Hancock Whitney Reports Earnings Beat Amidst Deposit Decline and Increased Expenses, Stock Retreats
Hancock Whitney Navigates Mixed Q3 Performance
Hancock Whitney Corp. (HWC), the Gulf South regional bank, reported adjusted earnings per share (EPS) of $1.49 for the third quarter of 2025, exceeding the Zacks Consensus Estimate of $1.41. This represents a 5.67% earnings surprise and a 12% increase from the prior-year quarter. Net income for the quarter totaled $127.5 million, an increase of 10.3% year-over-year.
Despite the robust EPS figure, HWC shares declined 2.7% in Tuesday's after-market trading session. This negative reaction was primarily driven by investor concerns regarding an increase in adjusted expenses and a sequential decline in total deposits.
Detailed Financials and Operational Highlights
Total revenues for the quarter reached $385.7 million, representing a 4.9% year-over-year increase. However, this figure slightly missed the Zacks Consensus Estimate of $387.9 million. Net Interest Income (NII) on a tax-equivalent basis increased 2.9% year-over-year to $282.3 million, with the Net Interest Margin (NIM) expanding by 10 basis points to 3.49%. Non-interest income also saw a notable rise of 10.5% to $106 million, driven by an 8% year-over-year increase in fee income.
Conversely, total non-interest expenses (GAAP) increased by 4.4% to $212.8 million. While the efficiency ratio improved to 54.10% from 54.42% in the year-ago quarter, falling below the average analyst estimate of 56.1%, the absolute increase in expenses contributed to investor caution.
On the balance sheet, total loans stood at $23.6 billion, showing a marginal increase from the prior quarter. However, total deposits declined 1.3% sequentially, or $387 million, to $28.7 billion. This decrease was attributed to seasonal outflows and a reduction in public fund balances, missing analyst estimates.
Credit quality saw improvement, with the provision for credit losses decreasing 31.9% from the prior-year quarter to $12.7 million. Net charge-offs were $11.4 million, or 0.19% of average total loans. The company also continued its share repurchase program, buying back 0.66 million shares at an average price of $60.45 per share during the quarter.
Market Reaction and Underlying Dynamics
The market's mixed reaction to Hancock Whitney's Q3 results underscores the sensitivity of investors to core banking fundamentals, particularly deposit stability and cost control. While the earnings beat, stable NIM, and improved efficiency ratio highlighted strong operational execution and profitability, the increase in adjusted expenses and, more significantly, the decline in deposits raised concerns.
For banking institutions, deposits are a crucial, low-cost funding source. A sequential decline, even if partly seasonal, can signal potential challenges for future loan growth or necessitate more expensive funding, thereby impacting profitability and competitive positioning. The market appears to have prioritized these fundamental metrics over the earnings beat, reflecting a cautious stance in the current economic climate.
Strategic Positioning and Broader Implications
Hancock Whitney's performance reflects a multi-year operational overhaul and strategic execution. The bank is pursuing a long-term strategy focused on organic growth, including a Dallas expansion, digital transformation, and emphasizing relationship-based lending. Management reported adding 20 net new bankers in Q3 2025, supporting market penetration in Texas and Florida, and is expanding its wealth management and fee-generating businesses.
The bank's NIM of 3.49% positions it within the typical range for large U.S. banks. Its efficiency ratio of 54.10% also outperforms the regional bank average, which typically remains above 60%, signaling strong cost discipline. Management anticipates NII growth of between 3% and 4% for the full year 2025, assuming a minimal impact from potential Federal Reserve rate cuts.
Despite these strategic strengths, the broader banking sector faces headwinds, including weak asset quality and subdued mortgage income. Hancock Whitney's strong capital position, with a Common Equity Tier 1 (CET1) ratio of 14.08%, provides flexibility for continued growth and capital returns. The share repurchases signal management's confidence in the company's valuation and commitment to shareholder value.
Outlook and Factors to Monitor
Looking ahead, Hancock Whitney anticipates low single-digit net growth for the fourth quarter of 2025. Management expects deposit growth to rebound due to seasonality and anticipated lower interest rates, projecting year-on-year growth between 3% and 3.5% for deposits. The company also projects 3-4% growth in net interest income and continued reductions in deposit costs, driven by CD maturities and renewals at lower rates.
HWC plans further expansion into additional metropolitan statistical areas (MSAs) by late 2026, with five new locations slated for the Dallas market in late 2025 or early 2026. Key factors to watch include the trajectory of deposit balances, the impact of Federal Reserve monetary policy on interest rates, and the effectiveness of the bank's strategic expansion initiatives in driving sustainable top-line growth and managing expenses in a competitive regional banking landscape.
