Hancock Whitney (HWC) Q3 2025: Fee Income Jumps 8% as Organic Growth and Dallas Expansion Accelerate

2025-10-14 | By EarningsIQ Research

Hancock Whitney’s third quarter marked a decisive shift toward organic growth, with fee income reaching a record high and hiring momentum building for 2026. Leadership is doubling down on expansion in Dallas and other key Southeast markets, while maintaining a fortress capital position and disciplined credit profile. Investors should watch for loan production outpacing paydowns and the impact of ongoing deposit repricing as rate cuts approach.

Summary

• Dallas and Southeast Expansion Accelerates: Branch openings and banker hiring signal a step-change in growth focus.
• Fee Income Sets New High: Investment and annuity fees anchor diversification beyond net interest income.
• Capital Deployment Remains Disciplined: Buybacks and organic investments prioritized over M&A.

Performance Analysis

Hancock Whitney delivered a robust quarter, with profitability metrics improving on both a sequential and year-over-year basis. Return on assets (ROA) rose, efficiency ratio improved nearly 100 basis points from last year, and pre-provision net revenue (PPNR) climbed 5% quarter over quarter. Net interest income (NII) expanded as average earning assets grew at higher yields, while deposit costs edged down despite industry-wide competition.

Fee income was a standout, rising 8% over the previous quarter and hitting a new organizational record, led by investment, insurance, and annuity fees. Non-interest expense growth remained muted, up just 1%, driven mainly by increased investment in revenue producers and incentive compensation linked to higher loan production. Loan growth was modest at 2% annualized, with strong production offset by heavier-than-expected paydowns, especially in industrial and healthcare segments. Deposits declined $387 million, largely due to seasonal public fund outflows and retail time deposit runoff, though the DDA (demand deposit account) mix remained strong at 36%.

• Fee Income Diversification: Record results from investment, insurance, and annuity lines now provide a durable earnings stream.
• Operational Efficiency: Continued improvement in the efficiency ratio reflects cost discipline and digital process gains.
• Loan Production vs. Paydowns: Underlying loan production was robust, but paydowns from project completions and industry consolidation weighed on net growth.

Capital ratios strengthened, with tangible common equity (TCE) at 10.01% and CET1 at 14.08%, allowing for ongoing buybacks and organic investments. Asset quality remained benign, with net charge-offs down and criticized commercial loans improving for the third consecutive quarter.

Executive Commentary

Strategic Positioning

1. Dallas Market Push and Banker Expansion

Hancock Whitney is executing a multi-year organic growth plan, with five new Dallas branches set to open by early 2026 and a net addition of 20 bankers year over year (9% run rate). This expansion is aimed at boosting balance sheet growth, especially in high-potential Texas and Southeast MSAs (Metropolitan Statistical Areas), and is supported by a targeted hiring strategy focused on experienced revenue producers. Management expects to further accelerate hiring in 2026, aiming for double-digit banker growth to ensure sustained loan production and market share gains.

2. Fee Income as a Core Competency

Record fee income, led by investment, insurance, and annuity lines, is now a core pillar of the earnings mix. Management highlighted that seven of the last eight quarters saw over $10 million in top-line revenue from these sources, with the Texas region just beginning to contribute meaningfully. This diversification reduces reliance on net interest income and positions HWC to weather NIM compression as rates fall.

3. Capital Allocation Discipline and M&A Stance

Capital deployment remains focused on organic growth and shareholder returns, with buybacks continuing at a steady pace and no active M&A initiatives despite market speculation. Management reiterated a preference for maintaining a CET1 ratio above 11%, only deploying excess capital for strategic growth or incremental buybacks. Dividend increases will be reviewed with the board in early 2026.

4. Credit and Deposit Management

Asset quality remains solid, with criticized loans and net charge-offs both trending lower. Deposit costs continue to decline, aided by proactive repricing of CDs and public funds, and management expects further reductions as rate cuts materialize. The competitive landscape for deposits has stabilized, with fewer irrational players in the Southeast, supporting a more rational pricing environment.

5. Loan Mix and Paydown Dynamics

Loan production is robust, particularly in owner-occupied real estate and investor CRE, which command better yields. However, higher-than-expected paydowns, driven by industrial project completions and client sales to upstream organizations, are diluting net growth. Management’s playbook is to outpace paydowns through aggressive hiring and disciplined loan origination, especially as private credit and industry consolidation remain headwinds.

Key Considerations

This quarter reflects a business in transition, balancing disciplined capital management with a more aggressive organic growth stance. The following points frame the strategic context for investors:

Key Considerations:

• Organic Growth Levers: Branch openings and banker hiring in Dallas and other Southeast markets are intended to offset persistent paydown pressure and drive sustainable loan growth.
• Fee Income Durability: Investment and annuity fees now provide a recurring revenue stream that is less sensitive to interest rate cycles.
• Deposit Cost Management: Proactive repricing and rational competition in core markets support further cost of funds improvement as rates decline.
• Credit Quality Vigilance: Asset quality remains strong, but management is closely monitoring for any normalization as macro conditions evolve.
• Capital Allocation Flexibility: Ongoing buybacks and dividend review signal commitment to shareholder returns, while M&A remains sidelined barring exceptional opportunities.

Risks

Persistent loan paydowns, especially from industrial project completions and client sales, could continue to limit net loan growth despite strong production. Deposit competition, while currently rational, may re-intensify if new entrants or credit unions become more aggressive. Fee income, though more durable, remains partly exposed to transaction-driven volatility, particularly around holiday seasonality. Rate cuts may compress NIM faster than deposit costs can be repriced downward, challenging margin management. Management’s optimism is contingent on continued execution and market stability.

Forward Outlook

For Q4 2025, Hancock Whitney guided to:

• Low single-digit loan and deposit growth, with deposit inflows expected to rebound seasonally.
• PPNR growth in the 5% to 6% range, with a bias toward the upper end.

For full-year 2025, management maintained guidance:

• Efficiency ratio improvement, stable NIM, and fee income near record levels.

Management highlighted several factors that will shape Q4 and 2026:

• Two anticipated rate cuts, with corresponding reductions in deposit and CD costs.
• Continued ramp in banker hiring and branch openings, especially in Dallas and surrounding MSAs.

Takeaways

Hancock Whitney is leaning into organic growth, with record fee income and a disciplined expansion strategy in the Southeast. The balance between strong loan production and persistent paydowns is the central operational challenge, with management betting on hiring and market disruption to tip the scales in 2026.

• Organic Growth Execution: The Dallas push and banker hiring are critical to overcoming paydown headwinds and achieving mid-single digit loan growth targets.
• Fee Income Anchors Diversification: Investment and annuity revenue now provide a core, recurring earnings stream that supports resilience through rate cycles.
• Forward Watchpoint: Investors should monitor net loan growth, deposit cost trajectory, and the pace of hiring as the key levers for 2026 upside.

Conclusion

Hancock Whitney’s Q3 2025 results showcase a bank in strategic transition, balancing robust profitability with an assertive organic growth agenda. Execution on hiring, deposit management, and fee income expansion will determine whether the company can sustain its momentum as the interest rate environment shifts.

Industry Read-Through

Hancock Whitney’s results signal a broader shift among regional banks toward organic growth and fee income diversification, especially as loan paydowns and deposit competition remain persistent headwinds. Expansion in high-growth markets like Dallas is becoming a common playbook, with experienced banker hiring as the primary lever to offset industry consolidation and private credit competition. Fee income resilience is increasingly vital for banks to weather NIM compression in a falling rate environment, and disciplined capital allocation—favoring buybacks and organic investments over M&A—is likely to remain the norm across the sector as uncertainty persists.

HWC Financials Regional banking Fee income Organic growth Deposit management Dallas expansion