Hancock Whitney Corporation - 6 Q4 FY2024 earnings call

• John Hairston highlighted fourth quarter results showing improving profitability, including an ROA of 1.40%, NIM expansion, and total risk-based capital near 16%. Announced acquisition of Sabal Trust Company, a multiyear organic growth plan with hiring of revenue-generating associates and opening of financial centers. Noted net interest income and NIM increases, modestly lower fee income, reduced operating expense, loans down due to commercial real estate payoffs, deposits up, and capital returned to investors via share repurchases.
• Mike Achary discussed fourth quarter net income of $122 million, PPNR down slightly less than 1%, ROA peer-leading 1.89%, and NIM expansion to 3.41%. Mentioned cost of funds down 21 basis points to 1.73% due to lower deposit costs and better funding mix. Expected NIM expansion and NII growth of 3.5%-4.5% in 2025, fee income up 3.5%-4.5% from 2024, expenses down 1% this quarter with expected 4%-5% increase in 2025, credit quality metrics normalizing, and capital ratios remaining strong despite share repurchases.

Fourth quarter net income was $122 million or $1.40 per share, up $6 million from the previous quarter. Return on average assets (ROA) was a notable 1.40%. Net interest income and net interest margin (NIM) increased, with NIM expanding 2 basis points to 3.41%. Fee income was modestly off due to lower secondary mortgage volume and specialty income. Loans were down $156 million due to higher payoffs on commercial real estate loans. Deposits were up $510 million despite the maturity of $183 million in broker deposits. Total risk-based capital was nearly 16%, and the common equity Tier 1 ratio ended the quarter at 14.14%.

• Updated guidance for 2025 reflects organic growth plan, excluding impact of Sabal acquisition. Anticipates total loans to grow mid-single digits in 2025, tilting toward the second half. Expects deposits to grow in low single digits in 2025. Sees NIM expansion and NII growth of 3.5%-4.5% in 2025 driven by loan growth, lower deposit rates, and bond portfolio repricing. Fee income expected up 3.5%-4.5% from 2024. Non-interest expense expected up 4%-5% in 2025, with efficiency ratio between 55%-56%.

• Economic environment rapidly evolving, making it difficult to accurately project results. Competition in the market, which could impact loan yields and deposit costs. Macro-economic changes that may affect the bank's ability to maintain current performance levels.

Q: Michael Rose asked about buybacks and loan growth outlook.

A: Mike Achary discussed buybacks reverting to prior levels, and John Hairston detailed loan growth drivers including commercial banking, commercial real estate, and small business.

Q: Matt Olney inquired about wealth management and organic growth.

A: John Hairston and Mike Achary spoke about wealth management focus, the Sabal acquisition's strategic fit, and organic growth plans including hiring and financial center openings.

Q: Catherine Mealor asked about credit size commercial loans.

A: Chris Ziluca discussed credit quality, criticized loans, and transitory factors affecting them, emphasizing no significant weakening in portfolios.

Q: Ben Gerlinger asked about M&A and organic growth.

A: Mike Achary talked about complementary organic and inorganic growth, and size parameters for potential M&A transactions.

Q: Brett Rabatin asked about expense guidance and betas.

A: Mike Achary explained expense guidance components and beta behavior, discussing CD repricing and deposit balance trends.

Q: Gary Tenner asked about CD repricing and bankers.

A: Mike Achary discussed CD maturities and John Hairston provided context on the increase in bankers and their projected impact.

Q: Stephen Scouten asked about loan growth and stock valuation.

A: Mike Achary and John Hairston discussed loan growth drivers and the bank's performance relative to stock valuation.

Q: Christopher Marinac asked about C&I utilization.

A: Chris Ziluca and John Hairston discussed C&I and CRE utilization trends, including the impact of new CRE commitments on utilization rates.