Introduction

Hancock Whitney Corporation, a prominent financial holding company headquartered in Gulfport, Mississippi, has a storied history spanning over a century. With a focus on providing comprehensive financial services to commercial, small business, and retail customers, Hancock Whitney has weathered numerous economic cycles, emerging as a resilient and adaptable institution.

History and Core Values

Founded in 1899, Hancock Whitney has maintained a steadfast commitment to its core values of Honor & Integrity, Strength & Stability, Commitment to Service, Teamwork, and Personal Responsibility. This unwavering dedication has enabled the company to navigate the ever-evolving financial landscape, consistently delivering value to its shareholders, customers, and the communities it serves. Over the past century, Hancock Whitney has demonstrated remarkable resilience, weathering significant economic challenges including the Great Depression, World War II, and the 2008 financial crisis. The company's ability to maintain the trust of its customers and communities throughout these turbulent periods is a testament to its steadfast approach and commitment to its core values.

Business Model and Expansion

Hancock Whitney's diversified business model, which encompasses traditional banking services, wealth management, and specialized lending, has been a key driver of its long-term success. The company's strategic acquisitions have played a crucial role in its growth and expansion. A notable example is the 2005 acquisition of Whitney Holding Corporation, which significantly strengthened Hancock Whitney's presence in key markets such as Louisiana and Florida. This move, along with other strategic initiatives, has allowed the company to expand its footprint across the Gulf South region, including southern and central Mississippi, southern and central Alabama, southern, central and northwest Louisiana, the northern, central, and panhandle regions of Florida, and certain areas of east and northeast Texas.

Financials

The company's financial performance has been characterized by resilience and adaptability. In 2024, Hancock Whitney reported revenue of $1.69 billion and net income of $460.81 million, or $5.28 per diluted share, reflecting a year-over-year increase of 17.4%. This robust performance was driven by a 26% increase in noninterest income, as well as disciplined expense management, which resulted in a relatively stable efficiency ratio of 55.36%. The company's operating cash flow for 2024 was $625.74 million, with free cash flow of $615.50 million.

In the most recent quarter (Q4 2024), Hancock Whitney reported revenue of $364.77 million and net income of $122.07 million. The year-over-year growth was impressive, with revenue up 18.3% and net income up 141.5%. This increase was attributed to higher net interest income and noninterest income, as well as lower expenses and provision for credit losses.

Hancock Whitney's net interest margin (NIM) expanded by 3 basis points to 3.37% in 2024, as the company effectively managed its funding costs and asset yields in a rising interest rate environment. The bank's loan portfolio, which totaled $23.30 billion as of December 31, 2024, experienced a modest decline of 3% year-over-year, primarily due to a strategic reduction in the shared national credit portfolio. However, the company's organic growth initiatives, including a multi-year plan to hire additional revenue-generating associates and expand its footprint in key markets like Texas and Florida, are expected to drive future loan growth.

Asset Quality

Hancock Whitney's asset quality metrics have remained strong, with a nonaccrual loan ratio of 0.42% and a net charge-off ratio of 0.19% as of December 31, 2024. The company's allowance for credit losses stood at a robust 1.47% of total loans, reflecting its prudent risk management practices and proactive approach to credit quality.

Liquidity and Capital Position

The company's capital position remains exceptionally strong, with a common equity Tier 1 capital ratio of 14.14% and a tangible common equity ratio of 9.47% as of December 31, 2024. This solid capital base has enabled Hancock Whitney to return capital to shareholders through a consistent dividend program and share repurchases. In January 2025, the company's Board of Directors approved a 12.5% increase in the quarterly cash dividend to $0.45 per share.

Hancock Whitney's liquidity position is robust, with $1.51 billion in cash as of December 31, 2024. The company's debt-to-equity ratio stands at 0.234, indicating a conservative approach to leverage. Additionally, Hancock Whitney has a line of credit with the Federal Home Loan Bank of Dallas, secured by certain loans, with $5.51 billion remaining available as of December 31, 2024. This provides the company with significant financial flexibility to support its operations and growth initiatives.

Growth Strategy

Hancock Whitney's growth strategy is multifaceted, with a focus on both organic and inorganic expansion. The company's recent acquisition of Sabal Trust Company, a Florida-based wealth management firm, is expected to further bolster its presence in the high-growth Florida market and enhance its fee-based revenue stream. Additionally, Hancock Whitney's organic growth initiatives, which include the planned opening of five new financial centers in North Dallas and potential expansion in Florida, are aimed at strengthening its market share and diversifying its geographical footprint.

Product Segments

Hancock Whitney operates through several key product segments:

1. Commercial and Industrial Loans: The company offers a variety of commercial loan services to a diversified customer base across various industries. These loans, which comprise 55% of the total loan portfolio at $12.89 billion, are used for working capital, business expansion, acquisitions, and equipment purchases.

2. Commercial Real Estate Loans: This segment includes both owner-occupied and income-producing commercial real estate loans, totaling $5.08 billion or 22% of the loan portfolio.

3. Construction and Land Development Loans: Hancock Whitney provides loans for the acquisition, development, and construction of both commercial and residential properties, amounting to $1.28 billion.

4. Residential Mortgages: The residential mortgage portfolio consists of closed-end loans secured by first liens on 1-4 family residential properties, totaling $3.96 billion.

5. Consumer Loans: This segment includes second lien mortgage home loans, home equity lines of credit, and various consumer purpose loans, amounting to $1.37 billion.

Risks and Challenges

While Hancock Whitney has navigated the challenging macroeconomic environment with resilience, the company is not immune to potential risks and uncertainties. Factors such as rising interest rates, economic downturns, increased competition from both traditional and non-traditional financial institutions, and regulatory changes could impact the company's future performance. However, Hancock Whitney's long-standing track record of prudent risk management and adaptability suggests that it is well-positioned to weather these challenges and continue delivering value to its stakeholders.

Forward Guidance

Hancock Whitney has provided updated guidance for 2025, reflecting its organic growth plan but excluding impacts from the Sabal Trust Company acquisition. Key points include:

• Net interest income and net interest margin (NIM) are expected to see modest growth, with NIM expansion and net interest income growth of 3.5% to 4.5%.

• Non-interest income is projected to increase by 3.5% to 4.5% from 2024 levels.
• Non-interest expense is anticipated to rise by 4% to 5% from the 2024 adjusted level, inclusive of the organic growth plan but excluding Sabal acquisition costs.
• Pre-provision net revenue (PPNR) is expected to grow by 3% to 4% from 2024 adjusted levels.
• The efficiency ratio is projected to be between 55% and 56% in 2025.
• The company expects modest charge-offs and provision levels for 2025, in the upper teens to low 20s basis points of average loans.

Conclusion

In conclusion, Hancock Whitney Corporation's rich history, diversified business model, and strong financial position make it a compelling investment proposition in the financial services sector. The company's strategic initiatives, coupled with its unwavering commitment to its core values, position it well to capitalize on future growth opportunities and maintain its status as a trusted financial institution in the markets it serves. With solid financial performance, a robust capital position, and a clear growth strategy, Hancock Whitney appears well-equipped to navigate the evolving financial landscape and continue delivering value to its stakeholders.