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Date

Jan. 20, 2026 at 4:30 p.m. ET

Call participants

  • Chief Executive Officer — John M. Hairston
  • Chief Financial Officer — Michael M. Achary
  • President, Hancock Whitney Bank and Chief Operating Officer — Shane Loper
  • Chief Credit Officer — Chris Ziluca

Takeaways

  • Net Income -- $126 million, or $1.49 per share, nearly unchanged from $127 million and $1.49 per share in the prior quarter.
  • Return on Average Assets (ROA) -- 1.41% for the quarter, with PPNR return on average assets at 1.96%.
  • Loan Growth -- Loans increased by $362 million, reflecting 6% annualized growth, with production rising by $260 million compared to the previous quarter and broad-based strength across all major markets.
  • Deposit Growth -- Deposits rose $620 million, a 9% annualized increase, mainly due to seasonal public fund activity and higher interest-bearing transaction balances.
  • DDA Mix -- Demand deposit account (DDA) mix ended the quarter at 35%.
  • Efficiency Ratio -- 54.9% for the quarter and 54.8% for the year, down 58 basis points from 2024's 55.4%.
  • Net Interest Margin (NIM) -- Decreased one basis point from the prior quarter but projected to benefit by 7 basis points annually from recent bond portfolio restructuring.
  • Net Interest Income (NII) -- Increased 1% during the quarter, with higher volume and favorable earning asset and liability mix.
  • Bond Portfolio Action -- $1.5 billion of bonds sold at a 2.49% yield and reinvested at 4.35%, expected to add $24 million to NII and $0.23 per share in annual EPS, and contribute 7 basis points to NIM in 2026.
  • Fee Income -- Rose in every quarter of 2025, totaling $107 million in the fourth quarter, with 2026 guidance for 4%-5% growth and fee drivers including core deposit accounts, treasury services, and Sable Trust Company integration.
  • Expense Growth -- Up 2% sequentially and guided to rise 5%-6% in 2026, reflecting organic growth investments and full-year Sable Trust Company costs.
  • Cost of Funds -- Dropped 7 basis points to 1.52% as deposit costs fell and FHLB advances declined.
  • Deposit Pricing -- Cost of deposits declined 7 basis points to 1.57%, ending December at 1.53%; management reduced promotional pricing following rate cuts.
  • Credit Quality -- Criticized commercial loans decreased by $14 million to $535 million; nonaccrual loans fell $7 million to $107 million; net charge-offs were 22 basis points; allowance for loan losses stood at 1.43% of loans.
  • Deposits Guidance -- Management expects low single-digit percentage growth from 2025, enabled by new banker hires and business banking expansion.
  • Loan Loss Guidance -- Net charge-offs to average loans expected at 15-25 basis points for full-year 2026.
  • Capital Ratios -- Tangible common equity ratio slightly above 10%; common equity Tier 1 at 13.66%, following the full use of prior share repurchase authority.
  • Share Buyback -- All prior buyback authority exhausted in 2025, with a new 5% buyback plan authorized for 2026 projected to be executed more evenly throughout the year.
  • Banker Hiring Plans -- Fifty bankers targeted for 2026 hires, double the 22 brought on from Q3 2024 through Q4 2025, with expected 60% business bankers and 40% commercial bankers to support both deposit and loan growth.
  • NIM Guidance -- Year-end NIM improvement anticipated to be 12-15 basis points from Q4 2025, with 7 basis points attributed to the bond portfolio restructuring.
  • Fee Income Mix -- Card and merchant fees described as flat quarter over quarter, with management citing growth opportunities in purchasing and business card products.
  • Balance Sheet Growth Outlook -- Management projects mid-single-digit loan growth, low-to-mid single-digit deposit growth, and modest NIM expansion for 2026 amid continued investments in revenue producers.
  • M&A Approach -- Management described its stance as "opportunistic" and stated "not something we're particularly focused on," with a three-year earn-back threshold not to be crossed for any deal considered.
  • Portfolio Duration -- Bond portfolio duration remained unchanged at 3.9 years after recent bond purchases and restructurings.
  • Credit Portfolio Management -- Diversified charge-offs in Q4 were attributed to situational, not sector-specific, issues, with management highlighting deliberate underwriting and portfolio management enhancements.

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Risks

  • Management expects paydowns to serve as a "headwind to CRE growth" in 2026, with these outflows from property lease-up and permanent market transitions potentially dampening net commercial real estate growth.
  • Loan yields are projected to "continue to decline a bit next year" due to anticipated rate cuts, possibly exerting pressure on NIM excluding the benefit from bond portfolio actions.
  • The level and predictability of specialty line fee income—such as BOLI, SBA fees, derivatives, and SBIC fees—are "very unpredictable quarter to quarter and even year to year," creating revenue visibility challenges.
  • Despite a solid allowance at 1.43% of loans, management will avoid reducing reserves below 1.25%-1.30% due to credit prudence, which could limit near-term provision relief.

Summary

Hancock Whitney (HWC 1.08%) reported stable earnings and continued efficiency gains while executing a large-scale bond portfolio restructuring expected to benefit NIM and EPS in 2026. The company outlined mid-single-digit loan expansion and low-single-digit deposit growth, supported by increased banker hiring and a renewed business banking strategy. Management projected fee income to grow 4%-5%, with core deposit account momentum and new product initiatives partially offset by unpredictable specialty fee sources. The board authorized a new 5% share buyback, and management emphasized ongoing organic balance sheet expansion over M&A transactions. Management expects to further optimize deposit costs as $8 billion in CDs reprice at lower rates, supporting overall margin expansion through 2026.

  • The anticipated hiring of 50 bankers in 2026 marks a doubling from recent annual additions, with enhanced recruiter processes and a clear focus on balanced loan and deposit relationships.
  • Efficiency initiatives are evident in a declining annual efficiency ratio, with quarterly expenses up only 2% sequentially mainly due to investments for future growth.
  • Capital levels remain strong, with management guiding tangible common equity down over time from current elevated levels through share buybacks and continued balance sheet growth.
  • Certain product lines, such as business card and merchant services, represent targeted areas for incremental fee income growth in the coming year.
  • Broad-based loan growth across Texas, Louisiana, and Florida has been fueled by segment diversification, including commercial real estate and healthcare finance, supporting the 2026 outlook.
  • Credit quality remains resilient with a decline in nonaccrual and criticized loan balances, and charge-offs distributed across unrelated sectors, reflecting broad portfolio discipline.

Industry glossary

  • PPNR (Pre-Provision Net Revenue): Income before credit loss provisions, excluding taxes and nonrecurring items, used as a core earnings power measure in banking.
  • DDA (Demand Deposit Account): Noninterest-bearing or low-interest checking accounts central to core deposit metrics in commercial banking.
  • NIM (Net Interest Margin): A measure of net interest income as a percentage of average earning assets, used to assess lending and funding effectiveness.
  • NII (Net Interest Income): The difference between interest income earned on assets and interest paid on liabilities.
  • FHLB Advances: Short- to medium-term borrowings from the Federal Home Loan Bank, used for liquidity and funding management by financial institutions.
  • SBIC Fees: Income related to activities in Small Business Investment Companies, which invest in small U.S. businesses under a government program.
  • BOLI (Bank-Owned Life Insurance): Life insurance owned by banks on employees, generating tax-advantaged investment income and regulatory capital relief.
  • HELOC (Home Equity Line of Credit): Revolving credit secured by the equity in customers' homes, often cited as a source of consumer loan growth.

Full Conference Call Transcript

John Hairston: On an annual basis, we expect the restructuring exercise to benefit NIM by seven basis points and EPS will improve $0.23 per share. Mike will give more details on the restructuring in his remarks. We provided guidance on page 22 for what we believe will be a very successful New Year. This guidance reflects our organic growth benefits as well as impact from the bond portfolio restructuring. Now for a few notes on the fourth quarter. We had another quarter of very solid earnings, with an ROA of 1.41%, and an efficiency ratio under 55%. Fee income growth again continued this quarter. And expenses remained well managed, including thoughtful investments supporting revenue generating activities.

Net interest income continued to grow as we reduced the cost of funds and enjoyed higher security yields. NIM was relatively flat, down one basis point from prior quarter, as a decline in loan yield outpaced our higher yield on securities and lower cost of funds. Loans grew $362 million or 6% annualized. As shown on Slide 11 of the investor deck, our production was quite strong. Our increase in production this quarter more than offset an increase in prepayments which produced a net growth of mid single digits. With the investments we're making into new revenue producers, we expect this trend to continue and loan growth in '26 will be mid single digits compared to the previous year end.

Deposits were up $620 million or 9% annualized largely driven by seasonal activity in public fund DDA and interest bearing accounts which increased $417 million. As a reminder, we usually experience seasonal public fund outflows in the first quarter of each year. Our interest bearing transaction balances were up $223 million with higher balances driven by competitive products and pricing. Retail time deposits decreased $90 million due to maturities during the quarter and DDA balances were up $70 million inclusive of a $191 million increase in public fund DDAs. DDA mix ended the quarter at a strong 35%.

We expect our investments in financial centers and revenue producers will support our guidance for deposits which we anticipate will increase low single digits from 2025 levels. As previously announced, we fully exhausted our share buyback authority last quarter which impacted capital ratios. Despite enhanced repurchase volume, we ended the quarter with TCE a little over 10%, and a common equity Tier one ratio of 13.66%. Our board approved a new 5% buyback plan that will be effective through the '26. We are very optimistic as we look forward to the coming year.

Our work over the past several years has resulted in solid capital levels a robust allowance for credit losses, superior profitability, ample liquidity, benign asset quality, now positive trends in balance sheet growth. We are excited for the opportunities in the coming year believe we are positioned well for a successful and growing 2026. Lastly, I would like to introduce you all to president of Hancock Whitney Bank and chief operating Officer, Shane Loper. He will be joining us on our earnings calls going forward. With that, I'll invite Mike to add additional comments. Thanks, John. Good afternoon, everyone.

Mike Achary: Fourth quarter's earnings were $126 million or $1.49 per share. Compared to $127 million or again $1.49 per share in the third quarter. PPNR for the company was down slightly from the prior quarter to $174 million Expressed as a return on average assets, that continues to be a solid 1.96%. NII increased 1% this quarter driven by favorable volume and mix for both average earning assets and interest bearing liabilities. Partly offset by a slightly lower NIM which decreased or narrowed one basis point this quarter. As John mentioned, our fee income business had a solid quarter and expenses were up due to continued investments and revenue generating activities.

Our efficiency ratio was 54.9 for the quarter and 54.8% for the year. That was down 58 basis points from 2024's 55.4%. Reflecting our net interest income growth strong fee income performance, and well controlled expenses. Fee income grew in each of the four quarters this year, totaling $107 million in the fourth quarter. We enjoyed solid performance across each category, with the increase this quarter driven by higher specialty income. We expect fee income will be up between 4-5% in 2026. With a continued focus on core deposit account growth that often delivers multiple categories of fees. As mentioned, expenses remain well controlled. Up only 2% from the prior quarter.

Much of this increase was from investments that we believe will enhance our revenue generating capabilities in 2026. We expect expenses will be up between 5-6% including an impact of about 185 basis points from the execution of our organic growth plan and a full year of expenses related to our acquisition of Sable Trust Company. Expense growth year over year was well controlled at only 3.6% inclusive of ample reinvestments. The one basis point contraction in our NIM was driven by lower loan yields on both new fixed and variable rate loans. And existing variable rate loans following the two rate cuts this quarter.

Partially offsetting this was higher bond yields lower cost of deposits, and a favorable mix and rates for other borrowings. Our overall cost of funds was down seven basis points to 1.52% due to a lower cost of deposits and better funding rates and mix. As we ended the quarter with lower FHLB advances. Our cost of deposits was down seven basis points to 1.57% for the quarter, with the cost of deposits down to 1.53% in the month of December. Following the rate cuts in October and December, we reduced promotional rate pricing on our interest bearing transaction accounts and retail CDs.

In 2026, we expect CDs will continue to mature and renew at lower rates which will support improvement in our cost of deposits. The yield on the bond portfolio was up six basis points to 2.98% due to cash flows of $213 million rolling off at 3.55% and reinvestment in $290 million of bonds had a yield of 4.45%. In addition, we had a $0 loss bond swap of $230 million with a yield pickup of 45 basis points. As John mentioned, we completed a bond portfolio restructuring in the first two weeks of January 2026. We sold $1.5 billion of bonds at a yield of 2.49% and reinvested the proceeds in bonds carrying a yield of 4.35%.

We're expecting the annual impact will support our NII and NIM growth in 2026. And will contribute seven basis points to our NIM $24 million to NII, and about $0.23 to earnings per share. Our forward guidance for 2026 is on Slide 22 of the earnings deck. And includes the expected impact of the bond portfolio restructuring but excluding the pretax charge of $99 million We are assuming two twenty five basis point rate cuts in April and July 2026. We expect NII will be up between 5-6% from 2025 with modest NIM expansion. And our PPNR guide is to be up between four and a half and five and a half percent.

Our efficiency ratio is expected to fall in the range of 54-55% in 2026. For the fourth consecutive quarter, our criticized commercial loans improved. Decreasing $14 million to $535 million Nonaccrual loans decreased $7 million to $107 million. Net charge offs came in at 22 basis points. Our loan loss reserves are solid at 1.43% of loans. We expect net charge offs to average loans will come in at between fifteen and twenty five basis points for the full year 2026. Lastly, a comment on capital. Our capital ratios remain remarkably strong. Even with the full exhaustion of our share repurchase plan where we bought back about $147 million of shares in the 2025.

Our board reauthorized a new 5% repurchase plan in 2026. And we expect share repurchases will occur at a more even pace across 2026. Changes in the growth dynamics of our balance sheet economic conditions, and share valuation could impact that view. I will now turn the call back to John.

John Hairston: Thanks, Mike. Let's open the call for questions.

Operator: Thank you. And everyone, if you would like to ask a question, please press 1 on your telephone keypad. Once again, that is 1 to ask a The first question is from Michael Rose Raymond James.

Michael Rose: Hey, good afternoon, guys. Thanks for taking my questions. Noticed that the fourth quarter loan production was up about 7.5% Q on Q. But pay downs were also up. Maybe, Mike or John, if you can just talk about what your expectations are for kind of gross production versus expected paydowns as we move through the year inclusive of those two cuts? Thanks. Thanks, Michael. I'm going to ask Shane to start with that question that answer. Go ahead, Shane. Okay. Thanks, John. And, really, what I'll do is I'll try to cover know, just kinda where the production came from and then tie out with what we see, you know, into the to the future.

First, I'd just like to say thanks to the entire team for delivering a good year operating results. And just thanks for that contribution to success. I think it's important to note that loan production increased for the third consecutive quarter. With nearly a billion six of production in the fourth quarter. Typically, we'll see 35% of all that production funded and then grow to about around about 40%. In the fourth quarter, the team produced an additional $260 million in production over the third quarter. Which contributed pretty significantly to that 6% growth that we're talking about. Geographically, the banking teams delivered growth across all of our core markets in Texas, Louisiana and Florida.

And this is also important because as we intentionally improve our commercial and middle market segment mix, That's going to deliver higher spread relationships. That may offset some of the thinner spreads in the specialty segments. Commercial real estate continues to deliver. Consistent production which will fund up once that initial equity burns off in those deals. And we expect to experience sustained fundings that really have occurred with production over the last, you know, eighteen to twenty four months throughout the year. In 2026 with expected and planned paydowns as a headwind to CRE growth. And I don't think that's anything new that we're talking about there.

A lot of those pay downs will get to lease up, CO and go maybe to the permanent market. CRE production for 2026 looks to continue to be steady. As the 2025 production funds up. Looking at health care, that team continues to deliver growth with current and new banker adds. The production delivers good, NII. But that's one of those slightly thinner spreads than the commercial and middle market segments. And I expect health care to continue to deliver as we've shifted our focus more to healthcare real estate and a selective focus on senior care sponsor operators. Commercial finance, which is our equipment finance and ABL teams, they also continue to deliver strong production and balanced growth.

We're expecting we're experiencing good deal flow there. So that we can screen credit and are considering and executing on capital and those companies that are considering and executing on capital investments. As I said about health care, these balances produce positive NII but are at a little bit lower spread. We saw some consumer loan growth for one of the first times, and it grew about $5 million in the quarter led by HELOC production. '5 was our first HELOC growth quarter in 'twenty five, about $15 million and a three year high of applications in the quarter. So we believe HELOCs will continue to be a solid consumer product into 2026 we get about 40% line utilization there.

And finally, kind of wrapping up on growth, I'd like to call out our business banking team. They produced a strong $36 million in growth this quarter at our highest spreads. We recently recruited an accomplished executive from the Super Regional Bank to lead our business banking segment. And have high expectations of that team concerning loan and deposit growth. Throughout 2026. Our goal is to be the best bank for privately owned businesses in country, and we're committed to delivering on that. Aspirational goal with Crick credit execution, market leading deposit products, and sophisticated wealth management. For both businesses and business owners. So I look forward to 2026, I believe our team is calling on the right clients.

And prospects to deliver on a better segment mix and deliver on our mid single digit growth guidance. So kind of wrapping up, when you look at paydowns, I think you know, we can expect pay downs in CRE I think we can still expect some entrant of you know, private credit and other lending opportunities like that with some of our clients. But, you know, right now, we, we feel like we've got a fairly stable base to work from and it's all about generating business going forward.

Michael Rose: It's a very detailed response, so I appreciate all the color. Maybe just as my follow-up question. So looks like the ROA target has been moved a little bit higher from last year. But the TCE ratio is also higher. Can you just walk us through some of the other assumptions that kind of underlie meeting some of those targets for your CSOs? I know you have the Fed funds rate at 3.25%, but would just love some other colors around kind of the base case expectations. Thanks.

Mike Achary: Sure, Michael. This is Mike. I can add some color to that in a few comments. I think the biggest thing is this notion of consistent balance sheet growth, organic balance sheet growth over the next three years. Our guidance for loans has stepped up this year to mid single digits from what we achieved last year, which was akin to more low single digits. So kinda continuing this notion of consistent balance sheet growth over the next couple of years is really important. You know, you called out the rate environment.

We're assuming you know, just to keep the assumptions know, straight forward, fed funds at three and a quarter, which is where we expect Fed funds to end at the end of this year. You know, we'll continue to reinvest back in the company, so I would expect expense growth to be something on par with what we're guiding for this year. Which if you kinda strip away you know, the investments that we're kind of calling out in the guidance and the annualized impact of Sable you know, is still a pretty reasonable run rate of you know, somewhere around three and a half to 4%. So that kinda continuing for the next couple of years.

And then, look, we've been tremendously successful in terms of kind of upscaling our fee income businesses. The guidance for next year is in the four to 5% range. So to kind of continue that going forward is equally important. We'll grow the deposit side of the balance sheet somewhere over the next couple of years, think, in low to mid single digits. And, you know, the NIM expansion will follow along with NII growth. So those are the main things. Now in terms of you know, the TCE guide of nine to nine and a half percent, you know, we're well north of that now at just over 10%.

You can assume that we'll continue buybacks at the levels we've done. You know, both in '25 and, again, what we're guiding for '26. So I think the combination of continuing a pretty robust buyback program along with addressing the dividend and organically growing the balance sheet should help us get our TCE down to those levels. So those are kind of the main assumptions.

John Hairston: Michael, this is John. Just to I'll add very little to it, but I think if we kinda step back to or step up to 60,000 feet and you take what Mike and Shane both shared, the ROA guidance being a little bit steeper than where we are today doesn't seem like a tall task if we weren't reinvesting back in future years revenue like we are today and what we guided to. But, you know, our goal is not to just become a very or be a very high profitability organization. It's also to deliver on pretty reliable balance sheet growth year in and year out. Investors see PPNR continue to grow but still maintain a pretty profitable book.

And that's a hat trick to pull all that off at the same time. And, you know, just for a bonus, maintain you know, excellent to very solid credit quality. So if we slowed the expense growth down some through reinvesting less, then our profitability guide would have been higher. But our goal is to, to add bankers and add offices perhaps the latter part of the year next year, and continue growing a bigger balance sheet in higher growth markets so that on an overall basis, investors gonna see that value build over time. So I hope that helps you kinda bring all those pieces together.

Michael Rose: No. It's all very helpful. I appreciate all the color. I'll step back. Thanks for taking my questions. You bet. You bet. Thanks, Mike. Call. Happy New Year.

Operator: The next question comes from Catherine Mealor from KBW. Thanks. Good afternoon.

John Hairston: Hey. Happy to hear, Kevin.

Catherine Mealor: A question on just on margin. You talked about seeing modest NIM expansion in '26, but we're getting seven basis points immediately upfront from the bond restructure. It's Are do you kind of walk us through kind of what you're thinking about the margin kind of outside of that one time event. Is it you can still see a core margin having upside, or is it or it's really that modest expansion coming from the bond restructure? Outside of that, we're kinda stable once we hit that new that new rate. Thanks.

Mike Achary: Sure. I'd be glad to, Kathryn. So I think the main underpinnings of what we're referring to in terms of our ability to widen the margin you know, and grow NII next year is really around the balance sheet. So you know, we've got the loan growth pegged at mid single digits. So if you assume that's somewhere between 4-5%, you know, that should add a healthy amount of volume to our balance sheet. You know, and certainly coming with that will be you know, an intended increase of average earning assets. So I think first and foremost, it's organically expanding the balance sheet. Then you called out the bond portfolio restructure.

So that'll contribute you know, 32 basis points in terms of the, the bond yield and about seven points on the NIM. But related to the bond portfolio, we also have about a billion $1.50 of cash flow, principal cash flow, coming back to us next year. That'll be coming back at about $3.75 and going back on the balance sheet, call it, between four and a quarter and 4.5% depending where rates are.

So that's a significant improvement on top of you know, the 32 basis points related to the bond So that could be as much as, you know, somewhere between forty five and fifty basis points of bond yield improvement from the '25 to the fourth quarter 'twenty six. So that's that's significant. Then in terms of our cost of deposits, you know, we're assuming the two rate cuts next year, one in April and one in July. So given that, you know, we've got anywhere from about 25 to 30 basis points improvement in our cost of deposits from fourth quarter to fourth quarter. A lot of that's coming from our continued ability to reprice ceding maturities.

We've got about $8 billion of CD maturities next year. Those will come off at about $3.34. The assumption is that they'll go back on at about $2.80 or so. That is inclusive of about an 81% renewal rate. So the organic growth of the balance sheet is securities yield improvement, our ability to continue to reduce our cost of deposits, those are the main tailwinds, if you will, toward NIM improvement next year. Probably one of the headwinds would be you know, we do expect with a couple of rate cuts next year, our loan yield will continue to decline a bit next year.

I think at a slower pace than what you saw over the course of the fourth quarter. I think you put all that together, and, you know, our NIM improvement you know, call it somewhere between you know, twelve and fifteen basis points, maybe a little bit north of that. You know, again, with seven coming from the bond restructure. So that's how we're kinda thinking about the NIM and NII next year.

John Hairston: By next year, you mean 26? 26. Yes. I'm sorry. This is the fourth quarter call.

Catherine Mealor: I understand. Was really helpful, Mike. Thank you so much. You bet. Then maybe just as a follow-up back to the revenue producer and hiring plans that you have. You know, you hired think you said, 22 new bankers third quarter '24 through fourth quarter twenty five. So call over the past year. And we're now gonna do 50 in '26, so we're, you know, doubling the amount of hiring. I know part of you kinda gained momentum in that plan. I know throughout the course of the year.

But if you just walk us through kinda what gives you confidence in being able to hire that many more bankers this upcoming year versus there's last year, and maybe kind of the pace that we should expect that to come on board as we move through the year.

Shane Loper: Sure. Catherine, this is Shane. Thanks for that. So we're confident in it. You know, however, hiring's competitive. As every bank is looking to hire from, you know, a limited pool of bankers. And the reason we're confident is we've significantly enhanced our banker hiring discipline. To really look just like our client acquisition process. You know, our goals are to hire probably a split of 60% business bankers, 40% commercial bankers, of that up to fifty and twenty six. And those folks, you know, really are targeted to intentionally generate a better portfolio mix, a little more granular. Business. The enhanced recruiting process is yielding expected results. We're out of the gate strong. In the first quarter.

We began this early fourth quarter and it's a process that is really pretty tight in terms of, you know, ongoing meetings pipeline, review of potential hires and where they are and what their skill sets are. And we're following up on that on a, a very regular basis. So I think the strength of that process has been greatly enhanced.

And as I've said before and we've said before, this organic hiring plan is designed to be like a flywheel with bankers hired in previous years and quarters ramping up production as those current year bankers are oriented to our sales and credit So we're getting the production from those folks that the 22 that we've hired last year as we're hiring up to the 50 this year. And really to date, the bankers hired are performing as expected. And contributing to our growth, and we monitor that performance on an ongoing basis. To ensure that we're getting what we expect We're also going to continue to be opportunistic in hiring bankers in our specialty segments.

So CRE, healthcare, equipment finance, and ABL. So at this point, given the enhanced processes and the work that's going on, the pipeline, if you will, of potential candidates to bring into the company is good. I feel very good about getting that up to fifty and twenty six.

Catherine Mealor: Great. Very helpful. Thank you. Great quarter, guys, and great year.

Shane Loper: Thank you.

Operator: Up next, we'll take a question from Casey Haire from Autonomous Research.

Casey Haire: I wanted to touch on fees. The fee guide, I know, four to 5% seems like a lot, but it's you didn't have Sable, which closed in the middle of the year. And it just doesn't it feels a little conservative because if I run rate this fourth quarter here, you're already at that. That $4.25 level. So I'm just wondering if there's if we're missing something or if it's just a little conservative. Thanks.

Shane Loper: Thanks. This is Shane. I'll take that one too. So, you know, FEM come across all of our banking segments and products. You just articulated, continues to deliver. In the fourth quarter. We've grown consumer DDAs in the fourth quarter and throughout year. That's contributing to service charges, which will contribute even more as a full year of those accounts are on the books. Mobile openings have increased by 20% year over year as well as 80% of our new checking accounts are digitally active. So that really makes them very sticky and kind of primary accounts. Business service charges continue to perform.

And those are reflective of the book that we have and our strong treasury service products and services. And as we improve our overall execution in business banking, as I mentioned before, I would expect those deposits and deposit fees to follow along that improvement curve. Card fees right now are generally holding flattish in a trajectory quarter over quarter. But I think there's an opportunity there to grow in 2026 through our purchasing card and business card growth Merchant is another area where we have solid opportunity to grow as that business banking execution improves and our product bundling strategy gains momentum there.

Mortgage fees, again, continue to perform and we're ready for anything that may happen in the mortgage market with direct to consumer digital offering that we have there. You mentioned the Sable Trust fees, the, you know, wealth management continues to contribute in their strong execution with the Sable team to retain clients and grow the base there. You know, annuity sales are a little softer. In fourth quarter. But have, remained historically strong for us. You know, with our managed money contributing recurring fees at about $15.6 billion of AUM.

So given those things and our focus on growing core deposit accounts, continuing to deepen wealth management, I think the fee income target of four to 5% is solid, and we should be able to, chin that bar.

Mike Achary: So Casey, this is Mike. One item just for consideration. You know, certainly, you know, the four and a half or four to 5% might look a little anemic. Compared to what we were able to do this year. '25. But, certainly, you have the impact of stable year over year. Which kinda distorted the '25 numbers a bit. And, certainly, '25 was an absolutely outstanding year for something like annuity fees. Which is just hard to imagine if that's gonna repeat at that same level. In '26. The other reminder, I think, is you know, we have a pretty healthy specialty series of specialty lines of business in our fee income. Book.

Those things are or you know, very unpredictable quarter to quarter and even year to year. You know, things like BOLI, s b SBA fees, derivatives, very dependent upon the rate environment. Syndication fees, SBIC fees. So if you dig into the quarter, one of the things that really drove the quarter the fourth quarter, was we had a really healthy quarter in terms of SBIC fees. Which again is one of those things that's really hard to predict and really hard to count on. Year to year. So I think overall, we feel pretty good about the 4% to 5%. And certainly, you know, we'll look at adjusting that if necessary as we go through the year.

Casey Haire: Alright. Great. That's that's that's super detailed. Okay. And then just wanna finish up on the m and a question. You guys are doing all the right things, you know, upping the buyback this quarter and pulling up your P ratio and clearly making a lot of hires and committed to the organic strategy. You know? But when you talk to investors, there's whatever reason, there's just a lot of concern that you guys are still in the m and a market and, you know, open to a deal even you're saying you're not focused on it. So I guess just what would you what would you say to that concern? Regarding m and a appetite?

Mike Achary: Well, I think the think the most important thing for us to say is really consistency with what we've been saying the last couple of quarters, which is really what you just kinda repeated in terms of you know, not something we're particularly focused on. And I think the best way to describe our stance is really opportunistic. And, I don't know what else to say about it other than to describe it that way. You know, again, as we've mentioned before, we're aware of the things that are going on around us. We're not sticking our head in a in a in the sand.

So we pay attention to those things and talk to folks just as an effort to get to know folks and let them get to know us. But at the end of the day, opportunistic is really, I think, the best way we can describe how we look at that. Wow. Hopefully, that helps.

Casey Haire: It does. I just you know, when you say opportunistic, is there is an opportunity above a three year earn back? Is that something not an opportunity for Hancock, or is that something that you guys would consider?

Mike Achary: I mean, look. In today's world, I think that this threshold of you know, not exceeding a three year earn back is something that if we were to go that route, we would not cross that line. But, look, that comment does not mean we're doing anything other than just approaching this from an opportunistic point of view. Doesn't mean we have something out there ready to reveal. That makes sense?

Casey Haire: Understood, Dave. Yep. Understood. Thank you.

Operator: Thanks, Kashy. The next question comes from Brett Rabatin from Hovde Group.

Brett Rabatin: Hey, guys. Good afternoon. Wanted to start on the purchases of securities during the quarter and the $1.4 billion at $435 million Can you talk maybe about what kind of securities those were? And then will that change the effective duration of 3.9 that you had at the end of the year?

Mike Achary: It will not, first off, Bret. And in terms of the securities that we bought and sold, and the bond restructure that we announced, those were almost entirely commercial mortgage backed securities. The vast majority of the bonds that we sold as you can imagine, were bought, you know, kind of in the 2020 and 2021 vintage. You know, some in 2019. But almost exclusively commercial mortgage backed securities. In terms of the no loss bond swap that we did during the quarter, that was also entirely commercial mortgage backed securities. In terms of the bonds that we bought during the quarter, it was a variety of commercial mortgage backed, some residential some SBA.

Brett Rabatin: Okay. So you effectively didn't change the duration of the portfolio. It was more an opportunity you felt like with capital to improve the yield.

Mike Achary: Yeah. Certainly, we have the capital to invest in something like this, so we decided to pull the trigger on the 100,000,000 It felt like the right time. The markets at the time were behaving. I'm I'm sure glad we did that. When we did it instead of, you know, commencing that in the current environment. So we're very fortunate in terms of that timing. But, yeah, I think so. It was just an opportunity to enhance our NII, enhance our NIM, you know, and improve the yield on our bond portfolio.

Brett Rabatin: Okay. And then the other question I had was just around deposits. Obviously, flows in the fourth quarter, some of that somewhat seasonal If you look at last year, deposits didn't grow. They were down slightly. And it sounds like from the comments you've made so far, you're expecting to price down CDs and be fairly aggressive with managing funding costs in twenty six. I'm just curious how you guys think you're gonna grow the deposits You know, is there will there be categories where you're more aggressive, or is there anything in particular that would drive deposit growth, you know, relative to what we saw last year?

Mike Achary: Well, I'll start just real briefly. But again, the guidance for next year for 'twenty six related to deposits is low single digits. Know, that means one to 3%, I guess. But in terms of how we get that, I let Shane, you know, answer that question, but I think it has all to do with new hires that we're planning for next year.

Shane Loper: Yeah. Brett, it has some to do with new hires. It has to do with our business banking, segment really getting traction in twenty six. We believe that, you know, quick credit execution there brings a multiple of those credit balances and deposits. You know, you heard me talk a lot about the growth that we're experiencing in our geographies. That's core business. In new relationships, as we, bring new bankers on and are calling on you know, different types of clients that bring enhanced deposits. So, we're adding, we talked about investments, we're adding new capabilities in terms of treasury services, which will also be attractive to clients to bring additional deposits to us.

So I think it's a combination of new bankers, good calling efforts in our core markets, and additional investments, that will be attractive to clients to bring additional deposits to us.

Brett Rabatin: Okay. Great. That's great color. Appreciate it.

John Hairston: Thanks, Brett.

Operator: Ben Gurlinger from Citi has the next question.

Ben Gerlinger: Hey. Good afternoon, everyone. Everyone. I just wanted to touch I know we talked through the hires quite a bit in the notable step up on 26 expectations. I was kinda curious, in the did you have any sort of let's say, mandates from the new bank or kind of signed with the bottom line, do they expect to have a loan within x amount of time frame? Are we profitable in certain time frame? Because I think 50 is great for '26, but in reality, is it fair to think that actually sets up? A much stronger '27 and '28 for growth expectations?

John Hairston: Yeah. Ben, this go ahead, John. I was gonna say, Ben, your question's about, like, to breakeven, time to get to target operating model. Is that the question? Exactly. Yes.

Shane Loper: Yep. Ben, this is Shane. You know, all new bankers, whether they're business banking, commercial, or middle market, we measure their effectiveness by, risk adjusted revenue. And we look at that from a total managed and self originated perspective. And I think, it's been said on previous calls typically, we'll see kind of median, breakeven at that, you know, twenty four to twenty six month range. So, you know, when you look at, new bankers hired last year a lot of those folks are, you know, approaching halfway through where their, you know, their breakeven point is.

And then this year of that 50, I would think, you know, by the '27, they would be producing very well on a risk adjusted revenue basis. And we measure that typically in you know, multiples of the of the cost of that banker.

Ben Gerlinger: Gotcha. That's helpful. Is there any kind of mandates on because whether it be the legacy core team you have today or new bankers being added on to the gathering address, specifically given the new kind of rate environment or how do you think about both sides of the balance sheet when you hire somebody in?

John Hairston: Questions around, kind of our expectations on deposits versus loans?

Ben Gerlinger: Correct.

John Hairston: Right, Ben? Having trouble hearing you. I'm sorry to ask you to repeat. You wanna tackle that one, Shane? Deposit expectations versus loans.

Shane Loper: Yeah. I think it's you know, for all of these bankers, we're expecting a blended portfolio. We're not interested in bringing on bankers that are just going to generate you know, loan balances. I mean, that's great. But we need the full relationship because with the full relationship, I talk about that risk adjusted revenue, you know, you get the credit for the deposits. You get the additional fee income that comes through treasury and card and other activities like that.

So you know, when you think about you know, how we are asking our folks to go to market, it's it's obviously, you're gonna have to have a credit relationship at some point maybe to get into a new relationship. We are expecting a full service, you know, to include treasury card and all the other fee products to include our sophisticated wealth management products for, you know, those business owners that I spoke about.

John Hairston: Yeah. Ben, this is John. I'll I'll add some color with which I think may be helpful in what you're looking for. The we've invested a tremendous amount of money and time over the last decade with tools that help our bankers understand what the implications are of their own portfolio balance sheet. So, for example, within a specialty line that generates credit but really doesn't have capacity to generate deposits, then their portfolio under their view is transfer priced on the lending side risk adjusted for credit, credit degradation, or improvement. So they really sort of are the balance sheet manager for their portfolio.

And their conversations with leadership around their goals look almost like an overall corporate balance sheet discussion our outcome meeting. It's a very sophisticated model that took us a long time put together, and that really was the secret sauce to the improvement had an overall cost of funds while pivoting to loan growth, the last year and what we're expecting in twenty six. So it's a very balanced, assessment So I wouldn't call it as much a mandate. As it is an overall risk adjusted revenue target for the year. And based on their tenure with the company, if that's a building revenue, set over time.

Then the core folks really have to produce liquidity to keep up funding requirement for the new folks if they're credit focused. But, ultimately, their time to generate fee and deposit, income will have to have to continue. When we say risk adjusted revenue, that's literally, as Shane said, that's deposits, fees, and loans. Offset by the risk. Does that make sense?

Ben Gerlinger: Yes. Absolutely. That's helpful. Thank you.

Mike Achary: Okay. You bet. Thanks for the question.

Operator: We'll take the next question today from Gary Tenner from D. A. Davidson.

Gary Tenner: Thanks. Good afternoon. I have two quick follow-up questions. I guess the first, Mike, on your comment about NIM improvement, that 12 to 15 basis points you mentioned. Just wanted to clarify to me that sounded more like a 4Q to 4Q number, not necessarily not full year over full year. Is that the right way to think about it?

Mike Achary: Yeah. That's exactly right. '25, the '26.

Gary Tenner: Okay. And then the second, just in terms of the buyback, because I don't wanna put words in your mouth. But based on what you're talking about, you know, it being on a more level basis over the course of the year, subject to maybe leaning in if there were to be some kind of sell off Doesn't sound like there maybe is a great deal of price sensitivity at this point. It's more about on the capital ratios a little Is that also fair?

Mike Achary: Well, I think it's fair to say that we're we're cognizant of the price sensitivity. So you know, that's something we'll we'll certainly consider as we execute that program over the year. The comment was really meant that you will not see, you know, a big aggregation or be unlikely to see a big aggregation of buybacks in one quarter like we did in '25. Think it'll be, all things equal, a little bit more spread evenly across the year. I mean, that'd be literally evenly, you know. Pretty close to Got it.

Gary Tenner: Makes sense. Thanks, man.

Mike Achary: Okay. Thank you.

Operator: Up next, we'll take question from Christopher Marinac from Janney Montgomery Scott.

Christopher Marinac: Hey, thanks. Good afternoon. Just want to dig a little bit into credit quality and just was curious if there's anything on the commercial charge offs in Q4 that would sort of be more just temporary from year end cleanup or would you see perhaps a slightly higher trend going into '26?

John Hairston: Thanks, Chris, for the question. We'll wake up Ziluca to answer that.

Chris Ziluca: Ken, thanks for the question. Appreciate it. Yeah. So from a credit quality perspective, actually, really are quite pleased with what we see as kind of a very resilient portfolio. You know, over the past, really, couple of years, we've fine tuned our underwriting portfolio management processes So we feel that's helping us kinda navigate any sort of specific issues. And as you can see, you know, with both nonaccruals and criticized going down in the quarter, You know, we saw a lot less inflows in general this quarter, which kinda helped with that. Situation.

And then on the charge off side of things, know, if I look at, you know, for instance, like, the top four charge offs in the quarter, they're really in many different, you know, different industries. There's not a single industry in there. That is similar to the other. So they really are very situationally specific. And in many instances, we had, you know, some reserves in place some specific reserves in place on those matters that were already in our criticized and non accrual book.

And so that's one of the reasons why you see, you know, if you go into the more details, specific reserves actually did come down a little bit this quarter because know, we made a decision to charge those off.

Christopher Marinac: Great. So I guess the question, I think, is there room for you to let the reserve kind of run down over this next year? I mean, you're still having low losses relative to a three year, three point five year maturity. For the whole book. I'm just curious if you've got covered up kind of gradually lower that over time.

Mike Achary: Yeah, Chris. This is Mike. I mean, admittedly, we're fairly high where we are at 143 basis points. So I think the short answer is yeah, there's probably a little bit of an opportunity, but you know, we're very cognizant of not letting that ratio get too low. So I don't know that you would see us you know, below a 125 or a 130 basis points. And, again, by making that comment doesn't mean that we're trying to get to that level. It just means you know, all things equal, I don't think we could go below that threshold

Christopher Marinac: Great. And then as this year plays out, depending on how many we do or don't get in terms of Fed rate cuts, how does that impact this kind of risk pricing as you think about it? I know the nominal returns are coming down or nominal yields are coming down, but is the risk adjusted you think, gonna be stable? Or maybe that's in more internal than you share with us. But curious how you think about it? Yeah. I don't I don't think it would be at least stable. Compared to where we are now even with a couple of rate cuts.

You know, again, from Shane's comments, and I'll let him add some color if he'd like to. But you know, we're very deliberate in terms of the kind of you know, new loan growth we're we're trying to add to the balance sheet. Very deliberate in terms of the credit quality that we consider. So you know, the risk adjusted spreads you know, should not all things equal, compress considerably.

Shane Loper: Yeah. I you know, I think we can get better at our pricing and, you know, overall deal execution to improve the overall loan yield. And I know you're asking about risk adjusted spread, but think the better we can execute, the better we can price And one of our strategic initiatives for 2026 is to calibrate how we actually price and our pricing models to win business, and to put some positive pressure on loan yields. And that calibration is going to require intentional focus given potential rate reductions, competition for new deals and pressure on current clients.

So I feel like, you know, we, we have an opportunity to, put that positive pressure in and Emery Mayfield, who's our new chief banking officer, will be leading that strategic initiative as we go into the year.

Christopher Marinac: Great. Thank you for your feedback today. I appreciate it. You bet. Thank you for the call.

Operator: We'll pause for just a moment. And everyone, at this time, there are no further questions. I'll hand conference back to Mr. John Hairston for any additional or closing remarks.

John Hairston: Thanks, Lisa, for moderating the call. Thanks, everyone, your attention. Have a wonderful New Year, and we look forward to seeing you on the road.

Operator: Once again, this does conclude today's conference. We would like to thank you all for your participant participation today. You may now disconnect.