Hancock Whitney (HWC) - 2025 Q2 - Quarterly Results

Financial Highlights & Overview The company reported solid Q2 2025 results with strong profitability, NIM expansion, and active capital deployment, despite acquisition-related expenses Second Quarter 2025 Highlights Hancock Whitney reported a solid second quarter for 2025, with a net income of $113.5 million, or $1.32 per diluted share Q2 2025 Key Financial Results | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $113.5M | $119.5M | $114.6M | | Diluted EPS | $1.32 | $1.38 | $1.31 | | Diluted EPS (Adjusted) | $1.37 | $1.38 | $1.31 | - The acquisition of Sabal Trust Company on May 2, 2025, resulted in $5.9 million ($0.05 per share) of supplemental disclosure items, impacting reported earnings[1][4] Q2 2025 Key Performance Indicators (vs. Q1 2025) | Indicator | Q2 2025 Value | Change vs. Q1 2025 | | :--- | :--- | :--- | | Adjusted PPNR | $167.9M | Up $5.5M | | Loans | $23.5B | Up 6% LQA | | Deposits | $29.0B | Down 2% LQA | | Net Interest Margin (NIM) | 3.49% | Up 6 bps | | Efficiency Ratio | 54.91% | Improved 31 bps | | CET1 Ratio (est.) | 14.03% | Down 45 bps | - CEO John M. Hairston highlighted the quarter's solid profitability, NIM expansion, improved efficiency, and proactive capital deployment for both organic growth and the repurchase of 750,000 shares[4] Financial Condition Analysis The company's financial condition shows growth in loans, a slight decrease in deposits, solid asset quality, and strong capital ratios Loans Total loans increased by $363.6 million to $23.5 billion in the second quarter, a 6% linked-quarter annualized growth rate Loan Portfolio Growth | Metric | June 30, 2025 (in billions) | Change from Mar 31, 2025 (in millions) | | :--- | :--- | :--- | | Total Loans | $23.5 billion | +$363.6 million (+2%) | | Average Loans | $23.2 billion | +$180.7 million (+1%) | - Management expects low-single digit loan growth in 2025 from December 31, 2024 levels[5] Deposits Total deposits saw a slight linked-quarter decrease of $148.1 million, ending the quarter at $29.0 billion Deposit Balances | Metric | June 30, 2025 (in billions) | Change from Mar 31, 2025 (in millions) | | :--- | :--- | :--- | | Total Deposits | $29.0 billion | -$148.1 million (-1%) | | Average Deposits | $28.6 billion | -$102.5 million (< -1%) | - Noninterest-bearing deposits (DDAs) increased by $23.9 million and constituted 37% of total deposits at quarter-end[7] - The decrease in deposits was primarily driven by a $234.4 million (6%) drop in retail time deposits and a decrease in interest-bearing public funds due to seasonal outflows[6][7] Asset Quality Asset quality remained solid with improvements in key areas Credit Quality Metrics (Q2 2025 vs Q1 2025) | Metric | Q2 2025 (in millions) | Q1 2025 (in millions) | | :--- | :--- | :--- | | ACL to Period-End Loans | 1.45% | 1.49% | | Provision for Credit Losses | $14.9M | $10.5M | | Net Charge-Offs (Annualized) | 0.31% | 0.18% | | Criticized Commercial Loans | $569.3M | $594.1M | | Nonaccrual Loans | $94.9M | $104.2M | - Criticized commercial loans decreased to 3.15% of total commercial loans from 3.35% in the prior quarter[10] - Nonaccrual loans as a percentage of total loans improved, decreasing to 0.40% from 0.45% linked-quarter[10] Capital Capital ratios remained strong despite a linked-quarter decrease due to deployment for growth and share buybacks Key Capital Ratios (June 30, 2025) | Ratio | Value (%) | Change vs. Mar 31, 2025 (%) | | :--- | :--- | :--- | | CET1 Ratio (est.) | 14.03% | -45 bps | | TCE Ratio | 9.84% | -17 bps | | Total Risk-Based Capital (est.) | 15.87% | -50 bps | - The company repurchased 750,000 shares of its common stock during Q2 2025, bringing the total repurchased under the current program to 1,100,000 shares[21] Results of Operations Analysis Operating results for Q2 2025 show increased net interest income and noninterest income, alongside higher expenses due to acquisition-related costs Net Interest Income and Net Interest Margin (NIM) Net interest income (TE) increased by $6.7 million to $279.5 million, and the net interest margin (NIM) expanded by 6 basis points to 3.49% linked-quarter Net Interest Income & Margin (TE) | Metric | Q2 2025 (in millions) | Change from Q1 2025 (in millions) | | :--- | :--- | :--- | | Net Interest Income (TE) | $279.5M | +$6.7M (+2%) | | Net Interest Margin (TE) | 3.49% | +6 bps | - The 6 bps NIM expansion was driven by: +4 bps from deposit rates, +2 bps from securities yields, and +2 bps from loan yields, partially offset by a -2 bps impact from unfavorable borrowing mix and rates[11] Noninterest Income Noninterest income rose by $3.7 million (4%) to $98.5 million compared to the prior quarter Noninterest Income Breakdown (Q2 2025 vs Q1 2025) | Category | Q2 2025 Value (in millions) | Change vs. Q1 2025 (in millions) | | :--- | :--- | :--- | | Total Noninterest Income | $98.5M | +$3.7M (+4%) | | Trust Fees | $22.8M | +$4.7M (+26%) | | Bank Card & ATM Fees | $22.0M | +$1.3M (+6%) | | Secondary Mortgage Operations | $4.1M | +$0.7M (+20%) | | Investment & Annuity/Insurance | $10.6M | -$0.8M (-7%) | | Other Noninterest Income | $14.8M | -$2.3M (-13%) | - The acquisition of Sabal Trust Company on May 2, 2025, contributed $3.6 million to trust fees in the quarter[14] Noninterest Expense & Taxes Noninterest expense increased by $10.9 million (5%) to $216.0 million, largely due to $5.9 million in one-time expenses related to the Sabal Trust Company acquisition - Total noninterest expense rose to $216.0 million, up $10.9 million from Q1 2025. This included $5.9 million in one-time acquisition expenses for Sabal Trust Company[16] - The acquisition-related expenses included $1.4 million in personnel costs and $4.5 million in other expenses, primarily professional services[17][19] - The effective income tax rate for the second quarter of 2025 was 21.5%[19] Financial Statements This section provides detailed financial statements, including income statement, balance sheet, average balance sheet, and asset quality information, for Q2 2025 and comparative periods Financial Highlights This section provides a consolidated, high-level overview of the company's financial performance and condition Selected Financial Highlights | Metric (Q2 2025) | Value | | :--- | :--- | | Net Income | $113.5M | | Diluted EPS | $1.32 | | Total Assets (Period-End) | $35.2B | | Total Loans (Period-End) | $23.5B | | Total Deposits (Period-End) | $29.0B | | Return on Average Assets | 1.32% | | Net Interest Margin (TE) | 3.49% | | Efficiency Ratio | 54.91% | Income Statement The detailed income statement shows a net income of $113.5 million for Q2 2025, a decrease from $119.5 million in Q1 2025 Income Statement Summary (in thousands) | Line Item | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Net Interest Income | $276,959 | $269,905 | $270,430 | | Provision for Credit Losses | $14,925 | $10,462 | $8,723 | | Noninterest Income | $98,524 | $94,791 | $89,174 | | Noninterest Expense | $215,979 | $205,059 | $206,016 | | Net Income | $113,531 | $119,504 | $114,557 | Balance Sheet The period-end balance sheet as of June 30, 2025, shows total assets of $35.2 billion, an increase from the prior quarter Period-End Balance Sheet Summary (in thousands) | Line Item | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Total Loans | $23,461,750 | $23,098,146 | $23,911,616 | | Total Assets | $35,212,652 | $34,750,680 | $35,412,291 | | Total Deposits | $29,046,612 | $29,194,733 | $29,200,718 | | Total Common Stockholders' Equity | $4,365,419 | $4,278,672 | $3,920,718 | Average Balance Sheet and Net Interest Margin Summary This section details the average balances for assets and liabilities during the quarter, which form the basis for the Net Interest Margin (NIM) calculation Net Interest Margin (TE) Summary (Q2 2025) | Metric | Value (%) | | :--- | :--- | | Average Earning Assets | $32.1B | | Average Earning Assets Yield (TE) | 5.06% | | Total Cost of Funds | 1.57% | | Net Interest Spread (TE) | 2.46% | | Net Interest Margin (TE) | 3.49% | Asset Quality Information This provides a detailed breakdown of asset quality metrics Asset Quality Metrics (June 30, 2025) | Metric | Value (in millions) | | :--- | :--- | | Nonaccrual Loans | $94.9M | | Nonaccrual Loans as a % of Loans | 0.40% | | Total Allowance for Credit Losses (ACL) | $340.3M | | ACL as a % of Period-End Loans | 1.45% | | Net Charge-Offs (Q2 2025) | $17.8M | Other Information This section provides details on the upcoming conference call, clarifies the use of non-GAAP financial measures, and includes reconciliations for these metrics Conference Call Information Management will host a conference call for analysts and investors to review the second quarter 2025 results - A conference call to discuss Q2 2025 results is scheduled for July 15, 2025, at 3:30 p.m. Central Time[22] Non-GAAP Financial Measures and Forward-Looking Statements This section clarifies the use of non-GAAP financial measures, such as figures presented on a fully taxable equivalent (TE) basis, adjusted pre-provision net revenue (PPNR), and an adjusted efficiency ratio - The company uses non-GAAP measures, including presenting net interest income and margin on a taxable-equivalent (TE) basis, to enhance comparability[25][26] - Adjusted Pre-Provision Net Revenue (PPNR) and an adjusted Efficiency Ratio are presented to exclude certain items, such as acquisition costs, to better reflect ongoing business trends[27][28] - The release contains forward-looking statements regarding performance, growth, and economic conditions, which are subject to significant risks and uncertainties[29][31] Appendix A: Reconciliation of Non-GAAP Measures This appendix provides the necessary reconciliations for the non-GAAP measures used in the report Reconciliation to Adjusted Pre-Provision Net Revenue (TE) (Q2 2025, in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | Net Income (GAAP) | $113,531 | | Plus: Provision for credit losses | $14,925 | | Plus: Income tax expense | $31,048 | | Plus: Taxable equivalent adjustment | $2,496 | | Plus: Sabal Trust acquisition expense | $5,911 | | Adjusted pre-provision net revenue (TE) | $167,911 | Efficiency Ratio Calculation (Q2 2025, in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | Total revenue (TE) | $377,979 | | GAAP Noninterest expense | $215,979 | | Less: Amortization of intangibles | ($2,524) | | Less: Sabal Trust acquisition expense | ($5,911) | | Adjusted noninterest expense | $207,544 | | Efficiency ratio | 54.91% |