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FOR
IMMEDIATE RELEASE
October 17, 2006
Hancock
Holding Company announces earnings for third quarter 2006
GULFPORT,
MS (October 17, 2006) - Hancock Holding Company (NASDAQ: HBHC)
and Leo W. Seal, Jr., President of Hancock Holding Company,
today announced earnings for the quarter ended September 30,
2006. Hancock's third quarter 2006 earnings were $36.0 million,
an increase of $34.6 million from the third quarter of 2005.
Diluted earnings per share for the third quarter of 2006 were
$1.08, an increase of $1.04 from the same quarter a year ago.
Hancock's
earnings for the third quarter of 2006 included a $20.0 million
negative provision for loan losses, which included a partial
reversal of the Company's storm-related allowance for loan
losses. In the third quarter of 2005, Hancock established
a $35.2 million allowance for loan losses related to projected
credit losses associated with the impact of Hurricane Katrina.
Through the third quarter of 2006, the Company has experienced
storm-related charge-offs of about $4.4 million. While management
has determined that the potential for further storm-related
charge-offs is present, the levels are projected to be lower
than originally anticipated. The Company reviewed the asset
quality of significant credits included in the original $35.2
million storm-related allowance and determined that this partial
reversal was appropriate.
Excluding
the aforementioned $20.0 million (pre-tax) negative provision
related to the storm, adjusted earnings for third quarter
2006 were $23.0 million. Adjusted earnings for the third quarter
of 2005 were $18.8 million (after excluding the pre-tax impact
of $35.2 million to establish a storm-related provision for
credit losses, a net gain on insurance less direct expenses
incurred of $12.3 million, and approximately $3.8 million
of waived fees). Adjusted diluted earnings per share were
$0.69 for the third quarter of 2006, compared to $0.57 for
the third quarter of 2005. Reported earnings for second quarter
2006 (there were no storm-related adjustments) were $22.0
million, and diluted earnings per share were $0.66.
Hancock's third quarter performance included the following
significant items:
- Superior
Returns: Hancock's third quarter adjusted return on
average assets was 1.51 percent, with an adjusted return
on average common equity of 17.63 percent
- Strong
Loan Growth: Third quarter average loans were up $86.3
million, or 12 percent annualized, compared to the second
quarter of 2006, and were up $161.7 million, or 6 percent,
compared to the third quarter of 2005. Loan growth was mostly
reflected in commercial purpose and mortgage loans and is
indicative of the ongoing recovery in the region.
- Net
Interest Margin: The Company's net interest margin (te)
of 4.29 percent narrowed 11 basis points from the third
quarter of 2005, but was 2 basis points wider than the previous
quarter. Net interest income (te) was $11.4 million, or
24 percent, higher than last year's third quarter, but was
$0.5 million lower than the previous quarter.
- Asset
Quality: Net charge-offs for the third quarter were
$2.6 million, or 0.34 percent of average loans, down $0.4
million from the $3.0 million, or 0.40 percent of average
loans, reported for the second quarter of 2006. Storm-related
net charge-offs for the third quarter of 2006 totaled $0.3
million and were $4.4 million since the third quarter of
2005. Non-performing assets as a percent of loans and foreclosed
property fell 9 basis points from the prior quarter to 0.20
percent at September 30, 2006. Loans past due 90 days at
September 30, 2006, were 0.12 percent, compared to 0.22
percent at June 30, 2006.
- Allowance
for Loan Losses: Hancock's allowance for loan losses
at September 30, 2006 was $48.4 million, or 1.54 percent
of period-end loans, a decrease of $22.6 million from the
June 30, 2006 level.
George A. Schloegel, Chief Executive Officer of Hancock Holding
Company, commented on the Company's third quarter operating
results, "The recovery work that continues on a daily
basis in our region is symbolic of a recovering economy that
will thrive as the rebuilding efforts ramp up. With third
quarter loan growth of $86.3 million compared to last quarter,
Hancock stands ready to continue participating in and leading
the region's rebuilding efforts."
Balance
Sheet Growth and Capital
At
September 30, 2006, Hancock's total loans were $3.1 billion,
which represented an increase of $157.0 million, or 5 percent,
from September 30, 2005. Period-end loans were up $97.1 million,
or 3 percent, compared to June 30, 2006. As mentioned, average
loans were up $86.3 million, or 12 percent annualized, from
the second quarter. Of that increase, approximately $50.4
million of growth was in Louisiana, $28.9 million in Mississippi
and $7.0 million in Florida. The Company expects that this
quarter's loan growth is representative of the rebuilding
efforts throughout the region and is sustainable.
Period-end
deposits for the third quarter were $5.0 billion, up $975.4
million, or 24 percent, from September 30, 2005, but were
down $246.8 million, or 5 percent, from June 30, 2006. The
Company believes that the third quarter's net out flows of
deposits is a signal that businesses and consumers alike are
beginning their own rebuilding efforts as the overwhelming
majority of deposit outflows occurred in transaction deposits
(both interest and non-interest bearing). The quarter-end
deposit balances do not include any significant funds from
the distribution of Community Development Block Grants (storm-
related federal aid to homeowners), which have not yet begun
in Louisiana or Mississippi.
The
Company's total assets at September 30, 2006, were $6.1 billion,
up $1.2 billion, or 25 percent compared to last year, but
down $33.5 million, or 0.5 percent, from June 30, 2006. Hancock
remains very well capitalized, even with a significant increase
in total assets from last year. As of September 30, 2006,
Hancock's Leverage (tier one) Ratio stands at 8.15 percent,
while the Tangible Equity Ratio was 7.79 percent.
Net
Interest Income
Net
interest income (te) for the third quarter increased $11.4
million, or 24 percent, from the third quarter of 2005, but
was $0.5 million lower then the second quarter of 2006. The
Company's net interest margin (te) was 4.29 percent in the
third quarter, 11 basis points narrower than the same quarter
a year ago and 2 basis points wider than the previous quarter.
Compared
to the same quarter a year ago, the primary driver of the
$11.4 million increase in net interest income (te) was a $1.2
billion, or 27 percent, increase in average earning assets
mainly from average deposit inflows of $1.3 billion, or 33
percent. The increase in deposits was related to insurance
settlements for business and consumers, as well as other forms
of federal aid to customers impacted by Hurricane Katrina.
Of the $1.2 billion increase in average earning assets, $161.7
million was deployed into loans and $1.0 billion into securities
and other short-term investments. The net interest margin
(te) narrowed 11 basis points as the increase in the average
earning asset yield (40 basis points) did not offset the increase
in total funding costs (51 basis points).
The
Company's level of net interest income (te) in the third quarter
decreased $0.5 million, or 0.8 percent, from the prior quarter.
Average earning assets decreased $96.9 million, or 2 percent,
from the previous quarter due to average deposit outflows
of $164.5 million, or 3 percent. Of the $164.5 million decrease
in average deposits, $79.0 million was in non-interest bearing
deposits and $106.3 million in interest-bearing transactions
deposits. The majority of deposit outflows were believed to
be related to rebuilding efforts throughout the Company's
operating region. Average loans were up $86.3 million, or
12 percent annualized, from the prior quarter, reflected mostly
in higher levels of commercial purpose loans and mortgage
loans. The net interest margin (te) widened 2 basis points
from the prior quarter as the yield on average earning assets
increased 27 basis points, while total funding costs were
up 25 basis points. The yield on average earning assets continues
to be impacted by the larger percent of the Company's earning
assets in securities and short-term investments (44 percent)
than deployed into loans (56 percent). The total cost of funds
was up 25 basis points mostly due to increase in cost of public
fund deposits (indexed to short-term market rates) as well
as higher rates paid on time deposits.
Non-interest
Income and Non-interest Expense
Excluding
the impact of storm-related gains/(losses) and securities
transactions, non-interest income for the third quarter was
up $4.0 million, or 19 percent, compared to the same quarter
a year ago. Non-interest income was down $0.3 million, or
1 percent, compared to the second quarter. The primary factors
impacting the higher levels of non-interest income as compared
to the same quarter a year ago were higher levels of service
charge fees (up $1.7 million, or 22 percent). In addition,
debit card and merchant fees were up $0.7 million, when compared
to the same quarter a year ago. However, insurance fees were
down $0.7 million. The decrease in non-interest income for
the third quarter (excluding securities transactions) compared
to the prior quarter was due to decreases in trust fees (down
$0.2 million) and insurance fees (down $0.5 million).
Operating
expenses for the third quarter were $7.6 million, or 18 percent,
higher compared to the same quarter a year ago, but were $0.8
million, or 2 percent, lower than the previous quarter. The
increase from the same quarter a year ago was reflected in
higher levels of personnel expense (up $2.8 million), data
processing expense (up $1.7 million), professional services
expense (up $1.3 million), and all other expenses (up $1.8
million). The decrease in non-interest expenses from the prior
quarter was reflected in lower levels of occupancy expense
(down $0.6 million) and other operating expenses (down $0.9
million), offset by a higher level of personnel expense (up
$0.7 million).
Asset
Quality
Annualized
net charge-offs, as a percent of average loans, for the third
quarter were 0.34 percent, compared to 0.40 percent for the
second quarter, and to 0.23 percent in the third quarter of
2005. During the third quarter of 2006, the Company recorded
$20.0 million negative provision, primarily as a result of
a better than expected credit loss experience related to Hurricane
Katrina. No provision for loan losses was booked in the second
quarter of 2006, while the third quarter of 2005's provision
was $36.9 million, of which $35.2 million was related to the
establishment of a storm-related allowance for loan losses.
Non-performing
assets as a percent of total loans and foreclosed assets was
0.20 percent at September 30, 2006, compared to 0.29 percent
at June 30, 2006. Compared to the third quarter of 2005, the
ratio of non-performing assets as a percent of total loans
and foreclosed assets was down 25 basis points. Non-performing
assets decreased $2.7 million from June 30, 2006, reflecting
primarily lower levels of non-accrual loans. The Company's
ratio of accruing loans 90 days or more past due to total
loans was 0.12 percent at September 30, 2006, compared to
0.22 percent at June 30, 2006 and to 0.21 percent at September
30, 2005.
The
Company's allowance for loan losses was $48.4 million at September
30, 2006, down $22.6 million from the $71.0 million reported
at June 30, 2006, and $28.2 million lower than the $76.6 million
reported at September 30, 2005. The ratio of the allowance
for loan losses as a percent of period-end loans was 1.54
percent at September 30, 2006, and 2.33 percent at June 30,
2006. The allowance coverage ratio (allowance for loan losses
to non-performers and past dues) was 495 percent in third
quarter 2006, as compared to 457 percent in second quarter,
and 393 percent in third quarter 2005. As previously mentioned,
the Company had established a specific allowance of $35.2
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
through September 30, 2006 of $4.4 million directly against
the aforementioned allowance. In the third quarter, the Company
recorded a $20.0 million negative loan loss provision that
included a partial reversal of the storm-related allowance.
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 $6.1 billion. Founded in
1899, Hancock Bank stands among the strongest, safest financial
institutions in the United States and 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
offers comprehensive financial solutions through more than
140 banking
and financial services offices and more than 130 automated
teller machines across south Mississippi, Louisiana, south
Alabama and the Florida Panhandle. Additional corporate
information and on-line
banking and bill
pay services are available online.
Financial
Highlights (1) | Financial Highlights
(2) | Financial Highlights (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.
FOR
MORE INFORMATION
George A. Schloegel, Chief Executive Officer
Carl J. Chaney, Chief Financial Officer
Michael M. Achary, Treasurer
Paul D. Guichet, Investor Relations
800.522.6542 or 228.563.6559
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