Hancock Whitney Corporation Common Stock 2026 Q3 Earnings Call

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-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 in 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, Chris Ziluca, Chief Credit Officer, and D. 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 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 same quarter previous year. We were also pleased to welcome new colleagues and clients through the transaction with One Florida Bank, which closed on August 1, 2026. Excluding loans acquired from One Florida, loan 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 One Florida, 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 non-accrual 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 continued 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.

Thanks, John, and 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. Expressed 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 cost 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. Non-accrual 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 remain 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 minimum 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 will likely be on the sidelines with additional repurchases until there is a little bit more clarity about where rates go from here. As far as 2027 is concerned, we will address that with our board in December, but I would say it is very likely that we will have some authority in place for next year. I will now turn the call back to John.