HWC Q1 Deep Dive: Fee Income and Deposit Costs Offset Loan Headwinds

Regional bank Hancock Whitney (NASDAQ: HWC) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 2.2% year on year to $364.7 million. Its non-GAAP profit of $1.38 per share was 7.1% above analysts’ consensus estimates.

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StockStory’s Take

Hancock Whitney’s first quarter results delivered modest top-line growth but failed to meet Wall Street’s revenue expectations, while non-GAAP profitability outperformed consensus forecasts. Management attributed this performance to disciplined expense controls, robust fee income across most categories, and continued expansion of its net interest margin, aided by lower deposit costs. CEO John Hairston described the quarter as a “very strong start to 2025,” highlighting stable deposit mix and the company’s focus on shifting toward more granular, full-relationship lending. However, loan balances declined due to higher payoffs in large healthcare and commercial non-real estate segments, partially offsetting production gains in targeted areas.

Looking ahead, Hancock Whitney’s guidance for the remainder of 2025 is shaped by expectations for low single-digit loan growth, further fee income expansion with the Sable Trust acquisition, and ongoing cost discipline. Management acknowledged uncertainty from macroeconomic trends, particularly tariffs and client sentiment, but remains optimistic for stronger loan growth in the second half of the year. CFO Mike Achary emphasized, “We believe we can continue to achieve modest NIM expansion and NII growth...driven primarily by the impact of lower deposit rates, low single-digit loan growth, and continued repricing of cash flows from both the bond and fixed-rate loan portfolios.”

Key Insights from Management’s Remarks

Management pointed to strong fee income, lower deposit costs, and a stable deposit mix as key drivers of profitability, while loan growth lagged due to sector-specific payoffs and macro headwinds.

• Fee income momentum: The company reported growth across most fee categories, including trust, investment management, and specialty lines such as SBA and syndication fees. Management expects continued strength as new hires expand client relationships and the Sable Trust acquisition bolsters wealth management revenues.

• Net interest margin expansion: Net interest margin (NIM) improved, driven by a reduction in overall funding costs and a favorable mix of deposits. CDs continued to reprice at lower rates, and management anticipates this trend will persist, supporting further NIM gains throughout the year.

• Loan balances declined: Loan balances fell primarily due to large payoffs in healthcare and commercial non-real estate, even as production in targeted growth areas remained solid. CEO John Hairston noted that new hires in equipment finance and other areas contributed positively but could not fully offset the payoffs this quarter.

• Expense control sustained: Expenses were well managed, with only a 1% increase over the quarter. Management reiterated its commitment to holding expense growth in the 4-5% range for the year, including integration costs for the Sable Trust acquisition.

• Deposit mix stability: Despite a decline in total deposits due to seasonal public fund outflows, non-interest-bearing deposit balances increased, and the company maintained a stable 36% mix in these lower-cost accounts, which supports profitability and funding flexibility.

Drivers of Future Performance

Hancock Whitney’s outlook for 2025 centers on expanding fee income, maintaining cost controls, and navigating uncertain loan demand amid shifting macroeconomic conditions.

• Fee income expansion with Sable Trust: Management expects the recently announced Sable Trust acquisition to contribute meaningfully to non-interest income, with further upside from organic growth in wealth management, treasury services, and specialty fee lines. These areas are projected to offset slower loan growth and provide more stable revenue streams.

• Loan growth timing and hiring impact: The company anticipates loan growth will be weighted toward the second half of the year, with new relationship bankers in key markets such as Texas, Florida, and equipment finance expected to drive origination. However, management cautioned that ongoing uncertainty from tariffs and client sentiment could delay production pipelines or reduce demand from larger clients.

• Cost discipline and margin resilience: Continued focus on cost control—including lighter incentive compensation and process efficiencies—should help absorb the incremental expense base from the Sable Trust integration. Management expects modest net interest margin expansion even under varying interest rate scenarios, with deposit repricing and funding mix as key levers.

Catalysts in Upcoming Quarters

In the coming quarters, our analyst team will be tracking (1) the pace of loan growth as hiring ramps up and new producers mature in key markets, (2) the integration and revenue contribution from the Sable Trust acquisition, and (3) the impact of further deposit repricing on net interest margin. Additionally, we will watch for shifts in client sentiment tied to tariffs or broader economic volatility that could affect lending demand and credit quality.

Hancock Whitney currently trades at $54.87, down from $56.80 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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