-----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, j/rMIqzs8h/YxaoU7OPkpIm80iZn4FMaPz1jcLYPe0LdhhSznwrrNb5PucDZCT15 QyNZFasi0L9aXe7ZS0FoxA== 0000950134-94-001011.txt : 19940822 0000950134-94-001011.hdr.sgml : 19940822 ACCESSION NUMBER: 0000950134-94-001011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 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: 94544131 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 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 June 30, 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) 868-4605 - - -------------------------------------------------------------------------------- (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 ---------- ---------- 7,557,018 Common Shares were outstanding as of August 1, 1994 for financial statement purposes. Page 1 of 12 2 HANCOCK HOLDING COMPANY I N D E X PART I. FINANCIAL INFORMATION PAGE NUMBER - - ------------------------------ ----------- ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- June 30, 1994 and December 31, 1993 3 Condensed Consolidated Statements of Earnings -- Three Months Ended June 30, 1994 and 1993 Six Months Ended June 30, 1994 and 1993 4 Condensed Consolidated Statements of Cash Flows -- Six Months Ended June 30, 1994 and 1993 5 Notes to Condensed Consolidated Financial Statements 6 - 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II. OTHER INFORMATION - - --------------------------- ITEM 6. Exhibits and Reports on Form 8K 11 SIGNATURES 12 Page 2 of 12 3 HANCOCK HOLDING COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) (Unaudited)
Restated June 30 December 31 1994 1993 * ---------- ----------- ASSETS: Cash and due from banks (non-interest bearing) $ 93,950 $ 94,198 Interest bearing time deposits with other banks 1,702 1,875 ---------- ---------- Total cash and due from banks 95,652 96,073 Securities available for sale 21,373 0 Securities held for sale (market value $28,836) 0 28,244 Investment securities (market value of $832,069 and $766,616) 836,410 751,578 Federal funds sold and securities purchased under agreements to resell 59,625 97,705 Loans, net of unearned income 863,193 874,558 Less: Reserve for loan losses (14,241) (14,219) ---------- ---------- Net loans 848,952 860,339 Property and equipment, at cost, less accumulated depreciation of $33,184 and $32,081 35,026 35,219 Other real estate 875 695 Accrued interest receivable 15,341 14,669 Other assets 17,822 18,637 ---------- ---------- TOTAL ASSETS $1,931,076 $1,903,159 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 368,376 $ 362,457 Interest bearing savings, NOW, money market and other time 1,346,383 1,323,200 ---------- ---------- Total deposits 1,714,759 1,685,657 Federal funds purchased and securities sold under agreements to repurchase 36,178 45,799 Other liabilities 13,660 12,028 Capital notes 480 480 Long-term bonds and notes 3,820 3,820 ---------- ---------- TOTAL LIABILITIES 1,768,897 1,747,784 ---------- ---------- STOCKHOLDERS' EQUITY: Common Stock 25,659 25,659 Capital Surplus 95,130 95,130 Undivided Profits 41,264 34,586 Unrealized gain on securities available for sale - net 126 0 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 162,179 155,375 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,931,076 $1,903,159 ========== ==========
* The balance sheet at December 31, 1993 has been restated to reflect the acquisition of First State Bank and Trust Co., Baker, Louisiana. See notes to condensed consolidated financial statements. Restated Page 3 of 12 4 HANCOCK HOLDING COMPANY CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA
Restated Restated Three Months Ended June 30 Six Months Ended June 30 ---------------------------- --------------------------- 1994 1993 1994 1993 ----------- ---------- ---------- ---------- INTEREST INCOME: Interest and fees on loans $ 19,316 $ 18,762 $ 37,976 $ 37,293 Interest on: U. S. Treasury Securities 4,976 5,663 8,843 9,798 Obligations of other U. S. Government agencies and corporations 5,155 5,035 10,819 11,508 Obligations of states and political subdivisions 679 831 1,364 1,783 Interest on Federal funds sold and securities purchased under agreements to resell 590 684 1,380 1,536 Interest on time deposits and other 910 1,492 1,918 2,897 ---------- ---------- ---------- ---------- Total interest income 31,626 32,467 62,300 64,815 INTEREST EXPENSE: Interest on deposits 11,333 11,349 22,498 22,712 Interest on federal funds purchased and securities sold under agreements to repurchase 315 276 559 536 Interest on capital notes 6 6 12 12 Interest on long term bonds and notes 78 101 151 209 ---------- ---------- ---------- ---------- Total interest expense 11,732 11,732 23,220 23,469 ---------- ---------- ---------- ---------- NET INTEREST INCOME 19,894 20,735 39,080 41,346 PROVISION FOR LOAN LOSSES 337 1,366 709 2,926 ---------- ---------- ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 19,557 19,369 38,371 38,420 ---------- ---------- ---------- ---------- Other Operating Income: Service charges on deposit accounts 2,850 2,701 5,678 5,418 Income from fiduciary activities 539 561 1,150 1,208 Securities gains (losses) 29 (44) 110 (44) Other non-interest income 1,162 1,482 2,673 3,137 ---------- ---------- ---------- ---------- Total other operating income 4,580 4,700 9,611 9,719 Other Operating Expenses: Salaries and employee benefits 8,413 7,635 16,687 15,103 Net occupancy expense of bank premises and equipment expense 1,659 2,465 4,974 4,725 Other non-interest expense 6,531 5,380 11,423 10,777 ---------- ---------- ---------- ---------- Total other operating expenses 16,603 15,480 33,084 30,605 ---------- ---------- ---------- --------- EARNINGS BEFORE INCOME TAXES 7,534 8,589 14,898 17,534 INCOME TAXES 2,403 2,588 4,710 5,332 ---------- ---------- ---------- ---------- NET EARNINGS $ 5,131 $ 6,001 10,188 12,202 ========== ========== ========== ========== NET EARNINGS PER COMMON SHARE $ 0.68 $ 0.79 $ 1.35 $ 1.62 ========== ========== ========== ========== DIVIDENDS PAID PER COMMON SHARE $ 0.23 $ 0.17 $ 0.46 $ 0.34 ========== ========== ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 7,555 7,550 7,555 7,550 ========== ========== ========== ==========
The statments of earnings have been restated to reflect the acquisition of First State Bank and Trust Co., Baker, Louisiana. See notes to condensed consolidated financial statements. Page 4 of 12 5 HANCOCK HOLDING COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (Amounts in thousands)
Six Months Ended June 30, Restated FINANCIAL RESOURCES PROVIDED: 1994 1993 - - ---------------------------- -------- -------- Cash Flows From Operating Activities: Net earnings $ 10,188 $ 12,202 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 2,079 750 Provision for loan losses 709 2,926 Gain on sales of investments 110 (44) (Increase) decrease in interest receivable (672) 805 Amortization of intangible assets 737 756 Increase in interest payable 323 942 Other - net 1,388 (5,206) --------- --------- Net cash provided by Operating Activities 14,862 13,131 --------- --------- Cash Flows from Investing Activities: Proceeds from sales/maturities of securities 62,837 146,416 Purchase of securities (140,782) (192,649) Net decrease (decrease) in federal funds sold and securities sold under agreements to repurchase 38,080 (2,135) Net (increase) decrease in loans 10,678 (10,988) Purchase of property and equipment, net (1,887) (883) Transfers from loans to other real estate (546) (660) Proceeds from sale of other real estate 367 1,049 --------- --------- Net cash used in Investing Activities (31,253) (59,850) --------- --------- Cash Flows from Financing Activities: Net increase in deposits 29,102 29,793 Dividends paid (3,511) (2,613) Net increase (decrease) in federal funds purchased, securities sold under agreements to repurchase and other temporary funds (9,621) 11,248 --------- --------- Net cash provided by Financing Activities 15,970 38,428 --------- --------- Net Decrease in Cash and Due from Banks (421) (8,291) Cash and Due from Banks, Beginning 96,073 107,800 --------- --------- Cash and Due from Banks, Ending $ 95,652 $ 99,509 ========= =========
See notes to condensed consolidated financial statements. Page 5 of 12 6 HANCOCK HOLDING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Six Months Ended June 30, 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 was accounted for using the pooling of interests method, therefore all prior years' financial information has been restated. 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 12 7 PROPOSED ACQUISITIONS In July 1994, the Company agreed to merge Hancock Bank of Louisiana, a wholly owned subsidiary of the Company, with Washington Bank & Trust Company (Washington), Franklinton, Louisiana. The merger will be consummated by the exchange of all outstanding common stock of Washington in return for approximately 540,000 shares of common stock of the Company. Completion of the merger is contingent upon approval by First State Bank shareholders, the Louisiana Commissioner of Financial Institutions, the Federal Deposit Insurance Corporation and the Federal Reserve. It is intended that the merger will be accounted for using the pooling of interests method. Washington had total assets of approximately $87,000,000 and stockholders' equity of approximately $11,700,000 as of March 31, 1994 and net earnings of $269,000 for the three month period then ended. Page 7 of 12 8 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:
Restated Restated June 30 March 31 December 31 1994 1994 1993 -------- -------- ----------- Total securities to total deposits 50.0% 48.6% 46.3% Total loans (net of unearned discount) to total deposits 50.3% 49.1% 45.6% Interest-earning assets to total assets 91.6% 90.9% 91.5% Interest-bearing deposits to total deposits 78.5% 78.5% 78.5%
Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate:
Restated Restated June 30 March 31 December 31 1994 1994 1993 -------- -------- ----------- Equity capital to total assets (1) 8.40% 8.20% 8.16% Total capital to risk-weighted 17.18% 17.35% 16.28% assets (2) Tier 1 Capital to risk-weighted 15.93% 16.10% 15.03% assets (3) Leverage Capital to total assets (4) 8.17% 7.95% 7.90% Fixed assets to equity capital 21.60% 22.10% 22.70%
Page 8 of 12 9 (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 $870,000 or 14% for the second quarter of 1994 compared to the second quarter of 1993. Net earnings for the first six months of 1994 decreased $2,014,000 or 17% from the comparable period in 1993. The decline in earnings in the second quarter and first six months of 1994 is largely attributable to a decreased net interest margin as a result of lower loan and investment rates and increased operating expenses.
Restated Restated Three Months Ended June 30 Six Months Ended June 30 -------------------------- ------------------------ 1994 1993 1994 1993 -------- -------- -------- -------- Results of Operations: Return on average assets 1.06% 1.28% 1.06% 1.32% Return on average equity 13.20% 16.40% 13.30% 16.40% Net Interest Income: Return on average interest-earning assets (tax equivalent) 7.28% 7.72% 7.22% 7.80% Cost of average interest-bearing funds 3.48% 3.56% 3.45% 3.57% ------ ------ ------ ------ Net interest spread 3.80% 4.16% 3.77% 4.23% ====== ====== ====== ====== Net interest margin (net interest income on a tax equivalent basis divided by average interest-earning assets) 4.62% 4.97% 4.57% 5.02% ====== ====== ====== ======
Page 9 of 12 10 Provision for Loan Losses The amount of the reserve equals the cumulative total of the provisions for loan losses, reduced by actual loan charge-offs, and increased by reserves acquired in acquisitions and recoveries of loans previously charged-off. Provisions are made to the reserve to reflect the currently perceived risks of loss associated with the bank's loan portfolio. 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 June 30 Six Months Ended June 30 -------------------------- ------------------------ 1994 1993 1994 1993 -------- -------- -------- -------- Annualized net charge-offs to average loans 0.15% 0.35% 0.15% 0.31% Annualized provision for loan losses to average 0.16% 0.68% 0.17% 0.75% loans Average reserve for loan losses to average loans 1.67% 1.88% 1.68% 1.85%
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 six months of 1994 was $1,744,000 compared to $2,245,000 for the comparable period in 1993. Income tax expense decreased from $5,332,000 in the first six months of 1993 to $4,710,000 in the first six months of 1994. This decrease is primarily due to decreased net income. Page 10 of 12 11 Part II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None Page 11 of 12 12 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 August 12, 1994 By: /s/ LEO W. SEAL, JR. Date Leo W. Seal, Jr. President and CEO August 12, 1994 By: /s/ GEORGE A. SCHLOEGELOPF Date George A. Schloegel Vice-Chairman of the Board Page 12 of 12 -----END PRIVACY-ENHANCED MESSAGE-----