Hancock Whitney Sets 2025 Targets: Sees Fee Income Growing 9-10%, Loans on the Rise

Insights from the Earnings Call: Hancock Whitney Corporation (HWC) First Quarter 2025

Management View

• John Hairston, CEO of the company, emphasized their robust financial standing, pointing out an impressive asset return rate of 1.41%, increased fees from services, and a boost in net interest margin up to 3.43%. Additionally, he mentioned revised projections taking into account the recent addition of Sabal Trust. These forecasts predict service charges will increase between 9% and 10% compared to last year, along with moderate credit extensions anticipated primarily during the latter part of 2025.

• The Sabal Trust deal, scheduled to conclude on May 2, will enable Hancock Whitney to broaden its regional banking offerings in Florida, particularly within the areas of Tampa and Orlando.

• CFO Mike Achary reported net income of $120 million or $1.38 per share for the quarter. He mentioned ongoing improvements in cost management, with expenses increasing only 1% from the prior quarter, and NIM expansion driven by controlled funding costs and favorable funding mix. The company expects NII growth of 3-4% for 2025.

• Achary emphasized that capital returns remain a focus, with 350,000 shares repurchased and a 50% year-over-year increase in the common stock dividend to $0.45 per share.

Outlook

• The firm revised its forecast for 2025, anticipating modest single-digit expansion in loans, primarily happening in the latter part of the year. They also predict that the addition of Sabal Trust will likely lead to a rise of about 9-10% in fee income.

• NIM is anticipated to continue modest expansion, supported by repricing of CDs and cash flows from bond and fixed-rate loan portfolios. The guidance includes assumptions of three 25-basis-point rate cuts in 2025.

• Non-interest expenses are forecasted to increase 4-5% year-over-year, including costs associated with the Sabal Trust integration.

Financial Results

• In the first quarter of 2025, the company reported earnings of $120 million, which represents a minor dip compared to the $122 million recorded in the fourth quarter of 2024. The pre-provision net revenue stood at $162.4 million, showing only a slight decline from the previous quarter yet marking an increase of 6% when measured against the same period last year.

• Deposits declined by $298 million, primarily due to seasonal public fund outflows. Retail CDs decreased following reductions in promotional rates, aiding in controlling deposit costs. Non-interest-bearing deposit (DDA) balances increased $18 million, maintaining a 36% mix.

• The loan balances decreased by $201 million, primarily due to increased repayments in sizable healthcare and commercial non-real estate loans, which was partially balanced out by robust activity in other sectors.

• The company reported a cost of funds decrease to 1.59%, with CDs repricing at lower rates. Bond portfolio yields rose to 2.78%, supported by reinvestment at higher yields.

Q&A

• Michael Rose, Raymond James: Inquired whether there might be an increase in share repurchases considering capital accumulation and sluggish loan expansion. CFO Achary replied that they anticipate buyback levels to remain steady or perhaps rise marginally, depending on prevailing external circumstances.

• Catherine Mealor from KBW asked about the company’s recruitment strategies and how they will influence expansion. CEO Hairston mentioned that the firm intends to bring aboard 20-30 additional bankers in 2025, anticipating an uptick in growth towards the latter part of the year.

• Stephen Scouten with Piper Sandler: Explored what’s behind the improved PPNR outlook. According to CFO Achary, significant contributors include an uptick in fee income, particularly from the Sabal Trust acquisition, along with managed expense levels.

Sentiment Analysis

• Experts showed guarded enthusiasm, with attention drawn to the difficulties of expanding loans and maintaining good credit quality. The queries signaled a wish for more information about what drives growth and plans for deploying capital.

• The leadership kept an assured stance, highlighting key strategies like acquiring Sabal Trust, controlling expenses, and managing deposit costs. CEO Hairston stressed the organization’s preparedness to handle market fluctuations and seize expansion possibilities.

Quarter-over-Quarter Comparison

• The guidance wording was updated to emphasize the effects of the Sabal Trust acquisition, with anticipated increases in fee income growth projections rising from 3.5-4.5% in Q4 2024 to 9-10% in Q1 2025.

• Loan growth guidance was reduced from mid-single-digit to low single-digit, reflecting client sentiment and macroeconomic uncertainties.

• The attention of analysts moved from overall performance indicators to targeted growth strategies and the allocation of capital.

• The management maintained a consistent tone, placing greater importance on capitalizing on strategic purchases and reducing expenses.

Risks and Concerns

• Management recognized possible challenges stemming from broad economic conditions, notably how client attitudes and interest rates could affect lending expansion.

• Experts voiced worries over loan reliability, pointing out rises in impaired loans and the possible effects of extended economic instability.

• Leaders emphasized ample liquidity, healthy capital ratios, and a substantial reserve for credit losses as ways to mitigate risks.

Final Takeaway

In the first quarter of 2025, Hancock Whitney Corporation showed robust financial results, fueled by careful expense control, targeted purchases, and efficient use of capital. The addition of The Sabal Trust is anticipated to boost revenue from fees and broaden the firm’s presence in crucial areas within Florida. Although projections for lending expansion have been adjusted downward, the organization remains optimistic about its recruitment tactics and competitive stance, indicating potential for growth towards the end of the year.

Review the complete earnings call transcript.

Further details about Hancock Whitney, notes from Hancock Whitney Corporation, and so forth.

• Hancock Whitney Corporation (HWC) First Quarter 2025 Earnings Call Transcript
• Hancock Whitney Corporation First Quarter 2025 Financial Results - Earnings Call Presentation
• Hancock Whitney: Strong Balance Sheet Makes Shares Attractive
• Hancock Whitney reported GAAP EPS of $1.38, surpassing estimates by $0.09, with revenue coming in at $367.5M, which fell short by $0.46M.
• Hancock Whitney reports obtained regulatory permissions for the takeover of Sabal Trust Company.

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