-----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, WZS6eKDFdU32DLCjIg6iEkVn/gCZTFtf6jU7LVZgJkNK5gbjoGhjhSAoKzbo752J ZZYVgjyrYqe2Dm6sw/ZFJw== 0000950134-96-004119.txt : 19960814 0000950134-96-004119.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950134-96-004119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96609197 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 QUARTER ENDED JUNE 30, 1996 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, 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 July 31, 1996 for financial statement purposes. Page 1 of 12 2 CONTENTS
PART I. FINANCIAL INFORMATION PAGE NUMBER - ------------------------------ ----------- ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- June 30, 1996 and December 31, 1995 3 Condensed Consolidated Statements of Earnings -- Three Months Ended June 30, 1996 and 1995 Six Months Ended June 30, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows -- Six Months Ended June 30, 1996 and 1995 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 8-K 11 SIGNATURES 12 - ----------
Page 2 of 12 3 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
(Unaudited) June 30, December 31, ASSETS: 1996 1995 * ---------- ---------- Cash and due from banks (non-interest bearing) $ 145,223 $ 124,276 Interest-bearing time deposits with other banks 2,945 1,550 Securities available-for-sale (cost of $109,320 and $109,297) 108,169 109,777 Securities held-to-maturity (market value of $804,416 and $749,497) 807,932 738,529 Federal funds sold and securities purchased under agreements to resell 72,175 153,725 Loans, net of unearned income 1,070,561 1,034,978 Less: Reserve for loan losses (17,698) (17,391) ---------- ---------- Net loans 1,052,863 1,017,587 Property and equipment, at cost, less accumulated depreciation of $41,153 and $37,640 38,599 38,746 Other real estate 749 1,086 Accrued interest receivable 19,440 19,360 Other assets 28,262 29,650 ---------- ---------- TOTAL ASSETS $2,276,357 $2,234,286 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 483,335 $ 468,446 Interest-bearing savings, NOW, money market and other time 1,455,780 1,459,235 ---------- ---------- Total deposits 1,939,115 1,927,681 Federal funds purchased and securities sold under agreements to repurchase 82,732 66,585 Other liabilities 18,028 13,806 Long-term bonds 2,035 2,035 ---------- ---------- TOTAL LIABILITIES 2,041,910 2,010,107 ---------- ---------- STOCKHOLDERS' EQUITY: Common stock 30,043 30,043 Capital surplus 130,000 130,000 Undivided profits 75,107 63,824 Unrealized (loss) gain on securities available-for-sale (703) 312 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 234,447 224,179 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,276,357 $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 12 4 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED (Amounts in thousands except per share data)
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- INTEREST INCOME: 1996 1995 1996 1995 --------- --------- --------- --------- Interest and fees on loans $ 26,101 $ 24,336 $ 51,858 $ 47,824 Interest on: U. S. Treasury Securities 3,515 3,536 7,160 7,060 Obligations of other U.S. government agencies and corporations 8,594 8,605 17,108 16,239 Obligations of states and political subdivisions 890 868 1,734 1,738 Interest on federal funds sold and securities purchased under agreements to resell 1,460 1,504 3,534 2,752 Interest on time deposits and other 1,872 1,554 3,358 3,076 --------- --------- --------- --------- Total interest income 42,432 40,403 84,752 78,689 --------- --------- --------- --------- INTEREST EXPENSE: Interest on deposits 15,100 14,483 30,276 27,962 Interest on federal funds purchased and securities sold under agreements to repurchase 930 670 1,829 1,235 Interest on bonds and notes 74 103 151 240 --------- --------- --------- --------- Total interest expense 16,104 15,256 32,256 29,437 --------- --------- --------- --------- NET INTEREST INCOME 26,328 25,147 52,496 49,252 Provision for loan losses 797 1,002 1,801 1,177 --------- --------- --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 25,531 24,145 50,695 48,075 --------- --------- --------- --------- Non-Interest Income: Service charges on deposit accounts 4,153 3,661 8,356 7,184 Income from fiduciary activities 633 507 1,153 1,105 Securities gains (losses) (34) (41) (34) (91) Other 1,394 1,348 2,797 2,891 --------- --------- --------- --------- Total non-interest income 6,146 5,475 12,272 11,089 --------- --------- --------- --------- Non-Interest Expense: Salaries and employee benefits 10,389 10,308 20,770 20,123 Net occupancy expense of premises and equipment expense 3,761 4,052 7,604 6,985 Other 5,593 5,382 11,036 12,056 --------- --------- --------- --------- Total non-interest expense 19,743 19,742 39,410 39,164 --------- --------- --------- --------- EARNINGS BEFORE INCOME TAXES 11,934 9,878 23,557 20,000 INCOME TAXES 3,902 3,266 7,757 6,608 --------- --------- --------- --------- NET EARNINGS $ 8,032 $ 6,612 $ 15,800 $ 13,392 ========= ========= ========= ========= NET EARNINGS PER COMMON SHARE $ 0.91 $ 0.75 $ 1.78 $ 1.51 ========= ========= ========= ========= DIVIDENDS PAID PER COMMON SHARE $ 0.25 $ 0.23 $ 0.50 $ 0.46 ========= ========= ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,880 8,879 8,880 8,879 ========= ========= ========= =========
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)
Six Months Ended June 30, -------------------------- 1996 1995 --------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 15,800 $ 13,392 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 2,461 2,500 Provision for loan losses 1,801 1,177 Provision for losses on real estate owned 86 30 Losses on sales of securities (34) (91) Increase in interest receivable (80) (183) Amortization of intangible assets 1,234 1,198 Increase in interest payable 643 1,235 Other, net (404) 1,632 --------- --------- Net cash provided by Operating Activities 21,507 20,890 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net increase in interest-bearing time deposits (1,395) (200) Proceeds from sales and maturities of securities held-to-maturity 187,198 166,652 Purchase of securities held-to-maturity (256,601) (197,509) Proceeds from sales and maturities of securities available-for-sale 18,627 4,840 Purchase of securities available-for-sale (17,053) (200) Net (increase) decrease in federal funds sold and securities purchased under agreements to resell 81,550 (42,575) Net (increase) decrease in loans (34,089) 8,159 Purchase of property and equipment, net (2,314) (2,551) Proceeds from sales of other real estate 447 540 Net cash received in connection with purchase transaction --- 7,872 --------- --------- Net cash used in Investing Activities (23,630) (54,972) --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 11,434 24,002 Dividends paid (4,511) (4,150) Net increase in federal funds purchased and securities sold under agreements to repurchase and other temporary funds 16,147 16,715 --------- --------- Net cash provided by Financing Activities 23,070 36,567 --------- --------- NET INCREASE IN CASH AND DUE FROM BANKS 20,947 2,485 CASH AND DUE FROM BANKS, BEGINNING 124,276 120,532 --------- --------- CASH AND DUE FROM BANKS, ENDING $ 145,223 $ 123,017 ========= =========
See notes to condensed consolidated financial statements. Page 5 of 12 6 HANCOCK HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Six Months Ended June 30, 1996 and 1995) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Hancock Holding Company (the "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 recently issued Statement No. 123 "Accounting for Stock Based Compensation" which is effective for stock options issued and similar transactions entered into after 1995. Although the Company has adopted a stock option plan, no options have been issued to date. PROPOSED MERGER On August 15, 1996, First National Bank of Denham Springs, a wholly owned subsidiary of the Company will merge with Hancock Bank of Louisiana, another wholly owned subsidiary of the Company. This transaction will only effect financial reporting of the subsidiaries and will result in no changes or restatements of current or the Company's historical financial statements. PROPOSED ACQUISITIONS In June of 1996, the Company entered into an Agreement and Plan of Reorganization whereby Community Bancshares, Inc. (Community) Independence, Louisiana, and its' subsidiary, Community State Bank, would be merged with and into the Company and Hancock Bank of Louisiana, respectively. The merger will be consummated by the exchange of all outstanding shares of Community and Community State Bank in return for approximately 450,000 shares of common stock of the Company and cash of approximately $5,500,000. Completion of the merger is contingent upon approval by Community's and Community State Bank's shareholders and appropriate regulatory authorities. Page 6 of 12 7 It is intended that the merger will be accounted for using the purchase method of accounting. Community had total assets of approximately $91,000,000 as of June 30, 1996 and net earnings of approximately $580,000 for the six month period then ended. In August of 1996, the Company entered into an Agreement and Plan of Reorganization whereby Southeast National Bank (Southeast) Hammond, Louisiana, would be merged with and into Hancock Bank of Louisiana, a wholly owned subsidiary of the Company. The merger will be consummated by the exchange of all outstanding shares of Southeast in return for approximately 105,000 shares of common stock of the Company and cash of approximately $3,700,000. Completion of the merger is contingent upon approval by Southeast's shareholders and appropriate regulatory authorities. It is intended that the merger will be accounted for using the purchase method of accounting. Southeast had total assets of approximately $37,000,000 as of June 30, 1996 and net earnings of approximately $250,000 for the six month period then ended. Page 7 of 12 8 HANCOCK HOLDING COMPANY AND SUBSIDIARIES 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:
June 30, March 31, December 31, 1996 1996 1995 -------- -------- -------- Total securities to total deposits 47.24% 46.39% 44.01% Total loans (net of unearned discount) to total deposits 55.21% 52.62% 53.69% Interest-earning assets to total assets 90.57% 90.69% 91.24% Interest-bearing deposits to total deposits 75.07% 76.51% 75.70%
Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate:
June 30, March 31, December 31, 1996 1996 1995 -------- -------- -------- Equity capital to total assets (1) 10.17% 9.88% 10.02% Total capital to risk-weighted assets (2) 18.60% 18.99% 18.64% Tier 1 Capital to risk-weighted assets (3) 17.62% 18.03% 17.69% Leverage Capital to total assets (4) 9.61% 9.47% 9.28% Property and equipment to equity capital 16.41% 16.86% 17.31%
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 21% or $1,420,000 for the second quarter of 1996 compared to the second quarter of 1995. Net earnings for the first six months of 1996 increased 18% or $2,408,000 from the comparable period in 1995. The increase in earnings is attributable to an increase in loan portfolio balances, a stable net interest margin, increased fee income and lower operating expenses due to FDIC premium insurance reductions.
Three Months Six Months Ended June 30, Ended June 30, --------------------- --------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Results of Operations: Return on average assets 1.39% 1.21% 1.37% 1.23% Return on average equity 14.15% 12.50% 14.09% 12.62% Net Interest Income: Return on average interest-earning assets (tax equivalent) 8.19% 8.20% 8.21% 8.08% Cost of average interest-bearing funds 4.11% 4.25% 4.11% 4.11% ------ ------ ------ ------ Net interest spread 4.08% 3.95% 4.10% 3.97% ------ ------ ------ ------ Net interest margin (net interest income on a tax equivalent basis divided by average interest-earning assets) 5.12% 5.15% 5.13% 5.10% ------ ------ ------ ------
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 Six Months Ended June 30, Ended June 30, --------------------- ---------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Annualized net charge-offs to average loans 0.20% 0.34% 0.28% 0.22% Annualized provision for loan losses to average loans 0.30% 0.40% 0.34% 0.24% Average reserve for loan losses to average loans 1.65% 1.66% 1.67% 1.66%
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 1996 was $2,121,000 compared to $2,133,000 for the comparable period in 1995. Income tax expense increased from $6,608,000 in the first six months of 1995 to $7,757,000 in the first six months of 1996. This increase is primarily due to increased earnings. 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 August 13, 1996 By: /s/ Leo W. Seal, Jr. - ---------------------------- ------------------------------------ Date Leo W. Seal, Jr. President and CEO August 13, 1996 By: /s/ George A. Schloegel - ---------------------------- ------------------------------------ Date George A. Schloegel Vice-Chairman of the Board August 13, 1996 By: /s/ Stan Bailey - ---------------------------- ------------------------------------ Date Stan Bailey Chief Financial Officer Page 12 of 12 13 EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION - ----------- ------------------- 27 Selected Financial Data
EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 145,223 2,945 72,175 0 108,169 807,932 804,416 1,070,561 (17,698) 2,276,357 1,939,115 82,732 18,028 2,035 30,043 0 0 204,404 2,276,357 51,858 29,536 3,358 84,752 30,276 32,256 52,496 1,801 (34) 39,410 23,557 23,557 0 0 15,800 1.78 1.78 5.12 5,177 4,073 0 0 17,391 2,630 1,136 17,698 17,698 0 2,000
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