*
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-36872
HANCOCK WHITNEY CORPORATION
(Exact name of registrant as specified in its charter)
Mississippi
64-0693170
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Hancock Whitney Plaza, 2510 14th Street,
Gulfport, Mississippi
39501
(Address of principal executive offices)
(Zip Code)
(228) 868-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, par value $3.33 per share
HWC
Nasdaq
6.25% Subordinated Notes
HWCPZ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
85,643,195 common shares were outstanding at April 30, 2025.
Table of Contents
Hancock Whitney Corporation
Index
Part I. Financial Information
Page
Number
ITEM 1.
Financial Statements
5
Consolidated Balance Sheets (unaudited) – March 31, 2025 and December 31, 2024
Consolidated Statements of Income (unaudited) – Three Months Ended March 31, 2025 and 2024
6
Consolidated Statements of Comprehensive Income (unaudited) – Three Months Ended March 31, 2025 and 2024
7
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) – Three Months Ended March 31, 2025 and 2024
8
Consolidated Statements of Cash Flows (unaudited) – Three Months Ended March 31, 2025 and 2024
9
Notes to Consolidated Financial Statements (unaudited) – March 31, 2025 and 2024
10
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
39
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
61
ITEM 4.
Controls and Procedures
63
Part II. Other Information
Legal Proceedings
64
ITEM 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Default on Senior Securities
N/A
Mine Safety Disclosures
ITEM 5.
Other Information
ITEM 6.
Exhibits
65
Signatures
66
2
Glossary of Defined Terms
Entities:
Hancock Whitney Corporation – a financial holding company registered with the Securities and Exchange Commission
Hancock Whitney Bank – a wholly-owned subsidiary of Hancock Whitney Corporation through which Hancock Whitney Corporation conducts its banking operations
Company – Hancock Whitney Corporation and its consolidated subsidiaries
Parent – Hancock Whitney Corporation, exclusive of its subsidiaries
Bank – Hancock Whitney Bank
Other Terms:
ACL – allowance for credit losses
AFS – available for sale securities
AI – Artificial Intelligence
ALCO – Asset Liability Management Committee
ALLL – allowance for loan and lease losses
AOCI – accumulated other comprehensive income or loss
ASC – Accounting Standards Codification
ASU – Accounting Standards Update
ATM – automated teller machine
Basel III – Basel Committee's 2010 Regulatory Capital Framework (Third Accord)
Beta – amount by which deposit or loan costs change in response to movement in short-term interest rates
BOLI – bank-owned life insurance
bp(s) – basis point(s)
C&I – commercial and industrial loans
CD – certificate of deposit
CDE – Community Development Entity
CECL – Current Expected Credit Losses
CEO – Chief Executive Officer
CFPB – Consumer Financial Protection Bureau
CFO – Chief Financial Officer
CISO – Chief Information Security Officer
CME – Chicago Mercantile Exchange
CMO – collateralized mortgage obligation
Core client deposits – total deposits excluding public funds and brokered deposits
Core deposits – total deposits excluding certificates of deposits of $250,000 or more and brokered deposits
CRE – commercial real estate
CET1 – Common equity tier 1 capital as defined by Basel III capital rules
DIF – Deposit Insurance Fund
EVE – Economic Value of Equity
Excess Liquidity – deposits held at the Federal Reserve above normal levels
FASB – Financial Accounting Standards Board
FDIC – Federal Deposit Insurance Corporation
FDICIA – Federal Deposit Insurance Corporation Improvement Act of 1991
Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes
monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed
by the President subject to Senate confirmation, and serve 14-year terms.
Federal Reserve System – The 12 Federal Reserve Banks, with each one serving member banks in its own district. This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the
credit structure. They implement the policies of the Federal Reserve Board and also conduct economic research.
FFIEC – Federal Financial Institutions Examination Council
FHA – Federal Housing Administration
FHLB – Federal Home Loan Bank
GAAP – Generally Accepted Accounting Principles in the United States of America
HTM – held to maturity securities
ICS – Insured cash sweep
IRR – Interest rate risk
IRS – Internal Revenue Service
IT – Information Technology
LIHTC – Low Income Housing Tax Credit
3
LTIP – long-term incentive plan
MBS – mortgage-backed securities
MD&A – management’s discussion and analysis of financial condition and results of operations
MDBCF – Mississippi Department of Banking and Consumer Finance
MEFD – reportable modified loans to borrowers experiencing financial difficulty
NAICS – North American Industry Classification System
NII – net interest income
n/m – not meaningful
NSF – Non-sufficient funds
OCI – other comprehensive income or loss
OD – Overdraft
ORE – other real estate defined as foreclosed and surplus real estate
PCD – purchased credit deteriorated loans, as defined by ASC 326
Pension Plan – the Hancock Whitney Corporation Pension Plan and Trust Agreement
PPNR – Pre-provision net revenue
QSCB – Qualified School Construction Bonds
QZAB – Qualified Zone Academy Bonds
Repos – securities sold under agreements to repurchase
RSA – Restricted share awards
RSU – Restricted stock units
SBA – Small Business Administration
SBIC – Small Business Investment Company
SEC – U.S. Securities and Exchange Commission
Securities Act – Securities Act of 1933, as amended
Short-term Investments – the sum of Interest-bearing bank deposits and Federal funds sold
SOFR – Secured Overnight Financing Rate
Supplemental disclosure items – certain highlighted items that are outside of our principal business and/or are not indicative of forward-looking trends
TBA – To Be Announced security contracts
te – taxable equivalent adjustment, or the term used to indicate that a financial measure is presented on a fully taxable equivalent basis
TSR – total shareholder return
U.S. Treasury – The United States Department of the Treasury
401(k) Plan – the Hancock Whitney Corporation 401(k) Savings Plan and Trust Agreement
4
Item 1. Financial Statements
Hancock Whitney Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
March 31,
December 31,
(in thousands, except per share data)
2025
2024
ASSETS
Cash and due from banks
$
510,347
574,910
Interest-bearing bank deposits
841,067
939,306
Federal funds sold
391
409
Securities available for sale, at fair value (amortized cost of $5,845,045 and $5,774,133)
5,334,528
5,161,491
Securities held to maturity (fair value of $2,194,627 and $2,233,526)
2,360,441
2,435,663
Loans held for sale (includes $25,935 and $18,929 measured at fair value)
26,596
21,525
Loans
23,098,146
23,299,447
Less: allowance for loan losses
(318,119
)
(318,882
Loans, net
22,780,027
22,980,565
Property and equipment, net of accumulated depreciation of $352,609 and $345,962
275,865
279,767
Right of use assets, net of accumulated amortization of $70,411 and $67,063
95,621
98,822
Prepaid expenses
51,068
45,763
Other real estate and foreclosed assets, net
26,690
27,797
Accrued interest receivable
140,526
143,237
Goodwill
855,453
Other intangible assets, net
33,110
35,224
Life insurance contracts
776,937
774,542
Funded pension assets, net
263,533
260,003
Deferred tax asset, net
104,991
146,567
Other assets
273,489
300,741
Total assets
34,750,680
35,081,785
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest-bearing
10,614,874
10,597,461
Interest-bearing
18,579,859
18,895,390
Total deposits
29,194,733
29,492,851
Short-term borrowings
542,780
639,015
Long-term debt
210,582
210,544
Accrued interest payable
18,024
20,148
Lease liabilities
114,282
117,817
Other liabilities
391,607
473,774
Total liabilities
30,472,008
30,954,149
Stockholders' equity:
Common stock
309,513
Capital surplus
1,699,474
1,719,609
Retained earnings
2,784,657
2,704,606
Accumulated other comprehensive loss, net
(514,972
(606,092
Total stockholders' equity
4,278,672
4,127,636
Total liabilities and stockholders' equity
Preferred shares authorized (par value of $20.00 per share)
50,000
Preferred shares issued and outstanding
—
Common shares authorized (par value of $3.33 per share)
350,000
Common shares issued
92,947
Common shares outstanding
86,033
86,124
See notes to unaudited consolidated financial statements.
Consolidated Statements of Income
Three Months Ended
Interest income:
Loans, including fees
331,488
363,293
Loans held for sale
341
303
Securities-taxable
51,899
46,785
Securities-tax exempt
4,218
4,526
Short-term investments
7,375
6,777
Total interest income
395,321
421,684
Interest expense:
120,507
147,483
1,845
4,966
3,064
Total interest expense
125,416
155,513
Net interest income
269,905
266,171
Provision for credit losses
10,462
12,968
Net interest income after provision for credit losses
259,443
253,203
Noninterest income:
Service charges on deposit accounts
24,119
22,239
Trust fees
18,022
17,077
Bank card and ATM fees
20,714
20,622
Investment and annuity fees and insurance commissions
11,415
11,844
Secondary mortgage market operations
3,468
2,891
Other income
17,053
13,178
Total noninterest income
94,791
87,851
Noninterest expense:
Compensation expense
88,952
96,569
Employee benefits
25,395
24,588
Personnel expense
114,347
121,157
Net occupancy expense
13,580
13,395
Equipment expense
4,091
4,228
Data processing expense
31,250
28,737
Professional services expense
12,235
9,036
Amortization of intangible assets
2,113
2,526
Deposit insurance and regulatory fees
5,026
8,931
Other real estate and foreclosed assets expense (income), net
1,780
(196
Other expense
20,637
19,908
Total noninterest expense
205,059
207,722
Income before income taxes
149,175
133,332
Income taxes expense
29,671
24,720
Net income
119,504
108,612
Earnings per common share-basic
1.38
1.25
Earnings per common share-diluted
1.24
Dividends paid per share
0.45
0.30
Weighted average shares outstanding-basic
86,092
86,521
Weighted average shares outstanding-diluted
86,462
86,726
Consolidated Statements of Comprehensive Income
($ in thousands)
Other comprehensive income (loss) before income taxes:
Net change in unrealized loss on securities available for sale, cash flow hedges and equity method investment
109,512
(77,799
Reclassification of net loss realized and included in earnings
9,415
13,577
Valuation adjustments to employee benefit plans
22,014
Amortization of unrealized net loss on securities transferred to held to maturity
405
428
Other comprehensive income (loss) before income taxes
119,332
(41,780
Income tax expense (benefit)
28,212
(9,392
Other comprehensive income (loss) net of income taxes
91,120
(32,388
Comprehensive income
210,624
76,224
Consolidated Statements of Changes in Stockholders’ Equity
Three Months Ended March 31, 2025 and 2024
Accumulated
Common Stock
Other
(in thousands, except parenthetical share data)
SharesIssued
Amount
CapitalSurplus
RetainedEarnings
ComprehensiveLoss
Total
Balance, December 31, 2024
Other comprehensive income
Dividends declared ($0.45 per common share)
(39,460
Common stock activity, long-term incentive plans
(471
(464
Issuance of stock from dividend reinvestment and stock purchase plans
1,083
Repurchase of common stock (350,000 shares)
(20,747
Balance, March 31, 2025
Balance, December 31, 2023
1,739,671
2,375,604
(621,127
3,803,661
Other comprehensive loss
Cash dividends declared ($0.30 per common share)
(26,527
(866
47
(819
897
Balance, March 31, 2024
1,739,702
2,457,736
(653,515
3,853,436
Consolidated Statements of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
7,792
8,176
Gain on other real estate and foreclosed assets
(446
(364
Deferred tax expense (benefit)
13,364
(2,314
Increase cash surrender value of life insurance contracts
(4,119
(8,851
(Gain) loss on disposal of assets
34
(1,430
Net (increase) decrease in loans held for sale
(4,703
9,633
Net amortization of securities premium/discount
3,405
3,421
Stock-based compensation expense
5,921
5,691
Net change in derivative collateral liability
(15,482
10,297
Net decrease in interest payable and other liabilities
(39,021
(21,324
Net decrease in other assets
4,164
40,643
Other, net
1,194
(1,013
Net cash provided by operating activities
104,182
166,671
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities available for sale
92,303
82,667
Purchases of securities available for sale
(155,951
(121,652
Proceeds from maturities of securities held to maturity
72,797
28,414
Net decrease in short-term investments
98,257
188,063
Net redemption of Federal Home Loan Bank stock
2,194
Proceeds from sales of loans and leases
30,245
28,508
Net (increase) decrease in loans
159,669
(86,295
Purchases of property and equipment
(3,951
(2,273
Proceeds from sales of other real estate and foreclosed assets
1,362
1,753
(5,679
618
Net cash provided by investing activities
291,246
119,803
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits
(298,118
85,847
Net decrease in short-term borrowings
(96,235
(487,069
Dividends paid
(39,582
(26,514
Payroll tax remitted on net share settlement of equity awards
(6,392
(6,557
Proceeds from dividend reinvestment and stock purchase plans
Repurchase of common stock
Net cash used in financing activities
(459,991
(433,396
NET DECREASE IN CASH AND DUE FROM BANKS
(64,563
(146,922
CASH AND DUE FROM BANKS, BEGINNING
561,202
CASH AND DUE FROM BANKS, ENDING
414,280
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans
2,319
591
HANCOCK WHITNEY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated financial statements include the accounts of Hancock Whitney Corporation and all other entities in which it has a controlling interest (the “Company”). The financial statements include all adjustments that are, in the opinion of management, necessary to fairly state the Company’s financial condition, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented. The Company has also evaluated all subsequent events for potential recognition and disclosure through the date of the filing of this Quarterly Report on Form 10-Q (this "Report" or "report'). Some financial information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Financial information reported in these financial statements is not necessarily indicative of the Company’s financial condition, results of operations, or cash flows for any other interim or annual period.
Certain prior period amounts have been reclassified to conform to the current period presentation. These changes in presentation did not have a material impact on the Company's financial condition or operating results.
Use of Estimates
The accounting principles the Company follows and the methods for applying these principles conform to GAAP and general practices followed by the banking industry. These accounting principles require management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.
Accounting Policies
There were no material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024.
Acquisition
On January 21, 2025, the Company announced that it had entered into a definitive agreement to acquire Sabal Trust Company, a non-depository trust company headquartered in St. Petersburg, Florida. The transaction closed subsequent to quarter end on May 2, 2025. The acquisition is not expected to have a material impact on the Company's financial condition or net operating results.
2. Securities
The following tables set forth the amortized cost, gross unrealized gains and losses, and estimated fair value of debt securities classified as available for sale and held to maturity at March 31, 2025 and December 31, 2024. Amortized cost of securities does not include accrued interest which is reflected in the accrued interest line item on the consolidated balance sheets totaling $30.5 million at March 31, 2025 and $29.8 million at December 31, 2024.
March 31, 2025
December 31, 2024
Gross
Securities Available for Sale
Amortized
Unrealized
Fair
Cost
Gains
Losses
Value
U.S. Treasury and government agency securities
208,408
2,303
1,651
209,060
185,827
349
3,894
182,282
Municipal obligations
197,366
3,640
193,728
200,272
3,942
196,330
Residential mortgage-backed securities
2,505,037
4,200
311,852
2,197,385
2,482,109
496
353,554
2,129,051
Commercial mortgage-backed securities
2,882,206
7,645
204,652
2,685,199
2,849,372
2,185
250,592
2,600,965
Collateralized mortgage obligations
34,528
1,824
32,704
37,553
2,306
35,247
Corporate debt securities
17,500
1,048
16,452
19,000
1,384
17,616
5,845,045
14,150
524,667
5,774,133
3,030
615,672
Securities Held to Maturity
389,904
221
37,288
352,837
394,689
45,876
348,813
585,857
17,395
568,523
623,907
169
20,867
603,209
553,972
49,163
504,809
573,057
61,525
511,532
806,954
61,296
745,658
818,604
72,854
745,750
23,754
954
22,800
25,406
1,184
24,222
282
166,096
2,194,627
202,306
2,233,526
The following tables present the amortized cost and fair value of debt securities available for sale and held to maturity at March 31, 2025 by contractual maturity. Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateral mortgage obligations.
Debt Securities Available for Sale
Due in one year or less
31,863
31,963
Due after one year through five years
971,094
950,634
Due after five years through ten years
2,336,366
2,146,246
Due after ten years
2,505,722
2,205,685
Total available for sale debt securities
Debt Securities Held to Maturity
110,832
110,453
764,462
733,857
536,603
505,119
948,544
845,198
Total held to maturity securities
The Company held no securities classified as trading at March 31, 2025 and December 31, 2024.
There were no gross gains or gross losses on sales of securities during the three months ended March 31, 2025 and 2024. Net gains or losses, when applicable, are reflected in the "Securities transactions, net" line item on the Consolidated Statements of Income.
Securities with carrying values totaling approximately $3.2 billion and $3.9 billion were pledged as collateral at March 31, 2025 and December 31, 2024, respectively, primarily to secure public deposits or securities sold under agreements to repurchase.
11
Credit Quality
The Company’s policy is to invest only in securities of investment grade quality. These investments are largely limited to U.S. agency securities and municipal securities. Management has concluded, based on the long history of no credit losses, that the expectation of nonpayment of the held to maturity securities carried at amortized cost is zero for securities that are backed by the full faith and credit of and/or guaranteed by the U.S. government. As such, no allowance for credit losses has been recorded for these securities. The municipal portfolio is analyzed separately for allowance for credit loss in accordance with the applicable guidance for each portfolio as noted below.
The Company evaluates credit impairment for individual securities available for sale whose fair value was below amortized cost with a more than inconsequential risk of default and where the Company had assessed whether the decline in fair value was significant enough to suggest a credit event occurred. There were no securities with a material credit loss event and, therefore, no allowance for credit loss was recorded in any period presented.
The fair value and gross unrealized losses for securities classified as available for sale with unrealized losses for the periods indicated follow.
Available for Sale
Losses < 12 months
Losses 12 months or >
FairValue
GrossUnrealizedLosses
17,540
206
7,115
1,445
24,655
18,742
127
167,611
3,513
186,353
138,747
718
1,543,488
311,134
1,682,235
72,632
531
2,191,851
204,121
2,264,483
14,452
247,661
1,582
3,957,221
523,085
4,204,882
Losses < 12 Months
Losses 12 Months or >
130,453
2,243
7,247
137,700
24,149
247
170,110
3,695
194,259
347,772
2,935
1,554,001
350,619
1,901,773
184,534
2,738
2,139,191
247,854
2,323,725
15,616
686,908
8,163
3,921,412
607,509
4,608,320
At each reporting period, the Company evaluated its held to maturity municipal obligation portfolio for credit loss using probability of default and loss given default models. The models were run using a long-term average probability of default migration and with a probability weighting of Moody’s economic forecasts. The resulting credit losses, if any, were negligible and no allowance for credit loss was recorded.
The fair value and gross unrealized losses for securities classified as held to maturity with unrealized losses for the periods indicated follow.
Held to Maturity
9,196
36
324,368
37,252
333,564
88,964
302
468,359
17,093
557,323
98,160
338
2,065,994
165,758
2,164,154
12
27,660
840
321,154
45,036
348,814
82,028
451
497,999
20,416
580,027
511,531
109,688
1,291
2,100,656
201,015
2,210,344
As of March 31, 2025 and December 31, 2024, the Company had 673 and 729 securities, respectively, with market values below their cost basis. There were no material unrealized losses related to the marketability of the securities or the issuer’s ability to meet contractual obligations. In all cases, the indicated impairment on these debt securities would be recovered no later than the security’s maturity date or possibly earlier if the market price for the security increases with a reduction in the yield required by the market. The unrealized losses were deemed to be non-credit related at March 31, 2025 and December 31, 2024. At March 31, 2025, the Company had adequate liquidity and, therefore, neither planned to nor expected to be required to liquidate these securities before recovery of the amortized cost basis.
13
3. Loans and Allowance for Credit Losses
The Company generally makes loans in its market areas of southern and central Mississippi; southern and central Alabama; northwest, central and southern Louisiana; the northern, central and panhandle regions of Florida; certain areas of east and northeast Texas; and the metropolitan areas of Nashville, Tennessee and Atlanta, Georgia. In addition, and to a lesser degree, the Bank makes loans both regionally and nationally, generally through its specialty lines of business, including the equipment finance, commercial real estate and healthcare segments, often with sponsors in our market areas.
The following table presents loans at their amortized cost basis, by portfolio class at March 31, 2025 and December 31, 2024. The amortized cost basis is net of unearned income and excludes accrued interest totaling $106.8 million and $109.8 million at March 31, 2025 and December 31, 2024, respectively. Accrued interest is reflected in the accrued interest line item in the Consolidated Balance Sheets.
Commercial non-real estate
9,636,594
9,876,592
Commercial real estate - owner occupied
3,000,998
3,011,955
Total commercial and industrial
12,637,592
12,888,547
Commercial real estate - income producing
3,809,664
3,798,612
Construction and land development
1,287,919
1,281,115
Residential mortgages
4,025,145
3,961,328
Consumer
1,337,826
1,369,845
Total loans
The following briefly describes the composition of each loan category and portfolio class.
Commercial and industrial
Commercial and industrial loans are made available to businesses for working capital (including financing of inventory and receivables), for business expansion, facilitating the acquisition of a business, and for the purchase of equipment and machinery, including equipment leasing. These loans are primarily made based on the identified cash flows of the borrower and, when secured, have the added strength of the underlying collateral.
Commercial non-real estate loans may be secured by the assets being financed or other tangible or intangible business assets such as accounts receivable, inventory, ownership, enterprise value or commodity interests, and may incorporate a personal or corporate guarantee; however, some short-term loans may be made on an unsecured basis, including a small portfolio of corporate credit cards, generally issued as a part of overall customer relationships.
Commercial real estate – owner occupied loans consist of commercial mortgages on properties where repayment is generally dependent on the cash flow from the ongoing operations and activities of the borrower. Like commercial non-real estate, these loans are primarily made based on the identified cash flows of the borrower, but also have the added strength of the value of underlying real estate collateral.
Commercial real estate – income producing
Commercial real estate – income producing loans consist of loans secured by commercial mortgages on properties where the loan is made to real estate developers or investors and repayment is dependent on the sale, refinance, or income generated from the operation of the property. Properties financed include multifamily, retail, healthcare related facilities, industrial, office, hotel/motel and restaurants, and other commercial properties.
14
Construction and land development loans are made to facilitate the acquisition, development, improvement and construction of both commercial and residential-purpose properties. Such loans are made to builders and investors where repayment is expected to be made from the sale, refinance or operation of the property or to businesses to be used in their business operations. This portfolio also includes residential construction loans and loans secured by raw land not yet under development.
Residential mortgages consist of closed-end loans secured by first liens on 1-4 family residential properties. The portfolio includes both fixed and adjustable rate loans, although most longer-term, fixed rate loans originated are generally sold in the secondary mortgage market.
Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans include both direct and indirect loans. Direct nonresidential consumer loans are made to finance the purchase of personal property, including automobiles, recreational vehicles and boats, and for other personal purposes (secured and unsecured), and also include deposit account secured loans. Indirect nonresidential consumer loans include automobile financing provided to the consumer through an agreement with automobile dealerships, though the Company is no longer engaged in this type of lending and the remaining portfolio is in runoff. Consumer loans also include a small portfolio of credit card receivables issued on the basis of applications received through referrals from the Bank’s branches, online and other marketing efforts.
Allowance for Credit Losses
The calculation of the allowance for credit losses is performed using two primary approaches: a collective approach for pools of loans that have similar risk characteristics using a loss rate analysis, and a specific reserve analysis for credits individually evaluated. The allowance for credit losses for collectively evaluated portfolios is developed using multiple Moody’s macroeconomic forecasts applied to internally developed credit models for a two year reasonable and supportable period.
The following tables present activity in the allowance for credit losses by portfolio class for the three months ended March 31, 2025 and 2024, as well as the allowance for credit loss by primary calculation method at the end of each period.
Commercial
Real Estate-
Construction
Non-Real
Owner
and
Income
and Land
Residential
Estate
Occupied
Industrial
Producing
Development
Mortgages
Three Months Ended March 31, 2025
Allowance for credit losses
Allowance for loan losses:
Beginning balance
121,090
36,264
157,354
71,975
21,158
42,445
25,950
318,882
Charge-offs
(6,132
(2,741
(8,873
(34
(8
(167
(4,211
(13,293
Recoveries
1,650
95
1,745
110
387
804
3,046
Net provision for loan losses
5,607
2,515
8,122
(1,562
(1,052
535
3,441
9,484
Ending balance - allowance for loan losses
122,215
36,133
158,348
70,379
20,208
43,200
25,984
318,119
Reserve for unfunded lending commitments:
6,441
309
6,750
642
14,639
2,018
24,053
Provision for losses on unfunded commitments
515
(13
502
(198
696
(1
(21
978
Ending balance - reserve for unfunded lending commitments
6,956
296
7,252
444
15,335
1,997
25,031
Total allowance for credit losses
129,171
36,429
165,600
70,823
35,543
43,203
27,981
343,150
Allowance for credit losses:
Individually evaluated
10,406
49
10,455
752
197
11,404
Collectively evaluated
118,765
36,380
155,145
42,451
27,784
331,746
In arriving at the allowance for credit losses at March 31, 2025, the Company weighted Moody’s March 2025 baseline economic forecast at 40% and downside mild recessionary S-2 scenario at 60%. The March 2025 baseline scenario maintains a generally optimistic outlook in its assumptions surrounding the drivers of economic growth, with no recession forecasted in the near-term. The S-2 scenario is less optimistic compared to the baseline, with a forecasted mild recession beginning in the second quarter of 2025 and lasting for three quarters.
The allowance for credit losses at March 31, 2025 compared to December 31, 2024, remained relatively flat across most portfolios, with a modest net increase in total reserve coverage to total loans due to the expected impact of stress related to prolonged elevated interest rates and inflation, tariffs and other market conditions impacting our customers.
15
Three Months Ended March 31, 2024
101,737
40,197
141,934
74,539
27,039
38,983
25,412
307,907
(9,630
(8,819
(75
(56
(4,786
(23,366
13,104
102
13,206
202
914
14,386
(853
(1,021
(1,874
12,154
(1,187
2,029
3,677
14,799
104,358
39,278
143,636
77,877
25,838
41,158
25,217
313,726
5,507
327
5,834
1,344
20,019
30
1,667
28,894
192
(40
152
(352
(1,615
(1,831
5,699
287
5,986
992
18,404
22
1,659
27,063
110,057
39,565
149,622
78,869
44,242
41,180
26,876
340,789
The allowance for credit loss at March 31, 2024, was up modestly when compared to December 31, 2023, reflecting a relatively consistent credit loss outlook and continued focus on risks that impact certain segments with the Company's loan portfolio. In arriving at the allowance for credit losses at March 31, 2024, the Company weighted the baseline economic forecast at 40% and the downside S-2 mild recession scenario at 60%.
Nonaccrual Loans and Certain Reportable Modified Loan Disclosures
The following table shows the composition of nonaccrual loans and those without an allowance for loan loss, by portfolio class.
Total Nonaccrual
Nonaccrual Without Allowance for Loan Loss
34,654
470
33,418
4,855
4,279
522
2,727
1,198
38,933
36,145
6,053
5,968
4,516
356
1,851
928
5,561
4,929
46,404
1,462
44,086
1,475
11,058
670
11,187
500
104,214
8,568
97,335
12,957
As a part of our loss mitigation efforts, we may provide modifications to borrowers experiencing financial difficulty to improve long-term collectability of the loans and to avoid the need for repossession or foreclosure of collateral. Nonaccrual loans include reportable nonaccruing modified loans to borrowers experiencing financial difficulty (“MEFDs”) totaling $25.0 million and $20.2 million at March 31, 2025 and December 31, 2024, respectively. Total reportable MEFDs, both accruing and nonaccruing, were $95.6 million and $99.5 million at March 31, 2025 and December 31, 2024, respectively. The Company had unfunded exposure to borrowers whose loan terms have been modified as a reportable MEFD totaling $4.0 million and $6.9 million at March 31, 2025 and December 31, 2024, respectively.
16
The tables below provide detail by portfolio class for reportable MEFDs entered into during the three months ended March 31, 2025 and 2024. Modified facilities are reported using the balance at the end of each period reported and are reflected only once in each table based on the type of modification or combination of modification.
Term Extension
Significant Payment Delay
Term Extensions and Significant Payment Delay
Balance
Percentage of Portfolio
44,700
0.46
%
0.00
366
0.01
45,066
0.36
13,167
0.33
412
Total reportable modified loans
58,233
0.25
609
17,846
0.18
5,275
0.05
0.14
0.04
1,573
1,893
113
19,852
0.08
0.02
Reportable modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2025 consisted of weighted average term extensions totaling approximately five months for commercial loans and one year for residential mortgage loans. The weighted average term of other than insignificant payment delays was five months for commercial loans and one month for residential during the three months ended March 31, 2025. Reported term extensions and payment delays are considered more than insignificant when they exceed six months when considering other modifications made in the past twelve months.
Reportable modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2024 consisted of weighted average term extensions totaling approximately eight months for commercial loans, eight years for residential mortgage loans and four years for consumer loans. The weighted average term of other than insignificant payment delays during the three months ended March 31, 2024 was four months for commercial loans.
The tables that follow present the aging analysis of reportable modifications to borrowers experiencing financial difficulty by portfolio class at March 31, 2025 and December 31, 2024.
30-59DaysPast Due
60-89DaysPast Due
Greater than90 DaysPast Due
TotalPast Due
Current
Total Reportable Modified Loans
(in thousands)
6,121
6,318
71,263
77,581
71,629
77,947
841
1,882
2,723
951
383
1,334
13,606
14,940
1,148
7,345
8,493
87,151
95,644
17
1,975
12,548
14,523
78,934
93,457
826
1,915
2,741
179
249
501
929
2,241
3,170
131
2,154
1,075
13,049
16,278
83,221
99,499
There were loans to two commercial borrowers totaling $1.9 million, with reportable term extensions and/or significant payment delays and interest rate reduction modifications that had post modification payment defaults during the three months ended March 31, 2025. There was one consumer borrower totaling $6 thousand with reportable term extensions that had post modification payment defaults during the three months ended March 31, 2025. There were loans to three commercial borrowers totaling $3.2 million with a reportable term extension modification that had a post modification payment default during the three-month period ended March 31, 2024. A payment default occurs if the loan is either 90 days or more delinquent or has been charged off as of the end of the period presented.
Aging Analysis
The tables below present the aging analysis of past due loans by portfolio class at March 31, 2025 and December 31, 2024.
TotalLoans
RecordedInvestment> 90 Days andStill Accruing
18,064
6,544
23,169
47,777
9,588,817
9,095
33,313
11,890
4,774
49,977
2,951,021
1,016
51,377
18,434
27,943
97,754
12,539,838
10,111
18,638
6,113
24,751
3,784,913
359
760
626
4,727
1,281,806
3,347
51,599
11,574
23,522
86,695
3,938,450
53
9,737
5,193
8,295
23,225
1,314,601
1,723
132,111
35,827
70,600
238,538
22,859,608
15,593
19,326
5,264
27,756
52,346
9,824,246
14,557
1,113
38
3,747
4,898
3,007,057
1,097
20,439
5,302
31,503
57,244
12,831,303
15,654
220
5,417
464
6,101
3,792,511
150
1,066
3,773
5,314
10,153
1,270,962
3,563
42,211
25,050
34,113
101,374
3,859,954
27
10,770
5,381
8,504
1,345,190
2,458
74,706
44,923
79,898
199,527
23,099,920
21,852
18
Credit Quality Indicators
The following tables present the credit quality indicators by segment and portfolio class of loans at March 31, 2025 and December 31, 2024. The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process.
CommercialNon-RealEstate
CommercialReal Estate -Owner-Occupied
TotalCommercialand Industrial
CommercialReal Estate -IncomeProducing
Constructionand LandDevelopment
TotalCommercial
Grade:
Pass
8,945,725
2,812,139
11,757,864
3,662,669
1,216,864
16,637,397
Pass-Watch
216,495
145,812
362,307
73,241
68,146
503,694
Special Mention
189,227
17,030
206,257
21,126
193
227,576
Substandard
285,147
26,017
311,164
52,628
2,716
366,508
Doubtful
17,735,175
9,157,232
2,833,228
11,990,460
3,625,981
1,207,404
16,823,845
219,975
135,566
355,541
99,638
66,221
521,400
149,705
17,901
167,606
22,278
1,014
190,898
349,680
25,260
374,940
50,715
6,476
432,131
17,968,274
ResidentialMortgage
Residential Mortgage
Performing
3,978,741
1,326,768
5,305,509
3,917,242
1,358,658
5,275,900
Nonperforming
57,462
55,273
5,362,971
5,331,173
19
Below are the definitions of the Company’s internally assigned grades:
Commercial:
Residential and Consumer:
20
Vintage Analysis
The following tables present credit quality disclosures of amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing at March 31, 2025 and December 31, 2024. The Company defines vintage as the later of origination, renewal or modification date. The gross charge-offs presented in the tables that follow are for the three months ended March 31, 2025 and the year ended December 31, 2024.
Term Loans
Revolving Loans
Amortized Cost Basis by Origination Year
Revolving
Converted to
2023
2022
2021
Prior
Commercial Non-Real Estate:
425,141
1,591,277
934,124
1,040,971
735,671
1,158,576
3,009,207
50,758
627
21,200
65,118
44,209
13,525
13,412
49,893
8,511
160
21,923
55,080
5,958
11,137
93,502
123
9,973
9,700
91,773
90,736
22,822
10,523
47,129
2,491
435,901
1,623,521
1,112,938
1,230,996
777,976
1,193,648
3,199,731
61,883
Gross Charge-offs
1,019
2,008
823
210
44
541
959
528
6,132
Commercial Real Estate - Owner Occupied:
72,900
379,003
307,993
524,738
513,126
912,352
101,929
98
35
15,995
9,312
64,014
5,260
47,438
1,758
2,000
137
4,383
6,689
5,416
3,241
5,906
2,531
13,973
73,438
399,381
320,951
601,347
526,333
973,763
103,687
2,098
Commercial Real Estate - Income Producing:
105,289
438,243
474,234
956,531
711,351
944,980
31,623
418
7,873
1,412
4,286
19,229
10,465
29,231
745
18,778
73
2,275
2,629
5,586
21,988
2,195
20,051
113,162
461,062
484,179
1,000,023
724,011
994,262
32,547
Construction and Land Development:
53,113
272,943
381,232
276,220
103,530
21,800
89,692
18,334
70
916
2,112
64,319
316
234
56
74
119
115
1,032
1,231
178
144
53,257
273,974
384,376
341,770
103,981
22,212
89,815
18,534
Residential Mortgage:
125,556
140,068
424,567
1,069,996
870,520
1,345,264
2,770
370
7,809
10,954
7,997
19,274
140,438
432,376
1,080,950
878,517
1,364,538
67
82
167
Consumer Loans:
25,274
37,444
35,672
31,502
17,296
69,537
1,098,971
11,072
48
77
300
1,856
965
6,367
171
1,274
25,322
37,521
35,972
33,358
18,261
75,904
1,099,142
12,346
324
205
486
2,226
372
4,211
21
2020
1,794,904
1,069,637
1,154,669
819,520
339,594
925,046
2,946,499
107,363
8,466
46,681
43,379
29,193
12,768
9,851
61,076
8,561
21,337
52,375
6,044
6,234
41
62,934
328
19,839
91,192
117,545
15,225
8,200
2,898
65,138
29,643
1,823,621
1,228,847
1,367,968
869,982
366,796
937,836
3,135,647
145,895
705
7,575
7,494
11,090
213
1,837
5,952
10,622
45,488
365,158
319,684
537,069
524,572
433,844
554,293
97,999
18,937
8,575
66,286
5,547
2,695
29,078
3,727
721
4,417
410
6,759
3,756
2,559
1,322
2,630
5,574
1,563
1,248
12,923
389,834
331,299
615,688
535,438
437,787
598,853
101,726
1,330
143
416,947
453,428
975,075
750,907
494,925
501,389
31,673
1,637
2,586
7,005
43,221
9,399
20,694
16,354
159
20,292
1,986
1,818
18,189
8,604
2,210
19,731
163
441,643
478,622
1,028,886
762,516
535,350
517,906
31,893
1,796
8,819
8,822
237,136
418,002
296,286
103,259
33,519
14,477
102,694
2,031
624
2,279
62,415
323
796
1,576
3,554
26
200
239,098
421,077
360,277
107,204
33,575
15,000
102,853
94
264
161,019
422,269
1,068,191
882,918
447,690
932,182
2,772
201
7,724
10,974
6,687
1,199
17,175
161,346
429,993
1,079,165
889,605
448,889
949,357
57
189
132
380
56,983
39,301
35,320
20,397
15,035
41,299
1,120,027
30,296
51
46
320
639
767
3,442
5,387
57,034
39,347
35,640
21,036
15,802
44,741
1,120,562
35,683
92
1,733
2,474
1,173
180
985
8,826
2,524
17,987
Residential Mortgage Loans in Process of Foreclosure
Loans in process of foreclosure include those for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction. Included in loans at March 31, 2025 and December 31, 2024 were $14.6 million and $10.5 million, respectively, of loans secured by single family residential real estate that were in process of foreclosure. In addition to the single family residential real estate loans in process of foreclosure, the Company also held foreclosed single family residential properties in other real estate owned totaling $3.2 million and $2.0 million at March 31, 2025 and December 31, 2024, respectively.
Loans Held for Sale
Loans held for sale totaled $26.6 million and $21.5 million at March 31, 2025 and December 31, 2024, respectively. Loans held for sale is composed primarily of residential mortgage loans originated for sale in the secondary market. At March 31, 2025, residential mortgage loans carried at the fair value option totaled $25.9 million with an unpaid principal balance of $25.2 million. At December 31, 2024, residential mortgage loans carried at the fair value option totaled $18.9 million with an unpaid principal balance of $18.6 million. All other loans held for sale are carried at the lower of cost or market.
4. Investments in Low Income Housing Tax Credit Entities
The Company invests in certain affordable housing project limited partnerships that are qualified low-income housing tax credit developments. These investments are considered variable interest entities for which the Company is not the primary beneficiary and, therefore, are not consolidated. These partnerships generate low-income tax credits that are earned over a 10-year period, beginning with the year the rental activity begins. The Company has elected to use the practical expedient method of amortization, which approximates the proportional amortization method, whereby the investment cost is amortized in proportion to the allocated tax credits over the 10 year tax credit period. Additionally, the Company recognizes deferred taxes on the basis difference of the tax equity investment to reflect the financial impact of other tax benefits (e.g., tax operating losses) not included in the practical expedient amortization. The tax credits, when realized, are reflected in the consolidated statements of income as a reduction of income tax expense. The Company’s investments in affordable housing limited partnerships totaled $37.5 million at both March 31, 2025 and December 31, 2024, with a carry balance net of accumulated amortization included in the other assets line item on our Consolidated Balance Sheets totaling $24.6 million and $25.6 million, respectively, for those same periods. The net impact of the low-income housing tax credit program was not material to our Consolidated Statements of Income or Cash Flows for the three months ended March 31, 2025 and 2024.
5. Securities Sold under Agreements to Repurchase
Included in short-term borrowings are securities sold under agreements to repurchase that mature daily and are secured by U.S. agency securities totaling $542.5 million and $638.7 million at March 31, 2025 and December 31, 2024, respectively. The Company borrows funds on a secured basis by selling securities under agreements to repurchase, mainly in connection with treasury management services offered to its deposit customers. As the Company maintains effective control over assets sold under agreements to repurchase, the securities continue to be carried on the consolidated statements of financial condition. Because the Company acts as borrower transferring assets to the counterparty, and the agreements mature daily, the Company’s risk is limited.
6. Derivatives
Risk Management Objective of Using Derivatives
The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments. The Bank also enters into interest rate derivative agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these customer derivatives in order to minimize its net interest rate risk exposure resulting from such agreements. In addition, the Bank also enters into risk participation agreements under which it may either sell or buy credit risk associated with a customer’s performance under certain interest rate derivative contracts related to loans in which participation interests have been sold to or purchased from other banks.
23
Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the notional or contractual amounts and fair values of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets at March 31, 2025 and December 31, 2024.
Derivative (1)
Type ofHedge
Notional orContractualAmount
Assets
Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps - variable rate loans
Cash Flow
1,500,000
1,371
34,883
1,350,000
48,022
Interest rate swaps - securities
Fair Value
477,500
31,816
39,647
Total derivatives designated as hedging instruments
1,977,500
33,187
1,827,500
Derivatives not designated as hedging instruments:
Interest rate swaps
4,639,533
90,206
90,316
4,926,461
108,702
108,761
Risk participation agreements
378,068
116
445,554
Interest rate-lock commitments on residential mortgage loans
41,443
902
25,526
Forward commitments to sell residential mortgage loans
25,373
594
27,465
420
To Be Announced (TBA) securities
28,500
71
15,250
88
1
Foreign exchange forward contracts
140,998
1,868
1,806
82,756
1,389
1,358
Visa Class B derivative contract
41,902
2,143
42,020
2,089
Total derivatives not designated as hedging instruments
5,295,817
92,991
95,046
5,565,032
110,606
112,601
Total derivatives
7,273,317
126,178
129,929
7,392,532
150,253
160,623
Less: netting adjustment (2)
(60,402
(76,413
Total derivative assets/liabilities
65,776
73,840
Cash Flow Hedges of Interest Rate Risk
The Company is party to various interest rate swap agreements designated and qualifying as cash flow hedges of the Company’s forecasted variable cash flows for pools of variable rate loans. For each agreement, the Company receives interest at a fixed rate and pays at a variable rate. The Company has terminated certain interest rate swaps designated as cash flow hedges prior to maturity. The net cash received/paid for these transactions was recorded as accumulated other comprehensive income (loss) and is being amortized into earnings through the original maturity dates of the respective contracts. The notional amounts of the active interest rate swap agreements at March 31, 2025 expire as follows: $50 million in 2025; $425 million in 2026; $825 million in 2027; $50 million in 2028 and $150 million in 2029.
Fair Value Hedges of Interest Rate Risk
Interest rate swaps on securities available for sale
The Company is party to forward-starting fixed payer swaps that convert the latter portion of the term of certain available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate risk. This strategy provides the Company with a fixed rate coupon during the front-end unhedged tenor of the bonds and results in a floating rate security during the back-end hedged tenor. At March 31, 2025, these single layer instruments have hedge start dates between January 2025 and July 2026, and maturity dates from December 2027 through March 2031. The fair value of the hedged item attributable to interest rate risk is presented in interest income along with the change in the fair value of the hedging instrument.
During the quarter ending March 31, 2025, $163.5 million of fair value hedges became effective with the resulting net earnings recorded in interest income on the "Securities-taxable" line item on the Consolidated Statements of Income. Once effective, fair value hedges synthetically convert the notional portion of the hedged asset to a variable rate over the life of the hedge that is indexed to the federal funds effective rate.
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The hedged available for sale securities are part of closed portfolios of pre-payable commercial mortgage backed securities. In accordance with ASC 815, prepayment risk may be excluded when measuring the change in fair value of such hedged items attributable to interest rate risk under the portfolio layer method. At March 31, 2025, the amortized cost basis of the closed portfolio of pre-payable commercial mortgage backed securities totaled $514.0 million, excluding any basis adjustment. The amount that represents the hedged items was $445.6 million and the basis adjustment associated with the hedged items was a loss totaling $31.9 million.
Derivatives Not Designated as Hedges
Customer interest rate derivative program
The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking customers to facilitate their risk management strategies. The Bank enters into offsetting agreements with unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.
The Bank also enters into risk participation agreements under which it may either assume or sell credit risk associated with a borrower’s performance under certain interest rate derivative contracts. In those instances where the Bank has assumed credit risk, it is not a direct counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because it is a party to the related loan agreement with the borrower. In those instances in which the Bank has sold credit risk, it is the sole counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because other banks participate in the related loan agreement. The Bank manages its credit risk under risk participation agreements by monitoring the creditworthiness of the borrower, based on the Bank’s normal credit review process.
Mortgage banking derivatives
The Bank also enters into certain derivative agreements as part of its mortgage banking activities. These agreements include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell loans to investors on either a best efforts or a mandatory delivery basis. The Company uses these forward sales commitments, which may include To Be Announced (“TBA”) security contracts, on the open market to protect the value of its rate locks and mortgage loans held for sale from changes in interest rates and pricing between the origination of the rate lock and the final sale of these loans. These instruments meet the definition of derivative financial instruments and are reflected in other assets and other liabilities in the Consolidated Balance Sheets, with changes to the fair value recorded in noninterest income within the secondary mortgage market operations line item in the Consolidated Statements of Income.
The loans sold on a mandatory basis commit the Company to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, we may be obligated to pay a pair-off fee, based on then-current market prices, to the investor/counterparty to compensate the investor for the shortfall. Mandatory delivery forward commitments include TBA security contracts on the open market to provide protection against changes in interest rates on the locked mortgage pipeline. The Company expects that mandatory delivery contracts, including TBA security contracts, will experience changes in fair value opposite to the changes in the fair value of derivative loan commitments. Certain assumptions, including pull through rates and rate lock periods, are used in managing the existing and future hedges. The accuracy of underlying assumptions could impact the ultimate effectiveness of any hedging strategies.
Forward commitments under best effort contracts commit the Company to deliver a specific individual mortgage loan to an investor if the loan to the underlying borrower closes. Generally, best efforts cash contracts have no pair-off risk regardless of market movement. The price the investor will pay the seller for an individual loan is specified prior to the loan being funded, generally the same day the Company enters into the interest rate lock commitment with the potential borrower. The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.
At the closing of the loan, the rate lock commitment derivative expires and the Company generally records a loan held for sale at fair value under the election of fair value option.
Customer foreign exchange forward contract derivatives
The Company enters into foreign exchange forward derivative agreements, primarily forward foreign currency contracts, with commercial banking customers to facilitate their risk management strategies. The Bank manages its risk exposure from such
25
transactions by entering into offsetting agreements with unrelated financial institutions. The Bank has not elected to designate these foreign exchange forward contract derivatives as hedges; as such, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.
The Company is a member of Visa USA. In 2018, the Company sold the majority of its Visa Class B holdings, at which time it entered into a derivative agreement with the purchaser whereby the Company will make or receive cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. The conversion ratio changes when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The Company is also required to make periodic financing payments to the purchaser until all of Visa’s covered litigation matters are resolved. Thus, the derivative contract extends until the end of Visa’s covered litigation matters, the timing of which is uncertain.
During the second quarter of 2024, Visa allowed Class B holders to convert some but not all of their Class B shares to Class A shares. As a result of this conversion event, the Bank and its counterparty agreed to modify the transaction agreement to reflect the partial exchange and include certain provisions related to conversion rate changes. The conversion plan approved by Visa requires a minimum of 12 months before another exchange event and thus extends the expected time for a full resolution of the matter.
The contract includes a contingent accelerated termination clause based on the credit ratings of the Company. The fair value of the liability associated with this contract was $2.1 million at both March 31, 2025 and December 31, 2024. Refer to Note 15 – Fair Value of Financial Instruments for discussion of the valuation inputs and process for this derivative liability.
Effect of Derivative Instruments on the Statements of Income
The effects of derivative instruments on the Consolidated Statements of Income for the three months ended March 31, 2025 and 2024 are presented in the table below.
Derivative Instruments:
Location of Gain (Loss) Recognizedin the Statements of Income:
Cash flow hedges:
Variable rate loans
Interest income - loans
(8,460
(12,558
Fair value hedges:
Securities
Interest income - securities - taxable
3,910
3,108
Derivatives not designated as hedging:
Residential mortgage banking
Noninterest income - secondary mortgage market operations
304
285
Customer and all other instruments
Noninterest income - other noninterest income
(271
(2,802
Total loss
(4,517
(11,967
Credit Risk-Related Contingent Features
Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in certain circumstances, such as the downgrade of the Bank’s credit ratings below specified levels, a default by the Bank on its indebtedness, or the failure of the Bank to maintain specified minimum regulatory capital ratios or its regulatory status as a well-capitalized institution. These derivative agreements also contain provisions regarding the posting of collateral by each party. At March 31, 2025, the Company was not in violation of any such provisions. The aggregate fair value of derivative instruments with credit risk-related contingent features that were in a net liability position at March 31, 2025 and December 31, 2024 was $28.2 million and $39.1 million, respectively, for which the Company had posted collateral of $28.3 million and $38.0 million, respectively.
Offsetting Assets and Liabilities
The Bank’s derivative instruments with certain counterparties contain legally enforceable netting provisions that allow for net settlement of multiple transactions to a single amount, which may be positive, negative, or zero. Agreements with certain bilateral counterparties require both parties to maintain collateral in the event that the fair values of derivative instruments exceed established
exposure thresholds. For centrally cleared derivatives, the Company is subject to initial margin posting and daily variation margin exchange with the central clearinghouses. Offsetting information in regards to all derivative assets and liabilities, including accrued interest, subject to these master netting agreements at March 31, 2025 and December 31, 2024 is presented in the following tables.
As of March 31, 2025
Gross Amounts Offset in
Net Amounts Presented in
Gross Amounts Not Offset in theStatement of Financial Condition
Gross AmountsRecognized
the Statementof Financial Condition
FinancialInstruments
CashCollateral
NetAmount
Derivative Assets
119,410
(62,139
57,271
46,865
52,944
63,350
Derivative Liabilities
As of December 31, 2024
149,808
(77,915
71,893
54,707
64,260
81,446
The Company has excess posted collateral compared to total exposure due to initial margin requirements for day-to-day rate volatility.
7. Stockholders’ Equity
Common Shares Outstanding
Common shares outstanding excludes treasury shares totaling 6.8 and 6.7 million at March 31, 2025 and December 31, 2024, respectively, with a first-in-first-out cost basis of $277.2 million and $264.1 million at March 31, 2025 and December 31, 2024, respectively. Shares outstanding also excludes unvested restricted share awards totaling 0.1 million at both March 31, 2025 and December 31, 2024.
Stock Buyback Programs
On December 9, 2024, the Company’s Board of Directors approved a stock buyback program, effective January 1, 2025, whereby the Company is authorized to repurchase up to approximately 4.3 million shares of its common stock through the program’s expiration date of December 31, 2026. The program allows the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions. The Company is not obligated to purchase any shares under this program, and the Board of Directors has the ability to terminate or amend the program at any time prior to the expiration date. During the three months ended March 31, 2025, the Company repurchased 350,000 shares of its common stock at an average cost of $59.28 per share, inclusive of commissions, under this program.
Prior to its expiration on December 31, 2024, the Company had in place a stock repurchase program authorized by the Board of Directors on January 26, 2023, whereby the Company was authorized to repurchase up to approximately 4.3 million shares of its outstanding common stock. The program allowed the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions from time to time, depending on market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission. There were no shares purchased under this plan during the three months ended March 31, 2024.
Accumulated Other Comprehensive Income (Loss)
A roll-forward of the components of Accumulated Other Comprehensive Income (Loss) is presented in the table that follows:
Availablefor SaleSecurities
HTM SecuritiesTransferredfrom AFS
EmployeeBenefit Plans
CashFlow Hedges
Equity Method Investment
(473,679
(8,071
(77,235
(47,136
29
Net change in unrealized gain (loss)
102,125
7,560
(173
955
8,460
Amortization of unrealized net loss on securities transferred to HTM
Income tax (expense) benefit
(24,014
(109
(384
(3,705
(28,212
(395,568
(7,775
(76,664
(34,821
(144
(450,748
(9,385
(103,061
(58,306
373
(48,264
(29,191
(344
12,558
10,927
(96
(5,176
3,737
9,392
(488,085
(9,053
(85,204
(71,202
Accumulated Other Comprehensive Income or Loss (“AOCI”) is reported as a component of stockholders’ equity. AOCI can include, among other items, unrealized holding gains and losses on securities available for sale (“AFS”), including the Company’s share of unrealized gains and losses reported by a partnership accounted for under the equity method, gains and losses associated with pension or other post-retirement benefits that are not recognized immediately as a component of net periodic benefit cost, and gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges. Net unrealized gains and losses on AFS securities reclassified as securities held to maturity (“HTM”) also continue to be reported as a component of AOCI and will be amortized over the estimated remaining life of the securities as an adjustment to interest income. Subject to certain thresholds, unrealized losses on employee benefit plans will be reclassified into income as pension and post-retirement costs are recognized over the remaining service period of plan participants. Accumulated gains or losses on cash flow hedges of variable rate loans described in Note 6 - Derivatives will be reclassified into income over the life of the hedge. Accumulated other comprehensive loss resulting from terminated interest rate swaps are being amortized over the remaining maturities of the designated instruments. Gains and losses within AOCI are net of deferred income taxes, where applicable.
The following table shows the line items in the consolidated statements of income affected by amounts reclassified from AOCI.
Amount reclassified from AOCI (a)
Affected line item on
the statement of income
(405
(428
Interest income
Tax effect
109
96
Income taxes
Net of tax
(296
(332
Amortization of defined benefit pension and post-retirement items
(955
(1,019
Other noninterest expense (b)
384
229
(571
(790
Reclassification of unrealized loss on cash flow hedges
(6,950
(12,658
1,607
2,844
(5,343
(9,814
Amortization of gain (loss) on terminated cash flow hedges
(1,510
100
(22
(1,161
78
Total reclassifications, net of tax
(7,371
(10,858
28
8. Other Noninterest Income
Components of other noninterest income are as follows:
Income from bank-owned life insurance
4,873
4,229
Credit related fees
2,840
3,131
Loss from customer and other derivatives
Net gains on sales of premises, equipment and other assets
1,857
2,779
Other miscellaneous
7,754
5,841
Total other noninterest income
9. Other Noninterest Expense
Components of other noninterest expense are as follows:
Corporate value and franchise taxes and other non-income taxes
4,303
5,071
Entertainment and contributions
3,387
3,178
Advertising
3,015
2,907
Telecommunications and postage
2,441
2,413
Travel expense
1,232
1,103
Tax credit investment amortization
1,068
1,554
Printing and supplies
882
Net other retirement expense
(3,884
(4,824
8,173
7,624
Total other noninterest expense
10. Earnings Per Common Share
The Company calculates earnings per common share using the two-class method. The two-class method allocates net income to each class of common stock and participating security according to common dividends declared and participation rights in undistributed earnings. Participating securities consist of nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents.
A summary of the information used in the computation of earnings per common share follows.
($ in thousands, except per share data)
Numerator:
Net income to common shareholders
Net income allocated to participating securities - basic and diluted
521
784
Net income allocated to common shareholders - basic and diluted
118,983
107,828
Denominator:
Weighted-average common shares - basic
Dilutive potential common shares
Weighted-average common shares - diluted
Earnings per common share:
Basic
Diluted
Potential common shares consist of nonvested performance-based awards, nonvested restricted stock units, and restricted share awards deferred under the Company’s nonqualified deferred compensation plan. These potential common shares do not enter into the calculation of diluted earnings per share if the impact would be antidilutive, i.e., increase earnings per share or reduce a loss per share. The weighted average of potentially dilutive common shares that were anti-dilutive totaled 3,188 for the three months ended March 31, 2025, and 43,493 for the three months ended March 31, 2024, and were excluded from the calculation of diluted earnings per share for the respective periods.
11. Segment Reporting
U.S. GAAP requires that information be reported about a company’s operating segments using a “management approach.” Reportable segments are identified in these standards as those revenue-producing components for which discrete financial information is produced internally and which are subject to evaluation by our chief operating decision maker in deciding how to allocate resources to segments. The Company has identified the Capital Committee as the chief operating decision maker. Consistent with the Company’s strategy that is focused on providing a consistent package of banking products and services across all markets, the Company has identified its overall banking operations as its only reportable segment. There have been no changes in the basis of segmentation or basis of measurement of segment profit or loss since our last annual filing as of December 31, 2024.
Because the overall banking operations comprise substantially all of the Company’s consolidated operations, no separate financial segment disclosures are presented. The significant segment expenses included in net income are presented in the financial statement captions shown on the face of the Consolidated Statements of Income and in Note 9 – Other Noninterest Expense, and align materially with those reported to the Capital Committee. There are no other segment items that are required to reconcile expenses included in net income to significant expenses reviewed by the Capital Committee.
12. Retirement Plans
The Company offers a qualified defined benefit pension plan, the Hancock Whitney Corporation Pension Plan and Trust Agreement (“Pension Plan”), that covers certain eligible associates and is closed to new entrants. The Company makes contributions to the Pension Plan in amounts sufficient to meet funding requirements set forth in federal employee benefit and tax laws, plus such additional amounts as the Company may determine to be appropriate. The Company made no contributions to the pension plan during the three months ended March 31, 2025 and 2024, and does not anticipate being required to make a contribution during 2025. The Company also sponsors a nonqualified defined benefit plan covering certain associates, under which accrued benefits were frozen and no future benefits are accrued under this plan.
The Company sponsors defined benefit post-retirement plans for certain associates that provide health care and life insurance benefits. These plans are closed to new entrants.
The following table shows the components of net periodic benefit cost included in expense for the periods indicated.
Three Months Ended March 31,
Pension Benefits
Other Post-Retirement Benefits
Service cost
1,600
1,979
Interest cost
6,275
5,920
154
Expected return on plan assets
(11,268
(11,917
Amortization of net (gain) or loss and prior service costs
1,140
1,204
(185
Net periodic benefit cost
(2,253
(2,814
Service cost is reflected in the “Benefit expense” line item of the Consolidated Statements of Income. Components other than service cost in the in the table above are reflected in “Net other retirement expense” in Note 9 – Other Noninterest Expense, and reported in the “Other expense” line item of the Consolidated Statements of Income.
Additional information related to the Company’s retirement plans is provided in Note 17 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
13. Share-Based Payment Arrangements
The Company maintains incentive compensation plans that provide for awards of share-based compensation to employees and directors. These plans have been approved by the Company’s shareholders. Detailed descriptions of these plans were included in Note 18 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
The Company’s restricted and performance-based share awards to certain employees and directors are subject to service requirements. A summary of the status of the Company’s nonvested restricted stock units and restricted and performance-based share awards at March 31, 2025 are presented in the following table.
Weighted
Average
Number of
Grant Date
Shares
Nonvested at January 1, 2025
1,391,236
46.14
Granted
515,588
56.32
Vested
(332,659
49.65
Forfeited
(17,542
47.58
Nonvested at March 31, 2025
1,556,623
48.75
At March 31, 2025, there was $66.5 million of total unrecognized compensation expense related to nonvested restricted and performance share awards and units expected to vest in the future. This compensation is expected to be recognized in expense over a weighted average period of 3.4 years. The total fair value of shares that vested during the three months ended March 31, 2025 was $16.3 million.
During the three months ended March 31, 2025, the Company granted 424,883 restricted stock units (RSUs) to certain eligible employees. Unlike restricted share awards (RSAs), the holders of unvested restricted stock units have no rights as a shareholder of the Company, including voting or dividend rights. The Company has elected to award dividend equivalents on each restricted stock unit not deferred under the Company's nonqualified deferred compensation plan. Such dividend equivalents are forfeited should the employee terminate employment prior to the vesting of the RSU.
During the three months ended March 31, 2025, the Company granted to key members of executive management 26,292 performance share awards subject to a total shareholder return (“TSR”) performance metric with a grant date fair value of $66.84 per share. The fair value of the performance share units subject to TSR at the grant date was determined using a Monte Carlo simulation method. The number of performance share units subject to TSR that ultimately vest at the end of the three-year performance period, if any, will be based on the relative rank of the Company’s three-year TSR among the TSRs of a peer group of 49 regional banks. The Company also granted 25,521 performance share awards subject to a return on average assets (ROAA) performance metric and 25,521 performance share awards subject to a return on average tangible common equity (ROATCE) performance metric with a grant date fair value of $52.02 per share for both performance share awards. The number of performance shares subject to ROAA and ROTCE that ultimately vest if any, will be based on the relative rank of the Company’s three-year ROAA and ROATCE relative the KBW Regional Bank index. The maximum number of performance share units that could vest is 200% of the target award. Compensation expense for these performance shares is recognized on a straight-line basis over the three-year service period.
14. Commitments and Contingencies
In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans. Under regulatory capital guidelines, the Company and Bank must include unfunded commitments meeting certain criteria in risk-weighted capital calculations.
Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent future cash requirements of the Company.
A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of credit primarily to provide credit enhancement to its customers’ other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.
The contractual amounts of these instruments reflect the Company’s exposure to credit risk. The Company undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may
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require collateral or other credit support. The Company had a reserve for unfunded lending commitments of $25.0 million and $24.1 million at March 31, 2025 and December 31, 2024, respectively.
The following table presents a summary of the Company’s off-balance sheet financial instruments as of March 31, 2025 and December 31, 2024:
Commitments to extend credit
9,100,306
9,249,468
Letters of credit
445,352
420,614
The Company is party to various legal proceedings arising in the ordinary course of business. Management does not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a material adverse effect on the consolidated financial position or liquidity of the Company.
Federal Deposit Insurance Corporation (FDIC) Special Assessment
In November 2023, the FDIC approved a final rule to implement a special deposit insurance assessment to recover losses to the Deposit Insurance Fund (DIF) arising from the full protection of uninsured depositors under the systemic risk exception following the receiverships of Silicon Valley Bank and Signature Bank in the spring of 2023. To-date, the Company has expensed $29.7 million related to this special assessment based loss estimate information provided by the FDIC.
The loss estimates resulting from the failures of these institutions may be subject to further change pending the projected and actual outcome of loss share agreements, joint ventures, and outstanding litigation. The exact amount of losses incurred will not be determined until the FDIC terminates the receiverships of these banks; therefore, the Company's exact exposure for FDIC special assessment remains unknown.
15. Fair Value Measurements
The Financial Accounting Standards Board (FASB) defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The FASB’s guidance also establishes a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair value, giving preference to quoted prices in active markets for identical assets or liabilities (“level 1”) and the lowest priority to unobservable inputs such as a reporting entity’s own data (“level 3”). Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
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Fair Value of Assets and Liabilities Measured on a Recurring Basis
The following tables present for each of the fair value hierarchy levels the Company’s financial assets and liabilities that are measured at fair value on a recurring basis on the consolidated balance sheets at March 31, 2025 and December 31, 2024:
Level 1
Level 2
Level 3
Available for sale debt securities:
Total available for sale securities
Mortgage loans held for sale
25,935
Derivative assets (1)
Total recurring fair value measurements - assets
5,426,239
Derivative liabilities (1)
127,786
Total recurring fair value measurements - liabilities
18,929
5,254,260
158,534
(1) For further disaggregation of derivative assets and liabilities, see Note 6 - Derivatives.
Securities classified as level 2 include obligations of U.S. Government agencies and U.S. Government-sponsored agencies, including U.S. Treasury securities, residential and commercial mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies, and state and municipal bonds. The level 2 fair value measurements for investment securities are obtained quarterly from a third-party pricing service that uses industry-standard pricing models. Substantially all of the model inputs are observable in the marketplace or can be supported by observable data.
The Company invests only in securities of investment grade quality with a targeted duration, for the overall portfolio, generally between two and five and a half years. Company policies generally limit investments to U.S. agency securities and municipal securities determined to be investment grade according to an internally generated score which generally includes a rating of not less than “Baa” or its equivalent by a nationally recognized statistical rating agency.
Loans held for sale consist of residential mortgage loans carried under the fair value option. The fair value for these instruments is classified as level 2 based on market prices obtained from potential buyers.
For the Company’s derivative financial instruments designated as hedges and those under the customer interest rate program, the fair value is obtained from a third-party pricing service that uses an industry-standard discounted cash flow model that relies on inputs,
33
Overnight Index swap rate curves and SOFR swap curves (where applicable), all observable in the marketplace. To comply with the accounting guidance, credit valuation adjustments are incorporated in the fair values to appropriately reflect nonperformance risk for both the Company and the counterparties. Although the Company has determined that the majority of the inputs used to value these derivative instruments fall within level 2 of the fair value hierarchy, the credit value adjustments utilize level 3 inputs, such as estimates of current credit spreads. The Company has determined that the impact of the credit valuation adjustments is not significant to the overall valuation of these derivatives. As a result, the Company has classified its derivative valuations for these instruments in level 2 of the fair value hierarchy. The Company’s policy is to measure counterparty credit risk quarterly for derivative instruments, which are all subject to master netting arrangements, consistent with how market participants would price the net risk exposure at the measurement date.
The Company also has certain derivative instruments associated with the Bank’s mortgage-banking activities. These derivative instruments include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis and To Be Announced securities for mandatory delivery contracts. The fair value of these derivative instruments is measured using observable market prices for similar instruments and is classified as a level 2 measurement.
The Company’s level 3 liability consists of a derivative contract with the purchaser of 192,163 shares of Visa Class B common stock. Pursuant to the agreement, the Company retains the risks associated with the ultimate conversion of the Visa Class B common shares into shares of Visa Class A common stock, such that the counterparty will be compensated for any dilutive adjustments to the conversion ratio and the Company will be compensated for any anti-dilutive adjustments to the ratio. The agreement also requires periodic payments by the Company to the counterparty calculated by reference to the market price of Visa Class A common shares at the time of sale and a fixed rate of interest that steps up once after the eighth scheduled quarterly payment. The fair value of the liability is determined using a discounted cash flow methodology. The significant unobservable inputs used in the fair value measurement are the Company’s own assumptions about estimated changes in the conversion rate of the Visa Class B common shares into Visa Class A common shares, the date on which such conversion is expected to occur and the estimated growth rate of the Visa Class A common share price. Refer to Note 6 – Derivatives for information about the derivative contract with the counterparty.
The Company believes its valuation methods for its assets and liabilities carried at fair value are appropriate; however, the use of different methodologies or assumptions, particularly as applied to level 3 assets and liabilities, could have a material effect on the computation of their estimated fair values.
Changes in Level 3 Fair Value Measurements and Quantitative Information about Level 3 Fair Value Measurements
The table below presents a rollforward of the amounts on the consolidated balance sheets for the three months ended March 31, 2025 and the year ended December 31, 2024 for financial instruments of a material nature that are classified within level 3 of the fair value hierarchy and are measured at fair value on a recurring basis:
Balance at December 31, 2023
1,342
Cash settlement
(1,442
Losses included in earnings
2,189
Balance at December 31, 2024
(263
317
Balance at March 31, 2025
The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure the financial instrument measured on a recurring basis and classified within level 3 of the valuation. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instrument. The assumptions reflected in the table below for March 31, 2025 were updated in consideration of the recent exchange offer from Visa.
Level 3 Class
Derivative liability
Valuation technique
Discounted cash flow
Unobservable inputs:
Visa Class A appreciation - range
6-12%
Visa Class A appreciation - weighted average
9%
Conversion rate - range
1.60x-1.56x
Conversion rate -weighted average
1.5800x
Time until resolution
30-42 months
33-45 months
The Company’s policy is to recognize transfers between valuation hierarchy levels as of the end of a reporting period.
Fair Value of Assets Measured on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis. Collateral-dependent loans individually evaluated for credit loss loans are level 2 assets measured at the fair value of the underlying collateral based on independent third-party appraisals that take into consideration market-based information such as recent sales activity for similar assets in the property’s market.
Other real estate owned and foreclosed assets, including both foreclosed property and surplus banking property, are level 3 assets that are adjusted to fair value, less estimated selling costs, upon transfer from loans or property and equipment. Subsequently, other real estate owned and foreclosed assets are carried at the lower of carrying value or fair value less estimated selling costs. Fair values are determined by sales agreement or third-party appraisals as discounted for estimated selling costs, information from comparable sales, and marketability of the assets.
The fair value information presented below is not as of the period end, rather it was as of the date the fair value adjustment was recorded during the twelve months for each of the dates presented below, and excludes nonrecurring fair value measurements of assets no longer on the balance sheet.
The following tables present the Company’s financial assets that are measured at fair value on a nonrecurring basis for each of the fair value hierarchy levels.
Collateral-dependent loans individually evaluated for credit loss
38,485
Other real estate owned and foreclosed assets, net
Total nonrecurring fair value measurements
65,175
28,301
56,098
Accounting guidance from the FASB requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring basis. The significant methods and assumptions used by the Company to estimate the fair value of financial instruments are discussed below.
Cash, Short-Term Investments and Federal Funds Sold – For these short-term instruments, the carrying amount is a reasonable estimate of fair value.
Securities – The fair value measurement for securities available for sale is discussed earlier in this note. The same measurement techniques were applied to the valuation of securities held to maturity.
Loans, Net – The fair value measurement for certain collateral dependent loans that are individually evaluated for credit loss was described earlier in this note. For the remaining portfolio, fair values were generally determined by discounting scheduled cash flows using discount rates determined with reference to current market rates at which loans with similar terms would be made to borrowers of similar credit quality.
Loans Held for Sale – These loans are either carried under the fair value option or at the lower of cost or market. Given the short duration of these instruments, the carrying amount is considered a reasonable estimate of fair value.
Deposits – The accounting guidance requires that the fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing checking and savings accounts, be assigned fair values equal to amounts payable upon demand (“carrying amounts”). The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.
Federal Funds Purchased and Securities Sold under Agreements to Repurchase – For these short-term liabilities, the carrying amount is a reasonable estimate of fair value.
Long-Term Debt – The fair value is estimated by discounting the future contractual cash flows using current market rates at which debt with similar terms could be obtained.
Derivative Financial Instruments – The fair value measurement for derivative financial instruments is described earlier in this note.
The following tables present the estimated fair values of the Company’s financial instruments by fair value hierarchy levels and the corresponding carrying amounts.
Total Fair
Carrying
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold
1,351,414
1,351,805
Available for sale securities
Held to maturity securities
22,506,158
Derivative financial instruments
Financial liabilities:
29,184,403
Federal funds purchased
Securities sold under agreements to repurchase
542,480
178,012
Total FairValue
CarryingAmount
1,514,216
1,514,625
22,562,577
29,482,628
638,715
174,660
37
16. Recent Accounting Pronouncements
There were no new accounting standards adopted during the during the three months ended March 31, 2025.
Accounting Standards Issued But Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," to enhance the transparency and decision usefulness of income tax disclosures by requiring additional categories of information about federal, state, and foreign income taxes to be included in the rate reconciliation and by requiring more detail to be disclosed on certain reconciling item categories that meet a quantitative threshold. Additionally, the amendment requires all entities to annually disclose disaggregated information about income taxes paid using specific quantitative thresholds and income tax expense (or benefit) from continuing operations. The amendments in this update are effective for annual periods beginning after December 15, 2024. Entities should apply the amendments on a prospective basis and retrospective application is permitted. As the update contains only amendments to disclosure requirements, adoption will have no impact to the Company’s consolidated results of operations or financial condition.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40),” to improve the disclosures about a public business entity’s expenses in commonly presented expense captions. The amendments in this update require disclosure of specified information about certain costs and expenses in the notes to financial statements. Disclosure requirements also include a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, among other items. An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. This update, as amended, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this update, or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the provisions of this guidance. As the update contains only amendments to disclosure requirements, adoption will have no impact to the Company’s consolidated results of operations or financial condition.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
The objective of this discussion and analysis is to provide material information relevant to the assessment of the financial condition and results of operations of Hancock Whitney Corporation and its subsidiaries during the three months ended March 31, 2025 and selected comparable prior periods, including an evaluation of the amounts and certainty of cash flows from operations and outside sources. This discussion and analysis is intended to highlight and supplement financial and operating data and information presented elsewhere in this report, including the consolidated financial statements and related notes. The discussion contains forward-looking statements within the meaning and protections of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, our actual results may differ from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q and in other reports or documents that we file from time to time with the SEC include, but are not limited to, the following:
Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook,” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.
Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Additional factors that could cause actual results to differ materially can be found in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, or in other periodic reports that we file with the SEC.
You are cautioned not to place undue reliance on these forward-looking statements. We do not intend, and undertake no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law.
40
OVERVIEW
Non-GAAP Financial Measures
Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used to describe our performance. These non-GAAP financial measures have inherent limitations as analytical tools and should not be considered on a standalone basis or as a substitute for analyses of financial condition and results as reported under GAAP. Non-GAAP financial measures are not standardized and therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. These disclosures should not be considered an alternative to GAAP.
A reconciliation of those measures to GAAP measures are provided in the Consolidated Financial Results table later in this item. The following is a summary of these non-GAAP measures and an explanation as to why they are deemed useful.
Consistent with the provisions of subpart 229.1400 of the Securities and Exchange Commission’s Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent ("te") basis. The te basis adjusts for the tax-favored status of net interest income from certain loans and investments using a statutory federal tax rate of 21% to increase tax-exempt interest income to a taxable equivalent basis. We believe this measure to be the preferred industry measurement of net interest income, and that it enhances comparability of net interest income arising from taxable and tax-exempt sources.
We present certain additional non-GAAP financial measures to assist the reader with a better understanding of the Company’s performance period over period, and to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. The Company highlights certain items that are outside of our principal business and/or are not indicative of forward-looking trends in supplemental disclosure items below our GAAP financial data and presents certain "Adjusted" ratios that exclude these disclosed items. These adjusted ratios provide management and the reader with a measure that may be more indicative of forward-looking trends in our business, as well as demonstrates the effects of significant gains or losses and changes.
We define Adjusted Pre-Provision Net Revenue as net income excluding provision expense and income tax expense, plus the taxable equivalent adjustment (as defined above), less supplemental disclosure items (as defined above). Management believes that adjusted pre-provision net revenue is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. We define Adjusted Revenue as net interest income (te) and noninterest income less supplemental disclosure items. We define Adjusted Noninterest Expense as noninterest expense less supplemental disclosure items. We define our Efficiency Ratio as noninterest expense to total net interest income (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items, if applicable. Management believes adjusted revenue, adjusted noninterest expense and the efficiency ratio are useful measures as they provide a greater understanding of ongoing operations and enhance comparability with prior periods.
Current Economic Environment
The first quarter of 2025 brought notable economic shifts as the new presidential administration swiftly began implementing its second-term agenda. Tariffs quickly became the most influential factor, creating cost pressures across supply chains and introducing additional risk of fallout from retaliatory actions from key trading partners. Concerns over the pace and scale of tariffs and federal spending cuts have created increased uncertainty as to near and long-term effects that led to volatility in equity markets and other economic impacts. Real gross domestic product (GDP), a key metric of the pace of economic activity, contracted 0.3% on an annualized basis in the first quarter of 2025. Longer-term interest rates experienced volatility, with the 10-year U.S. Treasury yield ranging from 4.1% to nearly 4.8% during the period as the market responded to changing edicts on tariffs, among other economic indicators and developments. However, the labor market showed signs of resilience, with unemployment rising only modestly to 4.2% in March 2025, and inflation markers trended favorably through the quarter, receding to 2.4% in March. The Federal Reserve remains committed to its dual mandate of maximum employment and price stability. Because of the substantial uncertainty over economic consequences of tariffs and other initiatives of the current administration, the Federal Reserve’s policy committee has made clear its intention to take a wait and see approach to further changes in monetary policy.
Within the financial services industry, inflationary pressures and prolonged elevated interest rates continue to present headwinds in terms of loan demand and deposit behavior. Within our markets, loan growth remains tempered due in part to demand, the credit health of borrowers, and a strategic reduction of exposure to syndicated credits as we focus on full-service relationships. Funding costs have further benefited from recent interest rate cuts, contributing to net interest margin expansion during the first quarter of 2025.
Economic Outlook
We utilize economic forecasts produced by Moody’s Analytics (Moody’s) that provide various scenarios to assist in the development of our economic outlook. This outlook discussion utilizes the March 2025 Moody’s forecast, the most current available at March 31, 2025. The forecasts are anchored on a baseline forecast scenario, which Moody’s defines as the “most likely outcome” of where the economy is headed based on current conditions. Several upside and downside scenarios are produced that are derived from the baseline scenario and incorporate varying degrees of favorable and unfavorable adjustments to economic indicators and circumstances as compared to the baseline.
The baseline scenario continues to maintain an overall optimistic tenor with respect to economic outcomes, though recent progress in reducing inflation has slowed and potential inflationary pressures from the current administration’s fiscal, tariff and immigration actions and plans suggest a longer road to normalization than previously expected. Key assumptions within the March 2025 baseline forecast include the following: (1) the Federal Reserve will issue rate cuts of 25 basis points each in September and December 2025, with further gradual reductions in 2026 until the benchmark rate reaches 3%; (2) though the labor market has softened, the economy remains near full-employment with the current unemployment rate of 4%, and is forecasted to rise only modestly to 4.1% in 2025 and 4.3% through 2027 before improving slightly to 4.2% in 2028; (3) GDP will display modest annual below-trend growth in the coming years of 1.9% in 2025, 1.7% in 2026, and 2.3% in 2027; and, (4) the 10-year U.S. Treasury yield will remain elevated near its current rate, and is forecasted to average 4.4% in 2025 and only gradually decline through the end of the decade.
The S-2 scenario presents a downside alternative to the baseline. The S-2 scenario assumes the impacts of current administration tariffs and immigrations actions and plans on the economy are worse than expected, causing inflation to rise in the second quarter of 2025. Further, elevated interest rates weaken credit-sensitive spending more than anticipated and there is longer and farther-reaching disturbance from geopolitical conflict. The scenario assumes the unemployment rate will rise considerably to 5.5% in 2025 and 6.5% in 2026 (peaking at 7.1% in the first quarter) before improving to 4.4% in 2027 and 4.2% in 2028. As a result of these pressures, the U.S. falls into a mild recession beginning in the second quarter of 2025 that lasts for three quarters, with the stock market contracting 20% and a peak-to-trough decline in GDP of 1%. Despite the onset of the recession, rising inflation prompts the Federal Reserve to raise its benchmark rate in the second quarter of 2025 before resuming easement in the third quarter of 2025.
Management has deemed certain assumptions underlying the S-2 scenario to be somewhat more likely to occur in the near term than those underlying the baseline scenario, and as such, the baseline scenario and the S-2 scenario were given probability weightings of 40% and 60%, respectively, in the calculation of our allowance for credit losses calculation at March 31, 2025.
The credit loss outlook for our portfolio as a whole has not changed materially since December 31, 2024. We continue to closely monitor our portfolio for customers that are sensitive to prolonged inflation, the elevated interest rate environment, tariffs and/or other economic circumstances that may impact credit quality. We have adjusted our expected full year 2025 loan growth percentage downward, now forecasted to be in the low single digits relative to December 31, 2024, reflecting current client sentiment.
Recent and expected changes in fiscal and other policies with the current administration create significant uncertainty as to the impact on the U.S and global economies. The effects of continued elevated inflation, and the Federal Reserve’s actions to counter these effects, as well as to respond to other economic concerns, could reduce economic growth in the near term. The full extent of the impact of these and other influential factors are uncertain and may have an adverse effect on the U.S. economy, including the possibility of an economic recession or slower growth in the near or midterm.
Highlights of the First Quarter 2025
We reported net income for the first quarter of 2025 of $119.5 million, or $1.38 per diluted common share, compared to $122.1 million, or $1.40 per diluted common share, in the fourth quarter of 2024 and $108.6 million, or $1.24 per diluted common share, in the first quarter of 2024. The first quarter of 2024 included a $3.8 million, or $0.04 per diluted share, supplemental disclosure item. There were no supplemental disclosure items in the first quarter of 2025 or the fourth quarter of 2024.
First quarter 2025 results compared to fourth quarter 2024:
42
Our results for the first quarter of 2025 reflect a strong start to the year. Our net interest margin expanded, fee income grew, and solid earnings facilitated substantial growth in our capital ratios. We enhanced shareholder value through an increased common share dividend and share repurchases during the quarter. We continue to maintain a robust allowance for credit loss coverage to total loans of 1.49% in light of the current credit and economic environment. We remain focused on balance sheet optimization and effective expense control, and believe we are well positioned to continue to enhance shareholder value. We continued to execute on our organic growth plan with the addition of four bankers and the selection of four of the five planned locations in the northern Dallas metropolitan area. We look forward to continued progress as we carry out our multi-year growth plan and add the Sabal Trust Company associates and clients to our organization.
Consolidated Financial Results
The following table contains the consolidated financial results for the periods indicated.
September 30,
June 30,
Income Statement Data:
414,286
429,476
427,545
Interest income (te) (a)
398,127
417,021
432,169
430,373
424,514
Interest expense
140,730
157,712
157,115
Net interest income (te)
272,711
276,291
274,457
273,258
269,001
11,912
18,564
8,723
Noninterest income
91,209
95,895
89,174
Noninterest expense
202,333
203,839
206,016
150,520
145,256
144,865
Income tax expense
28,446
29,684
30,308
122,074
115,572
114,557
Supplemental disclosure items-included above, pre-tax:
Included in noninterest expense:
FDIC special assessment
3,800
Balance Sheet Data:
Period end balance sheet data
23,455,587
23,911,616
23,970,938
Earning assets
31,661,169
31,857,841
32,045,222
32,056,415
31,985,610
35,238,107
35,412,291
35,247,119
Noninterest-bearing deposits
10,499,476
10,642,213
10,802,127
28,982,905
29,200,718
29,775,906
Stockholders' equity
4,174,687
3,920,718
Average balance sheet data
23,068,573
23,248,512
23,552,002
23,917,361
23,810,163
32,023,885
32,333,012
32,263,748
32,539,363
32,556,821
34,355,515
34,770,663
34,780,386
34,998,880
35,101,869
10,163,221
10,409,022
10,359,390
10,526,903
10,673,060
28,752,416
29,108,381
28,940,163
29,069,097
29,560,956
4,182,814
4,138,326
4,021,211
3,826,296
3,818,840
Common Share Data:
Earnings per share - basic
1.41
1.33
1.31
Earnings per share - diluted
1.40
Cash dividends per common share
0.40
Book value per share (period-end)
49.73
47.93
48.47
45.40
44.49
Tangible book value per share (period-end)
39.40
37.58
38.10
35.04
34.12
Weighted average number of shares - diluted
86,602
86,560
86,765
Period-end number of shares
86,136
86,355
86,622
43
Performance and other data:
Return on average assets
1.32
Return on average common equity
11.59
11.74
11.43
12.04
11.44
Return on average tangible common equity
14.72
14.96
14.70
15.73
Tangible common equity ratio (b)
10.01
9.47
9.56
8.77
8.61
Tangible common equity Tier 1 (CET1) ratio
14.48
14.14
13.78
13.25
12.65
Net interest margin (te)
3.43
3.41
3.39
3.37
3.32
Noninterest income as a percentage of total revenue (te)
25.79
24.82
25.89
24.60
24.62
Efficiency ratio (c)
55.22
54.46
54.42
56.18
56.44
Allowance for loan losses as a percentage of period-end loans
1.37
1.35
Allowance for credit losses as a percentage of period-end loans
1.49
1.47
1.46
1.43
1.42
Annualized net charge-offs to average loans
0.20
0.12
0.15
Nonaccrual loans as a percentage of loans
0.42
0.35
0.34
FTE headcount
3,497
3,476
3,458
3,541
3,564
Reconciliation of pre-provision net revenue (te) and adjusted pre-provision net revenue(te) (non-GAAP measures) (d)
Net income (GAAP)
Pre-provision net revenue
159,637
162,432
163,820
153,588
146,300
Taxable equivalent adjustment
2,806
2,735
2,693
2,828
2,830
Pre-provision net revenue (te)
162,443
165,167
166,513
156,416
149,130
Adjustments from supplemental disclosure items
Adjusted pre-provision net revenue (te)
152,930
Reconciliation of revenue (te), adjusted revenue (te) and efficiency ratio (non-GAAP measures) (d)
273,556
271,764
270,430
Total GAAP revenue
364,696
364,765
367,659
359,604
354,022
Total revenue (te)
367,502
367,500
370,352
362,432
356,852
GAAP noninterest expense
Amortization of intangibles
(2,113
(2,206
(2,292
(2,389
(2,526
(3,800
Adjusted noninterest expense for efficiency
202,946
200,127
201,547
203,627
201,396
RESULTS OF OPERATIONS
Net Interest Income
Net interest income (te) for the first quarter of 2025 was $272.7 million, down $3.6 million, or 1%, compared to the fourth quarter of 2024, and up $3.7 million, or 1%, from the comparable period in 2024.
The $3.6 million decrease in net interest income (te) compared to the fourth quarter of 2024 is largely attributable to two fewer accrual days, lower loan yields and volume, largely offset by a decrease in deposit costs and volume. Interest income (te) was down $18.9 million, primarily due to lower loan and short-term investment yields and volumes, and two fewer accrual days, partially offset by higher securities yields. Interest income on securities for the first quarter of 2025 includes $0.7 million of interest associated with certain fair value hedges that became effective during the quarter, favorably impacting the securities yield by 4 bps. Interest expense was down $15.3 million, largely due to lower cost of deposits, two fewer accrual days, and lower volumes of both deposits and borrowings. The net interest margin for the first quarter of 2025 was 3.43%, up 2 bps from 3.41% in the fourth quarter of 2024. The increase in the net interest margin from the prior quarter was largely driven by lower deposit costs, higher securities yields, and a more favorable funding mix, partially offset by lower loan yields.
The $3.7 million increase in net interest income (te) compared to the first quarter of 2024 reflects a decline in prevailing rates on interest-bearing liabilities outpacing lower yields on interest earning assets, partially offset by the impact of one less accrual day. Interest income (te) decreased $26.4 million, driven largely by lower yields on loans and loan contraction, partially offset by higher yields on mortgage-backed securities. Interest expense decreased $30.1 million, driven largely by lower rates on deposits, a decrease in the volume of deposits, including a $510.6 million decrease in average brokered deposits, and a decrease in the level of short-term borrowings. The net interest margin for the first quarter of 2025 of 3.43% increased 11 bps from 3.32% for the first quarter of 2024. The year-over-year improvement in the net interest margin also reflects a decrease in the cost of funds outpacing the decline in yield on earning assets. The rate on interest-bearing liabilities was down 52 bps from the first quarter of 2024, primarily driven by the impact of interest rate movement on the overall cost of funds that also fostered some shifting to a more favorable mix of retail deposits. The cost of funds further benefited from changes in funding mix as all brokered deposits matured and short-term FHLB borrowings were repaid during the period. The yield on average earning assets was down 22 bps, primarily driven by a 32 bp decline in the loan yield, partially offset by a 22 bp increase in securities yields as maturing securities were reinvested into instruments with higher yields, and the favorable impact from the fair value hedges described above.
We expect our full year 2025 net interest income (te) to be up between 3% to 4% when compared to 2024; with modest and consistent expansion in net interest margin throughout 2025. The forecasted improvement is expected to be driven by lower deposit costs, low single-digit loan growth and continued repricing of cash flows from both the securities and fixed rate loan portfolios. Our guidance assumes 25 bp rate cuts by the Federal Reserve in June, July and October 2025, however, modeling no rate cuts for 2025 yielded similar results.
The following tables detail the components of our net interest income (te) and net interest margin.
March 31, 2024
($ in millions)
Volume
Interest (d)
Rate
Average earning assets
Commercial & real estate loans (te) (a)
17,738.2
267.1
6.10
17,916.0
283.4
6.29
18,431.0
295.7
6.45
Residential mortgage loans
3,979.7
38.8
3.90
3,967.9
38.3
3.86
3,963.0
36.9
3.72
Consumer loans
1,350.7
27.6
8.28
1,364.6
29.1
8.47
1,416.2
31.3
8.88
Loan fees & late charges
(0.3
0.6
1.0
Total loans (te) (b)
23,068.6
333.2
5.84
23,248.5
351.4
6.02
23,810.2
364.9
6.16
20.5
0.3
6.69
21.1
6.08
15.4
7.90
US Treasury and government agency securities
588.7
4.4
3.00
595.1
4.5
3.04
515.6
3.5
2.69
Mortgage-backed securities and collateralized mortgage obligations
6,831.9
46.7
2.74
6,812.8
45.2
2.65
6,792.5
42.4
2.50
Municipals (te)
802.9
5.9
2.96
825.7
6.1
865.8
6.4
Other securities
18.0
0.2
3.64
23.4
3.87
23.5
3.51
Total securities (te) (c)
8,241.5
57.2
2.78
8,257.0
56.0
2.71
8,197.4
52.5
2.56
Total short-term investments
693.3
7.4
4.31
806.4
9.3
4.59
533.8
6.8
5.11
Total earning assets (te)
32,023.9
398.1
5.02
32,333.0
417.0
5.14
32,556.8
424.5
5.24
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits
11,202.4
57.3
2.08
11,127.2
61.6
2.20
10,803.2
60.1
2.24
Time deposits
4,272.8
40.0
3.79
4,672.3
50.0
4.26
4,965.3
59.1
4.79
Public funds
3,114.0
23.2
3.03
2,899.8
3.22
3,119.4
28.3
3.65
Total interest-bearing deposits
18,589.2
120.5
2.63
18,699.3
135.1
2.87
18,887.9
147.5
3.14
Repurchase agreements
631.8
1.7
1.15
651.8
2.3
620.2
2.7
1.77
Other short-term borrowings
4.0
0.1
5.10
5.01
163.8
5.51
210.6
3.1
5.82
227.7
5.38
236.3
3.0
5.19
Total borrowings
846.4
4.9
2.33
900.0
5.6
2.49
1,020.3
8.0
3.16
Total interest-bearing liabilities
19,435.6
125.4
2.62
19,599.3
140.7
2.86
19,908.2
155.5
Net interest-free funding sources
12,588.3
12,733.7
12,648.6
Total cost of funds
1.59
1.73
1.92
Net interest spread (te)
272.7
2.41
276.3
2.28
269.0
2.10
Net interest margin
45
Provision for Credit Losses
During the first quarter of 2025, we recorded a provision for credit losses of $10.5 million, compared to $11.9 million in the fourth quarter of 2024 and $13.0 million in the first quarter of 2024. The provision for credit loss in the first quarter of 2025 included net charge-offs of $10.3 million and a reserve build of $0.2 million, compared to net charge-offs of $11.7 million and a reserve build of $0.2 million in the fourth quarter of 2024. While the provision for credit losses for the first quarter of 2025 was down slightly from the previous period, the allowance coverage to total loans reflected a slight increase. The first quarter of 2024 provision for credit loss included net charge-offs of $9.0 million and a reserve build of $4.0 million.
Annualized net charge-offs as a percentage of average loans in the first quarter of 2025 were 0.18%, down from 0.20%, in the fourth quarter of 2024, and up from 0.15% in the first quarter of 2024. Net charge-offs in the first quarter of 2025 included $7.1 million in the commercial portfolio and $3.4 million in the consumer portfolio, partially offset by net recoveries of $0.2 million in the residential mortgage portfolio. Net charge-offs in the fourth quarter of 2024 included $7.5 million in the commercial portfolio and $4.3 million in the consumer portfolio, partially offset by net recoveries of less than $0.1 million in the residential mortgage portfolio. For the first quarter of 2024, net charge-offs included $5.2 million in the commercial portfolio and $3.9 million in the consumer portfolio, partially offset by a net recovery of $0.1 million in the residential mortgage portfolio.
We expect to continue to see modest charge-offs and provision for credit losses during the remainder of 2025. However, loan growth, portfolio mix, asset quality metrics and future assumptions in economic forecasts will drive the level of credit loss reserves.
The discussion labeled "Allowance for Credit Losses and Asset Quality" that appears later in this Item provides additional information on these changes and on general credit quality.
Noninterest Income
Noninterest income totaled $94.8 million for the first quarter of 2025, up $3.6 million, or 4%, from the fourth quarter of 2024 and $6.9 million, or 8%, from the same period in 2024. The increase in noninterest income from the fourth quarter of 2024 was driven by growth in most revenue lines that were partially offset by declines in bank card and ATM fees and trust fees. The increase from the first quarter of 2024 is also attributable to growth in most lines that was partially offset by declines in gains on sales of assets, investment and annuity fees and credit-related fees. A more detailed discussion of these and other noninterest income variances follows.
The components of noninterest income are presented in the following table for the indicated periods.
23,447
18,170
21,403
10,901
2,558
4,591
2,870
Income (loss) from customer and other derivatives
(851
1,055
7,065
Service charges on deposit accounts include consumer, business, and corporate deposit account servicing fees, as well as nonsufficient funds fees on non-consumer accounts, overdraft and overdraft protection fees, and other customer transaction-related fees. Service charges on deposits totaled $24.1 million for the first quarter of 2025, up $0.7 million, or 3%, compared to the fourth quarter of 2024 and up $1.9 million, or 8%, from the same period in 2024. The linked-quarter increase was primarily driven by an increase in analysis fees on business accounts. The increase from the same period in 2024 was also largely attributable to analysis fees, and to consumer overdraft fees, driven by higher instances of overdrafts.
Trust fee income represents revenue generated from a full range of trust services, including asset management and custody services provided to individuals, businesses and institutions. Trust fees totaled $18.0 million for the first quarter of 2025, down $0.1 million, or 1%, from the fourth quarter of 2024 and up $0.9 million, or 6%, from the same period in 2024. The year-over-year increase was
primarily attributable to personal, institutional, and corporate trust revenue, driven by market value and sales volumes. These increases were partially offset by a decline in employee benefits trust revenue.
Bank card and ATM fees include interchange and other income from credit and debit card transactions, fees earned from processing card transactions for merchants, and fees earned from ATM transactions. Bank card and ATM fees totaled $20.7 million for the first quarter of 2025, down $0.7 million, or 3%, from the fourth quarter of 2024 and up $0.1 million, or less than 1%, from the same period in 2024. The linked-quarter decrease was primarily driven by a seasonal decline in credit and debit card and ATM fees, partially offset by an increase in merchant fees that was largely due to pricing adjustments. The increase from the same period in 2024 was largely driven by increases in merchant and debit card fees, partially offset by a decline in ATM and credit card fees.
Investment and annuity fees and insurance commissions, which include both fees earned from sales of annuity and insurance products, as well as managed account fees, totaled $11.4 million, up $0.5 million, or 5%, from the fourth quarter of 2024 and down $0.4 million, or 4%, from the same period in 2024. The linked-quarter increase was largely driven by annuity sales volume and corporate underwriting fees, partially offset by a decrease in fixed income trading and insurance commissions. The decrease from the same period in 2024 was driven by a $1.1 million decrease in annuity fees that was partially offset by a $0.7 million increase in investment management fees.
Income from secondary mortgage market operations is comprised of income produced from the origination and sales of residential mortgage loans in the secondary market. We offer a full range of mortgage products to our customers and typically sell longer-term fixed-rate loans while retaining the majority of adjustable-rate loans, as well as loans generated through programs to support customer relationships. Secondary mortgage market operations income will vary based on mortgage application volume, pull through rates, the percentage of loans ultimately sold in the secondary market and the timing of such sales. Income from secondary mortgage market operations was $3.5 million in the first quarter of 2025, up $0.9 million, or 36%, from the fourth quarter of 2024 and up $0.6 million, or 20%, from the same period in 2024. The linked-quarter increase was primarily attributable to a higher percentage of loans sold in the secondary market. The year-over-year increase was driven by an increase in the level of mortgage loan production, reflective of a more favorable interest rate environment and the addition of lenders, as well as a higher percentage of loans sold in the secondary market.
Income from bank-owned life insurance (BOLI) is typically generated through insurance benefit proceeds as well as the growth of the cash surrender value of insurance contracts held. Income from BOLI was $4.9 million for the first quarter of 2025, up $0.3 million, or 6%, from the fourth quarter of 2024 and up $0.6 million, or 15%, from the same period in 2024. The linked-quarter increase was driven by income from changes in cash surrender value. The year-over-year increase is largely attributable to mortality gains.
Credit-related fees include fees assessed on letters of credit and unused portions of loan commitments. Credit-related fees were $2.8 million for the first quarter of 2025, virtually flat compared to the fourth quarter of 2024 and down $0.3 million, or 9%, from the same period in 2024. The decrease from the same period in 2024 was primarily driven by a decrease in unused commitment fees.
Income or loss from customer and other derivatives is largely from our customer interest rate derivative program. Loss from customer and other derivatives totaled $0.3 million for the first quarter of 2025, compared to a loss of $0.9 million in the fourth quarter of 2024 and $2.8 million in the first quarter of 2024. Derivative income can be volatile and is dependent upon the composition of the portfolio, volume and mix of sales and termination activity, and market value adjustments due to market interest rate movement. The variance compared to the fourth quarter was largely due to lower losses related to our Visa B derivative of $1.0 million, partially offset by lower earnings on customer derivatives of $0.4 million. The variance compared to the same quarter in the prior year reflects a $1.6 million improvement in earnings from customer derivatives, largely interest rate driven, and lower losses related to our Visa B derivative of $0.9 million.
Net gains on sales of premises, equipment and other assets consist primarily of net revenue earned from sales of excess-bank owned facilities and equipment no longer in use, gains on sales of Small Business Administration (SBA) and other non-residential mortgage loans, and leases and other assets associated with the equipment finance line of business. Net gains on sales of premises, equipment and other assets totaled $1.9 million for the first quarter of 2025, compared to $1.1 million for the fourth quarter of 2024 and $2.8 million in the same period in 2024. The linked-quarter increase was largely driven by gains on sales of SBA loans. The year-over-year decrease was largely driven by a gain on the sale of bank premises and equipment recorded in the first quarter of 2024, partially offset by an increase in gains on sales of SBA loans. The level of net gains or losses on sales of these assets in a given reporting period will vary based on a variety of circumstances.
Other miscellaneous income is comprised of various items, including income from investments in small business investment companies (SBIC), Federal Home Loan Bank (FHLB) stock dividends, and fees from loan syndication and other specialty lines of business. Other miscellaneous income totaled $7.8 million, up $0.7 million, or 10% from the fourth quarter of 2024 and up $1.9 million, or 33%, from the first quarter of 2024. The linked-quarter change was largely driven by increases of $1.5 million in
syndication fees and $1.1 million in SBIC income, partially offset by a $1.6 million decrease in dividends on FHLB stock, and a net $0.3 million decrease in other miscellaneous income. The year over year change was driven by an increase of $2.4 million of SBIC income and $1.3 million of syndication fees, partially offset by a $1.7 million decrease in FHLB stock dividends, and a net $0.1 million decrease in other miscellaneous income. The decrease in dividends on FHLB stock reflects a decline in the level of stock owned.
We expect noninterest income to be up 9% to 10% for the full year of 2025 from the 2024 noninterest income of $364.1 million. This guidance has been updated to include the impact of the acquisition of Sabal Trust Company that closed on May 2, 2025.
Noninterest Expense
Noninterest expense for the first quarter of 2025 was $205.1 million, up $2.7 million, or 1%, from the fourth quarter of 2024 and down $2.7 million, or 1%, from the same period in 2024. The linked-quarter increase was largely driven by other real estate and foreclosed assets expense, regulatory fees, personnel expense and data processing expense, partially offset by a decrease in business development expense, tax credit investment amortization and other miscellaneous expenses. The first quarter of 2024 included a $3.8 million supplemental disclosure item attributable to an FDIC special assessment. Excluding the impact of the supplemental disclosure item, noninterest expense was up $1.1 million, or 1%, driven largely by professional services, data processing expense, other real estate and foreclosed assets expense and other retirement expense, partially offset by a decrease in personnel expense. A more detailed discussion of these and other noninterest expense variances follows.
The components of noninterest expense are presented in the following table for the indicated periods.
92,530
21,193
113,723
13,659
4,203
30,648
12,457
2,206
3,790
Other real estate and foreclosed asset expense (income), net
(763
4,154
3,279
3,789
2,411
1,732
1,556
1,171
(4,385
8,703
Supplemental Disclosure Items Included in Noninterest Expense
FDIC deposit insurance special assessment
Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and insurance for medical, life and disability. Personnel expense totaled $114.3 million for the first quarter of 2025, up $0.6 million, or 1%, from the fourth quarter of 2024 and down $6.8 million, or 6%, from the same period in 2024. The linked quarter increase was largely driven by seasonal increases in payroll tax and benefits, partially offset by a decrease in bonus expense, and a decrease in compensation expense as a result of two fewer payroll days in the current period. The year over year decrease reflects a favorable impact from salary deferrals associated with lending activities, a decrease in headcount, and one fewer payroll day, partially offset by annual merit increases and annual increases in most benefit categories.
Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, taxes, and other equipment expenses. Occupancy and equipment expenses totaled $17.7 million for the first quarter of 2025, down $0.2 million, or 1%, from the fourth quarter of 2024 and virtually flat compared to the same period in 2024. The linked-quarter decrease was attributable to lower costs associated with general repairs and maintenance, partially offset by increases in property taxes, utilities, and leased facility expense.
Data processing expense includes expenses related to third party technology processing and servicing costs, technology project costs and fees associated with bank card and ATM transactions, and credit card reward expenses. Data processing expense was $31.3 million for the first quarter of 2025, up $0.6 million, or 2%, from the fourth quarter of 2024 and up $2.5 million, or 9%, from the same period in 2024. The linked-quarter increase was driven in part by certain activity-based processing fees, expenses associated with ongoing technology enhancements, and increases in card expense, partially offset by a decrease in software maintenance costs. The increase from the same period in 2024 was largely related to activity-based processing fees, partially offset by a decrease in software maintenance costs. Data processing expense can vary from period to period, depending on business needs and technology enhancement initiatives.
Professional services expense includes accounting and audit, legal, consulting and certain outsourced service expense. Professional services expense for the first quarter of 2025 totaled $12.2 million, down $0.2 million, or 2%, from the fourth quarter of 2024 and up $3.2 million, or 35%, from the same period in 2024. The linked-quarter decrease was largely driven by a decline in consulting, legal and other similar services, partially offset by an increase in expense from certain outsourced initiatives. The increase compared to the same period in 2024 was largely related to outsourcing initiatives.
Deposit insurance and regulatory fees for the first quarter of 2025 totaled $5.0 million, up $1.2 million, or 33%, from the fourth quarter of 2024 and down $3.9 million, or 44%, from the same period in 2024. Included in the first quarter of 2024 was a supplemental disclosure item of $3.8 million attributable to a more sizable adjustment to the special assessment by the FDIC to cover losses incurred under the systemic risk exception following the failure of two large regional banks. Excluding the impact of the supplemental disclosure item, both the linked-quarter and year over year changes in deposit insurance and regulatory fees were primarily attributable to changes in our risk-based assessment calculation as well as less significant quarterly adjustments to the special assessment based on quarterly updates from the FDIC.
The FDIC special assessment expense recorded to date is management's estimate of our portion of the cost attributable to the systemic risk exception based on information from the FDIC. However, the loss estimates resulting from the failures of Silicon Valley Bank and Signature Bank may be subject to further change pending the projected and actual outcome of loss share agreements, joint ventures, and outstanding litigation. The exact amount of losses incurred will not be determined until the FDIC terminates the receiverships of these banks; therefore, the exact exposure to the Company remains unknown.
Net losses from other real estate and foreclosed assets totaled $1.8 million in the first quarter of 2025, compared to net gains of $0.8 million in the fourth quarter of 2024 and $0.2 million for the same period in 2024. The level of net income or losses associated with maintaining the other real estate owned portfolio can vary depending on sales activity, valuation adjustments and income or expense associated with operating and maintaining foreclosed property. Gains or losses on the sale of other real estate and foreclosed assets may occur periodically and are dependent on the number and type of assets for sale and current market conditions. The net loss in the current period includes a $2.4 million valuation charge attributable to one commercial property.
Corporate value, franchise and other non-income tax expense for the first quarter of 2025 totaled $4.3 million, up $0.1 million, or 4%, from the fourth quarter of 2024 and down $0.8 million, or 15% from the same period in 2024. The linked-quarter increase is largely related to an increase in bank share tax, partially offset by a decrease in franchise tax. The year-over-year decline is primarily due to a decrease in franchise and bank share taxes. The calculation of bank share tax is based on multiple variables, including average quarterly assets, earnings and stockholders’ equity to determine the taxable assessment value and can vary from period to period.
Business development-related expenses (including advertising, travel, entertainment and contributions) totaled $7.6 million for the first quarter of 2025, down $1.2 million, or 13%, compared to the fourth quarter of 2024 and up $0.4 million, or 6%, from the same period in 2024. The decrease from the fourth quarter of 2024 was primarily attributable to lower advertising and travel expense. The increase from the first quarter of 2024 was largely attributable to increases in marketing expense, partially offset by lower charitable contributions. The timing and level of business development expense can vary based on business needs and promotional campaigns.
All other expenses, excluding amortization of intangibles, is comprised of a variety of other operational expenses and losses, tax credit investment amortization, and net other retirement expense. All other expenses totaled $8.7 million for the first quarter of 2025, down $0.8 million, or 8%, from the fourth quarter of 2024 and up $1.1 million, or 14%, from the same period in 2024. The linked-quarter decrease was largely in other miscellaneous expense, tax credit amortization and telecommunications and postage expense, partially offset by an increase in other retirement expense related pension and post-retirement benefit expense. The increase from the first
quarter of 2024 was primarily related to increases in other retirement expense and other miscellaneous expense, partially offset by a decrease in tax credit amortization.
We expect adjusted noninterest expense to be up 4% to 5% for the full year of 2025 from the 2024 adjusted noninterest expense of $816.1 million. While unchanged from prior guidance, we have incorporated the impact of the Sabal Trust Company acquisition.
Income Taxes
The effective income tax rate for the first quarter of 2025 was approximately 19.9% compared to 18.9% in the fourth quarter of 2024 and 18.5% in the first quarter of 2024. The linked-quarter increase in the effective tax rate is due primarily to a $1.4 million income tax benefit in the fourth quarter of 2024 related to various discrete items, such as share-based compensation. The first quarter of 2025 effective income tax is higher than the first quarter of 2024 primarily due to higher forecasted annual pre-tax earnings.
Many factors impact the effective income tax rate including, but not limited to, the level of pre-tax income and relative impact of net tax benefits related to tax credit investments, tax-exempt interest income, bank-owned life insurance, and nondeductible expenses. Additionally, discrete tax items recognized in any given period affect the comparability of the effective income tax rate between periods. Such items include share-based compensation, valuation allowance changes, uncertain tax position changes and tax law changes. Based on the current forecast, management expects the effective income tax rate for 2025 will be in the 20% to 21% range, absent any changes in tax law.
Our effective tax rate has historically varied from the federal statutory rate primarily because of tax-exempt income and tax credits. Interest income on bonds issued by or loans to state and municipal governments and authorities, and earnings from the bank-owned life insurance program are the major components of tax-exempt income. The main source of tax credits has been investments in tax-advantaged securities and tax credit projects. These investments are made primarily in the markets we serve and are directed at tax credits issued under the Federal and State New Market Tax Credit (“NMTC”) programs, Low-Income Housing Tax Credit (“LIHTC”) programs, as well as pre-2018 Qualified Zone Academy Bonds (“QZAB”) and Qualified School Construction Bonds (“QSCB”). These investments generate tax credits, which reduce current and future taxes and are recognized when earned as a benefit in the provision for income taxes.
We have invested in NMTC projects through investments in our own Community Development Entities (“CDE”), as well as other unrelated CDEs. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years. We have also invested in affordable housing projects that generate federal LIHTC tax credits that are recognized over a ten-year period, beginning in the year the rental activity begins. The amortization of the LIHTC investment cost is recognized as a component of income tax expense in proportion to the tax credits recognized over the ten-year credit period.
Based on tax credit investments that have been made to date in 2025, we expect to realize benefits from federal and state tax credits over the next three years totaling $8.2 million, $8.0 million, and $5.5 million in 2026, 2027, and 2028, respectively. We intend to continue making investments in tax credit projects. However, our ability to access new credits will depend upon, among other factors, federal and state tax policies and the level of competition for such credits.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Liquidity management ensures that funds are available to meet the cash flow requirements of our depositors and borrowers, while also meeting the operating, capital and strategic cash flow needs of the Company, the Bank and other subsidiaries. As part of the overall asset and liability management process, liquidity management strategies and measurements have been developed to manage and monitor liquidity risk. The following table summarizes available liquidity at March 31, 2025:
50
Total Available
Amount Used
Net Availability
Available Sources of Funding:
Internal Sources:
Free securities
4,459,645
External Sources:
Federal Home Loan Bank (a)
6,363,450
1,148,088
5,215,362
Federal Reserve Bank
3,391,264
Brokered deposits
4,379,210
1,229,000
Total Available Sources of Funding
19,822,569
18,674,481
Cash and other interest-bearing bank deposits
Total Liquidity
20,026,286
(a) Amount used includes letters of credit.
Liquidity levels of financial institutions continue to be in heightened focus since the failure of several major regional U.S. banks that experienced large-scale deposit runs in the first half of 2023. At March 31, 2025, our available on and off-balance sheet liquidity of $20.0 billion is well in excess of our estimated uninsured, noncollateralized deposits of approximately $11.0 billion.
The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities and repayments of investment securities and occasional sales of various assets. Short-term investments such as federal funds sold, securities purchased under agreements to resell and interest-bearing deposits with the Federal Reserve Bank or with other commercial banks are additional sources of liquidity to meet cash flow requirements. Free securities represent unpledged securities that can be sold or used as collateral for borrowings, and include unpledged securities assigned to short-term dealer repurchase agreements or to the Federal Reserve Bank discount window. Total pledged securities were $3.2 billion at March 31, 2025, compared to $3.9 billion at December 31, 2024 and $4.2 billion at March 31, 2024. Management has established an internal target for the ratio of free securities to total securities of 20% or greater. As shown in the table below, our ratio of free securities to total securities was 58.64% at March 31, 2025, compared to 48.65% at December 31, 2024 and 44.86% at March 31, 2024. The decrease in pledged securities and related increase in free securities compared to December 31, 2024 is largely attributable to pledges that were released in response to a decrease in public funds deposits. Both securities and FHLB letters of credit are pledged as collateral related to public funds and repurchase agreements.
Liquidity Metrics
Free securities / total securities
58.64
48.65
56.52
53.24
44.86
Core deposits / total deposits
94.34
94.12
92.95
93.06
92.61
Wholesale funds / core deposits
3.09
6.28
6.63
4.71
Liquid assets / total liabilities
18.08
15.26
18.38
16.30
13.19
Quarter-to-date average loans / quarter-to-date average deposits
80.23
79.87
81.38
82.28
80.55
The liability portion of the balance sheet provides liquidity mainly through the ability to use cash sourced from customer deposit accounts. At March 31, 2025, deposits totaled $29.2 billion, down $298.1 million from December 31, 2024, due in-part to a seasonal decline in public funds deposits. There were no brokered time deposits at March 31, 2025 compared to $6.9 million at December 31, 2024. The use of brokered deposits as a funding source is subject to certain policies regarding the amount, term and interest rate.
Core deposits consist of total deposits excluding certificates of deposit of $250,000 or more and brokered deposits. Core deposits totaled $27.5 billion at March 31, 2025, down $215.6 million, or 1%, from December 31, 2024 and down $32.2 million, or less than 1%, from March 31, 2024. Changes in the level of core deposits will vary based on the level of total deposits and the mix therein. The ratio of core deposits to total deposits was 94.34% at March 31, 2025, compared to 94.12% at December 31, 2024 and 92.61% at March 31, 2024.
Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings from customers provide additional sources of liquidity to meet short-term funding requirements. Besides funding from customer sources, the Bank has a line of credit with the FHLB that is secured by blanket pledges of certain mortgage loans. At March 31, 2025, the Bank had no borrowings and approximately $5.2 billion available under this line. At March 31, 2025, the unused borrowing capacity at the Federal Reserve’s discount window was approximately $3.4 billion. There were no outstanding borrowings with the Federal Reserve at any date during any period covered by this report.
Wholesale funds, which are comprised of short-term borrowings, long-term debt and brokered deposits were 2.74% of core deposits at March 31, 2025, compared to 3.09% at December 31, 2024 and 4.71% at March 31, 2024. At March 31, 2025, wholesale funds totaled $753.4 million, a decrease of $103.1 million, or 12%, from December 31, 2024 and $545.5 million, or 42%, from March 31, 2024. The amount of wholesale funds outstanding will vary based on retail deposit levels and current funding needs. The Company has established an internal target for wholesale funds to be less than 25% of core deposits.
Other key measures used to monitor liquidity include the liquid asset ratio and the loan-to-deposit ratio. The liquid asset ratio (liquid assets, consisting of cash, short-term investments and free securities, divided by total liabilities) measures our ability to meet short-term obligations. Our liquid asset ratio was 18.08% at March 31, 2025, compared to 15.26% at December 31, 2024 and 13.19% at March 31, 2024. Management has established a minimum liquid asset ratio of 7.5% and an internal target of 12% or greater. The loan to deposit ratio (average loans outstanding for the reporting period divided by average deposits outstanding) measures the amount of funds the Bank lends for each dollar of deposits on hand. Our average loan-to-deposit ratio for the first quarter of 2025 was 80.23%, compared to 79.87% for the fourth quarter of 2024 and 80.55% for the first quarter of 2024. Management has an established target range for the loan-to-deposit ratio of 87% to 89%, but will operate outside that range under certain circumstances.
Cash generated from operations is another important source of funds to meet liquidity needs. The Consolidated Statements of Cash Flows included in Part I, Item 1 of this document present operating cash flows and summarize all significant sources and uses of funds during the three months ended March 31, 2025 and 2024.
Dividends received from the Bank have been the primary source of funds available to the Parent for the payment of dividends to our stockholders, repurchasing our common stock in the open market, and for servicing its debt. The liquidity management process takes into account the various regulatory provisions that can limit the amount of dividends the Bank can distribute to the Parent. The Parent targets cash and other liquid assets to provide liquidity in an amount sufficient to fund approximately six quarters of ongoing cash or liquid asset needs, consisting primarily of common stockholder dividends, debt service requirements, and any expected early extinguishment of debt. The Parent may operate below the target level on a temporary basis if a return to the target can be achieved in the near-term, generally not to exceed four quarters. The Parent had cash and liquid assets of $267.2 million at March 31, 2025, exceeding our internal target.
Capital Resources
Stockholders’ equity totaled $4.3 billion at March 31, 2025, up $151.0 million, or 4%, from December 31, 2024. The increase from December 31, 2024 is primarily attributable to net income of $119.5 million, other comprehensive income of $91.1 million, and $0.6 million of long-term incentive plan and dividend reinvestment activity. These factors were partially offset by dividends of $39.5 million and share repurchases of $20.7 million.
The tangible common equity (TCE) ratio was 10.01% at March 31, 2025, up 54 bps from 9.47% at December 31, 2024, driven primarily by tangible net earnings (+36 bps), other comprehensive income (+26 bps), and a decrease in tangible assets (+10 bps), partially offset by dividends (-12 bps) and common share repurchases (-6 bps).
The regulatory capital ratios of the Company and the Bank at March 31, 2025 remained well in excess of current regulatory minimum requirements, including capital conservation buffers, by at least $1.3 billion. The Company and the Bank have been categorized as “well-capitalized” in the most recent notices received from our regulators. Refer to the Supervision and Regulation section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion of our capital requirements.
The following table shows the regulatory capital ratios for the Company and the Bank as calculated under current rules for the indicated periods. The capital ratios prior to March 31, 2025 reflect the election to use the CECL five-year transition rule, which expired on December 31, 2024.
52
Well-
Capitalized
Total capital (to risk weighted assets)
10.00
16.37
15.93
15.56
15.00
14.34
Hancock Whitney Bank
15.27
14.83
14.52
14.00
13.39
Tier 1 common equity capital (to risk weighted assets)
6.50
14.02
13.67
13.36
12.87
12.29
Tier 1 capital (to risk weighted assets)
8.00
Tier 1 leverage capital
5.00
11.55
11.29
11.03
10.71
10.49
11.18
10.91
10.69
10.40
10.19
We regularly perform stress analysis on our capital levels. One such scenario includes the hypothetical impact of including accumulated other comprehensive losses on market valuations of available for sale securities and cash flow hedges in regulatory capital and a further stress scenario that includes both those losses plus losses on the held to maturity investment portfolio in regulatory capital. We estimate that our regulatory capital ratios would remain in excess of the well-capitalized minimums under both of these stress scenarios at March 31, 2025.
On January 30, 2025, our board of directors declared the regular quarterly common stock cash dividend of $0.45 per share, an increase of $0.05 per common share, or 13%. The quarterly common stock cash dividend was paid on March 17, 2025 to shareholders of record on March 5, 2025. The Company has paid uninterrupted dividends to its shareholders since 1967.
In December 2024, our Board of Directors authorized a stock repurchase program, effective January 1, 2025, to repurchase up to 4.3 million shares of the Company’s common stock (approximately 5% of the shares of common stock outstanding as of December 31, 2024). The authorization is set to expire on December 31, 2026. The shares may be repurchased in the open market, by block purchase, through accelerated share repurchase plans, in privately negotiated transactions or otherwise, in one or more transactions, from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission. The Company is not obligated to purchase any shares under this program and the repurchase authorization may be terminated or amended by the Board at any time prior to the expiration date. During the first quarter of 2025, the Company repurchased 350,000 shares under this program at an average price of $59.28 per share, inclusive of commissions.
BALANCE SHEET ANALYSIS
Short-Term Investments
Short-term assets are held to so that funds are available to meet the cash flow needs of both borrowers and depositors. Short-term investments, including interest-bearing bank deposits and federal funds sold, were $841.5 million at March 31, 2025, down $98.3 million from December 31, 2024. Average short-term investments of $693.3 million for the first quarter of 2025 were down $113.1 million from the fourth quarter of 2024. Typically, the balance of short-term investments will change on a daily basis depending upon movement in customer loan and deposit accounts.
The purpose of the securities portfolio is to increase profitability, mitigate interest rate risk, provide liquidity and comply with regulatory pledging requirements. Our securities portfolio includes securities categorized as available for sale and held to maturity. Available for sale securities are carried at fair value and may be sold prior to maturity. Unrealized gains or losses on available for sale securities, net of deferred taxes, are recorded as accumulated other comprehensive income or loss in stockholders' equity.
Investment in securities totaled $7.7 billion at March 31, 2025, up $97.8 million, or 1%, from December 31, 2024. The increase from December 31, 2024 was primarily driven by favorable movement in the fair value adjustment on the available for sale portfolio of $102.1 million.
At March 31, 2025, securities available for sale totaled $5.3 billion and securities held to maturity totaled $2.4 billion.
Our securities portfolio consists mainly of residential and commercial mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies. We invest only in high quality investment grade securities with a targeted portfolio effective duration generally between two and five and a half years. At March 31, 2025, the average expected maturity of the portfolio was 5.46 years with an effective duration of 4.04 years and a nominal weighted-average yield of 2.70%.
Under an immediate, parallel rate shock using increases of 100 bps and 200 bps, the effective durations would be 4.05 and 4.03 years, respectively. At December 31, 2024, the average expected maturity of the portfolio was 5.58 years with an effective duration of 4.12 years and a nominal weighted-average yield of 2.66%. The changes in expected maturity, effective duration, and nominal weighted-average yield were largely the result of maturities and paydowns and reinvestment in the portfolio during the quarter. At March 31, 2025, approximately $514.0 million of our available for sale securities are hedged with $477.5 million in fair value hedges in order to provide protection and flexibility to reposition and/or reprice the portfolio, effectively reducing the duration (market price risk) on the hedged securities. During the first quarter of 2025, $163.5 million of fair value hedges became effective, with the net earnings recorded in interest income. Once effective, fair value hedges synthetically convert the notional amount of the hedged asset over the life of the hedge to a variable rate instrument that is indexed to the federal funds effective rate.
At the end of each reporting period, we evaluate the securities portfolio for credit loss. Based on our assessments, expected credit loss was not material for any period presented, and therefore no allowance for credit loss was recorded.
Total loans at March 31, 2025 were $23.1 billion, down $201.3 million, or 1%, from December 31, 2024. The net decrease in loans largely reflective of softer demand and an increase in payoffs of large healthcare and commercial non-real estate credits, discussed in more detail below.
The following table shows the composition of our loan portfolio at each date indicated.
Total loans:
9,588,309
9,847,759
9,926,333
3,096,173
3,094,258
3,080,192
12,684,482
12,942,017
13,006,525
3,988,661
4,053,812
4,042,797
1,423,615
1,528,393
1,541,773
3,988,309
4,000,211
3,983,321
1,370,520
1,387,183
1,396,522
Our commercial customer base is diversified over a range of industries. We lend mainly to middle-market and smaller commercial entities, although we do participate in larger shared-credit loan facilities generally with businesses/sponsors operating in our market areas that are well known to the relationship officers. Shared national credits outstanding at March 31, 2025 totaled approximately $2.2 billion, or 9.6% of total loans, down $93.1 million from December 31, 2024. At March 31, 2025 our larger concentrations in shared national credits includes approximately $316 million of real estate rental and leasing credits, $302 million of finance and insurance credits, $287 million of manufacturing credits, $243 million of healthcare-related credits, $208 million in information credits, and $200 million of transportation and warehousing, with the remainder of the balance in other diverse industries.
Commercial and industrial (“C&I”) loans include both non-real estate and owner occupied real estate secured loans. C&I totaled $12.6 billion at March 31, 2025, down $251.0 million, or 2%, from December 31, 2024. The decrease is reflective of an increase in payoffs of large healthcare and commercial non-real estate credits, as mentioned above.
Our C&I loan portfolio is well diversified by product, client, and geography throughout our footprint. Nevertheless, we may be exposed to certain concentrations of credit risk which exist in relation to different borrowers or groups of borrowers, specific types of collateral, industries, loan products, or regions. The following table provides detail of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS codes for all industries, with the exception of energy, which is based on the borrower’s source of revenue (i.e. a manufacturer whose income is derived from energy-related business is reported as energy).
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Pct of
( $ in thousands )
Commercial & industrial loans:
Health care and social assistance
1,387,001
1,447,349
1,373,275
1,421,071
1,500,050
Retail trade
1,301,529
1,283,203
1,262,357
1,258,798
1,285,503
Real estate and rental and leasing
1,220,072
1,189,727
1,216,311
1,255,485
1,254,432
Manufacturing
1,123,114
1,191,781
1,152,823
1,127,144
1,108,134
Wholesale trade
1,105,444
1,148,034
1,076,834
1,133,992
1,090,634
1,000,155
989,313
968,213
1,005,536
992,489
Transportation and warehousing
973,187
965,893
974,147
981,175
951,673
Accommodation, food services and entertainment
786,180
772,721
735,563
727,601
705,308
Professional, scientific, and technical services
729,215
756,573
747,559
741,955
762,181
Finance and insurance
638,039
683,401
729,627
778,041
862,004
Information
437,902
410,284
395,155
441,342
435,439
Public administration
388,659
402,872
412,246
422,262
443,547
Other services (except public administration)
381,715
414,514
404,696
391,496
386,709
Admin, support, waste mgmt, remediation services
330,951
326,385
337,175
338,350
296,396
Educational services
244,391
240,096
243,023
251,740
252,309
Energy
178,969
197,317
188,619
200,145
204,746
411,069
469,084
466,859
465,884
474,971
Total commercial & industrial loans
Commercial real estate - income producing loans totaled approximately $3.8 billion at March 31, 2025 and construction and land development loans totaled approximately $1.3 billion at March 31, 2025, both virtually flat compared to December 31, 2024. The following table details the end-of-period aggregated commercial real estate - income producing and construction loan balances by property type. Loans reflected in 1-4 family residential construction include both loans to construction builders as well as single family borrowers.
Commercial real estate - income producing and construction loans:
Multifamily
1,363,926
1,343,544
1,324,329
1,448,473
1,366,673
Retail
783,489
773,621
836,827
838,782
818,665
756,324
698,520
761,464
741,813
777,519
Healthcare related properties
647,046
658,067
746,342
758,806
800,164
Office
496,379
506,690
485,672
507,395
503,446
Hotel, motel and restaurants
423,005
424,866
491,065
489,829
474,636
1-4 family residential construction
217,849
235,745
264,819
302,179
362,495
Other land loans
183,725
192,919
181,459
176,069
180,857
225,840
245,755
320,299
318,859
300,115
Total commercial real estate - income producing and construction loans
5,097,583
5,079,727
5,412,276
5,582,205
5,584,570
The residential mortgage loan portfolio totaled $4.0 billion at March 31, 2025, up $63.8 million, or 2%, compared to December 31, 2024. The composition of the residential mortgage loan portfolio will depend on the volume of loans originated and the percentage ultimately sold in the secondary market.
The consumer loan portfolio totaled $1.3 billion at March 31, 2025, down $32.0 million, or 2%, from December 31, 2024. Changes in the consumer loan portfolio reflect both slowing demand and the impact of our exit from the indirect automobile lending market, where the existing portfolio is in run-off. The indirect loan portfolio totaled $12.7 million at March 31, 2025, down $5.4 million from December 31, 2024.
Average loans for the first quarter of 2025 of $23.1 billion were down $179.9 million, or 1%, compared to the fourth quarter of 2024.
Management expects the December 31, 2025 period-end loan growth percentage to be in the low single digits from the December 31, 2024 balance of $23.3 billion.
Allowance for Credit Losses and Asset Quality
Our allowance for credit losses was $343.2 million at March 31, 2025, up $0.2 million from December 31, 2024. The increase in the allowance for credit losses is attributable to a $10.5 million provision for credit losses, largely offset by $10.3 million of net charge-offs. Our overall credit loss outlook is not significantly different from that at December 31, 2024. However, uncertainty related to tariffs, ongoing inflationary pressure, elevated interest rates and the outcome of the Federal Reserve’s actions with respect to monetary
55
policy, and geopolitical conflicts continues to result in an elevated reserve relative to pre-pandemic levels. The allowance for loan loss decreased $0.8 million and the reserve for unfunded lending commitments increased $1.0 million from December 31, 2024. Though the allowance for loan losses at March 31, 2025 remained relatively flat compared to December 31, 2024, the reserve coverage to total loans increased modestly, driven largely by increases in the commercial non real estate and consumer direct lending portfolios.
We utilized the March 2025 Moody's economic scenarios for our allowance for credit losses at March 31, 2025. After considering the variables underlying each of the Moody's economic scenarios, management probability-weighed the baseline scenario at 40% and the downside S-2 mild recessionary scenario at 60% in the computation of the allowance for credit losses at March 31, 2025, consistent with the weighting used in the prior quarter. Each of the scenarios considered have varying degrees of severity and duration of impacts from tariffs and geopolitical conflicts, inflationary pressure, including volatility in commodities prices and impacts on the labor market, the consequences of the Federal Reserve's actions with regard to monetary policy, and the effects of disruption in the financial services industry. Refer to the Economic Outlook section of this discussion and analysis for further information on the Moody’s scenarios and our weighting assumptions.
Our allowance for credit losses coverage to total loans was 1.49% at March 31, 2025, up from 1.47% at December 31, 2024. The allowance for credit losses on the commercial portfolio totaled $272.0 million, or 1.53% of that portfolio, at March 31, 2025, compared to $272.5 million, or 1.52%, at December 31, 2024. The allowance for credit losses on the residential mortgage portfolio totaled $43.2 million, or 1.07% of that portfolio, at March 31, 2025, compared to $42.4 million, or 1.07%, at December 31 2024. The allowance for credit losses on the consumer portfolio totaled $28.0 million, or 2.09% of that portfolio, at March 31, 2025, compared to $28.0 million, or 2.04%, at December 31, 2024.
Criticized commercial loans totaled $594.1 million at March 31, 2025, down $28.9 million, or 5%, from $623.0 million at December 31, 2024. Criticized loans are defined as those having potential weaknesses that deserve management’s close attention (risk-rated as special mention, substandard and doubtful), including both accruing and nonaccruing loans. The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process. In addition, the Company often reviews portfolios of loans to determine if there are areas of risk not specifically identified in its loan by loan approach. Criticized commercial loans comprised 3.35% of that portfolio at March 31, 2025, down from 3.47% at December 31, 2024. We remain focused on identifying specific and broader risk indicators that may be impacting certain segments in our portfolio, and we have not seen signs of significant weakening in any particular industry, sector or geographic segment beyond what we believe has been experienced by the banking industry as a whole. Our criticized commercial loans at March 31, 2025 are diversified across many industries, with the largest concentrations as follows: $86.8 million in retail trade; $66.8 million in wholesale trade; $64.0 million in healthcare and social assistance; $62.5 million in accommodation, food services and entertainment; $62.5 million in manufacturing; $58.6 million in transportation and warehousing; $52.7 million in real estate, rental and leasing; and $50.0 million in construction. Commercial loans risk rated pass-watch totaled $503.7 million at March 31, 2025, down $17.7 million, or 3%, from December 31, 2024. The pass-watch risk rating includes credits with negative performance trends that reflect sufficient risk to cause concern, but have not risen to the level of criticized.
Net charge-offs were $10.3 million, or 0.18% of average total loans on an annualized basis in the first quarter of 2025, compared to $11.7 million, or 0.20% in the fourth quarter of 2024 and $9.0 million or, 0.15% in the first quarter of 2024. Net charge-offs in the first quarter of 2025 included $7.1 million in the commercial portfolio and $3.4 million in the consumer portfolio, partially offset by net recoveries of $0.2 million in the residential mortgage portfolio. Net charge-offs in the fourth quarter of 2024 included $7.5 million in the commercial portfolio and $4.3 million in the consumer portfolio, partially offset by net recoveries of less than $0.1 million in the residential mortgage portfolio.
The following table provides a rollforward for the allowance for credit loss, coverage ratios and net charge-off ratios for the periods indicated.
Provision and Allowance for Credit Losses
Allowance for loan losses at beginning of period
317,271
Loans charged-off:
Commercial non real estate
11,619
9,630
Commercial real estate - owner-occupied
Total commercial & industrial
8,873
11,762
75
Total commercial
8,915
11,765
18,524
151
4,738
4,786
Total charge-offs
13,293
16,654
23,366
Recoveries of loans previously charged-off:
4,225
4,275
1,855
4,277
13,270
165
471
Total recoveries
4,913
Total net charge-offs
10,247
11,741
8,980
Provision for loan losses
13,352
Allowance for loan losses at end of period
Reserve for Unfunded Lending Commitments:
Reserve for unfunded lending commitments at beginning of period
25,493
Provision for losses on unfunded lending commitments
(1,440
Reserve for unfunded lending commitments at end of period
Total Allowance for Credit Losses
342,935
Total Provision for Credit Losses
Coverage Ratios:
Allowance for loan losses to period-end loans
Allowance for credit losses to period-end loans
Charge-offs ratios:
Gross charge-offs to average loans
0.23
0.28
0.39
Recoveries to average loans
0.24
Net charge-offs to average loans
Net Charge-offs to average loans by portfolio
0.19
0.31
(0.14
)%
(0.01
(0.11
0.89
(0.03
(0.00
0.16
0.17
0.11
(0.02
1.02
1.10
The following table sets forth for the periods indicated nonaccrual loans and reportable loan modifications to borrowers experiencing financial difficulty by type, and foreclosed and surplus ORE and other foreclosed assets. The table also includes loans past due 90 days or more and still accruing.
Loans accounted for on a nonaccrual basis:
15,261
14,172
17,443
13,952
17,487
Commercial non-real estate - modified
19,393
19,246
3,954
3,999
Total commercial non-real estate
21,397
17,951
3,913
1,988
3,741
2,197
Commercial real estate - owner-occupied - modified
901
919
Total commercial real estate - owner-occupied
2,889
4,660
5,127
1,918
23,603
24,066
Commercial real estate - income producing - modified
Total commercial real estate - income producing
6,316
1,774
2,228
Construction and land development - modified
Total construction and land development
Residential mortgage
41,978
43,157
38,571
27,958
25,757
Residential mortgage - modified
4,426
335
Total residential mortgage
39,112
28,293
25,924
11,234
9,972
10,180
Consumer - modified
Total consumer
Total nonaccrual loans
82,866
86,253
82,082
ORE and foreclosed assets
27,732
2,114
2,793
Total nonaccrual loans and ORE and foreclosed assets
130,904
125,132
110,598
88,367
84,875
Modified loans - still accruing:
58,188
74,211
82,609
49,892
31,442
799
802
1,761
3,050
3,483
84
10,514
3,344
2,180
354
425
385
Total modified loans - still accruing
70,618
79,324
90,156
57,422
37,425
95,552
62,675
37,592
Loans 90 days past due still accruing
5,967
6,069
7,938
Ratios:
Nonaccrual loans to total loans
Nonaccrual loans plus ORE and foreclosed assets to loans plus ORE and foreclosed assets
0.57
0.54
0.47
0.37
Allowance for loan losses to nonaccrual loans
305.26
327.61
382.87
366.54
382.21
Allowance for loan losses to nonaccrual loans and accruing loans 90 days past due
265.53
267.55
357.15
342.44
348.51
Loans 90 days past due still accruing to loans
0.07
0.09
0.03
Nonaccrual loans plus ORE and foreclosed assets totaled $130.9 million at March 31, 2025, up $5.8 million from December 31, 2024. Nonaccrual loans of $104.2 million increased $6.9 million from December 31, 2024. Despite the increase in the level of nonaccrual loans from December 31, 2024, the ratio to total loans remains relatively low at 0.45% of the total portfolio. ORE and foreclosed assets were $26.7 million at March 31, 2025, down $1.1 million from December 31, 2024. The linked-quarter decline was largely due to a $2.4 million valuation charge on a commercial property. Nonaccrual loans plus ORE and other foreclosed assets as a percentage of total loans, ORE and other foreclosed assets was 0.57% at March 31, 2025, up 3 bps from December 31, 2024.
We expect to continue to see modest charge-offs and provision for credit losses for the remainder of 2025. Loan growth, portfolio mix, asset quality metrics and future assumptions in economic forecasts will drive the level of credit loss reserves.
Deposits provide the most significant source of funding for our interest earning assets. Generally, our ability to compete for market share depends on our deposit pricing and our wide range of products and services that are focused on customer needs, among other factors. We offer high-quality banking services with convenient delivery channels, including online and mobile banking. We provide specialized services to our commercial customers to promote commercial deposit growth. These services include treasury management, industry expertise and lockbox services.
Lack of diversity in concentration within a deposit base may increase the risk of events or trends that could prompt a larger-scale demand for deposits outflow. Concerns over a financial institution's ability to protect deposit balances in excess of the federally insured limit may increase the risk of a deposit run. We consider our deposit base to be seasoned, stable and well-diversified. We also offer our customers an insured cash sweep product (ICS) that allows customers to secure deposits above FDIC insured limits. We continue to see demand for the ICS product, with the balance totaling $378.5 million at March 31, 2025 compared to $359.7 million at
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December 31, 2024. At March 31, 2025, we have calculated our average deposit account size by dividing period-end deposits by the population of accounts with balances to be approximately $37,600, which includes $199,400 in our commercial and small business lines (excluding public funds), $122,000 in our wealth management business line, and $18,500 in our consumer business line.
Further, at March 31, 2025, our sources of liquidity exceed uninsured deposits. We have estimated the Bank’s amount of uninsured deposits using the methodologies and assumptions required for FDIC regulatory reporting to be approximately $14.3 billion at March 31, 2025, down $0.3 billion compared to December 31, 2024. Our uninsured deposit total at March 31, 2025 includes approximately $3.3 billion of public funds that have pledged securities as collateral, leaving approximately $11.0 billion of noncollateralized, uninsured deposits compared to total liquidity of $20.0 billion. Our ratio of noncollateralized, uninsured deposits to total deposits was approximately 37.7% at March 31, 2025, compared to 37.3% at December 31, 2024.
Total deposits were $29.2 billion at March 31, 2025, down $298.1 million, or 1%, from December 31, 2024. Average deposits for the first quarter of 2025 were $28.8 billion, down $356.0 million, or 1%, from the fourth quarter of 2024.
The following table shows the composition of our deposits at each date indicated.
Interest-bearing retail transaction and savings deposits
11,419,406
11,327,725
10,902,720
10,824,142
10,969,720
Interest-bearing public fund deposits:
Public fund transaction and savings deposits
2,921,566
3,127,427
2,622,580
2,837,048
2,989,966
Public fund time deposits
82,750
85,072
81,525
84,676
76,304
Total interest-bearing public fund deposits
3,004,316
3,212,499
2,704,105
2,921,724
3,066,270
Retail time deposits
4,156,137
4,348,265
4,686,111
4,612,564
4,543,018
Brokered time deposits
6,901
190,493
200,075
394,771
18,483,429
18,558,505
18,973,779
Noninterest-bearing demand deposits totaled $10.6 billion at March 31, 2025, up $17.4 million, or less than 1%, from December 31, 2024. Noninterest-bearing demand deposits comprised 36% of total deposits at March 31, 2025, unchanged compared to December 31, 2024.
Interest-bearing transaction and savings accounts totaled $11.4 billion at March 31, 2025, up $91.7 million, or 1%, from December 31, 2024. Interest-bearing public fund deposits totaled $3.0 billion at March 31, 2025, down $208.2 million, or 6%, from December 31, 2024. The decrease in public funds deposits is mostly reflective of typical seasonal outflows during the first quarter. Retail time deposits totaled $4.2 billion at March 31, 2025, down $192.1 million, or 4%, from December 31, 2024. The decline in retail time deposits is mostly attributable to maturities that did not renew, some of which shifted into interest-bearing transaction and savings accounts. We had no brokered time deposits at March 31, 2025, compared to $6.9 million at December 31, 2024, as a result of maturities of instruments that were not replaced.
The rate paid on interest-bearing deposits for the first quarter of 2025 was 2.63%, down 24 bps from 2.87% in the fourth quarter of 2024. Rates paid on deposits will vary based on prevailing interest rates and promotional rate offerings on the various product types.
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The following table sets forth average balances and weighted-average rates paid on deposits for the first quarter of 2025 and the fourth and the first quarter of 2024.
Three months ended
December 31, 2025
Mix
Interest-bearing deposits:
Interest-bearing transaction deposits
2,800.9
1.34
9.7
2,834.0
1.51
2,557.7
8.7
Money market deposits
6,320.5
2.88
22.0
6,254.0
3.07
21.5
6,131.3
3.28
20.7
Savings deposits
2,099.3
0.61
7.3
2,053.0
0.51
7.1
2,114.2
7.2
4,254.5
3.81
14.8
4,658.6
4.27
16.0
16.8
Public Funds
10.8
10.0
10.6
64.6
18,699.4
64.3
64.0
Noninterest-bearing demand deposits
10,163.2
35.4
10,409.0
35.7
10,673.1
36.0
28,752.4
100.0
29,108.4
29,561.0
The following sets forth the maturities of time certificates of deposit greater than $250,000 at March 31, 2025.
Three months
925,408
Over three months through six months
438,811
Over six months through one year
270,872
Over one year
23,121
1,658,212
Management expects the December 31, 2025 period-end deposit growth percentage to be in the low single digits compared to the December 31, 2024 balance of $29.5 billion.
Short-Term Borrowings
At March 31, 2025, short-term borrowings totaled $542.8 million, down $96.2 million from December 31, 2024. The change from December 31, 2024 is attributable to a decrease in customer repurchase agreements. Average short-term borrowings of $635.8 million in the first quarter of 2025 were down $36.4 million, or 5%, from the fourth quarter of 2024.
Short-term borrowings are a core portion of the Company’s funding strategy and can fluctuate depending on our funding needs and the sources utilized. Customer repurchase agreements and FHLB borrowings are the major sources of short-term borrowings. Customer repurchase agreements are offered mainly to commercial customers to assist them with their cash management strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for corporate or investment purposes. While customer repurchase agreements provide a recurring source of funds to the Bank, amounts available will vary. FHLB borrowings are funds from the Federal Home Loan Bank that are collateralized by certain residential mortgage and commercial real estate loans included in the Bank’s loan portfolio, subject to specific criteria. There were no FHLB borrowings outstanding at either March 31, 2025 or December 31, 2024.
Long-Term Debt
Long-term debt totaled $210.6 million at March 31, 2025, virtually unchanged from December 31, 2024.
Long-term debt at March 31, 2025 includes subordinated notes payable with an aggregate principal amount of $172.5 million, a stated maturity of June 15, 2060, and a fixed rate of 6.25% per annum that qualify as Tier 2 capital of certain regulatory capital ratios. Subject to prior approval by the Federal Reserve, the Company may redeem these notes in whole or in part on any of its quarterly interest payment dates after June 15, 2025.
OFF-BALANCE SHEET ARRANGEMENTS
Loan Commitments and Letters of Credit
In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as
60
funded loans. Under regulatory capital guidelines, the Company and Bank must include unfunded commitments meeting certain criteria in risk-weighted capital calculations.
Commitments to extend credit include revolving commercial credit lines, non-revolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent our future cash requirements.
The contractual amounts of these instruments reflect our exposure to credit risk. The Bank undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. At March 31, 2025, the Company had a reserve for credit losses on unfunded lending commitments totaling $25.0 million.
The following table shows the commitments to extend credit and letters of credit at March 31, 2025 according to expiration date.
Expiration Date
Less than
1-3
3-5
More than
1 year
years
5 years
3,880,217
2,235,720
2,193,158
791,211
372,116
40,617
32,619
9,545,658
4,252,333
2,276,337
2,225,777
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with those generally practiced within the banking industry which require management to make estimates and assumptions about future events. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, and the resulting estimates form the basis for making judgments about the carrying values of certain assets and liabilities not readily apparent from other sources. Actual results could differ significantly from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
Refer to Note 16 to our consolidated financial statements included elsewhere in this report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our primary market risk is interest rate risk that stems from uncertainty with respect to the absolute and relative levels of future market interest rates that affect our financial products and services. In an attempt to manage our exposure to interest rate risk, management measures the sensitivity of our net interest income and cash flows under various market interest rate scenarios, establishes interest rate risk management policies and implements asset/liability management strategies designed to promote a relatively stable net interest margin under varying rate environments.
Net Interest Income at Risk
The following table presents an analysis of our interest rate risk as measured by the estimated changes in net interest income resulting from an instantaneous and sustained parallel shift in rates at March 31, 2025. Shifts are measured in 100 basis point increments in a range from -500 to +500 basis points from base case, with -300 through +300 basis points presented in the table below. Our interest
rate sensitivity modeling incorporates a number of assumptions including loan and deposit repricing characteristics, the rate of loan prepayments and other factors. The base scenario assumes that the current interest rate environment is held constant over a 24-month forecast period and is the scenario to which all others are compared in order to measure the change in net interest income. Policy limits on the change in net interest income under a variety of interest rate scenarios are approved by the Board of Directors. All policy scenarios assume a static volume forecast where the balance sheet is held constant, although other scenarios are modeled.
Estimated Increase
(Decrease) in NII
Change in Interest Rates
Year 1
Year 2
(basis points)
-
-7.19
-15.31
-4.64
-10.19
-2.15
-4.81
+
2.02
4.35
3.88
8.40
5.73
12.47
The results indicate a general asset sensitivity across most scenarios driven primarily by repricing of cash flows in the investment and loan portfolios. As short-term rates have remained elevated, the funding mix has shifted to more rate sensitive deposits resulting in lower overall net interest income at risk as deposit repricing is expected to offset rate adjustments in the floating rate loan book. Furthermore, due to the funding mix shift, the Company is currently less sensitive to changes in short-term rate movements with interest rate risk being driven more by changes in the mid to long-term segment of the yield curve. When deemed prudent, management has taken actions to mitigate exposure to interest rate risk with on- or off-balance sheet financial instruments and intends to do so in the future. Possible actions include, but are not limited to, changes in the pricing of loan and deposit products, modifying the composition of earning assets and interest-bearing liabilities, and adding to, modifying or terminating existing interest rate swap agreements or other financial instruments used for interest rate risk management purposes.
Even if interest rates change in the designated amounts, there can be no assurance that our assets and liabilities would perform as anticipated. Additionally, a change in the U.S. Treasury rates in the designated amounts accompanied by a change in the shape of the U.S. Treasury yield curve would cause significantly different changes to net interest income than indicated above. Strategic management of our balance sheet and earnings is fluid and would be adjusted to accommodate these movements. As with any method of measuring interest rate risk, certain shortcomings are inherent in the methods of analysis presented above. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Certain assets such as adjustable-rate loans have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Also, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase. All of these factors are considered in monitoring exposure to interest rate risk.
Economic Value of Equity (EVE)
EVE simulation involves calculating the present value of all future cash flows from assets and subtracting the present value of all future cash outflows from liabilities including the impact of off-balance sheet items such as interest rate hedges. This analysis results in a theoretical market value of the bank's equity or EVE. Management’s focus on EVE analysis is not on the resulting calculation of EVE itself, but instead on the sensitivity of EVE to changes in market rates. Policy limits on the change in EVE under a variety of interest rate scenarios are approved by the Board of Directors. The following table presents an analysis of the change in the Bank’s EVE resulting from instantaneous and parallel shifts in rates as of March 31, 2025. Shifts are measured in 100 basis point increments ranging from -500 to +500 basis points from base case, with -300 through +300 basis points presented in table below.
Estimated Changein EVE at
3.30%
3.04%
2.00%
-2.57%
-5.41%
-8.28%
62
The net changes in EVE presented in the preceding table are within the parameters approved by the Boards of Directors. Because EVE measures the present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Further, EVE does not consider factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, possible hedging activities, or changing product spreads, each of which could mitigate the adverse impact of changes in interest rates.
Item 4. Controls and Procedures
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2025, the Company’s disclosure controls and procedures were effective.
Our management, including the Chief Executive Officer and Chief Financial Officer, identified no change in our internal control over financial reporting that occurred during the three month period ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company, including subsidiaries, is party to various legal proceedings arising in the ordinary course of business. We do not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a material adverse effect on our consolidated financial position or liquidity.
Item 1A. Risk Factors
In addition to the other information set forth in this Report, in evaluating an investment in the Company’s securities, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A of our 2024 Form 10-K. which could materially affect the Company's business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.
There are no material changes during the period covered by this Report to the risk factors previously disclosed in our 2024 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The Company has in place a Board-approved stock buyback program whereby the Company is authorized to repurchase up to 4,306,000 shares of its common stock through the program’s expiration date of December 31, 2026. The program allows the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions in accordance with the rules and regulations of the Securities and Exchange Commission. The Company is not obligated to purchase any shares under this program and the repurchase authorization may be terminated or amended by the Board at any time prior to the expiration date.
The following is a summary of common share repurchases during the three months ended March 31, 2025.
Total Number of Shares Purchased (a)
Average Price Paidper Share (b)
Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program
Maximum Number of Shares that may yet be Purchased under such Plans or Programs
January 1, 2025 - January 31, 2025
345
55.14
4,306,000
February 1, 2025 - February 28, 2025
456,278
59.39
3,956,000
March 1, 2025 - March 31, 2025
57.13
456,649
59.38
(a) Includes common stock purchased in connection with our share-based payment plans related shares used to cover payroll tax withholding requirements. See Note 13 – Share-Based Payment Arrangements in our 2024 Form 10-K, which includes additional information regarding our share-based incentive plans.
(b) Average price paid does not include the one percent excise tax charged on public company net share repurchases.
Item 5. Other Information
Pursuant to Item 408(a) of Regulation S-K, none of the Company's directors or executive officers adopted, terminated or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025.
Item 6. Exhibits
(a) Exhibits:
Exhibit Number
Description
Filed Herewith
Form
Exhibit
Filing Date
Second Amended and Restated Articles of Hancock Whitney Corporation
8-K
5/1/2020
3.2
Second Amended and Restated Bylaws of Hancock Whitney Corporation
10.14
Form of Hancock Whitney Performance Stock Award Agreement effective January 1, 2025
X
31.1
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By:
/s/ John M. Hairston
John M. Hairston
President & Chief Executive Officer
(Principal Executive Officer)
/s/ Michael M. Achary
Michael M. Achary
Senior Executive Vice President & Chief Financial Officer
(Principal Financial Officer)
May 8, 2025