Executive Summary / Key Takeaways

• Strategic Pivot to Growth: Hancock Whitney Corporation is executing a multi-year organic growth plan, complemented by the strategic acquisition of Sabal Trust Company, signaling a decisive shift from balance sheet derisking to aggressive expansion in high-growth markets like Texas and Florida.
• Robust Financial Performance: The company delivered a strong Q3 2025, with a 1.46% Return on Assets (ROA) and an improved efficiency ratio of 54.1%, driven by expanding net interest income (NII) and record fee income, demonstrating superior profitability and operational control.
• Fortress Capital and Liquidity: HWC maintains a strong capital position, with a 14.09% Common Equity Tier 1 (CET1) ratio and $19.2 billion in available liquidity, significantly exceeding uninsured deposits, providing a solid foundation for growth and resilience against economic uncertainties.
• Managed Credit Quality: Despite a dynamic economic environment and a 50% weighting to a mild recession scenario in its credit loss models, HWC's asset quality remains sound, with criticized commercial loans declining and net charge-offs at a manageable 0.19% annualized.
• Technological and Competitive Edge: Leveraging its established regional branch network, community relationships, and digital banking capabilities, HWC is strategically positioning itself to capture market share in privately owned businesses, differentiating through localized expertise and full-relationship banking amidst a competitive landscape.

A Regional Powerhouse's Strategic Evolution

Hancock Whitney Corporation, founded in 1899, has cultivated a legacy of financial stability and consistent shareholder returns, marked by uninterrupted dividends since 1967. This deep-rooted history in the Gulf South region has shaped its current strategic trajectory, which is now firmly focused on a multi-year organic growth plan and opportunistic inorganic expansion. The company's overarching ambition is to become "the best bank in the southern part of the U.S. for privately owned businesses," a goal underpinned by a commitment to "more granular full relationship loans" designed to yield favorable returns and comprehensive client engagement.

The foundation for this pivot was laid over several years, notably since 2020, when HWC embarked on a four-pronged strategy: derisking its balance sheet, building robust reserves, enhancing profitability and efficiency, and growing its capital base. A significant milestone in this journey was the successful reduction of its Shared National Credit (SNC) concentration to 10% or below by late 2024, eliminating a substantial headwind to net loan growth. This strategic derisking, combined with a strong capital stack, has positioned HWC to aggressively pursue growth in its target markets.

The broader economic landscape presents a complex backdrop for HWC's strategic initiatives. In the third quarter of 2025, the U.S. economy faced "increasingly complex" conditions, with tariffs averaging around 15% (up from 2.50% in recent years) disrupting global growth and contributing to inflationary pressures. While real GDP grew 4% annualized in Q3 2025, this was "buoyed by consumer spending that may not be sustainable," as consumer confidence steadily declined. The Federal Reserve is anticipated to implement rate cuts of 25 basis points in September and December 2025, with further gradual reductions in 2026, influencing loan yields and deposit costs. HWC's management has prudently weighted Moody's downside S-2 mild recessionary scenario at 50% in its credit loss calculations, reflecting concerns about a potential mild recession starting in Q4 2025.

Technological Edge and Operational Excellence

Hancock Whitney leverages a blend of traditional banking services with modern digital capabilities to enhance customer experience and operational efficiency. Its core technological offerings include robust online and mobile banking platforms, comprehensive treasury management services for commercial clients, and an Insured Cash Sweep (ICS) product. The ICS product, which secured $349.7 million in deposits at September 30, 2025, allows customers to protect balances above FDIC insured limits, demonstrating HWC's commitment to deposit safety and client solutions.

These digital tools and services provide tangible benefits, contributing to improved wallet share and density in business accounts. The company's focus on technology enhancement and process improvement projects is evident in its efficiency ratio, which improved to 54.1% in Q3 2025, down from 54.91% in Q2 2025 and a year-to-date average of 54.73%, nearly 100 basis points lower than the previous year. This operational excellence, partly driven by technology, translates into a competitive moat, enabling HWC to manage costs effectively and foster stronger customer retention. The strategic intent behind these investments is to drive growth in consumer and small business segments by offering convenient and efficient banking solutions.

Financial Performance: A Story of Profitability and Strategic Growth

Hancock Whitney's financial performance in Q3 2025 underscores its strategic pivot, showcasing strong profitability and disciplined growth. The company reported a "remarkably strong quarter" with a Return on Assets (ROA) of 1.46%, an increase from 1.32% a year prior. Adjusted pre-provision net revenue (PPNR) totaled $175.6 million, up 5% quarter-over-quarter, reflecting robust earnings generation.

Net interest income (NII) continued its expansion, driven by growth in average earning assets at higher yields and a reduction in deposit costs. The net interest margin (NIM) remained stable at 3.49% in Q3 2025, benefiting from a favorable earning asset mix and higher securities yields, despite an increase in higher-cost short-term borrowings. The yield on the bond portfolio rose by six basis points to 2.92%, with the company strategically reinvesting $200 million of principal cash flow at a higher rate of 4.61%. The loan yield saw a modest one-basis-point increase to 5.87%, though new loan yields remained flat at 6.78%. On the funding side, the cost of deposits continued its downward trend, decreasing by one basis point to 1.64% in Q3 2025, primarily due to the repricing of Certificates of Deposit (CDs) at lower rates.

Noninterest income was a significant growth driver, increasing for the third consecutive quarter to $106 million in Q3 2025, an 8% rise from the prior quarter. This surge was led by investment, insurance, and annuity fees, which hit a "record high for the organization." Trust fees also saw substantial growth, up 34.4% year-over-year in Q3 2025, largely due to the full quarter impact of the Sabal Trust Company acquisition. For the nine months ended September 30, 2025, total noninterest income reached $299.3 million, a 10% increase from the same period in 2024. Expense management remained disciplined, with adjusted net interest expense increasing by less than $3 million (1%) quarter-over-quarter, primarily due to strategic investments in revenue producers and higher incentive compensation.

HWC maintains a fortress balance sheet, characterized by ample liquidity and robust capital. Available on and off-balance sheet liquidity stood at $19.2 billion at September 30, 2025, significantly exceeding the estimated $11.2 billion in uninsured, noncollateralized deposits. The ratio of free securities to total securities was 60.83%, well above the internal target of 20%. The liquid asset ratio was 19.88%, surpassing both the minimum and internal targets. Stockholders' equity grew to $4.5 billion, an 8% increase from December 31, 2024.

The tangible common equity (TCE) ratio improved to 10.01%, and the Common Equity Tier 1 (CET1) ratio reached 14.09%, both "well in excess of current regulatory minimum requirements." The company actively manages its capital, repurchasing 662,500 shares of common stock in Q3 2025 at an average price of $60.48 per share, totaling 1.76 million shares for the nine months ended September 30, 2025.

Loan and Deposit Dynamics: Managing Headwinds, Seizing Opportunities

Hancock Whitney's loan portfolio demonstrated modest growth in Q3 2025, with total loans reaching $23.60 billion, a 1% increase from the prior quarter, representing a 2% annualized growth rate. This growth was achieved despite a "higher than anticipated" paydown environment. Loan production was "quite strong," up 6% quarter-over-quarter and 46% year-over-year. However, net growth was impacted by several factors, including higher payoffs of larger credits, a larger-than-expected reduction in line utilization among industrial contractors due to accelerated project completion, and sales of large core clients to upstream organizations. Additionally, private credit and private equity firms took down some healthcare deals that HWC had expected to retain.

The company's deposit base, a critical funding source, totaled $28.7 billion at September 30, 2025, reflecting a $386.9 million decrease from June 30, 2025, primarily due to typical seasonal movements in public funds and retail time deposit maturities. Despite this, the noninterest-bearing demand deposit (DDA) mix remained strong at 36%. Core deposits, excluding large CDs and brokered deposits, stood at $27.2 billion, with the core deposits to total deposits ratio at 94.81%. The average loan-to-deposit ratio for Q3 2025 was 82.22%, below the internal target range of 87% to 89%, indicating capacity for further loan growth funded by deposits.

Asset quality remains a key focus. Criticized commercial loans totaled $549.2 million at September 30, 2025, a 4% decrease from the prior quarter and a 12% decrease from December 31, 2024. These loans are diversified across various industries, with no significant concentration in any single sector or geography, a notable improvement from past experiences. Nonaccrual loans increased modestly to $114 million. The provision for credit losses in Q3 2025 was $12.7 million, including net charge-offs of $11.4 million. Annualized net charge-offs to average loans were 0.19%, down from 0.31% in Q2 2025. The allowance for credit losses (ACL) coverage to total loans remained solid at 1.45%. Management's credit loss calculation incorporates a 50% weighting to Moody's downside S-2 mild recessionary scenario, reflecting a proactive approach to potential economic headwinds.

Competitive Positioning: A Differentiated Approach

Hancock Whitney operates in a competitive financial services landscape, primarily contending with other regional banks such as Regions Financial Corporation (RF), Synovus Financial Corporation (SNV), and Truist Financial Corporation (TFC), as well as indirect competitors like fintech companies and online banks. HWC's competitive strength lies in its deep regional presence in the Gulf South, extensive branch network, and strong community relationships. This local expertise translates into enhanced customer loyalty and potentially superior margins through efficient cost structures in its familiar markets.

Compared to larger regional players like Regions Financial and Truist, HWC may lag in overall scale and the speed of digital innovation. Regions Financial, with its broader branch network and diversified revenue streams, offers greater competitive reach. Truist, a product of a major merger, leverages its size for faster expansion and more comprehensive digital platforms. However, HWC differentiates itself through a community-oriented, relationship-based banking model, which fosters deeper customer ties, particularly with privately owned businesses. Its strategic focus on "full relationship loans" aims to capture a greater share of client wallet, extending beyond lending to wealth management and treasury services.

Against Synovus, which also emphasizes technology-driven banking for mid-market businesses, HWC's offerings in trust and investment management, bolstered by the Sabal acquisition, provide a distinct advantage in personalized services. While Synovus might lead in the agility of its digital platforms, HWC's established presence and localized expertise in the Gulf Coast allow for effective competition and potentially lower operating costs in specific niches.

The competitive environment for deposits is described as "well-behaved," with the absence of "irrational players" and less aggressive behavior from credit unions, which is conducive to HWC's deposit pricing strategy. However, in lending areas like equipment finance and commercial real estate, the proliferation of non-bank players creates pressure on new business yields. HWC counters this by focusing on deal structure, quick decision-making, and certainty of execution. The company's regulatory licenses also serve as a barrier to entry, helping to stabilize its revenue base against new entrants.

Outlook and Strategic Initiatives: Fueling Future Expansion

Hancock Whitney's outlook for the remainder of 2025 and into 2026 is characterized by a continued commitment to its organic growth plan and the integration of its recent acquisition. The company anticipates "low single-digit growth in 2025" for total loans, with "low single-digit net growth for the fourth quarter as paydowns persist." To achieve consistent mid-single-digit annualized loan growth in 2026, HWC aims to significantly boost loan production to "about $2 billion maybe a little north of that" per quarter, supported by the addition of more "offensive players" (bankers).

Deposit costs are expected to decline in Q4 2025, driven by anticipated Federal Reserve rate cuts in October and December, and the continued repricing of maturing CDs at lower rates. The securities portfolio yield is also projected to increase as cash flows are reinvested at higher rates. While the overall loan yield is expected to decrease slightly due to rate cuts, the company anticipates modest NIM expansion, potentially a "handful of basis points," in the coming quarters. PPNR growth is projected to be in the "5% to 6% range," with a bias towards the upper end.

A cornerstone of HWC's strategic initiatives is its organic growth plan, which includes hiring additional revenue-generating associates and expanding its physical footprint. The company has hired 20 net new bankers in the past year and plans to open five new financial centers in the Dallas market in late 2025 or early 2026. Management has "no ceiling" on the number of seasoned bankers it would add, particularly in high-growth markets like Texas, Florida, Tennessee, Georgia, and the Carolinas, viewing market disruption as an opportunity to attract talent. The impact of these new hires is expected to be more significant in 2026 as their pipelines mature.

The acquisition of Sabal Trust Company on May 2, 2025, is a pivotal inorganic move, expanding HWC's market share in investment management and trust services in Central Florida. This acquisition, which added approximately $3 billion in assets under management and administration, makes Florida HWC's largest wealth management fee state, aligning with its long-term strategy to serve privately owned businesses comprehensively.

Key risks include the ongoing economic uncertainty, particularly the impact of elevated tariffs and the potential for a mild recession as indicated by Moody's S-2 scenario. Delays in economic data due to the government shutdown could further complicate policy decisions. Within the banking industry, prolonged elevated interest rates continue to challenge loan demand and deposit behavior. HWC has expensed $29.4 million related to the FDIC special assessment, with the final exposure remaining uncertain. However, the company's robust liquidity, strong capital ratios, and proactive credit risk management, including a diversified criticized loan book, are expected to mitigate these risks.

Conclusion

Hancock Whitney Corporation stands at a pivotal juncture, strategically shifting from a period of balance sheet fortification to one of targeted growth and expansion. The company's strong Q3 2025 financial performance, characterized by expanding profitability, efficient operations, and robust capital, provides a solid foundation for this ambitious trajectory. By leveraging its deep regional presence, disciplined expense management, and a strategic blend of organic hiring and opportunistic acquisitions like Sabal Trust Company, HWC is actively building out its capabilities in high-growth markets and specialized fee-income businesses.

The investment thesis for HWC is rooted in its ability to execute this growth strategy while maintaining superior asset quality and capital strength. The company's technological investments in digital banking and treasury management, though not explicitly detailed with quantitative performance metrics, are integral to enhancing customer relationships and driving operational efficiency. As HWC continues to expand its "offensive players" and physical footprint, particularly in wealth management and business banking, investors should monitor the pace of loan growth, the continued reduction in deposit costs, and the effective integration of new talent and acquisitions. While macroeconomic headwinds, including tariffs and potential recessionary pressures, remain, HWC's proactive risk management and strategic positioning for full-relationship banking with privately owned businesses underscore its potential for sustained value creation in the evolving financial services landscape.