Hancock Whitney Earnings Call Highlights Structured Growth Path

Hancock Whitney Corp ((HWC)) has held its Q4 earnings call. Read on for the main highlights of the call.

Hancock Whitney Earnings Call Signals Confidence Despite Near-Term Headwinds

Management struck an upbeat tone on Hancock Whitney Corp’s latest earnings call, emphasizing broad-based year-over-year improvements in profitability, balance sheet strength and core earnings power. While quarter-over-quarter progress was more muted and near-term margin and expense pressures were acknowledged, executives framed these as manageable trade-offs in support of longer-term growth. A sizable bond portfolio restructuring, strong capital ratios and a new share repurchase authorization underscored confidence in the bank’s trajectory, even as management flagged rate-driven NIM pressures, a one-time restructuring charge and seasonal funding dynamics as temporary drags.

Year-over-Year Earnings and Profitability Improvement

Hancock Whitney reported fourth-quarter earnings of $126 million, or $1.49 per share, representing an 8% increase in EPS from the prior year. Pre-provision net revenue (PPNR) grew 6% for the full year, reflecting stronger core profitability, while tangible book value per share climbed 12%, highlighting steady capital accretion. Management leaned on these year-over-year metrics to argue that the earnings engine is improving structurally, even if quarterly comparisons appear more subdued.

Strong Core Earnings and Efficiency

Core earnings remained solid, with PPNR of $174 million in the quarter and a robust PPNR return on average assets of 1.96%. Efficiency also improved, with the fourth-quarter efficiency ratio at 54.9% and the full-year figure at 54.8%, about 58 basis points better than the prior year. This lean cost structure gives the bank room to invest for growth while still delivering attractive returns, a point management highlighted as a competitive advantage in a choppy interest-rate environment.

Loan and Deposit Growth Momentum

Balance sheet growth was a bright spot. Loans increased $362 million in the fourth quarter, roughly 6% on an annualized basis, supported by nearly $1.6 billion of production. Deposits rose $620 million, about a 9% annualized pace, and the mix of noninterest-bearing demand deposits finished the quarter at a healthy 35%. The combination of solid loan demand and stable, relatively low-cost funding continues to underpin the earnings outlook.

Fee Income on a Steady Uptrend

Noninterest income is increasingly contributing to Hancock Whitney’s growth story. Fee income reached $107 million in the fourth quarter and increased in each quarter of 2025. Management expects this momentum to continue, guiding to 4%–5% fee income growth in 2026, driven by continued core deposit growth as well as expansion in treasury services, card activity and wealth management. A stronger fee base helps diversify revenue away from pure spread income and cushions the impact of rate headwinds.

Bond Portfolio Restructuring Boosts Earnings Power

A major theme of the call was the recently completed bond portfolio restructuring, which management characterized as immediately value-accretive. The bank sold $1.5 billion of securities yielding 2.49% and reinvested the proceeds at roughly 4.35%. Excluding a one-time $99 million pretax charge, the transaction is expected to add about 7 basis points to net interest margin, roughly $24 million of annualized net interest income and approximately $0.23 in EPS. Management framed this as an upfront cost for a meaningful and durable lift to run-rate earnings.

Funding Costs and Securities Yields Moving in the Right Direction

Funding and investment metrics showed tangible improvement. The overall cost of funds fell 7 basis points to 1.52%, and the cost of deposits also declined 7 basis points to 1.57% for the quarter, dipping to 1.53% in December. At the same time, the yield on the bond portfolio rose 6 basis points to 2.98% as proceeds from the restructuring were redeployed at higher rates. These moves collectively support margin stability and help offset pressure from declining loan yields.

Capital Strength and New Share Repurchase Plan

Despite an active buyback program in the fourth quarter—roughly $147 million in shares repurchased, fully using the prior authorization—Hancock Whitney’s capital levels remain robust. Tangible common equity sits just over 10%, and the CET1 ratio stands at 13.66%, well above regulatory minimums. Reflecting confidence in ongoing capital generation, the Board approved a new 5% share repurchase program for 2026, to be executed more steadily over the year, signaling continued commitment to shareholder returns.

Improving Asset Quality and Solid Reserves

Credit trends remain favorable. Criticized commercial loans declined by $14 million to $535 million, and nonaccrual loans fell $7 million to $107 million. The allowance for loan losses is a solid 1.43% of loans, providing a sizable cushion against potential credit losses. Management expects net charge-offs to run in a modest 15–25 basis point range in 2026, consistent with a benign credit environment and reflecting a portfolio that continues to perform well.

Clear 2026 Growth Targets and Rate Assumptions

Management laid out detailed 2026 guidance, assuming two 25-basis-point Federal Reserve rate cuts in April and July. Within this framework, net interest income is projected to rise 5%–6%, with modest net interest margin expansion of about 12–15 basis points from fourth quarter 2025 to fourth quarter 2026, including roughly 7 basis points from the bond restructuring. PPNR is expected to grow 4.5%–5.5%, while fee income is guided up 4%–5%. On the expense side, management anticipates a 5%–6% increase—partly due to an organic growth plan and a full year of the Stable Trust acquisition—resulting in an efficiency ratio in the 54%–55% range. Loans are expected to grow at a mid-single-digit pace and deposits in the low single digits, with net charge-offs averaging 15–25 basis points and capital ratios remaining comfortably above targets even as tangible common equity is managed toward roughly 9.0%–9.5%.

Quarterly EPS and PPNR Flatlining Near Term

Not everything pointed upward in the near term. Fourth-quarter earnings of $126 million, or $1.49 per share, were essentially unchanged from the prior quarter’s $127 million and $1.49 per share, and PPNR edged slightly lower to $174 million. Management acknowledged limited quarter-over-quarter upside at this stage of the cycle, but emphasized that underlying drivers—loan and deposit growth, fee expansion and portfolio repositioning—are setting the stage for renewed growth as 2026 unfolds.

NIM Pressure and Declining Loan Yields

Net interest margin was roughly flat in the quarter, narrowing by 1 basis point, as lower loan yields—reflecting both recent rate cuts and competitive pricing—more than offset the benefit of higher securities yields. Looking ahead, management expects loan yields to drift lower modestly in 2026, keeping some pressure on margin. The strategy, therefore, is to counterbalance this with mix improvements, higher-yield securities from the restructuring and disciplined funding costs, rather than relying on loan pricing alone to expand NIM.

One-Time Charge Weighs on Reported Results

The bond portfolio restructuring comes with a notable headline cost: a one-time pretax charge of $99 million that will be reflected in GAAP results. Management stressed that this charge is excluded from forward guidance, which focuses on the underlying earnings power post-transaction. For investors, this means reported numbers will show a temporary hit, but normalized earnings should improve meaningfully in subsequent periods as the higher-yielding securities flow through the income statement.

Higher Expenses from Strategic Investments

Operating expenses ticked higher, rising 2% sequentially and 3.6% year over year, driven largely by reinvestment in the business. Spending is up for revenue-producing hires and integration work, including the full-year impact of the Stable Trust Company acquisition. For 2026, management expects expenses to climb 5%–6%, with a meaningful portion tied to organic growth initiatives. While this weighs on short-term operating leverage, management’s message was that the spending is targeted and expected to yield higher revenue and improved efficiency over time.

Deposit and Funding Concentrations Under Watch

Funding remains a focus area, with both opportunity and risk. Retail time deposits fell $90 million in the quarter as certain CDs matured, and executives noted roughly $8 billion of CD maturities coming due in 2026. The bank assumes most of these roll over at lower rates than today, which should help funding costs, but management also highlighted typical seasonal outflows in public funds during the first quarter as a near-term headwind. Overall, the bank appears comfortable with its funding profile but is closely monitoring concentration and repricing risk.

CRE Paydowns and Specialty Lending Margin Pressure

Commercial real estate dynamics present a mixed picture. Higher prepayments and planned CRE paydowns are expected to act as a headwind to net CRE growth, even as new production is funded. Additionally, some specialty lending areas—such as healthcare and commercial finance—carry thinner spreads, which can put pressure on the overall margin as these segments grow. Management’s approach is to balance growth in these attractive, fee-rich niches with overall profitability targets, ensuring that portfolio mix does not unduly dilute returns.

Forward-Looking Outlook: Steady Growth with Manageable Risks

Looking ahead to 2026, Hancock Whitney’s guidance paints a picture of steady, disciplined growth anchored by higher run-rate net interest income and expanding fee businesses. With modest rate cuts assumed, the bank expects NII and PPNR to grow in the mid-single-digit range, supported by mid-single-digit loan growth and low-single-digit deposit growth, along with a modestly better margin helped by the bond restructuring. Expenses will rise as the company invests in talent and platforms, but management aims to keep the efficiency ratio in the mid-50s while maintaining solid credit quality and strong capital. A 5% share buyback program and active capital management round out a constructive, if not overly aggressive, outlook.

In sum, Hancock Whitney’s latest earnings call delivered a reassuring message for investors: structural earnings power is improving, capital remains ample and management is proactively reshaping the balance sheet to benefit from the current rate environment. Short-term headwinds—flat quarter-on-quarter earnings, NIM pressure, higher expenses and a one-time restructuring charge—are being absorbed in service of a clearer long-term growth path. For shareholders, the story is one of measured, sustainable progress rather than dramatic inflection, with the bond restructuring and buyback plan providing tangible catalysts for value creation over the coming year.