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News/Press Releases  FOR
IMMEDIATE RELEASE Hancock Holding Company reports earnings for first half of 2003 - up 8 percent GULFPORT, MS (July 10, 2003) - Hancock Holding Company (NASDAQ: HBHC) today announced earnings for the six-month period ended June 30, 2003. Net income for the first half of 2003 totaled $26.0 million, compared to $24.0 million for the first six months of 2002 - an increase of $2.0 million, or 8.3 percent. Diluted earnings per share for the first six months of 2003 were $1.56, compared to $1.40 for the same period in 2002, resulting in an increase of $.16 per share, or 11.4 percent. Net income for the second quarter of 2003 was $12.4 million, a decrease of $200,000, or 1.6 percent, from the $12.6 million reported for the second quarter of 2002. Diluted earnings per share were $0.74 for the second quarter of 2003, compared to $0.73 for the second quarter of 2002, an increase of $.01 per share, or 1.4 percent. The Company's returns on average assets and average common stockholders' equity for the second quarter of 2003 were 1.20 percent and 12.42 percent, respectively, compared with 1.30 percent and 13.04 percent, respectively, for the second quarter of 2002. Annualized returns on average assets and average common stockholders' equity for the six months ended June 30, 2003, were 1.28 percent and 13.24 percent, respectively, compared with 1.27 percent and 12.65 percent, respectively, for the six months ended June 30, 2002. Loans were $2.251 billion at June 30, 2003, compared to $1.954 billion at June 30, 2002, an increase of $297 million, or 15.2 percent. Deposits were $3.430 billion at June 30, 2003, compared to $3.198 billion at June 30, 2002, an increase of $232 million, or 7.3 percent. Total assets were $4.133 billion at June 30, 2003, a 6.7 percent increase from the $3.875 billion reported at June 30, 2002. Common stockholders' equity increased 2.1 percent to $397 million at June 30, 2003, from $389 million at June 30, 2002. Book value per share increased $1.18, or 4.8 percent, to $25.83 at June 30, 2003 from $24.65 at June 30, 2002. Common stock repurchases totaled 51,774 shares in the second quarter of 2003, bringing the total number of shares repurchased thus far this year to 72,774 shares. Compared to the first quarter of 2003, net income decreased $1.3 million, or 9.4 percent, in the second quarter of 2003. On a per-share basis, the decrease from the previous quarter was $0.08, or 9.3 percent. Returns on average assets and average common stockholders' equity were 17 and 166 basis points lower, respectively, in the second quarter versus the first quarter. In
commenting on Hancock's operating results for the second quarter
of 2003, Chief Executive Officer George A. Schloegel stated, "While
we are proud to report an 8.3 percent increase in earnings for the
first six months 2003 compared to 2002, we realize the dual challenges
that a slow economy and a historically low interest rate environment
present for the Company. Rest assured that all Hancock team members
are focused on working hard to overcome these challenges for benefit
of all of our shareholders." Net
interest income (te) for the second quarter of 2003 decreased $120,000,
or 0.3 percent, from the second quarter of 2002, but was $1.5 million,
or 3.9 percent higher than the first quarter of 2003. The Compared to the same quarter a year ago, the primary driver of the slightly decreased level of net interest income (te) was the 29-basis-point narrowing of the Company's net interest margin (te). The net interest margin narrowed as the overall yield on loans, securities, and short-term investments fell more rapidly (78 basis points) than the Company's ability to reduce total funding costs (49 basis points). Largely mitigating the narrowing of the net interest margin was $256 million of average loan growth from second quarter 2002 to second quarter 2003, which was funded by $221 million of average deposit growth for the same period. In addition, the Company's loan to deposit ratio improved to 63.4 percent, 360 basis points higher than the 59.8 percent reported in the same quarter a year ago. Loans now comprise 57.3 percent of the Company's average earning asset base as compared to 53.7 percent a year ago. The aforementioned improvements in the earning asset mix were a significant factor in the Company's ability to overcome the decline in its earning asset yield. The higher level of net interest income (te) and net interest margin (te) expansion compared to the previous quarter was primarily due to an improved earning asset mix. Average loan growth of $80 million, funded by average deposit growth of $71 million, contributed to the $95 million increase in average earning assets. Also contributing to the improved earning assets mix was the shifting of approximately $94 million of funds previously invested in short-term investments to the Company's securities portfolio. The Company's loan to deposit ratio improved by 100 basis points compared to the previous quarter, while loans as a percent of earning assets grew by 70 basis points. In addition to the impact of a better earning asset mix, the net interest margin expanded by 3 basis points due to a smaller reduction in the yield on average earning assets (10 basis points) than the reduction in funding costs (13 basis points). The Company continues to focus its efforts to increase net interest income and expand the net interest margin by working to further reduce deposit costs, increase loan growth, and better manage the securities portfolio. From an asset-liability management perspective, the Company's GAP position is balanced and therefore, well positioned to absorb the recent reduction in short-term rates with minimal impact to net interest income levels. In preparation for the eventuality of rising rates, the Company's securities portfolio has a relatively short effective duration of 1.90, inclusive of recent portfolio purchases, which will provide flexibility and cash flow for the near-term future. Non-Interest Income and Expense Non-interest income for the second quarter of 2003 was up $142,000, or 0.8 percent, compared to the same quarter a year ago, but was down $133,000, or 0.7 percent, compared to the previous quarter. The second quarter 2003 level includes a pre-tax net securities gain of $659,000, related to the sale of $50 million of U.S. Treasury and Agency securities with near-term maturity dates. The funds from the sale of these securities were reinvested in higher-yielding mortgage-backed securities with a 31 basis point yield advantage. The first quarter of 2003 also includes a pre-tax net securities gain of $455,000 related to the sale of floating-rate securities. Also included in the second quarter 2003 level of non-interest income was a mortgage servicing rights temporary impairment write-down of $850,000. The Company maintains a mortgage servicing portfolio of approximately $400 million and must periodically perform a valuation of those servicing rights. The $850,000 non-cash pre-tax write-down was required due to an increase in the expected speed of mortgage loan pre-payments resulting from the current low-interest rate environment and represents an after-tax charge of $.03 per share. Further impairment of the mortgage servicing rights portfolio is possible in future quarters and is dependent on mortgage pre-payment speeds. Somewhat mitigating this issue for the Company is a recent decision to begin selling mortgage servicing rights versus retaining these rights in our servicing portfolio pending a change in the interest rate environment. Excluding the impact of the aforementioned securities gains and mortgage servicing rights temporary impairment write-down, non-interest income increased $513,000, or 3.0 percent, from the first quarter of 2003 and was $333,000, or 1.9 percent, higher than the same quarter a year ago. Operating expenses for the second quarter of 2003 were $1.2 million, or 3.6 percent, higher compared to the same quarter a year ago and were $2.3 million, or 7.0 percent, higher than the previous quarter. The vast majority of these increases was reflected in other operating expenses and spread over a wide range of operating expense categories. In addition, the Company experienced an increase in personnel expenses primarily due to normal salary increases, as well as an increase in the number of full-time-equivalent employees (20 from the same quarter a year ago and 43 related to the previous quarter) partly due to the first quarter 2003 acquisition of two branch locations in Jefferson Parish, Louisiana. The Company's efficiency ratio (expressed as non-interest income as a percent of total revenue before securities transactions and amortization of purchased intangibles) increased to 60.09 percent in the second quarter of 2003. This was compared to 57.34 percent for the same quarter a year ago, and 57.33 percent for the previous quarter.
Non-performing
assets as a percent of total loans and foreclosed assets were 1.00
percent at June The Company's allowance for loan losses increased slightly to $35.2 million at June 30, 2003, from $34.7 million at March 31, 2003, and was $3.0 million higher than the $32.3 million at June 30, 2002. The ratio of the allowance for loan losses as a percent of period-end loans was 1.57 percent at June 30, 2003, compared to 1.64 percent at March 31, 2003, and 1.65 percent at June 30, 2002. The increase in the allowance for loan losses from June 30, 2002, was a function of the $297 million of loan growth experienced between June 30, 2002, and June 30, 2003. While the Company maintains a cautious outlook regarding overall uncertainty about economic conditions, the level of the allowance for loan losses is maintained at a level that reflects this uncertainty but also considers changes in the mix and size of the Company's loan portfolio. Annualized net charge-offs as a percent of average loans for the second quarter of 2003 was 0.64 percent, compared to 0.59 percent for the first quarter of 2003. Net charge-offs were increased $446,000 from first quarter 2003 to second quarter 2003 and were reflected primarily in higher levels of charge-offs in commercial loans. Compared to the second quarter of 2002, net charge-offs were reduced $732,000, or 24 basis points (expressed as a percent of average loans). The provision for loan losses in the second quarter of 2003 was $4.0 million, or 114 percent of the quarter's net charge-offs. This compares to the $3.0 million provision for the first quarter of 2003 and $4.9 million provision for the second quarter of 2002. In each of the aforementioned quarters, the ratio of provision for loan losses to net charge-offs was 100 percent and 116 percent, respectively. 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 financial statements are prepared and audited in accordance
with Generally Accepted Accounting Principles (GAAP). The Company's
systems of internal controls and risk management processes are in
place and fully functional. "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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