10-K: Hancock Whitney Reports Solid 2024 Earnings, Eyes Growth in Florida and Texas

Hancock Whitney Corporation announces strong 2024 results, driven by net interest margin expansion and strategic growth initiatives, including the pending acquisition of Sabal Trust Company and expansion in Florida and Texas.

Summary

• Hancock Whitney Corporation reported net income of $460.8 million for 2024, or $5.28 per diluted share, compared to $392.6 million, or $4.50 per diluted share in 2023.
• The company's balance sheet totaled $35.1 billion at December 31, 2024, with loans of $23.3 billion and deposits of $29.5 billion.
• The bank's net interest margin expanded 3 bps to 3.37% in 2024.
• The company is planning to open five additional financial centers in North Dallas in 2025 and is planning additional locations in Florida as it nears the completion of the pending Sabal transaction.
• The pending acquisition of Florida-based Sabal Trust Company is expected to expand the company's trust and asset management business with approximately $3 billion in assets under management.
• The company's common equity tier 1 capital ratio was 14.14% at December 31, 2024.
• The company expects net interest income for 2025 to increase in the range of 3.5% to 4.5%.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and strategic growth plans. While acknowledging risks, the overall tone is optimistic and confident.

Positives

• Net interest margin expanded 3 bps to 3.37% in 2024.
• Fee income grew and adjusted noninterest expense increased only modestly.
• Strong earnings facilitated substantial growth in capital ratios.
• The company's common equity tier 1 capital ratio was 14.14% at December 31, 2024, up 181 bps from December 31, 2023.
• The company's tangible common equity ratio was 9.47%, up 110 bps from December 31, 2023.
• The company expects net interest income for 2025 to increase in the range of 3.5% to 4.5%.

Negatives

• Loans of $23.3 billion, down $622.5 million; reflects a $307.6 million strategic reduction of the shared national credit portfolio
• Deposits of $29.5 billion, down $197.2 million; reflects organic growth offset by a decline of $582.9 million in brokered deposits
• Criticized commercial loans and nonaccrual loans continued to normalize following the recent benign credit environment

Risks

• Current uncertain economic conditions could adversely affect the company's business, financial condition, and results of operations.
• The company is subject to lending concentration risk in commercial and residential real estate, healthcare, hospitality, shared national credits, and leveraged loans.
• Changes in interest rates could affect the company's results of operations, demand for products, and ability to deliver products efficiently.
• The financial soundness and stability of other financial institutions could adversely affect the company.
• A failure in the company's operational systems or infrastructure, or those of third parties, could impair liquidity, disrupt businesses, result in unauthorized disclosure of confidential information, damage reputation, and cause financial losses.
• The development and use of artificial intelligence (AI) presents risks and challenges that may adversely impact the company's business.
• The company is subject to industry competition which may have an impact upon its success.
• The implementation of new lines of business or new products and services may subject the company to additional risk.
• The company may not realize the expected benefits from its efficiency and growth initiatives, which could negatively impact future profitability.
• The company's future growth and financial performance may be negatively affected if it is unable to successfully execute its growth plans, which may include acquisitions and de novo branching.
• Changes in retail distribution strategies and consumer behavior may adversely impact the company's investments in bank premises, equipment, technology and other assets and may lead to increased expenditures to change its retail distribution channel.
• The company is subject to regulation by various federal and state entities.
• The company and other financial institutions have been the subject of litigation, investigations and other proceedings which could result in legal liability and damage to reputation.
• Future issuances of equity securities could dilute the interests of holders of the company's common stock, and the company's common stock ranks junior to indebtedness.
• The company's ability to deliver and pay dividends depends primarily upon the results of operations of its subsidiary Bank, and the company may not pay, or be permitted to pay, dividends in the future.
• Mississippi law, and anti-takeover provisions in the company's articles of incorporation and bylaws could make a third-party acquisition of the company difficult and may adversely affect share value.
• Shares of the company's common stock are not insured deposits and may lose value.
• The company must attract and retain skilled personnel.
• Natural and man-made disasters could affect the company's ability to operate.
• Societal, legislative and regulatory responses to environmental, social and governance (ESG) concerns, and anti ESG concerns, as well as diversity, equity, and inclusion (DEI) and anti-DEI concerns, could adversely affect the company's business and performance, including indirectly through impacts on its customers.
• The company is exposed to reputational risk.
• Changes in accounting policies or in accounting standards could materially affect how the company reports its financial condition and results of operations.

Future Outlook

The company expects net interest income for 2025 to increase in the range of 3.5% to 4.5% and expects end of period loan growth in 2025 to be mid-single digits from the December 31, 2024 balance of $23.3 billion. Management expects the effective tax rate to be approximately 20% to 21% in 2025, absent any changes in tax law. Management expects noninterest expense to increase 4% to 5% for the year ended December 31, 2025 from the adjusted 2024 level of $816.1 million.

Management Comments

• We remain focused on balance sheet optimization and effective expense control, and we believe we are well positioned to continue to enhance shareholder value.
• As we close out our celebration of our 125th year, we are ready for the opportunities ahead, including our pending second quarter 2025 acquisition of Sabal Trust Company and the recently announced multi-year organic growth plan.

Industry Context

The announcement reflects a trend among regional banks to focus on efficiency, organic growth, and strategic acquisitions to enhance shareholder value in a changing economic and regulatory landscape.

Comparison to Industry Standards

• Hancock Whitney's CET1 ratio of 14.14% compares favorably to the average CET1 ratio of regional banks, indicating a strong capital position.
• The company's efficiency ratio of 55.36% is competitive with industry standards, reflecting effective expense management.
• The company's plan to open five additional financial centers in North Dallas in 2025 is similar to other regional banks expanding into high-growth markets.
• The company's pending acquisition of Sabal Trust Company is similar to other regional banks acquiring wealth management firms to diversify revenue streams.

Stakeholder Impact

• Shareholders: Positive impact due to increased profitability, capital ratios, and dividend payments.
• Employees: Potential for growth and development with expansion plans.
• Customers: Continued access to a broad range of financial services.
• Communities: Continued support through community development initiatives.

Next Steps

• Complete the acquisition of Sabal Trust Company in the second quarter of 2025.
• Open five additional financial centers in North Dallas in 2025.
• Continue to evaluate future acquisition opportunities.

Key Dates

Keywords

financial results, net income, net interest margin, loan growth, deposit growth, capital ratios, Sabal Trust Company, Florida expansion, Texas expansion, credit quality, Hancock Whitney, banking