Detailed Narrative
Q1 Performance Highlights
Hancock Whitney reported a strong start to 2026 with adjusted ROA of 1.43%, ROTCE of 14.64%, and EPS of $1.52, all showing improvement from the prior quarter. Adjusted EPS increased over 10% compared to the same quarter last year. The company achieved NIM expansion, maintained a solid efficiency ratio of 55%, and demonstrated strong fee income generation alongside well-managed expenses.
Net Interest Margin Dynamics
Net interest margin expanded by 7 basis points to 3.55% in Q1 FY26. This expansion was primarily driven by higher securities yields following a bond portfolio restructuring completed in January and a reduction in the cost of funds, which outpaced the impacts of lower loan yields. The bond restructuring contributed 4 basis points to Q1 NIM expansion and is expected to contribute 7 basis points annually. Management is confident in achieving 12-15 basis points of NIM expansion from Q4 FY25 to Q4 FY26.
Loan and Deposit Trends
Loans grew $33 million, representing a 1% annualized increase, with total loan production of $1.2 billion, up $365 million year-over-year. Average loan balances increased $250 million quarter-over-quarter. Deposits decreased $198 million, or 3% annualized, mainly due to seasonal public funds outflows. However, the DDA mix remained strong at 36%, and interest-bearing transaction and savings accounts were up $261 million. The company anticipates loan growth to accelerate to mid-single digits for the full year and deposits to be up low single digits from 2025 levels.
Capital Management and Shareholder Returns
Hancock Whitney proactively returned capital to shareholders by repurchasing 1.4 million shares of common stock and increasing its quarterly cash dividend by 11% to $0.50 per share. The company ended the quarter with robust capital ratios, including a TCE of 9.93% and a CET1 ratio of 13.3%. Management intends to exhaust the full-year share repurchase authority of 4.1 million shares, balancing it with organic balance sheet growth and market conditions.
Strategic Growth Initiatives
The company welcomed 27 net new revenue producers in Q1, with additional hires planned for Q2, aiming for a total of 50 net new bankers for the full year. These new hires, particularly 70% in business banking and 30% in commercial/middle market, are expected to drive incremental loan production. The company is also continuously investing in treasury management, payments, and card products to enhance its offerings for privately owned businesses and improve client interfaces.
Credit Quality
Credit quality remained strong, with criticized commercial loans improving for the fifth consecutive quarter, decreasing $13 million to $522 million. Net charge-offs were 19 basis points, down from 22 basis points in the prior quarter. The allowance for credit losses remained solid at 1.43% of loans. Management expects net charge-offs to average between 15 and 25 basis points for the full year.
Rate Environment and CD Strategy
Management is now assuming no rate cuts throughout 2026, which supports their confidence in achieving revenue guidance. In response to the flat rate environment, the company has shifted its CD maturity strategy to lengthen durations, offering promotional rates for longer terms (e.g., 3.5% for 11 months) to extend the benefit of lower deposit costs. Approximately $7 billion in CDs are maturing in FY26, with $5 billion in the last three quarters, expected to renew at lower rates.