News/Press Releases

FOR IMMEDIATE RELEASE
October 21, 2008

Hancock Holding Company Announces Earnings for Third Quarter 2008

• Net Income and Returns: Hancock's net income for the third quarter of 2008 was $16.0 million compared to $17.7 million for the same quarter a year ago, a decrease of $1.7 million, or 9.8 percent, and a decrease of $5.0 million, or 23.7 percent, over the prior quarter. Return on average assets for the quarter was 1.00 percent compared to 1.21 percent for 2007's third quarter and to 1.36 percent for the prior quarter. Return on average common equity was 10.90 percent compared to 12.58 percent for 2007's third quarter and to 14.51 per cent for the prior quarter.
  
  
• Impact of Hurricane Gustav: Hurricane Gustav made landfall on the southeastern Louisiana coast on Monday, September 1, 2008 and significantly impacted Hancock's markets in Baton Rouge and Alexandria, Louisiana. By Tuesday, September 2, Hancock was the first bank to open in Louisiana with over 25 percent of the Company's Louisiana branch offices open. By Saturday, September 6, Hancock had 100 percent of the Company's 50 Louisiana branch offices open. In dealing with Hurricane Gustav, the Company incurred $560 thousand in operating expenses (clean up and repair costs, fuel, lodging and other miscellaneous costs) and also rebated to customers $294 thousand in return item fees and other service charges. The Company incurred no major damage to any facilities and will not file a property and casualty insurance claim. The total pretax impact of the costs and fees rebated was $854 thousand, or approximately $.02 per diluted share on an after-tax basis.
  
  
• Net Charge-offs and Non-performing Assets: Net charge-offs for the third quarter of 2008 were $4.2 million, or 0.42 percent of average loans, up $1.7 million from the $2.5 million, or 0.27 percent of average loans, reported for the second quarter of 2008. The majority of the increase in net charge-offs as compared to the second quarter was reflected in commercial real estate loans where the collateral values were written down to revised levels. Non-performing assets as a percent of total loans and foreclosed assets was 0.59 percent at September 30, 2008, compared to 0.52 percent at June 30, 2008. The Company did report an increase in non-accrual loans of $3.8 million and an increase in ORE of $504 thousand as compared to the second quarter. The majority of the increase reported in non-accrual loans was reflected in a single relationship, a stalled real estate development project in Louisiana which was adequately reserved at September 30, 2008. Loans 90 days past due or greater (accruing) as a percent of period end loans decreased 2 basis points from June 30, 2008, to 0.15 percent at September 30, 2008.
  
  
• Allowance for Loan Losses: Hancock recorded a provision for loan losses of $8.1 million in the third quarter which, when combined with the quarter's net charge-offs of $4.2 million, resulted in a $3.9 million increase in the allowance for loan losses between June 30, 2008, and September 30, 2008. This increase was necessary to adjust the allowance to the level dictated by the Company's reserving methodologies. A major driver of the overall higher level of the allowance for loan losses was a $285 million, or 30 percent annualized, increase in loans between June 30, 2008 and September 30, 2008. The Company's allowance for loan losses was $57.2 million at September 30, 2008, compared to $53.3 million reported at June 30, 2008. The ratio of the allowance for loan losses as a percent of period-end loans was 1.40 percent at September 30, 2008, as compared to the 1.41 percent reported at June 30, 2008.
  
  
• Loans: For the quarter ended September 30, 2008, Hancock's average total loans were $3.95 billion, which represented an increase of $483.0 million, or 13.9 percent, from the quarter ended September 30, 2007. Also as mentioned, period-end loans were up $285.1 million, or 30 percent annualized, from last quarter, while average loans increased $241.2 million, or 26 percent annualized. The majority of the increase in loans was in commercial purpose loans but all consumer loan categories were up as well. Of the $241.2 million increase in average loans, approximately $99.0 million was in Mississippi, $90.0 million in Louisiana, and $28.0 million and $24.2 million in Alabama and Florida, respectively.
  
  
• Deposits: Average deposits were up $142.3 million, or 11.5 percent annualized, from the second quarter of 2008. The increase in average deposits was reflected mostly in public fund deposits (up $115.7 million) and time deposits (up $76.4 million). These increases were partly offset by decreases in noninterest-bearing deposits (down $10.5 million) and interest-bearing transaction deposits (down $39.3 million). Period-end deposits for the third quarter were $5.41 billion, up $415.2 million, or 8.3 percent, from September 30, 2007, and were up $394.0 million, or 32 percent annualized, from June 30, 2008. The large increase in period-end deposits as compared to June 30, 2008 was primarily in time deposits as well as public fund deposits. Over half of the $394.0 million increase occurred in the month of September as customers and many large public depositories sought the safety of Hancock Bank as the financial crisis continued to intensify.
  
  
• Net Interest Income: Net interest income (te) for the third quarter increased $3.9 million, or 7.3 percent, from the third quarter of 2007, and increased $2.8 million from the second quarter of 2008, or 20.7 percent annualized. The net interest margin (te) of 3.99 percent was 7 basis points narrower than the same quarter a year ago. Growth in average earning asset levels was strong compared to the same quarter a year ago with an increase of $495.9 million, or 9.4 percent, mostly reflected in higher average loans (up $483.0 million, or 13.9 percent). With short-term interest rates down significantly from a year ago, the Company's loan yield fell 124 basis points, pushing the yield on average earning assets down 80 basis points. However, total funding costs over the past year were down only 73 basis points. Compared to the prior quarter, the net interest margin (te) widened 8 basis points, mostly due to a continued reduction in the Company's funding costs. The Company's total cost of funds was down 9 basis points compared to the previous quarter with rates on time deposits down 33 basis points. The higher level of net interest income (te) from the prior quarter and wider net interest margin were due, in part, to the continued re-pricing of the Company's CD portfolio (during the quarter, $411 million of maturing time deposits were re-priced into lower costing CDs) as well as the aforementioned $241.2 million in average loan growth. The quarter's loan growth was funded by a combination of higher deposits and maturing securities.
  
  
• Non-interest income: Non-interest income, excluding securities transactions, for the third quarter was down $1.0 million, or 3.2 percent, compared to the same quarter a year ago and was also down $1.2 million, or 3.9 percent, compared to the previous quarter. The primary factors impacting the lower levels of non-interest income compared to the same quarter a year ago were lower levels of other income (down $1.5 million, or 31.6 percent) and insurance fees (down $451 thousand or 10.6 percent). The decrease in non-interest income (excluding securities transactions) for the third quarter compared to the prior quarter was primarily due to lower insurance fees (down $440 thousand, or 10.3 percent), investment and annuity fees (down $306 thousand, or 11.2 percent) and trust fees (down $245 thousand or 5.4 percent). Included in the lower level of service charges for the third quarter were $294 thousand in customer rebates related to Hurricane Gustav.
  
  
• Operating expense: Operating expenses for the third quarter were $0.4 million, or 0.7 percent, lower compared to the same quarter a year ago, but were $3.3 million, or 6.3 percent, higher than the previous quarter. The decrease from the same quarter a year ago was reflected in lower other operating expenses (down $809 thousand) and was partly offset by higher levels of occupancy expense (up $457 thousand). The increase in operating expense from last quarter was due to personnel expense (up $1.6 million), other operating expense (up $1.3 million), and occupancy expense (up $486 thousand). Included in operating expense during the third quarter was approximately $560 thousand of increased expense related to Hurricane Gustav.