Hancock Whitney Q2 2025 Earnings Report

Hancock Whitney EPS Results

• Actual EPS: $1.37
• Consensus EPS: $1.36
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $1.31

Hancock Whitney Revenue Results

• Actual Revenue: $377.98 million
• Expected Revenue: $375.99 million
• Beat/Miss: Beat by +$1.99 million
• YoY Revenue Growth: N/A

Hancock Whitney Announcement Details

• Quarter: Q2 2025
• Date: 7/15/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, July 15, 2025
• Conference Call Time: 4:30PM ET

Hancock Whitney (NASDAQ:HWC), headquartered in Gulfport, Mississippi, traces its origins to 1899 with the founding of Hancock Bank. Over the decades, the company has grown through strategic acquisitions and organic expansion, notably merging with New Orleans–based Whitney Holding Corporation in 2005. Today, Hancock Whitney operates as a full-service financial holding company, offering a broad array of banking and financial solutions to individual, business and institutional clients.

The company’s core business activities encompass commercial and consumer banking, treasury management, mortgage lending and wealth management services. Clients can access a variety of deposit products, including checking and savings accounts, certificates of deposit and money market accounts. On the lending side, Hancock Whitney provides commercial real estate loans, equipment financing, lines of credit and small business administration financing, alongside consumer mortgage and home equity loans.

Hancock Whitney maintains a strong presence across the Gulf South region, with branches and loan production offices in Alabama, Florida, Louisiana, Mississippi and Texas. The bank has invested in digital platforms and mobile banking tools to serve clients across its footprint, enabling remote account management, online payments and cash management solutions. In addition to its banking services, the company’s wealth management division offers financial planning, investment advisory and trust services, while an insurance subsidiary provides personal and business coverage options.

Leadership at Hancock Whitney is anchored by President and Chief Executive Officer Mark A. Mullins, who brings decades of banking experience and a focus on community engagement. The board of directors includes executives with expertise in finance, risk management and regional economic development. The company emphasizes corporate citizenship through philanthropic initiatives and partnerships that support education, disaster relief and economic growth in the communities it serves.

Hancock Whitney Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: During Q2, NIM expanded by 6 basis points and ROA reached 1.37% as loans grew $364 M (6% annualized) while DDA balances rose to 37% despite a $148 M deposit decline.
• Positive Sentiment: Fee income increased $4 M, driven by trust fees from the Sable acquisition, and the efficiency ratio improved to 54.91% as expenses remained controlled.
• Neutral Sentiment: The company reaffirmed guidance for low single-digit loan growth, modest NIM expansion, 3-4% net interest income growth, and 4-5% expense growth in 2025.
• Positive Sentiment: Credit quality strengthened with criticized commercial loans down 4% to $594 M, nonaccruals down 9% to $95 M, reserves at 1.45% of loans, and projected net charge-offs of 15-25 bps.
• Positive Sentiment: Returned capital by repurchasing 750,000 shares (~$40 M), maintaining strong capital ratios (TCE 9.84%, CET1 14.03%), and planning continued buybacks.

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to Hunt Cup Quitney Corporation's Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Catherine Mistich, Investor Relations Manager. You may begin.

[Kathryn Mistich, VP & Manager - IR at Hancock Whitney]

Thank you, and good afternoon. During today's call, we may make forward looking statements. We would like to remind everyone to carefully review the Safe Harbor language that was published with the earnings release and presentation and in the company's most recent 10 ks and 10 Q, including the risks and uncertainties identified therein. You should keep in mind that any forward looking statements made by Hancock Whitney speak only as of the date on which they were made. As everyone understands, the current economic environment is rapidly evolving and changing.

[Kathryn Mistich, VP & Manager - IR at Hancock Whitney]

Hancock Whitney's ability to accurately project results or predict the effects of future plans or strategies or predict market or economic developments is inherently limited. We believe that the expectations reflected or implied by any forward looking statements are based on reasonable assumptions, but are not guarantees of performance or results, and our actual results and performance could differ materially from those set forth in our forward looking statements. Hancock Whitney undertakes no obligation to update or revise any forward looking statements, and you are cautioned not to place undue reliance on such forward looking statements. Some of the remarks contain non GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables.

[Kathryn Mistich, VP & Manager - IR at Hancock Whitney]

The presentation slides included in our eight ks are also posted with the conference call webcast link on the Investor Relations website. We will reference some of these slides in today's call. Participating in today's call are John Hairston, President and CEO Mike Ackery, CFO and Chris Zalluca, Chief Credit Officer. I will now turn the call over to John Hairston.

[John Hairston, President, CEO & Director at Hancock Whitney]

Thank you all for joining us on a busy reporting day. The 2025 was another strong quarter. The results reflect our continued focus on profitability, efficiency and meaningful progress in our multi year growth plan. Our NIM expanded six basis points and we achieved an ROA of 1.37% after adjusting for expenses related to our transaction with Sable Trust Company, which closed on May 2. As expected, loans grew $364,000,000 or 6% annualized due to stronger demand, increased line utilization and lower payoffs.

[John Hairston, President, CEO & Director at Hancock Whitney]

We remain focused on more granular full relationship loans with the goal of achieving more favorable loan yields and relationship revenue. Our guidance on loan growth remains unchanged and we expect low single digit growth for the year 2025, which infers mid single digit growth for the second half of twenty twenty five. Deposits were down $148,000,000 reflecting a decrease in CDs due to maturity concentration and promotional rate reductions in the quarter along with a decrease in public funds. However, interest bearing transaction balances and DDA balances were up in the quarter and DDA mix actually increased to 37%. NIM continued to expand as our average earning assets grew at higher yields and we continue to reduce deposit costs.

[John Hairston, President, CEO & Director at Hancock Whitney]

Our fee income grew again this year with trust fees driving most of the growth thanks to the additional team and client book from Sable. Expenses remain controlled and in line with our expectations, reflecting investments we are making in new revenue producers and technology efforts to improve efficiency and client experience. During the quarter, we continued to return capital to investors by repurchasing 750,000 shares of common. We also deployed capital through the execution of our acquisition of Sable Trust. Our capital ratios despite all that remained very solid with TCE of 9.84% and common equity Tier one ratio of 14.03%.

[John Hairston, President, CEO & Director at Hancock Whitney]

We made meaningful progress on our organic growth plan this quarter. We added 10 net new bankers to the team during the quarter and have solidified the location of five new financial center locations for the Dallas market. We expect three of these financial centers to open in the '25 and the remaining two will open in the first half of twenty six. We will provide additional guidance on new offices and bankers on the January call. We remain very optimistic for our growth prospects for the rest of the year.

[John Hairston, President, CEO & Director at Hancock Whitney]

The macroeconomic environment remains dynamic, but our ample liquidity, solid allowance for credit losses at 1.45, and strong capital keep us well positioned to navigate challenges and support our clients in any economy. Before we continue the call, I want to take a moment to acknowledge the devastating floods that have impacted communities across Texas. Our thoughts are with all those affected. We are no strangers to the hardships that natural disasters can bring, and we're committed to supporting recovery efforts across the region. As always, we stand ready to serve our communities with the same strength and resilience that define both our company and the people we are proud to serve. With that, I'll invite Mike to add additional comments.

[Michael Achary, CFO at Hancock Whitney]

Thanks, John. Good afternoon, everyone. As John mentioned, our results reflect another quarter of outstanding performance. Our adjusted net income for the quarter was $118,000,000 or $1.37 per share compared to 120,000,000 or $1.38 per share in the first quarter. Second quarter results included $6,000,000 of supplemental disclosure items related to our acquisition of Sable Trust Company in May.

[Michael Achary, CFO at Hancock Whitney]

PPNR was up $5,000,000 or 3% from last quarter and was a peer leading 1.95% of assets. Our NIM again expanded this quarter, but by six basis points and NII was up $7,000,000 or 2%. Fee income was up $4,000,000 or 4% and expenses adjusted for onetime items remain well controlled and were up $5,000,000 or just 2%. Our efficiency ratio improved to 54.91% this quarter compared to 55.22% last quarter. The NIM expansion was driven by higher average earning asset volumes and yields and lower deposit costs, which were only partially offset by an unfavorable mix related to other borrowed funds.

[Michael Achary, CFO at Hancock Whitney]

That's all shown on Slide 15 of the investor deck. Bond yields were up eight basis points to 2.86%. We had $233,000,000 of principal cash flow at 3.15%, while we reinvested $359,000,000 into the bond portfolio at 4.71%. Additionally, another $40,000,000 of our fair value hedges became effective this quarter and contributed three basis points to the overall yield pickup. Next quarter, we expect about $152,000,000 of principal cash flow at 3.11% that will be reinvested at higher yields.

[Michael Achary, CFO at Hancock Whitney]

We expect the portfolio yield should continue to increase as we reinvest principal cash flows at higher rates. Our loan yield for the quarter was up two basis points to 5.86%. Yields on fixed rate loans were up 13 basis points to 5.17%, while yields on variable rate loans were down only two basis points. With no rate cuts expected in the third quarter of twenty twenty five, we expect the overall loan yield to again be largely flat. Our overall cost of funds was down two basis points to 1.57% due to a lower cost of deposits and less favorable borrowing mix as other borrowings increased compared to the prior quarter.

[Michael Achary, CFO at Hancock Whitney]

The downward trend in our cost of deposits continued with a decrease of five basis points to 1.65% in the second quarter. The drivers here were CD maturities and renewals at lower rates. We expect the cost of deposits will be down marginally in the third quarter with an additional reduction in the fourth quarter assuming the Fed cuts rates in September. For the quarter, we had $2,500,000,000 of CD maturities that matured at 3.85% and were repriced at 3.59% with a strong 86% renewal rate. Additionally, our DDA balances increased again this quarter, up $24,000,000 Our NIB mix was also up this quarter to 37%.

[Michael Achary, CFO at Hancock Whitney]

CDs will continue to reprice lower for the rest of 2025 given maturity volume and anticipated rate cuts. Total end of period deposits were down $148,000,000 mostly reflecting the impact this quarter CD repricing and other aspects of seasonality. We updated our guidance to reflect our current assumption of two rate cuts of 25 basis points in September and December, but with minimal impact. We expect modest NIM expansion in the 2025 and NII growth of between 34% for the year. There's no change to our PPNR or efficiency ratio guidance.

[Michael Achary, CFO at Hancock Whitney]

Our criticized commercial loans decreased 4% to $594,000,000 and nonaccrual loans decreased 9% to 95,000,000 Net charge offs were up this quarter and came in at 31 basis points. Our loan portfolio is diverse and we see no significant weakening in any specific portfolio sector or geography. Our loan reserves are solid again at 1.45% of loans, down four basis points from last quarter. We expect net charge offs to average loans will come in at between fifteen and twenty five basis points for the full year 2025. Lastly, a comment on capital.

[Michael Achary, CFO at Hancock Whitney]

Our capital ratios remain remarkably strong. We deployed capital this quarter through our acquisition of Sable Trust Company and a higher level of share repurchases. We more than doubled the buyback this quarter and bought back 750,000 shares. We expect share repurchases will continue at this level for the foreseeable future. Changes in the growth dynamics of our balance sheet, economic conditions and share valuation could impact that view. I will now turn the call back to John.

[John Hairston, President, CEO & Director at Hancock Whitney]

Thanks, Mike. Let's open the call for questions.

[Operator]

Our first question comes from the line of Michael Rose with Raymond James. Your line is open.

[Michael Rose, Managing Director at Raymond James Financial]

Hey, good afternoon, everyone. Thanks for taking my call my questions. Maybe we can just start on the last topic on buybacks. Mike, just given some of the deregulatory efforts that we've seen here recently, I know you mentioned that buybacks would kind of continue at this pace. But do you have a target CET1 ratio that you think you can, kind of operate on kind of through the cycle just assuming some of the deregulatory efforts and the fact that they're likely to come downhill over time? Thanks.

[Michael Achary, CFO at Hancock Whitney]

Yes, Michael, great question. And as we think about capital, the two ratios obviously we probably pay a little bit more attention to is TCE and that's down a little bit because of Sable, but still very close to 10%. And in the Tier one common, that still exceeds 14 even with the acquisition of Sable. So if we think about where those capital levels or where the company is kind of comfortable operating at, I would suggest it's somewhere between eleven percent and eleven point five for Tier one common. And then certainly anyone who knows our company knows that for TCE, it's in the neighborhood of 8%.

[Michael Rose, Managing Director at Raymond James Financial]

Okay. So as I think about your CSOs going out to the end of twenty twenty seven, it looks like the TCE would be around 8%. So would that kind of should we use that as a guide basically as we're thinking about buybacks beyond this year and into '26 and into '27? Is that fair?

[Michael Achary, CFO at Hancock Whitney]

Yes. Yes, I think so. And certainly, those levels again, I reiterate that those are levels we feel comfortable operating the company at. Our Board feels comfortable. But they're not necessarily hard lines.

[Michael Achary, CFO at Hancock Whitney]

So just depending on circumstances, we certainly could go below those levels or operate the company above those levels as we're doing now.

[Michael Rose, Managing Director at Raymond James Financial]

Understood. And maybe just as a one follow-up question. Just as it relates to to loan growth and and kind of the outlook, can you just give us a general update on kind of the health of of borrowers? You know, it does seem, you know, if you listen to some of the larger guys today that, you know, I think we're at a point where even though there's still some uncertainty around tariffs and things like that, I think there's just a comfort level and and borrowers are starting to move off the sidelines a little bit. So I understand your guidance, but would just, you know, like to appreciate more, you know, what the drivers could be in the near term.

[Michael Rose, Managing Director at Raymond James Financial]

You know, I know utilization rates tick a little bit higher, so maybe that's a trend that could continue. But what's kind of the upper what would drive you to the upper end versus the lower end of your guidance? Thanks.

[John Hairston, President, CEO & Director at Hancock Whitney]

Sure. Yeah. Michael, good question. This is John. If Chris or Mike want to weigh in, they can.

[John Hairston, President, CEO & Director at Hancock Whitney]

Generally speaking, we're we're really not relying on line utilization to to drive the upper end of the range. Certainly, it would help if utilization continues to increase. And it's only going up marginally each quarter, so we're glad to have it. The bigger driver is simply going to be net new loans to net new clients. And we've had a really good quarter, and I would expect that we'll continue to have good quarters in the foreseeable future, barring any kind of macroeconomic changes that would cause clients to become more chill.

[John Hairston, President, CEO & Director at Hancock Whitney]

I will suggest, you know, a quarter ago when we had this call, Michael, you know, it was clearly a disturbance in the force, if you will, people not really knowing how to how to make a sense of of Liberation Day and how it may impact their own business. I think over the last three months, people, at least in in our market areas from Texas to Florida and up in Tennessee, have largely become desensitized to those headlines. And I don't know if I would call it coming off the sidelines as much as I think they're just not as, as sensitive to the headline of the day. And they're back to relying more on whatever the facts may be that they're gonna use to make a decision of what to buy, expand, in the new markets, build a building, what have you. So, I think that's important to note.

[John Hairston, President, CEO & Director at Hancock Whitney]

Since you asked the question about the upper range, I guess I would also call out, you know, the only sector that we didn't enjoy growth this quarter was in the construction development book. And if you note in the deck on I think that's page nine. Everything's in the green. Health care is a little bit of a push, and c and d was down a little under a 100,000,000. The year to date commitments, in that sector are actually up a little under 200,000,000.

[John Hairston, President, CEO & Director at Hancock Whitney]

But as we've talked about in prior calls, it takes a few quarters for a client to burn through their equity in the, in the project before they get to our line of credit. So we would anticipate, a sustainable, growing C and D book to be somewhere towards the back half of the '26 or the following quarter sustainably. So that headwind will dissipate as we move through the year. And if it does, that would eventually lead more to the upper end of the range, all other things being equal.

[Michael Rose, Managing Director at Raymond James Financial]

Great. So a reflection point that you guys are talking about. All right. Thanks guys for all the color. I'll step back.

[John Hairston, President, CEO & Director at Hancock Whitney]

You bet. Thanks Michael for the question.

[Operator]

Our next question comes from the line of Catherine Miller with KBW. Your line is open.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thanks. Good afternoon.

[John Hairston, President, CEO & Director at Hancock Whitney]

Hi Catherine.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Could you just give us a little bit more of a color around your NIM outlook? I know you've continued to say that you think there's kind of upward NIM trajectory in the back half of the year really I guess regardless of what rate to do. But we've pushed back rate cuts. We now only have two in your numbers. And so just kind of help us think through where you think kind of NIM can go for in a stable rate environment and then sensitivity to those cuts in the back half of the year.

[Michael Achary, CFO at Hancock Whitney]

Sure, Catherine. This is Mike and I'm happy to share some thoughts and color around that. So I think first off and we did disclose this I believe on slide 15 of the deck. For us 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 one if we look at zero rate cuts or two rate cuts in the back half of the year. The difference is less than $1,000,000 on NII and it's about one basis point on NIM.

[Michael Achary, CFO at Hancock Whitney]

So certainly the dynamics are a little bit different in terms of how we get there. But what we do have baked into our guidance is the two cuts, the one at the September and then one in December, both 25 basis points. So assuming those two cuts do occur, the things that I think are really going to be the drivers of our ability to continue to expand our NIM in the second half of the year are going to be largely the things that we experienced in the first half of the year with the addition of obviously loan growth. So we're looking at a stable DDA mix. We're at 37% now.

[Michael Achary, CFO at Hancock Whitney]

We're guiding for that mix to be between 3738% by the end of this year. Feel really good about our ability to grow that mix to those levels, especially given where we are now. We'll continue to reduce our cost of deposits. But certainly if you again, you go back to slide 15, you can see that over the course of the second quarter, our cost of deposits did begin to level out. And we certainly expect that leveling out to kind of continue in the second half of the year.

[Michael Achary, CFO at Hancock Whitney]

We do think that we can reduce our cost of deposits, I would say a couple of basis points in the third quarter and then probably a little bit more than that in the fourth quarter. And again, that's really on the heels of an expected rate cut in September. So that is really very dependent upon our ability to continue to reprice our CDs lower. And so again, we've done a pretty good job of that I think through this cycle. And even with our cost of deposits kind of leveling out, we think we'll be able to do that in the second half of the year.

[Michael Achary, CFO at Hancock Whitney]

So in the second half of the year, have about $3,600,000,000 of CDs coming off at about 3.62 Those we think will reprice at about 3.5% or so. So no change in any of our promotional rates right now. Probably our best selling CD promotional rate is our eight month at 3.85%. So that continues. Certainly, we also have the loan growth for the second half of the year.

[Michael Achary, CFO at Hancock Whitney]

We're extremely proud of our ability to grow loans in the second quarter, the 6% linked quarter annualized. You can see in the guidance that we're expecting to kind of continue at more or less that level for the second half of the year. And on an end of period basis loans should come in again at that low single digit level year over year. And then finally, we still have a pretty good ability to reprice cash flows coming off the bond book as well as repricing fixed rate loans that are maturing in the second half of the year. So again back to the NIM, we expanded our NIM by about 10 basis points the first half of the year. The expansion in the second half of the year won't be at that level.

[Michael Achary, CFO at Hancock Whitney]

It could be at something close to half that level. But still we believe firmly that we can expand our NIM by a couple of basis points each in the next couple of quarters. So hopefully that answered your question. Anything else I can help you with?

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

It does. No, that was very helpful. Lot of great data there. And then maybe one follow-up just on the expense side. I know your expense guide is unchanged at the 4% to 5% and that includes Sabo coming in this quarter.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Is there now that the now that deal is closed, is there any kind of additional insight you can give us into how much of the expense base came from that just so we can kind of think about what one more, I guess, one additional month of that deal in third quarter kind of could mean versus where the expense growth is coming from some of your hires and all of that? Just kind of think about trying to think about the cadence of the expense base over the two quarters in the back half of the year.

[Michael Achary, CFO at Hancock Whitney]

If you look at the second quarter and again, we closed that deal at the end I'm sorry, very May. So we had two months. The increase in our expenses in the second quarter related to Sable was about $2,500,000 or so.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. Great. Great. Thank you, Gregor.

[Michael Achary, CFO at Hancock Whitney]

You bet. Thank you.

[Operator]

Our next question comes from the line of Casey Haire with Autonomous Research. Your line is open.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Great. Thanks. Good afternoon, everyone. Wanted to follow-up, I guess, on the loan growth. Again, the the CRE showed very strong for you guys.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

We've been hearing that that's been tough, tough slutting just given weak demand and just just a little more color as to what you're seeing to to drive, such strong results.

[John Hairston, President, CEO & Director at Hancock Whitney]

It was a little muddy. You said on the CRE sector, Casey. Is that right?

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Yeah. Yeah.

[John Hairston, President, CEO & Director at Hancock Whitney]

Commercial The difference yeah.

[John Hairston, President, CEO & Director at Hancock Whitney]

The difference quarter to quarter there was a little less payoffs. Very successful owner occupied real estate campaign in the business and commercial banking sectors. And then we we ended up with some bridge financing numbers that were pretty attractive out of the investor CRE group. That that shows up in CRE, not c and d. Does does that answer your question, or do you want a little more detail?

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

No. That's great. That that's great. Sounds like, yeah, payoffs slowing down. Okay. And then just switching to m and a. I know you guys sound very organic and heads down here. You did enter the year as, you know, looking to to, you know, be acquisitive.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Just wondering is what is the m and a market like in your markets and, you know, is active? And what would draw you back into, looking to be acquisitive?

[Michael Achary, CFO at Hancock Whitney]

So, Casey, this is Mike. And I guess first off, the narrative around M and A for us is completely unchanged with the narrative that we talked about on the first quarter call, so back in April. And back then we said that right now M and A is just not something we're focused on, but we did caveat that by saying that may change or could change at some point down the road. If we look at our capital priorities, first and foremost is to support organic balance sheet growth and more specifically our organic growth plan. Second is return of capital to shareholders through dividends and buybacks.

[Michael Achary, CFO at Hancock Whitney]

And then third is M and A opportunities that may or may not surface down the road. So I don't know that I want to be any more specific about that other than to maybe add the way we think about M and A down the road, think is opportunistic. And it's hard to put really a hard label on what that is or isn't until those circumstances arrive.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Okay. Great. Thank you.

[Michael Achary, CFO at Hancock Whitney]

Okay. You bet.

[Operator]

Our next question comes from the line of Ben Gurlinger with Citi. Your line is open.

[Ben Gerlinger, VP - Equity Research at Citigroup]

Hi. Good afternoon.

[John Hairston, President, CEO & Director at Hancock Whitney]

Hey, Brett.

[Ben Gerlinger, VP - Equity Research at Citigroup]

I don't know if Hi.

[Ben Gerlinger, VP - Equity Research at Citigroup]

Sorry. I didn't know if you guys said it in the prepared remarks, but I I know that the SNCs are below 10%, and you guys have good core organic growth. Is is it fair to think that the shared national credits are at a floor on a dollar percent or dollar rather than percentage? Or is that you should we still expect some runoff?

[John Hairston, President, CEO & Director at Hancock Whitney]

No. It's a it's about a push. If you look at the the numbers on I I put it what's the slide number for this next slide?

[Michael Achary, CFO at Hancock Whitney]

Yeah. It's slide 10.

[John Hairston, President, CEO & Director at Hancock Whitney]

Yeah. We're running about nine and a half percent, and I think between nine and ten is about where that's gonna stay. And so, the book on an absolute magnitude basis probably grows as loans grows as we maybe feel good about one particular sector. But at the end of the day, that percentage will not get above 10%.

[Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research]

Gotcha. Okay.

[John Hairston, President, CEO & Director at Hancock Whitney]

The question was should you expect any any big runoff? The answer to that is probably also no. I think where it is right now is where we're comfortable.

[Ben Gerlinger, VP - Equity Research at Citigroup]

Got it. Okay. Yeah. That that helps. And then whoever wants to field it either.

[Ben Gerlinger, VP - Equity Research at Citigroup]

But when you when you think about rate cuts, I know that when they first started cutting rates, it kinda seemed almost predetermined that we're gonna get 50 or potentially a 100. It's not obviously we ended up with a 100 basis points for the first wave. It gave you some flexibility on deposit pricing. But if it ends up being like a fed only moves 25 bps or so, when when you think about the flexibility, should we expect kind of the same relative beta despite it being like 25 bps? Or is it something a little bit more muted considering the first 100 is the easiest 100 on pricing on the right hand side?

[Michael Achary, CFO at Hancock Whitney]

Yeah, Ben. This is Mike. And that's a really good question. And I would suggest that if the Fed does move, let's say 25 in September, 25 in December that we would achieve something pretty close to where our cumulative where we think our cumulative deposit beta is going to end up for the cycle. So for total deposit beta that's 37,000,000 to 38,000,000 We're sitting at 35,000,000 now.

[Michael Achary, CFO at Hancock Whitney]

So I think that would creep up closer to that expected level. And then on interest bearing deposits, we expect for the cycle to be at 57%, 58%. We're sitting at 55% now. So similar to the total, you would see the interest bearing deposit beta start to kind of creep up. We'll be very proactive in reducing our deposit costs if and when the Fed does move as we've been so far this cycle.

[Michael Achary, CFO at Hancock Whitney]

We have 70%, 72% of our loans are variable, so those will reprice down. And so we have to be very cognizant of that back and then also reduce our funding costs accordingly. I think we've done a real good job of that during this cycle and have done that mostly through repricing our CDs and it's worked out pretty well.

[Ben Gerlinger, VP - Equity Research at Citigroup]

Got you. I appreciate the color. Thanks guys.

[Operator]

Our next question comes from the line of Brett Rabatin with Hovde Group. Your line is open.

[Brett Rabatin, Director - Research at Hovde Group]

Hey, good afternoon, everyone. Wanted to ask about going back to the loan growth one more time. Wanted to ask, if we look at slide 27, it shows the new loan rates impacted by the rate environment. And I noticed that 2Q in particular had what appeared to be some spread compression on both variable and fixed rate loan originations. And so I just wanted to get some color on if that's spread compression competitively or if you guys were being more aggressive and that was kind of the outcome being loan growth or loan growth for the quarter.

[Brett Rabatin, Director - Research at Hovde Group]

Just any color on the new loan originations would be helpful.

[Michael Achary, CFO at Hancock Whitney]

Yes. I can start. And I would suggest that there really is probably a combination of both those things. Certainly, environment out there is super competitive when it comes to not only securing new credit from customers, but then also pricing that credit. And I think overall, we've done a tremendous job of really restarting that growth engine as evidenced by the 6% linked quarter annualized growth in the quarter.

[Michael Achary, CFO at Hancock Whitney]

So the overall rate on the new loans to the balance sheet did compress by about 28 basis points. And I would suggest most of that is really related to pricing. However, it's also important to understand that the overall yield in our loan book is 5.86%. So certainly, our ability to again reprice mostly fixed rate loans higher is one of the things that will certainly help us continue to expand our NIM in the second half of the year. John, any color you want to add?

[John Hairston, President, CEO & Director at Hancock Whitney]

I think that was very good. The only points I'd add is, I mean, you'll note the mix is a good bit different in 2Q twenty twenty five than it was a year ago. And the size of the fixed rate new loan book has been tied a great deal to the degree of aggressive calling campaigns that we've had on specifically the owner occupied real estate opportunities that come with partially or fully compensated deposit balances. So we've talked to them on the last several calls about our very aggressive desire to have full service relationships. And so while the loan yield may suffer a little bit on the overall, the benefit we're getting is on the low cost deposits on the other side.

[John Hairston, President, CEO & Director at Hancock Whitney]

And that and that drives the NIM to a to a better view. That makes sense?

[Brett Rabatin, Director - Research at Hovde Group]

Okay. Yeah. No. That's helpful. And then, you know, you've got, I think, you know, next one to three years, 2,000,000,000 repricing at $5.17.

[Brett Rabatin, Director - Research at Hovde Group]

So that that's helpful too. The other question I have was just around the fee income guidance. And with the trust fees continue or trust fees likely to head higher. Just wanted to see the 9% to 10% growth. Is that based on continued strength in trust?

[Brett Rabatin, Director - Research at Hovde Group]

Or do you expect some of the other businesses that have done pretty well to continue to do so?

[John Hairston, President, CEO & Director at Hancock Whitney]

Well, it's a great question. In fact, thanks for the way you finished it because I going to try to slip that good news in too. But generally speaking, the trust quarter was actually good even without Sable. The Sable chunk of the $4,700,000 increase in trust fees was only $3,600,000 for the partial quarter. Now I'll remind you, trust fees are not particularly level month to month inside the quarter.

[John Hairston, President, CEO & Director at Hancock Whitney]

Some accounts are skewed to the first month, some to the to the the last month of the quarter. So, you can generally prorate that to see what the number will be, but it won't be exact. But the bottom line is Trust did well, and then the 3,600,000.0 from Sable goose the number on up to nearly 5,000,000 up. And we would expect to see the full benefit of the Sable team and that client book when we get into q three. Aside from that, the business and consumer service deposit account charges via the treasury products also performed very well for the second quarter.

[John Hairston, President, CEO & Director at Hancock Whitney]

And generally speaking, we can expect those fee increases to continue with the size and number of accounts added inside the book of consumer and business. So we think the second half is going to continue seeing growth on the fee income side from those sectors. Besides those, our fee categories like card revenue, treasury accounts, and merchant are also doing quite well. And and secondary mortgage will, will be driven by, number one, our our completing the pivot to secondary loans as a predominant source of fee income. And then if rates do decline, we should see a nice benefit from fee income on the secondary side. Does that answer your question?

[Brett Rabatin, Director - Research at Hovde Group]

Yeah. Ken, that's very helpful. Thanks, John.

[John Hairston, President, CEO & Director at Hancock Whitney]

You bet. Thank you for asking.

[Operator]

Our next question comes from the line of Gary Tenner with D. A. Davidson. Your line is open.

[Gary Tenner, Managing Director & Senior Research Analyst at D.A. Davidson]

Thanks. Good afternoon. I had a couple of questions. First, to go back to the buyback for a minute. I know, Mike, in your prepared remarks, you suggested that the buyback continues at the same level.

[Gary Tenner, Managing Director & Senior Research Analyst at D.A. Davidson]

But then I think in a follow-up, you kind of said it depends on the pricing. So purchased a lot more shares this quarter at $52 versus what you bought in the first quarter around $59 We're a lot closer to $59 right now. So just wanted to make sure I understood kind of the moving parts of your comment there in terms of what to expect at least in the short term.

[Michael Achary, CFO at Hancock Whitney]

Yes. Great way to distinguish that, Gary. Appreciate that. And I think the way to think about it is, if you look at the dollar amount of shares that we repurchased during the quarter, which is a little bit under $40,000,000 And so the intent would be to return at least that much in terms of money to shareholders via buybacks. And certainly the number of shares that we're able to buy back with that $40,000,000 certainly will change a little bit from quarter to quarter depending on market conditions and where our stock price is. But I think the controlling variable there would be the $40,000,000 or so that we'll spend.

[Gary Tenner, Managing Director & Senior Research Analyst at D.A. Davidson]

Okay. Appreciate it. And then just trying to think through the dynamics of deposit growth in the back half of the year getting to that kind of low single digit expectation. I guess two parts to that. One, since the CDs are projected to reprice lower by just a small amount, do you expect the retention of the CDs to be higher in the back half of the year than they were in the first half of the year?

[Gary Tenner, Managing Director & Senior Research Analyst at D.A. Davidson]

And then how much of the total growth for the year would you suggest is kind of driven by public funds in the fourth quarter?

[Michael Achary, CFO at Hancock Whitney]

Again, good question. So if we think about CDs and the renewal rate, I mean, again, that's been one of the things that really has been kind of the star of the show, if you will, around our ability to retain that money and reprice it lower. So it was something like 86% in the second quarter. And the assumption for the back half of the year is that it will be at least 81%, if not a little bit better. So the other thing I would suggest when we look at not only the guidance for deposits, but also the levels that we think will come in is because of the C and I nature of our book, there's a lot of seasonality built into it. You mentioned the public funds and certainly that does drive the numbers with a public fund book of around $3,000,000,000 or so.

[Michael Achary, CFO at Hancock Whitney]

So typically in the second quarter, see really the last couple of months of the outflows related to public funds and then we also see outflows related to tax payments, both corporate as well as individual. Typically in the third quarter, those deposit levels begin to stabilize, if not grow a little bit. And then on a seasonal basis, the fourth quarter tends to be our best quarter. Again, they're typically inflows related to corporate and middle market deposits. And then you have the arrival of the public fund inflows.

[Michael Achary, CFO at Hancock Whitney]

And those can range between as much as 200,000,000 to $300,000,000 just depending on the primarily the sales tax collections and property tax collections that typically happen in the fourth quarter.

[Gary Tenner, Managing Director & Senior Research Analyst at D.A. Davidson]

Great, Mike. Thanks for the color.

[Michael Achary, CFO at Hancock Whitney]

You bet.

[Operator]

Our next question comes from the line of Matt Olney with Stephens. Your line is open.

[Matt Olney, Managing Director at Stephens Inc]

Hey, thanks guys.

[Matt Olney, Managing Director at Stephens Inc]

I want to ask about credit and the charge offs in the second quarter were a little bit heavier than we were expecting, but it sounds like you feel really good about charge offs, the back half of the year moving lower. Can you just kind of flush this out for us? Did you get some resolutions of some lingering credits in 2Q? Or any color you can give us as far as the charge offs in 2Q and the outlook?

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

Hey, Matt. Chris Oluga. Thanks for the question. Good question as well. Yes, we feel pretty good about the guidance that we've given around the charge off range.

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

I mean, we've said kind of going into this year and even last year, we expect normalization of net charge offs kind of as the cycle winds through. And we really aren't seeing any sort of specific systemic issues in the portfolio, which really gives us comfort as to kind of the forward view around the remainder of the year. Yes, we did have some accounts that were kind of in our line of sight for resolution during the quarter, and we decided we had some reserves in place, specific reserves in place on one of them in particular that we decided that we would take down and just kind of resolve that to the best that we could. So that way, we're kind of looking forward in a little bit more of a positive view.

[Matt Olney, Managing Director at Stephens Inc]

Okay. Appreciate that. And then just as a follow-up to that, we've seen consecutive quarters of improving criticized commercial loans now. We would love to just get your your feel for criticized loans as we look at the back half of the year and what your visibility is there.

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

Yes. So again, good follow-up question. From our visibility, what we're seeing is a little bit more resolution and therefore outflows than we are seeing inflows. Normally, we would expect to see in this quarter a little bit more potential inflows, but we were pleasantly surprised that we were seeing less inflows and a little bit more resolution of outflows related to some of our longer standing credits. As I mentioned, think, in one of the earlier calls, it usually takes three to four quarters before kind of a criticized loan can get either rehabilitated or resolved or paid off, you know, what have you, you know, the whole portfolio management workout process.

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

So, with the lesser number of inflows, we feel pretty good about where we sit. Not to say that as the quarters go through that there aren't things that kind of, you know, catch us a little off guard, but we feel like we have a pretty robust portfolio management and workout process to deal with those.

[Matt Olney, Managing Director at Stephens Inc]

Okay. Thank you, guys.

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

Thank you.

[Operator]

Our next question comes from the line of Stephen Scouten with Piper Sandler. Your line is open.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Hey, good afternoon. Thanks, guys. I know, Mike, you gave some commentary around M and A saying it's largely unchanged outlook there. But I'm kind of curious as to how you think about the future path. I mean, to me, the only thing that's maybe been lacking from your story has been organic loan growth, and we're seeing great signs of that already this quarter. So should we think about you guys letting that story play out, profitability and efficiency continue to play out? And then if your shares warrant the valuation, I'm sure you feel they should, then that's when M and A might be pursued down the line. Is that a decent way to think about it?

[Michael Achary, CFO at Hancock Whitney]

Yes. That's a very plausible path. And again, we're thrilled about our ability to restart organic loan growth. We have a very well thought through organic growth plan that we're executing on right now. We've talked a lot about our earnings efficiency being extremely high right now or high.

[Michael Achary, CFO at Hancock Whitney]

And the only thing missing had been organic loan growth. And so we're thrilled with where we are and we're very anxious to continue to improve our earnings efficiency and overall profitability going forward. And that really is the focus of what we're trying to do.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Yes.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

I think that's fantastic. And then as it pertains to, the plans you guys have laid out for hiring, I think it was, what, another 14 people, give or take, slated for the rest of 2025. The uptick in M and A kind of in and around your markets, would there be potential upside to those numbers if you could be more opportunistic given M and A in your markets? Or do you kind of want to manage the expense build and the personnel build throughout the rest of the year? How should we think about the potential for upsizing to that?

[John Hairston, President, CEO & Director at Hancock Whitney]

Good question, Stephen. This is John. I think our appetite for good talent that is seasoned, knows the market, knows the type of clients that we would like to add, we really don't have a ceiling in how many bankers we would add over a given term. We've set the goal at 30 to be communicated externally just to to help investors understand our degree of interest in growing loans, not just this year, but but have that growth pattern flywheel up over the next several years and get back to that 85 to maybe higher eighties loan to deposit ratio, which is really our sweetest spot in terms of earnings capability. So the 30 number was essentially a 10 compounded annual number, and we would anticipate being at about 10% next year as well.

[John Hairston, President, CEO & Director at Hancock Whitney]

Now certainly, if opportunities came up for that number to be higher, we would gladly take it. Our our rate of people that don't survive over the long term once added is actually quite low, primarily because we try to screen very well and have potential bankers meet with people both in the line of business and in credit to assure that their appetite for clients matches up with us, so their potential for success is very high. So the to the I'm sure there is a maximum somewhere where Mike will get nervous about the expense. But so far, you know, my attitude is we would gladly take on that problem and be happy to explain that to investors because we have more offensive players on the field.

[Michael Achary, CFO at Hancock Whitney]

Well, there's no max to the revenue. Right? So

[John Hairston, President, CEO & Director at Hancock Whitney]

There's no max. Yes. Right. That's the question is, I mean, when we should we expect the compensating revenue? And and so far, you know, the expectation for this year was about 15% of our total loan growth would be coming from new hires, and I think we're on track to hit that.

[John Hairston, President, CEO & Director at Hancock Whitney]

And in fact, the business bankers, we've added are probably going to exceed that for the year, but that's really too early to call. I wouldn't want to commit to it just yet.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Got it. Thanks. That's really great color and congrats on a great quarter.

[John Hairston, President, CEO & Director at Hancock Whitney]

Thank you very much, Steven.

[Operator]

Our next question comes from the line of Christopher Marinac with Janney Montgomery Scott. Your line is open.

[Christopher Marinac, Director - Research at Janney Montgomery Scott]

Thanks. Good afternoon. John, it seems like history is repeating itself with some new entrants coming to Texas. I was curious your thoughts about opportunities that could create for Hancock in the future quarters ahead.

[John Hairston, President, CEO & Director at Hancock Whitney]

I'll start and then Mike can add color if he likes. I mean, disruption is usually good for us. I think we're viewed as a safe haven for people who, for whatever reason, would like to maybe raise their hand where otherwise they might not have. But but I mean, that disruption happens, you know, all around the footprint. We really never know how to size it, but certainly the the phone lines and email inboxes are open to to inbound calls.

[John Hairston, President, CEO & Director at Hancock Whitney]

And there's no secret across our footprint that we are indeed looking for good talent and that we are a great place for people to land, who wanna build a book rapidly with great partnership with their credit folks across the line. So, know, thanks for for asking the question. It gives me a chance for a free commercial, but but we're we're definitely hiring really in every place. I mean, we saw from page I think it's page seven. Is that right, Catherine, in the in the deck?

[John Hairston, President, CEO & Director at Hancock Whitney]

You know, we see the green markets. That's, where we actually have open roles that we're actively searching for now. So, not every market is highlighted right there primarily because, some of those markets we added people in last year. And so, we didn't, you know, make the circles bigger or smaller to denote how many people were in those different areas. But, but it does show that we're not piling everybody into one market, although, I would I would allow that the the the largest concentration of people are in markets that we consider higher growth, for for obvious benefit.

[John Hairston, President, CEO & Director at Hancock Whitney]

But it would not surprise me to see most of the called out markets in that sheet populated with new hires by the time we get to the end of next year. Note, this is a net document, not an absolute document.

[Christopher Marinac, Director - Research at Janney Montgomery Scott]

Good, John. Thanks for that. And then just a follow-up for Chris. Chris, are you seeing opportunities for some of the nondepository borrowers who are not banks but looking for credit from your side of the company? Is that an opportunity in the commercial book?

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

I mean, we do definitely see that as potential opportunities for us, but it's not something that we're specifically targeting.

[Christopher Marinac, Director - Research at Janney Montgomery Scott]

Could those loans have a depository element to them, over time?

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

Yeah. I mean, they they can. I mean, obviously, as they kind of, you know, grow and and kind of rehabilitate out of just being, you know, part of that non depository lending environment to, you know, a traditional banking environment. You know, I know that I've I've seen that before. You know, hit rate is always a little bit lower than you hope, but but it certainly is an opportunity, you know, for us.

[Christopher Ziluca, Chief Credit Officer at Hancock Whitney]

And and we certainly hope that some of them spin off into into opportunities for direct relationships.

[John Hairston, President, CEO & Director at Hancock Whitney]

Hey, Chris. This is John. The only thing I'd add here is not that we're necessarily averse to it, but I think I would I would use the word opportunistic, just like Mike did earlier that if it makes a a lot of sense for us and the client, then we certainly would explore it. But we're not designated a a group of new hires to target that. That's something we would rather have a longer relationship and understand the client before we we we jumped in too far.

[Christopher Marinac, Director - Research at Janney Montgomery Scott]

Got it. Thank you all for, for taking my questions. We appreciate it.

[John Hairston, President, CEO & Director at Hancock Whitney]

Thank you. Thank you for hanging in there on a busy day.

[Operator]

I will turn the call back over to John Harrison for closing remarks.

[John Hairston, President, CEO & Director at Hancock Whitney]

Thanks, Kate, for moderating the call. Thanks to everyone for your attention and interest, and we look forward to seeing you on the road over the next quarter.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Kathryn Mistich, VP & Manager - IR
• John Hairston, President, CEO & Director
• Christopher Ziluca, Chief Credit Officer

Analysts

• Michael Achary, CFO at Hancock Whitney
• Michael Rose, Managing Director at Raymond James Financial
• Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)
• Casey Haire, Senior Analyst - US Mid-Cap Banks at Autonomous Research
• Ben Gerlinger, VP - Equity Research at Citigroup
• Brett Rabatin, Director - Research at Hovde Group
• Gary Tenner, Managing Director & Senior Research Analyst at D.A. Davidson
• Matt Olney, Managing Director at Stephens Inc
• Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies
• Christopher Marinac, Director - Research at Janney Montgomery Scott