Hancock Holding Company announces earnings for third quarter 2007

     GULFPORT, MS (October 16, 2007) - Hancock Holding Company (NASDAQ: HBHC) announced earnings for the third quarter ended September 30, 2007. Hancock's third quarter 2007 earnings were $17.7 million, a decrease of $18.3 million, or 50.8 percent, from the third quarter of 2006. Diluted earnings per share for the third quarter of 2007 were $0.55, a decrease of $0.56 from the same quarter a year ago. Earnings for the third quarter of 2007 were down $2.6 million, or 12.72 percent, from the second quarter of 2007. Diluted earnings per share were down $0.07 from the second quarter of 2007.

     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, adding $13.0 million in after-tax earnings and $.39 in diluted earnings per share to the third quarter of 2006. Excluding the aforementioned reserve reversal, net earnings in the third quarter were down $5.2 million, or 22.84 percent, from the same quarter a year ago and diluted earnings per share were down $.14.

     Chief Executive Officer Carl J. Chaney commented on Hancock's third quarter results, "The comparison to last year was affected by the partial reversal of the storm-related allowance that took place in 2006. The primary driver of the quarter's earnings was higher expense levels, mostly in personnel, buildings and equipment costs - mainly related to ongoing recovery efforts and expansions in new or existing markets. A plan of action has been undertaken to reduce our operating costs across all aspects of our operations, which will help us quickly return to the top quartile peer performance level we have attained for the last four years."

Third Quarter 2007 Financial Highlights

• Net Income and Returns: Hancock's net income for the third quarter of 2007 was $17.7 million, compared to $36.0 million for the same quarter a year ago. Return on average assets for the quarter was 1.21 percent, compared to 2.36 percent for 2006's third quarter. Return on average common equity was 12.58 percent, compared to 27.58 percent for the same quarter a year ago. For the second quarter of 2007, return on average assets was 1.42 percent and return on average common equity was 14.53 percent. As mentioned, third quarter 2006's earnings and return levels were significantly affected by a $20.0 million reversal of the storm-related allowance for loan losses due to better than expected loss experience with storm-impacted credits.
  
  
• Asset Quality & Allowance for Loan Losses: Hancock recorded a provision for loan losses of $1.6 million in the third quarter which, when combined with the quarter's net charge-offs of $1.9 million, resulted in the $.3 million reduction in the allowance for loan losses between June 30, 2007, and September 30, 2007. This reduction was necessary to adjust the allowance to the level dictated by the Company's reserving methodologies. Net charge-offs for the third quarter of 2007 were $1.9 million, or 0.21 percent of average loans, up $352 thousand from the $1.5 million, or 0.18 percent of average loans, reported for the second quarter of 2007. Net charge-offs for the third quarter of 2006 were $2.61 million or 0.34 percent of average loans. Non-performing assets as a percent of total loans and foreclosed assets was 0.28 percent at September 30, 2007, compared to 0.25 percent at June 30, 2007. The Company's allowance for loan losses was $45.90 million at September 30, 2007, down $0.3 million from the $46.23 million reported at June 30, 2007, and $2.45 million lower than the $48.35 million reported at September 30, 2006. The ratio of the allowance for loan losses as a percent of period-end loans was 1.31 percent at September 30, 2007, and 1.35 percent at June 30, 2007.
  
  Credit Officer Alfred Rath commented, "At this point, loan quality for both consumer and commercial loans continues to track favorably. In previous natural disasters, loan quality at affected financial institutions began to show signs of weakening at the 18-24 month milestone. We see no such degradation at this time but will continue to closely monitor all aspects of asset quality."
  
  
• Loans: For the quarter ended September 30, 2007, Hancock's average total loans were $3.5 billion, which represented an increase of $389.8 million, or 13 percent, from the quarter ended September 30, 2006. Period-end loans were up $97.1 million, or 3 percent, compared to June 30, 2007. Average total loans were up $98.7 million, or 12 percent annualized, from the second quarter of 2007. Of that increase, approximately $39 million of growth was in Mississippi, $51 million in Louisiana, $8 million in Alabama, and $1 million in Florida. The majority of the increase in average loans compared to last quarter was in commercial purpose loans (approximately $66.5 million).
  
  
• Deposits: Period-end deposits for the third quarter were $5.0 billion, down $1.06 million, or .02 percent, from September 30, 2006, but were up $21.8 million, or 0.44 percent, from June 30, 2007. Average deposits were up $95.4 million, or 8 percent annualized, from the second quarter of 2007. The increase in average deposits was in time deposits (up $181.9 million) and in public fund deposits (up $47.9 million). These increases were offset by decreases in interest-bearing transaction deposits (down $77.2 million) and non-interest bearing deposits (down $57.2 million). The majority of the decreased levels of transaction deposits (interest-bearing and non-interest) continued to be concentrated in the Company's Katrina-affected Mississippi markets and related to customers' reducing deposit levels for rebuilding purposes
  
  
• Net Interest Income: Net interest income (te) for the third quarter decreased $5.7 million, or 10 percent, from the third quarter of 2006, and was down $244 thousand from the second quarter of 2007. The Company's net interest margin (te) was 4.06 percent in the third quarter, 23 basis points narrower than the same quarter a year ago and 11 basis points narrower than the previous quarter. Compared to the same quarter a year ago, the primary driver of the $5.7 million decrease in net interest income (te) was a $250 million, or 4.5 percent, decrease in average earning assets, mainly from a reduction in funding total borrowings of $98.6 million, or 32 percent, and a decrease in average deposits of $114.1 million, or 2 percent. The slightly lower level of net interest income (te) in the third quarter compared to the second quarter was due mostly to an increase in the Company's funding costs, which were up 16 basis points. The total cost of funds was up due to an increase in the rate paid on time deposits (up 10 basis points) and an unfavorable change in the third quarter's funding mix - higher levels of more costly time deposits and lower levels of transaction deposits.
  
  
• Non-interest Income: Non-interest income for the third quarter was up $4.9 million, or 19 percent, compared to the same quarter a year ago and was up $292 thousand, or 1 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 income (up $1.4 million, or 14 percent) and trust revenue (up $718 thousand, or 23 percent), investment and annuity fees (up $658 thousand), and other income (up $1.6 million). The increase in non-interest income (excluding securities transactions) for the third quarter compared to the prior quarter was due to increases in service charge fees (up $614 thousand), other income (up $703 thousand), and investment and annuity fees (up $235 thousand), which were mostly offset by reductions in insurance fees (down $777 thousand), trust fees (down $232 thousand), debit card income (down $149 thousand), and secondary mortgage operations (down $181 thousand).
  
  
• Operating Expense: Operating expenses for the third quarter were $4.9 million or 10 percent, higher compared to the same quarter a year ago and were $3.3 million, or 6 percent, higher than the previous quarter. Much of the expense increase from last year and the prior quarter were related to ongoing recovery and rebuilding efforts on the part of the Company as well as an expansion into the Mobile, New Orleans, and Pensacola markets. The increase from the same quarter a year ago was reflected in higher levels of occupancy expense (up $1.8 million), personnel expense (up $1.5 million), and other operating expense (up $1.4 million). The increase in operating expense over last quarter was due to higher levels of personnel expense (up $3.7 million) and occupancy expense (up $.3 million), offset slightly by a reduction in other operating expense (down $.7 million). Full-time equivalent headcount at September 30, 2007, was up 22 from June 30, 2007, and was up 178 compared to September 30, 2006..
  
  

Expense Control Efforts

     The Company is focused on the need to control expenses and ensure that shareholder value is received for each dollar expended. To that end, Hancock has embarked on a stringent expense control plan to reduce operating expenses not directly related to expansion in new markets. A plan of action has been undertaken to improve the Company's operational efficiency through the rationalization of every large vendor relationship, reductions in total personnel expense, and tightened management accountability for all organizational business units and segments.

     Chief Executive Officer John M. Hairston stated, "We are unwaveringly committed to superior performance for Hancock. We have taken immediate action to aggressively manage controllable expenses downward while continuing our investments in promising markets. Expense control initiatives will yield measurable improvements and restore the Company to top quartile performance."

Stock Repurchases

     Approximately 343,000 of the Company's shares were repurchased during the third quarter of 2007 under the Stock Repurchase Plan that was approved in 2000. The Company has repurchased 1,004,000 shares through September 30, 2007, compared to 39,000 shares during the first nine months of 2006. The remaining plan shares available for repurchase at September 30, 2007, were 0.6 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. Founded October 9, 1899, Hancock Bank consistently ranks as one of the country's strongest, safest financial institutions according to Veribanc, Inc., and BauerFinancial Services, Inc. Thomson Financial also 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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