Hancock Holding Company announces earnings for first quarter 2006

     GULFPORT, MS (April 20, 2006) - Hancock Holding Company (NASDAQ: HBHC) and Leo W. Seal, Jr., President of Hancock Holding Company, today announced earnings for the quarter ended March 31, 2006. Hancock's first quarter 2006 earnings were $22.01 million, an increase of $6.57 million, or 43 percent, from the first quarter of 2005. Diluted earnings per share for the first quarter of 2006 were $0.67, an increase of $0.20, or 43 percent, from the same quarter a year ago.

     While Hancock's earnings for the third and fourth quarters of 2005 were significantly impacted by Hurricane Katrina, the first quarter of 2006 contained no significant income statement items related to the impact of the storm. The financial impact of Hurricane Katrina on Hancock's earnings for the past three quarters is summarized in the table below.

     Compared to the fourth quarter of 2005, first quarter earnings were up $2.95 million, or 15 percent, with diluted earnings per share up $0.09. Excluding the impact of Hurricane Katrina (as indicated in the above table), the Company's earnings for the fourth quarter 2005 were $22.41 million, with diluted earnings per share of $0.68.

     Hancock's first quarter 2006 performance was highlighted by the following significant items:

• Superior Returns: return on average assets of 1.49 percent and return on average common equity of 18.34 percent. In addition, the Company's efficiency ratio (non-interest expense as a percent of total revenue) was 58.30 percent.
• Continued Strong Balance Sheet Growth: total assets were up $306 million, or 5 percent, between December 31, 2005 and March 31, 2006, led by deposit growth of $329 million, or 7 percent; deposits are up $1.52 billion, or 40 percent, since Hurricane Katrina made landfall on August 29, 2005; period-end loans were down $18 million since December 31, 2005, as loan production was not able to keep pace with maturities and pay-downs.
• Net Interest Income (te) Expansion: on the strength of deposit growth and the resulting earning asset expansion, net interest (te) was up $3.77 million, or 7 percent between fourth quarter 2005 and first quarter 2006; net interest income (te) was up $12.28 million, or 27 percent since first quarter 2005.
• Asset Quality: Hancock's provision for loan losses in the first quarter was a negative $705,000 due to a large commercial recovery (favorable impact to net charge-offs of $1.75 million); total reported net charge-offs for the quarter were a net recovery of $108,000 and included storm-related net charge-offs of $597,000; excluding the impact of the large commercial recovery and the storm-related charge-offs, net charge-offs would have been $1.05 million, or 0.14 percent, for the first quarter; non-performing assets as a percent of loans and foreclosed assets fell 7 basis points to 0.35 percent at March 31, 2006, from December 31, 2005, while loans 90 days past due fell 64 basis points to 0.22 percent.
• Non-interest Income Growth: non-interest income was up $1.87 million, or 8 percent, from the prior quarter with increases led by service charges (up $1.03 million), but also reflected increases in most other fee income categories.
• Expensing of Stock Options: FAS Statement No. 123(r), which Hancock adopted on January 1, 2006, requires entities to recognize in the income statement the grant-date fair value of share options and other equity-based compensation issued to employees; the first quarter 2006 after-tax impact of expensing stock options was $917,000 or $0.03 per common share.

     In commenting on Hancock's operating results for the first quarter of 2006, George A. Schloegel, Chief Executive Officer, stated, "While Hancock continues to be a major leader in the rebuilding efforts of the region, the Company is focused on doing our part to make the future a bright one for our associates, clients, and neighbors. Hancock's first quarter results speak for themselves and are a testament to the human spirit that carries on and thrives in the face of adversity."

Balance Sheet Growth and Capital

     Hancock continues to experience significant balance sheet growth in the aftermath of Hurricane Katrina. At March 31, 2006, Hancock had total loans of $2.97 billion and total deposits of $5.32 billion. The Company's total asset size at March 31, 2006, was $6.26 billion. For the period from August 31, 2005, to March 31, 2006, total loans have grown $33 million, or 1 percent, and total deposits have grown $1.52 billion, or 40 percent, while total assets have increased $1.46 billion, or 31 percent.

     The Company's deposit and earning asset growth continued into the first quarter of 2006. Total deposits were up $329 million, or 7 percent, at March 31, 2006, compared to year-end 2005. While loans were down $18 million for the same time period, earning assets were up $308 million, or 6 percent. The composition of the first quarter 2006 deposit inflows consisted of 14 percent non-interest-bearing demand accounts, 55 percent low cost interest-bearing transaction accounts, and 30 percent time deposits. Loan growth in the Company's operating region is expected to increase significantly once the inflows of insurance and federal aid funds begin to subside at some point later in 2006.

     The Loan/Deposit Ratio averaged 66 percent for the fourth quarter, but dropped to 59 percent for the first quarter of 2006, due to an average increase in deposits of $522 million, compared to $28 million decrease in average loans for the same period. At March 31, 2006, the Loan/Deposit Ratio was 56 percent.

     Hancock remains very well capitalized even with a $1.46 billion increase in total assets since the storm made landfall on August 29, 2005. As of March 31, 2006, Hancock's Leverage (tier one) Ratio stands at 7.45 percent, while the Tangible Equity Ratio is 6.75 percent.

Net Interest Income

     Net interest income (te) for the first quarter of 2006 increased $12.28 million, or 27 percent, from the first quarter of 2005, and was up $3.77 million, or 7 percent, from the fourth quarter of 2005. The Company's net interest margin (te) was 4.30 percent in the first quarter of 2006, 5 basis points narrower than the same quarter a year ago and 14 basis points narrower than the previous quarter.

     Compared to the same quarter a year ago, the primary driver of the $12.28 million increase in net interest income (te) was an $1.20 billion, or 28 percent, increase in average earning assets mainly from average deposit growth of $1.20 billion, or 31 percent, much of which was related to deposits inflows in the aftermath of Hurricane Katrina. The unprecedented deposit growth caused the Loan/Deposit Ratio to decline to 59 percent in the first quarter of 2006. The $1.20 billion increase in average earning assets was deployed into securities portfolio (average increase of $802 million, or 59 percent), short-term investments (average increase of $203 million), and into loans (average increase of $194 million, or 7 percent). Loans now comprise 54 percent of the Company's average earning asset base, as compared to 61 percent for the same quarter a year ago. The net interest margin (te) narrowed 5 basis points as the increase in the average earning asset yield (27 basis points) did not offset the increase in total funding costs (33 basis points).

     The Company's level of net interest income (te) in the first quarter of 2006 increased $3.77 million, or 7 percent, from the prior quarter. Average earning assets increased $571 million, or 12 percent, over the previous quarter. Fueled by storm-related deposit inflows, average deposits increased $522 million, or 12 percent, compared to the prior quarter. Of the $571 million increase in average earning assets, $19 million was deployed into short-term investments (mostly fed funds) and the balance, $581 million, into the securities portfolio. Average loans were down $28 million from the prior quarter as loan pay-downs continued to eclipse loan production. The net interest margin (te) narrowed 14 basis points from the prior quarter as the yield on average earning assets increased just 3 basis points, while total funding costs were up 18 basis points. The yield on average earning assets was impacted by the larger percent of the Company's earning assets in securities and short-term investments (46 percent) than the previous quarter (39 percent). The total cost of funds was up 18 basis points mostly due to increase in cost of public fund deposits (indexed to short-term market rates).

Non-interest Income and Non-interest Expense

     Excluding the impact of net storm-related items and securities transactions, non-interest income for the first quarter of 2006 was up $2.46 million, or 11 percent, compared to the same quarter a year ago. Non-interest income was up $1.87 million, or 8 percent, compared to the fourth quarter of 2005. The primary factors impacting the higher levels of non-interest income as compared to the same quarter a year ago were higher levels of insurance fees (up $1.28 million) mostly related to higher revenues associated with Magna Insurance Company, the Company's wholly owned insurance company, and the July, 1, 2005, acquisition of J. Everett Eaves, Inc. In addition, other income was up $1.26 million, when compared to the same quarter a year ago. However, service charges were down $1.61 million principally due to waived return item fees and other service charges as a result of accommodations to customers impacted by Hurricane Katrina. The increase in non-interest income for the first quarter of 2006 (excluding the 2005 net storm-related items and securities transactions) compared to the prior quarter was due to increases in service charges (up $1.03 million) and ATM fees (up $489,000).

     Operating expenses for the first quarter of 2006 were $7.52 million, or 18 percent, higher compared to the same quarter a year ago and were $4.54 million, or 10 percent, higher than the previous quarter. The increase from the same quarter a year ago was reflected in higher levels of personnel expense (up $3.82 million), occupancy expense (up $1.16 million), telephone expense (up $910,000) and all other expenses (up $1.62 million). The increase from the prior quarter was reflected in higher personnel expense (up $1.62 million) and higher other operating expenses (up $2.34 million). The Company's overall increase in operating expenses for the first quarter of 2006, while not containing any significant direct expenses related to the impact of Hurricane Katrina, did include an unquantifiable level of expenses indirectly related to the storm. This would include on-going expenditures related to occupancy (due to large numbers of employees remaining displaced from their regular pre-storm workplaces), equipment replacement, repair and maintenance expenses, and other costs related to the resumption of non-storm related expenditures.

Asset Quality

     Annualized net charge-offs as a percent of average loans for the first quarter of 2006 were a negative 0.01 percent (indicating a net recovery), compared to 0.33 percent for the first quarter of 2005, and to 0.41 percent in the fourth quarter of 2005. That represents a decrease of 42 basis points, or $3.21 million from the prior quarter and a decrease of 34 basis points, or $2.37 million from the same quarter a year ago. During the first quarter of 2006, the Company recovered a large commercial credit totaling $1.75 million. In addition, net charge-offs of $597,000, or 0.08 percent, were related to Hurricane Katrina and were charged directly against the $35.2 million storm-related allowance for loan losses established by the Company in the third quarter of 2005. Excluding the first quarter storm-related net charge-offs of $597,000 and the large commercial recovery of $1.75 million, net charge-offs for the first quarter were $1.05 million, or 0.14 percent of average loans.

     The provision for loan losses in the first quarter of 2006 was negative $705,000, due to the aforementioned large credit recovery. This compares to the $1.08 million provision booked in the fourth quarter of 2005, and to $2.76 million for the first quarter of 2005.

     Non-performing assets as a percent of total loans and foreclosed assets was 0.35 percent at March 31, 2006, compared to 0.42 percent at December 31, 2005. Compared to the first quarter of 2005, the ratio of non-performing assets as a percent of total loans and foreclosed assets was down 1 basis point from the 0.36 percent reported at March 31, 2005. Non-performing assets decreased $2.06 million from December 31, 2005, reflecting primarily lower levels of non-accrual assets. The composition of the Company's $10.46 million non-performing asset base continues to reflect granularity with many smaller credits and/or properties (only 7 credits or properties exceeding $250,000 and 160 credits or properties below $250,000).
The Company's ratio of accruing loans 90 days or more past due to total loans was 0.22 percent at March 31, 2006, compared to 0.86 percent at December 31, 2005 and to 0.10 percent at March 31, 2005. The higher level of loans 90 days or more past due at December 31, 2005, was due to storm-related accommodations granted to certain loan customers. In the aftermath of Hurricane Katrina, Hancock recognized that many credit customers (mostly residential mortgage holders) were in a position where time would be needed to recover sufficiently from the storm before they could resume payments on their loans. Accommodations in the form of loan payment extensions (most for 90 days) were granted on a customer-by-customer basis. As of March 31, 2006, accommodations in the form of loan payment extensions totaled $1.58 million and were not included in the aforementioned amounts and ratios of loans 90 days past due.

     The Company's allowance for loan losses was $73.96 million at March 31, 2006, down $597,000 from the $74.56 million reported at December 31, 2005, and $32.78 million higher than the $41.18 million reported at March 31, 2005. The ratio of the allowance for loan losses as a percent of period-end loans was 2.49 percent at March 31, 2006, unchanged from December 31, 2005. The allowance coverage ratio (allowance for loan losses to non-performers and past dues) was 433 percent in first quarter 2006, as compared to 196 percent in fourth quarter 2005, and 324 percent in first quarter 2005. As previously mentioned, the Company had established a specific allowance of $35.20 million for estimated credit losses related to the impact of Hurricane Katrina on Hancock's loan portfolio in the third quarter of 2005. Hancock recorded storm-related net charge-offs of $2.35 million during the fourth quarter and $597,000 in the first quarter that were charged directly against the aforementioned allowance. In doing so, the storm-related allowance was reduced by $2.95 million and as of March 31, 2006, stands at $32.25 million. Hancock is continuously reviewing the adequacy of the special storm-related allowance and, based on current information, views the current level to be adequate.

General

Hancock Holding Company - parent company of Hancock Bank (Mississippi), Hancock Bank of Louisiana, Hancock Bank of Florida, and Magna Insurance Company - has assets of $6.26 billion at March 31, 2006. Founded in 1899, Hancock Bank stands among the strongest, safest five-star financial institutions in America. Hancock Bank operates 100 Hancock full-service offices and 120 automated teller machines throughout South Mississippi, Louisiana, and Florida as well as subsidiaries Hancock Investment Services, Inc., Hancock Insurance Agency, and Harrison Finance Company. Investors can access additional corporate information or online banking and bill pay services online.

Financial Highlights Part 1 | Financial Highlights Part 2 | Financial Highlights Part 3

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about companies' anticipated future financial performance. This act provides a safe harbor for such disclosure, which protects the companies from unwarranted litigation if actual results are different from management expectations. This release contains forward-looking statements and reflects management's current views and estimates of future economic circumstances, industry conditions, Company performance, and financial results. These forward-looking statements are subject to a number of factors and uncertainties which could cause the Company's actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements

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