Hancock Whitney Corporation (NASDAQ:HWC) Q1 2025 Earnings Conference Call April 15, 2025 4:30 PM ET

Company Participants

Kathryn Mistich - IR Manager
John Hairston - President and CEO
Mike Achary - CFO
Chris Ziluca - CCO

Conference Call Participants

Michael Rose - Raymond James
Catherine Mealor - KBW
Stephen Scouten - Piper Sandler
Brett Rabatin - Hovde Group
Casey Haire - Autonomous Research
Gary Tenner - D.A. Davidson
Matt Olney - Stephens
Ben Gerlinger - Citi
Christopher Marinac - Janney Montgomery Scott

Operator

Please standby. Hancock Whitney Corporation's First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Kathryn Mistich, Investor Relations Manager.

You may begin.

Kathryn Mistich

Thank you, and good afternoon. During today's call, we may make forward-looking statements. We would like to remind everyone to carefully review the Safe Harbor language that was published with the earnings release, and presentation, and in the company's most recent 10-Ks and 10-Q, including the risks and uncertainties identified therein.

You should keep in mind that any forward-looking statements made by Hancock Whitney Corporation speak only as of the date on which they were made. As everyone understands, the current economic environment is rapidly evolving and changing. Hancock Whitney Corporation's ability to accurately project results or predict the effects of future plans or strategies or predict market or economic developments is inherently limited.

We believe that the expectations reflected or implied by any forward-looking statements are based on reasonable assumptions but are not guarantees of performance or results. Our actual results and performance could differ materially from those set forth in our forward-looking statements. Hancock Whitney Corporation undertakes no obligation to update or revise any forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements.

Some of the remarks contain non-GAAP financial measures. You can find reconciliations to the most comparable GAAP measures in our earnings release and financial tables. The presentation slides included in our 8-Ks are also posted with the conference call webcast link on the Investor Relations website.

We will reference some of these slides in today's call. Participating in today's call are John Hairston, President and CEO, Mike Achary, CFO, and Chris Ziluca, Chief Credit Officer. I will now turn the call over to John Hairston.

John Hairston

Thank you, Kathryn, and thanks everyone for joining us this afternoon. We are pleased to report another quarter of high-performing, profitable, and continued capital growth. A very strong start to 2025.

We achieved an impressive 1.41% ROA, grew fee income, enjoyed continued NIM expansion, and ended the quarter with total risk-based capital of 16.39%. NIM expanded as we were able to control funding costs and mix that more than offset the impact of lower loan yields and lower average earning assets. We had another quarter of strong fee income with growth across most categories.

Expenses remained well controlled with only a 1% increase this quarter. We've updated our guidance to reflect the impact of the Sable Trust transaction and now anticipate fee income to be up between 9% and 10% year over year. Our expectations for expense growth remain unchanged, between 4% and 5% higher year over year.

Loans were down $201 million due to higher payoffs on large healthcare and commercial non-real estate loans offsetting strong production. We have updated our guidance this quarter and expect loans will grow low single digits in 2025 with most of the growth coming in the second half of the year. The change in guidance accounts for uncertainty reflected in current client sentiment.

We remain focused on more granular full relationship loans with the goal of achieving more favorable loan yields and relationship revenue. Deposits were down $298 million, driven primarily by the seasonal public funds outflows. For the second quarter in a row, our DDA balances actually increased, and our DDA mix is stable at 36%.

Interest-bearing transaction accounts increased due to our competitive product offerings, and retail CDs declined due to the reduction of promo rates, which help control deposit costs. We continue to return capital to investors by repurchasing 350,000 shares of common stock this quarter. We also increased our common stock dividend to $0.45% per share, a cumulative increase of 50% from this time last year.

Even after returning capital, we had strong growth in all of our regulatory capital metrics due to excellent profitability, ending the quarter with a common equity tier one ratio of 14.51% and tangible common equity ratio of 10.01%. Last quarter on our call, we shared our plan to pivot to growth both organically and inorganically through the acquisition of Sable Trust Company. We continue to execute hiring plans with four additional bankers and have selected four new locations of five planned in the northern area of the Dallas MSA.

The Sable transaction is expected to close on May 2nd. We look forward to welcoming Sable clients and associates to Hancock Whitney Corporation and for the opportunity to expand our best-in-class regional banking services in the Greater Tampa and Orlando areas. Despite current market volatility, we remain optimistic for our growth prospects, particularly in the second half of the year.

We're closely monitoring macroeconomic trends and indicators, both nationally and within our own footprint. While the environment remains dynamic, our ample liquidity, solid allowance for credit losses of 1.49%, and strong capital keep us well-positioned to navigate challenges and support our clients in any economy. With that, I'll invite Mike to add additional comments.

Mike Achary

Thanks, John. Good afternoon. As John said at the onset, the company's performance in the first quarter was outstanding.

Our net income for the quarter was $120 million or $1.38% per share, compared to $122 million or $1.40% per share in the fourth quarter. Earnings were up 10% compared to the same quarter a year ago, while EPS was up 11%. PPNR was down slightly from last quarter, to $162.4% million but up $9.5% million or 6% compared to the first quarter of last year.

Our NIM expanded two basis points to 3.43%, but NII was down due to two fewer accrual days and a lower level of average earning assets. As mentioned, our fee income businesses had another outstanding quarter, and expenses continue to be well controlled. The NIM expansion was driven by lower deposit costs, higher yields on the bond portfolio, and a favorable mix of borrowed funds, partly offset by lower loan yields as shown on slide 16 of the investor deck.

Our overall cost of funds was down 14 basis points to 1.59% due to a lower cost of deposits and a better funding mix, as we ended the quarter with no home loan borrowing. The downward trend in our cost of deposits continued this quarter, with a decrease of 15 basis points to 1.70% in the first quarter. The drivers here were CD maturities and renewals at lower rates and a reduction of pricing on interest-bearing transaction accounts.

For the quarter, we had $2.7% billion of CD maturities, which repriced from 4.33% to 3.72% with an 86% renewal rate. Additionally, we ended the quarter with no brokered deposits, and our DDA balances increased $18 million. Our NIB mix was stable at 36%.

CDs will continue to reprice lower throughout 2025 given maturity volumes and three anticipated rate cuts over the remainder of 2025. Total EOP deposits were down $298 million, but that includes $320 million of seasonal public fund runoff. Bond yields for the company were up seven basis points to 2.78%.

We had $165 million of principal cash flow at 3.05% that was reinvested at 5.04%. Additionally, $164 million of our fair value hedges became effective and contributed four basis points to the overall yield pickup of seven basis points. Next quarter, we expect about $236 million of principal cash flow at 3.19% that will be reinvested at higher yields.

For the remainder of 2025, an additional $85 million of our fair value hedges will become effective, providing additional yield. Our loan yield for the quarter was down 18 basis points to 5.84%, impacted by lower average loan balances and lower yields on our variable rate loan portfolio. We updated our guidance this quarter to reflect the Sable transaction and our updated expectations for loan growth as well as a few other items.

We believe we can continue to achieve modest NIM expansion and NII growth of between 3% and 4% in 2025, driven primarily by the impact of lower deposit rates, low single-digit loan growth, and continued repricing of cash flows from both the bond and fixed-rate loan portfolios. Our guidance assumes three rate cuts of 25 basis points each in June, July, and October. Our updated PPNR guide is we expect to be up between 6% and 7% from 2024's adjusted levels, and our efficiency ratio will fall somewhere between 54% and 56% in 2025.

As John mentioned, we did receive regulatory approval for Sable and expect that transaction to close on May 2nd. So including Sable, we expect non-interest income will be up between 9% and 10% from 2024. Our expense guidance did not change, as we continue to expect expenses will be up between 4% and 5% for the year, not including any one-time costs associated with the Sable transaction.

Our criticized commercial loans decreased during the quarter, and non-accrual loans increased, albeit at a slower pace than in the prior quarter. Net charge-offs were down this quarter and came in at 18 basis points. Our loan portfolio is diverse, and we see no significant weakening in any specific portfolio sectors or geography.

Our loan reserves are solid at 1.49% of loans, up two basis points from last quarter. We continue to expect modest charge-offs and provisioning levels for 2025. Lastly, a comment on capital.

Our capital ratios remain remarkably strong. We increased our quarterly common dividend and modestly increased our share repurchases in the quarter. We expect share repurchases will continue at this level or a bit higher throughout 2025.

Changes in the growth dynamics of our balance sheet could impact that view. I will now turn the call back to John.

John Hairston

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

Operator

Thank you, sir. And everyone, if you would like to ask a question, please press star one on your telephone keypad. Again, that is star one to ask a question.

Michael Rose

Hey. Good morning, guys. Good afternoon, everyone.

Thanks for It's a lot. It's a lot day, Michael. It's only gonna get worse.

For reporting early. Yeah. So just on that last comment around the buyback, just given these the capital accretion this quarter and a slower kind of loan loan growth outlook as we move forward, which I totally understand.

Why why not lean in a little bit more you know, into the buyback just just given where the stock trades the earn back on the buyback. And what I see is a, you know, fairly robust you know, case for positive operating. All the good stuff that you guys worked so hard to achieve.

Why why not lean in a little bit harder here. Thanks.

Mike Achary

Hey, Michael. It's Mike. And, absolutely, I think we're doing that.

So you know, the comment was around at least the same level that we did last quarter and potentially a bit higher. And that is a pretty healthy increase compared to last quarter. I know I just described that as modest, but it probably is a little bit better than modest.

And certainly, if you look at the level we bought back all of last year. If we buy back at current levels and a little bit higher, consistently through the year, that's a pretty nice increase year over year. So I I think one of the caveats certainly is the external environment the dislocation of of share prices, and just what happens.

You know, in that external environment. But all things equal, the intent is that we'll buy back again, at current levels, if not a bit higher, consistently through the year. So hopefully that makes sense.

Michael Rose

Yeah. It does. Really appreciate it.

Just as a follow-up, certainly understand how credit has performed, you know, so well. You guys done a really good job bringing down the the SNCC balances, but yeah, I think it's probably too early to completely understand what's gonna happen with tariffs but yeah, I know you guys have have made bigger inroads into small business. In your markets, and that's, you know, an area of concern, I think, for investors the longer this situation takes to play out.

What what are you guys working on currently to to kind of better assess what the credit impacts could be assuming you know, tariffs go through at some sort of elevated level. Thanks.

Chris Ziluca

Yeah. Hi. This is Chris Ziluca.

You know, we we've done our best to just basically understand all the different sectors that could be impacted. The reality is, you know, you don't know what really will be the outcome or what target areas you know, the duration of all of those actions. You know, certainly, because of even the noise that's going on, it is creating a little bit of consternation.

You know, in in in the markets and in the individual customer But I think most of them are really taking a position of a little bit of wait and see. I think they're you know, the the ones that are, you know, much more organized are are assessing where the risk might lie and making, you know, kind of plans for, like, a plan a and a plan b and a plan c. In the event that it's, you know, more significant or long duration type of an impact.

But, you know, we certainly looked at the various NAICS codes that are likely subject areas and done some evaluation on the risk profiles so that we can prepare to kind of engage with the customers as we when it becomes more certain.

John Hairston

Michael, this is John. I'll I'll add to that. It wasn't exactly your question, but I think it's somewhat tangential to Chris's answer.

At at this point in time, client sentiment while it shows some of the apprehension that Chris mentioned, the customer behavior doesn't really line up with a very near and present fear of an impending recession, particularly one that might be worse than moderate and and longer. We typically will see a lot of line draws occur during that time as people pad the balance sheet with excess liquidity. Securing whatever forms of capital they have to for a near term amount of pressure.

And we really aren't seeing that. And, I mean, that kinda comment goes through yesterday. So in the second quarter.

So I think the mindset of our clot somewhat mirrors the mindset of the banks, not just ours, but others. Where the general sentiment is a little too early to tell. And hopefully, you know, the shock at all of the first week of the quarter will give way to individual skirmishes with particular countries or sectors and the overall impact will be a lot less pronounced than maybe we all fear on April the second.

I don't know if that's helpful, but that would be, I guess, my added confidence.

Michael Rose

No. I I appreciate it. Maybe I could just squeeze one more in.

Just on the the increase in the PNR guide, certainly understand that includes Sable Trust. How much of the increase in the PPNR guide is related to that versus core. Because right.

Because guys did better on expenses than I think, you know, most of us were anticipating. Thanks.

Mike Achary

Yeah. Great question, Michael. And I think that if you look at the change that we we made in fees up nine to ten percent, that's a bit more than certainly Sable is expected to bring for this calendar year.

So I think we we can certainly count on some continued growth in our various fee income lines of businesses. That's been an extreme strength of the company. The last couple of years, and we anticipate those businesses to continue contributing to the bottom line.

So I think that as well as on the expense side, you'll note that we actually kept the guidance the same So up to four to five percent but certainly that includes table. So that infers that we're saving expenses elsewhere throughout the company for for the balance of the year. So I think those two combined the the better performance in terms of fees the addition of Sable, and then continued expense control really account for the entirety of the increase in guidance around PPNR.

Michael Rose

Thanks for taking my questions. I'll step back.

John Hairston

Thank you, Michael.

Operator

The next question today is from Catherine Mealor, KBW.

Catherine Mealor

Thanks. Good afternoon.

Mike Achary

Hi, Catherine.

Catherine Mealor

Can you just give us an update on the hiring process and, kind of the number of vendors and revenue producers that you've hired this far and and kind of your plans for the next couple of quarters. And then and then just how that translates into the your growth outlook seems like you're, you know, growth feels like it's a little bit slower and then it pushed back to the back half of the year. Although, I know you've always said it's more back end loaded.

But just kinda curious, as we as we think about you know, like how successful the hiring process has been or if this fall delayed any of that as well. Thanks.

John Hairston

Sure. Thanks for the questions. I'll I'll try to answer both at the same time.

But if if you need to give me a second question to make sure I'm clear, don't don't be bothered by it. First, on the hiring, I think we shared the deck that we've added four in Q1. We added seven, I believe, in Q4.

Our run rate for the year should be around let's call it twenty to thirty. I think twenty-four was the number that we actually actually shared on the call back in January. For the year, and and I would expect to hit that.

You know, Q1 is typically a little easier time to move folks, but you know, our our our our friends on the other side are are giving up, you know, good towel bankers very easily. So our pull-through rate for offers is running about fifty percent. For the type of talent we're trying to attract.

I think that's a pretty good number. So the the volatility in the macro does not affect our desire to add offensive players and add offices in growth markets that are highly successful. And if we look back over our Texas performance, you know, the last five year you compounded annual growth rates somewhere in the neighborhood around sixteen percent with the with South Texas coming on very strong in Q1 and North Texas has been been strong for really the better part of of several years.

So makes no sense whatsoever to let the current volatility get in the way of that plan. So we'll continue If not, enhance it to make sure that we come out whatever the other side of this dust up and tariffs is, with with a strong hand. The sectors that we grew in in Q1 were driven a good bit by the new hires, So particularly in equipment finance. So that's, I guess, the the earlier hires in the the cycle to add business from a new hire in Equipment Finance is a little shorter.

So we're we're showing good progress there. I look forward to that you know, being replicated throughout some of the other loan generation sectors. And when in talking about sort of the guidance we gave a quarter ago for the year, typically, we're giving loan guidance in an annual basis.

Right. We don't get into the quarters, but but now that the first quarter is behind us, I really expected a push in total loans for Q1. I'm headed into the end of the quarter Looks like we very much may get there and then had the payoffs that occurred both in health care and and even though the CRE number is up, it would have been up a good bit more had we not had some payoffs toward the end of the quarter.

As the ten year note began to subside and we saw a pretty good pretty big mismatch between revolving rates and perm rates. So we had some unplanned payoffs right there at the end. So as we go go into the second quarter, Catherine, the the production levels are good.

The pipelines look better than they looked a quarter ago. I think the only potential interruption is if if if the somewhat pause that we're seeing from larger organizations and medium-sized organizations due to the tariff concerns last all through the quarter. That could push some of the production we're planning to Q3.

But at this point in time, really not seeing any deals come out of the pipeline. We're just seeing the closing get shipped back a matter of days or weeks. So we remain hopeful be able to present.

And I would be disappointed if we don't show growth in 2Q. Great. Is that helpful.

Catherine Mealor

Yes. That's that's great. Yeah.

Pipeline was actually my next question. So that you answered that, which was great. And then maybe my follow-up, then I'll move over to M and A. I know you've talked in previous calls about wanting to participate in M and A.

But, of course, your that price is is back to evaluation that makes that more challenging. So just kind of curious your updated thoughts on M and A versus organic growth versus I know you talked about buybacks earlier as well. Is this just a period where we see more buybacks from you and then a push for again at growth and and and then maybe comes at a later date once, the stock rebound.

Mike Achary

Yeah, Catherine. Thanks for that. And I I think you pretty much answered the question.

That's that's really how we think about it now. And you know, I'll keep it simple. I mean, for right now, M and A is just not something that we're focused on.

And certainly, the disruption in the external environment and the impact on our evaluation or factors, so that that may change. Or will change at some point down the road. But I think right now, in terms of capital priorities, it really is what we've done more recently and that is you know, return capital to shareholders via dividend increases.

And then more recently, you know, an uptick in our our buyback. So I I certainly think that you know, we'll continue to lean in to those two ways. Of managing capital.

And focus on our organic growth plan. As we continue to do so. And M and A, I think, is something simply for another day down the road.

Catherine Mealor

Makes sense. Great. Thank you.

John Hairston

You bet. Thanks for questions.

Operator

Next, we'll take a question from Stephen Scouten, Piper Sandler.

Stephen Scouten

Yeah. Good afternoon, everyone. I just wanted to follow back around, a little bit on the upside in the PPNR.

And and, Mike, I know you gave some color on Michael's question about Sable and the benefit there, but think the detail we have in the deck was in twenty-four. They added, like, twenty-two they had about twenty-two million in revenue. What's kind of the expense base of that business that's coming over just trying to think about where the you know, where their other reductions are kinda within that overall guide.

Mike Achary

Yeah. We Steven, we haven't disclosed that specifically, and I think we'll we'll hold on to that right now until after we get past the actual closing. And have a quarter to kind of under our belts.

But we have kinda disclosed that we believe the impact of Sable as a whole on this year will be about two cents per share. Certainly, the the revenue side of that is you know, somewhere around fourteen, fifteen million, somewhere in that neighborhood. And once we get Sable completely converted, along with another conversion that we have going on to our legacy trust business, We're really looking for twenty-seven to full to see the full impact of the acquisition, and we're kinda calling that out at about eight to ten cents per share.

You know, for twenty-seven. Then certainly, we'll build on that in in future years. So that's that that's the disclosures we're giving today on Sable.

And again, once we get transaction closed, I think we'll share a little bit more detail.

Stephen Scouten

Yeah. That makes sense. Makes sense.

And then I know your name guide, I think you said it assumes those three cuffs. June, July, October. Like, can you give us some some color on, you know, maybe sense sensitizing that one way or the other if I mean, these these expectations seemingly change daily if we were to get zero cuts, kinda what you would think about or if we got more than three, just kinda how we would think about the the directional shifts with with other scenarios.

Mike Achary

Sure. I'd be glad to. So we've kept our treasury and financial planning teams busy modeling different rate scenarios.

So our our profit plan for this year started off with the three rate cuts and that became part of our guidance. And then we've taken a couple of twists and turns over the past couple of weeks as as you might expect, and it landed pretty much back where we started with the three rate cuts really centered over the summer and then went into to the fall. So the other disclosure that we provided in the the earnings deck and and it really was a piggyback off the same disclosure we did in the first quarter And that's this notion that really, any way you cut it where we have three three rate cuts, two, one, or or none, it really isn't gonna have an appreciable impact on our NII for this year.

It's certainly gonna move the numbers around a couple of million in either direction. Certainly nothing that would be considered material or significant. The big things that really move it would be loan growth.

And certainly, we have the updated guidance around low single digit loan growth, and that's impacted the numbers on NII a bid, and that resulted in us reducing that guidance a little bit to reflect you know, the reality of of loan growth maybe being a little bit less than we had thought it would be at the onset here. But if if you look at our NIM and NII you know, growth components as we think about the next three quarters, it really is the things that have driven that in the past couple of quarters, and we've been able to know, kind of expand our NIM by around two or three basis points pretty consistently quarter over quarter. And really we we think under almost any scenario, we'll be able to continue to do that.

For the balance of of this year. We continue to have opportunities to reprice CDs. We continue to have opportunities to reprice cash flow coming off the bond portfolio. As well as opportunities to reprice our fixed rate loan portfolio.

So those have really been the three three main drivers And then certainly, our ability to maintain our NIB mix at current levels potentially grow that a bit, by year end. Those are the things that really is the recipe for us to be able to produce the kind of NII levels that's part of the guidance as well as the potential NIM expansion over the course of the year. So I I know that was probably a lot, but hopefully, that was helpful.

Stephen Scouten

That's extremely helpful, Mike. Appreciate that. And then maybe last thing for me.

I mean, obviously, the stock continues to trade at at kind of a discount in multiple multiple peers, and the profitability is phenomenal. The excess capital is attractive. Deposits are great.

I mean, it feels like loan growth continues to be the only maybe piece of the puzzle that's not that's not hitting where you'd want it to be. And and, obviously, the uncertainty and I know you mentioned some health care credits and other things that were impeding growth this quarter, but but lower in that guide down. What what really needs to happen apart from maybe the environment getting better and getting these hires on board to to be able to hit on all cylinders on growth and maybe surprise to the upside.

As opposed to having to revise down at at some point along the way.

John Hairston

That that's a terrific question. This is John. I'll take it.

The new hires to come in and be in the markets that we're trying to grow in. Because our growth rate in those markets is awesome, but terrific. It has to offset some slower growth areas that we have some concentration in.

So the upside surprise will come from the ten year staying up in the even the load of min four is just not below four. At that point in time, we begin to see a lot more payoff. So if the ten year will stay up, then long enough to get the new hires in place and if we can pull forward some of the hires planned for the fourth quarter into the second, third quarter, then that would drive us towards an upside So we haven't given up on the initial guidance.

But we're trying to be prudent and transparent that in the environment we're in and in the last week of March when rumors of pretty significant tariffs began to chill some of the sentiment. We're we're trying to be respectful of of not overpromising and and be honest about what those headwinds could be. So the lowering of the guide wasn't because of a lack of appetite for growth or any lack of of expected success in hiring where we wanna hire.

But it's kinda hard to outrun the fact that there's so many people looking to deploy credit and it's just not enough demand to satisfy everyone. So the deal's getting won right now on price structure, turnaround time on decisions, and certainty of execution. We can compete well in all those areas.

We just need more offense flares in markets that there's more deals to take.

Stephen Scouten

That's fantastic, caller. Thank you guys for all the time. Appreciate it.

John Hairston

Man, thank you for the great question.

Operator

Brett Rabatin of Havdy Group has the next question.

Brett Rabatin

Hey. Good afternoon, everyone. Wanted to go back wanted to go back to fee income for a second and just you know, with with the increase in the guidance, it seems like a lot of that is is stable.

Are there other pieces that would be you think, repeatable from here or that would drive some of the growth, derivative income, syndication fees, SBA, mortgage banking. Is there anything in particular that's helping that guy for the year.

Mike Achary

Yeah. So I'll I'll get started, Brett. And as we kinda mentioned before, if you look at you know, what the new guidance kind of translates into in terms of dollars, Really, about two-thirds of that is the the introduction of stable into the company's financials.

And the other one-third or so is increases that we're expecting in other fee income lines of business. And you kinda hit already on our kind of our specialty lines, which have really, I think, over contributed in the last couple of quarters, and we expect that to continue to do so. So that things that those some examples of that are are BOLI syndication fees.

You mentioned that. Our SBIC fees have been real strong of late expect some of that to continue at at certain levels. SBA fees is is another category.

Wealth management outside of Sable, And then we've also had some pretty nice increases in our ability to originate and sell some mortgage loans. So those are all for will kinda pick up that difference. In addition to what Sable will bring.

John, I don't know if there's anything you wanna add.

John Hairston

Sure. I'll I'll add to that. Mike shared that Sable contributes I but, you know, that shows up in the wealth management forecast.

But but even net of SABL, we had a really great quarter, and it's been a long time since we did not have a very great quarter with wealth management fees. That's in trust. It's in investment management. It's in annuity production at the retail shop.

It shows up in wealth management, but the retail folks are reaching a great deal of it. All those teams really do hit on all eight cylinders. And and we had another great quarter.

The the other area that is, I'll use your word, is repeatable is our density in our business accounts for operating accounts that we offer treasury services That density continues to improve in terms of wallet share. Some of the new hires we've talked about are on the treasury side. Ensure that that density continues to improve, and that's real money.

On the fee income side. And so that's improving And it has a bit of a tailwind just as balances normalized from the pandemic. You mentioned mortgage and with rates going up, I think they were priced at seven percent yesterday.

It's kinda hard to believe we'll see application improvement that generates a lot of fee income, but our share of the all the mortgages that do happen should continue to improve as we deploy our direct channel origination sources through the rest of the year. So I don't know that mortgage secondary fees is gonna light the board up for everybody. But for us, given our relative performance and relative attractiveness, as originator is gonna continue to improve, we might out punch our weight a bit in terms of of improvement there.

And and then finally, the specialty phase that Mike mentioned, the syndication fees related to that is sort of a stated desire I've talked about it on several calls. We're our participation as a smaller player in very large transactions has been is is getting replaced by leading. Smaller transactions that we can very well perform in, and then we get a bigger slice of that fee.

That allows us to create both more granular portfolio get more operating deposits, and get a fee contribution that otherwise would just be getting rewarded as a piece of somebody else's credit relationship. So we we won't, you know, certainly get out of the STICK business at all, but I think we pulled it down about three hundred basis points in the last seven or eight quarters. And replacing all that, is is is been, I think, the secret sauce to seeing some of the benefit on both the DDA side and the fee income side.

Is is that the clarity you were looking for.

Brett Rabatin

Yeah. That's that's really helpful from from both of you. And you did you just mentioned shared national credits.

The other question I had was just around, you know, that that bucket continued to atrophy a little bit this quarter. And then you talked about the the payoffs in health care and other potential credits just based on rates, etcetera. How how much of of the revised guidance or does the revised guidance kind of assume that those trends continue. Or how should we think about the the headwinds that you faced relative to the revised revised twenty-five.

Outlook.

John Hairston

I think if I kinda draw a box around health care, that may be the most digestible way to answer it. The diminishment we saw this quarter were from three syndicated well, two were syndications Two were leveraged and one was a syndication. That we had a share in that were recast in the quarter.

A little bit ahead of when the suggested or the maturity would have suggested them to be recast. Then we opted out of to use that liquidity for other purposes specifically loan growth in back half of the year. So that contributed nearly all of the demand adjustment in the SNIC density.

I think we reported nine point four It was in the mid nines. I've been trying to bring that back to my memory. And and we I don't think we will get north of ten.

But we we don't really we're not really intentionally writing it down. It's really just more of a replacement of participations and other credits with with leading our own that are smaller. But I didn't expect that to be as big a headwind in Q1 as it was because we didn't expect to see those payoffs.

But but I'm I'm not I'm not gonna cry over over having that happen because I have confidence we'll redeploy that toward the back half of the year. I thought I think I think that was the entire impact on SNICs other than people just doing pay downs on their lines.

Brett Rabatin

Okay. Great. That's really helpful.

Appreciate the call, guys.

John Hairston

You bet. Thank you.

Operator

Next up, we'll hear from Casey Haire, Autonomous Research.

Casey Haire

Thanks. Good afternoon, everyone. Follow-up on capital, two parter.

So first, stable What kind of CT one impact will will that transaction have And then two, any thought to I know you guys did a bond book restructuring in maybe twenty-three or so, but just wondering if that that's another way to to use some of the excess capital given, you know, the the bond book yield is is still a little light.

Mike Achary

Yeah. Thanks, Casey. This is Mike.

And related to Sable, again, we're we're not disclosing the the purchase price for that entity, but I will share that the impact on common tier one is is gonna be modest. It's not gonna be a huge a a a huge dent there. Any stretch.

And then your other question related to a restructuring, I mean, look, that's something that we consider, really every quarter. I mean, we model those kinds of things pretty on a pretty regular basis. And we'll continue to do so.

But I think to actually pull the trigger on something like that, we'll we'll need a little bit more stability, especially in the bond markets. Or a little bit confidence that the bond markets will remain stable if they get there. So, you know, so hopefully, we have that kind of confidence and stability. And, you know, we'll be able to consider those kinds of things.

But I think right now, there's probably just a little bit too much going on to.

Casey Haire

Yeah. Fair enough. Okay.

And then just on the the expense guide, I I appreciate you guys are not gonna lay out what the the Sable impact is. So I guess what where did you where did you find these cost saves to keep the expense guide flat given that the table will be additive, obviously, to the expense base. Like, where where are the cost is coming from.

Mike Achary

Sure. I'll I'll I'll provide some color on that. So so part of it you know, admittedly is we think our our incentive comps load this year will probably be a little bit lighter than than what we thought coming into the year, so there's some savings there.

And really the rest of it is really kind of across the board and continues to be you know, centered on our ability to to control costs. And you know, again, thinking about the the way that this year has really begun with so much uncertainty and know, issues with the the potential trade war and everything related to that. You know, we're cognizant of what we need to do to continue to to control costs and say cost.

So I think it's just a little bit more a heads down effort to make sure that we're spending money the way we need to and saving where we need to as well. So that's put us in a position, I think, to be able to be able to handle the on boarding of the stable expense base without changing the guidance.

Casey Haire

Gotcha. Thank you. Okay.

Operator

The next question is from Gary Tenner, DA Davidson.

Gary Tenner

Thanks. Good afternoon. What's my questions were answered, including that follow-up on the expenses.

But, Mike, I wonder if you could just give us the expected CD maturities and Canacc expected rate benefit or pickup in the second quarter.

Mike Achary

Yeah. So I'll I'll start off with what that benefit is for the year. So we're we we look to have about $5.5% billion of CD maturities over the next three quarters.

Those CDs will come off at about 3.7%, and we think they'll be repriced at somewhere near 3%. And again, that's for the remaining three quarters of the year. So that assumes a a seventy-five percent renewal.

So that's kind of the the headline story. By quarter, you asked about the second quarter. So we're looking at about $2.3% billion of CD maturities coming off at 3.88%.

Going back on at around 3.50% or a bit lower. With about a seventy-eight percent renewal. So those are the numbers for the year.

As well as the second quarter.

Gary Tenner

Okay. Great. And then I guess maybe just a follow-up to that.

Mike. In terms of the end of period deposit, expectation to be up low single digits over the course of the year then, does that kinda that's net of some amount of CVs that will not renew.

Mike Achary

Yeah. It'll continue to shift as we kinda described. And know, no changes in that guidance around the outlook for deposits to come in at low single digits.

So you know, that certainly accounts for the seasonal inflows and outflows of our public fund books. So again, for the this past quarter, deposits were actually down right about three hundred million. But if you back out the impact of the public fund outflows, which of course are seasonal, we actually would have grown deposits by about twenty to twenty-five million.

So all of those factors are considered and and part of the guide.

Gary Tenner

Thank you. Appreciate it.

Operator

Okay. The next question is Matt Olney Stevens.

Matt Olney

Hi, Matt. Hey, guys. Good afternoon.

Going back to the commentary around lung growth being stronger in the back half of the year, Just remind us how much of this growth would be from new hires that you made over the last year or so. And then secondly, just any color you can give us as far as loan pipeline that can just get us more comfortable with the loan growth in the back half of the year.

Mike Achary

Sure. I'll I'll go ahead. Yeah.

I'll start now with the the first question. So if you look at the overall loan growth that we're expecting for the year, it's somewhere around fifteen percent that we're expecting from root new revenue hires, and those would have been primarily folks that we've hired let's say, in the fourth quarter of last year, maybe a little bit into the first quarter of this year. And then on the the expense number, the impact the new hires on our expense guidance is about a hundred basis points or so.

So those numbers are largely unchanged from the disclosures that I think we gave last quarter.

John Hairston

Yeah. The the Matthew, this is John. The percentage has changed a bit.

Depending on which of the new hires are are loaded in a little earlier. So I gave the example in equipment finance to where a single new hire in that group can make a pretty big difference pretty rapidly because the the the time to decision and book a loan, particularly in the capital market side of equipment finance, is a good bit more rapid say a commercial banker adding that's gonna take, you know, a hundred and twenty, a hundred and fifty days to really begin to get their pipeline fleshed out. Once they get comfortable and kind of understand the tech, the policies, and the the people.

So the more of the middle market equipment finance and CRE hires and health care hires, we can get a load to the front of the year, the more of an impact above the fifteen it could be. So that's our goal, but we didn't we didn't, you know, build that in the plan to to make it maybe open to and it's kinda balanced out based on what our past has been. That said, you know, one of the earlier questions around the importance of an upside to to loan growth on our valuation, certainly, we're motivated to do that if we can find the talent.

Matt Olney

And, John, to follow-up on the the the comments you made, I think that, you know, your target between what, twenty and thirty new producer hires this year. Is there a target mix you have of the type of producer, whether it's real estate or or or commercial or or capital mortgage. Just any color on the mix.

John Hairston

Sure. There's a there's a I think to to average it out, there's a couple in each of the special few lines. Okay.

We'd like to add CRE folks in in Florida, in Texas, and specifically in Nashville. Would like to add additional equipment equipment finance folks They'll be based out of New Orleans, but it'll be focused on areas around our footprint. Probably half the numbers in business are commercial bankers.

There's four, I think, planned for financial advisors in the wealth management group. To to help augment our our new investment in Florida and central Florida. Via SABL.

And then and to be honest, if talent or teams come available to us because of disruption around us, we would not hesitate to add more than the twenty to thirty that I outlined. Like I said, the number you know, in the plan is twenty-four. But if we could get thirty or more, that would be just just fine with me.

So wherever there's talent in markets we're trying to grow in particularly, high annual organic growth rate options, Those are very much in demand to us.

Matt Olney

Okay. Great. Thank you, guys.

John Hairston

You bet. Thank you.

Operator

Next, we'll take a question from Ben Gerlinger, Citi.

Ben Gerlinger

Hey. Good afternoon.

John Hairston

Hi there.

Ben Gerlinger

I just wanna follow-up with quickly on the kind of the M and A conversation with Mike. You said there's really not a lot of appetite that in relation to depositories, I e loans and deposits, or is that, like, all M and A. So that would ex also include, like, not interested in fee income.

Generated business.

Mike Achary

Yes. Great great question, Ben, and and great clarification. So the the question was really directed I think, at depositories.

You know, certainly, we're we're in the midst of of closing on on Sable. So we like to get that one closed and and some good work done on getting that integrated. But probably would be a little bit more open to to those kinds of transactions and depositories.

In the current environment. So so thanks for that clarification.

Ben Gerlinger

I I appreciate everything else you've been asked and answered. Thanks, Chris.

John Hairston

You bet.

Operator

Our last question today comes from Chris Ziluca.

Chris Ziluca

Hey, good afternoon. I wanted to ask Chris about the growth in the on unfunded commitment reserve. Was that related to just volume there or risk or or any more color there.

Chris Ziluca

Yeah. Good question. Really, it's just, you know, the the change in our outlook or for fundings likely that, there's gonna be potentially more fundings just converting over to from unfunded to funded.

And so, therefore, it'll just kinda move over you know, from that perspective.

Chris Ziluca

Okay. And as some of the factors, you know, qualitatively in your modeling for reserves in general, do you have any visibility that that would lead to any any significant reserve build in second or third quarter, or is it simply too early to comment.

Chris Ziluca

It's probably too early to comment, but, you know, the the qualitative factors are there because of, you know, how we built our models, and they don't always take into consideration all of the variables that are going on at the loan level. So the qualitative factors are there to kind of kind of enhance that in many respects.

Chris Ziluca

So the idea of having a higher recession scenario, is that already in numbers that you had it as a year end or or as a March thirty-first.

Mike Achary

Yeah. So, Chris, this is Mike. So if we look at the the scenarios that we're using, and, of course, we use movies like like many of the the mid cap banks.

We're we're we're split between the baseline scenario as well as the the slower growth scenario. And the baseline scenario that we're using does not have the impact of a recession but certainly the slower growth one does. And there's a third scenario out there that includes a moderate recession, that as we go through this year and the next quarter or two, we know, we'll make judgment calls around how we might change or alter the mix of the scenarios that we're using.

But certainly, where we are today, it's too soon to make a call as to you know, where we'll be really at the end of this quarter given the potential for changes in the external environment.

Chris Ziluca

And I might also add I might also add that, you know, the scenarios in general have gotten a little bit more Right. Pessimistic in many respects. So even the baseline you know, tends to move.

So you wanna just kinda keep in mind the fact that the baseline, ultimately, if it's working correctly, will kind of follow where we are in the cycle. And so from last quarter to this quarter, there's more components within there that kind of sound like you know, higher recession risk.

Chris Ziluca

Okay. Great. That's that's good background.

Thank you both. I appreciate it.

John Hairston

You bet. Thanks for the question.

Operator

And everyone, that does conclude our question and answer session. I would like to hand the call back to Mr. . John Hairston for any additional or closing remarks.

John Hairston

Yeah. Thanks, Lisa. Thanks for moderating today, and thanks everyone for attending the late call.

Look forward to seeing you on the road soon.

Operator

Once again, everyone, that does conclude today's conference. Thank you for your participation. You may now disconnect.