-----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, PELl8jcHHHI5vlRHs6WcEMCOsyWI4e0GLe1A5k9qap0/sb1BjeCnMS11zrXYYP2u pynbcf9lhTUgYMFboacEbA== 0000950134-94-001225.txt : 19941104 0000950134-94-001225.hdr.sgml : 19941104 ACCESSION NUMBER: 0000950134-94-001225 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941027 SROS: NASD 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: 94555455 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 September 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 --- --- 7,557,924 Common Shares were outstanding as of October 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 -- September 30, 1994 and December 31, 1993 3 Condensed Consolidated Statements of Earnings -- Three Months Ended September 30, 1994 and 1993 Nine Months Ended September 30, 1994 and 1993 4 Condensed Consolidated Statements of Cash Flows -- Nine Months Ended September 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 September 30 December 31 1994 1993 * ------------ ----------- ASSETS: Cash and due from banks (non-interest bearing) $ 113,205 $ 94,198 Interest bearing time deposits with other banks 1,375 1,875 ---------- ---------- Total cash and due from banks 114,580 96,073 Securities available for sale 20,737 0 Securities held for sale (market value $28,836) 0 28,244 Investment securities (market value of $872,729 and $766,616) 875,260 751,578 Federal funds sold and securities purchased under agreements to resell 33,750 97,705 Loans, net of unearned income 873,651 874,558 Less: Reserve for loan losses (14,055) (14,219) ---------- ---------- Net loans 859,596 860,339 Property and equipment, at cost, less accumulated depreciation of $33,942 and $32,081 34,906 35,219 Other real estate 675 695 Accrued interest receivable 16,498 14,669 Other assets 18,184 18,637 ---------- ---------- TOTAL ASSETS $1,974,186 $1,903,159 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 373,165 $ 362,457 Interest bearing savings, NOW, money market and other time 1,378,412 1,323,200 ---------- ---------- Total deposits 1,751,577 1,685,657 Federal funds purchased and securities sold under agreements to repurchase 44,353 45,799 Other liabilities 7,702 12,029 Capital notes 480 480 Long-term bonds and notes 3,820 3,820 ---------- ---------- TOTAL LIABILITIES 1,807,932 1,747,785 ---------- ---------- STOCKHOLDERS' EQUITY: Common Stock 25,658 25,658 Capital Surplus 95,130 95,130 Undivided Profits 45,466 34,586 Unrealized gain on securities available for sale - net 0 0 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 166,254 155,374 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,974,186 $1,903,159 ========== ==========
* The balance sheet at December 31, 1993 has been restated for the acquisition of First State Bank and Trust Co., Baker, Louisiana which has been accounted for using the pooling-of-interests method. See notes to condensed consolidated financial statements. 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 September 30 Nine Months Ended September 30 ------------------------------- ------------------------------ 1994 1993 * 1994 1993 * ---------- ---------- ---------- ---------- INTEREST INCOME: Interest and fees on loans $ 19,915 $ 19,065 $ 57,891 $ 56,358 Interest on: U. S. Treasury Securities 3,984 4,722 12,827 14,520 Obligations of other U. S. Government agencies and corporations 6,715 5,333 17,534 16,841 Obligations of states and political subdivisions 799 800 2,163 2,583 Interest on Federal funds sold and securities purchased under agreements to resell 679 864 2,059 2,400 Interest on time deposits and other 1,346 958 3,264 3,855 ---------- ---------- ---------- ---------- Total interest income 33,438 31,742 95,738 96,557 INTEREST EXPENSE: Interest on deposits 11,895 11,334 34,393 34,046 Interest on federal funds purchased and securities sold under agreements to repurchase 435 281 994 817 Interest on capital notes 6 6 18 18 Interest on long term bonds and notes 88 96 239 305 ---------- ---------- ---------- ---------- Total interest expense 12,424 11,717 35,644 35,186 ---------- ---------- ---------- ---------- NET INTEREST INCOME 21,014 20,025 60,094 61,371 PROVISION FOR LOAN LOSSES 494 287 1,203 3,213 ---------- ---------- ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 20,520 19,738 58,891 58,158 ---------- ---------- ---------- ---------- Other Operating Income: Service charges on deposit accounts 2,948 2,699 8,626 8,117 Income from fiduciary activities 616 646 1,766 1,854 Securities gains (losses) (13) 265 97 221 Other non-interest income 1,919 1,545 4,592 4,682 ---------- ---------- ---------- ---------- Total other operating income 5,470 5,155 15,081 14,874 Other Operating Expenses: Salaries and employee benefits 8,742 8,093 25,429 23,196 Net occupancy expense of bank premises and equipment expense 3,379 2,546 8,353 7,271 Other non-interest expense 5,183 5,534 16,606 16,311 ---------- ---------- ---------- ---------- Total other operating expenses 17,304 16,173 50,388 46,778 ---------- ---------- ---------- ---------- EARNINGS BEFORE INCOME TAXES 8,686 8,720 23,584 26,254 INCOME TAXES 2,725 2,719 7,435 8,051 ---------- ---------- ---------- ---------- NET EARNINGS $ 5,961 $ 6,001 16,149 18,203 ========== ========== ========== ========== NET EARNINGS PER COMMON SHARE $ 0.79 $ 0.79 $ 2.14 $ 2.41 ========== ========== ========== ========== DIVIDENDS PAID PER COMMON SHARE $ 0.23 $ 0.17 $ 0.69 $ 0.51 ========== ========== ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 7,555 7,550 7,555 7,550 ========== ========== ========== ==========
* The statments of earnings have been restated for the acquisition of First State Bank and Trust Co., Baker, Louisiana which has been accounted for using the pooling-of-interests method. 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)
Nine Months Ended September 30, FINANCIAL RESOURCES PROVIDED: 1994 1993 * ----------------------------- --------- --------- (Restated) Cash Flows From Operating Activities: Net earnings $ 16,149 $ 18,203 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 4,281 2,926 Provision for loan losses 1,203 3,213 Gain on sales of investments 97 221 (Increase) decrease in interest receivable (1,829) 615 Amortization of intangible assets 737 756 Increase in interest payable 896 572 Other - net (5,506) (4,316) --------- --------- Net cash provided by Operating Activities 16,028 22,190 --------- --------- Cash Flows from Investing Activities: Proceeds from sales/maturities of investment securities 154,942 94,627 Purchase of investment securities (271,214) (96,814) Net decrease (decrease) in federal funds sold and securities sold under agreements to repurchase 63,955 (9,875) Net (increase) decrease in loans (460) (34,173) Purchase of property and equipment, net (3,968) (2,381) Transfers from loans to other real estate (675) (1,145) Proceeds from sale of other real estate 695 1,530 --------- --------- Net cash used in Investing Activities (56,725) (48,231) --------- --------- Cash Flows from Financing Activities: Net increase in deposits 65,920 38,729 Dividends paid (5,270) (3,921) Net increase (decrease) in federal funds purchased, securities sold under agreements to repurchase and other temporary funds (1,446) (7,272) --------- --------- Net cash provided by Financing Activities 59,204 27,536 --------- --------- Net Decrease in Cash and Due from Banks 18,507 1,495 Cash and Due from Banks, Beginning 96,073 107,800 Cash and Due from Banks, Ending $ 114,580 $ 109,295 ========= =========
* The statement of cash flows has been restated for the acquisition of First State Bank and Trust Co., Baker, Louisiana which has been accounted for using the pooling-of-interests method. See notes to condensed consolidated financial statements. Page 5 of 12 6 HANCOCK HOLDING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Nine Months Ended September 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 approximately $75,000,000 and stockholders' equity of approximately $11,800,000 as of April 29, 1994. Net interest income and net earnings of Baker for the nine months ended September 30, 1993 and the four months ended April 29, 1994 which are included in the consolidated statements of earnings were $42,353,000, $717,000, $992,000 and $335,000 respectively. Page 6 of 12 7 Following is a reconciliation of net interest income and net earnings for the nine months ended September 30, 1993 and of stockholders' equity at December 31, 1993 as previously reported to the amounts reported herein (in thousands). As previously reported $58,928 $17,486 $143,826 Merger with Baker 2,443 717 11,548 ------- ------- -------- As reported herein $61,371 $18,203 $155,374 ======= ======= ========
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 Washington 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 $88,300,000 and stockholders' equity of approximately $12,300,000 as of September 30, 1994 and net earnings of approximately $928,000 for the nine month period then ended. In August of 1994, the Company agreed to merge First Denham Bancshares, Inc. (Bancshares). Bancshares owns 100% of the stock of First National Bank of Denham Springs, Denham Springs, Louisiana. The merger will be consummated by the exchange of all outstanding common stock of Bancshares in return for approximately $4,000,000 cash and 770,000 shares of common stock of the Company. Completion of the merger is contingent upon approval by Bancshares shareholders, the Federal Reserve and the Federal Deposit Insurance Corporation. It is intended that the merger will be accounted for using the purchase method. Bancshares had total assets of approximately $109,300,000 and stockholders' equity of $10,900,000 as of September 30, 1994 and net earnings of approximately $2,000,000 for the nine 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 Sept. 30 June 30 March 31 December 31 1994 1994 1994 1993 -------- ------- -------- ----------- Total securities to total deposits 51.2% 50.0% 48.6% 46.3% Total loans (net of unearned discount) to total deposits 49.9% 50.3% 49.1% 45.6% Interest-earning assets to total assets 90.8% 91.6% 90.9% 91.5% Interest-bearing deposits to total deposits 78.7% 78.5% 78.5% 78.5%
Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate:
Restated Restated Sept. 30 June 30 March 31 December 31 1994 1994 1994 1993 -------- ------- -------- ----------- Equity capital to total 8.42% 8.40% 8.20% 8.16% assets (1) Total capital to risk-weighted 17.39% 17.18% 17.35% 16.28% assets (2) Tier 1 Capital to risk-weighted 16.14% 15.93% 16.10% 15.03% assets (3) Leverage Capital to total 8.22% 8.17% 7.95% 7.90% assets (4) Fixed assets to equity capital 21.00% 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 $40,000 or 1% for the third quarter of 1994 compared to the third quarter of 1993. Net earnings for the first nine months of 1994 decreased $2,054,000 or 11% from the comparable period in 1993. The decline in earnings in the third quarter and first nine 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 Sept. 30 Nine Months Ended Sept. 30 --------------------------- -------------------------- 1994 1993 1994 1993 ------ ------ ------ ------ Results of Operations: Return on average assets 1.12% 1.29% 1.11% 1.36% Return on average equity 14.29% 15.90% 13.30% 16.40% Net Interest Income: Return on average interest-earning assets (tax equivalent) 7.40% 7.52% 7.28% 7.70% Cost of average interest-bearing funds 3.49% 3.54% 3.46% 3.56% ------ ------ ------ ------ Net interest spread 3.91% 3.98% 3.82% 4.14% ====== ====== ====== ====== Net interest margin (net interest income on a tax equivalent basis divided by average interest-earning assets) 4.77% 4.79% 4.61% 5.00% ====== ====== ====== ======
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.
Restated Restated Three Months Ended Sept. 30 Nine Months Ended Sept. 30 --------------------------- -------------------------- 1994 1993 1994 1993 ------ ------ ------ ------ Annualized net charge-offs to average loans 0.32% 0.20% 0.21% 0.35% Annualized provision for loan losses to average 0.22% 0.10% 0.18% 0.53% loans Average reserve for loan losses to average loans 1.63% 1.87% 1.64% 1.86%
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 nine months of 1994 was $2,765,000 compared to $3,246,000 for the comparable period in 1993. Income tax expense decreased from $8,050,500 in the first nine months of 1993 to $7,435,000 in the first nine 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 (a) Exhibits (27) Selected Financial Data (b) 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 October 25, 1994 By: /s/ Leo W. Seal, Jr. Date Leo W. Seal, Jr. President and CEO October 25, 1994 By: /s/ George A. Schloegel Date George A. Schloegel Vice-Chairman of the Board Page 12 of 12 13 INDEX TO EXHIBITS
Exhibit Page Number Description Number ------- ----------- ------ (27) Selected Financial Data
EX-27 2 FINANCIAL DATA SCHEDULE
9 0000750577 HANCOCK HOLDING 1,000 9-MOS DEC-31-1994 JAN-1-1994 SEP-30-1994 114,580 1,378,412 33,750 0 20,737 875,260 895,997 873,651 14,055 1,974,186 1,751,577 480 7,702 3,820 25,658 0 0 140,596 1,974,186 57,891 34,583 3,264 95,738 34,393 35,644 60,094 1,203 97 50,388 23,584 23,584 0 0 16,149 2.14 2.14 4.55 4,147 2,073 630 0 14,219 2,471 1,104 14,055 14,055 0 0
-----END PRIVACY-ENHANCED MESSAGE-----