Hancock Whitney Reports Q3 2026 Results, Sees Low Double-Digit Growth

Hancock Whitney (NASDAQ: HWC ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Hancock Whitney reported a solid third quarter with a 17% EPS improvement, driven by profitability, efficiency, and balance sheet growth. The acquisition of OFB was completed, contributing to loan and deposit growth, with annualized deposit growth at 9% excluding OFB. Asset quality remains stable, with criticized loans improving for the seventh consecutive quarter, although nonaccrual loans increased modestly. The company maintained a strong capital position with a 1.42% ACL coverage and plans for low double-digit growth for the full year.

Deposit costs rose due to promotional rates, but the company expects continued organic balance sheet growth. Management remains optimistic about closing 2026 with continued growth and profitability, with a focus on expanding treasury management and maintaining a healthy liquidity position. The company acknowledged the impact of recent hurricanes in the Florida Panhandle and committed to supporting affected communities. Full Transcript OPERATOR All participants are in a listen-only mode.

Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Ashley Wilshire, Head of Investor Relations. You may begin.

Ashley Wilshire (Head of Investor Relations) Thank you and good afternoon. 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 10-K and 10-Q, including the risks and uncertainties identified therein. You should keep in mind that 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. 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. 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, and our actual results and performance could differ materially from those set forth in our forward-looking statements.

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 the financial tables. The presentation slides included in our 8-K are also posted with the conference call webcast link on the Investor Relations website.

We will reference some of these slides in today's call. Participating in today's call are John Hairston, President and CEO; Mike Achary, CFO; Christopher Ziluca, Chief Credit Officer; and Shane Loper, Chief Operating Officer. I will now turn the call over to John Hairston. John Hairston (President and CEO) Thank you, Ashley, and thanks everyone for joining us today.

The third quarter of 2026 was another solid quarter of profitability, efficiency, and balance sheet growth. Adjusting for expenses related to the acquisition, EPS improved 17% and PPNR grew 8%, both compared to the same quarter previous year. We were also pleased to welcome new colleagues and clients through the transaction with OFB, which closed on August 1. Excluding loans acquired from OFB, growth met expectations at 4% annualized and continued to be funded by growth in core deposits.

As shown on slide 8 of our investor deck, loan production was strong and line utilization remained consistent with prior quarter. Growth was driven primarily by a lift in commercial real estate across multiple products and continued growth in equipment finance. Our guidance for the full year remains unchanged at low double-digit growth. Excluding deposits acquired from OFB, deposit growth was strong at 9% annualized.

This growth was led by an increase in interest-bearing transactions resulting from attractive products, pricing, and strong clients. Our guidance for the full year remains unchanged at low double-digit growth for the year. Criticized loan levels improved for the seventh straight quarter, while nonaccrual loans modestly increased, and our ACL coverage remains solid at 1.42%. We view overall asset quality as stable and continue to be well reserved.

Profitability, efficiency, and returns continue to perform very well with an adjusted 1.41% ROA, efficiency ratio of 54.46%, and an ROTCE of 16.4%. Top-line revenue continued to cover significant offensive reinvestment, and expenses continue to be well managed. Mike will add additional comments in his remarks, but I will note we have updated our guidance on page 19 to provide both fourth quarter and full year 2026 outlook as shown on slide 18 of the investor deck. Our capital ratios remain strong and reflect capital deployed for both inorganic and organic growth, return to shareholders, and the impact of the rising rate environment.

We maintain confidence in our strategy to grow the balance sheet and enhance our operational efficiency, and we remain optimistic about closing out 2026 with continued growth and profitability. Lastly, before we continue the call, I want to take a moment to acknowledge the individuals, businesses, and communities across the Florida Panhandle who were impacted by the recent hurricane. Throughout the storm and afterward, our teams worked diligently to support our clients and ensure they had access to the services and resources they needed.

We remain a dedicated partner as recovery efforts continue, backed by the commitment of our team and the resilience of the clients and communities we are very privileged to serve. With that, I'll invite Mike to make additional comments. Mike Achary (Chief Financial Officer) Thanks, John. Good afternoon, everyone.

As John mentioned, the company's performance in the third quarter was strong. Our adjusted net income was $134 million, or $1.66 per share, compared to net income of $127 million, or $1.55 per share, in the second quarter. Adjusted for expenses related to the OFB acquisition, PPNR for the company was up 6% from the prior quarter to $189 million. As a return on average assets, this continues to be a solid 2%.

Net interest income increased 7% this quarter. Our fee income businesses continue to perform well, and expenses, adjusted for costs associated with OFB, were up but remain well controlled. The third quarter results reflect all expected one-time expenses related to the OFB acquisition. As expected, our net interest margin was up this quarter with a 5 basis point increase from 3.56% to 3.61%.

Four basis points of the NIM increase resulted from the purchase accounting accretion related to the acquisition. The remaining increase was due to higher earning asset yields of 12 basis points overall. With the higher earning asset yield, we benefited from a higher yield on the bond portfolio and higher average earning asset levels as well as higher loan yields. As expected, the yield on the bond portfolio was up 11 basis points to 3.46% related to the reinvestment of principal cash flows during the quarter.

Loan yields were up 11 basis points, with a 10 basis point quarter-over-quarter increase in new loan rates and a healthy increase in average loans of $1.4 billion linked quarter, or $299 million excluding OFB. The company's cost of deposits was up 12 basis points to 1.55% for the quarter, due mostly to increases in promotional rate pricing on our interest-bearing transaction deposits and certain CD maturity buckets, which drove an increase in our balances on those deposits. In turn, the cost of funds was up 8 basis points, with lower average other borrowings driving the difference to the cost of deposits.

Switching to asset quality, our criticized commercial loans improved for the seventh consecutive quarter, decreasing $7 million to $485 million. Nonaccrual loans did increase $19 million to $133 million. Net charge-offs came in at 16 basis points, so flat from the prior quarter. Our loan loss reserves remained solid at 1.42% of loans.

We continue to expect net charge-offs to average loans will come in at between 15 and 25 basis points for the full year 2026. Finally, on slide 19 of the earnings deck, you'll see our forward guidance for both fourth quarter and full year 2026. We have included one rate hike of 25 basis points in December, but with minimal impact on our expectations for the full year. We continue to expect loan and deposits to be up low double digits.

We revised our guidance on net interest income to be up between 9% and 9.5%, fee income up between 5.5% and 6%, and both operating expenses and PPNR up between 8% and 8.5%. Lastly, a comment on capital. TCE was 8.05%, down 173 basis points from the prior quarter. The largest drivers of that decrease resulted from the cash acquisition of OFB, third-quarter share repurchases, and a decrease in OCI.

We did repurchase 1 million shares in the third quarter and have another 1 million shares remaining in this year's authority. Coming into the quarter, the intention was to exhaust that authority during the fourth quarter. However, with the 10-year Treasury at elevated levels and with an unprecedented 82 basis point increase over the course of the third quarter, and with our TCE coming out of the quarter at 8.05%, we'll likely be on the sidelines with additional repurchases until there's a little bit more clarity about where rates go from here.

As far as 2027 is concerned, we'll address that with our board in December, but I'd say it's very likely that we'll have some authority in place for next year. I will now turn the call back to John. John Hairston (President and CEO) Thank you, Mike. Let's open the call for questions.

OPERATOR We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again.

We ask that you pick up your handset when asking a question to allow for optimum sound quality. And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Rose from Raymond James.

Please go ahead. Michael Rose (Analyst at Raymond James) Thanks for taking my questions, Mike. Maybe we can start with the margin. I think you expect some modest improvement in the fourth quarter on a core basis, ex-OFB.

But I did note, obviously, or you guys noted that deposit costs were up. Just trying to get a better understanding of the puts and takes here and what the potential could be if we do get a rate hike beyond, you know, the 25 that you've modeled in — you know, beta assumptions, you know, all the above. Mike Achary (Chief Financial Officer) Sure thing, Mike. We'll be glad to.

So first off, as far as any rate hikes in the fourth quarter, what we're assuming at this point is the Fed increases 25 in December. So any impact or any increase that late in the quarter really will have a minimum impact, I think, on our numbers for the fourth quarter. Having said that, you know, you guys know that we're modestly asset sensitive and certainly would benefit or will benefit from any increase in rates going forward. Having said that, I think the big drivers as we come out of the third quarter into the fourth quarter is first and foremost our continued ability to organically grow our balance sheet.

Certainly the third quarter results were a little noisy inclusive of OFB, but aside from that, we were able to continue to organically grow. The balance sheet loans grew 4% linked-quarter annualized; deposits, the better part of 9% linked-quarter annualized. Both of those numbers excluding the impact of OFB. So we would expect that kind of organic balance sheet growth at least to continue into the fourth quarter.

We're having really good success in growing especially our deposit base, certainly bringing in new customers, and have kind of a nice roster of promotional rates out there that I think have been well received by folks. We have promotional rates both with CDs as well as money market accounts. And again, as I mentioned, those have been pretty successful and I think have driven the growth that we were able to show in the third quarter and what we're expecting in the fourth quarter. So that's first and foremost.

We'll continue to reinvest cash flow coming out of the bond portfolio. At these levels, we were able to reprice at a pretty nice margin. So, for example, in the third quarter, we're looking at at least $300 million of bond principal cash flow coming off at well below 4%. And the assumption is that we'll be able to reinvest that north of five and a half percent.

So that certainly, that's a big driver. We certainly do have higher deposit costs. We were up in the third quarter compared to the second quarter. And for the fourth quarter we're assuming probably a similar increase, all things equal.

And again, a lot of that is pointed at the promotional rates that I just mentioned. So all those factors combined put us in a position, again, we're able to grow our average earning assets and produce the levels of NIM expansion and NII that we're looking at for the fourth quarter. So, you know, for us, a modest NIM expansion is probably somewhere between 3, 4, 5 basis points and then NII growing accordingly. So hopefully that was helpful.

Michael Rose (Analyst at Raymond James) Yeah, lots to unpack there. So I appreciate all the puts and takes there. Maybe just as one follow-up, how should we think about kind of underlying loan demand and production if we were to get more than another rate hike or two? I mean, is there certain categories, I assume things like construction, maybe commercial real estate, you might see a little slowdown.

But then you've also added OFB, which I think has, you know, pretty decent pipeline. So just talk to us about, you know, kind of ongoing levels of production and what that could mean in the context of potentially higher rates than what you've modeled. John Hairston (President and CEO) Yeah, thanks, Michael, this is John. I'll take a swing at that one first.

I mean there are puts and takes even from rate increases. And as the ten-year moves up on the good front, it does mean we see less payoffs, particularly in commercial real estate. So while there is certainly a downside that appetite for new projects could ebb if rates go up, you know, let's just say something more significant like 50 to 100 basis points over the next couple of quarters, we'll see a dramatic pullback in payoffs. So the net benefit from being asset sensitive should overcome what could be a little lesser production.

And as you did mention, we do have the additional resource coming from a pretty goodly number of net new bankers and also the resources that came with very fine organization Orlando. So I think our tailwinds outweigh the headwinds just a bit. But since you mentioned sentiment and just kind of how clients feel, I think we covered before — Shane's mentioned it a couple times on this call — that we do survey our clients' sentiment, particularly on the business side, pretty frequently, particularly when the macro seems to have headlines that are changing every week or so.

And right now the sentiment suggests both resilience and a tone of cautious optimism simply because the economy is still, you know, going quite well over the last few weeks. You can see even though sentiment is cautiously optimistic toward growth, those clients are focusing a little more on the cost of energy, its impact on overall inflation, and the Fed's response to that. And so I think it'd be fair to characterize our book as still being cautiously optimistic, but a growing focus on those factors. So if a quarter every couple three months is probably not going to be that big a deal, in fact may be a little helpful to the bottom line.

But obviously there's always some point where you kind of reach the proverbial squeal point where people begin to pull in their horns. And I think we're a little ways away from that and don't see that happening in Q4. Was that what you needed or you need to redirect one more time? Michael Rose (Analyst at Raymond James) Yep, no, that's perfect.

Thanks for all the color. I'll step back guys. Thank you. Ashley Wilshire (Head of Investor Relations) You bet.

Thanks, Michael, for the question. OPERATOR Your next question comes from the line of Ben Gerlinger from Citi. Please go ahead. Ben Gerlinger (Analyst at Citi) Hi, good afternoon.

Just wanted to kind of follow up on the funding. I get the repricing aspect. If you look, you guys included the table for OFB — it's on page 10 — where balances from beginning August to the end of September, they grew almost 6% over that 60-day window. If you look at a relative mix of deposits, you guys have drifted a little lower from OFB on their DDA.

So instead of like the mid 35, 36, 37%, you're now at 33 on DDA. I was just kind of curious how you guys think about DDA relative to the mix going forward and kind of juxtapose that against the growth opportunities in the kind of North Florida area. Mike Achary (Chief Financial Officer) Yeah, great question, Ben, and I'll start and John can certainly add some color.