Hancock Whitney outlines mid-single-digit loan growth for H2 2025 amid NIM expansion and robust share repurchases

Earnings Call Insights: Hancock Whitney Corporation (HWC) Q2 2025

MANAGEMENT VIEW

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John M. Hairston, President and CEO, described the second quarter of 2025 as "another strong quarter," highlighting a net interest margin (NIM) expansion of 6 basis points and an ROA of 1.37% after adjusting for expenses tied to the Sabal Trust Company acquisition, which closed on May 7. Hairston emphasized that "loans grew $364 million or 6% annualized due to stronger demand, increased line utilization and lower payoffs." He confirmed guidance remains unchanged for low single-digit loan growth for 2025, inferring mid-single-digit growth for the second half. Hairston also noted, "Deposits were down $148 million, reflecting a decrease in CDs due to maturity concentration and promotional rate reductions," but pointed to increases in both interest-bearing transaction balances and DDA balances, with DDA mix up to 37%.

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The CEO announced continued share repurchases, with "750,000 shares of common stock" bought back during the quarter, and described capital ratios as "very solid with TCE of 9.84% and common equity Tier 1 ratio of 14.03%." He reported further progress in the Dallas market with "10 net new bankers" added and plans for five new financial center locations, expecting three to open in late 2025 and two in early 2026.

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Michael M. Achary, CFO, stated, "Our adjusted net income for the quarter was $118 million or $1.37 per share compared to $120 million or $1.38 per share in the first quarter." Achary remarked, "PPNR was up $5 million or 3% from last quarter and was a peer-leading 1.95% of assets." He noted, "Our NIM again expanded this quarter by 6 basis points and NII was up $7 million or 2%. Fee income was up $4 million or 4% and expenses adjusted for onetime items remain well controlled and were up $5 million or just 2%." He added, "Our efficiency ratio improved to 54.91% this quarter compared to 55.22% last quarter."

OUTLOOK

* The guidance remains for low single-digit loan growth for the full year, with mid-single-digit growth expected in the second half of 2025. Achary said, "We expect modest NIM expansion in the second half of '25 and NII growth of between 3% and 4% for the year. There's no change to our PPNR or efficiency ratio guidance." CD repricing is expected to continue lowering deposit costs, and the company expects its DDA mix to finish the year between 37% and 38%. Management updated assumptions to two rate cuts of 25 basis points in September and December, with minimal impact projected.

FINANCIAL RESULTS

* Adjusted net income was $118 million or $1.37 per share, compared to $120 million or $1.38 per share in Q1. PPNR increased by $5 million to a peer-leading 1.95% of assets. Net interest income rose by $7 million, driven by NIM expansion and higher average earning assets. Fee income grew by $4 million, largely due to trust fees from the Sabal acquisition. Expenses, after adjustment for one-time items, rose by $5 million. The efficiency ratio improved to 54.91%. Loan yields were 5.86%. Loan reserves stood at 1.45% of loans, down 4 basis points from the prior quarter. Net charge-offs rose to 31 basis points, while criticized commercial loans fell 4% to $594 million and nonaccrual loans decreased 9% to $95 million. The company repurchased 750,000 shares and executed the Sabal Trust acquisition during the quarter.

Q&A

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Michael Edward Rose, Raymond James: Questioned buyback strategy and CET1 ratio targets through the cycle. Achary responded that the company is "comfortable operating at" a Tier 1 common ratio of "between 11% and 11.5%" and TCE "in the neighborhood of 8%."

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Rose also asked about loan growth drivers. Hairston replied, "The bigger driver is simply going to be net new loans to net new clients." He noted, "The only sector that we didn't enjoy growth this quarter was in the construction development book," but expects this headwind to dissipate as the year progresses.

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Catherine Mealor, KBW: Inquired about NIM outlook and expense cadence post-Sabal. Achary explained, "For the second half of the year, there really is not anywhere near a material difference between the impact on NII or our NIM, if we look at 0 rate cuts or 2 rate cuts... The difference is less than $1 million on NII, and it's about 1 basis point on NIM." He indicated the cost of deposits is expected to "reduce a couple of basis points in the third quarter and then probably a little bit more than that in the fourth quarter." On expenses, Achary said, "The increase in our expenses in the second quarter related to Sabal was about $2.5 million."

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Casey Haire, Autonomous Research: Asked about CRE loan growth and M&A strategy. Hairston attributed CRE growth to "less payoffs, very successful owner-occupied real estate campaign," and attractive bridge financing. Achary stated, "The narrative around M&A for us is completely unchanged... right now, M&A is just not something we're focused on."

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Ben Gerlinger, Citi: Queried about shared national credits. Hairston said, "We're running about 9.5%. And I think between 9% and 10% is about where that's going to stay."

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Brett Rabatin, Hovde Group: Sought detail on new loan spread compression. Achary responded, "The overall rate on the new loans to the balance sheet did compress by about 28 basis points."

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Gary Tenner, D.A. Davidson: Questioned buyback dollar amount and deposit retention. Achary clarified, "The intent would be to return at least that much in terms of money to shareholders via buybacks," roughly "$40 million." He expects CD renewal rates to be "at least 81%, if not a little bit better," in the second half.

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Matthew Olney, Stephens: Asked about credit quality and charge-offs. Ziluca explained that some "accounts that were kind of in our line of sight for resolution during the quarter" were resolved, contributing to the charge-off rate. He emphasized, "We feel pretty good about where we sit" regarding criticized loans.

SENTIMENT ANALYSIS

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Analysts pressed for specifics on buyback cadence, capital targets, NIM sensitivity, and loan growth sources, reflecting a slightly positive but cautious tone. Many questions focused on the sustainability of growth, competitive loan pricing, and M&A priorities.

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Management maintained a confident tone during prepared remarks—Hairston described the outlook as "very optimistic" and Achary consistently referenced "peer-leading" performance. In the Q&A, management was measured, providing detailed guidance and showing comfort with capital and credit positions.

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Compared to the previous quarter, analysts maintained focus on loan growth, buyback flexibility, and fee income sustainability, but with increased attention to the effects of the Sabal integration, competitive loan pricing, and CD retention. Management’s tone was consistently confident both quarters, though this quarter included more explicit forward-looking guidance on NIM and capital deployment.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for loan growth remained at low single digits for the full year but shifted to emphasize mid-single-digit growth for the second half, echoing the prior quarter’s focus on back-half expansion.

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Management executed on the Sabal Trust acquisition, closed in May, and substantially increased share repurchases from 350,000 in Q1 to 750,000 in Q2.

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NIM expansion continued, with guidance unchanged for modest further widening, and the efficiency ratio improved. Deposit mix shifted higher in DDA balances and lower CDs.

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Net charge-offs rose to 31 basis points from 18, while nonaccrual and criticized loans decreased. Loan reserves declined slightly.

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Analyst questions remained centered on capital management, loan growth strategies, and NIM, but with added focus on the impact of Sabal integration and competitive loan pricing.

RISKS AND CONCERNS

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Management acknowledged a dynamic macroeconomic environment, with potential headwinds in construction and development lending. The company’s credit outlook assumes continued normalization but no "systemic issues" identified in the portfolio.

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Loan spread compression and increased competition for new loans were highlighted as ongoing challenges. Achary noted, "the environment out there is super competitive when it comes to not only securing new credit from customers, but then also pricing that credit."

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The company is monitoring CD renewal rates and deposit retention as rates decline, as well as the pace of loan demand recovery in specific sectors.

FINAL TAKEAWAY

Hancock Whitney Corporation delivered another quarter of profitability, highlighted by NIM expansion, strong capital deployment, and notable progress on organic growth initiatives. The company remains committed to disciplined loan growth, strategic hiring, and efficiency improvements while integrating Sabal Trust and maintaining robust capital levels. Management’s guidance points to continued modest NIM expansion, stable to improving credit trends, and a focus on returning capital to shareholders through consistent buybacks in the coming quarters.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/hwc/earnings/transcripts]

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