Hancock Reports Second Quarter 2012 Financial Results


GULFPORT, Miss., July 26, 2012 (GLOBE NEWSWIRE) -- Hancock Holding Company (Nasdaq:HBHC) today announced financial results for the second quarter of 2012. Operating income for the second quarter of 2012 was $47.0 million or $.55 per diluted common share, compared to $40.5 million, or $.47 in the first quarter of 2012. Operating income was $26.6 million, or $.48, in the second quarter of 2011. Operating income is defined as net income excluding tax-effected merger-related costs and securities transactions gains or losses. Included in the financial tables is a reconciliation of net income to operating income.

Hancock's return on average assets, excluding merger-related costs and securities transactions gains or losses, was 1.00% for the second quarter of 2012, compared to 0.85% in the first quarter of 2012, and 0.92% in the second quarter a year ago.

Net income for the second quarter of 2012 was $39.3 million, or $.46 per diluted common share, compared to $18.5 million, or $.21 in the first quarter of 2012. Net income was $12.1 million, or $.22, in the second quarter of 2011. Pre-tax earnings for the second and first quarters of 2012 included merger-related costs of $11.9 million and $33.9 million, respectively. Pre-tax merger costs for the second quarter of 2011 totaled $22.2 million.

The Company's pre-tax, pre-provision profit for the second quarter of 2012 was $75.8 million compared to $69.2 million in the first quarter of 2012 and $49.5 million in the second quarter of 2011. Pre-tax pre-provision profit is total revenue (TE) less non-interest expense and excludes merger-related costs and securities transactions gains or losses. Included in the financial tables is a reconciliation of net income to pre-tax, pre-provision profit.

"Second quarter operating results improved 17% linked-quarter on a per share basis and were in line with our expectations and guidance," said Hancock's President and Chief Executive Officer Carl J. Chaney. "The Company's fundamentals remain strong and we are pleased to have reported a 1% operating ROA for the quarter. We will continue to focus on improving that return through increasing loan volumes, developing additional revenue opportunities and achieving additional expense synergies."

On June 4, 2011, Hancock completed its acquisition of Whitney Holding Corporation ("Whitney") headquartered in New Orleans, Louisiana. The impact of the acquisition is reflected in the Company's financial information from the acquisition date. Under purchase accounting, the Whitney balance sheet was recorded at fair value at acquisition date.       

Highlights & Key Operating Items from Hancock's Second Quarter Results

Total assets at June 30, 2012, were $18.8 billion, compared to $19.3 billion at March 31, 2012. 

Loans

Total loans at June 30, 2012 were $11.1 billion, a slight decrease of $52 million, or less than 1%, from March 31, 2012. Adjusting for a $46 million decline in the FDIC covered Peoples First portfolio during the second quarter, total loans were virtually unchanged compared to March 31, 2012. 

During the second quarter net growth in commercial and industrial (C&I), residential mortgage and consumer loans was offset by net reductions in commercial construction and land development (C&D) and commercial real estate (CRE) credits. 

The growth in the C&I portfolio reflected activity mainly in western Louisiana, Tampa and Greater New Orleans. The increase in the consumer portfolio was related to indirect and home equity lending campaigns kicked off during the quarter. 

The decline in C&D and CRE loans reflects ongoing payoffs and scheduled repayments within those portfolios, a portion of which were rated as problem credits. There have been limited opportunities for new project financing for these types of credits in today's environment.

Over $400 million of new loans were funded in markets throughout the company's footprint from both existing and new customers. The environment to generate new loans remains competitive. However, the pipeline for new originations is strong and management remains cautiously optimistic there will be net loan growth in the second half of 2012.

For the second quarter of 2012, average total loans were $11.1 billion, a decrease of $53 million, compared to the first quarter of 2012. 

Deposits

Total deposits at June 30, 2012 were $14.9 billion, down $502 million, or 3%, from March 31, 2012. Average deposits for the second quarter of 2012 were $15.2 billion, down $159 million, or 1%, from the first quarter of 2012. 

Noninterest-bearing demand deposits (DDAs) totaled $5.0 billion at June 30, 2012, down approximately $200 million, or 4%, compared to March 31, 2012. DDAs comprised 34% of total period-end deposits at June 30, 2012, unchanged from March 31, 2012. Interest bearing transaction and savings deposits totaled $5.9 billion at June 30, 2012, down approximately $120 million, or 2%, linked-quarter. The redeployment of temporary excess liquidity in a few customer relationships accounted for approximately half of the declines in DDAs and interest-bearing transaction deposits during the second quarter of 2012.

Interest-bearing public fund deposits were down $65 million linked-quarter reflecting the seasonal nature of these types of deposits.

Time deposits (CDs) totaled $2.5 billion at June 30, 2012, down $116 million compared to $2.6 billion at March 31, 2012. During the second quarter, approximately $745 million of time deposits matured at an average rate of 1.09%, of which approximately 70% renewed at an average cost of 0.48%. The opportunity to reprice CDs at significantly lower rates over the near term has largely been eliminated.   

Asset Quality

The Company's allowance for loan losses was $140.8 million at June 30, 2012, compared to $142.3 million at March 31, 2012.  The ratio of the allowance for loan losses to period-end loans was 1.27% at June 30, 2012, virtually unchanged from March 31, 2012. 

Hancock recorded a total provision for loan losses for the second quarter of 2012 of $8.0 million, down from $10.0 million in the first quarter of 2012. The provision for non-covered loans declined to $7.0 million in the second quarter of 2012 from $8.4 million in the first quarter of 2012. During the second quarter of 2012, the Company recorded a $5.1 million increase in the allowance for losses related to impairment of certain pools of covered loans, with a related increase of $4.1 million in the Company's FDIC loss share indemnification asset. The net impact on provision expense from the covered portfolio was $1.0 million in the second quarter, compared to $1.6 million for the first quarter of 2012. 

Net charge-offs from the non-covered loan portfolio in the second quarter of 2012 were $10.2 million, or .37% of average total loans on an annualized basis. This compares to net non-covered loan charge-offs of $7.1 million, or .25% of average total loans, for the first quarter of 2012. A portion of the charge-offs on impaired loans had been specifically reserved for in previous quarters.

The allowance calculated on the portion of the loan portfolio that excludes covered loans and loans acquired at fair value in the Whitney merger totaled $81.4 million, or 1.40% of this portfolio at June 30, 2012 and $84.5 million, or 1.55% at March 31, 2012. This ratio will tend to decline as the proportion of this portfolio representing new business from Whitney's operations grows, other factors held constant.

Non-performing assets (NPAs) totaled $271 million at June 30, 2012, down $17 million from $288 million at March 31, 2012. Non-performing assets as a percent of total loans and foreclosed assets was 2.42% at June 30, 2012, compared to 2.55% at March 31, 2012. The decrease in overall NPAs mainly reflects the net reduction in ORE and foreclosed assets during the quarter, including sales of bank branches closed at the completion of the systems integration in March 2012. Non-performing loans exclude loans from Whitney's and Peoples First's acquired credit-impaired loan portfolios that were recorded at estimated fair value at acquisition and are accreting interest income. 

Management expects the provision and other asset quality measures will remain within the range of the results reported over the past few quarters. Additional asset quality metrics for the acquired (Whitney), covered (Peoples First) and originated (Hancock legacy plus Whitney non-acquired loans) portfolios are included in the financial tables.

Net Interest Income

Net interest income (TE) for the second quarter of 2012 was $180.3 million, a slight improvement over the first quarter of 2012. The $1 million increase is mainly related to the impact of the reduction in overall funding cost during the quarter. Average earning assets were $16.2 billion in the second quarter of 2012, down $74 million, or less than 1%, from the first quarter of 2012.

The net interest margin (TE) was 4.48% for the second quarter of 2012, up 5 basis points (bps) from 4.43% in the first quarter of 2012. The margin continued to be favorably impacted by a shift in funding sources and a decline in funding costs (6bps), offset by a decline in the securities portfolio yield (9bps). Management expects the reported net interest margin will remain relatively stable over the next couple of quarters.

Non-interest Income

Non-interest income totaled $63.6 million for the second quarter of 2012, up $2.1 million, or 3%, from $61.5 million in the first quarter of 2012. 

Service charges on deposits totaled $20.9 million for the second quarter of 2012, up $4.6 million from the first quarter of 2012. In conjunction with the core systems integration in March 2012, the Company began offering new and standardized products and services across its footprint. These product changes accounted for the majority of the increase linked-quarter. 

Trust fees totaled $8.0 million for the second quarter of 2012, down from $8.7 million in the first quarter of 2012. As noted last quarter, a one-time event associated with the trust systems conversion at year-end 2011 increased first quarter results.  Excluding the impact of that event, trust fees were up slightly linked-quarter.

Insurance fees were $4.6 million for the second quarter, up $1.1 million linked-quarter. The increase mainly reflected annual policy renewals during the quarter. Fees from secondary mortgage operations were $3.0 million for the second quarter, down $1.0 million linked-quarter.  The decrease reflects a lower volume of mortgages being sold into the secondary market due, in part, to some increased emphasis on originations to be held in the loan portfolio.

Management expects the overall level of fee income to decline in the third quarter of 2012 reflecting, in part, the impact of the restrictions from the Durbin amendment on Hancock Bank. The Durbin restrictions began impacting Hancock Bank on July 1, 2012, and are expected to result in a loss of fee income of approximately $2.5 million per quarter. The restrictions began impacting Whitney Bank in October 2011.

Non-interest Expense & Taxes

Operating expense for the second quarter of 2012 totaled $168.1 million, down $3.5 million from the first quarter of 2012. Operating expense excludes merger-related costs. Amortization of intangibles totaled $7.9 million during the second quarter, down from $8.3 million in the first quarter of 2012. 

Total personnel expense was $89.3 million in the second quarter of 2012, a decrease of $2.5 million from the first quarter of 2012. The linked-quarter decrease reflects a reduction in quarterly payroll taxes and the reduction in force associated with the core systems conversion and branch consolidations in mid-March. These declines were partly offset by the Company's annual merit increase and recent strategic new hires.

Merger-related costs for the second quarter of 2012 totaled $11.9 million pre-tax. Merger-related expenses incurred to-date total approximately $133 million. Included in merger-related costs during the second quarter of 2012 were expenses associated with professional fees, contract cancellations, personnel costs and data processing expenses.

Management expects additional cost savings will continue to be generated over the third and fourth quarters of 2012, and is reiterating its total noninterest expense guidance for the fourth quarter of 2012 of $149 million to $153 million, excluding amortization of intangibles. 

The effective income tax rate for the second quarter of 2012 was 26%, up from 17% in the first quarter of 2012.  Management expects the full year 2012 reported tax rate to approximate 25%.  The effective income tax rate continues to be less than the statutory rate of 35%, due primarily to tax-exempt income and tax credits. 

Capital

Common shareholders' equity totaled $2.4 billion at June 30, 2012. The Company remained well-capitalized and improved its tangible common equity ratio to 8.72% at June 30, 2012, up from 8.27% at March 31, 2012. Additional capital ratios are included in the financial tables.

During the second quarter the Company announced a tender offer for up to $75 million of Whitney Bank subordinated notes. A total of $150 million in subordinated notes were issued by Whitney National Bank in March 2007 at a rate of 5.875%. In July 2012, the Company completed the tender and successfully repurchased approximately $52 million of the Whitney subordinated notes at a premium of $5.2 million. The transaction will be included in third quarter 2012 results.

Conference Call

Management will host a conference call for analysts and investors at 9:00 a.m. Central Time Friday, July 27, 2012 to review the results. A live listen-only webcast of the call will be available under the Investor Relations section of Hancock's website at www.hancockbank.com. To participate in the Q&A portion of the call, dial (877) 564-1219 or (973) 638-3429. An audio archive of the conference call will be available under the Investor Relations section of our website. A replay of the call will also be available through August 3, 2012 by dialing (855) 859-2056 or (404) 537-3406, passcode 96892404. 

About Hancock Holding Company

Hancock Holding Company, the parent company of Hancock Bank and Whitney Bank, operates a combined total of nearly 260 full-service bank branches and more than 350 ATMs across a Gulf south corridor comprising South Mississippi; southern and central Alabama; southern Louisiana; the northern, central, and Panhandle regions of Florida; and Houston, Texas. 

The Hancock Holding Company family of financial services companies also includes Hancock Investment Services, Inc.; Hancock Insurance Agency and Whitney Insurance Agency, Inc.; and corporate trust offices in Gulfport and Jackson, Miss., New Orleans and Baton Rouge, La., and Orlando, Fla.; and Harrison Finance Company. Additional information is available at www.hancockbank.com and www.whitneybank.com.

The Hancock Holding Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2758

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and we intend such forward-looking statements to be covered by the safe harbor provisions therein and are including this statement for purposes of invoking these safe-harbor provisions.  Forward-looking statements provide projections of results of operations or of financial condition or state other forward-looking information, such as expectations about future conditions and descriptions of plans and strategies for the future.  

Forward-looking statements that we may make include, but may not be limited to, comments with respect to loan growth, deposit trends, credit quality trends, net interest margin trends, future expense levels (including merger costs and cost synergies), projected tax rates, economic conditions in our markets, future profitability, purchase accounting impacts such as accretion levels, and the financial impact of regulatory requirements such as the Durbin amendment.

Hancock's ability to accurately project results or predict the effects of future plans or strategies is inherently limited.  Although Hancock believes that the expectations reflected in its forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements.  Factors that could cause actual results to differ from those expressed in Hancock's forward-looking statements include, but are not limited to, those risk factors outlined in Hancock's public filings with the Securities and Exchange Commission, which are available at the SEC's internet site (http://www.sec.gov).

You are cautioned not to place undue reliance on these forward-looking statements.  Hancock does not intend, and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law.

Hancock Holding Company           
Financial Highlights           
(amounts in thousands, except per share data and FTE headcount)           
(unaudited)           
 
   Three Months Ended   Six Months Ended 
  6/30/2012 3/31/2012 06/30/011 6/30/2012 6/30/2011
Per Common Share Data
           
Earnings per share:          
Basic $0.46 $0.22 $0.22 $0.68 $0.59
Diluted $0.46 $0.21 $0.22 $0.67 $0.59
Operating earnings per share: (a)          
Basic $0.55 $0.48 $0.48 $1.03 $0.93
Diluted  $0.55 $0.47 $0.48 $1.02 $0.93
Cash dividends per share  $0.24 $0.24 $0.24 $0.48 $0.48
Book value per share (period-end) $28.30 $28.02 $28.18 $28.30 $28.18
Tangible book value per share (period-end) $18.46 $17.99 $18.06 $18.46 $18.06
Weighted average number of shares:          
Basic  84,751  84,741  54,890  84,742  46,160
Diluted  85,500  85,442  55,035  85,467  46,310
Period-end number of shares  84,774  84,770  84,694  84,774  84,694
Market data:          
High sales price $36.56 $36.73 $34.57 $36.73 $35.68
Low sales price $27.96 $31.56 $30.04 $27.96 $30.04
Period end closing price  $30.44 $35.51 $30.98 $30.44 $30.98
Trading volume  39,310  32,423  32,122  71,733  58,064
           
           
Other Period-end Data
           
FTE headcount  4,456 4,601 4,911  4,456 4,911
Tangible common equity $1,565,029 $1,524,985 $1,529,955 $1,565,029 $1,529,955
Tier I capital $1,549,018 $1,513,485 $1,468,175 $1,549,018 $1,468,175
Goodwill and indefinite lived assets $628,877 $647,216 $622,929 $628,877 $622,929
Amortizing intangibles $205,249 $202,772 $233,121 $205,249 $233,121
           
Performance Ratios
           
Return on average assets 0.83% 0.39% 0.42% 0.61% 0.56%
Return on average assets (operating) (a) 1.00% 0.85% 0.92% 0.92% 0.87%
Return on average common equity  6.62% 3.13% 3.32% 4.88% 4.72%
Return on average common equity (operating) (a) 7.93% 6.86% 7.30% 7.40% 7.40%
Tangible common equity ratio  8.72% 8.27% 8.09% 8.72% 8.09%
Earning asset yield (TE) 4.80% 4.81% 4.77% 4.80% 4.81%
Total cost of funds 0.32% 0.38% 0.66% 0.35% 0.76%
Net interest margin (TE) 4.48% 4.43% 4.11% 4.45% 4.05%
Noninterest expense as a percent of total revenue (TE) before amortization of purchased intangibles and securities transactions and merger expenses 65.67% 67.81% 65.62% 66.73% 66.68%
Allowance for loan losses as a percent of period-end loans 1.27% 1.28% 1.00% 1.27% 1.00%
Allowance for loan losses to non-performing loans + accruing loans 90 days past due 104.78% 105.37% 85.22% 104.78% 85.22%
Average loan/deposit ratio 73.51% 73.10% 72.51% 73.30% 72.46%
Noninterest income excluding securities transactions as a percent of total revenue (TE) 26.06% 25.54% 31.43% 25.81% 32.05%
(a) Excludes tax-effected merger related expenses and securities transactions. Management believes that this is a useful financial measure because it enables investors to assess ongoing operations. 
           
Hancock Holding Company           
Financial Highlights           
(amounts in thousands)           
(unaudited)           
 
   Three Months Ended   Six Months Ended 
  6/30/2012 3/31/2012 06/30/011 6/30/2012 6/30/2011
Asset Quality Information
           
Non-accrual loans (b) $113,384 $111,378 $109,234 $113,384 $109,234
Restructured loans (c) 19,518 19,926 18,606 19,518 18,606
Total non-performing loans 132,902 131,304 127,840 132,902 127,840
ORE and foreclosed assets 138,118 156,332 130,320 138,118 130,320
Total non-performing assets $271,020 $287,636 $258,160 $271,020 $258,160
Non-performing assets as a percent of loans, ORE and foreclosed assets 2.42% 2.55% 2.27% 2.42% 2.27%
Accruing loans 90 days past due (b) $1,443 $3,780 $4,057 $1,443 $4,057
Accruing loans 90 days past due as a percent of loans 0.01% 0.03% 0.04% 0.01% 0.04%
Non-performing assets + accruing loans 90 days past due to loans, ORE and foreclosed assets 2.43% 2.58% 2.30% 2.43% 2.30%
           
Net charge-offs - non-covered $10,211 $7,054 $8,241 $17,265 $14,683
Net charge-offs - covered 3,499 15,790  --  $19,289  375
Net charge-offs - non-covered as a percent of average loans 0.37% 0.25% 0.49% 0.31% 0.51%
           
Allowance for loan losses $140,768 $142,337 $112,407 $140,768 $112,407
Allowance for loan losses as a percent of period-end loans 1.27% 1.28% 1.00% 1.27% 1.00%
Allowance for loan losses to non-performing loans + accruing loans 90 days past due 104.78% 105.37% 85.22% 104.78% 85.22%
           
Provision for loan losses $8,025 $10,015 $9,144 $18,040 $17,966
           
Allowance for Loan Losses
           
Beginning Balance $142,337 $124,881 $94,356 $124,881 $81,997
Provision for loan losses before FDIC benefit - covered loans 5,146 31,879 18,049 37,025 28,948
Benefit attributable to FDIC loss share agreement  (4,116) (30,285)  (17,148)  (34,401)  (27,502)
Provision for loan losses - non-covered loans 6,995 8,421 8,243 15,416 16,520
Net provision for loan losses 8,025 10,015 9,144 18,040 17,966
Increase in indemnification asset  4,116 30,285 17,148 34,401 27,502
Charge-offs - non-covered 12,711 9,666 12,993 22,377 21,697
Charge-offs - covered 3,499 15,790  --  19,289 375
Recoveries - non-covered  (2,500) (2,612) (4,752)  (5,112) (7,014)
Net charge-offs 13,710 22,844 8,241 36,554 15,058
Ending Balance $140,768 $142,337 $112,407 $140,768 $112,407
           
           
Net Charge-off Information 
           
Net charge-offs - non-covered:          
Commercial/real estate loans $5,627 $4,278 $5,210 $9,906 $9,390
Residential mortgage loans 1,846 721 1,001 2,567 1,372
Consumer loans 2,738 2,055 2,030 4,792 3,921
Total net charge-offs - non-covered  $10,211 $7,054 $8,241 $17,265 $14,683
           
Average loans:          
Commercial/real estate loans $7,946,781 $8,017,691 $4,564,701 $7,982,217 $3,836,050
Residential mortgage loans 1,548,803 1,549,131 864,768 1,548,945 759,543
Consumer loans 1,644,532 1,626,052 1,249,168 1,635,334 1,192,547
Total average loans $11,140,116 $11,192,874 $6,678,637 $11,166,496 $5,788,140
           
Net charge-offs - non-covered to average loans:          
Commercial/real estate loans 0.28% 0.21% 0.46% 0.25% 0.49%
Residential mortgage loans 0.48% 0.19% 0.46% 0.33% 0.36%
Consumer loans 0.67% 0.51% 0.65% 0.59% 0.66%
Total net charge-offs - non-covered to average loans 0.37% 0.25% 0.49% 0.31% 0.51%
           
(b) Non-accrual loans and accruing loans past due 90 days or more do not include acquired credit-impaired loans which were written down to fair value upon acquisition and accrete interest income over the remaining life of the loan.
 
(c) Included in restructured loans are $9.7 million, $5.2 million, and $8.4 million in non-accrual loans at 6/30/12, 3/31/12, and 6/30/11, respectively. Total excludes acquired credit-impaired loans.
           
Hancock Holding Company           
Financial Highlights           
(amounts in thousands)           
(unaudited)           
 
   Three Months Ended   Six Months Ended 
  6/30/2012 3/31/2012 06/30/011 6/30/2012 6/30/2011
Income Statement
           
Interest income  $190,489 $191,716 $115,477 $382,205 $198,010
Interest income (TE) 193,323 194,665 118,335 387,988 203,740
Interest expense 13,030 15,428 16,418 28,458 32,187
Net interest income (TE) 180,293 179,237 101,917 359,530 171,553
Provision for loan losses 8,025 10,015 9,144 18,040 17,966
Noninterest income excluding securities transactions  63,552 61,494 46,715 125,046 80,899
Securities transactions gains/(losses)  --  12  (36) 12  (87)
Noninterest expense  179,972 205,463 121,366 385,435 194,385
Income before income taxes 53,014 22,316 15,228 75,330 34,284
Income tax expense 13,710 3,821 3,140 17,531 6,868
Net income $39,304 $18,495 $12,088 $57,799 $27,416
           
Merger-related expenses  11,913 33,913 22,219 45,827 23,808
Securities transactions gains/(losses)  --  12  (36) 12  (87)
Taxes on adjustments 4,170 11,865 7,789 16,035 8,364
Operating income (d) $47,047 $40,531 $26,554 $87,579 $42,947
           
Difference between interest income and interest income (TE) $2,834 $2,949 $2,858 $5,783 $5,730
Provision for loan losses 8,025 10,015 9,144 18,040 17,966
Merger-related expenses  11,913 33,913 22,219 45,827 23,808
Less securities transactions gains/(losses)  --  12  (36) 12  (87)
Income tax expense 13,710 3,821 3,140 17,531 6,868
Pre-tax, pre-provision profit (PTPP) (e) $75,786 $69,181 $49,485 $144,968 $81,875
           
Noninterest Income and Noninterest Expense
           
Service charges on deposit accounts $20,907 $16,274 $12,343 $37,182 $21,887
Trust fees 7,983 8,738 5,301 16,721 9,292
Bank card fees  8,075 8,464 5,968 16,539 9,478
Insurance fees 4,581 3,477 4,628 8,058 7,878
Investment & annuity fees 4,607 4,415 3,267 9,022 6,400
ATM fees 4,844 4,334 3,290 9,177 6,021
Secondary mortgage market operations 3,015 4,002 1,877 7,017 3,444
Accretion of indemnification asset 2,000 3,000 5,450 5,000 8,494
Other income 7,540 8,790 4,591 16,330 8,005
Noninterest income excluding securities transactions $63,552 $61,494 $46,715 $125,046 $80,899
Securities transactions gains/(losses)  --  12  (36) 12  (87)
Total noninterest income including securities transactions $63,552 $61,506 $46,679 $125,058 $80,812
           
Personnel expense $89,329 $91,871 $53,511 $181,200 $91,335
Occupancy expense (net) 13,603 14,401 8,705 28,005 14,615
Equipment expense 5,924 5,877 3,599 11,800 6,408
Other operating expense 51,281 51,097 31,711 102,377 55,984
Amortization of intangibles 7,922 8,304 1,621 16,226 2,235
Merger-related expenses 11,913 33,913 22,219 45,827 23,808
Total noninterest expense  $179,972 $205,463 $121,366 $385,435 $194,385
           
(d) Net income less tax-effected merger costs and securities gains/losses. Management believes that this is a useful financial measure because it enables investors to assess ongoing operations.
 
(e) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense, merger items, and securities transactions. Management believes that PTPP profit is a useful financial measure because it enables investors and others to assess the Company's ability to generate capital to cover credit losses through a credit cycle.
           
Hancock Holding Company           
Financial Highlights           
(amounts in thousands)           
(unaudited)           
 
   Three Months Ended   Six Months Ended 
  6/30/2012 3/31/2012 06/30/011 6/30/2012 6/30/2011
Period-end Balance Sheet
           
Commercial non-real estate loans  $3,890,489 $3,754,592 $3,621,131 $3,890,489 $3,621,131
Construction and land development loans  1,167,496 1,285,214 1,371,351 1,167,496 1,371,351
Commercial real estate loans  2,830,530 2,952,569 3,241,037 2,830,530 3,241,037
Residential mortgage loans 1,519,711 1,511,349 1,443,817 1,519,711 1,443,817
Consumer loans 1,669,920 1,626,549 1,571,717 1,669,920 1,571,717
Total loans 11,078,146 11,130,273 11,249,053 11,078,146 11,249,053
Loans held for sale 44,918 42,484 67,081 44,918 67,081
Securities 4,320,457 4,393,845 4,573,973 4,320,457 4,573,973
Short-term investments 650,470 1,008,505 977,060 650,470 977,060
Earning assets 16,093,991 16,575,107 16,867,167 16,093,991 16,867,167
Allowance for loan losses (140,768) (142,337) (112,407) (140,768) (112,407)
Other assets 2,825,484 2,858,327 3,002,785 2,825,484 3,002,785
Total assets $18,778,707 $19,291,097 $19,757,545 $18,778,707 $19,757,545
           
Noninterest bearing deposits $5,040,484 $5,242,973 $4,852,440 $5,040,484 $4,852,440
Interest bearing transaction and savings deposits 5,876,843 5,995,622 5,586,151 5,876,843 5,586,151
Interest bearing public fund deposits 1,479,378 1,543,867 1,522,002 1,479,378 1,522,002
Time deposits 2,534,115 2,650,305 3,627,316 2,534,115 3,627,316
Total interest bearing deposits 9,890,336 10,189,794 10,735,469 9,890,336 10,735,469
Total deposits  14,930,820 15,432,767 15,587,909 14,930,820 15,587,909
Other borrowed funds 1,193,021 1,210,561 1,290,875 1,193,021 1,290,875
Other liabilities 255,504 272,566 492,448 255,504 492,448
Common shareholders' equity 2,399,362 2,375,203 2,386,313 2,399,362 2,386,313
Total liabilities & common equity $18,778,707 $19,291,097 $19,757,545 $18,778,707 $19,757,545
 
Capital Ratios
           
Common shareholders' equity $2,399,362 $2,375,203 $2,386,313 $2,399,362 $2,386,313
Tier 1 capital 1,549,018 1,513,485 1,468,175 1,549,018 1,468,175
Tangible common equity ratio  8.72% 8.27% 8.09% 8.72% 8.09%
Common equity (period-end) as a percent of total assets (period-end) 12.78% 12.31% 12.08% 12.78% 12.08%
Leverage (Tier 1) ratio  8.62% 8.27% 13.77% 8.62% 13.77%
Tier 1 risk-based capital ratio (f) 11.98% 11.53% 11.05% 11.98% 11.05%
Total risk-based capital ratio (f) 14.00% 13.78% 12.80% 14.00% 12.80%
           
(f) = estimated for most recent period end
           
Hancock Holding Company           
Financial Highlights           
(amounts in thousands)           
(unaudited)           
 
   Three Months Ended   Six Months Ended 
  6/30/2012 3/31/2012 06/30/011 6/30/2012 6/30/2011
Average Balance Sheet
           
Commercial non-real estate loans  $3,872,026 $3,780,412 $1,809,992 $3,826,584 $1,433,504
Construction and land development loans  1,235,612 1,267,192 830,931 1,251,362 735,013
Commercial real estate loans  2,839,143 2,970,087 1,923,778 2,904,271 1,667,533
Residential mortgage loans 1,548,803 1,549,131 864,768 1,548,945 759,543
Consumer loans 1,644,532 1,626,052 1,249,168 1,635,334 1,192,547
Total loans 11,140,116 11,192,874 6,678,637 11,166,496 5,788,140
Securities (g) 4,292,686 4,194,483 2,224,665 4,243,585 1,836,923
Short-term investments 733,489 852,843 1,028,067 793,166 886,203
Earning assets 16,166,291 16,240,200 9,931,369 16,203,247 8,511,266
Allowance for loan losses (142,991) (125,072) (95,313) (134,031) (89,070)
Other assets 2,964,097 3,078,392 1,752,765 3,021,242 1,500,158
Total assets $18,987,397 $19,193,520 $11,588,821 $19,090,458 $9,922,354
           
Noninterest bearing deposits $5,149,898 $5,359,504 $2,231,775 $5,254,701 $1,691,126
Interest bearing transaction and savings deposits 5,881,673 5,625,963 3,080,497 5,753,817 2,558,005
Interest bearing public fund deposits 1,517,743 1,531,110 1,283,183 1,524,426 1,255,606
Time deposits 2,604,387 2,795,935 2,615,876 2,700,161 2,483,957
Total interest bearing deposits 10,003,803 9,953,008 6,979,556 9,978,404 6,297,568
Total deposits 15,153,701 15,312,512 9,211,331 15,233,105 7,988,694
Other borrowed funds 1,212,692 1,237,849 761,438 1,225,271 631,952
Other liabilities 233,539 268,255 157,500 250,897 130,914
Common shareholders' equity 2,387,465 2,374,904 1,458,552 2,381,185 1,170,794
Total liabilities & common equity $18,987,397 $19,193,520 $11,588,821 $19,090,458 $9,922,354
           
(g) Average securities does not include unrealized holding gains/losses on available for sale securities.          
         
Hancock Holding Company         
Financial Highlights         
(amounts in thousands)         
(unaudited)        
 
Supplemental Asset Quality Information (excluding covered assets and acquired loans) h 6/30/2012 3/31/2012 6/30/2011
Non-accrual loans (i) (j)   $100,067 $100,192 $68,216
Restructured loans  19,518 19,926 18,606
Total non-performing loans   119,585 120,118 86,822
ORE and foreclosed assets (k) 93,339 107,804 104,975
Total non-performing assets   $212,924 $227,922 $191,797
Non-performing assets as a percent of loans, ORE and foreclosed assets   3.61% 4.10% 4.47%
Accruing loans 90 days past due    $1,443 $2,524 $2,504
Accruing loans 90 days past due as a percent of loans   0.02% 0.05% 0.06%
Non-performing assets + accruing loans 90 days past due to loans, ORE and foreclosed assets   3.63% 4.15% 4.53%
Allowance for loan losses (l)   $81,376 $84,496 $83,160
Allowance for loan losses as a percent of period-end loans   1.40% 1.55% 1.99%
Allowance for loan losses to nonperforming loans + accruing loans 90 days past due   67.24% 68.90% 93.10%
         
(h) Covered and acquired loans are considered to be performing due to the application of the accretion method under acquisition accounting. Acquired loans are recorded at fair value with no allowance brought forward in accordance with acquisition accounting. Certain acquired loans and foreclosed assets are also covered under FDIC loss sharing agreements, which provide considerable protection against credit risk. Due to the protection of loss sharing agreements and impact of acquisition accounting, management has excluded acquired loans and covered assets from this table to provide for improved comparability to prior periods and better perspective into asset quality trends. 
(i) Excludes acquired covered loans not accounted for under the accretion method of $6,174, $9,377, and $39,514.
(j) Excludes non-covered acquired performing loans at fair value accounted for under the accretion method of $7,143, $1,809, and $1,504 . 
(k) Excludes covered foreclosed assets of $44,779, $48,528, and $25,345. 
(l) Excludes allowance for loan losses recorded on covered acquired loans of $59,392, $57,841, and $29,247.
 
         
         
 
  3/31/2012
  Originated Loans  Acquired Loans (m) Covered Loans (n) Total
Commercial non-real estate loans  $1,666,845 $2,045,474 $42,273 $3,754,592
Construction and land development loans  639,217 524,570 121,427 1,285,214
Commercial real estate loans  1,396,466 1,495,280 60,823 2,952,569
Residential mortgage loans 564,218 671,275 275,856 1,511,349
Consumer loans 1,184,261 308,883 133,405 1,626,549
Total loans $5,451,007 $5,045,482 $633,784 $11,130,273
Change in loan balance from previous quarter $563,277 ($572,371) ($37,659) ($46,753)
         
  6/30/2012
  Originated Loans Acquired Loans (m) Covered Loans (n) Total
Commercial non-real estate loans  $1,902,292 $1,948,226 $39,971 $3,890,489
Construction and land development loans  630,997 443,057 93,442 1,167,496
Commercial real estate loans  1,316,772 1,450,796 62,962 2,830,530
Residential mortgage loans 654,149 598,199 267,363 1,519,711
Consumer loans 1,306,648 239,276 123,996 1,669,920
Total loans $5,810,858 $4,679,554 $587,734 $11,078,146
Change in loan balance from previous quarter $359,851 ($365,928) ($46,050) ($52,127)
         
(m) Loans which have been acquired and no allowance brought forward in accordance with acquisition accounting.
(n) Loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.
 
Hancock Holding Company 
Average Balance and Net Interest Margin Summary 
(amounts in thousands) 
(unaudited) 
 
  Three Months Ended
  6/30/2012 3/31/2012 6/30/2011
  Interest Volume Rate Interest Volume Rate Interest Volume Rate
                   
Average Earning Assets                  
Commercial & real estate loans (TE) $108,777 $7,946,781 5.50% $112,509 $8,017,691 5.64% $60,125 $4,564,701 5.28%
Residential mortgage loans  28,709  1,548,803 7.41%  26,422  1,549,131 6.82%  14,839  864,768 6.87%
Consumer loans  28,372  1,644,532 6.92%  28,562  1,626,052 7.05%  21,628  1,249,168 6.94%
Loan fees & late charges  1,548  -- 0.00%  799  -- 0.00%  234  -- 0.00%
Total loans (TE)  167,406  11,140,116 6.04%  168,292  11,192,874 6.04%  96,826  6,678,637 5.81%
                   
US treasury securities  2  150 4.66%  2  150 4.67%  13  10,802 0.47%
US agency securities  736  141,999 2.07%  1,262  219,287 2.30%  1,468  315,300 1.86%
CMOs  7,983  1,578,438 2.02%  6,783  1,361,132 1.99%  3,276  398,863 3.29%
Mortgage backed securities  13,921  2,296,126 2.43%  14,406  2,321,703 2.48%  13,233  1,251,563 4.23%
Municipals (TE)  2,741  266,661 4.11%  3,267  284,113 4.60%  2,728  211,301 5.16%
Other securities  65  9,312 2.79%  126  8,098 6.21%  275  36,836 2.99%
Total securities (TE) (o)  25,448  4,292,686 2.37%  25,846  4,194,483 2.46%  20,993  2,224,665 3.77%
                   
Total short-term investments  469  733,489 0.26%  527  852,843 0.25%  516  1,028,067 0.20%
                   
Average earning assets yield (TE)  193,323 $16,166,291 4.80% $194,665 $16,240,200 4.81% $118,335 $9,931,369 4.77%
                   
Interest-bearing Liabilities                  
Interest-bearing transaction and savings deposits   1,764  5,881,673 0.12%  2,181  5,625,963 0.16%  1,531  3,080,497 0.20%
Time deposits  5,018  2,604,387 0.77%  6,889  2,795,935 0.99%  10,631  2,615,876 1.63%
Public Funds  1,090  1,517,743 0.29%  1,192  1,531,110 0.31%  1,409  1,283,183 0.44%
Total interest bearing deposits  7,872  10,003,803 0.32%  10,262  9,953,008 0.41%  13,571  6,979,556 0.78%
                   
Total borrowings  5,158  1,212,692 1.71%  5,165  1,237,849 1.68%  2,847  761,438 1.50%
                   
Total interest bearing liabilities cost $13,030 $11,216,495 0.47% $15,427 $11,190,857 0.55% $16,418 $7,740,994 0.85%
                   
Net interest-free funding sources    4,949,796      5,049,343      2,190,375  
                   
Total Cost of Funds $13,030 $16,166,291 0.32% $15,427 $16,240,200 0.38% $16,418 $9,931,369 0.66%
                   
Net Interest Spread (TE) $180,293   4.33% $179,238   4.26% $101,917   3.92%
                   
Net Interest Margin (TE) $180,293 $16,166,291 4.48% $179,238 $16,240,200 4.43% $101,917 $9,931,369 4.11%
                   
(o) Average securities does not include unrealized holding gains/losses on available for sale securities.
                   
                   
                   
Hancock Holding Company 
Average Balance and Net Interest Margin Summary 
(amounts in thousands) 
(unaudited) 
 
   Six Months Ended 
  6/30/2012 6/30/2011
  Interest Volume Rate Interest Volume Rate
                   
Average Earning Assets                  
Commercial & real estate loans (TE)       $221,285 $7,982,217 5.57% $100,393 $3,836,050 5.27%
Residential mortgage loans        55,132  1,548,945 7.12%  25,663  759,543 6.76%
Consumer loans        56,934  1,635,334 6.98%  40,802  1,192,547 6.90%
Loan fees & late charges  2,347  -- 0.00%  174  -- 0.00%
Total loans (TE)        335,698  11,166,496 6.04%  167,032  5,788,140 5.81%
                   
US treasury securities        3  150 4.67%  25  10,800 0.47%
US agency securities        1,998  180,643 2.21%  2,238  244,104 1.83%
CMOs        14,766  1,469,785 2.01%  6,294  375,175 3.36%
Mortgage backed securities        28,327  2,308,915 2.45%  21,406  984,159 4.35%
Municipals (TE)        6,009  275,387 4.36%  5,407  195,192 5.54%
Other securities  191  8,705 4.38%  523  27,493 3.81%
Total securities (TE) (o)        51,294  4,243,585 2.42%  35,893  1,836,923 3.91%
                   
Total short-term investments        996  793,166 0.25%  815  886,203 0.19%
                   
Average earning assets yield (TE)       $387,988 $16,203,247 4.80% $203,740 $8,511,266 4.81%
                   
Interest-Bearing Liabilities                  
Interest-bearing transaction deposits        $3,946 $5,753,817 0.14% $3,126 $2,558,005 0.25%
Time deposits        11,906  2,700,161 0.88%  21,451 2,483,957 1.74%
Public Funds  2,283  1,524,426 0.30%  3,001 1,255,606 0.48%
Total interest bearing deposits       $18,135 $9,978,404 0.36% $27,578 $6,297,568 0.88%
                   
Total borrowings        10,323  1,225,271 1.69%  4,608  631,952 1.47%
                   
Total interest bearing liabilities cost       $28,458 $11,203,675 0.51% $32,187 $6,929,520 0.94%
                   
Net interest-free funding sources          4,999,572     1,581,746  
                   
Total Cost of Funds       $28,458 $16,203,247 0.35% $32,187 $8,511,266 0.76%
                   
Net Interest Spread (TE)       $359,530   4.30% $171,553   3.87%
                   
Net Interest Margin (TE) $359,530 $16,203,247 4.45% $171,553 $8,511,266 4.05%
                   
(o) Average securities does not include unrealized holding gains/losses on available for sale securities.


            

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