Hancock Whitney
Corporation
2024 ANNUAL REPORT
Earnings Per Share – Diluted
2023
2022
2021
2020
$5.28
$4.50
($0.54)
$5.22
$5.98
0
-1
1
2
3
4
5
6
2024
Adjusted PPNR(a)
(in millions)
$537.6
$641.1
$491.2
0
100
200
300
400
500
600
700
2024
$641.0
$635.7
2023
2022
2021
2020
0
5
10
15
20
25
2024
2023
2022
2021
2020
Total Loans
(in billions)
$23.9
$23.3
$21.8
$21.1
$23.1
0
5
10
15
20
25
30
35
2024
2023
2022
2021
2020
Total Deposits
(in billions)
$30.5
$29.1
$29.7
$29.5
$27.7
Hancock Whitney Corporation
Financial Highlights
(Dollars in thousands, except per share amounts)
2024
2023
INCOME STATEMENT DATA
Net income
$460,815
$392,602
Net interest income (TE)*
$1,093,007
$1,108,706
Adjusted pre-provision net revenue (PPNR)(a)
$641,026
$635,715
COMMON SHARE DATA
Earnings per share – diluted
$5.28
$4.50
Book value per share (period-end)
$47.93
$44.05
Tangible book value per share (period-end)
$37.58
$33.63
Cash dividends per share
$1.50
$1.20
Market data
High sales price
$62.40
$54.38
Low sales price
$41.19
$31.02
Period-end closing price
$54.72
$48.59
PERIOD-END BALANCE SHEET DATA
Securities
$7,597,154
$7,599,974
Loans
$23,299,447 $23,921,917
Earning assets
$31,857,841 $32,175,097
Total assets
$35,081,785 $35,578,573
Total deposits
$29,492,851 $29,690,059
Common stockholders’ equity
$4,127,636
$3,803,661
PERFORMANCE RATIOS
Return on average assets
1.32%
1.10%
Return on average common equity
11.66%
11.13%
Net interest margin (TE)*
3.37%
3.34%
Efficiency ratio(b)
55.36%
55.25%
Allowance for credit losses as percent of period-end loans
1.47%
1.41%
Tangible common equity ratio(c)
9.47%
8.37%
Return on average tangible common equity
15.08%
14.97%
Leverage (Tier 1) ratio
11.29%
10.10%
Common equity tier 1 (CET1) ratio
14.14%
12.33%
Total risk-based capital ratio
15.93%
13.93%
*Taxable equivalent (TE) amounts are calculated using a federal income tax rate of 21%.
(a) Adjusted pre-provision net revenue (PPNR) is net interest income (TE) and noninterest income less noninterest
expense and supplemental disclosure items. For reconciliation of this Non-GAAP financial measure, please refer
to the 4Q24 earnings release found on investors.hancockwhitney.com.
(b) The efficiency ratio is noninterest expense to total net interest income (TE) and noninterest income, excluding
amortization of purchased intangibles and supplemental disclosure items. For reconciliation of this Non-GAAP
financial measure, please refer to the 4Q24 earnings release found on investors.hancockwhitney.com.
(c) The tangible common equity ratio is common stockholders’ equity less intangible assets divided by total assets
less intangible assets.
To Our Shareholders:
2024 was a hallmark year for Hancock Whitney as we celebrated
the 125th anniversary of the original charter our founders
established in 1899. During the past one-and-a-quarter century,
we have grown from two smaller banks based in the Gulf South—
Hancock Bank in Gulfport, Mississippi, and Whitney Bank in New
Orleans—to a large regional financial services institution with
3,500 associates serving clients and communities across the five
contiguous Gulf Coast states.
Hancock Whitney ended 2024 with improved profitability,
remarkably strong capital, ample liquidity, de-risked balance sheet,
a seasoned and diversified deposit base, and a solid allowance
for credit losses. We believe we are well-positioned to exhibit our
strength, stability, and commitment to service for many years
to come.
Looking Forward
Fiscal year 2024 results reflect a year of improving profitability
and strengthening capital. As we look forward to 2025, we plan to
continue this momentum to achieving a new set of strategic goals.
We have updated our three-year Corporate Strategic Objectives
(CSOs). These CSOs are our board-approved targets for operating
the company over the next three years. They are key to every
decision we make and are reviewed annually.
Current Corporate
Strategic Objectives
(CSOs)
3-Year
Objective
(4Q27)2
4Q24
Actual
2024
Actual
ROA (Adjusted)1
1.40–1.50%
1.40%
1.32%
TCE
> 8%
9.47%
9.47%
ROTCE (Adjusted)1
> 18%
14.96%
15.17%
Efficiency Ratio1
< 55%
54.46%
55.36%
1 For additional information and non-GAAP reconciliations, please refer
to the 4Q24 earnings release found on investors.hancockwhitney.com.
2 Assumes Federal Funds Rates at approximately 3.75% for 2027.
In 2025, we plan to focus on growth and smart deployment of
capital to create opportunity and value for you, our shareholders.
In January 2025, we announced our pending acquisition of Sabal
Trust Company (Sabal), which will expand our wealth management
line of business in the high-growth Tampa/St. Petersburg and
Orlando, Florida MSAs. Additionally, we announced a multi-year
organic growth plan, which will include both hiring additional
revenue-generating associates and expanding our footprint by
opening five additional financial center locations in north Dallas,
Texas. We also expect to announce more financial center locations
in Florida as we near the completion of the Sabal transaction.
We are excited for the opportunities to come and believe we are
positioned for a successful 2025.
Financial Snapshot
December 31, 2024
• 180 financial centers
• 223 ATMs
• Total Assets: $35.1 Billion
• Total Loans: $23.3 Billion
• Total Deposits: $29.5 Billion
• Market Capitalization: $4.7 Billion
• Net Income: $460.8 Million
• Adjusted pre-provision net revenue (PPNR)3:
$641.0 Million
• Tangible common equity (TCE) ratio4 9.47%
• Common equity tier 1 (CET1) ratio 14.14%
• Full Time Equivalent associates:
Approximately 3,500
• Earned 255 Coalition Greenwich Awards for
top banking and client service since 2005
• Hancock Whitney was named one of
America’s Best Banks by Forbes for the third
consecutive year.
• Moody’s long-term issuer rating: Baa3;
outlook positive
• S&P long-term issuer rating: BBB;
outlook stable
3 For additional information and non-GAAP reconciliations,
please refer to the 4Q24 earnings release found on
investors.hancockwhitney.com.
4 The tangible common equity ratio is common stockholders’ equity
less intangible assets divided by total assets less intangible assets.
Our guidance currently reflects the expected impacts from our
organic growth plan but does not include any impacts from the
Sabal Trust Company. Loan growth projections reflect higher
demand as a result of past and future anticipated rate cuts, and
we expect growth to accelerate in the second half of 2025. We
remain focused on more granular relationships, which we believe
will continue to add value to our balance sheet in 2025. We plan
to utilize prudent pricing strategies to grow our client deposits this
year, and we expect to maintain our stable deposit base to provide
funding for loan growth.
1
We were successful at growing fee income in 2024, and we believe
we will continue to grow fee income in 2025, even excluding
the impact of the wealth management acquisition. The rate
environment still poses a challenge to net interest and fee income,
but we are confident we can achieve our targeted results. We
continue to remain focused on expanding other business lines to
offset the potential impact of proposed regulatory changes that
may put pressure on a number of deposit fees.
Excluding any impact from the pending Sabal acquisition, we
expect an increase in noninterest expense primarily as a result of
our organic growth plan.
We believe our results for 2024 reflect a company positioned well
for growth:
• Solid capital levels; top quartile capital levels including all
unrealized losses
• Commitment to maintaining a de-risked balance sheet
• Density in resilient deposit markets
• Stable, seasoned, diversified deposits; ability to organically
grow deposits
• Robust allowance for credit losses
• Proven ability to proactively manage expenses
• Technology projects that improve client experience and
enhance efficiencies
• Exceptional, dedicated, committed team of associates
Hancock Whitney Increases
Quarterly Dividend
At the regular meeting of the Hancock Whitney Board of
Directors in April, 2024, the board approved a regular second
quarter 2024 common stock cash dividend of $0.40 per
common share, an increase of $0.10 per common share, or
33%. Additionally, a dividend increase of $0.05 per common
share, or 12.5%, was approved at the January 2025 Board of
Directors meeting, bringing the common stock cash dividend
to $0.45 as of the first quarter of 2025. We are very proud to
have paid an uninterrupted quarterly dividend since 1967
and are delighted we could increase this payment to you, our
shareholders.
Hancock Whitney Renews
Share Repurchase Authorization
The Hancock Whitney Board of Directors authorized a stock
buyback program in which the company may, from time to
time, purchase up to 5% of the shares of company common
stock outstanding as of December 31, 2024 through December 31,
2026. This authorization replaced the previous stock buyback
program that expired on December 31, 2024.
Recent Accolades
Each day, Hancock Whitney associates demonstrate the core
values that guide how the company does business. Their efforts to
provide 5-star service to clients and communities regularly earn the
organization national, regional, and local recognition as a financially
sound institution and trusted financial and community partner.
In 2024, business and community accolades for the company
included these recognitions:
• BauerFinancial, Inc., a leading national independent bank
rating and analysis firm, recommended Hancock Whitney
as one of America’s strongest, safest financial institutions
for the 142nd consecutive quarter, as of the quarter ending
December 31, 2024.
• The Hermes Awards recognized Hancock Whitney as
a platinum winner for a partnership and campaign
with KABOOM! to build playgrounds in underserved
communities across the company’s footprint.
Coalition Greenwich Awards
The Crisil Coalition Greenwich 2025 Best Bank Awards in U.S.
Small Business and Middle Market Banking selects winners in
various categories to recognize the best of the best among banks
bringing quality service to clients. Based on their 2024 U.S.
Commercial Banking Study, Hancock Whitney received 14 awards,
for a total of 255 Coalition Greenwich Awards since 2005.
Best Bank – Middle Market Banking in the U.S.
• Overall Satisfaction
• Satisfaction in Cash Management
• Overall Satisfaction (South)
• Satisfaction with RM (South)
Best Bank – Small Business Banking in the U.S.
• Ease of Doing Business
• Values Long-Term Relationships
• Trust
• Satisfaction in Cash Management
• Satisfaction in Cash Management (South)
• Likelihood to Recommend
• Likelihood to Recommend (South)
• Overall Satisfaction
• Overall Satisfaction (South)
• Satisfaction with RM (South)
2
Leading Continued Growth in the Gulf South
In 2024, the company named D. Shane Loper as Hancock Whitney
Bank President, while also remaining Hancock Whitney Corporation
Chief Operating Officer. His accession as Bank President followed
former Hancock Whitney Corporation Senior Executive Vice
President Joe Exnicios’ retirement from the company after 46
devoted years of service. Mr. Loper has dedicated over 34 years
to the company, and we look forward to his continued guidance as
Hancock Whitney continues to grow across the Gulf South.
Since the organization’s founding, Hancock Whitney’s Board
of Directors has included some of the most influential business
leaders throughout the company’s Gulf South footprint. Hancock
Whitney Corporation appointed Alabama Power executive Moses
Feagin as the newest member of the Boards of Directors of
Hancock Whitney Corporation and its wholly owned subsidiary,
Hancock Whitney Bank, effective November 15, 2024. Mr. Feagin
has had an outstanding business record in his 35-year career,
including currently serving as Executive Vice President, Treasurer,
and Chief Financial Officer for Alabama Power in Birmingham,
Alabama, a subsidiary of the Atlanta, Georgia-based Southern
Company.
Building a Business That Will Never Know
Completion
Terrance Osborne, an artist deeply influenced by New Orleans’
rich culture, created this original painting to honor the milestone
anniversary Hancock Whitney celebrated this year, inspired by
the communities served throughout the Gulf South, progress, and
building a business that will never know completion.
The striking vertical design features a financial center under
construction on top, representing ongoing expansion and highlights
one of our most valuable assets—our associates.
The second layer captures the dynamic nature of modern banking,
embodying Commerce and Innovation.
The third layer represents the vibrant communities we serve,
where individuals and families work toward their financial goals
and dreams. It features Perseverance Oak—a symbol of grace,
strength, and resilience.
The foundational layer signifies Strength and Stability, the bedrock
of a business that is ever-growing yet steadfast in its principles.
Encircling the entire piece is a backdrop of water, reflecting our
regional footprint stretching across the Gulf South.
Original painting, acrylic on wood by Terrance Osborne
3
Ringing in 125 Years
In August, representatives from the company had the honor of
participating in the Nasdaq Opening Bell Ceremony at the Nasdaq
MarketSite in Times Square in New York City. This bell-ringing
hailed the forthcoming 125th anniversary of operating under the
charter that our founders established in 1899. Hancock Whitney
is proud to have honored its founders, past and current dedicated
associates, shareholders, clients, and communities for their
continued confidence and trust by participating in this ceremony.
Our journey began in 1899 where, during a national recession,
the Gulf Coast was booming. Due to proximity to railways and
waterways meeting at the Gulf of Mexico, New Orleans was an
ideal international trading post. Neighboring South Mississippi
reaped the benefits of this prosperity as well as reveling in its
own economic rush brought on by agriculture, seafood, timber,
and tourism.
As the coastal corridor flourished, several leading citizens with
Hancock County, Mississippi, and New Orleans ties recognized
the region’s economic promise and the corresponding need for
a strong, reliable bank to help people and communities succeed.
On October 9, 1899, they opened Hancock County Bank in Bay
St. Louis, Mississippi.
Over the next century, the corporate headquarters moved to
Gulfport, Mississippi, and the bank’s name changed to Hancock
Bank. The mission stayed the same—protect depositors’ money.
Throughout the 20th century, the journeys of Hancock Bank and
Whitney National Bank in New Orleans intertwined frequently.
Linked by geography, economy, and leadership, the banks
engaged in business deals that would further cement the
longstanding relationship and set the coordinates for a historic
intersection a century later.
In 2011, Hancock and Whitney came together as one strong
company, essentially doubling the size of the bank and service
footprint. Seven years later, the company established one state-
charted bank, renaming the original Hancock Bank charter as
Hancock Whitney Bank.
As we celebrate 125 years of serving the Gulf South, we are
continuously grateful to earn consistent recognition as one of
America’s strongest, safest financial institutions—an accolade we
credit to our shareholders’ confidence, our clients’ trust, and our
associates’ commitment.
To you, our shareholders, we promise to carry on our founding
core values every day as we enter our next 125 years: Honor &
Integrity, Strength & Stability, Commitment to Service, Teamwork,
and Personal Responsibility.
With gratitude,
John M. Hairston
President & CEO
4
1IRA
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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 Number)
Hancock Whitney Plaza, 2510 14th Street,
Gulfport, Mississippi
39501
(Address of principal executive offices)
(Zip Code)
(228) 868-4727
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Exchange on Which Registered
Common Stock, par value $3.33 per share
HWC
The NASDAQ Stock Market, LLC
6.25% Subordinated Notes
HWCPZ
The NASDAQ Stock Market, LLC
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 small reporting company or an
emerging growth company. See 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting stock held by nonaffiliates of the registrant was $4.1 billion based upon the closing market price on
NASDAQ on June 30, 2024. For purposes of this calculation only, shares held by nonaffiliates are deemed to consist of (a) shares held by all
shareholders other than directors and executive officers of the registrant plus (b) shares held by directors and officers as to which beneficial
ownership has been disclaimed.
On January 31, 2025, the registrant had 86,126,971 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for our annual meeting of shareholders to be filed with the Securities and Exchange Commission (“SEC” or
“the Commission”) are incorporated by reference into Part III of this Report.
Hancock Whitney Corporation
Form 10-K
Index
PART I
ITEM 1.
BUSINESS
6
ITEM 1A.
RISK FACTORS
25
ITEM 1B.
UNRESOLVED STAFF COMMENTS
38
ITEM 1C.
CYBERSECURITY
38
ITEM 2.
PROPERTIES
40
ITEM 3.
LEGAL PROCEEDINGS
41
ITEM 4.
MINE SAFETY DISCLOSURES
41
PART II
ITEM 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
42
ITEM 6.
RESERVED
43
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
44
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
80
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
81
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
141
ITEM 9A.
CONTROLS AND PROCEDURES
141
ITEM 9B.
OTHER INFORMATION
141
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
141
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
142
ITEM 11.
EXECUTIVE COMPENSATION
142
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
142
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
142
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
142
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
143
ITEM 16
FORM 10-K SUMMARY
146
1
Hancock Whitney Corporation
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
Hancock Whitney Investment Services – a wholly owned subsidiary of Hancock Whitney Corporation, through which Hancock
Whitney Corporation conducts limited broker-dealer services
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
AMERIBOR -American Interbank Offered Rate; benchmark interest rate based on an overnight unsecured loans transacted on the
American Financial Exchange
AML – Anti-money laundering
AOCI – Accumulated other comprehensive income or loss
ARG – Associate resource groups
ARRC – Alternative reference rate committee
ASC – Accounting Standards Codification
ASR– Accelerated share repurchase
ASU– Accounting Standards Update
ATM – Automated teller machine
Basel III - Basel Committee's 2010 Regulatory Capital Framework (Third Accord)
Beta – amount by which loan yields or deposit costs change in response to movements in market rates
BOLI – Bank-owned life insurance
bp(s) – basis point(s)
C&I – Commercial and industrial loans
CAMT – Corporate Alternative Minimum Tax
CARES Act – Coronavirus Aid Relief and Economic Security Act
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 deposit of $250,000 or more and brokered deposits
Coronavirus – The novel coronavirus declared a pandemic during the first quarter of 2020, resulting in prolonged market disruptions
COSO – Committee of Sponsoring Organizations of the Treadway Commission
2
COVID-19 – disease caused by the novel coronavirus
CRA – Community Reinvestment Act of 1977
CRE – Commercial real estate
CET1 – Common equity tier 1 capital as defined by Basel III capital rules
DEI – Diversity, equity and inclusion
DIF – Deposit Insurance Fund
Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act
ERM – Enterprise risk management
ESG – Environmental, Social and Governance; term used in discussion of risks and corporate policies related to those items
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
IRA of 2022 – Inflation Reduction Act of 2022
IRR – Interest rate risk
IRS – Internal Revenue Service
IT – Information Technology
LIBOR – London Interbank Offered Rate
LIHTC – Low Income Housing Tax Credit
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, as defined by ASC 326 effective January 1, 2023
NAICS – North American Industry Classification System
NII – Net interest income
n/m – not meaningful
NOL – Net operating loss
NSF – Nonsufficient 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, a non-GAAP measure
3
Reference rate reform – Refers to the global transition away from LIBOR and other interbank offered rates toward new reference
rates that are more reliable and robust
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
TDR – Troubled debt restructuring (as defined in ASC 310-40)
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
USA Patriot Act – Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act of 2001
U.S. Treasury – The United States Department of the Treasury
Volcker Rule – Section 619 of the Dodd-Frank Act and regulations promulgated thereunder, as applicable
401(k) Plan – the Hancock Whitney Corporation 401(k) Savings Plan and Trust Agreement
4
PART I
FORWARD-LOOKING STATEMENTS
This report 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. Important factors that could cause actual results to
differ materially from the forward-looking statements we make in this annual report are set forth in this Annual Report on Form 10-K
and in other reports or documents that we file from time to time with the SEC and include, but are not limited to, the following:
•
general economic and business conditions in our local markets, including conditions affecting employment levels, interest
rates, inflation, the threat of recession, volatile equity capital markets, property and casualty insurance costs, collateral values,
customer income, creditworthiness and confidence, spending and savings that may affect customer bankruptcies, defaults,
charge-offs and deposit activity; and the impact of the foregoing on client behavior (including the velocity and levels of
deposit withdrawals and loan repayment);
•
adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such
developments on customer confidence, liquidity and regulatory responses to these developments (including increases in the
cost of our deposit insurance assessments), the Company's ability to effectively manage its liquidity risk and any growth
plans, and the availability of capital and funding;
•
balance sheet and revenue growth expectations may differ from actual results;
•
the risk that our provision for credit losses may be inadequate or may be negatively affected by credit risk exposure;
•
loan growth expectations;
•
management’s predictions about charge-offs;
•
fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting the
Company’s loans;
•
the risk that our enterprise risk management framework may not identify or address risks adequately, which may result in
unexpected losses;
•
the impact of future business combinations, including the pending acquisition of Sabal Trust Company, upon our
performance and financial condition including our ability to successfully integrate the businesses;
•
deposit trends, including growth, pricing and betas;
•
credit quality trends;
•
changes in interest rates, including actions taken by the Federal Reserve Board and the impact of fluctuations in interest rates
on our financial projections, models and guidance;
•
net interest margin trends, including the impact of changes in interest rates;
•
changes in the cost and availability of funding due to changes in the deposit and credit markets;
•
success of revenue-generating and cost-reducing initiatives;
•
future expense levels;
•
changes in expense to revenue (efficiency ratio), including the risk that we may not realize and/or sustain benefits from our
efficiency and growth initiatives or that we may not be able to realize cost savings or revenue benefits in the time period
expected, which could negatively affect our future profitability;
•
the effectiveness of derivative financial instruments and hedging activities to manage risks;
•
risks related to our reliance on third parties to provide key components of our business infrastructure, including the risks
related to disruptions in services or financial difficulties of a third-party vendor;
•
risks related to potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation,
regulatory proceedings or enforcement actions;
•
risks related to the ability of our operational framework to manage risks associated with our business such as credit risk and
operation risk, including third-party vendors and other service providers, which could among other things, result in a material
breach of operating or security systems as a result of a cyber-attack or similar acts;
•
the extensive use, reliability, disruption, and accuracy of the models and data upon which we rely;
•
risks related to our implementation of new lines of business, new products and services, new technologies, and expansion of
our existing business opportunities;
•
projected tax rates;
•
future profitability;
5
•
purchase accounting impacts, such as accretion levels;
•
our ability to identify and address potential cybersecurity risks, which may be exacerbated by recent developments in
generative artificial intelligence, on our systems and/or third-party vendors and service providers on which we rely, a material
failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or
proprietary information, disruption or damage to our systems, increased costs, losses, or adverse effects to our reputation;
•
our ability to receive dividends from Hancock Whitney Bank could affect our liquidity, including our ability to pay dividends
or take other capital actions;
•
the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid
technology changes in the financial services market;
•
the impact on our financial results, reputation, and business if we are unable to comply with all applicable federal and state
regulations or other supervisory actions or directives and any necessary capital initiatives;
•
our ability to effectively compete with other traditional and non-traditional financial services companies, some of whom
possess greater financial resources than we do or are subject to different regulatory standards;
•
our ability to maintain adequate internal controls over financial reporting;
•
the financial impact of future tax legislation;
•
the effects of war or other conflicts, acts of terrorism, climate change, natural disasters such as hurricanes, freezes, flooding,
man-made disasters, such as oil spills, health emergencies, epidemics or pandemics, or other catastrophic events that may
affect general economic conditions, and/or increase costs, including, but not limited to, property and casualty and other
insurance costs;
•
uncertainties surrounding geopolitical events, trade policy, taxation policy, and monetary policy which continue to impact the
outlook for future economic growth. The potential U.S. imposition of tariffs against Mexico, Canada, and China and
consideration of responsive actions by these nations or the expansion of import fees and tariffs among a larger group of
nations is bringing greater ambiguity to the outlook for future economic growth;
•
risks related to diversity, equity and inclusion, and environmental, social and governance legislation, rulemaking, activism
and litigation, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party
affiliations;
•
changes in laws and regulations affecting our businesses, including governmental monetary and fiscal policies, legislation
and regulations relating to bank products and services, increased regulatory scrutiny resulting from bank failures, as well as
changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory
agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose
additional costs on us, or otherwise negatively affect our businesses;
•
the potential implementation of a regulatory reform agenda under the new presidential administration that is significantly
different than that of the prior administration, impacting rulemaking, supervision, examination and enforcement priorities of
the federal banking agencies; and
•
the risk that the regulatory environment may not be conducive to or may prohibit the consummation of future mergers and/or
business combinations, may increase the length of time and amount of resources required to consummate such transactions,
and the potential to reduce anticipated benefits from such mergers or combinations.
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. Factors that could cause actual results to differ from those expressed in the Company’s forward-looking
statements include, but are not limited to, those risk factors outlined in Item 1A. “Risk Factors.”
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.
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ITEM 1. BUSINESS
ORGANIZATION
Hancock Whitney Corporation (the “Company”) is registered with the Federal Reserve as a bank holding company and has elected to
be treated as a financial holding company under the Bank Holding Company Act of 1956, as amended. The Company provides
comprehensive financial services through its bank subsidiary, Hancock Whitney Bank (the “Bank”), a Mississippi state bank, and
other nonbank affiliates. Our principal executive offices are located at 2510 14th Street, Gulfport, Mississippi, 39501, and our
telephone number is (800) 522-6542. Our common stock trades on the Nasdaq Global Select Market under the ticker symbol “HWC.”
At December 31, 2024, our balance sheet totaled $35.1 billion, with loans of $23.3 billion and deposits of $29.5 billion.
NATURE OF BUSINESS AND MARKETS
The Bank offers a broad range of traditional and online banking services to commercial, small business and retail customers,
providing a variety of transaction and savings deposit products, treasury management services, secured and unsecured loan products
(including revolving credit facilities), letters of credit and similar financial guarantees. The Bank provides trust and investment
management services to retirement plans, corporations and individuals and provides its customers access to investment advisory and
brokerage products.
We offer other services through bank and nonbank subsidiaries. The Bank’s subsidiaries Hancock Whitney Equipment Finance, LLC
and Hancock Whitney Equipment Finance and Leasing, LLC, provide commercial finance products to middle market and corporate
clients, including leases and related structures. We have other subsidiaries of the bank for purposes such as facilitating investments in
new market tax credit activities and holding certain foreclosed assets. Our holding company’s nonbank subsidiary, Hancock Whitney
Investment Services, Inc., provides customers access to fixed annuity and life insurance products, investment advisory services and
also participates in select underwriting transactions, primarily for banking clients.
We operate primarily in 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. At December 31, 2024, we had 180 banking locations and 223 ATMs across our footprint.
Our operating strategy is to provide customers with the financial sophistication and range of products of a regional bank, while
successfully retaining the commercial appeal and level of service of a community bank.
Our priority is to continue to grow revenue in our existing markets with controlled expenses while providing five-star service through
enhanced technology and processes that make banking simpler for our clients. We have and will continue to invest in promoting new
and enhanced products that contribute to the goals of continuing to diversify our sources of revenue from both new and existing
clients. The pending acquisition of Florida-based Sabal Trust Company is expected to expand our trust and asset management business
with the addition of their leadership team and clients, including approximately $3 billion in assets under management. Following the
close, Florida is expected to become the state that generates the largest portion of our wealth management fees, and the Tampa/St.
Petersburg metropolitan area will become our largest individual wealth management fee market. The Sabal Company transaction is
expected to close in the second quarter of 2025, pending customary regulatory approval. In addition, we recently announced a
multiyear organic growth plan, which includes both hiring additional revenue-generating associates and expanding our footprint in
Florida and Texas. We expect to open five additional financial centers in North Dallas in 2025 and are planning additional locations in
Florida as we near the completion of the pending Sabal transaction. We added seven new bankers associated with this growth plan in
the fourth quarter of 2024, which aligns with our anticipated run rate for 2025, and likely for the foreseeable future. We also continue
to evaluate future acquisition opportunities that have the potential to increase shareholder value, provided overall economic conditions
and our capital levels would support such a transaction.
Additional information regarding the Company and the Bank is available at investors.hancockwhitney.com.
Loan Production, Underwriting Standards and Credit Review
The Bank’s primary lending focus is to provide commercial, consumer and real estate loans to consumers, small and middle market
businesses, and corporate clients in the markets served by the Bank. 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. We seek to provide quality loan products that are attractive to the
borrower and profitable to the Bank. We look to build enduring, profitable client relationships over time and maintain a strong
presence and position of influence in the communities we serve. Through our relationship-based approach, we have developed a deep
knowledge of our customers and the markets in which they operate. We continually work to provide a consistent lending process
across our banking footprint, to strengthen the underwriting criteria we employ to evaluate new loans and loan renewals, and to
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diversify our loan portfolio in terms of type, industry and geographical concentration. We believe that these measures position the
Bank to meet the credit needs of businesses and consumers in the markets we serve while pursuing a balanced strategy of loan
profitability, growth and credit quality.
The following describes the underwriting procedures of the lending function and presents our principal categories of loans. The results
of our lending activities and the relative risk of the loan portfolio are discussed in Item 7. “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”
The Bank has a set of loan policies, underwriting standards and key underwriting functions designed to achieve a consistent lending
and credit review approach. Our underwriting standards address the following criteria:
•
collateral requirements;
•
guarantor requirements (including policies on financial statements, tax returns, and guarantees);
•
appraisal requirements (and their review);
•
loan approval hierarchy;
•
standard consumer and small business credit scoring underwriting criteria (including credit score thresholds, maximum
maturity and amortization, loan-to-value limits, global debt service coverage, and debt to income limits);
•
commercial real estate and commercial and industrial underwriting guidelines (including minimum debt service coverage
ratio, maximum amortization, minimum equity requirements, and maximum loan-to-value ratios);
•
lending limits; and
•
credit approval authorities.
Additionally, our loan concentration policy sets limits and manages our exposures within specified concentration tolerances, including
those to particular borrowers, foreign entities, industries, and property types for commercial real estate. This policy sets standards for
portfolio risk management and reporting, monitoring of large borrower concentration limits and systematic tracking of large
commercial loans and our portfolio mix. We continually monitor our concentration of commercial real estate, healthcare, shared
national credits, leveraged loans and energy-related loans so that the mix is consistent with our risk tolerance. In addition, we also
employ enhanced due diligence on select customers, portfolios, industry sectors and concentrations for economic, weather or other
risk events to foster alignment between credit risk appetite and concentration risk management. Information related to our loan
portfolio concentrations is presented in Table 12, "Commercial and Industrial Loans by Industry Concentration" and Table 13,
"Commercial Real Estate-Income Producing and Construction by Property Type Concentration" in Item 7. "Management’s Discussion
and Analysis of Financial Condition and Results of Operations."
Our underwriting process is structured to require oversight that is proportional to the size and complexity of the lending relationship.
We delegate lending authority primarily to Regional or Senior Commercial Credit Officers and loan credit specialists in our
centralized underwriting units, which can be utilized to approve credit commitments for a single borrowing relationship. The limit of
delegated authority is based upon the experience, skill and training of the credit officer or loan credit specialist. Minimal loan
authority is held by leaders within the originating lines of business and is in place to primarily support limited incremental approvals
under specific parameters. Certain types and sizes of loans and relationships must be approved by either one of the Bank’s centralized
underwriting units or by Regional or Senior Regional Commercial Credit Officers, either individually or jointly with another member
of the Executive Credit Officer group, depending upon the overall size of the borrowing relationship.
Loans are underwritten in accordance with the underwriting standards and loan policies of the Bank. Loans are underwritten primarily
on the basis of the borrower’s ability to make timely debt service payments, and secondarily on collateral value. Generally, real estate
secured loans and mortgage loans are made when the borrower produces evidence of the ability to make timely debt service payments
along with appropriate equity investment in the property. Appropriate and regulatory compliant third-party valuations are required at
the time of origination for real estate secured loans.
Loans are assigned internal risk ratings using various processes depending on the type and size of the loan. Internal risk ratings are
used in the origination and renewal processes to assess risk on proposed transactions, monitor customer and portfolio quality trends,
establish a basis for appropriate pricing, and gauge the degree of attention, servicing and/or monitoring required. Internal risk ratings
are updated as new information becomes available as a result of periodic reviews of credit quality, a change in borrower performance
or approval of new loan exposure.
8
The Bank also has an independent credit review team to provide the Board of Directors and Executive Management with an
independent review and monitoring system for evaluating the corporation’s credit quality and compliance with external regulations
and internal policies, practices, and procedures related to credit risk exposure. The credit review staff assists in the early identification
of credit problems and determines that corrective measures are being taken to reduce or avoid potential losses. This includes reviewing
the activities of lending personnel to assure timely follow-up and corrective action for loans showing signs of deteriorating financial
condition. It also encompasses identifying and making corrective recommendations concerning deficiencies existing in the lending
function and contributing toward refinement of the Bank’s loan policies.
The following briefly describes the composition of our loan portfolio by segment:
Commercial and industrial
The Bank offers a variety of commercial loan services to a diversified customer base over a broad range of industries. Commercial and
industrial loans are made available to businesses for working capital (including financing of inventory and receivables), for business
expansion, to facilitate the acquisition of a business, and for the purchase of equipment and machinery, including equipment leasing,
among other items.
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, enterprise value, or commodity interest and may incorporate a personal or corporate guarantee;
however, some short-term loans may be made on an unsecured basis, including a relatively small portfolio of corporate credit cards,
generally issued as a part of overall customer relationships. Asset-based loans, such as accounts receivable and business inventory
secured loans, may have limits on borrowing that are based on the collateral values. Our source of repayment for asset-based loans is
generally the conversion of those assets to cash and may be substantially dependent on the ability of the borrower to collect amounts
due from its customers.
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.
Repayment of commercial real estate – income producing loans is generally dependent on the successful operation of the property
securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general
economy. The properties securing the commercial real estate – income producing portfolios are diverse in terms of type and
geographic location. We monitor and evaluate these loans based on collateral, geography and risk grade criteria. Past experience has
shown that commercial real estate conditions can be volatile, particularly during economic downturns, so we actively monitor
concentrations within this portfolio segment, among others.
Construction and land development
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 generally 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 operations.
Acquisition and development loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of
real estate absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are generally
based upon cost estimates, the amount of sponsor equity investment, and the projected value of the completed project. The Bank
monitors the construction process to mitigate or identify risks as they arise. Construction loans often involve the disbursement of
substantial funds with repayment largely dependent on the success of the ultimate project. Sources of repayment for these types of
construction loans may be permanent loans from external lenders, sales of developed property, or an interim loan commitment from
the Bank until permanent financing is obtained. These loans are typically closely monitored by on-site inspections and are considered
to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental
regulation of real property, general economic conditions, and the availability of long-term financing to repay the construction loan in
full.
9
Owner occupied loans for the development and improvement of real property to commercial customers to be used in their business
operations are underwritten subject to normal commercial and industrial credit standards and are generally subject to project tracking
processes, similar to those required for commercial real estate – income producing loans.
This portfolio also includes residential construction loans and loans secured by raw land not yet under development.
Residential Mortgages
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, depending on current strategies. The sale of fixed-rate mortgage loans allows the Bank to manage the interest rate
risks related to such lending operations.
Consumer
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 deposit account secured loans. Indirect nonresidential loans include automobile financing provided to the consumer
through an agreement with automobile dealerships, though we are no longer engaged in this type of lending and the remaining
portfolio continues to decrease. Consumer loans also include a relatively 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.
The Bank approves consumer loans based on income and financial information submitted by prospective borrowers as well as credit
reports collected from various credit agencies. Financial stability and credit history of the borrower are the primary factors the Bank
considers in granting such loans. The availability of collateral and whether the borrower is located in the Bank’s primary market areas
are also factors considered in making such loans.
Securities Portfolio
The investment portfolio primarily consists of U.S. agency debt securities, U.S. agency mortgage-related securities and obligations of
states and municipalities classified as either available for sale or held to maturity. We consider the available for sale portfolio as one of
many sources of liquidity available to fund our operations. Investments are made in accordance with an investment policy approved by
the Board Risk Committee. Company policies generally limit investments to 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 organization. The investment portfolio is tested monthly under multiple stressed
interest rate scenarios, the results of which are used to manage our interest rate risk position. The rate scenarios include regulatory and
management agreed upon instantaneous and ramped rate movements that may be up to plus or minus 500 basis points. The combined
portfolio has a target effective duration of two to five and a half years.
A significant portion of the securities portfolio is used to secure certain deposits and other liabilities requiring collateralization. We
limit the percentage of securities that can be pledged in order to keep a portion of securities available to support liquidity. The
securities portfolio can also be pledged to increase our line of credit available at the Federal Home Loan Bank (FHLB) of Dallas and
the Federal Reserve Bank of Atlanta.
The investments subcommittee of the asset/liability committee (ALCO) is responsible for the oversight, monitoring and management
of the investment portfolio. The investments subcommittee is also responsible for the development of investment strategies for the
consideration and approval of ALCO, including purchases, sales, classification as either available for sale or held to maturity, and
hedging activities. Final authority and responsibility for all aspects of the conduct of investment activities rests with the Board Risk
Committee, all in accordance with the overall guidance and limitations of the investment policy. See Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of Operations-Enterprise Risk Management,” for further discussion.
Deposits
The Bank has several programs designed to attract and retain deposit accounts from consumers and businesses at interest rates
generally consistent with market conditions. Deposits are the most significant funding source for the Company’s interest-earning
assets. Interest paid on deposits represents a significant component of our interest expense. Deposits are attracted principally from
clients within our retail branch network through the offering of a broad array of deposit products to individuals and businesses,
including noninterest-bearing demand deposit accounts, interest-bearing transaction accounts, savings accounts, money market deposit
accounts, and time deposit accounts. Terms vary among deposit products with respect to commitment periods, minimum balances and
applicable fees. Interest rates offered on interest-bearing deposits are determined based on a number of factors, including, but not
limited to (1) interest rates offered in local markets by competitors, (2) current and expected economic conditions, (3) anticipated
10
future interest rates, (4) the expected amount and timing of funding needs, and (5) the availability and cost of alternative funding
sources. Deposit flows are generally controlled primarily through pricing, and to a lesser extent, through promotional activities.
Deposit levels can also be, and in the past have been influenced by other factors such as inflows from government stimulus programs,
general changes in consumer and business spending behavior, including those as a result of inflation and recessionary concerns,
inflows from hurricane-related insurance proceeds, and customer confidence in the institution, among other things. Further, deposit
levels are also impacted by the level of brokered deposits, discussed below. Management believes that the rates that it offers on
deposit accounts are generally competitive with other financial institutions in the Bank’s market areas. Client deposits are attractive
sources of funding because of their stability and low relative cost. Deposits are regarded as an important part of the overall client
relationship. We consider our deposit base to be seasoned, stable and well diversified.
The Bank also holds deposits of public entities. The Bank’s strategy for acquiring public funds, as with any type of deposit, is
determined by ALCO’s funding and liquidity subcommittee, while pricing strategies are determined by ALCO’s deposit pricing
subcommittee. Typically, many public fund deposits are allocated based upon the rate of interest offered and the ability of a bank to
provide collateralization. The Bank can influence the level of its public fund deposits through pricing decisions. Public deposits
typically require the pledging of collateral, most commonly marketable securities and Federal Home Loan Bank letters of credit. This
is taken into account when determining the level of interest to be paid on public deposits. The pledging of collateral, monitoring and
management reporting represents additional operational requirements for the Bank. Public fund deposits are more volatile than other
core deposits because they tend to be price sensitive and have large balances. Public funds are only one of many possible sources of
liquidity that the Bank has available to draw upon as part of its liquidity funding strategy as set by ALCO.
Brokered deposits, including time deposits and money market accounts, totaled $6.9 million at December 31, 2024. Brokered deposits
are funds which the Bank obtains through deposit brokers who sell participations in a given bank deposit account or instrument to one
or more investors. These brokered deposits are fully insured by the FDIC because they are participated out by the deposit broker in
shares of $250,000 or less. Brokered deposit issuances are approved by ALCO as one component of its funding strategy to support
ongoing asset growth until such time customer deposit growth ultimately replaces the brokered deposits. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 (FDICIA), the Bank may continue to accept brokered deposits as long as it is either
“well-capitalized” or “adequately-capitalized.”
Trust Services
The Bank, through its trust department, offers a full range of trust services on a fee basis. In its trust capacities, the Bank provides
investment management services on an agency basis and acts as trustee for pension plans, profit sharing plans, corporate and
municipal bond issues, living trusts, life insurance trusts and various other types of trusts created by or for individuals, businesses, and
charitable and religious organizations. At December 31, 2024, the trust department of the Bank had approximately $34.9 billion of
assets under administration, comprised of investment management and investment advisory agency accounts of $5.9 billion and other
custody and safekeeping accounts of $12.0 billion, corporate trust accounts of $5.6 billion, and personal, employee benefit, estate and
other trust accounts totaling $11.4 billion. The pending acquisition of Florida-based Sabal Trust Company is expected to expand assets
under management by approximately $3 billion in 2025. The transaction is expected to close during the second quarter of 2025,
subject to receipt of regulatory approvals and the satisfaction of other customary closing conditions.
HUMAN CAPITAL RESOURCES
Our employees, whom we refer to as associates, are our most valuable asset. Associates are the collective face, voice and spirit of our
organization. To the people and communities we serve, our associates are Hancock Whitney. Our century-old culture and core values
are the consistent beacon that guides how our associates carry on our legacy with honor, integrity and service. Additionally, the
policies and practices we define for associates further reinforce the founding principles fundamental to who we are and how we do
business. Embracing the uniqueness our associates bring to our various teams fortifies us, making us a stronger and more resilient
company. This inclusivity cultivates a sense of belonging and encouragement, supporting our associates, clients, communities, and
shareholders in realizing their individual potential, aspirations and ambitions.
We promise our associates an environment where they can grow, have a voice, and are important. We are committed to providing an
associate experience and total rewards package that attracts, develops and retains top quality talent. We continually review and
develop strategies that support the needs of our associates while balancing business needs. In 2024, the Company’s human capital
strategy continued to focus on evolving to meet the ever-changing needs of our associates and supporting various initiatives to
improve operations and overall efficiency while maintaining our commitment to our clients, communities and shareholders.
A strong and impactful human capital program begins at the top. Our Board of Directors oversees our overall corporate strategy and
sets the tone for our culture, values and high ethical standards, and through its Committees, holds management accountable for results.
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The Board of Directors’ Compensation Committee expands beyond a traditional compensation-focused role to include oversight of all
human capital management efforts within Hancock Whitney. The Compensation Committee is provided periodic updates on the
Company’s human capital management efforts, including talent acquisition and retention; talent and performance management;
learning and development; total rewards; associate well-being; and inclusion and belonging through a human capital management
dashboard that it reviews periodically throughout the year. The dashboard includes a mixture of trending and point-in-time metrics
designed to provide information and analysis of workforce demographics, talent acquisition, workforce stability and total rewards and
associate programs.
Workforce Demographics
As of December 31, 2024, the Company had 3,476 full-time equivalent associates, predominately located in our core footprint of
Mississippi, Louisiana, Alabama, Florida, Texas and Tennessee, compared to 3,591 associates as of December 31, 2023.
Approximately 45% of associates were employed in Consumer Banking, 11% in Commercial Banking, 9% in Wealth Management,
and 35% in Treasury, Operations, and Other Corporate Business & Administration, respectively. As of December 31, 2024,
approximately 67% of our associates self-identified as a female and approximately 29% self-identified as a person of color. In 2024,
approximately 68% of our new hires self-identified as female and approximately 39% of new hires self-identified as people of color.
All associates are chosen on the basis of their qualifications and merit.
Inclusion and Belonging
Our 125-year-old founding principles inspire us to prioritize doing right and doing good to positively impact the lives and
communities we serve. Embracing inclusivity and a sense of belonging is at the core of our values, recognizing that diverse
perspectives, backgrounds, and experiences strengthen our ability to meet the needs of our associates, communities, clients and
shareholders. By fostering a culture that values varied viewpoints, we enhance teamwork, encourage innovative collaboration, and
improve organizational performance. This wider range of thinking empowers us to serve our stakeholders more effectively.
Our commitment to inclusion and belonging starts at the top of our organization, with oversight by the Compensation Committee.
Underscoring our ongoing commitment to a culture of inclusion and belonging, the Company has a diversity council sponsored by the
President and CEO, which consists of associates from a variety of locations, business segments, genders, races, ethnicities, tenures and
experiences who work together as thought leaders to promote and foster an inclusive workplace culture that appreciates differences
and values all perspectives.
We are committed to fostering respect, belonging and individual potential, supporting, developing, and celebrating our workforce, and
creating a high performing culture where all associates can thrive. We continuously assess the impact of our initiatives, programs and
practices to uphold these commitments to our associates and Company.
In 2024, we continued our efforts to build and attract a qualified and inclusive workforce representative of the clients and communities
we serve by cultivating new relationships, strengthening existing partnerships, and enhancing recruiting efforts with key organizations.
We were intentional with our campus recruiting, internship, and programming efforts across the footprint, to have a diverse talent pool
that included historically Black colleges and universities, among others. Our corporate internship program continued to provide an
inclusive experience that uniquely incorporates mentorship, financial literacy, community connection, and experiential learning
opportunities across the organization and footprint. We proudly hosted the 2024 class of interns, all chosen based on merit and
qualifications, and which consisted of 69% females and 39% people of color, also expanding our diverse pool of future talent and
campus advocates. Additionally, we continued to partner with many external professional organizations to expand our talent pipeline.
The Company continues to enhance its learning opportunities with programs and experiences designed to listen and learn directly from
the voices and experiences of our associates including Living Room Conversations, Cultural Tasting Series, Understanding Cultural
Bias Training, and Associate Spotlights featuring New Associates, Women of Excellence, Random Acts of Kindness, and Living Our
Core Values to help drive inclusive behaviors and inspire a growth mindset.
Last year, our Company introduced Associate Resource Groups (ARGs) to cultivate community, connection, and inclusion. These
voluntary groups, led by associates, serve as a platform for networking, creating community, professional development, and raising
awareness about relevant issues that promote inclusion and belonging in the workplace and beyond. All ARGs are open to all
associates regardless of background. By engaging in our ARGs, associates can learn, celebrate, and offer support to one another,
fostering stronger teams, increased productivity, and a culture of innovation. Launched in March 2023, the SheConnects ARG aims to
establish an environment that empowers women to connect, learn, and uplift one another. In August 2023, the Able ARG was
introduced to promote unity, facilitate meaningful conversations, and provide support for individuals with disabilities and their
caregivers. The Black Professional Collaborative ARG, launched in 2024, creates avenues for professional growth, development, and
support for African American/Black associates. Moreover, the Young Professional Network ARG empowers early career
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professionals to network with peers and seasoned associates, gaining insights into the unique challenges and opportunities at the early
stages of their careers for development and growth.
Total Rewards
We strive to provide a comprehensive total rewards package that meets the various needs of our associates, including market-
competitive pay and robust benefit options that attract and retain top talent. For our total rewards programs to remain competitive, we
engage in nationally recognized third-party compensation and benefits surveys and utilize the expertise of an independent executive
compensation firm, an outside benefits broker, and benefits consulting firms. These resources are used to objectively evaluate our
compensation and benefits packages and benchmark them against industry peers and similarly situated organizations on an annual
basis.
Our compensation philosophy is a performance-based strategy which aligns our programs with our business goals and objectives. Base
salaries are established considering competitive market rates for specific roles as well as the experience and performance levels of our
associates. The Company rewards associates for individual performance through merit-based compensation increases and provides
additional opportunities for financial advancement through promotions and various incentive opportunities.
We promote a pay-for-performance philosophy and motivate a majority of our associate population with incentive compensation
designed to drive strategies, behaviors and business goals while effectively balancing risk and reward. We also use long-term
incentive compensation to attract and retain top talent and to keep associates focused on long-term company performance, significant
milestone achievements and creation of shareholder value.
Talent Acquisition, Development and Retention
Hancock Whitney is dedicated to attracting, developing and retaining exceptional talent and strives to keep associates motivated,
rewarded and appreciated through our commitment to competitive total rewards packages, career development, and an inclusive
workplace. In 2024, total applications saw an 18% increase. Of the approximate 881 requisitions filled that year, 39% were filled
internally. Moreover, 11% of the workforce received promotions in 2024, with 70% being females and 36% people of color. The focus
was on rewarding merit and achievement while nurturing and progressing skilled talent across various business segments.
Recognizing the development of our associates is critical to our success, the Company invests in resources so that associates have
access to the tools needed to do their jobs effectively and succeed within the organization, including technical, skills-based,
management and leadership programs, as well as formal talent, performance management and succession planning processes. Through
customized learning plans, associates are provided targeted resources in order to gain the knowledge and skills needed to successfully
perform their duties in accordance with the Company’s practices. Associates also have access to a full suite of optional classes and
self-directed resources to personalize career development and prioritize their unique needs and growth opportunities. Additionally, the
Company supports the use of external resources such as professional conferences, specialized seminars, banking schools and other
development and leadership programs to supplement associates’ professional development and provides a tuition assistance program
for those seeking to deepen their education at undergraduate and graduate levels.
In 2024, Hancock Whitney launched a prescriptive learning platform that reimagined, reshaped and redefined learning and upskilling.
Our agile Learning and Development strategy, LEARN (Leverage Education and Resources Now), offers individualized learning and
development solutions for associates at all levels. Built on the ethos of associate growth, voice, and importance, LEARN enhances the
associate learning experience. LEARN fosters a culture that gives all associates permission to learn and grow, expanding opportunities
and creating tailored pathways for development.
Health, Safety and Well-Being
At Hancock Whitney, supporting the overall health, safety, and well-being of our associates are top priorities for the Company and
some of the most valuable investments we make as a company. We are committed to providing robust, competitive benefits and
programs that support associates in all aspects and stages of life. We continually explore opportunities for new or enhanced benefits
and other programs to better support the overall well-being of our associates.
Supplementing our various benefit plans and programs, the Hancock Whitney Associate Assistance Fund provides assistance for
associates with personal and financial needs during times of unexpected or unavoidable emergencies or disasters. The fund is managed
by the Gulf Coast Community Foundation and funded by contributions from the Company as well as associates, board members and
partner organizations.
Rooted in the Gulf South, our Company and associates are frequently impacted by hurricanes and other storms. We believe it is
paramount to provide relief and recovery resources to help associates and their families remain safe and recover quickly when a storm
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hits. Throughout the year, especially during hurricane season, we encourage associates to prepare for inclement weather and natural
disasters. We provide associates with resources to prepare for and respond to emergencies, including the American Red Cross,
Employee Assistance Program, and Hancock Whitney Associate Assistance Fund. We periodically prompt associates to review and
update contact information and emergency contact information in our HR system to ensure that they receive Company
communications and outreach during emergency situations.
We remain committed to providing a safe, secure environment for our associates and clients. We continuously remind associates of
their critical role in maintaining a safe and secure working environment. Trainings and communications are provided to educate and
reinforce our safety and security protocols including safely accessing facilities and workspaces; safeguarding information and devices;
and preventing, detecting, and reporting crimes and suspicious activities.
Engagement
We strive to create a culture of engagement where each associate knows they are important, valued, and can grow. We engage our
associates through various channels including written, digital and face-to-face communications with targeted audiences ranging from
all associates to core leaders, teams and one-on-ones. We encourage continuous open communication with our associates and leaders
where input is welcomed through an environment of mutual respect and trust. We promote a workplace focused on gratitude and
appreciation through our Value of You recognition program, Community Connection volunteer program as well as other associate
campaigns throughout the year.
We generally conduct associate engagement surveys on a biennial basis to measure our associates’ connection and commitment to the
Company and its goals. In 2024, we conducted an anonymous online associate engagement survey to measure associate engagement
and collect associate feedback. During the survey, associates answered questions and provided comments to capture their feelings
about the Company, leadership, and their team of associates. Our Company leaders are grateful for the consistent, strong response
from our associates, indicating an engaged, connected and committed workforce. The 2024 survey reflected almost three out of every
four associates feel a sense of belonging and respect across the Company. Using the results of the engagement survey, a leadership
series was launched to communicate ongoing leader insights and engage associates to reiterate the key role our associates play in
shaping our path forward.
Open Communication
Our Open Communication Policy cultivates a culture of open and honest communication between managers and associates as a day-
to-day business practice. Managers set the tone of the workplace by welcoming input from associates in an environment of mutual
respect and trust. We believe this process helps to define any issue and work toward resolving it in an informal manner.
We encourage associates to work with their immediate managers to resolve questions, conflicts and disputes. If concerns involve the
immediate manager, or if the issue has not been resolved appropriately, associates may escalate the issue to the next-level manager
and ultimately Human Resources.
Integrity in Action
Upholding the core values of Honor & Integrity, Strength & Stability and Personal Responsibility and further protecting our clients,
associates, and Company’s financial safety and soundness, our associates are expected to conduct business in a lawful, ethical and fair
manner. All associates are strongly encouraged to report ethical concerns related to matters such as accounting, internal controls,
auditing, discrimination, and harassment and/or violations or suspected violations of laws or regulations, our Code of Conduct, or
other Company policies and procedures by clients, associates, or vendors. Integrity in Action, our whistleblower policy, provides our
associates and others with a confidential method of reporting illegal, unethical, or unsafe activity. Administered through a third-party
provider, the independent reporting service allows individuals to make reports confidentially by telephone or online 24 hours a day,
seven days a week and allows for anonymous reports, if desired. All reports are investigated by Human Resources and/or Internal
Audit and monitored through final disposition. Updates are provided to the Audit Committee on a quarterly basis. A copy of our
Integrity in Action Whistleblower Policy is available under Governance Documents on our website, www.hancockwhitney.com.
COMPETITION
The financial services industry is highly competitive and may become more competitive as a result of recent and ongoing legislative,
regulatory, and technological changes, as well as continued consolidation within the financial services industry and the addition of
nontraditional competitors into our markets, including financial technology companies (fintechs). The traditional factors in the
competition for deposits and loans are interest rates and fee structures associated with the various products offered. We also compete
through the efficiency, quality and range of services and products we provide, as well as the convenience provided by an extensive
network of customer access channels including local branch offices, ATMs, online and mobile banking, and telebanking centers. In
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attracting deposits and in our lending activities, we generally compete with other commercial banks, savings associations, credit
unions, mortgage banking firms, securities brokerage firms, mutual funds and insurance companies, and other financial and non-
financial institutions offering similar products.
The continuing consolidation within the financial services industry is leading to larger, better capitalized and geographically diverse
institutions with enhanced product and technology capabilities. In addition to competition from fintechs, certain technology companies
are working to provide financial services directly to their customers. These nontraditional financial service providers have been
successful in developing digital and other products and services that effectively compete with traditional banking services, but are in
some cases subject to fewer regulatory restrictions than banks and bank holding companies, allowing them to operate with greater
flexibility and lower cost structures. Further, bank failures have and may in the future diminish public confidence in small and
regional banks’ abilities to safeguard deposits in excess of federally insured limits, which could prompt customers to maintain their
deposits with larger financial institutions.
We believe our relationship-based approach to banking has allowed us to remain competitive in our markets as many of our financial
services clients are generally influenced by convenience, quality of service, personal contacts, price of services, availability of
products, and technology that supports the client experience. We have made and continue to make investments in technology to
develop the Company's digital platform and capabilities to remain competitive in meeting our clients’ evolving needs and
expectations.
AVAILABLE INFORMATION
We make available free of charge, on or through our investor relations website investors.hancockwhitney.com, our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, and amendments to such filings, as soon as reasonably practicable after each is electronically filed
with, or furnished to, the SEC. The SEC maintains a website that contains the Company’s reports, proxy statements, and the
Company’s other SEC filings. The address of the SEC’s website is www.sec.gov. We include our website address throughout this
filing only as textual references. The information contained on our website is not incorporated in this document by reference.
Also available on our investor relations website are our corporate governance documents, including our Corporate Governance
Guidelines, Code of Business Ethics for Officers and Associates, Whistleblower Policy, Code of Ethics for Financial Officers, Code of
Ethics for Directors and Committee Charting. These documents are also available in print to any shareholder who requests a copy.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under federal and state law. This discussion is a summary and is
qualified in its entirety by reference to the particular statutory and regulatory provisions described below and is not intended to be an
exhaustive description of the statutes or regulations applicable to the Company or the Bank or all aspects of those statutes and
regulations.
Changes in laws and regulations may alter the structure, regulation and competitive relationships of financial institutions. In addition,
bank regulatory agencies may issue enforcement actions, policy statements, interpretive letters and similar written guidance applicable
to the Company or the Bank. It cannot be predicted whether and in what form new laws and regulations, or interpretations thereof,
may be adopted or the extent to which the business of the Company and the Bank may be affected thereby, but they may have a
material adverse effect on our business, operations, and earnings.
Supervision, regulation, and examination of the Company, the Bank, and our respective subsidiaries by the appropriate regulatory
agencies, as described herein, are intended primarily for the protection of consumers, bank depositors and the Deposit Insurance Fund
(DIF) of the FDIC, and the U.S. banking and financial system, rather than holders of our capital stock.
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Bank Holding Company Regulation
The Company is subject to extensive supervision and regulation by the Board of Governors of the Federal Reserve System (the
Federal Reserve) pursuant to the Bank Holding Company Act of 1956, as amended (the BHC Act). We are required to file with the
Federal Reserve periodic reports and such other information as the Federal Reserve may request. Ongoing supervision is provided
through regular examinations by the Federal Reserve and other means that allow the regulators to gauge management’s ability to
identify, assess and control risk in all areas of operations in a safe and sound manner and to ensure compliance with laws and
regulations. The Company is subject to regulation by the State of Mississippi under its general business corporation laws, and to
supervision by the Mississippi Department of Banking and Consumer Finance (the MDBCF). The Federal Reserve may also examine
our non-bank subsidiaries. Various federal and state bodies regulate and supervise our brokerage, investment advisory and insurance
agency operations. These include, but are not limited to, the SEC, the Financial Industry Regulatory Authority (FINRA), federal and
state banking regulators and various state regulators of insurance and brokerage activities.
Violations of laws and regulations, or other unsafe and unsound practices, may result in regulatory agencies imposing fines or
penalties, cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce these
remedies directly against officers, directors, employees and other parties participating in the affairs of a bank or bank holding
company. Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions,
federal and state banking regulators have the authority to compel or restrict certain actions on our part if they determine that we have
insufficient capital or other resources, or are otherwise operating in a manner that may be deemed to be inconsistent with safe and
sound banking practices. Under this authority, our regulators can require us or our subsidiaries to enter into informal or formal
supervisory agreements, including board resolutions, memoranda of understanding, written agreements and consent or cease and desist
orders, pursuant to which we would be required to take identified corrective actions to address cited concerns and to refrain from
taking certain actions.
If we become subject to and are unable to comply with the terms of any future regulatory actions or directives, supervisory
agreements, or orders, then we could become subject to additional, heightened supervisory actions and orders, possibly including
consent orders, prompt corrective action restrictions and/or other regulatory actions, including prohibitions on the payment of
dividends on our common stock and, if issued, preferred stock. If our regulators were to take such additional supervisory actions, then
we could, among other things, become subject to significant restrictions on our ability to develop any new business, as well as
restrictions on our existing business, and we could be required to raise additional capital, dispose of certain assets and liabilities within
a prescribed period of time, or both. The terms of any such supervisory action could have a material negative effect on our business,
reputation, operating flexibility, financial condition, and the value of our common stock and preferred stock, if issued.
Activity Limitations. The Company is registered with the Federal Reserve as a bank holding company and has elected to be treated as a
financial holding company under the BHC Act. Bank holding companies generally are limited to the business of banking, managing or
controlling banks, and other activities that the Federal Reserve determines to be closely related to banking, or managing or controlling
banks as to be a proper incident thereto. Bank holding companies are prohibited from acquiring or obtaining control of more than five
percent (5%) of any class of voting interests of any company that engages in activities other than those activities permissible for bank
holding companies. Examples of activities that the Federal Reserve has determined to be permissible are making, acquiring, brokering,
or servicing loans; leasing personal property; providing certain investment or financial advice; performing certain data processing
services; acting as agent or broker in selling credit life insurance and other insurance products in certain locations; securities
brokerage; and performing certain insurance underwriting activities. The BHC Act does not place domestic geographic limits on
permissible non-banking activities of bank holding companies. Even with respect to permissible activities, however, the Federal
Reserve has the power to order a holding company or its subsidiaries to terminate any activity or its control of any subsidiary when the
Federal Reserve has reasonable cause to believe that continuation of such activity or control of such subsidiary would pose a serious
risk to the financial safety, soundness or stability of any bank subsidiary of that holding company.
As a financial holding company, we are permitted to engage directly or indirectly in a broader range of activities than those permitted
for a bank holding company that has not elected to be a financial holding company. Financial holding companies may also engage in
activities that are considered to be financial in nature, as well as those incidental or, if determined by the Federal Reserve,
complementary to financial activities. If the Bank ceases to be “well capitalized” or “well managed” under applicable regulatory
standards, or if the Bank receives a rating of less than satisfactory under the Community Reinvestment Act of 1977 (CRA), the
Federal Reserve may, among other things, place limitations on our ability to conduct these broader financial activities or, if the
deficiencies persist, require us to divest the banking subsidiary or the businesses engaged in activities permissible only for financial
holding companies.
As further described below, the Company and the Bank are each well-capitalized under applicable regulatory standards as of
December 31, 2024, and the Bank has a rating of “Satisfactory” in its most recent CRA evaluation.
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Source of Strength Obligations. A bank holding company such as us is required to act as a source of financial and managerial strength
to its subsidiary bank and to maintain resources adequate to support its bank. The term “source of financial strength” means the ability
of a company, such as us, that directly or indirectly owns or controls an insured depository institution, such as the Bank, to provide
financial assistance to such insured depository institution in the event of financial distress. The appropriate federal banking agency for
the depository institution (in the case of the Bank, this agency is the FDIC) may require reports from us to assess our ability to serve as
a source of strength and to enforce compliance with the source of strength requirements by requiring us to provide financial assistance
to the Bank in the event of financial distress. If we were to enter bankruptcy or become subject to the orderly liquidation process
established by the Dodd-Frank Act, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank
would be assumed by the bankruptcy trustee or the FDIC, as appropriate, and entitled to a priority of payment. In addition, the FDIC
provides that any insured depository institution generally will be liable for any loss incurred by the FDIC in connection with the
default of, or any assistance provided by the FDIC to, a commonly controlled insured depository institution. The Bank is an FDIC-
insured depository institution and thus subject to these requirements.
Acquisitions. The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve or waiver of
such prior approval before it (1) acquires ownership or control of any voting shares of any bank if, after such acquisition, such bank
holding company will own or control more than five percent (5%) of any class of the voting shares of such bank, (2) acquires all of the
assets of a bank, or (3) merges with any other bank holding company. In reviewing a proposed covered acquisition, among other
factors, the Federal Reserve considers (1) the financial and managerial resources of the companies involved, including pro forma
capital ratios; (2) the risk to the stability of the United States banking or financial system; (3) the convenience and needs of the
communities to be served, including performance under the CRA; and (4) the effectiveness of the companies in combating money
laundering. The Federal Reserve also reviews any indebtedness to be incurred by a bank holding company in connection with a
proposed acquisition to ensure that the bank holding company can service such indebtedness without adversely affecting its ability to
serve as a source of strength to its bank subsidiaries. Well capitalized and well managed bank holding companies are permitted to
acquire control of banks in any state, subject to federal regulatory approval, without regard to whether such a transaction is prohibited
by the laws of any state. However, a bank holding company may not, following an interstate acquisition, control more than 10% of
nationwide insured deposits or 30% of deposits within any state in which the acquiring bank operates. States have the right to lower
the 30% limit, although no states within the Company’s current market area have done so. Federal banking regulators are also required
to take into account compliance with the CRA in evaluating any proposal for interstate bank acquisitions.
Change in Control. Federal law restricts the amount of voting stock of a bank holding company or a bank that a person may acquire
without the prior approval of banking regulators. Under the Change in Bank Control Act and the regulations thereunder, a person or
group must give advance notice to and obtain approval from the Federal Reserve before acquiring control of any bank holding
company, such as the Company. The Change in Bank Control Act creates a rebuttable presumption of control if a member or group
acquires a certain percentage or more of any class of a bank holding company’s voting stock. As a result, a person or entity generally
must provide prior notice to the Federal Reserve before acquiring the power to vote 10% or more of our outstanding common stock.
The overall effect of such laws is to make it more difficult to acquire a bank holding company by tender offer or similar means than it
might be to acquire control of another type of corporation. Consequently, shareholders of the Company may be less likely to benefit
from the rapid increases in stock prices that may result from tender offers or similar efforts to acquire control of other companies.
Investors should be aware of these requirements when acquiring shares of our stock.
Anti-tying rules. A bank holding company and its subsidiaries are prohibited from engaging in certain tying arrangements in
connection with extensions of credit, leases or sales of property, or furnishing of services.
Volcker Rule. The Volcker Rule prohibits us and our subsidiaries from (i) engaging in certain proprietary trading for our own account,
and (ii) acquiring or retaining an ownership interest in or sponsoring a “covered fund,” all subject to certain exceptions. The Volcker
Rule also specifies certain limited activities in which we and our subsidiaries may continue to engage, and required us to implement a
compliance program.
Capital Requirements
The Company and the Bank are required under federal law to maintain certain minimum capital levels based on ratios of capital to
total assets and capital to risk-weighted assets. The required capital ratios are minimums, and the federal banking agencies may
determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to
operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as
well as the institution’s exposure to a decline in the economic value of its capital due to changes in interest rates, and an institution’s
ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an
institution’s overall capital adequacy. The following is a brief description of the relevant provisions of these capital rules and their
potential impact on our capital levels.
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The Company and the Bank are subject to the following risk-based capital ratios: a common equity Tier 1 (CET1) risk-based capital
ratio, a Tier 1 risk-based capital ratio, which includes CET1 and additional Tier 1 capital, and a total risk-based capital ratio, which
includes Tier 1 and Tier 2 capital. CET1 is primarily comprised of the sum of common stock instruments and related surplus net of
treasury stock, retained earnings, and certain qualifying minority interests, less certain adjustments and deductions, including with
respect to goodwill, intangible assets, mortgage servicing assets and deferred tax assets subject to temporary timing differences.
Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock, tier 1 minority interests and
grandfathered trust preferred securities. Tier 2 capital consists of instruments disqualified from Tier 1 capital, including qualifying
subordinated debt, other preferred stock and certain hybrid capital instruments, and a limited amount of allowance for credit loss up to
a maximum of 1.25% of risk-weighted assets, subject to certain eligibility criteria. The capital rules also define the risk-weights
assigned to assets and off-balance sheet items to determine the risk-weighted asset components of the risk-based capital rules,
including, for example, certain “high volatility” commercial real estate, past due assets, structured securities and equity holdings.
The leverage capital ratio, which serves as a minimum capital standard, is the ratio of Tier 1 capital to quarterly average total assets
net of goodwill, certain other intangible assets, and certain required deduction items. The required minimum leverage ratio for all
banks and bank holding companies is 4%.
In addition, the capital rules also require a capital conservation buffer of CET1 capital of 2.5% above each of the minimum capital
ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress.
These buffer requirements must be met for a bank or bank holding company to be able to pay dividends, engage in share buybacks or
make discretionary bonus payments to executive management without restriction.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), among other things, requires the federal bank
regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital
requirements. FDICIA establishes five regulatory capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,”
“significantly undercapitalized,” and “critically undercapitalized.” A depository institution’s capital tier will depend upon how its
capital levels compare to various relevant capital measures and certain other factors, as established by regulation. FDICIA generally
prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be undercapitalized. FDICIA imposes progressively more
restrictive restraints on operations, management and capital distributions, depending on the category in which an institution is
classified. Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions may not accept brokered deposits absent a waiver from the FDIC, are subject to
growth limitations and are required to submit capital restoration plans for regulatory approval. A depository institution’s holding
company must guarantee any required capital restoration plan, up to an amount equal to the lesser of 5 percent of the depository
institution’s assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply
with the plan. Federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based
on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. If a depository institution fails to
submit an acceptable plan, it is treated as if it is significantly undercapitalized. The Bank was well capitalized at December 31, 2024,
and brokered deposits are not restricted.
To be well-capitalized, the Bank must maintain at least the following capital ratios:
•
5.0% leverage ratio.
•
6.5% CET1 to risk-weighted assets;
•
8.0% Tier 1 capital to risk-weighted assets; and
•
10.0% Total capital to risk-weighted assets;
The Federal Reserve has different requirements than those imposed under the current capital rules applicable to banks. For purposes of
the Federal Reserve’s Regulation Y, including determining whether a bank holding company meets the requirements to be a financial
holding company, bank holding companies, such as the Company, must maintain a Tier 1 risk-based capital ratio of 6.0% or greater
and a total risk-based capital ratio of 10.0% or greater to be well-capitalized. If the Federal Reserve were to apply the same or a very
similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of
December 31, 2024 would exceed such revised well-capitalized standard. Also, the Federal Reserve may require bank holding
companies, including the Company, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon
general economic conditions and a bank holding company’s particular condition, risk profile and growth plans.
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Throughout 2024, the Company’s and the Bank’s regulatory capital ratios were above the applicable well-capitalized standards and
met the capital conservation buffer requirements. Based on current estimates, we believe that the Company and the Bank will continue
to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2025. Risk-based
capital ratios and the leverage capital ratio at December 31, 2024 for the Company and the Bank were as follows:
Minimum Capital
Well-Capitalized
Plus Capital
Under Prompt
Conservation
Minimum
Corrective Action*
Buffer
Company
Bank
Tier 1 leverage capital ratio
4.00 %
5.00 %
N/A
11.29% 10.91%
Risk-based capital ratios
Common Equity Tier 1 capital
4.50 %
6.50 %
7.00 %
14.14% 13.67%
Tier 1 capital
6.00 %
8.00 %
8.50 %
14.14% 13.67%
Total risk-based capital (Tier 1 plus Tier 2)
8.00 %
10.00 %
10.50 %
15.93% 14.83%
*Applies to Bank.
Payment of Dividends
Hancock Whitney Corporation is a legal entity separate and distinct from Hancock Whitney Bank and other subsidiaries. Its primary
source of cash, other than securities offerings, is dividends from the Bank. Under the Federal Deposit Insurance Act, no dividends may
be paid by an insured bank if the bank is in arrears in the payment of any insurance assessment due to the FDIC. The payment of
dividends by the Bank may also be affected by other regulatory requirements and policies, such as the maintenance of adequate
capital. If, in the opinion of the applicable regulatory authority, a bank under its jurisdiction is engaged in, or is about to engage in, an
unsafe or unsound practice (which, depending on the financial condition of the bank, could include the payment of dividends), such
authority may require, after notice and hearing, that such bank cease and desist from such practice. The FDIC has formal and informal
policies which provide that insured banks should generally pay dividends only out of current operating earnings.
Under a Federal Reserve policy adopted in 2009, the board of directors of a bank holding company must consider certain factors to
ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic
earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong financial position. As a
general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should consult with the
Federal Reserve and eliminate, defer or significantly reduce the bank holding company’s dividends if:
•
its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is
not sufficient to fully fund the dividends;
•
its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective
financial condition; or
•
it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Bank Regulation
The operation of the Bank is subject to state and federal statutes applicable to state banks and the regulations of the Federal Reserve,
the FDIC and the Consumer Financial Protection Bureau (CFPB). The operations of the Bank may also be subject to applicable Office
of the Comptroller of the Currency (OCC) regulation to the extent state banks are granted parity with national banks. Such statutes and
regulations relate to, among other things, investments, loans, mergers and consolidations, issuances of securities, payments of
dividends, establishment of branches, consumer protection and other aspects of the Bank’s operations. Violations of laws and
regulations, or other unsafe and unsound practices, may result in these agencies imposing fines or penalties, cease and desist orders, or
taking other enforcement actions. Under certain circumstances, these agencies may enforce these remedies directly against officers,
directors, employees and other parties participating in the affairs of a bank or bank holding company.
Safety and Soundness. The Federal Deposit Insurance Act requires the federal prudential bank regulatory agencies, such as the FDIC,
to prescribe, by regulation or guideline, operational and managerial standards for all insured depository institutions relating to: (1)
internal controls; (2) information systems and audit systems; (3) loan documentation; (4) credit underwriting; (5) interest rate risk
exposure; and (6) asset quality. The agencies also must prescribe standards for asset quality, earnings, and stock valuation, as well as
standards for compensation, fees and benefits. The federal banking agencies have adopted regulations and Interagency Guidelines
Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set forth the safety and
soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired. Under
the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require
the bank to submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety
and soundness compliance plans.
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Examinations. The Bank is subject to regulation, reporting, and periodic examinations by the FDIC, the MDBCF, and the CFPB.
These regulatory authorities routinely examine the Bank’s loan and investment quality, consumer compliance, management policies,
procedures and practices and other aspects of operations. The FDIC has adopted the Federal Financial Institutions Examination
Council’s (FFIEC) rating system and assigns each financial institution a confidential composite rating based on an evaluation and
rating of six essential components of an institution’s financial condition and operations, including Capital Adequacy, Asset Quality,
Management, Earnings, Liquidity and Sensitivity to Market Risk (CAMELS), as well as the quality of risk management practices.
Consumer Protection. The CFPB has rule writing, examination, and enforcement authority with regard to the Bank’s (and the
Company’s) compliance with a wide array of consumer financial protection laws, including the Truth in Lending Act, the Real Estate
Settlement Procedures Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Equal Credit Opportunity Act, the Home
Mortgage Disclosure Act, the S.A.F.E. Mortgage Licensing Act, the Fair Credit Reporting Act (except Sections 615(e) and 628), the
Fair Debt Collection Practices Act, and the Gramm-Leach-Bliley Act (sections 502 through 509 relating to privacy), among others.
The CFPB has broad authority to enforce a prohibition on unfair, deceptive, or abusive acts and practices. The Bank is subject to
direct supervision and examination by the CFPB. The CFPB also may examine our other direct or indirect subsidiaries that offer
consumer financial products or services. In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and
regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce
consumer protection rules adopted by the CFPB against certain institutions.
In March 2023, the CFPB issued a final rule to implement Section 1071 of the Dodd-Frank Act, which requires lenders to collect, and
report information about lending to “women owned, minority-owned and small businesses.” This rule is due to take effect in stages
depending upon lending volume of the depository institution beginning in 2025. However, the final rule has been subject to ongoing
court challenges and may be revised by the CFPB. The Bank is monitoring these developments.
In December 2024, the CFPB finalized a rule that would substantially limit overdraft fees that larger institutions such as the Bank may
charge consumers, with an effective date of October 1, 2025. If implemented, this rule would impact the Bank’s non-interest income.
However, this rule has been challenged in court and may be revised by the CFPB. The Bank is monitoring these developments.
Branching. The Dodd-Frank Act authorizes national and state banks to establish de novo branches in other states to the same extent a
bank chartered in those states would be so permitted.
Deposit Insurance Assessments. The deposits of the Bank are insured by the FDIC up to applicable limits. The Deposit Insurance Fund
(DIF) of the FDIC insures the deposits of the Bank generally up to a maximum of $250,000 per depositor, per insured bank, for each
account ownership category. The FDIC charges insured depository institutions quarterly premiums to maintain the DIF. Deposit
insurance assessments are based on average total consolidated assets minus its average tangible equity and applies one of four risk
categories determined by reference to its capital levels, supervisory ratings, and certain other factors. The assessment rate schedule can
change from time to time, at the discretion of the FDIC, subject to certain limits. In October of 2022, the FDIC adopted a final rule to
increase the initial base deposit insurance assessment rate by two basis points, applicable to all insured depository institutions, which
began with the first quarterly assessment period in 2023 and will remain in effect until the level of the DIF reserve ratios to insured
deposits meets the FDIC's long-term goals. In addition, under section 13(c)(4)(G) of the Federal Deposit Insurance Act, a loss to the
DIF arising from the use of a systemic risk exception must be recovered from one or more special assessments on insured depository
institutions, depository institution holding companies (with the concurrence of the Secretary of the Treasury with respect to holding
companies), or both, as the FDIC determines to be appropriate. In November 2023, the FDIC approved a final rule to implement a
special assessment to recover the loss to the DIF associated with two bank failures that occurred during early 2023. The assessment
base for the special assessment is equal to estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first
$5 billion, to be collected at an annual rate of approximately 13.4 basis points for an anticipated total of eight quarterly assessment
periods, beginning with the first quarterly assessment period of 2024.
In 2024, as a result of changes in loss estimates for the 2023 failures, the FDIC began providing quarterly updates to the collection
period for the special assessment for impacted institutions. Based on the most recent notification received in December 2024, the
FDIC currently projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter
collection period, at an estimated quarterly rate of 1.69 basis points. The projected number of additional quarters and the estimated
rate applicable to those quarters are subject to change depending on any future adjustments to estimated losses or amendments to
uninsured deposits. Under the final rule, the FDIC retains the ability to cease collection early, extend the special assessment collection
period one or more quarters beyond the initial eight-quarter collection period, or impose a final shortfall special assessment on a one-
time basis after the receiverships for the two banks are terminated. The collection period may change due to updates to the estimated
loss pursuant to the systemic risk determination or if assessments collected change due to corrective amendments to the amount of
uninsured deposits reported for the December 31, 2022 reporting period.
20
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is
in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition
imposed by the FDIC. The Bank is not subject to any action, condition or violation that could lead to termination of its deposit
insurance. In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured
depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors,
and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims
against the institution, including those of the parent bank holding company.
Transactions with Affiliates and Insiders. The Bank is subject to restrictions on extensions of credit and certain other transactions
between the Bank and the Company or any nonbank affiliate. Generally, these covered transactions with either the Company or any
affiliate are limited to 10% of the Bank’s capital and surplus, and all such transactions between the Bank and the Company and all of
its nonbank affiliates combined are limited to 20% of the Bank’s capital and surplus. Loans and other extensions of credit from the
Bank to the Company or any affiliate generally are required to be secured by eligible collateral in specified amounts. In addition, any
transaction between the Bank and the Company or any affiliate are required to be on an arm’s length basis. Federal banking laws also
place similar restrictions on certain extensions of credit by insured banks, such as the Bank, to their directors, executive officers and
principal shareholders.
Mergers, Subsidiaries. The FDIC is also authorized to approve mergers, consolidations and assumption of deposit liability
transactions between insured banks and between insured banks and uninsured banks or institutions to prevent capital or surplus
diminution in such transactions where the resulting, continuing or assumed bank is an insured nonmember state bank.
On September 17, 2024, the FDIC approved the Final Statement of Policy on Bank Merger Transactions which, if it remains in place,
will result in additional scrutiny, including heightened financial stability analysis, to mergers that result in a large insured depository
institution with more than $100 billion in total assets, public meetings for mergers that result in insured depository institutions with
$50 billion or more in total assets, and board briefings for applications over 270 days old.
Reserves. Although the Bank is not a member of the Federal Reserve, it is subject to Federal Reserve regulations that require the Bank
to maintain reserves against transaction accounts (primarily checking accounts). These reserve requirements are subject to annual
adjustment by the Federal Reserve. Effective March 26, 2020, reserve requirement ratios were reduced to zero percent.
Anti-Money Laundering. A continued focus of governmental policy relating to financial institutions has been combating money
laundering and terrorist financing. The USA PATRIOT Act broadened the application of anti-money laundering (AML) regulations to
apply to additional types of financial institutions such as broker-dealers, investment advisors and insurance companies, and
strengthened the ability of the U.S. Government to help prevent, detect and prosecute international money laundering and the
financing of terrorism. The principal provisions of Title III of the USA PATRIOT Act require that regulated financial institutions,
including state member banks: (i) establish an AML program that includes training and audit components; (ii) comply with regulations
regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-
U.S. owned accounts; and (iv) perform certain verification and certification of money laundering risk for their foreign correspondent
banking relationships. Failure of a financial institution to comply with the USA PATRIOT Act’s requirements could have serious
legal and reputational consequences for the institution. The Bank has augmented its systems and procedures to meet the requirements
of these regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by law.
FinCEN has adopted rules that require financial institutions to obtain beneficial ownership information with respect to legal entities
with which such institutions conduct business, subject to certain exclusions and exemptions. Bank regulators are focusing their
examinations on AML compliance, and we continue to monitor and augment, where necessary, our AML compliance programs.
Bank regulators routinely examine institutions for compliance with these AML obligations and have imposed “cease and desist” and
other regulatory orders and money penalty sanctions against institutions found to be in violation of these requirements. On January 1,
2021, Congress passed federal legislation that made sweeping changes to federal AML laws, subject to pending implementation by
regulatory rulemaking. On June 30, 2021, FinCEN published the first set of “national AML priorities,” as required by the Bank
Secrecy Act, which include, but are not limited to, cybercrime, terrorist financing, fraud, and drug/human trafficking. FinCEN is
required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these
national priorities into their AML programs.
Economic Sanctions. The Office of Foreign Assets Control (OFAC) is responsible for helping to ensure that U.S. entities do not
engage in transactions with certain prohibited parties, as defined by various Executive Orders and acts of Congress. OFAC publishes,
and routinely updates, lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts,
including the Specially Designated Nationals and Blocked Persons List. If we find a name on any transaction, account or wire transfer
that is on an OFAC list, we must undertake certain specified activities, which could include blocking or freezing the account or
transaction requested, and we must notify the appropriate authorities.
21
Concentrations in Lending. During 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial
Real Estate Lending” (the Guidance) and advised financial institutions of the risks posed by commercial real estate (CRE) lending
concentrations. The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real
estate lending concentrations. Higher allowances for loan losses and capital levels may also be required. The Guidance is triggered
when CRE loan concentrations exceed either:
•
Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based
capital; or
•
Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land
development, and other land of 300% or more of a bank’s total risk-based capital.
The Guidance also applies when a bank has a sharp increase in CRE loans or has significant concentrations of CRE secured by a
particular property type.
Community Reinvestment Act. The Bank is subject to the provisions of the Community Reinvestment Act (CRA), which imposes a
continuing and affirmative obligation, consistent with their safe and sound operation, to help meet the credit needs of entire
communities where the bank accepts deposits, including low- and moderate-income neighborhoods. The FDIC’s assessment of the
Bank’s CRA record is made available to the public. Further, a less than satisfactory CRA rating will slow, if not preclude, expansion
of banking activities and prevent a company from becoming or remaining a financial holding company. Federal CRA regulations
require, among other things, that evidence of discrimination against applicants on a prohibited basis, and illegal or abusive lending
practices be considered in the CRA evaluation. The Bank has a rating of “Satisfactory” in its most recent CRA evaluation.
On October 24, 2023, the OCC, Federal Reserve, and FDIC issued a final rule to modernize their respective CRA regulations. The
revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January
1, 2026, and revised data reporting requirements taking effect January 1, 2027. Among other things, the revised rules evaluate lending
outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking,
apply a metrics-based benchmarking approach to assessment, and clarify eligible CRA activities. The final rules were challenged in
federal court and a preliminary injunction was granted in March 2024, enjoining implementation of the rules. The effective dates will
be extended for each day the injunction remains in place, pending the resolution of the lawsuit. If the final rules are reinstated, they
will likely make it more challenging and/or costly for the Bank to receive a rating of at least “Satisfactory” on its CRA exam.
Consumer Regulation. Activities of the Bank are subject to a variety of statutes and regulations designed to protect consumers. These
laws and regulations include, among numerous other things, provisions that:
•
limit the interest and other charges collected or contracted for by the Bank, including rules respecting the terms of credit
cards and of debit card overdrafts;
•
govern the Bank’s disclosures of credit terms to consumer borrowers;
•
require the Bank to provide information to enable the public and public officials to determine whether it is fulfilling its
obligation to help meet the housing needs of the communities it serves;
•
prohibit the Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to
extend credit;
•
govern the manner in which the Bank may collect consumer debts;
•
prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services; and
•
The CFPB issued a final rule in March 2024 that capped credit card late fees charged by certain larger card issuers at
$8.00. However, this final rule was subsequently enjoined by a court in Texas, and the litigation has continued. The Bank
continues to monitor these developments.
Mortgage Rules. Pursuant to rules adopted by the CFPB, banks that make residential mortgage loans are required to make a good faith
determination that a borrower has the ability to repay a mortgage loan prior to extending such credit, require that certain mortgage
loans contain escrow payments, obtain new appraisals under certain circumstances, comply with integrated mortgage disclosure rules,
and follow specific rules regarding the compensation of loan originators and the servicing of residential mortgage loans. In 2020, the
Coronavirus Aid, Relief and Economic Security (CARES) Act granted certain forbearance rights and protection against foreclosure to
borrowers with a “federally backed mortgage loan,” including certain first or subordinate lien loans designed principally for the
occupancy of one to four families. These consumer protections under the CARES Act continued during the COVID 19 pandemic
emergency, and while most of these protections expired in 2022, on January 18, 2023, in its revised Mortgage Servicing Examination
Procedures, the CFPB stated it expected servicers to continue to utilize these safeguards, regardless of their expiration.
22
Personal Financial Data Rights Rule. On October 22, 2024, the CFPB issued a final rule implementing section 1033 of the Dodd-
Frank Act, providing consumers with more choices and direction of their own financial data. This rule aims to enhance fair
competition, transparency, and accessibility in the markets for consumer financial products and services by requiring institutions that
issue credit cards and hold transaction accounts, among others, to provide information about transactions, costs, charges and usage to
consumers and authorized third parties in electronic form upon request. The rule mandates that financial institutions and providers
allow consumers to access and transfer their financial data to other providers at no charge, which the CFPB believes will promote
competition within the industry. Compliance with the rule will be phased in over a five-year period based on asset size for depository
institutions, with an expected effective date of April 1, 2027 for our institution. However, this rule has been challenged in court and
may be revised by the CFPB. The Bank is monitoring the developments.
Privacy, Credit Reporting and Cybersecurity. The Bank is subject to federal and state banking regulations that limit its ability to
disclose non-public information about consumers to non-affiliated third parties and prescribe standards for the protection of consumer
information. These limitations require us to periodically disclose our privacy policies to consumers and allow consumers to prevent
disclosure of certain personal information to a non-affiliated third party under certain circumstances. Consumers also have the option
to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies
for the purpose of marketing products or services. Banking institutions are required to implement a comprehensive information
security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer
records and information, as well as maintain procedures for notifying customers in the event of a security breach. These security and
privacy policies and procedures for the protection of confidential and personal information are in effect across our lines of business.
The Company has adopted and implemented our Comprehensive Information Security Policy to comply with these federal
requirements.
The Bank uses credit bureau data in underwriting activities. Use of such data is regulated under the Fair Credit Reporting Act and
Regulation V on a uniform, nationwide basis, including credit reporting, prescreening, and sharing of information between affiliates
and the use of credit data. The Fair and Accurate Credit Transactions Act, which amended the Fair Credit Reporting Act, permits
states to enact identity theft laws that are not inconsistent with the conduct required by the provisions of that Act.
Furthermore, the federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance cyber risk
management. A financial institution is expected to implement multiple lines of defense against cyber-attacks and ensure that their risk
management procedures address the risk posed by potential cyber threats. A financial institution is further expected to maintain
procedures to effectively respond to a cyber-attack and resume operations following any such attack. The Company has adopted and
implemented an Information Security Program to comply with the regulatory cybersecurity guidance. Effective April 1, 2022, the
federal banking agencies implemented a new rule that requires banks to notify their regulators within 36 hours of a “computer-security
incident” that rises to the level of a “notification incident.” Refer to Part I, Item 1C. "Cybersecurity" for further discussion.
Risk-retention rules. Banks that sponsor the securitization of asset-backed securities are generally required to retain not less than 5%
of the credit risk of any loan they securitize, except for residential mortgages that meet certain low-risk standards.
Debit Interchange Fees. Interchange fees are fees that merchants pay to credit card companies and card-issuing banks such as the
Bank for processing electronic payment transactions on their behalf. The maximum permissible interchange fee that an issuer may
receive for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the
transaction, subject to an upward adjustment of 1 cent if an issuer certifies that it has implemented policies and procedures reasonably
designed to achieve the fraud-prevention standards set forth by the Federal Reserve. In addition, the legislation prohibits card issuers
and networks from entering into arrangements requiring that debit card transactions be processed on a single network or only two
affiliated networks, and allows merchants to determine transaction routing. On October 25, 2023, the FRB proposed to lower the
maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a
regular process for updating the maximum amount every other year going forward. We continue to monitor the development of these
proposed rule revisions.
Interest rates based on LIBOR. On March 15, 2022, Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”)
to address references to LIBOR in contracts that (i) are governed by U.S. law; (ii) did not mature before June 30, 2023; and (iii) lack
fallback provisions providing for a clearly defined and practicable replacement for LIBOR. On December 16, 2022, the FRB adopted
a final rule to implement the LIBOR Act by identifying benchmark rates based on SOFR (Secured Overnight Financing Rate) that
replaced LIBOR in certain financial contracts after June 30, 2023. The final rule identified replacement benchmark rates based on
SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act.
Anti-Bribery Laws. Federal law prohibits offering or giving a bank official or any third party (or for the bank official to solicit or
receive for himself or a third party) "anything of value" other than what is given or offered to the bank itself. Further, the Foreign
Corrupt Practices Act makes it unlawful to make payments to foreign government officials to assist in obtaining or retaining business.
23
The Company and the Bank have implemented a Code of Business Ethics that governs the behavior of its officers, employees, and
directors.
Nonbanking Subsidiaries
The Company’s nonbanking subsidiaries may also be subject to a variety of state and federal laws. For example, Hancock Whitney
Investment Services, Inc. is subject to supervision and regulation by the SEC, FINRA and the State of Mississippi.
Compensation
In June 2010, the federal banking agencies issued joint guidance on executive compensation designed to help ensure that a banking
organization’s incentive compensation policies do not encourage imprudent risk taking and are consistent with the safety and
soundness of the organization. In addition, in June 2012, the Commission issued final rules to implement the Dodd-Frank Act’s
requirement that the Commission direct the national securities exchanges to adopt certain listing standards related to the compensation
committee of a company’s board of directors as well as its compensation advisers.
In 2016, the Federal Reserve, FDIC and SEC proposed rules that would, depending upon the assets of the institution, directly regulate
incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2024, these rules
had not been implemented. We have instituted measures to ensure that our incentive compensation plans do not encourage
inappropriate risks, consistent with three key principles—that incentive compensation arrangements should appropriately balance risk
and financial rewards, be compatible with effective controls and risk management, and be supported by strong corporate governance.
Accounting and Controls
The Company is also required to file certain reports with, and otherwise comply with the rules and regulations of the SEC under
federal securities laws. For example, we are required to comply with various corporate governance and financial reporting
requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC, the Public Company
Accounting Oversight Board, and Nasdaq. In particular, we are required to include management and independent registered public
accounting firm reports on internal controls over financial reporting as part of our Annual Report on Form 10-K in order to comply
with Section 404 of the Sarbanes-Oxley Act. We have evaluated our controls, including compliance with the SEC rules on internal
controls. The assessments of our financial reporting controls as of December 31, 2024 are included in this report under Item 9A.
“Controls and Procedures.” Our failure to comply with these internal control rules may materially adversely affect our reputation,
ability to obtain the necessary certifications to financial statements, and the value of our securities.
Effect of Governmental Monetary and Fiscal Policies
The difference between the interest rate paid on deposits and other borrowings and the interest rate received on loans and securities
comprises most of a bank’s earnings.
The earnings and growth of a bank will be affected by both general economic conditions and the monetary and fiscal policy of the
U.S. government and its agencies, particularly the Federal Reserve. The Federal Reserve sets national monetary policy to promote
maximum employment, stable prices, and moderate long-term interest rates. This is accomplished by its open-market operations in
U.S. government securities, adjustments in the amount of reserves that financial institutions are required to maintain and adjustments
to the discount rates on borrowings and target rates for federal funds transactions. The actions of the Federal Reserve in these areas
influence the growth of bank loans, investments and deposits and also affect interest rates on loans and deposits. The nature and
timing of any future changes in monetary policies and their potential impact on the Company cannot be predicted.
24
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The names, ages, positions and business experience of our executive officers as of February 26, 2025 are as follows:
Name
Age
Position
John M. Hairston
61
President of the Company since 2014; Chief Executive Officer since 2008 and Chief Operating
Officer from 2008 to 2014; Director since 2006.
Michael M. Achary
64
Senior Executive Vice President since 2017; Executive Vice President from 2008 to 2016;
Chief Financial Officer since 2007; Principal Accounting Officer since 2022.
D. Shane Loper
59
President of Hancock Whitney Bank since 2024; Senior Executive Vice President since 2017;
Executive Vice President from 2008 to 2016; Chief Operating Officer since 2014; Chief
Administrative Officer from 2013 to 2014; Chief Risk Officer from 2012 to 2013; Chief Risk
and Administrative Officer from 2010 to 2012.
Michael Otero
58
Senior Executive Vice President since 2025; Executive Vice President since 2013; Chief Risk
Officer since 2020; Chief Internal Auditor from 2013 to 2018.
Ruena Hall Thompson
63
Senior Executive Vice President since 2025; Executive Vice President since 2011; Chief
Human Resources Officer since 2011.
Christopher S. Ziluca
63
Senior Executive Vice President since 2025; Executive Vice President since 2018; Chief Credit
Officer since 2018.
Juanita P. Kuhner
44
Executive Vice President since 2024; General Counsel and Corporate Secretary since 2024;
Deputy General Counsel from 2022 to 2024; Senior Vice President from 2021 to 2024;
Corporate Counsel from 2017 to 2022; Vice President from 2017 to 2021.
25
ITEM 1A. RISK FACTORS
We face a number of material risks and uncertainties in connection with our operations. Our business, results of operations and
financial condition could be materially adversely affected by the factors described below.
While we describe each risk separately, some of these risks are interrelated and certain risks could trigger the applicability of other
risks described below. Also, the risks and uncertainties described below are not the only ones that we may face. Additional risks and
uncertainties not presently known to us, or that we currently do not consider significant, could also potentially impair, and have a
material adverse effect on our business, results of operations, and financial condition.
Risks Related to Economic and Market Conditions
Current uncertain economic conditions pose challenges, and could adversely affect our business, financial condition and results of
operations.
We are operating in an uncertain economic environment. Our business and operations, which primarily consist of lending money to
customers in the form of loans, borrowing money from customers in the form of deposits and investing in securities, are sensitive to
general business and economic conditions in the U.S. Continued economic uncertainty and a recessionary or stagnant economy could
result in financial stress on our borrowers, which could adversely affect our business, financial condition and results of operations.
Deteriorating conditions in the regional economies we serve, or in certain sectors of those economies, could drive losses beyond that
which is provided for in our allowance for credit losses. We could also face the following risks with the following events:
•
market developments and economic stagnation or slowdown may affect consumer confidence levels and may cause
adverse changes in payment patterns, resulting in increased delinquencies and default rates on loans and other credit
facilities;
•
the processes we use to estimate the allowance for credit losses and other reserves may prove to be unreliable. Such
estimates rely upon complex modeling inputs and judgments, including forecasts of economic conditions, which may be
rendered inaccurate and/or no longer subject to accurate forecasting;
•
our ability to assess the creditworthiness of our borrowers may be impaired if the models and approaches we use to select,
manage, and underwrite loans become less predictive of future charge-offs;
•
regulatory scrutiny of the industry could increase, leading to increased regulation of the industry that could lead to a
higher cost of compliance, limit our ability to pursue business opportunities and increase our exposure to litigation or
fines;
•
the current administration may seek to implement a regulatory reform agenda that is significantly different than that of the
Biden administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal
banking agencies and potentially resulting in uncertainty;
•
ineffective monetary policy or other market conditions could cause rapid changes in interest rates and asset values that
would have a materially adverse impact on our profitability and overall financial condition;
•
further erosion in the fiscal condition of the U.S. Treasury could lead to new taxes that would limit our ability to pursue
growth and return profits to shareholders; and
•
the U.S. government’s decisions regarding its debt ceiling and the possibility that the U.S. could default on its debt
obligations may cause further interest rate increases, disrupt access to capital markets and deepen recessionary conditions.
If these conditions or similar ones continue to exist or worsen, we could experience continuing or increased adverse effects on our
financial condition.
We may be vulnerable to certain sectors of the economy and to economic conditions both generally and locally across the specific
markets in which we operate.
Our financial performance may be adversely affected by macroeconomic factors that affect the U.S. economy. Unfavorable economic
conditions, particularly in the Gulf South region, could significantly affect the demand for our loans and other products, the ability of
borrowers to repay loans, and the value of collateral securing our outstanding loans. Such factors have and may continue to be caused
by events that are difficult to predict in respect to nature, timing, duration and severity.
26
Volatility in global financial markets, including, but not limited to inflation and governmental responses thereto, recessionary
concerns, wars and other ongoing global conflicts, may continue to have a spillover effect that could ultimately impair the
performance of the U.S. economy and, in turn, our results of operations and financial condition.
We are subject to lending concentration risk.
Our loan portfolio contains several industry, collateral and other concentrations including, but not limited to, commercial and
residential real estate, healthcare, hospitality, shared national credits, and leveraged loans. Due to the exposure in these concentrations,
disruptions in markets, economic conditions, including those resulting from heightened interest rates, inflation, supply chain
disruptions, changes in laws or regulations or other events could significantly impact the ability of our borrowers to repay their loans
and may have a material adverse effect on our business, financial condition and results of operations.
A substantial portion of our loan portfolio is secured by real estate. In weak economies, or in areas where real estate market conditions
are distressed, we may experience a higher-than-normal level of nonperforming real estate loans. These risks may be exacerbated by
heightened interest rates or tightening credit standards. The collateral value of the portfolio and the revenue stream from those loans
could come under stress, and/or could be impacted by unforeseen events, such as pandemics, weather events, environmental
contamination, among others, and additional provisions for the allowance for credit losses could be necessitated should actual and/or
forecasted losses be in excess of our expectations. Our desire to foreclose on these properties given each circumstance and/or the
ability to dispose of foreclosed real estate at prices at or above the respective carrying values could also be impaired, causing
additional losses.
Certain changes in interest rates, loan origination, inflation, or the financial markets could affect our results of operations,
demand for our products and our ability to deliver products efficiently.
Our assets and liabilities are primarily monetary in nature and we are subject to significant risks tied to changes in interest rates that
are highly sensitive to many factors that are beyond our control. Inflation can influence the growth of total assets in the banking
industry and the resulting level of capitalization. Inflation also affects the level of market interest rates, and therefore, the pricing of
financial instruments. We believe the most significant potential impact of inflation on our financial results is our ability to manage the
impact of changes in interest rates. Further, an increase in inflation could cause our and/or our customers' operating costs related to
salaries and benefits, technology and supplies to increase at a faster pace than revenues.
Our ability to operate profitably is largely dependent upon net interest income. Net interest income is the primary component of our
earnings and is affected by both local external factors such as economic conditions in the Gulf South and local competition for loans
and deposits, as well as broader influences, such as federal monetary policy and market interest rates. Unexpected and/or significant
movement in interest rates markedly changing the slope of the current yield curve could cause our and our customers’ net interest
margins to decrease, subsequently reducing net interest income. In addition, such changes could adversely affect the valuation of our
assets and liabilities.
In addition, loan originations, and potentially loan revenues, could be adversely impacted by sharply rising interest rates. Heightened
interest rates have had and may continue to have adverse impacts on our borrowers and demand for our loan products. Continued
heightened interest rates would increase debt service requirements for some of our borrowers; adversely affect those borrowers’ ability
to pay us as contractually obligated; potentially reduce loan demand or result in additional delinquencies or charge-offs; and increase
the cost of our deposits, which are a primary source of funding.
The fair market value of our securities portfolio and the investment income from these securities also fluctuate depending on general
economic and market conditions. In addition, actual net investment income and/or cash flows from investments that carry prepayment
risk, such as mortgage-backed and other asset-backed securities, may differ from those anticipated at the time of investment as a result
of interest rate fluctuations. Changes in market values of investment securities classified as available for sale have impacted and may
continue to negatively impact our other comprehensive income and equity levels through accumulated other comprehensive income,
which includes net unrealized gains and losses on those securities. Further, such losses could be realized into earnings should liquidity
and/or business strategy necessitate the sales of securities in a loss position.
An underperforming stock market could adversely affect wealth management fees associated with managed securities portfolios and
could also reduce brokerage transactions, therefore reducing investment brokerage revenues.
Although management believes it has implemented an effective asset and liability management strategy to manage the potential
effects of changes in interest rates, including the use of adjustable rate and/or short-term assets, and FHLB advances or longer term
repurchase agreements, any substantial, unexpected change in market interest rates could have a material adverse effect on our
financial condition and results of our operation and our strategies may not always be successful in managing the risks associated with
changes in interest rates.
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Changes in the policies of monetary authorities and other government action could adversely affect our profitability.
Interest rates and our financial performance are affected by credit policies of monetary authorities, particularly the Federal Reserve.
The instruments of monetary policy employed by the Federal Reserve include open market transactions in U.S. government securities,
changes in the discount rate or the federal funds rate on bank borrowings and changes in reserve requirements against bank deposits.
In view of changing conditions in the national economy and in the money markets, we cannot predict the potential impact of future
changes in interest rates, deposit levels, and loan demand on our business and earnings with certainty. Furthermore, the actions of the
U.S. government and other governments have resulted, and in the future may result in currency fluctuations, exchange controls,
market disruption, material decreases in the values of certain of our financial assets and other adverse effects.
Interest rate changes are dependent on the Federal Reserve’s assessment of economic data as it becomes available. Beginning in early
2022 and continuing into 2023, the Federal Reserve raised interest rates aggressively to combat inflation. Beginning in the third
quarter of 2024, the Federal Reserve began slowly decreasing interest rates, with future interest rate changes, either increases or
decreases uncertain, and dependent on the Federal Reserve’s assessment of economic conditions and inflation. As a result of both the
rising and sustained elevated interest rate environment compared to recent historical norms, we have and may continue to offer more
attractive interest rates to depositors to compete for deposits, or pursue other sources of liquidity, such as wholesale funds. Further,
when interest-bearing liabilities reprice or mature more quickly than interest-earning assets, an increase in interest rates generally
results in a decrease in net interest income. Conversely, decreasing interest rates reduce our yield on our variable rate loans and on our
new loans, which reduces our net interest income. In addition, lower interest rates may reduce our realized yields on investment
securities which would reduce our net interest income and cause downward pressure on net interest margin in future periods. A
significant reduction in our net interest income could have a material adverse impact on our capital, financial condition and results of
operations.
Changes in monetary policy, including changes in interest rates, influence (i) the amount of interest we receive on loans and securities,
(ii) the amount of interest we pay on deposits and borrowings, (iii) our ability to originate loans and obtain deposits, (iv) the fair value
of our assets and liabilities, and (v) the reinvestment risk associated with changes in the duration of our mortgage-backed securities
portfolio.
Changes in U.S. trade policies and other factors beyond the Company's control, including the imposition of tariffs and retaliatory
tariffs, may adversely impact its business, financial condition and results of operations.
Changes to U.S. trade policies, legislation, treaties and tariffs, including trade policies and tariffs affecting other countries, including
China, the European Union, Canada and Mexico and retaliatory tariffs by such countries may adversely impact our business, financial
condition and results of operations. Tariffs, retaliatory tariffs or other trade restrictions on products and materials that the Company’s
customers import or export, including among others, agricultural products, could cause the prices of our customers’ products to
increase, could reduce demand for such products, or reduce our customers’ margins, and adversely impact their revenues, financial
results and ability to service debt. Trade restrictions on products include export and import restrictions, such as those levied against
Russia.
In addition, to the extent changes in the political environment have a negative impact on the Company or on the markets in which the
Company operates its business, its results of operations and financial condition could be materially and adversely impacted.
The financial soundness and stability of other financial institutions could adversely affect us.
Our ability to engage in routine funding transactions could be adversely affected by the actions and financial soundness and stability
of other financial institutions as a result of credit, trading, clearing or other relationships with such institutions. We routinely execute
transactions with counterparties in the financial industry, including brokers and dealers, commercial banks and other institutional
clients. As a result, defaults by, and even rumors regarding, other financial institutions, regional banks, or the financial services
industry generally, could impair our ability to effect such transactions and could lead to losses or defaults by us. In addition, a number
of our transactions expose us to credit risk in the event of default of a counterparty or client. Additionally, our credit risk may be
increased if the collateral we hold in connection with such transactions cannot be realized or can only be liquidated at prices that are
not sufficient to cover the full amount of our financial exposure. Any such losses could have a material adverse effect on our financial
condition and results of operations.
Further, bank failures, including the failures in the first half of 2023, have and may in the future diminish public confidence in small
and regional banks’ abilities to safeguard deposits in excess of federally insured limits, which could prompt customers to maintain
their deposits with larger financial institutions. Concerns over rapid, large-scale deposit movement have and could in the future
heighten regulatory scrutiny surrounding liquidity and increase competition for deposits and the resulting cost of funding, which could
create pressure on our net interest margin and results of operations. In addition, bank failures have and could in the future prompt the
FDIC to increase deposit insurance costs. Increases in funding, deposit insurance or other costs as a result of these types of events
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have and could in the future materially adversely affect our financial condition and results of operations. Further, the disruption
following these types of events have and could in the future generate significant market trading volatility among publicly traded bank
holding companies and, in particular, regional banks like Hancock Whitney Bank.
Tax law and regulatory changes could adversely affect our financial condition and results of operations.
Changes to tax laws could significantly impact our business in the form of greater than expected income tax expense and taxes
payable. Such changes may also negatively impact the financial condition of our customers and/or overall economic conditions.
Further, future regulatory reforms that could include a heightened focus and scrutiny on BSA/AML-related compliance, expansion of
consumer protections, the regulation of loan portfolios and credit concentrations to borrowers impacted by climate change, increased
capital and liquidity requirements and limitations or additional taxes on share repurchases and dividends, could increase our costs and
impact our business.
Governmental responses to market disruptions and other events may be inadequate and may have unintended consequences.
Congress and financial regulators have and may continue to implement measures designed to stabilize financial markets, including in
reaction to inflation. The overall impact of these efforts on the financial markets may be ineffective and could adversely affect our
business.
We compete with a number of financial services companies that are not subject to the same degree of regulatory oversight. Further,
our credit union competitors benefit from competitive advantages, including the credit union exemption from paying federal income
tax and can, therefore, more aggressively price many products and services. The impact of the existing regulatory framework and any
future changes to it could negatively affect our ability to compete with these institutions, which could have a material adverse effect
on our results of operations and prospects.
We may need to rely on the financial markets to provide additional capital.
Our common stock is listed and traded on the NASDAQ Global Select Market. If our capital resources are inadequate to meet our
capital requirements in the future, we may need to raise additional debt or equity capital. If conditions in the capital markets are not
favorable, we may be constrained in raising capital. We maintain a consistent analyst following; therefore, downgrades in our
prospects by one or more of our analysts may cause our stock price to fall and significantly limit our ability to access the markets for
additional capital requirements. An inability to raise additional capital on acceptable terms when and if needed could have a material
adverse effect on our business, financial condition or results of operations.
The interest rates that we pay on our securities are also influenced by, among other things, the credit ratings that we, our affiliates
and/or our securities receive from recognized rating agencies. Our credit ratings are based on a number of factors, including our
financial strength and other factors not entirely within our control such as conditions affecting the financial services industry
generally, and remain subject to change at any time. A downgrade to the credit rating of us or our affiliates could affect our ability to
access the capital markets, increase our borrowing costs and negatively impact our profitability. A downgrade to us, our affiliates or
our securities could create obligations or liabilities under the terms of our outstanding securities that could increase our costs or
otherwise have a negative effect on our results of operations or financial condition. Additionally, a downgrade to the credit rating of
any particular security issued by us or our affiliates could negatively affect the ability of the holders of that security to sell the
securities and the prices at which any such securities may be sold.
Because our decision to incur debt and issue securities in future offerings will depend on market conditions and other factors beyond
our control, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financings. Further, market
conditions could require us to accept less favorable terms for the issuance of our securities in the future. In addition, geopolitical and
worldwide market conditions may cause disruption or volatility in the U.S. equity and debt markets, which could hinder our ability to
issue debt and equity securities in the future on favorable terms.
Our investments in certain tax-advantaged projects may not generate returns as anticipated or at all and may have an adverse
impact on our results of operations.
We invest in certain tax-advantaged investments that support qualified affordable housing projects and other community development
initiatives. Our investments in these projects rely on the ability of the projects to generate a return primarily through the realization of
federal and state income tax credits and other tax benefits. We face the risk that tax credits, which remain subject to recapture by
taxing authorities based on compliance with relevant requirements at the project level, may not be able to be realized. The risk of not
being able to realize the tax credits and other tax benefits associated with a particular project depends on many factors that are outside
of our control. The project’s failure to maintain compliance impacts our ability to realize these tax credits and other tax benefits,
which may have a negative impact on our investment, and as a result, on our financial condition and results of operations.
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Risks Related to the Financial Services Industry
We must maintain adequate sources of funding and liquidity.
Effective liquidity management is essential for the operation of our business. We require sufficient liquidity to support our operations
and fund outstanding liabilities, as well as to meet regulatory requirements. Our access to sources of liquidity in amounts adequate to
fund our activities on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services
industry or economy generally. Factors that could detrimentally impact our access to liquidity sources include an economic downturn
that affects the geographic markets in which our loans and operations are concentrated, or any material deterioration of the credit
markets. Our operating results may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business
strategy necessitate the sales of securities in a loss position, and/or access to select sources of liquidity could be limited should
unrealized losses continue to grow to exceed certain levels. Our access to deposits may also be affected by the liquidity needs of our
depositors and the loss of deposits to alternative institutions or investments. Although we have historically been successful in
replacing maturing deposits and advances as necessary, we might not be able to duplicate that success in the future, especially if a
large number of our depositors were to withdraw their amounts on deposit. A failure to maintain an adequate level of liquidity could
materially and adversely affect our business, financial condition and results of operations. Conversely, liquidity in excess of current
demand or operating needs may result in lower-earning assets that may adversely affect our results of operations.
Greater loan losses than expected may adversely affect our earnings.
We are exposed to the risk that our borrowers will be unable to repay their loans in accordance with their terms and that any collateral
securing the payment of their loans may not be sufficient to assure repayment. Credit risk is inherent in our business and any material
level of credit failure could have a material adverse effect on our operating results. Our credit risk with respect to our real estate and
construction loan portfolios relates principally to the creditworthiness of our corporate borrowers and the value of the real estate
pledged as security for the repayment of loans. Our credit risk with respect to our commercial and consumer loan portfolios depends
on the general creditworthiness of businesses and individuals within our local markets.
We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for estimated
credit losses based on a number of factors. This process requires subjective and complex judgments, including analysis of economic or
market conditions that might impair the ability of borrowers to repay their loans. If our assumptions or judgments prove to be
incorrect, the allowance for credit losses may not be sufficient to cover actual credit losses. We may have to increase our allowance in
the future in response to the request of one of our primary banking regulators, to adjust for changing conditions and assumptions, to
adjust for changes in resolution strategies, or as a result of any deterioration in the quality of our loan and lease portfolio. Losses in
excess of the existing allowance or any provisions for loan losses taken to increase the allowance will reduce our net income and could
materially adversely affect our financial condition and results of operations. Future provisions for loan losses may vary materially
from the amounts of past provisions.
Further, we use quantitative models to help manage certain aspects of our business and to assist with certain business decisions,
including estimating credit losses, grading loans and extending credit, estimating the effects of changing interest rates and other
market measures on our financial condition and results of operations. Our modeling methodologies rely on many assumptions,
historical analyses and correlations. These assumptions may be incorrect, particularly in times of market distress or volatility, and the
historical correlations on which we rely may not continue to be relevant. As a result, our models may not capture or fully express the
risks we face or may lead us to misjudge the business and economic environment in which we operate. If our models fail to produce
reliable results on an ongoing basis, we may not make appropriate risk management or other business or financial decisions.
Furthermore, strategies that we employ to manage and govern the risks associated with our use of models may not be effective or fully
reliable, and as a result, we may realize losses or other lapses.
We depend on the accuracy and completeness of information about clients and counterparties.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we rely in substantial part on
information furnished by or on behalf of clients and counterparties, including financial statements and other financial information. We
also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with
respect to financial statements, on reports of independent auditors if made available. If this information is inaccurate, we may be
subject to loan defaults, financial losses, regulatory action, reputational harm or other adverse effects with respect to our business,
financial condition and results of operations.
We are subject to a variety of risks in connection with the sale of any loans.
From time to time, we may sell all or a portion of one or more loan portfolios, and in connection therewith we may make certain
representations and warranties to the purchaser concerning the loans sold and the procedures under which those loans were originated
and serviced. If any of these representations and warranties are incorrect, we may be required to indemnify the purchaser for any
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related losses, or we may be required to repurchase part or all of the affected loans. We may also be required to repurchase loans as a
result of borrower fraud or in the event of early payment default by the borrower on a loan we have sold. If we are required to make
any indemnity payments or repurchases and do not have a remedy available to us against a solvent counterparty to the loan or loans,
we may not be able to recover our losses resulting from these indemnity payments and repurchases. Consequently, our results of
operations may be adversely affected.
Risks Related to Our Operations
A failure in our operational systems or infrastructure, or those of third parties, could impair our liquidity, disrupt our businesses,
result in the unauthorized disclosure of confidential information, damage our reputation and cause financial losses.
Our ability to adequately conduct and grow our business is dependent on our ability to create and maintain an appropriate operational
and organizational control infrastructure. Operational risk can arise in numerous ways including employee fraud, theft or malfeasance;
customer fraud; and control lapses in bank operations and information technology. Because the nature of the financial services
business involves a high volume of transactions, certain errors in processing or recording transactions appropriately may be repeated
or compounded before they are discovered. We have recently and plan to continue to make investments in technologies for sales and
service, including mobile and online banking, as well as teller, customer service and loan origination platforms. These technologies
and/or operational changes may lead to increased operational risk. Our dependence on our employees and automated systems,
including the automated systems used by acquired entities and third parties, to record and process transactions may further increase the
risk that technical failures or tampering of those systems will result in losses that are difficult to detect. We are also subject to
disruptions of our operating systems arising from events that are wholly or partially beyond our control. In addition, products, services
and processes are continually changing and we may not fully appreciate or identify new operational risks that may arise from such
changes. Failure to maintain an appropriate operational infrastructure can lead to loss of service to customers, additional expenditures
related to the detection and correction of operational failures, reputational damage and loss of customer confidence, legal actions, and
noncompliance with various laws and regulations.
We continuously monitor our operational and technological capabilities and make modifications and improvements when we believe it
to be appropriate to do so. However, there are inherent limits to such capabilities. In some instances, we may build and maintain these
capabilities ourselves. We also outsource some of these functions to third parties. These third parties may experience errors or
disruptions that could adversely impact us and over which we may have limited control. Third parties may fail to properly perform
services or comply with applicable laws and regulations, and replacing third-party providers could entail significant delay and
expense. We also face risk from the integration of new infrastructure platforms and/or new third-party providers of such platforms into
existing businesses.
Our operational and communications systems and infrastructure may fail or may be the subject of a breach or cyber-attack that, if
successful, could adversely affect our business and disrupt business continuity.
We depend on our ability to process, record and monitor a large number of client transactions and to communicate with clients and
other institutions on a continuous basis. Our clients depend on us for access to their assets and account information.
Our online, business, financial, accounting, data processing, or other operating systems and facilities may stop operating properly or
become disabled or damaged as a result of a number of factors, including events that are wholly or partially beyond our control. For
example, there could be sudden increases in client transaction volume; electrical or telecommunications outages; natural disasters such
as earthquakes, tornadoes, floods, and hurricanes; pandemics; events arising from local or larger scale political or social matters,
including terrorist acts; occurrences of employee error, fraud, or malfeasance; and, as described below, cyber-attacks. Furthermore, for
most financial institutions, transitioning from existing systems and software (or transitioning legacy systems and software) to a new
provider is a significant and expensive undertaking and includes a number of risks, including crashes and system downtime, transition
costs, decreased productivity, security risk, and legal and regulatory compliance risks.
Although we have response plans, business continuity plans and other safeguards in place, our operations and communications may be
adversely affected by significant and widespread disruption to our systems and infrastructure that support our businesses and clients.
While we continue to evolve and modify our response and business continuity plans, there can be no assurance in an escalating threat
environment that they will be effective in avoiding disruption and business impacts. Our insurance may not be adequate to compensate
us for all resulting losses, and the cost to obtain adequate coverage may continue to increase for us or the industry.
Security risks for financial institutions such as ours have dramatically increased in recent years, in part because of the proliferation of
new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased
sophistication, resources and activities of hackers, terrorists, activists, organized crime, and other external parties, including nation
state actors. In addition, clients may use devices or software to access our products and services that are beyond our control
environment, which may provide additional avenues for attackers to gain access to confidential information. Although we have
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information security procedures and controls in place, certain of our technologies, systems, networks, and clients’ devices and
software have in the past and in the future likely will continue to be the target of cyber-attacks or information security breaches that
could result in the unauthorized release, gathering, monitoring, use, loss, change or destruction of our or our clients’ confidential,
proprietary and other information (including personal identifying information of individuals), or otherwise disrupt our or our clients’
or other third parties’ business operations. From time to time, we, like other financial institutions, become aware of information
security vulnerabilities in software emanating from outside vendors and must take active steps to mitigate and prevent the potential
exploitation of such vulnerabilities. Further, U.S. financial institutions and financial services companies will continue to face breaches
in security of their websites or other systems, including attempts to shut down access to their networks and systems in an attempt to
extract compensation from them to regain control. Financial institutions have also experienced, and will continue to be the target of,
distributed denial-of-service attacks, a sophisticated and targeted attack intended to disable or degrade internet service or to sabotage
systems.
We and others in our industry are, and will continue to be, regularly the subject of attempts by attackers to gain unauthorized access to
our networks, systems, data and other infrastructure, or to obtain, change, or destroy confidential data (including personal identifying
information of individuals) through a variety of means, including computer hacking, acts of vandalism or theft, malware, computer
viruses or other malicious codes, phishing, employee error or malfeasance, catastrophes, unforeseen events or other cyber-attacks. In
the future, these attacks may result in unauthorized individuals obtaining material access to our confidential information or that of our
clients, or otherwise materially accessing, damaging, or disrupting our systems or infrastructure.
To date, we have seen no material adverse impact on our business or operations from cyber-attacks or events. Any future significant
compromise or breach of our data security, whether external or internal, or misuse of customer, associate, supplier or Company data,
could result in significant disruption of our operations, reimbursement and other costs, lost sales, fines, lawsuits and other legal
exposure, a loss of trust in us on the part of our clients, vendors or other counterparties, client attrition and damage to our reputation.
Any of these could materially and adversely affect our results of operations, our financial condition, and/or our share price. However,
the ever-evolving threats mean we and our third-party service providers and vendors must continually evaluate and adapt our
respective systems and processes and overall security environment, as well as those of any companies we acquire. We are
continuously enhancing our controls, processes and practices designed to protect our networks, systems, data and other infrastructure
from attack, damage or unauthorized access. This continued enhancement will require us to expend additional resources, including to
investigate and remediate any information security vulnerabilities that may be detected. Despite our ongoing investments in security
resources, talent, and business practices, there is no guarantee that these measures will be adequate to safeguard against all data
security breaches, system compromises or misuses of data.
We rely on other companies to provide key components of our business infrastructure.
We rely on certain third parties to provide products and services necessary to maintain day-to-day operations, such as back-office
support, data processing and storage, recording and monitoring transactions, online banking interfaces and services, Internet
connections, telecommunications, and network access. The failure of a third party to perform in accordance with the contracted
arrangements under service level agreements as a result of changes in the third party’s organizational structure, financial condition,
support for existing products and services, strategic focus, system interruption or breaches, or for any other reason, could be disruptive
to our operations, which could have a material adverse effect on our business, financial condition and results of operations. Our third-
party applications may include confidential and proprietary data provided by vendors and by us, including personal employee and/or
customer data. While we conduct due diligence prior to engaging with third-party vendors and perform ongoing monitoring of vendor
controls, we do not control their operations. Further, while our vendor management policies and practices are designed to comply with
current regulations, these policies and practices cannot eliminate this risk. Replacing these third parties could also create significant
delays and expense. Accordingly, use of such third parties creates an inherent risk to our business operations.
The development and use of artificial intelligence (AI) presents risks and challenges that may adversely impact our business.
The Company or its third-party (or fourth-party) vendors, clients or counterparties may develop or incorporate AI technology in
certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the
Company’s business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and
internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy,
consumer protection, employment, and other laws applicable to the use of AI. These evolving laws and regulations could require
changes in the Company’s implementation of AI technology and increase the Company’s compliance costs and the risk of non-
compliance. AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases
included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that
infringes on the intellectual property rights of others, or that is otherwise harmful. In addition, the complexity of many AI models
makes it difficult to understand why they are generating particular outputs. This limited transparency increases the challenges
associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing
erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which
decisions are made. Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent
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in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any
unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the
risks associated with the output of their models, matters over which the Company may have limited visibility. Any of these risks could
expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public
perception of its business or the effectiveness of its security measures.
We, or third parties from whom we license critical information technology systems, have in the past been, and in the future may be
alleged to have infringed upon intellectual property rights owned by others.
Competitors or other third parties have in the past alleged, and in the future may allege that we, or consultants or other third parties
retained or indemnified by us or from whom we license critical information technology systems, infringe on their intellectual property
rights. Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the
potential risks and uncertainties of intellectual property-related litigation, an assertion of an infringement claim against us or our
vendors may cause us to spend significant amounts to defend the claim (even if we ultimately prevail); to pay significant money
damages; to lose significant revenues; to be prohibited from using the relevant systems, processes, technologies or other intellectual
property; to cease offering certain products or services or to incur significant license, royalty or technology development expenses.
Moreover, it has become common in recent years for individuals and groups to purchase intellectual property assets for the sole
purpose of making claims of infringement and attempting to extract settlements from companies like ours. Even in instances where we
believe that claims and allegations of intellectual property infringement against us are without merit, defending against such claims is
time consuming and expensive and could result in the diversion of time and attention of our management and employees. In addition,
although in some cases a third party may have agreed to indemnify us for such costs, such indemnifying party may refuse, or be
unable, to uphold its contractual obligations.
Employee misconduct could expose us to significant legal liability and reputational harm.
We are vulnerable to reputational harm because we operate in an industry in which integrity and the confidence of our customers are
of critical importance. Our employees could engage in fraudulent, illegal, wrongful or suspicious activities, improper use or disclosure
of confidential information and/or activities resulting in consumer harm that adversely affects our customers and/or our business. The
precautions we take to detect and prevent such misconduct may not always be effective, and we may be exposed to regulatory
sanctions and/or penalties, and serious harm to our reputation, financial condition, customer relationships and ability to attract new
customers.
Our business may be adversely affected by fraud.
As a financial institution, we are inherently exposed to risk in the form of theft and other fraudulent activities by customers,
employees, or other third parties targeting us or our customers or data. Such activity may take many forms, including check fraud,
electronic fraud, wire fraud, phishing, social engineering, spoofing, and other dishonest acts. Although we devote substantial resources
to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of
possible perpetrators, we may experience financial losses or reputational harm as a result of fraud. Further, as a result of the increased
sophistication of fraud activity, we continue to invest in systems, resources, and controls to detect and prevent fraud. This will result in
continued ongoing investments in the future.
The value of our goodwill and other intangible assets may decline in the future.
A significant decline in our expected future cash flows, a significant adverse change in the business climate, slower growth rates or a
significant and sustained decline in the price of our common stock may necessitate our taking charges in the future to reflect an
impairment of our goodwill. Future regulatory actions and accounting changes could also have a material impact on assessments of
goodwill for impairment.
Adverse events or circumstances could impact the recoverability of our intangible assets, including significant loss of core deposits
and/or customer relationships acquired in our trust and asset management transaction, and increased competition or adverse changes in
the economy related to these products. To the extent these intangible assets are deemed unrecoverable, a non-cash impairment charge
would be recorded. While an impairment charge does not impact regulatory capital, it could have a material adverse effect on our
results of operations.
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Risks Related to Our Business Strategy
We are subject to industry competition which may have an impact upon our success.
Our profitability depends on our ability to compete successfully in a highly competitive market for banking and financial services, and
we expect such challenges to continue. Certain of our competitors are larger, have more resources than we do and may be perceived as
better than regional banks at safeguarding deposits in excess of federally insured limits. We face competition in our regional market
areas from other commercial banks, savings associations, credit unions, mortgage banking firms, securities brokerage firms, mutual
funds and insurance companies, and other financial institutions that offer similar services. Some of our nonbank competitors are not
subject to the same extensive supervision and regulation to which we or the Bank are subject, and may accordingly have greater
flexibility in competing for business. Over time, certain sectors of the financial services industry have become more concentrated, as
institutions involved in a broad range of financial services have been acquired by other firms. These developments could result in our
competitors gaining greater capital and other resources, or being able to offer a broader range of products and services with more
geographic range.
Our loan and deposit pricing may be negatively impacted by our competitive environment. If our fee structures are deemed less
favorable than other financial services providers, we may be at a competitive disadvantage in attracting customers for certain fee
producing products. Further, we may choose to implement changes to remain competitive that could adversely affect our operating
results.
Another competitive factor is that the financial services market, including banking services, is undergoing rapid changes with frequent
introductions of new technology-driven products and services, primarily as a result of the increased digitization of banking services.
We compete with many forms of payments offered by both bank and non-bank providers, including a variety of new and evolving
alternative payment mechanisms, systems and products, such as aggregators and web-based and wireless payment platforms or
technologies, digital or “crypto” currencies, prepaid systems and payment services targeting users of social networks, communications
platforms and online gaming. Our future success may depend, in part, on our ability to use technology competitively to offer products
and services that provide convenience to customers and create additional efficiencies in our operations. The widespread adoption of
new technologies has and will continue to require us to make substantial capital expenditures to modify or adapt our systems to remain
competitive and offer new products and services. Our ability to effectively implement new technologies to improve our operations and
systems will impact our competitive position in the financial services industry. Furthermore, we may not be successful in introducing
new products and services in response to industry trends or developments in technology, or those new products may not be accepted
by customers.
If we are unable to successfully compete with traditional competitors as well as the evolving landscape of fintech companies and other
nontraditional competitors to attract and retain customers, our business, financial condition or results of operations may also be
adversely affected, perhaps materially. In particular, if we experience an outflow of deposits as a result of our customers desiring to do
business with our competitors, we may be forced to rely more heavily on borrowings and other sources of funding to operate our
business and meet withdrawal demands, thereby adversely affecting our net interest margin.
The implementation of new lines of business or new products and services may subject us to additional risk.
We continuously evaluate our service offerings and may implement new lines of business or offer new products and services within
existing lines of business in the future. There are substantial risks and uncertainties associated with these efforts. The development of
new lines of business or new products and services often requires the commitment of significant resources that may not be recouped if
not successful. Variables beyond our control or that we do not foresee may prevent the successful implementation of new lines of
business, products or services. Initial timetables for the introduction and development of new lines of business and/or new products or
services may not be achieved, and price and profitability targets may not prove feasible. External factors, such as compliance with
regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of
business and/or a new product or service. Furthermore, any new line of business and/or new product or service could require the
establishment of new key and other controls and have a significant impact on our existing system of internal controls. Failure to
successfully manage these risks in the development and implementation of new lines of business and/or new products or services could
have a material adverse effect on our business and, in turn, our financial condition and results of operations.
34
We may not realize the expected benefits from our efficiency and growth initiatives, which could negatively impact our future
profitability.
Operating costs must decrease or grow at a slower pace than overall revenue in order to thrive in the competitive banking
environment. We have and will continue to implement strategies to grow our loan portfolio and increase noninterest income in order
to realize earnings growth and to remain competitive with the other banks in the markets we serve. We are continuously focused on
growth initiatives and strategies for expense reductions to increase efficiencies. While we have had success in cost-savings and
revenue growth in the past, there is no guarantee that these initiatives will be successful in the future. In addition, while expense
control continues to be a top focus for us, management also expects to continue to make strategic investments in technology that are
expected to improve our customer experience and support future growth, which will require an increase in expenditures. There can be
no assurance that we will ultimately realize the anticipated benefits of our expense reduction and growth strategies, which may impair
our earnings growth. Further, we may not be able to realize cost savings or revenue benefits in the time period expected and/or be able
to sustain success in such items at targeted levels, which could negatively affect our near-term profitability.
Our future growth and financial performance may be negatively affected if we are unable to successfully execute our growth
plans, which may include acquisitions and de novo branching.
We may not be able to continue our organic or internal growth, which depends upon economic conditions, our ability to identify
appropriate markets for expansion, our ability to recruit and retain qualified personnel, our ability to fund growth at a reasonable cost,
sufficient capital to support our growth initiatives, competitive factors, banking laws, and other factors.
We may seek to supplement our internal growth through acquisitions. We cannot predict the number, size or timing of acquisitions, or
whether any such acquisition will occur at all. Our acquisition efforts have traditionally focused on targeted banking entities in
markets in which we currently operate and markets in which we believe we can compete effectively. However, as consolidation of the
financial services industry continues, the competition for suitable acquisition candidates may increase and, as the number of
appropriate targets decreases, the prices for potential acquisitions could increase which could reduce our potential returns and reduce
the attractiveness of these opportunities to us. In addition, we have and expect to continue to seek to acquire other businesses or
segments of business that may support or add to existing product lines, such as trust and asset management services. We may compete
with other financial services companies for acquisition opportunities, and many of these competitors have greater financial resources
than we do and may be able to pay more for an acquisition than we are able or willing to pay.
We also may be required to use a substantial amount of our available cash and other liquid assets, or seek additional debt or equity
financing, to fund future acquisitions. Such events could make us more susceptible to economic downturns and competitive pressures,
and additional debt service requirements may impose a significant burden on our results of operations and financial condition. If we
are unable to locate suitable acquisition candidates willing to sell on terms acceptable to us, or we are otherwise unable to obtain
additional debt or equity financing necessary for us to continue making acquisitions, we would be required to find other methods to
grow our business and we may not grow at the same rate we have in the past, or at all.
We must generally satisfy several conditions, including receiving federal regulatory approval, in order to execute most acquisition
transactions. In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other
factors, the effect of the acquisition on competition, financial condition, and future prospects. The regulators also review current and
projected capital ratios and levels; the competence, experience, and integrity of management and its record of compliance with laws
and regulations; the convenience and needs of the communities to be served (including the acquiring institution’s record of
compliance under the Community Reinvestment Act) and the effectiveness of the acquiring institution in combating money laundering
activities. We cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted. We
may also be required to sell banks or branches as a condition to receiving regulatory approval, which condition may not be acceptable
to us or, if acceptable to us, may reduce the benefit of any acquisition. Additionally, federal and/or state regulators may charge us with
regulatory and compliance failures of an acquired business that occurred prior to the date of acquisition, and such failures may result
in the imposition of formal or informal enforcement actions.
We cannot provide assurance that we will be able to successfully consolidate any business or assets we acquire with our existing
business. The integration of acquired operations and assets may require substantial management effort, time and resources and may
divert management’s focus from other strategic opportunities and operational matters. Acquisitions may not perform as expected when
the transaction was consummated and may be dilutive to our overall operating results and stockholders’ equity per share of common
stock. Specifically, acquisitions could result in higher-than-expected deposit attrition, loss of key employees or other consequences
that could adversely affect our ability to maintain relationships with customers and employees. We may also sell or consider selling
one or more of our businesses. Such a sale would generally be subject to certain federal and/or state regulatory approvals, and may not
be able to generate gains on sale or related increases in stockholders’ equity commensurate with desirable levels.
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In addition to the acquisition of existing financial institutions, as opportunities arise, we may explore de novo branching as a part of
our internal growth strategy and possibly enter into new markets through de novo branching. De novo branching and any acquisition
carry numerous risks, including the following:
•
the inability to obtain all required regulatory approvals;
•
significant costs and anticipated operating losses associated with establishing a de novo branch or a new bank;
•
the inability to secure the services of qualified senior management;
•
the failure of the local market to accept the services of a new bank owned and managed by a bank holding company
headquartered outside of the market area of the new bank;
•
economic downturns in the new market;
•
the inability to obtain attractive locations within a new market at a reasonable cost; and
•
the additional strain on management resources and internal systems and controls.
We have experienced, to some extent, many of these risks with our de novo branching to date.
Changes in retail distribution strategies and consumer behavior may adversely impact our investments in bank premises,
equipment, technology and other assets and may lead to increased expenditures to change our retail distribution channel.
We have significant investments in bank premises and equipment for our branch network. Advances in technology such as e-
commerce, telephone, internet and mobile banking, and in-branch self-service technologies including automated teller machines and
other equipment, as well as an increasing customer preference for these other methods of accessing our products and services, could
decrease the value of our branch network, technology, or other retail distribution physical assets. Such advances may also cause us to
change our retail distribution strategy, close and/or sell certain branches or parcels of land held for development and restructure or
reduce our remaining branches and work force. Such actions in the future could lead to losses on disposition of such assets or could
adversely impact the carrying value of any long-lived assets and may lead to increased expenditures to renovate, reconfigure or close a
number of our remaining branches or to otherwise reform our retail distribution channel.
Risks Related to the Legal and Regulatory Environment
We are subject to regulation by various federal and state entities.
We are subject to the regulations of the Commission, the Federal Reserve, the FDIC, the CFPB and the MDBCF. New regulations
issued by these or other agencies may adversely affect our ability to carry on our business activities. We are subject to various federal
and state laws, and certain changes in these laws and regulations may adversely affect our operations. Other than the federal securities
laws, the laws and regulations governing our business are intended primarily for the protection of our depositors, our customers, the
financial system and the FDIC insurance fund, not our shareholders or other creditors. Further, we must obtain approval from our
regulators before engaging in certain activities, and our regulators have the ability to compel us to, or restrict us from, taking certain
actions entirely, such as increasing dividends, entering into merger or acquisition transactions, acquiring or establishing new branches,
and entering into certain new businesses. Noncompliance with certain of these regulations may impact our business plans, including
our ability to branch, offer certain products, or execute existing or planned business strategies.
For additional information regarding laws and regulations to which our business is subject, see “Supervision and Regulation.”
Any of the laws or regulations to which we are subject, including tax laws, regulations or their interpretations, may be modified or
changed from time to time, and we cannot be assured that such modifications or changes will not adversely affect us. Failure to
appropriately comply with any such laws or regulations could result in sanctions by regulatory authorities, civil monetary penalties or
damage to our reputation, all of which could adversely affect our business, financial condition or results of operations. Further,
implementation of new rules, such as the Commission’s proposed climate related disclosures, could require additional cost and
negatively impact operating results.
In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly
rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also
result in additional costs.
We and other financial institutions have been the subject of litigation, investigations and other proceedings which could result in
legal liability and damage to our reputation.
We and certain of our directors, officers and subsidiaries are named from time to time as defendants in various class actions and other
litigation relating to our business and activities. Past, present and future litigation has included or could include claims for substantial
compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in
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other reviews, investigations and proceedings (both formal and informal) by governmental, law enforcement and self-regulatory
agencies regarding our business. These matters could result in adverse judgments, settlements, fines, penalties, injunctions,
amendments and/or restatements of our Commission filings and/or financial statements, determinations of material weaknesses in our
disclosure controls and procedures or other relief. Substantial legal liability or significant regulatory action against us, as well as
matters in which we are involved that are ultimately determined in our favor, could materially adversely affect our business, financial
condition or results of operations, cause significant reputational harm to our business, divert management attention from the operation
of our business and/or result in additional litigation.
In addition, in recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of
various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a
lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a
degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or
shareholders. We have been and in the future could become subject to claims based on this or other evolving legal theories. Further,
banking institutions are also increasingly the target of class action lawsuits, including claims alleging deceptive practices or violations
of account terms in connection with non-sufficient funds or overdraft charges and violations of the Fair Labor Standards Act (FLSA).
We manage these risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics
processes, and other means. However, the commencement, outcome, and magnitude of litigation cannot be predicted or controlled
with any certainty.
Risks Related to Our Common Stock
Future issuances of equity securities could dilute the interests of holders of our common stock, and our common stock ranks
junior to indebtedness.
Our common stock ranks junior to all of our existing and future indebtedness with respect to distributions and liquidation. In addition,
future issuances of equity securities, including pursuant to outstanding share-based payment arrangements, could dilute the interests of
our existing shareholders, including you, and could cause the market price of our common stock to decline. Moreover, to the extent
that we issue restricted stock units, phantom shares, stock appreciation rights, options or warrants to purchase our common stock in
the future and those stock appreciation rights, options or warrants are exercised or as the restricted stock units vest, our shareholders
may experience further dilution.
Holders of our shares of common stock do not have preemptive rights. Additionally, sales of a substantial number of shares of our
common stock in the public markets and the availability of those shares for sale could adversely affect the market price of our
common stock.
Our ability to deliver and pay dividends depends primarily upon the results of operations of our subsidiary Bank, and we may not
pay, or be permitted to pay, dividends in the future.
We are a bank holding company that conducts substantially all of our operations through our subsidiary Bank. As a result, our ability
to make dividend payments on our common stock will depend primarily upon the receipt of dividends and other distributions from the
Bank.
The ability of the Bank to pay dividends or make other payments to us, as well as our ability to pay dividends on our common stock, is
limited by the Bank’s obligation to maintain sufficient capital and by other general regulatory restrictions on its dividends, which have
tightened since the financial crisis. The Federal Reserve has stated that bank holding companies should not pay dividends from
sources other than current earnings. If these requirements are not satisfied, we may be unable to pay dividends on our common stock.
We may also decide to limit the payment of dividends even when we have the legal ability to pay them in order to retain earnings for
use in our business, which could adversely affect the market value of our common stock. There can be no assurance of whether or
when we may pay dividends in the future.
Mississippi law, and anti-takeover provisions in our articles of incorporation and bylaws could make a third-party acquisition of us
difficult and may adversely affect share value.
Our articles of incorporation and bylaws contain provisions that make it more difficult for a third party to acquire us (even if doing so
might be beneficial to our shareholders) and for holders of our securities to receive any related takeover premium for their securities.
We are also subject to certain provisions of state and federal law and our articles of incorporation that may make it more difficult for
someone to acquire control of us. Under federal law, subject to certain exemptions, a person, entity, or group must notify the federal
banking agencies before acquiring 10% or more of the outstanding voting stock of a bank holding company, including shares of our
common stock. Banking agencies review the acquisition to determine if it will result in a change of control. The banking agencies
37
have 60 days to act on the notice, and take into account several factors, including the resources of the acquirer and the antitrust effects
of the acquisition. Additionally, a bank holding company must obtain the prior approval of the Federal Reserve before, among other
things, acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank. There are also Mississippi
statutory provisions and provisions in our articles of incorporation that may be used to delay or block a takeover attempt. As a result,
these statutory provisions and provisions in our articles of incorporation could result in our being less attractive to a potential acquirer
and limit the price that investors might be willing to pay in the future for shares of our common stock.
Shares of our common stock are not insured deposits and may lose value.
Shares of our common stock are not savings accounts, deposits or other obligations of any depository institution and are not insured or
guaranteed by the FDIC or any other governmental agency or instrumentality, any other deposit insurance fund or by any other public
or private entity, and are subject to investment risk, including the possible loss of principal.
General Risk Factors
We must attract and retain skilled personnel.
Our success depends, in substantial part, on our ability to attract and retain skilled, experienced personnel in key positions within the
organization. Competition for qualified candidates in the activities and markets that we serve is intense. If we are not able to hire,
adequately compensate, or retain these key individuals, we may be unable to execute our business strategies and may suffer adverse
consequences to our business, financial condition and results of operations. Labor shortages have and may continue to restrict our
ability to attract and retain personnel and increase related costs.
Natural and man-made disasters could affect our ability to operate.
Our market areas are often impacted by hurricanes and flooding. Natural disasters, such as hurricanes, flooding, tornados, freezes and
other natural and man-made disasters, such as oil spills, can disrupt our operations, result in significant damage to our properties or
properties and businesses of our borrowers, including property pledged as collateral, interrupt our ability to conduct business,
negatively affect the local economies in which we operate, and increase circumstances leading to litigation.
We cannot predict whether or to what extent damage caused by future hurricanes and other disasters will affect our operations or the
economies in our market areas, but such events could cause a decline in loan originations, a decline in the value or destruction of
properties securing the loans and an increase in the risk of delinquencies, foreclosures, loan losses and litigation. Climate change may
increase the nature, severity and frequency of adverse weather conditions in our footprint, making the impact from these types of
natural disasters on us or our customers worse.
We and our customers rely on the existence of, and ability of private and public insurance programs to provide coverage for these
types of events. Cost for insurance coverage under these programs has and may continue to increase, negatively impacting our
business costs and our customers’ levels of liquidity and the ability to service their debt. The unavailability of these types of coverage
or the inability of these entities to perform could also have a materially adverse impact on our operations.
Societal, legislative and regulatory responses to environmental, social and governance (ESG) concerns, and anti ESG concerns, as
well as diversity, equity, and inclusion (DEI) and anti-DEI concerns, could adversely affect our business and performance,
including indirectly through impacts on our customers.
Our business faces increasing public, investor, activist, legislative and regulatory scrutiny related to ESG and anti-ESG, DEI and anti-
DEI developments. We risk damage to our brand and reputation in certain sectors if we fail to act in response to ESG concerns, such
as diversity, equity and inclusion, environmental stewardship, human capital management, support for our local communities,
corporate governance and transparency, or fail to consider ESG factors in our business operations.
Concerns over the long-term impacts of climate change have led and will likely continue to lead to global governmental efforts to
mitigate those impacts. Consumers and businesses also may change their behavior and operations as a result of these concerns. The
Company and its customers may need to respond to new laws and regulations as well as consumer and business preferences resulting
from climate change concerns. We and our customers may face cost increases, asset value reductions and operating process changes.
The impact on our customers will likely vary depending on their specific circumstances, including a significant presence in areas that
are vulnerable to natural and man-made disasters that may be exacerbated by climate change, or reliance upon or a role in carbon
intensive activities. Among the impacts to the Company could be a drop in demand for our products and services, particularly in
certain sectors. In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets
securing loans. Our efforts to take these risks into account may not be effective in protecting us from the negative impact of new laws
and regulations or changes in consumer or business behavior.
38
Furthermore, as a result of our diverse base of clients and business partners, we may face potential negative publicity based on the
identity of our clients or business partners and the public's (or certain segments of the public’s) view of those entities. Such publicity
may arise from traditional media sources or from social media and may increase rapidly in size and scope. If our client or business
partner relationships were exposed to negative publicity, our ability to attract and retain clients, business partners, and employees may
be negatively impacted, and our stock price may also be negatively impacted. Additionally, we may face pressure to not do business in
certain industries that are viewed as harmful to the environment or are otherwise negatively perceived, which could impact our
growth.
Certain investors and shareholder advocates are placing increasing emphasis on how corporations address ESG issues in their business
strategy when making investment decisions and when developing their investment strategies and proxy recommendations. We may
incur increased costs with respect to our ESG efforts and if such efforts are negatively perceived, our reputation and stock price may
suffer.
In response to ESG developments (including, in particular DEI initiatives), there are increasing instances of anti-ESG legislation and
anti-DEI executive orders, adverse media coverage, regulation, and litigation that could have unintended impacts on ordinary banking
operations and increase litigation or reputational risk related to actions we choose to take and impact the results of our operations. If
legislatures in the states in which we operate adopt legislation intended to protect certain industries by limiting or prohibiting
consideration of business and industry factors in lending activities, certain portions of our lending operations may be impacted.
We are exposed to reputational risk.
Negative public opinion can result from our actual or alleged improper activities, such as lending practices, data security breaches,
corporate governance policies and decisions, and acquisitions, any of which may damage our reputation. Negative public opinion can
also result from action or inaction related to environmental, social and corporate governance matters. Additionally, actions taken by
government regulators and community organizations may also damage our reputation. Negative public opinion could adversely affect
our ability to attract and retain customers or expose us to litigation and regulatory action.
Changes in accounting policies or in accounting standards could materially affect how we report our financial condition and
results of operations.
The preparation of consolidated financial statements in conformity with U.S generally accepted accounting principles (“GAAP”),
including the accounting rules and regulations of the Commission and the FASB, requires management to make significant estimates
and assumptions that impact our financial statements by affecting the value of our assets or liabilities and results of operations. Some
of our accounting policies are critical because they require management to make difficult, subjective and complex judgments about
matters that are inherently uncertain and because materially different amounts may be reported if different estimates or assumptions
are used. If such estimates or assumptions underlying our financial statements are incorrect, our financial condition and results of
operations could be adversely affected.
From time to time, the FASB and the Commission change the financial accounting and reporting standards or the interpretation of
such standards that govern the preparation of our external financial statements. These changes are beyond our control, can be difficult
to predict, may require extraordinary efforts or additional costs to implement and could materially impact how we report our financial
condition and results of operations. Additionally, we may be required to apply a new or revised standard retrospectively, resulting in
the restatement of prior period financial statements in material amounts.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
The Company’s information security program is designed to protect the security, availability, integrity, and confidentiality of our
computer systems, networks, software and information assets, including client and other sensitive data. The program is comprised of
policies, guidelines, and procedures. These policies, guidelines, and procedures are intended to align with regulatory guidance, the
ISO Code of Practice for Information Security Controls, and common industry practices. Assessing, identifying and managing
cybersecurity related risks are integrated into our overall enterprise risk management process.
The Company expects each associate to be responsible for the security and confidentiality of client information. We communicate this
responsibility to associates upon hiring and regularly throughout their employment. We require each associate to complete training to
39
protect the confidentiality of client information at the time of hire and during each year of employment. Associates must successfully
pass a test to demonstrate understanding of these requirements and provide acknowledgement of their responsibilities.
Additionally, we regularly provide associates with information security awareness training covering the recognition and appropriate
handling of potential phishing emails, which can introduce malware to a company’s network, result in the theft of user credentials and,
ultimately, place client or employee data, or other sensitive company data, and information at risk. The Company employs a number
of technical controls to mitigate the risk of phishing emails. We regularly test associates to determine their susceptibility to phishing
emails. We require susceptible associates to take additional training and provide regular reports to management. We additionally
maintain procedures for the safe storage and handling and secure disposal of sensitive information.
The Company protects its network and information assets with industry-tested security products and processes. Our teams actively
monitor company networks and systems to detect suspicious or malicious events. The Company evaluates potential cyber risks, as
appropriate, in its regular risk assessments. The Company also conducts vulnerability scans, and contracts with third-party vendors to
perform penetration tests against the Company’s network. In addition, the Company’s Cyber Defense Center team monitors threat
intelligence sources to anticipate and research evolving threats, investigates their potential impact to financial services companies,
examines the Company’s controls to detect and defend against those threats, and proactively adjusts the Company’s defenses against
those threats. The Company also engages expert cyber consultants, as necessary and appropriate.
Before engaging third-party service providers who may have access to the Company’s, customer, employee or other sensitive data, or
to the Company’s systems, we perform due diligence in order to identify and evaluate their cyber risks, which includes self-attestation
questionnaires (developed using Service Organization Controls (SOC) reports). This process is led by the Vendor Management team
and includes participation of dedicated information security resources. Third-party service providers processing sensitive data are
contractually required to meet applicable legal and regulatory obligations to protect sensitive data against cybersecurity threats and
unauthorized access to the sensitive data. After contract executions, third-party service providers deemed critical by our vendor
management office undergo ongoing monitoring to ensure they continue to meet their security obligations and other potential
cybersecurity threats.
As part of our information security program, we have adopted an Information and Cybersecurity Incident Response Plan (Incident
Response Plan), which is administered by our Chief Information Security Officer (CISO) in close collaboration with our Director of
Enterprise IT Risk. The Incident Response Plan describes the Company’s processes, procedures, and responsibilities for responding to
cybersecurity incidents. The Incident Response Plan is intended to proceed on parallel paths in the event of a cybersecurity incident,
including implementation of (i) forensic and containment, eradication, and remediation actions by information technology and security
personnel and (ii) operational response actions by business, communications, and risk personnel. Our incident response team annually
performs exercises to simulate responses to cybersecurity events.
The Incident Response Plan includes procedures for timely escalation and reporting of potentially significant cybersecurity incidents
to the Company’s Chief Operating Officer, Chief Financial Officer, Chief Risk Officer, our Board Risk Committee, law enforcement,
government agencies and impacted parties, as needed.
Impacts of Cybersecurity Incidents
To date, the Company has no knowledge that we have experienced a cybersecurity incident that has or is reasonably likely to have a
material impact on our business strategy, results of operations, or financial condition. Despite our efforts, there can be no assurance
that our cybersecurity risk management processes and measures described will be fully implemented, complied with, or effective in
protecting our systems and information. We face risks from certain cybersecurity threats that, if realized, are reasonably likely to
materially affect our business strategy, results of operations or financial condition. See Item 1A. “Risk Factors” in this document for
further discussion of the risks associated with an interruption or breach in our information systems or infrastructure.
Cybersecurity Governance
Our Board of Directors is responsible for overseeing the Company’s business and affairs, including risks associated with cybersecurity
threats. The Board oversees the Company’s corporate risk governance processes primarily through its committees, and oversight of
cybersecurity threats is delegated primarily to our Board Risk Committee. The Board also periodically designates directors as its
cybersecurity contact points. Our Chief Operating Officer facilitates the involvement of these designated directors in oversight of
potentially significant cybersecurity incidents. The current directors designated as cybersecurity contacts are Chairman Jerry Levens,
Board Risk Committee Chair Frank Bertucci, and Suzette Kent.
The Risk Committee oversees the management process associated with cybersecurity risk. Cybersecurity matters and assessments are
regularly included in Board Risk Committee meetings. The Board Risk Committee has primary responsibility for overseeing the
Company’s comprehensive Enterprise Risk Management program. The Enterprise Risk Management program assists senior
management in identifying, assessing, monitoring, and managing risk, including cybersecurity risk, in a rapidly changing
40
environment. The Board Risk Committee provides reports to the full Board on the Company’s information security program on an
annual basis.
The Company’s CISO directs our information security program and the Director of Enterprise IT Risk directs our information
technology risk management. Led by our CISO and Director of Enterprise IT Risk, a team of dedicated security professionals
examines risks to the Company’s information systems and assets, designs and implements security solutions, monitors the
environment and provides immediate responses to threats.
The CISO regularly attends Board Risk Committee meetings and sits in executive session with the Committee members at least
annually to update committee members on material cybersecurity and other information security developments and risks. The CISO
also provides an annual information security program summary report to the Board, outlining the overall status of our information
security program and the Company’s compliance with regulatory guidelines.
The IT Risk Governance Subcommittee, a management level subcommittee of our Operations Committee, also addresses information
security and is responsible for overseeing the protection of the integrity, security, safety and resiliency of corporate information
systems and assets. The IT Risk Governance Committee meets quarterly to review the development of the program and provide
recommendations. The subcommittee provides regular reports to the Operations Committee and, ultimately, the Board Risk
Committee through the CISO. Together, our CISO and Director of Enterprise IT Risk co-lead the Company’s IT Risk Governance
Committee.
Our CISO is responsible for the Company’s information security program. In this role, the CISO manages the Company’s information
security and day-to-day cybersecurity operations and supports the information security risk oversight responsibilities of the Board and
its committees. The CISO is a member of the Company’s Corporate Operations group and reports to our Chief Information Officer,
who reports to our Head of Operations, Technology and Products, who in turn reports to our Chief Operating Officer. Our CISO has
cybersecurity experience spanning more than two decades. Prior experience includes senior security roles in large government
agencies and Fortune 200 companies. He has spoken at area colleges and various industry events about information security. He holds
a degree in electrical engineering, is a graduate of banking school, and maintains several industry certifications.
Our Director of Enterprise IT Risk is responsible for the Company’s information technology governance, risk, and compliance
program. In this role, the Director of Enterprise IT Risk provides independent oversight of information technology risk, promotes
effective challenge to the Company’s information technology systems, and ensures that high level risks receive appropriate attention.
The Director of Enterprise IT Risk is a member of the Company’s Corporate Risk Management Group and reports to our Chief Risk
Officer, who in turn reports to our CEO. Our Director of Enterprise IT Risk has over two decades of business continuity, crisis
management and risk experience in the financial services industry and maintains related industry certifications.
ITEM 2. PROPERTIES
The Company’s main office, which is the headquarters of the holding company, is located at Hancock Whitney Plaza, in Gulfport,
Mississippi. The Bank makes portions of the main office facilities and certain other facilities available for lease to third parties,
although such incidental leasing activity is not material to the Company’s overall operations.
The Company operates 180 full-service banking and financial services offices and 223 automated teller machines across our market,
primarily in the Gulf south corridor, including southern and central Mississippi; southern and central Alabama; southern, central and
northwest Louisiana; the northern, central, and panhandle regions of Florida; and certain areas of east and northeast Texas.
Additionally, the Company operates combined loan and deposit production offices in the metropolitan areas of Nashville, Tennessee
and Atlanta, Georgia. The Company owns over 75% of these facilities, and the remaining banking facilities are subject to leases, each
of which we consider reasonable and appropriate for its location. We ensure that all properties, whether owned or leased, are
maintained in suitable condition. We also evaluate our banking facilities on an ongoing basis to identify possible under-utilization and
to determine the need for functional improvements, relocations, closures or possible sales. The Bank and its subsidiaries hold a variety
of property interests acquired in settlement of loans. Some of these properties were acquired in transactions before 1979 and are
carried at nominal amounts on our balance sheet and reflected income of $0.1 million in our 2024 operating results.
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ITEM 3. LEGAL PROCEEDINGS
We and our subsidiaries are 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 4. MINE SAFETY DISCLOSURES
Not applicable.
0
50
100
150
200
250
2019
2020
2021
2022
2023
2024
Hancock Whitney Corporation
KBW Regional Banks Index
NASDAQ Composite-Total Return
42
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company’s common stock trades on the Nasdaq Global Select Market under the ticker symbol “HWC.” There were 6,908 active
holders of record of the Company’s common stock at January 31, 2025 and 86,126,971 shares outstanding.
Stock Performance Graph
The following performance graph and related information are neither “soliciting material” nor “filed” with the SEC, nor shall such
information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of
1934, each as amended, except to the extent the Company specifically incorporates it by reference into such filing.
The performance graph compares the cumulative five-year shareholder return on the Company’s common stock, assuming an
investment of $100 on December 31, 2019 and the reinvestment of dividends thereafter, to that of the common stocks of United States
companies reported in the Nasdaq Total Return Index and the common stocks of the KBW Regional Banks Total Return Index. The
KBW Regional Banks Total Return Index is a proprietary stock index of Keefe, Bruyette & Woods, Inc., that tracks the returns of
approximately 50 regional banking companies throughout the United States.
43
Equity Compensation Plan Information
The following table provides information as of December 31, 2024 with respect to shares of common stock that may be issued under
the Company’s equity compensation plans.
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
Weighted-Average Exercise
Price of Outstanding
Options, Warrants
and Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
Plan Category
(a)
(b)
(c)
Equity compensation plans approved by
security holders
1,510,274 (1) $
N/A
1,415,499
Equity compensation plans not approved by
security holders
—
—
—
Total
1,510,274
1,415,499
(1)
Includes 58,006 shares potentially issuable upon the vesting of outstanding restricted share units and 56,084 shares potentially issuable upon the vesting
of outstanding performance share units that represent awards deferred into the Company’s Nonqualified Deferred Compensation Plan. Also includes
405,920 performance share awards. Performance share awards and units are stated in amounts that would be issuable if the highest level of performance
conditions are met.
Issuer Purchases of Equity Securities
The Company had in place a stock buyback program approved by the Board of Directors whereby the Company was authorized to
repurchase up to 4,297,000 shares of its common stock through the program’s expiration date of December 31, 2024. 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 in accordance with the rules and regulations
of the Securities and Exchange Commission. The Company was not obligated to purchase any shares under this program and the
repurchase authorization could have been terminated or amended by the Board at any time prior to the expiration date. Prior to the
termination of this repurchase plan on December 31, 2024, the Board approved a new plan with similar terms effective January 1,
2025.
Common stock repurchase activity during the fourth quarter of 2024 was as follows:
Total Number of
Shares of Units
Purchased (a)
Average Price Paid
Per Share (b)
Total Number of
Shares Purchased as
a Part of Publicly
Announced Plans
or Programs
Maximum Number
of Shares That May
Yet Be Purchased
Under Plans or
Programs
Oct 1, 2024 - Oct 31, 2024
80,299 $
52.96
80,000
3,604,007
Nov 1, 2024 - Nov 30, 2024
117,083 $
52.04
70,000
3,534,007
Dec 1, 2024 - Dec 31, 2024
— $
—
—
3,534,007
Total
197,382 $
52.42
150,000
(a)
Includes common stock purchased in connection with our share-based payment plans related shares used to cover payroll tax withholding requirements.
See Note 18 – Share-Based Payment Arrangements in our 2024 in Part II, Item 8 of this 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 6.
Reserved.
44
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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 year ended December 31, 2024 and selected
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, which 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. See Forward-Looking Statements in Part I of this Annual Report.
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. A reconciliation of those measures to GAAP measures are provided in Table 1 “Consolidated Financial
Results” and Table 31 “Quarterly Consolidated Financial Results” of this section. The following is an overview of the non-GAAP
measures used and the reasons why management believes they are useful and important in understanding the Company’s financial
condition and results of operations included below.
Consistent with the provisions of Subpart 229.1400 of 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 interest income from certain loans and investments using the statutory federal tax rate (21% for all periods
presented) to increase tax-exempt interest income to a taxable-equivalent basis. This measure is the preferred industry measurement of
net interest income and 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, as well as 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.
EXECUTIVE OVERVIEW
The discussions and analyses that follow provide insight into the impact of macroeconomic and industry trends on our performance in
the most recent fiscal year, and our outlook for the near term.
Current Economic Environment
While the presidential and congressional elections came to the forefront of the economic and social landscape later in the year,
progress in the fight against inflation, continued robust economic activity, softening in the labor market and the eventual shift in policy
of the Federal Reserve drove much of the economic headlines during the year ended December 31, 2024. Economic activity remained
resilient in 2024, with real gross domestic product (GDP) displaying healthy growth of 2.8% for the year, relatively consistent with the
prior year and in excess of expectations. While the labor market remained strong overall, employment statistics began to migrate
during the year. By mid-year, it seemed that the Federal Reserve’s stated inflation target of 2% was in range, and, in September, the
Federal Reserve issued a 50 basis point (bp) rate cut, indicating its shift in focus to preserving a healthy labor market. Two additional
25 bp rate cuts followed in November and December. However, the upward trend in inflation markers in December coupled with
concerns over the potential fiscal impacts of the current administration’s policy actions, particularly around tariffs and immigration,
have somewhat clouded the picture surrounding monetary policy expectations. Longer-term interest rates experienced some volatility
45
as the market responded to mixed data on both inflation and employment throughout the year. The 10-year U.S. Treasury yield ranged
from below 4% to 4.7% ending the year at 4.6%, affecting bond indices and mortgage rates and other capital market indicators.
Within the financial services industry, some of the headwinds experienced in much of the previous year began to ease. While interest
rates remain elevated and continue to influence loan demand and deposit behavior, negative sentiment from recent high profile bank
failures has receded, and funding costs that had begun to stabilize in late 2023 further benefited from rate cuts in the latter half of
2024. Within our markets, loan growth remains tempered due in part to loan demand, the credit health of borrowers, and a strategic
reduction of exposure to syndicated credits as we focus on full-service relationships. However, interest rates on new, renewed and
repricing variable rate loans and investment securities continue to result in higher yields on earning assets that, coupled with
stabilization in funding costs, contributed to net interest margin expansion throughout the year.
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 December 2024 Moody’s forecast, the most current available at
December 31, 2024. 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 macroeconomic variables underlying the December 2024 economic scenarios differ in
many respects from the comparable forecasts available at December 31, 2023, given the shift in economic circumstances and risks,
particularly as a result of the outcome of the 2024 presidential and congressional elections.
The baseline scenario continues to maintain an overall optimistic tenor with respect to economic outcomes. The forecast reflects new
assumptions about fiscal policy, monetary policy and immigration and population growth given the Republican sweep of the White
House and Congress. Key assumptions within the December 2024 baseline forecast include the following: (1) With the Republican
majority, spending will decrease, personal income tax provisions of the Tax Cuts and Jobs Act will be extended and the corporate
income tax rate will decrease to 15%; (2) The Federal Reserve will issue two rate cuts of 25 basis points each in 2025, with further
gradual reductions in 2026 until the benchmark rate reaches 3%; (3) Though the labor market has softened, the economy remains near
full-employment with the current unemployment rate of 4%, and is forecasted to remain relatively stable at 4.1% over the succeeding
three years; (4) GDP will display modest annual below-trend growth in the coming years of 2.2% in 2025, 1.6% in 2026, and 1.8% in
2027; and, (5) the 10-year U.S. Treasury yield will remain elevated near its current rate, and is forecasted to average 4.3% for 2025
through 2027 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 deportations on the economy are worse than expected, elevated interest rates weaken credit-sensitive spending more than
anticipated and there is longer and farther-reaching disturbance from geopolitical conflict. Further, the scenario assumes the
unemployment rate will increase considerably to 6.3% in 2025 (peaking at 7.1% in the fourth quarter) before improving to 5.6% in
2026 and 4.1% in 2027. As a result of these pressures, the U.S. falls into a mild recession beginning in the first quarter of 2025 that
lasts for three quarters, with the stock market contracting 22% and a peak-to-trough decline in GDP of 1.1%. Despite the onset of the
recession, rising inflation prompts the Federal Reserve to raise its benchmark rate in the first quarter of 2025 before resuming
easement in the second 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 December 31, 2024.
Recent and expected changes in fiscal and other policies with the current administration creates 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 those
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 2024 Financial Results
Net income for the year ended December 31, 2024 was $460.8 million, or $5.28 per diluted common share, compared to $392.6
million, or $4.50 per diluted common share in 2023. Included in the results of the year ended December 31, 2024 is a charge of $3.8
million, or $0.03 per diluted share after-tax, supplemental disclosure item attributable to a revision of the FDIC special assessment.
Included in the results of the year ended December 31, 2023 is a net charge of $75.4 million (pre-tax), or $0.68 per share after tax,
comprised of the following supplemental disclosure items: a $65.4 million loss on restructuring of the securities portfolio, a $26.1
46
million FDIC special assessment charge and a $16.1 million gain on the sale of a parking facility. The following is an overview of
financial results for the year ended December 31, 2024 compared to December 31, 2023:
•
Net income of $460.8 million, or $5.28 per diluted common share
•
Adjusted pre-provision net revenue (a non-GAAP measure) totaled $641.0 million, up $5.3 million
•
Provision for credit losses of $52.2 million in 2024, compared to $59.1 million in 2023; allowance for credit losses to total
loans remains strong at 1.47% at December 31, 2024, up 6 basis points
•
Loans of $23.3 billion, down $622.5 million; reflects a $307.6 million strategic reduction of the shared national credit
portfolio
•
Deposits of $29.5 billion, down $197.2 million; reflects organic growth offset by a decline of $582.9 million in brokered
deposits
•
Common equity tier 1 capital ratio of 14.14%, up 181 bps from December 31, 2023; tangible common equity ratio of
9.47%, up 110 bps
•
Criticized commercial loans and nonaccrual loans continued to normalize following the recent benign credit environment
but remain comparable to peers; net charge-off ratio improved to 0.19% from 0.27%
•
Net interest margin expanded 3 bps to 3.37%
•
Efficiency ratio (a non-GAAP measure) of 55.36%, relatively consistent with 2023
Our results for the year ended December 31, 2024 represent a solid year of performance. Our net interest margin expanded, reflecting
higher earning asset yields and stabilization in the cost of funds. Fee income grew and adjusted noninterest expense increased only
modestly. Strong earnings facilitated substantial growth in our capital ratios. Though credit metrics normalized compared to the recent
benign credit environment, we have not seen signs of significant weakening in any particular industry, sector or geographic segment,
and we continue to maintain a robust allowance for credit loss coverage of 1.47% in light of the current credit and economic
environment. We remain focused on balance sheet optimization and effective expense control, and we believe we are well positioned
to continue to enhance shareholder value. As we close out our celebration of our 125th year, we are ready for the opportunities ahead,
including our pending second quarter 2025 acquisition of Sabal Trust Company and the recently announced multi-year organic growth
plan.
The table that follows presents our consolidated financial results. Additional information related to our results and outlook are
included in the discussions that follow.
47
Table 1. Consolidated Financial Results
(in thousands, except per share data)
2024
2023
2022
Income Statement:
Interest income (a)
$
1,692,991 $
1,620,497 $
1,137,063
Interest income (te) (b)
1,704,077
1,631,604
1,147,411
Interest expense
611,070
522,898
87,060
Net interest income (te)
1,093,007
1,108,706
1,060,351
Provision for credit losses
52,167
59,103
(28,399 )
Noninterest income
364,129
288,480
331,486
Noninterest expense
819,910
836,848
750,692
Income before income taxes
573,973
490,128
659,196
Income tax expense
113,158
97,526
135,107
Net income
$
460,815 $
392,602 $
524,089
Supplemental disclosure items - included above, pre-tax
Included in noninterest income:
Loss on securities portfolio restructure
$
— $
(65,380 ) $
—
Gain on sale of parking facility
—
16,126
—
Included in noninterest expense:
FDIC special assessment
3,800
26,123
—
Balance Sheet Data:
Period end balance sheet data
Loans
$
23,299,447 $
23,921,917 $
23,114,046
Earning assets
31,857,841
32,175,097
31,873,027
Total assets
35,081,785
35,578,573
35,183,825
Noninterest-bearing deposits
10,597,461
11,030,515
13,645,113
Total deposits
29,492,851
29,690,059
29,070,349
Stockholders' equity
4,127,636
3,803,661
3,342,628
Average balance sheet data
Loans
$
23,630,743 $
23,594,579 $
21,915,393
Earning assets
32,422,554
33,160,791
32,498,213
Total assets
34,912,199
35,633,442
35,059,178
Noninterest-bearing deposits
10,491,504
11,919,234
14,298,022
Total deposits
29,168,855
29,478,481
29,497,470
Stockholders' equity
3,951,871
3,528,911
3,405,206
Common Shares Data:
Earnings per share - basic
$
5.30 $
4.51 $
6.00
Earnings per share - diluted
5.28
4.50
5.98
Cash dividends per common share
1.50
1.20
1.08
Book value per share (period end)
47.93
44.05
38.89
Tangible book value per share (period end)
37.58
33.63
28.29
Weighted-average number of shares - diluted
86,648
86,423
86,394
Period end number of shares
86,124
86,345
85,941
Performance and other data:
Return on average assets
1.32 %
1.10 %
1.49 %
Return on average common equity
11.66 %
11.13 %
15.39 %
Return on average tangible common equity
15.08 %
14.97 %
21.07 %
Tangible common equity (c)
9.47 %
8.37 %
7.09 %
Tier 1 common equity
14.14 %
12.33 %
11.41 %
Net interest margin (te)
3.37 %
3.34 %
3.26 %
Noninterest income as a percentage of total revenue (te)
24.99 %
20.65 %
23.82 %
Efficiency ratio (d)
55.36 %
55.25 %
52.93 %
Allowance for loan loss as a percentage of total loans
1.37 %
1.29 %
1.33 %
Allowance for credit loss as a percentage of total loans
1.47 %
1.41 %
1.48 %
Annualized net charge-offs to average loans
0.19 %
0.27 %
0.01 %
Nonaccrual assets as a percentage of loans, ORE and foreclosed assets
0.54 %
0.26 %
0.18 %
FTE headcount
3,476
3,591
3,627
48
($ in thousands)
2024
2023
2022
Reconciliation of pre-provision net revenue (te) and adjusted pre-provision net
revenue (te) (non-GAAP measures) (e)
Net income (GAAP)
$
460,815 $
392,602 $
524,089
Provision for credit losses
52,167
59,103
(28,399 )
Income tax expense
113,158
97,526
135,107
Pre-provision net revenue
626,140
549,231
630,797
Taxable equivalent adjustment
11,086
11,107
10,348
Pre-provision net revenue (te)
637,226
560,338
641,145
Adjustments from supplemental disclosure items
Loss on securities portfolio restructure
—
65,380
—
Gain on sale of parking facility
—
(16,126 )
—
FDIC special assessment
3,800
26,123
—
Adjusted pre-provision net revenue (te)
$
641,026 $
635,715 $
641,145
Reconciliation of revenue (te), adjusted revenue (te) and efficiency ratio (non-
GAAP measures) (e)
Net interest income
$
1,081,921 $
1,097,599 $
1,050,003
Noninterest income
364,129
288,480
331,486
Total GAAP revenue
1,446,050
1,386,079
1,381,489
Taxable equivalent adjustment
11,086
11,107
10,348
Total revenue (te)
1,457,136
1,397,186
1,391,837
Adjustments from supplemental disclosure items
Loss on securities portfolio restructure
—
65,380
—
Gain on sale of parking facility
—
(16,126 )
—
Adjusted revenue
$
1,457,136 $
1,446,440 $
1,391,837
GAAP noninterest expense
$
819,910 $
836,848 $
750,692
Amortization of intangibles
(9,413 )
(11,556 )
(14,033 )
Adjustments from supplemental disclosure items
FDIC special assessment
(3,800 )
(26,123 )
—
Adjusted noninterest expense
$
806,697 $
799,169 $
736,659
Efficiency ratio (d)
55.36 %
55.25 %
52.93 %
(a)
Interest income includes the net impact of discount accretion and premium amortization arising from business combinations totaling $2.1 million, $2.4 million,
and $4.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.
(b)
For analytical purposes, management adjusts interest income and net interest income for tax-exempt items to a taxable equivalent basis using a federal income
tax rate of 21%.
(c)
The tangible common equity ratio is common stockholders’ equity less intangible assets divided by total assets less intangible assets.
(d)
The efficiency ratio (a non-GAAP measure) is noninterest expense to total net interest (te) and noninterest income, excluding amortization of purchased
intangibles and supplemental disclosure items.
(e)
See non-GAAP financial measures section of this analysis for a discussion of these measures.
49
RESULTS OF OPERATIONS
The following is a discussion of results from operations for the year ended December 31, 2024 compared to the year ended December
31, 2023. Refer to previously filed Annual Reports on Form 10-K Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” for discussion of prior year variances.
Net Interest Income
Net interest income was $1.1 billion in 2024, down $15.7 million, or 1%, from 2023. Net interest income is the primary component of
our earnings and represents the difference, or spread, between revenue generated from interest-earning assets and the interest expense
related to funding those assets. For analytical purposes, net interest income is adjusted to a taxable equivalent basis (te) using the
statutory federal tax rate of 21% on tax exempt items (primarily interest on municipal securities and loans). Net interest income (te)
was $1.1 billion in 2024, also down $15.7 million, or 1%, from 2023, and included an increase in interest income (te) of $72.5 million
more than offset by an increase of $88.2 million in interest expense. Net interest margin, the ratio of net interest income (te) to average
earning assets, increased 3 bps to 3.37% in 2024 from 3.34% in 2023.
The $72.5 million increase in interest income (te) is largely attributable to the sustained elevated interest rate environment, partially
offset by a $738 million decrease in average earning assets. The yield on earning assets (te) was 5.26% in 2024, up 34 bps from 2023.
Loan yield was up 30 bps to 6.17%, reflecting the impact of the new and repricing loans in the current interest rate environment. The
yield on investment securities increased 24 bps in 2024 to 2.63% as new investments were made at higher yields. The decline in
average earning assets included decreases of $680 million in investment securities and $91 million in short-term investments, while
average total loans remained relatively flat, but experienced a shift in mix from commercial and consumer loans into residential
mortgage.
The $88.2 million increase in interest expense was largely driven by the interest rate environment, as higher prevailing interest rates
drove an increase in the cost of deposits and continued to foster shifts in deposit composition from noninterest-bearing and within the
mix of interest-bearing deposits to higher-cost products, partially offset by a decrease in short-term borrowings expense, mostly
attributable to a decline in average Federal Home Loan Bank (FHLB) advances. Compared to the prior year, average noninterest-
bearing deposits were down $1.4 billion, while higher-cost time deposits were up $857.8 million. Average short-term borrowings in
2024 were down $802.0 million from 2023, as the incremental FHLB borrowings drawn as a cautionary measure in early 2023 were
repaid. Our total cost of funds increased 30 bps to 1.88% in 2024 from 1.58% in 2023, largely driven by higher interest-bearing
deposit costs, up 55 bps in 2024 to 3.08% from 2.53% in 2023, and other short-term borrowing costs, which consist largely of FHLB
advances, increasing 43 bps to 5.49% in 2024 from 5.06% in 2023.
Though interest rates remain elevated, the Federal Reserve cut its benchmark rate three times during 2024, beginning in September.
Our loan and interest-bearing deposits betas for the down rate cycle in the second half of the 2024 were 33% and 38%, respectively.
We expect deposit costs to decline in the near term as promotional pricing has been reduced. We expect our net interest income (te)
for 2025 to increase in the range of 3.5% to 4.5%. We expect modest and consistent expansion of net interest margin throughout 2025,
with an emphasis on balance sheet growth and by proactively managing deposit costs as interest rates continue to decline. Our forecast
assumes three 25 bp rate cuts occurring in July, September and December 2025. Modeling one and zero rate cut scenarios yielded
modestly better results for the year.
Discussions of Asset/Liability Management and Net Interest Income at Risk later in this item provide additional information regarding
our management of interest rate risk and the potential impact from changes in interest rates, respectively.
50
TABLE 2. Summary of Average Balances, Interest and Rates (te) (a)
Years Ended December 31,
2024
2023
2022
($ in millions)
Average
Balance
Interest
(d)
Rate
Average
Balance
Interest
(d)
Rate
Average
Balance
Interest
(d)
Rate
Assets
Interest-Earnings Assets:
Commercial & real estate loans (te) (a)
$
18,263.7 $ 1,179.0
6.46 % $
18,556.2 $ 1,131.8
6.10 % $
17,682.3 $ 759.9
4.30 %
Residential mortgage loans
3,982.1
152.8
3.84
3,541.2
128.3
3.62
2,666.1
90.3
3.39
Consumer loans
1,384.9
121.5
8.78
1,497.2
124.0
8.28
1,567.0
88.4
5.64
Loan fees & late charges
—
5.5
—
—
1.3
—
—
7.4
—
Loans (te) (b)
23,630.7
1,458.8
6.17
23,594.6
1,385.4
5.87
21,915.4
946.0
4.32
Loans held for sale
22.0
1.6
7.44
26.0
1.7
6.63
43.0
1.8
4.22
Investment securities:
U.S. Treasury and government
agency securities
549.9
15.8
2.87
567.2
15.3
2.70
426.7
8.3
1.95
Mortgage-backed securities and
collateralized mortgage obligations
6,805.2
175.0
2.57
7,423.9
170.4
2.30
7,652.1
154.5
2.02
Municipals (te)
843.4
25.0
2.96
887.0
26.5
2.98
912.0
27.0
2.96
Other securities
23.5
0.9
3.77
23.5
0.8
3.51
22.3
0.8
3.42
Total investment securities (te) (c)
8,222.0
216.7
2.63
8,901.6
213.0
2.39
9,013.1
190.6
2.11
Short-term investments
547.8
27.0
4.93
638.6
31.5
4.93
1,526.7
9.0
0.59
Total earning assets (te)
32,422.5
1,704.1
5.26 %
33,160.8
1,631.6
4.92 %
32,498.2
1,147.4
3.53 %
Nonearning assets:
Other assets
2,805.4
2,783.5
2,878.4
Allowance for loan losses
(315.7)
(310.9)
(317.4)
Total assets
$
34,912.2
$
35,633.4
$
35,059.2
Liabilities and Stockholders' Equity
Interest-bearing Liabilities:
Interest-bearing transaction and
savings deposits
$
10,891.8 $
248.2
2.28 % $
10,598.6 $
176.9
1.67 % $
11,201.1 $
21.2
0.19 %
Time deposits
4,846.9
223.3
4.61
3,989.1
166.5
4.17
1,056.4
4.7
0.44
Public funds
2,938.7
102.9
3.50
2,971.6
100.5
3.38
2,941.9
32.5
1.10
Total interest-bearing deposits
18,677.4
574.4
3.08
17,559.3
443.9
2.53
15,199.4
58.4
0.38
Repurchase agreements
639.9
10.6
1.65
513.3
7.0
1.36
536.7
1.1
0.21
Other short-term borrowings
251.5
13.8
5.49
1,180.1
59.7
5.06
822.0
15.1
1.83
Long-term debt
234.2
12.3
5.23
239.1
12.3
5.15
239.3
12.4
5.19
Total interest-bearing liabilities
19,803.0
611.1
3.25 %
19,491.8
522.9
2.68 %
16,797.4
87.0
0.52 %
Noninterest-bearing:
Noninterest-bearing deposits
10,491.5
11,919.2
14,298.0
Other liabilities
665.8
693.5
558.6
Stockholders' equity
3,951.9
3,528.9
3,405.2
Total liabilities and stockholders' equity
$
34,912.2
$
35,633.4
$
35,059.2
Net interest income (te) and margin
$ 1,093.0
3.37
$ 1,108.7
3.34
$ 1,060.4
3.26
Net earning assets and spread
$
12,619.5
2.17
$
13,669.0
2.24
$
15,700.8
3.01
Interest cost of funding earning assets
1.88 %
1.58 %
0.27 %
(a)
Taxable equivalent (te) amounts are calculated using federal income tax rate of 21%.
(b)
Includes nonaccrual loans.
(c)
Average securities do not include unrealized holding gains or losses on available for sale securities.
(d)
Included in interest income is net purchase accounting accretion of $2.1 million, $2.4 million and $4.7 million for the years December 31, 2024, 2023, and 2022
respectively.
51
TABLE 3. Summary of Changes in Net Interest Income (te) (a) (b)
2024 Compared to 2023
2023 Compared to 2022
Due to
Total
Due to
Total
Change in
Increase
Change in
Increase
($ in thousands)
Volume
Rate
(Decrease)
Volume
Rate
(Decrease)
Interest Income (te)
Commercial & real estate loans (te) (a)
$ (18,062 ) $ 65,233 $
47,171 $ 39,213 $ 332,722 $ 371,935
Residential mortgage loans
16,613
7,917
24,530
31,345
6,620
37,965
Consumer loans
(8,059 )
5,572
(2,487 )
(3,297 )
38,928
35,631
Loan fees & late charges
—
4,146
4,146
—
(6,089 )
(6,089 )
Loans (te) (c)
(9,508 )
82,868
73,360
67,261
372,181
439,442
Loans held for sale
(280 )
197
(83 )
(886 )
795
(91 )
Investment securities:
U.S. Treasury and government agency securities
(350 )
828
478
3,129
3,859
6,988
Mortgage-backed securities and collateralized mortgage
obligations
(14,862 )
19,443
4,581
(4,779 )
20,678
15,899
Municipals
(1,292 )
(158 )
(1,450 )
(743 )
181
(562 )
Other securities
(1 )
62
61
43
18
61
Total investment in securities (te) (d)
(16,505 )
20,175
3,670
(2,350 )
24,736
22,386
Short-term investments
(4,476 )
2
(4,474 )
(8,066 )
30,522
22,456
Total earning assets (te)
(30,769 ) 103,242
72,473
55,959
428,234
484,193
Interest-bearing deposits:
Interest-bearing transaction and savings deposits
(5,020 ) (66,306 )
(71,326 )
1,205
(156,819 ) (155,614 )
Time deposits
(38,313 ) (18,531 )
(56,844 ) (40,103 ) (121,719 ) (161,822 )
Public funds
1,122
(3,469 )
(2,347 )
(331 )
(67,718 )
(68,049 )
Total interest-bearing deposits
(42,211 ) (88,306 ) (130,517 ) (39,229 ) (346,256 ) (385,485 )
Repurchase agreements
(1,915 )
(1,701 )
(3,616 )
52
(5,871 )
(5,819 )
Other short-term borrowings
50,496
(4,595 )
45,901
(8,771 )
(35,876 )
(44,647 )
Long-term debt
257
(197 )
60
7
106
113
Total interest expense
6,627
(94,799 )
(88,172 ) (47,941 ) (387,897 ) (435,838 )
Net interest income (te) variance
$ (24,142 ) $
8,443 $ (15,699 ) $
8,018 $ 40,337 $ 48,355
(a)
Taxable equivalent (te) amounts are calculated using a federal income tax rate of 21%.
(b)
Amounts shown as due to changes in either volume or rate includes an allocation of the amount that reflects the interaction of volume and rate changes. This
allocation is based on the absolute dollar amounts of change due solely to changes in volume or rate.
(c)
Includes nonaccrual loans.
(d)
Average securities do not include unrealized holding gains or losses on available for sale securities.
Provision for Credit Losses
During the year ended December 31, 2024, we recorded a provision for credit losses of $52.2 million compared to $59.1 million for
the year ended December 31, 2023. The provision for credit losses recorded in 2024 included net charge-offs of $46.0 million and a
$6.1 million reserve build. The provision for credit losses recorded in 2023 included net charge-offs of $63.4 million and a reserve
release of $4.3 million. The provision for credit losses for the year ended December 31, 2023 included a $29.7 million charge-off
attributable to a single participation in a shared national credit. The modest reserve build in 2024 is the result of a higher allowance for
credit loss coverage to total loans, reflecting the impact of prolonged elevated interest rates and inflation and other market conditions.
Net charge-offs for the year ended December 31, 2024 totaled $46.0 million, or 0.19% of average loans outstanding, comprised of net
charge-offs of $31.3 million in the commercial portfolio and $14.9 million in the consumer portfolio, partially offset by net recoveries
of $0.2 million in the residential mortgage portfolio. Net charge-offs for the year ended December 31, 2023 totaled $63.4 million, or
0.27% of average loans outstanding, comprised of net charge-offs of $52.8 million in the commercial portfolio (inclusive of the $29.7
million single borrower charge-off described above) and $11.8 million in the consumer portfolio, partially offset by net recoveries of
$1.2 million in the residential mortgage portfolio.
We currently expect modest charge-offs and provision in 2025; however, loan growth, portfolio composition, asset quality metrics and
future assumptions in economic forecasts will drive the level of credit loss reserves in future periods.
52
Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Analysis—
Allowance for Credit Losses” provides additional information on changes in the allowance for credit losses and general credit quality.
Noninterest Income
Noninterest income for the year ended December 31, 2024 totaled $364.1 million, a $75.6 million, or 26%, increase from 2023. For
the year ended December 31, 2023, noninterest income included two supplemental disclosure items totaling $49.3 million, comprised
of a $65.4 million loss on restructuring of the available for sale securities portfolio and a $16.1 million gain on the sale of a parking
facility. Excluding these supplemental disclosure items, noninterest income was up $26.4 million, or 8%, driven by increases in most
fee categories. Noninterest income variances are discussed in more detail below.
Table 4 presents, for each of the three years ended December 31, 2024, 2023 and 2022, the components of noninterest income, along
with the percentage changes between years. Table 5 presents supplemental disclosure items included in noninterest income (Table 4)
by component for the same periods.
TABLE 4. Noninterest Income
($ in thousands)
2024
2023
Service charges on deposit accounts
$
91,105
$
86,020
Trust fees
71,734
67,565
Bank card and ATM fees
85,491
82,966
Investment and annuity fees and insurance commissions
43,424
36,714
Secondary mortgage market operations
12,374
9,159
Securities transactions
—
(65,380 )
Income from bank-owned life insurance
16,944
15,454
Credit-related fees
12,036
12,557
Income (loss) from derivatives
(3,790 )
420
Net gains on sales of premises, equipment and other assets
7,820
19,388
Other miscellaneous income
26,991
23,617
Total noninterest income
$
364,129
$
288,480
n/m – not meaningful
TABLE 5. Supplemental Disclosure Items Included in Noninterest Income
($ in thousands)
2024
2023
2022
Securities transactions:
Loss on securities portfolio restructure
$
—
$
(65,380) $
—
Other miscellaneous income:
Gain on sale of parking facility
—
16,126
—
Total supplemental disclosure items in noninterest income
$
—
$
(49,254) $
—
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 deposit accounts were $91.1 million, up $5.1 million, or 6%, from 2023. The increase from 2023 was largely attributable to
a $4.4 million increase in service charges on business accounts, including commercial analysis fees, nonsufficient funds and overdraft
fees, driven by deposit balance activity, strong sales activity, and higher instances of overdrafts. Consumer service charges increased
$0.7 million compared to the prior year.
Trust fee income represents revenue generated from asset management services provided to individuals, businesses and institutions.
Trust fees totaled $71.7 million in 2024, a $4.2 million, or 6%, increase from 2023, primarily attributable to an increase of $2.5
million in personal trust income, $1.4 million in institutional trust fees, and $0.4 million in corporate trust and retirement services fees.
Trust assets under management increased to $10.2 billion at December 31, 2024, compared to $9.7 billion at December 31, 2023.
Bank card and ATM fees include 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 $85.5 million in 2024, up $2.5 million, or 3%,
compared to 2023. The increase from 2023 is the result of increases of $1.7 million in merchant fees and $1.1 million in debit and
credit card fees, as spending was strong in 2024, partially offset by a $0.3 million decrease in ATM 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 $43.4 million in 2024, a $6.7 million, or 18%, increase from 2023. The increase is largely
53
attributable to a $7.4 million increase in annuity fees and investment fees as sales activity increased amid the favorable interest rate
environment, partially offset by a $0.7 million decline in corporate underwriting and insurance 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 and mortgage loans generated through programs to support
customer relationships. Income from secondary mortgage market operations totaled $12.4 million in 2024, an increase of $3.2 million,
or 35%, from 2023. Although there continued to be a dampened demand for mortgage loans and refinancing as a result of the elevated
interest rate environment, the dollar amount of mortgage loan originations that were sold in the secondary market versus retained in
our portfolio in 2024 was up 30%, driving higher income in this business line. Secondary mortgage market operations income will
vary based on application volume and the percentage of loans closed and ultimately sold.
There were no gains or losses on sales of securities during the year ended December 31, 2024. There was a $65.4 million loss on sales
of securities for the year ended December 31, 2023 as a result of the strategic restructuring of the available for sale portfolio to
enhance net interest margin through deployment of the proceeds into higher-yielding earning assets and repayment of short-term
borrowings.
Income from bank-owned life insurance (BOLI) is generated through insurance benefit proceeds as well as the growth of the cash
surrender value of insurance contracts held. BOLI income totaled $16.9 million, an increase of $1.5 million, or 10%, from 2023. The
increase was primarily driven by an increase in income from changes in cash surrender value.
Credit-related fees include fees assessed on letters of credit and unused portions of loan commitments. Credit-related fees were $12.0
million for 2024, down $0.5 million, or 4% compared to 2023, attributable to decreases of $0.4 million in letter of credit fees and $0.1
million in unused commitment fees. Income from these products will vary based on letters of credit issued, credit line utilization and
prevailing assessment rates.
Income or loss from derivatives, largely resulting from our customer interest rate derivative program, was a loss of $3.8 million in
2024, compared to income of $0.4 million in 2023. Derivative income or loss can be volatile and is dependent upon the composition
of the portfolio, volume and mix of sales activity and market value adjustments due to market interest rate movement. The year-over-
year decline is primarily due to a $3.8 million decrease in customer derivative income largely tied to the elevated interest rate
environment, which affects demand for variable rate loans and related derivative products, valuation adjustments, and related
collateral income/expense for the program as a whole. The decline in derivative income also reflects a $1.4 million increase in losses
associated with our Visa Class B derivative contract.
Net gains on sales of premises, equipment and other assets consists 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 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 $7.8 million in 2024, compared to $19.4 million in 2023, down $11.6 million. The decrease was primarily related
to previously mentioned gain on the sale of a stand-alone parking facility of $16.1 million in 2023 that was identified as a
supplemental disclosure item. Excluding the supplemental disclosure item, net gains on sales of premises, equipment and other assets
were up $4.6 million, and largely related to gains on sales of SBA loans and other premises sales.
Other miscellaneous income is comprised of various items, including dividends on FHLB stock, income from small business
investment companies (SBICs), and syndication fees, among others. Other miscellaneous income for the year ended December 31,
2024 was $27.0 million, up $3.4 million, or 14%, from 2023, largely due to a $2.2 million increase in dividends on FHLB stock as a
result of both an increase in prevailing rates and an increase in volume of stock owned and a $1.0 million increase in income from
SBICs.
We expect noninterest income for the year ended December 31, 2025 to increase 3.5% to 4.5% from the 2024 level of $364.1 million.
Our forecast has not yet been updated to include any impact from the pending Sabal Trust Company transaction.
Noninterest Expense
Noninterest expense for the year ended December 31, 2024 totaled $819.9 million, a $16.9 million, or 2%, decrease from 2023.
Noninterest expense for both years includes supplemental disclosure items attributable to a special assessment by the FDIC in
connection with the protection of uninsured depositors under the systemic risk exception for two bank failures in 2023, totaling $26.1
million in 2023, with an additional adjustment to the assessment of $3.8 million in 2024. Excluding the supplemental disclosure items
for both periods, noninterest expense totaled $816.1 million, up $5.4 million, or 1%, from 2023. Noninterest expense variances are
discussed in more detail below.
54
Table 6 presents, for each of the three years ended December 31, 2024, 2023 and 2022, noninterest expense, along with the percentage
changes between years. Table 7 presents supplemental disclosure items included in noninterest expense (Table 6) by component for
the same periods.
TABLE 6. Noninterest Expense
($ in thousands)
2024
2023
Compensation expense
$
380,591
$
376,055
Employee benefits
88,786
84,740
Personnel expense
469,377
460,795
Net occupancy expense
53,650
51,573
Equipment expense
17,432
18,852
Occupancy & equipment expense
71,082
70,425
Data processing expense
121,880
117,694
Professional services expense
41,935
38,331
Amortization of intangibles
9,413
11,556
Deposit insurance and regulatory fees
24,209
49,979
Other real estate and foreclosed assets income
(2,469 )
(624 )
Corporate value, franchise taxes, and other non-income taxes
19,002
20,355
Advertising
13,298
13,454
Telecommunications and postage
9,519
10,773
Entertainment and contributions
11,849
10,664
Tax credit investment amortization
6,250
5,791
Travel expenses
5,965
5,469
Printing and supplies
3,939
4,073
Other retirement expense
(18,112 )
(13,460 )
Other miscellaneous expense
32,773
31,573
Total noninterest expense
$
819,910
$
836,848
n/m - not meaningful
TABLE 7. Supplemental Disclosure Items Included in Noninterest Expense
($ in thousands)
2024
2023
2022
Deposit insurance and regulatory fees
$
3,800 $
26,123 $
—
Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such
as 401(k), pension, and medical, life and disability insurance. Personnel expense totaled $469.4 million in 2024, up $8.6 million or
2%, compared to 2023. The increase in personnel expense was largely driven by higher incentive-based compensation, bonus, merit-
based increases in salaries, related payroll tax expense and health insurance benefit cost. These increases were partially offset by the
impact of a decrease in headcount and a favorable impact from salary deferrals associated with lending activities.
Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, taxes, and
other equipment expenses. Total occupancy and equipment expenses of $71.1 million in 2024, increased $0.7 million, or 1%, from
2023. The increase was largely driven by the elimination of revenue from the parking facility sold in late 2023 and an increase in
leased facility expense, partially offset by decreases in depreciation and maintenance on furniture, fixtures and equipment.
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. Data processing expense totaling $121.9 million in 2024 was up $4.2
million, or 4%, from 2023. The increase was largely attributable to higher costs associated with ongoing data processing arrangements
of $3.7 million and net card, ATM and merchant fee expense of $1.4 million. These increases were partially offset by a decrease in
software amortization $1.1 million.
Professional services expense totaling $41.9 million in 2024 increased $3.6 million, or 9%, from 2023, primarily driven by expenses
incurred for certain outsourcing initiatives that commenced in the current year.
Amortization of intangibles in 2024 totaled $9.4 million, a $2.1 million, or 19% decrease from 2023 as a result of the accelerated
amortization methods used.
55
Deposit insurance and regulatory fees totaled $24.2 million for the year ended December 31, 2024, a decrease of $25.8 million from
2023. Included in the years ended December 31, 2024 and 2023 are previously mentioned $3.8 million and $26.1 million,
respectively, of expense attributable to a special assessment made by the FDIC. Excluding the special assessment charges in the
respective periods, deposit insurance and regulatory fees were down $3.4 million, or 14%, mostly reflective of changes in our risk-
based assessment calculation.
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 gains on sales of other real estate and foreclosed assets exceeded expense by $2.5 million in 2024, compared to $0.6 million in
2023. 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.
Corporate value, franchise taxes, and other non-income taxes totaled $19.0 million in 2024, a decrease of $1.4 million, or 7%, from
2023, largely attributable to a decrease in bank share tax, partially offset by an increase in franchise tax. 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.
Business development-related expenses (including advertising, travel, entertainment and contributions), totaling $31.1 million in 2024,
were up $1.5 million, or 5%, from 2023. The increase was largely driven by increases in marketing and business development
expense, including certain costs associated bank sponsored functions, natural disaster response and relief, travel expense and customer
incentives.
Other retirement expense includes costs associated with pension on other post-retirement plan expense. Noninterest expense in each of
the years ended December 31, 2024 and 2023 was reduced by a net credit in other retirement expense totaling $18.1 million and $13.5
million, respectively. The higher net credit in 2024 was largely driven by changes in actuarial assumptions for the current plan year.
All other expenses totaled $52.5 million in 2024, up $0.3 million, or 1%, from 2023.
We expect noninterest expense to increase 4% to 5% for the year ended December 31, 2025 from the adjusted 2024 level of $816.1
million. Our forecast has not yet been updated to include any impact from the pending Sabal Trust Company transaction.
Income Taxes
We recorded income tax expense at an effective rate of 19.7% in 2024, relatively consistent with 19.9% in 2023. Based on the current
forecast, management expects the effective tax rate to be approximately 20% to 21% in 2025, absent any changes in tax law.
Our effective tax rate has historically varied from the federal statutory rate primarily due to tax-exempt income and tax credits.
Interest income on bonds issued by or loans to state and municipal governments and authorities, and earnings from the bank-owned
life insurance contract program are the major components of tax-exempt income.
Table 8 reconciles reported income tax expense to that computed at the statutory tax rate of 21% for the years ended December 31,
2024, 2023 and 2022.
56
TABLE 8. Income Taxes
($ in thousands)
2024
2023
2022
Taxes computed at statutory rate
$
120,534 $
102,927 $
138,431
Tax credits:
QZAB/QSCB
(908 )
(1,114 )
(1,391 )
NMTC - Federal and State
(7,521 )
(7,177 )
(5,745 )
LIHTC and other tax credits
(4,751 )
(4,884 )
(4,232 )
LIHTC amortization
3,727
3,732
3,329
Total tax credits
(9,453 )
(9,443 )
(8,039 )
State income taxes, net of federal income tax benefit
12,640
10,323
13,272
Tax-exempt interest
(8,443 )
(8,755 )
(8,612 )
Life insurance contracts
(6,017 )
(4,020 )
(1,812 )
Employee share-based compensation
(1,514 )
(505 )
(2,084 )
FDIC assessment disallowance
2,466
2,893
1,836
Impact of deferred tax asset re-measurement
(435 )
—
—
Net operating loss carryback under CARES Act
—
—
238
Other, net
3,380
4,106
1,877
Income tax expense
$
113,158 $
97,526 $
135,107
The main source of tax credits has been investments in tax-advantage securities and tax credit projects. These investments are made
primarily in the markets we serve and directed at tax credits issued under the Federal and State New Market Tax Credit (NMTC),
Low-Income Housing Tax Credit (LIHTC) and pre-2018 Qualified Zone Academy Bonds (QZAB) and Qualified School Construction
Bonds (QSCB) programs. The investments generate tax credits which reduce current and future taxes and are recognized when earned
as a benefit in the provision for income taxes. Additionally, the amortization of the LIHTC investment cost will be recognized as a
component of income tax expense in proportion to the tax credits recognized over the 10-year credit period of each project.
We have invested in NMTC projects through investments in our own CDEs, 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.
Based only on tax credit investments that have been made through 2024, we expect to realize benefits from federal and state tax
credits over the next three years totaling $9.8 million, $8.2 million and $8.0 million for 2025, 2026 and 2027, 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.
At December 31, 2024, we had a net deferred tax asset of $146.6 million, which is comprised of $297.4 million in deferred tax assets
(net of valuation allowance), offset by $150.8 million of deferred tax liabilities. Several factors are considered in determining the
recoverability of the deferred tax asset components, such as the history of taxable earnings, reversal of taxable temporary differences,
future taxable income and tax planning strategies. Based on our review of these factors, we have established a $2.6 million valuation
allowance for state net operating losses and $2.0 million valuation allowance for deferred executive compensation.
BALANCE SHEET ANALYSIS
Short-Term Investments
Short-term liquidity assets are held to ensure funds are available to meet the cash flow needs of both borrowers and depositors. At
December 31, 2024, short-term liquidity investments, including interest-bearing bank deposits and federal funds sold, totaled $939.7
million, an increase of $312.6 million from December 31, 2023. Average short-term investments for 2024 totaled $547.8 million, a
$90.8 million decrease from $638.6 million in 2023. Typically, these balances will change on a daily basis depending upon movement
in customer loan and deposit accounts. The comparative average balance for the year ended December 31, 2023 was impacted by
excess liquidity held in response to the disruption in the financial industry caused by bank failures. See further discussion in the
“Liquidity” section that follows.
57
Investment Securities
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.
Our investment in securities totaled $7.6 billion at both December 31, 2024 and 2023. The investment securities portfolio is managed
by ALCO to assist in the management of interest rate risk and liquidity while providing an acceptable rate of return. At December 31,
2024, the amortized cost of securities available for sale totaled $5.8 billion and securities held to maturity totaled $2.4 billion,
compared to $5.5 billion and $2.7 billion, respectively, at December 31, 2023. The year over year changes in each of the portfolios is
largely reflective of maturities and paydowns from both portfolios reinvested in the available for sale portfolio.
Our securities portfolio consists mainly of residential and commercial mortgage-backed securities that are issued or guaranteed by
U.S. government agencies. We invest only in high quality investment grade securities and manage the investment portfolio duration
generally between two and five and a half years. 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%. Under an immediate, parallel rate shock of
100 bps and 200 bps, the effective duration would be 4.11 years and 4.07 years, respectively. At December 31, 2023, the average
expected maturity of the portfolio was 6.22 years with an effective duration of 4.60 years and a nominal weighted-average yield of
2.48%. The change in expected maturity, effective duration, and nominal weighted-average yield is primarily attributable to portfolio
reinvestment activity in 2024.
We have in place fair value hedges on certain fixed-rate commercial mortgage-backed securities. As of December 31, 2024, we had
approximately $477.5 million in notional amount of forward-starting fixed payer swaps that convert the latter portion of the term of
these available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate
risk. This strategy provides a fixed-rate coupon during the front-end unhedged tenor of the bonds and results in a floating-rate security
during the back-end hedged tenor.
At the end of each reporting period, we evaluate the securities portfolio for credit loss. Based on our assessments, expected credit loss
was negligible for all reporting periods in 2024 and 2023, and therefore no allowance for credit loss was recorded.
There were no investments in securities of a single issuer, other than U.S. Treasury and U.S. government agency securities and
mortgage-backed securities issued or guaranteed by U.S. government agencies that exceeded 10% of stockholders’ equity. We do not
invest in subprime or “Alt A” home mortgage-backed securities. Investments classified as available for sale are carried at fair value,
while held to maturity securities are carried at amortized cost. Unrealized holding gains (losses) on available for sale securities are
excluded from net income and are recognized, net of tax, in other comprehensive income and in accumulated other comprehensive
income, a separate component of stockholders’ equity.
The following table presents the amortized cost of debt securities by type at December 31, 2024 and 2023.
TABLE 9. Debt Securities by Type
($ in thousands)
2024
2023
Available for sale securities
U.S. Treasury and government agency securities
$
185,827 $
97,741
Municipal obligations
200,272
203,533
Residential mortgage-backed securities
2,482,109
2,440,411
Commercial mortgage-backed securities
2,849,372
2,683,872
Collateralized mortgage obligations
37,553
47,661
Corporate debt securities
19,000
23,500
Total Available for sale Securities
$
5,774,133 $
5,496,718
Held to maturity securities
U.S. Treasury and government agency securities
$
394,689 $
413,490
Municipal obligations
623,907
664,488
Residential mortgage-backed securities
573,057
654,262
Commercial mortgage-backed securities
818,604
920,048
Collateralized mortgage obligations
25,406
32,491
Total Held to maturity securities
$
2,435,663 $
2,684,779
58
The amortized cost, fair value and yield of debt securities at December 31, 2024, by final contractual maturity, are presented in the
following table. Securities are classified according to their final contractual maturities without consideration of scheduled and
unscheduled principal amortization, potential prepayments or call options. Accordingly, actual maturities will differ from their
reported contractual maturities. The expected average maturity years presented in the table includes scheduled principal payments and
assumptions for prepayments. The yield calculation does not include adjustments to amortized cost of available for sale securities for
active fair value hedges.
TABLE 10. Debt Securities Maturities by Type
($ in thousands)
One Year
or Less
Over One
Year
Through
Five Years
Over Five
Years
Through
Ten Years
Over
Ten
Years
Total
Fair
Value
Weighted
Average
Yield (te)
Expected
Average
Maturity
Years
Available for sale
U.S. Treasury and government
agency securities
$
29,846
$
30,313
$
—
$
125,668
$
185,827
$
182,282
4.72%
6.1
Municipal obligations
—
19,822
180,261
189
200,272
196,330
3.42%
1.4
Residential mortgage-backed
securities
4,052
35,417
133,198
2,309,442
2,482,109
2,129,051
2.57%
6.8
Commercial mortgage-backed
securities
1,393
870,645
1,977,334
—
2,849,372
2,600,965
2.82%
5.8
Collateralized mortgage obligations
—
—
24,237
13,316
37,553
35,247
1.94%
2.6
Other debt securities
1,500
2,000
15,500
—
19,000
17,616
3.56%
1.6
Total debt securities
$
36,791
$
958,197
$
2,330,530
$
2,448,615
$
5,774,133
$
5,161,491
2.79%
6.0
Fair Value
$
36,914
$
924,308
$
2,099,062
$
2,101,207
$
5,161,491
Weighted-Average Yield (te)
4.51%
3.53%
2.56 %
2.70%
2.79 %
Held to maturity
U.S. Treasury and government
agency securities
$
—
$
134,092
$
—
$
260,597
$
394,689
$
348,813
2.36%
5.7
Municipal obligations
31,170
163,029
408,690
21,018
623,907
603,209
3.19%
2.3
Residential mortgage-backed
securities
—
—
25,109
547,948
573,057
511,532
2.33%
5.3
Commercial mortgage-backed
securities
74,522
483,512
131,752
128,818
818,604
745,750
2.54%
5.0
Collateralized mortgage obligations
—
—
6,820
18,586
25,406
24,222
2.62%
2.4
Total debt securities
$
105,692
$
780,633
$
572,371
$
976,967
$
2,435,663
$
2,233,526
2.63%
4.5
Fair Value
$
105,035
$
740,241
$
535,864
$
852,386
$
2,233,526
Weighted-Average Yield (te)
2.86%
2.64%
2.86 %
2.45%
2.63 %
Loan Portfolio
Total loans at December 31, 2024 were $23.3 billion, compared to $23.9 billion at December 31, 2023, down $622.5 million, or 3%.
The decrease is reflective of the strategic reduction of the shared national credit portfolio as we focus on originating more granular
loans, down $307.6 million, and includes declines across all portfolios except for residential mortgage, discussed in more detail below.
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. The funded balance of our shared national credits portfolio at December 31,
2024 totaled approximately $2.3 billion, or 10% of total loans, compared to $2.6 billion, or 11% of total loans at December 31, 2023.
Our shared national credit industry concentration at December 31, 2024 includes approximately $339.7 million in both health care-
related facilities and finance and insurance, $336.3 million in manufacturing, and $306.4 million in real estate, rental and leasing, with
the remaining to various other industries.
59
The following table shows the composition of our loan portfolio at December 31, 2024 and 2023.
TABLE 11. Loans Outstanding by Type
($ in thousands)
2024
2023
Commercial non-real estate
$
9,876,592 $
9,957,284
Commercial real estate - owner occupied
3,011,955
3,093,763
Total commercial & industrial
12,888,547
13,051,047
Commercial real estate - income producing
3,798,612
3,986,943
Construction and land development
1,281,115
1,551,091
Residential mortgages
3,961,328
3,886,072
Consumer
1,369,845
1,446,764
Total loans
$
23,299,447 $
23,921,917
The commercial and industrial (“C&I”) loan portfolio includes both commercial non-real estate and commercial real estate – owner
occupied loans. C&I loans totaled $12.9 billion, or 55% of the total loan portfolio, at December 31, 2024, a decrease of $162.5 million
from December 31, 2023. The year over year decline in this portfolio is reflective of a $286.2 million reduction of shared national
credits within this portfolio.
Our loan portfolio is well diversified by product, client, and geography throughout our footprint. Nevertheless, we may be exposed to
certain concentrations of credit risk which exist in relation to different borrowers or groups of borrowers, specific types of collateral
and industries.
The following table provides detail of the more significant industry concentrations for our commercial and industrial loan portfolio,
which is based on NAICS codes for all industries, with the exception of energy, which is based on the borrower’s source of revenue
(i.e. manufacturer whose income is derived from energy-related business is reported as energy).
TABLE 12. Commercial & Industrial Loans by Industry Concentration
2024
2023
Pct of
Pct of
($ in thousands)
Balance
Total
Balance
Total
Health care and social assistance
$
1,447,349
11 % $
1,481,669
11 %
Retail trade
1,283,203
10
1,236,830
9
Manufacturing
1,191,781
9
1,120,232
9
Real estate and rental and leasing
1,189,727
9
1,270,568
10
Wholesale trade
1,148,034
9
1,111,643
8
Construction
989,313
8
998,802
8
Transportation and warehousing
965,893
7
872,379
7
Accommodation, food services and entertainment
772,721
6
706,141
5
Professional, scientific, and technical services
756,573
6
735,381
6
Finance and insurance
683,401
5
878,824
7
Other services (except public administration)
414,514
3
396,674
3
Information
410,284
3
424,532
3
Public administration
402,872
3
461,390
3
Admin, support, waste management, remediation services
326,385
3
357,390
3
Educational services
240,096
2
247,003
2
Energy
197,317
2
204,633
2
Other
469,084
4
546,956
4
Total commercial & industrial loans
$ 12,888,547
100 % $ 13,051,047
100 %
Commercial real estate – income producing loans totaled $3.8 billion at December 31, 2024, a decrease of $188.3 million, or 5%, from
December 31, 2023. Construction and land development loans totaled approximately $1.3 billion at December 31, 2024, a decrease of
$270.0 million, or 17%, from December 31, 2023. The decrease reflects loans converting to permanent financing outpacing the
funding of new and existing loans. The declines in both the commercial real estate - income producing and construction loan
portfolios is reflective of an increase in payoffs and our efforts to limit our growth in income-producing real estate with a focus on
resilient projects given the current economic environment.
60
The following table details the end of period aggregated commercial real estate – income producing and construction loan balances by
property type. Loans reflected in 1-4 Family Residential Construction include both loans to construction builders as well as single-
family borrowers.
TABLE 13. Commercial Real Estate– Income Producing and Construction by Property Type Concentration
2024
2023
Pct of
Pct of
($ in thousands)
Balance
Total
Balance
Total
Multifamily
$ 1,343,544
26 % $ 1,268,342
23 %
Retail
773,621
15
812,556
15
Industrial
698,520
14
753,074
13
Healthcare related properties
658,067
13
777,473
14
Office
506,690
10
514,763
9
Hotel, motel and restaurants
424,866
8
477,761
9
1-4 family residential construction
235,745
5
429,107
8
Other land loans
192,919
4
187,514
3
Other
245,755
5
317,444
6
Total commercial real estate - income producing and construction loans $ 5,079,727
100 % $ 5,538,034
100 %
Residential mortgages totaled $4.0 billion at December 31, 2024, up $75.3 million, or 2%, from December 31, 2023. The growth in
mortgage loans includes a combination of completed construction loans converting to permanent financing, as well as new loan
growth. Consumer loans totaled $1.4 billion at December 31, 2024, down $76.9 million, or 5%, compared to December 31, 2023. The
decline is reflective of both slowing demand and the impact of our exit from the indirect automobile lending market, where the
existing portfolio is in run-off.
The following table shows average loans by category, the effective taxable equivalent yield and the percentage of total loans for each
of the preceding three years.
TABLE 14. Average Loans
2024
2023
2022
Yield
Pct of
Yield
Pct
of
Yield Pct of
($ in thousands)
Balance
(te)
Total
Balance
(te)
Total
Balance
(te)
Total
Commercial & real estate loans
$ 18,263,676
6.46%
77% $
18,556,175
6.10 %
79 % $ 17,682,332
4.30 %
81 %
Residential mortgages
3,982,122
3.84%
17%
3,541,245
3.62 %
15 %
2,666,134
3.39 %
12 %
Consumer
1,384,945
8.78%
6%
1,497,159
8.28 %
6 %
1,566,927
5.64 %
7 %
Total loans
$ 23,630,743
6.17% 100% $
23,594,579
5.87 %
100 % $ 21,915,393
4.32 %
100 %
The following table sets forth the contractual maturity by portfolio segment at December 31, 2024.
TABLE 15. Loan Maturities by Type
December 31, 2024
Maturity Range
($ in thousands)
Within
One Year
After One
Through
Five Years
After Five
Through
Fifteen Years
After Fifteen
Years
Total
Commercial non-real estate
$
2,243,721 $
6,023,231 $ 1,487,788 $
121,852 $
9,876,592
Commercial real estate - owner occupied
223,312
1,100,784 1,630,214
57,645
3,011,955
Total commercial & industrial
2,467,033
7,124,015 3,118,002
179,497
12,888,547
Commercial real estate - income producing
983,756
2,220,356
588,739
5,761
3,798,612
Construction and land development
333,928
741,612
135,912
69,663
1,281,115
Residential mortgages
40,677
34,498
328,732 3,557,421
3,961,328
Consumer
58,346
357,813
67,181
886,505
1,369,845
Total loans
$
3,883,740 $ 10,478,294 $ 4,238,566 $ 4,698,847 $ 23,299,447
61
The sensitivity to interest rate changes for the portion of our loan portfolio that matures after one year is shown below.
TABLE 16. Loan Sensitivity to Changes in Interest Rates for Loans that Mature After One Year
December 31, 2024
($ in thousands)
Fixed Rate
Floating Rate
Total
Commercial non-real estate
$ 3,183,190 $
4,449,681 $
7,632,871
Commercial real estate - owner occupied
1,953,727
834,916
2,788,643
Total commercial & industrial
5,136,917
5,284,597
10,421,514
Commercial real estate - income producing
1,044,476
1,770,380
2,814,856
Construction and land development
243,066
704,121
947,187
Residential mortgages
2,188,348
1,732,303
3,920,651
Consumer
162,623
1,148,876
1,311,499
Total loans
$ 8,775,430 $
10,640,277 $
19,415,707
Management expects end of period loan growth in 2025 to be mid-single digits from the December 31, 2024 balance of $23.3 billion.
62
Asset Quality
The following table sets forth, for the periods indicated, nonaccrual loans and reportable loans modified or restructured loans, by type,
and foreclosed and surplus ORE and other foreclosed assets. Loans past due 90 days or more and still accruing are also disclosed.
TABLE 17. Nonaccrual loans, loans modified or restructured, and ORE and foreclosed assets
December 31,
($ in thousands)
2024
2023
Loans accounted for on a nonaccrual basis:
Commercial non-real estate
$
14,172 $
20,840
Commercial non-real estate - modified
19,246
—
Total commercial non-real estate
33,418
20,840
Commercial real estate - owner occupied
2,727
2,228
Commercial real estate - owner-occupied - modified
—
—
Total commercial real estate - owner-occupied
2,727
2,228
Commercial real estate - income producing
356
461
Commercial real estate - income producing - modified
—
—
Total commercial real estate - income producing
356
461
Construction and land development
5,561
815
Construction and land development - modified
—
—
Total construction and land development
5,561
815
Residential mortgage
43,157
26,039
Residential mortgage - modified
929
98
Total residential mortgage
44,086
26,137
Consumer
11,187
8,555
Consumer - modified
—
—
Total consumer
11,187
8,555
Total nonaccrual loans
$
97,335 $
59,036
ORE and foreclosed assets
27,797
3,628
Total nonaccrual loans and ORE and foreclosed assets
$
125,132 $
62,664
Modified loans - still accruing:
Commercial non-real estate
$
74,211 $
21,956
Commercial real estate - owner occupied
—
1,774
Commercial real estate - income producing
2,741
—
Construction and land development
—
85
Residential mortgage
2,241
359
Consumer
131
274
Total modified loans - still accruing
$
79,324 $
24,448
Total reportable modified loans
$
99,499 $
24,546
Loans 90 days past due still accruing
$
21,852 $
9,609
Ratios:
Nonaccrual loans to total loans
0.42%
0.25%
Nonaccrual loans plus ORE and foreclosed assets to loans plus ORE
and foreclosed assets
0.54%
0.26%
Allowance for loan losses to nonaccrual loans
327.61%
521.56%
Allowance for loan losses to nonaccrual loans and accruing loans 90 days past due
267.55%
448.55%
Loans 90 days past due still accruing to loans
0.09%
0.04%
Nonaccrual loans plus ORE and foreclosed assets totaled $125.1 million at December 31, 2024, up $62.5 million compared to
December 31, 2023. Nonaccrual loans totaled $97.3 million, an increase of $38.3 million compared to December 31, 2023.
Nonaccrual loans as a percentage of the loan portfolio increased to 0.42% in 2024, compared to 0.25% in 2023, which we believe
represents a return to a more typical level following the recent benign credit environment. ORE and foreclosed assets were $27.8
million at December 31, 2024, up $24.2 million from December 31, 2023, largely attributable to foreclosed property from one
commercial borrower.
Reportable modified loans to borrowers experiencing financial difficulties totaled $99.5 million in 2024 and includes $20.2 million of
nonaccrual loans. Modified loans to borrowers experiencing financial difficulties totaled $24.5 million in 2023 and included $0.1
63
million of nonaccrual loans. These reportable modifications are granted as a part of our loss mitigation strategy to maximize expected
payments. The increase in reportable modified loans reflects the continued stress on certain borrowers resulting from prolonged
elevated interest rates, inflation, insurance costs, and other market conditions.
Criticized commercial loans totaled $623.0 million at December 31, 2024, up from $273.7 million at December 31, 2023. Criticized
loans are defined as those having potential or well-defined weaknesses that deserve management’s close attention (risk-rated special
mention, substandard and doubtful), including both accruing and nonaccruing loans. Criticized commercial loans comprised 3.47% of
that portfolio at December 31, 2024, up from 1.47% at December 31, 2023. Management believes the migration in the level of
criticized loans to be mostly indicative of continued normalization compared to the recent benign credit environment, including certain
downgrades resulting from the most recent regulatory examination of loans within our shared national credit portfolio. 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 December 31, 2024 are spread across many
industries, with the largest concentrations as follows: $95.7 million in manufacturing, $90.9 million in retail trade, $68.8 million in
wholesale trade, $68.7 million in hospitality, $62.7 million in transportation and warehousing, $56.7 million in construction, $49.4
million real estate, rental and leasing, $44.6 million healthcare and social assistance, and $27.4 million in professional, scientific and
technical services. Commercial loans risk rated pass-watch totaled $521.4 million at December 31, 2024, compared to $433.6 million
at December 31, 2023. 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.
Allowance for Credit Losses
At December 31, 2024, the allowance for credit losses was $342.9 million, comprised of $318.9 million in allowance for loan losses
and $24.1 million in the reserve for unfunded lending commitments. The allowance for credit losses increased $6.1 million from
$336.8 million at December 31, 2023, which was comprised of $307.9 million in allowance for loan losses and $28.9 million in the
reserve for unfunded lending commitments. The $11.0 million increase in the funded allowance for loan losses at December 31, 2024
compared to December 31, 2023 reflects higher coverage across most portfolios, resulting from stress related to prolonged elevated
interest rates and inflation and other market conditions. The decline in the reserve for unfunded lending commitments of $4.8 million
was largely volume driven as unfunded commitments are down.
Our allowance for credit losses coverage to total loans increased to 1.47% at December 31, 2024, compared to 1.41% at December 31,
2023. The allowance for credit losses on the commercial portfolio totaled $272.5 million, or 1.52% of that portfolio, at December 31,
2024, up from $270.7 million, or 1.46%, at December 31, 2023. The allowance for credit losses on the residential mortgage portfolio
totaled $42.4 million, or 1.07% of that portfolio, at December 31, 2024, up from $39.0 million, or 1.00%, at December 31, 2023. The
allowance for credit losses on the consumer portfolio totaled $28.0 million, or 2.04% of that portfolio, at December 31, 2024, up from
$27.1 million, or 1.87%, at December 31, 2023. We believe the increased coverage to total loans is prudent given the uncertainty in
economic conditions.
The $6.1 million net increase in the allowance for credit losses from December 31, 2023 includes an increase of $7.9 million in
individually evaluated reserves (generally used for nonperforming loans), partially offset by a decline of $1.8 million in collectively
evaluated reserves. We utilized the December 2024 Moody’s economic scenarios to inform our allowance for credit losses at
December 31, 2024. After considering the variables underlying each of the Moody’s economic scenarios, management probability-
weighed the baseline scenario at 40% and the downside S-2 mild recessionary scenario at 60% in the computation of the allowance for
credit losses at December 31, 2024, consistent with the weighting used at December 31, 2023. Each of the scenarios considered have
varying degrees of severity and duration of inflationary pressure, including volatility in commodities prices and impacts to the labor
market, the consequences of the Federal Reserve’s actions with regard to monetary policy, the effect of the recent change in
presidential administration on fiscal and other policies, and impacts from geopolitical unrest. Refer to the Economic Outlook section
of this discussion and analysis for further information on the Moody’s scenarios and our weighting assumptions.
We currently expect modest charge-offs and provision for credit losses in 2025; however, loan growth, portfolio composition, asset
quality metrics and future assumptions in economic forecasts will drive the level of credit loss reserves in future periods.
64
The following table sets forth activity in the allowance for loan losses for the periods indicated.
TABLE 18. Summary of Activity in the Allowance for Credit Losses
December 31,
($ in thousands)
2024
2023
2022
Provision and Allowance for Credit Losses
Allowance for Loan Losses:
Allowance for loan losses at beginning of period
$
307,907
$
307,789
$
342,065
Loans charged-off:
Commercial non real estate
45,488
59,830
7,637
Commercial real estate - owner occupied
143
—
948
Total commercial & industrial
45,631
59,830
8,585
Commercial real estate - income producing
8,822
73
1,073
Construction and land development
264
72
3
Total Commercial
54,717
59,975
9,661
Residential mortgages
380
55
137
Consumer
17,987
15,393
12,792
Total charge-offs
73,084
75,423
22,590
Recoveries of loans previously charged-off:
Commercial non real estate
22,292
6,152
11,812
Commercial real estate - owner occupied
1,036
957
733
Total commercial & industrial
23,328
7,109
12,545
Commercial real estate - income producing
7
14
878
Construction and land development
64
11
134
Total commercial
23,399
7,134
13,557
Residential mortgages
595
1,278
1,749
Consumer
3,057
3,611
5,382
Total recoveries
27,051
12,023
20,688
Total net charge-offs
46,033
63,400
1,902
Provision for loan losses
57,008
63,518
(32,374 )
Allowance for loan losses at end of period
$
318,882
$
307,907
$
307,789
Reserve for Unfunded Lending Commitments:
Reserve for unfunded lending commitments at beginning of period
28,894
33,309
29,334
Provision for losses on unfunded lending commitments
(4,841)
(4,415)
3,975
Reserve for unfunded lending commitments at end of period
$
24,053
$
28,894
$
33,309
Total Allowance for Credit Losses
$
342,935
$
336,801
$
341,098
Total Provision for Credit Losses
$
52,167
$
59,103
$
(28,399 )
Coverage ratios:
Allowance for loan losses to period end loans
1.37%
1.29%
1.33 %
Allowance for credit loss to period end loans
1.47%
1.41%
1.48 %
Charge-offs ratios
Gross charge-offs to average loans
0.31%
0.32%
0.10 %
Recoveries to average loans
0.11%
0.05%
0.09 %
Net charge-offs to average loans
0.19%
0.27%
0.01 %
Net Charge-offs to average loans by portfolio:
Commercial non real estate
0.24%
0.54%
(0.04 )%
Commercial real estate - owner occupied
(0.03)%
(0.03)%
0.01 %
Total commercial & industrial
0.17%
0.40%
(0.03 )%
Commercial real estate - income producing
0.22%
0.00%
0.01 %
Construction and land development
0.01%
0.00%
(0.01 )%
Total Commercial
0.17%
0.28%
(0.02 )%
Residential mortgages
(0.01)%
(0.03)%
(0.06 )%
Consumer
1.08%
0.79%
0.47 %
65
An allocation of the loan loss allowance by major loan category is set forth in the following table for the periods indicated.
TABLE 19. Allocation of Allowance for Loan Losses by Category
December 31,
2024
2023
($ in thousands)
Allowance for
Loan Losses
% of Total
Allowance
Allowance for
Loan Losses
% of Total
Allowance
Commercial non-real estate
$
121,090
38 % $
101,737
33 %
Commercial real estate - owner occupied
36,264
11
40,197
13
Total commercial & industrial
157,354
49
141,934
46
Commercial real estate - income producing
71,975
23
74,539
24
Construction and land development
21,158
7
27,039
9
Residential mortgages
42,445
13
38,983
13
Consumer
25,950
8
25,412
8
Total
$
318,882
100 % $
307,907
100 %
Deposits
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 $359.7 million at December 31, 2024, compared to $303.8
million at December 31, 2023. At December 31, 2024, we have calculated our average deposit account size by dividing period-end
deposits by the population of accounts with balances to be approximately $37,900, which includes $199,500 in our commercial and
small business lines (excluding public funds), $122,500 in our wealth management business line, and $18,600 in our consumer
business line.
Further, at December 31, 2024, 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 $14.6 billion
at December 31, 2024, compared to $13.8 billion at December 31, 2023. Our uninsured deposit total at December 31, 2024 includes
approximately $3.6 billion of public funds that have pledged securities as collateral, leaving approximately $11.0 billion of
noncollateralized, uninsured deposits compared to total liquidity of $19.5 billion. Our ratio of noncollateralized, uninsured deposits to
total deposits was approximately 37.3% at December 31, 2024, compared to 34.4% at December 31, 2023.
Total deposits were $29.5 billion at December 31, 2024, down $197.2 million or 1%, from December 31, 2023. Deposit levels and
composition in 2024 were influenced by the decline in brokered deposits and the elevated interest rate environment fostering a
continued shift toward and growth in interest-bearing products. Average deposits of $29.2 billion for 2024 were down $309.6 million,
or 1%, from 2023.
66
The following table shows the composition of our deposits at December 31, 2024 and 2023 is as follows:
TABLE 20. Deposits
December 31,
($ in thousands)
2024
2023
Noninterest-bearing deposits
$
10,597,461 $
11,030,515
Interest-bearing retail transaction and savings deposits
11,327,725
10,680,741
Interest-bearing public fund deposits:
Public fund transaction and savings deposits
3,127,427
3,069,341
Public fund time deposits
85,072
73,674
Total interest-bearing public fund deposits
3,212,499
3,143,015
Retail time deposits
4,348,265
4,246,027
Brokered time deposits
6,901
589,761
Total interest-bearing deposits
18,895,390
18,659,544
Total deposits
$
29,492,851 $
29,690,059
At December 31, 2024, noninterest-bearing demand deposits were $10.6 billion, down $433.1 million, or 4%, from December 31,
2023. Noninterest-bearing demand deposits comprised 36% of total deposits at December 31, 2024 and 37% at December 31, 2023.
Noninterest-bearing deposit levels continued to trend downward as customers shift to interest-bearing products amid the elevated
interest rate environment and as consumer and business spending remains strong. The current level of noninterest-bearing deposits to
total deposits of 36% represents what we consider to be a more typical, pre-pandemic mix of noninterest-bearing and interest-bearing
deposits.
Interest-bearing transaction and savings accounts of $11.3 billion at December 31, 2024 increased $647.0 million, or 6%, from
December 31, 2023. Retail time deposits totaled $4.3 billion at December 31, 2024, up $102.2 million, or 2%, from December 31,
2023, with 6% of the increase in time deposits greater than $250,000. The year over year growth in these products is largely reflective
of attractive rate offerings in the elevated interest rate environment.
Interest-bearing public fund deposits totaled $3.2 billion at December 31, 2024, up $69.5 million, or 2%, from December 31, 2023.
Year-end public fund account balances are subject to annual fluctuations dependent upon a number of factors, including the timing of
tax collections. Seasonal cash inflows from public entities in the fourth quarter of each year typically results in higher balances than at
other times during the year with subsequent reductions in the first quarter of the following year. Brokered deposits totaled $6.9
million at December 31, 2024, down $582.9 million from December 31, 2023 as a result of the maturity of brokered deposits that were
not replaced.
Table 21 sets forth average balances and weighted-average rates paid on deposits for each year in the three-year period ended
December 31, 2024, as well as the percentage of total deposits for each category. Table 22 sets forth the maturities of time certificates
of deposit greater than $250,000 at December 31, 2024.
TABLE 21. Average Deposits
2024
2023
2022
($ in millions)
Balance
Rate
Mix
Balance
Rate
Mix
Balance
Rate
Mix
Interest-bearing deposits:
Interest-bearing transaction deposits
$
2,686.1
1.55%
9.2% $
2,429.5
0.93 %
8.2 % $
2,630.3
0.15%
8.9 %
Money market deposits
6,136.1
3.25%
21.0%
5,762.9
2.67 %
19.6 %
5,679.8
0.30%
19.3 %
Savings deposits
2,082.8
0.34%
7.1%
2,424.9
0.02 %
8.2 %
2,917.4
0.01%
9.9 %
Time deposits
4,833.7
4.62%
16.6%
3,970.4
4.17 %
13.5 %
1,030.1
0.45%
3.5 %
Public Funds
2,938.7
3.50%
10.1%
2,971.6
3.38 %
10.1 %
2,941.9
1.10%
10.0 %
Total interest-bearing deposits
18,677.4
3.08%
64.0%
17,559.3
2.53 %
59.6 %
15,199.5
0.38%
51.6 %
Noninterest bearing demand deposits
10,491.5
36.0%
11,919.2
40.4 %
14,298.0
48.4 %
Total deposits
$ 29,168.9
100.0% $ 29,478.5
100.0 % $ 29,497.5
100.0 %
67
TABLE 22. Maturity of Time Certificates of Deposit greater than or equal to $250,000*
December 31,
($ in thousands)
2024
Three months
$
1,016,121
Over three months through six months
233,485
Over six months through one year
454,960
Over one year
25,029
Total
$
1,729,595
* Includes public fund time deposits
As noted above, we have estimated the Bank’s amount of uninsured deposits at December 31, 2024 to be approximately $14.6 billion,
using the methodologies and assumptions required for FDIC regulatory reporting.
Management expects full year 2025 end of period growth in deposits to be in the low single digit range from $29.5 billion at
December 31, 2024.
Short-Term Borrowings
Short-term borrowings totaled $639.0 million at December 31, 2024, down $515.8 million, or 45% from December 31, 2023. Average
short-term borrowings for 2024 totaled $672.3 million, down $802.0 million, or 47%, compared to 2023. The declines from December
31, 2023 reflects the net repayment of $700 million of FHLB borrowings. Short-term borrowings are a core portion of the Company’s
funding strategy, the balance of which can fluctuate depending on our funding needs and the sources utilized.
Table 23 sets forth balances of short-term borrowings for each of the past three years. Short-term borrowings consist of federal funds
purchased, securities sold under agreements to repurchase and borrowings from the FHLB. Customer repurchase agreements are a
source of customer funding. These agreements are offered mainly to commercial customers to assist them with their ongoing cash
management strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for corporate or
investment purposes. While customer repurchase agreements provide a recurring source of funds to the Bank, the amounts available
over time will vary.
TABLE 23. Short-Term Borrowings
($ in thousands)
2024
2023
2022
Federal funds purchased:
Amount outstanding at period end
$
300
$
350
$
1,850
Average amount outstanding during period
12,935
7,525
13,176
Maximum amount at any month end during period
200,275
100,350
2,350
Weighted-average interest rate at period end
3.90 %
4.90 %
3.90 %
Weighted-average interest rate during period
5.61 %
5.70 %
2.82 %
Securities sold under agreements to repurchase:
Amount outstanding at period end
$
638,715
$
454,479
$
444,421
Average amount outstanding during period
639,912
513,306
536,727
Maximum amount at any month end during period
792,589
625,773
640,592
Weighted-average interest rate at period end
0.95 %
1.16 %
0.53 %
Weighted-average interest rate during period
1.65 %
1.36 %
0.21 %
FHLB borrowings:
Amount outstanding at period end
$
—
$
700,000
$ 1,425,000
Average amount outstanding during period
238,593
1,172,603
808,784
Maximum amount at any month end during period
650,000
3,100,000
1,425,000
Weighted-average interest rate at period end
0.00 %
5.58 %
4.70 %
Weighted-average interest rate during period
5.48 %
5.05 %
1.82 %
Long-Term Debt
Long-term debt totaled $210.5 million at December 31, 2024, down $25.8 million from December 31, 2023, largely due to activity
associated with tax credit fund activity.
68
Long-term debt at December 31, 2024 includes subordinated notes payable with an aggregate principal amount of $172.5 million, a
fixed rate of 6.25% per annum and a stated maturity of June 15, 2060. Subject to prior approval by the Federal Reserve, the Company
may redeem the notes in whole or in part on any interest payment date on or after June 15, 2025. This debt qualifies as tier 2 capital in
the calculation of certain regulatory capital ratios.
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
funded loans.
Commitments to extend credit totaled $9.2 billion at December 31, 2024 and include revolving commercial credit lines, non-revolving
loan commitments issued mainly to finance the acquisition and development of 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, which may include the maintenance of
sufficient collateral coverage levels, payment and financial performance, and compliance with 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 adjustment or 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.
Letters of credit totaled $420.6 million at December 31, 2024. 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 customers’ other commercial or public financing
arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.
The contract 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 December 31, 2024, the Company had a reserve for unfunded lending commitments of $24.1 million.
The following table shows the commitments to extend credit and letters of credit at December 31, 2024 and 2023 according to
expiration date.
TABLE 24. Loan Commitments and Letters of Credit
Expiration Date
($ in thousands)
Total
Less Than
1 Year
1-3
Years
3-5
Years
More Than
5 Years
December 31, 2024
Commitments to extend credit
$
9,249,468 $
3,894,217 $
2,344,538 $
2,236,744 $
773,969
Letters of credit
420,614
1,134
387,121
32,359
—
Total
$
9,670,082 $
3,895,351 $
2,731,659 $
2,269,103 $
773,969
Expiration Date
($ in thousands)
Less Than
1 Year
1-3
Years
3-5
Years
More Than
5 Years
December 31, 2023
Commitments to extend credit
$
9,852,367 $
3,822,335 $
2,750,327 $
2,484,180 $
795,525
Letters of credit
481,910
379,813
30,552
71,417
128
Total
$
10,334,277 $
4,202,148 $
2,780,879 $
2,555,597 $
795,653
69
ENTERPRISE RISK MANAGEMENT
We proactively manage risks to capture opportunities and maximize shareholder value. We balance revenue generation and
profitability with the inherent risks of our business activities. Enterprise risk management helps protect shareholder value by
assessing, monitoring, and managing the risks associated with our businesses. Strong risk management practices enhance decision-
making, facilitate successful implementation of new initiatives, and where appropriate, support undertaking greater levels of well-
managed risk to drive growth and achieve strategic objectives. Our risk management culture integrates a board-approved risk appetite
with senior management direction and governance to facilitate the execution of the Company’s strategic plan. This integration ensures
the daily management of risks by product types and continuous corporate monitoring of the levels of risk across the Company. We
make changes to our enterprise risk management program and risk governance framework as described here at the direction of senior
management and the Board of Directors to capture opportunities and to respond to changes in strategic, business, and operational
environments.
Risk Categories and Definitions
Consistent with other participants in the financial services industry, the primary risk exposures of the Company are credit, market,
liquidity, operational, legal, reputational, and strategic. We have adopted these seven risk categories as outlined by the Federal
Reserve Board and other bank regulators to govern the risk management of banks and bank holding companies. Oversight
responsibility for these categories is assigned within our risk committee governance structure:
•
Credit risk arises from the potential that a borrower or counterparty will fail to perform on an obligation.
•
Market risk is a financial institution’s condition resulting from adverse movements in market rates or prices, such as
interest rates, foreign exchange rates, or equity prices.
•
Liquidity risk is the potential that an institution will be unable to meet its obligations as they come due because of an
inability to liquidate assets or obtain adequate funding (referred to as “funding liquidity risk”) or that it cannot easily
unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or
market disruptions ("market liquidity risk").
•
Operational risk is the potential that inadequate information systems, operational problems, breaches in internal controls,
breaches in customer data, fraud, or unforeseen catastrophes will result in unexpected losses. Consistently and
interchangeably for the Company, Basel II defines this risk as the risk of loss resulting from inadequate or failed internal
processes, people and systems, or from external events. The Company assesses compliance risk, the risk to current or
anticipated earnings or capital arising from violations of laws, rules or regulations, or from non-conformance with
prescribed practices, internal policies and procedures or ethical standards, as a subcategory of operational risk.
•
Legal risk is the potential that unenforceable contracts, lawsuits, or adverse judgments can disrupt or otherwise negatively
affect the operations or condition of a banking organization.
•
Reputational risk is the potential that negative publicity regarding an institution’s business practices, whether true or not,
will cause a decline in the customer base, costly litigation, or revenue reductions. The Company also recognizes its
reputation with shareholders and associates is an important factor of reputational risk.
•
Strategic risk is the risk to current or anticipated earnings, capital, or franchise or enterprise value arising from adverse
business decisions, poor implementation of business decisions, or lack of responsiveness to changes in the competitive
landscape of banking and financial services industries and operating environment.
Risk Committee Governance Structure
Effective risk management governance requires active oversight, participation, and interaction by senior management and the Board of
Directors. Our enterprise risk management framework uses a tiered risk/reward committee structure to facilitate the timely discussion
of significant risks, issues and risk mitigation strategies to inform management and the Board’s decision making. Additionally, the
committee structure provides ongoing oversight and facilitates escalation within assigned risk committees. Following is a summary of
our risk governance structure and related responsibilities:
•
Board risk committees. The Company’s Board of Directors has established a Board Risk Committee and Credit Risk
Management Subcommittee of the Board Risk Committee to oversee the effective establishment of a risk governance
framework, provide for an independent Credit Review assurance function, ensure the overall corporate risk profile is
within its risk appetite, and direct changes or make recommendations to the Board of Directors when determined
necessary. Additionally, the Board of Directors has established an Audit Committee to provide independent oversight on
the effectiveness of these matters and the Company’s internal control and regulatory environment. The Board Risk
70
Committee is chaired by an independent director. The Board has designated Ms. Joan Teofilo and Mr. H. Merritt Lane,
III, independent directors who serve on the Board Risk Committee, as risk management experts. Other committees of the
Board of Directors oversee certain risks that overlap with the Board Risk Committee’s enterprise risk management
oversight, including the Compensation Committee, which evaluates and manages any risk posed by compensation and
benefits programs and oversees inclusion and belonging efforts, and the Corporate Governance and Nominating
Committee, which provides oversight on a broad range of issues surrounding the composition and operation of the Board
of Directors.
•
Governance committees. The Capital Committee (CAPCO) of the Company serves as the senior level management
risk/reward committee and oversees the business strategy, organizational structure, capital planning, and liquidity
strategies for the Company. CAPCO directly oversees the strategic and reputation risk categories, which include litigation
strategy and the development of capital stress testing within the Company’s risk governance framework. CAPCO drives
business strategy development and execution, provides corporate financial oversight, and is responsible for portfolio risk
committee oversight. CAPCO provides oversight of the portfolio risk/reward committees to ensure tactics to address
business strategy changes are properly vetted and adopted, and protect the Company’s reputation.
•
Portfolio committees. The Company has three portfolio risk/reward committees focusing on credit (CREDCO), market
and liquidity through asset/liability management (ALCO), and operational, legal and compliance (OPCO) risk categories.
These committees review and monitor the risk categories in a portfolio context ensuring risk assessment and management
processes are being effectively executed to identify and manage risk and direct changes and escalate issues to CAPCO
and Board Risk Committees when needed. The committees also monitor the risk portfolios for changes to the Company’s
risk profile as well as ensure the risk portfolio is performing within the board-approved risk appetite. Portfolio
committees report to CAPCO. In addition, the Company has established a Sustainability Committee, which is a
management committee that develops, monitors and assesses the strategies related to the environment, social
responsibility and sustainable growth.
Risk Leadership and Organization
The risk management function of the Company is led by our Chief Risk Officer. The Chief Risk Officer, who reports directly to the
CEO, provides overall vision, direction and leadership regarding our enterprise risk management program. The Chief Risk Officer
exercises independent judgment and reporting of risk through a direct working relationship with the Board Risk Committee, and the
Chief Credit Officer has the same role with the Credit Risk Management Subcommittee. The functional areas reporting to the Chief
Risk Officer are the enterprise risk management, operational risk management, model risk management, information technology risk
management, data governance, compliance, credit review (administrative only), corporate insurance, regulatory relations, and
financial crimes programs. The Chief Risk Officer also works closely with the Chief Internal Auditor to provide assurance to the
Board and senior management regarding risk management controls and their effectiveness. The Chief Internal Auditor reports to the
Board’s Audit Committee to assure independence of the internal audit function. Another risk management function reporting to the
CEO is the Chief Credit Officer.
Credit Risk
The Bank’s primary lending focus is to provide commercial, consumer, and real estate loans to consumers, to small and middle market
businesses, to larger corporate clients in their respective market areas, and to state, county, parish and municipal government entities.
Diversification in the loan portfolio is a means to reduce the risks associated with economic fluctuations. The Bank has no significant
concentrations of loans to individual borrowers or foreign entities.
Our commercial and industrial portfolio, which includes commercial non-real estate and owner occupied commercial real estate
lending is diverse across various industries. We continuously manage our exposure to improve our cross-industry diversification, and
proactively manage potential impacts to earnings.
Real estate loan levels are monitored throughout the year and the bank currently does not have a commercial real estate concentration
as defined by interagency guidelines.
Monitoring collateral is also an essential component of managing the Bank’s real estate-and non-real estate related credit risk
exposure. For real estate-secured loans, third-party valuations are obtained at the time of origination, and updated if it is determined
that the collateral value has deteriorated or if the loan is deemed to be a problem loan. Property valuations are ordered through, and
reviewed by, the Bank’s appraisal department, which is independent of the loan origination and approval process. When deemed
necessary, third-party valuations may also be obtained for non-real estate collateral based on the same criteria as real estate secured
loans. Collateral valuations, along with anticipated selling costs, are used to assess the need for an appropriate allowance allocation
and/or full or partial charge-off when it is probable that the borrower will be unable to meet payment obligations as they become due.
71
The Bank maintains a Credit Review function, that is managed by our Director of Credit Review who reports to the Credit Risk
Management Subcommittee, a subcommittee of the Board Risk Committee, so that developing credit concerns are identified and
addressed in a timely manner. Further, an active watch list review process is in place as part of the Bank’s problem loan management
strategy, and a list of loans 90 days past due and still accruing is reviewed with management (including the Chief Credit Officer) at
least monthly. Recommendations flow from all of the above activities with the goal of recognizing nonperforming loans and
determining the appropriate accrual status.
Asset/Liability Management
Asset/Liability Management consists of quantifying, analyzing, and controlling interest rate risk (IRR) to maintain stability in net
interest income under varying interest rate environments. The principal objective of asset/liability management is to maximize net
interest income while operating within acceptable interest rate risk limits and maintaining adequate levels of liquidity. Our net
earnings are materially dependent on our net interest income.
IRR inherent in the Company’s balance sheet consists of reprice, option, yield curve, and basis risks. Reprice risk results from
differences in the maturity or repricing of asset and liability portfolios. Option risk arises from “embedded options” present in many
financial instruments such as loan prepayment options, deposit early withdrawal options, and interest rate options. These options allow
customers opportunities to benefit when market interest rates change, which typically results in higher costs or lower revenue for the
Company. Yield curve risk refers to the risk resulting from unequal changes in the spread between two or more rates for different
maturities for the same instrument. Basis risk refers to the potential for changes in the underlying relationship between market rates
and indices, which subsequently results in changes to the profit spread on an earning asset or liability. Basis risk is also present in
administered rate liabilities, such as savings accounts, negotiable order of withdrawal accounts, and money market accounts where
historical pricing relationships to market rates may change due to the level or directional change in market interest rates.
ALCO manages our IRR exposures through proactive measurement, monitoring, and management actions. ALCO is responsible for
maintaining levels of IRR within limits approved by the Board of Directors by adhering to a risk management policy that is designed
to promote a stable net interest margin in periods of interest rate fluctuation. Accordingly, the Company’s interest rate sensitivity and
liquidity are monitored on an ongoing basis by ALCO, which oversees market risk management and establishes risk measures, limits
and policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. A variety of
measures are used to provide for a comprehensive view of the magnitude of interest rate risk, the distribution of risk, the level of risk
over time and the exposure to changes in certain interest rate relationships.
The Company utilizes an asset/liability model as the primary quantitative tool in measuring the amount of IRR associated with
changing market rates. The model is used to perform net interest income, economic value of equity (EVE), stochastic, and gap
analyses. When performing net interest income at risk analysis, the model is used to quantify the effects of various interest rate
scenarios on projected net interest income and projected net income over the next 12-month and 24-month periods. The model
measures the impact on net interest income relative to a base case scenario given hypothetical fluctuations in interest rates over the
next 24 months. Regarding EVE analysis, the model is used to assess the change in theoretical equity market value that would occur in
response to instantaneous and sustained parallel shifts in market interest rates. EVE analysis is primarily used to identify long-term
structural mismatches in the balance sheet as market rates move, while net interest income analysis assesses the impact of market rate
movements over a short time horizon. Net interest income simulations incorporate assumptions regarding balance sheet growth and
mix as well as the pricing, repricing, and maturity characteristics of the existing and projected balance sheet. The impact of interest
rate derivatives, such as interest rate swaps, caps and floors, is also included in the model. Other interest rate-related risks such as
prepayment, basis, and option risk are also considered.
Net Interest Income at 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.
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 December 31, 2024. 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 Table 25. 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 balance sheet composition and 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
72
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.
TABLE 25. Net Interest Income (te) at Risk
Estimated Increase
in NII
Change in Interest Rates
Year 1
Year 2
(basis points)
- 300
(7.08)%
(13.69)%
- 200
(4.44)%
(9.14)%
- 100
(2.04)%
(4.30)%
+ 100
1.95%
3.89%
+ 200
3.71%
7.52%
+ 300
5.48%
11.22%
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 and wholesale
sources 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 Bank 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 December 31, 2024. 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 26.
TABLE 26. Economic Value of Equity
Estimated Change
in EVE at
Change in Interest Rates
December 31, 2024
(basis points)
- 300
4.33%
- 200
3.72%
- 100
2.27%
+ 100
-2.81%
+ 200
-5.87%
+ 300
-8.93%
73
The net changes in EVE presented in the preceding table are within the parameters approved by the Board 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.
Operational Risk Management
Operational risk is the risk of loss resulting from inadequate or failed internal controls and processes, people and systems, or from
external events, including fraud, litigation and breaches in data security. We depend on the ability of our employees and systems to
process, record and monitor a large number of transactions on an on-going basis. As operational risk remains elevated and as customer
and regulatory expectations regarding information security have increased, the Company continues to enhance its controls, processes
and systems in order to protect the Company’s networks, computers, software and data from attack, damage or unauthorized access.
The Board Risk Committee has primary responsibility for the oversight of operational risk. In this capacity, the Board Risk Committee
oversees the Company’s processes for identifying, assessing, monitoring and managing cybersecurity risk. In addition, individual
business lines have direct and primary responsibility and accountability for identifying, controlling, and monitoring operational risks
embedded in their business activities.
See Item 1A. “Risk Factors” for further discussion of the risks associated with an interruption or breach in our information systems or
infrastructure and Item 1C. “Cybersecurity” for additional disclosures on cybersecurity and related risk management strategy and
governance.
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 December 31, 2024.
TABLE 27. Net Available Sources of Funds
December 31, 2024
($ in thousands)
Total
Available
Amount
Used
Net
Availability
Available Sources of Funding:
Internal Sources
Free securities
$
3,631,840 $
— $
3,631,840
External Sources
Federal Home Loan Bank (a)
6,592,945
1,083,088
5,509,857
Federal Reserve Bank
3,231,661
—
3,231,661
Brokered deposits
4,423,928
6,901
4,417,027
Other
1,229,000
—
1,229,000
Total Available Sources of Funding
$
19,109,374 $
1,089,989 $
18,019,385
Cash and other interest-bearing bank deposits
1,514,625
Total Liquidity
$
19,534,010
(a) Amount used includes funded advances and letters of credit.
TABLE 28. Liquidity Metrics
2024
2023
2022
Free securities / total securities
48.65%
38.80 %
41.59%
Core deposits / total deposits
94.12%
92.51 %
98.12%
Wholesale funds / core deposits
3.09%
7.21 %
7.43%
Liquid assets / total liabilities
15.26%
12.69 %
13.61%
Average loans / average deposits
81.01%
80.04 %
74.30%
74
Liquidity levels of financial institutions have received heightened attention since the failure of several major regional U.S. banks that
experienced large-scale deposit runs in the first half of 2023. Dampened depositor confidence over a financial institution’s ability to
protect deposit balances in excess of the federally insured limit is thought to pose a higher likelihood of a deposit run, and, in turn, the
risk that the institution may have insufficient liquidity to meet the customer demand. At December 31, 2024, our available on and off-
balance sheet liquidity of $19.5 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. Management has established an internal target for the ratio of free securities to total securities of 20% or greater. As
shown in Table 28 above, our ratios of free securities to total securities were 48.65% and 38.80% at December 31, 2024 and 2023,
respectively. Securities and FHLB letters of credit are pledged as collateral related to public funds and repurchase agreements. The
carry value of total pledged securities was $3.9 billion at December 31, 2024, a decrease of $829 million from December 31, 2023,
driven largely by an increase in pledged FHLB letters of credits of $699 million, resulting a higher level of free securities.
The liability portion of the balance sheet provides liquidity mainly through the ability to use cash sourced from various customers’
interest-bearing and noninterest-bearing deposit accounts. At December 31, 2024, deposits totaled $29.5 billion, a decrease of $197
million, or 1%, from December 31, 2023. The decrease is reflective of the maturity of $583 million of brokered deposits that were not
replaced, partially offset by organic growth.
Core deposits represent total deposits excluding certificates of deposits (CDs) of $250,000 or more and brokered deposits. Core
deposits totaled $27.8 billion at December 31, 2024, a decrease of $293 million from December 31, 2023. The ratio of core deposits to
total deposits was 94.12% at December 31, 2024 up from 92.51% at December 31, 2023. The largest driver in the increase in the ratio
was the decline in brokered deposits.
Brokered deposits totaled $6.9 million as of December 31, 2024, down from $583 million at December 31, 2023 as the result of the
maturity of brokered certificates of deposit that were not replaced. The use of brokered deposits as a funding source is subject to
certain policies regarding the amount, term and interest rate.
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 December 31, 2024, the Bank had not
borrowed from the FHLB and had approximately $5.5 billion remaining available under this line. The Bank also has unused
borrowing capacity at the Federal Reserve’s discount window of approximately $3.2 billion. There were no outstanding borrowings
with the Federal Reserve at December 31, 2024 and December 31, 2023, or at any point during the years then ended.
Wholesale funds, which are comprised of short-term borrowings, long-term debt and brokered deposits were 3.09% of core deposits at
December 31, 2024 and 7.21% at December 31, 2023. Wholesale funds totaled $856 million at December 31, 2024, a decrease of $1.1
billion from December 31, 2023. The decrease was primarily due to the repayment of $700 million of FHLB borrowings and the
maturity of $582 million of brokered time deposits, partially offset by a $184 million increase in customer securities sold under
agreements to repurchase. 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 15.26% at December 31, 2024 compared to 12.69% at December 31, 2023. 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 during the reporting period divided by average deposits outstanding) measures the amount of funds the Company lends for
each dollar of deposits on hand. Our average loan-to-deposit ratio was 81.01% for the year ended December 31, 2024 compared to
80.04% for the year ended December 31, 2023. Management has established a target range for the loan to deposit ratio of 87% to
89%, but has and will continue to operate outside that range under certain market conditions and circumstances.
Cash generated from operations is another important source of funds to meet liquidity needs. The Consolidated Statements of Cash
Flows included in Part II, Item 8 of this document present operating cash flows and summarize all significant sources and uses of
funds during the years ended December 31, 2024 and 2023.
75
Dividends received from the Bank have been the primary source of funds available to the Parent Company for the payment of
dividends to our stockholders and for servicing its debt. The liquidity management process takes into account the various regulatory
provisions that can limit the amount of dividends that the Bank can distribute to the Parent Company, as described in Note 12 –
Stockholder’s Equity to the consolidated financial statements. 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 share repurchase or 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 totaling $272.7 million at December 31, 2024.
Material Cash Requirements
The Company has sufficient access to liquidity for operations. The following table summarizes select significant contractual
obligations as of December 31, 2024, according to payments due by period. The table excludes obligations under deposit contracts and
short-term borrowings discussed previously in this analysis. The maturities of time deposits in amounts greater than $250,000 are
presented in Table 22. Purchase obligations represent material legal and binding contracts to purchase services and goods that cannot
be settled or terminated without paying substantially all of the contractual amounts.
TABLE 29. Contractual Cash Obligations
Payment due by period
($ in thousands)
Total
Less Than
1 Year
1-3
Years
3-5
Years
More Than
5 Years
Long-term debt obligations
$ 599,570 $
28,718 $
42,669 $
27,304 $ 500,879
Operating lease obligations
144,156
17,704
33,169
27,086
66,197
Purchase obligations
171,120
89,546
69,841
11,733
—
Commitments to fund low income housing and small business
investment company
20,781
20,781
—
—
—
Total
$ 935,627 $ 156,749 $ 145,679 $
66,123 $ 567,076
Capital Resources
The Company has a strong capital position which is vital to continued profitability, promotes depositor and investor confidence, and
provides a solid foundation for economic downturns, future growth and flexibility in addressing strategic opportunities. Stockholders’
equity totaled $4.1 billion at December 31, 2024 compared to $3.8 billion at December 31, 2023. The $324.0 million increase from
December 31, 2023 is attributable to net income of $460.8 million, $15.0 million of other comprehensive income and $17.9 million of
long-term incentive and dividend reinvestment activity, partially offset by dividends of $131.9 million and share repurchases of $37.8
million.
At December 31, 2024, our tangible common equity ratio was 9.47%, compared to 8.37% at December 31, 2023. The 110 bp increase
from December 31, 2023 is comprised of net income (+136 bps), tangible asset contraction (+13 bps), stock-based compensation and
other activity (+6 bps), and other comprehensive income (+4 bps), partially offset by dividends (-38 bps) and share repurchases (-11
bps).
The primary quantitative measures that regulators use to gauge capital adequacy are the ratios of Total, Tier 1 and Common Equity
Tier 1 regulatory capital to risk-weighted assets (risk-based capital ratios) and the ratio of Tier 1 capital to average total assets
(Leverage ratio). The Federal Reserve Board’s final rule implementing the Basel III regulatory capital framework and related changes
per the Dodd-Frank Act established the Basel III minimum regulatory capital requirements for all organizations for Total, Tier 1 and
Common Equity Tier 1 risk-based capital ratios equal to 8.00%, 6.00%, and 4.5%, respectively, as well as set a conservation buffer of
2.5% and a Leverage ratio of 4.0%. Based on capital ratios as of December 31, 2024 using Basel III definitions, the Company and the
Bank exceeded all capital requirements of the rule. The Company and the Bank have established internal target ranges for Total, Tier
1 and Common Equity Tier 1 risk-based capital ratios and the leverage ratio. At December 31, 2024, each of these capital ratios fell
within, or above, their respective target range.
At December 31, 2024, our regulatory capital ratios were well in excess of current regulatory minimum requirements, including the
conservatism buffers, by at least $1.2 billion. Additionally, both the Company and the Bank were considered “well capitalized” by
regulatory agencies. Note 12 – Stockholders’ Equity to the consolidated financial statements provides additional information about the
Bank’s regulatory capital ratios.
The following table shows certain of the Company’s capital ratios and our regulatory capital ratios as calculated under current rules at
December 31, 2024 and 2023.
76
TABLE 30. Risk-Based Capital and Capital Ratios
($ in thousands)
2024
2023
Common equity tier 1 capital
$
3,886,926
$
3,584,474
Additional tier 1 capital
—
—
Tier 1 capital
3,886,926
3,584,474
Tier 2 capital
491,822
464,771
Total capital
$
4,378,748
$
4,049,245
Risk-weighted assets
$ 27,490,356
$
29,067,426
Ratios
Leverage (Tier 1 capital to average assets)
11.29%
10.10%
Common equity tier 1 capital to risk-weighted assets
14.14%
12.33%
Tier 1 capital to risk-weighted assets
14.14%
12.33%
Total capital to risk-weighted assets
15.93%
13.93%
Common stockholders' equity to total assets
11.77%
10.69%
Tangible common equity to total assets
9.47%
8.37%
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 December 31, 2024.
In April 2024, the Company’s Board of Directors declared a 33% increase in the regular quarterly cash dividend to $0.40 per share.
The Company paid quarterly dividends of $0.30 per share for the first quarter of 2024 and $0.40 per share for the remaining three
quarters of 2024, for an annual cash dividend rate of $1.50 per share. During 2023, the Company paid quarterly dividends of $0.30 per
share, for an annual cash dividend rate of $1.20 per share. Subsequent to year end, on January 30, 2025, the Company’s Board of
Directors increased the quarterly dividend to $0.45 per share, or 12.5%. The increases in our dividends are reflective of our strong
regulatory ratios, allowing for improved shareholder returns. The Company has paid uninterrupted quarterly dividends to shareholders
since 1967.
STOCK REPURCHASE PROGRAM
In January 2023, the Company’s Board of Directors authorized a stock repurchase program pursuant to which the Company may, from
time to time, purchase up to approximately 4.3 million shares of its outstanding common stock (approximately 5% of the shares of
common stock outstanding as of December 31, 2022). The program allowed the Company to repurchase shares 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 program did not obligate the Company to purchase any shares and could have been
terminated or amended by the Board at any time prior to the expiration date. Prior to the expiration on December 31, 2024, the
Company repurchased 762,993 shares of its common stock at an average cost of $49.40 per share, inclusive of commissions, under
this program during 2024. The Company has accrued $0.1 million of estimated excise tax associated with share repurchases during
2024. No shares were repurchased under this program in 2023.
In December 2024, the Company’s Board of Directors authorized a stock repurchase program, effective January 1, 2025, pursuant to
which the Company may, from time to time, purchase up to approximately 4.3 million shares of its outstanding common stock
(approximately 5% of the shares of common stock outstanding as of December 31, 2024). Like the prior program, 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 program has an expiration date of December 31, 2026 and
does not obligate the Company to purchase any shares. The program may be terminated or amended by the Board at any time prior to
the expiration date. This program allows us to continue to opportunistically repurchase shares of our common stock when the market
is advantageous.
77
FOURTH QUARTER RESULTS
Net income for the fourth quarter of 2024 totaled $122.1 million, or $1.40 per diluted common share (EPS), compared to $115.6
million, or $1.33 per diluted common share, in the third quarter of 2024 and $50.6 million, or $0.58 per diluted common share in the
fourth quarter of 2023. The fourth quarter of 2023 included a net charge of $75.4 million, or $0.68 per diluted share after-tax, of
supplemental disclosure items. Excluding the impact of these supplemental disclosure items, EPS would have been $1.26 per diluted
share in the fourth quarter of 2023. There were no supplemental disclosure items in the third or fourth quarters of 2024.
Highlights of our fourth quarter of 2024 results (compared to third quarter of 2024):
•
Net income of $122.1 million, up $6.5 million
•
Pre-provision net revenue (a non-GAAP measure) of $165.2 million, compared to $166.5 million in the prior quarter
•
Loans declined $156.1 million, or 1%
•
Criticized commercial loans and nonaccrual loans continued to normalize, annualized net charge-off percentage improved
to 0.20%, compared to 0.30%
•
Allowance for credit losses coverage remained strong at 1.47%, up 1 bp
•
Deposits increased $509.9 million, or 2%
•
Net interest margin 3.41%, up 2 bp
•
Common equity tier 1 ratio was 14.14%, up 36 bps; tangible common equity ratio of 9.47%, down 9 bps
•
Efficiency ratio (a non-GAAP measure) of 54.46%, up 4 bps
Total loans at December 31, 2024 were $23.3 billion, a decrease of $156.1 million, or 1%, from September 30, 2024. The linked-
quarter decline reflects increased payoffs of commercial real estate loans, partially offset by a seasonal increase in line utilization and
higher activity in commercial non-real estate loans.
Total deposits at December 31, 2024 were $29.5 billion, up $509.9 million, or 2%, from September 30, 2024. The increase is largely
the result of seasonal inflows in interest-bearing public funds, an increase in interest-bearing transaction and savings due to
seasonality, competitive products and pricing, and an increase in noninterest-bearing deposits. These increases were partially offset by
a decrease in retail time deposits driven by maturity concentration repricing at lower rates and promotional rate reductions during the
fourth quarter, and a decrease in brokered deposits that matured and were not replaced.
Noninterest-bearing deposits totaled $10.6 billion at December 31, 2024, up $98.0 million, or 1%, from September 30, 2024 and
comprised 36% of total deposits at December 31, 2024. Interest-bearing transaction and savings deposits totaled $11.3 billion at
December 31, 2024, up $413.1 million, or 4%, compared to September 30, 2024. Interest-bearing public fund deposits increased
$508.4 million, or 19%, to $3.2 billion at December 31, 2024. The increase in public funds is seasonal and largely attributable to year-
end tax collections by local municipalities. Typically, these balances begin to runoff in the first quarter of each year. Retail time
deposits of $4.4 billion decreased $326.0 million, or 7%, from September 30, 2024, largely attributable to maturities with lower
repricing rate offerings. Brokered deposits were $6.9 million at December 31, 2024, down $183.6 million due to maturities which
were not replaced.
Net interest income (te) for the fourth quarter of 2024 was $276.3 million, up $1.8 million, or 1%, from the third quarter of 2024. The
net interest margin for the fourth quarter of 2024 was 3.41%, up 2 bps from the third quarter of 2024, as lower deposit costs (+16 bps)
and a favorable borrowing mix (+5 bps), and higher securities yields (+1 bp) was partially offset by lower loan yields (-20 bps).
The provision for credit losses recorded in the fourth quarter of 2024 was $11.9 million, compared to $18.6 million in the third quarter
of 2024. Net charge-offs were $11.7 million, or 0.20% of average total loans on an annualized basis in the fourth quarter of 2024,
down from $18.0 million, or 0.30% of average total loans, in the third quarter of 2024. Our allowance for credit losses was $342.9
million at December 31, 2024, up $0.2 million from September 30, 2024. Criticized commercial loans were $623.0 million, or 3.47%
of total commercial loans at December 31, 2024, compared to $508.0 million, or 2.81% of total commercial loans at September 30,
2024. Nonaccrual loans totaled $97.3 million, or 0.42% of total loans at December 31, 2024, compared to $82.9 million, or 0.35% of
total loans at September 30, 2024. ORE and foreclosed assets totaled $27.8 million at December 31, 2024, virtually flat compared to
September 30, 2024.
Noninterest income totaled $91.2 million for the fourth quarter of 2024, down $4.7 million, or 5%, from the third quarter of 2024.
Service charges on deposits were up $0.3 million, or 1%, from the third quarter of 2024. Bank card and ATM fees were down $0.2
78
million, or 1%, from the third quarter of 2024. Investment and annuity fees and insurance commissions were relatively flat linked-
quarter. Trust fees were up $0.2 million, or 1%, linked quarter. Fees from secondary mortgage operations totaled $2.6 million for the
fourth quarter of 2024, down $0.8 million, or 24%, linked-quarter, largely as a result of a higher percentage of loans retained for
investment. Other noninterest income was $14.7 million in the fourth quarter of 2024, down $4.1 million, or 22% from the third
quarter of 2024, primarily due to declines in derivative income and gains on sales of SBA loans.
Noninterest expense totaled $202.3 million, down $1.5 million, or 1%, from the third quarter of 2024. The primary driver of the
decrease is attributable to personnel expense, which was down $2.0 million, or 2%, from the third quarter of 2024, driven by lower
incentives and retirement benefits expenses.
The effective income tax rate for fourth quarter 2024 was 18.9%. The effective income tax rate continues to be less than the statutory
rate primarily due to tax-exempt income and income tax credits.
The following table provides selected comparative financial information for the five quarters ending with December 31, 2024.
TABLE 31. Quarterly Consolidated Financial Results
(in thousands, except per share data)
December 31, 2024
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
Income Statement Data:
Interest income
$
414,286
$
429,476
$
427,545
$
421,684
$
426,794
Interest income (te) (a)
417,021
432,169
430,373
424,514
429,628
Interest expense
140,730
157,712
157,115
155,513
157,334
Net interest income (te)
276,291
274,457
273,258
269,001
272,294
Provision for credit losses
11,912
18,564
8,723
12,968
16,952
Noninterest income
91,209
95,895
89,174
87,851
38,951
Noninterest expense
202,333
203,839
206,016
207,722
229,151
Income before income taxes
150,520
145,256
144,865
133,332
62,308
Income tax expense
28,446
29,684
30,308
24,720
11,705
Net income
$
122,074
$
115,572
$
114,557
$
108,612
$
50,603
Supplemental disclosure items-included above, pre-tax:
Included in noninterest income:
Gain on sale of parking facility
$
—
$
—
$
—
$
—
$
16,126
Loss on securities portfolio restructure
—
—
—
—
(65,380 )
Included in noninterest expense:
FDIC special assessment
—
—
—
3,800
26,123
Balance Sheet Data:
Period end balance sheet data:
Loans
$
23,299,447
$
23,455,587
$
23,911,616
$
23,970,938
$
23,921,917
Earning assets
31,857,841
32,045,222
32,056,415
31,985,610
32,175,097
Total assets
35,081,785
35,238,107
35,412,291
35,247,119
35,578,573
Noninterest-bearing deposits
10,597,461
10,499,476
10,642,213
10,802,127
11,030,515
Total deposits
29,492,851
28,982,905
29,200,718
29,775,906
29,690,059
Stockholders' equity
4,127,636
4,174,687
3,920,718
3,853,436
3,803,661
Average balance sheet data:
Loans
23,248,512
23,552,002
23,917,361
23,810,163
23,795,681
Earning assets
32,333,012
32,263,748
32,539,363
32,556,821
33,128,130
Total assets
34,770,663
34,780,386
34,998,880
35,101,869
35,538,300
Noninterest-bearing deposits
10,409,022
10,359,390
10,526,903
10,673,060
11,132,354
Total deposits
29,108,381
28,940,163
29,069,097
29,560,956
29,974,941
Stockholders' equity
4,138,326
4,021,211
3,826,296
3,818,840
3,560,978
Common Shares Data:
Earnings per share:
Basic
$
1.41
$
1.33
$
1.31
$
1.25
$
0.58
Diluted
1.40
1.33
1.31
1.24
0.58
Cash dividends per common share
0.40
0.40
0.40
0.30
0.30
Performance Ratios:
Return on average assets
1.40%
1.32 %
1.32 %
1.24%
0.56 %
Return on average common equity
11.74%
11.43 %
12.04 %
11.44%
5.64 %
Efficiency ratio (b)
54.46%
54.42 %
56.18 %
56.44%
55.58 %
Net interest margin (te)
3.41%
3.39 %
3.37 %
3.32%
3.27 %
Annualized net charge offs to average loans
0.20%
0.30 %
0.12 %
0.15%
0.27 %
79
..
..
(in thousands, except per share data)
December 31, 2024
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
Reconciliation of pre-provision net revenue (te) and
adjusted pre-provision net revenue(te) (non-GAAP
measures) (c)
Net income (GAAP)
$
122,074
$
115,572
$
114,557
$
108,612
$
50,603
Provision for credit losses
11,912
18,564
8,723
12,968
16,952
Income tax expense
28,446
29,684
30,308
24,720
11,705
Pre-provision net revenue
162,432
163,820
153,588
146,300
79,260
Taxable equivalent adjustment
2,735
2,693
2,828
2,830
2,834
Pre-provision net revenue (te)
165,167
166,513
156,416
149,130
82,094
Adjustments from supplemental disclosure items
Loss on securities portfolio restructure
—
—
—
—
65,380
Gain on sale of parking facility
—
—
—
—
(16,126 )
FDIC special assessment
—
—
—
3,800
26,123
Adjusted pre-provision net revenue (te)
$
165,167
$
166,513
$
156,416
$
152,930
$
157,471
Reconciliation of revenue (te), adjusted revenue (te) and
efficiency ratio (non-GAAP measures) (c)
Net interest income
$
273,556
$
271,764
$
270,430
$
266,171
$
269,460
Noninterest income
91,209
95,895
89,174
87,851
38,951
Total GAAP revenue
364,765
367,659
359,604
354,022
308,411
Taxable equivalent adjustment
2,735
2,693
2,828
2,830
2,834
Total revenue (te)
367,500
370,352
362,432
356,852
311,245
Adjustments from supplemental disclosure items
Loss on securities portfolio restructure
—
—
—
—
65,380
Gain on sale of parking facility
—
—
—
—
(16,126 )
Adjusted revenue
367,500
370,352
362,432
356,852
360,499
GAAP noninterest expense
202,333
203,839
206,016
207,722
229,151
Amortization of intangibles
(2,206)
(2,292 )
(2,389 )
(2,526)
(2,672 )
Adjustments from supplemental disclosure items
FDIC special assessment
—
—
—
(3,800)
(26,123 )
Adjusted noninterest expense
$
200,127
$
201,547
$
203,627
$
201,396
$
200,356
Efficiency ratio (b)
54.46%
54.42 %
56.18 %
56.44%
55.58 %
(a) Taxable equivalent basis (te). For analytical purposes, management adjusts interest income and net interest income for tax-exempt items to a taxable equivalent basis
using a federal income tax rate of 21%.
(b) The efficiency ratio is noninterest expense to total net interest (te) and noninterest income, excluding amortization of purchased intangibles and supplemental
disclosure items.
(c) Refer to the Non-GAAP Financial Measures section of this analysis for a discussion of these measures.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
The accounting principles we follow and the methods for applying these principles conform to accounting principles generally
accepted in the United States of America and general practices followed by the banking industry. The significant accounting principles
and practices we follow are described in Note 1 to the consolidated financial statements, included in Item 8 of this document. These
principles and practices require management to make estimates and assumptions about future events that affect the amounts reported
in the consolidated financial statements and accompanying notes. Management evaluates the estimates and assumptions made on an
ongoing basis to help ensure the resulting reported amounts reflect management’s best estimates and judgments given current facts
and circumstances. The following discusses certain critical accounting policies that involve a higher degree of management judgment
and complexity in producing estimates that may significantly affect amounts reported in the consolidated financial statements and
notes thereto.
Allowance for Credit Losses
The allowance for credit losses (ACL) is comprised of the allowance for loan and lease losses (ALLL), a valuation account available
to absorb losses on loans and leases held for investment, and the reserve for unfunded lending commitments, a liability established to
absorb credit losses for the expected life of the contractual term of on and off-balance sheet exposures as of the date of the
determination. Accounting standards require that management incorporate an economic forecast for a reasonable and supportable
period, which is two years based on our current policy. We utilize third party forecasts that consist of multiple economic scenarios,
including a baseline, with a probability distribution of 50% better or worse economic performance and various upside and downside
scenarios utilized at an aggregated state (or regional) levels across our footprint or national level, depending on the portfolio. The
economic forecasts are generally lagging and may not incorporate all events and circumstances through the financial statement date.
The Company’s management considers available forecasts, current events not captured and our specific portfolio characteristics and
applies weights to the scenario output based on a best estimate of likely outcomes. Changing economic conditions introduce enhanced
estimation uncertainty in the forecasts used to estimate expected credit loss. Our credit loss models were built using historical data that
may not correlate to existing economic conditions. The estimate of the life of a loan considers both contractual cash flows as well as
estimated prepayments and forecasted draws on unfunded loan commitments that were also built on historical data that may react
80
differently given the current environment. Such forecasted information is inherently uncertain, therefore, actual results may differ
significantly from management’s estimates.
Management applies significant judgment when weighting the macroeconomic scenarios for the reasonable and supportable period.
Our assessment considers the scenario description compared to our portfolio performance and benchmarking select variables to other
third-party forecasts. At December 31, 2024, the Company weighted the Moody’s baseline scenario at 40% and the mild recessionary
S-2 scenario at 60%. Results by scenario can vary significantly from period to period as both the scenario assumptions and the
portfolio composition are changing, therefore comparison of scenario weighting from period to period may not be meaningful. For
example, holding all other assumptions constant, the slower growth S-2 scenario produced expected credit losses 40% higher than
utilization of the baseline scenario at December 31, 2024. In contrast, for the year ended December 31, 2023, the slower growth S-2
scenario produced results 34% higher than the baseline scenario. In addition, these quantitative results are adjusted, sometimes
materially, by the qualitative assessment described below.
The quantitative loss rate analysis is supplemented by a review of qualitative factors that considers whether conditions differ from
those existing during the historical periods used in the development of the credit loss models. Such factors include, but are not limited
to, problem loan trends, changes in loan profiles and volumes, changes in lending policies and procedures, current or expected
economic trends, business conditions, credit concentrations, model limitations and other relevant factors not captured by our models.
While quantitative data for these factors is used where available, there is significant judgment applied in these processes.
For credits that are individually evaluated, a specific allowance is calculated as the shortfall between the credit’s value and the bank’s
exposure. The loan’s value is measured by either the loan’s observable market price, the fair value of the collateral of the loan (less
liquidation costs) if it is collateral dependent, or by the present value of expected future cash flows discounted at the loan’s effective
interest rate. Collateral supporting loans individually evaluated for credit loss may include, but is not limited to, commercial and
residential real estate, accounts receivable and other corporate assets. Valuations are highly subjective and based on information
available at the time of valuation and the current resolution strategy. These values are difficult to assess and have heightened
uncertainty resulting from current market conditions. Actual results could differ from these estimates.
Management considers the appropriateness of these critical assumptions as part of its allowance review and believes the ACL level is
appropriate based on information available through the financial statement date. Refer to Note 3 – Loans and Allowance for Credit
Losses, included in Part II, Item 8 of this document, for further discussion of significant assumptions used in the current allowance
calculation.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 to our consolidated financial statements that appears in Part II, Item 8. “Financial Statements and Supplementary Data.”
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required for this item is included in the sections entitled “Asset/Liability Management” and “Net Interest Income at
Risk” that appear in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and is
incorporated here by reference.
81
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Hancock Whitney Corporation has prepared the consolidated financial statements and other information in our
Annual Report in accordance with accounting principles generally accepted in the United States of America and is responsible for its
accuracy. The financial statements necessarily include amounts that are based on management’s best estimates and judgments.
In meeting its responsibility, management relies on internal accounting and related control systems. The internal control systems are
designed to ensure that transactions are properly authorized and recorded in the Company’s financial records and to safeguard the
Company’s assets from material loss or misuse. Such assurance cannot be absolute because of inherent limitations in any internal
control system.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in the Rule 13(a)–15(f) under the Securities Exchange Act of 1934. Under the supervision and with the participation of
management, including the Company’s principal executive officer and principal financial officer, the Company conducted an
evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management also conducted
an assessment of requirements pertaining to Section 112 of the Federal Deposit Insurance Corporation Improvement Act. This section
relates to management’s evaluation of internal control over financial reporting, including controls over the preparation of financial
statements in accordance with the instructions to the Consolidated Financial Statements for Bank Holding Companies (Form FR Y-
9C) and in compliance with laws and regulations. Our evaluation included a review of the documentation of controls, evaluations of
the design of the internal control system and tests of the effectiveness of internal controls.
The Company’s internal control over financial reporting as of December 31, 2024 was audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their accompanying report which expresses an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.
Based on the Company’s evaluation under the framework in Internal Control – Integrated Framework (2013), management concluded
that internal control over financial reporting was effective as of December 31, 2024.
/s/ John M. Hairston
/s/ Michael M. Achary
John M. Hairston
Michael M. Achary
President & Chief Executive Officer
Senior Executive Vice President & Chief Financial Officer
(Principal Executive Officer)
(Principal Financial Officer)
February 26, 2025
February 26, 2025
82
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Hancock Whitney Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Hancock Whitney Corporation and its subsidiaries (the
“Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of
changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the
related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control
over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the
Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. Management’s assessment and our audit of Hancock Whitney Corporation's internal control over financial reporting also
included controls over the preparation of financial statements in accordance with the instructions to the Consolidated Financial
Statements for Bank Holding Companies (Form FR Y-9C) to comply with the reporting requirements of Section 112 of the Federal
Deposit Insurance Corporation Improvement Act (FDICIA). A company’s internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
83
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are
material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Allowance for Credit Losses for the Collectively Evaluated Portfolios
As described in Notes 1 and 3 to the consolidated financial statements, the allowance for credit losses (“ACL”) is comprised of the
allowance for loan and lease losses, a valuation account available to absorb losses on loans and leases held for investment, and the
reserve for unfunded lending commitments, a liability established to absorb credit losses for the expected life of the contractual term
of on and off-balance sheet exposures. As of December 31, 2024, the total allowance for credit losses was $343 million on total loans
of $23.3 billion. The analysis and methodology for estimating the ACL includes two primary elements: 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 for credit loss. Management utilizes internally developed credit models and third-party economic forecasts for the
calculation of expected credit loss for the collectively evaluated portfolios. Management calculates a collective allowance for a two-
year reasonable and supportable forecast period utilizing probability weighted multiple macroeconomic scenarios, and then reverts on
a linear basis over four quarters to an average historical loss rate for the remaining term. Qualitative adjustments to the output of
quantitative calculations are made when management deems it necessary to reflect differences in current and forecasted conditions as
compared to those during the historical loss period used in model development.
The principal considerations for our determination that performing procedures relating to the allowance for credit losses for the
collectively evaluated portfolios is a critical audit matter are (i) the significant judgment by management in estimating the allowance
for credit losses, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and
evaluating audit evidence relating to the application of probability weighted multiple macroeconomic scenarios and the qualitative
adjustments used in estimating the allowance for credit losses and (ii) the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion
on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s
process for estimating the allowance for credit losses for the collectively evaluated portfolios, including controls over the application
of probability weighted multiple macroeconomic scenarios and qualitative adjustments. These procedures also included, among
others, testing management’s process for estimating the allowance for credit losses by (i) evaluating the appropriateness of
management’s methodology, (ii) testing certain data used in the estimate, and (iii) evaluating the reasonableness of the application of
probability weighted multiple macroeconomic scenarios and the qualitative adjustments; professionals with specialized skill and
knowledge were used to assist in performing these procedures to test management’s process.
/s/ PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 26, 2025
We have served as the Company’s auditor since 2009.
84
Hancock Whitney Corporation and Subsidiaries
Consolidated Balance Sheets
December 31,
(in thousands, except per share data)
2024
2023
Assets:
Cash and due from banks
$
574,910 $
561,202
Interest-bearing bank deposits
939,306
626,646
Federal funds sold
409
436
Securities available for sale, at fair value (amortized cost of $5,774,133 and $5,496,718)
5,161,491
4,915,195
Securities held to maturity (fair value of $2,233,526 and $2,485,918)
2,435,663
2,684,779
Loans held for sale (includes $18,929 and $13,269 measured at fair value)
21,525
26,124
Loans
23,299,447
23,921,917
Less: allowance for loan losses
(318,882 )
(307,907)
Loans, net
$
22,980,565 $
23,614,010
Property and equipment, net of accumulated depreciation of $345,962 and $318,746
279,767
301,639
Right of use assets, net of accumulated amortization of $67,063 and $55,815
98,822
105,799
Prepaid expense
45,763
45,234
Other real estate and foreclosed assets, net
27,797
3,628
Accrued interest receivable
143,237
157,179
Goodwill
855,453
855,453
Other intangible assets, net
35,224
44,637
Life insurance contracts
774,542
749,495
Funded pension assets, net
260,003
216,849
Deferred tax asset, net
146,567
153,384
Other assets
300,741
516,884
Total assets
$
35,081,785 $
35,578,573
Liabilities and Stockholders' Equity:
Deposits:
Noninterest-bearing
$
10,597,461 $
11,030,515
Interest-bearing
18,895,390
18,659,544
Total deposits
29,492,851
29,690,059
Short-term borrowings
639,015
1,154,829
Long-term debt
210,544
236,317
Accrued interest payable
20,148
45,000
Lease liabilities
117,817
125,618
Other liabilities
473,774
523,089
Total liabilities
30,954,149
31,774,912
Stockholders' equity:
Common stock
309,513
309,513
Capital surplus
1,719,609
1,739,671
Retained earnings
2,704,606
2,375,604
Accumulated other comprehensive loss, net
(606,092 )
(621,127)
Total stockholders' equity
4,127,636
3,803,661
Total liabilities and stockholders' equity
$
35,081,785 $
35,578,573
Preferred shares authorized (par value of $20.00 per share)
50,000
50,000
Preferred shares issued and outstanding
—
—
Common shares authorized (par value of $3.33 per share)
350,000
350,000
Common shares issued
92,947
92,947
Common shares outstanding
86,124
86,345
See accompanying notes to consolidated financial statements.
85
Hancock Whitney Corporation and Subsidiaries
Consolidated Statements of Income
Years Ended December 31,
(in thousands, except per share data)
2024
2023
2022
Interest income:
Loans, including fees
$
1,452,402 $
1,379,263 $
940,629
Loans held for sale
1,640
1,723
1,814
Securities-taxable
194,227
189,386
166,731
Securities-tax exempt
17,698
18,627
18,847
Short-term investments
27,024
31,498
9,042
Total interest income
1,692,991
1,620,497
1,137,063
Interest expense:
Deposits
574,441
443,924
58,439
Short-term borrowings
24,372
66,657
16,191
Long-term debt
12,257
12,317
12,430
Total interest expense
611,070
522,898
87,060
Net interest income
1,081,921
1,097,599
1,050,003
Provision for credit losses
52,167
59,103
(28,399 )
Net interest income after provision for credit losses
1,029,754
1,038,496
1,078,402
Noninterest income:
Service charges on deposit accounts
91,105
86,020
87,663
Trust fees
71,734
67,565
65,132
Bank card and ATM fees
85,491
82,966
84,591
Investment and annuity fees and insurance commissions
43,424
36,714
28,752
Secondary mortgage market operations
12,374
9,159
11,524
Securities transactions, net
—
(65,380 )
(87 )
Other income
60,001
71,436
53,911
Total noninterest income
364,129
288,480
331,486
Noninterest expense:
Compensation expense
380,591
376,055
378,482
Employee benefits
88,786
84,740
82,153
Personnel expense
469,377
460,795
460,635
Net occupancy expense
53,650
51,573
48,767
Equipment expense
17,432
18,852
18,573
Data processing expense
121,880
117,694
103,942
Professional services expense
41,935
38,331
36,065
Amortization of intangibles
9,413
11,556
14,033
Deposit insurance and regulatory fees
24,209
49,979
14,889
Other real estate and foreclosed assets income
(2,469)
(624 )
(4,407 )
Other expense
84,483
88,692
58,195
Total noninterest expense
819,910
836,848
750,692
Income before income taxes
573,973
490,128
659,196
Income tax expense
113,158
97,526
135,107
Net income
$
460,815 $
392,602 $
524,089
Earnings per common share - basic
$
5.30 $
4.51 $
6.00
Earnings per common share - diluted
$
5.28 $
4.50 $
5.98
Dividends paid per share
$
1.50 $
1.20 $
1.08
Weighted-average shares outstanding - basic
86,346
86,130
86,068
Weighted-average shares outstanding - diluted
86,648
86,423
86,394
See accompanying notes to consolidated financial statements.
86
Hancock Whitney Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31,
($ in thousands)
2024
2023
2022
Net income
$
460,815 $
392,602 $
524,089
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss) on securities available for sale and cash flow
hedges
(65,141 )
91,061
(898,241 )
Reclassification of net (gain) loss realized and included in earnings
52,832
115,619
(5,947 )
Valuation adjustments to employee benefit plans
28,191
(13,325 )
(24,139 )
Amortization of unrealized net loss on securities transferred to held to maturity
1,670
1,747
1,355
Other comprehensive income (loss) before income taxes
17,552
195,102
(926,972 )
Income tax expense (benefit)
2,517
44,047
(208,725 )
Other comprehensive income (loss) net of income taxes
15,035
151,055
(718,247 )
Comprehensive income (loss)
$
475,850 $
543,657 $
(194,158 )
See accompanying notes to consolidated financial statements.
87
Hancock Whitney Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
Accumulated
Other
Comprehensive
Common Stock
Capital
Retained
Income (Loss),
(in thousands, except parenthetical share data)
Shares Amount
Surplus
Earnings
Net
Total
Balance, December 31, 2021
92,947 $
309,513 $ 1,755,701 $ 1,659,073 $
(53,935) $ 3,670,352
Net income
—
—
—
524,089
—
524,089
Other comprehensive loss
—
—
—
—
(718,247)
(718,247)
Comprehensive loss
(194,158)
Cash dividends declared ($1.08 per common share)
—
—
—
(94,891 )
—
(94,891)
Common stock activity, long-term incentive plans
—
—
16,498
142
—
16,640
Issuance of stock from dividend reinvestment and stock
purchase plans
—
—
3,577
—
—
3,577
Repurchase of common stock (1,204,368 shares)
—
—
(58,892)
—
—
(58,892)
Balance, December 31, 2022
92,947 $
309,513 $ 1,716,884 $ 2,088,413 $
(772,182) $ 3,342,628
Net income
—
—
—
392,602
—
392,602
Other comprehensive income
—
—
—
—
151,055
151,055
Comprehensive income
543,657
Cash dividends declared ($1.20 per common share)
—
—
—
(105,557 )
—
(105,557)
Common stock activity, long-term incentive plans
—
—
18,972
146
—
19,118
Issuance of stock from dividend reinvestment and stock
purchase plans
—
—
3,815
—
—
3,815
Balance, December 31, 2023
92,947 $
309,513 $ 1,739,671 $ 2,375,604 $
(621,127) $ 3,803,661
Net income
—
—
—
460,815
—
460,815
Other comprehensive income
—
—
—
—
15,035
15,035
Comprehensive income
475,850
Cash dividends declared ($1.50 per common share)
—
—
—
(131,946 )
—
(131,946)
Common stock activity, long-term incentive plans
—
—
13,647
133
—
13,780
Issuance of stock from dividend reinvestment and stock
purchase plans
—
—
4,120
—
—
4,120
Repurchase of common stock (762,993 shares)
—
—
(37,829)
—
—
(37,829)
Balance, December 31, 2024
92,947 $
309,513 $ 1,719,609 $ 2,704,606 $
(606,092) $ 4,127,636
See accompanying notes to consolidated financial statements.
88
Hancock Whitney Corporation and Subsidiaries
Consolidated Statements of Cash Flows
($ in thousands)
2024
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
460,815 $
392,602 $
524,089
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
32,301
34,720
31,582
Provision for credit losses
52,167
59,103
(28,399 )
Gain on other real estate and foreclosed assets
(2,022 )
(967 )
(4,382 )
Deferred tax expense (benefit)
4,299
13,986
(22,166 )
Increase in cash surrender value of life insurance contracts
(27,315 )
(17,671 )
(7,010 )
(Gain) loss on disposal or impairment of assets
(1,242 )
(15,753 )
259
Loss on sale of securities available for sale
—
65,380
87
Net (increase) decrease in loans held for sale
4,504
(24,589 )
61,031
Net amortization of securities premium/discount
13,704
16,383
35,490
Amortization of intangible assets
9,413
11,556
14,033
Stock-based compensation expense
22,703
24,652
23,489
Net change in derivative collateral liability
(5,288 )
58,326
64,867
Increase (decrease) in interest payable and other liabilities
(16,833 )
48,714
6,838
(Increase) decrease in other assets
84,981
(160,890 )
176,354
Other, net
(6,445 )
(10,303 )
(34,141 )
Net cash provided by operating activities
$
625,742 $
495,249 $
842,021
89
Hancock Whitney Corporation and Subsidiaries
Consolidated Statements of Cash Flows—(Continued)
($ in thousands)
2024
2023
2022
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale
$
— $
977,114 $
73,219
Proceeds from maturities of securities available for sale
454,188
813,214
502,628
Purchases of securities available for sale
(750,265 )
(1,044,988 )
(635,593 )
Proceeds from maturities of securities held to maturity
238,899
163,266
147,879
Purchases of securities held to maturity
—
(6,023 )
(884,427 )
Proceeds received upon termination of fair value hedge instruments
—
19,275
90,601
Payments made to terminate cash flow hedge instruments
(13,730 )
(2,915 )
—
Net redemptions (purchases) of Federal Home Loan Bank stock
134,667
(68,057 )
(12,095 )
Net (increase) decrease in short-term investments
(312,633 )
(303,022 )
3,506,845
Proceeds from sales of loans and leases
119,166
115,119
30,652
Net (increase) decrease in loans
407,460
(968,237 )
(2,088,836 )
Purchases of life insurance contracts
—
—
(65,000 )
Purchases of property and equipment
(10,237 )
(25,025 )
(29,145 )
Proceeds from sales of property
6,144
33,130
62
Proceeds from sales of other real estate and foreclosed assets
1,795
3,575
14,081
Other, net
(698 )
(1,637 )
11,487
Net cash provided by (used in) investing activities
274,756
(295,211 )
662,358
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits
(197,208 )
619,710
(1,395,548 )
Net increase (decrease) in short-term borrowings
(515,814 )
(716,442 )
206,210
Repayments of long-term debt
—
—
(480 )
Issuance of long-term debt, net of issuance costs
—
—
5,629
Dividends paid
(130,840 )
(104,697 )
(94,458 )
Payroll tax remitted on net share settlement of equity awards
(9,358 )
(5,681 )
(7,386 )
Other repurchases of common stock
(37,690 )
—
(58,892 )
Proceeds from exercise of stock options
—
—
227
Proceeds from dividend reinvestment and stock purchase plan
4,120
3,815
3,577
Net cash used in financing activities
(886,790 )
(203,295 )
(1,341,121 )
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS
13,708
(3,257 )
163,258
CASH AND DUE FROM BANKS, BEGINNING
561,202
564,459
401,201
CASH AND DUE FROM BANKS, ENDING
$
574,910 $
561,202 $
564,459
SUPPLEMENTAL INFORMATION
Income taxes paid
$
89,635 $
103,190 $
135,193
Interest paid
635,770
487,681
80,076
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans
28,491
4,302
596
See accompanying notes to consolidated financial statements.
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Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements
DESCRIPTION OF BUSINESS
Hancock Whitney Corporation (the “Company”) is a financial services company headquartered in Gulfport, Mississippi that is both a
financial holding company and a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The
Company provides a comprehensive and fully integrated suite of financial choices to customers through its bank subsidiary, Hancock
Whitney Bank (the “Bank”), a Mississippi state bank. The Bank offers a broad range of traditional and online banking services to
commercial, small business and retail customers, providing a variety of transaction and savings deposit products, treasury
management services, secured and unsecured loan products (including revolving credit facilities), and letters of credit and similar
financial guarantees. The Bank also provides access to trust and investment management services to retirement plans, corporations and
individuals, as well as investment advisory and brokerage products. In addition, the Company offers its customers access to fixed
annuity and life insurance products and investment management and other services through its limited purpose broker-dealer
subsidiary, Hancock Whitney Investment Services, Inc., a nonbank subsidiary of the holding company. The Company primarily
operates across the Gulf South region, including southern and central Mississippi; southern and central Alabama; southern, central and
northwest Louisiana; the northern, central, and panhandle regions of Florida; and the certain areas of east and northeast Texas. In
addition, the Company operates loan and deposit production offices in the metropolitan areas of Nashville, Tennessee and Atlanta,
Georgia.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S.
(U.S. GAAP) and those generally practiced within the banking industry. Following is a summary of the more significant accounting
policies.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and all other entities in which the Company has a
controlling interest. Variable interest entities for which the Company has been deemed the primary beneficiary are also consolidated.
Significant intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been
reclassified to conform to the current period presentation.
Use of Estimates
The accounting principles the Company follows and the methods for applying these principles conform to U.S. GAAP and general
practices followed by the banking industry. These accounting principles and practices 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.
Fair Value Accounting
Fair value is generally defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an
orderly transaction between market participants at the measurement date under current market conditions. U.S. GAAP requires the use
of fair values in determining the carrying values of certain assets and liabilities in the financial statements, as well as for specific
disclosures about certain assets and liabilities.
Accounting guidance 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 (level 1) and the lowest priority to unobservable inputs such as a reporting
entity’s own data or information or assumptions developed from this 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.
91
Business Combinations
Business combinations are accounted for under the purchase method of accounting. Purchased assets, including identifiable
intangibles, and assumed liabilities are recorded at their respective acquisition date fair values. If the fair value of net assets purchased
exceeds the consideration given, a bargain purchase gain is recognized. If the consideration given exceeds the fair value of the net
assets received or if the fair value of the net liabilities assumed exceeds the consideration received, goodwill is recognized. Fair values
are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values
becomes available. Acquisition costs are expensed as incurred.
All identifiable intangible assets that are acquired in a business combination are recognized at the acquisition date fair value.
Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e.,
capable of being sold, transferred, licensed, rented, or exchanged separately from the entity).
Cash and Due from Banks
The Company considers only cash on hand, cash items in process of collection and noninterest-bearing balances due from financial
institutions as cash and due from banks.
Securities
Securities are classified as trading, held to maturity or available for sale. Management determines the appropriate classification of debt
and equity securities at the time of purchase and reevaluates this classification periodically as conditions change that could require
reclassification.
Available for sale securities are stated at fair value. Unrealized holding gains and unrealized holding losses are reported net of tax in
other comprehensive income or loss and in accumulated other comprehensive income or loss (AOCI) until realized.
Securities that the Company both positively intends and has the ability to hold to maturity are classified as securities held to maturity
and are carried at amortized cost. The intent and ability to hold are not considered satisfied when a security is available to be sold in
response to changes in interest rates, prepayment rates, liquidity needs or other reasons as part of an overall asset/liability management
strategy.
Premiums and discounts on securities, both those held to maturity and those available for sale, are amortized and accreted to income
as an adjustment to the securities’ yields using the effective interest method. Realized gains and losses on the sale of securities are
reported net as a component of noninterest income. The cost of securities sold is specifically identified for use in calculating realized
gains and losses.
Credit Losses on Securities
At least quarterly, or more often when warranted, the Company performs an assessment of held to maturity debt securities for
expected credit losses and available for sale debt securities for credit-related impairment, resulting in an allowance for credit losses, if
applicable. The Company applies the practical expedient to exclude the accrued interest receivable balance from amortized cost basis
of securities. The allowance for credit losses on held to maturity debt securities is estimated at the individual security level when there
is a more than inconsequential risk of default. The assessment uses probability of default and loss given default models based on
public ratings, where available, or mapped internally developed risk grades to public ratings and forecasted cash flows using the same
economic forecasts and probability weighting as used for the Company’s evaluation of the loan portfolio. Qualitative adjustments to
the output of the quantitative calculation are made when management deems it necessary to reflect differences in current and
forecasted conditions as compared to those during the historical loss period used in model development. The Company evaluates
credit impairment on available for sale debt securities at an individual security level. This evaluation is done for securities whose fair
value is below amortized cost with a more than inconsequential risk of default and where the Company has assessed the decline in fair
value is significant enough to suggest a credit event occurred. Credit events are generally assessed based on adverse conditions
specifically related to the security, an industry, or geographic area, changes in the financial condition of the issuer of the security, or in
the case of an asset-backed debt security, changes in the financial condition of the underlying loan obligors. The allowance for credit
losses for such securities is measured using a discounted cash flow methodology, through which management compares the present
value of expected cash flows with the amortized cost basis of the security. The allowance for credit loss is limited to the amount by
which the fair value is less than the amortized cost basis.
The Company records changes in the allowance for credit losses on securities with a corresponding adjustment recorded in the
provision for credit loss expense. If the Company intends to sell the debt security, or more likely than not will be required to sell the
security before recovery of its amortized cost basis, the security is charged down to fair value against the allowance for credit losses,
with any incremental impairment reported in earnings.
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Loans
Loans Held for Sale
Residential mortgage loans originated for sale are classified as loans held for sale on the Consolidated Balance Sheets. The Company
generally elects the fair value option on funded residential mortgage loans originated for sale that are associated with forward sales
contracts. For mortgage loans for which the Company has elected the fair value option, gains and losses are included in noninterest
income within secondary mortgage market operations.
Held for sale loans also includes residential construction loans that are anticipated to be sold upon completion of the construction
term. At times, management may originate other types of loans with the intent to sell or decide to sell loans that were not originated
for that purpose. Such loans are reclassified as held for sale at the lower of cost or market when that decision is made.
Loans Held for Investment
Loans that the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff are considered loans
held for investment and reported as loans on the Consolidated Balance Sheets and in the related footnote disclosures. Loans held for
investment include loans originated for investment and loans acquired in purchase transactions.
Loans are reported at the principal balance outstanding net of unearned income. Interest on loans and accretion of unearned income,
including net deferred loan fees and costs, are computed in a manner that approximates a level yield on recorded principal. Interest on
loans is recognized in income as earned.
The accrual of interest is discontinued (“nonaccrual status”) when, in management’s opinion, it is probable that the borrower will be
unable to meet payment obligations as they become due, as well as when required by regulatory provisions. When accrual of interest
is discontinued on a loan, all unpaid accrued interest is reversed and payments subsequently received are applied first to recover
principal. Interest income is recognized for payments received after contractual principal has been satisfied. Loans are returned to
accrual status when all the principal and interest contractually due are brought current and future payment performance is reasonably
assured.
Acquired Loans
Acquired loans are segregated between those purchased with credit deterioration (PCD) and those that are not (non-PCD). Loans
considered PCD include those individual loans (or groups of loans with similar risk characteristics) that as of the date of acquisition
are assessed as having experienced a more-than-insignificant deterioration in credit quality since origination. The assessment of what
is more-than-insignificant credit deterioration since origination considers information including, but not limited to, financial assets that
are delinquent, on nonaccrual and/or otherwise adversely risk rated as of the acquisition date, those that have been downgraded since
origination, and those for which, after origination, credit spreads have widened beyond the threshold specified in policy. The
Company bifurcates the fair value discount between the credit and noncredit components and records an allowance for credit losses
for PCD loans by adding the credit portion of the fair value discount to the initial amortized cost basis and increasing the allowance
for credit losses at the date of acquisition. Any noncredit discount or premium resulting from acquiring loans with credit deterioration
is allocated to each individual asset. All non-PCD loans acquired are recorded at the estimated fair value of the loan at acquisition,
with the estimated allowance for credit loss recorded as a provision for credit losses through earnings in the period in which the
acquisition has occurred. The noncredit discount or premium for PCD loans and full discount for non-PCD loans will be accreted to
interest income using the interest method based on the effective interest rate at the acquisition date.
Modifications of Loans to Borrowers Experiencing Financial Difficulties and Troubled Debt Restructurings
As 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. As described in the "Recent
Accounting Pronouncements" that appears later in this footnote, the Company adopted Accounting Standards Update (ASU) 2022-02,
effective January 1, 2023, that requires monitoring and reporting of qualifying modifications, including renewals and refinancings
where the borrowers are experiencing financial difficulties (MEFDs). Qualifying modifications are interest rate reductions, other-than-
insignificant payment delays, term extensions, or any combination of these terms. Our MEFD policy generally considers six months or
less to be the time frame that is considered insignificant for payment delays and/or term extensions. Multiple payment delays and/or
term extensions to borrowers experiencing financial difficulty within a twelve-month period are evaluated collectively. Qualifying
modified loans are subject to reporting requirements for the twelve-month period following the modification. This standard was
adopted on a prospective basis and therefore, only modifications on or after January 1, 2023 are evaluated and reported under the new
requirements.
MEFDs can remain on nonaccrual, move to nonaccrual, return to accrual, or continue to accrue interest, depending on the individual
facts and circumstances of the borrower. The Company has elected to evaluate these modified loans for credit loss consistent with
93
policies for the non-modified portfolio, which includes individually evaluating for specific reserves all nonaccrual MEFDs over our
existing materiality threshold and collectively evaluating credit loss for all other MEFDs, including those that continue to accrue
interest. The credit loss methodology for MEFDs is the same as described in the Allowance for Credit Losses section that follows.
Prior to January 1, 2023, troubled debt restructurings (TDRs) occurred when a borrower was experiencing, or was expected to
experience, financial difficulties in the near-term and a modification of loan terms was granted that would otherwise not have been
considered. Like MEFDs, troubled debt restructurings resulted in loans remaining on nonaccrual, moving to nonaccrual, or continuing
to accrue, depending on the individual facts and circumstances of the borrower. When establishing credit reserves on a loan modified
in a TDR, the loan’s value was determined by either the present value of expected cash flows calculated using the loan’s effective
interest rate before the restructuring, or the loan’s observable market price or the fair value of the collateral if the loan was collateral
dependent. If the value as determined was less than the recorded investment in the loan, the difference was charged off through the
allowance for loan and lease losses.
Allowance for Credit Losses
The allowance for credit losses (ACL) is comprised of the allowance for loan and lease losses (ALLL), a valuation account available
to absorb losses on loans and leases held for investment, and the reserve for unfunded lending commitments, a liability established to
absorb credit losses for the expected life of the contractual term of on and off-balance sheet exposures as of the date of the
determination. Quarterly, management estimates losses in the portfolio and unfunded exposures based on a number of factors,
including the Company’s past loan loss experience, known and potential risks in the portfolio, adverse situations that may affect the
borrowers’ ability to repay, the estimated value of any underlying collateral, and current and forecasted economic conditions.
The analysis and methodology for estimating the ACL includes two primary elements: 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 for credit
loss. For the collective approach, the Company segments loans into commercial non-real estate, commercial real estate – owner
occupied, commercial real estate – income producing, construction and land development, residential mortgage and consumer, with
further segmentation by region and sub-portfolio, as deemed appropriate. Both quantitative and qualitative factors are applied at the
portfolio segment levels. The Company applies the practical expedient that permits the exclusion of the accrued interest receivable
balance from amortized cost basis of financing receivables for all classes of loans as our nonaccrual policy results in the timely write-
off of interest accrued but uncollected.
For the collectively evaluated portfolios, the Company utilizes internally developed credit models and third party economic forecasts
for the calculation of expected credit loss over the reasonable and supportable forecast period for the majority of the portfolio and
other methods, generally historical loss based, for select portfolios. The Company calculates a collective allowance for a two-year
reasonable and supportable forecast period utilizing probability weighted multiple macroeconomic scenarios, and then reverts on a
linear basis over four quarters to an average historical loss rate for the remaining term. The credit models consist primarily of
multivariate regression and autoregressive models that correlate our historical net charge-off rates to select macroeconomic variables
at a collective level. Forward-looking macroeconomic forecasts are applied as inputs to the regression equations to estimate quarterly
collective net charge-off rates over the reasonable and supportable period. The net charge-off rates from the credit models for the
reasonable and supportable period, the linear reversion rates, and the average loss rates for the post reasonable and supportable periods
are applied to forecasted balance runoff for the estimated remaining term. The balance runoff incorporates prepayment assumptions
developed from historical experience that are applied to the multiple macroeconomic forecasts. Forecasted net charge-off rates are also
applied to forecasted draws and subsequent runoff of unfunded commitments in the calculation of the reserve for unfunded lending
commitments. Qualitative adjustments to the output of quantitative calculations are made when management deems it necessary to
reflect differences in current and forecasted conditions as compared to those during the historical loss period used in model
development. Conditions to be considered include, but are not limited to, problem loan trends, current business and economic
conditions, credit concentrations, lending policies and procedures, lending staff, collateral values, loan profiles and volumes, loan
review quality, changes in competition and regulations, and other adjustments for model limitations or other variables not specifically
captured.
The Company establishes specific reserves using an individually evaluated approach for nonaccrual loans and, prior to January 1,
2023, loans modified in troubled debt restructures and loans for which a troubled debt restructure was reasonably expected, as well as
any other financial instruments that are deemed to not share risk characteristics with other collectively evaluated financial assets. For
loans individually evaluated, a specific allowance is recognized for any shortfall between the loan’s value and its recorded investment.
The loan’s value is measured by either the loan’s observable market price, the fair value of the collateral of the loan (less liquidation
costs) if it is collateral dependent, or by the present value of expected future cash flows discounted at the loan’s effective interest rate.
The Company applies the practical expedient and defines collateral dependent loans as those where the borrower is experiencing
financial difficulty and on which repayment is expected to be provided substantially through the operation or sale of the collateral.
Loans individually analyzed are not incorporated into the pool analysis to avoid double counting. The Company limits the individually
94
evaluated specific reserve analysis to include commercial and residential mortgage loans with relationship balances of $1 million or
greater and, prior to January 1, 2023, all loans classified as troubled debt restructurings.
It is the policy of the Company to promptly charge off all commercial and residential mortgage loans, or portions of loans, when
available information reasonably confirms that they are wholly or partially uncollectible. Prior to recording a charge, the loan’s value
is established based on an assessment of the value of the collateral securing the loan, the borrower’s and the guarantor’s ability and
willingness to pay and the status of the account in bankruptcy court, if applicable. Consumer loans are generally charged down when
the loan is 120 days past due for most secured and unsecured loans and 150 days past due for consumer credit card loans, unless the
loan is clearly both well secured and in the process of collection. Loans are charged down to the fair value of the collateral, if any, less
estimated selling costs. Loans are charged off against the allowance for loan losses, with subsequent recoveries added back to the
allowance.
Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation is charged to expense
using the straight-line method over the estimated useful lives of the assets, which are up to 30 years for buildings and three to ten
years for most furniture and equipment. Amortization expense for software is generally charged over three years, or seven years for
core systems. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the
improvements, whichever is shorter. The Company evaluates whether events and circumstances have occurred that indicate that such
long-lived assets have been impaired. Measurement of any impairment of such long-lived assets is based on their fair values.
Property and equipment used in operations is considered held for sale when certain criteria are met, including when management has
committed to a plan to sell the asset, the asset is available for sale in its immediate condition, and the sale is probable within one year
of the reporting date. Assets held for sale are reported at the lower of cost or fair value less costs to sell. Gains and losses related to
retirement or disposition of property and equipment are recorded in the consolidated statements of income as realized, reflected in
either other income under noninterest income or other expense under noninterest expense, depending on the nature of the item.
Operating Leases
The Company recognizes a liability representing the present value of future lease payments (the lease liability) and a right-of-use asset
representing its right to use the underlying asset over the lease term in the Consolidated Balance Sheets.
The Company determines if an arrangement is a lease at inception of the contract and assesses the appropriate classification as finance
or operating. Operating leases with terms greater than one year are included in right-of-use lease assets and lease obligations on the
Company’s Consolidated Balance Sheets. The lease term includes payments to be made in optional or renewal periods only if the
lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Operating lease
right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the
lease term using the interest rate implicit in the contract, when available, or the Company’s incremental collateralized borrowing rate
with similar terms. Agreements with both lease and non-lease components are accounted for separately, with only the lease component
capitalized. The right-of-use asset is the amount of the lease liability adjusted for prepaid or accrued lease payments, remaining
balance of any lease incentives received, unamortized initial direct costs, and impairment. Lease expense is recorded on a straight-line
basis over the lease term through amortization of the right-of-use asset plus implicit interest accreted on the operating lease liability
obligation, and is reflected in net occupancy expense in the Consolidated Statements of Income.
The Company evaluates whether events and circumstances have occurred that indicate right-of-use assets have been impaired.
Measurement of any impairment of such assets is based on their fair values. Once a right-of-use asset for an operating lease is
impaired, the carrying amount of the right-of-use asset is reduced through expense and the remaining balance is subsequently
amortized on a straight-line basis.
Certain of the Company’s leases contain variable components, such as annual changes to rent based on the consumer price index.
Operating lease liabilities are not re-measured as a result of changes to variable components unless the lease must be re-measured for
some other reason such as a renewal that was not reasonably certain of being exercised. Changes to the variable components are
treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.
As allowed in the transition guidance in Topic 842, "Leases," the Company elected to use the standard’s “package of practical
expedients,” which allows the use of previous conclusions about lease identification, lease classification and the accounting treatment
for initial direct costs. The Company also elected the short-term lease recognition exemption for all leases with lease terms of one year
or less; as such, the Company does not recognize right-of-use assets or lease liabilities on the consolidated balance sheet for such
leases.
95
Other Real Estate and Foreclosed Assets
Other real estate and foreclosed assets includes real property and other assets that have been acquired in satisfaction of loans and
leases, and real property no longer used in the Bank’s business. These assets are recorded at the estimated fair value less the estimated
cost of disposition and carried at the lower of either cost or market. Fair value is based on independent appraisals and other relevant
factors. Any initial reduction in the carrying amount of a loan to the fair value of the collateral received less selling costs is charged to
the allowance for loan losses. Each asset is revalued on an annual basis, or more often if market conditions necessitate. Subsequent
losses on the periodic revaluation of these assets and gains or losses recognized on disposition are charged to current earnings, as are
revenues from and costs of operating and maintaining real property; with the resulting net (income) expense reflected in noninterest
expense in the Consolidated Statements of Income. Improvements made to real property are capitalized if the expenditures are
expected to be recovered upon the sale of the property.
Goodwill and Other Intangible Assets
Goodwill represents the excess of consideration paid over the fair value of net assets acquired or the excess of the fair value liabilities
assumed over consideration received in a business combination. Goodwill is not amortized but assessed for impairment on an annual
basis, or more often if events or circumstances indicate there may be impairment. Accounting guidance permits the Company to first
assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If
the Company determines it is more likely than not that the fair value exceeds book value, then a quantitative impairment test is not
necessary. If the Company elects to bypass the qualitative assessment, or concludes that it is more likely than not that the fair value is
less than the carrying value, a quantitative goodwill impairment test is performed. In addition, absent any triggering events,
quantitative impairment test will be performed every three years to ensure goodwill is periodically reviewed within a reasonable
timeframe. The quantitative impairment test compares the estimated fair value of a reporting unit with its net book value. The
Company has assigned all goodwill to one reporting unit that represents overall banking operations. The fair value of the reporting
unit is based on valuation techniques that market participants would use in an acquisition of the whole unit, and may include analysis
such as estimated discounted cash flows, the quoted market price of the Company’s stock adjusted for a control premium, and
observable average price-to-earnings and price-to-book multiples of competitors. If the unit’s fair value is less than its carrying value,
an estimate of the implied fair value of the goodwill is compared to the goodwill’s carrying value, and any impairment is recognized.
Other identifiable intangible assets with finite lives, such as core deposit intangibles, customer lists and trade names, are initially
recorded at fair value and are generally amortized over the periods benefited. These assets are evaluated for impairment in a similar
manner to long-lived assets.
Life Insurance Contracts
Bank-owned life insurance contracts (BOLI) are comprised of long-term life insurance contracts on the lives of certain current and
past employees where the insurance policy benefits and ownership are retained by the employer. Its cash surrender value is an asset
that the Company uses to partially offset the future cost of employee benefits. The cash value accumulation on BOLI is permanently
tax deferred if the policy is held to the insured person’s death and certain other conditions are met.
Federal Home Loan Bank Stock
As a member of the Federal Home Loan Bank (FHLB), the Company is required to purchase and hold shares of capital stock in the
FHLB in an amount equal to a membership investment plus an activity-based investment determined according to the level of
outstanding FHLB advances. The shares are recorded at amortized cost, which approximates fair value, and is reflected in Other
Assets in the Consolidated Balance Sheets.
Derivative Instruments and Hedging Activities
The Company records all derivatives on the Consolidated Balance Sheets at fair value as components of other assets and other
liabilities. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the
Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging
relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the
exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate
risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected
future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for
the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value
of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged
forecasted transactions in a cash flow hedge.
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For derivatives designated as hedging the exposure to changes in the fair value of an asset or liability (fair value hedge), the gain or
loss is recognized in earnings in the period of the fair value change together with the offsetting loss or gain on the hedged item
attributable to the risk being hedged. Derivatives designated as hedging exposure to variable cash flows of a forecasted transaction
(cash flow hedge), are reported as a component of other comprehensive income or loss and subsequently reclassified into earnings
when the forecasted transaction affects earnings or, in certain circumstances, when the hedge is terminated, with the full impact of
hedge gains and losses recognized in the period in which the hedged transaction impacts the entity’s earnings. For derivatives that are
not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately. Note 11 -
Derivatives describes the derivative instruments currently used by the Company and discloses how these derivatives impact the
Company’s financial condition and results of operations.
Stockholders’ Equity
Common stock reflects shares issued at par value. Repurchase of the Company’s common stock (treasury stock) is recorded at cost as
a reduction of stockholders’ equity within capital surplus in the accompanying Consolidated Balance Sheets and the Statements of
Changes in Stockholders’ Equity. When treasury shares are subsequently reissued, treasury stock is reduced by the cost of such stock
using the first-in-first-out method, with the difference recorded in capital surplus or retained earnings, as applicable.
Revenue Recognition
Interest Income
Interest income is recognized on an accrual basis driven by written contracts, such as loan agreements or securities contracts. Loan
origination fees and costs are recognized over the life of the loan as an adjustment to yield. Unamortized premiums, discounts and
other basis adjustments on loans and investment securities are recognized in interest income as a yield adjustment over the contractual
lives. However, premiums for certain callable investment securities are amortized to the earliest call date.
Service Charges on Deposit Accounts
Service charges on deposit accounts include transaction-based fees for nonsufficient funds, account analysis fees, and other service
charges on deposits, including monthly account service fees. Nonsufficient funds fees are recognized at the time when the account
overdraft occurs in accordance with regulatory guidelines. Account analysis fees consist of fees charged on certain business deposit
accounts based upon account activity as well as other monthly account fees, and are recorded under the accrual method of accounting
as services are performed.
Other service charges are earned by providing depositors safeguard and remittance of funds as well as by providing other elective
services for depositors that are performed upon the depositor’s request. Charges for deposit services for the safeguard and remittance
of funds are recognized at the end of the statement cycle, after services are provided, as the customer retains funds in the account.
Revenue for other elective services is earned at the point in time the customer uses the service.
Trust Fees
Trust fee income represents revenue generated from asset management services provided to individuals, businesses, and institutions.
The Company has a fiduciary responsibility to the beneficiary of the trust to perform agreed upon services which can include investing
assets, periodic reporting, and providing tax information regarding the trust. In exchange for these trust and custodial services, the
Company collects fee income from beneficiaries as contractually determined via fee schedules. The Company’s performance
obligation is primarily satisfied over time as the services are performed and provided to the customer. These fees are recorded under
the accrual method of accounting as the services are performed. The Company generally acts as the principal in these transactions and
records revenue and expenses on a gross basis.
Bank Card and Automated Teller Machine (ATM) Fees
Bank card and ATM fees include credit card, debit card and ATM transaction revenue. The majority of this revenue is card
interchange fees earned through a third-party network. Performance obligations are satisfied for each transaction when the card is used
and the funds are remitted. The network establishes interchange fees that the merchant remits for each transaction, and costs are
incurred from the network for facilitating the interchange with the merchant. Card fees also include merchant services fees earned for
providing merchants with card processing capabilities.
ATM income is generated from allowing customers to withdraw funds from other banks’ machines and from allowing a non-customer
cardholder to withdraw funds from the Company’s machines. The Company satisfies its performance obligations for each transaction
at the point in time that the withdrawal is processed.
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Bank card and ATM fee income is recorded on accrual basis as services are provided with the related expense reflected in data
processing expense.
Investment and Annuity Fees and Insurance Commissions
Investment and annuity services fee income represents income earned from investment and advisory services. The Company provides
its customers with access to investment products through the use of third-party carriers to meet their financial needs and investment
objectives. Upon selection of an investment product, the customer enters into a policy with the carrier. The performance obligation is
satisfied by fulfilling its responsibility to process the order to acquire the investment for which a commission fee is earned from either
the carrier or our third-party service provider based on agreed-upon fee percentages on a trade date basis, net of any associated costs.
The Company has a contractual relationship with a third-party broker dealer to provide full-service brokerage and investment advisory
activities. As the agent in the arrangement, the Company recognizes the investment services commissions on a net basis. Investment
revenue also includes portfolio management fees, which represent monthly fees charged on a contractual basis to customers for the
management of their investment portfolios and are recorded under the accrual method of accounting. Prior to August 12, 2022,
investment and annuity services fee income was recorded on a gross basis, with expenses recorded in the appropriate expense line
item; subsequent to that date, such fee income is recorded net of expenses, as the Company is now agent in these transactions
following a change in service providers.
This revenue line item includes investment banking income, which includes fees for services arising from securities offerings or
placements in which the Company acts as a principal. Revenue is recognized at the time the underwriting is completed and the
revenue is reasonably determinable. Any costs associated with these transactions are reflected in the appropriate expense line item.
Insurance commission revenue is recognized as of the effective date of the insurance policy, as the Company’s performance obligation
is connecting the customer to the insurance products. Until August 12, 2022, the Company also received contingent commissions from
insurance companies as additional incentive for achieving specified premium volume goals and/or the loss experience of the insurance
placed. Those fees are no longer earned following the change in service providers. Those contingent commissions from insurance
companies as well as fees for policy renewals are recognized when determinable, which is generally when such commissions are
received or when we receive data from the insurance companies and/or our third-party service provider that allows the reasonable
estimation of these amounts. Prior to August 12, 2022, costs associated with these transactions were reflected in the appropriate
expense line item; subsequent to that date, with the change in service providers, the Company is now agent in these transactions and
expenses are recorded net in this revenue line item.
Secondary Mortgage Market Operations
Secondary mortgage market operations revenue is primarily comprised of service release premiums earned on the sale of closed-end
mortgage loans to other financial institutions or government agencies that are recognized in revenue as each sales transaction occurs.
This revenue line item also includes derivative income associated with our mortgage banking operations. Refer to Note 11 –
Derivatives for a discussion of these derivative instruments.
Securities Transactions
Securities transactions include net realized gain (losses) on securities sold reflecting the excess (deficiency) of proceeds received over
the specifically identified carrying amount of the assets being sold plus cost to sell. Securities sales are recorded as each transaction
occurs on a trade-date basis.
Income from Bank-Owned Life Insurance
Bank-owned life insurance income primarily represents income earned from the appreciation of the cash surrender value of insurance
contracts held and the proceeds of insurance benefits. Revenue from the proceeds of insurance benefits is recognized at the time a
claim is confirmed.
Credit Related Fees
Credit-related fee income is primarily composed of letter of credit fees and unused commercial commitment fees. Revenue for letters
of credit fees is recognized over time. Revenue for unused commercial commitment fees are recognized based on contractual terms,
generally when collected.
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Income from Derivatives
Income from derivatives consists primarily of income from interest rate swaps, net of fair value adjustments for customer derivatives
and the related offsetting agreements with unrelated financial institutions for which the derivative instruments are not designated as
hedges.
Net Gains on Sales of Premises, Equipment and Other Assets
Net gains on sales of premises, equipment and other assets consists primarily of net revenue earned from sales of excess-bank owned
facilities and equipment no longer in use, gains on sales of non-residential mortgage loans and leases and other assets associated with
the equipment finance line of business. Gains or losses are generally recognized when the asset has been legally transferred to the
buyer, net of costs to sell.
Other Miscellaneous Income
Other miscellaneous income represents a variety of revenue streams, including safe deposit box income, wire transfer fees, syndication
fees, and any other income not reflected above. Income is recorded once the performance obligation is satisfied, generally on the
accrual basis or on a cash basis if not material and/or considered constrained.
Advertising Costs
Advertising costs are expensed as incurred and recorded as a component of noninterest expense.
Income Taxes
Income taxes are accounted for using the asset and liability method. Current tax liabilities or assets are recognized for the estimated
income taxes payable or refundable on tax returns to be filed with respect to the current year. Deferred tax assets and liabilities are
based on temporary differences between the financial statement carrying amounts and the tax bases of the Company’s assets and
liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be realized or settled. Valuation allowances are established against deferred tax
assets if, based on all available evidence, it is more likely than not that some or all of the assets will not be realized. The benefit of a
position taken or expected to be taken in a tax return is recognized when it is more likely than not that the position will be sustained on
its technical merits. The effects of changes in tax rates and laws upon deferred tax balances are recognized in the period in which the
legislation is enacted.
The Company makes investments that generate solar investment tax credits (solar ITC). The Company uses the deferral method of
accounting for solar ITC investments whereby the tax benefit from the investment tax credits is recognized as a reduction of the book
basis of the related asset and is amortized into income over the tax life of the underlying investment.
The Company also made investments in projects that yield tax credits issued under the Qualified Zone Academy Bonds (QZAB) and
Qualified School Construction Bonds (QSCB) prior to December 31, 2017, as well as Federal and State New Market Tax Credit
(NMTC) programs. Returns on these investments are generated through the receipt of federal and state tax credits. The tax credits are
recorded as a reduction to the income tax provision in the year that they are earned. Tax credits from QZAB and QSCB bonds are
generally earned over the life of the bonds in lieu of interest income. Credits on Federal NMTC investments are earned over the seven-
year compliance period beginning with the year of investment. Credits on State NMTC investments are generally earned over a three
to five-year period depending upon the specific state program. The Company has elected not to apply the proportional amortization
method to the qualifying NMTC program for any existing and future eligible investments. As such, any investment income, gains and
losses, and tax credits will continue to be presented gross in statement of income, where income and gains and losses on the
investment are reported as a component of pre-tax book income/loss while the tax credits are reported as a component of income tax
expense. The election for any eligible future investments in other tax credit programs will be made at the time of investment.
The Company also invests in affordable housing projects that generate low-income tax credits (LIHTC) 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 to amortize
the investment cost, which approximates the proportional amortization method, over the 10-year tax credit period.
With the exception of QZAB and QSCB tax credits, all of the tax credits described above can be carried back one-year and carried
forward 20 years if the credit cannot be fully used in the year the credits first become available for use. QZAB and QSCB tax credits
generally can be carried forward indefinitely if they cannot be fully used in the year the credits are generated.
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Retirement Benefits
The Company sponsors defined benefit pension plans and certain other defined benefit postretirement plans for eligible employees.
The amounts reported in the consolidated financial statements with respect to these plans are based on actuarial valuations that
incorporate various assumptions regarding future experience under the plans. Note 17 – Retirement Benefit Plans discusses the
actuarial assumptions and provides information about the liabilities or assets recognized for the funded status of the Company’s
obligations under these plans, the net benefit expense charged to current operations, and the amounts recognized as a component of
other comprehensive income or loss and AOCI.
Share-Based Payment Arrangements
The grant date fair value of equity instruments awarded to employees and directors establishes the cost of the services received in
exchange, and the cost associated with awards that are expected to vest is recognized over the requisite service period. Share-based
compensation for service-based awards that contain a graded vesting schedule is recognized on a straight-line basis over the requisite
service period for the entire award. Forfeitures of unvested awards are recognized in earnings in the period in which they occur. Refer
to Note 18 – Share-Based Payment Arrangements for additional information.
Earnings (Loss) per Common Share
The Company computes earnings (loss) per share using the two-class method. The two-class method allocates net income to each class
of common stock and participating security according to the common dividends declared and participation rights in undistributed
earnings. For reporting periods in which a net loss is recorded, net loss is not allocated to participating securities because the holders
of such securities bear no contractual obligation to fund or otherwise share in the loss. Participating securities currently consist of
unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents.
Basic earnings (loss) per common share is computed by dividing income or loss available to common shareholders by the weighted-
average number of common shares outstanding for the applicable period. Shares outstanding exclude treasury shares and unvested
share-based payment awards under long-term incentive compensation plans and directors’ compensation plans. Diluted earnings per
common share is computed using the weighted-average number of common shares outstanding increased by (1) the number of shares
in which employees would vest under performance-based stock awards and stock unit awards based on expected performance factors
and (2) the number of additional shares that would have been issued if potentially dilutive stock options were exercised; each as
determined using the treasury stock method. For reporting periods in which a net loss is recorded, no effect is given to potentially
dilutive shares as the impact of such shares would be anti-dilutive.
Reportable Segment Disclosures
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 the chief operating decision maker in deciding how to allocate resources to
segments. The Company’s stated strategy is to provide a consistent package of banking products and services throughout a coherent
market area; as such, the Company has identified its overall banking operations as its only reportable segment. Because the overall
banking operations comprise substantially all of the Company’s consolidated operations, no separate financial segment disclosures are
presented. See additional segment disclosure information in Note 16 – Segment Reporting.
Other
Assets held by the Bank in a fiduciary capacity are not assets of the Bank and are not included in the Consolidated Balance Sheets.
RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Standards Adopted in 2024
In March 2023, FASB issued Accounting Standards Update (ASU) 2023-02, “Investments – Equity Method and Joint Ventures (Topic
323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method,” to allow reporting entities to
have the option to elect and expand the use of the proportional amortization method of accounting for qualifying tax credit equity
investments structures that meet certain criteria. The Company adopted this standard effective January 1, 2024, and has elected not to
apply the proportional amortization method to the new market tax program, which includes our existing qualifying new market tax
credit investments. The election for any eligible future investments in other tax credit programs will be made at the time of
investment. The adoption of this standard had no impact to the Company’s consolidated results of operations or financial condition.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures.” The amendments in this update improve reportable segment disclosure requirements primarily through enhanced
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disclosures about significant segment expenses and other information, including disclosure of the title and position of the chief
operating decision maker (CODM) and an explanation of how the CODM uses reported measure(s) of segment profit or loss in
assessing segment performance and deciding how to allocate resources. In addition, the update requires entities that have identified a
single reportable segment to provide disclosures required by the amendments in this update and all existing segment disclosures in
Topic 280. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods
within fiscal years beginning after December 15, 2024. The Company adopted this standard effective December 31, 2024 and included
the required disclosures in Note 16 –Segment Reporting. As the update contains only amendments to disclosure requirements,
adoption had no impact to the Company’s consolidated results of operations or financial condition.
Accounting Standards Adopted in 2023 and 2022
In March 2022, the FASB issued ASU 2022-02, "Financial Instruments: Credit Losses (Topic 326) - Troubled Debt Restructurings
and Vintage Disclosures." The amendments in this update cover two matters: (1) the elimination of TDR recognition and measurement
guidance as prescribed by ASC 310-40 and introduced new requirements related to certain modifications of receivables made to
borrowers experiencing financial difficulty; and (2) for public business entities, the requirement that an entity disclose current-period
gross write-offs by year of origination for financing receivables in the vintage disclosures required for public business entities. The
Company adopted this standard effective January 1, 2023, on a prospective basis for all amendments. The adoption of this standard
was not material to the Company’s consolidated results of operations or financial condition. See further discussion of the resulting
changes to our policies in the “Modifications of loans to Borrowers Experiencing Financial Difficulties and Troubled Debt
Restructurings” section of this Note and required disclosures in Note 3 – Loans.
The following additional standards were applicable to the Company and adopted in 2023 and 2022 but did not have a material impact
on the Company’s consolidated financial position or results of operation:
•
ASU 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method"
•
ASU 2022-06, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848"
Accounting Standards Issued But Not Yet Adopted
The following accounting standards were issued and applicable to the Company but have not yet been adopted, and are either not
expected to have a material impact to its consolidated financial position or results of operations or only impacts disclosure
requirements:
In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements,” to modify the disclosure or presentation requirements
related to various subtopics in the FASB Accounting Standards Codification. The ASU was issued in response to the Securities and
Exchange Commission (SEC) August 2018 final rule that updated and simplified disclosure requirements that the SEC believed were
redundant, duplicative, overlapping, outdated, or superseded. The amendments in this update are intended to align U.S. GAAP
requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. The amendments in this update add
14 of the 27 disclosure or presentation requirements identified in the SEC’s final rule to the Codification. However, each amendment
in the ASU will only become effective if the SEC removes the related disclosure or presentation requirement from its existing
regulations by June 30, 2027. For entities subject to the SEC’s existing disclosure requirements, such as the Company, the effective
date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-
K becomes effective, with early adoption prohibited. The amendments in this update should be applied prospectively. The Company is
currently evaluating the provision of this guidance, but expects any applicable provisions to affect only presentation or disclosure and,
therefore, have no effect on its consolidated results of operations or financial condition.
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. Early
adoption is permitted. 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
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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.
Note 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 December 31, 2024 and 2023. Amortized cost of securities does not include
accrued interest which is reflected in the accrued interest line item on the consolidated balance sheets totaling $29.8 million and $27.4
million at December 31, 2024 and December 31, 2023, respectively.
Securities Available for Sale
December 31, 2024
December 31, 2023
Gross
Gross
Gross
Gross
Amortized Unrealized Unrealized
Fair
Amortized
Unrealized Unrealized
Fair
($ in thousands)
Cost
Gains
Losses
Value
Cost
Gains
Losses
Value
U.S. Treasury and government agency
securities
$ 185,827 $
349 $
3,894 $ 182,282 $
97,741 $
1,581 $
1,514 $
97,808
Municipal obligations
200,272
—
3,942
196,330
203,533
79
2,200
201,412
Residential mortgage-backed securities
2,482,109
496
353,554 2,129,051
2,440,411
2,734
329,279
2,113,866
Commercial mortgage-backed securities 2,849,372
2,185
250,592 2,600,965
2,683,872
7,176
253,576
2,437,472
Collateralized mortgage obligations
37,553
—
2,306
35,247
47,661
—
3,376
44,285
Corporate debt securities
19,000
—
1,384
17,616
23,500
—
3,148
20,352
Total
$ 5,774,133 $
3,030 $ 615,672 $ 5,161,491 $ 5,496,718 $
11,570 $ 593,093 $ 4,915,195
Securities Held to Maturity
December 31, 2024
December 31, 2023
Gross
Gross
Gross
Gross
Amortized Unrealized Unrealized
Fair
Amortized
Unrealized Unrealized
Fair
($ in thousands)
Cost
Gains
Losses
Value
Cost
Gains
Losses
Value
U.S. Treasury and government agency
securities
$
394,689 $
— $
45,876 $
348,813 $
413,490 $
179 $ 43,971 $
369,698
Municipal obligations
623,907
169
20,867
603,209
664,488
1,252
19,593
646,147
Residential mortgage-backed securities
573,057
—
61,525
511,532
654,262
—
59,223
595,039
Commercial mortgage-backed securities
818,604
—
72,854
745,750
920,048
—
75,803
844,245
Collateralized mortgage obligations
25,406
—
1,184
24,222
32,491
—
1,702
30,789
Total
$ 2,435,663 $
169 $
202,306 $ 2,233,526 $ 2,684,779 $
1,431 $ 200,292 $ 2,485,918
The Company held no securities classified as trading at December 31, 2024 or 2023.
The following tables present the amortized cost and fair value of debt securities available for sale and held to maturity at December
31, 2024 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.
($ in thousands)
Amortized
Cost
Fair
Value
Debt Securities Available for Sale
Due in one year or less
$
36,791 $
36,914
Due after one year through five years
958,196
924,308
Due after five years through ten years
2,330,532
2,099,062
Due after ten years
2,448,614
2,101,207
Total available for sale debt securities
$
5,774,133 $
5,161,491
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($ in thousands)
Amortized
Cost
Fair
Value
Debt Securities Held to Maturity
Due in one year or less
$
105,692 $
105,035
Due after one year through five years
780,633
740,241
Due after five years through ten years
572,371
535,864
Due after ten years
976,967
852,386
Total held to maturity debt securities
$
2,435,663 $
2,233,526
The following table presents the proceeds from, gross gains on, and gross losses on sales of securities during the years ended
December 31, 2024, 2023 and 2022. Net gains or losses are reflected in the "Securities transactions, net" line item on the Consolidated
Statements of Income.
Years Ended December 31,
($ in thousands)
2024
2023
2022
Proceeds
$
— $
977,114 $
73,219
Gross gains
—
—
—
Gross losses
—
65,380
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During the twelve months ended December 31, 2022, the Company transferred securities with an aggregate fair value of $561.8
million, inclusive of an unrealized loss of $15.4 million, from the available for sale portfolio to the held to maturity portfolio; as such,
the securities were recorded with an amortized cost of $561.8 million within the held to maturity portfolio. The unrealized loss is
reflected in accumulated other comprehensive income and is being amortized to interest income over the remaining lives of the
securities. There were no such transfers in 2024 or 2023.
Securities with carrying values totaling approximately $3.9 billion at December 31, 2024 and $4.7 billion at December 31, 2023 were
pledged as collateral, primarily to secure public deposits or securities sold under agreements to repurchase.
Credit Quality
The Company’s policy is to invest only in securities of investment grade quality. These investments are largely limited to U.S. agency
securities and municipal securities. Management has concluded, based on the long history of no credit losses, that the expectation of
nonpayment of the held to maturity securities carried at amortized cost is zero for securities that are backed by the full faith and credit
of and/or guaranteed by the U.S. government. As such, no allowance for credit losses has been recorded for these securities. The
municipal portfolio is analyzed separately for allowance for credit loss in accordance with the applicable guidance for each portfolio
as noted below.
The Company evaluates credit impairment for individual securities available for sale whose fair value was below amortized cost with
a more than inconsequential risk of default and where the Company had assessed whether the decline in fair value was significant
enough to suggest a credit event occurred. There were no securities with a material credit loss event and therefore, no allowance for
credit loss was recorded in any period presented.
The fair value and gross unrealized losses for securities classified as available for sale with unrealized losses at December 31, 2024 are
presented in the table below.
Available for sale
December 31, 2024
Losses < 12 Months
Losses 12 Months or >
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
($ in thousands)
Value
Losses
Value
Losses
Value
Losses
U.S. Treasury and government agency securities
$
130,453 $
2,243 $
7,247 $
1,651 $
137,700 $
3,894
Municipal obligations
24,149
247
170,110
3,695
194,259
3,942
Residential mortgage-backed securities
347,772
2,935
1,554,001
350,619
1,901,773
353,554
Commercial mortgage-backed securities
184,534
2,738
2,139,191
247,854
2,323,725
250,592
Collateralized mortgage obligations
—
—
35,247
2,306
35,247
2,306
Corporate debt securities
—
—
15,616
1,384
15,616
1,384
Total
$
686,908 $
8,163 $
3,921,412 $
607,509 $
4,608,320 $
615,672
103
The fair value and gross unrealized losses for securities classified as available for sale with unrealized losses at December 31, 2023 are
presented in the table below.
Available for sale
December 31, 2023
Losses < 12 Months
Losses 12 Months or >
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
($ in thousands)
Value
Losses
Value
Losses
Value
Losses
U.S. Treasury and government agency securities
$
— $
— $
7,790 $
1,514 $
7,790 $
1,514
Municipal obligations
49,832
374
128,965
1,826
178,797
2,200
Residential mortgage-backed securities
3,062
25
1,795,154
329,254
1,798,216
329,279
Commercial mortgage-backed securities
—
—
2,227,703
253,576
2,227,703
253,576
Collateralized mortgage obligations
—
—
44,285
3,376
44,285
3,376
Corporate debt securities
—
—
19,852
3,148
19,852
3,148
Total
$
52,894 $
399 $
4,223,749 $
592,694 $
4,276,643 $
593,093
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 at December 31, 2024 are
presented in the table below.
Held to maturity
December 31, 2024
Losses < 12 Months
Losses 12 Months or >
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
($ in thousands)
Value
Losses
Value
Losses
Value
Losses
U.S. Treasury and government agency securities
$
27,660 $
840 $
321,154 $
45,036 $
348,814 $
45,876
Municipal obligations
82,028
451
497,999
20,416
580,027
20,867
Residential mortgage-backed securities
—
—
511,531
61,525
511,531
61,525
Commercial mortgage-backed securities
—
—
745,750
72,854
745,750
72,854
Collateralized mortgage obligations
—
—
24,222
1,184
24,222
1,184
Total
$
109,688 $
1,291 $
2,100,656 $
201,015 $
2,210,344 $
202,306
The fair value and gross unrealized losses for securities classified as held to maturity with unrealized losses at December 31, 2023 are
presented in the table below.
Held to maturity
December 31, 2023
Losses < 12 Months
Losses 12 Months or >
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
($ in thousands)
Value
Losses
Value
Losses
Value
Losses
U.S. Treasury and government agency securities
$
9,530 $
63 $
339,533 $
43,908 $
349,063 $
43,971
Municipal obligations
343,401
1,801
226,165
17,792
569,566
19,593
Residential mortgage-backed securities
—
—
595,039
59,223
595,039
59,223
Commercial mortgage-backed securities
—
—
844,245
75,803
844,245
75,803
Collateralized mortgage obligations
—
—
30,789
1,702
30,789
1,702
Total
$
352,931 $
1,864 $
2,035,771 $
198,428 $
2,388,702 $
200,292
104
At December 31, 2024 and 2023, the Company had 729 and 698 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 December 31, 2024 and 2023. 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.
Note 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 December 31, 2024 and December 31, 2023. The
amortized cost basis is net of unearned income and excludes accrued interest totaling $109.8 million and $124.7 million at December
31, 2024 and 2023, respectively. Accrued interest is reflected in the accrued interest line item in the Consolidated Balance Sheets.
December 31,
($ in thousands)
2024
2023
Commercial non-real estate
$
9,876,592 $
9,957,284
Commercial real estate - owner occupied
3,011,955
3,093,763
Total commercial and industrial
12,888,547
13,051,047
Commercial real estate - income producing
3,798,612
3,986,943
Construction and land development
1,281,115
1,551,091
Residential mortgages
3,961,328
3,886,072
Consumer
1,369,845
1,446,764
Total loans
$
23,299,447 $
23,921,917
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.
Construction and land development
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
105
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
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
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.
The Bank makes loans in the normal course of business to directors and executive officers of the Company and the Bank and to their
associates. Loans to such related parties are made on substantially the same terms, including interest rates and collateral requirements,
as those prevailing at the time for comparable transactions with unrelated parties and do not involve more than normal risk of
collectability when originated. Balances of loans to the Company’s directors, executive officers and their associates at December 31,
2024 and 2023 were approximately $46.2 million and $23.5 million, respectively. Related party loan activity in 2024 reflect new loans
of $25.7 million, repayments of $17.1 million, and a net increase of $14.1 million related to changes in directors and executive officers
and their associates.
The Bank has a line of credit with the Federal Home Loan Bank of Dallas that is secured by blanket pledges of certain qualifying loan
types. The Bank had no borrowings on this line at December 31, 2024 and $0.7 billion at December 31,2023.
LIBOR Transition
Effective July 1, 2023, the London Interbank Offered Rate (LIBOR) is no longer a representative rate for the overnight, one-month,
three-month, six-month, and twelve-month settings. The Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”), signed into law in
March of 2022, offered a federal solution for transitioning legacy instruments that lack sufficient provisions addressing LIBOR’s
cessation by outlining a uniform process to govern the transition from LIBOR to a replacement rate. The Federal Reserve Bank Board,
authorized under the LIBOR Act to issue appropriate and necessary regulations to administer and carry out the purposes of the Act,
issued final regulations which became effective on February 27, 2023. Under the LIBOR Act and the related regulations, the Chicago
Mercantile Exchange Term Secured Overnight Financing Rate (CME Term SOFR) plus a tenor spread adjustment was designated as
the replacement reference rate for instruments that previously referenced LIBOR.
Effective July 3, 2023, approximately $3.1 billion of variable rate loans tied to LIBOR were transitioned in accordance with the
statutory framework established by the Federal Reserve, with the transition rate to be utilized upon the next reset period, in a manner
that is consistent with industry practice. There was no material financial impact from this transition on the Company’s operating
results for the years ended December 31, 2024 or 2023.
106
The following schedules show activity in the allowance for credit losses by portfolio class for the years ended December 31, 2024,
2023 and 2022, as well as the corresponding recorded investment in loans at December 31, 2024, 2023 and 2022.
Commercial
Non-Real
Estate
Commercial
Real Estate-
Owner
Occupied
Total
Commercial
and
Industrial
Commercial
Real Estate-
Income
Producing
Construction
and Land
Development
Residential
Mortgages Consumer
Total
($ in thousands)
Year Ended December 31, 2024
Allowance for credit losses
Allowance for loan losses:
Beginning balance
$
101,737 $
40,197 $
141,934
$
74,539 $
27,039
$
38,983 $
25,412 $
307,907
Charge-offs
(45,488 )
(143 )
(45,631 )
(8,822 )
(264 )
(380 )
(17,987 )
(73,084 )
Recoveries
22,292
1,036
23,328
7
64
595
3,057
27,051
Net provision for loan losses
42,549
(4,826 )
37,723
6,251
(5,681 )
3,247
15,468
57,008
Ending balance - allowance for loan losses
$
121,090
$
36,264
$
157,354
$
71,975
$
21,158
$
42,445
$
25,950 $
318,882
Reserve for unfunded lending commitments:
Beginning balance
$
5,507 $
327 $
5,834
$
1,344 $
20,019
$
30 $
1,667 $
28,894
Provision for losses on unfunded
commitments
934
(18 )
916
(702 )
(5,380 )
(26 )
351
(4,841 )
Ending balance - reserve for unfunded
lending commitments
$
6,441
$
309
$
6,750
$
642
$
14,639
$
4
$
2,018 $
24,053
Total allowance for credit losses
$
127,531
$
36,573
$
164,104
$
72,617
$
35,797
$
42,449
$
27,968 $
342,935
Allowance for credit losses:
Individually evaluated
$
8,672 $
— $
8,672
$
— $
—
$
751 $
197 $
9,620
Collectively evaluated
$
118,859 $
36,573 $
155,432
$
72,617 $
35,797
$
41,698 $
27,771 $
333,315
Commercial
Non-Real
Estate
Commercial
Real Estate-
Owner
Occupied
Total
Commercial
and
Industrial
Commercial
Real Estate-
Income
Producing
Construction
and Land
Development
Residential
Mortgages Consumer
Total
($ in thousands)
Year Ended December 31, 2023
Allowance for credit losses
Allowance for loan losses:
Beginning balance
$
96,461 $
48,284 $
144,745
$
71,961 $
30,498
$
32,464 $
28,121 $
307,789
Charge-offs
(59,830 )
—
(59,830 )
(73 )
(72 )
(55 )
(15,393 )
(75,423 )
Recoveries
6,152
957
7,109
14
11
1,278
3,611
12,023
Net provision for loan losses
58,954
(9,044 )
49,910
2,637
(3,398 )
5,296
9,073
63,518
Ending balance - allowance for loan losses
$
101,737
$
40,197
$
141,934
$
74,539
$
27,039
$
38,983
$
25,412 $
307,907
Reserve for unfunded lending commitments:
Beginning balance
$
4,984 $
302 $
5,286
$
1,395 $
25,110
$
31 $
1,487 $
33,309
Provision for losses on unfunded
commitments
523
25
548
(51 )
(5,091 )
(1 )
180
(4,415 )
Ending balance - reserve for unfunded
lending commitments
$
5,507
$
327
$
5,834
$
1,344
$
20,019
$
30
$
1,667 $
28,894
Total allowance for credit losses
$
107,244
$
40,524
$
147,768
$
75,883
$
47,058
$
39,013
$
27,079 $
336,801
Allowance for credit losses:
Individually evaluated
$
1,666 $
— $
1,666
$
— $
—
$
— $
— $
1,666
Collectively evaluated
$
105,578 $
40,524 $
146,102
$
75,883 $
47,058
$
39,013 $
27,079 $
335,135
Commercial
Non-Real
Estate
Commercial
Real Estate-
Owner
Occupied
Total
Commercial
and
Industrial
Commercial
Real Estate-
Income
Producing
Construction
and Land
Development
Residential
Mortgages Consumer
Total
($ in thousands)
Year Ended December 31, 2022
Allowance for credit losses
Allowance for loan losses:
Beginning balance
$
95,888 $
53,433 $
149,321
$
108,058 $
22,102
$
30,623 $
31,961 $
342,065
Charge-offs
(7,637 )
(948 )
(8,585 )
(1,073 )
(3 )
(137 )
(12,792 )
(22,590 )
Recoveries
11,812
733
12,545
878
134
1,749
5,382
20,688
Net provision for loan losses
(3,602 )
(4,934 )
(8,536 )
(35,902 )
8,265
229
3,570
(32,374 )
Ending balance - allowance for loan losses
$
96,461
$
48,284
$
144,745
$
71,961
$
30,498
$
32,464
$
28,121 $
307,789
Reserve for unfunded lending commitments:
Beginning balance
$
4,522 $
323 $
4,845
$
1,694 $
21,907
$
22 $
866 $
29,334
Provision for losses on unfunded
commitments
462
(21 )
441
(299 )
3,203
9
621
3,975
Ending balance - reserve for unfunded
lending commitments
$
4,984
$
302
$
5,286
$
1,395
$
25,110
$
31
$
1,487 $
33,309
Total allowance for credit losses
$
101,445
$
48,586
$
150,031
$
73,356
$
55,608
$
32,495
$
29,608 $
341,098
Allowance for credit losses:
Individually evaluated
$
71 $
31 $
102
$
16 $
18
$
239 $
101 $
476
Collectively evaluated
$
101,374 $
48,555 $
149,929
$
73,340 $
55,590
$
32,256 $
29,507 $
340,622
107
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. These forecasts are anchored on a baseline
economic forecast, which Moody’s defines as the “most likely outcome” based on current conditions and its view of where the
economy is headed. The baseline scenario is positioned at the 50th percentile of possible outcomes. Several upside and downside
alternative scenarios are also derived from that baseline scenario and considered when assessing reasonably possible outcomes.
The modest net increase in the allowance for credit losses at December 31, 2024 compared to December 31, 2023 reflects higher
coverage across most portfolios, due to the expected impact of stress related to prolonged elevated interest rates and inflation and
other market conditions. In arriving at the allowance for credit losses at December 31, 2024, the Company weighted Moody’s
December 2024 baseline economic forecast at 40% and downside mild recessionary S-2 scenario at 60%. The December 2024
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 mild recession forecasted
starting in the first quarter of 2025 and lasting for three quarters.
The modest decrease in the allowance for credit losses at December 31, 2023 as compared to December 31, 2022 reflected relatively
stable economic conditions, outlook and credit quality metrics for the year. In arriving at the allowance for credit losses at December
31, 2023, the Company weighted the baseline economic forecast at 40%, the downside recessionary scenario S-2 at 60%. The decrease
in the allowance for credit losses at December 31, 2022 as compared to December 31, 2021 reflected improvement in expected
economic conditions. In arriving at the allowance for credit losses at December 31, 2022, the Company weighted the baseline
economic forecast at 25%, the downside recessionary scenario S-2 at 75%.
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 at
December 31, 2024 and 2023.
December 31,
2024
2023
($ in thousands)
Total
Nonaccrual
Nonaccrual
Without
Allowance For
Loan Loss
Total
Nonaccrual
Nonaccrual
Without
Allowance For
Loan Loss
Commercial non-real estate
$
33,418 $
4,855
$
20,840 $
13,637
Commercial real estate - owner occupied
2,727
1,198
2,228
—
Total commercial and industrial
36,145
6,053
23,068
13,637
Commercial real estate - income producing
356
—
461
—
Construction and land development
5,561
4,929
815
—
Residential mortgages
44,086
1,475
26,137
—
Consumer
11,187
500
8,555
—
Total loans
$
97,335 $
12,957
$
59,036 $
13,637
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. As described in Note 1 – Summary
of Significant Accounting Policies and Recent Accounting Pronouncements, accounting and reporting requirements changed related to
such modifications effective January 1, 2023.
Nonaccrual loans include reportable nonaccruing modified loans to borrowers experiencing financial difficulty (MEFDs) of $20.2
million at December 31, 2024 and $0.1 million, at December 31, 2023. Total reportable MEFDs, both accruing and nonaccruing, were
$99.5 million at December 31, 2024 and $24.5 million at December 31, 2023. Unfunded commitments to borrowers whose terms have
been modified as a reportable MEFD were $6.9 million and $0.7 million at December 31, 2024 and 2023, respectively.
108
The tables below provide detail by portfolio class for reportable MEFDs entered into during the years ended December 31, 2024 and
2023. Modified facilities are reported using the balance at the end of each period reported and are reflected only once in each table
based on the type of modification or combination of modification.
Year Ended December 31, 2024
Term Extension
Payment Delay
Term Extensions and
Payment Delay
Other(1)
($ in thousands)
Balance
Percentage
of Portfolio
Balance
Percentage
of Portfolio Balance
Percentage
of Portfolio Balance
Percentage
of
Portfolio
Commercial non-real estate
$ 58,176
0.59 % $ 19,150
0.19 % $ 15,373
0.16% $
758
0.01 %
Commercial real estate - owner occupied
—
—
—
—
—
—
—
—
Total commercial and industrial
58,176
0.45 %
19,150
0.15 %
15,373
0.12%
758
0.01 %
Commercial real estate - income producing
2,741
0.07 %
—
—
—
—
—
—
Construction and land development
—
—
—
—
—
—
—
—
Residential mortgages
3,170
0.08 %
—
—
—
—
—
—
Consumer
131
0.01 %
—
—
—
—
—
—
Total reportable modified loans
$ 64,218
0.28 % $ 19,150
0.08 % $ 15,373
0.07% $
758
0.00 %
(1) Includes interest rate reduction and other than insignificant payment delays.
Year Ended December 31, 2023
Term Extension
Payment Delay
Term Extensions and
Payment Delay
Other(1)
($ in thousands)
Balance
Percentage
of Portfolio
Balance
Percentage
of Portfolio Balance
Percentage
of Portfolio Balance
Percentage
of
Portfolio
Commercial non-real estate
$
7,930
0.08 % $ 4,274
0.04 % $ 9,753
0.10% $
—
—
Commercial real estate - owner occupied
1,774
0.06 %
—
—
—
—
—
—
Total commercial and industrial
9,704
0.07 %
4,274
0.03 %
9,753
0.07%
—
—
Commercial real estate - income producing
—
—
—
—
—
—
—
—
Construction and land development
85
0.01 %
—
—
—
—
—
—
Residential mortgages
254
0.01 %
—
—
—
—
202
0.01 %
Consumer
78
0.01 %
—
—
196
0.01%
—
—
Total reportable modified loans
$
10,121
0.04 % $ 4,274
0.02 % $ 9,949
0.04% $
202
0.00 %
(1) Includes interest rate reduction and other than insignificant payment delays.
Reportable modifications to borrowers experiencing financial difficulty during the year ended December 31, 2024 consisted of
weighted-average term extensions totaling nine months for the commercial portfolio, six years for the residential mortgage portfolio
and four years for the consumer portfolio. The weighted-average term of other than insignificant payment delays for the commercial
portfolio was eight months. The weighted-average interest rate reduction for the commercial portfolio was 50 basis points. Reported
term extensions and payment delays are considered more than insignificant if they exceeded six months when considering other
modifications made in the past twelve months.
Reportable modifications to borrowers experiencing financial difficulty during the year ended December 31, 2023 consisted of
weighted-average term extensions totaling ten months for commercial, ten years for residential mortgage and eight years for
consumer. The weighted-average term of other than insignificant payment delays for the commercial and consumer portfolios was
three months. The weighted-average interest rate reduction for the residential mortgage portfolio was 80 basis points. Reported term
extensions and payment delays are considered more than insignificant if they exceeded six months when considering other
modifications made in the past twelve months.
The tables below present the aging analysis of reportable modifications to borrowers experiencing financial difficulty by portfolio
class at December 31, 2024 and 2023.
109
December 31, 2024
30-59
Days
Past Due
60-89
Days
Past Due
Greater
Than
90 Days
Past Due
Total
Past Due Current
Total
Reportable
Modified
Loans
(in thousands)
Commercial non-real estate
$
1,975
$
— $
12,548
$ 14,523
$ 78,934 $
93,457
Commercial real estate - owner occupied
—
—
—
—
—
—
Total commercial and industrial
1,975
—
12,548
14,523
78,934
93,457
Commercial real estate - income producing
—
826
—
826
1,915
2,741
Construction and land development
—
—
—
—
—
—
Residential mortgages
179
249
501
929
2,241
3,170
Consumer
—
—
—
—
131
131
Total reportable modified loans
$
2,154
$
1,075 $
13,049
$ 16,278
$ 83,221 $
99,499
December 31, 2023
30-59
Days
Past Due
60-89
Days
Past Due
Greater
Than
90 Days
Past Due
Total
Past Due Current
Total
Reportable
Modified
Loans
(in thousands)
Commercial non-real estate
$
3,149
$
233 $
4,430
$
7,812
$ 14,145 $
21,957
Commercial real estate - owner occupied
—
—
—
—
1,774
1,774
Total commercial and industrial
3,149
233
4,430
7,812
15,919
23,731
Commercial real estate - income producing
—
—
—
—
—
—
Construction and land development
—
—
—
—
85
85
Residential mortgages
66
—
—
66
390
456
Consumer
—
—
—
—
274
274
Total reportable modified loans
$
3,215
$
233 $
4,430
$
7,878
$ 16,668 $
24,546
There were seven commercial non-real estate loans totaling $20.8 million and three residential mortgage loans totaling $0.8 million
with a reportable term extension and/or significant payment delay modification that had post modification payment defaults during the
twelve months ended December 31, 2024. There was one commercial non-real estate loan totaling $4.4 million with a reportable term
extension and significant payment delay modification that had a post modification payment default during the twelve months ended
December 31, 2023. 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.
During the year ended December 31, 2022, three residential mortgage loans and three consumer loans with pre and post modification
balances totaling $0.2 million were classified as TDRs. The TDRs modified during the year ended December 31, 2022, included $0.1
million of loans with reduced interest rates and $0.1 million with other modifications. Three commercial non real estate loans totaling
$3.1 million and two residential mortgage loans and four consumer loans totaling $0.3 million with payment defaults during the year
ended December 31, 2022 had been modified in a TDR in the twelve months preceding default.
Aging Analysis
The tables below present the aging analysis of past due loans by portfolio class at December 31, 2024 and 2023.
December 31, 2024
30-59 Days
Past Due
60-89
Days
Past Due
Greater
Than
90 Days
Past Due
Total
Past Due
Current
Total
Loans
Recorded
Investment
> 90 Days
and
Accruing
($ in thousands)
Commercial non-real estate
$
19,326 $
5,264 $
27,756 $
52,346 $ 9,824,246 $ 9,876,592 $
14,557
Commercial real estate - owner occupied
1,113
38
3,747
4,898
3,007,057
3,011,955
1,097
Total commercial and industrial
20,439
5,302
31,503
57,244
12,831,303
12,888,547
15,654
Commercial real estate - income producing
220
5,417
464
6,101
3,792,511
3,798,612
150
Construction and land development
1,066
3,773
5,314
10,153
1,270,962
1,281,115
3,563
Residential mortgages
42,211
25,050
34,113
101,374
3,859,954
3,961,328
27
Consumer
10,770
5,381
8,504
24,655
1,345,190
1,369,845
2,458
Total loans
$
74,706 $
44,923 $
79,898 $
199,527 $ 23,099,920 $ 23,299,447 $
21,852
110
December 31, 2023
30-59 Days
Past Due
60-89
Days
Past Due
Greater
Than
90 Days
Past Due
Total
Past Due
Current
Total
Loans
Recorded
Investment
> 90 Days
and
Accruing
($ in thousands)
Commercial non-real estate
$
12,311 $
4,381 $
21,132 $
37,824 $ 9,919,460 $ 9,957,284 $
5,782
Commercial real estate - owner occupied
1,614
1,596
1,715
4,925
3,088,838
3,093,763
431
Total commercial and industrial
13,925
5,977
22,847
42,749
13,008,298
13,051,047
6,213
Commercial real estate - income producing
3,938
606
408
4,952
3,981,991
3,986,943
—
Construction and land development
1,655
1,220
1,208
4,083
1,547,008
1,551,091
742
Residential mortgages
40,189
9,121
18,960
68,270
3,817,802
3,886,072
172
Consumer
11,059
5,957
6,611
23,627
1,423,137
1,446,764
2,482
Total loans
$
70,766 $
22,881 $
50,034 $
143,681 $ 23,778,236 $ 23,921,917 $
9,609
Credit Quality Indicators
The following tables present the credit quality indicators by segment and portfolio class of loans at December 31, 2024 and 2023.
December 31, 2024
($ in thousands)
Commercial Non-
Real Estate
Commercial
Real
Estate - Owner
Occupied
Total
Commercial
and Industrial
Commercial
Real
Estate - Income
Producing
Construction
and
Land
Development
Total
Commercial
Grade:
Pass
$
9,157,232 $
2,833,228 $ 11,990,460 $
3,625,981 $ 1,207,404 $ 16,823,845
Pass-Watch
219,975
135,566
355,541
99,638
66,221
521,400
Special Mention
149,705
17,901
167,606
22,278
1,014
190,898
Substandard
349,680
25,260
374,940
50,715
6,476
432,131
Doubtful
—
—
—
—
—
—
Total
$
9,876,592 $
3,011,955 $ 12,888,547 $
3,798,612 $ 1,281,115 $ 17,968,274
December 31, 2023
($ in thousands)
Commercial
Non-
Real Estate
Commercial
Real
Estate -
Owner
Occupied
Total
Commercial
and Industrial
Commercial
Real
Estate - Income
Producing
Construction
and
Land
Development
Total
Commercial
Grade:
Pass
$
9,524,018 $ 3,016,277 $ 12,540,295 $
3,799,004 $
1,542,460 $ 17,881,759
Pass-Watch
234,211
52,027
286,238
139,932
7,460
433,630
Special Mention
11,486
6,647
18,133
40,826
356
59,315
Substandard
187,569
18,812
206,381
7,181
815
214,377
Doubtful
—
—
—
—
—
—
Total
$
9,957,284 $ 3,093,763 $ 13,051,047 $
3,986,943 $
1,551,091 $ 18,589,081
December 31, 2024
December 31, 2023
($ in thousands)
Residential
Mortgage
Consumer
Total
Residential
Mortgage
Consumer
Total
Performing
$
3,917,242 $
1,358,658 $
5,275,900 $
3,859,935 $
1,438,209 $ 5,298,144
Nonperforming
44,086
11,187
55,273
26,137
8,555
34,692
Total
$
3,961,328 $
1,369,845 $
5,331,173 $
3,886,072 $
1,446,764 $ 5,332,836
The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management
process. Below are the definitions of the Company’s internally assigned grades:
Commercial:
•
Pass - loans properly approved, documented, collateralized, and performing which do not reflect an abnormal credit risk.
•
Pass - Watch - credits in this category are of sufficient risk to cause concern. This category is reserved for credits that
display negative performance trends. The “Watch” grade should be regarded as a transition category.
111
•
Special Mention - a criticized asset category defined as having potential weaknesses that deserve management’s close
attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the
repayment prospects for the credit or the institution’s credit position. Special mention credits are not considered part of the
Classified credit categories and do not expose an institution to sufficient risk to warrant adverse classification.
•
Substandard - an asset that is inadequately protected by the current sound worth and paying capacity of the obligor or of
the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the
liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the
deficiencies are not corrected.
•
Doubtful - an asset that has all the weaknesses inherent in one classified Substandard with the added characteristic that the
weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly
questionable and improbable.
•
Loss - credits classified as Loss are considered uncollectable and are charged off promptly once so classified.
Residential and Consumer:
•
Performing – accruing loans
•
Nonperforming – loans for which there are good reasons to doubt that payments will be made in full. Nonperforming
loans include all loans with nonaccrual status.
112
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 December 31, 2024 and 2023. The Company defines vintage as the later of origination, renewal
or modification date.
Term Loans
Revolving
Loans
December 31, 2024
Amortized Cost Basis by Origination Year
Revolving Converted to
($ in thousands)
2024
2023
2022
2021
2020
Prior
Loans
Term Loans
Total
Commercial Non-Real Estate:
Pass
$
1,794,904 $
1,069,637 $
1,154,669 $
819,520 $
339,594 $
925,046 $
2,946,499 $
107,363 $ 9,157,232
Pass-Watch
8,466
46,681
43,379
29,193
12,768
9,851
61,076
8,561
219,975
Special Mention
412
21,337
52,375
6,044
6,234
41
62,934
328
149,705
Substandard
19,839
91,192
117,545
15,225
8,200
2,898
65,138
29,643
349,680
Doubtful
—
—
—
—
—
—
—
—
—
Total
$
1,823,621 $
1,228,847 $
1,367,968 $
869,982 $
366,796 $
937,836 $
3,135,647 $
145,895 $ 9,876,592
Gross Charge-offs
$
705 $
7,575 $
7,494 $
11,090 $
213 $
1,837 $
5,952 $
10,622 $
45,488
Commercial Real Estate - Owner Occupied:
Pass
$
365,158 $
319,684 $
537,069 $
524,572 $
433,844 $
554,293 $
97,999 $
609 $ 2,833,228
Pass-Watch
18,937
8,575
66,286
5,547
2,695
29,078
3,727
721
135,566
Special Mention
4,417
410
6,759
3,756
—
2,559
—
—
17,901
Substandard
1,322
2,630
5,574
1,563
1,248
12,923
—
—
25,260
Doubtful
—
—
—
—
—
—
—
—
—
Total
$
389,834 $
331,299 $
615,688 $
535,438 $
437,787 $
598,853 $
101,726 $
1,330 $ 3,011,955
Gross Charge-offs
$
— $
— $
131 $
— $
— $
12 $
— $
— $
143
Commercial Real Estate - Income Producing:
Pass
$
416,947 $
453,428 $
975,075 $
750,907 $
494,925 $
501,389 $
31,673 $
1,637 $ 3,625,981
Pass-Watch
2,586
7,005
43,221
9,399
20,694
16,354
220
159
99,638
Special Mention
20,292
—
1,986
—
—
—
—
—
22,278
Substandard
1,818
18,189
8,604
2,210
19,731
163
—
—
50,715
Doubtful
—
—
—
—
—
—
—
—
—
Total
$
441,643 $
478,622 $
1,028,886 $
762,516 $
535,350 $
517,906 $
31,893 $
1,796 $ 3,798,612
Gross Charge-offs
$
— $
— $
8,819 $
— $
— $
3 $
— $
— $
8,822
Construction and Land Development:
Pass
$
237,136 $
418,002 $
296,286 $
103,259 $
33,519 $
14,477 $
102,694 $
2,031 $ 1,207,404
Pass-Watch
624
2,279
62,415
391
30
323
159
—
66,221
Special Mention
1,014
—
—
—
—
—
—
—
1,014
Substandard
324
796
1,576
3,554
26
200
—
—
6,476
Doubtful
—
—
—
—
—
—
—
—
—
Total
$
239,098 $
421,077 $
360,277 $
107,204 $
33,575 $
15,000 $
102,853 $
2,031 $ 1,281,115
Gross Charge-offs
$
— $
113 $
94 $
30 $
— $
20 $
— $
7 $
264
Residential Mortgage:
Performing
$
161,019 $
422,269 $
1,068,191 $
882,918 $
447,690 $
932,182 $
2,772 $
201 $ 3,917,242
Nonperforming
327
7,724
10,974
6,687
1,199
17,175
—
—
44,086
Total
$
161,346 $
429,993 $
1,079,165 $
889,605 $
448,889 $
949,357 $
2,772 $
201 $ 3,961,328
Gross Charge-offs
$
— $
57 $
189 $
2 $
— $
132 $
— $
— $
380
Consumer Loans:
Performing
$
56,983 $
39,301 $
35,320 $
20,397 $
15,035 $
41,299 $
1,120,027 $
30,296 $ 1,358,658
Nonperforming
51
46
320
639
767
3,442
535
5,387
11,187
Total
$
57,034 $
39,347 $
35,640 $
21,036 $
15,802 $
44,741 $
1,120,562 $
35,683 $ 1,369,845
Gross Charge-offs
$
92 $
1,733 $
2,474 $
1,173 $
180 $
985 $
8,826 $
2,524 $
17,987
113
Term Loans
Revolving
Loans
December 31, 2023
Amortized Cost Basis by Origination Year
Revolving Converted to
($ in thousands)
2023
2022
2021
2020
2019
Prior
Loans
Term Loans
Total
Commercial Non-Real Estate:
Pass
$ 1,557,202 $ 1,812,370 $ 1,106,433 $
483,739 $
398,626 $
923,143 $ 3,186,189 $
56,316 $ 9,524,018
Pass-Watch
30,360
60,228
20,730
8,245
4,988
9,117
94,252
6,291
234,211
Special Mention
411
6,206
936
27
26
836
2,620
424
11,486
Substandard
48,264
48,178
18,882
8,058
3,079
1,660
54,453
4,995
187,569
Doubtful
—
—
—
—
—
—
—
—
—
Total
$ 1,636,237 $ 1,926,982 $ 1,146,981 $
500,069 $
406,719 $
934,756 $ 3,337,514 $
68,026 $ 9,957,284
Gross Charge-offs
$
7,885 $
1,179 $
1,484 $
27,000 $
81 $
1,750 $
11,971 $
8,480 $
59,830
Commercial Real Estate - Owner Occupied:
Pass
$
374,466 $
689,626 $
620,272 $
501,054 $
284,032 $
493,707 $
40,533 $
12,587 $ 3,016,277
Pass-Watch
2,574
9,587
9,654
3,451
8,791
17,581
389
—
52,027
Special Mention
837
—
617
—
110
5,083
—
—
6,647
Substandard
2,322
4,956
967
1,295
584
7,374
1,314
—
18,812
Doubtful
—
—
—
—
—
—
—
—
—
Total
$
380,199 $
704,169 $
631,510 $
505,800 $
293,517 $
523,745 $
42,236 $
12,587 $ 3,093,763
Gross Charge-offs
$
— $
— $
— $
— $
— $
— $
— $
— $
—
Commercial Real Estate - Income Producing:
Pass
$
456,334 $
953,501 $
966,402 $
618,003 $
323,344 $
367,010 $
65,486 $
48,924 $ 3,799,004
Pass-Watch
9,469
3,064
3,886
75,182
23,827
22,504
2,000
—
139,932
Special Mention
156
32,255
—
354
—
8,061
—
—
40,826
Substandard
4,086
1,921
286
—
122
766
—
—
7,181
Doubtful
—
—
—
—
—
—
—
—
—
Total
$
470,045 $
990,741 $
970,574 $
693,539 $
347,293 $
398,341 $
67,486 $
48,924 $ 3,986,943
Gross Charge-offs
$
73 $
— $
— $
— $
— $
— $
— $
— $
73
Construction and Land Development:
Pass
$
388,453 $
676,687 $
248,036 $
62,086 $
6,008 $
18,834 $
139,587 $
2,769 $ 1,542,460
Pass-Watch
3,067
2,820
827
83
128
323
212
—
7,460
Special Mention
294
—
—
—
62
—
—
—
356
Substandard
—
87
96
49
9
279
295
—
815
Doubtful
—
—
—
—
—
—
—
—
—
Total
$
391,814 $
679,594 $
248,959 $
62,218 $
6,207 $
19,436 $
140,094 $
2,769 $ 1,551,091
Gross Charge-offs
$
— $
7 $
54 $
— $
— $
11 $
— $
— $
72
Residential Mortgage:
Performing
$
439,024 $
910,361 $
950,400 $
489,262 $
176,041 $
891,232 $
3,615 $
— $ 3,859,935
Nonperforming
561
2,233
3,260
730
2,366
16,987
—
—
26,137
Total
$
439,585 $
912,594 $
953,660 $
489,992 $
178,407 $
908,219 $
3,615 $
— $ 3,886,072
Gross Charge-offs
$
— $
— $
— $
— $
— $
55 $
— $
— $
55
Consumer Loans:
Performing
$
75,615 $
59,454 $
36,693 $
28,076 $
31,802 $
39,150 $ 1,144,401 $
23,018 $ 1,438,209
Nonperforming
176
237
245
438
445
2,528
369
4,117
8,555
Total
$
75,791 $
59,691 $
36,938 $
28,514 $
32,247 $
41,678 $ 1,144,770 $
27,135 $ 1,446,764
Gross Charge-offs
$
567 $
2,388 $
1,473 $
215 $
573 $
824 $
7,735 $
1,618 $
15,393
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 are $10.5 million and $7.1 million of consumer loans secured by single family
residential real estate that are in process of foreclosure as of December 31, 2024 and 2023, respectively. In addition to the single
family residential real estate loans in process of foreclosure, the Company also held $2.0 million and $1.6 million of foreclosed single
family residential properties in other real estate owned as of December 31, 2024 and 2023, respectively.
Loans Held for Sale
Loans held for sale totaled $21.5 million and $26.1 million, respectively, at December 31, 2024 and 2023. At December 31, 2024,
residential mortgage loans carried at the fair value option totaled $18.9 million with an unpaid principal balance of $18.6 million. All
other loans held for sale are carried at lower of cost or market.
114
Note 4. Property and Equipment
Property and equipment consisted of the following at December 31, 2024 and 2023:
December 31,
($ in thousands)
2024
2023
Land and land improvements
$
63,016 $
63,016
Buildings and leasehold improvements
312,871
310,052
Furniture, fixtures and equipment
128,401
128,567
Software
106,884
105,480
Assets under development
14,557
13,270
Property and equipment, gross
625,729
620,385
Accumulated depreciation and amortization
(345,962 )
(318,746)
Property and equipment, net
$
279,767 $
301,639
Assets under development is comprised primarily of software design and implementation costs.
Depreciation and amortization expense was $32.3 million, $34.7 million and $31.6 million for the years ended December 31, 2024,
2023, and 2022, respectively.
Property and Equipment Held for Sale
Certain of the Company’s property and equipment meet the criteria to be classified as assets held for sale. There were no assets that
met the criteria to be classified as held for sale at December 31, 2024. At December 31, 2023 the Company had $0.3 million of assets
held for sale. These held for sale assets are reported within Other Assets in the consolidated balance sheets. For more information on
the Company’s policy for accounting for assets held for sale, refer to Note 1 – Summary of Significant Accounting Policies and
Recent Accounting Pronouncements.
Note 5. Operating Leases
The Company has operating leases on a number of its branches, certain regional headquarters and other properties to limit its exposure
to ownership risks such as fluctuations in real estate prices and obsolescence. The Company leases real estate with lease terms
generally from five to 20 years, some of which have renewal options from one to 20 years. As these extension options are not
generally considered reasonably certain of renewal, they are not included in the lease term. The Company is not a lessee in any
contracts classified as finance leases.
The following tables present supplemental information pertaining to operating leases at and for the years ended December 31, 2024
and 2023.
Years Ended December 31,
($ in thousands)
2024
2023
Cash paid for amounts included in the measurement of lease liabilities for operating leases
$
16,992
$
16,903
Right of use assets obtained in exchange for lease liabilities
5,749
9,606
December 31,
2024
2023
Weighted-average remaining lease term (in years)
10.40
10.82
Weighted-average discount rate
3.77%
3.66%
115
The following table sets forth the maturities of the Company’s lease liabilities and the present value discount at December 31, 2024.
($ in thousands)
2025
$
17,704
2026
17,029
2027
16,140
2028
14,689
2029
12,397
Thereafter
66,197
Total
$
144,156
Present value discount
(26,339)
Lease liability
$
117,817
The following table sets forth the components of the Company’s lease expense for the years ended December 31, 2024, 2023 and
2022.
Years Ended December 31,
($ in thousands)
2024
2023
2022
Operating lease expense
$
16,358 $
16,545 $
16,881
Short-term lease expense
323
144
209
Variable lease expense
329
243
63
Sublease income
(391)
(403)
(508 )
Total
$
16,619 $
16,529 $
16,645
At December 31, 2024, the Company had not entered into any material leases that had not yet commenced.
Note 6. Goodwill and Other Intangible Assets
Goodwill represents the excess of the consideration paid over the fair value of the net assets acquired or the excess of the fair value of
the net liabilities assumed over the consideration received in a business combination. The carrying amount of goodwill was
$855.5 million at both December 31, 2024 and 2023.
The Company completed its annual impairment test of goodwill as of September 30, 2024 by performing a qualitative (Step Zero)
assessment. The qualitative assessment involved the examination of changes in macroeconomic conditions, industry and market
conditions, overall financial performance, cost factors and other relevant entity-specific events, including changes in management and
other key personnel and changes in the share price of the Company’s common stock. As a result of the assessment, the Company
concluded that its goodwill was not impaired.
No goodwill impairment charges were recognized during the years ended December 31, 2024, 2023 or 2022.
Identifiable intangible assets with finite lives are amortized over the periods benefited and are evaluated for impairment similar to
other long-lived assets. The purchase and carrying values of intangible assets subject to amortization at December 31, 2024 and 2023
were as follows:
December 31, 2024
Purchase
Accumulated
Carrying
($ in thousands)
Value
Amortization
Value
Core deposit intangibles
$
235,845 $
217,260 $
18,585
Credit card and trust relationships
49,962
33,323
16,639
Total
$
285,807 $
250,583 $
35,224
December 31, 2023
Purchase
Accumulated
Carrying
($ in thousands)
Value
Amortization
Value
Core deposit intangibles
$
235,845 $
209,658 $
26,187
Credit card and trust relationships
49,962
31,512
18,450
Total
$
285,807 $
241,170 $
44,637
116
Aggregate amortization expense by category of finite lived intangible assets for the years ended December 31, 2024, 2023, and 2022
are as follows:
Years Ended December 31,
($ in thousands)
2024
2023
2022
Core deposit intangibles
$
7,602 $
9,613 $
11,909
Credit card and trust relationships
1,811
1,943
2,124
Total
$
9,413 $
11,556 $
14,033
At December 31, 2024, the weighted-average remaining life of core deposit intangibles was approximately 7 years, and the weighted-
average remaining life of other identifiable intangibles was approximately 11 years.
The following table shows estimated amortization expense of other intangible assets at December 31, 2024 for the five succeeding
years and all years thereafter, calculated based on current amortization schedules.
($ in thousands)
2025
$
7,985
2026
5,322
2027
3,682
2028
3,306
2029
2,982
Thereafter
11,947
Total
$
35,224
Note 7. Other Assets
Significant balances included in Other Assets in the Consolidated Balance Sheets at December 31, 2024 and 2023 are presented
below.
December 31,
($ in thousands)
2024
2023
Derivative assets
$
73,840
$
90,712
Derivative collateral
64,260
96,176
Investments in small business investment and other companies
61,952
60,686
Investments in low income housing tax credit entities
25,577
29,583
Income tax receivable
19,207
57,761
FHLB stock
11,958
138,994
Other
43,947
42,972
Total
$
300,741
$
516,884
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 and $37.8 million at December
31, 2024 and 2023, respectively, with a carry balance net of accumulated amortization included in the other assets line item on our
Consolidated Balance Sheets totaling $25.6 million and $29.6 million, respectively, for those same periods. The net impact of the low-
income housing tax credit program was not material to our Consolidated Statements of Income or Cash Flows for the years ended
December 31, 2024 and 2023.
117
Note 8. Deposits
The following table presents a detail of deposits at December 31, 2024 and 2023:
December 31,
($ in thousands)
2024
2023
Noninterest-bearing deposits
$
10,597,461 $
11,030,515
Interest-bearing retail transaction and savings deposits
11,327,725
10,680,741
Interest-bearing public fund deposits:
Public fund transaction and savings deposits
3,127,427
3,069,341
Public fund time deposits
85,072
73,674
Total interest-bearing public fund deposits
3,212,499
3,143,015
Retail time deposits
4,348,265
4,246,027
Brokered time deposits
6,901
589,761
Total interest-bearing deposits
18,895,390
18,659,544
Total deposits
$
29,492,851 $
29,690,059
The maturity of time deposits at December 31, 2024 follows.
($ in thousands)
2025
$
4,364,469
2026
50,783
2027
13,367
2028
6,233
2029
4,576
Thereafter
810
Total time deposits
$
4,440,238
Certificates of deposit in amounts greater than or equal to $250,000 totaled approximately $1.7 billion at December 31, 2024.
Note 9. Short-Term Borrowings
The following table presents information concerning short-term borrowings at and for the years ended December 31, 2024 and 2023:
December 31,
($ in thousands)
2024
2023
Federal funds purchased:
Amount outstanding at period end
$
300
$
350
Average amount outstanding during period
12,935
7,525
Maximum amount at any month end during period
200,275
100,350
Weighted-average interest rate at period end
3.90%
4.90%
Weighted-average interest rate during period
5.61%
5.70%
Securities sold under agreements to repurchase:
Amount outstanding at period end
$
638,715
$
454,479
Average amount outstanding during period
639,912
513,306
Maximum amount at any month end during period
792,589
625,773
Weighted-average interest rate at period end
0.95%
1.16%
Weighted-average interest rate during period
1.65%
1.36%
FHLB borrowings:
Amount outstanding at period end
$
—
$
700,000
Average amount outstanding during period
238,593
1,172,603
Maximum amount at any month end during period
650,000
3,100,000
Weighted-average interest rate at period end
0.00%
5.58%
Weighted-average interest rate during period
5.48%
5.05%
Federal funds purchased represent unsecured borrowings from other banks, generally on an overnight basis.
118
Securities sold under agreements to repurchase (“repurchase agreements”) are funds borrowed on a secured basis by selling securities
under agreements to repurchase, mainly in connection with treasury-management services offered to deposit customers. The customer
repurchase agreements mature daily and are secured by agency securities. As the Company maintains effective control over assets sold
under agreements to repurchase, the securities continue to be presented in the Consolidated Balance Sheets. Because the Company
acts as a borrower transferring assets to the counterparty, and the agreements mature daily, the Company’s risk is limited.
The $700 million of FHLB borrowings at December 31, 2023 consists of one fixed rate note entered into on December 29, 2023, that
matured on January 2, 2024.
Note 10. Long-Term Debt
At December 31, 2024 and 2023, long-term debt was comprised of the following:
December 31,
($ in thousands)
2024
2023
Subordinated notes payable, maturing June 2060
$
172,500 $
172,500
Other long-term debt
43,424
69,349
Less: unamortized debt issuance costs
(5,380 )
(5,532)
Total long-term debt
$
210,544 $
236,317
The following table sets forth unamortized debt issuance costs associated with the respective debt instruments at December 31, 2024:
($ in thousands)
Principal
Unamortized
Debt
Issuance Costs
Subordinated notes payable, maturing June 2060
$
172,500 $
5,380
Other long-term debt
43,424
—
Total
$
215,924 $
5,380
On June 9, 2020, the Company completed the issuance of subordinated notes payable with an aggregate principal amount of
$172.5 million, with a stated maturity of June 15, 2060. The notes accrue interest at a fixed rate of 6.25% per annum, with quarterly
interest payments that began September 15, 2020. Subject to prior approval by the Federal Reserve, the Company may redeem the
notes in whole or in part on any interest payment date on or after June 15, 2025. This debt qualifies as tier 2 capital in the calculation
of certain regulatory capital ratios.
All of the Company’s other long-term debt consists of borrowings associated with tax credit fund activities. Although these
borrowings have indicated maturities through 2052, each is expected to be satisfied at the end of the seven-year compliance period for
the related tax credit investments.
Note 11. Derivatives
Risk Management Objective of Using Derivatives
The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of
the Company’s known or expected cash receipts and its known or expected cash payments. The Bank also enters into interest rate
derivative agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these customer
derivatives in order to minimize its net interest rate risk exposure resulting from such agreements. In addition, the Bank also enters
into risk participation agreements under which it may either sell or buy credit risk associated with a customer’s performance under
certain interest rate derivative contracts related to loans in which participation interests have been sold to or purchased from other
banks.
119
Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the notional or contractual amounts and fair values of the Company’s derivative financial instruments as well
as their classification on the consolidated balance sheets at December 31, 2024 and 2023.
December 31, 2024
December 31, 2023
Derivative (1)
Derivative (1)
($ in thousands)
Type of
Hedge
Notional or
Contractual
Amount
Assets
Liabilities
Notional or
Contractual
Amount
Assets
Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps - variable rate loans
Cash Flow $ 1,350,000 $
— $
48,022 $ 1,550,000 $
— $ 73,611
Interest rate swaps - securities
Fair Value
477,500
39,647
—
477,500
22,819
—
$ 1,827,500 $
39,647 $
48,022 $ 2,027,500 $ 22,819 $ 73,611
Derivatives not designated as hedging
instruments:
Interest rate swaps
N/A
$ 4,926,461 $ 108,702 $ 108,761 $ 5,128,144 $ 131,271 $ 129,994
Risk participation agreements
N/A
445,554
7
9
364,906
34
18
Forward commitments to sell residential
mortgage loans
N/A
25,526
—
383
13,355
—
286
Interest rate-lock commitments on residential
mortgage loans
N/A
27,465
420
—
18,563
372
—
To Be Announced (TBA) securities
N/A
15,250
88
1
13,500
—
47
Foreign exchange forward contracts
N/A
82,756
1,389
1,358
83,134
1,864
1,840
Visa Class B derivative contract
N/A
42,020
—
2,089
42,617
—
1,342
$ 5,565,032 $ 110,606 $ 112,601 $ 5,664,219 $ 133,541 $ 133,527
Total derivatives
$ 7,392,532 $ 150,253 $ 160,623 $ 7,691,719 $ 156,360 $ 207,138
Less: netting adjustments (2)
(76,413 )
—
(65,648)
—
Total derivate assets/liabilities
$
73,840 $ 160,623
$ 90,712 $ 207,138
(1)
Derivative assets and liabilities are reported in other assets or other liabilities, respectively, in the consolidated balance sheets.
(2)
Represents balance sheet netting of derivative assets and liabilities for variation margin collateral held or placed with the same central clearing counterparty. See
offsetting assets and liabilities for further information.
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 terminated four and six swap agreements during the twelve months ended December 31, 2024
and 2023, respectively, and paid cash of approximately $13.7 million and $2.9 million, respectively, for those same periods. 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. Using the elections allowed for ASU 2022-06 "Reference Rate
Return (Topic 848)," as amended, the Company converted all of its LIBOR-based swaps to SOFR and replaced the variable rate loan
pools with SOFR based instruments during the second quarter of 2023, with minimal impact to financial results. The notional amounts
of the swap agreements in place at December 31, 2024 expire as follows: $50 million in 2025; $425 million in 2026, $825 million in
2027 and $50 million thereafter.
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 December 31, 2024, these single layer instruments have hedge start dates between January 2025 and
120
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 fair value of the hedging instrument.
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 (formerly referred to as last-of-layer). At December 31, 2024, the
amortized cost basis of the closed portfolio of pre-payable commercial mortgage-backed securities totaled $514.1 million, excluding
any basis adjustment. The amount that represents the hedged items was $437.7 million and the basis adjustment associated with the
hedged items was a loss totaling $39.8 million.
There were no fair value swap agreements terminated during the year ended December 31, 2024. The Company terminated four fair
value swap agreements during the year ended December 31, 2023, and received cash of approximately $19.3 million. The Company
terminated 25 fair value swap agreements during the year ended December 31, 2022, and received cash of approximately $90.6
million. At the time of termination, the value of the swaps was recorded as an adjustment to the book value of the underlying security,
thereby changing its current book yield and extending its duration, if held, or impacting the net gain or loss, if sold.
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.
Risk participation agreements
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
121
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
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.
Visa Class B derivative contract
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. At December 31, 2024
and 2023, the fair value of the liability associated with this contract was $2.1 million and $1.3 million respectively. Refer to Note 20 –
Fair Value of Financial Instruments for discussion of the valuation inputs and process for this derivative liability.
LIBOR Transition
Using the elections allowed for ASU 2022-06 "Reference Rate Return (Topic 848)," as amended, and in accordance with the Federal
Reserve Bank Board’s Final Rule published pursuant to the authority granted under the LIBOR Act, all of the Company’s remaining
derivative instruments with LIBOR based indexes were transitioned to the Fallback Rate SOFR benchmark as recommended by the
International Swap and Derivatives Association effective July 1, 2023. Transitioned LIBOR based instruments included interest rate
swaps and risk participation agreements with notional amounts totaling $3.5 billion and $163.5 million, respectively, at July 1, 2023.
There was no material financial impact to the Company’s operating results from this transition.
Effect of Derivative Instruments on the Statements of Income
The effects of derivative instruments on the Consolidated Statements of Income for the years ended December 31, 2024, 2023, and
2022 are presented in the table below.
122
Years Ended December 31,
($ in thousands)
Derivative Instruments:
Location of Gain (Loss) Recognized
in the Statements of Income:
2024
2023
2022
Cash flow hedges:
Variable rate loans
Interest income - loans
$
(47,944 ) $
(40,714 ) $
9,928
Fair value hedges:
Securities
Interest income - securities -
taxable
12,627
11,945
4,963
Securities - termination
Noninterest income - securities
transactions, net
—
2,725
1,620
Derivatives not designated as hedging:
Residential mortgage banking
Noninterest income - secondary
mortgage market operations
335
753
2,918
Customer and all other instruments
Noninterest income - other
noninterest income
(3,790 )
420
5,832
Total gain (loss)
$
(38,772 ) $
(24,871 ) $
25,261
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. The
Company is 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 December 31, 2024 and 2023 was $39.1 million and $65.6 million,
respectively, for which the Company had posted collateral of $38.0 million and $66.0 million, respectively.
Offsetting Assets and Liabilities
The Bank’s derivative instruments with certain counterparties contain legally enforceable netting provisions that allow for net
settlement of multiple transactions to a single amount, which may be positive, negative, or zero. Agreements with certain bilateral
counterparties require both parties to maintain collateral in the event that the fair values of derivative instruments exceed established
exposure thresholds. For centrally cleared derivatives, the Company is subject to initial margin posting and daily variation margin
exchange with the central clearinghouses. Offsetting information in regards to all derivative assets and liabilities, including accrued
interest subject to these master netting agreements at December 31, 2024 and 2023 is presented in the following tables:
As of December 31, 2024
Gross Amounts
Offset in the
Net Amounts
Presented in
the
Gross Amounts Not Offset in the
Statement of Financial Position
($ in thousands)
Gross
Amounts
Recognized
Statement of
Financial
Position
Statement of
Financial
Position
Financial
Instruments
Cash
Collateral
Net
Amount
Derivative Assets
$
149,808 $
(77,915) $
71,893 $
54,707 $
64,260 $
81,446
Derivative Liabilities
$
54,707 $
— $
54,707 $
54,707 $
— $
—
As of December 31, 2023
Gross Amounts
Offset in the
Net Amounts
Presented in
the
Gross Amounts Not Offset in the
Statement of Financial Position
($ in thousands)
Gross
Amounts
Recognized
Statement of
Financial
Position
Statement of
Financial
Position
Financial
Instruments
Cash
Collateral
Net
Amount
Derivative Assets
$
152,740 $
(68,282) $
84,458 $
84,458 $
— $
—
Derivative Liabilities
$
87,567 $
— $
87,567 $
84,458 $
96,176 $
(93,067)
The Company has excess posted collateral compared to total exposure due to initial margin requirements for day-to-day rate volatility.
123
Note 12. Stockholders’ Equity
Common Shares Outstanding
Common shares outstanding excludes treasury shares totaling 6.7 million and 6.3 million with a first-in-first-out cost basis of $264.1
million and $236.7 million at December 31, 2024 and 2023, respectively. Shares outstanding also excludes unvested restricted share
awards of totaling 0.1 million and 0.3 million at December 31, 2024 and 2023, respectively.
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.
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. During the year ended December 31, 2024, the Company repurchased 762,993 shares of its common stock at an average
cost of $49.40 per share, inclusive of commissions, under this program. No shares were repurchased under this program in 2023. The
Company has accrued $0.1 million of estimated excise tax associated with share repurchases during 2024.
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income or Loss (AOCI) is reported as a component of stockholders’ equity. AOCI can include,
among other items, unrealized holding gains and losses on securities available for sale (AFS), including the Company’s share of
unrealized gains and losses reported by a partnership accounted for under the equity method, gains and losses associated with pension
or other post-retirement benefits that are not recognized immediately as a component of net periodic benefit cost, and gains and losses
on derivative instruments that are designated as, and qualify as, cash flow hedges. Net unrealized gains and losses on AFS securities
reclassified as securities held to maturity (HTM) also continue to be reported as a component of AOCI and will be amortized over the
estimated remaining life of the securities as an adjustment to interest income. Subject to certain thresholds, unrealized losses on
employee benefit plans will be reclassified into income as pension and post-retirement costs are recognized over the remaining service
period of plan participants. Accumulated gains or losses on cash flow hedges of variable rate loans described in Note 11 will be
reclassified into income over the life of the hedge. Accumulated other comprehensive loss resulting from the terminated interest rate
swaps will be amortized over the remaining maturities of the designated instruments. Gains and losses within AOCI are net of
deferred income taxes, where applicable.
124
A rollforward of the components of Accumulated Other Comprehensive Income (Loss) is presented in the table that follows:
($ in thousands)
Available
for Sale
Securities
HTM
Securities
Transferred
from AFS
Employee
Benefit
Plans
Cash Flow
Hedges
Equity
Method
Investment
Total
Balance, December 31, 2021
$
11,037 $
153 $ (80,946) $
16,284 $
(463) $ (53,935 )
Net change in unrealized gain (loss)
(785,538)
—
—
(113,171)
468 (898,241 )
Reclassification of net (gain) loss realized and included in
earnings
1,707
—
2,274
(9,928)
—
(5,947 )
Valuation adjustments to employee benefit plans
—
—
(24,139)
—
—
(24,139 )
Transfer of net unrealized loss from AFS to HTM
securities portfolio
15,405
(15,405 )
—
—
—
—
Amortization of unrealized net loss on securities
transferred to held to maturity
—
1,355
—
—
—
1,355
Income tax benefit
172,981
3,163
4,859
27,722
—
208,725
Balance, December 31, 2022
$ (584,408) $ (10,734 ) $ (97,952) $ (79,093) $
5 $ (772,182 )
Net change in unrealized gain (loss)
104,543
—
—
(13,850)
368
91,061
Reclassification of net loss realized and included in
earnings
68,105
—
6,800
40,714
—
115,619
Valuation adjustments to employee benefit plans
—
—
(13,325)
—
—
(13,325 )
Amortization of unrealized net loss on securities
transferred to held to maturity
—
1,747
—
—
—
1,747
Income tax (expense) benefit
(38,988)
(398 )
1,416
(6,077)
—
(44,047 )
Balance, December 31, 2023
$ (450,748) $
(9,385 ) $ (103,061) $ (58,306) $
373 $ (621,127 )
Net change in unrealized gain (loss)
(31,119)
—
—
(33,678)
(344)
(65,141 )
Reclassification of net loss realized and included in
earnings
—
—
4,888
47,944
—
52,832
Valuation adjustments to employee benefit plans
—
—
28,191
—
—
28,191
Amortization of unrealized net loss on securities
transferred to held to maturity
—
1,670
—
—
—
1,670
Income tax (expense) benefit
8,188
(356 )
(7,253)
(3,096)
—
(2,517 )
Balance, December 31, 2024
$ (473,679) $
(8,071 ) $ (77,235) $ (47,136) $
29 $ (606,092 )
The following table shows the line items in the consolidated statements of income affected by amounts reclassified from AOCI:
Amount reclassified from AOCI (a)
Year Ended December 31,
Increase (Decrease) in Affected Line
($ in thousands)
2024
2023
Item in the Income Statement
Amortization of unrealized net loss on securities transferred to HTM $
(1,670 ) $
1,747
Interest income
Tax effect
356
(398 ) Income taxes
Net of tax
(1,314 )
1,349
Net income
Loss on sale of AFS securities
—
(68,105 ) Securities transactions, net
Tax effect
—
15,380
Income taxes
Net of tax
—
(52,725 ) Net income
Amortization of defined benefit pension and post-retirement items
(4,888 )
(6,800 ) Other noninterest expense
Tax effect
1,072
1,476
Income taxes
Net of tax
(3,816 )
(5,324 ) Net income
Reclassification of unrealized loss on cash flow hedges
(45,537 )
(47,285 ) Interest income
Tax effect
9,882
10,697
Income taxes
Net of tax
(35,655 )
(36,588 ) Net income
Amortization of gain/ (loss) on terminated cash flow hedges
(2,407 )
6,571
Interest income
Tax effect
522
(1,486 ) Income taxes
Net of tax
(1,885 )
5,085
Net income
Total reclassifications, net of tax
$ (42,670 ) $
(88,203 ) Net income
(a)
Amounts in parentheses indicate reduction in net income.
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Regulatory Capital
Measures of regulatory capital are an important tool used by regulators to monitor the financial health of financial institutions. The
primary quantitative measures used to gauge capital adequacy are Common Equity Tier 1, Tier 1 and Total regulatory capital to risk-
weighted assets (risk-based capital ratios) and the Tier 1 capital to average total assets (leverage ratio). Both the Company and the
Bank subsidiary are required to maintain minimum risk-based capital ratios of 8.0% total capital, 4.5% Common Equity Tier 1, and
6.0% Tier 1 capital. The minimum leverage ratio is 3.0% for bank holding companies and banks that meet certain specified criteria,
including having the highest supervisory rating. All others are required to maintain a leverage ratio of at least 4.0%.
To evaluate capital adequacy, regulators compare an institution’s regulatory capital ratios with their agency guidelines, as well as with
the guidelines established as part of the uniform regulatory framework for prompt corrective supervisory action toward financial
institutions. The framework for prompt corrective action categorizes capital levels into one of five classifications rating from well-
capitalized to critically under-capitalized. For an institution to be eligible to be classified as well capitalized its Total risk-based capital
ratios must be at least 10.0% for total capital, 6.5% for Common Equity Tier 1 and 8.0% for Tier 1 capital, and its leverage ratio must
be at least 5.0%. In reaching an overall conclusion on capital adequacy or assigning a classification under the uniform framework,
regulators also consider other subjective and quantitative measures of risk associated with an institution. The Company and the Bank
were deemed to be well capitalized based upon the most recent notifications from their regulators. There are no conditions or events
since those notifications that management believes would change the classifications. At December 31, 2024 and 2023, the Company
and the Bank were in compliance with all of their respective minimum regulatory capital requirements.
Following is a summary of the actual regulatory capital amounts and ratios for the Company and the Bank together with
corresponding regulatory capital requirements at December 31, 2024 and 2023.
Actual
Required for
Minimum Capital
Adequacy
Required
To Be Well
Capitalized
($ in thousands)
Amount
Ratio %
Amount
Ratio %
Amount
Ratio %
At December 31, 2024
Tier 1 leverage capital
Hancock Whitney Corporation
$
3,886,926
11.29 $ 1,377,216
4.00 $ 1,721,520
5.00
Hancock Whitney Bank
3,754,217
10.91 1,376,113
4.00 1,720,142
5.00
Common equity tier 1 (to risk weighted assets)
Hancock Whitney Corporation
$
3,886,926
14.14 $ 1,237,066
4.50 $ 1,786,873
6.50
Hancock Whitney Bank
3,754,217
13.67 1,235,956
4.50 1,785,270
6.50
Tier 1 capital (to risk weighted assets)
Hancock Whitney Corporation
$
3,886,926
14.14 $ 1,649,421
6.00 $ 2,199,228
8.00
Hancock Whitney Bank
3,754,217
13.67 1,647,942
6.00 2,197,256
8.00
Total capital (to risk weighted assets)
Hancock Whitney Corporation
$
4,378,748
15.93 $ 2,199,228
8.00 $ 2,749,036
10.00
Hancock Whitney Bank
4,073,539
14.83 2,197,256
8.00 2,746,570
10.00
At December 31, 2023
Tier 1 leverage capital
Hancock Whitney Corporation
$
3,584,474
10.10
$ 1,419,209
4.00 $ 1,774,011
5.00
Hancock Whitney Bank
3,493,531
9.86
1,417,854
4.00
1,772,318
5.00
Common equity tier 1 (to risk weighted assets)
Hancock Whitney Corporation
$
3,584,474
12.33
$ 1,308,034
4.50 $ 1,889,383
6.50
Hancock Whitney Bank
3,493,531
12.03
1,306,464
4.50
1,887,115
6.50
Tier 1 capital (to risk weighted assets)
Hancock Whitney Corporation
$
3,584,474
12.33
$ 1,744,046
6.00 $ 2,325,394
8.00
Hancock Whitney Bank
3,493,531
12.03
1,741,952
6.00
2,322,603
8.00
Total capital (to risk weighted assets)
Hancock Whitney Corporation
$
4,049,245
13.93
$ 2,325,394
8.00 $ 2,906,743
10.00
Hancock Whitney Bank
3,785,802
13.04
2,322,603
8.00
2,903,254
10.00
The Company elected the five-year rule that provides a full delay of the estimated impact of CECL on regulatory capital transition
(0%) for 2020 and 2021, followed by a three-year transition (25% of the impact included in 2022, 50% in 2023, 75% in 2024 and
100% thereafter). The two-year delay included the full impact of day one CECL plus the estimated impact of current CECL activity
calculated quarterly as 25% of the current ACL over the day one balance (“modified transition amount”). The modified transition
126
amounts were recalculated each quarter in 2020 and 2021, with the December 31, 2021 impact of $24.9 million, plus the day one
impact of $44.1 million (net of tax) carrying through the remaining three years of the transition.
Regulatory Restrictions on Dividends
Regulatory policy statements provide that generally, bank holding companies should pay dividends only out of current operating
earnings and that the level of dividends must be consistent with current and expected capital requirements. Dividends received from
the Bank have been the primary source of funds available to the Company for the payment of dividends to its stockholders. Federal
and State banking laws and regulations restrict the amount of dividends the Bank may distribute to the Company without prior
regulatory approval, as well as the amount of loans it may make to the Company. Dividends paid by the Bank are subject to approval
by the Commissioner of Banking and Consumer Finance of the State of Mississippi. Further, a capital conservation buffer of 2.5%
above each of the minimum capital ratio requirements (Common Equity Tier 1, Tier 1, and Total risk-based capital) must be met for a
bank or bank holding company to be able to pay dividends without restrictions.
Note 13. Other Noninterest Income and Other Noninterest Expense
The components of other noninterest income and other noninterest expense are as follows:
Years Ended December 31,
($ in thousands)
2024
2023
2022
Other noninterest income:
Income from bank-owned life insurance
$
16,944 $
15,454 $
15,881
Credit-related fees
12,036
12,557
10,483
Income (loss) from derivatives
(3,790)
420
5,832
Net gains on sales of premises, equipment and other assets
7,820
19,388
3,096
Other miscellaneous income
26,991
23,617
18,619
Total other noninterest income
$
60,001 $
71,436 $
53,911
Other noninterest expense:
Corporate value and franchise taxes
$
19,002 $
20,355 $
16,744
Advertising
13,298
13,454
13,783
Telecommunication and postage
9,519
10,773
11,870
Entertainment and contributions
11,849
10,664
10,336
Tax credit investment amortization
6,250
5,791
4,768
Travel expenses
5,965
5,469
4,336
Printing and supplies
3,939
4,073
3,795
Other retirement expense
(18,112)
(13,460 )
(29,693 )
Other miscellaneous expense
32,773
31,573
22,256
Total other noninterest expense
$
84,483 $
88,692 $
58,195
Note 14. Income Taxes
Income tax expense (benefit) included in net income consisted of the following components:
Years Ended December 31,
($ in thousands)
2024
2023
2022
Included in net income
Current federal
$
94,382 $
72,884 $
142,433
Current state
14,477
10,656
14,840
Total current provision
108,859
83,540
157,273
Deferred federal
3,648
12,139
(23,556 )
Deferred state
651
1,847
1,390
Total deferred provision
4,299
13,986
(22,166 )
Total expense included in net income
$
113,158 $
97,526 $
135,107
Income tax expense does not reflect the tax effects of amounts recognized in other comprehensive income and in AOCI, a separate
component of stockholders’ equity. These amounts include unrealized gains and losses on securities available for sale or transferred to
held to maturity, unrealized gains and losses on derivatives and hedging transactions, and valuation adjustments of defined benefit and
other post-retirement benefit plans. Refer to Note 12 – Stockholders’ Equity for additional information.
127
Temporary differences arise between the tax bases of assets or liabilities and their carrying amounts for financial reporting purposes.
The expected tax effects from when these differences are resolved are recorded currently as deferred tax assets or liabilities.
Significant components of the Company’s deferred tax assets and liabilities were as follows:
December 31,
($ in thousands)
2024
2023
Deferred tax assets:
Allowance for loan losses
$
80,270 $
76,407
Loan purchase accounting adjustments
—
164
State net operating loss
2,560
3,348
Lease liability
26,686
28,226
Net unrealized losses on securities available-for-sale and cash flow hedges
155,432
148,825
Derivatives
22,840
26,344
Other
14,271
15,553
Gross deferred tax assets
302,059
298,867
Valuation allowance
(4,623 )
(5,145 )
Net deferred tax assets
$
297,436 $
293,722
Deferred tax liabilities:
Employee compensation and benefits
$
(14,708 ) $
(9,895 )
Fixed assets & intangibles
(33,500 )
(28,129 )
Lease financing
(60,354 )
(56,576 )
Right-of-use asset
(22,383 )
(23,773 )
Loan purchase accounting adjustments
(8 )
—
Other
(19,916 )
(21,965 )
Gross deferred tax liabilities
$
(150,869 ) $
(140,338 )
Net deferred tax asset
$
146,567 $
153,384
Reported income tax expense (benefit) differed from amounts computed by applying the statutory income tax rate of 21% for the years
ended December 31, 2024, 2023 and 2022 to earnings or loss before income taxes. Historically, the primary differences have been due
to tax-exempt income, federal and state tax credits and excess tax benefits from stock-based compensation. 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 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). A summary of the factors that impacted income tax expense follows.
2024
2023
2022
($ in thousands)
Amount
%
Amount
%
Amount
%
Taxes computed at statutory rate
$ 120,534
21.0 % $
102,927
21.0 % $
138,431
21.0 %
Increases (decreases) in taxes resulting from:
State income taxes, net of federal income tax
benefit
12,640
2.2 %
10,323
2.1 %
13,272
2.0 %
Tax-exempt interest
(8,443 )
(1.5 %)
(8,755 )
(1.8 %)
(8,612 )
(1.3 %)
Life insurance contracts
(6,017 )
(1.1 %)
(4,020 )
(0.8 %)
(1,812 )
(0.3 %)
Tax credits
(9,453 )
(1.6 %)
(9,443 )
(1.9 %)
(8,039 )
(1.2 %)
Employee share-based compensation
(1,514 )
(0.2 %)
(505 )
(0.1 %)
(2,084 )
(0.3 %)
FDIC assessment disallowance
2,466
0.4 %
2,893
0.6 %
1,836
0.3 %
Impact of deferred tax asset re-measurement
(435 )
(0.1 %)
—
—
—
—
Net operating loss carryback under CARES
act
—
—
—
—
238
0.0 %
Other, net
3,380
0.6 %
4,106
0.8 %
1,877
0.3 %
Income tax expense
$ 113,158
19.7 % $
97,526
19.9 % $
135,107
20.5 %
The Company had approximately $58.3 million in state net operating loss carryforwards that originated in the tax years 2003 through
2024 and begin expiring in 2032. A $58.3 million gross state valuation allowance has been established for all non-bank entity level
128
state net operating loss carryforwards, which translates to a net $2.6 million valuation allowance in the Company’s deferred tax
inventory. The remainder of the allowance is related to deferred executive compensation. The impact of this valuation allowance is not
material to the financial statements.
The tax benefit of a position taken or expected to be taken in a tax return should be recognized when it is more likely than not that the
position will be sustained on its technical merits. The liability for unrecognized tax benefits was immaterial as of December 31, 2024,
2023 and 2022. The Company does not expect the liability for unrecognized tax benefits to change significantly during 2025. The
Company recognizes interest and penalties, if any, related to income tax matters in income tax expense, and the amounts recognized
during 2024, 2023 and 2022 were insignificant.
The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various state returns. Generally,
the federal returns for years prior to 2021 are no longer subject to examination. State returns that are open to examination vary by
jurisdiction and are generally open three to four years.
Note 15. Earnings Per Share
The Company calculates earnings per share using the two-class method. The two-class method allocates net income to each class of
common stock and participating security according to common dividends declared and participation rights in undistributed earnings.
Participating securities consist of nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend
equivalents
A summary of the information used in the computation of earnings per common share follows.
Years Ended December 31,
($ in thousands, except per share data)
2024
2023
2022
Numerator:
Net income to common shareholders
$
460,815 $
392,602 $ 524,089
Net income or dividends allocated to participating securities - basic and diluted
3,027
4,014
7,620
Net income allocated to common shareholders - basic and diluted
$
457,788 $
388,588 $ 516,469
Denominator:
Weighted-average common shares - basic
86,346
86,130
86,068
Dilutive potential common shares
302
293
326
Weighted-average common shares - diluted
86,648
86,423
86,394
Earnings per common share:
Basic
$
5.30 $
4.51 $
6.00
Diluted
$
5.28 $
4.50 $
5.98
Potential common shares consist of stock options, nonvested performance-based awards, nonvested restricted stock units, and
nonvested 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 16,338,
100,391 and 3,116 for the years ended December 31, 2024, 2023 and 2022, respectively, and were excluded from the calculation of
diluted earnings per common diluted share for the respective periods.
Note 16. 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 the 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. The Capital Committee is
comprised of the Chief Executive Officer, Chief Financial Officer, Hancock Whitney Bank President and Chief Operating Officer,
Chief Credit Officer, Chief Risk Officer, Chief Human Resources Officer, and General Counsel. 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.
The Capital Committee primarily uses net income and its components to make operational and financial decisions and manage the
Company. Financial reports utilized include actual results compared to budget, forecasts, prior period results, and peer and analyst
estimates. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary
129
of significant accounting policies found in Note 1 – Summary of Significant Accounting Policies and Recent Accounting
Pronouncements. 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 13 – Other Noninterest Income and 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.
Note 17. Retirement Benefit Plans
The Company sponsors a qualified defined benefit pension plan, the Hancock Whitney Corporation Pension Plan and Trust
Agreement (“Pension Plan”), covering certain eligible associates. Eligibility is based on minimum age and service-related
requirements. In 2017, the Pension Plan was amended to exclude any individual hired or rehired by the Company after June 30, 2017
from eligibility to participate. The Pension Plan amendment further provided that the accrued benefits of each participant in the
Pension Plan whose combined age plus years of service as of January 1, 2018 totaled less than 55 were to be frozen as of January 1,
2018, and not thereafter increase.
The Company makes contributions to this 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 was not required
to make a contribution to the Pension Plan during 2024 or 2023. The Company does not anticipate being required to make a
contribution, nor does it anticipate making a discretionary contribution to the Pension Plan in 2025.
The Company also offers a defined contribution retirement benefit plan (401(k) plan), the Hancock Whitney Corporation 401(k)
Savings Plan and Trust Agreement (“401(k) Plan”), that covers substantially all associates who have been employed 60 days and meet
a minimum age requirement and employment classification criteria. The Company matches 100% of the first 1% of compensation
saved by a participant, and 50% of the next 5% of compensation saved. Newly eligible associates are automatically enrolled at an
initial 3% savings rate unless the associate actively opts out of participation in the plan. The 401(k) Plan was also amended during the
second quarter of 2017 for participants whose benefits were frozen under the Pension Plan to add an enhanced Company contribution
beginning January 1, 2018, in the amount of 2%, 4% or 6% of such participant’s eligible compensation, based on the participant’s age
and years of service with the Company. The 401(k) Plan’s amendment further provided that the Company will contribute to the
benefit of those associates of the Company hired or rehired after June 30, 2017, and those associates of the Company never enrolled in
the Pension Plan an additional basic contribution in an amount equal to 2% of the associate’s eligible compensation beginning January
1, 2018. Participants vest in the new basic and enhanced Company contributions upon completion of three years of service.
The Company’s 401(k) plan matching expense totaled $17.8 million, $17.9 million and $17.3 million for the years ended December
31, 2024, 2023, and 2022, respectively.
Certain associates who were designated executive officers of Whitney Holding Corporation and/or Whitney National Bank before the
acquisition by the Company are also covered by an unfunded nonqualified defined benefit pension plan. The benefits under this
nonqualified plan were designed to supplement amounts to be paid under the defined benefit plan previously maintained for
employees of Whitney Holding Corporation and/or Whitney National Bank (the “Whitney Pension Plan”), and are calculated using the
Whitney Pension Plan’s formula, but without applying the restrictions imposed on qualified plans by certain provisions of the Internal
Revenue Code. Accrued benefits under this plan were frozen as of December 31, 2012 in connection with the merger of the Whitney
Pension Plan into the Company’s qualified defined benefit pension plan, and no future benefits will be accrued under this plan.
The Company also sponsors defined benefit postretirement plans for certain associates. The Hancock postretirement plans are
available only to associates hired by the Company prior to January 1, 2000. The Hancock plans provide health care and life insurance
benefits to retiring associates who participate in medical and/or group life insurance benefit plans for active associates and have
reached 55 years of age with ten years of service, at the time of retirement. The postretirement health care plan is contributory, with
retiree contributions adjusted annually and subject to certain employer contribution maximums.
The Whitney postretirement plans are available only to former employees of Whitney Holding Corporation and/or Whitney National
Bank who meet the eligibility requirements, and offer health care and life insurance benefits for eligible retirees and their eligible
dependents. Participant contributions are required under the health plan. These plans restrict eligibility for postretirement health
benefits to retirees already receiving benefits as of the date of the plan amendments in 2007 and to those active participants who were
eligible to receive benefits as of December 31, 2007 (i.e., were age 55 with ten years of credited service). Life insurance benefits are
currently only available to associates who retired before December 31, 2007.
The Company assumed certain trends in health care costs in the determination of the benefit obligations. The plans assumed a 7%
increase in health costs, increasing to 7.50% in 2025, declining to 6.60% uniformly over a three year period, and then following the
Getzen model thereafter. At December 31, 2024, the mortality assumption was based on Revised RP-2014 Employee and Healthy
Annuitants Bottom Quartile Fully Generational Mortality Table for Males and Females - Projected with Improvement Scale MP-2021.
130
The following tables detail the changes in the benefit obligations and plan assets of the defined benefit plans for the years ended
December 31, 2024 and 2023, as well as the funded status of the plans at each year end and the amounts recognized in the Company’s
Consolidated Balance Sheets. The Company uses a December 31 measurement date for all defined benefit pension plans and other
postretirement benefit plans.
Pension Benefits
Other Post-Retirement
Benefits
($ in thousands)
2024
2023
2024
2023
Change in benefit obligation
Benefit obligation at beginning of year
$
517,648
$
495,746
$
13,404
$
13,796
Service cost
7,707
7,916
31
34
Interest cost
24,047
23,854
578
622
Plan participants' contributions
—
—
608
691
Net actuarial gain (loss)
(35,453 )
15,285
(2,371)
92
Benefits paid
(27,718 )
(25,153)
(1,803)
(1,831)
Benefit obligation, end of year
486,231
517,648
10,447
13,404
Change in plan assets
Fair value of plan assets at beginning of year
723,064
700,535
—
—
Actual return on plan assets
40,388
48,497
—
—
Employer contributions
1,264
1,136
1,196
1,140
Plan participants' contributions
—
—
608
691
Benefit payments
(27,718 )
(25,153)
(1,804)
(1,831)
Expenses
(2,178 )
(1,951)
—
—
Fair value of plan assets, end of year
734,820
723,064
—
—
Funded status at end of year - net asset (liability)
$
248,589
$
205,416
$
(10,447) $
(13,404)
Amounts recognized in accumulated other comprehensive loss
Unrecognized loss (gain) at beginning of year
$
141,049
$
135,243
$
(7,902) $
(8,837)
Net actuarial loss (gain)
(31,725 )
5,806
(1,572)
935
Unrecognized loss (gain) at end of year
$
109,324
$
141,049
$
(9,474) $
(7,902)
Projected benefit obligation
$
486,231
$
517,648
Accumulated benefit obligation
467,634
493,800
Fair value of plan assets
734,820
723,064
The net funded status of $248.6 million for pension benefits plans includes an excess of plan assets over the benefit obligation of
$260.0 million on the defined benefit pension plan, offset by an unfunded benefit obligation of $11.4 million for the nonqualified
retirement plan.
Net actuarial gain is a significant component of the change in the projected benefit obligation of the Pension Plan for the year ended
December 31, 2024. The actuarial gain was primarily driven by a change in the discount rate used in computing the projected benefit
obligation at December 31, 2024.
131
The following table shows net periodic (benefit) cost included in expense and the changes in the amounts recognized in AOCI during
the years ended December 31, 2024, 2023, and 2022.
Pension Benefits
Other Post-Retirement Benefits
($ in thousands)
2024
2023
2022
2024
2023
2022
Net periodic (benefit) cost
Service cost
$ 7,707 $ 7,916 $ 11,438 $
31 $
34 $
59
Interest cost
24,047 23,854
14,639
578
622
375
Expected return on plan assets
(47,626 ) (44,710 )
(46,615 )
—
—
—
Amortization of net (gain) loss/prior service cost
5,687
7,643
2,830
(799 )
(843 )
(650 )
Net periodic benefit
(10,185 )
(5,297 )
(17,708 )
(190 )
(187 )
(216 )
Other changes in plan assets and benefit
obligations recognized in other
comprehensive income, before taxes
Net (loss) gain recognized during the year
(5,687 )
(7,643 )
(2,830 )
799
843
650
Net actuarial loss (gain)
(26,038 ) 13,449
29,952
(2,371 )
92
(5,906 )
Total recognized in other comprehensive
income
(31,725 )
5,806
27,122
(1,572 )
935
(5,256 )
Total recognized in net periodic benefit
cost and other comprehensive income
$ (41,910 ) $
509 $ 9,414
$ (1,762 ) $
748 $ (5,472 )
Discount rate for benefit obligations
5.62 %
4.83 %
5.00 %
5.56 %
4.81 %
4.98 %
Discount rate for net periodic benefit cost
4.83 %
5.00 %
2.77 %
4.81 %
4.98 %
2.32 %
Expected long-term return on plan assets
6.50 %
6.50 %
5.50 %
n/a
n/a
n/a
Rate of compensation increase
scaled * scaled * scaled *
n/a
n/a
n/a
*Graded scale, declining from 7.25% at age 20 to 2.25% at age 65
The long term rate of return on plan assets is determined by using the weighted-average of historical real returns for major asset
classes based on target asset allocations. For all periods presented, the discount rate for the benefit obligation was calculated by
matching expected future cash flows to the USI Consulting Group Pension Discount Curve (AA).
The following table presents expected plan benefit payments over the ten years succeeding December 31, 2024:
($ in thousands)
Pension
Post-Retirement
Total
2025
$
29,213 $
1,008 $
30,221
2026
30,762
827
31,589
2027
32,185
851
33,036
2028
33,433
852
34,285
2029
34,589
818
35,407
2030-2034
185,618
3,709
189,327
.
$
345,800 $
8,065 $
353,865
The expected benefit payments are estimated based on the same assumptions used to measure the Company’s benefit obligations at
December 31, 2024.
The fair values of pension plan assets at December 31, 2024 and 2023, by asset category, are shown in the following tables. The fair
value is presented based on the Financial Accounting Standards Board’s fair value hierarchy that prioritizes inputs into the valuation
techniques used to measure fair value. Level 1 uses quoted prices in active markets for identical assets, Level 2 uses significant
observable inputs, and Level 3 uses significant unobservable inputs. In accordance with Subtopic 820-10 common trust funds are
reported at fair value using net asset value per share (or its equivalent) as a practical expedient and are not classified in the fair value
hierarchy.
132
For all investments, the plan attempts to use quoted market prices of identical assets on active exchanges, or Level 1 measurements.
Where such quoted market prices are not available, the plan will use quoted prices for similar instruments or discounted cash flows to
estimate the value, reported as Level 2.
December 31, 2024
Fair Value Measurements by Asset Category / Fund
Level 1
Level 2
Level 3
Total
($ in thousands)
Cash and equivalents
$
6,357 $
— $
— $
6,357
Total cash and cash equivalents
6,357
—
—
6,357
Fixed income securities
26,476
37,726
—
64,202
Exchange Traded Fund (ETF)-Fixed income
4,133
—
4,133
Total fixed income
30,609
37,726
—
68,335
Domestic and foreign stock
48,279
—
—
48,279
Mutual funds-equity
38,812
—
—
38,812
Total equity
87,091
—
—
87,091
Total assets at fair value
124,057
37,726
—
161,783
Common trust funds (fixed income)
—
—
—
514,562
Common trust fund (real assets)
—
—
—
58,475
Total
$
124,057 $
37,726 $
— $
734,820
December 31, 2023
Fair Value Measurements by Asset Category / Fund
Level 1
Level 2
Level 3
Total
($ in thousands)
Cash and equivalents
$
5,268 $
— $
— $
5,268
Total cash and cash equivalents
5,268
—
—
5,268
Fixed income securities
25,539
38,750
—
64,289
Exchange Traded Fund (ETF)-Fixed income
3,434
—
3,434
Total fixed income
28,973
38,750
—
67,723
Domestic and foreign stock
45,864
—
—
45,864
Mutual funds-equity
95,066
—
—
95,066
Total equity
140,930
—
—
140,930
Total assets at fair value
175,171
38,750
—
213,921
Common trust funds (fixed income)
—
—
—
451,493
Common trust fund (real assets)
—
—
—
57,650
Total
$
175,171 $
38,750 $
— $
723,064
The following table presents the percentage allocation of the plan assets by asset category and corresponding target allocations at
December 31, 2024 and 2023.
Plan Assets
Target Allocation
at December 31,
at December 31,
2024
2023
2024
2023
Asset category:
Cash and equivalents
1 %
1 %
0 - 5%
0 - 5%
Fixed income securities
79
72
8-72%
62-84%
Equity securities
12
19
16-22%
16-22%
Real assets
8
8
4-10%
4-10%
100 %
100 %
133
Plan assets are invested in long-term strategies and evaluated within the context of a long-term investment horizon. Plan assets will be
diversified across multiple asset classes so as to minimize the risk of large losses. Short-term fluctuations in value will be considered
secondary to long-term results. The Company employs a total return approach whereby a diversified mix of asset class investments are
used to maximize the long-term return of plan assets for an acceptable level of risk. Risk tolerance is established through careful
consideration of the plan liabilities, plan funded status and the Company’s financial condition. The investment performance of the plan
is regularly monitored to ensure that appropriate risk levels are being taken and to evaluate returns versus a suitable market
benchmark. The benefits investment committee meets periodically to review the policy, strategy, and performance of the plans.
Note 18. Share-Based Payment Arrangements
The Company maintains incentive compensation plans that incorporate share-based payment arrangements for associates and
directors. The current plan under which share-based awards may be granted, the 2020 Long Term Incentive Plan (the “2020 Plan”),
was approved by the Company’s stockholders at the 2020 annual meeting as a successor to the Company’s 2014 Long-Term Incentive
Plan (the “2014 Plan”). Certain share-based awards remain outstanding under the 2014 Plan and prior equity incentive compensation
plans, but no future awards may be granted thereunder.
The Compensation Committee of the Company’s Board of Directors administers the equity incentive plans, makes determinations
with respect to participation by employees or directors and authorizes the share-based awards. Under the 2020 Plan, participants may
be awarded stock options (including incentive stock options for associates), restricted shares, performance stock awards and stock
appreciation rights, all on a stand-alone, combination or tandem basis. To date, the Committee has awarded stock options, tenure-
based restricted share awards and units, and performance stock units under the 2020 Plan and the prior equity incentive plans.
Under the 2020 Plan, future awards may be granted for the issuance of an aggregate of 3,900,000 shares of the Company’s common
stock, plus a number of additional shares of the Company’s common stock (not to exceed 1,000,000) for which awards under the 2014
Plan are cancelled, expired, forfeited or otherwise not issued, or settled in cash. The 2020 Plan limits the number of shares for which
awards may be granted to any participant during any calendar year to 250,000 shares. The Company may use authorized unissued
shares or shares held in treasury to satisfy awards under the 2020 Plan.
As of December 31, 2024, there were approximately 1.4 million shares available for future issuance under the 2020 equity
compensation plan.
For the years ended December 31, 2024, 2023 and 2022, total share-based compensation expense recognized in income was $22.7
million, $24.7 million and $23.5 million, respectively. The total recognized tax benefit related to the share-based compensation was
$6.3 million, $5.7 million and $7.0 million for 2024, 2023 and 2022, respectively.
A summary of the Company’s nonvested restricted and performance shares for the year ended December 31, 2024 is presented below:
Number of
Shares
Weighted-
Average
Grant-Date
Fair Value
Nonvested at January 1, 2024
1,457,401 $
44.65
Granted
789,726
42.38
Vested
(670,957)
39.08
Cancelled/Forfeited
(184,934)
43.97
Nonvested at December 31, 2024
1,391,236 $
46.14
At December 31, 2024, there was $44.4 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 3.0 years. The fair value of shares that vested during the years ended December 31, 2024 and 2023 totaled
$24.0 million and $18.4 million, respectively.
During the year ended December 31, 2024, the Company granted 550,976 restricted stock units (RSUs) to certain eligible employees.
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.
134
During the year ended December 31, 2024, the Company granted 47,734 performance share awards subject to a total shareholder
return (TSR) performance metric with a grant date fair value of $43.23 per share and 47,734 performance share awards subject to an
adjusted earnings per share performance metric with a grant date fair value of $36.25 per share to key members of executive
management. The number of performance shares 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 50 regional banks. The
fair value of the performance shares subject to TSR at the grant date was determined using a Monte Carlo simulation method. The
number of performance shares subject to adjusted earnings per share that ultimately vest will be based on the Company’s attainment of
certain adjusted earnings per share goals over the two-year performance period. The maximum number of performance shares 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.
Note 19. Commitments and Contingencies
Credit Related
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
require collateral or other credit support. At December 31, 2024 and 2023, the Company had a reserve for unfunded lending
commitments totaling $24.1 million and $28.9 million, respectively.
The following table presents a summary of the Company’s off-balance sheet financial instruments as of December 31, 2024 and
December 31, 2023:
December 31,
($ in thousands)
2024
2023
Commitments to extend credit
$
9,249,468 $
9,852,367
Letters of credit
420,614
481,910
Legal Proceedings
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. In the fourth quarter of 2023, the Company recorded a
pre-tax special assessment expense totaling $26.1 million based on the November 2023 final rule. In 2024, the FDIC provided several
135
notices with updated estimates of losses attributable to the protection of uninsured depositors, extending the collection period by
quarters and necessitating less material adjustments to the expense in the current year.
The loss estimates resulting from the failures of these institutions are 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.
Note 20. Fair Value Measurements
The 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.
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 December 31, 2024 and 2023:
December 31, 2024
($ in thousands)
Level 1
Level 2
Level 3
Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities
$
— $
182,282 $
— $
182,282
Municipal obligations
—
196,330
—
196,330
Corporate debt securities
—
17,616
—
17,616
Residential mortgage-backed securities
—
2,129,051
—
2,129,051
Commercial mortgage-backed securities
—
2,600,965
—
2,600,965
Collateralized mortgage obligations
—
35,247
—
35,247
Total available for sale securities
—
5,161,491
—
5,161,491
Mortgage loans held for sale
—
18,929
—
18,929
Derivative assets (1)
—
73,840
—
73,840
Total recurring fair value measurements - assets
$
— $ 5,254,260 $
— $
5,254,260
Liabilities
Derivative liabilities (1)
$
— $
158,534 $
2,089 $
160,623
Total recurring fair value measurements - liabilities
$
— $
158,534 $
2,089 $
160,623
(1)
For further disaggregation of derivative assets and liabilities, see Note 11 – Derivatives.
136
December 31, 2023
(in thousands)
Level 1
Level 2
Level 3
Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities
$
— $
97,808 $
— $
97,808
Municipal obligations
—
201,412
—
201,412
Corporate debt securities
—
20,352
—
20,352
Residential mortgage-backed securities
—
2,113,866
—
2,113,866
Commercial mortgage-backed securities
—
2,437,472
—
2,437,472
Collateralized mortgage obligations
—
44,285
—
44,285
Total available for sale securities
—
4,915,195
—
4,915,195
Mortgage loans held for sale
—
13,269
—
13,269
Derivative assets (1)
—
90,712
—
90,712
Total recurring fair value measurements - assets
$
— $ 5,019,176 $
— $
5,019,176
Liabilities
Derivative liabilities (1)
$
— $
205,796 $
1,342 $
207,138
Total recurring fair value measurements - liabilities
$
— $
205,796 $
1,342 $
207,138
(1)
For further disaggregation of derivative assets and liabilities, see Note 11 – 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 U.S. investments to 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,
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
137
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 11 – 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 sheet for the years ended December 31, 2024 and
2023 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:
($ in thousands)
Balance at December 31, 2022
$
1,883
Cash settlement
(2,547)
Losses included in earnings
2,006
Balance at December 31, 2023
1,342
Cash settlement
(1,442)
Losses included in earnings
2,189
Balance at December 31, 2024
$
2,089
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 December 31, 2024 were updated in consideration of the recent
exchange offer from Visa.
Level 3 Class
December 31, 2024
December 31, 2023
Derivative liability
$
2,089
$
1,342
Valuation technique
Discounted cash flow
Discounted cash flow
Unobservable inputs:
Visa Class A appreciation - terminal range
6-12%
6-12%
Visa Class A appreciation - at end of reporting period
9%
9%
Conversion rate - range
1.60x-1.56x
1.60x-1.59x
Conversion rate - at end of reporting period
1.5800x
1.5950x
Time until resolution
33-45 months
3-9 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 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 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.
138
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:
December 31, 2024
($ in thousands)
Level 1
Level 2
Level 3
Total
Collateral dependent individually evaluated loans
$
— $
— $
28,301 $
28,301
Other real estate owned and foreclosed assets
—
—
27,797
27,797
Total nonrecurring fair value measurements
$
— $
— $
56,098 $
56,098
December 31, 2023
($ in thousands)
Level 1
Level 2
Level 3
Total
Collateral dependent individually evaluated loans
$
— $
15,882 $
— $
15,882
Other real estate owned and foreclosed assets
—
—
3,628
3,628
Total nonrecurring fair value measurements
$
— $
15,882 $
3,628 $
19,510
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 and 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.
Short-Term FHLB Borrowings – There were no FHLB borrowings at December 31, 2024. FHLB borrowings at December 31, 2023
consisted of short-term fixed rate borrowings (five calendar days outstanding); as such, the carrying amount of the instrument 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.
139
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.
December 31, 2024
Total
Carrying
($ in thousands)
Level 1
Level 2
Level 3
Fair Value
Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold
$ 1,514,216 $
409 $
— $ 1,514,625 $ 1,514,625
Available for sale securities
—
5,161,491
—
5,161,491
5,161,491
Held to maturity securities
—
2,233,526
—
2,233,526
2,435,663
Loans, net
—
—
22,562,577
22,562,577 22,980,565
Loans held for sale
—
21,525
—
21,525
21,525
Derivative financial instruments
—
73,840
—
73,840
73,840
Financial liabilities:
Deposits
$
— $
— $ 29,482,628 $ 29,482,628 $ 29,492,851
Federal funds purchased
—
300
—
300
300
Securities sold under agreements to repurchase
—
638,715
—
638,715
638,715
Long-term debt
—
174,660
—
174,660
210,544
Derivative financial instruments
—
158,534
2,089
160,623
160,623
December 31, 2023
Total
Carrying
($ in thousands)
Level 1
Level 2
Level 3
Fair Value
Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold
$ 1,188,284 $
— $
— $ 1,188,284 $ 1,188,284
Available for sale securities
—
4,915,195
—
4,915,195
4,915,195
Held to maturity securities
—
2,485,918
—
2,485,918
2,684,779
Loans, net
—
15,882
23,170,377
23,186,259 23,614,010
Loans held for sale
—
26,124
—
26,124
26,124
Derivative financial instruments
—
90,712
—
90,712
90,712
Financial liabilities:
Deposits
$
— $
— $ 29,679,228 $ 29,679,228 $ 29,690,059
Federal funds purchased
350
—
—
350
350
Securities sold under agreements to repurchase
454,479
—
—
454,479
454,479
FHLB short-term borrowings
700,000
—
—
700,000
700,000
Long-term debt
—
196,182
—
196,182
236,317
Derivative financial instruments
—
205,796
1,342
207,138
207,138
140
Note 21. Condensed Parent Company Information
The following condensed financial statements reflect the accounts and transactions of Hancock Whitney Corporation only:
Condensed Balance Sheets
December 31,
($ in thousands)
2024
2023
Assets:
Cash
$
272,693 $
218,714
Investment in bank subsidiaries
3,994,927
3,712,718
Investment in non-bank subsidiaries
27,460
29,446
Due from subsidiaries and other assets
3,301
11,628
Total assets
$
4,298,381 $
3,972,506
Liabilities and Stockholders' Equity:
Long term debt
$
167,120 $
166,968
Other liabilities
3,625
1,877
Stockholders' equity
4,127,636
3,803,661
Total liabilities and stockholders' equity
$
4,298,381 $
3,972,506
Condensed Statements of Income
Years Ended December 31,
($ in thousands)
2024
2023
2022
Operating income
From subsidiaries:
Cash dividends received from bank subsidiaries
$
205,000
$
185,000
$
180,000
Cash dividend from nonbank subsidiary
6,000
—
2,500
Equity in earnings of subsidiaries greater than dividends received
265,188
222,731
355,853
Total operating income
476,188
407,731
538,353
Other expense, net
19,828
19,587
17,708
Income tax benefit
(4,455)
(4,458)
(3,444)
Net income
$
460,815
$
392,602
$
524,089
Other comprehensive income (loss), net of tax
15,035
151,055
(718,247)
Comprehensive income (loss)
$
475,850
$
543,657
$
(194,158 )
Condensed Statements of Cash Flows
Years Ended December 31,
($ in thousands)
2024
2023
2022
Cash flows from operating activities - principally
dividends received from subsidiaries
$
227,125
$
198,093
$
192,816
Net cash provided by operating activities
227,125
198,093
192,816
Cash flows from investing activities:
Proceeds from sale of premises and equipment
320
—
855
Net cash provided by investing activities
320
—
855
Cash flows from financing activities:
Dividends paid to stockholders
(130,840 )
(104,697 )
(94,458 )
Repurchase of common stock
(37,690 )
—
(58,892 )
Proceeds from dividend reinvestment and other incentive plans
4,422
3,815
3,972
Payroll tax remitted on net share settlement of equity awards
(9,358 )
(5,681 )
(7,386 )
Net cash used in financing activities
(173,466 )
(106,563 )
(156,764 )
Net increase in cash
53,979
91,530
36,907
Cash, beginning of year
218,714
127,184
90,277
Cash, end of year
$
272,693
$
218,714
$
127,184
141
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as
amended (the Exchange Act). The rules refer to our controls and other procedures that are designed to ensure that information required
to be disclosed in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to
our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions
regarding required disclosure.
Management, including our principal executive officer and principal financial officer, has performed an evaluation of the effectiveness
of our disclosure controls and procedures and based on that evaluation, our principal executive officer and principal financial officer
have concluded that our disclosure controls and procedures were effective as of December 31, 2024.
Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Rule 13a-15(f) under the Exchange Act, designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. The Company’s management, with the participation of its principal executive and principal financial officers, evaluated the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 based on the framework set forth in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management also conducted an assessment of requirements pertaining to Section 112 of the Federal Deposit Insurance Corporation
Improvement Act. This section relates to management’s evaluation of internal control over financial reporting, including controls over
the preparation of the schedules equivalent to the basic financial statements in accordance with the instructions to the Consolidated
Financial Statements for Bank Holding Companies (Form Y-9C) and compliance with specific laws and regulations. Our evaluation
included a review of the documentation of controls, evaluations of the design of the internal control system and tests of the
effectiveness of internal controls.
PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the Company’s consolidated financial
statements included in Item 8. “Financial Statements and Supplementary Data,” has issued an attestation report on the Company’s
internal control over financial reporting, which is also included in Item 8.
Based on the foregoing evaluation, management concluded that the Company’s internal control over financial reporting was effective
as of December 31, 2024.
There was no change in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2024 that
has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Pursuant to Item 408(a) of Regulation S-K, none of our directors or executive officers adopted, terminated or modified a Rule 10b5-1
trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended December 31, 2024.
Hancock Whitney Corporation will hold its Annual Meeting of Shareholders of common stock virtually on Wednesday, April 23,
2025, at 11:00 a.m. Central Daylight Time. Additional information about the Annual Meeting, including the matters to be considered,
will be set forth in the Company’s definitive proxy statement for the 2025 Annual Meeting to be filed in due course with the SEC.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
142
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning our directors will appear in our definitive proxy statement to be filed with the Securities and Exchange
Commission for our 2025 annual meeting of the shareholders under the caption, “Information about Our Directors.” Information
concerning compliance with Section 16(a) of the Exchange Act will appear in our proxy statement under the caption, "Delinquent
Section 16(a) Reports.” Information concerning our code of business ethics for officers and associates, our code of ethics for financial
officers, and our code of ethics for directors will appear in our proxy statement under the caption “Transactions with Related Persons.”
Information concerning our audit committee will appear in our proxy statement under the caption “Board of Directors and Corporate
Governance – Board Committees – Audit Committee.” The information set forth under each such caption is incorporated herein by
reference. The information required by Item 10 of this Report regarding our executive officers appears in a separately captioned
heading in Item 1 of this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 402, Item 407(e)(4) and Item 407(e)(5) of Regulation S-K will appear in our definitive proxy
statement relating to our 2025 annual meeting of shareholders and is incorporated herein by reference.
The Company has adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by
directors, officers and associates of the Company and its subsidiaries and their immediate family members (collectively, "Insiders")
and any other individuals whom the Company may designate as Insiders because they have access to material nonpublic information
concerning the Company. A copy of our insider trading policy is filed as Exhibit 19 to this Annual Report on Form 10-K for the fiscal
year ended December 31, 2024. In addition, with regard to the Company’s trading its own securities, it is the Company's policy to
comply with federal securities laws and the applicable exchange listing requirements.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information concerning ownership of certain beneficial owners and management will appear in our definitive proxy statement relating
to our 2025 annual meeting of shareholders under the caption “Security Ownership of Certain Beneficial Owners and Management.”
The information set forth under each such caption is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information concerning certain relationships and related transactions will appear in our definitive proxy statement relating to our 2025
annual meeting of shareholders under the caption “Transactions with Related Persons.” Information concerning director independence
will appear in our proxy statement under the caption “Board of Directors and Corporate Governance.” The information set forth under
each such caption is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company’s independent registered public accounting firm is PricewaterhouseCoopers LLP, New Orleans, LA, Auditor Firm ID
238.
Information concerning principal accountant fees and services will appear in our definitive proxy statement relating to our 2025
annual meeting of shareholders under the caption “Independent Registered Public Accounting Firm.” Such information is incorporated
herein by reference.
143
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this Report:
1.
The following consolidated financial statements of Hancock Whitney Corporation and subsidiaries are filed as part of this
Report under Item 8. “Financial Statements and Supplementary Data”:
Consolidated Balance Sheets – December 31, 2024 and 2023
Consolidated Statements of Income – Years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Other Comprehensive Income – Years ended December 31, 2024, 2023, and 2022
Consolidated Statements of Changes in Stockholders’ Equity– Years ended December 31, 2024, 2023, and 2022
Consolidated Statements of Cash Flows –Years ended December 31, 2024, 2023, and 2022
Notes to Consolidated Financial Statements – December 31, 2024
2.
Financial schedules required to be filed by Item 8 of this Report, and by Item 15(d) below:
The schedules to the consolidated financial statements set forth by Article 9 of Regulation S-X are not required under the related
instructions or are inapplicable and, therefore, have been omitted.
3.
Exhibits required to be filed by Item 601 of Regulation S-K, and by Item 15(b) below.
All other financial statements and schedules are omitted as the required information is inapplicable or the required information is
presented in the consolidated financial statements or related notes.
144
EXHIBIT INDEX
Exhibit
Number
Description
3.1
Second Amended and Restated Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s 8-K
(File No. 001-36872) filed with the Commission on May 1, 2020 and incorporated herein by reference).
3.2
Second Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to the Company’s 8-K (File No. 001-
36872) filed with the Commission on May 1, 2020 and incorporated herein by reference).
4.1
Specimen stock certificate of the Company (reflecting change in par value from $10.00 to $3.33, effective March 6,
1989) (filed as Exhibit 4 to the Company’s registration statement on Form S-8 (File No. 333-11831) filed with the
Commission on September 12, 1996 and incorporated herein by reference).
4.2
Indenture, dated as of March 9, 2015, between Hancock Holding Company and The Bank of New York Mellon Trust
Company, N.A. (incorporated by reference to Exhibit 4.1 to Hancock Whitney Corporation’s Current Report on Form
8-Kfiled with the Securities and Exchange Commission on March 9, 2015).
4.3
Supplemental Indenture, dated as of June 2, 2020, between Hancock Whitney Corporation and The Bank of New York
Mellon Trust Company, N.A. (filed as Exhibit 4.2 to the Company’s Form 8-K (File No. 001-36872) filed with the
Commission on June 2, 2020 and incorporated herein by reference).
4.4
Form of Global Note representing the 6.25% Subordinated Notes due 2060 (filed as Exhibit 4.3 to the Company’s Form
8-K (File No. 001-36872) filed with the Commission on June 2, 2020 and incorporated herein by reference).
*10.1
2014 Long Term Incentive Plan (filed as Exhibit 10.1 to the Company’s Form 8-K (File No. 0-13089) filed with the
Commission on April 21, 2014 and incorporated herein by reference).
*10.2
Amendment to the Hancock Holding Company 2014 Long Term Incentive Plan (filed as Appendix A of the Company’s
definitive Proxy Statement on Schedule 14A (File No. 001-36872) filed with the Commission on March 17, 2017 and
incorporated herein by reference).
*10.3
Hancock Whitney Corporation 2020 Long Term Incentive Plan (filed as Exhibit 10.1 to the Company’s Form 8-K (File
Number 001-36872) filed with the Commission on May 1, 2020 and incorporated herein by reference).
*10.4
Amendment to the Hancock Whitney Corporation 2020 Long Term Incentive Plan (filed as Appendix B of the
Company’s definitive Proxy Statement on Schedule 14A (File No. 001-36872) filed with the Commission on March 15,
2022 and incorporated herein by reference).
*10.5
Hancock Whitney Corporation 2010 Nonqualified Deferred Compensation Plan, restated effective May 25, 2018 (filed
as Exhibit 99.3 to the Company’s Form S-8 (File No. 333-258295) filed with the Commission on July 30, 2021 and
incorporated herein by reference).
*10.6
Hancock Whitney Corporation 2010 Employee Stock Purchase Plan, amended and restated effective July 1, 2018 (filed
as Exhibit 99.2 to the Company’s Form S-8 (file No. 333-258295) filed with the Commission on July 30, 2021 and
incorporated herein by reference).
*10.7
Form of Change in Control Employment Agreement between the Company and certain named executive officers
effective January 1, 2021 (filed as exhibit 10.7 to the Company’s Form 10-K for the year ended December 31, 2022
(File No. 001-36872) filed with the Commission on February 27, 2023 and incorporated by reference).
*10.8
Hancock Whitney Corporation Executive Incentive Plan effective January 1, 2022 (filed as exhibit 10.8 to the
Company’s Form 10-K for the year ended December 31, 2022 (File No. 001-36872) filed with the Commission on
February 27, 2023 and incorporated by reference).
*10.9
Insurance Plan and Summary Plan Description, adopted by the Company effective July 1, 2014 (filed as Exhibit 10.20
to the Company’s Form 10-K for the year ended December 31, 2014 (File No. 0-13089) filed with the Commission on
February 27, 2015 and incorporated herein by reference).
*10.10
Form of Restricted Common Stock Award Agreement effective January 1, 2020 (filed as exhibit 10.10 to the
Company’s Form 10-K for the year ended December 31, 2022 (File No. 001-36872) filed with the Commission on
February 27, 2023 and incorporated by reference).
*10.11
Form of Restricted Stock Unit Award Agreement effective January 1, 2022 (filed as exhibit 10.11 to the Company’s
Form 10-K for the year ended December 31, 2022 (File No. 001-36872) filed with the Commission on February 27,
2023 and incorporated by reference).
145
*10.12
Form of Performance Stock Unit Award Agreement effective January 1, 2020 (filed as exhibit 10.12 to the Company's
Form 10-K for the year ended December 31, 2022 (File No. 001-36872) filed with the Commission on February 27,
2023 and incorporated by reference).
*10.13
Form of Performance Stock Unit Award Agreement effective January 1, 2022 (filed as exhibit 10.13 to the Company’s
Form 10-K for the year ended December 31, 2022 (File No. 001-36872) filed with the Commission on February 27,
2023 and incorporated by reference).
**19
Hancock Whitney Corporation Insider Trading Policy
**21.1
Subsidiaries of the Company.
**23.1
Consent of PricewaterhouseCoopers LLP.
**31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange
Act of 1934, as amended.
**31.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange
Act of 1934, as amended.
**32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
**32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
97
Hancock Whitney Corporation Compensation Recoupment Policy (filed as exhibit 97 to the Company's Form 10-K for
the year ended December 31, 2023 (File No 001-36872) filed with the Commission on February 28, 2024 and
incorporated by reference) Compensation Recoupment Policy
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL
tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).
*
Compensatory plan or arrangement.
**
Filed with this Form 10-K.
146
ITEM 16. FORM 10-K SUMMARY
Not applicable.
147
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HANCOCK WHITNEY CORPORATION
Registrant
February 26, 2025
By:
/s/ John M. Hairston
Date
John M. Hairston
President & Chief Executive Officer
(Principal Executive Officer)
February 26, 2025
By:
/s/ Michael M. Achary
Date
Michael M. Achary
Senior Executive Vice President & Chief Financial Officer
(Principal Financial Officer)
148
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Jerry L. Levens
Jerry L. Levens
Chairman of the Board, Director
February 26, 2025
/s/ Frank E. Bertucci
Frank E. Bertucci
Director
February 26, 2025
/s/ Moses H. Feagin Sr.
Moses H. Feagin Sr.
Director
February 26, 2025
/s/ Hardy B. Fowler
Director
February 26, 2025
Hardy B. Fowler
/s/ Randall W. Hanna
Randall W. Hanna
Director
February 26, 2025
/s/ Suzette K. Kent
Director
February 26, 2025
Suzette K. Kent
/s/ H. Merritt Lane III
H. Merritt Lane III
Director
February 26, 2025
/s/ Constantine S. Liollio
Constantine S. Liollio
Director
February 26, 2025
/s/ Sonya C. Little
Sonya C. Little
Director
February 26, 2025
/s/ Thomas H. Olinde
Thomas H. Olinde
Director
February 26, 2025
/s/ Sonia A. Pérez
Sonia A. Pérez
Director
February 26, 2025
/s/ Christine L. Pickering
Christine L. Pickering
Director
February 26, 2025
/s/ Joan C. Teofilo
Joan C. Teofilo
Director
February 26, 2025
/s/ C. Richard Wilkins
C. Richard Wilkins
Director
February 26, 2025
[This page intentionally left blank]
[This page intentionally left blank]
Corporate Information
Annual Meeting
The annual meeting of shareholders will be held at 11:00 a.m. Central Time,
Wednesday, April 23, 2025, virtually.
Corporate Offices
Hancock Whitney Plaza
2510 14th Street
Gulfport, MS 39501
228-868-4000
800-522-6542
Subsidiaries of Hancock Whitney Corporation
Hancock Whitney Bank
Hancock Whitney Equipment Finance, LLC
Hancock Whitney Equipment Financing and Leasing, LLC
Hancock Whitney Investment Services, Inc.
Hancock Whitney New Markets Fund, LLC
Hancock Insurance Agency
Common Stock
The company’s common stock is traded on the Nasdaq Global Select Market
under the symbol HWC.
Stockholder Information
Shareholders seeking information may call the transfer agent at
888-490-1239, email HelpAST@equiniti.com, access the website at
www.equiniti.com, or write:
Equiniti Trust Company, LLC
55 Challenger Road 2nd Floor
Ridgefield Park, NJ 07660
Shareholders may also contact the company directly by emailing
shareholderservices@hancockwhitney.com.
Dividend Reinvestment and Stock Purchase Plan
Shareholders seeking full details about the plan may call 888-490-1239,
email HelpAST@equiniti.com, access the website at www.equiniti.com,
or write:
Equiniti Trust Company, LLC
55 Challenger Road 2nd Floor
Ridgefield Park, NJ 07660
Cash Dividend Direct Deposit
Shareholders may elect to have their Hancock Whitney Corporation dividends
directly deposited into a checking, savings, or money market account. This
service provides a safe, convenient method of receiving dividends and
is offered at no cost to shareholders. To obtain more information and an
enrollment form, call 888-490-1239, email HelpAST@equiniti.com, access
the website at www.equiniti.com, or write:
Equiniti Trust Company, LLC
55 Challenger Road 2nd Floor
Ridgefield Park, NJ 07660
Financial Information
Copies of Hancock Whitney Corporation financial reports, including its
Annual Report on Form 10-K filed with the Securities and Exchange
Commission, are available without charge upon request to:
Kathryn Shrout Mistich
Vice President
Investor Relations Manager
Hancock Whitney Corporation
P.O. Box 4019
Gulfport, MS 39502-4019
InvestorRelations@hancockwhitney.com
Earnings releases and other financial information about the company are
available on the company’s Investor Relations website:
investors.hancockwhitney.com
Board of Directors
Jerry L. Levens*
Frank E. Bertucci
Moses H. Feagin, Sr.
Hardy B. Fowler
John M. Hairston
Randall W. Hanna
Suzette K. Kent
H. Merritt Lane, III
Constantine “Dean” S. Liollio
Sonya C. Little
Thomas H. Olinde
Sonia A. Pérez
Christine L. Pickering
Joan C. Teofilo
C. Richard Wilkins
Corporate & Affiliate Bank Officers**
John M. Hairston
President & CEO
Michael M. Achary
Chief Financial Officer
D. Shane Loper
President, Hancock Whitney Bank
& Chief Operating Officer
Joshua R. Caldwell
Chief Internal Auditor
Cindy S. Collins
Chief Compliance Officer
Alan M. Ganucheau
Treasurer
Juanita P. Kuhner
General Counsel &
Corporate Secretary
Emory L. Mayfield
Chief Consumer Banking Officer
Miles S. Milton
Chief Wealth Management Officer
Eric S. Obeck
Chief Commercial Banking Officer
Michael Otero
Chief Risk Officer
Rudi Hall Thompson
Chief Human Resources Officer
Christopher S. Ziluca
Chief Credit Officer
*Independent Chairman of the Board
**As of December 31, 2024
Your Dream. Our Mission.
hancockwhitney.com
Personal Responsibility
Teamwork
Commitment to Service
Strength & Stability
Honor & Integrity
We conduct business in accordance with
these core values: