Earnings call transcript: Hancock Whitney Q2 2025 beats EPS forecast

Hancock Whitney Corporation (HWC) reported strong Q2 2025 results, with adjusted net income of $1.37 per share exceeding analyst expectations, which drove a 1.59% increase in its stock price. The bank achieved a 2% rise in net interest income and a 4% increase in fee income, supported by 6% annualized organic loan growth and strategic expansions, including the acquisition of Sable Trust and new Dallas market centers. Management projects continued low single-digit loan growth and modest Net Interest Margin expansion in the second half of 2025, assuming two Federal Reserve rate cuts, while maintaining robust capital ratios and actively repurchasing shares.

Analysis

Hancock Whitney Corporation (HWC) reported Q2 2025 adjusted net income of $1.37 per share, exceeding analyst expectations and driving a 1.59% stock price increase to $60.49. This performance was underpinned by robust organic loan growth of 6% annualized, a 2% rise in net interest income, and a 4% increase in fee income, further bolstered by the acquisition of Sable Trust and expansion into the Dallas market. The company's P/E ratio of 11.29x is considered attractive relative to its near-term earnings growth potential.

Management projects continued low single-digit loan growth and modest Net Interest Margin (NIM) expansion in the second half of 2025, factoring in two anticipated 25 basis point Federal Reserve rate cuts. HWC is actively pursuing organic growth through new banker hires and strategic market entries, while maintaining strong capital ratios with a TCE of 9.84% and CET1 of 14.03%.

Capital allocation includes significant share repurchases, with 750,000 shares bought back in Q2, and plans to continue returning approximately $40 million per quarter. While InvestingPro's Fair Value suggests the stock is "slightly overvalued," key risks include macroeconomic pressures, intense competition, a $148 million decrease in deposits, and the potential impact of future rate cuts on margins.

Key Decisions for Investors

• Monitor HWC's ability to sustain organic loan growth and achieve projected Net Interest Margin expansion in H2 2025, particularly as Federal Reserve rate cuts materialize and influence funding costs and loan yields
• Evaluate the effectiveness of HWC's capital deployment strategy, considering the balance between ongoing share repurchases and strategic investments for growth, especially given the stock's current valuation metrics
• Assess the company's resilience against macroeconomic headwinds, competitive pressures, and deposit fluctuations, while closely watching for any changes in credit quality trends