Hancock Whitney Corporation - 6 (HWC) 10-Q 2007 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x	Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ending March 31, 2007
or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________________ to ________________________

For Quarter Ending            March 31, 2007

Commission File Number	0-13089
HANCOCK HOLDING COMPANY
(Exact name of registrant as specified in its charter)

MISSISSIPPI	64-0693170
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

ONE HANCOCK PLAZA, P.O. BOX 4019, GULFPORT, MISSISSIPPI	39502
(Address of principal executive offices)	(Zip Code)

(228) 868-4000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(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   o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  x                       Accelerated filer ____                         Non-accelerated filer ____
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
	YES  o       NO   x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 32,389,893 common shares were outstanding as of April 30, 2007 for financial statement purposes.

HANCOCK HOLDING COMPANY
INDEX
PART I. FINANCIAL INFORMATION	PAGE NUMBER

ITEM 1.	Financial Statements Condensed Consolidated Balance Sheets (Unaudited)— March 31, 2007 and December 31, 2006	1
	Condensed Consolidated Statements of Income (Unaudited) — Three Months Ended March 31, 2007 and 2006	2
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) – Three Months Ended March 31, 2007 and 2006	3
	Condensed Consolidated Statements of Cash Flows (Unaudited) — Three Months Ended March 31, 2007 and 2006	4
	Notes to Condensed Consolidated Financial Statements – (Unaudited)	5-21
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22-34
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	35
ITEM 4.	Controls and Procedures	35
PART II. OTHER INFORMATION
ITEM 1A.	Risk Factors	35
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 4.	Submission of Matters to a Vote of Security Holders	37
ITEM 6.	Exhibits	37
SIGNATURES		38

Hancock Holding Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

	March 31, 2007 (Unaudited)			December 31, 2006
Assets:
Cash and due from banks (non-interest bearing)	$	175,435		$	190,114
Interest-bearing time deposits with other banks		11,862			10,197
Federal funds sold		123,062			212,242
Securities available for sale, at fair value         (amortized cost of $1,832,982 and $1,916,845)		1,820,772			1,903,658
Loans held for sale		21,341			16,946
Loans		3,315,885			3,267,058
Less: allowance for loan losses		(46,517	)		(46,772	)
unearned income		(17,237	)		(17,420	)
Loans, net		3,252,131			3,202,866
Property and equipment, net of accumulated         depreciation of $67,897 and $66,043		152,497			140,554
Other real estate, net		674			568
Accrued interest receivable		34,204			32,984
Goodwill, net		62,277			62,277
Other intangible assets, net		9,820			10,355
Life insurance contracts		108,362			107,170
Reinsurance receivables		36,314			38,042
Deferred tax asset, net		17,284			16,544
Other assets		19,079			20,048
Total assets	$	5,845,114		$	5,964,565
Liabilities and Stockholders’ Equity:
Deposits:
Non-interest bearing demand	$	995,864		$	1,057,358
Interest-bearing savings, NOW, money market            and time		3,927,899			3,973,633
Total deposits		4,923,763			5,030,991
Federal funds purchased		1,625			3,800
Securities sold under agreements to repurchase		216,361			218,591
Long-term notes		256			258
Policy reserves and liabilities		87,050			93,669
Other liabilities		54,451			58,846
Total liabilities		5,283,506			5,406,155
Common Stockholders’ Equity:
Common Stock-$3.33 par value per share; 350,000,000         shares authorized, 32,517,613 and 32,666,052 issued,         respectively		108,284			108,778
Capital surplus		130,507			139,099
Retained earnings		345,870			334,546
Accumulated other comprehensive loss, net		(23,053	)		(24,013	)
Total common stockholders’ equity		561,608			558,410
Total liabilities and            common stockholders’ equity	$	5,845,114		$	5,964,565
See notes to unaudited condensed consolidated financial statements.

1

Hancock Holding Company and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)

	Three Months Ended March 31,
	2007		2006
Interest income:
Loans, including fees	$	60,851	$	53,259
Securities - taxable		19,404		21,866
Securities - tax exempt		1,647		1,693
Federal funds sold		2,867		3,586
Other investments		939		1,186
Total interest income		85,708		81,590
Interest expense:
Deposits		32,426		23,021
Federal funds purchased and securities sold     under agreements to repurchase		1,857		1,659
Long-term notes and other interest expense		25		593
Total interest expense		34,308		25,273
Net interest income		51,400		56,317
Provision for (reversal of) loan losses, net		1,211		(705	)
Net interest income after provision for  (reversal of) loan losses		50,189		57,022
Noninterest income:
Service charges on deposit accounts		9,190		7,884
Other service charges, commissions and fees		13,142		12,505
Securities gains, net		6		118
Other income		3,557		4,501
Total noninterest income		25,895		25,008
Noninterest expense:
Salaries and employee benefits		26,563		26,202
Net occupancy expense		4,073		3,659
Equipment rentals, depreciation and maintenance		2,272		2,668
Amortization of intangibles		423		675
Other expense		15,809		15,961
Total noninterest expense		49,140		49,165
Net income before income taxes		26,944		32,865
Income tax expense		7,715		10,854
Net income	$	19,229	$	22,011
Basic earnings per share	$	0.59	$	0.68
Diluted earnings per share	$	0.58	$	0.67
Dividends paid per share	$	0.240	$	0.195
Weighted avg. shares outstanding-basic		32,665		32,393
Weighted avg. shares outstanding-diluted		33,299		33,088
See notes to unaudited condensed consolidated financial statements.

2

Hancock Holding Company and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share and per share data)

							Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss, net			Unearned Compensation			Total
	Common Stock
	Shares			Amount
Balance, January 1, 2006		32,301,123		$	107,563		$	129,222		$	262,055		$	(22,066	)	$	(2,343	)	$	474,431
Comprehensive income
Net income per consolidated
statements of income		—			—			—			22,011			—			—			22,011
Net change in fair value of         securities available for sale, net of tax		—			—			—			—			(7,726	)		—			(7,726	)
Comprehensive income																				14,285
Cash dividends paid ($0.195 per common share)		—			—			—			(6,360	)		—			—			(6,360	)
Common stock issued, long-term incentive plan		209,837			699			2,348			—			—			—			3,047
Compensation expense, long-term incentive plan		—			—			1,823			—			—			—			1,823
SFAS No. 123(R) reclass of unearned   compensation		—			—			(2,343	)		—			—			2,343			—
Repurchase/retirement of common stock		(17,000	)		(57	)		(710	)		—			—			—			(767	)
Balance, March 31, 2006		32,493,960		$	108,205		$	130,340		$	277,706		$	(29,792	)	$	—		$	486,459
Balance, January 1, 2007		32,666,052		$	108,778		$	139,099		$	334,546		$	(24,013	)	$	—		$	558,410
Comprehensive income
Net income per consolidated         statements of income		—			—			—			19,229			—			—			19,229
Net change in fair value of         securities available for sale, net of tax		—			—			—			—			960			—			960
Comprehensive income																				20,189
Cash dividends paid ($0.240 per common share)		—			—			—			(7,905	)		—			—			(7,905	)
Common stock issued, long-term incentive plan,   including income tax benefit of $64		79,561			265			159			—			—			—			424
Compensation expense, long-term incentive plan		—			—			494			—			—			—			494
Repurchase/retirement of common stock		(228,000	)		(759	)		(9,245	)		—			—			—			(10,004	)
Balance, March 31, 2007		32,517,613		$	108,284		$	130,507		$	345,870		$	(23,053	)	$	—		$	561,608

3

Hancock Holding Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

	Three Months Ended March 31,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	19,229		$	22,011
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization		2,826			2,238
Provision for (reversal of) loan losses, net		1,211			(705	)
Provision for losses on other real estate owned, net		26			(109	)
Deferred tax benefit		(757	)		(5,306	)
Increase in cash surrender value of life insurance contracts		(1,192	)		(864	)
Gain on sales of securities available for sale, net		(6	)		(118	)
Gain on sales of real estate owned, net		(795	)		(39	)
Gain on disposal of assets		(48	)		—
Accretion of securities premium/discount, net		(1,700	)		(3,458	)
Amortization of mortgage servicing rights		92			—
Amortization of intangible assets		423			823
Stock-based compensation expense		494			1,272
Increase in accrued interest receivable		(1,220	)		(1,216	)
Increase (decrease) in accrued expenses		(3,088	)		2,729
Increase (decrease) in other liabilities		479			(59	)
Increase (decrease) in interest payable		(1,786	)		436
Decrease in policy reserves and liabilities		(6,619	)		(4,177	)
Decrease in reinsurance receivable		1,728			1,924
Decrease in other assets		649			8,043
(Increase) decrease in loans held for sale		(4,395	)		3,996
Excess tax benefit from share based payments		(64	)		—
Other, net		20			91
Net cash provided by operating activities		5,507			27,512
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing time deposits		(1,665	)		(628	)
Proceeds from sales of securities available for sale		2,293			—
Proceeds from maturities of securities available for sale		385,919			143,469
Purchases of securities available for sale		(302,643	)		(471,488	)
Net decrease (increase) in federal funds sold		89,180			(6,520	)
Net (increase) decrease in loans		(50,670	)		13,785
Purchases of property, equipment and software, net		(14,422	)		(11,551	)
Proceeds from sale of property, plant and equipment		85			—
Proceeds from sales of other real estate		857			707
Net cash provided by (used in) investing activities		108,934			(332,226	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits		(107,228	)		329,129
Net decrease in federal funds purchased and          securities sold under agreements to repurchase		(4,405	)		(33,683	)
Repayments of long-term notes		(2	)		(1	)
Dividends paid		(7,905	)		(6,360	)
Proceeds from exercise of stock options		360			3,008
Repurchase/retirement of common stock		(10,004	)		(767	)
Excess tax benefit from stock option exercises		64			—
Other stock transactions, net		—			795
Net cash provided by (used in) financing activities		(129,120	)		292,121
NET DECREASE IN CASH AND DUE FROM BANKS		(14,679	)		(12,593	)
CASH AND DUE FROM BANKS, BEGINNING		190,114			271,104
CASH AND DUE FROM BANKS, ENDING	$	175,435		$	258,511
SUPPLEMENTAL INFORMATION:
Income taxes paid	$	9,077		$	2,079
Interest paid, including capitalized interest          of $390 and $0, respectively		36,094			24,837
Restricted stock issued to employees of Hancock		2			2,373
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Transfers from loans to other real estate	$	166		$	342
See notes to unaudited condensed consolidated financial statements

4

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

     The condensed consolidated financial statements of Hancock Holding Company and all majority-owned subsidiaries (the “Company”) included herein are unaudited; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the Company’s Condensed Consolidated Balance Sheets at March 31, 2007 and December 31, 2006, the Company’s Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006 and the Company’s Condensed Consolidated Statements of Income for the three months ended March 31, 2007 and 2006. Although the Company believes the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to the Company’s organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2006 and the notes thereto included in the Company’s Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2007 are not necessarily indicative of the results expected for the full year.

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to allowance for loan losses, investments, intangible assets and goodwill, property, plant and equipment, income taxes, insurance, employment benefits and contingent liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

     Certain reclassifications have been made to conform prior year financial information to the current period presentation. These reclassifications had no material impact on the condensed consolidated financial statements.

Critical Accounting Policies

     There have been no material changes or developments in the Company’s evaluation of accounting estimates and underlying assumptions or methodologies that the Company believes to be Critical Accounting Policies and Estimates as disclosed in our Form 10-K, for the year ended December 31, 2006.

2.  Securities

    During the quarter ended March 31, 2007, a subsidiary of the Company, Magna Insurance Company, sold three securities out of its portfolio to provide liquidity for surrenders of annuities for Magna Insurance Company. These three securities had a gross loss of $4,160.

5

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

3. Loans and Allowance for Loan Losses

        The following table sets forth, for the periods indicated, allowance for loan losses, amounts charged-off and recoveries of loans previously charged-off (amounts in thousands):

	Three Months Ended March 31,
	2007			2006
Balance of allowance for loan losses   at beginning of period	$	46,772	$	74,558
Provision for (reversal of) loan losses, net		1,211		(705	)
Loans charged-off:
Commercial, real estate and mortgage		503		603
Direct and indirect consumer		1,215		1,938
Finance company		633		441
Demand deposit accounts		725		940
Total charge-offs		3,076		3,922
Recoveries of loans previously   charged-off:
Commercial, real estate and mortgage		312		2,190
Direct and indirect consumer		546		452
Finance company		144		193
Demand deposit accounts		608		1,195
Total recoveries		1,610		4,030
Net charge-offs		1,466		(108	)
Balance of allowance for loan losses     at end of period	$	46,517	$	73,961

        In some instances, loans are placed on nonaccrual status. All accrued but uncollected interest related to the loan is deducted from income in the period the loan is assigned a nonaccrual status. For such period as a loan is in nonaccrual status, any cash receipts are applied first to principal, second to expenses incurred to cause payment to be made and lastly to the recovery of any reversed interest income and interest that would be due and owing subsequent to the loan being placed on nonaccrual status.

        Nonaccrual loans and foreclosed assets, which make up total non-performing assets, amounted to approximately 0.16% and 0.13% of total loans at March 31, 2007 and December 31, 2006, respectively. Interest recognized on nonaccrual loans is immaterial to the Company’s operating results.

        As of March 31, 2007 and December 31, 2006, the Company had $17.2 million in loans carried at fair value.

        The Company held $21.3 million and $16.9 million in loans held for sale at March 31, 2007 and December 31, 2006, respectively, carried at fair value. These loans are originated on a best-efforts basis, whereby a commitment by a third party to purchase the loan has been received concurrent with the Banks’ commitment to the borrower to originate the loan.

6

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

3.  Loans and Allowance for Loan Losses (continued)

    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:

	Three Months Ended March 31,
	2007		2006
Ratios :
Net charge-offs (recoveries) to average net loans (annualized)	0.18	%	-0.01	%
Net charge-offs (recoveries) to period-end net loans (annualized)	0.18	%	-0.01	%
Allowance for loan losses to average net loans	1.41	%	2.49	%
Allowance for loan losses to period-end net loans	1.41	%	2.49	%
Net charge-offs (recoveries) to loan loss allowance	3.15	%	-0.15	%
Provision for loan losses to net charge-offs	82.66	%	652.78	%

7

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

4. Goodwill and Other Intangible Assets

     Goodwill represents costs in excess of the fair value of net assets acquired in connection with purchase business combinations. In accordance with the provisions of SFAS No. 142“Goodwill and Other Intangibles”, the Company tests its goodwill for impairment annually. No impairment charges were recognized as of March 31, 2007. The carrying amount of goodwill was $62.3 million as of March 31, 2007 and December 31, 2006.

     The following tables present information regarding the components of the Company’s identifiable intangible assets, and related amortization for the dates indicated (amounts in thousands):

	As of March 31, 2007				As of December 31, 2006
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount			Accumulated Amortization
Amortizable intangible assets:
Core deposit intangibles	$	14,137	$	7,564	$	14,137	$	7,290
Value of insurance business acquired		3,767		1,585		3,767		1,459
Non-compete agreements		368		197		368		179
Trade Name		100		35		100		30
Total	$	18,372	$	9,381	$	18,372	$	8,958

		Three Months Ended March 31,
		2007		2006
Aggregate amortization expense for:
Core deposit intangibles	$	274	$	341
Value of insurance businesses acquired		126		280
Non-compete agreements		18		54
Trade Name		5		—
Total	$	423	$	675

8

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

4.  Goodwill and Other Intangible Assets (continued)

     The remaining amortization expense for the core deposit intangibles in 2007 is estimated to be approximately $0.9 million. The amortization expense for core deposit intangibles is estimated to be approximately $1.1 million in 2008, $1.1 million in 2009, $1.1 million in 2010, $0.9 million in 2011 and the remainder of $1.4 million thereafter. The amortization of the value of business acquired, non-compete agreements and trade name are expected to approximate $349,974 for the remainder of 2007, $404,327 in 2008, $369,709 in 2009, $311,091 in 2010, $267,673 in 2011 and the remainder of $715,226 thereafter. The weighted-average amortization period used for intangibles is 10 years.

5.  Mortgage Banking (including Mortgage Servicing Rights)

     The Company adopted FASB Statement No. 156,Accounting for Servicing of Financial Assets (“SFAS No. 156”) on January 1, 2007 without material impact. SFAS No. 156 requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable, and permits an entity to subsequently measure those servicing assets and servicing liabilities at fair value. Under SFAS No. 156, the Company decided to continue to use the amortization method instead of adopting the fair value measurement method. Management has determined that it has one class of servicing rights – mortgage servicing rights – which are based on the type of loan. The following are the risk characteristics of the underlying financial assets used to stratify servicing assets for purposes of measuring impairment: interest rate, type of product (fixed vs. variable), duration and asset quality. The fair value of the mortgage servicing rights was $2.1 million and $2.2 million as of March 31, 2007 and December 31, 2006, respectively. The fair value was based upon Bloomberg prepayment speeds for the performing portion of the portfolio and actual prepayment speeds for the watch list portion of the portfolio. The following table shows the amount of contractually specified fees for the three months ended March 31, 2007 and 2006, respectively:

	Three Months Ended March 31,
	2007		2006
Servicing fees	$	167	$	218
Late fees		17		7
Ancillary fees		8		7
Total	$	192	$	232

9

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

5.  Mortgage Banking (including Mortgage Servicing Rights) (continued)

        The gross carrying amount of mortgage servicing rights is equal to the net carrying amount. There was no valuation allowance on the mortgage servicing rights portfolio for the three months ended March 31, 2007 and the twelve months ended December 31, 2006.

        The changes in the carrying amounts of mortgage servicing rights for the three months ended March 31, 2007 and for the twelve months ended December 31, 2006 are as follows ( in thousands):

		Net Carrying Amount
Balance as of December 31, 2005	$	1,576
Additions		21
Disposals		(107	)
Amortization		(549	)
Balance as of December 31, 2006		941
Additions		1
Disposals		(21	)
Amortization		(92	)
Balance as of March 31, 2007	$	829

        Amortization of servicing rights is estimated to be approximately $261,000 for the remainder of 2007, $230,000 in 2008, $159,000 in 2009, $103,000 in 2010, $55,000 in 2011, and the remainder of $21,000 thereafter.

10

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

6. Comprehensive Loss

        Comprehensive income (loss) is the change in equity during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

        In addition to net income, the Company has identified changes related to other nonowner transactions in the Consolidated Statements of Stockholders’ Equity. Changes in other nonowner transactions consist of changes in the fair value of securities available for sale and liability adjustments for pension and post-retirement benefit plans.

        In the calculation of comprehensive income, certain reclassification adjustments are made to avoid duplicating items that are displayed as part of net income and other comprehensive income in that period or earlier periods. The following table reflects the reclassification amounts and the related tax effects of changes in fair value of securities available for sale and the liability adjustment for pension and post-retirement benefit plans for the year ended December 31, 2006 and the three months ended March 31, 2007.

	Before-Tax Amount			Tax Effect			Accumulated Other Comprehensive Loss
Balance, December 31, 2005	$	(33,271	)	$	11,205		$	(22,066	)
Minimum pension liability		1,685			(628	)		1,057
Adoption of SFAS No. 158		(12,663	)		4,719			(7,944	)
Net change in fair value of securities available   for sale		3,100			(1,352	)		1,748
Less adjustment for net losses included in income		5,169			(1,977	)		3,192
Balance, December 31, 2006		(35,980	)		11,967			(24,013	)
Net change in fair value of securities available   for sale		974			(14	)		960
	$	(35,006	)	$	11,953		$	(23,053	)

11

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

7. Earnings Per Share

     Following is a summary of the information used in the computation of earnings per common share (in thousands):

	Three Months Ended March 31,
	2007		2006
Net income - used in computation of      earnings per share	$	19,229	$	22,011
Weighted average number of shares      outstanding - used in computation of basic      earnings per share		32,665		32,393
Effect of dilutive securities      Stock options and restricted stock awards		634		695
Weighted average number of shares      outstanding plus effect of dilutive      securities - used in computation of      diluted earnings per share		33,299		33,088

12

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

8. Stock-Based Payment Arrangements

Stock Option Plans

     At March 31, 2007, the Company had two stock option plans. The 1996 Hancock Holding Company Long-Term Incentive Plan (the “1996 Plan”) that was approved by the Company’s shareholders in 1996 was designed to provide annual incentive stock awards. Awards as defined in the 1996 Plan include, with limitations, stock options (including restricted stock options), restricted and performance shares, and performance stock awards, all on a stand-alone, combination or tandem basis. A total of fifteen million (15,000,000) common shares can be granted under the 1996 Plan with an annual grant maximum of two percent (2%) of the Company’s outstanding common stock as reported for the fiscal year ending immediately prior to such plan year. Grants of restricted stock awards are limited to one-third of the grant totals.

     The exercise price is equal to the market price on the date of grant, except for certain of those granted to major stockholders where the option price is 110% of the market price. Options awards generally vest based on five years of continuous service and have ten-year contractual terms. The Company’s policy is to issue new shares upon share option exercise and issue treasury shares upon restricted stock award vesting. The 1996 Long-Term Incentive Plan expired in 2006.

     In March of 2005, the stockholders of the Company approved Hancock Holding Company’s 2005 Long-Term Incentive Plan (the “2005 Plan”). The 2005 Plan is designed to enable employees and directors to obtain a proprietary interest in the Company and to attract and retain outstanding personnel. The 2005 Plan provides that awards for up to an aggregate of five million (5,000,000) shares of the Company’s common stock may be granted during the term of the 2005 Plan. The 2005 Plan limits the number of shares for which awards may be granted during any calendar year to two percent (2%) of the outstanding Company’s common stock as reported for the fiscal year ending immediately prior to such plan year.

     The fair value of each option award is estimated on the date of grant using Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. No grants have been issued in 2007. Expected volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock and other factors. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	Three Months Ended March 31, 2006
Expected volatility	29.87	%
Expected dividends	1.61% - 1.96	%
Expected term (in years)	5 - 8
Risk-free rates	4.30% - 4.54	%

13

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

8. Stock-Based Payment Arrangements (continued)

   A summary of option activity under the plans for the three months ended March 31, 2007, and changesduring the three months then ended is presented below:

Options	Number of Shares		Weighted- Average Exercise Price ($)		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2007	1,511,261		$	27.04	6.6
Granted	—		$	—	—
Exercised	(103,392	)	$	14.43	4.1	$	3,356,106
Forfeited or expired	(2,860	)	$	44.04	8.9
Outstanding at March 31, 2007	1,405,009		$	27.57	6.5	$	21,929,497
Exercisable at March 31, 2007	1,048,042		$	23.81	6.0	$	21,138,258
Share options expected to vest	232,777		$	41.58	8.8	$	557,692

   The total intrinsic value of options exercised during the three months ended March 31, 2007 and 2006 was $3.4 million and $5.3 million, respectively.

     A summary of the status of the Company’s nonvested shares as of March 31, 2007, and changes during the three months ended March 31, 2007, is presented below:

	Number of Shares		Weighted- Average Grant-Date Fair Value ($)
Nonvested at January 1, 2007	522,570		$	26.67
Granted	50		$	49.27
Vested	(66,522	)	$	18.00
Forfeited	(4,074	)	$	24.93
Nonvested at March 31, 2007	452,024		$	23.53

        As of March 31, 2007, there was $6.2 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a weighted-average period of 3.5 years. The total fair value of shares which vested during the three months ended March 31, 2007 and 2006 was $1.2 million and $0 million, respectively.

14

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

9. Retirement Plans

     Net periodic benefits cost includes the following components for the three months ended March 31, 2007 and 2006:

	Pension Benefits						Other Post-retirement Benefits
	Three Months Ended March 31,
	2007			2006			2007			2006
Service cost	$	663,956		$	575,934		$	68,500		$	78,750
Interest cost		958,450			874,760			102,000			98,500
Expected return on plan assets		(1,051,435	)		(966,840	)		—			—
Amortization of prior service cost		—			—			(13,250	)		(13,250	)
Amortization of net loss		280,549			265,527			19,250			29,000
Amortization of transition obligation		—			—			1,250			1,250
Net periodic benefit cost	$	851,520		$	749,381		$	177,750		$	194,250

     The Company anticipates that it will contribute $4.64 million to its pension plan and approximately $565,000 to its post-retirement benefits in 2007. During the first three months of 2007, the Company contributed approximately $1.1 million to its pension plan.

15

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

10. Other Service Charges, Commission and Fees, and Other Income

        Components of other service charges, commission and fees are as follows:

	Three Months Ended March 31,
	2007		2006
	(amounts in thousands)
Trust fees	$	3,693	$	3,078
Credit card merchant discount fees		1,778		1,709
Income from insurance operations		4,369		5,159
Investment and annuity fees		1,978		1,264
ATM fees		1,324		1,295
Total	$	13,142	$	12,505

        Components of other income are as follows:

	Three Months Ended March 31,
	2007		2006
	(amounts in thousands)
Secondary mortgage market operations	$	911	$	817
Income from bank owned life insurance		1,192		864
Outsourced check income		653		639
Other		801		2,181
Total other non-interest income	$	3,557	$	4,501

11. Other Expense

       Components of other expense are as follows:

	Three Months Ended March 31,
	2007		2006
	(amounts in thousands)
Data processing expense	$	2,467	$	1,920
Postage and communications		2,260		2,376
Ad valorem and franchise taxes		822		998
Legal and professional services		4,962		2,213
Stationery and supplies		491		548
Advertising		1,562		1,359
Deposit insurance and regulatory fees		256		56
Training expenses		174		165
Other fees		827		956
Annuity expense		463		1,791
Claims paid		428		295
Other expense		1,097		3,284
Total non-interest expense	$	15,809	$	15,961

16

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

12. Income Taxes

     The Company adopted FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes, An Interpretation of FASB Statement No. 109  (“FIN 48”), on January 1, 2007 and determined that there was no need to make an adjustment to retained earnings due to the adoption of this Interpretation. The total balance of unrecognized tax benefits at January 1, 2007, was $317,175. The Company does not expect that unrecognized tax benefits will significantly increase or decrease within the next 12 months.

     It is the Company’s policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense. As of January 1, 2007, $36,735 in interest, and $80,053 in penalties, had been accrued on the Company’s balance sheet.

     The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various returns in the states where its banking offices are located. Its filed income tax returns are no longer subject to examination by taxing authorities for years before 2003.

17

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

13. Segment Reporting

     The Company’s primary segments are geographically divided into the Mississippi (MS), Louisiana (LA), Florida (FL) and Alabama (AL) markets. Each segment offers the same products and services but is managed separately due to different pricing, product demand, and consumer markets. Each segment offers commercial, consumer and mortgage loans and deposit services. In the following tables, the column “Other” includes additional consolidated subsidiaries of the Company: Hancock Investment Services, Inc. and subsidiaries, Hancock Insurance Agency, Inc. and subsidiaries, Harrison Finance Company, Magna Insurance Company and subsidiary and three real estate corporations owning land and buildings that house bank branches and other facilities.

                Following is selected information for the Company’s segments (amounts in thousands):

	Three Months Ended March 31, 2007
	MS			LA			FL			AL		Other		Eliminations			Consolidated
Interest income	$	46,314		$	35,492		$	2,501		$	119	$	5,957	$	(4,675	)	$	85,708
Interest expense		19,952			15,737			1,234			3		1,942		(4,560	)		34,308
Net interest income		26,362			19,755			1,267			116		4,015		(115	)		51,400
Provision for (reversal of) loan   losses		(1,589	)		2,208			(84	)		—		676		—			1,211
Noninterest income		11,067			8,156			170			0		6,514		(12	)		25,895
Depreciation and amortization		1,898			723			95			0		110		—			2,826
Other noninterest expense		20,244			16,872			1,375			42		7,788		(7	)		46,314
Net income before   income taxes		16,876			8,108			51			74		1,955		(120	)		26,944
Income tax expense (benefit)		5,753			1,892			(75	)		29		116		—			7,715
Net income	$	11,123		$	6,216		$	126		$	45	$	1,839	$	(120	)	$	19,229
Total assets	$	3,389,175		$	2,429,839		$	165,129		$	12,765	$	819,540	$	(971,334	)	$	5,845,114
Total interest income from   affiliates	$	4,487		$	—		$	—		$	73	$	—	$	(4,560	)	$	—
Total interest income from   external customers	$	41,827		$	35,492		$	2,501		$	46	$	5,957	$	(115	)	$	85,708
Amortization & (accretion) of   securities	$	(876	)	$	(844	)	$	10		$	—	$	10	$	—		$	(1,700	)

18

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

13. Segment Reporting (continued)

	Three Months Ended March 31, 2006
	MS			LA			FL		AL		Other		Eliminations			Consolidated
Interest income	$	45,713		$	31,042		$	2,362	$	—	$	4,469	$	(1,996	)	$	81,590
Interest expense		15,121			10,328			501		—		1,225		(1,902	)		25,273
Net interest income		30,592			20,714			1,861		—		3,244		(94	)		56,317
Provision for (reversal of ) loan    losses		(1,412	)		519			43		—		145		—			(705	)
Noninterest income		10,879			7,491			112		—		6,565		(39	)		25,008
Depreciation and amortization		1,440			610			74		—		114		—			2,238
Other noninterest expense		21,969			15,269			1,106		—		8,598		(15	)		46,927
Net income (loss) before    income taxes		19,474			11,807			750		—		952		(118	)		32,865
Income tax expense (benefit)		6,645			3,560			274		—		420		(45	)		10,854
Net income (loss)	$	12,829		$	8,247		$	476	$	—	$	532	$	(73	)	$	22,011
Total assets	$	3,745,211		$	2,332,736		$	121,028	$	—	$	701,692	$	(644,078	)	$	6,256,589
Total interest income from   affiliates	$	1,854		$	—		$	48	$	—	$	—	$	(1,902	)	$	—
Total interest income from   external customers	$	43,859		$	31,042		$	2,314	$	—	$	4,469	$	(94	)	$	81,590
Amortization & (accretion) of   securities	$	(3,179	)	$	(310	)	$	13	$	—	$	15	$	—		$	(3,459	)

19

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

14. New Accounting Pronouncements

     In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 159,The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”) which permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS No. 159 are elective; however, the amendment to FASB Statement No. 115,Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. The FASB’s stated objective in issuing this standard is as follows: “to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.”

     The fair value option established by Statement 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings (or another performance indicator if the business entity does not report earnings) at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. The Company will adopt the provisions of SFAS No. 159 in the first quarter of 2008, as required.

    In September 2006, the FASB issued Statement No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 106, and 132(R) (“SFAS No. 158”). This pronouncement requires an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its balance sheet. SFAS No. 158 also requires an employer to recognize changes in that funded status in the year in which the changes occur through comprehensive income effective for fiscal years ending after December 15, 2006. In addition, this statement requires an employer to measure the funded status of a plan as of its year-end balance sheet date effective for fiscal years ending after December 15, 2008. The Company adopted the requirement to recognize the funded status of the benefit plans and related disclosure requirements as of December 31, 2006. The Company is currently evaluating the requirements of SFAS No. 158 related to the measurement date and has not yet determined the impact of adoption on the Company’s consolidated financial statements.

     In September 2006, the FASB issued Statement No. 157,Fair Value Measurements (“SFAS No. 157”) which defines fair value, establishes a framework for measuring fair value under accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company will be required to adopt SFAS No. 157 in the first quarter of fiscal year 2008. Management is currently evaluating the requirements of SFAS No. 157 but does not expect the impact to be significant.

In September 2006, the FASB ratified the consensus the EITF reached regarding EITF No.06-5,Accounting for Purchases of Life Insurance - Determining the Amount that Could Be Realized in Accordance with FASB Technical Bulletin 85-4(“EITF 06-5”). The EITF concluded that a policyholder should consider any additional amounts included in the contractual terms of the life insurance policy in determining the “amount that could be realized under the insurance contract.” For group policies with multiple certificates or multiple policies with a group rider, the Task Force also tentatively concluded that the amount that could be realized should be determined at the individual policy or certificate level, i.e., amounts that would be realized only upon surrendering all of the policies or certificates would not be included when measuring the assets. The Company adopted EITF 06-5 effective January 1, 2007. The adoption of EITF 06-5 has not had a material impact on the Company’s financial condition or results of operations.

20

Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

14. New Accounting Pronouncements (continued)

In September 2005, the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position 05-1,Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (“SOP 05-1”). SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in FASB Statement No. 97,Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. The Company adopted SOP 05-1 effective January 1, 2007. The adoption of SOP 05-1 has not had a material impact on the Company’s financial condition or results of operations.

21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview  

     General

     The following discussion should be read in conjunction with our financial statements included with this report and our financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2006 included in our Annual Report on Form 10-K. Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements are based on certain assumptions we consider reasonable. For information about these assumptions, you should refer to the section below entitled “Forward-Looking Statements.”

     We were organized in 1984 as a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and are headquartered in Gulfport, Mississippi. We currently operate more than 140 banking and financial services offices and more than 130 automated teller machines (ATMs) in the states of Mississippi, Louisiana, Florida and Alabama through four wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi (Hancock Bank MS), Hancock Bank of Louisiana, Baton Rouge, Louisiana (Hancock Bank LA), Hancock Bank of Florida, Tallahassee, Florida (Hancock Bank FL) and Hancock Bank of Alabama, Mobile, Alabama (Hancock Bank AL). Hancock Bank MS, Hancock Bank LA, Hancock Bank FL and Hancock Bank AL are referred to collectively as the “Banks.”

     The Banks are community oriented and focus primarily on offering commercial, consumer and mortgage loans and deposit services to individuals and small to middle market businesses in their respective market areas. Our operating strategy is to provide our customers with the financial sophistication and breadth of products of a regional bank, while successfully retaining the local appeal and level of service of a community bank. At March 31, 2007, we had total assets of $5.8 billion and employed on a full-time equivalent basis 1,311 persons in Mississippi, 573 persons in Louisiana, 43 persons in Florida and 2 persons in Alabama.

Selected Financial Data

(amounts in thousands, except per share data)
	Three Months Ended March 31,
	2007		2006
Per Common Share Data
Earnings per share:
Basic	$	0.59	$	0.68
Diluted	$	0.58	$	0.67
Cash dividends per share	$	0.240	$	0.195
Book value per share (period end)	$	17.27	$	15.06
Weighted average number of shares:
Basic		32,665		32,393
Diluted (1)		33,299		33,088
Period end number of shares		32,518		32,494
Market data:
High price	$	54.09	$	46.67
Low price	$	41.88	$	37.75
Period end closing price	$	43.98	$	46.52
Trading volume		8,577		3,990

(1) There were 70,088 anti-dilutive share-based incentives outstanding for the three months ended March 31, 2007. There were no anti-dilutive share-based incentives outstanding for the three months ended March 31, 2006.

22

	Three Months Ended March 31,
	2007			2006
	(dollar amounts in thousands)
Performance Ratios
Return on average assets		1.32	%		1.49	%
Return on average common equity		13.77	%		18.34	%
Earning asset yield (Tax Equivalent (“TE”))		6.64	%		6.17	%
Total cost of funds		2.60	%		1.88	%
Net interest margin (TE)		4.04	%		4.30	%
Common equity (period end) as a percent of total assets (period end)		9.61	%		7.82	%
Leverage ratio (period end)		8.80	%		7.45	%
FTE Headcount		1,929			1,768
Asset Quality Information
Non-accrual loans	$	4,494		$	8,676
Foreclosed assets	$	718		$	1,779
Total non-performing assets	$	5,212		$	10,455
Non-performing assets as a percent of loans and  foreclosed assets		0.16	%		0.35	%
Accruing loans 90 days past due	$	6,035		$	3,626
Accruing loans 90 days past due as a percent of loans		0.18	%		0.22	%
Non-performing assets + accruing loans 90 days past due   to loans and foreclosed assets		0.34	%		0.57	%
Net charge-offs	$	1,466			($108	)
Net charge-offs as a percent of average loans		0.18	%		-0.01	%
Allowance for loan losses	$	46,517		$	73,961
Allowance for loan losses as a percent of period end loans		1.41	%		2.51	%
Allowance for loan losses to NPAs + accruing loans  90 days past due		413.60	%		432.85	%
Provision for (reversal of) loan losses	$	1,211			($ 705	)
Average Balance Sheet
Total loans	$	3,292,593		$	2,970,461
Securities		1,830,557			2,152,958
Short-term investments		231,558			335,986
Earning assets		5,354,708			5,459,405
Allowance for loan losses		(46,704	)		(74,429	)
Other assets		597,949			598,546
Total assets	$	5,905,953		$	5,983,522
Non-interest bearing deposits	$	983,973		$	1,201,186
Interest bearing transaction deposits		1,492,405			1,714,514
Interest bearing public fund deposits		820,652			712,394
Time deposits		1,698,217			1,406,969
Total interest bearing deposits		4,011,274			3,833,877
Total deposits		4,995,247			5,035,063
Other borrowed funds		205,737			287,738
Other liabilities		138,775			173,989
Common stockholders’ equity		566,194			486,732
Total liabilities & common stockholders’ equity	$	5,905,953		$	5,983,522

23

	Three Months Ended March 31,
	2007			2006
	(dollar amounts in thousands)
Period end Balance Sheet
Commercial/real estate loans	$	1,953,907		$	1,688,820
Mortgage loans		420,780			398,201
Direct consumer loans		469,783			447,215
Indirect consumer loans		358,844			349,412
Finance company loans		95,334			67,300
Total loans		3,298,648			2,950,948
Loans held for sale		21,341			20,223
Securities		1,820,772			2,278,613
Short-term investments		134,924			417,373
Earning assets		5,275,685			5,667,157
Allowance for loan losses		(46,517	)		(73,961	)
Other assets		615,946			663,393
Total assets	$	5,845,114		$	6,256,589
Noninterest bearing deposits	$	995,864		$	1,225,744
Interest bearing transaction deposits		1,515,116			1,730,873
Interest bearing public funds deposits		777,692			892,894
Time deposits		1,635,091			1,469,438
Total interest bearing deposits		3,927,899			4,093,205
Total deposits		4,923,763			5,318,949
Other borrowed funds		222,534			273,629
Other liabilities		137,209			174,568
Common stockholders’ equity		561,608			489,443
Total liabilities & common stockholders’ equity	$	5,845,114		$	6,256,589
Net Charge-Off Information
Net charge-offs (recoveries):
Commercial/real estate loans	$	168			($ 1,769	)
Mortgage loans		23			181
Direct consumer loans		110			579
Indirect consumer loans		676			653
Finance company loans		489			248
Total net charge-offs	$	1,466			($ 108	)
Net charge-offs to average loans:
Commercial/real estate loans		0.04	%		-0.43	%
Mortgage loans		0.02	%		0.18	%
Direct consumer loans		0.09	%		0.50	%
Indirect consumer loans		0.77	%		0.75	%
Finance company loans		2.15	%		1.56	%
Total net charge-offs to average net loans		0.18	%		-0.01	%

24

	Three Months Ended March 31,
	2007			2006
	(dollar amounts in thousands)
Average Balance Sheet Composition
Percentage of earning assets/funding sources:
Loans		61.49	%		54.41	%
Securities		34.19	%		39.44	%
Short-term investments		4.32	%		6.15	%
Earning assets		100.00	%		100.00	%
Non-interest bearing deposits		18.38	%		22.00	%
Interest bearing transaction deposits		27.87	%		31.40	%
Interest bearing public funds deposits		15.33	%		13.05	%
Time deposits		31.71	%		25.77	%
Total deposits		93.29	%		92.23	%
Other borrowed funds		3.84	%		5.27	%
Other net interest-free funding sources		2.87	%		2.50	%
Total funding sources		100.00	%		100.00	%
Loan mix:
Commercial/real estate loans		58.68	%		56.38	%
Mortgage loans		12.94	%		13.80	%
Direct consumer loans		14.74	%		15.82	%
Indirect consumer loans		10.84	%		11.83	%
Finance company loans		2.80	%		2.17	%
Total loans		100.00	%		100.00	%
Average dollars
Loans	$	3,292,593		$	2,970,461
Securities		1,830,557			2,152,958
Short-term investments		231,558			335,986
Earning assets	$	5,354,708		$	5,459,405
Non-interest bearing deposits	$	983,973		$	1,201,186
Interest bearing transaction deposits		1,492,405			1,714,514
Interest bearing public funds deposits		820,652			712,394
Time deposits		1,698,217			1,406,969
Total deposits		4,995,247			5,035,063
Other borrowed funds		205,737			287,738
Other net interest-free funding sources		153,724			136,604
Total funding sources	$	5,354,708		$	5,459,405
Loans:
Commercial/real estate loans	$	1,931,966		$	1,674,706
Mortgage loans		426,103			410,023
Direct consumer loans		485,201			469,832
Indirect consumer loans		357,008			351,405
Finance company loans		92,315			64,495
Total average loans	$	3,292,593		$	2,970,461

25

Liquidity Management and Contractual Obligations

Liquidity Management

        Liquidity management encompasses our ability to ensure that funds are available to meet the cash flow requirements of depositors and borrowers, while also ensuring that we have adequate cash flow to meet our various needs, including operating, strategic and capital. In addition, our principal source of liquidity is dividends from our subsidiary banks.

        The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities of investment securities and occasional sales of various assets. Short-term investments such as federal funds sold, securities purchased under agreements to resell and maturing interest-bearing deposits with other banks are additional sources of funding.

        The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and non-interest-bearing deposit accounts. Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings are additional sources of liquidity and represent our incremental borrowing capacity. Our short-term borrowing capacity includes an approved line of credit with the Federal Home Loan Bank of $346.8 million and borrowing capacity at the Federal Reserve’s Discount Window in excess of $100 million.

        During the quarter ended March 31, 2007, our subsidiary, Magna Insurance Company, sold three securities out of their portfolio to provide liquidity for surrenders of annuities for Magna Insurance Company. These three securities had a gross loss of $4,160.

        The following liquidity ratios at March 31, 2007 and December 31, 2006 compare certain assets and liabilities to total deposits or total assets:

	March 31, 2007			December 31, 2006
Total securities to total deposits		36.98	%		37.84	%
Total loans (net of unearned      income) to total deposits		66.99	%		64.59	%
Interest-earning assets      to total assets		90.26	%		90.41	%
Interest-bearing deposits      to total deposits		79.77	%		78.98	%

Capital Resources

                We continue to maintain an adequate capital position. The ratios as of March 31, 2007 and December 31, 2006 are as follows:

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	March 31, 2007			December 31, 2006
Common equity (period-end) as a percent of   total assets (period-end)		9.61	%		9.36	%
Regulatory ratios:
Total capital to risk-weighted assets (1)		13.14	%		13.60	%
Tier 1 capital to risk-weighted      assets (2)		12.04	%		12.46	%
Leverage capital to average total assets (3)		8.80	%		8.63	%

(1)	Total capital consists of equity capital less intangible assets plus a limited amount of allowance for loan losses. 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.
(2)	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.

(3) Leverage capital consists of equity capital less goodwill and core deposit intangibles. Regulations require a minimum 3% leverage capital ratio for an entity to be considered adequately capitalized.

Contractual Obligations

     Payments due from us under specified long-term and certain other binding contractual obligations were scheduled in our annual report on Form 10-K for the year ended December 31, 2006. The most significant obligations, other than obligations under deposit contracts and short-term borrowings, were for operating leases for banking facilities.

Results of Operations

Net Income

     Net income for the first quarter of 2007 totaled $19.2 million, a decrease of $2.8 million, or 13%, from the first quarter of 2006. Diluted earnings per share for the first quarter of 2007 were $0.58, a decrease of $0.09 from the same quarter a year ago. Return on average assets for the first quarter of 2007 was 1.32% compared to 1.49% for the first quarter of 2006. Return on average common equity was 13.77% compared to 18.34% for the same quarter a year ago.

Net Interest Income

     Net interest income (te) for the first quarter decreased $4.5 million, or 8%, from the first quarter of 2006. The primary driver of the $4.5 million decrease in net interest income (te) was a $104.7 million, or 2%, decrease in average earning assets mainly from a reduction in total borrowings of $82.0 million, or 29%, and a decrease in average deposits of $39.8 million, or .8%. Our net interest margin (te) was 4% in the first quarter, 26 basis points narrower than the same quarter a year ago as the increase in the average earning asset yield (46 basis points) did not offset the increase in total funding costs (72 basis points).

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The following tables detail the components of our net interest spread and net interest margin.

	Three Months Ended March 31,							Three Months Ended March 31,
	2007							2006
(dollars in thousands)	Interest		Volume		Rate			Interest		Volume		Rate
Average Earning Assets
Commercial & real estate loans (TE)	$	35,231	$	1,931,966		7.39	%	$	28,637	$	1,674,706		6.93	%
Mortgage loans		6,509		426,103		6.11	%		5,897		410,023		5.75	%
Consumer loans		20,197		934,524		8.76	%		17,473		885,732		8.00	%
Loan fees & late charges		443		—		0.00	%		2,320		—		0.00	%
Total loans (TE)		62,380		3,292,593		7.67	%		54,327		2,970,461		7.40	%
US treasury securities		736		60,480		4.94	%		627		60,086		4.23	%
US agency securities		11,755		940,516		5.00	%		13,786		1,194,312		4.62	%
CMOs		1,104		107,986		4.09	%		1,810		184,276		3.93	%
Mortgage backed securities		5,482		444,427		4.93	%		5,519		477,789		4.62	%
Municipals (TE)		2,861		198,815		5.76	%		2,723		163,175		6.67	%
Other securities		922		78,333		4.71	%		872		73,320		4.76	%
Total securities (TE)		22,860		1,830,557		5.00	%		25,336		2,152,958		4.71	%
Total short-term investments		2,883		231,558		5.05	%		3,900		335,986		4.71	%
Average earning assets yield (TE)	$	88,124	$	5,354,709		6.64	%	$	83,563	$	5,459,405		6.17	%
Interest-Bearing Liabilities
Interest-bearing transaction deposits	$	4,765	$	1,492,405		1.29	%	$	3,266	$	1,714,514		0.77	%
Time deposits		19,022		1,698,218		4.54	%		13,005		1,406,969		3.75	%
Public Funds		9,029		820,652		4.46	%		6,750		712,394		3.84	%
Total interest bearing deposits		32,816		4,011,275		3.32	%		23,021		3,833,877		2.44	%
Total borrowings		1,492		205,736		2.94	%		2,252		287,738		3.17	%
Total interest bearing liability cost	$	34,308	$	4,217,011		3.30	%	$	25,273	$	4,121,615		2.49	%
Noninterest-bearing deposits				983,973							1,201,186
Other net interest-free funding sources				153,725							136,604
Total Cost of Funds	$	34,308	$	5,354,709		2.60	%	$	25,273	$	5,459,405		1.88	%
Net Interest Spread (TE)	$	53,816				3.34	%	$	58,290				3.69	%
Net Interest Margin (TE)	$	53,816	$	5,354,709		4.04	%	$	58,290	$	5,459,405		4.30	%

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Provision for Loan Losses

       The amount of the allowance for loan losses equals the cumulative total of the provisions for loan losses, reduced by actual loan charge-offs, and increased by recoveries of loans previously charged-off. Provisions are made to the allowance to reflect the currently perceived risks of loss associated with our 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.

       Annualized net charge-offs, as a percent of average loans, were 0.18% for the first quarter of 2007, compared to -0.01% in the first quarter of 2006. During the first quarter of 2006, we recorded a large recovery that drove the negative net charge-off ratio. The provision for the quarter ended March 31, 2007 reflects more normalized activity and is within management’s expectations.

       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. (Dollar amounts shown are in thousands.)

	At and for the Three Months Ended March 31,
	2007			2006
Annualized net charge-offs to average loans		0.18	%		-0.01	%
Annualized provision (recovery) for loan losses      to average loans		0.15	%		-0.10	%
Average allowance for loan losses to average loans		1.42	%		2.51	%
Gross charge-offs	$	3,076		$	3,922
Gross recoveries	$	1,610		$	4,030
Non-accrual loans	$	4,494		$	8,676
Accruing loans 90 days or more past due	$	6,035		$	6,632

      Accruing loans 90 days or more past due decreased $0.6 million from March 31, 2006. Since December 31, 2005, accruing loans 90 days or more past due, net of deferrals, have decreased $19.6 million to $6.0 million at March 31, 2007. This decrease is related to improved ability of certain borrowers to meet their regular payments after Hurricane Katrina.

Noninterest Income

      Noninterest income for the first quarter was up $1.0 million, or 4%, compared to the same quarter a year ago. The primary factors impacting the higher levels of non-interest income as compared to the same quarter a year ago, were higher levels of service charge fees (up $1.3 million, or 17%) and trust fees (up $0.6 million, or 20%). However, other income was down $1.0 million, or 21%.

29

The components of noninterest income for the three months ended March 31, 2007 and 2006 are presented in the following table:

	Three Months Ended March 31,
	2007		2006
	(dollars in thousands)
Service charges on deposit accounts	$	9,190	$	7,884
Trust fees		3,693		3,079
Credit card merchant discount fees		1,778		1,709
Income from insurance operations		4,369		5,159
Investment and annuity fees		1,978		1,264
ATM fees		1,324		1,294
Secondary mortgage market operations		911		817
Other income		2,646		3,684
Total other non-interest income		25,889		24,890
Securities transactions gains, net		6		118
Total non interest income	$	25,895	$	25,008

Noninterest Expense

     Operating expenses for the first quarter were $0.2 million, or .4%, higher compared to the same quarter a year ago. The increase from the same quarter a year ago was reflected in higher levels of personnel expense (up $0.4 million) and occupancy expense (up $0.4 million), with lower levels of equipment expense (down $0.4 million) and other expenses (down $0.2 million).

     The following table presents the components of noninterest expense for the three months ended March 31, 2007 and 2006.

	Three Months Ended March 31,
	2007			2006
	(dollars in thousands)
Employee compensation	$	20,533		$	21,086
Employee benefits		6,030			5,116
Total personnel expense		26,563			26,202
Equipment and data processing expense		4,739			4,588
Net occupancy expense		4,073			3,659
Postage and communications		2,260			2,376
Ad valorem and franchise taxes		822			998
Legal and professional services		4,962			2,213
Stationery and supplies		491			548
Amortization of intangible assets		423			675
Advertising		1,562			1,359
Deposit insurance and regulatory fees		256			56
Training expenses		174			165
Other real estate owned expense		(766	)		(449	)
Other expense		3,581			6,775
Total non interest expense	$	49,140		$	49,165

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Income Taxes

     Our effective federal income tax rate continues to be less than the statutory rate of 35% due primarily to tax-exempt interest income. For the three months ended March 31, 2007 and 2006, the effective federal income tax rate was approximately 29% and 33%, respectively. The decrease in the effective rate in 2007 is due primarily to the increase in the percentage of tax-exempt interest income as it relates to book income. The total amount of tax-exempt income earned during the first three months of 2007 was $4.4 million compared to $3.5 million for the comparable period in 2006. Tax-exempt income for three months ended March 31, 2007 consisted of $1.7 million from securities and $2.7 million from loans and leases. Tax-exempt income for the first three months of 2006 consisted of $1.7 million from securities and $1.8 million from loans and leases.

Off-Balance Sheet Transactions

      In the normal course of business, we enter into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of our customers. Such instruments are not reflected in the accompanying condensed consolidated financial statements until they are funded and involve, to varying degrees, elements of credit risk not reflected in the condensed consolidated balance sheets. The contract amounts of these instruments reflect our exposure to credit loss in the event of non-performance by the other party on whose behalf the instrument has been issued. We undertake the same credit evaluation in making commitments and conditional obligations as we do for on-balance-sheet instruments and may require collateral or other credit support for off-balance-sheet financial instruments.

     At March 31, 2007, we had $1.2 billion in unused loan commitments outstanding, of which approximately $478.4 million were at variable rates, with the remainder at fixed rates. A commitment to extend credit is an agreement to lend to a customer as long as the conditions established in the agreement have been satisfied. A commitment to extend credit generally has a fixed expiration date or other termination clauses and may require payment of a fee by the borrower. Since commitments often expire without being fully drawn, the total commitment amounts do not necessarily represent our future cash requirements. We continually evaluate each customer’s credit worthiness on a case-by-case basis. Occasionally, a credit evaluation of a customer requesting a commitment to extend credit results in our obtaining collateral to support the obligation.

     Letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. The credit risk involved in issuing a letter of credit is essentially the same as that involved in extending a loan. At March 31, 2007, we had $70.5 million in letters of credit issued and outstanding.

     The following table shows the commitments to extend credit and letters of credit at March 31, 2007 according to expiration date.

	Expiration Date
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(dollars in thousands)
Commitments to extend credit	$	1,178,632	$	863,348	$	34,098	$	41,770	$	239,416
Letters of credit		70,477		20,504		33,161		16,812		—
Total	$	1,249,109	$	883,852	$	67,259	$	58,582	$	239,416

        Our liability associated with letters of credit is not material to our condensed consolidated financial statements.

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Critical Accounting Policies and Estimates

     Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. We prepare these financial statements in conformity with U.S. generally accepted accounting principles. As such, we are required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience, available information and various other assumptions we believe to be reasonable under the circumstances. On an on-going basis, we evaluate our estimates; however, actual results may differ from these estimates under different assumptions or conditions. There have been no material changes or developments in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our Form 10-K for the year ended December 31, 2006.

New Accounting Pronouncements  

     In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 159,The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”) which permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS No. 159 are elective; however, the amendment to FASB Statement No. 115,Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. The FASB’s stated objective in issuing this standard is as follows: “to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.”

     The fair value option established by Statement 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings (or another performance indicator if the business entity does not report earnings) at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. We will adopt the provisions of SFAS No. 159 in the first quarter of 2008, as required.

    In September 2006, the FASB issued Statement No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 106, and 132(R) (“SFAS No. 158”). This pronouncement requires an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its balance sheet. SFAS No. 158 also requires an employer to recognize changes in that funded status in the year in which the changes occur through comprehensive income effective for fiscal years ending after December 15, 2006. In addition, this statement requires an employer to measure the funded status of a plan as of its year-end balance sheet date effective for fiscal years ending after December 15, 2008. We adopted the requirement to recognize the funded status of the benefit plans and related disclosure requirements as of December 31, 2006. We are currently evaluating the requirements of SFAS No. 158 related to the measurement date and have not yet determined the impact of adoption on our consolidated financial position, results of operations and cash flows.

     In September 2006, the FASB issued Statement No. 157,Fair Value Measurements (“SFAS No. 157”) which defines fair value, establishes a framework for measuring fair value under accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We will be required to adopt SFAS No. 157 in the first quarter of fiscal year 2008. Management is currently evaluating the requirements of SFAS No. 157 but does not expect the impact to be significant.

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In September 2006, the FASB ratified the consensus the EITF reached regarding EITF No.06-5,Accounting for Purchases of Life Insurance - Determining the Amount that Could Be Realized in Accordance with FASB Technical Bulletin 85-4(“EITF 06-5”). The EITF concluded that a policyholder should consider any additional amounts included in the contractual terms of the life insurance policy in determining the “amount that could be realized under the insurance contract.” For group policies with multiple certificates or multiple policies with a group rider, the Task Force also tentatively concluded that the amount that could be realized should be determined at the individual policy or certificate level, i.e., amounts that would be realized only upon surrendering all of the policies or certificates would not be included when measuring the assets. We adopted EITF 06-5 effective January 1, 2007. The adoption of EITF 06-5 has not had a material impact on our financial condition or results of operations.

In September 2005, the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position 05-1,Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (“SOP 05-1”). SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in FASB Statement No. 97,Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. We adopted SOP 05-1 effective January 1, 2007. The adoption of SOP 05-1 has not had a material impact on our financial condition or results of operations.

Forward Looking Information

     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 disclosures that 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 that could cause our 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 Risk

        Our net earnings are dependent, in part, on our 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. Interest rate risk sensitivity is the potential impact of changing rate environments on both net interest income and cash flows. In an attempt to manage our exposure to changes in interest rates, management monitors interest rate risk and administers an interest rate risk management policy designed to produce a relatively stable net interest margin in periods of interest rate fluctuations.

        Notwithstanding our 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 our investment securities. As of quarter close, the effective duration of the securities portfolio was 2.18. A rate increase of 100 basis points would move the effective duration to 2.53, while a reduction in rates of 100 basis points would result in an effective duration of 1.46.

33

        In adjusting our asset/liability position, the Board and management attempt to manage our interest rate risk while enhancing net interest margins. This measurement is done primarily by running net interest income simulations. The net interest income simulations run at March 31, 2007 indicate that the Company is to some extent asset sensitive as compared to the stable rate environment. Exposure to instantaneous changes in interest rate risk for the current quarter is presented in the following table.

Net Interest Income (te) at Risk
Change in interest rate (basis point)	Estimated increase (decrease) in net interest income
-100	-2.28%
Stable	0.00%
+100	0.73%

        The foregoing disclosures related to our market risk should be read in conjunction with our audited consolidated financial statements, related notes and management’s discussion and analysis for the year ended December 31, 2006 included in our 2006 Annual Report on Form 10-K.

Item 4. Controls and Procedures

        At the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officers and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officers and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to timely alert them to material information relating to us (including our consolidated subsidiaries) required to be included in our Exchange Act filings.

        Our management, including the Chief Executive Officers and Chief Financial Officer, identified no change in our internal control over financial reporting that occurred during the three month period ended March 31, 2007, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors.

     There have been no material changes from the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2006.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

     The following table provides information with respect to purchases made by the issuer or any affiliated purchaser of the issuer’s equity securities.

	(a)			(b)		(c)		(d)
	Total number of shares or units purchased			Average Price Paid per Share		Total number of shares purchased as a part of publicly announced plans or programs (1)		Maximum number of shares that may yet be purchased under Plans or Programs
Jan. 1, 2007 - Jan. 31, 2007		—	(2)	$	—		—		1,545,378
Feb. 1, 2007 - Feb. 28, 2007		—	(3)		—		—		1,545,378
Mar. 1, 2007 - Mar. 31, 2007		228,000	(4)		43.88		228,000		1,317,378
Total as of Mar. 31, 2007		228,000			43.88		228,000

(1)	The Company publicly announced its stock buy-back program on July 18, 2000.
(2)	0 shares were purchased on the open market during January in order to satisfy obligations pursuant to the Company’s long term incentive plan that was established in 1996.
(3)	0 shares were purchased on the open market during February in order to satisfy obligations pursuant to the Company’s long term incentive plan that was established in 1996.
(4)	228,000 shares were purchased on the open market during March in order to satisfy obligations pursuant to the Company’s long term incentive plan that was established in 1996.

35

Item 4.  Submission of Matters to a Vote of Security Holders.

A.	The Company’s Annual Meeting was held on March 29, 2007.
B.	The Directors elected at the Annual Meeting held on March 29, 2007 were:

		Votes Cast
		For	Withheld
1.	Don P. Descant	26,679,198	1,465,512
2.	James B. Eastabrook, Jr.	26,589,666	1,555,045
3.	Robert W. Roseberry	26,477,505	1,571,439
4.	Leo W. Seal, Jr.	26,574,947	1,569,764
5.	Anthony J. Topazi	26,671,800	1,472,911

C. KPMG LLP was approved as the independent public accountants of the Company.

For	Against	Abstained
28,010,871	40,266	76,169

D. Approval of the Amendment of the Articles of Incorporation to increase the number of authorized shares of Common Stock from 75,000,000 to 350,000,000.

For	Against	Abstained
15,556,852	7,189,885	102,230

Item 6. Exhibits.

(a)  Exhibits:

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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
By:	/s/ Carl J. Chaney
	Carl J. Chaney
	Chief Executive Officer
	/s/ John M. Hairston
	John M. Hairston
	Chief Executive Officer
	/s/ Michael M. Achary
	Michael M. Achary
	Chief Financial Officer
Date:	May 8, 2007

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Index to Exhibits

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.