Hancock Whitney outlines low single-digit growth for Q4 2025 as loan production rises 46% year-over-year

Earnings Call Insights: Hancock Whitney Corporation (HWC) Q3 2025

MANAGEMENT VIEW

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John Hairston, President and CEO, reported "The third quarter of 2025 was a remarkably strong quarter with an ROA of 1.46% versus 1.32% a year ago." He emphasized sustained profitability improvement, a reduction in the efficiency ratio, and progress on the organic growth plan. Net interest income expanded as average earning assets grew at higher yields, while deposit costs were trimmed by 1 basis point. Hairston highlighted that "for the third quarter in a row, fee income grew totaling $106 million, an increase of 8% from prior quarter," with investment, insurance, and annuity fees at a record high.

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He noted expenses were "up less than $3 million or 1% from prior quarter," mainly due to investment in revenue producers and higher incentive income. Loans grew $135 million, or 2% annualized, with production up 6% quarter-over-quarter and 46% from the same period last year. However, higher payoffs of larger credits, including shared national credits (SNCs), and reduced line utilization among industrial contractors impacted net growth. Hairston said, "We remain focused on more granular full relationship loans with the goal of achieving more favorable loan yields and relationship revenue."

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On strategic initiatives, "We've hired 20 net new bankers from the same quarter last year, a 9% run rate. We're well underway in our plan to open 5 new locations in the Dallas market. These branches will open either in late 2025 or early 2026."

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Michael Achary, Senior EVP, CFO, stated, "Our adjusted net income for the quarter was nearly $128 million or $1.49 per share compared to adjusted net income of $118 million or $1.37 per share in the second quarter." He noted that PPNR was up $8 million or 5% from the prior quarter, with fee income up $7 million or 8%. The efficiency ratio improved to 54.1% from 54.91% last quarter. Achary also commented, "Our capital ratios remained remarkably strong with growth this quarter due to our higher earnings levels," and confirmed share repurchases of about $40 million, with plans to continue at this level in Q4 2025.

OUTLOOK

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Management expects "low single-digit growth in 2025 and perhaps low single-digit net growth for the fourth quarter as paydowns persist." Net charge-offs to average loans are expected to be "between 15 and 25 basis points for the full year 2025."

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Achary provided guidance that includes "2 rate cuts of 25 basis points in October and December" and expects deposit costs will be down in the fourth quarter following these cuts. CDs maturing in the fourth quarter are expected to "reprice lower" given anticipated rate cuts.

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The company anticipates an increase in the pace of hiring to bolster its compounded annual balance sheet growth rate, with a focus on expanding offensive personnel.

FINANCIAL RESULTS

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Adjusted net income for Q3 2025 was nearly $128 million or $1.49 per share. Fee income was $106 million, up 8% from the prior quarter. Net interest income was up $3 million or 1% from the previous quarter. NIM was stable at 3.49%.

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Expenses were up less than $3 million or 1% from the previous quarter’s adjusted expense base. Efficiency ratio improved to 54.1%. The yield on the bond portfolio rose to 2.92% and the loan yield increased modestly to 5.87%.

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Loan growth was $135 million, or 2% annualized, with production up 46% year-over-year. Deposit balances declined $387 million, primarily due to seasonality in public funds and promotional pricing changes.

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Criticized commercial loans decreased by $20 million to $549 million, while nonaccrual loans increased modestly to $114 million. Net charge-offs fell to 19 basis points.

Q&A

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Michael Rose, Raymond James: Asked about loan growth sustainability, SNCs, and payoffs. Hairston explained, "loan production was up 6% over prior quarter and a healthy 46% over the same quarter a year ago ... the production level was exactly where we expected to the organic growth plan, maybe a little better. The paydowns were likewise heavier."

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Rose inquired about capital deployment and M&A. Achary responded, "Our stance on M&A hasn't changed... We're not really focused on that right now at all... The first priority... continues to be to deploy capital in terms of organically growing the balance sheet."

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Benjamin Gerlinger, Citi: Sought clarity on expense growth and investment. Achary described annualized expected spending on new hires and Dallas facility expansion, reiterating intentions for further investments in 2026.

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Gerlinger followed up on PPNR guidance. Achary confirmed, "PPNR growth will probably be in the 5% to 6% range and probably a little bit of a bias toward the upper end of that 5% to 6%."

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Casey Haire, Autonomous Research: Queried about net interest income guide and paydown pressures. Achary said, "We expect the portfolio yield should increase with continued reinvestment at higher rates for the remainder of 2025," while Hairston detailed that industrial contractor paydowns and industry consolidation were primary drivers.

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Catherine Mealor, KBW: Asked about margin sensitivity to rate cuts. Achary replied, "Short answer is we expect to be pretty proactive...in reducing deposit costs. So no big change, and we fully expect to come in and hit the numbers that we've kind of talked about."

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Gary Tenner, D.A. Davidson: Sought deposit spot rates. Achary stated, "it's 1.63% in September. And for the third quarter, we were 1.64% and our cost of funds in September is flat with the quarter at 1.59%."

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Matt Olney, Stephens: Asked about criticized commercial loans. Achary noted, "We feel pretty good about a nice return to moderation in criticized loans."

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Brett Rabatin, Hovde Group: Inquired on deposit growth and Dallas strategy. Achary said, "the fourth quarter seasonally is usually a pretty good quarter for us in terms of deposit growth...That should put us around somewhere between 3% and 3.5% year-over-year."

SENTIMENT ANALYSIS

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Analysts focused on loan growth sustainability, paydown pressures, margin sensitivity, and capital deployment, often probing for specifics and future guidance, with a generally neutral to slightly positive tone. Questions reflected curiosity about the durability of performance gains and strategic priorities.

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Management maintained a confident and optimistic stance in both prepared remarks and Q&A, with repeated emphasis on disciplined execution, robust profitability, and sound capital position. Phrases like "we are confident in the company's ability to navigate any challenges before us" and "we feel pretty good" were common. Tone during Q&A was consistent with prepared remarks and matched the previous quarter’s level of confidence.

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Compared to the previous quarter, sentiment remains steady. Analysts continued to probe for clarity on growth drivers and risk management, while management’s responses were detailed and maintained an optimistic outlook with few signs of defensiveness or hesitation.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for low single-digit loan and deposit growth was reiterated for Q4 2025, with management now signaling an increased focus on hiring to drive future expansion and offset persistent paydowns.

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Fee income growth accelerated, investment, insurance, and annuity fees reached record highs, and the efficiency ratio improved further. Net charge-offs decreased, and criticized loan levels continued to decline.

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Management tone and confidence remained consistent with the previous quarter, continuing to stress organic growth, disciplined credit, and capital deployment rather than M&A.

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Analysts’ focus shifted slightly more toward sustainability of growth and operational expense trends, with ongoing interest in the Dallas expansion and competitive positioning.

RISKS AND CONCERNS

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Loan growth continues to be offset by higher-than-expected paydowns, including from industrial project completions and industry consolidation. Management’s mitigation strategy involves ramping up hiring and expanding branch presence in growth markets.

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Deposit balances declined due to seasonal public fund outflows and competitive pricing adjustments. Management expects fourth quarter deposit growth to rebound with seasonality and lower rates.

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Nonaccrual loans increased modestly but remain controlled, and the company sees no significant weakness in any loan portfolio sector or geography. Reserve levels are steady at 1.45% of loans.

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Management acknowledged dynamic macroeconomic conditions and the possibility of rate cuts impacting loan yields, but expressed confidence in navigating these challenges.

FINAL TAKEAWAY

Management highlighted a strong third quarter marked by record fee income, stable margins, and controlled expenses. The company remains committed to organic growth through increased hiring, new branch openings, and a disciplined approach to credit and capital management. Despite ongoing headwinds from loan paydowns and market dynamics, Hancock Whitney projects low single-digit net growth for the fourth quarter and continues to focus on driving profitability and shareholder returns through its established playbook.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/hwc/earnings/transcripts]

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