HANCOCK WHITNEY CORP

Previous wording

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 three months ended March 31, 2025 and selected comparable 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 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. Forward-looking statements 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. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q and in other reports or documents that we file from time to time with the SEC include, but are not limited to, the following:

Current wording

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 six months ended June 30, 2025 and selected comparable 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 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. Forward-looking statements 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. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q and in other reports or documents that we file from time to time with the SEC include, but are not limited to, the following:

Previous wording

uncertainties surrounding geopolitical events, trade policy, taxation policy, and monetary policy which continue to impact the outlook for future economic growth; impacts from recently announced U.S. imposition of tariffs against China, Mexico, Canada and other nations; consideration of responsive actions by these nations, including retaliatory tariffs, 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, including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, impacts from decreased international tourism, decreased demand for other banking products and services, and negative credit quality developments arising from the foregoing or other factors;

Current wording

uncertainties surrounding geopolitical events, trade policy, taxation policy, and monetary policy which continue to impact the outlook for future economic growth; impacts from current and/or future imposition of tariffs by the United States against other nations; consideration of responsive actions by these nations, including retaliatory tariffs, 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, including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, impacts from decreased international tourism, decreased demand for other banking products and services, and negative credit quality developments arising from the foregoing or other factors;

Previous wording

the impact of current and future business combinations upon our performance and financial condition including our ability to successfully integrate the businesses;

Current wording

the impact of current and future business combinations, including Sabal Trust Company, upon our performance and financial condition including our ability to successfully integrate the businesses;

Previous wording

The first quarter of 2025 brought notable economic shifts as the new presidential administration swiftly began implementing its second-term agenda. Tariffs quickly became the most influential factor, creating cost pressures across supply chains and introducing additional risk of fallout from retaliatory actions from key trading partners. Concerns over the pace and scale of tariffs and federal spending cuts have created increased uncertainty as to near and long-term effects that led to volatility in equity markets and other economic impacts. Real gross domestic product (GDP), a key metric of the pace of economic activity, contracted 0.3% on an annualized basis in the first quarter of 2025. Longer-term interest rates experienced volatility, with the 10-year U.S. Treasury yield ranging from 4.1% to nearly 4.8% during the period as the market responded to changing edicts on tariffs, among other economic indicators and developments. However, the labor market showed signs of resilience, with unemployment rising only modestly to 4.2% in March 2025, and inflation markers trended favorably through the quarter, receding to 2.4% in March. The Federal Reserve remains committed to its dual mandate of maximum employment and price stability. Because of the substantial uncertainty over economic consequences of tariffs and other initiatives of the current administration, the Federal Reserve’s policy committee has made clear its intention to take a wait and see approach to further changes in monetary policy.

Current wording

The second quarter of 2025 was marked with economic volatility as markets continued to contend with changing edicts on tariffs and various other political and social actions and developments. The tariff declaration in early April, or "Liberation Day," triggered a steep but brief selloff in financial markets that was followed by a strong rebound upon announcement of a pause on new tariffs to allow for negotiations of trade agreements. Inflation markers trended favorably in the early part of the quarter before rising to 2.7% in June. Unemployment statistics remained fairly positive and stable in the range of 4.1% to 4.2% during the period, though concerns of further softening in the labor market remain. Longer-term interest rates also experienced volatility, with the 10-year U.S. Treasury yield ranging from just under 4% to nearly 4.6% during the period. Despite the disruption and uncertainty, real gross domestic product (GDP), a key metric of the pace of economic activity, grew 3.0% on an annualized basis in the second quarter of 2025. The Federal Reserve reiterated its commitment to its dual mandate of maximum employment and price stability. While uncertainty about the economic outlook has diminished somewhat, it remains elevated, leading the Federal Reserve’s policy committee to maintain its wait and see approach for further changes in monetary policy.

Previous wording

Within the financial services industry, inflationary pressures and prolonged elevated interest rates continue to present headwinds in terms of loan demand and deposit behavior. Within our markets, loan growth remains tempered due in part to demand, the credit health of borrowers, and a strategic reduction of exposure to syndicated credits as we focus on full-service relationships. Funding costs have further benefited from recent interest rate cuts, contributing to net interest margin expansion during the first quarter of 2025.

Current wording

Within the financial services industry, economic uncertainty and prolonged elevated interest rates continue to present headwinds in terms of loan demand and deposit behavior. Despite these pressures, we experienced solid linked-quarter loan growth due to stronger demand, increased line utilization and lower payoffs. Funding costs continued to benefit from repricing of interest-bearing deposits as a result of earlier interest rate cuts and promotional rate reductions, contributing to net interest margin expansion during the period.

Previous wording

The baseline scenario continues to maintain an overall optimistic tenor with respect to economic outcomes, though recent progress in reducing inflation has slowed and potential inflationary pressures from the current administration’s fiscal, tariff and immigration actions and plans suggest a longer road to normalization than previously expected. Key assumptions within the March 2025 baseline forecast include the following: (1) the Federal Reserve will issue rate cuts of 25 basis points each in September and December 2025, with further gradual reductions in 2026 until the benchmark rate reaches 3%; (2) though the labor market has softened, the economy remains near full-employment with the current unemployment rate of 4%, and is forecasted to rise only modestly to 4.1% in 2025 and 4.3% through 2027 before improving slightly to 4.2% in 2028; (3) GDP will display modest annual below-trend growth in the coming years of 1.9% in 2025, 1.7% in 2026, and 2.3% in 2027; and, (4) the 10-year U.S. Treasury yield will remain elevated near its current rate, and is forecasted to average 4.4% in 2025 and only gradually decline through the end of the decade.

Current wording

Key assumptions within the June 2025 baseline forecast include the following: (1) The effective tariff rate will rise from nearly 3% to an average close to 15% through mid-2026 before slowly falling in subsequent years; (2) the Federal Reserve will issue rate cuts of 25 basis points each in September and December 2025, with further gradual reductions in 2026 until the benchmark rate reaches 3%; (3) the economy remains near full-employment with the current unemployment rate of 4.1%, but global trade war is expected to damage the U.S. economy and, as a result, the unemployment rate will rise to a peak of 4.8% in late 2026; (4) GDP will display modest annual below-trend growth in the coming years of 1.5% in 2025, 1.4% in 2026, and 1.8% in 2027; and, (5) the 10-year U.S. Treasury yield is forecasted to average 4.3% in 2025 and hover around its current level through the end of the decade because of elevated inflation and fiscal uncertainty.

Previous wording

The S-2 scenario presents a downside alternative to the baseline. The S-2 scenario assumes the impacts of current administration tariffs and immigrations actions and plans on the economy are worse than expected, causing inflation to rise in the second quarter of 2025. Further, elevated interest rates weaken credit-sensitive spending more than anticipated and there is longer and farther-reaching disturbance from geopolitical conflict. The scenario assumes the unemployment rate will rise considerably to 5.5% in 2025 and 6.5% in 2026 (peaking at 7.1% in the first quarter) before improving to 4.4% in 2027 and 4.2% in 2028. As a result of these pressures, the U.S. falls into a mild recession beginning in the second quarter of 2025 that lasts for three quarters, with the stock market contracting 20% and a peak-to-trough decline in GDP of 1%. Despite the onset of the recession, rising inflation prompts the Federal Reserve to raise its benchmark rate in the second quarter of 2025 before resuming easement in the third quarter of 2025.

Current wording

The S-2 scenario presents a downside alternative to the baseline. The S-2 scenario assumes the impacts of the current administration's tariff and immigration plans and actions on the economy are worse than expected, causing inflation to rise in the third quarter of 2025. The effective tariff rate is forecasted to increase to 22% and remain elevated through most of 2026. Further, elevated interest rates weaken credit-sensitive spending more than anticipated and there is longer and farther-reaching disturbance from geopolitical conflict. The scenario assumes the unemployment rate will rise considerably to a peak of 7.1% in the second quarter of 2026 and remain elevated before returning to full employment in mid-2029. As a result of these pressures, the U.S. falls into a mild recession beginning in the third quarter of 2025 that lasts for three quarters, with the stock market contracting 23% and a peak-to-trough decline in GDP of 1%. Despite the onset of the recession, rising inflation prompts the Federal Reserve to raise its benchmark rate in the third quarter of 2025 before resuming easement in the fourth quarter of 2025.

Previous wording

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 March 31, 2025.

Current wording

Management has deemed certain assumptions underlying the downside S-2 scenario to be as likely to occur in the near term as those underlying the baseline scenario, and, as such, the baseline scenario and the S-2 scenario were each given probability weightings of 50% in the calculation of our allowance for credit losses calculation at June 30, 2025. The weighting of scenarios has changed from the March 31, 2025 calculation of allowance for credit losses, where the baseline scenario was weighted at 40% and the downside S-2 scenario was weighted at 60%. The change in weighting does not represent a significant shift in our outlook, but rather is a function of a shift in the assumptions underlying the forecasts.

Previous wording

The credit loss outlook for our portfolio as a whole has not changed materially since December 31, 2024. We continue to closely monitor our portfolio for customers that are sensitive to prolonged inflation, the elevated interest rate environment, tariffs and/or other economic circumstances that may impact credit quality. We have adjusted our expected full year 2025 loan growth percentage downward, now forecasted to be in the low single digits relative to December 31, 2024, reflecting current client sentiment.

Current wording

The credit loss outlook for our portfolio as a whole has not changed materially since March 31, 2025. We continue to closely monitor our portfolio for customers that are sensitive to prolonged inflation, the elevated interest rate environment, tariffs and/or other economic circumstances that may impact credit quality.

Previous wording

We reported net income for the first quarter of 2025 of $119.5 million, or $1.38 per diluted common share, compared to $122.1 million, or $1.40 per diluted common share, in the fourth quarter of 2024 and $108.6 million, or $1.24 per diluted common share, in the first quarter of 2024. The first quarter of 2024 included a $3.8 million, or $0.04 per diluted share, supplemental disclosure item. There were no supplemental disclosure items in the first quarter of 2025 or the fourth quarter of 2024.

Current wording

We reported net income for the second quarter of 2025 of $113.5 million, or $1.32 per diluted common share, compared to $119.5 million, or $1.38 per diluted common share, in the first quarter of 2025 and $114.6 million, or $1.31 per diluted common share, in the second quarter of 2024. The second quarter of 2025 includes $5.9 million, or $0.05 per diluted share, of supplemental disclosure items related to the costs associated with the acquisition of Sabal. There were no supplemental disclosure items in the first quarter of 2025 or the second quarter of 2024.

Previous wording

First quarter 2025 results compared to fourth quarter 2024:

Current wording

Second quarter 2025 results compared to first quarter 2025:

Previous wording

Pre-provision net revenue, a non-GAAP measure, totaled $162.4 million, compared to $165.2 million

Current wording

Adjusted pre-provision net revenue, a non-GAAP measure, totaled $167.9 million, up $5.5 million, or 3%

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Period-end loans totaled $23.1 billion, down $201.3 million, or 1%

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Period-end loans totaled $23.5 billion, up $363.6 million, or 2%

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Period-end deposits totaled $29.2 billion, down $298.1 million, or 1%

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Period-end deposits totaled $29.0 billion, down $148.1 million, or 1%

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Criticized commercial loans decreased and nonaccrual loans increased; annualized net charge-offs as a percentage of average loans decreased to 0.18% compared to 0.20%

Current wording

Nonaccrual loans and criticized commercial loans decreased

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Allowance for credit losses coverage to total loans of 1.49%, up 2 basis points (bps)

Current wording

Allowance for credit losses coverage to total loans remains solid at 1.45%, down 4 basis points (bps)

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Efficiency ratio, a non-GAAP measure, was 55.22%, compared to 54.46%

Current wording

Efficiency ratio, a non-GAAP measure, improved to 54.91%, compared to 55.22%

Previous wording

The $3.7 million increase in net interest income (te) compared to the first quarter of 2024 reflects a decline in prevailing rates on interest-bearing liabilities outpacing lower yields on interest earning assets, partially offset by the impact of one less accrual day. Interest income (te) decreased $26.4 million, driven largely by lower yields on loans and loan contraction, partially offset by higher yields on mortgage-backed securities. Interest expense decreased $30.1 million, driven largely by lower rates on deposits, a decrease in the volume of deposits, including a $510.6 million decrease in average brokered deposits, and a decrease in the level of short-term borrowings. The net interest margin for the first quarter of 2025 of 3.43% increased 11 bps from 3.32% for the first quarter of 2024. The year-over-year improvement in the net interest margin also reflects a decrease in the cost of funds outpacing the decline in yield on earning assets. The rate on interest-bearing liabilities was down 52 bps from the first quarter of 2024, primarily driven by the impact of interest rate movement on the overall cost of funds that also fostered some shifting to a more favorable mix of retail deposits. The cost of funds further benefited from changes in funding mix as all brokered deposits matured and short-term FHLB borrowings were repaid during the period. The yield on average earning assets was down 22 bps, primarily driven by a 32 bp decline in the loan yield, partially offset by a 22 bp increase in securities yields as maturing securities were reinvested into instruments with higher yields, and the favorable impact from the fair value hedges described above.

Current wording

The net interest margin for the six months ended June 30, 2025 was 3.46%, up 12 bps from 3.34% for the same period in 2024. The increase in the net interest margin also reflects the decrease in the cost of funds outpacing the decline in the yield on earning assets. The rate on interest-bearing liabilities was down 55 bps from 2024, primarily driven by the lower interest rate environment, promotional rate reductions, and a more favorable mix of retail deposits. The yield on average earning assets was down 23 bps, largely the result of a 35 bp decline in the loan yield, reflective of market interest rate movement, that was partially offset by a 24 bp increase in securities yields, as cash flows from maturing securities were reinvested into instruments with higher yields, coupled with the favorable impact from the fair value hedges described above.

Previous wording

We expect our full year 2025 net interest income (te) to be up between 3% to 4% when compared to 2024; with modest and consistent expansion in net interest margin throughout 2025. The forecasted improvement is expected to be driven by lower deposit costs, low single-digit loan growth and continued repricing of cash flows from both the securities and fixed rate loan portfolios. Our guidance assumes 25 bp rate cuts by the Federal Reserve in June, July and October 2025, however, modeling no rate cuts for 2025 yielded similar results.

Current wording

We expect full year 2025 net interest income (te) to be up between 3% to 4% when compared to 2024; with modest and consistent expansion in net interest margin during the second half of 2025. The forecasted improvement for the full year is expected to be driven by lower deposit costs, low single-digit loan growth and continued repricing of cash flows from both the securities and fixed rate loan portfolios. Our guidance assumes 25 bp rate cuts by the Federal Reserve in September and December 2025; however, modeling a scenario with no rate cuts in the remainder of 2025 yielded similar results.

Previous wording

Included in interest income is net purchase accounting accretion of $0.5 million and $0.3 million for the three months ended December 31, 2024 and March 31, 2024, respectively. There was no purchase accounting accretion in 2025.

Current wording

Included in interest income is net purchase accounting accretion of $0.8 million for the three months ended June 30, 2024. There was no net purchase accounting accretion in 2025.

Previous wording

During the first quarter of 2025, we recorded a provision for credit losses of $10.5 million, compared to $11.9 million in the fourth quarter of 2024 and $13.0 million in the first quarter of 2024. The provision for credit loss in the first quarter of 2025 included net charge-offs of $10.3 million and a reserve build of $0.2 million, compared to net charge-offs of $11.7 million and a reserve build of $0.2 million in the fourth quarter of 2024. While the provision for credit losses for the first quarter of 2025 was down slightly from the previous period, the allowance coverage to total loans reflected a slight increase. The first quarter of 2024 provision for credit loss included net charge-offs of $9.0 million and a reserve build of $4.0 million.

Current wording

During the second quarter of 2025, we recorded a provision for credit losses of $14.9 million, compared to $10.5 million in the first quarter of 2025. The provision for credit loss in the second quarter of 2025 included net charge-offs of $17.8 million and a reserve release of $2.9 million, compared to net charge-offs of $10.3 million and a reserve build of $0.2 million in the first quarter of 2025. The increase in provision expense is largely attributable to the higher charge-offs in the current quarter, including a $14.6 million commercial charge-off related to a single borrower that is working through resolution, with relatively stable to improving performance in other credit metrics.

Previous wording

Annualized net charge-offs as a percentage of average loans in the first quarter of 2025 were 0.18%, down from 0.20%, in the fourth quarter of 2024, and up from 0.15% in the first quarter of 2024. Net charge-offs in the first quarter of 2025 included $7.1 million in the commercial portfolio and $3.4 million in the consumer portfolio, partially offset by net recoveries of $0.2 million in the residential mortgage portfolio. Net charge-offs in the fourth quarter of 2024 included $7.5 million in the commercial portfolio and $4.3 million in the consumer portfolio, partially offset by net recoveries of less than $0.1 million in the residential mortgage portfolio. For the first quarter of 2024, net charge-offs included $5.2 million in the commercial portfolio and $3.9 million in the consumer portfolio, partially offset by a net recovery of $0.1 million in the residential mortgage portfolio.

Current wording

Annualized net charge-offs as a percentage of average loans in the second quarter of 2025 were 0.31%, up from 0.18%, in the first quarter of 2025. Net charge-offs in the second quarter of 2025 included $14.7 million in the commercial portfolio, $2.9 million in the consumer portfolio and $0.2 million in the residential mortgage portfolio. Net charge-offs in the first quarter of 2025 included $7.1 million in the commercial portfolio and $3.4 million in the consumer portfolio, partially offset by net recoveries of $0.2 million in the residential mortgage portfolio.

Previous wording

We expect to continue to see modest charge-offs and provision for credit losses for the remainder of 2025. Loan growth, portfolio mix, asset quality metrics and future assumptions in economic forecasts will drive the level of credit loss reserves.

Current wording

We currently expect net charge-offs as a percentage of average loans to range from 0.15% to 0.25% for 2025. Future assumptions in economic forecasts, loan growth, portfolio mix and asset quality metrics will drive the level of credit loss reserves and resulting provision for credit loss expense.

Previous wording

Noninterest income totaled $94.8 million for the first quarter of 2025, up $3.6 million, or 4%, from the fourth quarter of 2024 and $6.9 million, or 8%, from the same period in 2024. The increase in noninterest income from the fourth quarter of 2024 was driven by growth in most revenue lines that were partially offset by declines in bank card and ATM fees and trust fees. The increase from the first quarter of 2024 is also attributable to growth in most lines that was partially offset by declines in gains on sales of assets, investment and annuity fees and credit-related fees. A more detailed discussion of these and other noninterest income variances follows.

Current wording

Noninterest income totaled $98.5 million for the second quarter of 2025, up $3.7 million, or 4%, from the first quarter of 2025. The increase in noninterest income from the first quarter of 2025 was largely driven by trust fees as a result of the Sabal acquisition, as well as growth in most revenue lines that were partially offset by declines in other miscellaneous income, net gains on sales of assets, investment and annuity fees and insurance commissions, and credit related fees. For the six months ended June 30, 2025, noninterest income totaled $193.3 million, up $16.3 million, or 9%, from the same period in 2024. The increase from the six months ended June 30, 2024 is also attributable to growth in most lines that was partially offset by declines in other miscellaneous income, net gains on sales of assets, and credit related fees. A more detailed discussion of these and other noninterest income variances follows.

Previous wording

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 deposits totaled $24.1 million for the first quarter of 2025, up $0.7 million, or 3%, compared to the fourth quarter of 2024 and up $1.9 million, or 8%, from the same period in 2024. The linked-quarter increase was primarily driven by an increase in analysis fees on business accounts. The increase from the same period in 2024 was also largely attributable to analysis fees, and to consumer overdraft fees, driven by higher instances of overdrafts.

Current wording

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 deposits totaled $24.3 million for the second quarter of 2025, relatively flat compared to the first quarter of 2025. The linked-quarter results reflect an increase in consumer overdraft fees, largely offset by a decline in analysis fees on business accounts. For the six months ended June 30, 2025, service charges on deposits totaled $48.4 million, up $3.9 million, or 9%, from the same period in 2024. The year-over-year increase was largely attributable to consumer overdraft fees, and analysis fees and overdraft fees on business accounts.

Previous wording

Trust fee income represents revenue generated from a full range of trust services, including asset management and custody services provided to individuals, businesses and institutions. Trust fees totaled $18.0 million for the first quarter of 2025, down $0.1 million, or 1%, from the fourth quarter of 2024 and up $0.9 million, or 6%, from the same period in 2024. The year-over-year increase was primarily attributable to personal, institutional, and corporate trust revenue, driven by market value and sales volumes. These increases were partially offset by a decline in employee benefits trust revenue.

Current wording

Trust fee income represents revenue generated from a full range of trust services, including asset management and custody services provided to individuals, businesses and institutions. Trust fees totaled $22.8 million for the second quarter of 2025, up $4.7 million, or 26%, from the first quarter of 2025. The linked-quarter increase reflects $3.6 million in personal trust fees as a result of the May 2, 2025 Sabal acquisition, $0.6 million in seasonal tax preparation fees, and market value-driven growth in personal and corporate trust fees in our legacy business. Trust fees for the six months ended June 30, 2025 totaled $40.8 million, up $5.2 million, or 15%, from the same period in 2024. The year-over-year increase also reflects $3.6 million in personal trust fees as a result of the Sabal acquisition and growth in our legacy personal and corporate trust fees, partially offset by a decline in employee benefits trust revenue.

Previous wording

Bank card and ATM fees include interchange and other 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 $20.7 million for the first quarter of 2025, down $0.7 million, or 3%, from the fourth quarter of 2024 and up $0.1 million, or less than 1%, from the same period in 2024. The linked-quarter decrease was primarily driven by a seasonal decline in credit and debit card and ATM fees, partially offset by an increase in merchant fees that was largely due to pricing adjustments. The increase from the same period in 2024 was largely driven by increases in merchant and debit card fees, partially offset by a decline in ATM and credit card fees.

Current wording

Bank card and ATM fees include interchange and other 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 $22.0 million for the second quarter of 2025, up $1.3 million, or 6%, from the first quarter of 2025. The linked-quarter increase was driven by increases in credit card, including purchasing card, and debit card processing fees. For the six months ended June 30, 2025, bank card and ATM fees totaled $42.7 million, up $0.3 million, or 1%, from the same period in 2024, as increases in purchasing card and debit card processing fees were partially offset by declines in business credit card processing fees and ATM fees.

Previous wording

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 $11.4 million, up $0.5 million, or 5%, from the fourth quarter of 2024 and down $0.4 million, or 4%, from the same period in 2024. The linked-quarter increase was largely driven by annuity sales volume and corporate underwriting fees, partially offset by a decrease in fixed income trading and insurance commissions. The decrease from the same period in 2024 was driven by a $1.1 million decrease in annuity fees that was partially offset by a $0.7 million increase in investment management fees.

Current wording

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 $10.6 million, down $0.8 million, or 7%, from the first quarter of 2025. The linked-quarter decrease was largely driven declines in fixed income trading and corporate underwriting fees, partially offset by increases in annuity sales volume and insurance commissions. For the six months ended June 30, 2025, investment and annuity fees and insurance commissions totaled $22.0 million, up $0.4 million, or 2%, from the same period in 2024. The year-over-year increase was driven by an increase in investment management fees, which was partially offset by a decline in annuity sales volume.

Previous wording

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, as well as loans generated through programs to support customer relationships. Secondary mortgage market operations income will vary based on mortgage application volume, pull through rates, the percentage of loans ultimately sold in the secondary market and the timing of such sales. Income from secondary mortgage market operations was $3.5 million in the first quarter of 2025, up $0.9 million, or 36%, from the fourth quarter of 2024 and up $0.6 million, or 20%, from the same period in 2024. The linked-quarter increase was primarily attributable to a higher percentage of loans sold in the secondary market. The year-over-year increase was driven by an increase in the level of mortgage loan production, reflective of a more favorable interest rate environment and the addition of lenders, as well as a higher percentage of loans sold in the secondary market.

Current wording

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, as well as loans generated through programs to support customer relationships. Secondary mortgage market operations income will vary based on mortgage application volume, pull through rates, the percentage of loans ultimately sold in the secondary market and the timing of such sales. Income from secondary mortgage market operations was $4.1 million in the second quarter of 2025, up $0.7 million, or 20%, from the first quarter of 2025. The linked-quarter increase was primarily attributable to an increase in mortgage loan production. For the six months ended June 30, 2025, income from secondary mortgage market operations totaled $7.6 million, up $1.2 million, or 18%, from the same period in 2024. The year-over-year increase was attributable to an increase in mortgage loan production, partially offset by a lower percentage of loans sold in the secondary market, as opposed to being retained in our portfolio.

Previous wording

Income from bank-owned life insurance (BOLI) is typically generated through insurance benefit proceeds as well as the growth of the cash surrender value of insurance contracts held. Income from BOLI was $4.9 million for the first quarter of 2025, up $0.3 million, or 6%, from the fourth quarter of 2024 and up $0.6 million, or 15%, from the same period in 2024. The linked-quarter increase was driven by income from changes in cash surrender value. The year-over-year increase is largely attributable to mortality gains.

Current wording

Income from bank-owned life insurance (BOLI) is typically generated through insurance benefit proceeds as well as the growth of the cash surrender value of insurance contracts held. Income from BOLI was $5.3 million for the second quarter of 2025, up $0.4 million, or 9%, from the first quarter of 2025. The linked-quarter increase was attributable to a $0.2 million increase in mortality gains and a $0.2 million increase in income associated with changes in cash surrender value. For the six months ended June 30, 2025, income from BOLI totaled $10.2 million, up $2.2 million, or 28%, from the same period in 2024. The year-over-year increase is attributable to a $1.6 million increase in income associated with changes in cash surrender value and a $0.6 million increase in mortality gains.

Previous wording

Credit-related fees include fees assessed on letters of credit and unused portions of loan commitments. Credit-related fees were $2.8 million for the first quarter of 2025, virtually flat compared to the fourth quarter of 2024 and down $0.3 million, or 9%, from the same period in 2024. The decrease from the same period in 2024 was primarily driven by a decrease in unused commitment fees.

Current wording

Credit related fees include fees assessed on letters of credit and unused portions of loan commitments. Credit related fees were $2.7 million for the second quarter of 2025, down $0.1 million, or 4%, from the first quarter of 2025. For the six months ended June 30, 2025, credit related fees totaled $5.6 million, down $0.7 million, or 11%, from the same period in 2024. The linked-quarter and year-over-year decreases were largely driven by unused commitment fees, which are generally a function of credit line utilization.

Previous wording

Income or loss from customer and other derivatives is largely from our customer interest rate derivative program. Loss from customer and other derivatives totaled $0.3 million for the first quarter of 2025, compared to a loss of $0.9 million in the fourth quarter of 2024 and $2.8 million in the first quarter of 2024. Derivative income can be volatile and is dependent upon the composition of the portfolio, volume and mix of sales and termination activity, and market value adjustments due to market interest rate movement. The variance compared to the fourth quarter was largely due to lower losses related to our Visa B derivative of $1.0 million, partially offset by lower earnings on customer derivatives of $0.4 million. The variance compared to the same quarter in the prior year reflects a $1.6 million improvement in earnings from customer derivatives, largely interest rate driven, and lower losses related to our Visa B derivative of $0.9 million.

Current wording

Income or loss from customer and other derivatives is largely from our customer interest rate derivative program. Income from customer and other derivatives totaled $2.0 million for the second quarter of 2025, compared to a loss of $0.3 million in the first quarter of 2025. The linked-quarter increase was primarily driven by the customer interest rate derivative program, which can vary period to period based on the market conditions. For the six months ended June 30, 2025, income from customer and other derivatives totaled $1.7 million compared to a loss of $3.9 million for the same period in 2024. The year-over-year increase was due in part to the 2024 results including a $1.5 million loss related to assumption changes for certain valuation inputs on customer derivatives and $1.7 million of higher losses resulting from assumption changes to the Visa Class B derivative liability. The remaining year-over-year increase is attributable to the customer interest rate derivative program, driven by market conditions. Derivative income can be volatile and is dependent upon the composition of the portfolio, volume and mix of sales and termination activity, and market value adjustments due to market interest rate movement.

Previous wording

Net gains on sales of premises, equipment and other assets consist 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 (SBA) 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 $1.9 million for the first quarter of 2025, compared to $1.1 million for the fourth quarter of 2024 and $2.8 million in the same period in 2024. The linked-quarter increase was largely driven by gains on sales of SBA loans. The year-over-year decrease was largely driven by a gain on the sale of bank premises and equipment recorded in the first quarter of 2024, partially offset by an increase in gains on sales of SBA loans. The level of net gains or losses on sales of these assets in a given reporting period will vary based on a variety of circumstances.

Current wording

Net gains on sales of premises, equipment and other assets consist 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 (SBA) 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 $1.0 million for the second quarter of 2025, down $0.8 million from the first quarter of 2025, largely attributable to a decrease in gains on sales of SBA loans. For the six months ended June 30, 2025, net gains on sales of premises, equipment and other assets totaled $2.9 million, down $0.9 million from the same period in 2024, largely driven by a decline in gains on sales of premises totaling $1.5 million that was partially offset by a $0.6 million increase in gains on sales of SBA loans. The level of net gains or losses on sales of these assets in a given reporting period will vary based on a variety of circumstances.

Previous wording

Other miscellaneous income is comprised of various items, including income from investments in small business investment companies (SBIC), Federal Home Loan Bank (FHLB) stock dividends, and fees from loan syndication and other specialty lines of business. Other miscellaneous income totaled $7.8 million, up $0.7 million, or 10% from the fourth quarter of 2024 and up $1.9 million, or 33%, from the first quarter of 2024. The linked-quarter change was largely driven by increases of $1.5 million in syndication fees and $1.1 million in SBIC income, partially offset by a $1.6 million decrease in dividends on FHLB stock, and a net $0.3 million decrease in other miscellaneous income. The year over year change was driven by an increase of $2.4 million of SBIC income and $1.3 million of syndication fees, partially offset by a $1.7 million decrease in FHLB stock dividends, and a net $0.1 million decrease in other miscellaneous income. The decrease in dividends on FHLB stock reflects a decline in the level of stock owned.

Current wording

Other miscellaneous income is comprised of various items, including income from investments in small business investment companies (SBIC), Federal Home Loan Bank (FHLB) stock dividends, and fees from loan syndication and other specialty lines of business. Other miscellaneous income totaled $3.7 million, down $4.0 million, or 52% from the first quarter of 2025. For the six months ended June 30, 2025, other miscellaneous income totaled $11.5 million, down $0.7 million, or 6%, from the same period in 2024. The linked-quarter decline was largely driven by a $2.6 million decrease in SBIC income and a $1.7 million decrease in syndication fees. The year-over-year decline was largely driven by a decrease of $3.4 million in dividends on FHLB stock, reflecting a decline in the level of stock owned, partially offset by increases of $1.6 million in SBIC income and $1.3 million in syndication fees. SBIC income and syndication fees will vary from period to period, depending on activity.

Previous wording

We expect noninterest income to be up 9% to 10% for the full year of 2025 from the 2024 noninterest income of $364.1 million. This guidance has been updated to include the impact of the acquisition of Sabal Trust Company that closed on May 2, 2025.

Current wording

We expect noninterest income to be up 9% to 10% for the full year of 2025 from the 2024 noninterest income of $364.1 million. This guidance includes the impact of the Sabal acquisition that closed on May 2, 2025.

Previous wording

Noninterest expense for the first quarter of 2025 was $205.1 million, up $2.7 million, or 1%, from the fourth quarter of 2024 and down $2.7 million, or 1%, from the same period in 2024. The linked-quarter increase was largely driven by other real estate and foreclosed assets expense, regulatory fees, personnel expense and data processing expense, partially offset by a decrease in business development expense, tax credit investment amortization and other miscellaneous expenses. The first quarter of 2024 included a $3.8 million supplemental disclosure item attributable to an FDIC special assessment. Excluding the impact of the supplemental disclosure item, noninterest expense was up $1.1 million, or 1%, driven largely by professional services, data processing expense, other real estate and foreclosed assets expense and other retirement expense, partially offset by a decrease in personnel expense. A more detailed discussion of these and other noninterest expense variances follows.

Current wording

Noninterest expense for the second quarter of 2025 was $216.0 million, up $10.9 million, or 5%, from the first quarter of 2025. Included in noninterest expense for the second quarter of 2025 were supplemental disclosure items totaling $5.9 million attributable to costs associated with the Sabal acquisition. Excluding the supplemental disclosure items, noninterest expense for the second quarter of 2025 was up $5.0 million, or 2%, from the first quarter of 2025, largely attributable to increases in professional services expense, personnel expense, occupancy and equipment expense, and business development expense that were partially offset by decreases in other real estate and foreclosed assets expense and deposit insurance and regulatory fees. For the six months ended June 30, 2025, noninterest expense totaled $421.0 million, up $7.3 million, or 2%, from the same period in 2024. The six months ended June 30, 2025 included the $5.9 million Sabal acquisition supplemental disclosure items as described above and the six months ended June 30, 2024 included a $3.8 million supplemental disclosure item attributable to an FDIC special assessment. Excluding the impact of the supplemental disclosure items in both periods, noninterest expense was up $5.2 million, or 1%, from the same period in 2024, largely attributable to increases in professional services expense, other real estate and foreclosed assets expense, data processing expense, other retirement expense, and business development expense, partially offset by decreases in personnel expense, deposit insurance and regulatory fees, and corporate value and franchise taxes and other non-income taxes. A more detailed discussion of these and other noninterest expense variances follows.

Previous wording

Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and insurance for medical, life and disability. Personnel expense totaled $114.3 million for the first quarter of 2025, up $0.6 million, or 1%, from the fourth quarter of 2024 and down $6.8 million, or 6%, from the same period in 2024. The linked quarter increase was largely driven by seasonal increases in payroll tax and benefits, partially offset by a decrease in bonus expense, and a decrease in compensation expense as a result of two fewer payroll days in the current period. The year over year decrease reflects a favorable impact from salary deferrals associated with lending activities, a decrease in headcount, and one fewer payroll day, partially offset by annual merit increases and annual increases in most benefit categories.

Current wording

Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and insurance for medical, life and disability. Personnel expense totaled $116.5 million for the second quarter of 2025, up $2.2 million, or 2%, from the first quarter of 2025. The three months ended June 30, 2025 included $1.4 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding the Sabal acquisition costs, personnel expense for the second quarter of 2025 was up $0.7 million, or 1%, from the first quarter of 2025. The linked-quarter increase was largely attributable to increases in salary expense as a result of annual merit increases, one additional payroll day, the addition of Sabal associates, and higher stock-based compensation, partially offset by declines in payroll tax and 401(k) match expense, as the first quarter of 2025 included seasonal incremental expense. For the six months ended June 30, 2025, personnel expense totaled $230.9 million, down $9.0 million, or 4%, from the same period in 2024. Excluding the $1.4 million of the Sabal acquisition costs, personnel expense for the six months ended June 30, 2025 was down $10.4 million, or 4%, from the same period in 2024. The year-over-year decline reflects a favorable impact from salary deferrals associated with lending activities, a decrease in incentives and bonus expense, decreased headcount (excluding new associates from Sabal), and one less payroll day, partially offset by annual merit increases, the addition of Sabal associates, and increases in most benefit categories.

Previous wording

Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, taxes, and other equipment expenses. Occupancy and equipment expenses totaled $17.7 million for the first quarter of 2025, down $0.2 million, or 1%, from the fourth quarter of 2024 and virtually flat compared to the same period in 2024. The linked-quarter decrease was attributable to lower costs associated with general repairs and maintenance, partially offset by increases in property taxes, utilities, and leased facility expense.

Current wording

Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, property taxes, and other equipment expenses. Occupancy and equipment expenses totaled $18.4 million for the second quarter of 2025, up $0.7 million, or 4%, from the first quarter of 2025, as increases in building and equipment maintenance and leased facility expense were partially offset by a decline in building insurance expense. For the six months ended June 30, 2025, occupancy and equipment expenses totaled $36.0 million, up $0.9 million, or 3%, compared to the same period in 2024. The year-over-year increase was largely driven by building and equipment maintenance and leased facility expense that was partially offset by decreases in depreciation and amortization and building insurance and personal property taxes. The increase in occupancy and equipment expense for both the three and six month periods ending June 30, 2025 includes approximately $0.3 million of Sabal operating costs post-merger.

Previous wording

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, and credit card reward expenses. Data processing expense was $31.3 million for the first quarter of 2025, up $0.6 million, or 2%, from the fourth quarter of 2024 and up $2.5 million, or 9%, from the same period in 2024. The linked-quarter increase was driven in part by certain activity-based processing fees, expenses associated with ongoing technology enhancements, and increases in card expense, partially offset by a decrease in software maintenance costs. The increase from the same period in 2024 was largely related to activity-based processing fees, partially offset by a decrease in software maintenance costs. Data processing expense can vary from period to period, depending on business needs and technology enhancement initiatives.

Current wording

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, and credit card reward expenses. Data processing expense was $33.4 million for the second quarter of 2025, up $2.2 million, or 7%, from the first quarter of 2025. Included in the three months ended June 30, 2025 was $2.0 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding the Sabal acquisition costs, data processing expense for the second quarter of 2025 was up $0.2 million, or 1%, from the first quarter of 2025, as increases in certain activity-based processing fees and ATM services expense were largely offset by a decrease in amortization and maintenance on data processing software. For the six months ended June 30, 2025, data processing expense totaled $64.7 million, up $4.6 million, or 8%, from the same period in 2024. Excluding the $2.0 million of Sabal acquisition costs, data processing expense for the six months ended June 30, 2025 was up $2.6 million, or 4%, from the same period in 2024. The year-over-year increase was largely attributable to increases in certain activity-based fees, including card processing and technology enhancement costs, credit card rewards expense and ATM servicing, partially offset by a decrease in amortization and maintenance on data processing software. Data processing expense can vary from period to period, depending on business needs and technology enhancement initiatives.

Previous wording

Deposit insurance and regulatory fees for the first quarter of 2025 totaled $5.0 million, up $1.2 million, or 33%, from the fourth quarter of 2024 and down $3.9 million, or 44%, from the same period in 2024. Included in the first quarter of 2024 was a supplemental disclosure item of $3.8 million attributable to a more sizable adjustment to the special assessment by the FDIC to cover losses incurred under the systemic risk exception following the failure of two large regional banks. Excluding the impact of the supplemental disclosure item, both the linked-quarter and year over year changes in deposit insurance and regulatory fees were primarily attributable to changes in our risk-based assessment calculation as well as less significant quarterly adjustments to the special assessment based on quarterly updates from the FDIC.

Current wording

Deposit insurance and regulatory fees for the second quarter of 2025 totaled $4.8 million, down $0.2 million, or 4%, from the first quarter of 2024. For the six months ended June 30, 2025, deposit insurance and regulatory fees totaled $9.8 million, down $5.1 million, or 34%, from the same period in 2024. Included in the six months ended June 30, 2024 was a supplemental disclosure item of $3.8 million attributable to a more sizable adjustment to the special assessment by the FDIC to cover losses incurred under the systemic risk exception following the failure of two large regional banks. Excluding the impact of the supplemental disclosure item, the year-over-year decline in deposit insurance and regulatory fees was primarily attributable to changes in our risk-based assessment calculation as well as less significant quarterly adjustments to the special assessment based on quarterly updates from the FDIC.