To control interest rate risk, management regularly monitors the volume of interest sensitive assets compared with interest sensitive liabilities over specific time intervals. The Company's interest rate management policy is designed to reduce the exposure to changes in its net interest margin in periods of interest rate fluctuations. Interest rate risk is monitored, quantified and managed to produce an acceptable impact on short-term earnings.
The interest sensitivity gap is the difference between total interest sensitive assets and liabilities in a given time period. At December 31, 2002, the Company's cumulative interest sensitivity gap in the one year interval was (5.0%). The percentage reflects a higher level of interest sensitive liabilities than assets re-pricing within one year. Generally, when rate sensitive liabilities exceed rate sensitive assets, the net interest margin is expected to be positively affected during periods of decreasing interest rates and negatively affected during periods of increasing rates.
The following tables set forth the scheduled re-pricing or maturity of the Company's assets and liabilities at December 31, 2002 and December 31, 2001. The assumed prepayment of investments and loans were based on the Company's assessment of current market conditions on such dates. Estimates have been made for the re-pricing of savings, NOW and money market accounts. Actual prepayments and deposit withdrawals will differ from the following analysis due to variable economic circumstances and consumer behavior. Although assets and liabilities may have similar maturities or re-pricing periods, reactions will vary as to timing and degree of interest rate change.
Analysis of Interest Sensitivity at December 31, 2002
Within 6 months 1 to 3 > 3 Non-Sensitive
Overnight 6 months to 1 year years years Balance Total
------------ ----------- ----------- ---------- ---------- ---------- ------------
(amounts in thousands)
Assets
Securities $ -- $ 264,002 $ 235,338 $ 467,133 $ 494,965 $ -- $ 1,461,438
Federal funds sold & Short-term investments 22,214 -- 216 - 24,827 47,257
Loans 26,512 1,072,824 279,728 511,423 214,494 -- 2,104,981
Other assets -- -- -- -- 66,807 292,664 359,471
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Assets $ 48,726 $ 1,336,826 $ 515,282 $ 978,556 $ 801,093 $ 292,664 $ 3,973,147
=========== =========== =========== =========== =========== =========== ===========
Liabilities
Interest bearing transaction deposits $ -- $ 736,755 $ 192,087 $ 554,900 $ 57,729 $ -- $ 1,541,471
Time deposits -- 432,127 149,750 277,138 270,223 -- 1,129,238
Non-interest bearing deposits -- 264,865 126,270 220,209 19,446 -- 630,790
Federal funds purchased -- -- -- -- -- -- --
Borrowings 165,237 -- -- -- 46,840 -- 212,077
Other liabilities -- -- -- -- -- 34,989 34,989
Shareholders' Equity -- -- 9,774 -- 414,808 -- 424,582
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities & Equity $ 165,237 $ 1,433,747 $ 477,881 $ 1,052,247 $ 809,046 $ 34,989 $ 3,973,147
=========== =========== =========== =========== =========== =========== ===========
Interest sensitivity gap $(116,511) $ (96,921) $ 37,401 $ (73,691) $ (7,953) $ 257,675
Cumulative interest rate sensitivity gap $(116,511) $ (213,432) $ (176,031) $ (249,722) $ (257,675) $ --
Cumulative interest rate
sensitivity gap as a percentage of
total earning assets (3.0)% (6.0)% (5.0)% (7.0)% (7.0)%
Analysis of Interest Sensitivity at December 31, 2001
Within 6 months 1 to 3 > 3 Non-Sensitive
Overnight 6 months to 1 year years years Balance Total
------------ ----------- ----------- ---------- ---------- ---------- -----------
(amounts in thousands)
Assets
Securities $ -- $ 294,577 $ 192,068 $ 560,662 $ 318,192 $ -- $ 1,365,499
Federal funds sold & Short-term
investments 92,000 2,589 5,844 -- -- -- 100,433
Loans 730 1,003,918 271,742 566,186 47,463 -- 1,890,039
Other assets -- -- -- -- 60,191 263,683 323,874
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Assets $ 92,730 $ 1,301,084 $ 469,654 $ 1,126,848 $ 425,846 $ 263,683 $ 3,679,845
=========== =========== =========== =========== =========== =========== ===========
Liabilities
Interest bearing transaction deposits $ -- $ 605,516 $ 131,993 $ 449,837 $ 62,371 $ -- $ 1,249,717
Time deposits -- 703,584 240,544 141,571 80,260 -- 1,165,959
Non-interest bearing deposits -- 262,038 124,922 217,859 19,239 -- 624,058
Federal funds purchased 125 -- -- -- -- -- 125
Borrowings 162,602 3,361 3,444 16,196 27,211 -- 212,814
Other liabilities -- -- -- -- -- 22,555 22,555
Shareholders' Equity -- -- 9,314 -- 395,303 -- 404,617
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities & Equity $ 162,727 $ 1,574,499 $ 510,217 $ 825,463 $ 584,384 $ 22,555 $ 3,679,845
=========== =========== =========== =========== =========== =========== ===========
Interest sensitivity gap $ (69,997) $ (273,415) $ (40,563) $ 301,385 $ (158,538) $ 241,128
Cumulative interest rate sensitivity gap $ (69,997) $ (343,412) $ (383,975) $ (82,590) $ (241,128) $ --
Cumulative interest rate
sensitivity gap as a percentage of
total earning assets (2.1)% (10.2)% (11.4)% (2.5)% (7.2)%
Page 20 of 44
Income Taxes:
The Company had income tax expense of $22.5 million and $17.9 million for the years ended December 31, 2002 and 2001, respectively. This represents an effective income tax rate of 30.6% for 2002 and 31.3% for 2001. The effective income tax rates are lower than the statutory rates since the Company earns a portion of its income on tax-exempt loans and securities.
Performance and Equity Ratios:
Information regarding performance and equity ratios is contained in the "Financial Highlights" on pages 8 through 9 of the Company's 2002 Annual Report to Stockholders incorporated herein by reference.
Securities Portfolio:
The Company generally purchases securities to be held to maturity, with a maturity schedule that provides ample liquidity. Securities classified as held-to-maturity are carried at amortized cost. Certain securities have been classified as available-for-sale based on management's internal assessment of the portfolio considering future liquidity, earning requirements and capital position.
The available-for-sale portfolio balance was $1.3 billion at December 31, 2002. At December 31, 2002, the amortized cost of the held-to-maturity portfolio was $228.0 million and the fair value was $238.2 million.
The amortized cost of securities classified as available-for-sale at December 31, 2002, 2001 and 2000, were as follows (in thousands):
December 31,
----------------------------------------------------
2002 2001 2000
--------------- --------------- ---------------
U.S. Treasury $ 49,970 $ 30,258 $ 77,054
U.S. government agencies 517,482 440,481 265,029
Municipal obligations 74,270 85,284 36,400
Mortgage-backed securities 43,820 69,704 48,841
CMOs 524,414 422,368 137,170
Other debt securities 12,288 19,338 6,140
Equity securities 11,216 10,696 7,932
--------------- --------------- ---------------
$ 1,233,460 $ 1,078,129 $ 578,566
=============== =============== ===============
Page 21of 44
The amortized cost, yield and fair value of debt securities classified as available-for-sale at December 31, 2002, by contractual maturity, were as follows (amounts in thousands):
Over One Over Five
One Year Year Years Over Weighted
or Through Through Ten Fair Average
Less Five Years Ten Years Years Total Value Yield
------------ ------------ ----------- -------------- -------------- ----------------- ----------
U.S. Treasury $ 49,970 $ - $ - $ - $ 49,970 $ 50,835 3.28%
U.S. government agencies 247,133 269,420 - 929 517,482 530,495 4.28%
Municipal obligations 4,237 19,965 34,849 15,219 74,270 76,564 4.81%
Mortgage-backed securities 3 1,967 7,595 34,255 43,820 45,672 6.66%
CMOs 199,933 255,523 34,606 34,352 524,414 531,371 3.21%
Other debt securities - 52 4,852 7,384 12,288 12,610 6.83%
------------ ------------ ----------- -------------- -------------- -----------------
$ 501,276 $ 546,927 $ 81,902 $ 92,139 $ 1,222,244 $ 1,247,547 3.92%
============ ============ =========== ============== ============== =================
Fair Value $ 507,788 $ 561,098 $ 85,026 $ 93,635 $ 1,247,547
Weighted Average Yield 2.67% 4.53% 5.34% 5.87% 3.92%
The amortized cost of securities classified as held-to-maturity at December 31, 2002, 2001 and 2000 were as follows (in thousands)
December 31,
--------------------------------------------------------
2002 2001 2000
--------------- ----------------- -----------------
U.S. Treasury $ 294 $ 293 $ 8,292
U.S. government agencies 16,350 35,746 71,286
Municipal obligations 136,122 148,545 159,977
Mortgage-backed securities 35,950 37,749 69,896
CMOs 30,087 58,508 102,167
Other debt securities 9,176 6,529 6,159
--------------- ----------------- -----------------
$ 227,979 $ 287,370 $ 417,777
=============== ================= =================
The amortized cost, yield and fair value of securities classified as held-to-maturity at December 31, 2002, by contractual maturity, were as follows (amounts in thousands):
Over One Over Five
One Year Year Years Over Weighted
or Through Through Ten Fair Average
Less Five Years Ten Years Years Total Value Yield
---------- -------------- ------------- -------------- -------------- --------------- ------------
U.S. Treasury $ 101 $ 193 $ - $ - $ 294 $ 294 5.25%
U.S. government agencies 5,001 1,415 2,688 7,246 16,350 16,979 5.89%
Municipal obligations 6,744 37,440 80,923 11,015 136,122 143,203 4.83%
Mortgage-backed securities 5,010 10,457 8,806 11,677 35,950 37,577 6.99%
CMOs 14,751 8,315 7,021 - 30,087 30,967 6.19%
Other debt securities 6,115 2,940 105 16 9,176 9,176 5.93%
---------- -------------- ------------- -------------- -------------- --------------- 5.42%
$ 37,722 $ 60,760 $ 99,543 $ 29,954 $227,979 $238,196
========== ============== ============= ============== ============== ===============
Fair Value $ 38,188 $ 63,809 $105,090 $ 31,109 $238,196
Weighted Average Yield 5.84% 5.43% 5.09% 5.93% 5.42%
Page 22 of 44
Loan Portfolio:
The Banks' primary lending focus is to provide commercial, consumer and real estate loans to consumers and to small and middle market businesses in their respective market areas. Diversification in the loan portfolio is a means of reducing the risks associated with economic fluctuations. The Banks have no significant concentrations of loans to particular borrowers or loans to any foreign entities.
Loan underwriting standards and loan loss allowance maintenance further reduces the impact of credit risk to the Company. Loans are underwritten on the basis of cash flow capacity and collateral market value. Generally, real estate mortgage loans are made when the borrower produces sufficient cash flow capacity and equity in the property to offset historical market devaluations. The loan loss allowance adequacy is tested quarterly based on historical losses through different economic cycles and projected future losses specifically identified.
The following table sets forth, for the periods indicated, the composition of the loan portfolio of the Company:
Loan Portfolio
--------------
December 31,
--------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
------------- --------------- --------------- --------------- ------------------
(in thousands)
Real estate:
Residential mortgages 1-4 family $ 539,808 $ 458,372 $ 410,716 $ 342,443 $ 244,150
Residential mortgages multifamily 20,305 21,875 20,510 18,939 12,220
Home equity lines/loans 86,609 56,887 42,644 29,549 8,815
Construction and development 197,166 184,750 171,009 136,179 73,789
Nonresidential 445,733 398,704 328,005 309,488 143,445
Commercial, industrial and other 346,808 308,306 281,701 214,041 224,686
Consumer 434,407 435,205 396,112 417,594 544,137
Lease financing and depository
Institutions 29,565 23,632 27,394 24,727 17,324
Political subdivisions - - 21,755 24,687 21,069
Credit cards and other revolving credit 14,085 12,333 11,393 40,789 40,649
------------- --------------- --------------- --------------- ------------------
2,114,486 1,900,064 1,711,239 1,558,436 1,330,284
Less, unearned income 9,504 10,025 11,398 16,915 24,729
------------- --------------- --------------- --------------- ------------------
Net loans $ 2,104,982 $ 1,890,039 $ 1,699,841 $ 1,541,521 $ 1,305,555
============= =============== =============== =============== ==================
Page 23 of 44
The following table sets forth, for the periods indicated, the approximate contractual maturity by type of the loan portfolio of the Company:
Loan Maturity Schedule
December 31, 2002 December 31, 2001
----------------------------------------------------- ------------------------------------------------
Maturity Range Maturity Range
----------------------------------------------------- ------------------------------------------------
After One After One
Within Through After Five Within Through After Five
One Year Five Years Years Total One Year Five Years Years Total
---------- -------------- ----------- ------------- ----------- ----------- ------------ -------------
(in thousands)
Commercial, industrial and
other $ 132,706 $ 184,926 $ 29,176 $ 346,808 $ 133,871 $ 142,394 $ 27,736 $ 304,001
Real estate - construction 140,322 44,852 11,992 197,166 129,790 41,485 11,091 182,366
All other loans 391,972 839,214 339,326 1,570,512 446,735 682,419 284,543 1,413,697
---------- -------------- ----------- ------------- ----------- ----------- ------------ -------------
Total loans $ 665,000 $ 1,068,992 $ 380,494 2,114,486 $ 710,396 $ 866,298 $ 323,370 $1,900,064
========== ============== =========== ============= =========== =========== ============ =============
The sensitivity to interest rate changes of that portion of the Company's loan portfolio that matures after one year is shown below:
Loan Sensitivity to Changes in Interest Rates
---------------------------------------------
December 31,
----------------------------------------------
2002 2001
----------------------- ---------------------
(in thousands)
Commercial, industrial, and real estate construction
maturing after one year:
Fixed rate $ 180,020 $ 180,624
Floating rate 90,926 42,082
Other loans maturing after one year:
Fixed rate 815,612 778,057
Floating rate 362,928 188,905
----------------- ----------------
Total $ 1,449,486 $1,189,668
================= =================
Page 24 of 44
Nonperforming Assets:
The following table sets forth nonperforming assets by type for the periods indicated, consisting of nonaccrual loans, restructured loans and real estate owned. Loans past due 90 days or more and still accruing are also disclosed.
December 31,
---------------------------------------------------------------------------------
2002 2001 2000 1999 1998
----------------- -------------- -------------- --------------- -------------
(Amounts in thousands)
Nonaccrual loans:
Real estate $ 10,521 $ 14,358 $ 7,856 $ 5,129 $ 2,459
Commercial, industrial and other 1,276 2,877 2,296 1,236 1,023
Consumer, credit card and other
revolving credit 73 93 30 536 1,120
Lease financing - - - - -
Depository institutions - - - - -
Political subdivisions - - - - -
Restructured loans - - - 152 1,332
----------------- -------------- -------------- ------------- ---------------
Total nonperforming loans 11,870 17,328 10,182 7,053 5,934
Acquired other real estate - 1,330 - 794
Other real estate 5,936 1,673 1,492 822 2,245
----------------- -------------- -------------- ------------- ---------------
Total nonperforming assets $ 17,806 $ 20,331 $ 11,674 $ 8,669 $ 8,179
================= ============== ============== ============= ===============
Loans 90+ days past due and still accruing $ 6,407 $ 12,591 $ 9,277 $ 4,442 $ 2,907
================= ============== ============== ============= ===============
Ratios (%):
Nonperforming loans to net loans 0.56 0.92 0.60 0.46 0.45
Nonperforming assets to net loans and other
real estate 0.84 1.07 0.69 0.56 0.63
Nonperforming loans to average net loans 0.61 0.97 0.63 0.49 0.48
Allowance for loan losses to nonperforming
loans 293 199 281 365 367
The amount of interest that would have been recorded on nonaccrual loans had the loans not been classified as "nonaccrual" was $662,000, $735,000, $686,000, $462,000 and $424,000 for the years ended December 31, 2002, 2001, 2000, 1999 and 1998, respectively.
Interest actually received on nonaccrual loans was not material. The amount of interest recorded on restructured loans did not differ significantly from the interest that would have been recorded under the original terms of those loans.
Analysis of Allowance for Loan Losses:
The allowance for loan losses is a valuation account available to absorb losses on loans. All losses are charged to the allowance for loan losses when the loss actually occurs or when a determination is made that a loss is likely to occur; recoveries are credited to the allowance for loan losses at the time of receipt. Periodically, management estimates the probable level of losses to determine whether the allowance is adequate to absorb reasonably foreseeable, anticipated losses in the existing portfolio based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay, and the estimated value of any underlying collateral and current economic conditions. All commercial
Page 25 of 44
loans in lending relationships with an aggregate balance of $250,000 or more are risk rated and evaluated on an individual basis, as well as, all consumer and mortgage real estate loans with a balance of $100,000 or more. All consumer and mortgage real estate loans under $100,000 are risk rated as pools of homogeneous loans and classified according to past due status. Commercial loans are reviewed for impairment at the time a loan is no longer current or at the time management is made aware of a degradation in a borrower's financial status or a deficiency in collateral. Loss factors recommended by the Banks' regulators are applied to loans graded by standard loan classifications in determining a general allowance. Unclassified loans are categorized and reserved for at the greater of a five-year average net charge-off ratio or a minimum threshold stated as a percentage of loans outstanding. The allowance for loan loss stated as a percentage of period end loans, used in conjunction with the evaluation of current and anticipated economic conditions, composition of the Company's present loan portfolio, and trends in both delinquencies and nonaccruals, is a measurement standard utilized by management in determining the adequacy of the allowance. The unallocated portion of the allowance for loan losses is available to compensate for the uncertainties in estimating the potential losses.
Page 26 of 44
The following table sets forth, for the periods indicated, average net loans outstanding, allowance for loan losses, amounts charged-off and recoveries of loans previously charged-off:
At and For The Years Ended December 31,
-----------------------------------------------------------------------------
2002 2001 2000 1999 1998
-------------- -------------- ------------ ------------ -----------
(in thousands)
Net loans outstanding at end of period $2,104,982 $1,890,039 $1,699,841 $1,541,521 $1,305,555
============== ============== ============ ============ ===========
Average net loans outstanding $1,961,299 $1,792,559 $1,611,046 $1,452,305 $1,243,617
============== ============== ============ ============ ===========
Balance of allowance for loan losses
at beginning of period $ 34,417 $ 28,604 $ 25,713 $ 21,800 $ 21,000
Loans charged-off:
Real estate 109 45 80 85 26
Commercial 9,143 6,386 6,803 3,112 1,041
Consumer, credit cards and other
revolving credit 14,291 9,853 6,802 8,999 7,835
Lease financing 10 14 34 5 20
Depository institutions - - - - -
Political subdivisions - - - - -
-------------- -------------- ------------ ------------ -----------
Total charge-offs 23,553 16,298 13,719 12,201 8,922
-------------- -------------- ------------ ------------ -----------
Recoveries of loans previously
charged-off:
Real estate 7 2 1 5 5
Commercial 639 319 1,333 808 541
Consumer, credit cards and other
revolving credit 5,135 4,365 2,814 2,797 2,220
Lease financing - 1 - 1 -
Depository institutions - - - - -
Political subdivisions - - - - -
-------------- --------------------------- ------------ -----------
Total recoveries 5,781 4,687 4,148 3,611 2,766
-------------- --------------------------- ------------ -----------
Net charge-offs 17,772 11,611 9,571 8,590 6,156
Provision for loan losses 18,495 9,082 12,609 8,688 6,956
Balance acquired through acquisition & other (400) 8,342 (147) 3,815 -
-------------- -------------- ------------ ------------ -----------
Balance of allowance for loan losses
at end of period $ 34,740 $ 34,417 $ 28,604 $ 25,713 $ 21,800
============== ============== ============ ============ ===========
The following table sets forth, for the periods indicated, certain ratios related to the Company's charge-offs, allowance for loan losses and outstanding loans:
At and For The Years Ended December 31,
-------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ------------- -------------- ------------- --------------
Ratios (%):
Net charge-offs to average net loans 0.91 0.65 0.59 0.59 0.50
Net charge-offs to period-end net loans 0.84 0.61 0.56 0.56 0.47
Allowance for loan losses to average net loans 1.77 1.92 1.78 1.77 1.75
Allowance for loan losses to period-end net loans 1.65 1.82 1.68 1.67 1.67
Net charge-offs to loan loss allowance 51.16 33.74 33.46 33.41 28.24
Loan loss provision to net charge-offs 104.07 78.22 131.74 101.14 113.00
An allocation of the loan loss allowance by major loan category is set forth in the following table. Except for an increase in the outstanding loan portfolio balance, there were no relevant variations in loan concentrations, quality or terms. The allocation is not necessarily indicative of the category of future losses, and the full allowance at December 31, 2002 is available to absorb losses occurring in any category of loans.
Page 27 of 44
December 31,
------------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------- ---------------------- ------------------- -------------------- ----------------------
Allowance % of Allowance % of Allowance % of Allowance % of Allowance % of
for Loans for Loans for Loans for Loans for Loans
Loan to Total Loan to Total Loan to Total Loan to Total Loan to Total
Losses Loans Losses Loans Losses Loans Losses Loans Losses Loans
---------- ----------- ----------- -------- ---------- -------------------- ---------- --------- --------
(amounts in thousands)
Real estate $7,664 61.26 $6,701 42.73 $5,700 57.26 $4,300 53.68 $2,500 36.26
Commercial, industrial
and other 11,610 17.71 14,380 22.13 8,200 19.39 7,900 16.71 7,000 19.78
Consumer and other
revolving credit 10,174 21.02 9,848 35.14 11,444 23.35 11,200 29.61 10,200 43.96
Unallocated 5,292 - 3,488 - 3,260 - 2,313 - 2,100 -
---------- -------- ----------- --------- ---------- ---------- --------- -------- --------- ----------
$34,740 100.00 $34,417 100.00 $28,604 100.00 $25,713 100.00 $21,800 100.00
========== ======== =========== ========= ========== ========== ========= ======== ========= ==========
Deposits and Other Debt Instruments:
The following table sets forth the distribution of the average deposit accounts for the periods indicated and the weighted average interest rate paid on each category of deposits:
2002 2001 2000
------------------------------- ------------------------------- ----------------------------------
Percent Percent Percent
Average of Rate Average of Rate Average of Rate
Balance Deposits (%) Balance Deposits (%) Balance Deposits (%)
------------ --------- ----- ------------- ---------- ----- ------------- --------- -----
(amounts in thousands)
Non-interest bearing accounts $ 601,374 18.94 - $ 562,989 19.96 - $ 537,057 21.67 -
NOW accounts 552,419 17.40 1.84 195,079 6.92 1.76 219,511 8.86 2.30
Money market and other
savings accounts 887,357 27.95 1.60 917,024 32.51 2.74 761,855 30.75 3.62
Time deposits 1,133,796 35.71 3.80 1,145,259 40.61 5.47 959,493 38.72 5.62
------------ --------- ------------- ---------- ------------- ---------
$ 3,174,946 100.00 $ 2,820,351 100.00 $ 2,477,916 100.00
============ ========= ============= ========== ============= =========
The Banks traditionally price their deposits to position themselves competitively with the local market. The Banks' policy is not to accept brokered deposits.
Time certificates of deposit of $100,000 and greater at December 31, 2002 had maturities as follows:
December 31, 2002
-----------------
(in thousands)
Three months or less $ 142,115
Over three through six months 75,787
Over six months through one year 61,944
Over one year 180,145
---------------
Total $459,991
===============
Page 28 of 44
Short-Term Borrowings:
The following table sets forth certain information concerning the Company's short-term borrowings, which consist of federal funds purchased and Federal Home Loan Bank ("FHLB") advances as well as securities sold under agreements to repurchase.
Years Ended December 31,
----------------------------------------
2002 2001 2000
----------- ------------ -------------
(amounts in thousands)
Federal funds purchased and FHLB advances:
Amount outstanding at period-end $0 $125 $0
Weighted average interest at period-end 0.00% 1.30% 0.00%
Maximum amount at any month-end during period 1,550 2,000 17,700
Average amount outstanding during period 1,832 1,316 41,282
Weighted average interest rate during period 1.57% 3.58% 5.89%
Securities sold under agreements to repurchase:
Amount outstanding at period-end $161,058 $161,208 $144,561
Weighted average interest at period-end 0.92% 1.45% 5.42%
Maximum amount at any month end during-period 189,858 195,905 180,767
Average amount outstanding during period 173,084 159,511 157,633
Weighted average interest rate during period 1.28% 3.29% 4.46%
Liquidity:
Liquidity represents an institution's ability to provide funds to satisfy demands from depositors, borrowers and other commitments by either converting assets into cash or accessing new or existing sources of incremental funds. The principal sources of funds that provide liquidity are customer deposits, payments of interest and principal on loans, maturities in and sales of investment securities, earnings and borrowings. At December 31, 2002, cash and due from banks and securities available-for-sale were in excess of 43.8% of total deposits.
The Company depends upon the dividends paid to it from the Banks as a principal source of funds for its debt service and dividend requirements. At December 31, 2002, the Banks had approximately $160 million available for dividends to the Company.
Capital Resources:
The information under the caption "Notes to Consolidated Financial Statements" on page 28, Note 9 Common Stockholders' Equity of the Company's 2002 Annual Report to Stockholders is incorporated herein by reference.
Page 29 of 44
Impact of Inflation:
The Company's non-interest income and expenses can be affected by increasing rates of inflation; however, unlike most industrial companies, the assets and liabilities of financial institutions such as the Banks are primarily monetary in nature. Interest rates, therefore, have a more significant impact on the Banks' performance than the effect of general levels of inflation on the price of goods and services.
Forward Looking Statements
Congress 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 disclosure, which protects the companies from unwarranted litigation, if actual results are different from management expectations. In addition to historical information, this report contains forward-looking statements and information, which are based on management's beliefs, plans, expectations and assumptions and on information currently available to management. Forward-looking statements and information presented reflects management's views and estimates of future economic circumstances, industry conditions, Company performance and financial results. The words "may", "should", "expect", "anticipate", "intend", "plan", "continue", "believe", "seek", "estimate" and similar expressions used in this report do not relate to historical facts and are intended to identify forward-looking statements. These statements appear in a number of places in this report, including, but not limited to, statements found in Item 1 "Business" and in Item 7 "Management's Discussion and Analysis". All phases of the Company's operations are subject to a number of risks and uncertainties. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in this report, including, without limitation, the portions referenced above, and the uncertainties set forth from time to time in the Company's other public reports and filings and public statements, many of which are beyond the control of the Company, and any of which, or a combination of which, could materially affect the results of the Company's operations and whether forward-looking statements made by the Company ultimately prove accurate.
ITEM 2 - PROPERTIES
The Company's main offices are located at One Hancock Plaza, Gulfport, Mississippi. The building has fourteen stories, of which seven are utilized by the Company. The remaining seven stories are presently leased to outside parties.
Page 30 of 44
Title to the following banking offices in Mississippi and Louisiana is owned in fee (number of locations shown in parenthesis):
Albany, LA (1) Long Beach, MS (2)
Alexandria, LA (2) Loranger, LA (1)
Baker, LA (1) Lyman, MS (1)
Baton Rouge, LA (13) Mamou, LA (1)
Bay St. Louis, MS (2) Mandeville, LA (1)
Biloxi, MS (3) Moss Point, MS (1)
Bogalusa, LA (1) Oakdale, LA (1)
Boyce, LA (1) Ocean Springs, MS (2)
Covington, LA (1) Pascagoula, MS (2)
Denham Springs, LA (3) Pass Christian, MS (1)
D'Iberville, MS (1) Petal, MS (1)
Escatawpa, MS (1) Picayune, MS (1)
Eunice, LA (2) Pineville, LA (1)
Franklinton, LA (1) Poplarville, MS (1)
Gautier, MS (1) Prentiss, MS (1)
Glenmora, LA (1) Purvis, MS (2)
Gonzales, LA (1) St. Francisville, LA (1)
Gulfport, MS (6) Sumrall, MS (1)
Hineston, LA (1) Ville Platte, LA (1)
Hammond, LA (2) Vancleave, MS (1)
Hattiesburg, MS (2) Walker, LA (1)
Independence, LA (1) Waveland, MS (1)
The following banking offices in Mississippi and Louisiana are leased under agreements with unexpired terms of from four to forty-nine years including renewal options (number of locations shown in parenthesis):
Baton Rouge, LA (4) Mandeville, LA (1)
Bay St. Louis, MS (3) Opelousas, LA (1)
Biloxi, MS (1) Pascagoula, MS (2)
Diamondhead, MS (1) Picayune, MS (2)
Gulfport, MS (5) Ponchatoula, LA (1)
Hammond, LA (1) Saucier, MS (1)
Hattiesburg, MS (2) Slidell, LA (1)
Kiln, MS (1) Springfield, LA (1)
In addition to the above, Hancock Bank MS owns land and other properties acquired through foreclosures of loan collateral. The major item is approximately 3,700 acres of timber land in Hancock County, Mississippi, which Hancock Bank MS acquired by foreclosure in the 1930's.
Page 31 of 44
ITEM 3 - LEGAL PROCEEDINGS
The Company is party to various legal proceedings arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, all such matters are adequately covered by insurance or, if not so covered, are not expected to have a material adverse effect on the financial statements of the Company.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter ended December 31, 2002.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
Stock Split:
On July 12, 2002 the Company's Board of Directors declared a three-for-two stock split in the form of a 50% common stock dividend. The additional shares were payable August 5, 2002 to shareholders of record at the close of business on July 23, 2002.
All information concerning earnings per share, dividends per share, and number of shares outstanding have been adjusted to give effect to this split.
The information under the caption "Market Information" on page 10 of the Company's 2002 Annual Report to Stockholders is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information under the caption "Financial Highlights" on pages 8 and 9 of the Company's 2002 Annual Report to Stockholders is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on Pages 38 through 47 of the Company's 2002 Annual Report to Stockholders is incorporated herein by reference.
Page 32 of 44
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information under the caption "Asset/Liability Management" on pages 42 and 43 of the Company's 2002 Annual Report to Stockholders is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and subsidiaries, and the independent auditors' report, appearing on Pages 8 through 47 of the Company's 2002 Annual Report to Stockholders is incorporated herein by reference:
Financial Highlights on Pages 8 through 10
Independent Auditors' Report on Page 11
Consolidated Balance Sheets on Page 18
Consolidated Statements of Earnings on Page 19
Consolidated Statements of Stockholders' Equity on Page 20
Consolidated Statements of Comprehensive Earnings on Page 20
Consolidated Statements of Cash Flows on Page 21
Notes to Consolidated Financial Statements on Pages 22 through 37
Management's Discussion and Analysis of Financial Condition
And Results of Operations on Pages 38 through 47
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change in the two most recent fiscal years nor has there been any disagreements with the Company's independent accountants and auditors on any matter of accounting principles or practices or financial statement disclosure.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information concerning directors who are not also executive officers of the registrant, see "Election of Directors" (Pages 3-7) in the Proxy Statement for the Annual Meeting of Shareholders held February 27, 2003, which was filed by the Registrant in definitive form with the Commission on January 29, 2003 and is incorporated herein by reference.
Information concerning executive officers of the registrant is listed below.
Leo W. Seal, Jr. Director of the Company since 1984. President, Hancock Bank, Gulfport, Mississippi from 1963 to 1990; President of Hancock Holding Company since 1984, Chief Executive Officer from 1984 to 2000, Advisory Director, Hancock Bank of Louisiana since 1993. Mr. Seal has been employed with Hancock Bank since 1947. He was elected to the Board of Directors of Hancock Bank in 1961 and named President in 1963 and in 1977 he was named Chief Executive Officer.
Page 33 of 44
George A. Schloegel Director of Company since 1984. President, Hancock Bank, Gulfport, Mississippi, since 1990, Vice Chairman of the Board of Hancock Holding Company since 1984 and named Chief Executive Officer, Hancock Holding Company 2000; Director of Hancock Bank of Louisiana, since 1990; Director of Mississippi Power Company, Gulfport, Mississippi. Mr. Schloegel was employed part-time with Hancock Bank from 1956-1959 and began full-time employment in 1962. He served in various capacities until being named President in 1990.
A. Hartie Spence President, Hancock Bank of Louisiana since 1997, Chairman of the Board, Hancock Bank of Louisiana 1996. Prior to that Mr. Spence served as President, Calcasieu Marine National Bank, Lake Charles, Louisiana from 1987 to 1996.
Charles A. Webb, Jr. Executive Vice President and Secretary, Hancock Holding Company since 1992; Director Hancock Bank since 1995; Executive Vice President, Hancock Bank since 1977; Director, Hancock Bank of Louisiana since 1990. Mr. Webb has been employed with Hancock Bank since 1948. He served as Vice President and Secretary of the Company from 1984 until 1992.
Robert E. Easterly Executive Vice President, Hancock Bank of Louisiana since 1995; President and Chief Executive Officer, First National Bank of Denham Springs from 1981-1996; Chairman of the Board, First National Bank of Denham Springs from 1993-1996; Director, Hancock Bank since 1995.
Carl J. Chaney Chief Financial Officer, Hancock Holding Company and Hancock Bank since 1998; Executive Vice President, Hancock Holding Company and Hancock Bank since 2001; Senior Vice President, Hancock Holding Company and Hancock Bank from 1999 to 2001. Prior to Mr. Chaney joining Hancock, he was Director and Shareholder of the law firm, Watkins Ludlam Winter & Stennis, P.A., Jackson Mississippi from 1995 to 1998, where he specialized in Investment Banking and Merger and Acquisitions in the Banking Industry.
John M. Hairston Chief Operating Officer, Hancock Holding Company and Hancock Bank since 1997; Executive Vice President, Hancock Holding Company and Hancock Bank since 2001; Senior Vice President, Hancock Holding Company and Hancock Bank from 1996 to 2001; Vice President, Hancock Bank from 1994 to 1995; Senior Operations Officer, Hancock Holding Company from 1994 to 1996. Prior to Mr. Hairston joining Hancock, he was a Manager with Financial Services Consulting, a Division of Andersen Consulting, headquartered in Chicago, Illinois.
Richard T. Hill Executive Vice President, Hancock Holding Company, since February 2002; Senior Vice President and Louisiana Retail Banking Executive, Hancock Bank of Louisiana, from June 1998 to January 2002; Executive Vice President and Retail Banking Executive, City National Bank (a subsidiary of First Commerce Corporation), November 1993 -June 1998.
Clifton J. Saik Executive Vice President, Hancock Holding Company, since February 2002; Senior Vice President and Director, Trust and Financial Services Group, Hancock Bank from July 1998 to January 2002. Prior to coming to Hancock Bank, Mr. Saik served in the following capacities at First Commerce Corporation, New Orleans, Louisiana: Executive Vice President and Director, Card Services; CEO, Marquis Insurance Agency, L.L.C.; and Member, Marquis Investments, L.L.C. Management Committee, June 1997 June 1998; Executive Vice President and Director, Trust and Retail Brokerage Services Group, Senior Vice President and Director, Trust Group; October 1994 to June 1997; Senior Vice President and Senior Trust Officer, October 1992 to October 1994.
Page 34 of 44
ITEM 11 - EXECUTIVE COMPENSATION
For information concerning this item see "Executive Compensation" (pages 11-17) in the Proxy Statement for the Annual Meeting of Shareholders held February 27, 2003, which was filed by the Registrant in definitive form with the Commission on January 29, 2003 and is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information concerning this item see "Security Ownership of Certain Beneficial Owners" (page 9) and "Security Ownership of Management" (page 10) in the Proxy Statement for the Annual Meeting of Shareholders held February 27, 2003, which was filed by the Registrant in definitive form with the Commission on January 29, 2003 and is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions and Relationships" (Page 17) in the Proxy Statement for the Annual Meeting of Shareholders held February 27, 2003, which was filed by the Registrant in definitive form with the Commission on January 29, 2003 and is incorporated herein by reference.
ITEM 14 CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures As defined by the Securities and Exchange Commission in Exchange Act Rules 13a-14(c) and 15d-14(c), a company's "disclosure controls and procedures" means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.
As of December 31, 2002, (the "Evaluation Date"), the Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures as defined in the Exchange Act Rules. Based on their evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded the Company's disclosure controls and procedures are sufficiently effective to ensure that material information relating to the Company and required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.
Changes in Internal Controls Subsequent to the Evaluation Date, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls.
ITEM 15 PRINCIPAL ACCOUNTANT FEES
For information concerning this item, see "Principal Accounting Firm Fees" on Page 19 of the Company's Proxy Statement for the Annual Meeting of Shareholders held February 27, 2003, which was filed by the Registrant in definitive form with the Commission on January 29, 2003 and is incorporated herein by reference.
Page 35 of 44
PART IV
ITEM 16 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Hancock Holding Company and Consolidated Subsidiaries
(a) 1. and 2. Consolidated Financial Statements: The following have been incorporated herein from the Company's 2002 Annual Report to Stockholders and are incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 2002 and 2001
Consolidated Statements of Earnings for the three years ended December 31, 2002
Consolidated Statements of Stockholders' Equity for the three years ended December 31, 2002
Consolidated Statements of Comprehensive Earnings for the three years ended December 31, 2002
Consolidated Statements of Cash Flows for the three years ended December 31, 2002
Notes to Consolidated Financial Statements for the three years ended December 31, 2002
Financial Highlights at and as of each of the five years ended December 31, 2002
All other financial statements and schedules are omitted as the required information is inapplicable or the required information is presented in the consolidated financial statements or related notes.
(a) 3. Exhibits:
(2.1) Agreement and Plan of Merger between Hancock
Holding Company and Lamar Capital Corporation dated
February 21, 2001 (Appendix C to the Prospectus
contained in the S-4 Registration Statement
333-60280 filed on May 4, 2001 and incorporated by
reference herein).
(3.1) Amended and Restated Articles of Incorporation
dated November 8, 1990 (filed as Exhibit 3.1 to the
Registrant's Form 10-K for the year ended December
31, 1990 and incorporated herein by reference).
(3.2) Amended and Restated Bylaws dated
November 8, 1990 (filed as Exhibit 3.2 to the
Registrant's Form 10-K for the year ended
December 31, 1990 and incorporated herein by
reference).
(3.3) Articles of Amendment to the Articles of
Incorporation of Hancock Holding Company, dated
October 16, 1991 (filed as Exhibit 4.1 to the
Registrant's Form 10-Q for the quarter ended
September 30, 1991).
(3.4) Articles of Correction, filed with Mississippi
Secretary of State on November 15, 1991 (filed as
Exhibit 4.2 to the Registrant's Form 10-Q for the
quarter ended September 30, 1991).
(3.5) Articles of Amendment to the Articles of
Incorporation of Hancock Holding Company, adopted
February 13, 1992 (filed as Exhibit 3.5 to the
Registrant's Form 10-K for the year ended December
31, 1992 and incorporated herein by reference).
(3.6) Articles of Correction, filed with Mississippi
Secretary of State on March 2, 1992 (filed as
Exhibit 3.6 to the Registrant's Form 10-K for the
year ended December 31, 1992 and incorporated
herein by reference).
(3.7) Articles of Amendment to the Articles of
Incorporation adopted February 20, 1997 (filed as
Exhibit 3.7 to the Registrant's Form 10-K for the
year ended December 31, 1996 and incorporated
herein by reference).
(4.1) Specimen stock certificate (reflecting change in
par value from $10.00 to $3.33, effective March 6,
1989) (filed as Exhibit 4.1 to the Registrant's
Form 10-Q for the quarter ended March 31, 1989 and
incorporated herein by reference).
Page 36 of 44
(4.2) By executing this Form 10-K, the Registrant hereby
agrees to deliver to the Commission upon request
copies of instruments defining the rights of
holders of long-term debt of the Registrant or its
consolidated subsidiaries or its unconsolidated
subsidiaries for which financial statements are
required to be filed, where the total amount of
such securities authorized thereunder does not
exceed 10 percent of the total assets of the
Registrant and its subsidiaries on a consolidated
basis.
(10.1) 1996 Long Term Incentive Plan (filed as Exhibit
10.1 to the Registrant's Form 10-K for the year
ended December 31, 1995, and incorporated herein by
reference).
(10.2) Description of Hancock Bank Executive Supplemental
Reimbursement Plan, as amended (filed as Exhibit
10.2 to the Registrant's Form 10-K for the year
ended December 31, 1996, and incorporated herein by
reference).
(10.3) Description of Hancock Bank Automobile Plan (filed
as Exhibit 10.3 to the Registrant's Form 10-K for
the year ended December 31, 1996, and incorporated
herein by reference).
(10.4) Description of Deferred Compensation Arrangement
for Directors (filed as Exhibit 10.4 to the
Registrant's Form 10-K for the year ended December
31, 1996, and incorporated herein by reference).
(10.5) Site Lease Agreement between Hancock Bank and City
of Gulfport, Mississippi dated as of March 1, 1989
(filed as Exhibit 10.4 to the Registrant's Form
10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.6) Project Lease Agreement between Hancock Bank and
City of Gulfport, Mississippi dated as of March 1,
1989 (filed as Exhibit 10.5 to the Registrant's
Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.7) Deed of Trust dated as of March 1, 1989 from
Hancock Bank to Deposit Guaranty National Bank as
trustee (filed as Exhibit 10.6 to the Registrant's
Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.8) Trust Indenture between City of Gulfport,
Mississippi and Deposit Guaranty National Bank
dated as of March 1, 1989 (filed as Exhibit 10.7 to
the Registrant's Form 10-K for the year ended
December 31, 1989 and incorporated herein by
reference).
(10.9) Guaranty Agreement dated as of March 1, 1989 from
Hancock Bank to Deposit Guaranty National Bank as
trustee (filed as Exhibit 10.8 to the Registrant's
Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.10) Bond Purchase Agreement dated as of February 23,
1989 among Hancock Bank, J. C. Bradford & Co. and
City of Gulfport, Mississippi (filed as Exhibit
10.9 to the Registrant's Form 10-K for the year
ended December 31, 1989 and incorporated herein by
reference).
(13) Annual Report to Stockholders for year ending
December 31, 2002 furnished for the information of
the Commission only and not deemed "filed" except
for those portions which are specifically
incorporated herein by reference).
(21) Proxy Statement for the Registrant's Annual Meeting of
Shareholders on February 27, 2003 (deemed "filed"
for the purposes of this Form 10-K only for those
portions which are specifically incorporated herein
by reference).
Page 37 of 44
(22) Subsidiaries of the Registrant.
Jurisdiction Holder of
Name of Incorporation Outstanding Stock (1)
Hancock Bank Mississippi Hancock Holding Company
Hancock Bank of Louisiana Louisiana Hancock Holding Company
Hancock Bank Securities Corporation Mississippi Hancock Bank
Hancock Insurance Agency Mississippi Hancock Bank
Hancock Investment Services, Inc. Mississippi Hancock Bank
Town Properties, Inc. Mississippi Hancock Bank
The Gulfport Building, Inc. Mississippi Hancock Bank
Harrison Finance Company Mississippi Hancock Bank
Hancock Mortgage Corporation Mississippi Hancock Bank and
Hancock Bank Securities Corporation
Harrison Life Insurance Company Mississippi 79% owned by Hancock Bank
(1) All are 100% owned except as indicated.
(23) Independent Auditors' Consent
(b) Reports on Form 8-K:
A Form 8-K was filed on November 11, 2002 for the
purpose of revising the Company's 2002 fourth
quarter earnings-per-share guidance.
(c): Not applicable.
(d): Not applicable.
Page 38 of 44
SIGNATURES
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
------------------------
Registrant
March 27, 2003 By: /s/ George A. Schloegel
- ------------------- ------------------------------
Date George A. Schloegel
Vice-Chairman of the Board &
Chief Executive Officer
March 27, 2003 By: /s/ Carl J. Chaney
- ------------------- ------------------------------
Date Carl J. Chaney
Executive Vice President &
Chief Financial Officer
CERTIFICATION The undersigned hereby certifies in his capacity as an officer of HANCOCK HOLDING COMPANY (the "Company") that the Annual Report of the Company on Form 10-K for the periods ended December 31, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such periods and the results of operations of the Company for such periods.
March 27, 2003 By: /s/ George A. Schloegel
- ------------------- ------------------------------
Date George A. Schloegel
Vice-Chairman of the Board &
Chief Executive Officer
CERTIFICATION The undersigned hereby certifies in his capacity as an officer of HANCOCK HOLDING COMPANY (the "Company") that the Annual Report of the Company on Form 10-K for the periods ended December 31, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such periods and the results of operations of the Company for such periods.
March 27, 2003 By: /s/ Carl J. Chaney
- ------------------- ------------------------------
Date Carl J. Chaney
Executive Vice President &
Chief Financial Officer
Page 39 of 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
DATE March 27, 2003 /s/ George A. Schloegel
- ------------------------- ------------------------
by George A. Schloegel, Vice Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Leo W. Seal, Jr President, March 27, 2003
---------------------------- Director
Leo W. Seal, Jr.
/s/ Joseph F. Boardman, Jr Chairman of the Board, March 27, 2003
- ---------------------------- Director
Joseph F. Boardman, Jr.
/s/ George A. Schloegel Vice Chairman of the Board, March 27, 2003
- ---------------------------- Director
George A. Schloegel Chief Executive Officer
Director, Emeritus March 27, 2003
- ----------------------------
Thomas W. Milner, Jr
Director, Emeritus March 27, 2003
- ----------------------------
Dr. Homer C. Moody, Jr
/s/ James B. Estabrook, Jr. Director March 27, 2003
- -----------------------------
James B. Estabrook, Jr.
Director March 27, 2003
- ----------------------------
Charles H. Johnson
/s/ L. A. Koenenn, Jr Director, Emeritus March 27, 2003
- ----------------------------
L. A. Koenenn, Jr
/s/ Victor Mavar Director, Emeritus March 27, 2003
- ----------------------------
Victor Mavar
Director March 27, 2003
- ----------------------------
Christine L. Smilek
Page 40 of 44
(signatures continued)
Director March 27, 2003
- ----------------------------
Frank E. Bertucci
/s/ James H. Horne Director March 27, 2003
- ----------------------------
James H. Horne
/s/ Carl J. Chaney Executive Vice President and March 27, 2003
- ---------------------------- Chief Financial Officer
Carl J. Chaney
/s/ Robert W. Roseberry Director March 27, 2003
- ----------------------------
Robert W. Roseberry
Page 41 of 44
CERTIFICATIONS
I, George A. Schloegel, certify that:
1. I have reviewed this annual report on Form 10-K of
Hancock Holding Company.
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and
other financial information included in this annual
report, fairly present in all material respects the
financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented
in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures
to ensure that material information relating to
the registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing
the equivalent function):
a. all significant deficiencies in the design or
operation of internal controls which could
adversely affect the registrant's ability to
record, process, summarize and report financial
data and have identified for the registrant's
auditors any material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: March 27, 2003 /s/ George A. Schloegel
--------------------------------
George A. Schloegel
Vice-Chairman
of the Board &
Chief Executive Officer
Page 42 of 44
CERTIFICATIONS
I, Carl J. Chaney, certify that:
1. I have reviewed this annual report on Form 10-K of
Hancock Holding Company.
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and
other financial information included in this annual
report, fairly present in all material respects the
financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented
in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures
to ensure that material information relating to
the registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing
the equivalent function):
a. all significant deficiencies in the design or
operation of internal controls which could
adversely affect the registrant's ability to
record, process, summarize and report financial
data and have identified for the registrant's
auditors any material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: March 27, 2003 /s/ Carl J. Chaney
--------------------------
Carl J. Chaney
Executive Vice President &
Chief Financial Officer
Page 43 of 44
Exhibit (23)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements of Hancock Holding Company on Form S-8 (No. 2-99863) and on Form S-3 (No. 33-31782) of our report dated January 17, 2003 incorporated by reference in this Annual Report on Form 10-K for the year ended December 31, 2002.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
March 27, 2003
Page 44 of 44
