HANCOCK WHITNEY CORP (HWC)·Q1 2025 Earnings Summary

Executive Summary

• EPS beat alongside modest NIM expansion; diluted EPS of $1.38 vs Wall Street consensus $1.29 (+7.0% beat), while consensus revenue was missed as SPGI “revenue” printed below estimates despite strong GAAP revenue and fee growth . Estimates from S&P Global: EPS $1.289*, Revenue $367.962M*; Actual EPS $1.38, Revenue $353.166M*.
• Balance sheet re-mix and funding cost control lifted NIM to 3.43% (+2 bps q/q), with deposit costs down 15 bps to 1.70% and bond portfolio yields up 7 bps; NII down modestly on two fewer accrual days and lower average earning assets .
• Guidance updated: loans now expected to grow low-single digits in 2025 (from mid-single digits previously), NII up 3–4%, adjusted PPNR up 6–7%, noninterest income up 9–10%; expense guidance maintained at +4–5%, efficiency ratio targeted 54–56% .
• Capital return remains a catalyst: CET1 14.51% and TCE 10.01%, with 350k shares repurchased (avg $59.25) and dividend raised to $0.45 (50% y/y increase) .

What Went Well and What Went Wrong

• What Went Well

  • NIM expansion and lower funding costs: “Our NIM expanded 2 basis points to 3.43%, … cost of deposits decreased 15 bps to 1.70%” ; deposit mix stable with DDA at 36% .
  • Fee income strength across categories, including derivatives, SBIC, and SBA: noninterest income up $3.6M q/q (+4%) .
  • Capital build with continued shareholder returns: CET1 14.51%, TCE 10.01%; buybacks and dividend lift while ratios climbed . CEO: “A very strong start to 2025… capital growth… ROA 1.41%” .

• What Went Wrong

  • Loan balances dipped ($201M LQA decline) amid large healthcare and C&I payoffs; loan yield fell 18 bps to 5.84% .
  • Deposits down $298M LQA on seasonal public funds outflows and lower retail time deposits; total EOP deposits $29.2B .
  • Revenue miss vs SPGI consensus despite solid GAAP revenue, reflecting definition differences and accrual-day impact on NII* .

Financial Results

Segment and KPIs

• Noninterest Income Breakdown (Q1 2025):
  • Service charges $24.12MM ; Trust fees $18.02MM ; Bank card & ATM $20.71MM ; Investment/annuity & insurance $11.42MM ; Secondary mortgage $3.47MM ; Other $17.05MM .
• Deposit Mix and Credit KPIs:
  • DDA $10.615B; IB transaction & savings $11.400B; IB public funds $3.004B; Time deposits $4.175B; Total deposits $29.195B .
  • Criticized commercial loans $594.1MM (3.35% of commercial); Nonaccrual loans $104.2MM (0.45% of loans); ACL/loans 1.49%; Net charge-offs 0.18% of avg loans .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “The first quarter of 2025 was a very strong start to the year… ROA was 1.41%, NIM continued to expand… capital ratios continued to build… and… a 50% year-over-year increase in the quarterly common stock dividend” .
• CFO on NIM drivers: “NIM expanded… driven by lower deposit costs, higher bond portfolio yields, and a favorable borrowing mix, partly offset by lower loan yields” .
• CEO on macro: client behavior does not indicate an imminent severe recession; sentiment is cautious but measured regarding tariffs .
• CFO on PPNR and expense: PPNR guide up 6–7% y/y; expenses up 4–5% with savings offsetting Sabal costs .

Q&A Highlights

• Buybacks: Management intends to maintain or increase repurchase activity given excess capital and valuation; cadence subject to external conditions .
• Tariff sensitivity: Credit teams analyzing impacted sectors; clients preparing contingency plans; no broad stress signals; sentiment “too early to tell” .
• PPNR/Earnings drivers: ~2/3 of noninterest income uplift from Sabal, ~1/3 from core growth (derivative, SBIC, SBA, wealth) .
• Rate path/NIM sensitivity: 0–3 cuts scenario has limited NII impact; main levers are deposit repricing, bond cash flows, fixed loan repricing .
• CD repricing: ~$5.5B maturing over next 3 quarters; repricing from ~3.7–3.0% with ~75% renewal; Q2 ~$2.3B at 3.88% → ~3.5% (~78% renewal) .
• Loan pipelines/hiring: 20–30 producer hires targeted; ~15% of 2025 loan growth from new hires; equipment finance ramping faster .

Estimates Context

• EPS: HWC delivered $1.38 vs S&P Global consensus $1.289 — bold beat. Revenue: SPGI “revenue” actual $353.166M vs $367.962M consensus — bold miss.* Actual GAAP total revenue was $364.7M; NII affected by two fewer accrual days . Values retrieved from S&P Global.*
• Implications: EPS beats driven by lower funding costs and fee growth; consensus models likely need lower loan yields/volume and accrual-day adjustments reflected, with fee lines revised up, and NIM trajectory nudged higher.

Key Takeaways for Investors

• Funding-cost tailwinds and securities reinvestment underpin ongoing NIM expansion; expect modest, consistent NIM improvement through 2025 .
• Loan growth is now back-half weighted and lowered to low-single digits; watch healthcare & C&I payoff dynamics and producer-hire ramp timing .
• Fee income is a differentiator (derivatives, SBIC, SBA, wealth); Sabal adds scale in Florida and ~$0.02 to 2025 EPS, with $0.08–$0.10 by 2027 .
• Capital return remains robust with rising CET1/TCE, buybacks, and higher dividend; valuation support likely if operating metrics sustain .
• Credit quality mixed but contained: criticized loans down, nonaccruals up modestly; ACL at 1.49% with provisioning guided “modest” .
• Near-term trading: EPS beat vs consensus and capital-return messaging are positives; revenue definition differences vs SPGI may create headline noise — focus on GAAP revenue, NIM trend, and fee momentum .
• Medium-term thesis: Deposit discipline, rate-insensitive NIM levers, fee diversification, and organic growth hires position HWC to drive ROTCE higher within efficiency ratio targets .

Note: All financial and qualitative claims are sourced to company filings and the Q1 2025 earnings call as cited. Consensus and “actual” estimate figures are sourced from S&P Global and marked with an asterisk. 

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