Hancock Whitney Sees Mid-Single-Digit Loan Growth in H2 2025 with NIM Expansion and Strong Buybacks

Key Highlights from Hancock Whitney Corporation's Q2 2025 Earnings Call

Hancock Whitney Corporation (HWC) reported another strong quarter in the second quarter of 2025, with several key financial and operational metrics showing positive trends. The company’s net interest margin (NIM) expanded by 6 basis points, and the return on assets (ROA) stood at 1.37% after accounting for expenses related to the Sabal Trust Company acquisition, which was completed on May 7. The CEO, John M. Hairston, emphasized that loan growth reached $364 million, or 6% annualized, driven by increased demand, higher line utilization, and lower payoffs. He also noted that the company expects low single-digit loan growth for the full year, with mid-single-digit growth anticipated for the second half of 2025.

Hairston highlighted that deposits declined by $148 million, primarily due to a decrease in certificates of deposit (CDs) as a result of maturity concentration and promotional rate reductions. However, there were increases in both interest-bearing transaction balances and demand deposit account (DDA) balances, with DDA making up 37% of total deposits. The company also continued its share repurchase program, buying back 750,000 shares of common stock during the quarter. Capital ratios remained strong, with tangible common equity (TCE) at 9.84% and the common equity Tier 1 ratio at 14.03%.

In addition, the company made progress in the Dallas market, adding 10 net new bankers and planning for five new financial center locations. Three of these are expected to open in late 2025, with two more planned for early 2026.

Financial Performance and Outlook

The CFO, Michael M. Achary, reported adjusted net income of $118 million, or $1.37 per share, compared to $120 million, or $1.38 per share, in the first quarter. The performance-based net revenue (PPNR) increased by $5 million, reaching 1.95% of assets, which is considered peer-leading. Net interest income rose by $7 million, or 2%, driven by NIM expansion and higher average earning assets. Fee income grew by $4 million, or 4%, largely due to trust fees from the Sabal acquisition. Adjusted expenses increased by $5 million, or 2%, while the efficiency ratio improved to 54.91% from 55.22% in the previous quarter.

Looking ahead, the company maintains its guidance for low single-digit loan growth for the full year, with mid-single-digit growth expected in the second half of 2025. Management anticipates modest NIM expansion in the second half of the year, with net interest income (NII) growth projected between 3% and 4% for the year. There is no change to PPNR or efficiency ratio guidance. CD repricing is expected to continue reducing deposit costs, and the DDA mix is expected to finish the year between 37% and 38%. The company has updated its assumptions to include two rate cuts of 25 basis points in September and December, with minimal impact projected.

Q&A Insights and Analyst Questions

During the Q&A session, analysts raised several questions about the company’s buyback strategy, capital targets, NIM outlook, and loan growth drivers. Achary responded that the company is comfortable operating with a Tier 1 common ratio between 11% and 11.5% and TCE around 8%. Hairston noted that the primary driver of loan growth is new loans to new clients, with the only sector experiencing a decline being construction development. However, he expects this headwind to ease as the year progresses.

Other questions focused on the impact of the Sabal acquisition on NIM and expenses. Achary explained that the difference in NII and NIM between 0 and 2 rate cuts would be minimal, less than $1 million on NII and about 1 basis point on NIM. He also mentioned that deposit costs are expected to decrease slightly in the third quarter and more significantly in the fourth quarter. On expenses, the increase related to Sabal was approximately $2.5 million.

Analysts also inquired about commercial real estate (CRE) loan growth and M&A strategy. Hairston attributed CRE growth to fewer payoffs and a successful owner-occupied real estate campaign. Achary reiterated that M&A is not currently a priority for the company. Other questions covered shared national credits, loan spread compression, and CD retention rates.

Sentiment and Market Position

Overall, the sentiment from the earnings call was cautiously optimistic. Management maintained a confident tone, with Hairston describing the outlook as "very optimistic" and Achary highlighting peer-leading performance. The company provided detailed guidance on NIM and capital deployment, showing comfort with its current capital and credit positions.

Compared to the previous quarter, analysts focused more on the effects of the Sabal integration, competitive loan pricing, and CD retention. Despite these concerns, management’s tone remained consistent, emphasizing disciplined loan growth, strategic hiring, and efficiency improvements.

Risks and Challenges

Management acknowledged potential headwinds in the construction and development lending sectors, though it did not identify any systemic issues in its portfolio. Loan spread compression and increased competition for new loans were identified as ongoing challenges. Achary noted that the current environment is highly competitive, particularly in securing and pricing new credit.

The company is closely monitoring CD renewal rates and deposit retention as interest rates decline. It is also tracking the pace of loan demand recovery in specific sectors. Despite these challenges, the company remains committed to maintaining strong capital levels and returning value to shareholders through consistent buybacks.

Final Takeaway

Hancock Whitney Corporation delivered another quarter of profitability, marked by NIM expansion, strong capital deployment, and progress on organic growth initiatives. The company continues to focus on disciplined loan growth, strategic hiring, and efficiency improvements while integrating the Sabal Trust acquisition. With a strong capital position and a clear focus on returning value to shareholders, the company is well-positioned to navigate the evolving economic landscape.