Hancock Holding Company announces earnings for second quarter 2007

GULFPORT, MS (July 17, 2007) - Hancock Holding Company (NASDAQ: HBHC) announced earnings for the second quarter ended June 30, 2007. Hancock's second quarter 2007 earnings were $20.3 million, a decrease of $1.7 million, or 7.6 percent, from the second quarter of 2006. Diluted earnings per share for the second quarter of 2007 were $0.62, a decrease of $0.04 from the same quarter a year ago. Earnings for the second quarter of 2007 were up $1.1 million, or 5.7 percent, from the first quarter of 2007. Diluted earnings per share were up $0.04 from the first quarter of 2007.

In commenting on Hancock's second quarter 2007 results, Chief Executive Officer Carl J. Chaney stated, "The increase in earnings from the first quarter was a clear sign that the Company was on track toward superior financial performance and that the rebuilding of the region was in full swing."

For comparative purposes, net income for 2006 was affected by several items related to the impact of Hurricane Katrina, which made landfall in the Company's operating region on August 29, 2005. In the third quarter of 2006, the Company reversed $20.0 million from the storm-related allowance for loan losses due to better than expected loss experience with storm-impacted credits. In addition, the Company negotiated a final settlement with the primary property and casualty insurance provider and recognized a $5.1 million gain in 2006's fourth quarter. There were no significant storm-related items in the first and second quarters of 2006 and 2007.

Also commenting on Hancock's second quarter earnings was Chief Executive Officer John M. Hairston: "The quarter's results are a clear indication of the Company's ongoing tradition of strength and stability and building shareholder value."

Second Quarter 2007 Financial Highlights

• Net Income and Returns: Hancock's net income for the second quarter of 2007 was $20.3 million compared to $22.0 million for the same quarter a year ago. Return on average assets for the quarter was 1.42 percent compared to 1.45 percent for 2006's second quarter. Return on average common equity was 14.53 percent compared to 17.89 percent for the same quarter a year ago. For the first quarter of 2007, return on average assets was 1.32 percent and return on average common equity was 13.77 percent.
  
  
• Asset Quality & Allowance for Loan Losses: Hancock recorded a provision for loan losses of $1.2 million in the second quarter which, when combined with the quarter's net charge-offs of $1.53 million, resulted in the $0.3 million reduction in the allowance for loan losses between March 31, 2007, and June 30, 2007. This provision was necessary to further adjust the allowance to the level dictated by the Company's reserving methodologies. Net charge-offs for the second quarter of 2007 were $1.53 million, or 0.18 percent of average loans, up $63 thousand from the $1.47 million, or 0.18 percent of average loans, reported for the first quarter of 2007. Net charge-offs for the second quarter of 2006 were $3.00 million or 0.40 percent of average loans. Non-performing assets as a percent of total loans and foreclosed assets was 0.25 percent at June 30, 2007, compared to 0.16 percent at March 31, 2007. Compared to the second quarter of 2006, the ratio of non-performing assets as a percent of total loans and foreclosed assets was down 4 basis points from the 0.29 percent reported at June 30, 2006. Non-performing assets increased $3.5 million from March 31, 2007, reflecting the addition to non-accrual loans of one credit totaling $4.0 million. The Company's ratio of accruing loans 90 days or more past due to total loans was 0.07 percent at June 30, 2007, compared to 0.18 percent at March 31, 2007, and to 0.22 percent at June 30, 2006. The Company's allowance for loan losses was $46.23 million at June 30, 2007, down $0.3 million from the $46.52 million reported at March 31, 2007, and $24.73 million lower than the $70.96 million reported at June 30, 2006. The ratio of the allowance for loan losses as a percent of period-end loans was 1.35 percent at June 30, 2007, and 1.41 percent at March 31, 2007. The allowance coverage ratio (allowance for loan losses to non-performers and past dues) was 411 percent for the second quarter of 2007, as compared to 457 percent for the second quarter of 2006.
  
  
• Loans: For the quarter ended June 30, 2007, Hancock's average total loans were $3.4 billion, which represented an increase of $377.3 million, or 13 percent, from the quarter ended June 30, 2006. Period-end loans were up $117.5 million, or 4 percent, compared to March 31, 2007. Average total loans were up $78.9 million, or 10 percent annualized, from the first quarter of 2007. Of that increase, approximately $32 million of growth was in Mississippi, $39 million in Louisiana, and $9 million in Alabama, with a $1 million decrease in Florida. The majority of the increase in average loans compared to last quarter was in commercial purpose loans (approximately $57.5 million).

• Deposits: Period-end deposits for the second quarter were $5.0 billion, down $269.7 million, or 5 percent, from June 30, 2006, but were up $53.9 million, or 1 percent, from March 31, 2007. Average deposits were down $152.8 million, or 12 percent annualized, from the first quarter of 2007. The decrease in average deposits was in public fund deposits (down $45.2 million), time deposits (down $42.9 million), transaction deposits (down $31.3 million) and non-interest bearing deposits (down $33.4 million). The decline in average deposits compared to the prior quarter and same quarter a year ago was the result of the continued rebuilding efforts in the region following Hurricane Katrina and the slower than expected pace of federal grants to homeowners. However, as noted above, the Company's June 30, 2007, deposit balances did reflect a $53.9 million increase as compared to March 31, 2007. The majority of this increase took place throughout the month of June and was reflected in higher time and public fund deposits.

• Net Interest Income: Net interest income (te) for the second quarter decreased $5.9 million, or 10 percent, from the second quarter of 2006, and was basically unchanged from the first quarter of 2007. The Company's net interest margin (te) was 4.17 percent in the second quarter, 10 basis points narrower than the same quarter a year ago and 13 basis points wider than the previous quarter. Compared to the same quarter a year ago, the primary driver of the $5.9 million decrease in net interest income (te) was a $432.7 million, or 8 percent, decrease in average earning assets, mainly from a reduction in total borrowings of $13.2 million, or 6 percent, and a decrease in average deposits of $374.0 million, or 7 percent. As mentioned, the net interest margin (te) narrowed 10 basis points as the increase in the average earning asset yield (44 basis points) did not offset the increase in total funding costs (54 basis points). The Company's level of net interest income (te) in the second quarter remained unchanged from the prior quarter. The net interest margin (te) widened 13 basis points from the prior quarter as the yield on average earning assets increased 12 basis points, while total funding costs were down 1 basis point.

• Non-interest income & operating expense: Non-interest income for the second quarter was up $4.3 million, or 16 percent, compared to the same quarter a year ago and was up $4.3 million, or 17 percent, compared to the previous quarter. The primary factors impacting the higher levels of non-interest income (excluding securities transactions) as compared to the same quarter a year ago, were higher levels of service charge fees (up $1.2 million, or 14 percent) and trust fees (up $0.7 million, or 21 percent). The increase in non-interest income (excluding securities transactions) for the second quarter compared to the prior quarter was due to increases in service charge fees (up $1.3 million), other income (up $1.3 million), insurance fees (up $0.7 million), and trust fees (up $0.4 million). Operating expenses for the second quarter were $.7 million, or 1 percent, higher compared to the same quarter a year ago and were $2.7 million, or 6 percent, higher than the previous quarter. The increase from the same quarter a year ago was reflected in higher levels of other expense (up $1.4 million) and occupancy expense (up $1.0 million) with lower personnel expense (down $1.6 million). The increase in operating expense over last quarter was due to higher levels of occupancy and equipment expense (up $0.9 million) and other operating expense (up $3.6 million, primarily in higher levels of professional fees, advertising, ORE expense and other miscellaneous expense), offset by lower personnel expense (down $1.7 million). The second quarter of 2007 included about $1.0 million of one-time expenses related to certain legal and other professional fees as well as moving costs associated with the June 23, 2007 move of the Company's data center to a newly constructed facility north of Interstate 10.

Branch Expansion

During the second quarter, the Company officially opened its flagship branch in downtown Mobile, AL. Additional Alabama branches are planned in Daphne, the Eastern Shore, and Mobile. All are expected to be open in temporary facilities within 90 days, with possibly four additional locations by the end of 2008. A new branch will open in downtown New Orleans, LA, by September 30, 2007, and as many as three additional branches in Pensacola, FL, by the end of 2008.

Stock Repurchases

Approximately 433,000 of the Company's shares were repurchased during the second quarter of 2007 under the Stock Repurchase Plan that was approved in 2000. The Company has repurchased 661,000 shares through June 30, 2007 compared to 39,000 shares during the first six months of 2006. The remaining plan shares available for repurchase at June 30, 2007, were 0.9 million shares. Management intends to continue repurchasing shares as long as market conditions are conducive to that action.

About Hancock Holding Company & Hancock Bank

Hancock Holding Company - parent company of Hancock Bank Mississippi, Hancock Bank of Louisiana, Hancock Bank of Florida, and Hancock Bank of Alabama - has assets of approximately $5.9 billion. Bank subsidiaries include Hancock Investment Services, Inc., Hancock Insurance Agency, and Harrison Finance Company. Additionally, the company operates corporate trust offices in Gulfport, MS, Jackson, MS, New Orleans, LA, and Baton Rouge, LA.

Founded October 10, 1899, Hancock Bank is the only financial services company headquartered in the Gulf South to rate among the top 20 percent of America's top performing banks. Hancock consistently ranks as one of the country's strongest, safest financial institutions, according to Veribanc, Inc., and BauerFinancial Services, Inc. Thomson Financial also recently listed Hancock as the ninth largest corporate trustee bank in the U.S. More corporate information and online banking are available at www.hancockbank.com.

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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