管理層發言
Good day, ladies and gentlemen, and welcome to Hancock Whitney Corporation's Second Quarter 26 Earnings Conference Call. At this time, 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, Ashleigh Flower Wilshire, Head of Investor Relations. You may begin.
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-Ks and 10-Qs, 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.
Our actual results and performance could differ materially from those set 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 comparable GAAP measures in our earnings release and the financial tables. The presentation slides included in our materials 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 Chief Executive Officer; Michael Achary, Chief Financial Officer; Christopher S. Zaylaca, Chief Credit Officer; and Shane Loper, Chief Operating Officer. I will now turn the call over to John Hairston.
Thank you, Ashleigh, and thanks, everyone, for joining us today. The second quarter of 26 was another strong quarter of profitability, efficiency, and return of capital to shareholders. We were pleased to add solid balance sheet growth on both sides of the ledger to an already excellent quarter. Compared to the same period a year ago, we were pleased to see EPS improvement of 13%, PPNR growth of 6%, a sixth straight quarter of improved commercial criticized loans, 5% growth in loans, and 2% growth in total deposits. We were pleased to welcome another 15 net new bankers in the second quarter, bringing our total for the year to 42 against our annual goal of 50. Focusing on the second quarter, on a linked quarter annualized basis, loans grew 10% and deposits 8%. As shown on Slide 9 of our investor deck, loan production was strong and line utilization improved. Growth was spread across every line of business except mortgage.
Our guidance for the full year remains unchanged at mid single digit growth. For deposits, the 8% annualized growth was related to an increase in interest-bearing money market accounts of $786 million, partially offset by a slight decline in CD balances from maturities in the quarter. We have updated our guidance for deposits from low single to mid single digit growth for the year. Profitability, efficiency and returns continue to perform very well, with a 1.42% ROA, an efficiency ratio of 55.3%, and an ROTCE of 14.9%. Top-line revenue continued to cover significant offensive reinvestment and net interest margin improved modestly while substantially funding loan growth with core deposits. Expenses were well managed as nearly all our expense growth was due to the full quarter impact of robust banker additions in Q1 and merit increases to our overall team in April. We were pleased to secure regulatory and shareholder approval in July for the 1 Florida Bank transaction with an expected closing date of August 1st.
Mike will add additional comments in his remarks, but I will note we have updated our guidance on page 20 to provide fiscal year 26 outlook both excluding and including 1 Florida. In both cases, the second half of 26 guidance reflects a continuation of high profitability, strong capital and continuing growth. Regarding capital deployment, our stated priorities remain capitalizing a growing balance sheet, supporting dividends, and completing the current 5% authorization by the end of this year. We are very pleased here at halftime of 2026 to see very solid performance and growth in alignment with our goals. We are very excited to welcome our new colleagues and clients from 1 Florida in only 10 days, augmenting our profitability and growth story. With that, I will invite Mike to add additional comments.
Thanks, John, and good afternoon, everyone. As John said at the onset, the company's performance in the second quarter was excellent. Net income for the quarter was $127 million, or $1.55 per share compared to adjusted net income of $125 million or $1.52 per share in the first quarter. PPNR for the company was up 3% from the prior quarter to $178 million. Expressed as a return on average assets, this continues to be a solid 1.99%. Net interest income increased 3% this quarter. Our fee income business continues to perform remarkably well, and expenses are up but remained well controlled. Fee income for the company was up $2.3 million or 2% adjusted for the net loss on the bond portfolio restructuring last quarter. The increase was driven by higher activity in our investment and annuity income and insurance as well as our trust business. These increases were offset by a decrease in our syndication fees and SBIC income which can be somewhat unpredictable from quarter to quarter.
Expenses remain well controlled, up 2% from the prior quarter and were primarily related to our annual merit increases and the impact of our new hires during the first half of 26. As expected, our net interest margin was up this quarter, albeit at a slightly slower pace with a 1 basis point increase from 3.55% to 3.56%. Our earning asset yield was up 2 basis points and our cost of funds was up 1 basis point. In addition, our level of average earning assets was up $570 million from last quarter. Within higher earning asset yield, we benefited from higher yield on the bond portfolio and higher average earning asset levels, partially offset by lower loan yields. Within our total cost of funds, unfavorable other borrowing balances and rates partially offset a lower cost of deposits. As expected, the yield on the bond portfolio was up 12 basis points to 3.35% related to a full quarter's impact of the first quarter restructuring transaction but also due to reinvestment of principal cash flows during the quarter.
Loan yields were down 2 basis points, mostly due to the impact of a 12-basis point quarter-over-quarter drop in new loan rates, but this was partially offset by a healthy increase in average loans of $374 million linked quarter. Our cost of deposits was down 4 basis points to 1.43% for the quarter due mostly to a lower rate on maturing CDs. We did increase promotional rate pricing on our interest-bearing transaction deposits and certain CD maturity buckets, which drove an increase in our end-of-period balances on those deposits. For the second half of 26, we do expect the benefit from repricing maturing CDs will largely come to an end as new CD rates will likely be higher. Turning to asset quality, our criticized commercial loans improved for the sixth consecutive quarter, decreasing $30 million to $492 million. Nonaccrual loans increased $1 million to $114 million. Net charge-offs came in at 16 basis points, down from the prior quarter's 19 basis points.
Our loan loss reserves are solid at 1.42% of loans. We continue to expect net charge-offs as a percent of loans will come in between 15 and 25 basis points for full year 2026. Finally, in Slide 20 of the earnings deck, you will see our forward guidance for the remainder of 2026. For guidance excluding OFB, we made a number of revisions mostly moving to the upper end of our previous ranges. For guidance including OFB, we expect loans and deposits to be up low double digits, net interest income up between 8% to 9%, fee income up between 6% to 7%, operating expenses up between 7.5% and 8.5%, and finally PPNR up between 7% to 8%. These expectations do not include any meaningful revenue synergies from the acquisition such as expanding wealth products and services to OFB clients. Also, the cost savings will be fully realized by the time we enter 2027, and as John mentioned we anticipate a closing date of August 1st.
As we look forward to the second half of this year, we remain encouraged by the momentum across our franchise. While the operating environment continues to present challenges, our solid balance sheet, strong customer relationships, and disciplined execution positions us well to deliver on objectives for the remainder of this year and going forward. I will now turn the call back to John.
Thank you, Mike. Let's open the call for questions.
分析師問答
We will now begin the question and answer session. If you would like to ask a question, press star 1. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question 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 hold. Your line is open. Please go ahead.
Hey, good afternoon, everyone. Thanks for taking my questions. Just wanted to start on loan growth. Obviously, a very solid quarter, but I think what struck me was the almost 20% increase in quarter-over-quarter production, yet you kind of reiterated the standalone outlook for the year, which would imply maybe a bit of a slowdown to some degree. Is that just conservatism? Or is it competition where you are maybe seeing a little bit more pressure? Just looking to get a little more color on puts and takes. Thanks.
Shane, would you like to take that question?
Sure. Michael, I'll give you a little broader context. When we think about our clients, they are still approaching their business as broadly stable. The majority of them are indicating generally steady performance with an optimistic outlook, but they are being really cautious. Right now, there is a lot of credit supply for limited demand, and that is where competition is creeping in. We feel like we did a great job with production this quarter. Loan growth was $588 million. We produced $1.5 billion in loans, up from $1.2 billion in the first quarter, and we saw strength in all of our segments: business banking, commercial, middle market, consumer performed well and CRE continues to perform well. A lot of net growth was supported with new originations; line fundings were up slightly this quarter, and then we saw normalized paydown and payoff activity. I view our growth for the quarter as high quality and spread across segments and geographies. Regarding pricing, it continues to be highly competitive. We are focused and disciplined in our pricing, trying to step up and match competition without giving too much so we can continue to grow the balance sheet.
And Michael, this is John. I'll add to Shane's comments. It's probably good to look at the first half of the year as a body of work and the second half as another body of work. While the numbers for Q2 were outstanding — one of our better quarters in several years — a lot of that work started in Q1 and closed in early Q2. Hence, the average balance for the second quarter is a bit higher. If you look at the second half of the year, I would not say we are being conservative. What Shane is telling you is what we expect. But we have to remember in the face of potential rate increases and the possibility of inflation, there are macro conditions that could dampen appetite, so we want to be realistic in our guide to mid-singles for the year.
Your next question comes from the line of Catherine Malcolm. Did you have a follow-up? Apologies. We can bring Michael back. Did you have a follow-up, Michael? Please hold one moment. Michael, your line is open. Please go ahead.
Alright. Sorry about that. I couldn't get off mute. Okay. Maybe just as a follow-up. Mike, maybe if you can talk about some of the deposit competition and what you are seeing there. I know Shane touched on the loan side. It looks like the NIM mix did tick down 60 or 70 basis points quarter-on-quarter. Can you just talk about the ongoing ability to fund loan growth and competitive trends in and around your markets? Thanks.
Sure. I would be glad to, Michael. The best way to describe the deposit pricing environment is that it is absolutely competitive, but in our markets it is also pretty rational. We are in an environment where some banks are experiencing higher loan demand, and people like to fund loan growth with deposit growth. For us, one of the things we are most pleased with about the quarter was not only the arrival of significant organic balance sheet growth, but that we were able to fund that growth dollar for dollar with deposits. That is what we are trying to achieve. As we think about the second half of the year, the plan is to continue to do that. While you alluded to a possible step down in loan growth for the second half, you should also note that there is likely a step up in deposit growth in the second half. You will see us end the year with loan growth pretty much matched dollar for dollar with deposit growth, which is how we want to manage the balance sheet now and going forward.
Yep. Very helpful. I will step back now. Thanks for taking my questions.
Your next question comes from the line of Catherine Mealor from KBW. Please go ahead.
Thanks. Just want to follow up on deposit pricing. You talked about an increase in deposit growth at the end of the quarter from some promotional interest-bearing transactions. Can you talk about the cost around what that looks like? As we grow your interest-bearing transaction account, where do you think that trends to outside of any changes in rates, with these promotional deposits coming in?
Sure. If you look at the second quarter, it was a bit unusual in that most of the deposit growth was back-ended toward the end of the quarter. We had an increase in end-of-period deposits of about $550 million, but the average for the quarter was actually down about $50 million. Going forward in the second half of the year, you should see end-of-period growth more closely match average growth in Q3. What we did in Q2 was focus on bringing in deposits with a couple of promotional offers. We have an 11-month CD at 3.85% that we had been offering in Florida and Texas which we expanded to Louisiana, Mississippi, and Alabama, and that was successful. We also have a money market offering at 3.75% for some existing customers and a 4% money market for new customers. In addition, we offered a promotional CD in Orlando related to OFB. Those promotional deposit pricing offerings were all successful in the second quarter and we expect them to be effective going forward.
Right. So is it fair to say that you got the full impact of that and we are at a bottom for deposit cost, and so that will just start to increase as we move to the back half of the year?
Yes, I think so. In the second half of the year you will see net interest income continue to grow. It may not grow as much as it did in the second quarter, but it will grow. Our NIM should be flat to slightly up. We will see an increase in deposit costs and overall cost of funds. From Q2 through Q4, our cost of deposits could be up around 10 basis points. We will continue to reprice bonds and fixed rate loans higher, which is a big tailwind. The biggest tailwind will be the continuation of organic balance sheet growth in the second half — loans growing at mid single digits, along with deposits. On loan yields, new loan yields are coming in around 6.04%, which is higher than the 5.60% average, but new loan yields have come down over the past couple of quarters. Over the back half of the year, I think we will see a modest increase in loan yield, maybe 4 to 5 basis points. We also got a head start in July with SOFR up about 4 basis points, which will be a small tailwind.
Okay. Great. Very helpful. Thank you.
Your next question comes from the line of Freddie Strickland from Hovde Group. Your line is open. Please go ahead.
Hey, good afternoon. Just want to follow along with Catherine's line of questioning on loan yields. Specifically, I wanted to ask about middle market C&I. Has there been any abatement in competition in that space, or is it still pretty tight?
It is still very tight. Clients are managing through the uncertainty and there is a fair amount of loan demand, but a much higher level of supply. To get quality deals and grow responsibly is tough right now from a pricing perspective. We have improved our pricing model and are talking with each of our bankers to ensure we are getting the best pricing possible. We are also trying to win deals to grow the balance sheet in a high-quality manner. Bankers are doing a great job calling and saving deals we already have on the books while bringing on new deals.
Got it. Appreciate that. And switching gears to noninterest income, it looks like you revised the guide up a bit. Is there a particular component driving better expectations there, such as trust or investment, annuity, insurance? Or is it just what you have seen so far this year? Curious what led you to increase that a little bit.
We continue to be very proud of the wealth management execution and the progress they are making in the broker-dealer channel and across the trust platforms. We do have some tailwind from the Sable deal from last year, but overall the penetration into the current client book and new business wins is performing very well. Card and merchant services remain a strength and continue to perform well. Secondary mortgage is pretty much in line with expectations. We'd like to see more syndication fees as we move forward; that team is working on it. Overall, wealth management is performing strongly, which is a result of investments we've made over the last five to eight years in skills, processes, tools, and capabilities.
Understood. That is helpful. Thanks for taking my questions.
Your next question comes from the line of Stephen Scouten from Piper Sandler. Please go ahead.
Good afternoon. Thanks for the time. I'm curious about the changes in the CECL methodology you mentioned in the presentation. Can you give any additional color on what precipitated that — for example, did Moody's worsen the scenarios overall, or what drove that change?
Yes, Steven. I will start and Christopher can offer additional color if he would like. What we saw with the scenarios was the baseline becoming more conservative than it had been. A quarter or so ago, the baseline scenario probably did not fully include the impact of what is going on in the Middle East; now it does. We felt it was appropriate to add a bit more emphasis to the baseline and to round out the slow growth scenario. We moved the weighting from 40/60 to 50/50. It was really as simple as that.
Got it. Very helpful. And on the pace of hiring, you are getting close to that 50-person goal halfway through the year. What upside could there be to that number? Would you extend much further beyond 50 if good people came along, even if it meant the efficiency ratio going a tick higher in the near term? How should we think about the push and pull on investment timing?
This is a bright spot. We have had great success this year with 42 hires against a goal of 50. We feel confident in that goal. We will continue to focus on opportunities that come up; bankers are performing as expected and that flywheel is building momentum. New bankers contributed to about 26% of growth for the quarter, so we are beginning to see the momentum take place. We are proud of the leadership team executing recruiting since the fourth quarter of 25. We feel good about the 50 and will continue to evaluate opportunities as they present themselves.
Is there an impediment to going much beyond that from an expense perspective? Would you want to space it out more ratably, or be opportunistic irrespective of timing if good people come to you?
We do not have a specific number, but we know what it costs to bring on a new banker and the time it takes for them to become accretive. We feel like we have room to add the ones we need.
Steven, you will note that we did increase the guidance around operating expenses excluding OFB, and some of that was a nod to the potential that we could add a few more people.
Your next question comes from the line of Brett Rabatin from Stonex Group. Please go ahead.
Good afternoon, everyone. I wanted to talk about the franchise post the 1 Florida deal and see if there are thoughts for additional expansion in Florida. Post bulking up in Orlando, is the way to think about the organic growth level of the franchise from here changed? Have we moved that up several percent with recent hires in Texas and Florida? Any thoughts on how you view the franchise as a growth company going forward?
Thanks for the question. The initial focus with the August 1st close is welcoming the new clients and team members, getting them comfortable over the next several months during integration. Integration will be mid to late Q4 to get it wrapped up. In the back half of the year in Orlando, the focus is acclimating the team and clients; by 2027 we will be able to share expectations for Orlando moving forward. Several team members are familiar with surrounding markets. We've expressed a desire to build up a bigger book in Jacksonville. It is early to share detailed plans, but by the January call we should be able to address that more. Several years ago we pivoted to growth deliberately, hiring talent in core markets when available. We focused on adding experienced team members in markets where we didn't have a large presence but had high organic growth potential, which is why we expanded in Texas and Florida. Moving into the next couple of years, we will be in a position to discuss macro and potential upside, but today we are focused on acclimating our new colleagues and clients, covering loan growth in the back half of the year with deposits, and turning DDAs into a better growth trajectory. Our target remains a mid single digit compounded annual growth rate, and if the flywheel yields something better, we'll discuss it when we get there.
And on capital, you bought back over 700 thousand shares this quarter. With 2 million shares remaining under authorization, would you expect to be as active in the back half of the year as you were in the second quarter?
Yes, Brett. The intent is to exhaust the buyback authority. We have the 5% authorization in place and the 2 million shares remaining. We expect to exhaust that authority over the course of the second half of the year, likely on a pro rata basis between the third and fourth quarters. For next year, that is something we will address when we get there; it is likely we will have some authority in place next year, but the level will be determined by the board.
Okay. Great. Appreciate the color, guys.
Your next question comes from the line of Casey Haire from Autonomous. Please go ahead.
One more on NIM. How much purchase accounting is in this guide?
Casey, the guidance excluding OFB — which is flat to slightly up — does not include any purchase accounting related to OFB. Honestly, the purchase accounting amount is not significant and will not move the needle much. Guidance including OFB is essentially the same.
Okay. And on capital management, you mentioned rebuilding capital to pre-OFB levels. What's the timeline around that and what does it mean for share buybacks in 2027 and post-2026 buyback appetite?
We disclosed where our capital ratios are today and where we think they will be once we fold in OFB in August. Our TCE will be down about 120 basis points and common tier 1 down around 170 basis points. For the back half of the year, those ratios probably will not change materially, inclusive of the organic balance sheet growth in our guidance and the buybacks. The idea that it would take about eight quarters, all else equal, to get back to pre-deal levels is just a data point — not a statement of intent. We feel comfortable with TCE in the 9% range and common Tier 1 around 12%. If we did not do buybacks in the second half, we would essentially be at those levels. Our plan is to exhaust the buyback authority this year, and for 2027 we will disclose our intentions when we get there.
Thank you.
A reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Christopher Marinac from Janney. Please go ahead.
Approval from 1 Florida — does that make it interesting to consider additional M&A, or would you be surprised by how quickly this happened?
I don't think we were surprised by how quickly it happened. That was pretty much the pace that transactions have been approved by the regulatory bodies we've needed approval from of late, and we expected a rapid approval. We were on the timeline we expected and guided to. Integration looks like it will be mid to maybe the latter part of Q4, so the integration will be fairly rapid as well. We anticipated this timeline.
Very much so. In this environment where regulatory focus seems more accommodative to these types of transactions, we were not surprised we were able to do this quickly. It was an extremely clean and rather small deal, so the quick approval and timeline to integration were things we planned for. And to reiterate what John said earlier, we expect cost takeouts to be realized by the end of the fourth quarter so that when we start 2027 the cost savings will be fully reflected.
Great. Thanks for hosting us today. I appreciate it.
At this time, there are no further questions. I would like to now pass the call back to Mr. John Hairston for closing remarks.
Okay. Thank you, Jay, for moderating the call. Thanks, everyone, for your attention and time, and we look forward to seeing you on the road very soon.
This concludes today's call. Thank you for attending. You may now disconnect.