Hancock Holding Company Announces Preliminary Earnings for 2009

GULFPORT, Miss., Jan. 19, 2010 (GLOBE NEWSWIRE) -- Hancock Holding Company (Nasdaq:HBHC) today announced preliminary net income for the year ended December 31, 2009. Hancock’s 2009 net income was $74.8 million, an increase of $9.4 million, or 14.4 percent, from 2008’s net income of $65.4 million. Diluted earnings per share for 2009 were $2.26, an increase of $0.22 from 2008’s diluted earnings per share of $2.04. Hancock’s return on average assets for 2009 was 1.05 percent, compared to 1.02 percent for 2008. These results include the impact of the Company’s recent common stock offering and acquisition of Peoples First Community Bank, which are both more fully described below.

Preliminary net income for the fourth quarter of 2009 was $31.8 million, an increase of $23.5 million, or 282.0 percent, from the fourth quarter of 2008, and an increase of $16.6 million, or 108.8 percent, from 2009’s third quarter. Diluted earnings per share for 2009’s fourth quarter were $0.89, compared to $0.26 per diluted share for the same quarter a year ago and to $0.47 per diluted share for 2009’s third quarter. The Company’s fourth quarter results were also impacted by the recently completed common stock offering and acquisition of Peoples First Community Bank, which are both more fully described below. 

The Company’s financial results for the fourth quarter of 2009 and the year as a whole were impacted by two very significant events. The impact of these events is summarized below:

• On October 26, 2009, the Company closed a very successful common stock offering. In connection with the offering, the company issued 4,945,000 shares of common stock at a price of $35.50. Gross proceeds were $175.5 million, with net proceeds of $167.3 million after expenses. The proceeds of the offering are intended to be used for general corporate purposes, which may include financing acquisition opportunities and other expansion efforts. The offering was significantly over subscribed (over four times) and priced among the best of all offerings for 2009.
• On December 18, 2009, the Company acquired the assets and assumed the liabilities of Panama City, FL, based Peoples First Community Bank (Peoples First) through a purchase and assumption agreement containing a loss-sharing clause with the Federal Deposit Insurance Corporation (FDIC). The loss-sharing clause lessens the significant credit risk that usually accompanies a more traditional merger or acquisition. As a result of the loss-sharing clause, FDIC will cover all acquired loans, with reimbursement of 80 percent of losses up to $385 million and 95 percent of losses beyond $385 million. Hancock Bank acquired approximately $1.71 billion in assets and assumed $1.69 billion in liabilities.  These values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information relative to the closing may become available.  All of theother real estate owned (including foreclosed real estate) was retained by the FDIC. The acquisition resulted in a pretax acquisition gain of $33.6 million and pretax merger related expenses of $3.7 million.  Peoples First has 29 branches in the Florida Panhandle and Central Florida. With this transaction, Hancock increased the company’s total banking and financial services offices to more than 180 locations in Florida, Alabama, Mississippi, and Louisiana. The following chart summarizes the net assets acquired:

Commenting on the Company’s fourth quarter events, Hancock Holding Company President and Chief Executive Officer Carl J. Chaney stated, “The fourth quarter saw two very significant events in the long and storied history of Hancock Bank. These events position us very favorably for future growth and prosperity. First was our common stock offering in late October. We were very pleased with the overwhelming interest and the results the offering generated. We believe the response reflected the company’s 110-year history of financial strength and stability. The proceeds generated will further position Hancock for expansion opportunities that fit the company’s strategic growth plans throughout the Gulf South region.

“The second event was that the Company was able to take advantage of a strategic growth opportunity that we had positioned ourselves for by expanding into the Panhandle and North Central Florida regions with the acquisition of Peoples First Community Bank, headquartered in Panama City, Florida. This was an FDIC-assisted loss sharing transaction, which reduces the significant credit risk that usually accompanies a more traditional merger or acquisition. The Peoples First banking team shares the same type of community commitment and core values that have distinguished Hancock since 1899. This partnership further expands Hancock's current Florida footprint into attractive, long-term growth markets in the Florida Panhandle, and North Central Florida," said Chaney.

Highlights & Key Operating Items from Hancock’s Fourth Quarter Results

Balance Sheet and Capital

Total assets at December 31, 2009 were $8.70 billion, up $1.89 billion, or 27.8 percent, from $6.81 billion at September 30, 2009. Compared to December 31, 2008, total assets increased $1.53 billion, or 21.3 percent. The overall increase in total assets from September 30 was due to the acquisition of Peoples First headquartered in Panama City, Florida. Hancock continued to remain well capitalized with total equity of $837.7 million at December 31, 2009, up $228.2 million, or 37.4 percent, from December 31, 2008. Hancock’s tangible equity ratio at December 31, 2009, was 8.85 percent, up 14 basis points from the 8.71 percent reported at September 30, 2009.

Excluding Peoples First, at December 31, 2009, total assets were $7.09 billion, up $289.8 million, or 4.3 percent, from $6.81 billion at September 30, 2009. Compared to December 31, 2008, total assets decreased $72.5 million, or 1.0 percent. The overall increase in total assets from September 30 was due primarily to the funds received through an increase in period end deposits. Hancock continued to remain well capitalized with total equity of $798.8 million at December 31, 2009, up $144.1 million, or 22.0 percent, from September 30, 2009. 

Hancock’s fourth quarter capital and balance sheet-related ratios including the acquisition of Peoples First Community Bank are as follows:

Loan Growth

For the quarter ended December 31, 2009, Hancock’s average total loans were $4.4 billion, which represented an increase of $187.7 million, or 4.5 percent, from the same quarter a year ago and was up $73.6 million, or 1.7 percent, from the third quarter of 2009. Period-end loans were up $862.0 million, or 20.3 percent, from last quarter. The increase in period-end loans was in commercial/real estate (up $420.2 million, or 15.3 percent), mortgage loans (up $337.0 million or 83.6 percent), and direct consumer loans (up $129.7 million or 21.7 percent). This increase was partially offset by a decrease in indirect consumer loans (down $27.1 million, or 6.8 percent).

Excluding Peoples First, for the quarter ended December 31, 2009, Hancock’s average total loans were $4.2 billion, which represented an increase of $53.4 million, or 1.3 percent, from the same quarter a year ago and was down $60.8 million, or 1.4 percent, from the third quarter of 2009. Period-end loans were down $86.7 million, or 2.0 percent, from last quarter. The decrease in period-end loans was in commercial/real estate loans (down $58.4 million, or 2.1 percent), indirect consumer loans (down $27.1 million, or 6.8 percent), and mortgage loans (down $5.7 million or 1.3 percent). This decrease was partially offset by an increase in finance company loans (up $2.2 million or 2.0 percent) and direct consumer loans (up $2.2 million or 0.4 percent).

Deposit Growth

Period-end deposits for the fourth quarter were $7.20 billion, up $1.26 billion, or 21.3 percent, from December 31, 2008, and were up $1.78 billion, or 32.8 percent, from September 30, 2009. The increase in period-end deposits as compared to September 30, 2009, was due primarily to the acquisition of People’s First. Average deposits were up $56.5 million, or 1.0 percent, from the third quarter of 2009. The increase in average deposits was reflected in time deposits (up $141.7 million), interest bearing transaction deposits (up $66.4 million), and non-interest bearing deposits (up $12.4 million). A decrease in interest bearing public fund deposits of $164.1 million offset some of the increase. 

Excluding Peoples First, period-end deposits for the fourth quarter were $5.66 billion, down $267.0 million, or 4.5 percent, from December 31, 2008, but were up $243.8 million, or 4.5 percent, from September 30, 2009. The increase in period-end deposits as compared to September 30, 2009, was primarily in interest bearing public fund deposits (up $156.8 million), interest bearing transaction deposits (up $44.8 million), and noninterest bearing transaction deposits (up $72.7 million). Average deposits were down $162.0 million, or 2.9 percent, from the third quarter of 2009. The decrease in average deposits was reflected in interest bearing public fund deposits (down $163.9 million), time deposits (down $8.8 million), and non-interest bearing deposits (down $0.6 million). An increase in interest bearing transaction deposits of $11.3 million slightly offset the decrease.

Asset Quality

Net charge-offs for 2009’s fourth quarter were $13.6 million, or 1.24 percent of average loans, up $0.1 million from the $13.5 million, or 1.24 percent of average loans, reported for the third quarter of 2009. Non-performing assets as a percent of total loans and foreclosed assets was 4.10 percent at December 31, 2009, up from 1.06 percent at September 30, 2009. The aforementioned increase in non-performing assets (including non-accrual loans) was due primarily to the acquisition of Peoples First. Non-accrual loans increased $160.3 million, while other real estate owned (ORE) increased $4.6 million compared to the prior quarter. Loans 90 days past due or greater (accruing) as a percent of period end loans increased 5 basis points from September 30, 2009, to 0.23 percent at December 31, 2009, again, primarily due to the Peoples First acquisition.

Hancock recorded a provision for loan losses for the fourth quarter of $15.8 million. The Company’s allowance for loan losses was $66.1 million at December 31, 2009, and $63.9 million at September 30, 2009. The ratio of the allowance for loan losses as a percent of period-end loans was 1.29 percent at December 31, 2009, compared to 1.50 at September 30, 2009. Additional asset quality information (inclusive and exclusive of the acquisition of Peoples First) is provided in the table below:

Net Interest Income

Net interest income (te) for the fourth quarter increased $8.7 million, or 15.8 percent, while the net interest margin (te) of 3.97 percent was 46 basis points wider than the same quarter a year ago. Growth in average earning assets was strong compared to the same quarter a year ago, with an increase of $158.5 million, or 2.5 percent, mostly reflected in higher average loans (up $187.7 million, or 4.5 percent).

With short-term interest rates down significantly from the same quarter a year ago, the Company’s loan yield fell 12 basis points, pushing the yield on average earning assets down 28 basis points. However, total funding costs over the same quarter a year ago were down 73 basis points. 

Compared to the prior quarter, the net interest margin (te) expanded 11 basis points, and the level of net interest income was up $3.0 million, or 4.9 percent. The yield on average earning assets was up 6 basis points from last quarter at 5.32 percent, while the total cost of funds reduced by 4 basis points, primarily due to an across the board reduction in rates paid on all interest-bearing deposits and liabilities. The most significant rate reduction was in public funds (down 21 basis points). 

Non-interest Income

Non-interest income, excluding securities transactions, for the fourth quarter was up $32.8 million, or 107.2 percent, compared to the same quarter a year ago and was up $33.0 million, or 108.8 percent, compared to the previous quarter. The primary factor impacting the increase in non-interest income compared to the same quarter a year ago was the acquisition gain of $33.6 million. Other factors impacting noninterest income were higher levels of secondary mortgage market operations (up $810 thousand or 128.8 percent), service charges on deposit accounts (up $347 thousand or 3.0 percent), trust fees (up $160 thousand or 4.2 percent), ATM fees (up $148 thousand or 8.8 percent), and debit card and merchant fees (up $91 thousand or 3.2 percent). These increases were partially offset by decreases in investment and annuity fees (down $1.2 million or 41.7 percent) and insurance fees ($807 thousand or 19.5 percent).

The increase in non-interest income (excluding securities transactions) for the fourth quarter compared to the prior quarter was primarily due to the acquisition gain of Peoples First in the amount of $33.6 million. Excluding the acquisition gain, non-interest income decreased by $617 thousand compared to the prior quarter. Factors contributing to the decrease were investment and annuity fees (down $345 thousand or 17.2 percent), insurance fees (down $197 thousand or 5.6 percent), trust fees (down $71 thousand or 1.8 percent), secondary mortgage market operations (down $43 thousand or 2.9 percent), and ATM fees (down $24 thousand or 1.3 percent). These decreases were offset slightly by increases in debit card and merchant fees (up $99 thousand or 3.5 percent) and service charges on deposit accounts (up $19 thousand or 0.2 percent). 

Operating Expense & Taxes

Operating expenses for the fourth quarter were up $8.0 million, or 14.4 percent, compared to the same quarter a year ago, and were $7.9 million, or 14.2 percent, higher than the previous quarter. One factor contributing to the increase from the previous quarter and the prior year quarter was $3.7 million in merger-related expenses related to the acquisition of Peoples First. The increase from the same quarter a year ago was reflected in higher personnel expense (up $4.4 million or 15.5 percent) and other operating expenses (up $3.8 million or 19.6 percent). These increases were slightly offset by a decrease in equipment expense (down $252 thousand or 9.7 percent). The increase in operating expense from last quarter was primarily due to other operating expense (up $4.2 million or 22.6 percent) and personnel expense (up $3.7 million or 12.9 percent). 

For the year ended December 31, 2009, and 2008, the effective income tax rates were approximately 23 percent and 25 percent, respectively. The decline in the effective tax rate in 2009 was due primarily to higher levels of tax-exempt interest income and tax credits. The fourth quarter effective tax rate was higher than previous quarters primarily due to the Peoples First acquisition gain.

About Hancock Holding Company

Hancock Holding Company -- parent company of Hancock Bank (Mississippi and Florida), Hancock Bank of Louisiana, and Hancock Bank of Alabama -- had assets of approximately $8.7 billion as of December 31, 2009. Founded in 1899, Hancock Bank recently rated as one of the country’s strongest, safest financial institutions, for more than 20 consecutive years, according to BauerFinancial, Inc. More corporate information and e-banking are available at www.hancockbank.com.

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

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about companies’ anticipated future financial performance. This act provides a safe harbor for such disclosure, which protects the companies from unwarranted litigation if actual results are different from management expectations. This release contains forward-looking statements and reflects management’s current views and estimates of future economic circumstances, industry conditions, company performance, and financial results. These forward-looking statements are subject to a number of factors and uncertainties which could cause the Company’s actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements.