-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pohr0PJvw3Q9rwDByLAkCPjh2moKMkNVMyqKwNW12jpn3ALrK8sLq8qjuAPhP9W1 EUb7I4pYZ5MuJmaiAmT5dQ== 0000950134-96-002066.txt : 19960515 0000950134-96-002066.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950134-96-002066 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 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: 96564216 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 PERIOD END MARCH 31, 1996 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ---- Quarterly Report Pursuant to Section 13 or 15 (d) X 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, 1996 ------------------------------------------------------------- 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 ---------- ---------- 8,880,857 Common Shares were outstanding as of April 29, 1996 for financial statement purposes. Page 1 of 11 2 HANCOCK HOLDING COMPANY INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER - ------------------------------ ----------- ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- March 31, 1996 and December 31, 1995 3 Condensed Consolidated Statements of Earnings -- Three Months Ended March 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows -- Three Months Ended March 31, 1996 and 1995 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: 1996 1995 * ---------- ---------- Cash and due from banks (non-interest bearing) $ 141,360 $ 124,276 Interest-bearing time deposits with other banks 2,750 1,550 Securities available-for-sale (cost of $111,659 and $109,297) 111,514 109,777 Securities held-to-maturity (market value of $821,557 and $749,497) 810,435 738,529 Federal funds sold and securities purchased under agreements to resell 135,350 153,725 Loans, net of unearned income 1,045,810 1,034,978 Less: Reserve for loan losses (17,427) (17,391) ---------- ---------- Net loans 1,028,383 1,017,587 Property and equipment, at cost, less accumulated depreciation of $40,204 and $37,640 38,683 38,746 Other real estate 1,007 1,086 Accrued interest receivable 23,069 19,360 Other assets 29,461 29,650 ---------- ---------- TOTAL ASSETS $2,322,012 $2,234,286 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 466,848 $ 468,446 Interest-bearing savings, NOW, money market and other time 1,520,740 1,459,235 ---------- ---------- Total deposits 1,987,588 1,927,681 Federal funds purchased and securities sold under agreements to repurchase 83,640 66,585 Other liabilities 19,464 13,806 Long-term bonds 2,035 2,035 ---------- ---------- TOTAL LIABILITIES 2,092,727 2,010,107 ---------- ---------- STOCKHOLDERS' EQUITY: Common stock 30,043 30,043 Capital surplus 130,000 130,000 Undivided profits 69,336 63,824 Unrealized (loss) gain on securities available-for-sale (94) 312 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 229,285 224,179 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,322,012 $2,234,286 ========== ==========
* The balance sheet at December 31, 1995 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: 1996 1995 --------- --------- Interest and fees on loans $ 25,757 $ 23,488 Interest on: U. S. Treasury Securities 3,645 3,524 Obligations of other U.S. government agencies and corporations 8,514 7,634 Obligations of states and political subdivisions 844 870 Interest on federal funds sold and securities purchased under agreements to resell 2,074 1,248 Interest on time deposits and other 1,486 1,522 --------- --------- Total interest income 42,320 38,286 --------- --------- INTEREST EXPENSE: Interest on deposits 15,176 13,479 Interest on federal funds purchased and securities sold under agreements to repurchase 899 565 Interest on bonds and notes 77 137 --------- --------- Total interest expense 16,152 14,181 --------- --------- NET INTEREST INCOME 26,168 24,105 Provision for loan losses 1,004 175 --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 25,164 23,930 --------- --------- Non-Interest Income: Service charges on deposit accounts 4,203 3,523 Income from fiduciary activities 520 598 Securities gains (losses) --- (50) Other 1,403 1,543 --------- --------- Total non-interest income 6,126 5,614 --------- --------- Non-Interest Expense: Salaries and employee benefits 10,381 9,815 Net occupancy expense of premises and equipment expense 3,843 2,933 Other 5,443 6,674 --------- --------- Total non-interest expense 19,667 19,422 --------- --------- EARNINGS BEFORE INCOME TAXES 11,623 10,122 INCOME TAXES 3,855 3,342 --------- --------- NET EARNINGS $ 7,768 $ 6,780 ========= ========= NET EARNINGS PER COMMON SHARE $ 0.87 $ 0.76 ========= ========= DIVIDENDS PAID PER COMMON SHARE $ 0.25 $ 0.23 ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,880 8,879 ========= =========
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, ---------------------------- 1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 7,768 $ 6,780 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 1,188 1,104 Provision for loan losses 1,004 175 Provision for losses on real estate owned 80 28 Losses on sales of securities -- 50 Decrease (increase) in interest receivable (3,709) 971 Amortization of intangible assets 615 575 Increase in interest payable 418 4,038 Other, net 2,332 (289) --------- --------- Net cash provided by Operating Activities 9,696 13,432 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) decrease in interest-bearing time deposits (1,200) 200 Proceeds from sales and maturities of securities held-to-maturity 118,193 51,765 Purchase of securities held-to-maturity (190,099) (36,592) Proceeds from sales and maturities of securities available-for-sale 11,781 1,500 Purchase of securities available-for-sale (13,518) (375) Net (increase) decrease in federal funds sold and securities purchased under agreements to resell 18,375 (77,575) Net (increase) decrease in loans (9,865) 2,710 Purchase of property and equipment, net (1,125) (1,020) Proceeds from sales of other real estate 139 412 Net cash received in connection with purchase transaction -- 7,872 --------- --------- Net cash used in Investing Activities (67,319) (51,103) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 59,907 45,716 Dividends paid (2,255) (2,075) Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase and other temporary funds 17,055 (8,863) --------- --------- Net cash provided by Financing Activities 74,707 34,778 --------- --------- NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 17,084 (2,893) CASH AND DUE FROM BANKS, BEGINNING 124,276 120,532 --------- --------- CASH AND DUE FROM BANKS, ENDING $ 141,360 $ 117,639
========= ========= 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, 1996 and 1995) 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 and other subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation. The accompanying Unaudited Condensed 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 1995 Annual Report to Shareholders. RECENT CHANGES IN FINANCIAL ACCOUNTING STANDARDS The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires the investment portfolio to be classified into one of three reporting categories, held-to-maturity, available-for-sale or trading. The Company's adoption of this statement in 1994 did not have a material effect on its financial statements. 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 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, 1996 1995 -------- -------- Total securities to total deposits 46.39% 44.01% Total loans (net of unearned discount) to total deposits 52.62% 53.69% Interest-earning assets to total assets 90.69% 91.24% Interest-bearing deposits to total deposits 76.51% 75.70%
Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate:
March 31, December 31, 1996 1995 -------- -------- Equity capital to total assets (1) 9.88% 10.02% Total capital to risk-weighted assets (2) 18.99% 18.64% Tier 1 Capital to risk-weighted 18.03% 17.69% assets (3) Leverage Capital to total assets (4) 9.47% 9.28% Property and equipment to equity capital 16.86% 17.31%
(1) Equity capital consists of stockholder's equity (common stock, capital surplus and undivided profits). Page 7 of 11 8 (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 $988,000 or 15% for the first quarter of 1996 compared to the first quarter of 1995. The increase in earnings is attributable to an increase in loan portfolio balances, an increased net interest margin and lower operating expenses due to FDIC premium insurance reductions.
Three Months Ended March 31, ---------------------------- 1996 1995 -------- -------- Results of Operations: Return on average assets 1.36% 1.26% Return on average equity 13.70% 12.88% Net Interest Income: Return on average interest-earning assets (tax equivalent) 8.24% 7.94% Cost of average interest-bearing funds 4.11% 3.76% ------ ------ Net interest spread 4.13% 4.18% ===== ===== Net yield on interest-earning assets (net interest income on a tax equivalent basis divided by average interest-earning assets) 5.14% 5.05% ===== =====
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 Page 8 of 11 9 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, ---------------------------- 1996 1995 -------- -------- Annualized net charge-offs to average loans 0.37% 0.11% Annualized provision for loan losses to average 0.39% 0.07% loans Average reserve for loan losses to average loans 1.69% 1.65%
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 1996 was $1,057,000 compared to $1,078,000 for the comparable period in 1995. Income tax expense increased from $3,342,000 in the first three months of 1995 to $3,855,000 in the first three months of 1996. This increase is primarily due to increased 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 22, 1996. B. Directors elected at the Annual Meeting held February 22, 1996:
Votes Cast -------------------- Affirmed Withheld -------- -------- 1. Joseph F. Boardman, Jr. 7,166,834.7 3,323.4 2. Charles H. Johnson 7,161,318.2 8,839.9 3. Thomas W. Milner, Jr. 7,145,507.8 24,650.3 Continuing Directors: 4. L.A. Koenenn, Jr. 5. Dr. Homer C. Moody, Jr. 6. George A. Schloegel 7. James B. Estabrook, Jr. 8. Victor Mavar 9. Leo W. Seal, Jr.
C. (1) Approval of Deloitte & Touche LLP as the independent public accountants of the Company. 7,168,432.2 affirmative votes, 1,027.9 negative and 697.9 abstained. C.(2) Approval of the Hancock Holding Company 1996 Long-Term Incentive Plan. 7,041,665.5 affirmative votes, 23,683.1 negative and 96,294.4 abstained. D. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit (27) Selected financial data. 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 13, 1996 By: /s/ LEO W. SEAL, JR. - -------------------- ----------------------------------- Date Leo W. Seal, Jr. President and CEO May 13, 1996 By: /s/ GEORGE A. SCHLOEGEL - -------------------- ----------------------------------- Date George A. Schloegel Vice-Chairman of the Board May 13, 1996 By: /s/ STAN BAILEY - -------------------- ----------------------------------- Date Stan Bailey Chief Financial Officer Page 11 of 11 12 EXHIBIT INDEX ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit (27) Selected financial data. EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 141,360 2,750 135,350 0 111,514 810,435 821,557 1,045,810 17,427 2,322,012 1,987,588 83,640 19,464 2,035 30,043 0 0 199,242 2,322,012 25,757 15,077 1,486 42,320 15,176 16,152 26,168 1,004 0 19,667 11,623 11,623 0 0 7,768 0.87 0.87 5.14 5,421 4,702 0 0 17,391 1,310 342 17,427 17,427 0 2,200
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