8-K: Hancock Whitney Reports Solid Q2 2025 Results Driven by Loan Growth and Efficiency Gains Amidst Acquisition Integration

Hancock Whitney Corporation announced second quarter 2025 net income of $113.5 million, or $1.32 diluted EPS, alongside strategic loan growth and improved efficiency, despite a slight linked-quarter decrease in net income.

Summary

• Net income for the second quarter of 2025 totaled $113.5 million, or $1.32 per diluted common share (EPS), compared to $119.5 million, or $1.38 per diluted common share, in the first quarter of 2025.
• Excluding $5.9 million, or $0.05 per share, of supplemental disclosure items related to the acquisition of Sabal Trust Company, adjusted EPS would be $1.37, down $0.01 linked-quarter.
• Adjusted pre-provision net revenue (PPNR) totaled $167.9 million, up $5.5 million compared to the first quarter of 2025.
• Total loans were $23.5 billion at June 30, 2025, up $363.6 million, or 2% from March 31, 2025, representing a 6% linked-quarter annualized (LQA) increase.
• Total deposits at June 30, 2025, were $29.0 billion, down $148.1 million, or 1% from March 31, 2025, representing a 2% LQA decrease.
• Noninterest-bearing deposits (DDA) totaled $10.6 billion at June 30, 2025, up $23.9 million, and comprised 37% of total period-end deposits.
• Net interest margin (NIM) (TE) was 3.49% in the second quarter of 2025, up 6 basis points linked-quarter.
• The efficiency ratio improved to 54.91%, a 31 basis point improvement compared to the prior quarter.
• The total allowance for credit losses (ACL) was $340.3 million at June 30, 2025, with ACL coverage at 1.45% of period-end loans.
• Net charge-offs in the second quarter of 2025 were $17.8 million, or 0.31% of average total loans on an annualized basis, up from $10.3 million, or 0.18% in the first quarter of 2025.
• The company repurchased 750,000 shares of its common stock at an average price of $52.36 per share during the second quarter of 2025.
• Capital ratios remain strong, with CET1 ratio estimated at 14.03%, TCE ratio at 9.84%, and total risk-based capital ratio estimated at 15.87% at June 30, 2025.

Sentiment

Score: 7

Explanation: While net income and EPS saw a linked-quarter decline, the adjusted figures show stability. Strong loan growth, NIM expansion, and improved efficiency ratio are positive indicators. Capital remains robust, and the acquisition integration is progressing. The increase in net charge-offs and deposit decline are areas to monitor, but the overall outlook and management commentary are positive, suggesting a healthy underlying business.

Positives

• Adjusted pre-provision net revenue (PPNR) totaled $167.9 million, up $5.5 million compared to the first quarter of 2025.
• Loans increased $363.6 million, or 6% linked-quarter annualized (LQA), with diverse growth across most commercial segments due to stronger loan demand, increasing line utilization, and lower payoffs.
• Net Interest Margin (NIM) expanded to 3.49%, up 6 basis points linked-quarter, driven by changes in deposit rates, higher securities yields, and higher loan yields.
• The efficiency ratio improved to 54.91%, a 31 basis point improvement compared to the prior quarter, reflecting effective expense management.
• Criticized commercial loans decreased to $569.3 million (3.15% of total commercial loans) from $594.1 million (3.35%) in the prior quarter.
• Nonaccrual loans decreased to $94.9 million (0.40% of total loans) from $104.2 million (0.45%) in the prior quarter, indicating improved asset quality.
• Allowance for Credit Losses (ACL) coverage remains solid at 1.45% of period-end loans.
• Noninterest-bearing deposits (DDA) increased $23.9 million, maintaining a strong 37% of total period-end deposits.
• Trust fees increased $4.7 million, or 26% linked-quarter, including $3.6 million from the acquisition of Sabal Trust Company.
• Bank card and ATM fees were up $1.3 million, or 6% linked-quarter, due to higher activity on client accounts.
• The company maintains a strong liquidity position with approximately $19.9 billion in internal and external sources of funding available.
• Capital ratios remain well above regulatory minimums, with CET1 at 14.03% and TCE at 9.84%.
• The company repurchased 750,000 shares of its common stock, demonstrating a commitment to shareholder returns.

Negatives

• Net income decreased to $113.5 million from $119.5 million linked-quarter.
• Diluted EPS decreased to $1.32 from $1.38 linked-quarter.
• Return on Assets (ROA) decreased to 1.32% from 1.41% in the prior quarter.
• Adjusted ROA decreased to 1.37% from 1.41% in the prior quarter.
• Return on Tangible Common Equity (ROTCE) decreased to 13.71% from 14.72% in the prior quarter.
• Total deposits decreased $148.1 million, or 2% linked-quarter annualized.
• Retail time deposits decreased $234.4 million, or 6% linked-quarter, driven by maturity concentration and promotional rate reductions.
• Interest-bearing public fund deposits decreased $18.3 million, or 1% linked-quarter, due to seasonal outflows.
• Provision for credit losses increased to $14.9 million from $10.5 million in the first quarter of 2025.
• Net charge-offs increased to $17.8 million (0.31% of average total loans) from $10.3 million (0.18%) in the first quarter of 2025.
• Allowance for Credit Losses (ACL) coverage decreased to 1.45% from 1.49% in the prior quarter.
• Noninterest expense increased $10.9 million, or 5% linked-quarter, primarily due to $5.9 million of one-time expenses related to the Sabal Trust Company acquisition.
• Other noninterest income decreased $2.3 million, or 13% linked-quarter, primarily due to lower SBIC income, syndication fees, and SBA loan fees.

Risks

• Impact of current and future economic conditions, including effects of declines in the real estate market, tariffs or trade wars (reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services).
• High unemployment, inflationary pressures, increasing insurance costs, and elevated interest rates, including the impact of changes in interest rates on financial projections, models, and guidance, and slowdowns in economic growth, as well as financial stress on borrowers.
• General economic business conditions in local markets.
• Federal Reserve action with respect to interest rates.
• Effects of war or other conflicts, acts of terrorism, climate change, and the impact of natural or man-made disasters.
• Adequacy of the enterprise risk management framework.
• Potential claims, damages, penalties, fines, and reputational damage resulting from pending or future litigation, regulatory proceedings, assessments, and enforcement actions, as well as the impact of negative developments affecting the banking industry and resulting media coverage.
• Potential impact of current (including Sabal Trust Company) or future business combinations on performance and financial condition, including the ability to successfully integrate the businesses.
• Effectiveness of derivative financial instruments and hedging activities to manage risks.
• Increased cybersecurity risks, including potential business disruptions or financial losses.
• Adequacy of internal controls over financial and non-financial reporting.
• Financial impact of regulatory requirements and tax reform legislation.

Future Outlook

Management expects low-single digit loan growth and low-single digit period-end deposit growth from December 31, 2024 levels for the full year 2025, with mid-single digit loan growth anticipated in the second half of 2025. Modest and consistent Net Interest Margin (NIM) expansion is expected over the remainder of 2025, assuming two 25 basis point rate cuts in September and December 2025. Net Interest Income (TE) is projected to be up between 3%-4% from FY24, and adjusted Pre-Provision Net Revenue (PPNR) is expected to increase by 6%-7% from FY24 adjusted PPNR. Noninterest income is forecast to be up 9%-10% from FY24, and adjusted noninterest expense is expected to be up 4%-5% from FY24. The effective tax rate is anticipated to be approximately 20-21%, and the efficiency ratio is expected to be maintained within the 54-56% range for FY25. Long-term operating objectives for 4Q27 include an Adjusted ROA of 1.40%-1.50%, TCE of at least 8%, Adjusted ROTCE of at least 18%, and an Efficiency Ratio of 55% or less.

Management Comments

• John M. Hairston, President & CEO, stated: 'Our team delivered another quarter of solid profitability and progress on our growth plan for 2025. Adjusted ROA was 1.37%, NIM continued to expand, and our efficiency ratio improved to 54.91%. We welcomed new colleagues and clients via the Sabal Trust Company acquisition on May 2nd. Capital was proactively deployed to fund both organic and inorganic growth, while simultaneously repurchasing 750,000 shares of our common stock. The pivot to loan growth began with a 6.3% LQA improvement across the footprint and in nearly every business segment. We look forward to the rest of 2025 as we execute our organic growth plan and maintain focus on profitability and efficiency.'

Industry Context

Hancock Whitney's second-quarter performance reflects a regional bank navigating a dynamic interest rate environment, with a strategic focus on organic loan growth and efficiency improvements. The acquisition of Sabal Trust Company aligns with broader industry trends of financial institutions expanding their fee-based services, particularly in wealth management. The company's ability to expand its Net Interest Margin (NIM) and improve its efficiency ratio, despite a slight linked-quarter dip in net income, demonstrates resilience. The emphasis on maintaining strong capital levels and managing asset quality, with nonaccrual loans near top quartile levels, positions the bank favorably compared to peers in a potentially uncertain economic climate. The increase in noninterest-bearing deposits, while overall deposits declined, highlights a stable funding base, a key competitive advantage in the current banking landscape.

Comparison to Industry Standards

• Nonaccrual loans continue near top quartile levels, suggesting better-than-average asset quality compared to peers.
• Noninterest-bearing demand deposit accounts (DDA) as a percentage of total deposits remains among best-in-class at 37% at June 30, 2025.
• The company's regulatory capital ratios (CET1 14.03%, Tier 1 14.03%, Total Risk-Based 15.87%, Leverage 11.39%) are significantly above the 'Well Capitalized Minimums' (6.50%, 8.00%, 10.00%, 5.00% respectively), indicating strong capital adequacy relative to regulatory benchmarks.

Stakeholder Impact

• Shareholders are impacted by the linked-quarter decrease in diluted EPS, but the share repurchase program indicates a return of capital and management's confidence. Strong capital ratios and a positive future outlook could support long-term shareholder value.
• Employees will see the integration of new colleagues from the Sabal Trust Company acquisition, contributing to the company's approximately 3,600 full-time equivalent employees.
• Customers benefit from expanded trust services due to the Sabal Trust Company acquisition and increased bank card and ATM activity suggests higher client engagement. The availability of the Insured Cash Sweep (ICS) product provides options for securing deposits above FDIC limits.
• Creditors are supported by the company's strong capital ratios and robust liquidity position, which provide financial stability and security.

Next Steps

• Execute the organic growth plan for the remainder of 2025.
• Maintain focus on profitability and efficiency throughout 2025.
• Continue to manage asset quality and reserve levels based on evolving economic forecasts.
• Reinvest principal runoff of approximately $152 million and pre-invest $100 million of 1H26 bond maturities during the third quarter of 2025.
• Continue the share buyback program, with 3,206,000 shares remaining available under the current authority.
• Host an investor call and webcast on July 15, 2025, at 3:30 p.m. Central Time to discuss the second quarter 2025 results.

Key Dates

Recommendation

Keywords

Hancock Whitney, HWC, Banking, Financial Results, Q2 2025, Earnings, Net Income, EPS, Loans, Deposits, Net Interest Margin, NIM, Capital Ratios, Asset Quality, Credit Losses, Sabal Trust Company, Acquisition, Share Repurchase, Financial Services, Regional Bank