HANCOCK WHITNEY CORP Q1 FY2025 earnings call

• Achieved 1.41% ROA, grew fee income, and NIM expanded. Total risk-based capital ended at 16.39%.
• NIM expanded due to lower deposit costs, higher bond portfolio yields, and favorable funding mix, partly offset by lower loan yields.
• Fee income strong across most categories, expenses up 1% this quarter.
• Updated guidance: fee income up 9-10% YOY, expense growth 4-5% YOY. Loans expected to grow low single digits in 2025, mostly in second half.
• Deposits down $298 million, with DDA balances increasing and retail CDs declining. Repurchased 350,000 shares and increased common stock dividend to $0.45 per share.
• Pivoting to growth via acquisition of Sable Trust Company, expected to close May 2nd. Capital ratios strong, ample liquidity, and solid allowance for credit losses.

Net income for the quarter was $120 million or $1.38 per share. PPNR was $162.4 million, down slightly from last quarter but up $9.5 million or 6% compared to first quarter of last year. NIM expanded two basis points to 3.43%. Loans were down $201 million due to higher payoffs on large healthcare and commercial non-real estate loans. Deposits were down $298 million, driven primarily by seasonal public funds outflows. Total risk-based capital was 16.39%, common equity tier one ratio was 14.51%, and tangible common equity ratio was 10.01%. Fee income businesses had another strong quarter with growth across most categories.

• Fee income expected to be up 9-10% year over year.
• Expense growth expected to be between 4% and 5% higher year over year.
• Loans expected to grow low single digits in 2025, with most growth in the second half.
• Anticipate modest NIM expansion and NII growth of between 3% and 4% in 2025, assuming three rate cuts in June, July, and October.
• Sable transaction expected to close on May 2nd, expected to impact non-interest income.

• Current market volatility.
• Uncertainty in macroeconomic trends and indicators.
• Potential impact of tariff concerns on client sentiment and loan production.
• Dislocation in share prices affecting buyback plans.

Q: Just on that last comment around the buyback, given capital accretion and slower loan growth outlook, why not lean in more on buyback?

A: Mike Achary said buyback at current levels or higher, intent to continue, with the intent being to buy back again at current levels or higher consistently through the year.

Q: Credit impacts of tariffs?

A: Chris Ziluca said they've assessed sectors, client sentiment is wait and see, and monitoring NAICS codes for risk profiles. John Hairston added client behavior doesn't show near-term fear of recession.

Q: PPNR guide breakdown (Sable vs core)?

A: Mike Achary said fee growth from Sable and core fee lines, expense control helps account for the increase in PPNR guide.

Q: Hiring process and pipeline?

A: John Hairston said added 4 in Q1, run rate 20-30, pipeline good but potential delay due to tariff concerns.

Q: M&A vs organic growth vs buybacks?

A: Mike Achary said focus on buybacks and organic growth, M&A not current focus, with M&A potentially being considered later down the road.

Q: Sable impact on CT1 and expense guide?

A: Mike Achary said Sable's impact on common tier one is modest, expense saves from incentive comp and cost control help keep expense guide unchanged.

Q: CD maturities and deposit outlook?

A: Mike Achary said about $5.5 billion of CD maturities over next three quarters, deposits expected low single-digit growth.

Q: Loan growth mix and pipeline?

A: John Hairston said target 20-30 new producer hires, mix includes commercial bankers, equipment finance, CRE, and wealth management, with pipeline looking better but potential delay due to tariff concerns.

Q: M&A on depositories?

A: Mike Achary said more open to depository M&A in current environment.

Q: Reserves and recession scenarios?

A: Mike Achary said they use baseline, slower growth, and moderate recession scenarios, too early to comment on significant reserve build given external environment changes.