X Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
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Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934
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For Quarter Ending September 30, 2001
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Commission File Number 0-13089
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HANCOCK HOLDING COMPANY
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(Exact name of registrant as specified in its charter)
MISSISSIPPI 64-0693170
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
ONE HANCOCK PLAZA, P.O. BOX 4019, GULFPORT, MISSISSIPPI 39502
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(Address of principal executive offices) (Zip Code)
(228) 868-4872
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES X NO
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10,621,834 Common Shares were outstanding as of November 12, 2001 for financial statement purposes.
HANCOCK HOLDING COMPANY
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets --
September 30, 2001 and December 31, 2000 3
Condensed Consolidated Statements of Earnings --
Three Months and Nine Months Ended September 30, 2001 and 2000 4
Condensed Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 2001 and 2000 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
(Unaudited)
September 30, December 31,
2001 2000 *
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ASSETS:
Cash and due from banks (non-interest bearing) $ 146,484 $ 130,380
Interest-bearing time deposits with other banks 9,081 3,877
Securities available for sale (amortized cost of
$1,051,632 and $578,566) 1,072,193 576,318
Securities held to maturity (fair value of $321,079
and $418,612) 311,549 417,777
Federal funds sold 47,000 59,000
Loans, net of unearned income 1,897,110 1,699,841
Less: Allowance for loan losses (36,122) (28,604)
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Loans, net 1,860,988 1,671,237
Property and equipment, net of accumulated
depreciation of $61,307 and $58,406 65,364 51,636
Other real estate, net 3,162 1,492
Accrued interest receivable 29,331 25,585
Goodwill and other intangibles 49,219 40,757
Other assets 40,577 35,371
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TOTAL ASSETS $ 3,634,948 $ 3,013,430
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing demand $ 588,595 $ 528,754
Interest-bearing savings, NOW, money market
and time 2,402,921 1,975,034
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Total deposits 2,991,516 2,503,788
Federal funds purchased 450 --
Securities sold under agreements to repurchase 154,525 144,560
Other liabilities 31,867 21,515
Long-term notes 51,742 2,177
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TOTAL LIABILITIES 3,230,100 2,672,040
COMMITMENTS AND CONTINGENCIES -- --
PREFERRED STOCK - $20 par value per share; 50,000,000
shares authorized and 1,658,564 shares issued 33,171 --
COMMON STOCKHOLDERS' EQUITY:
Common Stock-$3.33 par value per share; 75,000,000
shares authorized and 11,072,770 issued 36,872 36,872
Capital surplus 196,087 196,024
Retained earnings 133,883 115,366
Unrealized gain (loss) on securities available for
sale, net 13,365 (1,461)
Unearned compensation (510) (844)
Treasury stock (8,020) (4,567)
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TOTAL COMMON STOCKHOLDERS' EQUITY 371,677 341,390
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,634,948 $ 3,013,430
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* The balance sheet at December 31, 2000 has been taken from the audited balance sheet at that date
See notes to condensed consolidated financial statements
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2001 2000 2001 2000
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INTEREST INCOME:
Loans $ 43,320 $ 38,332 $121,154 $109,819
U. S. Treasury securities 596 1,292 2,604 4,279
Obligations of U. S. government agencies 7,033 5,271 18,059 16,823
Obligations of states and political subdivisions 2,823 2,368 7,653 7,095
Mortgage-backed securities 2,240 2,375 5,956 7,264
CMOs 5,033 4,092 13,347 12,870
Federal funds sold 865 418 4,695 1,516
Other investments 480 816 1,398 1,648
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Total interest income 62,390 54,964 174,866 161,314
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INTEREST EXPENSE:
Deposits 25,528 22,550 73,718 62,987
Federal funds purchased and securities sold
under agreements to repurchase 1,212 1,867 4,422 5,243
Notes and other interest-bearing liabilities 845 174 980 612
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Total interest expense 27,585 24,591 79,120 68,842
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NET INTEREST INCOME 34,805 30,373 95,746 92,472
Provision for loan losses 2,088 3,322 6,116 8,021
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 32,717 27,051 89,630 84,451
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NON-INTEREST INCOME
Service charges on deposit accounts 7,635 6,918 21,093 20,228
Other service charges, commissions and fees 3,133 3,436 9,293 9,415
Gain on sale of creidt card portfolio -- -- -- 3,082
Other 2,604 2,048 7,224 6,025
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Total non-interest income 13,372 12,402 37,610 38,750
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NON-INTEREST EXPENSE
Salaries and employee benefits 18,207 14,527 49,553 45,467
Net occupancy expense of premises 2,343 1,778 5,959 5,246
Equipment rentals, depreciation and maintenance 2,045 1,959 5,766 6,305
Amortization of intangibles 1,265 909 3,084 2,846
Other 8,211 7,580 23,375 22,919
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Total non-interest expense 32,071 26,753 87,737 82,783
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EARNINGS BEFORE INCOME TAXES 14,018 12,700 39,503 40,418
Income taxes 4,283 4,033 12,234 12,823
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NET EARNINGS 9,735 8,667 27,269 27,595
PREFERRED DIVIDEND REQUIREMENT 663 -- 663 --
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NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS $ 9,072 $ 8,667 $ 26,606 $ 27,595
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BASIC EARNINGS PER COMMON SHARE $ 0.85 $ 0.80 $ 2.48 $ 2.54
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DILUTED EARNINGS PER COMMON SHARE $ 0.85 $ 0.80 $ 2.48 $ 2.54
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DIVIDENDS PAID PER COMMON SHARE $ 0.28 $ 0.25 $ 0.84 $ 0.75
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WEIGHTED AVG. COMMON SHARES OUTSTANDING-BASIC 10,707 10,872 10,723 10,876
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WEIGHTED AVG. COMMON SHARES OUTSTANDING-DILUTED 11,475 10,879 10,996 10,883
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See notes to condensed consolidated financial statements
Nine Months Ended September 30,
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 27,269 $ 27,595
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 4,499 4,491
Amortization of software 1,862 1,525
Provision for loan losses 6,116 8,021
Provision for losses on real estate owned 85 155
Gain on sales of securities (16) (4)
(Gain) on sale of credit card portfolio -- (3,082)
(Increase)/decrease in interest receivable (470) 390
Amortization of intangible assets 3,084 2,846
Increase in interest payable (1,171) 2,224
Other, net (1,884) 7,836
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Net cash provided by operating activities 39,374 51,997
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing time deposits (5,204) (2,655)
Proceeds from maturities of securities held
to maturity 106,228 75,903
Purchase of securities held to maturity -- (1,855)
Proceeds from maturities of securities available
for sale 406,704 113,039
Purchase of securities available for sale (710,344) (72,761)
Net increase in federal funds sold 32,775 (19,500)
Net decrease (increase) in loans 5,812 (138,086)
Proceeds from sale of credit card portfolio -- 20,415
Purchase of property, equipment and software, net (9,214) (3,550)
Proceeds from sales of other real estate 1,914 847
Net cash used in connection with purchase transaction (52) --
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Net cash used in investing activities (171,381) (28,203)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 171,406 87,597
Dividends paid (9,831) (8,298)
Net increase (decrease) in federal funds purchased and
securities sold under agreements to repurchase
and other temporary funds 10,414 (57,559)
Purchase of treasury shares (3,453) (787)
Reductions of long-term notes (20,425) (399)
Repayment of FHLB advance -- (50,000)
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Net cash provided by (used in) financing activities 148,111 (29,446)
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NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 16,104 (5,652)
CASH AND DUE FROM BANKS, BEGINNING 130,380 156,738
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CASH AND DUE FROM BANKS, ENDING $ 146,484 $ 151,086
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See notes to condensed consolidated financial statements
The accompanying unaudited condensed consolidated financial statements include the accounts of Hancock Holding Company, its wholly-owned banks, Hancock Bank and Hancock Bank of Louisiana and other subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the consolidated financial statements and notes thereto of Hancock Holding Company's 2000 Annual Report to Shareholders.
COMPREHENSIVE EARNINGSBR>Following is a summary of the Company's comprehensive earnings for the three months and six months ended September 30, 2001 and 2000.
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
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2001 2000 2001 2000
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Net earnings $ 9,735 $8,667 $27,269 $27,595
Other comprehensive income
(net of income tax):
Unrealized holding gains on
securities available for sale
10,352 4,986 14,826 5,351
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Total Comprehensive Earnings $ 20,087 $13,653 $42,095 $32,946
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PREFERRED STOCKOn June 28, 2001 the Company's stockholders approved the issuance of up to 50 million shares of $20 par value preferred stock on terms to be determined by the Company's Board of Directors.
This issuance of 1,658,564 shares of 8% Cumulative Convertible Preferred Stock Series A was authorized by the Board of Directors in connection with the acquisition of Lamar Capital Corporation on July 1, 2001. Each share of the preferred stock is convertible into .4444 of the Company's common stock at any time after issuance. The Company can call for conversion of the preferred stock into common stock or for redemption at par any time between the 30th and 60th month following issuance if the closing price of the Company's common stock exceeds $56.25 for 20 consecutive days. After 60 months, the Company can call for redemption at par at any time. At the end of 30 years the Company must redeem the preferred stock at par.
The Series A Preferred stock qualifies as Tier 1 capital for regulatory purposes but will be classified similar to a liability for reporting under accounting principles generally accepted in the United States of America.
On July 1, 2001 the Company acquired 100% of the common stock of Lamar Capital Corporation (LCC), Purvis, Mississippi and its subsidiaries, The Lamar Bank and Southern Financial Services, Inc. The acquisition was accounted for as a purchase and the results of LCC's operations are included in the consolidated financial statements of the Company from the date of acquisition. LCC operated 9 banking offices in southern Mississippi. The Company acquired LCC in order to expand the geographic area in which its services are offered. The aggregate purchase is estimated to be $47.5 million, including cash of $14.2 million and 1,660,000 shares of mandatory redeemable convertible preferred stock with an estimated fair value of $33.2 million.
The following unaudited pro forma consolidated results of operations give effect to the acquisition of LCC as though it had occurred on January 1, 2000 (in thousands, except per share data):
Three Months Ended Sept 30, Nine Monhs ended sept 30,
2001 2000 2001 2000
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Interest income $ 62,390 $ 62,804 $ 190,136 $ 184,838
Interest expense (27,585) (88,713) (82,438) (29,236)
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Net interest income 34,805 34,806 101,423 102,400
Net earnings $ 9,735 $ 9,174 $ 25,929 $ 29,372
Preferred dividend requirement 663 663 1,990 1,990
Net earnings available to common shareholders 9,072 8,511 23,939 27,382
Basic earnings per common share 0.85 0.78 2.23 2.52
Diluted earnings per common share 0.85 0.78 2.23 2.53
The unaudited pro forma information is not necessarily indicative either of results ofoperations that would have occurred had the purchase been made as of January 1, 2000, or of future results of operations of the combined companies.
The following table summarizes the estimated fair values, in thousands, of the assets acquired and liabilities assumed at the date of acquisition.
Cash and due from banks $ 14,155
Securities 168,861
Federal funds sold 20,775
Loans 210,021
Property and equipment 10,565
Core deposit intangible 9,500
Goodwill 4,800
Other 1,390
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Total assets acquired 440,067
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Deposits 316,322
Other Liabilities 76,245
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Total liabilities assumed 392,567
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Net assets acquired $ 47,500
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The Company is in the process of obtaining third party valuations of the preferred stock issued,property and equipment, core deposit intangibles and certain other assets; thus, the purchase price and its allocation are subject to refinement.
The core deposit intangible has an estimated life of between 8 and 10 years. Goodwill was assigned to the Mississippi segment and is not deductible for tax purposes.
The $76,245 of Other Liabilities Includes $70,000 of long term advances from the Federal Home Loan Bank. Approximately $50,000 of these advances were unpaid at September 30, 2001 and are included in long term notes payble at September 30, 2001.
NEW ACCOUNTING PRONOUNCEMENTSIn June 2001 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations" and No. 142 "Goodwill and Other Intangibles". These Statements provide that, among
other things, (1) all business combinations on or after July 1, 2001 be accounted for as purchases, (2) any related goodwill on those acquisitions does not require amortization, but is subject to a periodic impairment test and that (3) goodwill on any of the Company’s acquisitions prior to July 1, 2001 not be amortized after January 1, 2002, but is subject to a periodic impairment test. Amortization of goodwill by the Company, related to previous acquisitions, amounted to approximately $2.7 million in the nine months ended September 30, 2001 and was not deductible for income tax purposes.
The following discussion provides management's analysis of certain factors which have affected the Company's financial condition and operating results during the periods included in the accompanying condensed consolidated financial statements.
CHANGES IN FINANCIAL CONDITIONThe Company manages liquidity through traditional funding sources of core deposits, federal funds, and maturities of loans and securities held to maturity and sales and maturities of securities available for sale.
The following liquidity ratios compare certain assets and liabilities to total deposits or total assets:
September 30, June 30, March 31, December 31,
2001 2001 2001 2000
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Total securities to total deposits 46.26% 43.87% 39.97% 39.70%
Total loans (net of unearned
income) to total deposits 63.42% 62.31% 62.25% 67.89%
Interest-earning assets
to total assets 91.80% 91.86% 91.88% 91.56%
Interest-bearing deposits
to total deposits 80.32% 79.33% 79.46% 78.88%
Capital ResourcesThe Company continues to maintain capital levels in excess of regulatory requirements.
September 30, June 30, March 31, December 31,
2001 2001 2001 2000
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Average equity to average assets (1) 10.96% 11.01% 11.06% 10.87%
Total capital to risk-weighted assets (2) 16.03% 16.65% 16.74% 17.20%
Tier 1 capital to risk-weighted 14.76% 15.41% 15.49% 15.95%
assets (3)
Leverage capital to average total assets (4) 8.42% 9.68% 10.00% 10.20%
(1) Equity capital consists of stockholder's equity (excluding unrealized gains/(losses)).
(2) Total capital consists of equity capital less intangible assets plus a limited amount of loan
loss allowance. Risk-weighted assets represent the assigned risk portion of all on and off-
balance-sheet assets. Based on Federal Reserve Board guidelines, assets are assigned a risk
factor percentage from 0% to 100%. A minimum ratio of total capital to risk-weighted assets of
8% is required.
(3) Tier 1 capital consists of equity capital less intangible assets. A minimum ratio of tier 1
capital to risk-weighted assets of 4% is required.
(4) Leverage capital consists of equity capital less goodwill and core deposit intangibles.
Regulations require a minimum 4% leverage capital ratio for an entity to be considered adequately capitalized.
Net earnings increased approximately $805,000 or 9.2% over the previous quarter of 2001 and $1,068,000 or 12.3% compared to the third quarter of 2000. The current quarter reflects the after-tax impact of merger expenses totaling $436,000, thereby reducing earnings. Excluding the impact of merger-related expenses, regular net earnings have actually increased $1,240,000 or 13.9% over the previous quarter and $1,503,000 over the same quarter last year. In the current quarter the Company's regular earnings included approximately $1.1 million related to the acquisition of Lamar Capital Corporation ("LCC") on July 1, 2001. Excluding earnings from this new division as well as the merger-related expenses, the increases over the previous quarter and same quarter last year were $140,000 and $400,000, respectively.
On a year-to-date basis net earnings have decreased $326,000 or 1.2% in 2001 as compared to 2000. This decrease reflects the approximate $436,000, net of tax, in merger expenses associated with the acquisition of LCC. During the first nine months of 2000, the Company recognized additional after-tax earnings of $2.0 million from the sale of its credit card portfolio. Following is selected information for comparison:
Three Month Ended Sept. 30, Nine Months Ended Sept 30,
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2001 2000 2001 2000
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Results of Operations:
Return on average assets w/o merger expenses or
gain on sale of credit card portfolio 1.10 % 1.15 % 1.11 % 1.14 %
Return on average assets 1.06 % 1.12 % 1.09 % 1.23 %
Return on average equity w/o merger expenses or
gain on sale of credit card portfolio 10.14 % 10.47 % 10.14 % 10.63 %
Return on average equity 9.72 % 10.46 % 9.98 % 11.47 %
Net Interest Income:
Yield on average interest-earning assets
(tax equivalent) 7.64 % 8.23 % 7.87 % 8.08 %
Cost of average interest-bearing funds 4.15 % 4.64 % 4.42 % 4.36 %
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Net interest spread 3.49 % 3.59 % 3.45 % 3.72 %
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Net yield on interest-earning assets
(net interest income on a tax-equivalent basis
divided by average interest-earning assets) 4.37 % 4.66 % 4.42 % 4.72 %
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Net Interest IncomeThe third quarter of 2001 showed an increase in net interest income, on a tax-equivalent basis (TE), of $4.1 million or 12.4%, compared to the previous quarter and $4.7 million or 14.8% compared to the same period one year ago. The primary factor causing the increase is the Company's
acquisition of LCC on July 1, 2001. The increase attributable to that acquisition is approximately $3.0 million. The Company’s net interest margin for the three-month period ended September 30, 2001 was 4.37% compared to 4.42% for the previous quarter and 4.66% for the prior year period.
Year-to-date net interest income(TE) has increased $4.1 million or 4.2%. The increase in year- to-date net interest income is primarily attributable to the Company's acquisition of LCC. The Company's net interest margin for the first nine months of 2001 was 4.42% compared to 4.72% for the same period one year ago.
Provision for Loan LossesThe amount of the allowance equals the cumulative total of the provisions for loan losses, reduced by actual loan charge-offs, and increased by allowances acquired in acquisitions and recoveries of loans previously charged-off. Provisions are made to the allowance to reflect the currently perceived risks of loss associated with the bank's loan portfolio. A specific loan is charged-off when management believes, after considering, among other things, the borrower's financial condition and the value of any collateral, that collection of the loan is unlikely.
The following information is useful in determining the adequacy of the loan loss allowance and loan loss provision. The ratios are calculated using average loan balances. (Amounts shown are in thousands)
At and For the
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Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
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2001 2000 2001 2000
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Annualized net charge-offs to average loans 0.65% 0.68% 0.54% 0.55%
Annualized provision for loan losses to average
loans 0.44% 0.81% 0.46% 0.67%
Average allowance for loan losses to average loans 1.93% 1.64% 1.78% 1.66%
Gross charge-offs $ 4,188 $ 3,677 $ 10,507 $ 9,577
Gross recoveries $ 1,074 $ 880 $ 3,365 $ 3,019
Non-accrual loans $ 16,214 $ 12,123 $ 16,214 $ 12,123
Accruing loans 90 days or more past due $ 7,648 $ 7,790 $ 7,648 $ 7,790
The data in the table above includes the impact of the reclassification of Demand Deposit charge-offs and recoveries. These changes have been made in accordance with regulatory requirements.
Non-Interest IncomeNon-interest income increased $1.3 million or 10.6% from the second quarter and $1.0 million or 7.7% when compared to the same period one year ago. The largest factor contributing to the increase over the second quarter was addition of income from LCC which was acquired July 1, 2001. The increase over the same period last year is also primarily attributable to the LCC acquisition. The non-interest income attributable to those bank branches and finance company offices is approximately $1.0 million.
On a year-to-date basis, excluding the 2000 gain realized on the sale of the Company's credit card portfolio, non-interest income has increased $1.9 million. The primary source of that increase results from the inclusion of income from the divisions created by the acquisition of LCC.
Non-Interest ExpenseNon-interest expense for the three-month period ended September 30, 2001 increased $4.0
million, or 14.3%, compared to the previous quarter and $5.3 million, or 19.3%, compared to the same period the previous year. Increases from the previous quarter result primarily from the acquisition of LCC. The total associated with that acquisition is approximately $2.4 million. Compared to the same period last year, increases result primarily from the same factors as the change in expense levels from second to third quarter 2001.
On a year-to-date basis, non-interest expense is higher by $4.9 million and results primarily from additional expense for the expansion of the Company’s market area by the acquisition of LCC. Unfavorable trends, however, have been partially offset by decreases in equipment expense.
Income TaxesThe effective federal income tax rate of the Company continues to be less than the statutory rate of 35%, due primarily to tax-exempt interest income. The amount of tax-exempt income earned during the first nine months of 2001 was $10,115,000 compared to $8,813,000 for the comparable period in 2000.
Forward Looking InformationCongress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about a company's anticipated future financial performance. This Act provides a safe harbor for such disclosures which protects the companies from unwarranted litigation if the actual results are different from management expectations. This report 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe Company's net earnings are dependent, in part, on its net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest-earning assets. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.
In an attempt to manage its exposure to changes in interest rates, management monitors the Company’s interest rate risk. The Company’s interest rate management policy is designed to produce a relatively stable net interest margin in periods of interest rate fluctuations. Interest sensitive assets and liabilities are those that are subject to maturity or repricing within a given time period. Management also reviews the Company’s securities portfolio, formulates investment strategies and oversees the timing and implementation of transactions to assure attainment of the Board’s objectives in the most effective manner. Notwithstanding the Company’s interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income and the fair value of the Company’s investment securities.
In adjusting the Company’s asset/liability position, the Board and management attempt to manage the Company’s interest rate risk while enhancing net interest margins. At times, depending on the level of general interest rates, the relationship between long and short-term interest rates, market conditions and competitive factors, the Board and management may determine to increase the Company’s interest rate risk position somewhat in order to increase its net interest margin. The Company’s results of operations and net portfolio values remain vulnerable to increases in interest rates and to fluctuations in the difference between long and short-term interest rates.
The Company also controls interest rate risk reductions by emphasizing non-certificate depositor accounts. The Board and management believe that a material portion of such accounts may be more resistant to changes in interest rates than are certificate accounts. At September 30, 2001 the Company had $323 million of regular savings and club accounts and $874 million of money market and NOW accounts, representing 49.8% of total interest-bearing depositor accounts.
The Company does not currently engage in significant trading activities or use derivative instruments to control interest rate risk. Even though such activities may be permitted with the approval of the Board of Directors, the Company does not intend to engage in such activities in the immediate future.
Interest rate risk is the most significant market risk affecting the Company. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company's business activities.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HANCOCK HOLDING COMPANY
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Registrant
November 26, 2001 By: /s/ George A. Schloegel
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Date George A. Schloegel
Vice-Chairman of the Board &
Chief Executive Officer
November 26, 2001 By: /s/ Carl J. Chaney
- ----------------------- -------------------- Date Carl J.
Date Carl J. Chaney
Executive Vice President
Chief Financial Officer