Hancock Whitney Corporation - 6 (HWC) 10-Q 2014 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 ended March 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

82,283,744 common shares were outstanding as of May 1, 2014.

Hancock Holding Company

Index

		Page Number
Part I. Financial Information
ITEM 1.	Financial Statements
	Consolidated Balance Sheets — March 31, 2014 (unaudited) and December 31, 2013		1
	Consolidated Statements of Income (unaudited) — Three months ended March 31, 2014 and 2013		2
	Consolidated Statements of Comprehensive Income (unaudited) — Three months ended March 31, 2014 and 2013		3
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) — Three months ended March  31, 2014 and 2013		4
	Consolidated Statements of Cash Flows (unaudited) — Three months ended March 31, 2014 and 2013		5
	Notes to Consolidated Financial Statements (unaudited) — March 31, 2014		6-46
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		47-68
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		69
ITEM 4.	Controls and Procedures		69
Part II. Other Information
ITEM 1.	Legal Proceedings		70
ITEM 1A.	Risk Factors		70
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		70
ITEM 3.	Default on Senior Securities		N/A
ITEM 4.	Mine Safety Disclosures		N/A
ITEM 5.	Other Information		N/A
ITEM 6.	Exhibits		71
Signatures			71

Part I. Financial Information

Item 1. Financial Statements

Hancock Holding Company and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

	March 31,			December 31,
	2014			2013
ASSETS
Cash and due from banks	$	415,024		$	348,440
Interest-bearing bank deposits		279,322			267,236
Federal funds sold		1,051			1,604
Securities available for sale, at fair value (amortized cost of $1,353,442 and $1,408,780)		1,370,948			1,421,772
Securities held to maturity (fair value of $2,417,879 and $2,576,584)		2,426,935			2,611,352
Loans held for sale		15,911			24,515
Loans		12,527,937			12,324,817
Less: allowance for loan losses		(128,248	)		(133,626	)
Loans, net		12,399,689			12,191,191
Property and equipment, net of accumulated depreciation of $178,271 and $172,798		425,638			432,346
Prepaid expenses		65,799			65,220
Other real estate, net		69,606			76,668
Accrued interest receivable		41,722			42,977
Goodwill		625,675			625,675
Other intangible assets, net		152,734			159,773
Life insurance contracts		387,564			381,437
FDIC loss share receivable		104,469			113,834
Deferred tax asset, net		74,682			89,708
Other assets		147,401			155,503
Total assets	$	19,004,170		$	19,009,251
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand	$	5,613,872		$	5,530,253
Interest-bearing savings, NOW, money market and time		9,660,902			9,830,263
Total deposits		15,274,774			15,360,516
Short-term borrowings		712,634			657,960
Long-term debt		380,001			385,826
Accrued interest payable		5,914			4,353
Other liabilities		168,313			175,527
Total liabilities		16,541,636			16,584,182
Stockholders’ equity
Common stock - $3.33 par value per share; 350,000,000 shares authorized, 82,282,057 and 82,237,162 issued and outstanding, respectively		273,999			273,850
Capital surplus		1,563,462			1,558,432
Retained earnings		657,062			628,166
Accumulated other comprehensive loss, net		(31,989	)		(35,379	)
Total stockholders’ equity		2,462,534			2,425,069
Total liabilities and stockholders’ equity	$	19,004,170		$	19,009,251

See notes to condensed consolidated financial statements.

1

Hancock Holding Company and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended
	March 31,
	2014			2013
Interest income:
Loans, including fees	$	151,177		$	163,982
Securities-taxable		22,708			19,404
Securities-tax exempt		1,027			1,241
Federal funds sold and other short-term investments		228			645
Total interest income		175,140			185,272
Interest expense:
Deposits		5,352			6,745
Short-term borrowings		1,049			1,319
Long-term debt and other interest expense		3,177			3,193
Total interest expense		9,578			11,257
Net interest income		165,562			174,015
Provision for loan losses		7,963			9,578
Net interest income after provision for loan losses		157,599			164,437
Noninterest income:
Service charges on deposit accounts		18,712			19,015
Trust fees		10,238			8,692
Bank card and ATM fees		10,569			11,058
Investment and annuity fees		4,952			4,577
Secondary mortgage market operations		1,965			4,383
Insurance commissions and fees		3,744			3,994
Amortization of FDIC loss share receivable		(3,908	)		—
Other income		10,427			8,468
Total noninterest income		56,699			60,187
Noninterest expense:
Compensation expense		67,165			71,351
Employee benefits		14,267			16,576
Personnel expense		81,432			87,927
Net occupancy expense		11,266			12,326
Equipment expense		4,274			5,301
Data processing expense		12,419			11,534
Professional services expense		6,409			7,946
Amortization of intangibles		7,038			7,555
Telecommunications and postage		3,583			4,028
Deposit insurance and regulatory fees		2,967			3,646
Other real estate expense, net		1,777			708
Other expense		15,817			18,631
Total noninterest expense		146,982			159,602
Income before income taxes		67,316			65,022
Income taxes		18,201			16,446
Net income	$	49,115		$	48,576
Basic earnings per common share	$	0.58		$	0.56
Diluted earnings per common share	$	0.58		$	0.56
Dividends paid per share	$	0.24		$	0.24
Weighted avg. shares outstanding-basic		82,277			84,871
Weighted avg. shares outstanding-diluted		82,534			84,972

See notes to condensed consolidated financial statements.

2

Hancock Holding Company and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended
	March 31,
	2014		2013
Net income	$	49,115	$	48,576
Other comprehensive income before income taxes
Net change in unrealized gain (loss)		4,514		(12,438	)
Reclassification adjustment for net losses realized and included in earnings		53		1,929
Amortization of unrealized net gain (loss) on securities transferred to held-to-maturity		665		(2,984	)
Other comprehensive income (loss) before income taxes		5,232		(13,493	)
Income tax expense (benefit)		1,842		(4,940	)
Other comprehensive income (loss) net of income taxes		3,390		(8,553	)
Comprehensive income	$	52,505	$	40,023

See notes to condensed consolidated financial statements.

3

Hancock Holding Company and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands, except share and per share data)

	Common Stock				Capital		Retained			Accumulated Other Comprehensive
	Shares		Amount		Surplus		Earnings			(Loss)/Income, net			Total
Balance, January 1, 2013		84,847,796	$	282,543	$	1,647,638	$	546,022		$	(22,925	)	$	2,453,278
Net income		—		—		—		48,576			—			48,576
Other comprehensive income		—		—		—		—			(8,553	)		(8,553	)
Comprehensive income		—		—		—		48,576			(8,553	)		40,023
Cash dividends declared ($0.24 per common share)		—		—		—		(20,786	)		—			(20,786	)
Common stock activity, long-term incentive plan		34,174		114		4,471		—			—			4,585
Balance, March 31, 2013		84,881,970	$	282,657	$	1,652,109	$	573,812		$	(31,478	)	$	2,477,100
Balance, January 1, 2014		82,237,162	$	273,850	$	1,558,432	$	628,166		$	(35,379	)	$	2,425,069
Net income		—		—		—		49,115			—			49,115
Other comprehensive income		—		—		—		—			3,390			3,390
Comprehensive income		—		—		—		49,115			3,390			52,505
Cash dividends declared ($0.24 per common share)		—		—		—		(20,219	)		—			(20,219	)
Common stock activity, long-term incentive plan		44,895		149		5,030		—			—			5,179
Balance, March 31, 2014		82,282,057	$	273,999	$	1,563,462	$	657,062		$	(31,989	)	$	2,462,534

See notes to condensed consolidated financial statements.

4

Hancock Holding Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended
	March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	49,115		$	48,576
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,899			7,961
Provision for loan losses		7,963			9,578
Losses (gains) on other real estate owned		1,388			(10	)
Deferred tax expense		13,182			5,341
Increase in cash surrender value of life insurance contracts		(2,282	)		(4,666	)
Net decrease in loans originated for sale		9,264			15,670
(Gains) Losses on disposals of other assets		(1,682	)		124
Net amortization of securities premium/discount		4,236			10,401
Amortization of intangible assets		7,038			7,555
Amortization of FDIC Indemnification Asset		3,908			—
Stock-based compensation expense		3,832			3,535
Decrease in interest payable and other liabilities		(7,814	)		(7,795	)
Funds collected under FDIC loss share agreements		—			29,875
Increase in FDIC loss share receivable		(1,414	)		(3,490	)
Decrease in other assets		6,545			9,803
Other, net		1,947			(102	)
Net cash provided by operating activities		103,125			132,356
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale		1,301			—
Proceeds from maturities of securities available for sale		76,221			193,403
Purchases of securities available for sale		(24,703	)		(1,017,609	)
Proceeds from maturities of securities held to maturity		183,363			161,558
Purchases of securities held to maturity		—			(308,988	)
Net (increase) decrease in interest-bearing bank deposits		(12,086	)		1,024,541
Net decrease (increase) in federal funds sold and short-term investments		553			(30	)
Net (increase) decrease in loans		(217,289	)		74,269
Purchases of property, equipment and intangible assets		(6,111	)		(11,719	)
Proceeds from sales of property and equipment		6,562			99
Proceeds from sales of other real estate		11,348			38,242
Other, net		758			(2,483	)
Net cash provided by investing activities		19,917			151,283
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits		(85,742	)		(490,837	)
Net increase in short-term borrowings		54,674			83,404
Repayments of long-term debt		(8,955	)		(8,822	)
Issuance of long-term debt		3,130			6,153
Dividends paid		(20,219	)		(20,786	)
Proceeds from exercise of stock options		654			233
Net cash used in financing activities		(56,458	)		(430,655	)
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS		66,584			(147,016	)
CASH AND DUE FROM BANKS, BEGINNING		348,440			448,491
CASH AND DUE FROM BANKS, ENDING	$	415,024		$	301,475
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans	$	6,337		$	13,322

See notes to condensed consolidated financial statements.

5

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The consolidated financial statements include the accounts of Hancock Holding Company and all other entities in which it has a controlling interest (the “Company”). The financial statements include all adjustments that are, in the opinion of management, necessary to present fairly the Company’s financial condition, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented. Some financial information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP) have been condensed or omitted in thisForm 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 and the notes thereto included in the Company’s 2013 Annual Report onForm 10-K. Financial information reported in these financial statements is not necessarily indicative of the Company’s financial condition, results of operations, or cash flows for any other interim or annual period.

Use of Estimates

The accounting principles the Company follows and the methods for applying these principles conform with U.S. GAAP and to those generally practiced within the banking industry. These accounting principles require management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Critical Accounting Policies and Estimates

There have been no material changes or developments with respect to the assumptions or methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in our Form 10-K for the year ended December 31, 2013.

6

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

2. Securities

The amortized cost and fair value of securities classified as available for sale and held to maturity follow (in thousands):

Securitites Available for Sale

	March 31, 2014								December 31, 2013
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
US Treasury and government agency securities	$	417	$	1	$	1	$	417	$	504	$	2	$	1	$	505
Municipal obligations		23,148		204		7		23,345		35,809		177		25		35,961
Mortgage-backed securities		1,222,626		25,017		6,446		1,241,197		1,262,633		24,402		10,077		1,276,958
CMOs		94,941		—		2,056		92,885		96,369		—		2,244		94,125
Corporate debt securities		3,500		—		—		3,500		3,500		—		—		3,500
Equity securities		8,810		795		1		9,604		9,965		785		27		10,723
	$	1,353,442	$	26,017	$	8,511	$	1,370,948	$	1,408,780	$	25,366	$	12,374	$	1,421,772

Securitites Held to Maturity

	March 31, 2014								December 31, 2013
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
US Treasury and government agency securities	$	—	$	—	$	—	$	—	$	100,000	$	316	$	— ��	$	100,316
Municipal obligations		184,854		1,569		3,302		183,121		193,189		919		6,436		187,672
Mortgage-backed securities		980,154		9,467		2,601		987,020		1,003,327		296		4,671		998,952
CMOs		1,261,927		3,717		17,906		1,247,738		1,314,836		1,062		26,254		1,289,644
	$	2,426,935	$	14,753	$	23,809	$	2,417,879	$	2,611,352	$	2,593	$	37,361	$	2,576,584

The following table presents the amortized cost and fair value of debt securities at March 31, 2014 by contractual maturity (in thousands). Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and CMOs.

	Amortized		Fair
	Cost		Value
Debt Securities Available for Sale
Due in one year or less	$	13,570	$	13,628
Due after one year through five years		168,554		167,997
Due after five years through ten years		133,410		139,280
Due after ten years		1,029,098		1,040,439
Total available for sale debt securities	$	1,344,632	$	1,361,344

	Amortized		Fair
	Cost		Value
Debt Securities Held to Maturity
Due in one year or less	$	4,736	$	4,764
Due after one year through five years		651,155		636,445
Due after five years through ten years		126,510		124,267
Due after ten years		1,644,534		1,652,403
Total held to maturity securities	$	2,426,935	$	2,417,879

7

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

2. Securities (continued)

The Company held no securities classified as trading at March 31, 2014 or December 31, 2013.

The details for securities classified as available for sale with unrealized losses for the periods indicated follow (in thousands):

March 31, 2014	Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
US Treasury and government agency securities	$	191	$	—	$	51	$	1	$	242	$	1
Municipal obligations		2,993		7		—		—		2,993		7
Mortgage-backed securities		244,366		2,766		69,932		3,680		314,298		6,446
CMOs		50,029		691		42,856		1,365		92,885		2,056
Equity securities		—		—		3		1		3		1
	$	297,579	$	3,464	$	112,842	$	5,047	$	410,421	$	8,511
December 31, 2013	Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
US Treasury and government agency securities	$	205	$	1	$	—	$	—	$	205	$	1
Municipal obligations		7,975		25		—		—		7,975		25
Mortgage-backed securities		376,350		7,164		49,061		2,913		425,411		10,077
CMOs		94,125		2,244		—		—		94,125		2,244
Equity securities		3,282		26		3		1		3,285		27
	$	481,937	$	9,460	$	49,064	$	2,914	$	531,001	$	12,374

8

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

2. Securities (continued)

The details for securities classified as held to maturity with unrealized losses for the periods indicated follow (in thousands):

March 31, 2014	Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Municpal obligations	$	85,568	$	2,995	$	9,672	$	307	$	95,240	$	3,302
Mortgage-backed securities		137,744		2,601		—		—		137,744		2,601
CMOs		736,954		17,173		150,843		733		887,797		17,906
	$	960,266	$	22,769	$	160,515	$	1,040	$	1,120,781	$	23,809
December 31, 2013	Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Municpal obligations	$	131,499	$	6,311	$	2,878	$	125	$	134,377	$	6,436
Mortgage-backed securities		950,288		4,671		—		—		950,288		4,671
CMOs		947,061		25,088		175,633		1,166		1,122,694		26,254
	$	2,028,848	$	36,070	$	178,511	$	1,291	$	2,207,359	$	37,361

The unrealized losses relate to changes in market rates on fixed-rate debt securities since the respective purchase date. In all cases, the indicated impairment would be recovered by the security’s maturity date or possibly earlier if the market price for the security increases with a reduction in the yield required by the market. None of the unrealized losses relate to the marketability of the securities or the issuer’s ability to meet contractual obligations. The Company has adequate liquidity and, therefore, does not plan to and, more likely than not, will not be required to sell these securities before recovery of the indicated impairment. Accordingly, the unrealized losses on these securities have been determined to be temporary.

Securities with carrying values totaling $2.9 billion at March 31, 2014 and $3.1 billion at December 31, 2013 were pledged primarily to secure public deposits or securities sold under agreements to repurchase.

9

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses

Loans, net of unearned income, consisted of the following:

	March 31,		December 31,
	2014		2013
	(In thousands)
Originated loans:
Commercial non-real estate	$	4,353,549	$	4,113,837
Construction and land development		824,837		752,381
Commercial real estate		2,110,096		2,022,528
Residential mortgages		1,228,170		1,196,256
Consumer		1,407,712		1,409,130
Total originated loans	$	9,924,364	$	9,494,132
Acquired loans:
Commercial non-real estate	$	830,211	$	926,997
Construction and land development		134,443		142,931
Commercial real estate		907,170		967,148
Residential mortgages		293,111		315,340
Consumer		107,501		119,603
Total acquired loans	$	2,272,436	$	2,472,019
Covered loans:
Commercial non-real estate	$	14,269	$	23,390
Construction and land development		19,518		20,229
Commercial real estate		52,050		53,165
Residential mortgages		199,026		209,018
Consumer		46,274		52,864
Total covered loans	$	331,137	$	358,666
Total loans:
Commercial non-real estate	$	5,198,029	$	5,064,224
Construction and land development		978,798		915,541
Commercial real estate		3,069,316		3,042,841
Residential mortgages		1,720,307		1,720,614
Consumer		1,561,487		1,581,597
Total loans	$	12,527,937	$	12,324,817

10

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

The following briefly describes the distinction between originated, acquired and covered loans and certain significant accounting policies relevant to each category.

Originated loans

Loans originated for investment are reported at the principal balance outstanding net of unearned income. Interest on loans and accretion of unearned income, including deferred loan fees, are computed in a manner that approximates a level yield on recorded principal. Interest on loans is recognized in income as earned.

The accrual of interest on an originated loan is discontinued when, in management’s opinion, it is probable that the borrower will be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. When accrual of interest is discontinued on a loan, all unpaid accrued interest is reversed and payments subsequently received are applied first to recover principal. Interest income is recognized for payments received after contractual principal has been satisfied. Loans are returned to accrual status when all the principal and interest contractually due are brought current and future payment performance is reasonably assured.

Acquired loans

Acquired loans are those loans that were purchased in the Whitney Holding Corporation acquisition on June 4, 2011. These loans were recorded at estimated fair value at the acquisition date with no carryover of the related allowance for loan losses. The acquired loans were segregated between those considered to be performing (“acquired-performing”) and those with evidence of credit deterioration (“acquired-impaired”) based on such factors as past due status, nonaccrual status and credit risk ratings (rated substandard or worse). The acquired loans were further segregated into loan pools designed to facilitate the development of expected cash flows to be used in estimating fair value.

Acquired-performing loans were segregated into pools based on characteristics such as loan type, credit risk ratings, and contractual interest rate and repayment terms. The major loan types included commercial and industrial loans not secured by real estate, real estate construction and land development loans, commercial real estate loans, residential mortgage loans, and consumer loans, with further segregation within certain loan types as needed. Expected cash flows, both principal and interest, from each pool were estimated based on key assumptions covering such factors as prepayments, default rates, and severity of loss given a default. These assumptions were developed using both Whitney Holding Corporation’s historical experience and the portfolio characteristics at acquisition as well as available market research.

The difference at the acquisition date between the fair value and the contractual amounts due of an acquired-performing loan pool (the “fair value discount”) is accreted into income over the estimated life of the pool. Acquired-performing loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated portfolio.

In addition to those factors considered for acquired-performing loans, the acquired-impaired loans were segregated into pools by identifying loans with similar credit risk profiles and were based primarily on characteristics such as loan type and market area in which originated. Loan types included most of the major types used for the acquired-performing portfolio. The acquired-impaired loans that had been originated in Louisiana and Texas were further disaggregated from loans originated in Mississippi, Alabama and Florida, in recognition of the differences in general economic conditions affecting borrowers in these market areas. The fair value estimate for each pool of acquired performing and acquired-impaired loans was based on the estimate of expected cash flows from the pool discounted at prevailing market rates.

11

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

The excess of estimated cash flows expected to be collected from an acquired-impaired loan pool over the pool’s carrying value is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan pool. Each pool of acquired-impaired loans is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Acquired-impaired loans in pools with an accretable yield and expected cash flows that are reasonably estimable are considered to be accruing and performing even though collection of contractual payments on loans within the pool may be in doubt, because the pool is the unit of accounting. Management recasts the estimate of cash flows expected to be collected on each acquired-impaired loan pool at each reporting date. If the present value of expected cash flows for a pool is less than its carrying value, impairment is recognized by an increase in the allowance for loan losses and a charge to the provision for loan losses. If the present value of expected cash flows for a pool is greater than its carrying value, any previously established allowance for loan losses is reversed and any remaining difference increases the accretable yield which will be taken into interest income over the remaining life of the loan pool. Acquired-impaired loans are generally not subject to individual evaluation for impairment and are not reported with impaired loans or troubled debt restructurings even if they would otherwise qualify for such treatment.

Covered loans and the related loss share receivable

The loans purchased in the 2009 acquisition of Peoples First Community Bank (Peoples First) are covered by two loss share agreements between the FDIC and the Company which afford the Company significant loss protection. These covered loans are accounted for as acquired-impaired loans as described above in the section on acquired loans. The Company treated all loans for the Peoples First acquisition under ASC 310-30 based on the significant amount of deteriorating and nonperforming loans comprised mainly of adjustable rate mortgages and home equity loans located in Florida. The loss share receivable is measured separately from the related covered loans as it is not contractually embedded in the loans and is not transferrable should the loans be sold. The fair value of the loss share receivable at acquisition was estimated by discounting expected reimbursements for losses from the loans covered by the loss share agreements, including appropriate consideration of possible true-up payments to the FDIC at the expiration of the agreements.

The loss share receivable is reviewed and updated prospectively as loss estimates related to covered loan pools change. Increases in expected reimbursements under the loss sharing agreements will lead to an increase in the loss share receivable. A decrease in expected reimbursements is reflected first as a reversal of any previously recorded increase in the loss share receivable on the covered loan pool with the remainder reflected as a reduction in the loss share receivable’s accretion rate. Increases and decreases in the loss share receivable related to changes in loss estimates result in reductions in or additions to the provision for loan losses, which serves to offset the impact on the provision from impairments or impairment reversals recognized on the underlying covered loan pool. The excess (or shortfall) of expected claims as compared to the carrying value of the loss share receivable is accreted (amortized) into noninterest income over the shorter of the remaining life of the covered loan pool or the life of the loss share agreement. The impact on operations of a reduction in the loss share receivable’s accretion rate is associated with an increase in the accretable yield on the underlying loan pool. The indemnification asset is reduced as cash is received from the FDIC related to losses incurred on covered assets.

12

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

The following schedule shows activity in the FDIC loss share receivable for the three months ended March 31, 2014 and 2013 (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Balance, January 1	$	113,834		$	177,844
Accretion (amortization)		(3,908	)		—
(Charge-offs, write-downs and other losses) recoveries		(7,305	)		1,272
External expenses qualifying under loss share agreement		1,848			3,490
Payments received from the FDIC		—			(29,875	)
Ending balance	$	104,469		$	152,731

In the following discussion and tables, certain disaggregated information was not available for the commercial non-real estate, construction and land development and commercial real estate loan categories for March 31, 2013. In these instances, combined information for these categories is provided under the caption “commercial loans.”

The following schedule shows activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2014 and March 31, 2013 as well as the corresponding recorded investment in loans at the end of each period.

	Commercial non-real estate			Construction and land development			Commercial real estate			Residential mortgages			Consumer			Total
(In thousands)	Three Months Ended March 31, 2014
Originated loans
Allowance for loan losses:
Beginning balance	$	33,091		$	6,180		$	20,649		$	6,892		$	12,073		$	78,885
Charge-offs		(2,386	)		(91	)		(723	)		(241	)		(4,041	)		(7,482	)
Recoveries		826			651			331			94			1,602			3,504
Net provision for loan losses		2,202			(739	)		716			(153	)		2,627			4,653
Ending balance	$	33,733		$	6,001		$	20,973		$	6,592		$	12,261		$	79,560
Ending balance:
Individually evaluated for impairment	$	1,457		$	508		$	189		$	196		$	—		$	2,350
Collectively evaluated for impairment		32,276			5,493			20,784			6,396			12,261			77,210
Loans:
Ending balance:	$	4,353,549		$	824,837		$	2,110,096		$	1,228,170		$	1,407,712		$	9,924,364
Individually evaluated for impairment		9,109			11,064			12,418			2,549			—			35,140
Collectively evaluated for impairment		4,344,440			813,773			2,097,678			1,225,621			1,407,712			9,889,224
Acquired loans
Allowance for loan losses:
Beginning balance	$	1,603		$	10		$	34		$	—		$	—		$	1,647
Charge-offs		—			—			—			—			—			—
Recoveries		—			—			—			—			—			—
Net provision for loan losses		2,396			108			424			496			188			3,612
Ending balance	$	3,999		$	118		$	458		$	496		$	188		$	5,259
Ending balance:
Individually evaluated for impairment	$	88		$	32		$	282		$	—		$	—		$	402
Amounts related to acquired-impaired loans		—			—			—			—			—			—
Collectively evaluated for impairment		3,911			86			176			496			188			4,857
Loans:
Ending balance:	$	830,211		$	134,443		$	907,170		$	293,111		$	107,501		$	2,272,436
Individually evaluated for impairment		1,998			721			2,281			—			—			5,000
Acquired-impaired loans		13,272			17,560			30,018			5,545			102			66,497
Collectively evaluated for impairment		814,941			116,162			874,871			287,566			107,399			2,200,939

13

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

	Commercial non-real estate			Construction and land development			Commercial real estate			Residential mortgages			Consumer			Total
(In thousands)	Three Months Ended March 31, 2014
Covered loans
Allowance for loan losses:
Beginning balance	$	2,323		$	2,655		$	10,929		$	27,989		$	9,198		$	53,094
Charge-offs		(46	)		(458	)		(3,117	)		(308	)		(81	)		(4,010	)
Recoveries		445			857			136			6			56			1,500
Net provision for loan losses		(36	)		(32	)		(22	)		(118	)		(94	)		(302	)
Decrease in FDIC loss share receivable		(809	)		(732	)		(507	)		(2,666	)		(2,139	)		(6,853	)
Ending balance	$	1,877		$	2,290		$	7,419		$	24,903		$	6,940		$	43,429
Ending balance:
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—
Amounts related to acquired-impaired loans		1,877			2,290			7,419			24,903			6,940			43,429
Collectively evaluated for impairment		—			—			—			—			—			—
Loans:
Ending balance:	$	14,269		$	19,518		$	52,050		$	199,026		$	46,274		$	331,137
Individually evaluated for impairment		—			—			—			—			—			—
Acquired-impaired loans		14,269			19,518			52,050			199,026			46,274			331,137
Collectively evaluated for impairment		—			—			—			—			—			—
Total loans
Allowance for loan losses:
Beginning balance	$	37,017		$	8,845		$	31,612		$	34,881		$	21,271		$	133,626
Charge-offs		(2,432	)		(549	)		(3,840	)		(549	)		(4,122	)		(11,492	)
Recoveries		1,271			1,508			467			100			1,658			5,004
Net provision for loan losses		4,562			(663	)		1,118			225			2,721			7,963
Decrease in FDIC loss share receivable		(809	)		(732	)		(507	)		(2,666	)		(2,139	)		(6,853	)
Ending balance	$	39,609		$	8,409		$	28,850		$	31,991		$	19,389		$	128,248
Ending balance:
Individually evaluated for impairment	$	1,545		$	540		$	471		$	196		$	—		$	2,752
Amounts related to acquired-impaired loans		1,877			2,290			7,419			24,903			6,940			43,429
Collectively evaluated for impairment		36,187			5,579			20,960			6,892			12,449			82,067
Loans:
Ending balance:	$	5,198,029		$	978,798		$	3,069,316		$	1,720,307		$	1,561,487		$	12,527,937
Individually evaluated for impairment		11,107			11,785			14,699			2,549			—			40,140
Acquired-impaired		27,541			37,078			82,068			204,571			46,376			397,634
Collectively evaluated for impairment		5,159,381			929,935			2,972,549			1,513,187			1,515,111			12,090,163

14

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

				Residential
	Commercial			mortgages			Consumer			Total
(In thousands)	Three Months Ended March 31, 2013
Originated loans
Allowance for loan losses:
Beginning balance	$	59,149		$	6,406		$	13,219		$	78,774
Charge-offs		(7,027	)		(135	)		(4,075	)		(11,237	)
Recoveries		2,723			487			1,394			4,604
Net provision for loan losses		2,754			(1,502	)		2,103			3,355
Ending balance	$	57,599		$	5,256		$	12,641		$	75,496
Ending balance:
Individually evaluated for impairment	$	2,174		$	—		$	—		$	2,174
Collectively evaluated for impairment		55,425			5,256			12,641			73,322
Loans:
Ending balance:		5,161,227			886,232			1,331,477			7,378,936
Individually evaluated for impairment		56,702			1,664			—			58,366
Collectively evaluated for impairment	$	5,104,525		$	884,568		$	1,331,477		$	7,320,570
Acquired loans
Allowance for loan losses:
Beginning balance	$	788		$	—		$	—		$	788
Charge-offs		—			—			—			—
Recoveries		—			—			—			—
Net provision for loan losses		(639	)		267			—			(372	)
Ending balance	$	149		$	267		$	—		$	416
Ending balance:
Individually evaluated for impairment	$	149		$	267		$	—		$	416
Amounts related to acquired-impaired loans		—			—			—			—
Collectively evaluated for impairment		—			—			—			—
Loans:
Ending balance:		2,996,718			449,500			180,632			3,626,850
Individually evaluated for impairment		11,354			4,228			—			15,582
Acquired-impaired loans		113,978			17,584			520			132,082
Collectively evaluated for impairment	$	2,871,386		$	427,688		$	180,112		$	3,479,186

15

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

				Residential
	Commercial			mortgages			Consumer			Total
(In thousands)	Three Months Ended March 31, 2013
Covered loans
Allowance for loan losses:
Beginning balance	$	18,032		$	32,674		$	5,903		$	56,609
Charge-offs		(3,569	)		(24	)		(539	)		(4,132	)
Recoveries		523			24			363			910
Net provision for loan losses		3,544			1,861			1,190			6,595
Increase in FDIC loss share receivable		431			1,246			206			1,883
Ending balance	$	18,961		$	35,781		$	7,123		$	61,865
Ending balance:
Individually evaluated for impairment	$	—		$	—		$	—		$	—
Amounts related to acquired-impaired loans		18,961			35,781			7,123			61,865
Collectively evaluated for impairment		—			—			—			—
Loans:
Ending balance:		133,564			251,787			91,625			476,976
Individually evaluated for impairment		—			—			—			—
Acquired-impaired loans		133,564			251,787			91,625			476,976
Collectively evaluated for impairment	$	—		$	—		$	—		$	—
Total loans
Allowance for loan losses:
Beginning balance	$	77,969		$	39,080		$	19,122		$	136,171
Charge-offs		(10,596	)		(159	)		(4,614	)		(15,369	)
Recoveries		3,246			511			1,757			5,514
Net provision for loan losses		5,659			626			3,293			9,578
Increase in FDIC loss share receivable		431			1,246			206			1,883
Ending balance	$	76,709		$	41,304		$	19,764		$	137,777
Ending balance:
Individually evaluated for impairment	$	2,323		$	267		$	—		$	2,590
Amounts related to acquired-impaired loans		18,961			35,781			7,123			61,865
Collectively evaluated for impairment		55,425			5,256			12,641			73,322
Loans:
Ending balance:		8,291,509			1,587,519			1,603,734			11,482,762
Individually evaluated for impairment		68,056			5,892			—			73,948
Acquired-impaired loans		247,542			269,371			92,145			609,058
Collectively evaluated for impairment	$	7,975,911		$	1,312,256		$	1,511,589		$	10,799,756

16

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

The following table shows the composition of nonaccrual loans by portfolio segment and class. Acquired-impaired and certain covered loans are considered to be performing due to the application of the accretion method of accounting and are excluded from the table. Covered loans accounted for using the cost recovery method do not have an accretable yield and are included below as nonaccrual loans. Acquired-performing loans that have subsequently been placed on nonaccrual status are also included below.

	March 31,		December 31,
Nonaccrual Loans	2014		2013
	(In thousands)
Originated loans:
Commercial non-real estate	$	13,726	$	10,119
Construction and land development		13,598		13,171
Commercial real estate		29,140		32,772
Residential mortgages		15,153		13,449
Consumer		4,693		4,802
Total originated loans	$	76,310	$	74,313
Acquired loans:
Commercial non-real estate	$	3,391	$	3,209
Construction and land development		1,866		1,990
Commercial real estate		6,501		6,525
Residential mortgages		7,971		8,262
Consumer		1,982		1,814
Total acquired loans	$	21,711	$	21,800
Covered loans:
Commercial non-real estate	$	1	$	2
Construction and land development		1,539		1539
Commercial real estate		1,147		1163
Residential mortgages		400		544
Consumer		287		296
Total covered loans	$	3,374	$	3,544
Total loans:
Commercial non-real estate	$	17,118	$	13,330
Construction and land development		17,003		16,700
Commercial real estate		36,788		40,460
Residential mortgages		23,524		22,255
Consumer		6,962		6,912
Total loans	$	101,395	$	99,657

17

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

The amount of interest that would have been recognized on nonaccrual loans for the three months ended March 31, 2014 was approximately $1.2 million. Interest actually received and taken into income on nonaccrual loans during the three months ended March 31, 2014 was $1.1 million.

Included in nonaccrual loans at March 31, 2014 is $11.3 million in restructured commercial loans. Total troubled debt restructurings (TDRs) were $24.5 million as of March 31, 2014 and $24.9 million at December 31, 2013. Individual acquired and covered impaired loans modified post-acquisition are not removed from their accounting pool and accounted for as TDRs, even if those loans would otherwise be deemed TDRs.

The table below details TDRs that occurred during the three months ended March 31, 2014 and March 31, 2013 by portfolio segment and TDRs that subsequently defaulted within twelve months of modification (dollar amounts in thousands). All troubled debt restructurings are rated substandard and individually evaluated for impairment.

	Three Months Ended
	March 31, 2014						March 31, 2013
Troubled Debt Restructurings:	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Originated loans:
Commercial non-real estate		—	$	—	$	—		—	$	—	$	—
Construction and land development		—		—		—		—		—		—
Commercial real estate		1		963		918		2		602		594
Residential mortgages		2		773		507		—		—		—
Consumer		—		—		—		—		—		—
Total originated loans		3	$	1,736	$	1,425		—	$	602	$	594
Aquired loans:
Commercial non-real estate		—	$	—	$	—		—	$	—	$	—
Construction and land development		—		—		—		—		—		—
Commercial real estate				—		—		1		513		501
Residential mortgages		—		—		—		1		514		493
Consumer		—		—		—		—		—		—
Total acquired loans		—	$	—	$	—		2	$	1,027	$	994
Covered loans:
Commercial non-real estate		—	$	—	$	—		—	$	—	$	—
Construction and land development		—		—		—		—		—		—
Commercial real estate		—		—		—		—		—		—
Residential mortgages		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Total covered loans		—	$	—	$	—		—	$	—	$	—
Total loans:
Commercial non-real estate		—	$	—	$	—		—	$	—	$	—
Construction and land development		—		—		—		—		—		—
Commercial real estate		1		963		918		3		1,115		1,095
Residential mortgages		2		773		507		1		514		493
Consumer		—		—		—		—		—		—
Total loans		3	$	1,736	$	1,425		4	$	1,629	$	1,588

18

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

	Three Months Ended
	March 31, 2014				March 31, 2013
Troubled Debt Restructurings That Subsequently Defaulted:	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Originated loans:
Commercial non-real estate		1	$	926		—	$	—
Construction and land development		—		—		—		—
Commercial real estate		—		—		—		—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total originated loans		1	$	926		—	$	—
Aquired loans:
Commercial non-real estate		—	$	—		—	$	—
Construction and land development		—		—		—		—
Commercial real estate		—		—		—		—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total acquired loans		—	$	—		—	$	—
Covered loans:
Commercial non-real estate		—	$	—		—	$	—
Construction and land development		—		—		—		—
Commercial real estate		—		—		—		—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total covered loans		—	$	—		—	$	—
Total loans:
Commercial non-real estate		1	$	926		—	$	—
Construction and land development		—		—		—		—
Commercial real estate		—		—		—		—
Residential mortgages		—		—		—		—
Consumer		—		—		—		—
Total loans		1	$	926		—	$	—

19

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

Those loans that are determined to be impaired and have balances of $1 million or more are individually evaluated for impairment. The tables below present loans that are individually evaluated for impairment disaggregated by class at March 31, 2014 and December 31, 2013:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
March 31, 2014	Investment		Balance		Allowance		Investment		Recognized
	(In thousands)
Originated loans:
With no related allowance recorded:
Commercial non-real estate	$	516	$	638	$	—	$	516	$	—
Construction and land development		3,058		3,511		—		3,058		22
Commercial real estate		8,019		10,290		—		8,019		68
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		11,593		14,439		—		11,593		90
With an allowance recorded:
Commercial non-real estate		9,109		9,617		1,453		9,109		20
Construction and land development		11,064		13,359		508		11,064		32
Commercial real estate		12,418		14,951		193		12,418		—
Residential mortgages		2,549		2,712		196		2,549		—
Consumer		—		—		—		—		—
		35,140		40,639		2,350		35,140		52
Total:
Commercial non-real estate		9,625		10,255		1,453		9,625		20
Construction and land development		14,122		16,870		508		14,122		54
Commercial real estate		20,437		25,241		193		20,437		68
Residential mortgages		2,549		2,712		196		2,549		—
Consumer		—		—		—		—		—
Total originated loans	$	46,733	$	55,078	$	2,350	$	46,733	$	142
Acquired loans:
With no related allowance recorded:
Commercial non-real estate	$	—	$	—	$	—	$	—	$	—
Construction and land development		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		—		—		—		—		—
With an allowance recorded:
Commercial non-real estate		2,002		3,800		88		2,002		61
Construction and land development		735		767		32		735		7
Commercial real estate		2,318		2,339		282		2,318		5
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		5,055		6,906		402		5,055		73
Total:
Commercial non-real estate		2,002		3,800		88		2,002		61
Construction and land development		735		767		32		735		7
Commercial real estate		2,318		2,339		282		2,318		5
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
Total acquired loans	$	5,055	$	6,906	$	402	$	5,055	$	73

20

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
March 31, 2014	Investment		Balance		Allowance		Investment		Recognized
Covered loans:
With no related allowance recorded:
Commercial non-real estate	$	—	$	—	$	—	$	—	$	—
Construction and land development		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		—		—		—		—		—
With an allowance recorded:
Commercial non-real estate		—		—		—		—		—
Construction and land development		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		—		—		—		—		—
Total:
Commercial non-real estate		—		—		—		—		—
Construction and land development		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
Total covered loans	$	—	$	—	$	—	$	—	$	—
Total loans:
With no related allowance recorded:
Commercial non-real estate	$	516	$	638	$	—	$	516	$	—
Construction and land development		3,058		3,511		—		3,058		22
Commercial real estate		8,019		10,290		—		8,019		68
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		11,593		14,439		—		11,593		90
With an allowance recorded:
Commercial non-real estate		11,111		13,417		1,541		11,111		81
Construction and land development		11,799		14,126		540		11,799		39
Commercial real estate		14,736		17,290		475		14,736		5
Residential mortgages		2,549		2,712		196		2,549		—
Consumer		—		—		—		—		—
		40,195		47,545		2,752		40,195		125
Total:
Commercial non-real estate		11,627		14,055		1,541		11,627		81
Construction and land development		14,857		17,637		540		14,857		61
Commercial real estate		22,755		27,580		475		22,755		73
Residential mortgages		2,549		2,712		196		2,549		—
Consumer		—		—		—		—		—
Total loans	$	51,788	$	61,984	$	2,752	$	51,788	$	215

21

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
December 31, 2013	Investment		Balance		Allowance		Investment		Recognized
	(In thousands)
Originated loans:
With no related allowance recorded:
Commercial non-real estate	$	329	$	442	$	—	$	235	$	18
Construction and land development		4,101		5,131		—		2,780		82
Commercial real estate		5,321		7,458		—		15,886		374
Residential mortgages		—		—		—		262		—
Consumer		—		—		—		1,013		—
		9,751		13,031		—		20,176		474
With an allowance recorded:
Commercial non-real estate		4,965		5,303		477		8,936		180
Construction and land development		6,498		8,343		22		2,549		—
Commercial real estate		8,708		9,090		268		19,683		460
Residential mortgages		605		620		1		228		—
Consumer		—		—		—		1,025		—
		20,776		23,356		768		32,421		640
Total:
Commercial non-real estate		5,294		5,745		477		9,171		198
Construction and land development		10,599		13,474		22		5,329		82
Commercial real estate		14,029		16,548		268		35,569		834
Residential mortgages		605		620		1		490		—
Consumer		—		—		—		2,038		—
Total originated loans	$	30,527	$	36,387	$	768	$	52,597	$	1,114
Acquired loans:
With no related allowance recorded:
Commercial non-real estate	$	2,141	$	3,275	$	—	$	865	$	8
Construction and land development		728		1,142		—		296		3
Commercial real estate		1,865		2,634		—		1,339		49
Residential mortgages		473		507		—		407		—
Consumer		—		—		—		—		—
		5,207		7,558		—		2,907		60
With an allowance recorded:
Commercial non-real estate		—		—		—		2,747		63
Construction and land development		—		—		—		157		—
Commercial real estate		—		—		—		2,663		—
Residential mortgages		—		—		—		845		—
Consumer		—		—		—		—		—
		—		—		—		6,412		63
Total:
Commercial non-real estate		2,141		3,275		—		3,612		71
Construction and land development		728		1,142		—		453		3
Commercial real estate		1,865		2,634		—		4,002		49
Residential mortgages		473		507		—		1,252		—
Consumer		—		—		—		—		—
Total acquired loans	$	5,207	$	7,558	$	—	$	9,319	$	123

22

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
December 31, 2013	Investment		Balance		Allowance		Investment		Recognized
Covered loans:
With no related allowance recorded:
Commercial non-real estate	$	—	$	—	$	—	$	—	$	—
Construction and land development		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		—		—		—		—		—
With an allowance recorded:
Commercial non-real estate		—		—		—		—		—
Construction and land development		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
		—		—		—		—		—
Total:
Commercial non-real estate		—		—		—		—		—
Construction and land development		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential mortgages		—		—		—		—		—
Consumer		—		—		—		—		—
Total covered loans	$	—	$	—	$	—	$	—	$	—
Total loans:
With no related allowance recorded:
Commercial non-real estate	$	2,470	$	3,717	$	—	$	1,100	$	26
Construction and land development		4,829		6,273		—		3,076		85
Commercial real estate		7,186		10,092		—		17,225		423
Residential mortgages		473		507		—		669		—
Consumer		—		—		—		1,013		—
		14,958		20,589		—		23,083		534
With an allowance recorded:
Commercial non-real estate		4,965		5,303		477		11,683		243
Construction and land development		6,498		8,343		22		2,706		—
Commercial real estate		8,708		9,090		268		22,346		460
Residential mortgages		605		620		1		1,073		—
Consumer		—		—		—		1,025		—
		20,776		23,356		768		38,833		703
Total:
Commercial non-real estate		7,435		9,020		477		12,783		269
Construction and land development		11,327		14,616		22		5,782		85
Commercial real estate		15,894		19,182		268		39,571		883
Residential mortgages		1,078		1,127		1		1,742		—
Consumer		—		—		—		2,038		—
Total loans	$	35,734	$	43,945	$	768	$	61,916	$	1,237

23

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

Covered loans and acquired credit impaired loans with an accretable yield are considered to be current in the following delinquency table. Certain covered loans accounted for using the cost recovery method are disclosed according to their contractual payment status below. The following table presents the age analysis of past due loans at March 31, 2014 and December 31, 2013:

March 31, 2014	30-59 days past due		60-89 days past due		Greater than 90 days past due		Total past due		Current		Total Loans		Recorded investment > 90 days and accruing
	(In thousands)
Originated loans:
Commercial non-real estate	$	6,355	$	2,641	$	6,561	$	15,557	$	4,337,992	$	4,353,549	$	609
Construction and land development		7,840		1,181		7,100		16,121		808,716		824,837		56
Commercial real estate		5,773		1,484		13,043		20,300		2,089,796		2,110,096		427
Residential mortgages		12,484		1,565		4,521		18,570		1,209,600		1,228,170		—
Consumer		7,434		1,772		3,063		12,269		1,395,443		1,407,712		1,452
Total	$	39,886	$	8,643	$	34,288	$	82,817	$	9,841,547	$	9,924,364	$	2,544
Acquired loans:
Commercial non-real estate	$	2,330	$	189	$	3,275	$	5,794	$	824,417	$	830,211	$	178
Construction and land development		1,098		113		2,069		3,280		131,163		134,443		285
Commercial real estate		2,200		458		2,516		5,174		901,996		907,170		629
Residential mortgages		4,795		1,142		3,490		9,427		283,684		293,111		315
Consumer		692		26		1,135		1,853		105,648		107,501		47
Total	$	11,115	$	1,928	$	12,485	$	25,528	$	2,246,908	$	2,272,436	$	1,454
Covered loans:
Commercial non-real estate	$	—	$	—	$	—	$	—	$	14,269	$	14,269	$	—
Construction and land development		—		—		1,539		1,539		17,979		19,518		—
Commercial real estate		—		—		675		675		51,375		52,050		—
Residential mortgages		—		—		3		3		199,023		199,026		—
Consumer		—		—		—		—		46,274		46,274		—
Total	$	—	$	—	$	2,217	$	2,217	$	328,920	$	331,137	$	—
Total loans:
Commercial non-real estate	$	8,685	$	2,830	$	9,836	$	21,351	$	5,176,678	$	5,198,029	$	787
Construction and land development		8,938		1,294		10,708		20,940		957,858		978,798		341
Commercial real estate		7,973		1,942		16,234		26,149		3,043,167		3,069,316		1,056
Residential mortgages		17,279		2,707		8,014		28,000		1,692,307		1,720,307		315
Consumer		8,126		1,798		4,198		14,122		1,547,365		1,561,487		1,499
Total	$	51,001	$	10,571	$	48,990	$	110,562	$	12,417,375	$	12,527,937	$	3,998

24

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

December 31, 2013	30-59 days past due			60-89 days past due		Greater than 90 days past due		Total past due		Current		Total Loans		Recorded investment > 90 days and accruing
	(In thousands)
Originated loans:
Commercial non-real estate	$	11,645		$	1,203	$	4,803	$	17,651	$	4,096,186	$	4,113,837	$	521
Construction and land development		5,877			1,264		5,970		13,111		739,270		752,381		—
Commercial real estate		8,178			5,744		14,620		28,542		1,993,986		2,022,528		420
Residential mortgages		12,410			3,870		3,540		19,820		1,176,436		1,196,256		—
Consumer		8,798			1,913		3,823		14,534		1,394,596		1,409,130		2,344
Total	$	46,908		$	13,994	$	32,756	$	93,658	$	9,400,474	$	9,494,132	$	3,285
Acquired loans:
Commercial non-real estate	$	1,982		$	2,332	$	1,467	$	5,781	$	921,216	$	926,997	$	541
Construction and land development		862			1,529		1,161		3,552		139,379		142,931		541
Commercial real estate		3,742			1,345		9,026		14,113		953,035		967,148		5,853
Residential mortgages		5,632			2,698		5,503		13,833		301,507		315,340		72
Consumer		1,029			120		1,013		2,162		117,441		119,603		82
Total	$	13,247		$	8,024	$	18,170	$	39,441	$	2,432,578	$	2,472,019	$	7,089
Covered loans:
Commercial non-real estate	$	—		$	—	$	—	$	—	$	23,390	$	23,390	$	—
Construction and land development		—			—		1,539		1,539		18,690		20,229		—
Commercial real estate		—			—		675		675		52,490		53,165		—
Residential mortgages		—			—		3		3		209,015		209,018		—
Consumer		—	��		—		—		—		52,864		52,864		—
Total	$	—		$	—	$	2,217	$	2,217	$	356,449	$	358,666	$	—
Total loans:
Commercial non-real estate	$	13,627		$	3,535	$	6,270	$	23,432	$	5,040,792	$	5,064,224	$	1,062
Construction and land development		6,739			2,793		8,670		18,202		897,339		915,541		541
Commercial real estate		11,920			7,089		24,321		43,330		2,999,511		3,042,841		6,273
Residential mortgages		18,042			6,568		9,046		33,656		1,686,958		1,720,614		72
Consumer		9,827			2,033		4,836		16,696		1,564,901		1,581,597		2,426
Total	$	60,155		$	22,018	$	53,143	$	135,316	$	12,189,501	$	12,324,817	$	10,374

25

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

The following tables present the credit quality indicators of the Company’s various classes of loans at March 31, 2014 and December 31, 2013.

Commercial Non-Real Estate Credit Exposure

Credit Risk Profile Based on Payment Activity

	March 31, 2014								December 31, 2013
	Originated		Acquired		Covered		Total		Originated		Acquired		Covered		Total
	(In thousands)								(In thousands)
Grade:
Pass	$	4,222,077	$	761,925	$	3,003	$	4,987,005	$	3,990,318	$	846,135	$	10,476	$	4,846,929
Pass-Watch		66,110		33,235		8		99,353		46,734		44,105		9		90,848
Special Mention		22,873		19,253		2,913		45,039		41,812		19,915		2,897		64,624
Substandard		41,569		15,242		8,345		65,156		34,276		16,125		9,662		60,063
Doubtful		920		556		—		1,476		695		718		345		1,758
Loss		—		—		—		—		—		—		—		—
Total	$	4,353,549	$	830,211	$	14,269	$	5,198,029	$	4,113,835	$	926,998	$	23,389	$	5,064,222
Construction Credit Exposure Credit Risk Profile Based on Payment Activity
	March 31, 2014								December 31, 2013
	Originated		Acquired		Covered		Total		Originated		Acquired		Covered		Total
	(In thousands)								(In thousands)
Grade:
Pass	$	780,621	$	101,172	$	1,618	$	883,411	$	709,261	$	112,773	$	—	$	822,034
Pass-Watch		7,746		1,879		1,218		10,843		7,817		1,907		1,226		10,950
Special Mention		4,156		12,459		270		16,885		3,926		9,409		276		13,611
Substandard		32,314		18,933		14,920		66,167		31,377		18,842		11,498		61,717
Doubtful		—		—		1,492		1,492		—		—		7,228		7,228
Loss		—		—		—		—		—		—		—		—
Total	$	824,837	$	134,443	$	19,518	$	978,798	$	752,381	$	142,931	$	20,228	$	915,540
Commercial Real Estate Credit Exposure Credit Risk Profile by Internally Assigned Grade
	March 31, 2014								December 31, 2013
	Originated		Acquired		Covered		Total		Originated		Acquired		Covered		Total
	(In thousands)								(In thousands)
Grade:
Pass	$	1,953,908	$	839,044	$	7,553	$	2,800,505	$	1,864,116	$	896,578	$	1,678	$	2,762,372
Pass-Watch		52,052		9,606		7,826		69,484		49,578		9,530		10,266		69,374
Special Mention		18,944		13,412		1,168		33,524		15,785		19,798		1,999		37,582
Substandard		85,178		45,108		34,532		164,818		93,034		41,242		31,350		165,626
Doubtful		14		—		971		985		16		—		7,872		7,888
Loss		—		—		—		—		—		—		—		—
Total	$	2,110,096	$	907,170	$	52,050	$	3,069,316	$	2,022,529	$	967,148	$	53,165	$	3,042,842

26

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

Residential Mortgage Credit Exposure

Credit Risk Profile by Internally Assigned Grade

	March 31, 2014								December 31, 2013
	Originated		Acquired		Covered		Total		Originated		Acquired		Covered		Total
	(In thousands)								(In thousands)
Performing	$	1,212,619	$	285,140	$	199,023	$	1,696,782	$	1,182,266	$	307,078	$	209,015	$	1,698,359
Nonperforming		15,551		7,971		3		23,525		13,990		8,262		3		22,255
Total	$	1,228,170	$	293,111	$	199,026	$	1,720,307	$	1,196,256	$	315,340	$	209,018	$	1,720,614
Consumer Credit Exposure Credit Risk Profile Based on Payment Activity
	March 31, 2014								December 31, 2013
	Originated		Acquired		Covered		Total		Originated		Acquired		Covered		Total
	(In thousands)								(In thousands)
Performing	$	1,402,732	$	105,519	$	46,274	$	1,554,525	$	1,404,032	$	117,789	$	52,864	$	1,574,685
Nonperforming		4,980		1,982		—		6,962		5,098		1,814		—		6,912
Total	$	1,407,712	$	107,501	$	46,274	$	1,561,487	$	1,409,130	$	119,603	$	52,864	$	1,581,597

Loan review uses a risk-focused continuous monitoring program that provides for an independent, objective and timely review of credit risk within the company. Below are the definitions of the Company’s internally assigned grades:

Commercial:

• Pass - loans properly approved, documented, collateralized, and performing which do not reflect an abnormal credit risk.

• Pass - Watch - Credits in this category are of sufficient risk to cause concern. This category is reserved for credits that display negative performance trends. The “Watch” grade should be regarded as a transition category.

• Special Mention - These credits exhibit some signs of “Watch,” but to a greater magnitude. These credits constitute an undue and unwarranted credit risk, but not to a point of justifying a classification of “Substandard.” They have weaknesses that, if not checked or corrected, weaken the asset or inadequately protect the bank.

• Substandard - These credits constitute an unacceptable risk to the bank. They have recognized credit weaknesses that jeopardize the repayment of the debt. Repayment sources are marginal or unclear.

• Doubtful - A Doubtful credit has all of the weaknesses inherent in one classified “Substandard” with the added characteristic that weaknesses make collection in full highly questionable or improbable.

27

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

• Loss - Credits classified as Loss are considered uncollectable and are charged off promptly once so classified.

Residential Mortgage and Consumer:

• Performing – Loans on which payments of principal and interest are less than 90 days past due.

• Nonperforming – Loans on which payments of principal and interest are more than 90 days past due and on nonaccrual status.

Changes in the carrying amount of acquired-impaired loans and accretable yield are presented in the following table for the three months ended March 31, 2014 and the year ended December 31, 2013:

	March 31, 2014												December 31, 2013
	Covered						Non-covered						Covered						Non-covered
	Carrying						Carrying						Carrying						Carrying
	Amount			Accretable			Amount			Accretable			Amount			Accretable			Amount			Accretable
	of Loans			Yield			of Loans			Yield			of Loans			Yield			of Loans			Yield
(In thousands)
Balance at beginning of period	$	358,666		$	122,715		$	68,075		$	131,370		$	515,823		$	115,594		$	141,201		$	203,186
Additions		—			—			—			—			—			—			—			—
Payments received, net		(33,087	)		(568	)		(16,129	)		(9,591	)		(189,987	)		(1,298	)		(116,187	)		(47,330	)
Accretion		5,557			(5,557	)		14,551			(14,551	)		32,830			(32,830	)		43,061			(43,061	)
(Decrease)/Increase in expected cash flows based on actual cash flows and changes in cash flow assumptions		—			4,754			—			(100	)		—			(17,433	)		—			3,894
Net transfers from nonaccretable differerence to accretable yield		—			6,264			—			8,934			—			58,682			—			14,681
Balance at end of period	$	331,136		$	127,608		$	66,497		$	116,062		$	358,666		$	122,715		$	68,075		$	131,370

4. Fair Value

The Financial Accounting Standards Board (FASB) defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The FASB’s guidance also established a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair value, giving preference to quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs such as a reporting entity’s own data (level 3).Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

28

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

4. Fair Value (continued)

Fair Value of Assets and Liabilities Measured on a Recurring Basis

The following tables present for each of the fair value hierarchy levels the Company’s assets and liabilities that are measured at fair value (in thousands) on a recurring basis in the consolidated balance sheets.

	March 31, 2014
	Level 1		Level 2		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	417	$	—	$	417
Municipal obligations		—		23,345		23,345
Corporate debt securities		3,500		—		3,500
Mortgage-backed securities		—		1,241,197		1,241,197
Collateralized mortgage obligations		—		92,885		92,885
Equity securities		9,604		—		9,604
Total available-for-sale securities		13,521		1,357,427		1,370,948
Derivative assets (1)		—		15,325		15,325
Total recurring fair value measurements - assets	$	13,521	$	1,372,752	$	1,386,273
Liabilities
Derivative liabilities (1)	$	—	$	15,524	$	15,524
Total recurring fair value measurements - liabilities	$	—	$	15,524	$	15,524

(1) For further disaggregation of derivative assets and liabilities, see Note 5 - Derivatives.

	December 31, 2013
	Level 1		Level 2		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	505	$	—	$	505
Municipal obligations		—		35,961		35,961
Corporate debt securities		3,500		—		3,500
Mortgage-backed securities		—		1,276,958		1,276,958
Collateralized mortgage obligations		—		94,125		94,125
Equity securities		10,723		—		10,723
Total available-for-sale securities		14,728		1,407,044		1,421,772
Derivative assets (1)		—		15,579		15,579
Total recurring fair value measurements - assets	$	14,728	$	1,422,623	$	1,437,351
Liabilities
Derivative liabilities (1)	$	—	$	15,006	$	15,006
Total recurring fair value measurements - liabilities	$	—	$	15,006	$	15,006

(1) For further disaggregation of derivative assets and liabilities, see Note 5 - Derivatives.

29

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

4. Fair Value (continued)

Securities classified as level 1 within the valuation hierarchy include U.S. Treasury securities, obligations of U.S. Government-sponsored agencies, and certain other debt and equity securities. Level 2 classified securities include residential mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies, and state and municipal bonds. The level 2 fair value measurements for investment securities are obtained quarterly from a third-party pricing service that uses industry-standard pricing models. Substantially all of the model inputs were observable in the marketplace or can be supported by observable data. The Company invests only in high quality securities of investment grade quality with a targeted duration, for the overall portfolio, generally between two to five years. Company policies limit investments to securities having a rating of not less than “Baa” or its equivalent by a nationally recognized statistical rating agency. There were no transfers between valuation hierarchy levels during the periods shown.

The fair value of derivative financial instruments, which are predominantly customer interest rate swaps, is obtained from a third-party pricing service that uses an industry-standard discounted cash flow model that relies on inputs, LIBOR swap curves and Overnight Index swap rate curves, observable in the marketplace. To comply with the accounting guidance, credit valuation adjustments are incorporated in the fair values to appropriately reflect nonperformance risk for both the Company and the counterparties. Although the Company has determined that the majority of the inputs used to value the derivative instruments fall within level 2 of the fair value hierarchy, the credit value adjustments utilize level 3 inputs, such as estimates of current credit spreads. The Company has determined that the impact of the credit valuation adjustments is not significant to the overall valuation of these derivatives. As a result, the Company has classified its derivative valuations in their entirety in level 2 of the fair value hierarchy. The Company’s policy is to measure counterparty credit risk quarterly for all derivative instruments, including those subject to master netting arrangements consistent with how market participants would price the net risk exposure at the measurement date.

The Company also has certain derivative instruments associated with the Bank’s mortgage-banking activities. These derivative instruments include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis. The fair value of these derivative instruments is measured using observable market prices for similar instruments and is classified as a level 2 measurement.

Fair Value of Assets Measured on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Collateral-dependent impaired loans are level 2 assets measured at the fair value of the underlying collateral based on third-party appraisals that take into consideration market-based information such as recent sales activity for similar assets in the property’s market.

Other real estate owned, including both foreclosed property and surplus banking property, are level 3 assets that are adjusted to fair value, less estimated selling costs, upon transfer to other real estate owned. Subsequently, other real estate owned is carried at the lower of carrying value or fair value less estimated selling costs. Fair values are determined by sales agreement or third-party appraisals as discounted for estimated selling costs, information from comparable sales, and marketability of the property.

30

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

4. Fair Value (continued)

The following tables present for each of the fair value hierarchy levels the Company’s financial assets that are measured at fair value (in thousands) on a nonrecurring basis.

	March 31, 2014
	Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	26,104	$	—	$	26,104
Other real estate owned		—		—		26,157		26,157
Total nonrecurring fair value measurements	$	—	$	26,104	$	26,157	$	52,261
	December 31, 2013
	Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	24,392	$	—	$	24,392
Other real estate owned		—		—		25,525		25,525
Total nonrecurring fair value measurements	$	—	$	24,392	$	25,525	$	49,917

Accounting guidance from the FASB requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring basis. The significant methods and assumptions used by the Company to estimate the fair value of financial instruments are discussed below.

Cash,Short-Term Investments and Federal Funds Sold- For thoseshort-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities Available for Sale -The fair value measurement for securities available for sale was discussed earlier in the note. The same measurement techniques were applied to the valuation of securities held to maturity.

Loans, Net -The fair value measurement for certain impaired loans was discussed earlier in the note. For the remaining portfolio, fair values were generally estimated by discounting scheduled cash flows using discount rates determined with reference to current market rates at which loans with similar terms would be made to borrowers with similar credit quality.

Accrued Interest Receivable and Accrued Interest Payable -The carrying amounts are a reasonable estimate of fair values.

Deposits- The accounting guidance requires that the fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing checking and savings accounts, be assigned fair values equal to amounts payable upon demand (carrying amounts). The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Securities Sold under Agreements to Repurchase, Federal Funds Purchased, and FHLB Borrowings - For these short-term liabilities, the carrying amount is a reasonable estimate of fair value.

31

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

4. Fair Value (continued)

Long-Term Debt - The fair value is estimated by discounting the future contractual cash flows using current market rates at which debt with similar terms could be obtained.

Derivative Financial Instruments – The fair value measurement for derivative financial instruments was discussed earlier.

The following tables present the estimated fair values of the Company’s financial instruments by fair value hierarchy levels and the corresponding carrying amount at March 31, 2014 and December 31, 2013 (in thousands):

	March 31, 2014
							Total		Carrying
	Level 1		Level 2		Level 3		Fair Value		Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold	$	695,397	$	—	$	—	$	695,397	$	695,397
Available for sale securities		13,521		1,357,427		—		1,370,948		1,370,948
Held to maturity securities		—		2,417,879		—		2,417,879		2,426,935
Loans, net		—		26,104		12,240,853		12,266,957		12,399,689
Loans held for sale		—		15,911		—		15,911		15,911
Accrued interest receivable		41,722		—		—		41,722		41,722
Derivative financial instruments		—		15,325		—		15,325		15,325
Financial liabilities:
Deposits	$	—	$	—	$	15,010,599	$	15,010,599	$	15,274,774
Federal funds purchased		8,875		—		—		8,875		8,875
Securities sold under agreements to repurchase		703,759		—		—		703,759		703,759
Long-term debt		—		380,163		—		380,163		380,001
Accrued interest payable		5,914		—		—		5,914		5,914
Derivative financial instruments		—		15,524		—		15,524		15,524

32

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

4. Fair Value (continued)

	December 31, 2013
							Total		Carrying
	Level 1		Level 2		Level 3		Fair Value		Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold	$	617,280	$	—	$	—	$	617,280	$	617,280
Available for sale securities		14,728		1,407,044		—		1,421,772		1,421,772
Held to maturity securities		100,316		2,476,268		—		2,576,584		2,611,352
Loans, net		—		24,392		12,023,330		12,047,722		12,191,191
Loans held for sale		—		24,515		—		24,515		24,515
Accrued interest receivable		42,977		—		—		42,977		42,977
Derivative financial instruments		—		15,579		—		15,579		15,579
Financial liabilities:
Deposits	$	—	$	—	$	15,352,024	$	15,352,024	$	15,360,516
Federal funds purchased		7,725		—		—		7,725		7,725
Securities sold under agreements to repurchase		650,235		—		—		650,235		650,235
Long-term debt		—		385,557		—		385,557		385,826
Accrued interest payable		4,353		—		—		4,353		4,353
Derivative financial instruments		—		15,006		—		15,006		15,006

5. Derivatives

Risk Management Objective of Using Derivatives

The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments, currently related to our variable rate borrowing. The Bank has also entered into interest rate derivative agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these customer derivatives in order to minimize the net risk exposure resulting from such agreements. The Bank also enters into risk participation agreements under which it may either sell or buy credit risk associated with a customer’s performance under certain interest rate derivative contracts related to loans in which participation interests have been sold to or purchased from other banks.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the notional amounts and fair values (in thousands) of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2014 and December 31, 2013.

33

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

5. Derivatives (continued)

Fair and Notional Values of Derivative Instruments

	Fair Values (1)
		Notional Amounts				Assets				Liabilities
(in thousands)	Type of Hedge	March 31, 2014		December 31, 2013		March 31, 2014		December 31, 2013		March 31, 2014		December 31, 2013
Derivatives not designated as hedging instruments:
Interest rate swaps (2)	N/A	$	742,649	$	650,667	$	14,571	$	14,147	$	14,670	$	13,777
Risk participation agreements	N/A		82,091		19,736		89		2		145		2
Forward commitments to sell residential mortgage loans	N/A		38,051		45,910		104		326		113		115
Interest rate-lock commitments on residential mortgage loans	N/A		27,431		25,956		39		56		95		107
Foreign exchange forward contracts	N/A		21,920		21,299		522		1,048		501		1,005
		$	912,142	$	763,568	$	15,325	$	15,579	$	15,524	$	15,006

(1) Derivative assets and liabilities are reported with other assets or other liabilities, respectively, in the consolidated balance sheets.

(2) The notional amount represents both the customer accommodation agreements and offsetting agreements with unrelated financial institutions.

Derivatives Not Designated as Hedges

Customer interest rate derivatives

The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking customers to facilitate their risk management strategies. The Bank simultaneously enters into offsetting agreements with unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings as part of other income.

Risk participation agreements

The Bank also enters into risk participation agreements under which it may either assume or sell credit risk associated with a borrower’s performance under certain interest rate derivative contracts. In those instances where the Bank has assumed credit risk, it is not a direct counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because it is a party to the related loan agreement with the borrower. In those instances in which the Bank has sold credit risk, it is the sole counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because other banks participate in the related loan agreement. The Bank manages its credit risk under risk participation agreements by monitoring the creditworthiness of the borrower, based on its normal credit review process.

Mortgage banking derivatives

The Bank also enters into certain derivative agreements as part of its mortgage banking activities. These agreements include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis.

34

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

5. Derivatives (continued)

Customer foreign exchange forward contract derivatives

The Bank enters into foreign exchange forward derivative agreements, primarily forward currency contracts, with commercial banking customers to facilitate its risk management strategies. The Bank manages its risk exposure from such transactions by entering into offsetting agreements with unrelated financial institutions. Because the foreign exchange forward contract derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings as part of other income.

Effect of Derivative Instruments on the Income Statement

The effect of the Company’s derivative financial instruments on the income statement was immaterial for the three month periods ended March 31, 2014 and 2013.

Credit-risk-related Contingent Features

Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in certain circumstances, such as the downgrade of the Bank’s credit ratings below specified levels, a default by the Bank on its indebtedness, or the failure of a Bank to maintain specified minimum regulatory capital ratios or its regulatory status as a well-capitalized institution. These derivative agreements also contain provisions regarding the posting of collateral by each party. As of March 31, 2014, the aggregate fair value of derivative instruments with credit-risk-related contingent features that were in a net liability position was $6.5 million, for which the Bank had posted collateral of $13.4 million.

35

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

5. Derivatives (continued)

Offsetting Assets and Liabilities

Offsetting information in regards to derivative assets and liabilities subject to master netting agreements at March 31, 2014 and December 31, 2013 is presented in the following tables (in thousands):

			Gross Amounts Offset in the		Net Amounts Presented in the		Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts Recognized		Statement of Financial Position		Statement of Financial Position		Financial Instruments		Cash Collateral		Net Amount
As of March 31, 2014
Derivative Assets	$	14,653	$	—	$	14,653	$	2,956	$	—	$	11,697
Total	$	14,653	$	—	$	14,653	$	2,956	$	—	$	11,697
Derivative Liabilities	$	14,808	$	—	$	14,808	$	2,956	$	13,430	$	(1,578	)
Total	$	14,808	$	—	$	14,808	$	2,956	$	13,430	$	(1,578	)
As of December 31, 2013
Derivative Assets	$	14,149	$	—	$	14,149	$	3,462	$	—	$	10,687
Total	$	14,149	$	—	$	14,149	$	3,462	$	—	$	10,687
Derivative Liabilities	$	13,779	$	—	$	13,779	$	3,462	$	7,406	$	2,911
Total	$	13,779	$	—	$	13,779	$	3,462	$	7,406	$	2,911

6. Stockholders’ Equity

Stock Repurchase Program

The Company’s board of directors approved a stock repurchase program on April 30, 2013 that authorizes the repurchase of up to 5% of the Company’s outstanding common stock.

On May 8, 2013 Hancock entered into an accelerated share repurchase (ASR) transaction with Morgan Stanley & Co. LLC (Morgan Stanley). In the ASR transaction, the Company paid $115 million to Morgan Stanley and received from them approximately 2.8 million shares of Hancock common stock, representing approximately 76% of the estimated total number of shares to be repurchased. On May 5, 2014, final settlement of the ASR agreement occurred at which time the Company received approximately 0.6 million shares from Morgan Stanley.

The number of shares delivered to the Company in this ASR transaction was based generally on the volume-weighted average price per share of the Hancock common stock during the term of the ASR agreement less a specified discount and on the amount paid at inception to Morgan Stanley, subject to certain adjustments in accordance with the terms of the ASR agreement. The ASR transaction was treated as two separate transactions: (i) the acquisition of treasury shares on the date the shares were received; and (ii) a forward contract indexed to the Company’s common stock that is classified as equity.

36

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

6. Stockholders’ Equity (continued)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) (AOCI) is reported as a component of stockholders’ equity. AOCI can include, among other items, unrealized holding gains and losses on securities available for sale (AFS), gains and losses associated with pension or other post retirement benefits that are not recognized immediately as a component of net periodic benefit cost, and gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges. The net unrealized gain on AFS securities reclassified as securities held to maturity (HTM) during 2012 and the net unrealized loss on AFS securities reclassified as securities held to maturity (HTM) during 2013 continue to be reported as a component of AOCI and will be amortized or accreted over the estimated remaining life of the securities as an adjustment to interest income. The components of AOCI are reported net of related tax effects.

The components of AOCI and changes in those components are presented in the following table (in thousands).

	Available for Sale Securities			HTM Securities Transferred from AFS			Employee Benefit Plans			Loss on Effective Cash Flow Hedges			Total
Balance, January 1, 2013	$	38,854		$	19,090		$	(80,688	)	$	(181	)	$	(22,925	)
Other comprehensive income before income taxes:
Net change in unrealized (loss) gain		(12,434	)		—			—			(4	)		(12,438	)
Transfer of net unrealized loss from AFS to HTM, net of cumulative tax effect		—			—			—			—			—
Reclassification of net (gains) losses realized and included in earnings		—			—			1,754			175			1,929
Amortization/accretion of unrealized net gain/loss on securities transferred to HTM		—			(2,984	)		—			—			(2,984	)
Income tax (benefit) expense		(4,586	)		(1,078	)		657			67			(4,940	)
Balance, March 31, 2013	$	31,006		$	17,184		$	(79,591	)	$	(77	)	$	(31,478	)
Balance, January 1, 2014	$	8,263		$	(21,189	)	$	(22,453	)	$	—		$	(35,379	)
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)		4,514			—			—			—			4,514
Transfer of net unrealized gain from AFS to HTM, net of cumulative tax effect		—			—			—			—			—
Reclassification of net (gains) losses realized and included in earnings					—			53			—			53
Amortization of unrealized net gain on securities transferred to HTM		—			665			—			—			665
Income tax expense		1,598			225			19			—			1,842
Balance, March 31, 2014	$	11,179		$	(20,749	)	$	(22,419	)	$	—		$	(31,989	)

37

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

6. Stockholders’ Equity (continued)

The following table shows the line items in the consolidated income statements affected by amounts reclassified from accumulated other comprehensive income:

Amount reclassified from AOCI	Three Months Ended March 31,					Increase (decrease) in affected line item
(in thousands)	2014		2013			on the income statement
Gains and losses on sale of AFS securities	$	—	$	—		Securities gains (losses)
Tax effect		—		—		Income taxes
Net of tax		—		—		Net income
Amortization/accretion of unrealized net gain/(loss) on securities transferred to HTM	$	665	$	(2,984	)	Interest income
Tax effect		225		(1,078	)	Income taxes
Net of tax		440		(1,906	)	Net income
Amortization of defined benefit pension and post-retirement items	$	53	$	1,754		(a) Employee benefits expense
Tax effect		19		657		Income taxes
Net of tax		34		1,097		Net income
Gains and losses on cash flow hedges	$	—	$	171		Interest expense
Tax effect		—		67		Income taxes
Net of tax		—		104		Net income
Total reclassifications, net of tax	$	474	$	(705	)	Net income

(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and post-retirement cost that is reported with employee benefits expense (see footnote 9 for additional details).

38

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

7. Earnings Per Share

Hancock calculates earnings per share using the two-class method. The two-class method allocates net income to each class of common stock and participating security according to common dividends declared and participation rights in undistributed earnings. Participating securities consist of unvested stock-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents.

A summary of the information used in the computation of earnings per common share follows (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2014		2013
Numerator:
Net income to common shareholders	$	49,115	$	48,576
Net income allocated to participating securities — basic and diluted		1,081		902
Net income allocated to common shareholders - basic and diluted	$	48,034	$	47,674
Denominator:
Weighted-average common shares - basic		82,277		84,871
Dilutive potential common shares		257		101
Weighted average common shares - diluted		82,534		84,972
Earnings per common share:
Basic	$	0.58	$	0.56
Diluted	$	0.58	$	0.56

Potential common shares consist of employee and director stock options. These potential common shares do not enter into the calculation of diluted earnings per share if the impact would be anti-dilutive, i.e., increase earnings per share or reduce a loss per share. Weighted-average anti-dilutive potential common shares totaled 689,958 for the three months ended March 31, 2014 and 1,107,790 for the three months ended March 31, 2013.

39

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

8. Share-Based Payment Arrangements

Hancock maintains incentive compensation plans that provide for awards of share-based compensation to employees and directors. These plans have been approved by the Company’s shareholders. Detailed descriptions of these plans were included in Note 13 to the consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2013.

A summary of option activity for the three months ended March 31, 2014 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, 2014		1,332,656		$	38.85
Exercised		(22,611	)		28.92
Forfeited or expired		(4,488	)		67.33
Outstanding at March 31, 2014		1,305,557		$	38.92		4.5	$	3,645
Exercisable at March 31, 2014		990,610		$	41.44		3.6	$	1,820

The total intrinsic value of options exercised during the three months ended March 31, 2014 and 2013 was $0.2 million and $0.1 million, respectively.

A summary of the status of the Company’s nonvested restricted and performance shares as of March 31, 2014 and changes during the three months ended March 31, 2014, is presented below. These restricted and performance shares are subject to service requirements.

	Number of Shares			Weighted- Average Grant-Date Fair Value ($)
Nonvested at January 1, 2014		1,981,820			$	31.75
Granted		71,382				38.11
Vested		(20,965	)			33.51
Forfeited		(17,682	)			31.38
Nonvested at March 31, 2014		2,014,555			$	31.96

40

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

8. Share-Based Payment Arrangements (continued)

As of March 31, 2014, there was $38.3 million of total unrecognized compensation expense related to nonvested restricted and performance shares expected to vest. This compensation is expected to be recognized in expense over a weighted-average period of 3.5 years. The total fair value of shares which vested during the three months ended March 31, 2014 and 2013 was $0.8 million and $0.5 million, respectively.

During the three months ended March 31, 2014, the Company granted 71,382 performance shares with a weighted average fair value of $38.11 per share to key members of executive and senior management. The number of 2014 performance shares that ultimately vest at the end of the three-year required service period will be based on the relative rank of Hancock’s three-year total shareholder return (TSR) among the TSRs of a peer group of fifty regional banks. The maximum number of performance shares that could vest is 200% of the target award. The fair value of the performance awards at the grant date was determined using a Monte Carlo simulation method. Compensation expense for these performance shares will be recognized on a straight-line basis over the service period.

9. Retirement Plans

The Company has a qualified defined benefit pension plan covering all eligible employees. Eligibility is based on minimum age and service-related requirements as well as job classification. Accrued benefits under a nonqualified plan covering certain legacy Whitney employees were frozen as of December 31, 2012 and no future benefits will be accrued under this plan.

The Company also sponsors defined benefit postretirement plans for both legacy Hancock and legacy Whitney employees that provide health care and life insurance benefits. Benefits under the Hancock plan are not available to employees hired on or after January 1, 2000. Benefits under the Whitney plan are restricted to retirees who were already receiving benefits at the time of plan amendments in 2007 or active participants who were eligible to receive benefits as of December 31, 2007.

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Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

9. Retirement Plans (continued)

The following table shows the components of net periodic benefits cost included in expense for the plans.

							Other Post-
	Pension Benefits						retirement Benefits
	Three Months Ended March 31,
	2014			2013			2014		2013
	(In thousands)
Service cost	$	3,425		$	3,929		$	37	$	55
Interest cost		4,809			3,944			338		330
Expected return on plan assets		(8,061	)		(6,263	)		—		—
Amortization of prior service cost		—			—			—		—
Amortization of net loss		8			1,745			157		38
Amortization of transition obligation					—					—
Net periodic benefit cost	$	181		$	3,355		$	532	$	423

Based on currently available information, Hancock does not anticipate making a contribution to the pension plan during 2014.

The Company also provides a defined contribution retirement benefit plan (401(k) plan). Under the plan, the Company matches 100% of the first 1% of compensation saved by a participant, and 50% of the next 5% of compensation saved.

10. Other Noninterest Income

Components of other noninterest income are as follows:

	Three Months Ended
	March 31,
(In thousands)	2014		2013
Income from bank owned life insurance	$	2,314	$	3,299
Credit related fees		2,732		1,441
Income from derivatives		759		631
Gain on sale of assets		1,682		314
Safety deposit box income		513		551
Other miscellaneous		2,427		2,232
Total noninterest income	$	10,427	$	8,468

42

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

11. Other Noninterest Expense

Components of other noninterest expense are as follows:

	Three Months Ended
	March 31,
(In thousands)	2014		2013
Advertising	$	1,759	$	2,177
Ad valorem and franchise taxes		2,661		2,202
Printing and supplies		1,329		1,309
Insurance expense		1,040		1,066
Travel expense		896		1,113
Entertainment and contributions		1,412		1,722
Tax credit investment amortization		2,172		1,426
Other miscellaneous		4,548		7,616
Total other noninterest expense	$	15,817	$	18,631

43

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

12. Segment Reporting

Prior to the close of business on March 31, 2014, Whitney Bank (headquartered in New Orleans, Louisiana) was merged into Hancock Bank (headquartered in Gulfport, Mississippi). The consolidated entity was renamed Whitney Bank. Whitney Bank does business under the brand names “Hancock Bank” in Mississippi, Alabama and Florida, and “Whitney Bank” in Louisiana and Texas. The Company’s reportable operating segments consist of the Hancock segment and the Whitney segment. Each segment offers commercial, consumer and mortgage loans and deposit services as well as certain other services, such as trust and treasury management services. Although the segments offer the same products and services, they are managed separately due to different pricing, product demand, and consumer markets. In addition, the “Other” column in the following tables includes activities of other consolidated subsidiaries which do not constitute reportable segments under the quantitative and aggregation accounting guidelines. These subsidiaries provide investment services, insurance agency services, consumer finance and various other services to third parties.

	Three Months Ended March 31, 2014
	Hancock			Whitney			Other			Eliminations			Consolidated
Interest income	$	66,657		$	104,229		$	5,372		$	(1,118	)	$	175,140
Interest expense		(5,041	)		(4,091	)		(1,451	)		1,005		$	(9,578	)
Net interest income		61,616			100,138			3,921			(113	)		165,562
Provision for loan losses		(5,962	)		(922	)		(1,079	)		—			(7,963	)
Noninterest income		14,404			32,736			9,559			—			56,699
Depreciation and amortization		(4,044	)		(3,536	)		(319	)		—			(7,899	)
Other noninterest expense		(47,857	)		(79,368	)		(11,858	)		—			(139,083	)
Income before income taxes		18,157			49,048			224			(113	)		67,316
Income tax expense		4,903			13,243			55			—			18,201
Net income	$	13,254		$	35,805		$	169		$	(113	)	$	49,115
Goodwill	$	94,130		$	527,063		$	4,482		$	—		$	625,675
Total assets	$	6,609,445		$	12,684,451		$	2,927,480		$	(3,217,206	)	$	19,004,170
Total interest income from affiliates	$	807		$	308		$	—		$	(1,115	)	$	—
Total interest income from external customers	$	65,850		$	103,921		$	5,372		$	(3	)	$	175,140

44

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

12. Segment Reporting (continued)

	Three Months Ended March 31, 2013
	Hancock			Whitney			Other			Eliminations			Consolidated
Interest income	$	62,813		$	117,799		$	5,867		$	(1,207	)	$	185,272
Interest expense		(4,943	)		(5,157	)		(2,249	)		1,092		$	(11,257	)
Net interest income		57,870			112,642			3,618			(115	)		174,015
Provision for loan losses		(5,422	)		(2,980	)		(1,176	)		—			(9,578	)
Noninterest income		18,411			30,794			10,995			(13	)		60,187
Depreciation and amortization		(3,698	)		(3,981	)		(282	)		—			(7,961	)
Other noninterest expense		(52,975	)		(86,863	)		(11,816	)		13			(151,641	)
Securitites transactions		—			—			—			—			—
Income before income taxes		14,186			49,612			1,339			(115	)		65,022
Income tax expense		2,690			12,943			813			—			16,446
Net income	$	11,496		$	36,669		$	526		$	(115	)	$	48,576
Goodwill	$	94,130		$	527,063		$	4,482		$	—		$	625,675
Total assets	$	6,380,941		$	12,696,705		$	2,884,581		$	(2,898,104	)	$	19,064,123
Total interest income from affiliates	$	992		$	215		$	—		$	(1,207	)	$	—
Total interest income from external customers	$	61,821		$	117,584		$	5,867		$	—		$	185,272

45

Hancock Holding Company and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

13. New Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) on reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure. The new ASU clarifies when an in substance repossession or foreclosure occurs – that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The new ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. The adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In July 2013, the (FASB) issued an ASU that applies to companies that have unrecognized tax benefits when net operating loss (NOL) or similar tax loss carryforwards or tax credit carryforwards exist at the reporting date. Under the updated guidance, an entity should present its unrecognized tax benefits net against the deferred tax assets for all same jurisdiction NOL or similar tax loss carryforwards, or tax credit carryforwards that are available to and would be used by the entity to settle additional income taxes resulting from disallowance of the uncertain tax position. The ASU was effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations.

In July 2013, the FASB issued an ASU to allow entities to use the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a U.S. benchmark interest rate for hedge accounting purposes. Previously, only the interest rates on direct Treasury obligations of the United States and the London Interbank Offered Rate swap rate were considered benchmark rates. The amendment also removed the restriction requiring entities to use the same benchmark rate for similar hedges. This ASU was effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations.

14. Subsequent Event

In April 2014, the Company sold its property and casualty and group benefits insurance intermediary business. The lines of business being divested represent approximately half of the Company’s 2013 insurance commissions and fees. An approximate $9.4 million gain was recorded on the sale based on a $15.5 million sales price less the related tangible and intangible assets.

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

OVERVIEW

Recent Economic and Industry Developments

Recent reports from the Federal Reserve point to continued improvement of economic activity throughout most of Hancock’s market area. Activity among energy-related businesses operating mainly in Hancock’s south Louisiana and Houston, Texas market areas remained strong with expectations of some further improvement over the coming months. The travel and tourism industry, which is important within several of the Company’s market areas, saw an increase in activity after a sluggish January. The outlook is positive over the next six months and the industry is expected to increase year-over-year. Retailers are showing improved sales over prior-year levels, but continue to express concern over increased healthcare premiums having an impact on personal discretionary income. Reports on manufacturing activity were generally positive, although the severe winter weather suppressed production earlier this year.

The real estate markets for residential properties were mixed. Sales of existing homes were soft, mainly due to higher home prices, limited inventory, and somewhat higher mortgage rates. Although the outlook for home sales has weakened since the last quarter, most brokers have indicated that they expect to see continued improvement over prior-year levels. New home sales and construction activity are ahead of prior-year levels and growing.

The commercial real estate market continues to improve, with growing demand for office and industrial space in certain market areas and continued high occupancy and rising rental rates for apartments throughout the region. Commercial construction activity has increased in these sectors. Continued improvement in the commercial real estate market is expected over the next several months.

The recovery of the overall U.S. economy continues; however, the rate of growth is not consistent across all regions, leading to slow and erratic overall improvement. National unemployment rates continue to decrease, but are still well above desired levels. Competition among financial services firms remains intense for high quality customers, continuing to exert downward pressure on loan pricing.

The Federal Reserve has responded to the slow and tenuous recovery from the deep recession by taking steps to hold interest rates at unprecedented low levels and has expressed its intent to maintain rates at these levels pending further improvement in the unemployment rate.

Highlights of First Quarter 2014 Financial Results

Net income in the first quarter of 2014 was $49.1 million, or $0.58 per diluted common share, compared to $34.7 million, or $0.41, in the fourth quarter of 2013. Net income was $48.6 million, or $0.56 per diluted common share, in the first quarter of 2013. Operating income for the first quarter of 2014 and the first quarter of 2013 was the same as net income, while operating income for the fourth quarter of 2013 was $45.8 million, or $0.55 per diluted share. The Company defines its operating income as net income excluding tax-effected securities transactions and one-time noninterest expense items. A reconciliation of net income to operating income is included in the later section on “Selected Financial Data.” Management believes that operating income provides a useful measure of financial performance that helps investors compare the Company’s fundamental operations over time.

As part of its ongoing planning process, management determined that certain areas of the Company needed to be right-sized or retooled in order to achieve our long-term profitability and efficiency targets. As a result, management announced an expense and efficiency initiative in early 2013 that is designed to reduce overall annual expense levels by $50 million as compared to annualized expenses for the first quarter of 2013. Management set a target for one-half of the expense reduction to be achieved by the first quarter of 2014 and the remainder by the fourth quarter of 2014. In addition to the expense reduction target, the Company also set a

47

longer-term sustainable efficiency ratio target of 57% - 59% for 2016. The Company achieved its first quarter 2014 expense target primarily as a result of the branch consolidation and sales, and is on track to achieve its remaining targets. In 2013, the Company completed the previously announced consolidation of 28 branch locations across its five-state footprint. The sales of 10 additional branches, which were also announced previously, were completed in the fourth quarter of 2013 and the first quarter of 2014. The branches sold were small retail locations with approximately $11 million in loans and $32 million in deposits. Certain one-time costs associated with the branch closures and other activities related to the expense and efficiency initiative were recognized in noninterest expense during the third and fourth quarters of 2013.

Prior to the close of business on March 31, 2014, Whitney Bank (headquartered in New Orleans, Louisiana) was merged into Hancock Bank (headquartered in Gulfport, Mississippi). The consolidated entity was renamed Whitney Bank. Whitney Bank does business under the brand names “Hancock Bank” in Mississippi, Alabama and Florida, and “Whitney Bank” in Louisiana and Texas.

Highlights of the Company’s first quarter of 2014 results:

• Continued improvement in the overall quality of earnings (replacing declining purchase accounting income with core results)

• Operating expenses declined $10.1 million linked-quarter, or 6%, exceeding the first quarter’s expense goal and achieving the targeted fourth quarter goal ahead of schedule

• Efficiency ratio improved to 62%; additional branch closures and the previously announced divestiture of selected insurance lines of business will fund revenue-generating projects that will contribute to achieving the efficiency ratio target for 2016 of 57%-59%

• Core net interest income (TE) was flat linked-quarter; core net interest margin (NIM) narrowed 3 basis points (bps) (we define our core results as reported results less the impact of net purchase accounting adjustments)

• Approximately $231 million linked-quarter net loan growth, or 8% annualized, and approximately $1.2 billion, or 11%, year-over-year loan growth (each excluding the FDIC-covered portfolio)

• Purchase accounting loan accretion declined $0.6 million; expect continuation of quarterly declines with accelerating declines in the second half of 2014

• Continued improvement in overall asset quality metrics

• Return on average assets (ROA) (operating) improved to 1.05% from 0.97% in the fourth quarter of 2013 and 1.03% in the first quarter a year ago

RESULTS OF OPERATIONS

Net Interest Income

Net interest income (taxable equivalent or “te”) for the first quarter of 2014 was $168.2 million, virtually unchanged from the fourth quarter of 2013. Average earnings assets were $16.7 billion in the first quarter of 2014, a $364 million (2%) increase from the fourth quarter of 2013, as average loans were up $476 million (4%). Net interest income (te) for the first quarter of 2014 was down $8.5 million (5%) compared to the first quarter of 2013, primarily due to a reduced level of total purchase-accounting loan accretion in the first quarter of 2014. For internal analytical purposes, management adjusts net interest income to a taxable equivalent basis using a 35% federal tax rate on tax exempt items (primarily interest on municipal securities and loans).

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The net interest margin was 4.06% for the first quarter of 2014, down 3 bps from the fourth quarter of 2013, and down 26 bps from the first quarter of 2013. The current quarter’s core margin of 3.37% (reported net interest income (te) excluding total net purchase accounting adjustments, annualized, as a percent of average earning assets) compressed 3 bps compared to the fourth quarter of 2013 and 4 bps compared to the first quarter of 2013. The continued decline in the core loan yield was partially offset by the favorable impact of net loan growth on the earning asset mix and an improvement in the yield on investment securities. A reconciliation of the reported and core margins is presented below.

The overall reported yield on earning assets was 4.29% in the first quarter of 2014, a decrease of 3 bps from the fourth quarter of 2013 and a decrease of 31 bps from the first quarter of 2013. The reported loan portfolio yield of 5.00% for the current quarter was down 10 bps from the fourth quarter of 2013 and 83 bps from the first quarter of 2013. Excluding purchase-accounting accretion, the core loan yield of 4.02% in the current quarter was down 7 bps from the fourth quarter of 2013 and 38 bps from a year earlier. Partially offsetting the decrease in loan yields, the yield on the security portfolio yield was 2.47% for the first quarter of 2014, an increase of 4 bps from the fourth quarter of 2013 and 30 bps over the first quarter of 2013. This increase primarily resulted from decreased discount amortization primarily due to a reduced level of security prepayments.

The overall cost of funding earning assets was 0.23% in the first quarter of 2014, unchanged from the fourth quarter of 2013 and down 5 bps from the first quarter of 2013. The mix of funding sources improved in the first quarter of 2014 compared to the first quarter of 2013. Interest-free sources, including noninterest-bearing demand deposits, funded 34.6% of earning assets in the current period, up from 32.4% a year ago. The overall rate paid on interest-bearing deposits was 0.22% in the current quarter, down slightly from the fourth quarter of 2013 and 5 bps below the first quarter of 2013. The decreases were primarily due to the impact of the sustained low rate environment on overall deposit rates including the re-pricing of time deposits.

The following tables detail the components of our net interest income and net interest margin and provide a reconciliation of the Company’s core net interest margin to its reported margin.

49

	Three Months Ended
	March 31, 2014							December 31, 2013							March 31, 2013
(dollars in millions)	Volume		Interest		Rate			Volume		Interest		Rate			Volume		Interest		Rate
Average earning assets
Commercial & real estate loans (te) (a) (b)	$	9,095.7	$	107.9		4.81	%	$	8,629.0	$	104.2		4.79	%	$	8,281.2	$	113.3		5.54	%
Mortgage loans		1,720.6		21.3		4.96			1,701.1		23.5		5.52			1,592.7		25.3		6.36
Consumer loans		1,563.1		23.1		6.00			1,573.4		24.4		6.15			1,618.9		26.5		6.64
Loan fees & late charges		—		0.8					—		1.0					—		0.6
Total loans (te)		12,379.4		153.1		5.00			11,903.5		153.1		5.10			11,492.8		165.7		5.83
Loans held for sale		19.2		0.2		4.06			18.8		0.1		2.28			37.1		0.4		3.91
US Treasury and agency securities		93.5		0.5		2.25			100.2		0.6		2.22			5.6		—		1.22
Mortgage-backed securities and CMOs		3,612.8		21.2		2.34			3,725.4		21.6		2.32			3,698.4		18.7		2.02
Municipals (te)		217.0		2.5		4.56			235.8		2.4		4.14			217.0		2.6		4.71
Other securities		12.3		0.1		3.86			9.3		0.1		2.48			8.3		—		1.96
Total securities (te) (c)		3,935.6		24.3		2.47			4,070.7		24.7		2.43			3,929.3		21.3		2.17
Total short-term investments		406.2		0.2		0.23			383.6		0.2		0.23			1,058.5		0.6		0.25
Average earning assets (te)	$	16,740.4	$	177.8		4.29	%	$	16,376.6	$	178.1		4.32	%	$	16,517.7	$	188.0		4.60	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	6,072.1	$	1.5		0.10	%	$	5,981.1	$	1.4		0.09	%	$	5,982.3	$	1.7		0.11	%
Time deposits		2,170.4		3.1		0.58			2,197.5		3.3		0.60			2,406.8		4.1		0.69
Public funds		1,526.6		0.8		0.20			1,253.2		0.7		0.21			1,608.9		1.0		0.25
Total interest-bearing deposits		9,769.1		5.4		0.22			9,431.8		5.4		0.23			9,998.0		6.8		0.27
Short-term borrowings		785.1		1.0		0.54			848.9		1.1		0.51			763.7		1.3		0.69
Long-term debt		386.0		3.2		3.34			381.6		3.1		3.27			396.4		3.2		3.28
Total interest-bearing liabilities		10,940.2		9.6		0.36	%		10,662.3		9.6		0.36	%		11,158.1		11.3		0.41	%
Net interest-free funding sources		5,800.2							5,714.3							5,359.6
Total Cost of Funds	$	16,740.4	$	9.6		0.23	%	$	16,376.6	$	9.6		0.23	%	$	16,517.7	$	11.3		0.28	%
Net Interest Spread (te)			$	168.2		3.93	%			$	168.5		3.96	%			$	176.7		4.19	%
Net Interest Margin	$	16,740.4	$	168.2		4.06	%	$	16,376.6	$	168.5		4.09	%	$	16,517.7	$	176.7		4.32	%

(a) Tax equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.

(b) Includes nonaccrual loans

(c) Average securities does not include unrealized holding gains/losses on available for sale securities.

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Reconciliation of Reported Net Interest Margin to Core Margin

	Three Months Ended
	March 31,			December 31,			March 31,
(dollars in millions)	2014			2013			2013
Net interest income (te)		$168.2			$168.5			$176.7
Purchase accounting adjustments
Loan accretion		29.7			30.2			40.2
Whitney premium bond amortization		(1.5	)		(1.8	)		(3.5	)
Whitney and Peoples First CD accretion		0.1			0.1			0.3
Total net purchase accounting adjustments		28.3			28.5			37.0
Net interest income (te) - core		$139.9			$140.0			$139.7
Average earning assets	$	16,740.4			$16,376.6		$	16,517.7
Net interest margin - reported		4.06	%		4.09	%		4.32	%
Net purchase accounting adjustments (%)		0.69	%		0.69	%		0.91	%
Net interest margin - core		3.37	%		3.40	%		3.41	%

Provision for Loan Losses

During the first quarter of 2014, Hancock recorded a total provision for loan losses of $8.0 million, up from $7.3 million in the fourth quarter of 2013. The provision for non-covered loans was $8.3 million in the first quarter of 2014, compared to $7.9 million in the fourth quarter of 2013. The net provision for the covered portfolio was a credit of $0.3 million for the first quarter of 2014 compared to a credit of $0.5 million for the fourth quarter of 2013. The net provision for the covered portfolio was $6.6 million for the first quarter of 2013. The decrease in the provision year-over-year was caused by reductions in the estimates on future losses within the covered portfolio.

The section below on “Allowance for Loan Losses and Asset Quality” provides additional information on changes in the allowance for loans losses and general credit quality. Certain differences in the determination of the allowance for loan losses for originated loans and for acquired-performing loans and acquired-impaired loans (which includes all covered loans) are described in Note 4 to the consolidated financial statements in the Form 10-K.

Noninterest Income

Noninterest income totaled $56.7 million for the first quarter of 2014, down $2.3 million (4%) from the fourth quarter of 2013, and down $3.5 million (6%) from the first quarter of 2013. Excluding the effect of the amortization of the FDIC loss share receivable, noninterest income was virtually flat compared to the prior quarter and up $0.4 million compared to the first quarter of 2013.

Service charges on deposits totaled $18.7 million for the first quarter of 2014, down $0.9 million (5%) from the fourth quarter of 2014, and down $0.3 million (2%) from the first quarter of 2013. Bank card and ATM fees totaled $10.6 million in the first quarter of 2014, down $0.7 million (6%) from the fourth quarter of 2013. Compared to the first quarter of 2013, bank card and ATM fees were down $0.5 million (4%) in the current year. A portion of these decreases compared to the prior quarter is due to two fewer business days in the current quarter.

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Trust, investment and annuity and insurance fees totaled $18.9 million, up $0.8 million (4%) from the fourth quarter of 2013 and up $1.7 million (10%) from the first quarter of 2013. Improving stock market values and new business were primary factors in the increases. Included in this total was $3.7 million of insurance revenue. Hancock announced on April 1, 2014 the divestiture of selected insurance business lines, which contributed approximately half of first quarter insurance revenues.

Fees from secondary mortgage operations totaled $2.0 million for the first quarter of 2014, a $0.4 million (27%) increase over the fourth quarter of 2013, but down $2.4 million (55%) from first quarter of 2013. The increase compared to the prior quarter reflects a higher level of loans sold during the quarter. The decline compared to the same quarter in 2013 reflects reduced loan sales as a result of an overall slowing of mortgage refinancing.

Gains on the sale of assets increased over $1.0 million compared both to the prior quarter and to the first quarter of 2013. Included in this increase was the deposit premium related to the sale of three branches in the first quarter of 2014.

Amortization on the FDIC loss share receivable totaled $3.9 million in the first quarter of 2014 compared to $1.6 million in the fourth quarter of 2013 year. These amounts reflect a reduction in the amount of expected reimbursements under the loss sharing agreements due to lower loss projections for the related covered loan pools. Higher levels of amortization of the loss share receivable are anticipated in 2014 as projected losses from the covered portfolio have decreased.

The components of noninterest income are presented in the following table for the indicated periods:

	Three Months Ended
	March 31,			December 31,			March 31,
	2014			2013			2013
(In thousands)
Service charges on deposit accounts	$	18,712			$ 19,605		$	19,015
Trust fees		10,238			10,214			8,692
Bank card and ATM fees		10,569			11,261			11,058
Investment and annuity fees		4,952			4,619			4,577
Secondary mortgage market operations		1,965			1,554			4,383
Insurance commissions and fees		3,744			3,304			3,994
Amortization of FDIC loss share receivable		(3,908	)		(1,649	)		—
Income from bank owned life insurance		2,314			2,459			3,299
Credit related fees		2,732			2,755			1,441
Income from derivatives		759			1,379			631
Gain on sale of assets		1,682			655			314
Safety deposit box income		513			443			551
Other miscellaneous		2,427			2,295			2,232
Securities transactions		—			105			—
Total noninterest income	$	56,699			$ 58,999		$	60,187

52

Noninterest Expense

Noninterest expense for the first quarter of 2014 totaled $147.0 million. Noninterest expense totaled $174.2 million in the fourth quarter of 2013, including $17.1 million of one-time expenses related to the expense and efficiency initiative. Excluding these costs, noninterest expense totaled $157.1 million in the fourth quarter of 2013, $10.1 million (6%) more than the current quarter. Noninterest expense in the first quarter of 2013 totaled $159.6 million. The decreases are primarily related to cost savings related to Hancock’s expense and efficiency initiative.

Total personnel expense was $81.4 million in the first quarter of 2014, down $3.5 million (4%) from the fourth quarter of 2013 excluding one-time expenses, and down $6.5 million (7%) compared to the first quarter of 2013. Occupancy and equipment expenses totaled $15.5 million in the first quarter of 2014. This total is down $0.8 million (5%) from the fourth quarter of 2013 and down $2.1 million (12%) from the first quarter of 2013. The reductions in personnel, occupancy and equipment expenses reflect the effect of the closure or sales of several branches during 2013 and the first quarter of 2014 and other expense and efficiency initiatives as management continually looks to rationalize the branch network.

All other expenses, excluding amortization of intangibles, totaled $43.0 million in the first quarter of 2014, $5.7 million (12%) less than the fourth quarter of 2013 (excluding one-time expenses), and $3.5 million (8%) less than the first quarter of 2013. Major components of these decreases were reductions in advertising and professional services.

The components of noninterest expense are presented in the following table for the indicated periods:

	Three Months Ended
	March 31,			December 31,		March 31,
	2014			2013		2013
(In thousands)
Compensation expense	$	67,165			$  69,128	$	71,351
Employee benefits		14,267			15,784		16,576
Personnel expense		81,432			84,912		87,927
Net occupancy expense		11,266			11,613		12,326
Equipment expense		4,274			4,679		5,301
Data processing expense		12,419			12,018		11,534
Professional services expense		6,409			8,727		7,946
Amortization of intangibles		7,038			7,178		7,555
Telecommunications and postage		3,583			3,948		4,028
Deposit insurance and regulatory fees		2,967			3,279		3,646
Other real estate owned expense, net		1,777			1,535		708
Advertising		1,759			3,098		2,177
Ad valorem and franchise taxes		2,661			2,534		2,202
Printing and supplies		1,329			1,149		1,309
Insurance expense		1,040			1,076		1,066
Travel		896			1,197		1,113
Entertainment and contributions		1,412			1,305		1,722
Tax credit investment amortization		2,172			3,228		1,426
One-time expenses		—			17,116		—
Other expense		4,548	��		5,621		7,616
Total noninterest expense	$	146,982			$174,213	$	159,602

One-time expenses in the fourth quarter of 2013 included $6.7 million in personnel expenses, $3.1 million in professional services and $7.3 million in other miscellaneous expenses related to branch closures.

53

Income Taxes

The effective income tax rate for the first quarter of 2014 was approximately 27%, compared to 20% for the fourth quarter of 2013, and 25% for the first quarter of 2013. Management expects the annual effective tax rate to approximate 26% to 27% in 2014.

The Company’s effective tax rates have varied from the 35% federal statutory rate primarily because of tax-exempt income and the availability of tax credits. Interest income from the financing of state and local governments and earnings from the bank-owned life insurance program are the major components of tax-exempt income. The source of the tax credits for 2014 and 2013 has been investments that generate new market tax credits, low-income housing credits and qualified bond credits.

Selected Financial Data

The following tables contain selected financial data as of the dates and for the periods indicated.

	Three Months Ended
	March 31,		December 31,		March 31,
	2014		2013		2013
Common Share Data
Earnings per share:
Basic		$0.58		$0.41		$0.56
Diluted		0.58		0.41		0.56
Operating earnings per share: (a)
Basic		0.58		0.55		0.56
Diluted		0.58		0.55		0.56
Cash dividends per share		0.24		0.24		0.24
Book value per share (period-end)		29.93		29.49		29.18
Tangible book value per share (period-end)		20.47		19.94		19.67
Weighted average number of shares (000s):
Basic		82,277		82,085		84,871
Diluted		82,534		82,220		84,972
Period-end number of shares (000s)		82,282		82,237		84,882
Market data:
High price		$38.50		$37.12		$33.59
Low price		$32.66		$30.09		$29.37
Period-end closing price		$36.65		$36.68		$30.92
Trading volume (000s) (b)		31,328		27,816		29,469

(a) Excludes tax-effected securities transactions and one-time noninterest expense items. Management believes that this is a useful financial measure that helps investors compare the Company’s fundamental operations over time.

(b) Trading volume is based on the total volume as determined by NASDAQ on the last day of the quarter.

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	Three Months Ended
	March 31,		December 31,		March 31,
	2014		2013		2013
(in thousands)
Income Statement:
Interest income	$	175,140		$175,650	$	185,272
Interest income (TE)		177,776		178,109		187,998
Interest expense		9,578		9,643		11,257
Net interest income (TE)		168,198		168,466		176,741
Provision for loan losses		7,963		7,331		9,578
Noninterest income excluding securities transactions		56,699		58,894		60,187
Securities transactions gains		—		105		—
Noninterest expense		146,982		174,213		159,602
Income before income taxes		67,316		43,462		65,022
Income tax expense		18,201		8,746		16,446
Net income	$	49,115		$  34,716	$	48,576
Securities transactions		—		105		—
One-time noninterest expense items:
Costs associated with efficiency initiative and other items		—		17,116		—
Total one-time noninterest expense items		—		17,116		—
Taxes on adjustments		—		5,954		—
Total adjustments, net of tax		—		11,057		—
Operating income (a)	$	49,115		$  45,773	$	48,576

(a) Net income less tax-effected securities gains/losses and one-time noninterest expense items. Management believes that this is a useful financial measure that helps investors compare the Company’s fundamental operations over time.

(b) For internal analytical purposes, management adjusts net interest income to a “taxable equivalent” basis using a 35% federal tax rate on tax exempt items (primarily interest on municipal securities and loans).

55

	Three Months Ended
	March 31,			December 31,			March 31,
	2014			2013			2013
Performance Ratios
Return on average assets		1.05	%		0.74	%		1.03	%
Return on average assets (operating) (a)		1.05	%		0.97	%		1.03	%
Return on average common equity		8.18	%		5.85	%		8.05	%
Return on average common equity (operating) (a)		8.18	%		7.71	%		8.05	%
Tangible common equity ratio		9.24	%		9.00	%		9.14	%
Earning asset yield (TE)		4.29	%		4.32	%		4.60	%
Total cost of funds		0.23	%		0.23	%		0.28	%
Net interest margin (TE)		4.06	%		4.09	%		4.32	%
Efficiency ratio (b)		62.23	%		65.94	%		64.17	%
Allowance for loan losses to period-end loans		1.02	%		1.08	%		1.20	%
Allowance for loan losses to non-performing loans + accruing loans 90 days past due		112.64	%		111.97	%		87.34	%
Average loan/deposit ratio		81.20	%		79.93	%		75.30	%
Noninterest income excluding securities transactions to total revenue (TE)		25.21	%		25.90	%		25.40	%

(a) Excludes tax-effected securities transactions and one-time noninterest expense items. Management believes that this is a useful financial measure that helps investors compare the Company’s fundamental operations over time.

(b) Efficiency ratio is defined as noninterest expense as a percent of total revenue (TE) before amortization of purchased intangibles, one-time expense items and securities transactions.

	Three Months Ended
	March 31,			December 31,			March 31,
	2014			2013			2013
Asset Quality Information
Non-accrual loans (a)	$	85,348		$	84,011		$	115,289
Restructured loans (b)		24,511			24,947			34,390
Total non-performing loans		109,859			108,958			149,679
Other real estate (ORE) and foreclosed assets		69,813			76,979			79,627
Total non-performing assets		179,672			185,937			229,306
Non-performing assets to loans, ORE and foreclosed assets		1.43	%		1.50	%		1.98	%
Accruing loans 90 days past due (a)	$	3,998		$	10,387		$	8,076
Accruing loans 90 days past due to loans		0.03	%		0.08	%		0.07	%
Non-performing assets + accruing loans 90 days past due to loans, ORE and foreclosed assets		1.46	%		1.58	%		2.05	%
Net charge-offs - non-covered	$	3,978		$	5,216		$	6,633
Net charge-offs - covered		2,510			(3,399	)		3,222
Net charge-offs - non-covered to average loans		0.13	%		0.17	%		0.23	%
Allowance for loan losses	$	128,248		$	133,626		$	137,777
Allowance for loan losses to period-end loans		1.02	%		1.08	%		1.20	%
Allowance for loan losses to non-performing loans + accruing loans 90 days past due		112.64	%		111.97	%		87.34	%
Provision for loan losses	$	7,963		$	7,331		$	9,578

(a) Non-accrual loans and accruing loans past due 90 days or more do not include acquired credit-impaired loans which were written down to fair value upon acquisition and accrete interest income over the remaining life of the loan. Nonaccrual restructured loans are reported in the total for restructured loans. See note (b) below.

(b) Included in restructured loans are $16.1 million, $15.7 million, and $21.1 million in non-accrual loans at 3/31/14, 12/31/13, and 3/31/13, respectively. Total excludes acquired credit-impaired loans.

56

Supplemental Asset Quality Information	Originated		Acquired (a)			Covered (a) (b)			Total
	March 31, 2014
Non-accrual loans	$	63,348	$	18,626		$	3,374		$	85,348
Restructured loans		20,590		3,921			—			24,511
Total non-performing loans		83,938		22,547			3,374			109,859
ORE and foreclosed assets (c)		45,386		—			24,427			69,813
Total non-performing assets		129,324		22,547			27,801			179,672
Accruing loans 90 days past due		2,543		1,455			—			3,998
Allowance for loan losses		79,560		5,259			43,429			128,248
	December 31, 2013
Non-accrual loans	$	61,887	$	18,580		$	3,544		$	84,011
Restructured loans		21,222		3,725			—			24,947
Total non-performing loans		83,109		22,305			3,544			108,958
ORE and foreclosed assets		51,240		—			25,739			76,979
Total non-performing assets		134,349		22,305			29,283			185,937
Accruing loans 90 days past due		3,298		7,089			—			10,387
Allowance for loan losses		78,885		1,647			53,094			133,626
Loans Outstanding	Originated		Acquired (a)			Covered (a) (b)			Total
	March 31, 2014
Commercial non-real estate loans	$	4,353,549	$	830,211		$	14,269		$	5,198,029
Construction and land development loans		824,837		134,443			19,518			978,798
Commercial real estate loans		2,110,096		907,170			52,050			3,069,316
Residential mortgage loans		1,228,170		293,111			199,026			1,720,307
Consumer loans		1,407,712		107,501			46,274			1,561,487
Total loans		9,924,364		2,272,436			331,137			12,527,937
Change in loan balance from previous quarter		430,232		(199,583	)		(27,530	)		203,120
	December 31, 2013
Commercial non-real estate loans	$	4,113,837	$	926,997		$	23,390		$	5,064,224
Construction and land development loans		752,381		142,931			20,229			915,541
Commercial real estate loans		2,022,528		967,148			53,165			3,042,841
Residential mortgage loans		1,196,256		315,340			209,018			1,720,614
Consumer loans		1,409,130		119,603			52,864			1,581,597
Total loans		9,494,132		2,472,019			358,666			12,324,817
Change in loan balance from previous quarter		793,365		(169,684	)		(33,336	)		590,345

(a) Acquired and covered loans are subject to purchase accounting guidance as described in note 4 to the condensed consolidated financial statements.

(b) Acquired loans which are covered by loss sharing agreements with the FDIC providing considerable protection against credit risk.

(c) ORE received in settlement of acquired loans is no longer subject to purchase accounting guidance and has been included with ORE from originated loans. ORE received in settlement of covered loans remains covered under the FDIC loss share agreements.

57

	Three Months Ended
	March 31,			December 31,			March 31,
	2014			2013			2013
Period-end Balance Sheet
Total loans, net of unearned income	$	12,527,937		$	12,324,817		$	11,482,762
Loans held for sale		15,911			24,515			34,813
Securities		3,797,883			4,033,124			4,662,279
Short-term investments		280,373			268,839			475,677
Earning assets		16,622,104			16,651,295			16,655,531
Allowance for loan losses		(128,248	)		(133,626	)		(137,777	)
Goodwill		625,675			625,675			625,675
Other intangible assets, net		152,734			159,773			181,853
Other assets		1,731,905			1,706,134			1,738,841
Total assets	$	19,004,170		$	19,009,251		$	19,064,123
Noninterest bearing deposits	$	5,613,872		$	5,530,253		$	5,418,463
Interest bearing transaction and savings deposits		6,118,150			6,162,959			6,017,735
Interest bearing public funds deposits		1,451,430			1,571,532			1,528,790
Time deposits		2,091,322			2,095,772			2,288,363
Total interest bearing deposits		9,660,902			9,830,263			9,834,888
Total deposits		15,274,774			15,360,516			15,253,351
Short-term borrowings		712,634			657,960			722,537
Long-term debt		380,001			385,826			393,920
Other liabilities		174,227			179,880			217,215
Stockholders’ equity		2,462,534			2,425,069			2,477,100
Total liabilities & stockholders’ equity	$	19,004,170		$	19,009,251		$	19,064,123
	Three Months Ended
	March 31,			December 31,			March 31,
	2014			2013			2013
Average Balance Sheet
Total loans, net of unearned income	$	12,379,316		$	11,903,603			11,492,837
Loans held for sale		19,207			18,776			37,091
Securities (a)		3,935,616			4,070,657			3,929,255
Short-term investments		406,214			383,551			1,058,519
Earning assets		16,740,353			16,376,587			16,517,702
Allowance for loan losses		(134,670	)		(138,708	)		(137,110	)
Goodwill and other intangible assets		781,434			788,990			811,213
Other assets		1,667,990			1,712,222			1,960,846
Total assets	$	19,055,107		$	18,739,091		$	19,152,651
Noninterest bearing deposits	$	5,499,993		$	5,483,918			5,314,648
Interest bearing transaction and savings deposits		6,072,113			5,981,110			5,982,345
Interest bearing public fund deposits		1,526,611			1,253,199			1,608,925
Time deposits		2,170,426			2,197,450			2,406,772
Total interest bearing deposits		9,769,150			9,431,759			9,998,042
Total deposits		15,269,143			14,915,677			15,312,690
Short-term borrowings		785,063			848,934			763,696
Long-term debt		386,026			381,561			396,414
Other liabilities		178,895			237,151			231,841
Stockholders’ equity		2,435,980			2,355,768			2,448,010
Total liabilities & stockholders’ equity	$	19,055,107		$	18,739,091		$	19,152,651

(a) Average securities does not include unrealized holding gains/losses on available for sale securities.

58

LIQUIDITY

Liquidity management is focused on ensuring that funds are available to meet the cash flow requirements of our depositors and borrowers, while also meeting the operating, capital and strategic cash flow needs of the Company, the Bank and other subsidiaries. Hancock develops its liquidity management strategies and measures and monitors liquidity risk as part of its overall asset/liability management process.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities and repayments of investment securities and occasional sales of various assets. Short-term investments such as federal funds sold, securities purchased under agreements to resell and interest-bearing deposits with the Federal Reserve Bank or with other commercial banks are additional sources of liquidity to meet cash flow requirements. As shown in the table below, our ratio of free securities to total securities was 21% at March 31, 2014, compared to 22% at December 31, 2013 and 41% at March 31, 2013. Free securities represent securities that are not pledged for any purpose, and include unpledged securities assigned to short-term dealer repo agreements or to the Federal Reserve Bank discount window. As discussed later, the Company redeployed approximately $1.0 billion of excess short-term liquidity investments from the end of 2012 into the securities portfolio during the latter part of the first quarter of 2013. Beginning in the last half of 2013, the Company has been funding loan growth from maturities and payoffs of the investment securities portfolio.

Liquidity Metrics	March 31,			December 31,			March 31,
	2014			2013			2013
Free securities / total securities*		21.00	%		22.00	%		41.00	%
Noncore deposits / total deposits		8.67	%		8.33	%		8.47	%
Wholesale funds / core deposits		7.83	%		7.41	%		8.00	%

* total debt securities, excluding fair value adjustments

The liability portion of the balance sheet provides liquidity mainly through various customers’ interest-bearing and noninterest-bearing deposit and sweep accounts. Core deposits consist of total deposits less certificates of deposits (CDs) of $100,000 or more, brokered CDs, and balances in sweep time deposit products used by commercial customers. Periodically, as part of its contingency funding plan, the Company issues brokered CDs through third-party intermediaries. Brokered CDs outstanding at March 31, 2014 totaled $98 million, compared to $60 million at December 31, 2013.

Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings are additional sources of liquidity to meet short-term funding requirements. Wholesale funds, which are comprised of short-term borrowings and long-term debt, were 7.83% of core deposits at March 31, 2014. See the discussion of “Deposits” for more information. Besides funding from customer sources, our short-term borrowing capacity includes an approved line of credit with the Federal Home Loan Bank of $2.8 billion and borrowing capacity at the Federal Reserve’s discount window in excess of $0.5 billion at March 31, 2014. No amounts had been borrowed under these lines at March 31, 2014 or year-end 2013.

Cash generated from operations is another important source of funds to meet liquidity needs. The consolidated statements of cash flows present operating cash flows and summarize all significant sources and uses of funds for the three months ended March 31, 2014 and 2013.

59

Dividends received from the Bank has been the primary source of funds available to the Company for the payment of dividends to our stockholders and for servicing debt issued by the holding company. The liquidity management process takes into account the various regulatory provisions that can limit the amount of dividends the Bank can distribute to the Company. It is the Company’s policy to maintain assets at the holding company to provide liquidity sufficient to fund five quarters of anticipated stockholder dividends, debt service and operations.

CAPITAL RESOURCES

Stockholders’ equity totaled $2.5 billion at March 31, 2014, up $37 million from December 31, 2013. The tangible common equity ratio increased to 9.24% at March 31, 2014 from 9.00% at December 31, 2013.

The primary quantitative measures that regulators use to gauge capital adequacy are the ratios of total and Tier 1 regulatory capital to risk-weighted assets (risk-based capital ratios) and the ratio of Tier 1 capital to average total assets (leverage ratio). Both the Company and its bank subsidiary are currently required to maintain minimumrisk-based capital ratios of 8.0% total regulatory capital and 4.0% Tier 1 capital. The minimum leverage ratio is 3.0% for bank holding companies and banks that meet certain specified criteria, including having the highest supervisory rating. All others are required to maintain a leverage ratio of at least 4.0%.

On July 2, 2013 the Federal Reserve Board finalized its rule implementing the Basel III regulatory capital framework and related Dodd-Frank Act changes. The interim final rule strengthens the definition of regulatory capital, increases risk-based capital requirements, and makes selected changes to the calculation of risk-weighted assets. The rule sets the Basel III minimum regulatory capital requirements for all organizations. It includes a new common equity Tier 1 ratio of 4.5% of risk-weighted assets, raises the minimum Tier 1 capital ratio from 4% to 6% of risk-weighted assets and sets a new conservation buffer of 2.5% of risk-weighted assets. The final rule is effective for the Company on January 1, 2015; however, the rule allows for transition periods for certain changes, including the conservation buffer. Based on estimated capital ratios using Basel III definitions, the Company and the Bank currently exceed all capital requirements of the new rule, including the fully phased-in conservation buffer.

At March 31, 2014, the regulatory capital ratios of the Company and the Bank were well in excess of current regulatory minimum requirements, as indicated in the table below. The Company and the Bank have been categorized as “well capitalized” in the most recent notices received from our regulators. Regulatory capital ratios for the Company and the Bank increased from December 31, 2013 to March 31, 2014 as the Company’s net income exceeded dividends.

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	March 31,			December 31,
	2014			2013
Regulatory ratios:
Total capital (to risk weighted assets)
Hancock Holding Company		13.20	%		13.11	%
Whitney Bank		13.02	%		12.98	%*
Tier 1 capital (to risk weighted assets)
Hancock Holding Company		11.90	%		11.76	%
Whitney Bank		11.72	%		11.64	%*
Tier 1 leverage capital
Hancock Holding Company		9.43	%		9.34	%
Whitney Bank		9.32	%		9.29	%*

* Restated to give effect to merger of Hancock Bank and Whitney Bank

(1) Tier 1 capital generally includes common equity, retained earnings, non-controlling interest in equity of consolidated subsidiaries and a limited amount of qualifying perpetual preferred stock, reduced by goodwill and other disallowed intangibles and disallowed deferred tax assets and certain other assets. Total capital consists of Tier 1 capital plus perpetual preferred stock not qualifying as Tier 1 capital, mandatory convertible securities, certain types of subordinated debt and a limited amount of allowances for credit losses.

(2) The risk-weighted asset base is equal to the sum of the aggregate value of assets and credit-converted off-balance sheet items in each risk category as specified in regulatory guidelines, multiplied by the weight assigned by the guidelines to that category.

(3) The Tier 1 leverage capital ratio is Tier 1 capital divided by average total assets reduced by the deductions for Tier 1 capital noted above.

BALANCE SHEET ANALYSIS

Securities

Investment in securities totaled $3.8 billion at March 31, 2014, down $235 million (6%) from the end of December 2013, and down $864 million (19%) from March 31, 2013. During the first quarter of 2014, funds from repayments and maturities in the securities portfolio were used primarily to support loan growth. At March 31, 2014, securities available for sale totaled $1.4 billion and securities held to maturity totaled $2.4 billion.

Our securities portfolio consists mainly of residential mortgage-backed securities and collateralized mortgage obligations issued or guaranteed by U.S. government agencies. The portfolio is designed to enhance liquidity while providing an acceptable rate of return. We invest only in high quality securities of investment grade quality with a targeted duration, for the overall portfolio, generally between two to five. At March 31, 2014, the average maturity of the portfolio was 4.63 years with an effective duration of 3.81 and a weighted-average yield of 2.31%. The effective duration increases to 4.16 with a 100 basis point increase in the yield curve and to 4.45 with a 200 basis point increase. At year-end 2013, the average maturity of the portfolio was 3.97 years with an effective duration of 3.93 and a weighted-average yield of 2.28%.

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Loans

Total loans at March 31, 2014 were $12.5 billion, up $203 million from December 31, 2013 and up $1 billion (9%) from March 31, 2013. Excluding the FDIC-covered portfolio, which has declined almost $28 million during the first three months of 2014, total loans increased $231 million (2%) compared to year-end 2013. The non-covered loan portfolio was up $1.2 billion (11%) from March 31, 2013.

See Note 3 to the consolidated financial statements for the composition of originated, acquired and covered loans at March 31, 2014 and December 31, 2013. Originated loans include all loans not included in the acquired and covered loan portfolios described as follows. Acquired loans are those purchased in the Whitney acquisition on June 4, 2011 and that continue to be subject to purchase accounting considerations. Acquired loans include those that were performing satisfactorily at the acquisition date (acquired-performing) and loans acquired with evidence of credit deterioration (acquired-impaired). Covered loans are those purchased in the December 2009 acquisition of Peoples First, which are covered by loss share agreements between the FDIC and the Company that afford significant loss protection. Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date without carryover of any allowance for loan losses. Certain differences in the accounting for originated loans and for acquired-performing and acquired-impaired loans (which include all covered loans) are described in Note 3 to the consolidated financial statements.

The largest component of linked-quarter net growth (excluding the FDIC-covered portfolio) was in the commercial and industrial (C&I) portfolio, with additional growth in the construction, commercial real estate (CRE) and residential mortgage portfolios. Many of the markets across the Company’s footprint reported net period-end loan growth during the quarter, with the majority of the growth in the Houston, southwest Louisiana, Mississippi, and central Florida regions. For the full year of 2014 management expects period-end loan growth in the upper single digit range.

The Company’s commercial customer base is diversified over a range of industries, including oil and gas (O&G), wholesale and retail trade in various durable and nondurable products and the manufacture of such products, marine transportation and maritime construction, financial and professional services, and agricultural production. Loans outstanding to O&G industry customers increased approximately $80 million at March 31, 2014, compared to December 31, 2013. The majority of the O&G portfolio is with customers providing transportation and other services and products to support exploration and production activities. The Bank lends mainly to middle-market and smaller commercial entities, although it also participates in larger shared-credit loan facilities with familiar businesses operating in the Company’s market areas. Shared credits funded at March 31, 2014 totaled approximately $1.5 billion, up about 1% from December 31, 2013. Approximately $884 million of shared national credits were with O&G customers at March 31, 2014, an increase of about 1% from year-end.

Construction and land development loans (C&D) loans and commercial real estate (CRE) loans in the originated and acquired portfolios increased a net $92 million over the first three months of 2014. CRE loans include loans on both income-producing properties as well as properties used by borrowers in commercial operations. The largest component of new lending activity during 2014 has been on properties used by smaller C&I customers. Overall, opportunities for funding new quality projects in the current environment, while improving, remain limited.

Residential mortgages in the originated and acquired portfolios were up a net $10 million over the first three months of 2014. Consumer loans decreased by a net $14 million over the first three months of 2014.

Total covered loans at March 31, 2014 were down $146 million from March 31, 2013 and $28 million from December 31, 2013, reflecting normal repayments, charge-offs and foreclosures. The covered portfolio will continue to decline over the terms of the loss share agreements.

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Allowance for Loan Losses and Asset Quality

The Company’s total allowance for loan losses was $128.2 million at March 31, 2014, down from $133.6 million at December 31, 2013. The ratio of the allowance to period-end loans was 1.02%, compared to 1.08% at December 31, 2013. The allowance maintained on the originated portion of the loan portfolio totaled $79.6 million, or 0.80% of related loans, at March 31, 2014, compared to $78.9 million, or 0.83% of related loans, at December 31, 2013.

During the first quarter of 2014, Hancock recorded a total provision for loan losses of $8.0 million, down from $9.6 million in the first quarter of 2013. The provision for non-covered loans was $8.3 million in the first quarter of 2014, compared to $3.0 million in the first quarter of 2013. The net provision from the covered portfolio was a credit of $0.3 million for the first quarter of 2014 compared to $6.6 million provision for the first quarter of 2013. The decrease in the provision year-over-year was caused by reductions in the estimates on future losses.

Net charge-offs from the non-covered loan portfolio were $4.0 million, or 0.13% of average total loans on an annualized basis, in the first quarter of 2014, down from $6.6 million, or 0.23% in the first quarter of 2013. The decrease is mainly in commercial and real estate loans.

In the following tables, certain disaggregated information was not available for the commercial non-real estate, construction and land development and commercial real estate loans categories for March 31, 2013. In these instances, combined information for these categories is provided under the caption “commercial loans.”

The following table sets forth activity in the allowance for loan losses for the periods indicated.

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��	Three Months Ended
	March 31,			December 31,			March 31,
	2014			2013			2013
Allowance for loan losses at beginning of period	$	133,626		$	138,223		$	136,171
Loans charged-off:
Non-covered loans:
Commercial		—			—			7,027
Commercial non real estate		2,386			1,473			—
Commercial and land development		91			2,765			—
Commercial real estate		723			1,807			—
Residential mortgages		241			748			135
Consumer		4,041			4,722			4,075
Total non-covered charge-offs		7,482			11,515			11,237
Covered loans:
Commercial		—			—			3,569
Commercial non real estate		46			390			—
Commercial and land development		458			(540	)		—
Commercial real estate		3,117			98			—
Residential mortgages		308			585			24
Consumer		81			105			539
Total covered charge-offs		4,010			638			4,132
Total charge-offs		11,492			12,153			15,369
Recoveries of loans previously charged-off:
Non-covered loans:
Commercial		—			—			2,723
Commercial non real estate		826			2,409			—
Commercial and land development		651			433			—
Commercial real estate		331			1,019			—
Residential mortgages		94			945			487
Consumer		1,602			1,493			1,394
Total non-covered recoveries		3,504			6,299			4,604
Covered loans:
Commercial		—			—			523
Commercial non real estate		445			—			—
Commercial and land development		857			181			—
Commercial real estate		136			3,763			—	��
Residential mortgages		6			—			24
Consumer		56			93			363
Total covered recoveries		1,500			4,037			910
Total recoveries		5,004			10,336			5,514
Net charge-offs - non-covered		3,978			5,216			6,633
Net charge-offs - covered		2,510			(3,399	)		3,222
Total net charge-offs		6,488			1,817			9,855
Provision for loan losses before FDIC benefit - covered		(7,155	)		(10,643	)		8,484
(Benefit) attributable to FDIC loss share agreement		6,853			10,111			(1,883	)
Provision for loan losses non-covered loans		8,265			7,863			2,977
Provision for loan losses, net		7,963			7,331			9,578
Increase (decrease) in FDIC loss share receivable		(6,853	)		(10,111	)		1,883
Allowance for loan losses at end of period	$	128,248		$	133,626		$	137,777
Ratios:
Gross charge-offs - non-covered to average loans		0.24	%		0.38	%		0.39	%
Recoveries - non-covered to average loans		0.11	%		0.21	%		0.16	%
Net charge-offs - non-covered to average loans		0.13	%		0.17	%		0.23	%
Allowance for loan losses to period-end loans		1.02	%		1.08	%		1.20	%

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The following table sets forth nonperforming assets by type for the periods indicated, consisting of nonaccrual loans, troubled debt restructurings and foreclosed and surplus real estate owned (ORE) and other foreclosed assets. Loans past due 90 days or more and still accruing are also disclosed.

	March 31,			December 31,
	2014			2013
	(In thousands)
Loans accounted for on a non-accrual basis:
Commercial non-real estate loans	$	13,580		$	8,705
Commercial non-real estate loans - restructured		3,543			4,654
Total commercial non-real estate loans		17,123			13,359
Construction and land development loans		9,152			8,770
Construction and land development loans - restructured		7,850			7,930
Total construction and land development loans		17,002			16,700
Commercial real estate loans		32,637			37,369
Commercial real estate loans - restructured		4,153			3,091
Total commercial real estate loans		36,790			40,460
Residential mortgage loans		23,017			22,255
Residential mortgage loans - restructured		507			—
Total residential mortgage loans		23,524			22,255
Consumer loans		6,962			6,912
Total non-accrual loans		101,401			99,686
Restructured loans:
Commercial non-real estate loans - non-accrual		3,543			4,654
Construction and land development loans - non-accrual		7,850			7,930
Commercial real estate loans - non-accrual		4,153			3,091
Residential mortgage loans - non-accrual		507			—
Consumer loans - non-accrual		—			—
Total restructured loans - non-accrual		16,053			15,675
Commercial non-real estate loans - still accruing		2,302			2,323
Construction and land development loans - still accruing		3,275			3,298
Commercial real estate loans - still accruing		2,881			3,144
Residential mortgage loans - still accruing		—			507
Consumer loans - still accruing		—			—
Total restructured loans - still accruing		8,458			9,272
Total restructured loans		24,511			24,947
ORE and foreclosed assets		69,813			76,979
Total non-performing assets*	$	179,672		$	185,937
Loans 90 days past due still accruing	$	3,998		$	10,387
Ratios:
Non-performing assets to loans plus ORE and foreclosed assets		1.43	%		1.50	%
Allowance for loan losses to non-performing loans and accruing loans 90 days past due		112.64	%		111.97	%
Loans 90 days past due still accruing to loans		0.03	%		0.08	%

* Includes total non-accrual loans, total restructured loans - still accruing and ORE and foreclosed assets.

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Non-performing assets (NPAs) totaled $179.7 million at March 31, 2014, down from $185.9 million at December 31, 2013, and down from $229.3 million at March 31, 2013. During the first quarter, total non-performing loans increased less than 1%, while foreclosed and surplus real estate (ORE) and other foreclosed assets decreased over $7 million. Non-performing assets as a percent of total loans, ORE and other foreclosed assets were 1.02% at March 31, 2014, compared to 1.08% at December 31, 2013, and 1.20% at March 31, 2013.

Short-Term Investments

Short-term liquidity investments, including interest-bearing bank deposits and Federal funds sold, increased $11.5 million from December 31, 2013 to a total of $280 million at March 31, 2014. Short-term investments were relatively stable for the first quarter of 2014. As discussed earlier in the section on “Securities,” during the latter part of the first quarter of 2013, management redeployed the excess short-term investments it had accumulated toward the end of 2012 in anticipation of possible increased demands on liquidity from the expiration of the TAG Program.

Deposits

Total deposits at March 31, 2014 were $15.3 billion, up $21 million (1%) from March 31, 2013, and down $86 million (1%) from December 31, 2013. Average deposits for the first quarter of 2014 were $15.3 billion, virtually flat with the first quarter of 2013.

Noninterest-bearing demand deposits (DDAs) totaled $5.6 billion at March 31, 2014, up $195 million (4%) compared to March 31, 2013 and up $84 million (2%) from year-end 2013. DDAs comprised 37% of total period-end deposits at March 31, 2014 compared to 36% at March 31, 2013 and 36% at year-end 2013.

Interest-bearing public fund deposits totaled $1.5 billion at March 31, 2014, down $77 million (5%) from March 31, 2013 and $120 million (8%) from year-end 2013. Typically public fund balances increase toward year-end with subsequent reductions beginning in the first quarter.

Time deposits totaled $2.1 billion at March 31, 2014, down slightly from December 31, 2013. Balances in sweep time deposit products increased $34 million from the end of 2013. Movement of excess funds from DDAs by some commercial customers, provided most of this increase. Certificates of deposits (CDs) were down $38 million (2%) compared to December 31, 2013 as low yields available to customers on maturing CDs continue to drive reductions in CD balances.

Short-Term Borrowings

At March 31, 2014, short-term borrowings totaled $713 million, up $55 million (8%) from December 31, 2013. Securities sold under agreements to repurchase are the main source of short-term borrowings. These agreements are offered mainly to commercial customers to assist them with their cash management strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for corporate or investment purposes. While customer repurchase agreements provide a recurring source of funds to the Bank, the amounts available over time can be volatile.

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OFF-BALANCE SHEET ARRANGEMENTS

Loan Commitments and Letters of Credit

In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans.

Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and has not violated other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent future cash requirements of the Company.

A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of credit primarily to provide credit enhancement to its customers’ other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.

The contract amounts of these instruments reflect the Company’s exposure to credit risk. The Company undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support.

The following table shows the commitments to extend credit and letters of credit at March 31, 2014 according to expiration date.

			Expiration Date
			Less than		1-3		3-5		More than
	Total		1 year		years		years		5 years
	(In thousands)
Commitments to extend credit	$	5,296,538	$	2,689,159	$	1,099,428	$	991,059	$	516,892
Letters of credit		423,619		308,977		57,019		54,230		3,393
Total	$	5,720,157	$	2,998,136	$	1,156,447	$	1,045,289	$	520,285

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with those generally practiced within the banking industry which require management to make estimates and assumptions about future events. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, and the resulting estimates form the basis for making judgments about the carrying values of certain assets and liabilities not readily apparent from other sources. Actual results could differ significantly from those estimates.

67

During the second quarter of 2013, in order to better refine the process and reflect the activity in the Bank’s loan portfolios at a more granular level, management revised the estimation process for evaluating the adequacy of the general reserve component of the allowance for loan losses for the originated portfolio. The change in methodology was implemented as of April 1, 2013 and resulted in no material change in the total amount of allowance for loan losses.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 13 to our Consolidated Financial Statements included elsewhere in this report.

SEGMENT REPORTING

Note 12 to the consolidated financial statements provides information about the Company’s reportable operating segments and presents comparative financial information for these operating segments for the three month periods ended March 31, 2014 and March 31, 2013.

Net income in the first quarter of 2014 for the Hancock segment totaled $13.3 million, up $1.8 million from the same period in 2013. Net interest income increased $3.7 million mainly due to an increase in purchased loan accretion. Noninterest income decreased $4.0 million primarily related to the amortization to the FDIC loss share receivable. Noninterest expense decreased $5.1 million between these periods, mainly attributable to savings associated with the Company’s current expense reduction and efficiency initiative discussed in the “Overview” section under “Highlights of First Quarter 2014 Financial Results”.

Net income for the Whitney segment in the first quarter of 2014 totaled $35.8 million, down almost $1 million from the same period in 2013. Net interest income decreased by $12.5 million mainly due to lower core loan yields. Noninterest income increased $1.9 million primarily due to the deposit premium related to the first quarter sale of branches. Noninterest expense decreased $7.5 million primarily related to savings associated with the efficiency initiative.

FORWARD LOOKING STATEMENTS

This Form 10-Q contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and we intend such forward-looking statements to be covered by the safe harbor provisions therein and are including this statement for purposes of invoking these safe-harbor provisions. Forward-looking statements provide projections of results of operations or of financial condition or state other forward-looking information, such as expectations about future conditions and descriptions of plans and strategies for the future. Forward-looking statements that we may make include, but may not be limited to, comments with respect to future levels of economic activity in our markets, loan growth, deposit trends, credit quality trends, future sales of nonperforming assets, net interest margin trends, future expense levels and the ability to achieve reductions in non-interest expense or other cost savings, projected tax rates, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts such as accretion levels, the impact of the branch rationalization process, and the financial impact of regulatory requirements. Hancock’s ability to accurately project results or predict the effects of future plans or strategies is inherently limited. Although Hancock believes that the expectations reflected in its forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ from those expressed in Hancock’s forward-looking statements include, but are not limited to, those risk factors outlined in Hancock’s public filings with the Securities and Exchange Commission, which are available at the SEC’s internet site (http://www.sec.gov). You are cautioned not to place undue reliance on these forward-looking statements. Hancock does not intend, and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our net income is materially dependent on our net interest income. Hancock’s primary market risk is interest rate risk that stems from uncertainty with respect to absolute and relative levels of future market interest rates that affect our financial products and services. In an attempt to manage our exposure to interest rate risk, management measures the sensitivity of our net interest income and cash flows under various market interest rate scenarios, establishes interest rate risk management policies and implements asset/liability management strategies designed to produce a relatively stable net interest margin under varying rate environments.

Hancock measures its interest rate sensitivity primarily by running net interest income simulations. The model measures annual net interest income sensitivity relative to a base case scenario and incorporates assumptions regarding balance sheet growth and the mix of earning assets and funding sources as well as pricing, re-pricing and maturity characteristics of the existing and projected balance sheet. The table below presents the results of simulations run as of March 31, 2014, assuming the indicated instantaneous and sustained parallel shift in the yield curve at the measurement date. These results indicate that we are slightly asset sensitive as compared to the stable rate environment assumed for the base case.

Net Interest Income (te) at Risk
Change in interest rate (basis point)		Estimated increase (decrease) in net interest income
	Stable		0.00	%
	+100		1.78	%
	+200		4.27	%
	+300		6.86	%

Note: Decrease in interest rates discontinued in the current rate environment

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, 2013 included in our 2013 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, 2014, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is party to various legal proceedings arising in the ordinary course of business. We do not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a material adverse effect on our consolidated financial position or liquidity.

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, 2013. The risks described may not be the only risks facing us. Additional risks and uncertainties not currently known to us or that are currently considered to not be material also may materially adversely affect our business, financial condition, and/or operating results.

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

The following table provides information with respect to purchases made by the issuer or any affiliated purchaser of the issuer’s equity securities for the three months ended March 31, 2014.

	(a) Total number of shares or units purchased		(b) Average price paid per share		(c) Total number of shares purchased as a part of publicly announced plans or programs (1)		(d) Maximum number of shares that may yet be purchased under plans or programs
Jan. 1, 2014 - Jan. 31, 2014		—	$	—		—		1,426,458
Feb. 1, 2014 - Feb. 28, 2014		—		—		—		1,426,458
Mar. 1, 2014 - Mar. 31, 2014		—		—		—		1,426,458
Total		—	$	—		—

(1) The Company publicly announced its stock buy-back program on April 30, 2013.

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Item 6. Exhibits.

(a) Exhibits:

Exhibit Number	Description
31.1	Certification of Chief Executive Officers 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 Officers 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.
101	XBRL Interactive Data.

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
	President & Chief Executive Officer
	/s/ John M. Hairston
	John M. Hairston
	Chief Executive Officer & Chief Operating Officer
	/s/ Michael M. Achary
	Michael M. Achary
	Chief Financial Officer
Date:	May 9, 2014

71

Index to Exhibits

Exhibit Number	Description
31.1	Certification of Chief Executive Officers 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 Officers 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.
101	XBRL Interactive Data.