Hancock Whitney Corporation - 6 Q1 FY2025 earnings call

Key Points

• Achieved 1.41% ROA, grew fee income, and had NIM expansion. Expenses were well controlled with a 1% increase.
• Updated guidance: fee income up 9%-10% y/y, expense growth 4%-5% y/y, loan growth low single digits in 2025 with growth in second half.
• Executed hiring plans for Sable Trust transaction, selected new locations, and Sable transaction expected to close on May 2nd.
• Returned capital to investors via repurchasing 350,000 shares and increasing common stock dividend to $0.45 per share.
• NIM expansion driven by lower deposit costs, higher bond portfolio yields, and favorable funding mix.
• Loan yield down 18 basis points to 5.84% due to lower average loan balances and variable rate loan portfolio yields.

Net income for the quarter was $120 million or $1.38 per share. NIM expanded to 3.43%. Fee income grew across most categories. Loans were down $201 million. Deposits were down $298 million. Total risk-based capital was 16.39%, common equity tier one ratio was 14.51% and tangible common equity ratio was 10.01%.

Guidance Points

• Fee income expected to be up between 9% and 10% year over year.
• Expense growth expectations remain unchanged, between 4% and 5% higher year over year.
• Loans expected to grow low single digits in 2025 with most growth in second half.
• Anticipate modest NIM expansion and NII growth of between 3% and 4% in 2025, driven by lower deposit rates, low single-digit loan growth, and repricing of cash flows.
• Sable transaction expected to close on May 2nd, and including Sable, non-interest income expected to be up between 9% and 10% from 2024.

Risks

• Current market volatility.
• Uncertainty in macroeconomic trends and indicators.
• Potential impact of tariffs on credit quality and client sentiment.

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

A: It's stated that the intent is to buy back at current levels or a bit higher consistently through the year, with the caveat of external environment.

Q: What are you guys working on currently to better assess credit impacts assuming tariffs go through at elevated level?

A: Looked at various NAICS codes, assessed risk profiles, and clients are taking wait and see approach with plan a, b, c.

Q: Update on M and A versus organic growth versus buybacks?

A: Currently, M and A is not focused on, capital priorities are return capital to shareholders via dividend increases and buybacks, and focus on organic growth.

Q: Color on CD maturities and rate benefit pickup in second quarter?

A: About $2.3 billion of CD maturities coming off at 3.88% going back on at around 3.50% with 78% renewal rate.

Q: What really needs to happen to hit on all cylinders on growth and surprise to the upside?

A: New hires to come in and offset slower growth areas, ten year note staying up long enough, and pulling forward hires planned for fourth quarter into second, third quarter.