Q2 2025 Hancock Whitney Corp Earnings Call

Good day, ladies and gentlemen, and welcome to Hancock Whitney corporation's. Second quarter 2025 earnings conference call.

At this time, all participants are in a listen-only mode.

Later, we will conduct question and answer session and instructions will follow at the time.

As a reminder, this call may be recorded.

I would now like to introduce your host for today's conference. Katherine vistage, investor, relations manager. You may begin

Katherine Vistage: Thank you and good afternoon.

Katherine Vistage: During today's call, we may make forward-looking statements, we would like to remind everyone to carefully review. The Safe Harbor language that was published with the earnings, release and presentation and in the company's most recent 10K and 10 Q, including the risks and uncertainties identified therein.

Katherine Vistage: Any forward-looking statements made by Hancock Whitney speak only as of the date on which they were made.

As everyone understands the current economic environment is rapidly, evolving and changing.

Katherine Vistage: Hancock Whitney's ability to accurately project, results or predict the effects of future plans or strategies, or predict Market, or economic developments is inherently Limited.

Katherine Vistage: We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions, but are not guarantees of performance or results.

Katherine Vistage: And our actual results and performance could differ materially from those set forth in our forward-looking statements.

Katherine Vistage: Hancock Whitney undertakes. No obligation to update or revise, any forward-looking statements and you are cautioned not to place undue Reliance on such forward-looking statements.

Some of the remarks contain non-gaap Financial measures, you can find reconciliations to the most comparable gaap measures in our earnings release and financial tables. The presentation slides included in our AK are also posted with the conference. Call webcast link on the investor relations website.

Katherine Vistage: We will reference some of these slides in today's call.

John Harrison: Participating in today's call are John Harrison, president. And CEO, Mike akari CFO and Chris aluca Chief credit officer. I will now turn the call over to John Harrison.

Thank you all for joining us on a busy reporting day. The second quarter of 2025, was another strong quarter. The results, reflect our continued focus on profitability, efficiency and meaningful progress in our multi-year growth plan. Our Nim expanded 6 basis points and we achieved an Roa of 1.37% after adjusting for expenses related to our transaction with Sabal trust company which closed on May 2nd as expected. Loans grew 364 million or 6% annualized you to Stronger demand increased line utilization and lower payoffs. We remain focused on more granular, full relationship. Loans, with the goal of achieving more favorable loan yields in relationship Revenue. Our guidance on loan growth remains unchanged, we expect low single digit growth for the year 2025 which infers mid single-digit growth for the second half of 2025.

John Harrison: Deposits were down 148 million, reflecting a decrease in CDs, due to maturity concentration and promotional rate reductions in the quarter along with the decrease in public funds. However, interest bearing transaction balances, and DDA balances were up in the quarter and DDA mix actually increased to 37% Nim continued to expand as our average earning assets grew at higher yields and we continue to reduce deposit cost. Our

John Harrison: The income grew again. This year was trust fees driving, most of the growth, thanks to the additional team and client book from Sable expenses, remain controlled. And in line with our expectations reflecting Investments, we are making in new Revenue, producers and Technology efforts to improve efficiency and client experience.

John Harrison: During the quarter. We continue to return Capital to investors. Buy repurchasing, 750,000 shares of common. We also deployed Capital through the execution of our acquisition of Sabal trust our Capital ratios. Despite all that remain very solid with tce of 9.84% and common Equity, Tier 1 ratio of 1403.7. We made meaningful progress on our organic growth plan. This quarter, we added 10, net, new Bankers to the team during the quarter and a solidified. The location of 5 new Financial Center locations for the Dallas Market. We expect 3 of these Financial Centers to open in the back, half of 25 and the remaining 2 will open in the first half of 26. We will provide additional guidance on new offices and bankers on the January call.

John Harrison: We remain very optimistic for our growth, prospects for the rest of the year, the macroeconomic environment, remains Dynamic, but our ample liquidity solid allowance for credit losses, at 1.45% and strong Capital. Keep us, well, positioned to navigate challenges and support our clients in any economy. Before we continue the call. I want to take a moment to acknowledge the devastating floods that have impacted communities across Texas. Our thoughts are with all those affected. We are no strangers to the hardships that

Mike: Natural disasters can bring and we're committed to supporting recovery efforts across the region. As always, we stand ready to serve our communities with the same strength and resilience that Define, both our company. And the people, we are proud to serve with that. I'll invite Mike to add additional comments.

Thanks John. Good afternoon everyone. As John mentioned our results, reflect another quarter of outstanding performance, our adjusted net income. For the quarter was 118 million or a dollar 37 per share compared to 12 million or a dollar 38 per share in the first quarter.

Mike: Ppnr was up 5 million or 3% from last quarter, and was a peer leading 1.95% of assets.

Mike: Our Nim again expanded this quarter, but by 6 basis points and nii was up 7 million or 2%.

Mike: The income was up 4 million or 4% and expenses. Adjusted for 1 time items remain. Well, controlled and were up 5 million or just 2%.

Mike: Our efficiency ratio improved to 54.91% this quarter compared to 55.22% last quarter.

Mike: The Nim expansion was driven by higher, average earning asset volumes, and yields and lower deposit costs, which were only partially offset by an unfavorable mix related to other borrowed funds. That's all shown on slide, 15 of the investor deck.

Mike: Bond yields were up 8 basis points to 2.86%.

Mike: We had 233 million of principal cash flow at 3.15% while we reinvested 359 million into the bond portfolio at 4.71%.

Additionally, another 40 million of our fair value, Hedges became effective this quarter and can truly did 3 basis points to the overall yield pickup.

Mike: Next quarter. We expect about 152 million of principal cash flow at 3.11%. That will be reinvested at higher yields.

Mike: We expect the portfolio yield should continue to increase as we reinvest principal cash flows at higher rates.

Our loan yield for the quarter was up 2 basis points to 5.86% yields on fixed rate loans are up 13 basis points to 5.17% while yields on variable rate. Loans were down only 2 basis points.

Mike: With no rate Cuts expected. In the third quarter of 25, we expect the overall loan yield to again, be largely flat.

Our overall cost of funds was down 2 basis points to 1.57% due to a lower cost of deposits and less, favorable volume mix as other borrowings increase compared to the prior quarter.

Mike: The downward Trend in our cost of deposits continued with a decrease of 5 basis points to 1.65%. In the second quarter, the drivers here were CD maturities and renewals at lower rates. We expect the cost of deposits will be down marginally in the third quarter, with an additional.

Mike: reduction in the fourth quarter, assuming the FED Cuts rates in September,

For the quarter, we had 2.5 billion of CD maturities that matured at 3.85% and were repriced at 3.59% with a strong 86% renewal rate.

Additionally, our DDA balances increased. Again, this quarter up 24 million.

our nib mix was also up this quarter to 37%

Mike: CDs will continue to reprice lower for the rest of 2025, giving maturity volume and anticipated, rate cuts.

Total end of period deposits were down 148 million mostly reflected in the impact of this quarter CD repricing and other aspects of seasonality.

Mike: We updated our guidance to reflect our current Assumption of 2 rate, cuts of 25 basis points in September and December.

Mike: But with minimal impact, we expect modest Nim expansion in the second half of 25 and nii growth of between 3 and 4 percent for the year.

Mike: There's no change to our ppnr or efficiency ratio guidance.

Our criticized commercial loans decreased 4% to 594 million and non-accrual Loans, decreased 9% to 95 million.

Net charge offs were up this quarter and came in at 31 basis points.

Mike: Our loan portfolio is diverse and we see no significant weakening in any specific portfolio sector or geography.

Our loan reserves are solid again at 1.45% of loans, down 4 basis points from last quarter.

We expect net charge offs to average. Loans will come in at between 15 and 25 basis points for the full year 2025.

Mike: Capital this quarter through our acquisition of Sabal, Trust Company and a higher level of share repurchases.

Mike: We more than doubled, the buyback, this quarter and bought back 750,000 shares.

Mike: We expect share repurchases will continue at this level for the foreseeable future.

Mike: Changes in the growth dynamics of our balance sheet, economic conditions, and share valuation could impact that view. I will now turn the call back to John

John Harrison: Thanks Mike. Let's open the call for questions.

Speaker Change: At this time, I would like to remind everyone in order to ask a question. Please press star then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster.

Speaker Change: Our first question comes from the line of Michael rose with Raymond James, your line is open.

Hey, good afternoon, everyone. Thanks for, uh, taking my call. Uh, my questions. Um, May, maybe we can just start on the the last topic on on BuyBacks. Um, like, you know, just giving some of the deregulatory efforts that we've seen here recently. Um, I know you mentioned that, that BuyBacks would kind of continue at this pace, but you have a Target, cet1 ratio that you think you can, you know, kind of operate on, you know, kind of through the cycle just assuming some of the deregulatory efforts and the fact that they're likely to, you know, uh, come downhill over time. Thanks.

Speaker Change: Yeah, Michael great question. And um, as we think about Capital the 2 ratios obviously that we probably pay a little bit more attention to is tce and uh, that's down a little bit because of sable but still, you know, very close to 10% and in the Tier 1 common that still exceeds 14% even with the uh the acquisition of sable. So if we think about where those Capital levels or where the company is kind of comfortable operating that I would suggest that somewhere between 11 and 11 and a half for Tier 1 common and then certainly anyone who knows our company knows that for tce. It's in the neighborhood of 8%.

Okay. So as I think about your CSO is going out to the end of 2027, you know, it looks like the tce would be around 8%. So would that kind of

you know, um, should we use that as a guide basically? Um, as we're thinking about BuyBacks, you know, you know, beyond this year and into into 26 and into 27, is that fair? Yeah. Uh, yeah. I think so. And and certainly, um, you know, those levels again, uh, reiterate that those levels we feel comfortable operating the company at our board feels comfortable, uh, but they're not necessarily hard lines. So just depending on circumstances, uh, we, we certainly could, uh, go below those levels or operate the company above those levels, you know, as we're doing now,

Speaker Change: Understood it may be just as a 1 1st, you know, it does seem you know if you listen to some of the larger guys today that you know I think we're at a point where even though there's still some uncertainty around tariffs and things like that, I think there's just a comfort level and borrowers are starting to move off the sidelines a little bit. So I understand your guidance um but would just you know like to appreciate more you know what the drivers could be in the near term. You know, I know you utilization rate to take a little bit higher. So maybe that's a trend that could continue. But what's kind of the upper, you know, what would drive you to the the upper end versus the lower end of your, of your guidance? Thanks.

Sure. Yeah, Michael good question. This is John uh, if Chris or Mike want to weigh in, they can generally speaking. We're we're really not relying on line utilization to uh, to drive the upper end of the range. Certainly it would help if you utilization continues to increase and it's only going up marginally each quarter. So we're glad to have it. Um the bigger driver is simply going to be net new loans, to net new clients. And we've had a, a really good quarter. And I would expect that we'll continue to having good quarters in the foreseeable future barring any kind of macroeconomic changes, that would cause clients to become more chill. Um, I will suggest, you know, a quarter ago when we had this call Michael, um, you know, there was clearly a disturbance in the force, if you will, people not really knowing how to how to make, uh, a sense of

So uh uh I think that's important to note. Um, since you asked the question about the upper range, uh I guess I would also call out, you know, the only sector that we didn't enjoy growth. This quarter was in uh the construction and development book and if you note in the deck on uh I think that's page 9. UM everything's uh in the green Healthcare is a little bit of a push and C and D was down a little under 100 million the year to date commitments, uh, in that sector are actually up a little under 200 million. But as we've talked about in Prior calls, uh, it takes a few quarters for a client to burn through their equity in the uh, in the project before they get to our line of credit. So we wouldn't anticipate um a sustainable uh growing C and D book to be somewhere towards the back half of the first quarter of 26 or, uh, or the, or the, following quarter sustainably. So that that headwind will dissipate as we move through the year,

Um and and if it does that would eventually lead more to um, to the upper end of the range, all other things being equal.

Michael Rose: Great. So I have a collection point that you guys are talking about. All right, thanks guys for all the color. I'll step back, you bet. Thanks Michael for the question.

Speaker Change: Our next question comes from the line of Katherine Miller with KBW. Your line is open.

Katherine Miller: Thanks, good afternoon.

Speaker Change: Hi Katherine.

Katherine Miller: Um, could you just give us a little bit more of a, of a color around your Nim Outlook. I know you've, you've continued to say that you think there's kind of upward Nim trajectory in the back half of the year, really, I guess, regardless of what rates do. But you, we push back rate Cuts. We now only have 2 in the, in your numbers. And so just kind of help us think through, um, where you think kind of NY can go for in a stable rate, environment, and then sensitivity to those those cuts in the back half of the year.

Speaker Change: Oh sure. Katherine. This is Mike and I'm happy to share some thoughts and color around that. So I think first off and we did disclose this, I believe on side 15 of the deck for us. For the second half of the Year there really is not anywhere near a material difference between the impact on knee or our Nim. Uh, if we look at 1, we look at zero rate Cuts or 2 rate Cuts in the back half of the year, the difference is less than a million dollars on knee and it's about 1 basis. Point on Nim.

Speaker Change: So certainly the Dynamics are a little bit different in terms of how we get there. But what we do have baked into our guidance is the 2 cuts, the 1 at the midpoint of September and then 1 in December both, 25 basis points. So assuming those 2 Cuts do occur, the things that uh, I think are really going to be the drivers of our ability to continue to expand our Nim in the second half of the year, are going to be largely, the things that we experienced in the first half of the year with the addition of obviously loan growth.

Speaker Change: So we're looking at a stable DDA mix where 37% now, we're guiding for that mix to be between 37 and 38%, by the end of this year. Feel really good about our ability to, uh, to grow that mix to to those levels, especially given where we are now.

Speaker Change: Uh, we'll continue to uh reduce our cost of deposits. But certainly if you um again if you go back to slide 15 you can see that over the course of the second quarter our cost of deposits did begin to level out and we certainly expect that leveling out to kind of continue in the second half of the year. We do think that we can reduce our cost of deposits, but let's say a couple of basis points in the third quarter and then probably a little bit more than that in the fourth quarter and again that's really on the heels of an expected rate cut in September.

So uh so that is um, you know, really very dependent upon our ability to continue to reprice our CDs lower. And so again we've got a pretty good job of that I think through this cycle and even with our cost of deposits kind of leveling out, you know, we think we'll be able to do that in the second half of the year. So, in the second half of the year, we have about 3.6 billion of CDs coming off at about 3.62% or so.

Speaker Change: So no change in any of our promotional rates, right now, our uh, probably our best-selling. Uh, CD promotional rate is our 8-month at 385 so that that continues

Speaker Change: um,

Speaker Change: More or less that level for the second half of the year. And on an end of period basis, loans should come in. You know, again at that low, single digit level year-over-year. And then finally, uh, we still have a pretty good ability to reprice cash flows coming off the bond book, as well as uh, repricing fixed rate loans in a maturing, uh, in the second half of the year. So again, back to the Nim, uh, we expanded our Nim by about 10 basis points. Uh, the first half of the year, the expansion in the second half of the Year, won't be at that level it. It could be at something close to half that level. But still, we, we believe firmly that we can expand our Nim by a couple of basis Points each in the next couple of quarters.

Speaker Change: So uh so hopefully that uh that answered your question anything else I can help you with. It does know that that was very helpful. A lot of a lot of great um data there and then maybe you want to follow up just on the expense side I know that your expense guide is unchanged at the 4 to 5% and that include um cyber coming in this quarter is there. Um now that the none of that deal is closed is there any

Speaker Change: Kind of additional Insight. You can give us into how much of the of the expense base came from that. Just so we can kind of think about what 1 more I guess 1 additional month of that deal and third quarter kind of, could mean versus where the expense growth is coming from, some of your hires and and all of that just kind of think about trying to think about the Cadence of the expense base. Over the, the 2,

Speaker Change: In the back half of the year. When you look at the um the second quarter. And again you know we close that deal at the end. I'm sorry, the very beginning of May so we had 2 months

The uh, increase in our expenses. In the second quarter related to Sable was about 2 and a half million or so.

Speaker Change: Okay.

Speaker Change: Great. Thank you, Rick. We're

Speaker Change: you bet. Thank you.

Speaker Change: Our next question comes from the line of Casey hair with autonomous research. Your line is open.

Speaker Change: Great, thanks. Good afternoon everyone. Um

Casey Hair: Wanted to follow up, I guess, on a long growth again the the CRA show very strong for you guys. Um, we've been hearing that that's been

Casey Hair: Tough, uh, tough sliding, just given weak demand and just just a little more color as to what you're seeing to drive, uh, such strong results.

Casey Hair: It was a little muddled you said on the CRA sector, okay. Is that right? Yes. Yeah, I think the, the difference.

Casey Hair: yeah, the difference quarter to quarter there was uh a little less payoffs

Casey Hair: Um uh, very successful on our occupied, real estate campaign and the business and Commercial Banking sectors. And then we, uh, we ended up with some Bridge financing numbers that were pretty attractive out of the investor CRA group that that shows up in CRA. Uh, not C and D.

Casey Hair: Does that answer your question or do you want a little more detail?

Speaker Change: No, that's great. That that's great. Sounds like uh yeah payoffs um slowing down. Um okay uh and then just switching to uh m&a. I know you guys sound very organic and heads down here.

Speaker Change: Um you did enter the year as you know looking to to you know be inquisitive just wondering is what is the m&a market like in your markets and you know, is that active and what would draw you back into uh you know, looking to uh, be inquisitive.

Michael Rose: So Casey, this is my and uh, I guess, first off the, The Narrative around m&a for us is completely unchanged with the, uh, the narrative that we talked about on the first quarter call. So back in April and back, then we said that right now. M&a is just not something we're focused on, but we did caveat that by saying, you know, that may change or could change at some point down the road. Um, if we look at our Capital priorities, first and foremost is to support organic balance, sheet growth and more specifically, our organic growth plan. Second is return of capital of shareholders through dividends and BuyBacks. And then third is m&a opportunities. You know, that may or may not surface down the road. So I I don't know that I want to be any more specific about

About that other than to, maybe add, you know, the way we think about m&a down the road, I think is opportunistic. And, um,

Michael Rose: You know, it's hard to put really a hard label on what that is or or isn't, you know, until those circumstances arrived. So

Michael Rose: Okay, great. Thank you.

Michael Rose: Yep, you bet.

Michael Rose: Good afternoon.

Michael Rose: I don't know if.

Hi, uh sorry. I didn't know if you guys said it in the prepared remarks, but I I know that this snicks are below 10%.

And you guys have good core organic growth is, is it fair to think that the shared National credits are at a floor on a dollar percentage or a dollar rather than percentage or is that you 2? We still expect some runoff.

No, it's a it's a push. If you look at the uh, the numbers on, I, what, what's the slide number for the Snick side?

Yeah, it's fine.

Yeah, we're running about 9 and a half percent and I think between 9 and 10 is about where that's going to stay. And so uh the book on an absolute magnitude basis, probably grows as loans, grows as we, maybe feel good about 1 particular sector, but the end of the day that percentage will not get above 10%.

Speaker Change: Gotcha. Okay. The question was, should you inspect any, any big runoff the answer to that is probably also know.

Michael Rose: I think there it is right now is where we're comfortable.

Michael Rose: Got it. Okay. Yeah, that that helps. Um

Michael Rose: And then whoever wants to feel it either. Uh, but when you, when you think about rate Cuts, I know that when they first started cutting rates, it kind of seemed almost predetermined that we were going to get 50 or potentially 100. And obviously we ended up with a 100 basis points for the first. Wave, it gave you some flexibility on deposit pricing but if it ends up being like a Fed, only moves 25 BS or so when you think about the flexibility, should we expect kind of the same relative beta? Despite it being like 25 VIPs or is it something a little bit more muted? Considering the first 100 is the easiest 100 on pricing on the the right hand side.

Michael Rose: Yeah, been, this is Mike, and that's a really good question, and I would suggest that, um, you know, if the FED does move, let's say 25 and September 25 in December that, you know, we would achieve something pretty close to where our cumulative will we think our cumulative deposit date is going to end up for the cycle. So, for total deposit data, that's 37 to 38. We're sitting at 35 now. So I, I think that would creep up closer to, that expected level ended on interest bearing deposits. Uh, we expect for the cycle to be at 5758. We're sitting at 55 now, so similar to the total. You would see the interest bearing, uh, deposit date to start to kind of creep up. Um, you know, we'll, we'll be very

Michael Rose: Very proactive in reducing our, our deposit costs if and when the FED does move as we've been so far this cycle, um you know we have 70% 72% of our loans are variable so those will price will repriced down. And so we have to be very um cognizant of that fact and then also reduce our our funding costs accordingly. And and I think we've done a real good job of that during this cycle and have done that mostly through, you know, repricing our CDs and it's it's worked out pretty well.

Speaker Change: Gotcha, I appreciate the color. Thanks guys.

Our next question comes from the line of Brad, robatin with hope your line is open.

Speaker Change: Hey, good afternoon, everyone.

Speaker Change: Wanted to ask about going back to the salon growth 1 more time wanted to ask if we look at slide 27, it shows that the L new uh loan rates impacted by the rate environment. And I noticed that the 2 Q in particular, I would appear to be some Sprite compression um on on both variable and fixed rate.

Speaker Change: Loan, originations. And so just wanted to get some caller on. If that's, you know, spread compassion, spread compression competitively, or if you guys were being more aggressive and that was, you know, kind of the the outcome being loan, growth better, loan growth for the quarter, just any color on the new loan originations would be helpful.

Yeah, I can, I can start. Um, and um I would suggest that that really is probably a combination of of both those things. Certainly, the the environment out there is super competitive when it comes to, you know, not only securing new credits and customers but then also pricing that credit and I I think overall we've done a tremendous job of really restarting that growth engine as evidenced by the, you know, the 6% link water annualized growth in the quarter.

Speaker Change: So the overall rate on the new loans to the balance sheet did compress by about 28 basis points, and I would suggest. Most of that is really related to uh, to pricing

Speaker Change: Is 586. So certainly our ability to again reprice mostly fixed rate loans. Higher is 1 of the uh 1 of the things that will certainly help us continue to expand our Nim in the second half of the year.

So any, John any color you want to add? No, I think that was very good. The only points I'd add is when you'll note, the mix is a good bit different, uh, in 225 than it was a year ago. Um, and uh, uh, the, the the size of the fixed rate, new loan book has been tied a great deal to the degree of, uh, aggressive calling campaigns that we've had on specifically the owner occupied, real estate opportunities that come with partially or fully compensated deposit balances. So, we've talked to them on on the last several calls about our, our very aggressive desire to have full service relationships. And so while the loan uh yield may suffer a little bit on the overall the benefit we're getting is on the low cost deposit on the other side.

Speaker Change: And that, and that drives the Nim to a to a better View.

Speaker Change: Does that make sense? Okay?

Speaker Change: Yeah, no that's helpful. And then you know you've got I think um,

Speaker Change: You know, in the next 1 to 3 years 2 billion in pricing at 517, so that that's helpful too. Um, the other question I have was just around the fee income guidance um and it you know with the trust fees continuing or trustees likely to head higher, just wanted to see that, you know, the 9 to 10% growth is that based on continued strength and trust, or do you expect some of the other businesses that have done pretty well to continue to do so?

Speaker Change: No, it's it's a great question and thanks for the way you finished it because I was, I was going to try to slip that good news into. But generally speaking, the trust quarter was actually good even without Sable. Um, the Sable, uh, chunk of the, uh, the 4.7 million increase in trust fees, was only 3.6 million for the partial quarter. Now, I'll remind you trust fees are not particularly level month-to-month inside the quarter. Some accounts are skewed to the first month, some to the, to the, the last month of the quarter. So, uh, you can generally prorate that to see with a number will be, but it won't be exact, but the bottom line is trust did well. And then the 3.6 million from Sable. Goose, the number on up to nearly 5 million up, um, and we would expect to see the full benefit of the Sable team and that client book when we get into Q3, um, aside from that, uh, the business and consumer service deposit account charge is via the

Speaker Change: Treasury products also perform very well for the second quarter. And generally speaking, we can expect those fee increases to continue with the size and number of accounts, added inside the book of consumer and business. So we think the second half is going to continue seeing growth on the fee, income side, from those sectors. Besides those our fee categories, like card Revenue, uh, treasury accounts. And Merchants are also doing quite well and and secondary mortgage will uh will be driven by number 1. Our our completing the pivot to secondary loans as a predominant source of fee income. And then if rates do decline, we should see a nice benefit from uh, from fee income on the secondary side.

Speaker Change: Does that answer your question? Yeah, that's very helpful. Thanks John.

You bet. Thank you for asking.

Gary Tener: Our next question comes from the line is Gary tener with da Davidson your line is open.

Gary Tener: Uh, thanks. Good afternoon.

Gary Tener: I had a couple of questions, uh, first to go back to the buyback for a minute. I, I know, Mike and your prepared remarks, you, you suggested that the buyback continues at the same level, but then, I think in a follow-up you kind of said, it depends on the pricing. So, you know, you purchased a lot more shares. This quarter at 52 Bucks versus what you bought in the first quarter around 59. We're a lot closer to 59 right now. So, just wanted to make sure I understood.

Gary Tener: Kind of the moving parts of your of your comment there in terms of what to expect at least in the short term.

Gary Tener: Okay, appreciate it. And then uh just trying to think through the Dynamics of of deposit growth in the back half of the Year getting to that kind of low single digit expectation. Um, I guess 2 parts of that 1.

Since the CDs, uh, are projected to reprice lower by just a small amount. Do you expect the retention?

Gary Tener: Of the CDs to be higher in the back half of the year than they were in the first half of the year and then how much of the total growth for the year? Uh would you suggest is kind of driven by public funds in the fourth quarter?

Uh, again, good question. So if we we think about CDs and renewal rate, I mean, again, that's when that's been 1 of the things that, um,

Gary Tener: Really has been kind of the star of the show if you will around our ability to, uh, retain that money and re price it lower. So it was something like 86% in the second quarter and the Assumption for the back half of the year is that it'll be at least 81% if not a little bit better.

Gary Tener: So the other thing that I would suggest, when we look at, not only the guidance for deposits, but also the levels that we think will come in is, um, because of the cni nature of our book, you know, there's a lot of seasonality built into it. You mentioned the public funds and and certainly that does Drive the numbers with a public fund book of around 3 billion or so.

Gary Tener: So, typically in the second quarter, you know, we see really the last couple of months of the outflows related to public funds and then we also see uh, outflows related to tax payments uh, both corporate as well as individual typically in a third quarter. Those deposit levels begin to stabilize if not grow a little bit and then on a seasonal basis, the fourth quarter tends to be our best quarter. Again they're typically inflows related to corporate and Middle Market deposits. And then you have the arrival of the, uh, the public fund, uh, inflows. And those can range between, you know, as much as 200 to 300 million. Just, depending on, uh, the, the, the primarily the sales tax Collections and property tax collections that typically happen in the, uh, the fourth quarter.

Speaker Change: Fair Mark. Thanks for the caller.

Gary Tener: You bet.

Speaker Change: Our next question comes from the line of Matt. Only with Stevens, your line is open.

Speaker Change: Hey uh thanks guys. Uh want to ask about credit and the charge offs in the second quarter were a little bit heavier than we were expecting but it sounds like you feel really good about charge offs.

The back half of the Year moving lower. Can you just kind of flush this out for us? Did you, did you get some resolutions, uh, of some lingering credits and and 2 Q or any color you can give us as far as the charge offs and 2 q and the Outlook.

Speaker Change: Hey, Matt, uh, Chris Luca. Uh, thanks for the question. Um, good question as well. Um, yeah, we, we feel pretty good about the guidance that we've given around, uh, the charge off range. I mean, as we've said, kind of going into this year and even last year, you know, we expect normalization of net, charge offs, um, kind of as the cycle winds through and, and we really aren't seeing any, any sort of specific, um, uh, systemic issues in the portfolio, which really gives us comfort as to kind of the forward view around. Uh, the remainder of the Year. Yes, we did have some accounts that were kind of, in, in our, uh, line of sight for resolution, uh, during the quarter. And we decided, uh, we had some reserves in place specific reserves in place on on, uh, on 1 of them. In particular that we decided that we would take down and just kind of resolve that, um, to the best that we could. Uh, so that way, we're kind of looking forward and a little bit more of a positive View.

Speaker Change: Okay, appreciate that. And then just as a follow-up to that, we've seen consecutive quarters of uh improving criticized, commercial loans. Now um we would love to just to get your your feel for criticized loans. As we look at the back half of the year uh uh and what your visibility is there.

Follow-up question.

Speaker Change: Ated or resolved or paid off. You know, what have you? You know, the whole uh, portfolio management work out process. So, uh, with the Lesser number of inflows. Uh, we feel pretty good about where we sit, uh, not to say that as the quarters go through that, there aren't things that kind of you know uh catch us a little off guard. Uh but we feel like we have a pretty robust portfolio management and work out process to deal with those.

Speaker Change: Okay.

Speaker Change: Thank you guys.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Steven scouting with 5%. Through your line is open,

Speaker Change: Hey good afternoon, thanks guys. Um I know Mike you gave some commentary around m&a saying it's largely unchanged Outlook there but

I'm kind of curious as to how you think about the future path. I mean, to me what the only thing that's maybe been lacking from from y'all's story has been organic loan growth and and we're seeing great signs of that already this quarter. So should we think about, you know, you guys letting that story play out profitability and efficiency continue to play out and then you know, if you're your shares weren't the valuation, I'm sure you feel they should then that's when m&a might be pursued down. The line, is that a decent way to think about it.

Speaker Change: Yeah, that's a, that's a very plausible path. And, uh, you know, again, we're we're thrilled about our ability to restart organic loan growth. We have a very well thought through, uh, organic growth plan that we're executing on right now. Um, you know, we've talked a lot about our earnings efficiency being extremely high right now. Our high and, uh, the only thing missing had been, you know, organic loan growth. And so, you know, we're we're thrilled with where we are. And we're very anxious to, um, you know, to continue to improve our earnings efficiency and overall profitability going forward. And that really is the focus of what we're trying to do.

Yeah, I think that's fantastic and then as it pertains to um the plans you guys have laid out for hiring, I think it was what another 14 people give or take slated for the rest of 2025 with with the uptick in m&a, kind of in and around your markets. Um,

would there be potential, you know, upside to those numbers if if you could be more opportunistic given uh m&a in your markets or or do you kind of want to manage the expense build and the, and the Personnel build

Speaker Change: You know, throughout the rest of the year, how should we think about the the potential for upsizing to that?

Speaker Change: Yeah, good question, Steve. And this is John, um, I think our appetite for good, uh, talent. That is seasoned knows, the market knows, the type of clients that we would like to add. Uh, we really don't have a ceiling in how many Bankers uh we would add over a given term. We've set the goal at 30. Um, uh, to be communicated externally, just to to help investors understand our degree of interest in growing loans. Not just this year, but but I have that growth pattern flywheel up over the next several years and get back to that 85 to maybe, uh, higher 80s loan to deposit ratio, which is really our sweetest spot in terms of, uh, earnings capability. So the 30th compounded, uh, annual number and we would anticipate being at about 10% next year, as well. Now certainly, if opportunities came up for that number to be higher, we would be gladly take it, um, you know, our, our uh, our rate of people that don't

Speaker Change: Um, uh, you know, survive over the long term. Once added is actually quite low primarily because we try to screen very well and have potential Bankers meet with people. Uh both in uh the line of business and in Credit to assure that their appetite for clients matches up with us. So their potential for success is very high. So, uh, the to the, I'm sure there is a maximum somewhere where Mike will get nervous about the expense, but so far,

Speaker Change: Yeah, I'm our attitude is, uh, we would gladly take on that problem and be happy to explain that to investors because we have more offensive players on the field. Well, there's no Max to the revenue, right? So there's no back. Yes, right. That's the question is, you know, when would you expect the compensating revenue and and so far, you know, that expectation for this year was about 15% of our total loan growth, would be coming from new hires. And I think we're on track to hit that and in fact, the business Bankers we've added are probably going to exceed that for the year, but that's really too early to call. I wouldn't want to commit to it just yet.

Speaker Change: That's really great color and congrats on a great quarter.

Stephen: Thank you very much, Stephen.

Speaker Change: Our next question comes from the line of Christopher marinick with Janie Mont Clary Scott. Your line is open.

Speaker Change: Thoughts about opportunities that that could create for Hancock, um, in the future quarters. I had

Started and and Mike can add color if he likes, I mean, disruption is is usually good for us. I think we're viewed as a safe haven for people who for whatever reason uh uh would like to maybe raise their hand where otherwise they might not have. But but but that disruption happens, you know, all around the footprint we really never know how to size it. But certainly the, uh, the phone lines and email inboxes are open to, uh, to inbound calls and there's no secret across our footprint. That we are indeed looking for good talent. Um, and uh, that we are a great place for people to land who want to build a book, um rapidly with great partnership with their credit of folks across the line. So, um,

Speaker Change: Thanks for for asking, the question that gives me a chance for a free commercial but but, uh, we're, we're definitely hiring really in every place. I mean, if you saw from page, I think it's page 7, is that right? Uh, Katherine in the, in the deck? Um, you know, you see the green markets, that's uh where we actually have open roles that were actively, uh, searching for now. So, uh, not every Market is highlighted right there, primarily because some of those markets we added people in last year,

Speaker Change: And so, uh, we didn't, you know, make the circles bigger or smaller to denote how many people were in those different areas. But, uh, but it does show that we're not piling everybody into 1 market. Although, I would, I would allow that the, the largest concentration of people are in markets that we consider higher growth, uh, for for obvious benefit. But, uh, it would not surprise me to see.

Speaker Change: Most of the called out markets in that, uh, sheet populated with new hires, by the time we get to the end of next year.

Speaker Change: And note, this is a net document, not an absolute document.

Speaker Change: Good, John. Thanks for that. Um, and then just a follow up for Chris. Um, Chris are you seeing opportunities for some of the non-depository uh borrowers who are not Banks? But you know looking for credit uh from your side as a company? Is that an opportunity in the commercial book?

I mean, we do definitely see that as uh as potential opportunities for us, but it's not something that we're specifically targeting.

Could those loans have a depository element to them uh over time.

Speaker Change: Yeah. I mean they they can I mean obviously as they kind of you know, grow and and kind of rehabilitate out of just being uh you know, part of that non-depository lending environment to, you know, a traditional banking environment. Um you know I know that I've I've seen that before, you know, the hit rates always a little bit lower than you hope. But um, but it certainly is an opportunity, you know, for us and and we certainly hope that some of them spin off into uh into opportunities for direct relationships.

John Harrison: Yeah. Chris, this is John at the only thing I'd add is not that we're necessarily averse to it, but I think I would I would use the word opportunistic. Uh, just like Mike did earlier that if it makes a lot of sense for us and the client then we certainly would explore it. But we're not designated a, a group of new hires to Target that and that's something. We would rather have a longer relationship and understand the client. Before we we we jumped in too far.

Speaker Change: Got it. Thank you all for uh, for taking my questions. We appreciate it.

Speaker Change: Thank you. Thank you for hanging in there on a busy day.

I will share the call back over to John Harrison for closing remarks.

Speaker Change: Thanks Kate for uh for moderating the call, thanks to everyone for for your attention and interest and we look forward to seeing you on the road over the next quarter.

Speaker Change: Ladies and gentlemen, that concludes today's call, thank you all for joining. You may now disconnect