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News/Press Releases  FOR
IMMEDIATE RELEASE Hancock Holding Company reports first quarter 2005 earnings- up 9 percent GULFPORT, MS (April 14, 2005) - Hancock Holding Company (NASDAQ: HBHC) today announced earnings for the quarter ended March 31, 2005. Net income for the first quarter of 2005 totaled $15.44 million, compared to $14.14 million reported for the first quarter of 2004, an increase of $1.3 million, or 9 percent. In commenting on Hancock's operating results for the first quarter of 2005, Hancock Holding Company President Leo W. Seal, Jr. stated, "While Hancock's management team is pleased with the 9 percent growth in earnings from the first quarter of 2004, we realize that 2005 will present a unique challenge to the Company as we strive to maintain the current asset quality improvements and look for opportunities to expand and further strengthen our competitive presence in our primary and targeted growth markets." Diluted earnings per share for the first quarter of 2005 were $0.47, compared to $0.43 for the first quarter of 2004, resulting in an increase of $0.04 per share, or 9 percent. Net income for the fourth quarter of 2004 was $15.79 million and diluted earnings per share were $0.48. The Company's annualized returns on average assets and average common stockholders' equity for the first quarter of 2005 were 1.32 percent and 13.32 percent, respectively, compared with 1.33 percent and 13.01 percent, respectively, for the first quarter of 2004. Annualized returns on average assets and average common stockholders' equity for the fourth quarter of 2004 were 1.39 percent and 13.54 percent, respectively. Key performance trends and highlights for the first quarter of 2005 included: · Average loans grew $298 million, or 12 percent, compared to the first quarter of 2004 with significant growth reflected in commercial, mortgage and indirect consumer loans. Compared to the prior quarter, average loans grew $62 million, or 2 percent, with commercial loans the major growth category. · Average deposits increased $303 million, or 9 percent, over the first quarter of 2004 with growth in all deposit categories except for interest-bearing transaction deposits. Average growth over the fourth quarter of 2004 was $225 million, or 6 percent, with over $168 million of growth reflected in seasonal inflows of public fund deposits. · Net interest margin (tax equivalent "te") was 4.35 percent in the current quarter, 6 basis points narrower than the first quarter of 2004 and 18 basis points narrower than the prior quarter. In addition, net interest income (te) was up $3.79 million, or 9 percent, from the first quarter of 2004, but was down $24,000, or less than 1 percent, from the prior quarter. · The ratio of non-performing assets to loans and foreclosed assets at March 31, 2005 fell 23 basis points from March 31, 2004 to 0.36 percent, and was reduced 4 basis points from December 31, 2004. Non-performing assets at March 31, 2005 stood at $9.93 million, a decrease of $4.96 million from March 31, 2004, and a decrease of $1.07 million from December 31, 2004. · Net charge-offs as a percent of average loans for the first quarter 2005 was 0.33 percent, a decrease of 12 basis points from the same quarter a year ago and 23 basis points lower than the prior quarter. Compared to the prior quarter, lower overall levels of net charge-offs were reflected in every loan category, with the exception of a nominal increase in net charge-offs of mortgage loans. Net Interest Income Net interest income (te) for the first quarter of 2005 increased $3.79 million, or 9 percent, from the first quarter of 2004, but was $24,000, or less than 1 percent, lower than the fourth quarter of 2004. The Company's net interest margin (te) was 4.35 percent in the first quarter of 2005, 6 basis points narrower than the same quarter a year ago, and 18 basis points narrower than the previous quarter. Compared to the same quarter a year ago, the primary driver of the $3.79 million increase in net interest income (te) was a $419 million, or 11 percent, increase in average earning assets, mainly from average loan growth of $298 million, or 12 percent. In addition, the securities portfolio increased $63 million, or 5 percent, while short-term investments increased $58 million, or 76 percent. The Company's overall increase in earnings assets was primarily funded by average deposit growth of $303 million, or 9 percent. As previously mentioned, deposit growth was reflected in nearly every deposit category with the majority of the $303 million increase reflected in public fund deposits (up $116 million) and time deposits (up $123 million). This improvement in the earning asset mix enabled the Company to improve its loan to deposit ratio from 70 percent in the first quarter of 2004 to 72 percent in the current quarter. The net interest margin (te) narrowed slightly (by 6 basis points) as the cost of funds increased more rapidly (14 basis points) than the overall yield on loans, securities and short-term investments (8 basis points). Most of the increase in funding costs was reflected in the rate paid on public fund deposits (up 66 basis points). The slightly lower level of net interest income (te) (down $24,000, or less than 1 percent) and the lower net interest margin (down 18 basis points) as compared to the previous quarter was primarily due to the following major factors: · Earning asset mix unfavorable as loan growth slowed to $62 million and deposits surged $225 million; the relative percentage of earning assets deployed in loans dropped 200 basis points to 65 percent; average earning assets were up $205 million, with over $143 million invested in either the securities portfolio or short-term funds. · Loan yield up only 2 basis points as loan fees dropped $474,000 and loan clients rushed to convert variable rate loans to a fixed rate. The overall percent of variable rate loans to total loans dropped to 38 percent in the first quarter of 2005 from as high as 40 percent in the third quarter of 2004. · Total cost of funds increased 8 basis points due to a 30 basis point increase in the rate paid on public fund deposits (mostly index driven); the rate paid on time deposits was up only 1 basis point, while the rate on interest-bearing transaction deposits actually dropped by 2 basis points. Asset-Liability Management Strategic planning forecasts reflect stability in earnings growth. In accordance with the Company's methodology, rate increases of 100 and 200 basis points are projected to increase annual net interest income between 2 percent and 5 percent. Loan growth below forecast levels combined with changes in the portfolio mix resulted in lower asset yield growth than originally projected, as previously described above. The tax equivalent loan yield grew by 2 basis points, driven by a drop in the percentage of variable rate loans. Compared to the first quarter of 2004, the percentage has fallen from 39 percent to 38 percent. Funding cost increases were in line with strategic planning forecasts for the current rate environment. Funding costs rose 8 basis points from fourth quarter 2004 to first quarter 2005; however, the average earning asset yields fell by 10 basis points. 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 3.00 versus 2.60 one quarter ago. An instantaneous rate increase of 100 basis points would move the effective duration to 3.63, while a 200 basis points rise would result in an effective duration of 3.89. Non-Interest Income and Expense Non-interest income (excluding gains from the sale of branches and security transactions) for the first quarter of 2005 was up $2.20 million, or 11 percent, compared to the same quarter a year ago and was up $390,000, or 2 percent, compared to the fourth quarter of 2004. Impacting the change from the same quarter a year ago were higher levels of insurance fees (up $1.40 million, or 56 percent) in Magna Insurance Company and Hancock Insurance Agency. In addition, increases were reflected in trust fees (up $556,000, or 28 percent) and investment and annuity fees (up $495,000, or 71 percent). Service charges on deposit accounts were down $740,000, or 7 percent, from the first quarter of 2004. The increase in non-interest income from the prior quarter was concentrated in insurance fees (up $2.06 million, or 113 percent), again, due primarily to Magna Insurance Company. This was offset by decreases in service charges on deposit accounts and secondary mortgage market operations (down $1.57 million and $990,000, respectively). Secondary mortgage market operations income was lower due to the reversal (due to changes in the interest rate environment) of a previously established $850,000 valuation allowance related to the mortgage servicing rights intangible during the fourth quarter of 2004, which was not repeated during the first quarter of 2005. Operating expenses for the first quarter of 2005 were $2.38 million, or 6 percent, higher compared to the same quarter a year ago, and were $3.70 million, or 10 percent, higher than the previous quarter. The increase from the first quarter of 2004 was primarily due to higher expenses levels related to Magna Insurance Company ($1.70 million) and a higher expense base related to the Company's Florida operation ($1.24 million). A significant factor driving the $3.70 million increase in operating expenses from the previous quarter was the presence of two one-time items in the fourth quarter of 2004, as well as a higher expense base related to Magna Insurance Company (up $1.64 million) in 2005. The two fourth quarter 2004 one-time items that were not repeated during the first quarter of 2005 included an $800,000 reversal of previously accrued expense related to favorable claims experience in the Company's medical plan and a recovery of $1.15 million in previously paid franchise taxes to the State of Mississippi. Asset Quality Overall, asset quality continued the established trend of quarterly improvement with significant reductions from the prior quarter in both non-performing assets (down $1.07 million) and net charge-offs (down $1.58 million). Compared to the first quarter of 2004, non-performing assets as a percent of total loans and foreclosed assets was down 23 basis points from the 0.59 percent reported at March 31, 2004. Non-performing assets as a percent of total loans and foreclosed assets was 0.36 percent at March 31, 2005, compared to 0.40 percent at December 31, 2004. Non-performing assets decreased $1.07 million from December 31, 2004 and was reflected in lower levels of non-accrual loans. The majority of the improvement in nonaccrual loans occurred in smaller credits (less than $250,000) in Louisiana. The composition of the Company's $9.93 million of non-performing assets continues to reflect significant granularity with only 6 credits/properties exceeding $250,000 and 117 credits/properties below $250,000. The Company's ratio of accruing loans 90 days or more past due to total loans was 0.10 percent at March 31, 2005, compared to 0.19 percent at December 31, 2004 and 0.20 percent at March 31, 2004. The Company's allowance for loan losses was $3.68 million, or 10 percent, higher than the $37.50 million reported at March 31, 2004, and increased $500,000, or 1 percent, to $41.18 million at March 31, 2005 from $40.68 million at December 31, 2004. The increase in the allowance for loan losses from March 31, 2004 was a function of the Company's allowance methodology as well as $269 million of period-end loan growth experienced between March 31, 2004 and March 31, 2005. The ratio of the allowance for loan losses to period-end loans decreased 1 basis point from 1.49 percent at March 31, 2004 to 1.48 percent at March 31, 2005 and December 31, 2004. The reserve coverage ratio (allowance for loan losses to non-performers and past dues) was 324 percent in first quarter 2005, as compared to 189 percent in first quarter 2004, and 252 percent in fourth quarter 2004. Annualized net charge-offs as a percent of average loans for the first quarter of 2005 were 0.33 percent, compared to 0.45 percent for the first quarter of 2004. Net charge-offs decreased $526,000, while the ratio of annualized net charge-offs as a percent of average loans decreased 12 basis points. Compared to the fourth quarter of 2004 net charge-offs decreased $1.58 million. The ratio of annualized net charge-offs as a percent of average loans decreased 23 basis points from 0.56 percent for the previous quarter. Reductions in net charge-offs were reflected in all categories except mortgage loans, where there was a nominal increase. The provision for loan losses in the first quarter of 2005 was $2.76 million, or 122 percent of the quarter's net charge-offs. This compares to the $3.54 million provision for the first quarter of 2004 and $5.80 million provision for the fourth quarter of 2004. The ratio of provision for loan losses to net charge-offs was 127 percent in the first quarter of 2004 and 151 percent in the fourth quarter of 2004. 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 $4.8 billion at March 31, 2005. Founded in 1899, Hancock Bank stands among the strongest, safest five-star financial institutions in America. Hancock Bank operates more than 100 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 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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