Mississippi 0-13089 64-0169065
- ------------------------- -------------------- -----------------------------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
One Hancock Plaza, 2510 14th Street,
Gulfport, Mississippi 39501
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(Address of principal executive offices) (Zip code)
(228) 868-4000
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(Registrant's telephone number, including area code)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
99.1 Press Release issued by Hancock Holding Company
dated July 8, 2004, headed "Hancock Holding
Company reports first half of 2004 earnings - up 17 percent"
Item 9. Regulation FD Disclosure. On July 8, 2004, Hancock Holding Company
announced by press release its first half of 2004 earnings of 2004 were up
17 percent. A copy of this press release is attached hereto as Exhibit 99.1.
Item 12. Results of Operation and Financial Condition. On July 8, 2004, Hancock
Holding Company announced by press release its earnings for first half of 2004
were up 17 percent. A copy of this press release is attached hereto as Exhibit 99.1.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 9, 2004
HANCOCK HOLDING COMPANY
(Registrant)
By: /s/ Carl J. Chaney
--------------------------------
Carl J. Chaney
Chief Financial Officer
Exhibit 99.1 to Hancock Holding Company Form 8-K
For Immediate Release For More Information
July 8, 2004 George A. Schloegel, Chief Executive Officer
Carl J. Chaney, Chief Financial Officer
Paul D. Guichet, Vice President, Investor Relations
800.522.6542 or 228.214.5242
Hancock Holding Company reports first half of 2004 earnings - up 17 percent
GULFPORT, MS (July 8, 2004) - Hancock Holding Company (NASDAQ: HBHC) today announced earnings for the
six-month period ended June 30, 2004. Net income for the first half of 2004 totaled $30.52 million, compared to
$26.05 million reported for the first half of 2003, an increase of $4.47 million, or 17 percent. Diluted
earnings per share for the first six months of 2004 were $0.93, compared to $0.78 for the same period in 2003,
resulting in an increase of $0.15 per share, or 19 percent.
Net income for the second quarter of 2004 was $16.37 million, an increase of $3.99 million, or 32 percent,
from the $12.38 million reported for the second quarter of 2003. Diluted earnings per share were $0.50 for the
second quarter of 2004, compared to $0.37 for the second quarter of 2003, an increase of $0.13 per share, or 35
percent.
The Company's returns on average assets and average common stockholders' equity for the second quarter of
2004 were 1.49 percent and 14.97 percent, respectively, compared with 1.20 percent and 12.42 percent for the
second quarter of 2003. Annualized returns on average assets and average common stockholders' equity for the six
months ended June 30, 2004, were 1.41 percent and 13.99 percent, respectively, compared with 1.28 percent and
13.24 percent for the six months ended June 30, 2003.
The second quarter of 2004 included an after-tax gain of $1.95 million, or $0.06 per share, related to the
recently announced partnership of the Company's merchant services business with Denver-based First Data
Corporation. Excluding the impact of this gain, net income increased $2.04 million, or 16 percent from the
second quarter of 2003 and was $278,000, or 2 percent, higher than the first quarter of 2004. Under the terms of
the recently signed agreement with First Data Corporation, all merchant payment processing services will be
provided by First Data on behalf of Hancock Bank. Hancock will participate in revenue related to both the
existing book of business and new business.
Inclusive of the second quarter gain on the merchant services partnership with First Data Corporation, net
income for the second quarter of 2004 was $2.2 million, or 16 percent, higher than the first quarter of 2004.
Second quarter of 2004 diluted earnings per share were $0.50, or $.07, higher than the first quarter of 2004.
Other key performance trends for the second quarter of 2004 included
o Net interest margin (te) was 4.40 percent in the current quarter, 1 basis point narrower than the prior
quarter, and 3 basis points wider than the same quarter a year ago.
o The efficiency ratio (before amortization of purchased intangibles, gains on sale of branches and credit
card merchant services, and securities transactions) was 59.40 percent for the second quarter of 2004 and
was 69 basis points lower than the second quarter of 2003.
o Returns on average assets and average common stockholders' equity were 16 and 196 basis points higher,
respectively, in the second quarter versus the first quarter.
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o Average loans grew $86 million, or 4 percent, over the previous quarter. The loan/deposit ratio was 70
percent for the current quarter - unchanged from the previous quarter, but improved 675 basis points from
the same quarter a year ago; average loans grew $391 million, or 18 percent, compared to the same quarter a
year ago.
o Average deposits grew $124 million, or 4 percent, over the previous quarter and $228 million, or 7
percent, over the same quarter a year ago.
o Non-performing assets ratio at June 30, 2004 improved 4 basis points from March 31, 2004 to 0.55
percent. The ratio of net charge-offs to average loans was 0.47 percent for the second quarter of 2004, an
increase of 2 basis points from the previous quarter and a decrease of 17 basis points from the same quarter
a year ago.
o Common stock repurchases totaled 100,000 shares in the second quarter of 2004, bringing the total number
of shares repurchased thus far this year to 151,754.
In commenting on Hancock's operating results for the second quarter of 2004, George A. Schloegel, Chief
Executive Officer, stated, "Hancock's second quarter results continue to be consistent with the long-term
strategic focus of the Company. Our management team continues to evaluate opportunities for growth and expansion
as evidenced by last quarter's entrance into Florida, but also is cognizant of opportunities where exiting a
business line makes sense for our shareholders, such as this quarter's decision related to the partnership of our
merchant services area. Both actions represent strategic decisions that were made in the best interests of our
shareholders."
Net Interest Income
Net interest income (te) for the second quarter of 2004 increased $2.5 million or 6 percent, from the second
quarter of 2003 and was $1.7 million, or 4 percent, higher than the first quarter of 2004. The Company's net
interest margin (te) was 4.40 percent in the second quarter of 2004, 3 basis points wider than the same quarter a
year ago and 1 basis point narrower than the previous quarter.
Compared to the same quarter a year ago, the primary driver of the $2.5 million increase in net interest
income (te) was a $203 million, or 5 percent, increase in average earning assets mainly from average loan growth
of $391 million, or 18 percent. Average deposit growth of $228 million, or 7 percent, along with a net decrease
in the securities portfolio of $171 million, or 11 percent, funded the Company's loan growth and related increase
in earning assets. This overall improvement in earning asset mix enabled the Company to maintain its
loan-to-deposit ratio at approximately 70 percent since the fourth quarter of 2003. In addition, loans now
comprise 64 percent of the Company's earning asset base, as compared to 57 percent for the same quarter a year
ago. The net interest margin (te) widened 3 basis points as the reduction in total funding costs (15 basis
points) more than offset the decline in the yield on average earning assets (12 basis points).
The higher level of net interest income (te) (up $1.7 million, or 4 percent) and the relatively flat net
interest margin (down 1 basis point) as compared to the previous quarter was primarily due to a larger earning
asset base (average earning assets were up $157 million from the prior quarter). Average loans grew $86 million,
or 4 percent, from the previous quarter and were funded largely through average deposit growth. Average deposits
were up $124 million, or 4 percent, from the prior quarter primarily due to a $79 million increase in time
deposits - mostly related to an effort to lock in longer-term CDs at historically low rates. The yield on the
Company's $1.40 billion securities portfolio improved 2 basis points to 4.50 percent. The Company's overall
funding costs increased by 2 basis points from the prior quarter, mostly through a 5 basis point increase in the
cost of interest-bearing deposits.
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Asset-Liability Management
As with any commercial banking enterprise, the Company's levels of net interest income are susceptible to
interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than
interest earning assets. The Company's results of operations and net portfolio values are well positioned for a
rising rate environment.
Rate increases of 100 and 200 basis points would result in percentage increases in net interest income of
3.61 percent and 6.76 percent, respectively. Over the past six quarters, the Company has effectively mitigated
its deposit rate sensitivity by increasing its percentage of variable rate loans from 31 percent in the first
quarter of 2003 to 40 percent in the current quarter. During the same period, the loan-to-deposit ratio has
risen from 62 percent to 70 percent.
As part of its Asset-Liability Management strategy, the Company pays close attention to the effective
duration of its securities portfolio. Currently, the effective duration is 2.79. A rate increase of 100 basis
points would move the effective duration to 3.30, while a 200 basis points rise would result in an effective
duration of 3.46.
Non-Interest Income and Expense
Non-interest income (excluding the gain on sale of branches, merchant services, and securities transactions)
for the second quarter of 2004 was up $4.6 million, or 27 percent, compared to the same quarter a year ago and
was up $1.4 million, or 7 percent, compared to the first quarter of 2004. The primary factor impacting the
higher levels of non-interest income as compared to the quarter a year ago, were higher levels of insurance fees
(up $2.0 million) mostly related to the December 31, 2003 purchase of Magna Insurance Company. In addition, other
income was up $1.2 million when compared to the quarter a year ago due to income related to a bank owned life
insurance program that was initiated in July 2003. Driving the higher levels of non-interest income from the
prior quarter were increases in service charges on deposit accounts (up $541,000), trust fees (up $292,000), and
insurance fees (up $344,000).
Operating expenses for the second quarter of 2004 were $4.1 million, or 12 percent, higher compared to the
same quarter a year ago and were $175,000, or 0.4 percent, higher than the previous quarter. An increase from
the prior quarter was reflected in increased other operating expense (up $1.7 million) and higher amortization of
intangibles (up $199,000) but was substantially offset by decreased personnel expense (down $1.8 million). The
increase from the same quarter a year ago was reflected in higher personnel expense (up $432,000), higher other
operating expense (up $3.1 million), and higher amortization of intangibles (up $346,000).
The Company's efficiency ratio (expressed as operating expenses as a percent of total revenue (te) before
gain on sale of branches, merchant services, securities transactions, and amortization of purchased intangibles)
decreased to 59.40 percent for the second quarter of 2004. This was compared to 60.09 percent for the same
quarter a year ago, and 62.34 percent for the previous quarter. The Company's number of full-service banking
facilities stands at 103 as of June 30, 2004, and the number of full-time equivalent employees was 1,754 at June
30, 2004, a reduction of 35 from one year ago.
Asset Quality
Non-performing assets as a percent of total loans and foreclosed assets was 0.55 percent at June 30, 2004,
compared to 0.59 percent at March 31, 2004. Non-performing assets decreased $478,000 from March 31, 2004,
reflected primarily in lower levels of foreclosed assets. Compared to the second quarter of 2003, non-performing
assets as a percent of total loans and foreclosed assets was down 45 basis points from the 1.00 percent reported at
June 30, 2003. The composition of the Company's $14.4 million non-performing asset base continues to reflect
significant granularity with only five credits or properties exceeding $250,000 and 211 credits/properties below
$250,000. The Company's ratio of accruing loans 90 days or more past due to total loans was 0.14 percent at
June 30, 2004, compared to 0.20 percent at March 31, 2004 and to 0.13 percent at June 30, 2003.
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The Company's allowance for loan losses was $38.30 million at June 30, 2004, up $800,000 from the $37.50
million reported at March 31, 2004, and was $3.06 million higher than the $35.24 million reported at June 30,
2003. The ratio of the allowance for loan losses as a percent of period-end loans was 1.47 percent at June 30,
2004, compared to 1.49 percent at March 31, 2004 and 1.57 percent at June 30, 2003. The reserve coverage ratio
(allowance for loan losses to non-performers and past dues) was 212 percent in second quarter 2004, as compared
to 139 percent in second quarter 2003, and 189 percent in first quarter 2004.
Annualized net charge-offs as a percent of average loans for the second quarter of 2004 were 0.47 percent,
compared to 0.45 percent for the first quarter of 2004. Net charge-offs increased $231,000, or 2 basis points
(expressed as a percent of average loans) from the first quarter of 2004 and were reflected primarily in higher
levels of charge-offs in consumer loans. Compared to the second quarter of 2003, net charge-offs decreased
$449,000, or 17 basis points (expressed as a percent of average loans). The provision for loan losses in the
second quarter of 2004 was $3.8 million, or 127 percent of the quarter's net charge-offs. This compares to the
$3.5 million provision for the first quarter of 2004 and $4.0 million for the second quarter of 2003. The ratio
of provision for loan losses to net charge-offs was 127 percent in the first quarter of 2004 and was 114 percent
in the second quarter of 2003.
General
Hancock Holding Company subscribes to the highest standards of corporate responsibility with respect to
legal, moral, and regulatory relationships with shareholders, customers, employees, and communities Hancock
serves. Accordingly, these unwavering business principles support a corporate culture of ethical compliance and
accountability that ensures that financial statements are prepared and audited in accordance with accounting
principles generally accepted in the United States of America (GAAP). The Company's systems of internal controls
and risk management processes are in place and fully functional.
Hancock Holding Company - parent company of Hancock Bank (Mississippi), Hancock Bank of Louisiana, Hancock
Bank of Florida, and Magna Insurance Company - has assets of $4.5 billion at June 30, 2004. Founded in 1899,
Hancock Bank stands among the strongest, safest financial institutions in America. Hancock Bank operates 103
full-service offices and more than 130 automated teller machines throughout South Mississippi, Louisiana, and
Florida as well as subsidiaries Hancock Investment Services, Inc., Hancock Insurance Agency, Hancock Mortgage
Corporation, and Harrison Finance Company. Investors can access additional corporate information or online
banking and bill pay services at www.hancockbank.com.
"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.