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News/Press Releases  FOR
IMMEDIATE RELEASE Hancock
Holding Company reports first half of 2005 earnings - up 10 percent GULFPORT, MS (July 14, 2005) - Leo W. Seal, Jr., President of Hancock Holding Company (NASDAQ: HBHC), today announced earnings for the six-month period ended June 30, 2005. Net income for the first half of 2005 totaled $33.53 million, compared to $30.52 million reported for the first half of 2004, an increase of $3.01 million, or 10 percent. Diluted earnings per share for the first six months of 2005 were $1.02, compared to $0.92 for the same period in 2004, resulting in an increase of $0.10 per share, or 11 percent. Net income for the second quarter of 2005 was $18.09 million, an increase of $1.72 million, or 11 percent, from the $16.37 million reported for the second quarter of 2004. Diluted earnings per share were $0.55 for the second quarter of 2005, compared to $0.50 for the second quarter of 2004, an increase of $0.05 per share, or 10 percent. Compared to the first quarter of 2005, earnings for the second quarter of 2005 were $2.66 million higher, while earnings per share increased $0.08 - both represent increases of over 17 percent. In commenting on Hancock's operating results for the second quarter of 2005, George A. Schloegel, Chief Executive Officer, stated, "Hancock's second quarter results represent not only record quarterly earnings but, more importantly, are tangible proof that the Company is successfully executing the strategy of strengthening our competitive presence in our primary and targeted growth markets across the I-10 corridor." The Company's returns on average assets and average common stockholders' equity for the second quarter of 2005 were 1.52 percent and 15.27 percent, respectively, compared with 1.49 percent and 14.97 percent for the second quarter of 2004. Annualized returns on average assets and average common stockholders' equity for the six months ended June 30, 2005, were 1.42 percent and 14.31 percent, respectively, compared with 1.41 percent and 13.99 percent for the six months ended June 30, 2004. Second quarter returns on average assets and average common stockholders' equity were 20 basis points and 195 basis points, respectively, higher versus the first quarter of 2005. The primary drivers of the Company's record second quarter performance included
Net Interest Income Net interest income (te) for the second quarter of 2005 increased $3.9 million, or 9 percent, from the second quarter of 2004 and was $1.8 million, or 4 percent, higher than the first quarter of 2005. The Company's net interest margin (te) was 4.42 percent in the second quarter of 2005, 2 basis points wider than the same quarter a year ago and 7 basis points wider than the previous quarter. Compared to the same quarter a year ago, the primary driver of the $3.9 million increase in net interest income (te) was a $334 million, or 8 percent, increase in average earning assets mainly from average loan growth of $272 million, or 11 percent. Average deposit growth of $195 million, or 5 percent, along with an increase in customer repurchase agreements of $56 million, or 32 percent, funded the Company's loan growth and related increase in earning assets. The overall improvement in the earning asset mix enabled the Company to improve its loan to deposit ratio to approximately 74 percent in the second quarter of 2005. In addition, loans now comprise 65 percent of the Company's earning asset base, as compared to 64 percent for the same quarter a year ago. The net interest margin (te) widened 2 basis points as the increase in the earning asset yield (25 basis points) more than offset the increase in the total funding costs (23 basis points). The higher level of net interest income (te) (up $1.8 million, or 4 percent) and the widened net interest margin (up 7 basis points) as compared to the previous quarter were primarily due to a larger earning asset base (average earning assets were up $73 million from the prior quarter) and a higher yield on average earning assets (up 18 basis points). Average loans grew $59 million, or 2 percent, from the previous quarter and were funded largely through a decrease in short-term investments. Average deposits were up $16 million, or 0.4 percent, from the previous quarter primarily due to a $29 million increase in non-interest-bearing deposits. The yield on the Company's $1.45 billion securities portfolio improved 6 basis points to 4.54 percent. Even though short-term interest rates (fed funds rate) were up an average of 48 basis points from the first to the second quarter of 2005, the Company's overall funding costs increased by only 11 basis points from the prior quarter. The majority of this increase was due to a 45 basis point increase in the cost of the Company's nearly $700 million public fund deposit base, most of which is indexed to short-term rates. Asset-Liability Management The rising short-term rate environment combined with a flattening yield curve will continue to put pressure on net interest margins throughout the banking industry. The Company continues to effectively manage this risk through tight control of its funding cost and continued focus on variable rate lending to take advantage of movements in short-term rates. The 3.9 percent increase in net interest income (te) during the second quarter tracks favorably with the Company's interest rate risk scenarios. Besides the balance sheet management strategies for loans and deposits, efficient management of the securities portfolio continues to complement earnings. The securities portfolio's effective duration is currently 2.41 as of June 30, 2005. The Company's asset sensitive position and net interest income (te) forecast reflects active management of the deposit rate structure in response to rising rates and competitive pressures but with a favorable mix to fund earning assets and manage interest rate risk. The Company projects rate increases of 100 and 200 basis points would result in percentage increases in net interest income of 2.72 percent and 4.92 percent, respectively. Non-Interest Income and Expense Non-interest income for the second quarter of 2005 was up $3.1 million, or 14 percent, compared to the same quarter a year ago (excluding the 2004 gain on sale of branches, merchant services, and securities transactions). Non-interest income was also up $2.3 million, or 10 percent, compared to the first 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 $671,000), mostly related to the December 31, 2003, purchase of Magna Insurance Company. In addition, other income was up $978,000, when compared to the same quarter a year ago and was primarily due to the termination of a contract to provide insurance products to one of Magna's outlets ($400,000) and the final settlement related to the merchant services partnership with First Data Corporation ($250,000). Driving the higher levels of non-interest income from the prior quarter were increases in service charges on deposit accounts (up $969,000), trust fees (up $318,000), and the aforementioned transactions related to Magna and the merchant services partnership with First Data Corporation. Operating expenses for the second quarter of 2005 were $3.1 million higher, or 8 percent, compared to the same quarter a year ago and were $863,000 higher, or 2 percent, than the previous quarter. The increase from the prior quarter was reflected in increased personnel expense (up $546,000) and higher advertising expense (up $647,000). While there were also less significant increases in other categories of expense, those increases were more than offset by a $679,000 decrease in professional fees (primarily associated with compliance testing related to the Sarbanes-Oxley Act section 404). The increase from the same quarter a year ago was reflected in higher personnel expense (up $1.8 million), higher advertising expense (up $710,000), and occupancy expense (up $171,000). The Company's efficiency ratio (expressed as operating expenses as a percent of total revenue (te) before securities transactions and amortization of purchased intangibles) improved to 57.83 percent for the second quarter of 2005. This was compared to 56.79 percent for the same quarter a year ago, and 59.99 percent for the previous quarter. The Company's number of full-service banking facilities stands at 103 as of June 30, 2005, and the number of full-time equivalent employees was 1,813 at June 30, 2005, an increase of 59 from one year ago. Asset
Quality Annualized net charge-offs as a percent of average loans for the second quarter of 2005 were 0.24 percent, compared to 0.33 percent for the first quarter of 2005. Net charge-offs decreased $569,000, or 9 basis points (expressed as a percent of average loans) from the first quarter of 2005 and were reflected primarily in lower levels of charge-offs in commercial/real estate loans. Compared to the second quarter of 2004, net charge-offs decreased $1.3 million, or 23 basis points (expressed as a percent of average loans). The provision for loan losses in the second quarter of 2005 was $1.9 million, or 112 percent of the quarter's net charge-offs. This compares to the $2.8 million provision for the first quarter of 2005 and $3.8 million for the second quarter of 2004. The ratio of provision for loan losses to net charge-offs was 122 percent in the first quarter of 2005 and was 127 percent in the second quarter of 2004. Non-performing assets as a percent of total loans and foreclosed assets was 0.37 percent at June 30, 2005, compared to 0.36 percent at March 31, 2005. Non-performing assets increased $693,000 from March 31, 2005, reflected primarily in higher levels of non-accrual loans. Compared to the second quarter of 2004, non-performing assets as a percent of total loans and foreclosed assets was down 18 basis points from the 0.55 percent reported at June 30, 2004. The composition of the Company's $10.6 million non-performing asset base continues to reflect significant granularity, with only eight credits or properties exceeding $250,000 and 96 credits/properties below $250,000. The Company's ratio of accruing loans 90 days or more past due to total loans was 0.14 percent at June 30, 2005, compared to 0.10 percent at March 31, 2005 and to 0.14 percent at June 30, 2004. The Company's allowance for loan losses was $41.38 million at June 30, 2005, up $200,000 from the $41.18 million reported at March 31, 2005, and was $3.08 million higher than the $38.30 million reported at June 30, 2004. The ratio of the allowance for loan losses as a percent of period-end loans was 1.45 percent at June 30, 2005, compared to 1.48 percent at March 31, 2005 and 1.47 percent at June 30, 2004. The reserve coverage ratio (allowance for loan losses to non-performers and past dues) was 285 percent in second quarter 2005, as compared to 212 percent in second quarter 2004, and 324 percent in first quarter 2005. General Hancock Holding Company subscribes to the highest standards of corporate responsibility with respect to legal, moral, and regulatory relationships with shareholders, customers, employees, and communities Hancock serves. Accordingly, these unwavering business principles support a corporate culture of ethical compliance and accountability that ensures that financial statements are prepared and audited in accordance with accounting principles generally accepted in the United States of America (GAAP). The Company's systems of internal controls and risk management processes are in place and fully functional. Hancock Holding Company - parent company of Hancock Bank (Mississippi), Hancock Bank of Louisiana, Hancock Bank of Florida and Magna Insurance Company - has assets of $4.8 billion at June 30, 2005. Founded in 1899, Hancock Bank stands among the strongest, safest financial institutions in America. Hancock Bank operates 103 full-service offices and more than 130 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 on Hancock Bank's website. 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. — 30 — FOR
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