Market Overview

Hancock Reports Third Quarter 2012 Financial Results

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GULFPORT, Miss., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Hancock Holding Company (Nasdaq: HBHC) today announced financial results for the third quarter of 2012. Operating income for the third quarter of 2012 was $49.8 million or $.58 per diluted common share, compared to $47.0 million, or $.55 in the second quarter of 2012. Operating income was $45.2 million, or $.53, in the third quarter of 2011. Operating income is defined as net income excluding tax-effected merger-related costs and securities transactions gains or losses. In addition, for the third quarter of 2012, operating income excludes the tax-effected expenses associated with the repurchase of a portion of Whitney Bank's subordinated debt (sub debt). Included in the financial tables is a reconciliation of net income to operating income.

During the second quarter of 2012 the Company initiated a tender offer for up to $75 million of Whitney Bank's sub debt. A total of $150 million of sub debt was issued by Whitney National Bank in March 2007 at a rate of 5.875%. In July 2012, the tender was consummated, and approximately $52 million of the Whitney sub debt was repurchased. In addition to paying the indebtedness represented by the notes and accrued interest, the Company incurred approximately $5.3 million in costs, including a premium of $5.1 million.

Hancock's return on average assets, on an operating basis, was 1.07% for the third quarter of 2012, compared to 1.00% in the second quarter of 2012, and 0.92% in the third quarter a year ago.

Net income for the third quarter of 2012 was $47.0 million, or $.55 per diluted common share, compared to $39.3 million, or $.46 in the second quarter of 2012. Net income was $30.4 million, or $.36, in the third quarter of 2011. Pre-tax earnings for the third quarter of 2012 included no merger-related costs. The second quarter of 2012 and third quarter of 2011 included pre-tax merger-related costs of $11.9 million and $22.8 million, respectively.

The Company's pre-tax, pre-provision profit for the third quarter of 2012 was $78.5 million compared to $75.8 million in the second quarter of 2012 and $73.9 million in the third quarter of 2011. Pre-tax pre-provision profit is total revenue (TE) less non-interest expense and excludes merger-related costs, securities transactions gains or losses and the sub debt redemption expenses. Included in the financial tables is a reconciliation of net income to pre-tax, pre-provision profit.

"During the third quarter we continued to make progress on several fronts and generated solid quarterly results," said Hancock's President and Chief Executive Officer Carl J. Chaney. "We produced net loan growth of over $350 million, realized additional quarterly cost savings, expanded the net interest margin and improved our operating ROA this quarter, and remain committed to improving upon these overall results and growing our company."

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

Total assets at September 30, 2012, were $18.5 billion, compared to $18.8 billion at June 30, 2012.

Loans

Total loans at September 30, 2012 were $11.4 billion, up $356 million, or 3%, from June 30, 2012. Excluding the FDIC-covered portfolio acquired with People's First, which declined $32 million during the third quarter, total loans were up $388 million, or approximately 4%, linked-quarter.

The net growth noted above represents a slowdown in the pace of loan payoffs, and more significantly, the impact of both strategic new hires and the completion of the Company's systems integration process. New loans and refinancings of over $700 million were funded in markets throughout the company's footprint from both existing and new customers, exceeding regularly scheduled payoffs and paydowns. 

The net loan growth was mainly generated in the commercial and industrial (C&I) portfolio, up 9% linked-quarter. The growth reflected activity in Houston, Greater New Orleans, western Louisiana and several Florida markets, with a sizeable portion of the new business generated from customers in the energy sector. As of September 30, 2012 the Company's energy portfolio totaled $758 million, up $125 million from June 30, 2012.

Hancock's loan pipeline remains strong, but the market for new loans remains highly competitive. Although management expects continued net loan growth in future quarters, the rate of growth may be below the pace in the current quarter.

For the third quarter of 2012, average total loans were $11.3 billion, an increase of $119 million, compared to the second quarter of 2012. 

Deposits

Total deposits at September 30, 2012 were $14.8 billion, down $158 million, or 1%, from June 30, 2012. Average deposits for the third quarter of 2012 were $14.8 billion, down $308 million, or 2%, from the second quarter of 2012. 

Noninterest-bearing demand deposits (DDAs) totaled $5.2 billion at September 30, 2012, up $111 million, or 2%, compared to June 30, 2012. DDAs comprised 35% of total period-end deposits at September 30, 2012, up slightly from June 30, 2012. 

Time deposits (CDs) totaled $2.4 billion at September 30, 2012, down $110 million from June 30, 2012. During the third quarter, approximately $600 million of time deposits matured at an average rate of .54%, of which approximately two-thirds renewed at an average cost of 0.21%. 

Interest-bearing public fund deposits were down $158 million linked-quarter reflecting the seasonal nature of these types of deposits. Typically these deposits reflect higher balances around the beginning of the year with subsequent reductions beginning in the summer months.

Asset Quality

The Company's total allowance for loan losses was $135.6 million at September 30, 2012, compared to $140.8 million at June 30, 2012.  The ratio of the allowance for loan losses to period-end loans was 1.19% at September 30, 2012, down from 1.27% at June 30, 2012. Charge-offs against the portion of allowance established for previously-identified impairment of certain pools of FDIC-covered loans reduced the total allowance by $3.5 million. The Company identified no additional impairment on these covered loan pools in the quarterly review as of September 30, 2012 and, as a result, recorded no provision for loan losses on the covered portfolio for the third quarter of 2012.

Hancock recorded a total provision for loan losses for the third quarter of 2012 of $8.1 million, virtually unchanged from $8.0 million in the second quarter of 2012. The provision for non-covered loans increased to $8.1 million in the third quarter of 2012 from $7.0 million in the second quarter of 2012. As noted above, no provision was recorded in the third quarter of 2012 for the FDIC-covered portfolio.  The net impact on provision expense from the covered portfolio in the second quarter of 2012 was $1.0 million. 

Net charge-offs from the non-covered loan portfolio in the third quarter of 2012 were $9.7 million, or .34% of average total loans on an annualized basis. This compares to net non-covered loan charge-offs of $10.2 million, or .37% of average total loans, for the second quarter of 2012. 

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 $79.7 million, or 1.21% of this portfolio at September 30, 2012 and $81.4 million, or 1.40% at June 30, 2012. This ratio is expected to decline as the proportion of this portfolio representing new business from Whitney's operations grows, other factors held constant.

Non-performing assets (NPAs), which exclude acquired credit-impaired loans from Whitney and People's First, totaled $298 million at September 30, 2012, up $27 million from $271 million at June 30, 2012. Non-performing assets as a percent of total loans, ORE and foreclosed assets was 2.58% at September 30, 2012, compared to 2.42% at June 30, 2012. The increase in overall NPAs reflects an increase in nonaccrual loans of $22 million, an increase of $13 million in restructured loans, and a decline of $8 million in ORE and foreclosed assets. The increase in nonaccrual loans is mainly related to a small portion of Whitney's acquired portfolio that was performing at acquisition date and has subsequently moved to nonaccrual. The loans are comprised of smaller dollar residential mortgage and commercial credits, mainly located in Louisiana.

Management continues to work towards reducing the overall level of nonperforming assets and currently has approximately $60 million of its total ORE portfolio under sales contracts that are scheduled to close in the fourth quarter of 2012. 

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 third quarter of 2012 was $180.1 million, virtually unchanged from the second quarter of 2012. Average earning assets were $15.8 billion in the third quarter of 2012, down $336 million from the second quarter of 2012.

The net interest margin (TE) was 4.54% for the third quarter of 2012, up 6 basis points (bps) from 4.48% in the second quarter of 2012. The core margin (net interest margin excluding total net purchase accounting adjustments) compressed approximately 5bps during the third quarter from a decline in both the yield on the loan and the securities portfolios. The core margin was favorably impacted by a change in the mix of earning assets, a shift in funding sources and a slight decline in funding costs. The decline in funding costs is mainly related to the redemption of the Whitney Bank sub debt.

Whitney's acquired loan portfolio continued to perform better than expected during the third quarter. As a result, re-projections of expected cash flows from the acquired portfolio led to higher yields realized on this portfolio that favorably impacted both net interest income and the net interest margin and offset the core margin compression.

As earning assets continue to reprice, and with a diminished opportunity to significantly lower funding costs, management expects continued compression on the core margin in the near term. All else equal, compression in the reported margin in the near term is also anticipated.

Non-interest Income

Non-interest income totaled $63.8 million for the third quarter of 2012, up slightly from $63.6 million in the second quarter of 2012. Included in the third quarter was $.9 million from gains on securities transactions. Excluding securities transactions, non-interest income declined slightly from second quarter of 2012.

Service charges on deposits totaled $20.8 million for the third quarter of 2012, virtually unchanged from the second quarter of 2012. 

Bankcard fees totaled $7.6 million in the third quarter of 2012, down $.5 million from the second quarter. As noted previously, the Durbin interchange restrictions began impacting Hancock Bank on July 1, 2012 and resulted in a loss of bankcard fees of approximately $2.0 million during the third quarter of 2012. This loss of income was partly offset by a $1.4 million increase in merchant fees during the third quarter. The increase in merchant fees is related to the reacquisition of the Company's merchant business and change in the terms of the servicing agreement. The reacquisition also added approximately $.5 million to amortization of intangibles in the third quarter. The Durbin interchange restrictions negatively impacted the third quarter's ATMs fees by approximately $.5 million.

Fees from secondary mortgage operations totaled $4.3 million for the third quarter of 2012, up $1.3 million linked-quarter. The increase reflects a higher volume of mortgage production during the third quarter mainly related to refinancing activity.

Fees related to trust, insurance, and investment and annuity lines of business were all down linked-quarter, mainly reflecting the volatility and seasonality of those businesses.

Non-interest Expense & Taxes

Operating expense for the third quarter of 2012 totaled $164.4 million, down $3.6 million from the second quarter of 2012. Operating expense excludes merger-related costs and for the third quarter of 2012, $5.3 million of sub debt repurchase expenses. There were essentially no merger-related costs in the third quarter of 2012, compared to $11.9 million of pre-tax merger costs in the second quarter of 2012. 

Total personnel expense was $88.2 million in the third quarter of 2012, a decrease of $1.2 million from the second quarter of 2012. The linked-quarter decrease mainly reflects the staff reductions associated with the core systems conversion and branch consolidations. Linked-quarter declines related to the systems conversion and branch consolidations are also reflected in occupancy, equipment and various categories included in other noninterest expense.

Amortization of intangibles totaled $8.1 million during the third quarter, up from $7.9 million in the second quarter of 2012. The increase is related to the reacquisition of the merchant services business noted above. Amortization of intangibles should approximate $7.8 million in the fourth quarter of 2012.

Operating expense, excluding amortization of intangibles, was $156.3 million for the third quarter of 2012. Management expects additional cost savings will continue to be generated in the fourth quarter of 2012, and is reiterating its operating expense guidance for the fourth quarter of 2012 of $149 million to $153 million, excluding amortization of intangibles. 

During the third quarter of 2012, the Company announced the closing of several branches as part of its ongoing branch rationalization process. The Company is continuing its review of its current branch network and will announce additional closures, relocations or new branch openings as decisions are approved.

The effective income tax rate for the third quarter of 2012 was 26%, essentially unchanged from the second quarter of 2012. 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 September 30, 2012. The Company remained well-capitalized and improved its tangible common equity ratio to 9.09% at September 30, 2012, up from 8.72% at June 30, 2012. Additional capital ratios are included in the financial tables.

Conference Call and Slide Presentation

Management will host a conference call for analysts and investors at 9:00 a.m. Central Time Friday, October 26, 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. A slide presentation related to third quarter results is also posted as part of the webcast link. 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 November 2, 2012 by dialing (855) 859-2056 or (404) 537-3406, passcode 37314225. 

About Hancock Holding Company

Hancock Holding Company, the parent company of Hancock Bank and Whitney Bank, operates a combined total of more than 250 full-service bank branches and over 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, future sales of ORE properties, net interest margin trends, future expense levels and the ability to achieve additional cost savings, projected tax rates, economic conditions in our markets, future profitability, purchase accounting impacts such as accretion levels, the impact of the branch rationalization process, and the financial impact of regulatory requirements.

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   Nine Months Ended 
  9/30/2012 6/30/2012 9/30/2011 9/30/2012 9/30/2011
Per Common Share Data          
           
Earnings per share:          
Basic $0.55 $0.46 $0.36 $1.23 $0.97
Diluted $0.55 $0.46 $0.36 $1.22 $0.97
Operating earnings per share: (a)          
Basic $0.58 $0.55 $0.53 $1.61 $1.48
Diluted $0.58 $0.55 $0.53 $1.60 $1.48
Cash dividends per share $0.24 $0.24 $0.24 $0.72 $0.72
Book value per share (period-end) $28.71 $28.30 $28.65 $28.71 $28.65
Tangible book value per share (period-end) $18.97 $18.46 $18.78 $18.97 $18.78
Weighted average number of shares:          
Basic  84,777  84,751  84,699  84,757  59,149
Diluted  85,632  85,500  84,985  85,525  59,442
Period-end number of shares  84,782  84,774  84,698  84,782  84,698
Market data:          
High sales price $33.27 $36.56 $33.25 $36.73 $35.68
Low sales price $27.99 $27.96 $25.61 $27.96 $25.61
Period end closing price $30.98 $30.44 $26.81 $30.98 $26.81
Trading volume  26,877  39,310  38,205  98,609  96,269
           
           
Other Period-end Data          
           
FTE headcount  4,290 4,456 4,740  4,290 4,740
Tangible common equity $1,608,285 $1,565,029 $1,590,264 $1,608,285 $1,590,264
Tier I capital $1,619,807 $1,581,101 $1,549,153 $1,619,807 $1,549,153
Goodwill $628,877 $628,877 $629,688 $628,877 $629,688
Amortizing intangibles $197,139 $205,249 $206,424 $197,139 $206,424
           
Performance Ratios          
           
Return on average assets 1.00% 0.83% 0.62% 0.74% 0.59%
Return on average assets (operating) (a) 1.07% 1.00% 0.92% 0.97% 0.89%
Return on average common equity 7.77% 6.62% 4.98% 5.86% 4.85%
Return on average common equity (operating) (a) 8.24% 7.93% 7.40% 7.68% 7.40%
Tangible common equity ratio 9.09% 8.72% 8.56% 9.09% 8.56%
Earning asset yield (TE) 4.84% 4.80% 4.82% 4.82% 4.81%
Total cost of funds 0.30% 0.32% 0.50% 0.34% 0.63%
Net interest margin (TE) 4.54% 4.48% 4.32% 4.48% 4.18%
Efficiency ratio (b) 64.33% 65.67% 66.98% 65.93% 66.81%
Allowance for loan losses as a percent of period-end loans 1.19% 1.27% 1.06% 1.19% 1.06%
Allowance for loan losses to non-performing loans + accruing loans 90 days past due 77.81% 104.78% 107.90% 77.81% 107.90%
Average loan/deposit ratio 75.85% 73.51% 72.76% 74.14% 72.60%
Noninterest income excluding securities transactions as a percent of total revenue (TE) 25.86% 26.06% 26.49% 25.83% 29.30%
(a) Excludes tax-effected merger related expenses, debt early redemption costs and securities transactions. Management believes that this is a useful financial measure because it enables investors to assess ongoing operations.
(b) Efficiency ratio is defined as noninterest expense as a percent of total revenue (TE) before amortization of purchased intangibles, securities transactions, merger related expenses and debt redemption costs.
           
           
 Hancock Holding Company 
 Financial Highlights 
 (amounts in thousands) 
 (unaudited) 
           
   Three Months Ended   Nine Months Ended 
  9/30/2012 6/30/2012 9/30/2011 9/30/2012 9/30/2011
Asset Quality Information          
           
Non-accrual loans (c) $135,499 $113,384 $93,775 $135,499 $93,775
Restructured loans (d) 32,339 19,518 14,048 32,339 14,048
Total non-performing loans 167,838 132,902 107,823 167,838 107,823
ORE and foreclosed assets 130,613 138,118 123,140 130,613 123,140
Total non-performing assets $298,451 $271,020 $230,963 $298,451 $230,963
Non-performing assets as a percent of loans, ORE and foreclosed assets 2.58% 2.42% 2.06% 2.58% 2.06%
Accruing loans 90 days past due (c) $6,423 $1,443 $1,638 $6,423 $1,638
Accruing loans 90 days past due as a percent of loans 0.06% 0.01% 0.01% 0.06% 0.01%
Non-performing assets + accruing loans 90 days past due to loans, ORE and foreclosed assets 2.64% 2.43% 2.07% 2.64% 2.07%
           
Net charge-offs - non-covered $9,728 $10,211 $7,825 $26,993 $22,507
Net charge-offs - covered 3,550 3,499  -- $22,839 375
Net charge-offs - non-covered as a percent of average loans 0.34% 0.37% 0.28% 0.32% 0.39%
           
Allowance for loan losses $135,591 $140,768 $118,113 $135,591 $118,113
Allowance for loan losses as a percent of period-end loans 1.19% 1.27% 1.06% 1.19% 1.06%
Allowance for loan losses to non-performing loans + accruing loans 90 days past due 77.81% 104.78% 107.90% 77.81% 107.90%
           
Provision for loan losses $8,101 $8,025 $9,256 $26,141 $27,221
           
Allowance for Loan Losses          
           
Beginning Balance $140,768 $142,337 $112,407 $124,881 $81,997
Provision for loan losses before FDIC benefit - covered loans  --  5,146 4,500 37,025 33,448
Benefit attributable to FDIC loss share agreement  --  (4,116)  (4,275)  (34,401)  (31,777)
Provision for loan losses - non-covered loans 8,101 6,995 9,031 23,517 25,550
Net provision for loan losses 8,101 8,025 9,256 26,141 27,221
Increase in indemnification asset  --  4,116 4,275 34,401 31,777
Charge-offs - non-covered 12,211 12,711 14,530 34,588 36,227
Charge-offs - covered 3,550 3,499  --  22,839 375
Recoveries - non-covered  (2,483) (2,500) (6,705)  (7,595) (13,720)
Net charge-offs 13,278 13,710 7,825 49,832 22,882
Ending Balance $135,591 $140,768 $118,113 $135,591 $118,113
           
           
Net Charge-off Information          
           
Net charge-offs - non-covered:          
Commercial/real estate loans $3,905 $5,627 $5,174 $13,811 $15,735
Residential mortgage loans 2,012 1,846 285 4,579 730
Consumer loans 3,811 2,738 2,366 8,603 6,042
Total net charge-offs - non-covered $9,728 $10,211 $7,825 $26,993 $22,507
           
Average loans:          
Commercial/real estate loans $8,018,634 $7,946,781 $8,141,068 $7,994,444 $5,286,825
Residential mortgage loans 1,573,559 1,548,803 1,527,915 1,557,210 1,018,482
Consumer loans 1,667,399 1,644,532 1,579,745 1,646,100 1,323,031
Total average loans $11,259,592 $11,140,116 $11,248,728 $11,197,754 $7,628,338
           
Net charge-offs - non-covered to average loans:          
Commercial/real estate loans 0.19% 0.28% 0.25% 0.23% 0.40%
Residential mortgage loans 0.51% 0.48% 0.07% 0.39% 0.10%
Consumer loans 0.91% 0.67% 0.59% 0.70% 0.61%
Total net charge-offs - non-covered to average loans 0.34% 0.37% 0.28% 0.32% 0.39%
           
(c) 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.
(d) Included in restructured loans are $21.6 million, $9.7 million, and $4.4 million in non-accrual loans at 9/30/12, 6/30/12, and 9/30/11, respectively. Total excludes acquired credit-impaired loans.
           
           
 Hancock Holding Company 
 Financial Highlights 
 (amounts in thousands) 
 (unaudited) 
           
   Three Months Ended   Nine Months Ended 
  9/30/2012 6/30/2012 9/30/2011 9/30/2012 9/30/2011
Income Statement          
           
Interest income $189,205 $190,489 $197,695 $571,410 $395,705
Interest income (TE) 192,071 193,323 200,835 580,060 404,676
Interest expense 11,949 13,030 20,653 40,407 52,840
Net interest income (TE) 180,122 180,293 180,182 539,653 351,836
Provision for loan losses 8,101 8,025 9,256 26,141 27,221
Noninterest income excluding securities transactions 62,842 63,552 64,937 187,888 145,834
Securities transactions gains/(losses) 917  --  16  929  (71)
Noninterest expense 169,714 179,972 194,019 555,149 388,404
Income before income taxes 63,200 53,014 38,720 138,530 73,003
Income tax expense 16,216 13,710 8,342 33,747 15,210
Net income $46,984 $39,304 $30,378 $104,783 $57,793
           
Merger-related expenses (38) 11,913 22,752 45,789 46,560
Securities transactions gains/(losses)  917  --  16  929  (71)
Debt early redemption  5,336  --  --  5,336  --
Taxes on adjustments 1,533 4,170 7,958 17,569 16,321
Operating income (e) $49,832 $47,047 $45,156 $137,410 $88,103
           
Difference between interest income and interest income (TE) $2,866 $2,834 $3,140 $8,650 $8,971
Provision for loan losses 8,101 8,025 9,256 26,141 27,221
Merger-related expenses (38) 11,913 22,752 45,789 46,560
Less securities transactions gains/(losses) 917  --  16 929  (71)
Debt early redemption  5,336  --  -- 5,336  --
Income tax expense 16,216 13,710 8,342 33,747 15,210
Pre-tax, pre-provision profit (PTPP) (f) $78,548 $75,786 $73,852 $223,517 $155,826
           
Noninterest Income and Noninterest Expense          
           
Service charges on deposit accounts $20,834 $20,907 $16,858 $58,015 $38,744
Trust fees 7,743 7,983 7,215 24,464 16,507
Bank card fees 7,568 8,075 11,066 24,107 20,542
Insurance fees 4,045 4,581 4,356 12,103 12,234
Investment & annuity fees 4,269 4,607 4,642 13,291 11,042
ATM fees 4,301 4,843 4,127 13,479 10,148
Secondary mortgage market operations 4,312 3,015 3,477 11,328 6,921
Other income 9,770 9,541 13,196 31,101 29,696
Noninterest income excluding securities transactions $62,842 $63,552 $64,937 $187,888 $145,834
Securities transactions gains/(losses) 917  --  16 929  (71)
Total noninterest income including securities transactions $63,759 $63,552 $64,953 $188,817 $145,763
           
Personnel expense $88,176 $89,330 $92,821 $269,376 $184,157
Occupancy expense (net)  13,169 13,604 13,877  41,173 28,492
Equipment expense  5,010 5,924 5,231  16,811 11,640
Other operating expense  49,951 51,279 52,241  152,328 108,223
Amortization of intangibles  8,110 7,922 7,097  24,336 9,332
Debt early redemption  5,336  --   --   5,336  -- 
Merger-related expenses (38) 11,913 22,752  45,789 46,560
Total noninterest expense $169,714 $179,972 $194,019 $555,149 $388,404
           
(e) Net income less tax-effected merger costs, debt early redemption costs, and securities gains/losses. Management believes that this is a useful financial measure because it enables investors to assess ongoing operations.
(f) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense, merger items, debt early redemption costs, 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   Nine Months Ended 
  9/30/2012 6/30/2012 9/30/2011 9/30/2012 9/30/2011
Period-end Balance Sheet          
           
Commercial non-real estate loans  $4,235,823 $3,890,489 $3,653,336 $4,235,823 $3,653,336
Construction and land development loans  1,044,637 1,167,496 1,345,761 1,044,637 1,345,761
Commercial real estate loans  2,907,007 2,830,530 3,076,150 2,907,007 3,076,150
Residential mortgage loans 1,561,640 1,519,711 1,451,506 1,561,640 1,451,506
Consumer loans 1,685,341 1,669,920 1,575,516 1,685,341 1,575,516
Total loans 11,434,448 11,078,146 11,102,269 11,434,448 11,102,269
Loans held for sale 50,389 44,918 64,545 50,389 64,545
Securities 4,053,271 4,320,457 4,604,835 4,053,271 4,604,835
Short-term investments 320,057 650,470 895,235 320,057 895,235
Earning assets 15,858,165 16,093,991 16,666,884 15,858,165 16,666,884
Allowance for loan losses (135,591) (140,768) (118,113) (135,591) (118,113)
Other assets 2,800,472 2,825,484 2,866,918 2,800,472 2,866,918
Total assets $18,523,046 $18,778,707 $19,415,689 $18,523,046 $19,415,689
           
Noninterest bearing deposits $5,151,146 $5,040,484 $5,050,354 $5,151,146 $5,050,354
Interest bearing transaction and savings deposits 5,876,638 5,876,843 5,580,160 5,876,638 5,580,160
Interest bearing public fund deposits 1,321,227 1,479,378 1,361,860 1,321,227 1,361,860
Time deposits 2,423,940 2,534,115 3,299,835 2,423,940 3,299,835
Total interest bearing deposits 9,621,805 9,890,336 10,241,855 9,621,805 10,241,855
Total deposits  14,772,951 14,930,820 15,292,209 14,772,951 15,292,209
Other borrowed funds 1,056,961 1,193,021 1,278,646 1,056,961 1,278,646
Other liabilities 258,646 255,504 418,172 258,646 418,172
Common shareholders' equity 2,434,488 2,399,362 2,426,662 2,434,488 2,426,662
Total liabilities & common equity $18,523,046 $18,778,707 $19,415,689 $18,523,046 $19,415,689
           
Capital Ratios          
           
Common shareholders' equity $2,434,488 $2,399,362 $2,426,662 $2,434,488 $2,426,662
Tier 1 capital 1,619,807 1,581,101 1,549,153 1,619,807 1,549,153
Tangible common equity ratio  9.09% 8.72% 8.56% 9.09% 8.56%
Common equity (period-end) as a percent of total assets (period-end) 13.14% 12.78% 12.50% 13.14% 12.50%
Leverage (Tier 1) ratio  9.11% 8.71% 8.28% 9.11% 8.28%
Tier 1 risk-based capital ratio (g) 12.30% 12.18% 11.91% 12.30% 11.91%
Total risk-based capital ratio (g) 13.92% 14.20% 13.99% 13.92% 13.99%
           
(g) = estimated for most recent period end          
           
           
 Hancock Holding Company 
 Financial Highlights 
 (amounts in thousands) 
 (unaudited) 
           
   Three Months Ended   Nine Months Ended 
  9/30/2012 6/30/2012 9/30/2011 9/30/2012 9/30/2011
Average Balance Sheet          
           
Commercial non-real estate loans $4,056,457 $3,872,026 $3,651,227 $3,903,767 $2,180,869
Construction and land development loans 1,092,181 1,235,612 1,350,920 1,197,915 942,571
Commercial real estate loans 2,869,996 2,839,143 3,138,921 2,892,762 2,163,385
Residential mortgage loans 1,573,559 1,548,803 1,527,915 1,557,210 1,018,482
Consumer loans 1,667,399 1,644,532 1,579,745 1,646,100 1,323,031
Total loans (h) 11,259,592 11,140,116 11,248,728 11,197,754 7,628,338
Securities (i) 4,039,191 4,292,686 4,358,802 4,174,956 2,686,787
Short-term investments 531,195 733,489 983,784 705,205 919,087
Earning assets 15,829,978 16,166,291 16,591,314 16,077,915 11,234,212
Allowance for loan losses (140,661) (142,991) (114,304) (136,257) (97,574)
Other assets 2,909,649 2,964,097 3,078,674 2,983,774 2,032,113
Total assets $18,598,966 $18,987,397 $19,555,684 $18,925,432 $13,168,751
           
Noninterest bearing deposits $5,076,152 $5,149,898 $4,931,083 $5,194,751 $2,782,980
Interest bearing transaction and savings deposits 5,869,281 5,881,673 5,660,284 5,792,586 3,603,461
Interest bearing public fund deposits 1,426,405 1,517,743 1,400,972 1,491,514 1,304,594
Time deposits 2,473,450 2,604,387 3,469,365 2,624,039 2,816,037
Total interest bearing deposits 9,769,136 10,003,803 10,530,621 9,908,139 7,724,092
Total deposits 14,845,288 15,153,701 15,461,704 15,102,890 10,507,072
Other borrowed funds 1,112,304 1,212,692 1,405,815 1,187,340 892,741
Other liabilities 236,134 233,539 268,762 245,940 177,367
Common shareholders' equity 2,405,240 2,387,465 2,419,403 2,389,262 1,591,571
Total liabilities & common equity $18,598,966 $18,987,397 $19,555,684 $18,925,432 $13,168,751
           
(h) Includes loans held for sale
(i) 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) j   9/30/2012 6/30/2012 9/30/2011
Non-accrual loans (k) (l)   $106,413 $100,067 $58,608
Restructured loans   32,339 19,518 14,048
Total non-performing loans   138,752 119,585 72,656
ORE and foreclosed assets (m)   91,725 93,339 99,834
Total non-performing assets   $230,477 $212,924 $172,490
Non-performing assets as a percent of loans, ORE and foreclosed assets   3.45% 3.61% 3.72%
Accruing loans 90 days past due   $6,423 $1,443 $531
Accruing loans 90 days past due as a percent of loans   0.10% 0.02% 0.01%
Non-performing assets + accruing loans 90 days past due to loans, ORE and foreclosed assets   3.55% 3.63% 3.73%
Allowance for loan losses (n)   $79,749 $81,376 $84,366
Allowance for loan losses as a percent of period-end loans   1.21% 1.40% 1.86%
Allowance for loan losses to nonperforming loans + accruing loans 90 days past due   54.93% 67.24% 115.27%
         
(j) Covered and acquired credit impaired loans are considered 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.
(k) Excludes acquired covered loans not accounted for under the accretion method of $6,162, $6,174, and $34,106.
(l) Excludes non-covered acquired performing loans at fair value of $22,924, $7,143, and $1,061.
(m) Excludes covered foreclosed assets of $38,888, $44,779, and $23,306.
(n) Excludes allowance for loan losses recorded on covered acquired loans of $55,842, $59,392, and $33,747. There is no allowance on non-covered impaired loans.
         
         
   
  6/30/2012
  Originated Loans Acquired Loans (o) Covered Loans (p) 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)
   
  9/30/2012
  Originated Loans Acquired Loans (o) Covered Loans (p) Total
Commercial non-real estate loans $2,416,143 $1,797,827 $21,855 $4,235,825
Construction and land development loans 628,067 368,476 48,094 1,044,637
Commercial real estate loans 1,421,526 1,378,706 106,775 2,907,007
Residential mortgage loans 757,471 532,551 271,618 1,561,640
Consumer loans 1,357,987 219,962 107,390 1,685,339
Total loans $6,581,194 $4,297,522 $555,732 $11,434,448
Change in loan balance from previous quarter $770,336 ($382,032) ($32,002) $356,302
         
(o) Loans which have been acquired and no allowance brought forward in accordance with acquisition accounting.
(p) 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
  9/30/2012 6/30/2012 9/30/2011
  Interest Volume Rate Interest Volume Rate Interest Volume Rate
                   
Average Earning Assets                  
Commercial & real estate loans (TE) $109,069 $8,018,634 5.41% $108,777 $7,946,781 5.50% $113,111 $8,141,068 5.51%
Residential mortgage loans  28,533  1,573,559 7.25%  28,709  1,548,803 7.41%  26,166  1,527,915 6.85%
Consumer loans  29,942  1,667,399 7.14%  28,372  1,644,532 6.92%  28,328  1,579,745 7.11%
Loan fees & late charges  891  -- 0.00%  1,548  -- 0.00%  886  -- 0.00%
Total loans (TE)  168,435  11,259,592 5.95%  167,406  11,140,116 6.04%  168,491  11,248,728 5.95%
                   
US treasury securities  2  150 4.64%  2  150 4.66%  11  10,617 0.41%
US agency securities  49  18,269 1.08%  736  141,999 2.07%  1,851  362,689 2.04%
CMOs  7,820  1,663,741 1.88%  7,983  1,578,438 2.02%  7,129  1,089,308 2.62%
Mortgage backed securities  12,530  2,097,097 2.39%  13,921  2,296,126 2.43%  19,003  2,567,892 2.96%
Municipals (TE)  2,864  252,771 4.53%  2,741  266,661 4.11%  3,471  306,863 4.52%
Other securities  63  7,163 3.58%  65  9,312 2.79%  246  21,433 4.58%
Total securities (TE) (q)  23,328  4,039,191 2.30%  25,448  4,292,686 2.37%  31,711  4,358,802 2.91%
                   
Total short-term investments  308  531,195 0.23%  469  733,489 0.26%  633  983,784 0.26%
                   
Average earning assets yield (TE)  192,071 $15,829,978 4.84% $193,323 $16,166,291 4.80% $200,835 $16,591,314 4.82%
                   
Interest-bearing Liabilities                  
Interest-bearing transaction and savings deposits  1,688  5,869,281 0.11%  1,764  5,881,673 0.12%  2,810  5,660,284 0.20%
Time deposits  4,829  2,473,450 0.78%  5,018  2,604,387 0.77%  11,209  3,469,365 1.28%
Public Funds  1,002  1,426,405 0.28%  1,090  1,517,743 0.29%  1,119  1,400,972 0.32%
Total interest bearing deposits  7,519  9,769,136 0.31%  7,872  10,003,803 0.32%  15,138  10,530,621 0.57%
                   
Total borrowings  4,430  1,112,304 1.58%  5,158  1,212,692 1.71%  5,515  1,405,815 1.56%
                   
Total interest bearing liabilities cost $11,949 $10,881,440 0.44% $13,030 $11,216,495 0.47% $20,653 $11,936,436 0.69%
                   
Net interest-free funding sources    4,948,538      4,949,796      4,654,878  
                   
Total Cost of Funds $11,949 $15,829,978 0.30% $13,030 $16,166,291 0.32% $20,653 $16,591,314 0.50%
                   
Net Interest Spread (TE) $180,122   4.40% $180,293   4.33% $180,182   4.13%
                   
Net Interest Margin (TE) $180,122 $15,829,978 4.54% $180,293 $16,166,291 4.48% $180,182 $16,591,314 4.32%
                   
(q) 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) 
             
   Nine Months Ended 
  9/30/2012 9/30/2011
  Interest Volume Rate Interest Volume Rate
             
Average Earning Assets            
Commercial & real estate loans (TE) $330,355 $7,994,444 5.52% $213,504 $5,286,825 5.39%
Residential mortgage loans  83,664  1,557,210 7.16%  51,829  1,018,482 6.79%
Consumer loans  86,876  1,646,100 7.05%  69,130  1,323,031 6.99%
Loan fees & late charges  3,238  -- 0.00%  1,062  -- 0.00%
Total loans (TE)  504,133  11,197,754 6.01%  335,525  7,628,338 5.88%
             
US treasury securities  5  150 4.66%  36  10,738 0.45%
US agency securities  2,047  126,123 2.16%  4,089  284,067 1.92%
CMOs  22,586  1,534,909 1.96%  13,422  615,835 2.91%
Mortgage backed securities  40,858  2,237,794 2.43%  40,409  1,517,871 3.55%
Municipals (TE)  8,872  267,793 4.42%  8,979  232,825 5.14%
Other securities  255  8,187 4.15%  768  25,451 4.03%
Total securities (TE) (q)  74,623  4,174,956 2.39%  67,703  2,686,787 3.36%
             
Total short-term investments  1,304  705,205 0.25%  1,448  919,087 0.21%
             
Average earning assets yield (TE)  580,060 $16,077,915 4.82% $404,676 $11,234,212 4.81%
             
Interest-Bearing Liabilities            
Interest-bearing transaction deposits $5,634 $5,792,586 0.13% $5,937 $3,603,461 0.22%
Time deposits  16,735  2,624,039 0.85%  32,659 2,816,037 1.55%
Public Funds  3,285  1,491,514 0.29%  4,120 1,304,594 0.42%
Total interest bearing deposits $25,654 $9,908,139 0.35% $42,716 $7,724,092 0.74%
             
Total borrowings  14,753  1,187,340 1.66%  10,123  892,741 1.52%
             
Total interest bearing liabilities cost $40,407 $11,095,479 0.49% $52,840 $8,616,833 0.82%
             
Net interest-free funding sources    4,982,436     2,617,379  
             
Total Cost of Funds $40,407 $16,077,915 0.34% $52,840 $11,234,212 0.63%
             
Net Interest Spread (TE) $539,653   4.33% $351,836   3.99%
             
Net Interest Margin (TE) $539,653 $16,077,915 4.48% $351,836 $11,234,212 4.18%
             
(q) Average securities does not include unrealized holding gains/losses on available for sale securities.
 
CONTACT: For More Information Trisha Voltz Carlson SVP, Investor Relations Manager 504.299.5208 trisha.carlson@hancockbank.com

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