-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, oC8DRPpAoyEqA4P3cJ+uWIOQ9+BiuHK+uzHNpeshIUrj0W4i9oS1J+xX/DNzuC22 zTKH7Y/Bvc3Q3Yjra9T81A== 0000950134-94-000586.txt : 19940518 0000950134-94-000586.hdr.sgml : 19940518 ACCESSION NUMBER: 0000950134-94-000586 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK HOLDING CO CENTRAL INDEX KEY: 0000750577 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 640693170 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13089 FILM NUMBER: 94528434 BUSINESS ADDRESS: STREET 1: ONE HANCOCK PLZ STREET 2: P.O. BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39502 BUSINESS PHONE: 6018684605 MAIL ADDRESS: STREET 1: ONE HANCOCK PLZ STREET 2: P O BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39502 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1994 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /x/ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ending March 31, 1994 Commission File Number 0-13089 HANCOCK HOLDING COMPANY (Exact name of registrant as specified in its charter) MISSISSIPPI 64-0693170 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) ONE HANCOCK PLAZA, P. O. BOX 4019, GULFPORT, MISSISSIPPI 39502 (Address of principal executive offices) (Zip Code) (601) 868-4606 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, address and fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO __________ 7,027,932 Common Shares were outstanding as of April 29, 1994 for financial statement purposes. Page 1 of 11 2 HANCOCK HOLDING COMPANY I N D E X
PART I. FINANCIAL INFORMATION PAGE NUMBER - - ------------------------------ ----------- ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- March 31, 1994 and December 31, 1993 3 Condensed Consolidated Statements of Earnings -- Three Months Ended March 31, 1994 and 1993 4 Condensed Consolidated Statements of Cash Flows -- Three Months Ended March 31, 1994 and 1993 5 Notes to Condensed Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 PART II. OTHER INFORMATION - - --------------------------- ITEM 4. Submission of Matters to a Vote 10 of Security Holders ITEM 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 - - ----------
Page 2 of 11 3 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
Unaudited March 31 December 31 ASSETS: 1994 1993 * ---------- ---------- Cash and due from banks (non-interest bearing) $ 103,565 $ 90,544 Interest bearing time deposits with other banks 1,775 1,875 ---------- ---------- Total cash and due from banks 105,340 92,419 Securities available for sale 22,723 0 Securities held for sale (market value $28,836) 0 28,244 Investment securities (market value of $763,670 and $714,754) 763,926 700,936 Federal funds sold and securities purchased under agreements to resell 85,500 85,500 Loans, net of unearned income 830,465 860,128 Less: Reserve for loan losses 14,058 14,029 ---------- ---------- Net loans 816,407 846,099 Property and equipment, at cost, less accumulated depreciation of $26,156 and $26,784 34,712 34,998 Other real estate 551 654 Accrued interest receivable 14,586 13,800 Other assets 18,965 18,400 ---------- ---------- TOTAL ASSETS $1,862,710 $1,821,050 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 355,356 $ 346,307 Interest bearing savings, NOW, money market and other time 1,302,621 1,269,288 ---------- ---------- Total deposits 1,657,977 1,615,595 Federal funds purchased and securities sold under agreements to repurchase 39,220 45,799 Other liabilities 14,126 11,530 Capital notes 480 480 Long-term bonds and notes 3,820 3,820 ---------- ---------- TOTAL LIABILITIES 1,715,623 1,677,224 ---------- ---------- STOCKHOLDERS' EQUITY: Common Stock 23,903 23,903 Capital Surplus 95,130 95,130 Undivided Profits 27,940 24,793 Unrealized gain on securities available for sale - net 114 0 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 147,087 143,826 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,862,710 $1,821,050 ========== ==========
* The balance sheet at December 31, 1993 has been taken from the audited balance sheet at that date. See notes to condensed consolidated financial statements. Page 3 of 11 4 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED (Amounts in thousands except per share data)
Three Months Ended March 31 --------------------------- INTEREST INCOME: 1994 1993 ---------- ---------- Interest and fees on loans $ 18,340 $ 18,208 Interest on: U. S. Treasury Securities 3,867 4,135 Obligations of other U. S. Government agencies and corporations 4,978 5,722 Obligations of states and political subdivisions 629 889 Interest on Federal funds sold and securities purchased under agreements to resell 735 795 Interest on time deposits and other 1,037 1,406 ---------- ---------- Total interest income 29,586 31,155 INTEREST EXPENSE: Interest on deposits 10,831 10,982 Interest on federal funds purchased and securities sold under agreements to repurchase 244 261 Interest on bonds and other debt 73 108 Interest on subordinated notes 6 6 ---------- ---------- Total interest expense 11,154 11,357 ---------- ---------- NET INTEREST INCOME 18,432 19,798 PROVISION FOR LOAN LOSSES 373 1,530 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 18,059 18,268 ---------- ---------- Other Operating Income: Service charges on deposit accounts 2,665 2,575 Income from fiduciary activities 611 648 Securities gains 81 0 Other non-interest income 1,483 1,610 ---------- ---------- Total other operating income 4,840 4,833 ---------- ---------- Other Operating Expenses: Salaries and employee benefits 7,939 7,127 Net occupancy expense of bank premises and equipment expense 3,214 2,163 Other non-interest expense 4,751 5,257 ---------- ---------- Total other operating expenses 15,904 14,547 ---------- ---------- EARNINGS BEFORE INCOME TAXES 6,995 8,554 INCOME TAXES 2,198 2,631 ---------- ---------- NET EARNINGS $ 4,797 $ 5,923 ========== ========== NET EARNINGS PER COMMON SHARE $ 0.68 $ 0.84 ========== ========== DIVIDENDS PAID PER COMMON SHARE $ 0.23 $ 0.17 ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 7,022,124 7,022,124 ========== ==========
See notes to condensed consolidated financial statements. Page 4 of 11 5 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (Amounts in thousands)
Three Months Ended March 31 FINANCIAL RESOURCES PROVIDED: 1994 1993 - - ---------------------------- -------- -------- Cash Flows From Operating Activities: Net earnings $ 4,797 $ 5,923 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 1,045 633 Provision for loan losses 373 1,530 Gain on sales of investments 81 0 Increase in interest receivable (786) (789) Amortization of intangible assets 368 378 Increase (decrease) in interest payable 314 276 Other, net 1,288 (3,293) --------- --------- Net cash provided by Operating Activities 7,480 4,658 --------- --------- Cash Flows from Investing Activities: Proceeds from sales/maturities of securities 78,489 83,566 Purchase of securities (135,764) (144,396) Net decrease in federal funds sold and securities sold under agreements to repurchase 0 (12,500) Net decrease in loans 29,320 11,748 Purchase of property and equipment, net (760) (751) Transfers from loans to other real estate (110) (348) Proceeds from sale of other real estate 214 194 --------- --------- Net cash used in Investing Activities (28,611) (62,487) --------- --------- Cash Flows from Financing Activities: Net increase in deposits 42,382 31,464 Dividends paid (1,651) (1,220) Net decrease in federal funds purchased and securities sold under agreements to repurchase (6,579) 16,206 --------- --------- Net cash provided by Financing Activities 34,152 46,450 --------- --------- Net Increase (Decrease) in Cash and Due From Banks 13,021 (11,379) Cash and Due from Banks, Beginning 90,544 99,473 --------- --------- Cash and Due from Banks, Ending $ 103,565 $ 88,094 ========= =========
See notes to condensed consolidated financial statements. Page 5 of 11 6 HANCOCK HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Three Months Ended March 31, 1994 and 1993) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Hancock Holding Company, its wholly owned banks, Hancock Bank and Hancock Bank of Louisiana and other subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation. The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the consolidated financial statements and notes thereto of Hancock Holding Company's 1993 Annual Report to Shareholders. RECENT CHANGES IN FINANCIAL ACCOUNTING STANDARDS Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. This Statement requires securities to be classified into one of three reporting categories (held-to-maturity, available-for-sale, or trading). Securities classified as held-to-maturity, also referred to herein as investment securities, are carried at amortized cost. Those classified as available-for-sale are carried at market value with the unrealized gain or loss (net of income tax effect) reflected as a component of stockholder's equity. Those classified as trading are carried at market value with the unrealized gain or loss reflected in the statement of earnings. ACQUISITION On April 29, 1994, the Company merged Hancock Bank of Louisiana, a wholly owned subsidiary of the Company with First State Bank and Trust Company of East Baton Rouge Parish, Baker, Louisiana (BAKER). The merger was consummated by the exchange of all outstanding common stock of BAKER in return for approximately 520,000 shares of common stock of the Company. The merger will be accounted for using the pooling of interests method. BAKER had total assets of appproximately $75,000,000 and stockholders' equity of approximately $11,800,000 as of April 29, 1994. Page 6 of 11 7 HANCOCK HOLDING COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion provides management's analysis of certain factors which have affected the Company's financial condition and operating results during the periods included in the accompanying condensed consolidated financial statements. CHANGES IN FINANCIAL CONDITION Liquidity The Company manages liquidity through traditional funding sources of core deposits, federal funds, and maturities of loans and investment securities. The following liquidity ratios compare certain assets and liabilities to total deposits or total assets:
March 31 December 31 1994 1993 -------- -------- Total securities to total deposits 47.4% 45.1% Total loans (net of unearned discount) to total deposits 50.1% 53.2% Interest-earning assets to total assets 86.7% 91.4% Interest-bearing deposits to total deposits 78.6% 88.0%
Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate:
March 31 December 31 1994 1993 -------- -------- Equity capital to total assets (1) 7.90% 7.90% Total capital to risk-weighted assets (2) 17.61% 15.42% Tier 1 Capital to risk-weighted 16.68% 14.49% assets (3) Leverage Capital to total assets (4) 7.99% 7.62% Fixed assets to equity capital 23.60% 24.30%
Page 7 of 11 8 (1) Equity capital consists of stockholder's equity (common stock, capital surplus and undivided profits). (2) Total capital consists of equity capital less intangible assets plus a limited amount of loan loss reserves. Risk-weighted assets represent the assigned risk portion of all on and off balance sheet assets. Based on Federal Reserve Board guidelines, assets are assigned a risk factor percentage from 0% to 100%. A minimum ratio of total capital to risk- weighted assets of 8% is required. (3) Tier 1 capital consists of equity capital less intangible assets. A minimum ratio of tier 1 capital to risk-weighted assets of 4% is required. (4) Leverage capital consists of equity capital less goodwill and core deposit intangibles. The Federal Reserve Board currently requires bank holding companies rated Composite 1 under the BOPEC rating system to maintain a minimum 3% leverage capital ratio and all other bank holding companies not rated a Composite 1 under the BOPEC rating system to maintain a minimum 4% to 5% leverage capital ratio. RESULTS OF OPERATIONS Net Earnings Net earnings decreased $1,126,000 or 19% for the first quarter of 1994 compared to the first quarter of 1993. The decrease in earnings is primarily attributable to a net interest margin decline of .53% or $1,366,000.
Three Months Ended March 31 --------------------------- 1994 1993 -------- -------- Results of Operations: Return on average assets 1.04% 1.35% Return on average equity 13.35% 18.13% Net Interest Income: Return on average interest-earning assets (tax equivalent) 7.14% 7.92% Cost of average interest-bearing funds 3.35% 2.90% ------ ------ Net interest spread 3.79% 5.02% ====== ====== Net yield on interest-earning assets (net interest income on a tax equivalent basis divided by average interest-earning assets) 4.55% 5.08% ====== ======
Page 8 of 11 9 Provision for Loan Losses Provisions are made to the reserve in sufficient amounts to bring the balance in the reserve for loan losses to a level adequate to absorb possible loan losses based upon management's knowledge of the loan portfolio and current and expected economic conditions. A specific loan is charged-off when management believes, after considering, among other things, the borrower's condition and the value of any collateral, that collection of the loan is unlikely. The following ratios are useful in determining the adequacy of the loan loss reserve and loan loss provision and are calculated using average loan balances.
Three Months Ended March 31 --------------------------- 1994 1993 -------- -------- Annualized net charge-offs to average loans 0.13% 0.24% Annualized provision for loan losses to average 0.18% 0.81% loans Average reserve for loan losses to average loans 1.70% 1.80%
Income Taxes The effective tax rate of the Company continues to be less than the statutory rate of 35%, due primarily to tax-exempt interest income. The amount of tax-exempt income earned during the first three months of 1994 was $830,000 compared to $1,134,000 for the comparable period in 1993. Income tax expense decreased from $2,631,000 in the first three months of 1993 to $2,198,000 in the first three months of 1994. This decrease is primarily due to decreased earnings. Page 9 of 11 10 Part II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A. Annual Meeting held February 24, 1994. B. Directors elected at the Annual Meeting held February 24, 1994:
Votes Cast -------------------- Affirmed Withheld -------- -------- 1. L. A. Koenenn, Jr. 5,922,201 9,036 2. Dr. Homer C. Moody, Jr. 5,916,598 14,639 3. George A. Schloegel 5,922,345 8,892
Continuing Directors: 4. A. F. Dantzler 5. Vertis Ramsay 6. Leo W. Seal, Jr. 7. Joseph F. Boardman, Jr. 8. Charles H. Johnson 9. Thomas W. Milner, Jr. C. Approval of Deloitte & Touche as the independent public accountants of the company 5,921,347 affirmative votes, 7,440 negative and 2,450 abstained. D. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None Page 10 of 11 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HANCOCK HOLDING COMPANY Registrant May 10, 1994 By: /s/ Leo W. Seal, Jr. Date Leo W. Seal, Jr. President and CEO May 10, 1994 By: /s/ George A. Schloegel Date George A. Schloegel Vice-Chairman of the Board Page 11 of 11 -----END PRIVACY-ENHANCED MESSAGE-----