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News/Press Releases  FOR
IMMEDIATE RELEASE Hancock Holding Company reports 2004 earnings - up 12 percent GULFPORT, MS (January 13, 2005) - Hancock Holding Company (NASDAQ: HBHC) today announced earnings for the year ended December 31, 2004. Net income for 2004 totaled $61.70 million, compared to $54.96 million reported for 2003, an increase of $6.74 million, or 12 percent. Diluted earnings per share for 2004 were $1.87, compared to $1.64 for 2003, resulting in an increase of $0.23 per share, or 14 percent. Net income for the fourth quarter of 2004 was $15.79 million and diluted earnings per share were $0.48. Compared to the fourth quarter of 2003, net income was $543,000, or 4 percent, higher, while diluted earnings per share were $0.02, or 4 percent, higher. Compared to the third quarter of 2004, net income was $395,000, or 3 percent, higher, while diluted earnings per share were $0.01, or 2 percent, higher. The Company increased the quarterly per share common dividend twice during 2004. The quarterly per share common dividend now stands at $0.165 per share. Hancock Holding Company President Leo W. Seal, Jr. commented, "We are pleased to have increased the quarterly per share common dividend by $0.05 per share, or 43 percent, during 2004." Key performance trends and highlights for the fourth quarter of 2004 included:
In commenting on Hancock's operating results for 2004, George A. Schloegel, Chief Executive Officer, stated, "It is with great pride that I join my fellow associates at Hancock Holding Company in reporting another year of record earnings. While we are delighted with the 12 percent increase in earnings over 2003, we are also committed to continuing the established legacy of strength, stability and integrity, while also working to provide superior returns to our shareholders." Net Interest Income Net interest income (te) for the fourth quarter of 2004 increased $3.10 million, or 7 percent, from the fourth quarter of 2003, and was $1.42 million, or 3 percent, higher than the third quarter of 2004. The Company's net interest margin (te) was 4.53 percent in the fourth quarter of 2004, 1 basis point narrower than the same quarter a year ago, and 11 basis points wider than the previous quarter. Compared to the same quarter a year ago, the primary driver of the $3.10 million increase in net interest income (te) was a $284 million, or 8 percent, increase in average earning assets mainly from average loan growth of $320 million, or 13 percent. The Company's loan growth and overall increase in earnings assets was primarily funded by average deposit growth of $194 million, or 6 percent, together with a net decrease in the securities portfolio of $42 million, or 3 percent. This overall improvement in earning asset mix enabled the Company to improve its loan to deposit ratio from 70 percent in the fourth quarter of 2003 to 75 percent in the current quarter. In addition, loans now comprise 67 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) narrowed slightly (by 1 basis point) as the cost of funds increased more rapidly (5 basis points) than the overall yield on loans, securities and short-term investments (4 basis points). The Company's ability to effect continuing improvements in the earning asset mix remains a significant positive contributor to future earnings expansion. The
higher level of net interest income (te) (up $1.42 million, or 3
percent) and the higher net interest margin (up 11 basis points)
as compared to the previous quarter was primarily due to a 14 basis
point increase in the average earning asset yield. The cumulative
impact of five recent Federal Reserve short-term rate increases
positively affected the Company's net interest margin and level
of net interest income. In addition, the Company was able to limit
any increase in overall funding costs to 3 basis points during the
current quarter as efforts were made to limit any increase in deposit
costs to longer-term time deposit maturities. Also contributing
to the expanded margin and higher net interest income levels was
a $73 million, or 3 percent, increase in average loans from the
previous quarter, which was funded largely through short-term borrowings
and cash flows from the securities portfolio. Average deposits were
down $5 million, or less than 1 percent, from the prior quarter.
Interest-bearing deposits decreased by $22 million as non-interest
bearing deposits increased by $17 million. Asset-Liability Management Rising interest rates expose many banks to interest rate risk due to the potential for interest-bearing liabilities to mature or re-price on a different basis than interest-earning assets. The Company's strategic management of operations and net portfolio values in 2004 brought about positive reactions to the rise in interest rates during the second half of the year. Strategic planning forecasts reflect stability in earnings growth. According to the Company's methodology, rate increases of 100 and 200 basis points are projected to increase net interest income between 3 percent and 6 percent. Key components to the ability to increase earnings in a rising rate environment are absence of margin compression and consistency in the level of variable rate lending. At year-end 2004, variable rate loans comprised 40 percent of the total loan portfolio versus 39 percent of total loans one year ago. Along with tight control of funding costs (up only 3 basis points from third to fourth quarter 2004), management of the Company's securities portfolio has contributed favorably to margin performance. Laddering of the securities portfolio cash flows has been matched appropriately with the rising rate environment. This contributed to a 13 basis point increase in the security portfolio yield in the current quarter from the same quarter a year ago. As part of its Asset-Liability Management strategy, the Company closely monitors the effective duration of its securities portfolio. The portfolio's effective duration remains well within management's target range. Currently, the effective duration is 2.60 versus 2.76 one quarter ago. An instantaneous rate increase of 100 basis points would move the effective duration to 3.60, while a 200 basis points rise would result in an effective duration of 4.07. Non-Interest Income and Expense Non-interest income for the fourth quarter of 2004 was up $2.38 million, or 12 percent, compared to the same quarter a year ago and was up $1.06 million, or 5 percent, compared to the third quarter of 2004. Impacting the change from the same quarter a year ago were higher levels of insurance fees (up $1.27 million), mostly related to the December 31, 2003 purchase of Magna Insurance Company. In addition, increases were reflected in trust fees (up $511,000), debit card & merchant fees (up $302,000) and secondary mortgage market operations (up $907,000). However, investment and annuity fees and other income were down $293,000 and $410,000, respectively. The increase from the prior quarter was concentrated in secondary mortgage market operations (up $960,000). The Company maintains a mortgage servicing portfolio of approximately $380 million and must periodically perform a valuation of those servicing rights. During 2003, the Company established a valuation allowance in the amount of $850,000 for the mortgage servicing rights intangible, due to an increase in the expected speed of mortgage loan prepayments resulting from the then low interest rate environment. However, changes in the interest rate environment caused the valuation of the servicing rights intangible to improve, which necessitated a reversal of the $850,000 valuation allowance in the fourth quarter of 2004. Excluding the impact of the aforementioned reversal of mortgage servicing rights valuation allowance, non-interest income increased $214,000, or 1 percent, from the third quarter of 2004 and was $1.53 million, or 8 percent, higher than the same quarter a year ago. Operating expenses for the fourth quarter of 2004 were $2.38 million, or 7 percent, higher compared to the same quarter a year ago, but were $361,000, or less than 1 percent, lower than the previous quarter. Significant factors driving the $361,000 decrease in operating expenses from the previous quarter included an $800,000 reversal of previously accrued expense related to favorable claims experience in the Company's medical plan. In addition, a recovery of $1.15 million in previously paid franchise taxes to the state of Mississippi was reflected in the fourth quarter expense base. Excluding the aforementioned items results in an overall increase in operating expenses from the previous quarter of $1.59 million, or 4 percent, due to higher levels of personnel costs (up $1.04 million), advertising expense (up $372,000) and occupancy/equipment costs (up $286,000). The increase from the same quarter a year ago resulted from higher personnel expense (up $2.46 million) and higher levels of occupancy/equipment costs (up $482,000). An increase in full time equivalent employees of 33 from December 31, 2003 to December 31, 2004, higher costs related to the Company's expansion into the Tallahassee, Florida market and expenses associated with compliance with section 404 of the Sarbanes-Oxley legislation all contributed to higher expenses in the current quarter. The Company's efficiency ratio (expressed as operating expenses as a percent of total revenue (te) before gain or loss on sale of securities transactions and amortization of purchased intangibles) was 54.95 percent for the fourth quarter of 2004. This was compared to 56.12 percent for the same quarter a year ago, and 57.55 percent for the previous quarter. The Company's number of full service banking facilities stands at 102 as of December 31, 2004, down 1 from September 30, 2004, but up 1 from the prior year. The number of full-time equivalent employees was 1,767 at December 31, 2004, up 36 from September 30, 2004 and an increase of 33 from one year ago. Asset Quality Non-performing assets as a percent of total loans and foreclosed assets was 0.40 percent at December 31, 2004, compared to 0.44 percent at September 30, 2004. Non-performing assets decreased $928,000 from September 30, 2004 and were reflected in both lower levels of non-accrual loans and foreclosed assets. Compared to the fourth quarter of 2003, non-performing assets as a percent of total loans and foreclosed assets was down 33 basis points from the 0.73 percent reported at December 31, 2003. The composition of the Company's $10.99 million of non-performing assets continues to reflect significant granularity with only 4 credits or properties exceeding $250,000 and 136 credit/properties below $250,000. The Company's ratio of accruing loans 90 days or more past due to total loans was 0.19 percent at December 31, 2004, compared to 0.20 percent at September 30, 2004 and 0.15 percent at December 31, 2003. The Company's allowance for loan losses increased $1.95 million, or 5 percent, to $40.68 million at December 31, 2004 from $38.73 million at September 30, 2004 and was $3.93 million, or 11 percent, higher than the $36.75 million reported at December 31, 2003. The increase in the allowance for loan losses from December 31, 2003 was a function of the Company's allowance methodology as well as $300 million of period-end loan growth experienced between December 31, 2003 and December 31, 2004. The ratio of the allowance for loan losses as a percent of period-end loans was 1.48 percent at December 31, 2004, compared to 1.45 percent at September 30, 2004 and 1.50 percent at December 31, 2003. The reserve coverage ratio (allowance for loan losses to non-performers and past dues) was 252 percent in fourth quarter 2004, as compared to 170 percent in fourth quarter 2003, and 225 percent in third quarter 2004.
Annualized net charge-offs as a percent of average loans for the fourth quarter of 2004 were 0.56 percent, compared to 0.45 percent for the third quarter of 2004. Net charge-offs increased $876,000 from third quarter 2004 and were reflected primarily in higher levels of charge-offs in commercial and indirect consumer loans. Compared to the fourth quarter of 2003, net charge-offs increased $159,000, however, the ratio of annualized net charge-offs as a percent of average loans decreased 5 basis points. The provision for loan losses in the fourth quarter of 2004 was $5.80 million, or 151 percent of the quarter's net charge-offs. This compares to the $3.39 million provision for the third quarter of 2004 and $4.18 million provision for the fourth quarter of 2003; the ratio of provision for loan losses to net charge-offs was 114 percent for both comparative quarters. 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 in accordance with accounting principles generally accepted in the United States of America (GAAP). Hancock Holding Company - parent company of Hancock Bank (Mississippi), Hancock Bank of Louisiana, Hancock Bank of Florida and Magna Insurance Company - has assets of $4.7 billion at December 31, 2004. Founded in 1899, Hancock Bank stands among the strongest, safest five-star financial institutions in America. Hancock Bank operates 102 full-service offices and more than 140 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 at www.hancockbank.com. "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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Member FDIC.
 Equal Housing Lender.
All loans subject to credit approval. |