-----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, i3bGS42ZLuDf/3pFL/wo9M1qKlzlZ+2hpP5tsPnYCAs4l5UBZ516q+LJJYSl9Fay 1spg1pycw3YZ1CERZFY18A== 0000950134-95-001155.txt : 19950516 0000950134-95-001155.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950134-95-001155 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK HOLDING CO CENTRAL INDEX KEY: 0000750577 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [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: 95539427 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 3/31/95 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, 1995 ------------------------------------------------------------- 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 --- --- 8,880,192 Common Shares were outstanding as of April 29, 1995 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 -- March 31, 1995 and December 31, 1994 3 Condensed Consolidated Statements of Earnings -- Three Months Ended March 31, 1995 and 1994 4 Condensed Consolidated Statements of Cash Flows -- Three Months Ended March 31, 1995 and 1994 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 4. Submission of Matters to a Vote 11 of Security Holders ITEM 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 - ----------
Page 2 of 12 3 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
Unaudited Restated March 31 December 31 ASSETS: 1995 1994 * ---------- ---------- Cash and due from banks (non-interest bearing) $ 117,639 $ 120,532 Interest bearing time deposits with other banks 1,250 1,450 ---------- ---------- Total cash and due from banks 118,889 121,982 Securities available-for-sale (cost of $46,449 and $20,382) 45,748 19,747 Securities held-to-maturity (market value of $807,234 and $828,968) 828,675 847,593 Federal funds sold and securities purchased under agreements to resell 138,350 55,900 Loans, net of unearned income 994,581 925,665 Less: Reserve for loan losses (16,417) (15,372) ---------- ---------- Net loans 978,164 910,293 Property and equipment, at cost, less accumulated depreciation of $26,156 and $26,784 39,797 35,470 Other real estate 1,179 1,000 Accrued interest receivable 17,294 17,425 Other assets 33,087 17,755 ---------- ---------- TOTAL ASSETS $2,201,183 $2,027,165 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 443,154 $ 390,074 Interest bearing savings, NOW, money market and other time 1,483,437 1,385,652 ---------- ---------- Total deposits 1,926,591 1,775,726 Federal funds purchased and securities sold under agreements to repurchase 45,433 54,296 Other liabilities 16,078 11,753 Long-term bonds and notes 2,955 2,955 ---------- ---------- TOTAL LIABILITIES 1,991,057 1,844,730 ---------- ---------- STOCKHOLDERS' EQUITY: Common Stock 29,942 26,798 Capital Surplus 135,087 93,991 Undivided Profits 45,132 62,061 Unrealized loss on securities available for sale - net (35) (415) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 210,126 182,435 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,201,183 $2,027,165 ========== ==========
* The balance sheet at December 31, 1994 has been restated to reflect a 1995 transaction accounted for using the pooling of interests method. See notes to condensed consolidated financial statements. Page 3 of 12 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: 1995 1994 ---------- ---------- Interest and fees on loans $ 23,488 $ 19,802 Interest on: U. S. Treasury Securities 3,524 3,871 Obligations of other U. S. Government agencies and corporations 7,634 5,726 Obligations of states and political subdivisions 870 701 Interest on Federal funds sold and securities purchased under agreements to resell 1,248 969 Interest on time deposits and other 1,522 1,009 ---------- ---------- Total interest income 38,286 32,078 INTEREST EXPENSE: Interest on deposits 13,479 11,546 Interest on federal funds purchased and securities sold under agreements to repurchase 565 244 Interest on bonds and other debt 137 73 Interest on subordinated notes --- 6 ---------- ---------- Total interest expense 14,181 11,869 ---------- ---------- NET INTEREST INCOME 24,105 20,209 PROVISION FOR LOAN LOSSES 175 463 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 23,930 19,746 ---------- ---------- Other Operating Income: Service charges on deposit accounts 3,523 3,008 Income from fiduciary activities 598 611 Securities gains (losses) (50) 81 Other non-interest income 1,543 1,549 ---------- ---------- Total other operating income 5,614 5,249 ---------- ---------- Other Operating Expenses: Salaries and employee benefits 9,815 8,667 Net occupancy expense of bank premises and equipment expense 2,933 2,754 Other non-interest expense 6,674 5,802 ---------- ---------- Total other operating expenses 19,422 17,223 ---------- ---------- EARNINGS BEFORE INCOME TAXES 10,122 7,772 INCOME TAXES 3,342 2,307 ---------- ---------- NET EARNINGS $ 6,780 $ 5,465 ========== ========== NET EARNINGS PER COMMON SHARE $ 0.76 $ 0.68 ========== ========== DIVIDENDS PAID PER COMMON SHARE $ 0.23 $ 0.23 ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,879 8,092 ========== ==========
See notes to condensed consolidated financial statements. Page 4 of 12 5 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (Amounts in thousands)
Three Months Ended March 31 FINANCIAL RESOURCES PROVIDED: 1995 1994 - ---------------------------- -------- -------- Cash Flows From Operating Activities: Net earnings $ 6,780 $ 5,465 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 1,104 1,045 Provision for loan losses 175 463 (Loss) gain on sales of investments (50) 81 Decrease (increase) in interest receivable 971 (690) Amortization of intangible assets 575 368 Increase in interest payable 4,038 2,427 Other, net 490 (1,681) --------- --------- Net cash provided by Operating Activities 14,083 7,478 --------- --------- Cash Flows from Investing Activities: Proceeds from sales/maturities of securities held-to-maturity 51,765 72,968 Purchase of securities held-to-maturity (36,592) (124,912) Proceeds from sales/maturities of securities available-for sale 1,500 5,521 Purchase of securities available-for-sale (375) 0 Net (increase) decrease in federal funds sold and securities sold under agreements to repurchase (77,575) 3,465 Net decrease in loans 2,710 22,619 Purchase of property and equipment, net (1,020) (845) Transfers from loans to other real estate (451) (117) Proceeds from sale of other real estate 412 314 --------- Net cash received in connection with purchase transaction 7,872 --------- Net cash used in Investing Activities (51,754) (20,987) --------- --------- Cash Flows from Financing Activities: Net increase in deposits 45,716 35,122 Dividends paid (2,075) (1,651) Net decrease in federal funds purchased and securities sold under agreements to repurchase (8,863) (6,578) --------- --------- Net cash provided by Financing Activities 34,778 26,893 --------- --------- Net (Decrease) Increase in Cash and Due From Banks (2,893) 13,384 Cash and Due from Banks, Beginning 120,532 99,106 --------- --------- Cash and Due from Banks, Ending $117,639 $ 112,490 ========= =========
See notes to condensed consolidated financial statements. Page 5 of 12 6 HANCOCK HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Three Months Ended March 31, 1995 and 1994) 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, Hancock Bank of Louisiana and First National Bank of Denham Springs since its acquisition on January 13, 1995, 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 1994 Annual Report to Shareholders. RECENT CHANGES IN FINANCIAL ACCOUNTING STANDARDS The Company adopted Statement of Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan," effective January 1, 1995. SFAS No. 114 requires the measurement of impaired loans be based on the present value of expected future cash flows discounted at the loan's effective interest rate, or at the loan's observable market price or the fair value of its collateral. SFAS No. 114 does not apply to large groups of smaller balance homogeneous loans that are collectively evaluated for impairment. For the Company, loans collectively evaluated for impairment include all single family mortgage loans, loans to individuals for household family and other consumer expenditures and commercial and industrial and real estate loans ("major loans") under a certain dollar amount, excluding loans which have entered the workout process. The adoption of SFAS No. 114 did not result in additional provisions for loan losses due to the Company's continuing policy of measuring loan impairment based on methods prescribed in SFAS No. 114. The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company's impaired loans within the scope of SFAS No. 114 include troubled debt restructurings, and performing and non-performing major loans in which full payment of principal or interest is not expected. Page 6 of 12 7 The Company also adopted Statement of Financial Accounting Standards No. 118, "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures," effective January 1, 1995. This statement allows a creditor to use existing methods for recognizing interest income on impaired loans and thus the adoption of SFAS No. 114 did not result in any change in the amount of interest income reported. The Company's impaired loans amounted to approximately 1/2% of total loans at March 31, 1995 and the related reserve amount was not significant at that date. There was no significant change in these amounts during the three months ended March 31, 1995. Interest income recognized on these loans amounted to approximately $100,000 for the three months ended March 31, 1995. ACQUISITIONS On January 31, 1995, the Company merged Hancock Bank of Louisiana with Washington Bank & Trust Company (Washington), Franklinton, Louisiana. The merger was consummated by the exchange of all outstanding common stock of Washington in return for approximately 542,350 shares of common stock of the Company. The merger was accounted for using the pooling-of-interests method effective February 1, 1995 and accordingly all prior periods' financial information has been restated. Washington had total assets of approximately $86,100,000 and stockholders' equity of approximately $12,400,000 as of December 31, 1994. Net interest income and net earnings of the separate companies for the periods preceding the acquisition were as follows:
January 1, 1995 Three Months Ended to January 31, 1995 March 31, 1994 ------------------- -------------- Net Interest Income Company $7,535 $18,432 Washington 372 1,777 ------ ------- Combined $7,907 $20,209 ====== ======= Net Earnings Company $2,382 $ 4,797 Washington 144 668 ------ ------- Combined $2,526 $ 5,465 ====== =======
On January 13, 1995, the Company merged with First Denham Bancshares, Inc. (Bancshares) which owns 100% of the stock of First National Bank of Denham Springs, Denham Springs, Louisiana. The merger was in return for approximately $4,000,000 cash and 774,098 shares of common stock of the Company. The merger was accounted for using the purchase method. Bancshares had total assets of approximately $111,000,000 and stockholders' equity of approximately $10,300,000 as of December 31, 1994 and net earnings of approximately $2,500,000 for the year then ended. Following is certain selected unaudited proforma combined financial information assuming the Bancshares acquisition had been consummated January 1, 1994.
Three Months Ended March 31, 1995 1994 ---- ---- Net Interest Income $24,384 $22,036 Net Earnings 6,855 6,103 Net Earnings Per Share $0.77 $0.69
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 securities held-to-maturity and sales of securities available-for-sale. The following liquidity ratios compare certain assets and liabilities to total deposits or total assets:
March 31 December 31 1995 1994 -------- -------- Total securities to total deposits 45.4% 48.84% Total loans (net of unearned discount) to total deposits 51.6% 52.13% Interest-earning assets to total assets 90.6% 90.59% Interest-bearing deposits to total deposits 77.0% 78.03%
Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate:
March 31 December 31 1995 1994 -------- -------- Equity capital to total assets (1) 9.53% 8.99% Total capital to risk-weighted assets (2) 17.21% 17.52% Tier 1 Capital to risk-weighted 16.25% 16.26% assets (3) Leverage Capital to total assets (4) 8.71% 8.20% Fixed assets to equity capital 18.96% 19.47%
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 increased $1,315,000 or 24% for the first quarter of 1995 compared to the first quarter of 1994. The increase in earnings is primarily attributable to a net interest margin improvement of 19.3% or $3,896,000 and the acquisition of First National Bank of Denham Springs in January which was accounted for as a purchase. This transaction improved net interest income by $1,558,000 or 7.8% and net income by $393,000 or 7.2%.
Three Months Ended March 31 --------------------------- 1995 1994 -------- -------- Results of Operations: Return on average assets 1.26% 1.09% Return on average equity 12.88% 12.81% Net Interest Income: Return on average interest-earning assets (tax equivalent) 7.94% 7.09% Cost of average interest-bearing funds 3.76% 3.29% ------ ------ Net interest spread 4.18% 3.80% ====== ====== Net yield on interest-earning assets (net interest income on a tax equivalent basis divided by average interest-earning assets) 5.05% 4.51% ====== ======
Page 9 of 12 10 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 --------------------------- 1995 1994 -------- -------- Annualized net charge-offs to average loans 0.11% 0.13% Annualized provision for loan losses to average 0.07% 0.18% loans Average reserve for loan losses to average loans 1.65% 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 1995 was $1,078,000 compared to $902,000 for the comparable period in 1994. Income tax expense increased from $2,307,000 in the first three months of 1994 to $3,342,000 in the first three months of 1995. This increase is primarily due to increased earnings. Page 10 of 12 11 Part II _ OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A. Annual Meeting held February 23, 1995. B. Directors elected at the Annual Meeting held February 23, 1995:
Votes Cast -------------------- Affirmed Withheld -------- -------- 1. James B. Estabrook, Jr. 6,506,080.0 15,889.6 2. Victor Mavar 6,516,657.0 5,312.6 3. Leo W. Seal, Jr. 6,516,895.6 4,874.0
Continuing Directors: 4. L. A. Koenenn, Jr. 5. Dr. H. C. Moody, Jr. 6. George A. Schloegel 7. Joseph F. Boardman, Jr. 8. Charles H. Johnson 9. Thomas W. Milner, Jr. C. Approval of Deloitte & Touche, LLP as the independent public accountants of the company 6,500,215.4 affirmative votes, 1,679.2 negative and 11,075 abstained. D. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit-27 Financial Data Schedule 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 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 May 10, 1995 By: /s/ Stan Bailey - ------------------------- --------------------------------------- Date Stan Bailey Chief Financial Officer
Page 12 of 12 13 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
9 0000750577 HANCOCK HOLDING COMPANY 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 117,639 1,250 138,350 0 45,748 828,675 807,234 994,581 16,417 2,201,183 1,926,591 45,433 16,078 2,955 29,942 0 0 180,184 2,201,183 23,488 13,276 1,522 38,286 13,479 702 24,105 175 (50) 19,422 10,122 6,780 0 0 6,780 .76 .76 5.05 3,687 4,514 0 0 14,198 1,056 794 16,417 16,417 0 2,000
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