able to present. And I would be disappointed if we don't show growth in 2Q.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great.

[John Hairston, President and CEO at Hancock Whitney]

Is that helpful?

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

And then Yes. That's that's great. Yeah. The pipeline was actually my next question, so that you answered that, which was great. And then maybe my follow-up then I'll move over

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

to M and A.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

I know you've talked in previous calls about wanting to participate in M and A, but of course your stock price is back to evaluation that makes that more challenging. So just kind of curious your updated thoughts on M and A versus organic growth versus I know you talked about buybacks earlier as well. Is this just a period where we see more buyback from you and then a push for organic growth and M and A maybe comes at a later date once the stock rebounds?

[Michael Achary, CFO at Hancock Whitney]

Yes, Kathryn. Thanks for that. And I think you pretty much answered the question. That's really how we think about it now. And I'll

[Michael Achary, CFO at Hancock Whitney]

keep

[Michael Achary, CFO at Hancock Whitney]

it simple. I mean for right now M and A is just not something that we're focused on. And certainly the disruption in the external environment and the impact on our valuation are factors. So that may change or will change at some point down the road. But I think right now in terms of capital priorities, it really is what we've done more recently and that is return capital to shareholders via dividend increases and then more recently an uptick in our buyback.

[Michael Achary, CFO at Hancock Whitney]

So I certainly think that we'll continue to lean into those two ways of managing capital and focus on our organic growth plan as we continue to do so. And M and A I think is something simply for another day down the road.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Makes sense. Great. Thank you.

[Michael Achary, CFO at Hancock Whitney]

You bet. Thanks for the questions.

[Operator]

Next we'll take a question from Stephen Scouten, Piper Sandler.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Yeah. Good afternoon, everyone. I just wanted to follow back around, a little bit on the upside in the PPNR. And Mike, know you gave some color on Michael's question about, Sable and the benefit there. But think the detail we have in the deck was in '24.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

They added, like, '22 they had about 22,000,000 in revenue. What's kind of the expense base, of that business that's coming over? Just trying to think about where the other reductions are kind of within that overall guide.

[Michael Achary, CFO at Hancock Whitney]

Yes. We Steven, we haven't disclosed that specifically and I think we'll hold on to that right now until after we get past the actual closing and have a quarter or two kind of under our belts. But we have kind of disclosed that we believe the impact of Sable as a whole on this year will be about $02 per share. Certainly, revenue side of that is somewhere around $14,000,000 15 million dollars somewhere in that neighborhood. And once we get SABL completely converted along with another conversion that we have going on to our legacy trust business, We're really looking for '27 to see the full impact of the acquisition and we're kind of calling that out at about $08 to $0.10 per share for $27 And then certainly we'll build on that in future years.

[Michael Achary, CFO at Hancock Whitney]

So that's the disclosures we're giving today on Sable. And again, once we get the transaction closed, think we'll share a little bit more detail.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Yes. That makes sense. That makes sense. And then I know your NIM guide, think you said it assumes those three cuts June, July, October. Like, can you give us some color on maybe sensitizing that one way or the other?

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

I mean, these expectations seemingly change daily if we were to get zero cuts, kind of what you would think about or if we got more than three, just kind of how we would think about the directional shifts with other scenarios?

[Michael Achary, CFO at Hancock Whitney]

Sure. I'd be glad to. So we've kept our treasury and financial planning teams busy modeling different rate scenarios. So our profit plan for this year started off with the three rate cuts and that became part of our guidance. And then we've taken a couple of twists and turns over the past couple of weeks as you might expect and it landed pretty much back where we started with the three rate cuts really centered over the summer and then one into the fall.

[Michael Achary, CFO at Hancock Whitney]

So the other disclosure that we provided in the earnings deck and it really was a piggyback off the same disclosure we did in the first quarter And that's this notion that really any way you cut it where we have three rate cuts, two, one or none, it really isn't going to have an appreciable impact on our NII for this year. It's certainly going to move the numbers around a couple of million in either direction, but certainly nothing that would be considered material or significant. The big things that really move it would be loan growth. And certainly we have the updated guidance around low single digit loan growth. And that's impacted the numbers on NII a bit and that resulted in us reducing that guidance a little bit to reflect the reality of loan growth maybe being a little bit less than we had thought it would be at the onset of the year.

[Michael Achary, CFO at Hancock Whitney]

But if you look at our NIM and NII growth components as we think about the next three quarters, it really is the things that have driven that in the past couple of quarters. And we've been able kind of expand our NIM by around two or three basis points pretty consistently quarter over quarter. And really we think under almost any scenario we'll be able to continue to do that for the balance of this year. We continue to have opportunities to reprice CDs. We continue to have opportunities to reprice cash flow coming off the bond portfolio as well as opportunities to reprice our fixed rate loan portfolio.

[Michael Achary, CFO at Hancock Whitney]

So those have really been the three main drivers. And then certainly our ability to maintain our NIV mix at current levels potentially grow that a bit by year end. Those are the things that really is the recipe for us to be able to produce the kind of NII levels that's part of the guidance as well as the potential NIM expansion over the course of the year. So I know that was probably a lot, but hopefully that was helpful.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

That's extremely helpful, Mike. Appreciate that. And then maybe last thing for me. I mean, obviously, the stock continues to trade at kind of a discounted multiple to peers and the profitability is phenomenal. The excess capital is attractive.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Deposits are great. I mean, feels like loan growth continues to be the only maybe piece of the puzzle that's not that's not hitting where you'd want it to be. And and, obviously, the uncertainty and I know you mentioned some health care credits and other things that were impeding growth this quarter, but lowering that guide down, what really needs to happen, apart from maybe the environment getting better and getting these hires on board to be able to hit on all cylinders on growth and maybe surprise to the upside as opposed to having to revise down at some point along the way?

[John Hairston, President and CEO at Hancock Whitney]

That's a terrific question. This is John. I'll take it. The new hires to come in and be in the markets that we're trying to grow in Because our growth rate in those markets is terrific, but it has to offset some slower growth areas that we have some concentration in. So the upside surprise will come from the ten year staying up in the low to mid-4s, just not below four.

[John Hairston, President and CEO at Hancock Whitney]

At that point in time, we begin to see a lot more payoff. So if the ten year will stay up long enough to get the new hires in place and if we can pull forward some of the hires planned for the fourth quarter into the second, third quarter, then that would drive us towards an upside. So we haven't given up on the initial guidance, but we're trying to be prudent and transparent that in the environment we're in and in the March when rumors of pretty significant tariffs began to chill some of the sentiment, we're trying to be respectful of not overpromising and be honest about what those headwinds could be. So the lowering of the guide wasn't because of a lack of appetite for growth or any lack of expected success in hiring where we want

[John Hairston, President and CEO at Hancock Whitney]

to hire.

[John Hairston, President and CEO at Hancock Whitney]

But it's kind of hard to outrun the fact that there's so many people looking to deploy credit and and just not enough demand to satisfy everyone. So the deal's getting won right now on price structure, turnaround time on decisions, uncertainty of execution. We can compete well in all those areas. We just need more offensive players in market that there's more deals to take.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

That's fantastic color. Thank you guys for all the time. Appreciate it.

[John Hairston, President and CEO at Hancock Whitney]

You bet. Thanks for the great question.

[Operator]

Brett Rabatin of Hovde Group has the next question.

[Brett Rabatin, Director of Research at Hovde Group]

Hey, good afternoon, everyone. Wanted to go back to fee income for a second and just with the increase in the guidance, it seems like a lot of that is stable. Are there other pieces that would be you think repeatable from here or that would drive some of the growth, derivative income, syndication fees, SBA, mortgage banking? Is there anything in particular that's helping that guide for the year?

[Michael Achary, CFO at Hancock Whitney]

Yes. So I'll get started, Brett. And as we kind of mentioned before, if you look at what the new guidance kind of translates into in terms of dollars, really about two thirds of that is the introduction of SABL into the company's financials. And the other one third or so is increases that we're expecting in other fee income lines of business. And you kind of hit already on kind of our specialty lines, which have really I think over contributed in the last couple of quarters and we expect that to continue to do so.

[Michael Achary, CFO at Hancock Whitney]

So that things those examples of that are BOLI syndication fees, you mentioned that. Our SBIC fees have been real strong of late. We expect some of that to continue at certain levels. SBA fees is another category. Wealth management outside of Sable.

[Michael Achary, CFO at Hancock Whitney]

And then we've also had some pretty nice increases in our ability to originate and sell some mortgage loans. So those are all categories that will kind of pick up that difference in addition to what Sable will bring. John, I don't if there's anything you want to add.

[John Hairston, President and CEO at Hancock Whitney]

Sure. I'll add to that. Mike shared the Sable contribution, that shows up in the wealth management forecast. But even net of Sable, we had a really great quarter. And it's been a long time since we did not have a really great quarter with wealth management fees.

[John Hairston, President and CEO at Hancock Whitney]

That's in trust. It's in investment management. It's in annuity production out of the retail shop. It shows up in wealth management, but the retail folks are reaching a great deal of it. All those teams really do hit on all eight cylinders, and we had another great quarter.

[John Hairston, President and CEO at Hancock Whitney]

The other area that is, I'll use your word, is repeatable, is our density in our business accounts for operating accounts that we offer treasury services. That density continues to improve in terms of wallet share. Some of the new hires we've talked about are on the treasury side to ensure that that density continues to improve, and that's real money on the fee income side. And so that's improving. And it has a bit of a tailwind just as balance has normalized from the pandemic.

[John Hairston, President and CEO at Hancock Whitney]

You mentioned mortgage and with rates going up, I think they were credited 7% yesterday. It's kind of hard to believe we'll see application improvement that generates a lot of fee income. But, our share of the all the mortgages that do happen should continue to improve as we deploy our direct channel origination sources through the rest of the year. So I don't know that mortgage, secondary fees is going to light the board up for everybody. But for us, given our relative performance and our relative attractiveness as originator is going to continue to improve, we might out plunge our weight a bit in terms of improvement there.

[John Hairston, President and CEO at Hancock Whitney]

And then finally, the specialty phase that Mike mentioned, the syndication phase related to that is sort of a stated desire. I've talked about it on several calls. We're our participation, as a smaller player in very large transactions has been is is getting replaced by leading, smaller transactions that we can very well perform in, and then we get a bigger slice of that fee. That allows us to create both more granular portfolio, get more operating deposits and get a fee contribution that otherwise we would just be getting rewarded as a piece of somebody else's credit relationship. So we won't certainly get out of the SNC business at all, but I think we pulled it down about 300 basis points in the last seven or eight quarters.

[John Hairston, President and CEO at Hancock Whitney]

And replacing all that has been, I think, the secret sauce to seeing some of the benefit on both the DDA side and the fee income side. Is is that the clarity you were looking for?

[Brett Rabatin, Director of Research at Hovde Group]

Yeah. That's that's really helpful from, from both of you. And you just you just mentioned, shared national credits. The other question I had was just around that bucket continues to atrophy a little bit this quarter. And then you talked about the payoffs in health care and other potential credits just based on rates, etcetera.

[Brett Rabatin, Director of Research at Hovde Group]

How much of the revised guidance or does the revised guidance kind of assume that those trends continue? Or how should we think about the headwinds that you faced relative to the revised '25 outlook?

[John Hairston, President and CEO at Hancock Whitney]

I think if I kind of draw a box around health care, that may be the most digestible way to answer it. The diminishment we saw this quarter were from three, syndicated well, two were syndications two were leveraged and one was a syndication that, we had a share in that were recast in the quarter a little bit ahead of when the suggested or the maturity would have suggested them to be recast that we opted out of to use that liquidity for other purposes, specifically loan growth in the back half of the year. So that contributed nearly all of the diminishment in the SNC density. I think we reported 9.4. It was in the mid-9s.

[John Hairston, President and CEO at Hancock Whitney]

I'll try to bring I'll bring that back to my memory. And and we I don't think we will get north of 10, but we we don't really we're not really intentionally running it down. It's really just more of a replacement of participations and other credits with with leading our own that are smaller. But, I didn't expect that to be as big a headwind in q one as it was because we didn't expect to see those payoffs. But but I'm I'm not I'm not gonna cry over over, having that happen because I have confidence we'll redeploy that toward the back half of the year.

[John Hairston, President and CEO at Hancock Whitney]

I think I think that was the entire impact on SNCs other than people just doing pay downs on their lines. Okay.

[Brett Rabatin, Director of Research at Hovde Group]

Great. That's really helpful. Appreciate the color, guys.

[John Hairston, President and CEO at Hancock Whitney]

You bet. Thank you.

[Operator]

Next up, we'll hear from Casey Haire, Autonomous Research.

[Casey Haire, Senior Research Analyst, Mid-Cap Banks at Autonomous Research]

Thanks. Good afternoon, everyone. Follow-up on capital, two parter. So first, stable, what kind of CET1 impact will will that transaction have? And then two, any thoughts to I know you guys did a bond book restructuring restructuring in maybe '23 or so, but just wondering if that's another way to use some of the excess capital given the bond book yield is still a little light.

[Michael Achary, CFO at Hancock Whitney]

Yes. Thanks, Casey. This is Mike. And related to Sable, again, we're not disclosing the purchase price for that entity, but I will share that the impact on common Tier one is going to be modest. So it's not going to be a huge dent there by any stretch.

[Michael Achary, CFO at Hancock Whitney]

And then your other question related to restructuring. Mean, that's something that we consider really every quarter. I mean, we model those kinds of things on a pretty regular basis and we'll continue to do so. But I think to actually pull the trigger on something like that, we'll need a little bit more stability especially in the bond markets or a little bit confidence that the bond markets will remain stable if they get there. So hopefully, we have that kind of confidence and stability and we'll be able to consider those kinds of things.

[Michael Achary, CFO at Hancock Whitney]

But I think right now, there's probably just a little bit too much going on to on a practical basis consider a bond restructuring right now.

[Casey Haire, Senior Research Analyst, Mid-Cap Banks at Autonomous Research]

Yeah. Fair enough. Okay. And then just on the expense guide, I appreciate you guys are not going to lay out what the SABL impact is. So I guess what where did you where did you find these cost saves to keep the expense guide flat given that the SABL will be additive, obviously, to the expense base?

[Casey Haire, Senior Research Analyst, Mid-Cap Banks at Autonomous Research]

Like where where are the cost base

[Michael Achary, CFO at Hancock Whitney]

I'll provide some color on that. So so part of it, you know, admittedly is we think our our incentive comp low this year will probably be a little bit lighter than what we thought coming into the year, so there's some savings there. And really the rest of it is really kind of across the board and continues to be centered on our ability to control costs. And again, thinking about the way that this year has really begun with so much uncertainty and issues with the potential trade war and everything related to that, we're cognizant of what we need to do to continue to control costs and save costs. So I think it's just a little bit more a heads down effort to make sure that we're spending money the way we need to and saving where we need to as well.

[Michael Achary, CFO at Hancock Whitney]

So that's put us in a position I think to be able to handle the onloading of the stable expense base without changing the guidance.

[Casey Haire, Senior Research Analyst, Mid-Cap Banks at Autonomous Research]

Got you. Thank you.

[Michael Achary, CFO at Hancock Whitney]

Okay.

[Operator]

The next question is from Gary Tenner, D. A. Davidson.

[Gary Tenner, MD & Senior Research Analyst at D.A. Davidson Companies]

Thanks. Good afternoon. Most of my questions were answered including that follow-up on the expenses. But Mike, wonder if you could just give us the expected CD maturities and kind of expected rate benefit or pickup in the second quarter?

[Michael Achary, CFO at Hancock Whitney]

Yes. So I'll start off with what that benefit is for the year. So we look to have about $5,500,000,000 of CD maturities over the next three quarters. Those CDs will come off at about $3,700,000,000 and we think they'll be repriced at somewhere near 3%. And again, that's for the remaining three quarters of the year.

[Michael Achary, CFO at Hancock Whitney]

So that assumes a 75% renewal. So that's kind of the headline story. By quarter, you asked about the second quarter. So we're looking at about $2,300,000,000 of CD maturities coming off at 3.88 percent going back on at around 3.5% or a bit lower with about a 78% renewal. So those are the numbers for the year as well as the second quarter.

[Gary Tenner, MD & Senior Research Analyst at D.A. Davidson Companies]

Okay, great. And then I guess maybe just a follow-up to that Mike. In terms of the end of period deposit expectation to be up low single digits over the course of the year then does that kind of that's net of some amount of CDs that will not renew? So that mix should shift a little bit?

[Michael Achary, CFO at Hancock Whitney]

It will continue to shift as we kind of described. And no changes in that guidance around the outlook for deposits to come in at low single digits. So that certainly accounts for the seasonal inflows and outflows of our public fund book. So again for this past quarter deposits were actually down right about 300,000,000 But if you back out the impact of the public fund outflows which of course are seasonal, we actually would have grown deposits by about 20,000,000 to $25,000,000 So all of those factors are considered and part of the guidance.

[Gary Tenner, MD & Senior Research Analyst at D.A. Davidson Companies]

Thank you. Appreciate it.

[Michael Achary, CFO at Hancock Whitney]

Okay.

[Operator]

The

[Operator]

next question is Matt Olney, Stephens.

[Michael Achary, CFO at Hancock Whitney]

Hi, Matt.

[Matt Olney, Managing Director at Stephens Inc]

Hey, guys. Good afternoon. Going back to the commentary around loan growth being stronger in the back half of the year, just remind us how much of this growth would be from new hires that you made over last year or so? And then secondly, just any color you

[Matt Olney, Managing Director at Stephens Inc]

can give us as far

[Matt Olney, Managing Director at Stephens Inc]

as loan pipelines that can just get us more comfortable with the loan growth in the back half of the year?

[John Hairston, President and CEO at Hancock Whitney]

I'll go ahead.

[Michael Achary, CFO at Hancock Whitney]

Yes. I'll start, Matt, with the first question. So if you look at the overall loan growth that we're expecting for the year, it's somewhere around 15% that we're expecting from new revenue hires. And those would have been primarily folks that we would have hired, let's say in the fourth quarter of last year, maybe a little bit into the first quarter of this year. And then on the expense number, the impact of the new hires on our expense guidance is about 100 basis points or so.

[Michael Achary, CFO at Hancock Whitney]

So those numbers are largely unchanged from the disclosures that I think we gave last quarter.

[John Hairston, President and CEO at Hancock Whitney]

Yeah. The Matt, this is John. The percentages change a bit depending on which of the new hires are are loaded in a little earlier. So I gave the example in equipment finance to where a single new hire in that group can make a pretty big difference pretty rapidly because the time to decision and book a loan, particularly in the Capital Markets side of Equipment Finance, is a good bit more rapid than say a commercial banker adding that's gonna take, you know, a hundred and twenty, a hundred and fifty days to really begin to get their pipeline flushed out, once they get comfortable and kind of understand the tech, the policies, the the people. So, the more of the middle market equipment finance and CRE hires and health care hires, we can get loaded to the front of the gear, the more of an impact above the 15 it could be.

[John Hairston, President and CEO at Hancock Whitney]

So that's our goal, but we didn't we didn't, you know, build that in the plan to to make it maybe open to it. It's kind of balanced out based on what our past has been. That said, one of the earlier questions around the importance of an upside to loan growth on our valuation, certainly we're motivated to do that if we can find the talent.

[Matt Olney, Managing Director at Stephens Inc]

And John to follow-up on the comments you made, I think that you're targeting between what twenty and thirty new producer hires this year. Is there a target mix you have of the type of producer whether it's real estate or commercial or capital mortgage? Just any color on the mix?

[John Hairston, President and CEO at Hancock Whitney]

Sure. There's I think to average it out there's a couple in each of the specialty lines. We'd like to add CRE folks in Florida, in Texas and specifically in Nashville. We'd like to add additional equipment finance folks. They'll be based out of New Orleans, but it'll be focused on areas around our footprint.

[John Hairston, President and CEO at Hancock Whitney]

Probably half the numbers in business are commercial bankers. There's four, I think, planned for financial advisers in the wealth management group to help augment our new investment in Florida and Central Florida via Sable. And then and to be honest, if talent or teams come available to us because of disruption around us, we would not hesitate to add more than the 20 to 30 that I outlined. Like I said, the number in the plan is 24. But if we could get 30 or more, that would be just fine with me.

[John Hairston, President and CEO at Hancock Whitney]

So wherever there's talent in markets we're trying to grow in, high annual organic growth rate options, those are very much in demand to us.

[Matt Olney, Managing Director at Stephens Inc]

Okay, great. Thank you, guys.

[John Hairston, President and CEO at Hancock Whitney]

You bet. Thank you.

[Operator]

Next, we'll take a question from Ben Gerlinger, Citi.

[Ben Gerlinger, Vice President of Equity Research at Citigroup]

Hey. Good afternoon.

[John Hairston, President and CEO at Hancock Whitney]

Hi, there.

[Ben Gerlinger, Vice President of Equity Research at Citigroup]

I just wanted to follow-up quickly on the kind of the M and A conversation. Mike, you said there's really not a lot of appetite Is that in relation to depositories, I. E. Loans and deposits? Or is that, like, all M and A?

[Ben Gerlinger, Vice President of Equity Research at Citigroup]

So that would also include, like, not interested in fee income generating business?

[Michael Achary, CFO at Hancock Whitney]

Yes. Great great question, Ben, and great clarification. So the question was really directed I think at depositories. Certainly, we're in the midst of closing on Sable. So we'd like to get that one closed and get some good work done on getting that integrated.

[Michael Achary, CFO at Hancock Whitney]

But probably would be a little bit more open to those kinds of transactions and depositories in the current environment. Thanks for that clarification.

[Ben Gerlinger, Vice President of Equity Research at Citigroup]

I appreciate everything else that's been asked and answered. Thanks, Chris.

[Michael Achary, CFO at Hancock Whitney]

You bet.

[Operator]

Our last question today comes from Christopher Marinac, Janney Montgomery Scott.

[Christopher Marinac, Director of Research at Janney Montgomery Scott]

Hey, good afternoon. I wanted to Chris about the growth in the unfunded commitment reserve. Was that related to just volume there or risk or any more color there?

[Christopher Ziluca, Executive VP & Chief Credit Officer at Hancock Whitney]

Yes, good question. Really, it's just, you know, the the change in our outlook for for fundings likely that there's gonna be potentially more fundings just converting over to from unfunded to funded. And so, therefore, it'll just kinda move over, from that perspective.

[Christopher Marinac, Director of Research at Janney Montgomery Scott]

Okay. And as some of the factors qualitatively in your modeling for reserves in general, do you have visibility that that would lead to any significant reserve build in the second or third quarter? Or was it simply too early to comment?

[Christopher Ziluca, Executive VP & Chief Credit Officer at Hancock Whitney]

It's probably too early to comment, but the qualitative factors are there because of, you know, how we built our models, and they don't always take into consideration all of the variables that are going on at the loan level. So the qualitative factors are there to kind of kind of enhance that in many respects.

[Christopher Marinac, Director of Research at Janney Montgomery Scott]

So the idea of having a higher recession scenario is that already in the numbers that you had as of year end or as of March 31?

[Michael Achary, CFO at Hancock Whitney]

Yes. So Chris, this is Mike. So if we look at the scenarios that we're using and of course we use Moody's like many of the mid cap banks. We're split between the baseline scenario as well as the slower growth scenario. And the baseline scenario that we're using does not have the impact of a recession, but certainly the slower growth one does.

[Michael Achary, CFO at Hancock Whitney]

And there's a third scenario out there that includes a moderate recession that as we go through this year and the next quarter or two, we'll make judgment calls around how we might change or alter the mix of the scenarios that we're using. But certainly where we are today, it's too soon to make a call as to where we'll be really at the end of this quarter given the potential for changes in the external environment.

[Christopher Ziluca, Executive VP & Chief Credit Officer at Hancock Whitney]

And I might also add that the scenarios in general have gotten a little bit more pessimistic in many respects. Even the baseline, you know, tends to move. So I wanna just kinda keep in mind the fact that the baseline ultimately, if it's working correctly, will kind of follow where we are in the cycle. And so from last quarter to this quarter, there's more components within there that kind of sound like higher recession risk.

[Christopher Marinac, Director of Research at Janney Montgomery Scott]

Okay, great. That's good background. Thank you both. I appreciate it.

[Christopher Ziluca, Executive VP & Chief Credit Officer at Hancock Whitney]

You bet. Thanks for the question.

[Operator]

And everyone, that does conclude our question and answer session. I would like to hand the call back to Mr. John Hairston for any additional or closing remarks.

[John Hairston, President and CEO at Hancock Whitney]

Yes. Thanks, Lisa. Thanks for moderating today, and thanks, everyone, for attending a late call. Look forward to seeing you on the road soon.

[Operator]

Once again, everyone, that does conclude today's conference. Thank you for your participation. You may now disconnect.

Participants

Executives

• Kathryn Mistich, Investor Relations Manager
• John Hairston, President and CEO
• Christopher Ziluca, Executive VP & Chief Credit Officer

Analysts

• Michael Achary, CFO at Hancock Whitney
• Michael Rose, MD - Banking at Raymond James Financial
• Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)
• Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies
• Brett Rabatin, Director of Research at Hovde Group
• Casey Haire, Senior Research Analyst, Mid-Cap Banks at Autonomous Research
• Gary Tenner, MD & Senior Research Analyst at D.A. Davidson Companies
• Matt Olney, Managing Director at Stephens Inc
• Ben Gerlinger, Vice President of Equity Research at Citigroup
• Christopher Marinac, Director of Research at Janney Montgomery Scott