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FOR
IMMEDIATE RELEASE
July 18, 2006
Hancock
Holding Company announces earnings for second quarter 2006
GULFPORT, MS (July 18, 2006) - Hancock Holding Company (NASDAQ:
HBHC) and Leo W. Seal, Jr., President of Hancock Holding Company,
today announced earnings for the quarter ended June 30, 2006.
Hancock's second quarter 2006 earnings were $22.00 million,
an increase of $3.90 million, or 22 percent, from the second
quarter of 2005. Diluted earnings per share for the second
quarter of 2006 were $0.66, an increase of $0.11, or 20 percent,
from the same quarter a year ago. Compared to the first quarter
of 2006, second quarter earnings were down $13,000, or .1
percent, with diluted earnings per share down $0.01.
For
the first six months of 2006, Hancock earned $44.01 million,
an increase of $10.48 million, or 31 percent compared to the
first six months of 2005. Diluted earnings per share for the
first six months of 2006 were $1.32, an increase of $0.30,
or 30 percent, from the first six months of 2005.
Hancock's
second quarter 2006 performance was highlighted by the following
significant items:
- Returns:
return on average assets of 1.45 percent and return on average
common equity of 17.89 percent; in 2006, both ROA and ROE
have performed at consistently high levels as the Company
continues to improve returns and profitability in the region's
post-storm environment.
- Balance
Sheet Growth: total assets were up $1.37 billion, or
29 percent, between June 30, 2005, and June 30, 2006; the
increase in assets from last year was funded by deposit
growth of $1.39 billion, or 36 percent; second quarter 2006
average deposits were up $181 million, or 4 percent, compared
to the first quarter of 2006, while average loans were up
$24 million, or 1 percent from the same period; period-end
loans were up $73 million since March 31, 2006, while period-end
deposits were down $72 million from the same period.
- Net
Interest Income (te): on the continued strength of deposit
growth and the resulting earning asset expansion, net interest
income (te) was up $1.45 million, or 2 percent between first
quarter 2006 and second quarter 2006; net interest income
(te) was up $11.93 million, or 25 percent since the second
quarter of 2005; for the first half of 2006, net interest
income (te) was up $24.21 million, or 26 percent.
- Asset
Quality: total net charge-offs for the quarter were
$3.00 million, which included storm-related net charge-offs
of $1.13 million; excluding the storm-related charge-offs,
net charge-offs would have been $1.87 million, or 0.25 percent
of average loans, for the second quarter; non-performing
assets as a percent of loans and foreclosed assets fell
6 basis points to 0.29 percent at June 30, 2006, from March
31, 2006; loans 90 days past due at June 30, 2006, were
$6.68 million or 0.22 percent of loans and foreclosed assets,
which was virtually flat with the level reported at March
31, 2006.
- Allowance
for Loan Losses: Hancock's allowance for loan losses
at June 30, 2006, was $70.96 million, or 2.33 percent of
period-end loans, a decrease of $3.00 million from the March
31, 2006 level; Hancock did not record a provision for loan
losses in the second quarter of 2006 as management determined
that the allowance level at June 30, 2006 was adequate and
no addition to the allowance was necessary this quarter;
this was done after considering current levels of charge-offs,
delinquency levels, and loan growth levels, as well as the
pace of recovery for the region.
- Non-interest
Income Growth: non-interest income was up $1.05 million,
or 4 percent, from the prior quarter with increases led
by service charges (up $1.34 million), but also reflected
significant increases in trust and investment and annuity
fees (up 11 percent and 26 percent, respectively).
In
commenting on Hancock's operating results for the second quarter
of 2006, George A. Schloegel, Chief Executive Officer, stated,
"Management is pleased with the Company's second quarter
results and remains focused on continuing to be a cornerstone
in the region's rebuilding efforts."
Balance
Sheet Growth and Capital
At
June 30, 2006, Hancock had total loans of $3.04 billion and
total deposits of $5.25 billion. The Company's total asset
size at June 30, 2006, was $6.16 billion. For the period from
August 31, 2005, to June 30, 2006, total loans have grown
$106 million, or 4 percent, and total deposits have grown
$1.44 billion, or 38 percent, while total assets have increased
$1.36 billion, or 28 percent.
Hancock's
period-end deposits were down $72 million compared to March
31, 2006. The majority of the period-end decrease was in transaction
deposits partly offset by higher time deposits. However, as
mentioned, average deposits were up $181 million between first
and second quarter of 2006. The composition of the second
quarter 2006 average total deposit base consisted of 22 percent
non-interest-bearing demand accounts, 17 percent public funds,
32 percent low cost interest-bearing transaction accounts
and 29 percent time deposits. This funding mix is slightly
more favorable as compared to the same quarter a year ago.
Loan growth in the Company's operating region was up considerably
as period-end loans were up $73 million, or 3 percent, as
compared to the first quarter 2006. The majority of the period-end
loan growth was reflected in commercial and direct consumer
purpose loans.
The
Loan/Deposit Ratio averaged 59 percent for the first quarter,
but dropped to 57 percent for the second quarter of 2006 due
to an average increase in deposits of $181 million, compared
to $24 million increase in average loans for the same period.
At June 30, 2006, the Loan/Deposit Ratio was 58 percent.
Hancock
remains very well capitalized even with a $1.36 billion increase
in total assets since the storm made landfall on August 29,
2005. As of June 30, 2006, Hancock's Leverage (tier one) Ratio
stands at 7.59 percent, while the Tangible Equity Ratio is
6.92 percent.
Net
Interest Income
Net
interest income (te) for the second quarter of 2006 increased
$11.93 million, or 25 percent, from the second quarter of
2005, and was up $1.45 million, or 2 percent, from the first
quarter of 2006. The Company's net interest margin (te) was
4.27 percent in the second quarter of 2006, 15 basis points
narrower than the same quarter a year ago and 3 basis points
narrower than the previous quarter.
Compared
to the same quarter a year ago, the primary driver of the
$11.93 million increase in net interest income (te) was a
$1.27 billion, or 29 percent, increase in average earning
assets mainly from average deposit growth of $1.37 billion,
or 35 percent, much of which was related to deposit inflows
in the aftermath of Hurricane Katrina. The $1.27 billion increase
in average earning assets was deployed into the securities
portfolio (average increase of $823 million, or 57 percent),
short-term investments (average increase of $291 million),
and into loans (average increase of $159 million, or 6 percent).
Loans now comprise 53 percent of the Company's average earning
asset base, as compared to 65 percent for the same quarter
a year ago. The net interest margin (te) narrowed 15 basis
points as the increase in the average earning asset yield
(24 basis points) did not offset the increase in total funding
costs (39 basis points).
The
Company's level of net interest income (te) in the second
quarter of 2006 increased $1.45 million, or 2 percent, from
the prior quarter. Average earning assets increased $146 million,
or 3 percent, over the previous quarter. Fueled by storm-related
deposit inflows, average deposits increased $181 million,
or 4 percent, compared to the prior quarter. Of the $146 million
increase in average earning assets, $2 million was deployed
into short-term investments (mostly fed funds), $24 million
into loans, and the remaining $120 million, into the securities
portfolio. Average loans were up $24 million from the prior
quarter. The net interest margin (te) narrowed 3 basis points
from the prior quarter as the yield on average earning assets
increased 14 basis points, while total funding costs were
up 17 basis points. The total cost of funds was up 17 basis
points, mostly due to increase in cost of public fund deposits
(indexed to short-term market rates) and higher rates on interest-bearing
deposits (up 23 basis points).
Non-interest
Income and Non-interest Expense
Excluding
the impact of securities transactions, non-interest income
for the second quarter of 2006 was up $1.25 million, or 5
percent, compared to the same quarter a year ago. Non-interest
income was up $1.05 million, or 4 percent, compared to the
first quarter of 2006. 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 $1.10
million) mostly related to higher revenues associated with
the July, 1, 2005, acquisition of J. Everett Eaves, Inc. In
addition, debit card and merchant fees were up $789,000 and
trust fees were up $550,000, when compared to the same quarter
a year ago. However, service charges were down $1.24 million
principally due to the impact of higher customer deposit balances
related to the storm-related deposit inflows of the past year.
The increase in non-interest income for the second quarter
of 2006 (excluding securities transactions) compared to the
prior quarter was due to increases in service charges (up
$1.34 million), investment and annuity fees (up $327,000),
and trust fees (up $331,000).
Operating
expenses for the second quarter of 2006 were $8.67 million,
or 20 percent, higher compared to the same quarter a year
ago and were $2.01 million, or 4 percent, higher than the
previous quarter. The increase from the same quarter a year
ago was reflected in higher levels of personnel expense (up
$3.48 million), occupancy expense (up $898,000), professional
services expense (up $1.10 million), and all other expenses
(up $3.19 million). The increase from the prior quarter was
reflected in higher personnel expense (up $197,000) and higher
professional services expense (up $1.50 million). The Company's
overall increase in operating expenses for the second quarter
of 2006, while not containing any significant direct expenses
related to the impact of Hurricane Katrina, did include an
unquantifiable level of expenses indirectly related to the
storm. This would include on-going expenditures related to
occupancy (due to large numbers of employees remaining displaced
from their regular pre-storm workplaces), equipment replacement,
repair and maintenance expenses, and other costs.
Asset
Quality
Annualized
net charge-offs as a percent of average loans for the second
quarter of 2006 were 0.40 percent, compared to 0.24 percent
for the second quarter of 2005, and were a negative (recovery)
.01 percent in the first quarter of 2006. The second quarter's
net charge-offs of $3.00 million included $1.13 million of
charge-offs that were classified as related to Hurricane Katrina.
Excluding the storm-related items, net charge-offs for the
second quarter of 2006 would have been $1.87 million, or 0.25
percent of average loans. During the first quarter of 2006,
the Company recovered a large commercial credit totaling $1.75
million. In addition, net charge-offs of $597,000, or 0.08
percent, were related to Hurricane Katrina. Excluding the
first quarter storm-related net charge-offs of $597,000 and
the large commercial recovery of $1.75 million, net charge-offs
for the first quarter were $1.05 million, or 0.14 percent
of average loans.
As
previously mentioned, no provision for loan losses was recorded
in the second quarter of 2006 as management determined through
careful analysis of available information on charge-offs,
delinquencies, and loan growth, as well as the pace of recovery
for the region, that no addition to the allowance for loan
losses was necessary this quarter. The provision for loan
losses in the second quarter of 2005 was $1.89 million and
was a negative $705,000 in the first quarter of 2006 (due
to the large commercial recovery).
Non-performing
assets as a percent of total loans and foreclosed assets was
0.29 percent at June 30, 2006, compared to 0.35 percent at
March 31, 2006. Compared to the second quarter of 2005, the
ratio of non-performing assets as a percent of total loans
and foreclosed assets was down 8 basis point from the 0.37
percent reported at June 30, 2005. Non-performing assets decreased
$1.61 million from March 31, 2006, reflecting primarily lower
levels of non-accrual assets. The composition of the Company's
$8.84 million non-performing asset base continues to reflect
granularity with many smaller credits and/or properties (only
4 credits or properties exceeding $250,000 and 137 credits
or properties below $250,000). The Company's ratio of accruing
loans 90 days or more past due to total loans was 0.22 percent
at June 30, 2006, unchanged from March 31, 2006, and 0.14
percent at June 30, 2005. Accommodations in the form of loan
payment extensions (most for 90 days) were granted on a customer-by-customer
basis as a result of economic conditions brought by the impact
of Hurricane Katrina. At June 30, 2006, accommodations in
the form of loan payment extensions totaled $1.55 million
(16 loans) and were not included in the aforementioned amounts
and ratios of loans 90 days past due.
The
Company's allowance for loan losses was $70.96 million at
June 30, 2006, down $3.00 million from the $73.96 million
reported at March 31, 2006, and $29.58 million higher than
the $41.38 million reported at June 30, 2005. The ratio of
the allowance for loan losses as a percent of period-end loans
was 2.33 percent at June 30, 2006, a decrease of 16 basis
points from March 31, 2006. The allowance coverage ratio (allowance
for loan losses to non-performers and past dues) was 457 percent
in second quarter 2006, as compared to 433 percent in first
quarter 2006, and 285 percent in second quarter 2005. As previously
mentioned, the Company had established a specific allowance
of $35.20 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 of $2.35 million in the fourth quarter of
2005, $597,000 during the first quarter of 2006, and $1.13
million in the second quarter of 2006 that were charged directly
against the aforementioned allowance. In doing so, the storm-related
allowance has been reduced by $4.08 million and, as of June
30, 2006, stands at $31.12 million. Hancock is continuously
reviewing the adequacy of the special storm-related allowance,
and while ratios of non-performing assets actually improved
for the second quarter of 2006, management believes that sufficient
uncertainty continues to exist at this time as to the ultimate
level of storm-related losses to maintain the storm-related
allowance at its current level.
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 $6.16 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
150 banking and financial services offices
and more than 130 automated
teller machines across South Mississippi, Louisiana, southern
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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