-----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, VAO6JNwqzGj6hvE6Jn6bdVPNJUSxTInGUXdyRUzxNcdrbbLZ/Mr4XmaQoExjFdu9 Rpl9SYu0dzTmhUv7CcS+Ig== 0001030798-97-000049.txt : 19970520 0001030798-97-000049.hdr.sgml : 19970520 ACCESSION NUMBER: 0001030798-97-000049 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97607153 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 HANCOCK HOLDING COMPANY FORM 10-Q 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, 1997 Commission File Number 0-13089 HANCOCK HOLDING COMPANY (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 (telephone number, including area code) NOT APPLICABLE (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 10,845,201 Common Shares were outstanding as of April 29, 1997 for financial statement purposes. Page 1 of 14 HANCOCK HOLDING COMPANY INDEX PART I. FINANCIAL INFORMATION PAGE NUMBER ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- March 31, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Earnings -- Three Months Ended March 31, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows -- Three Months Ended March 31, 1997 and 1996 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 14
HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) (Unaudited) March 31, December 31, ASSETS: 1997 1996 * ---------- ---------- Cash and due from banks (non-interest bearing) $ 128,169 $ 119,483 Interest-bearing time deposits with other banks 2,141 2,945 Securities available-for-sale (cost of $87,777 and $98,567) 86,882 97,595 Securities held-to-maturity (market value of $874,859 and $806,710) 878,747 803,998 Federal funds sold and securities purchased under agreements to resell 67,500 12,000 Loans, net of unearned income 1,196,298 1,173,967 Less: Reserve for loan losses (19,800) (19,800) ---------- ---------- Net loans 1,176,498 1,154,167 Property and equipment, at cost, less accumulated depreciation of $43,022 and $43,365 41,512 40,412 Other real estate 2,065 1,875 Accrued interest receivable 19,667 20,188 Other assets 41,057 36,919 ---------- ---------- TOTAL ASSETS $2,444,238 $2,289,582 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 449,590 $ 432,964 Interest-bearing savings, NOW, money market and other time 1,591,247 1,493,612 ---------- ---------- Total deposits 2,040,837 1,926,576 Federal funds purchased and securities sold under agreements to repurchase 113,376 87,609 Other liabilities 17,910 12,409 Long-term bonds 1,050 1,050 ---------- ---------- TOTAL LIABILITIES 2,173,173 2,027,644 ---------- ---------- STOCKHOLDERS' EQUITY: Common stock 36,655 36,255 Capital surplus 143,513 140,024 Undivided profits 91,479 86,292 Unrealized loss on securities available-for-sale (582) (633) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 271,065 261,938 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,444,238 $2,289,582 ========== ==========
* The balance sheet at December 31, 1996 has been taken from the audited balance sheet at that date. See notes to condensed consolidated financial statements. Page 3 of 14
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: 1997 1996 ---------- ------- Interest and fees on loans $ 28,648 $ 25,757 Interest on: U. S. Treasury Securities 3,054 3,645 Obligations of other U.S. government agencies and corporations 9,161 8,514 Obligations of states and political subdivisions 935 844 Interest on federal funds sold and securities purchased under agreements to resell 686 2,074 Interest on time deposits and other 1,816 1,486 --------- --------- Total interest income 44,300 42,320 --------- --------- INTEREST EXPENSE: Interest on deposits 15,875 15,176 Interest on federal funds purchased and securities sold under agreements to repurchase 1,106 899 Interest on bonds and notes 22 77 --------- --------- Total interest expense 17,003 16,152 --------- --------- NET INTEREST INCOME 27,297 26,168 Provision for loan losses 836 1,004 --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 26,461 25,164 --------- --------- Non-Interest Income: Service charges on deposit accounts 4,391 4,203 Income from fiduciary activities 852 520 Securities gains 2 --- Other 1,729 1,403 --------- --------- Total non-interest income 6,974 6,126 --------- --------- Non-Interest Expense: Salaries and employee benefits 11,190 10,381 Net occupancy expense of premises and equipment expense 3,460 3,843 Other 6,503 5,443 --------- --------- Total non-interest expense 21,153 19,667 --------- --------- EARNINGS BEFORE INCOME TAXES 12,282 11,623 INCOME TAXES 4,025 3,855 --------- --------- NET EARNINGS $ 8,257 $ 7,768 ========= ========= NET EARNINGS PER COMMON SHARE $ 0.76 $ 0.76 ========= ========= DIVIDENDS PAID PER COMMON SHARE $ 0.25 $ 0.22 ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,816 10,212 ========= =========
See notes to condensed consolidated financial statements. Page 4 of 14
HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (Amounts in thousands) THREE MONTHS ENDED MARCH 31, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 8,257 $ 7,768 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 1,139 1,188 Provision for loan losses 865 1,004 Provision for losses on real estate owned 80 80 Gains on sales of securities (2) -- Decrease (increase) in interest receivable 801 (3,709) Amortization of intangible assets 542 615 Increase in interest payable (280) 418 Other, net 2,818 2,332 --------- --------- Net cash provided by Operating Activities 14,220 9,696 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) decrease in interest-bearing time deposits 804 (1,200) Proceeds from maturities of securities held-to-maturity 65,561 118,193 Purchase of securities held-to-maturity (139,069) (190,099) Proceeds from sales and maturities of securities available-for-sale 19,107 11,781 Purchase of securities available-for-sale (1,000) (13,518) Net (increase) decrease in federal funds sold and securities purchased under agreements to resell (53,500) 18,375 Net (increase) decrease in loans 1,866 (9,865) Purchase of property and equipment, net (822) (1,125) Proceeds from sales of other real estate 278 139 Net cash paid in connection with purchase transaction (1,397) -- --------- --------- Net cash used in Investing Activities (107,672) (67,319) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 79,123 59,907 Dividends paid (2,752) (2,255) Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase and other temporary funds 25,767 17,055 --------- --------- Net cash provided by Financing Activities 102,138 74,707 --------- --------- NET INCREASE IN CASH AND DUE FROM BANKS 8,686 17,084 CASH AND DUE FROM BANKS, BEGINNING 119,483 124,276 --------- --------- CASH AND DUE FROM BANKS, ENDING $ 128,169 $ 141,360 ========= =========
See notes to condensed consolidated financial statements. Page 5 of 14 HANCOCK HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Three Months Ended March 31, 1997 and 1996) 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 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 1996 Annual Report to Shareholders. ACQUISITION On January 17, 1997 the Company merged Hancock Bank of Louisiana, a wholly owned subsidiary of the Company with Southeast National Bank, Hammond, Louisiana (SOUTHEAST). The merger was consummated by the exchange of all outstanding common stock of SOUTHEAST in return for approximately $3,700,000 cash and approximately 120,000 shares of common stock of the Company. The merger was accounted for using the purchase method. SOUTHEAST had total assets of approximately $40,000,000 and stockholders equity of approximately $4,000,000 as of December 31, 1996 and net earnings of approximatley $500,000 for the year then ended. Page 6 of 14 HANCOCK HOLDING COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF 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, 1997 1996 Total securities to total deposits 47.32% 46.80% Total loans (net of unearned discount) to total deposits 58.62% 60.94% Interest-earning assets to total assets 91.30% 91.30% Interest-bearing deposits to total deposits 77.97% 77.53% CAPITAL RESOURCES The Company continues to maintain an adequate capital position, as the following ratios indicate: March 31, December 31, 1997 1996 Equity capital to total assets (1) 11.11% 11.47% Total capital to risk-weighted assets (2) 17.51% 19.02% Tier 1 Capital to risk-weighted assets (3) 16.56% 18.03% Leverage Capital to total assets (4) 9.94% 10.37% Property and equipment to equity capital 15.28% 15.39% (1) Equity capital consists of stockholder's equity (common stock, capital Page 7 of 14 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 $489,000 or 6.3% for the first quarter of 1997 compared to the first quarter of 1996. The increase in earnings is attributable primarily to an increase in loan portfolio balances. THREE MONTHS ENDED MARCH 31, 1997 1996 Results of Operations: Return on average assets 1.38% 1.36% Return on average equity 12.21% 13.70% Net Interest Income: Return on average interest-earning assets (tax equivalent) 8.29% 8.24% Cost of average interest-bearing funds 4.09% 4.11% ----- ----- Net interest spread 4.20% 4.13% ===== ===== Net yield on interest-earning assets (net interest income on a tax equivalent basis divided by average interest-earning assets) 5.15% 5.14% ===== ===== 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. Page 8 of 14 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, 1997 1996 Annualized net charge-offs to average loans 0.40% 0.37% Annualized provision for loan losses to average loans 0.28% 0.39% Average reserve for loan losses to average loans 1.69% 1.69% 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 1997 was $1,115,000 compared to $1,057,000 for the comparable period in 1996. Income tax expense increased from $3,855,000 in the first three months of 1996 to $4,025,000 in the first three months of 1997. This increase is primarily due to increased earnings. Page 9 of 14 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A. Annual Meeting held February 20, 1997. B. Directors elected at the Annual Meeting held February 20, 1997: VOTES CAST AFFIRMED WITHHELD 1. L. A. Koennen, Jr. 8,278,797.8 53,220.9 2. Dr. Homer C. Moody 8,271,811.9 60,206.8 3. George A. Schloegel 8,280,422.5 51,711.2 Continuing Directors: 4. James B. Estabrook, Jr. 5. Victor Mavar 6. Leo W. Seal, Jr. 7. Joseph F. Boardman, Jr. 8. Charles H. Johnson 9. Thomas W. Milner, Jr. C.(1) Approval of Deloitte & Touche LLP as the independent public accountants of the Company. 8,433,315.7 affirmative votes, 1,709 negative votes and 10,694.0 abstained. C.(2) Approval of Amendment to the Amended and Restated Articles of Incorporation (the "Articles") to conform with recent amendments to the Mississippi Business Corporation Act concerning indemnification of Directors and Officers. 8,294,723.3 affirmative votes, 4,614.5 negative votes and 17,718.8 abstained. C.(3) Approval of Amendment to the Articles to increase the number of authorized shares of common stock from 20,000,000 to 75,000,000. 7,762,126.2 affirmative votes, 539,376.7 negative votes and 29,821.8 abstained. C.(4) Approval of Shareholder Rights Plan. 7,419,824.9 affirmative votes, 481,902.7 negative votes and 51,324.09 abstained. D. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit (27) Selected financial data. Page 10 of 14 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 15, 1997 By: /S/ LEO W. SEAL, JR. Date Leo W. Seal, Jr. President and CEO MAY 15, 1997 By: /S/ GEORGE A. SCHLOEGEL Date George A. Schloegel Vice-Chairman of the Board MAY 15, 1997 By: /S/ STAN BAILEY Date Stan Bailey Chief Financial Officer Page 11 of 14 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION 27 Financial Data Schedule Page 12 of 14 EX-27 2 FDS HANCOCK HOLDING COMPANY 10-Q
9 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 128,169 2,141 67,500 0 86,882 878,747 874,859 1,196,298 (19,800) 2,444,238 2,040,837 113,376 17,910 1,050 0 0 36,655 234,410 2,444,238 28,648 13,836 1,816 44,300 15,875 17,003 27,297 836 2 21,153 12,282 12,282 0 0 8,257 0.76 0.76 5.15 1,206 5,342 0 0 19,800 1,842 642 19,800 19,800 0 2,000
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