1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
{ X } ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 {FEE REQUIRED}
For the fiscal year ended December 31, 1993.
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 {NO FEE REQUIRED}
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 (I.R.S. Employer Identification
incorporation or organization) Number)
One Hancock Plaza, Gulfport, Mississippi 39501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (601) 868-4715
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- ------------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $3.33 PAR VALUE
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes X No _______
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 _______
Continued
2
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of January 14, 1994 was approximately $183,476,600. For
purposes of this calculation only, shares held by non-affiliates are deemed to
consist of (a) shares held by all shareholders other than directors and
executive officers of the registrant plus (b) shares held by directors and
officers as to which beneficial ownership has been disclaimed.
On December 31, 1993 the registrant had outstanding 7,023,829 shares of
common stock for financial statement purposes.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the year
ended December 31, 1993 filed with the Registrant's definitive proxy materials
on January 24, 1994 are incorporated herein by reference into Part II of this
report.
Portions of the definitive Proxy Statement used in connection with the
registrant's Annual Meeting of Stockholders to be held February 24, 1994 filed
by the Registrant on January 24, 1994 are herein incorporated by reference into
Part III of this report.
3
PART I
ITEM 1 - BUSINESS
BACKGROUND AND CURRENT OPERATIONS
BACKGROUND
GENERAL:
Hancock Holding Company (the "Company") was organized in 1984 as a bank
holding company registered under the Bank Holding Company Act of 1956, as
amended. The Company, headquartered in Gulfport, Mississippi, operates 54
banking offices and 80 automated teller machines ("ATM's") (34 of which are
free-standing) in the states of Mississippi and Louisiana through two
wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi ("Hancock
Bank MS") and Hancock Bank of Louisiana, Baton Rouge, Louisiana ("Hancock Bank
LA"). Hancock Bank MS and Hancock Bank LA hereinafter are referred to
collectively as the "Banks."
The Banks are community oriented and focus primarily on offering
commercial, consumer and mortgage loans and deposit services to individuals and
small to middle market businesses in their respective market areas. The
Company's operating strategy is to provide its customers with the financial
sophistication and breadth of products of a regional bank, while successfully
retaining the local appeal and level of service of a community bank. At
December 31, 1993, the Company had total assets of $1.8 billion and employed on
a full-time basis 776 persons in Mississippi and 327 persons in Louisiana.
Hancock Bank MS was originally chartered as Hancock County Bank in 1899
and since its organization the strategy of Hancock Bank MS has been to achieve
a dominant market share on the Mississippi Gulf Coast. Prior to a series of
acquisitions begun in 1985, growth was primarily internal and was accomplished
by concentrating branch expansions in areas of population growth where no
dominant financial institution previously served the market area. Economic
expansion on the Mississippi Gulf Coast has resulted primarily from growth of
-2-
4
military and government-related facilities, tourism, port facility activities,
industrial complexes and the gaming industry. Hancock Bank MS currently has
the largest market share in each of the four counties in which it operates,
Harrison, Hancock, Jackson and Pearl River. With assets of $1.3 billion,
Hancock Bank MS currently ranks as the fifth largest bank in Mississippi.
Beginning with the 1985 acquisition of the Pascagoula-Moss Point Bank
("PMP") in Pascagoula, Mississippi, the Company has acquired approximately
$611.9 million in assets and approximately $556.2 million in deposit
liabilities through selected acquisitions or purchase and assumption
transactions.
RECENT ACQUISITION ACTIVITY:
The majority of the Company's acquisition activity occurred in 1990 and
1991, beginning with the June 1990, merger of Metropolitan National Bank
("MNB") Biloxi, Mississippi into Hancock Bank MS. At the time of its
acquisition, MNB had total assets of approximately $98.8 million and total
deposit liabilities of approximately $95.1 million.
Also in June 1990, pursuant to a purchase and assumption agreement,
Hancock Bank MS acquired the Poplarville, Mississippi branch of Unifirst Bank
for Savings from the Resolution Trust Corporation ("RTC"). The acquisition
increased Hancock Bank MS total assets by approximately $7.8 million and its
total deposit liabilities by approximately $7.4 million.
In August 1990, the Company formed Hancock Bank LA for the purpose of
assuming the deposit liabilities and acquiring the consumer loan portfolio,
corporate credit card portfolio and non-adversely classified securities
portfolio of American Bank and Trust ("AmBank") Baton Rouge, Louisiana, from
the Federal Deposit Insurance Corporation ("FDIC"). As a result of this
transaction, Hancock Bank LA acquired 15 banking offices in the greater Baton
Rouge area, approximately $337.5 million in assets and approximately $300.9
million in deposit liabilities. During 1993, Hancock Bank LA's deposits
increased approximately 3.4% to $468.2 million. It is currently one of the
five largest banks in East Baton Rouge Parish. Economic expansion in East
-3-
5
Baton Rouge Parish has resulted primarily from growth in state government and
related service industries, educational and medical complexes, petrochemical
industries, port facility activities and transportation and related industries.
In August 1991, Hancock Bank MS acquired certain assets and deposit
liabilities of Peoples Federal Savings Association, Bay St. Louis, Mississippi,
from the RTC. As a result of this transaction, the Bank acquired assets of
approximately $39.0 million and deposit liabilities of approximately $38.5
million.
In connection with the MNB and AmBank acquisitions, the Company
borrowed $18,750,000 from Whitney National Bank, New Orleans, Louisiana
("Whitney") to partially fund these acquisitions. On November 28, 1991, the
Company sold 1,552,500 shares of its common stock at $17 per share, following a
two-for-one stock split in the form of a 100% stock dividend on October 15,
1991 and an increase in the number of authorized shares to 20,000,000. The net
proceeds of this sale, after underwriting discount and expenses, of
approximately $24,700,000, were used to pay the interest, retire $18,500,000 of
principal debt on the Whitney loans and increase Hancock Bank LA's capital by
$5,000,000.
PROPOSED ACQUISITION:
In November 1993, the Company agreed to merge Hancock Bank of
Louisiana, a wholly owned subsidiary of the Company with First State Bank and
Trust Company of East Baton Rouge Parish, Baker, Louisiana. The merger will be
consummated by the exchange of all outstanding common stock of First State Bank
in return for approximately 520,000 shares of common stock of the Company.
Completion of the merger is contingent upon approval by First State Bank
shareholders, the Louisiana Commissioner of Financial Institutions, the Federal
Deposit Insurance Corporation and the Federal Reserve. It is intended that the
merger will be accounted for using the pooling of interests method. First
State Bank had total assets of $82,000,000 and stockholders equity of
$11,500,000 as of December 31, 1993 and net earnings of $1,250,000 for the year
then ended.
-4-
6
CURRENT OPERATIONS
LOAN PRODUCTION AND CREDIT REVIEW:
The Banks' primary lending focus is to provide commercial, consumer and
real estate loans to consumers and to small and middle market businesses in
their respective market areas. The Banks have no concentrations of loans to
particular borrowers or loans to any foreign entities. Each loan officer has
Board approved loan limits on the principal amount of secured and unsecured
loans he or she can approve for a single borrower without prior approval of a
loan committee. All loans, however, must meet the credit underwriting and loan
policies of the Banks.
For Hancock Bank MS, all loans over an individual loan officer's Board
approved lending authority and below $150,000 must be approved by his or her
region's loan committee or by another loan officer with greater lending
authority. If a borrower's total indebtedness exceeds $150,000, any loan must
be reviewed and approved by both the regional loan committee and the Bank's
senior loan committee. Each loan file is reviewed by the Bank's loan review
department to ensure proper documentation.
For Hancock Bank LA, all loans over an individual loan officer's Board
approved lending authority must be approved by the Bank's senior loan committee
or by another loan officer with greater lending authority. Aggregate lending
relationships above the loan officers' authority of up to $500,000 must be
approved by the Company's loan committee. Each loan file is reviewed by the
Bank's loan review department to ensure proper documentation.
LOAN REVIEW AND ASSET QUALITY:
Each Bank's portfolio of credit relationships aggregating $250,000 or
more is continually reviewed by the respective Bank to identify any
deficiencies and to take corrective actions as necessary. Credit relationships
aggregating less than $250,000 are reviewed on a periodic basis. As a result
of such reviews, each Bank places on its Watchlist loans that are
-5-
7
deemed to require close or frequent review. All loans classified by a
regulator are also placed on the Watchlist. All Watchlist and past due loans
are reviewed at least monthly by the Banks' senior lending officers and monthly
by the Banks' Board of Directors.
In addition, all loans to a particular borrower are reviewed,
regardless of classification, each time such borrower requests a renewal or
extension of any loan or requests an additional loan. All lines of credit are
reviewed annually prior to renewal. The Banks currently have mechanisms in
place which allow for at least an annual review of the financial statements and
the financial condition of all borrowers, except borrowers with secured
installment and residential mortgage loans.
As a matter of policy, the Banks place loans on nonaccrual status
whenever debt service becomes impaired or collection becomes questionable.
The Banks follow the standard FDIC loan classification system which is
designed to serve the dual purpose of providing management with (1) a general
view of the quality of the overall loan portfolio (each branch's loans and each
commercial loan officer's lending portfolio) and (2) information on specific
loans which may need individual attention.
The Banks hold nonperforming assets, consisting of real property,
vehicles and other items held for resale, which were acquired generally through
the process of foreclosure. At December 31, 1993, the book value of
nonperforming assets held for resale was approximately $700 thousand.
SECURITIES PORTFOLIO:
The Banks maintain portfolios of securities consisting primarily of
U.S. Treasury securities, U.S. Government agency issues and tax-exempt
obligations of states and political subdivisions. The portfolios are designed
to enhance liquidity while providing acceptable rates of return. Therefore,
the Banks invest only in high grade investment quality securities with
acceptable yields and generally with maturities of less than 7 years.
-6-
8
Investments are limited by the Banks' policies to securities having a rating of
no less than "Baa" by Moody's Investors' Service, Inc., except that non-rated
but creditworthy general obligations of Mississippi or Louisiana governmental
agencies or political subdivisions are permissible.
DEPOSITS:
The Banks have a number of programs designed to attract depository
accounts which are offered to consumers and to small and middle market
businesses at interest rates generally consistent with market conditions.
Additionally, the Banks offer 80 ATMs, 46 ATMs at their 54 banking offices and
34 free-standing ATMs at other locations. As members of regional and
international ATM networks such as "GulfNet", "PLUS" and "CIRRUS", the Banks
offer customers access to their depository accounts from regional, national and
international ATM facilities. Deposit flows are controlled by the Banks
primarily through pricing of such deposits and to a certain extent through
promotional activities. Management believes that the rates it offers, which
are posted weekly on deposit accounts, are generally competitive with or, in
some cases, slightly below other financial institutions in the Banks'
respective market areas.
TRUST SERVICES:
The Banks', through their respective Trust Departments, offer a full
range of trust services on a fee basis. The Banks act as executor,
administrator, or guardian in administering estates. Also provided are
investment custodial services for individual, businesses and charitable and
religious organizations. In their trust capacities, the Banks provide
investment management services on an agency basis and act as trustee for
pension plans, profit sharing plans, corporate and municipal bond issues,
living trusts, life insurance trusts and various other types of trusts created
by or for individuals, businesses and charitable and religious organizations.
As of December 31, 1993, the Trust Departments of the Banks had approximately
$2.3 billion of assets under management, of which $1.7 billion were corporate
accounts and $600 million were personal, employee benefit, estate and other
trust accounts.
-7-
9
OPERATING EFFICIENCY STRATEGY:
The primary focus of the Company's operating strategy is to increase
operating income and to reduce operating expense. Management has taken steps
beginning in January of 1988 to improve operating efficiencies and as a result,
employees at Hancock Bank MS have been reduced from 0.78 per $1.0 million in
assets in February 1988 to 0.61 as of December 31, 1993. Since its acquisition
in August 1990, Hancock Bank LA's employees have been reduced from 0.97 per
$1.0 million of assets to 0.62 as of December 31, 1993. Management annually
establishes an employee to asset goal for each Bank. The Banks also have set
an internal long range goal of at least covering total salary and benefit costs
by fee income. The ratio of fee income to total salary and benefit costs is
$0.49 per $1.00 of total salary and benefit costs at Hancock Bank MS. Hancock
Bank LA has a higher level of fee income and through December 31, 1993 has
achieved a ratio of $0.69 to $1.00 of salary and benefit costs.
OTHER ACTIVITIES:
Hancock Bank MS has six subsidiaries through which it engages in the
following activities: providing consumer financing services; mortgage lending;
owning, managing and maintaining certain real property; providing general
insurance agency services; holding investment securities; and marketing credit
life insurance. The income of these subsidiaries generally accounts for less
than 10% of the Company's total income annually.
Hancock Bank MS also owns approximately 3,700 acres of timberland in
Hancock County, Mississippi, most of which was acquired through foreclosure in
the 1930's. Less than 1% of the Company's annual income is generated from
timber sales and oil and gas leases on this acreage.
COMPETITION:
The deregulation of the financial services industry, the elimination of
many previous distinctions between commercial banks and other types of
financial institutions and the enactment in Mississippi, Louisiana and other
-8-
10
states of legislation permitting state-wide branching or multi-bank holding
companies as well as regional interstate banking has created a highly
competitive environment for commercial banking in the Company's market area.
The principal competitive factors in the markets for deposits and loans are
interest rates paid and charged. The Company also competes through the
efficiency, quality, range of services and products it provides, convenience of
office and ATM locations and office hours.
In attracting deposits and in its lending activities, the Company
competes generally with other commercial banks, savings associations, credit
unions, mortgage banking firms, consumer finance companies, securities
brokerage firms, mutual funds, insurance companies and other financial
institutions, many of which have greater resources than those available to the
Company.
-9-
11
SUPERVISION AND REGULATION
BANK HOLDING COMPANY REGULATION
GENERAL:
As a bank holding company, the Company is subject to extensive
regulation by the Board of Governors of the Federal Reserve System (the
"Federal Reserve") pursuant to the Bank Holding Company Act of 1956, as amended
(the "Bank Holding Company Act"). The Company also is required to file certain
reports with, and otherwise comply with the rules and regulations of, the
Securities and Exchange Commission (the "Commission") under federal securities
laws.
FEDERAL REGULATION:
The Bank Holding Company Act generally prohibits the Company from
engaging in activities other than banking or managing or controlling banks or
other permissible subsidiaries or from acquiring or obtaining direct or
indirect control of any company engaged in activities other than those
activities determined by the Federal Reserve to be so closely related to
banking or managing or controlling banks as to be proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity can reasonably be
expected to produce benefits to the public, such as greater convenience,
increased competition or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices. For example,
making, acquiring or servicing loans, leasing personal property, providing
certain investment or financial advice, performing certain data processing
services, acting as agent or broker in selling credit life insurance and
certain other types of insurance in connection with credit transactions and
certain insurance underwriting activities have all been determined by
regulations of the Federal Reserve to be permissible activities. The Bank
Holding Company Act does not place territorial limitations on permissible
-10-
12
bank-related activities of bank holding companies. However, despite prior
approval, the Federal Reserve has the power to order a holding company or its
subsidiaries to terminate any activity, or terminate its ownership or control
of any subsidiary, when it has reasonable cause to believe that continuation of
such activity or ownership of such subsidiary or control constitutes a serious
risk to the financial safety, soundness or stability of any bank subsidiary of
that holding company.
The Bank Holding Company Act requires every bank holding company to
obtain the prior approval of the Federal Reserve: (1) before it may acquire
direct or indirect ownership or control of any voting shares of any bank if,
after such acquisition, such bank holding company will directly or indirectly
own or control more than 5% of the voting shares of such bank, (2) before it or
any of its subsidiaries other than a bank may acquire all or substantially all
of the assets of a bank, or (3) before it may merge or consolidate with any
other bank holding company. In reviewing a proposed acquisition, the Federal
Reserve considers financial, managerial and competitive aspects, and must take
into consideration the future prospects of the companies and banks concerned
and the convenience and needs of the community to be served. As part of its
review, the Federal Reserve reviews the indebtedness to be incurred by a bank
holding company in connection with the proposed acquisition to ensure that the
bank holding company can service such indebtedness in a manner that does not
adversely affect the capital requirements of the holding company or its
subsidiaries. The Bank Holding Company Act further requires that consummation
of approved acquisitions or mergers be delayed for a period of not less than 30
days following the date of such approval. During such 30-day period,
complaining parties may obtain a review of the Federal Reserve's order granting
its approval by filing a petition in the appropriate United States Court of
Appeals petitioning that the order be set aside.
The Federal Reserve has adopted capital adequacy guidelines for use in
its examination and regulation of bank holding companies. The regulatory
capital of a bank holding company under applicable federal capital adequacy
guidelines is particularly important in the Federal Reserve's evaluation of a
bank holding company and any applications by the bank holding company to the
-11-
13
Federal Reserve. If regulatory capital falls below minimum guideline levels, a
bank holding company or bank may be denied approval to acquire or establish
additional banks or non-bank businesses or to open additional facilities. In
addition, a financial institution's failure to meet minimum regulatory capital
standards can lead to other penalties, including termination of deposit
insurance or appointment of a conservator or receiver for the financial
institution. There are two measures of regulatory capital presently applicable
to bank holding companies, (1) risk- based capital and (2) leverage capital
ratios.
The Federal Reserve rates bank holding companies by a component and
composite 1-5 rating system ("BOPEC"). The leverage ratios adopted by the
Federal Reserve requires all but the most highly rated bank holding companies
to maintain Tier 1 Capital at 4% to 5% of total assets. Certain bank holding
companies having a composite 1 BOPEC rating and not experiencing or
anticipating significant growth may satisfy the Federal Reserve guidelines by
maintaining Tier 1 Capital of at least 3% of total assets. Tier 1 Capital for
bank holding companies includes: stockholder's equity; minority interest in
equity accounts of consolidated subsidiaries; and qualifying perpetual
preferred stock. In addition, Tier 1 Capital excludes goodwill and other
disallowed intangibles. The Company's leverage ratio at December 31, 1993, was
7.62%.
The risk-based capital guidelines are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies, to account for off-balance sheet exposure and to
minimize disincentives for holding liquid assets. Under the risk-based capital
guidelines, assets are assigned to one of four risk categories; these are 0%,
20% 50% and 100%. As an example, U.S. Treasury securities are assigned to the
0% risk category while most categories of loans are assigned to the 100% risk
category. The risk weight of off-balance sheet items such as standby letters
of credit is determined by a two-step process. First, the amount of the
off-balance sheet item is multiplied by a credit conversion factor of either
0%, 20%, 50% or 100%. Then, the result is assigned to one of the four risk
categories. At December 31, 1993, the Company's off-balance
-12-
14
sheet items aggregated $189.9 million; however, after the credit conversion
these items represented $5.6 million of balance sheet equivalents.
The primary component of risk-based capital is defined as Tier 1
Capital, which is essentially equal to common stockholders' equity, plus a
certain portion of perpetual preferred stock. Tier 2 Capital, which consists
primarily of the excess of any perpetual preferred stock, mandatory convertible
securities, subordinated debt and general reserves for loan losses, is a
secondary component of risk-based capital. The risk-weighted asset base is
equal to the sum of the aggregate dollar values of assets and off-balance sheet
items in each risk category, multiplied by the weight assigned to that
category. Under these guidelines bank holding companies are required to
maintain a ratio of Tier 1 Capital to risk-weighted assets of at least 4% and a
ratio of Total Capital (Tier 1 and Tier 2) to risk-weighted assets of at least
8%. At December 31, 1993, the Company's Tier 1 and Total Capital ratios were
14.49% and 15.42%, respectively.
Proposed regulations will increase capital requirements when as yet
undetermined levels of interest rate risk are exceeded. Because the Company's
liabilities generally reprice within periods of one year, interest rate risk
occurs when assets funded by such liabilities reprice at longer intervals. It
is not anticipated that such regulations will have a significant impact on the
Company's capital requirements.
The Company, as a bank holding company within the meaning of the Bank
Holding Company Act, is required to obtain the prior approval of the Federal
Reserve before it may acquire substantially all the assets of any bank, or
ownership or control of any voting shares of any bank, if, after such
acquisition, it would own or control, directly or indirectly, more than 5% of
the voting shares of such bank. In no case, however, may the Federal Reserve
approve the acquisition by the Company of the voting shares, or substantially
all the assets, of any bank located outside Mississippi unless such acquisition
is specifically authorized by the laws of the state in which the bank to be
acquired is located. The banking laws of Mississippi presently permit
out-of-state banking organizations to acquire Mississippi banking
-13-
15
organizations, provided the out-of-state banking organization's home state
grants similar privileges to banking organizations in Mississippi. This
reciprocity privilege is restricted to banking organizations in specified
geographic regions which encompass the states of Alabama, Arkansas, Florida,
Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South
Carolina, Tennessee, Texas, Virginia and West Virginia. In addition,
Mississippi banking organizations are permitted to acquire certain out-of-state
financial institutions. A bank holding company is additionally prohibited from
itself engaging in, or acquiring direct or indirect control of more than 5% of
the voting shares of any company engaged in, non-banking activities.
As a bank holding company, the Company is required to give the Federal
Reserve prior written notice of any purchase or redemption of its outstanding
equity securities if the gross consideration for the purchase or redemption,
when combined with the net consideration paid for all such purchases or
redemptions during the proceeding 12 months, is equal to 10% or more of the
Company's consolidated net worth. The Federal Reserve may disapprove such a
purchase or redemption if it determines that the proposal constitutes an unsafe
or unsound practice, would violate any law, regulation, Federal Reserve order
or directive or any condition imposed by, or written agreement with, the
Federal Reserve.
In November 1985, the Federal Reserve adopted its Policy Statement on
Cash Dividends Not Fully Covered by Earnings (the "Policy Statement"). The
Policy Statement sets forth various guidelines that the Federal Reserve
believes that a bank holding company should follow in establishing its dividend
policy. In general, the Federal Reserve stated that bank holding companies
should not pay dividends except out of current earnings and unless the
prospective rate of earnings retention by the holding company appears
consistent with its capital needs, asset quality and overall financial
condition.
The activities of the Company are also restricted by the provisions of
the Glass-Steagall Act of 1933 (the "Act"). The Act prohibits the Company
-14-
16
from owning subsidiaries engaged principally in the issue, floatation,
underwriting, public sale or distribution of securities. The interpretation,
scope and application of the provisions of the Act currently are being reviewed
by regulators and legislators. The outcome of the current examination and
appraisal of the provisions in the Act and effect of such outcome on the
ability of bank holding companies to engage in securities-related activities
cannot be predicted.
The Company is a legal entity separate and distinct from the Banks.
There are various restrictions which limit the ability of the Banks to finance,
pay dividends or otherwise supply funds to the Company or other affiliates. In
addition, subsidiary banks of holding companies are subject to certain
restrictions imposed by the Federal Reserve Act on any extension of credit to
the bank holding company or any of its subsidiaries, on investments in the
stock or other securities thereof and on the taking of such stock or securities
as collateral for loans to any borrower. Further, a bank holding company and
its subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with extensions of credit, or leases or sales of property or
furnishing of services.
BANK REGULATION:
The operations of the Banks are subject to state and federal statutes
applicable to state banks and the regulations of the Federal Reserve and of the
FDIC. Such statutes and regulations relate to, among other things, required
reserves, investments, loans, mergers and consolidations, issuance of
securities, payment of dividends, establishment of branches and other aspects
of the Banks' operations.
Hancock Bank MS is subject to regulation and periodic examinations by
the FDIC and the State of Mississippi Department of Banking and Consumer
Finance. Hancock Bank LA is subject to regulation and periodic examinations by
the FDIC and the Office of Financial Institutions, State of Louisiana. These
regulatory authorities examine such areas as reserves, loan and investment
quality, management policies, procedures and practices and other aspects of
-15-
17
operations. These examinations are designed for the protection of the Banks'
depositors, rather than their stockholders. In addition to these regular
examinations, the Company and the Banks must furnish periodic reports to their
respective regulatory authorities containing a full and accurate statement of
their affairs.
The Banks are members of the FDIC, and their deposits are insured as
provided by law by the Bank Insurance Fund ("BIF"). As of July 1, 1991, the
annual BIF premium was 0.23% of the Banks' deposits. BIF premiums for the year
ended December 31, 1993, were $3.45 million, 10% higher than the BIF premiums
for the same period in 1992. This increase can be attributed to growth in
deposits.
On December 19, 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 (the "FDIC Improvement Act") was enacted. The Federal
Deposit Insurance Act as amended by Section 302 of the FDIC Improvement Act
calls for risk-related deposit insurance assessment rates. The risk
classification of an institution will determine its deposit insurance premium.
Assignment to one of three capital groups, coupled with assignment to one of
three supervisory sub groups determines which of the nine risk classifications
is appropriate for an institution. The Banks have received a risk
classification of 1A for assessment purposes for the first six months of 1994
which translates to a 0.23% rate.
In general, the FDIC Improvement Act subjects banks and bank holding
companies to significantly increased regulation and supervision. The FDIC
Improvement Act increased the borrowing authority of the FDIC in order to
bolster the Bank Insurance Fund, and the future borrowings are to be repaid by
increased assessments on FDIC member banks. Other significant provisions of
the FDIC Improvement Act require a new regulatory emphasis linking supervision
to bank capital levels and require the federal banking regulators to take
prompt regulatory action with respect to depository institutions that fall
below specified capital levels and to draft non-capital regulatory measures to
assure bank safety, including underwriting standards and minimum earnings
levels.
-16-
18
The FDIC Improvement Act contains a "prompt regulatory action" section
which is intended to resolve problem institutions at the least possible
long-term cost to the deposit insurance funds. Pursuant to this section, which
applies to both banks and savings associations, the federal banking agencies
are required to prescribe both a leverage limit and a risk-based capital
requirement indicating levels at which institutions will be deemed to be "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." In the case of a
depository institution which is "critically undercapitalized" (a term defined
to include institutions which still have a positive net worth), the federal
banking regulators are generally required to appoint a conservator or receiver.
The FDIC Improvement Act further requires regulators to perform annual
on-site bank examinations, places limits on real estate lending and tightens
audit requirements. The new legislation will eliminate after 1994 the "too big
to fail" doctrine, which protects uninsured deposits of large banks, and
restricts the ability of undercapitalized banks to obtain extended loans from
the Federal Reserve Board discount window. As previously discussed, deposit
insurance premiums for the Bank Insurance Fund have changed from flat premiums
to fees that will require banks engaging in risk practices or with low capital
to pay higher deposit insurance premiums than conservatively managed banks.
The FDIC Improvement Act also imposes new disclosure requirements relating to
fees charged and interest paid on checking and deposit accounts. Most of the
significant changes brought about by the FDIC Improvement Act required new
regulations.
In addition to regulating capital, the FDIC has broad authority to
prevent the development or continuance of unsafe or unsound banking practices.
Pursuant to this authority, the FDIC has adopted regulations which, among other
things, restrict preferential loans and loan amounts by banks to "affiliates"
and "insiders" of banks, require banks to keep information on loans to major
stockholders and executive officers and bar certain director and officer
interlocks between financial institutions. The FDIC also is authorized to
approve mergers, consolidations and assumption of deposit liability
transactions between insured banks and between insured banks and
-17-
19
uninsured banks or institutions to prevent capital or surplus diminution in
such transactions where the resulting, continuing or assumed bank is an insured
nonmember state bank, like the Banks.
Although the Banks are not members of the Federal Reserve System, they
are subject to Federal Reserve regulations that require the Banks to maintain
reserves against transaction accounts (primarily checking accounts), money
market deposit accounts and nonpersonal time deposits. Because reserves
generally must be maintained in cash or in noninterest-bearing accounts, the
effect of the reserve requirements is to increase the cost of funds for the
Banks. Subject to an exemption from reserve requirements on a limited amount
of an institution's transaction accounts, the Federal Reserve regulations
currently require that reserves be maintained against net transaction accounts
in the amount of 3% of the aggregate of such accounts up to $41.4 million, or,
if the aggregate of such accounts exceeds $41.4 million, $1.233 million plus
12% of the total in excess of $41.4 million.
The foregoing is a brief summary of certain statutes, rules and
regulations affecting the Company and the Banks and is not intended to be an
exhaustive discussion of all the statutes and regulations having an impact on
the operations of such entities.
EFFECT OF GOVERNMENTAL POLICIES:
In general, the difference between the interest rate paid by a bank on
its deposits and its other borrowings, and the interest rate received by a bank
on loans extended to its customers and securities held in its portfolios, will
comprise a major portion of the bank's earnings. However, due to recent
deregulation of the industry, the banking business is becoming increasingly
dependent on the generation of fees and service charges.
The earnings and growth of a bank will be affected not only by general
economic conditions, both domestic and foreign, but also by the monetary and
fiscal policy of the United States Government and its agencies, particularly
the Federal Reserve. The Federal Reserve can and does implement national
monetary policy, such as seeking to curb inflation and combat recession by its
-18-
20
open-market operations in United States Government securities, adjustments in
the amount of reserves that banks and other financial institutions are required
to maintain and adjustments to the discount rates applicable to borrowings by
banks which are members of the Federal Reserve System and target rates for
federal funds transactions. The actions of the Federal Reserve in these areas
influence the growth of bank loans, investments and deposits and also affect
interest rates charged on loans and paid on deposits. The nature and timing of
any future changes in monetary policies and their potential impact on the
Company cannot be predicted.
-19-
21
STATISTICAL INFORMATION
The following tables and other material present certain statistical
information regarding the Company. This information is not audited and should
be read in conjunction with the Company's consolidated financial statements and
the accompanying notes.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
AND INTEREST RATES AND DIFFERENTIALS
Net interest income, the difference between interest income and
interest expense, is the most significant component of the Banks earnings. For
internal analytical purposes, management adjusts net interest income to a
"taxable equivalent" basis using a 34% in 1992 and 35% in 1993 federal tax rate
on tax exempt items (primarily interest on municipal securities).
Another significant statistic in the analysis of net interest income
is the effective interest differential, which is the difference between the
average rate of interest earned on earning assets and the effective rate paid
for all funds, non-interest bearing as well as interest bearing. Since a
portion of the Bank's deposits do not bear interest, such as demand deposits,
the rate paid for all funds is lower than the rate on interest bearing
liabilities alone. The rate differential for the years 1992 and 1993 was 5.12%
and 4.85%, respectively.
Recognizing the importance of interest differential to total earnings,
management places great emphasis on managing interest rate spreads. Although
interest differential is affected by national, regional, and area economic
conditions, including the level of credit demand and interest rates, there are
significant opportunities to influence interest differential through
appropriate loan and investment policies. These policies are designed to
maximize interest differential while maintaining sufficient liquidity and
availability of funds for purposes of meeting existing commitments and for
investment in loans and other investment opportunities that may arise.
-20-
22
The following table shows interest income on earning assets and
related average yields earned as well as interest expense on interest bearing
liabilities and related average rates paid for the periods indicated:
Comparative Average Balances - Yields and Costs
Years Ended December 31,
---------------------------------------------------------------------------------------
1991 1992 1993
------------------------- --------------------------- ---------------------------
Average Average Average
Amount Yield or Amount Yield or Amount Yield or
Average Paid or Rate Average Paid or Rate Average Paid or Rate
Amount Earned (%) Amount Earned (%) Amount Earned (%)
------- ------- -------- ------- ------- -------- ------- ------- --------
(Amounts in thousands)
Assets:
Earning assets:
Investment securities:
U.S. Treasury $ 280,010 $ 21,740 7.76 $ 277,614 $ 19,750 7.11 $ 278,821 $ 16,056 5.76
U.S. Government agencies 162,085 12,741 7.86 293,568 20,825 7.09 346,650 21,920 6.32
Municipal securities (1) 60,219 7,153 11.88 50,308 6,152 12.23 39,371 4,646 11.80
Other securities 20,778 1,693 8.15 66,565 4,782 7.18 86,258 4,775 5.54
Federal funds sold 104,461 5,983 5.73 90,933 3,124 3.44 104,369 3,075 2.95
Repurchase agreements -- -- -- -- -- -- -- -- --
Interest bearing deposits
with banks 13,089 576 4.40 1,121 41 3.66 597 26 4.36
Net loans (1)(2)(3) 711,311 78,187 10.99 731,048 74,584 10.20 780,787 74,480 9.54
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
Total earning assets/
interest income 1,351,953 128,073 9.47 1,511,157 129,258 8.55 1,636,853 124,978 7.64
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
Less: reserve for loan losses 11,534 -- -- 12,323 -- -- (14,302) -- --
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
1,340,419 $1,498,834 $1,622,551
Nonearning assets:
Cash and due from banks 65,925 -- -- 85,059 -- -- 97,677 -- --
Fixed assets 34,884 -- -- 34,838 -- -- 33,811 -- --
Other assets 40,929 -- -- 41,225 -- -- 34,681 -- --
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
Total assets $1,482,157 $1,659,956 $1,788,720
========== ========== ==========
Liabilities and Stockholders
Equity:
Interest bearing liabilities:
Deposits:
Savings, NOW and money
market $ 405,266 $ 19,341 4.77 $ 586,662 19,331 3.30 $ 684,857 18,196 2.66
Time 659,713 43,898 6.65 617,111 31,146 5.05 580,805 25,637 4.41
Federal funds purchased 20,724 1,120 5.40 21,261 677 3.18 18,046 487 2.70
Reverse repurchase agreement 41,038 2,246 5.47 22,571 731 3.24 23,607 534 2.26
Long-term bonds and notes 23,276 2,117 9.10 6,523 543 8.32 4,501 400 8.89
Capital notes 480 24 5.00 480 24 5.00 480 24 5.00
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
Total interest bearing
liabilities/interest
expense 1,150,497 68,746 5.98 1,254,608 52,452 4.18 1,312,296 45,278 3.45
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
-21-
23
Noninterest bearing liabilities:
Demand 233,080 -- -- 270,221 -- -- 328,195
Other liabilities 12,909 -- -- 13,860 -- -- 10,693 -- --
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
Total liabilities 1,396,486 -- -- 1,538,689 -- -- 1,651,184 -- --
Stockholders' equity 85,671 -- -- 121,267 -- -- 137,536 -- --
---------- -------- ----- ---------- -------- ----- ---------- -------- -----
Total liabilities and
stockholders' equity $1,482,157 $1,659,956 $1,788,720
========== ========== ==========
Net interest rate spread 3.49 4.37 4.12
===== ===== =====
Net interest income/margin
on earning assets $ 59,327 4.39 $ 76,806 5.08 $ 79,700 4.82
======== ===== ======== ===== ======== =====
- ----------
(1) Includes tax equivalent adjustments to interest earned of $3.3
million, $2.6 million and $1.8 million in 1991, 1992 and 1993
respectively, using an effective tax rate of 34% in 1991 and 1992 and
35% in 1993.
(2) Interest earned includes fees on loans of $3.2 million in 1991 and
1992 and $3.1 million in 1993.
(3) Includes nonaccrual loans. See "Nonperforming Assets."
-22-
24
The following table sets forth, for the periods indicated, a summary of
the changes in interest income on earning assets and interest expense on
interest bearing liabilities relating to rate and volume variances. Nonaccrual
loans are included in average amounts of loans and do not bear interest for
purposes of the presentation.
Analysis of Changes in Net Interest Income
Years Ended December 31,
-------------------------------------------------------------------------------------------
1991 1992 1993
--------------------------- --------------------------- ---------------------------
Volume Rate Total Volume Rate Total Volume Rate Total
------ ---- ----- ------ ---- ----- ------ ---- -----
(Amounts in thousands)
Interest Income:
Investment securities:
U.S. Treasury $ 2,010 $ (56) $ 1,954 $ (186) $ (1,804) $(1,990) $ 70 $ (3,764) $(3,694)
U.S. Government agencies 9,468 (1,378) 8,090 10,335 (2,251) 8,084 3,357 (2,262) 1,095
Municipals (1) (1,462) 11 (1,451) (1,177) 176 (1,001) (1,291) (215) (1,506)
Other securities (1,446) 107 (1,339) 3,731 (642) 3,089 1,090 (1,097) (7)
Federal funds sold 2,640 (2,307) 333 (775) (2,084) (2,859) 396 (445) (49)
Repurchase agreements (479) -- (479) -- -- -- -- -- --
Interest bearing deposits
with banks 641 (549) 92 (527) (8) (535) (23) 8 (15)
Net loans 18,598 (3,290) 15,308 2,169 (5,772) (3,603) 4,745 (4,849) (104)
------- ------- ------- ------- -------- ------- ------- -------- -------
Total 29,970 (7,462) 22,508 13,570 (12,385) 1,185 8,344 (12,624) (4,280)
------- ------- ------- ------- -------- ------- ------- -------- -------
Interest Expense:
Deposits:
Savings, NOW and money
market 4,682 (2,475) 2,207 8,657 (8,667) (10) 2,609 (3,744) (1,135)
Time 10,257 (7,757) 2,500 (2,835) (9,917) (12,752) (1,603) (3,906) (5,509)
Federal funds purchased (682) (312) (994) 29 (472) (443) (87) (103) (190)
Reverse repurchase
agreements 2,569 (954) 1,615 (1,011) (504) (1,515) 23 (220) (197)
Long-term bonds and
notes 666 93 759 (1,637) (88) (1,725) (180) 37 (143)
Capital notes -- -- -- -- -- -- -- -- --
------- ------- ------- ------- -------- ------- ------- ------- -------
Total 17,492 (11,405) 6,087 3,203 (19,648) (16,445) 762 (7,936) (7,174)
------- ------- ------- ------- -------- ------- ------- ------- -------
Increase (decrease) in
net interest income $12,478 $ 3,943 $16,421 $10,367 $ 7,263 $17,630 $ 7,582 $ (4,688) $ 2,894
======= ======= ======= ======= ======== ======= ======= ======== =======
- ----------
(1) Yields on tax-exempt investments have been adjusted to a tax
equivalent basis utilizing a 34% effective tax rate in 1991 and 1992
and 35% in 1993.
-23-
25
RATE SENSITIVITY
In order to control interest rate risk, management regularly monitors
the volume of interest sensitive assets relative to interest sensitive
liabilities over specific time intervals. The Company's interest rate
management policy is to attempt to maintain a stable net interest margin in
periods of interest rate fluctuations. Interest sensitive assets and
liabilities are those that are subject to maturity or repricing within a given
time period. The interest sensitivity gap is the difference between total
interest sensitive assets and liabilities in a given time period. At December
31, 1993, the Company's cumulative interest sensitivity gap in the one year
interval was (20.48%) as compared to a cumulative interest sensitivity gap in
the one year interval of (29.81%) at December 31, 1992. The percentage
reflects a higher level of interest sensitive liabilities than assets repricing
within one year. Generally, where rate sensitive liabilities exceed rate
sensitive assets, the net interest margin is expected to be positively impacted
during periods of decreasing interest rates and negatively impacted during
periods of increasing rates.
The following tables set forth the Company's interest rate sensitivity
gap at December 31, 1993 and December 31, 1992:
-24-
26
Analysis of Interest Sensitivity at December 31, 1993
After Three
Within Through One After Five
Three Twelve Through Years and
Months Months Five Years Insensitive Total
--------- --------- ---------- ----------- ----------
(Amounts in thousands)
Net loans $ 233,673 $ 82,289 $ 372,059 $ 172,106 $ 860,127
Securities and time deposits 165,538 174,370 309,608 81,539 731,055
Federal funds 85,500 -- -- -- 85,500
--------- --------- --------- --------- ----------
Total earning assets $ 484,711 $ 256,659 $ 681,667 $ 253,645 $1,676,682
========= ========= ========= ========= ==========
28.91% 15.31% 40.65% 15.13% 100.00%
========= ========= ========= ========= ==========
Interest bearing deposits, excluding
CD's greater than $100,000 $ 635,727 $ 325,762 $ 215,059 $ 909 $1,177,457
CD's greater than $100,000 43,862 31,449 16,290 230 91,831
Short-term borrowings 45,799 -- -- -- 45,799
Other borrowings 1,373 780 3,588 320 6,061
--------- --------- --------- --------- ----------
Total interest-bearing funds 726,761 357,991 234,937 1,459 1,321,148
Interest-free funds -- -- -- 355,534 355,534
--------- --------- --------- --------- ----------
Funds supporting earning assets $ 726,761 $ 357,991 $ 234,937 $ 356,993 $1,676,682
========= ========= ========= ========= ==========
43.35% 21.35% 14.01% 21.29% 100.00%
========= ========= ========= ========= ==========
Interest sensitivity gap $(242,050) $(101,332) $ 446,730 $(103,348) --
Cumulative gap $(242,050) $(343,382) $ 103,348 -- --
Percent of total earning assets (14.44%) (20.48%) 6.16% -- --
========= ========= ========= ========= ==========
Analysis of Interest Sensitivity at December 31, 1992
After Three
Within Through One After Five
Three Twelve Through Years and
Months Months Five Years Insensitive Total
--------- --------- ---------- ----------- ----------
(Amounts in thousands)
Net loans $ 245,792 $ 62,888 $ 300,229 $ 167,192 $ 776,101
Securities and time deposits 96,022 133,813 233,388 263,013 726,236
Federal funds 79,000 -- -- -- 79,000
--------- --------- --------- --------- ----------
Total earning assets $ 420,814 $ 196,701 $ 533,617 $ 430,205 $1,581,337
========= ========= ========= ========= ==========
26.61% 12.44% 33.74% 27.21% 100.00%
========= ========= ========= ========= ==========
Interest bearing deposits, excluding
CD's greater than $100,000 $ 618,080 $ 331,675 $ 143,184 $ -- $1,092,939
CD's greater than $100,000 62,532 38,945 37,252 230 138,959
Short-term borrowings 36,909 -- -- -- 36,909
Other borrowings -- 815 4,300 -- 5,115
--------- --------- --------- --------- ----------
Total interest-bearing funds 717,521 371,435 184,736 230 1,273,922
Interest-free funds -- -- -- 307,415 307,415
--------- --------- --------- --------- ----------
Funds supporting earning assets $ 717,521 $ 371,435 $ 184,736 $ 307,645 $1,581,337
========= ========= ========= ========= ==========
45.37% 23.49% 11.68% 19.46% 100.00%
========= ========= ========= ========= ==========
Interest sensitivity gap $(296,707) $(174,734) $ 348,881 $ 122,560 --
Cumulative gap $(296,707) $(471,441) $(122,560) -- --
Percent of total earning assets (18.76%) (29.81%) (7.75%) -- --
========= ========= ========= ========= ==========
-25-
27
The Company had income tax expense of $9.7 million and $6.7 million
for the years ended December 31, 1993 and 1992, respectively. This represents
effective tax rates of 30.42% and 25.71% for December 31, 1993 and 1992,
respectively; a greater portion of the Company's income in 1993 has been
generated from taxable sources coupled with a 1% corporate tax rate increasee
contributed to the rise in the effective tax rate.
PERFORMANCE AND EQUITY RATIOS
The following table sets forth, for the periods indicated, the
percentage of net income to average assets and average stockholders' equity,
the percentage of common stock dividends to net income and the percentage of
average stockholders' equity to average assets.
Years Ended December 31,
------------------------
1991 1992 1993
---- ---- ----
Return on average assets (%) 0.84 1.16 1.24
Return on average stockholders' equity (%) 14.12 15.84 16.08
Dividend payout ratio (%) 27.99 25.41 29.21
Average stockholders' equity to average assets (%) 5.92 7.31 7.69
SECURITIES PORTFOLIO
The Company's general policy is to purchase securities to be held to
maturity, with a maturity schedule that provides the Company with ample
liquidity. Investment securities are carried at net amortized cost and
securities held for sale are carried at the lower of net amortized cost or
market value. The December 31, 1993 book value of the consolidated portfolio
was $729.2 million and the market value was $743.6 million.
-26-
28
The following table sets forth, for the period indicated, the
composition and book value (purchase price less amortization of premiums plus
discount accretion) of the portfolio of securities held for sale by the Company
at December 31, 1993:
Book Value of Securities Held for Sale
December 31, 1992
-----------------
(Amounts in thousands)
CMOs $ 27,314
Municipal Obligations 930
--------
Total $ 28,244
========
The following tables set forth, for the period indicated, the maturity
distributions and yields of the portfolio of securities held for sale by the
Company.
Securities Held for Sale Maturity Distributions
and Yields at December 31, 1993
After One Through After Five Through
Within One Year Five Years Ten Years After Ten Years
--------------- ----------------- ------------------ ---------------
Yield Yield Yield Yield
Amount (%) Amount (%) Amount (%) Amount (%)
------ ----- ------ ----- ------ ----- ------ -----
(Amounts in thousands)
CMOs $ -- -- $ -- -- $ 551 6.05 $ 26,763 6.33
Municipal Obligations -- -- 875 4.16 55 6.51 -- --
-------- ----- -------- ----- -------- ----- -------- -----
Total investment securities
and average yields (1) $ -- -- $ 875 4.16 $ 606 6.09 $ 26,763 6.33
======== ===== ======== ===== ======== ===== ======== =====
-27-
29
The following table sets forth, for the periods indicated, the
composition and book value (purchase price less amortization of premiums plus
discount accretion) of the investment securities portfolio held by the Company:
Book Value of Investment Securities
December 31,
--------------------------------
1991 1992 1993
---- ---- ----
(Amounts in thousands)
U.S. Treasury $264,280 $249,087 $279,461
U.S. Government agencies 259,632 333,326 192,400
Municipal Obligations 56,462 45,467 35,383
MBS, CMOs and Other 25,241 93,481 193,692
-------- -------- --------
Total $605,584 $721,361 $700,936
======== ======== ========
The following tables set forth, for the periods indicated, the
maturity distributions and yields of the investment securities portfolio of the
Company.
Investment Securities Maturity Distributions and Yields at December 31, 1993
After One Through After Five Through
Within One Year Five Years Ten Years After Ten Years
--------------- ----------------- ------------------ ---------------
Yield Yield Yield Yield
Amount (%) Amount (%) Amount (%) Amount (%)
------ ----- ------ ----- ------ ----- ------ -----
(Amounts in thousands)
U.S. Treasury $127,252 4.57 $129,416 5.03 $ 17,349 6.90 $ 5,444 8.52
U.S. Government agencies 10,787 5.05 79,445 5.93 61,445 7.28 40,723 5.54
Municipal Obligations (1) 6,245 6.99 17,451 7.22 7,659 6.86 4,028 6.65
MBS, CMOs and Other 79,824 4.85 10,663 6.57 20,086 5.61 83,119 6.62
-------- ----- -------- ----- -------- ----- -------- -----
Total investment securities
and average yields (1) $224,108 4.75 $236,975 5.56 $106,539 6.41 $133,314 6.37
======== ===== ======== ===== ======== ===== ======== =====
Investment Securities Maturity Distributions and Yields at December 31, 1992
After One Through After Five Through
Within One Year Five Years Ten Years After Ten Years
--------------- ----------------- ------------------ ---------------
Yield Yield Yield Yield
Amount (%) Amount (%) Amount (%) Amount (%)
------ ----- ------ ----- ------ ----- ------ -----
(Amounts in thousands)
U.S. Treasury $119,364 $113,229 $ 11,044 $ 5,450
U.S. Government agencies 10,236 115,179 97,494 110,417
Municipal Obligations (1) 7,794 21,943 12,615 3,115
MBS, CMOs and Other 5,960 15,264 5,982 66,275
-------- ----- -------- ----- -------- ----- -------- -----
Total investment securities
and average yields (1) $143,354 6.11 $265,615 6.29 $127,135 7.49 $185,257 7.39
======== ===== ======== ===== ======== ===== ======== =====
- ----------
(1) Yields on tax-exempt investments have been adjusted to a tax
equivalent basis utilizing a 34% effective tax rate in 1992 and 35% in
1993.
-28-
30
LOAN PORTFOLIO
The following tables set forth, for the periods indicated, the
composition of the loan portfolio of the Company:
Loan Portfolio
--------------
December 31,
------------------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
(Amounts in thousands)
Real estate:
Residential mortgages 1-4 family $127,719 $165,025 $180,031 $195,543 $198,537
Residential mortgages multifamily 3,660 3,352 5,308 8,130 7,509
Home equity lines 3,120 10,505 12,205 13,412 13,858
Construction and development 7,642 8,294 10,710 15,397 22,615
Nonresidential 87,395 115,026 115,845 101,603 112,703
Commercial, industrial and other 97,536 136,192 135,786 146,933 144,855
Consumer 125,524 250,829 266,047 271,290 340,839
Lease financing and depository
institutions 5,549 4,044 9,733 6,079 6,673
Political subdivisions 13,833 18,275 15,710 12,791 11,668
Credit card -- 3,616 16,432 26,482 26,581
-------- -------- -------- -------- --------
471,978 715,158 767,807 797,660 885,838
Less, unearned income 17,350 19,089 19,548 21,559 25,710
-------- -------- -------- -------- --------
Net loans $454,628 $696,069 $748,259 $776,101 $860,128
======== ======== ======== ======== ========
1990 consumer loan balances reflect an increase of 99.8% as a result
of the acquisitions of MNB (approximately $7.8 million) and AmBank
(approximately $127.0 million).
Prior to July 1991, a correspondent bank of Hancock Bank MS issued
credit cards under the Bank's name to customers of Hancock Bank MS and retained
the outstanding receivables. In July 1991, Hancock Bank MS purchased, at par,
from its correspondent bank, certain credit cards with outstanding balances of
approximately $7.8 million and simultaneously transferred, at par, the cards
and balances to Hancock Bank LA. The resulting combined consumer and corporate
credit card portfolio aggregated approximately $11.5 million with approximately
17,700 cards outstanding. At December 31, 1993, the portfolio balance had
increased to approximately $26.6 million with approximately 45,000 cards
outstanding.
-29-
31
The following table sets forth, for the periods indicated, the
approximate maturity by type of the loan portfolio of the Company:
Loan Maturity Schedule
----------------------
December 31, 1992 December 31, 1992
--------------------------------------- ---------------------------------------
Maturity Range Maturity Range
--------------------------------------- ---------------------------------------
After One After One
Within Through After Five Within Through After Five
One Year Five Years Years Total One Year Five Years Years Total
-------- ---------- ----- ----- -------- ---------- ----- -----
(Amounts in thousands)
Commercial, industrial and
other $103,765 $ 36,154 $ 7,014 $146,933 $ 93,753 $ 40,137 $ 10,965 $144,855
Real estate - construction 14,776 621 -- 15,397 13,089 7,579 1,947 22,615
All other loans 195,641 359,795 79,894 635,330 152,542 330,952 234,874 718,368
-------- -------- -------- -------- -------- -------- -------- --------
Total loans $314,182 $396,570 $ 86,908 $797,660 $259,384 $378,668 $247,786 $885,838
======== ======== ======== ======== ======== ======== ======== ========
The sensitivity to interest rate changes of that portion of the
Company's loan portfolio that matures after one year is shown below:
Loan Sensitivity to Changes in Interest Rates
December 31, December 31,
1992 1993
----------- -----------
(Amounts in thousands)
Commercial, industrial, and real estate construction
maturing after one year:
Fixed rate $ 20,698 $ 27,412
Floating rate 23,091 23,690
Other loans maturing after one year:
Fixed rate 404,440 554,245
Floating rate 35,249 21,107
-------- --------
Total $483,478 $626,454
======== ========
-30-
32
NONPERFORMING ASSETS
The following table sets forth nonperforming assets by type for the
periods indicated, consisting of nonaccrual loans, restructured loans, real
estate owned and loans past due 90 days or more and still accruing:
December 31,
--------------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
(Amounts in thousands)
Nonaccrual loans:
Real estate $ 2,102 $ 3,153 $ 5,057 $ 3,986 $ 1,478
Consumer 1,386 1,588 1,214 1,715 1,322
Lease financing -- -- -- 22 --
Depository institutions -- -- -- -- --
Political subdivisions -- -- -- -- --
Commercial, industrial and other 1,518 903 643 93 1,371
Restructured loans 447 120 111 194 482
------- ------- ------- ------- -------
Total nonperforming loans 5,453 5,764 7,025 6,010 4,635
Acquired real estate owned -- 1,843 -- -- --
Real estate owned 2,129 3,676 3,599 1,327 654
------- ------- ------- ------- -------
Total nonperforming assets $ 7,582 $11,283 $10,624 $ 7,337 $ 5,289
======= ======= ======= ======= =======
Loans 90+ days past due and still accruing $ 3,523 $ 6,541 $ 5,825 $ 7,204 $ 4,175
======= ======= ======= ======= =======
Ratios (%):
Nonperforming loans to net loans 1.20 0.83 0.94 0.77 0.55
Nonperforming assets to net loans and
foreclosed properties 1.66 1.61 1.41 0.94 0.61
Nonperforming loans to average loans 1.23 1.05 0.99 0.82 0.59
Allowance to nonperforming loans 110.03 202.78 163.57 220.88 302.65
The following table sets forth, for the periods indicated, the amount
of interest that would have been recorded on nonaccrual loans had the loans
not been classified as "nonaccrual" as well as the interest which would have
been recorded under the original terms of restructured loans:
December 31,
--------------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
(Amounts in thousands)
Nonaccrual $ 558 $ 587 $ 685 $ 585 $ 506
Restructured 50 10 10 17 43
------- ------- ------- ------- -------
Total $ 608 $ 597 $ 695 $ 602 $ 549
======= ======= ======= ======= =======
Interest actually received on nonaccrual and restructured loans was
insignificant.
-31-
33
LOAN LOSS, CHARGE-OFF AND RECOVERY EXPENSES
The following table sets forth, for the periods indicated, average net
loans outstanding, reserve for loan losses, amounts charged-off and recoveries
of loans previously charged-off.
December 31,
----------------------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
(Amounts in thousands)
Net loans outstanding at end of period $454,628 $696,069 $748,259 $776,101 $860,128
======== ======== ======== ======== ========
Daily average net loans outstanding $443,804 $548,944 $711,311 $731,048 $780,787
======== ======== ======== ======== ========
Balance of reserve for loan losses
at beginning of period $ 6,000 $ 6,000 $ 11,688 $ 11,492 $ 13,275
Loans charged-off:
Real estate 28 233 209 539 60
Consumer 1,184 1,882 2,741 3,850 3,012
Lease financing 9 99 -- 2 53
Depository institutions -- -- -- -- --
Political subdivisions -- -- -- -- --
Commercial, industrial and other 2,448 1,585 2,829 2,515 1,904
-------- -------- -------- -------- --------
Total charge-offs 3,669 3,799 5,779 6,906 5,029
-------- -------- -------- -------- --------
Recoveries of loans previously
charged-off:
Real estate -- -- 54 48 51
Consumer 224 243 424 555 829
Lease financing 11 6 6 1 2
Depository institutions -- -- -- -- --
Political subdivisions -- -- -- -- --
Commercial, industrial and other 79 363 412 430 669
-------- -------- -------- -------- --------
Total recoveries 314 612 896 1,034 1,551
-------- -------- -------- -------- --------
Net charge-offs 3,355 3,187 4,883 5,872 3,478
Provision for loan losses 3,355 2,939 4,687 7,655 4,231
Reserves of acquired companies -- 5,936 -- --
-------- -------- -------- -------- --------
Balance of reserve for loan losses
at end of period $ 6,000 $ 11,688 $ 11,492 $ 13,275 $ 14,028
======== ======== ======== ======== ========
The following table sets forth, for the periods indicated, certain
ratios related to the Company's charge-offs, reserve for loan losses and
outstanding loans:
Years Ended December 31,
--------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Ratios (%):
Net charge-offs to average net loans 0.76 0.58 0.69 0.80 0.44
Net charge-offs to period end net loans 0.74 0.46 0.65 0.76 0.40
Reserve for loan losses to average net loans 1.35 2.13 1.62 1.68 1.82
Reserve for loan losses to period end net loans 1.32 1.68 1.54 1.71 1.63
Net charge-offs to loan loss reserve 55.92 27.27 42.49 44.23 25.79
Net charge-offs to loan loss provision 100.00 108.44 104.18 76.71 82.20
-32-
34
An allocation of the loan loss reserve by major loan category is set
forth in the following table. The allocation is not necessarily indicative of
the category of future losses and the full reserve at December 31, 1993 is
available to absorb losses occurring in any category of loans.
December 31,
-----------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993
----------------- ----------------- ----------------- ------------------ ------------------
Reserve % of Reserve % of Reserve % of Reserve % of Reserve % of
for Loans for Loans for Loans for Loans for Loans
Loan to Total Loan to Total Loan to Total Loan to Total Loan to Total
Losses Loans Losses Loans Losses Loans Losses Loans Losses Loans
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(Amounts in thousands)
Real estate $ 500 50.49 $ 1,700 43.42 $ 1,500 42.21 $ 2,000 41.88 $ 2,000 40.10
Commercial, industrial
and other 3,000 25.72 4,000 22.77 4,000 21.00 4,000 20.79 4,000 18.42
Consumer 1,300 23.79 3,500 33.29 4,000 34.65 5,000 34.01 5,000 38.48
Credit card -- -- -- .52 500 2.14 500 3.32 500 3.00
Unallocated 1,200 -- 2,488 -- 1,492 -- 1,775 -- 2,528 --
------ ------ ------- ------ ------- ------ ------- ------ ------- ------
$6,000 100.00 $11,688 100.00 $11,492 100.00 $13,275 100.00 $14,028 100.00
====== ====== ======= ====== ======= ====== ======= ====== ======= ======
DEPOSITS AND OTHER DEBT INSTRUMENTS
The following table sets forth the distribution of the average deposit
accounts for the periods indicated and the weighted average interest rates on
each category of deposits:
1991 1992 1993
------------------------------- --------------------------------- ---------------------------------
Percent Percent Percent
of of of
Amount Deposits Rate (%) Amount Deposits Rate (%) Amount Deposits Rate (%)
------ -------- -------- ------ -------- -------- ------ -------- --------
(Amounts in thousands)
Noninterest bearing accounts $ 233,080 17.96 -- $ 270,221 18.33 -- $ 328,195 20.59 --
NOW accounts 133,527 10.29 3.91 223,544 15.17 2.98 237,496 14.90 2.95
Money market and other
savings accounts 271,739 20.93 4.55 363,118 24.63 3.49 447,361 28.07 2.50
Time deposits 659,713 52.04 7.83 617,111 41.87 5.05 580,805 36.44 4.41
---------- ------ ---------- ------ ---------- ------
$1,298,059 100.00 $1,473,994 100.00 $1,593,857 100.00
========== ====== ========== ====== ========== ======
-33-
35
The Banks traditionally price their deposits to position themselves in
the middle of the local market. The Banks' policy is not to accept brokered
deposits.
Maturities of CD's of $100,000 and Over
Less
Than Three After Percent
Three to Twelve Twelve of Total
Months Months Months Total Deposits
------ ------ ------ ----- --------
At December 31, 1992 $62,532 $38,945 $37,482 $138,959 8.9
At December 31, 1993 43,862 31,449 16,520 91,831 5.7
SHORT-TERM BORROWINGS
The following table sets forth certain information concerning the
Company's short-term borrowings, which consist of federal funds purchased and
securities sold under agreements to repurchase.
Years ended December 31,
---------------------------
1991 1992 1993
---- ---- ----
Federal funds purchased:
Amount outstanding at period end $14,350 $19,300 $14,650
Weighted average interest at period end 3.19% 3.12% 2.75%
Maximum amount at any month end during period $25,775 $41,625 27,725
Average amount outstanding during period 21,674 21,261 18,046
Weighted average interest rate during period 5.17% 3.18% 2.70%
Securities sold under repurchase agreements:
Amount outstanding at period end $39,158 $17,091 $31,149
Weighted average interest at period end 4.40% 2.50% 2.50%
Maximum amount at any month end during period $49,245 $44,418 $31,289
Average amount outstanding during period 41,109 22,571 23,607
Weighted average interest rate during period 5.46% 3.24% 2.26%
Hancock Bank LA acts as a correspondent bank for 70 Louisiana
financial institutions. Many of those banks maintain federal funds
relationships which accounts for most of the volume of federal funds bought and
sold.
-34-
36
LIQUIDITY
Liquidity represents an institution's ability to provide funds to
satisfy demands from depositors, borrowers and other commitments by either
converting assets into cash or accessing new or existing sources of incremental
funds. The principal sources of funds which provide liquidity are customer
deposits, payments of interest and principal on loans, maturities in and sales
of investment securities, earnings and borrowings. At December 31, 1993, cash
and due from banks, investment securities, federal funds sold and repurchase
agreements were 56.0% of total deposits, as compared to 58.3% at December 31,
1992.
The Company depends upon the dividends paid to it from the Banks as a
principal source of funds for its debt service requirements. As of December
31, 1993, there was approximately $50 million available to be dividended up to
the Company from the Banks.
CAPITAL RESOURCES
Risk-based and leverage capital ratios for the Company and the Banks
for the periods indicated are shown in the following table:
Risk-Based Capital Ratios Tier 1 Leverage
-------------------------------------------------------- --------------------------
Total Tier 1 Ratio
-------------------------- -------------------------- --------------------------
December 31, December 31, December 31, December 31, December 31, December 31,
1992 1993 1992 1993 1992 1993
---- ---- ---- ---- ---- ----
Hancock Bank MS 14.56% 15.45% 13.65% 14.62% 7.50% 8.14%
Hancock Bank LA 12.44 14.26 11.31 13.01 5.55 6.92
Company 15.62 15.42 14.09 14.49 7.03 7.62
Risk-based capital requirements are intended to make regulatory
capital more sensitive to risk elements of the Company. Currently, the Company
is required to maintain a minimum risk-based capital ratio of 8.0%, with not
less than 4.0% in Tier 1 capital. In addition, the Company must maintain a
minimum Tier 1 leverage ratio (Tier 1 capital to total assets) of at least 4.0%
based upon the regulators latest composite rating of the institution.
-35-
37
RECENT CHANGES IN FINANCIAL ACCOUNTING STANDARDS
During 1992, the Company adopted Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Postretirement Benefits Other Than
Pensions. This Statement requires accrual of postretirement benefits (such as
health care benefits) during the years an employee provides services. The
costs of these benefits were previously expenses on a pay-as-you-go basis. The
adoption of this Statement decreased net earnings by $250,000 ($0.04 per share)
in 1992.
Effective January 1, 1993, the Company changed its method of
accounting for income taxes for the deferred method to the liability method as
required by Statement of Financial Accounting Standard No. 109. Prior years
have not been restated. The cumulative effect of this accounting change did
not have a significant effect on the Company's financial statements and was
recorded in income tax expense in the year ended December 31, 1993.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 112, Employers' Accounting for Post Employment
Benefits which requires the accrual of certain post employment benefits other
than pension and health care. The Company does not anticipate that the
adoption of this Statement in 1994 will have a significant effect on its
financial condition or results of operations.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of Certain
Loans, which requires the present value of expected future cash flows of
impaired loans be discounted at the loan's effective interest rate. The
Company does not anticipate that the adoption of this Statement in 1995 will
have a significant effect on its financial condition or results of operations.
The Financial Accounting Standards Board has issued Statement of
Financial Standards No. 115 Accounting for Certain Investments in Debt and
Equity Securities which is effective in 1994. This Statement requires the
investment portfolio to be classified into one of three reporting categories,
held-to-maturity, available-for-sale, or trading. The Company has not yet
-36-
38
completed its review of Statement No. 115 relative to its securities portfolio
but does not believe that the adoption of the Statement will have a material
effect on its financial statements.
IMPACT OF INFLATION:
Unlike most industrial companies, the assets and liabilities of
financial institutions such as the Banks are primarily monetary in nature.
Therefore, interest rates have a more significant effect on the Banks'
performance than the effect of general levels of inflation on the price of
goods and services. While interest rates earned and paid by the Banks are
affected to a degree by the rate of inflation, and noninterest income and
expenses can be affected by increasing rates of inflation, the Company believes
that the effects of inflation are generally manageable through asset/liability
management.
-37-
39
ITEM 2 - PROPERTIES
The Company's main offices are located at One Hancock Plaza, Gulfport,
Mississippi. The building has fourteen stories, of which seven are utilized by
the Company. The remaining seven stories are presently leased to outside
parties.
The building is leased from the City of Gulfport in connection with a
urban development revenue bond issue with a present balance of $3,820,000. The
lease payments by Hancock Bank MS, which are equivalent in amount to the
payments of principal and interest on the bonds, are used by the City to make
payments on the bonds. Hancock Bank MS, however, effectively has ownership of
the building since title will revert when all outstanding bonds have been paid.
For this reason, the Company carries the building as an asset and the bonds as
a long term payable on its balance sheet. The bonds mature at various dates
through 1997.
The following banking offices in Mississippi and Louisiana are held in
fee (number of locations shown in parenthesis):
Bay St. Louis, MS (2) Ocean Springs, MS (3)
Biloxi, MS (2) Orange Grove, MS (1)
D'Iberville, MS (1) Pascagoula, MS (4)
Escatawpa, MS (1) Pass Christian, MS (1)
Gautier, MS (1) Picayune, MS (4)
Gulfport, MS (3) Poplarville, MS (1)
Long Beach, MS (2) Waveland, MS (1)
Lyman, MS (1) Baker, LA (1)
Mississippi City, MS (1) Baton Rouge, LA (13)
Moss Point, MS (2)
The following banking offices in Mississippi and Louisiana are leased
under agreements with unexpired terms of from one to twelve years including
renewal options (number of locations shown in parenthesis):
Bay St. Louis, MS (1) Pascagoula, MS (1)
Biloxi, MS (1) Vancleave, MS (1)
Diamondhead, MS (1) Baton Rouge, LA (1)
Gulfport, MS (3)
-38-
40
In addition to the above, Hancock Bank MS owns land and other
properties acquired through foreclosures of loans. The major item is
approximately 3,700 acres of timber land in Hancock County, Mississippi, which
Hancock Bank MS acquired by foreclosure in the 1930's.
ITEM 3 - LEGAL PROCEEDINGS
Not applicable.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDERS MATTERS
The information under the caption "Market Information" on page 6 of
the Company's 1993 Annual Report to Stockholders (filed with the Registrant's
definitive proxy materials on January 25, 1994 and incorporated herein by
reference).
ITEM 6 - SELECTED FINANCIAL DATA
The information under the caption "Consolidated Summary of Selected
Financial Information" on Page 7 of the Company's 1993 Annual Report to
Stockholders (filed with the Registrant's definitive proxy materials on January
25, 1994 and incorporated herein by reference).
-39-
41
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on Pages 32 and 33
of the Company's 1993 Annual Report to Stockholders (filed with the
Registrant's definitive proxy materials on January 25, 1994 and incorporated
herein by reference).
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and
subsidiaries, and the independent auditors' report, appearing on Pages 18
through 30 of the Company's 1993 Annual Report to Stockholders (filed with the
Registrant's definitive proxy materials on January 25, 1994 and incorporated
herein by reference):
Consolidated Balance Sheets on Page 18
Consolidated Statements of Earnings on Page 19
Consolidated Statements of Stockholders' Equity on Page 20
Consolidated Statements of Cash Flows on Page 21
Notes to Consolidated Financial Statements on Pages 22 through 30
Independent Auditors' Report on Page 31
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information responsive to this Item, see "Election of Directors"
(Pages 2-6) and "Management Compensation" (Pages 10-15) in the Proxy Statement
for the Annual Meeting of Stockholders held February 24, 1994 which was filed
by the Registrant in definitive form with the Commission on January 25, 1994
and is incorporated herein by reference.
-40-
42
ITEM 11 - EXECUTIVE COMPENSATION
For information responsive to this item see "Management Compensation"
(Pages 10-15) in the Proxy Statement for the Annual Meeting of Stockholders
held February 24, 1994 which was filed by the Registrant in definitive form
with the Commission on January 25, 1994 and is incorporated herein by
reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information responsive to this item see "Principal Stockholders"
(Page 7) and "Election of Directors" (Pages 2-6) in the Proxy Statement for the
Annual Meeting of Stockholders held February 24, 1994 which was filed by the
Registrant in definitive form with the Commission on January 25, 1994 and is
incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information responsive to this item see "Certain Transactions and
Relationships" (Page 16) in the Proxy Statement for the Annual Meeting of
Stockholders held February 24, 1994 which was filed by the Registrant in
definitive form with the Commission on January 25, 1994 and is incorporated
herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
HANCOCK HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
(A) 1. AND 2. CONSOLIDATED FINANCIAL STATEMENTS:
The following have been incorporated herein from the Company's 1993
Annual Report to Stockholders (filed with the Registrant's definitive proxy
materials on January 25, 1994 and incorporated herein by reference):
- Independent Auditors' Report
-41-
43
- Consolidated Balance Sheets as of December 31, 1993 and 1992.
- Consolidated Statements of Earnings for the three years ended
December 31, 1993
- Consolidated Statements of Stockholders' Equity for the three years
ended December 31, 1993
- Consolidated Statements of Cash Flows for the three years ended
December 31, 1993
- Notes to Consolidated Financial Statements for the three years ended
December 31, 1993
All other financial statements and schedules are omitted as the
required information is inapplicable or the required information is presented
in the consolidated financial statements or related notes.
(a) 3. Exhibits:
(2.1) Agreement and Plan of Merger dated May 30, 1985 among Hancock
Holding Company, Hancock Bank and Pascagoula-Moss Point Bank
(filed as Exhibit 2 to the Registrant's Form 8-K dated June 6,
1985 and incorporated herein by reference).
(2.2) Amendment dated July 9, 1985 to Agreement and Plan of Merger
dated May 30, 1985 among Hancock Holding Company, Hancock Bank
and Pascagoula-Moss Point Bank (filed as Exhibit 19 to
Registrant's Form 10-Q for the quarter ended June 30, 1985 and
incorporated herein by reference).
(2.3) Stock Purchase Agreement dated February 12, 1990 among Hancock
Holding Company, Metropolitan Corporation and Metropolitan
National Bank (filed as Exhibit 2.3 to Registrant's Form 10-K
for the year ended December 31, 1989 and incorporated herein
by reference).
(2.4) Modified Purchase and Assumption Agreement dated August 2,
1990, among Hancock Bank of Louisiana and the Federal Deposit
Insurance Corporation, receiver of American Bank and Trust
Company of Baton Rouge, Louisiana (filed as Exhibit 2.1 to the
Registrant's Form 10-Q for the quarter ended June 30, 1990 and
incorporated herein by reference).
-42-
44
(2.5) Agreement and Plan of Reorganization dated November 30, 1993
among Hancock Holding Company, Hancock Bank of Louisiana and
First State Bank and Trust Company of East Baton Rouge Parish,
Baker, Louisiana (filed as Exhibit 2.5 to the Registrant's
Form 10-K dated December 31, 1993).
(3.1) Amended and Restated Articles of Incorporation dated November
8, 1990 (filed as Exhibit 3.1 to the Registrant's Form 10-K
for the year ended December 31, 1990 and incorporated herein
by reference).
(3.2) Amended and Restated Bylaws dated November 8, 1990 (filed as
Exhibit 3.2 to the Registrant's Form 10-K for the year ended
December 31, 1990 and incorporated herein by reference).
(3.3) Articles of Amendment to the Articles of Incorporation of
Hancock Holding Company, dated October 16, 1991 (filed as
Exhibit 4.1 to the Registrant's Form 10-Q for the quarter
ended September 30, 1991).
(3.4) Articles of Correction, filed with Mississippi Secretary of
State on November 15, 1991 (filed as Exhibit 4.2 to the
Registrant's Form 10-Q for the quarter ended September 30,
1991).
(3.5) Articles of Amendment to the Articles of Incorporation of
Hancock Holding Company, adopted February 13, 1992 (filed as
Exhibit 3.5 to the Registrant's Form 10-K for the year ended
December 31, 1992 and incorporated herein by reference).
(3.6) Articles of Correction, filed with Mississippi Secretary of
State on March 2, 1992 (filed as Exhibit 3.6 to the
Registrant's Form 10-K for the year ended December 31, 1992
and incorporated herein by reference).
(4.1) Specimen stock certificate (reflecting change in par value
from $10.00 to $3.33, effective March 6, 1989) (filed as
Exhibit 4.1 to the Registrant's Form 10-Q for the quarter
ended March 31, 1989 and incorporated herein by reference).
-43-
45
(4.2) By executing this Form 10-K, the Registrant hereby
agrees to deliver to the Commission upon request copies of
instruments defining the rights of holders of long-term debt of the
Registrant or its consolidated subsidiaries or its unconsolidated
subsidiaries for which financial statements are required to be filed,
where the total amount of such securities authorized thereunder does
not exceed 10 percent of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
(10.1) Description of Hancock Bank Executive Supplemental
Reimbursement Plan, as amended (provided on page 14 of the
Registrant's definitive proxy statement for its annual shareholders'
meeting on February 24, 1994 filed by the Registrant on January 25,
1994 and incorporated herein by reference).
(10.2) Description of Hancock Bank Automobile Plan (provided on page
14 of the Registrant's definitive proxy statement for its
annual shareholders' meeting on February 24, 1994 filed by the
Registrant on January 25, 1994 and incorporated herein by reference).
(10.3) Description of Deferred Compensation Arrangement for Directors
(provided on pages 10-15 of the Registrant's definitive proxy
statement for its annual shareholders' meeting on February 25,
1994 filed by the Registrant on January 25, 1994 and incorporated
herein by reference).
(10.4) Site Lease Agreement between Hancock Bank and City of
Gulfport, Mississippi dated as of March 1, 1989 (filed as
Exhibit 10.4 to the Registrant's Form 10-K for the year ended
December 31, 1989 and incorporated herein by reference).
(10.5) Project Lease Agreement between Hancock Bank and City of
Gulfport, Mississippi dated as of March 1, 1989 (filed as
Exhibit 10.5 to the Registrant's Form 10-K for the year ended
December 31, 1989 and incorporated herein by reference).
-44-
46
(10.6) Deed of Trust dated as of March 1, 1989 from Hancock Bank to
Deposit Guaranty National Bank as trustee (filed as Exhibit
10.6 to the Registrant's Form 10-K for the year ended December
31, 1989 and incorporated herein by reference).
(10.7) Trust Indenture between City of Gulfport, Mississippi and
Deposit Guaranty National Bank dated as of March 1, 1989
(filed as Exhibit 10.7 to the Registrant's Form 10-K for the
year ended December 31, 1989 and incorporated herein by
reference).
(10.8) Guaranty Agreement dated as of March 1, 1989 from Hancock Bank
to Deposit Guaranty National Bank as trustee (filedas Exhibit
10.8 to the Registrant's Form 10-K for the year ended December
31, 1989 and incorporated herein by reference).
(10.9) Bond Purchase Agreement dated as of February 23, 1989 among
Hancock Bank, J. C. Bradford & Co. and City of Gulfport,
Mississippi (filed as Exhibit 10.9 to the Registrant's Form
10-K for the year ended December 31, 1989 and incorporated
herein by reference).
-45-
47
(13) Annual Report to Stockholders for year ending December 31,
1993 (furnished for the information of the Commission only
and not deemed "filed" except for those portions which are
specifically incorporated herein by reference).
(21) Proxy Statement for the Registrant's Annual Meeting of
Shareholders on February 24, 1994 (deemed "filed" for the
purposes of this Form 10-K only for those portions which are
specifically incorporated herein by reference).
(22) Subsidiaries of the Registrant.
Jurisdiction Holder of
Name Of Incorporation Outstanding Stock (1)
- ---- ---------------- ---------------------
Hancock Bank Mississippi Hancock Holding Company
Hancock Bank of Louisiana Louisiana Hancock Holding Company
Hancock Bank Securities Mississippi Hancock Bank
Corporation
Hancock Insurance Agency Mississippi Hancock Bank
Town Properties, Inc. Mississippi Hancock Bank
The Gulfport Building, Inc. Mississippi Hancock Bank
of Mississippi
Harrison Financial Services, Mississippi Hancock Bank
Inc.
Hancock Mortgage Corporation Mississippi Hancock Bank
Harrison Life Insurance Mississippi 79% owned by Hancock
Company Bank
(1) All are 100% owned except as indicated.
(23) Consent of Independent Accountants.
-46-
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HANCOCK HOLDING COMPANY
DATE February 1, 1994 /s/ LEO W. SEAL, JR.
___________________________________
By Leo W. Seal, Jr., President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ LEO W. SEAL, JR. President and Director February 1, 1994
______________________________ (Principal Executive,
Leo W. Seal, Jr. Financial, and Accounting
Officer)
/s/ JOSEPH F. BOARDMAN, JR. Director, February 1, 1994
______________________________ Chairman of the Board
Joseph F. Boardman, Jr.
/s/ THOMAS W. MILNER, JR. Director February 1, 1994
______________________________
Thomas W. Milner, Jr.
/s/ GEORGE A. SCHLOEGEL Director, February 1, 1994
______________________________ Vice-Chairman of the Board
George A. Schloegel
/s/ DR. HOMER C. MOODY, JR. Director February 1, 1994
______________________________
Dr. Homer C. Moody, Jr.
/s/ A. F. DANTZLER Director February 1, 1994
______________________________
A. F. Dantzler
/s/ CHARLES H. JOHNSON Director February 1, 1994
______________________________
Charles H. Johnson
/s/ L. A. KOENENN, JR. Director February 1, 1994
______________________________
L. A. Koenenn, Jr.
/s/ VICTOR MAVAR Director February 1, 1994
______________________________
Victor Mavar
-47-