Hancock Whitney Q3 Profit Falls on Acquisition Costs as Adjusted EPS Rises

Hancock Whitney (Nasdaq: HWC) reported lower third-quarter 2026 GAAP earnings as costs tied to its One Florida Bank acquisition weighed on results, while adjusted profit, pre-provision revenue and net interest margin increased from the previous quarter. The acquisition also drove substantial loan and deposit growth but contributed to lower capital ratios.

Net income for the quarter ended Sept. 30 was $110.1 million, or $1.36 per diluted share, compared with $127.0 million, or $1.55 per share, in the second quarter and $127.5 million, or $1.49 per share, a year earlier. Results included $30.4 million of pretax supplemental disclosure items related to the One Florida Bank acquisition, reducing earnings by $0.30 per share.

Excluding those items, adjusted diluted earnings were $1.66 per share, up 7% sequentially. Adjusted pre-provision net revenue rose 6% from the prior quarter to $189.3 million and increased from $175.6 million a year earlier. Adjusted return on average assets was 1.41%, while adjusted return on tangible common equity reached 16.40%.

Margin and balance-sheet growth

Taxable-equivalent net interest income increased 7% sequentially to $314.9 million. The taxable-equivalent net interest margin expanded by 5 basis points to 3.61%, including a 4-basis-point contribution from One Florida Bank purchase-accounting accretion. Purchase-accounting accretion added $3.3 million to net interest income.

Loan yields increased to 5.71% from 5.60%, while the securities yield rose 11 basis points to 3.46%. The cost of deposits also increased, reaching 1.55% from 1.43% in the second quarter.

Period-end loans totaled $26.5 billion, up $2.0 billion from June 30. One Florida Bank contributed $1.72 billion of loans at the Aug. 1 acquisition date. Excluding acquired balances, loans increased by $243 million, or 4% on a linked-quarter annualized basis, with growth concentrated in commercial real estate and equipment finance. Commercial loans represented 79.8% of the portfolio.

Deposits rose by $2.5 billion to $32.2 billion, including $1.88 billion acquired from One Florida Bank. Excluding acquired balances, deposits increased by $671 million, or 9% annualized. Noninterest-bearing demand deposits accounted for 33% of total deposits, down from 35% in the second quarter, while interest-bearing transaction and savings accounts increased to 48% of the total.

Adjusted noninterest expense increased 3% sequentially to $232.6 million, reflecting new hires and One Florida Bank personnel costs. The bank said it had hired 38 net new bankers through the first nine months of 2026. GAAP noninterest expense was $262.0 million, including $29.4 million of acquisition-related supplemental disclosure items.

Noninterest income was relatively stable at $107.0 million, compared with $108.4 million in the prior quarter. Higher deposit service charges and other income were offset by lower secondary mortgage, trust, and bank card and ATM fees. The non-GAAP efficiency ratio improved to 54.46% from 55.31%.

Credit metrics remain mixed

Criticized commercial loans declined by $7 million to $485 million, or 2.29% of commercial loans, from 2.55% in the previous quarter. Nonaccrual loans, however, increased to $133 million, or 0.50% of total loans, from $114 million, or 0.46%.

The provision for credit losses rose to $16.1 million from $13.8 million. Adjusted provision expense was $15.1 million, comprising $10.2 million of net charge-offs and a $4.9 million reserve build. The allowance for credit losses totaled $376 million, maintaining coverage at 1.42% of loans and leases.

Net charge-offs were unchanged at an annualized 0.16% of average loans. Hancock Whitney said it was not seeing broad weakness across any industry, collateral category or geography.

Capital declines following acquisition and buybacks

The preliminary common equity Tier 1 ratio fell to 11.53% from 13.19% at June 30, while the tangible common equity ratio declined to 8.05% from 9.78%. The presentation attributed changes in capital to factors including the One Florida Bank transaction, balance-sheet growth, dividends and share repurchases.

Hancock Whitney repurchased 1 million shares during the quarter at an average price of $77.91. Another 1 million shares remained under its existing authorization, which runs through Dec. 31, 2026.

The bank reported approximately $19.3 billion of remaining net liquidity and no brokered time deposits at quarter-end. Adjusted uninsured deposits, excluding collateralized public funds, represented 44.3% of deposits, up from 41.8% at the end of the second quarter.

Fourth-quarter outlook

For the fourth quarter, management expects period-end loans to increase at a mid-single-digit rate and deposits to rise at an upper-single-digit rate compared with the third quarter. Taxable-equivalent net interest income is projected to grow 3% to 4%, with modest net interest margin expansion. The forecast assumes a 25-basis-point Federal Reserve rate increase in December 2026.

Adjusted noninterest income is expected to increase 0.5% to 1%, while adjusted noninterest expense is projected to rise 2% to 2.5%. Management expects adjusted pre-provision net revenue to increase 3% to 4% and plans to maintain the efficiency ratio below 55%. Net charge-offs are forecast at 0.15% to 0.25%.

For full-year 2026, Hancock Whitney expects low-double-digit growth in period-end loans and deposits, 9% to 9.5% growth in taxable-equivalent net interest income, and double-digit net interest margin expansion compared with 2025. The company also expects adjusted pre-provision net revenue to increase 8% to 8.5%.

The outlook remains subject to changes in interest rates, deposit pricing and mix, credit quality, economic conditions, and the timing and costs of integrating One Florida Bank. The presentation also identified inflation, tariffs, real-estate weakness, cybersecurity threats, regulatory developments and broader banking-sector stress as factors that could cause results to differ from management’s expectations.