-----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, DH/xbc3rNSfPIlOPVUoMHWA+rwVs2jdWUHQvHJcEKm2vkNPfsK5WipAyHbRU8n6J l9QpoxEdH6GPyDf3IM2CHg== 0001030798-98-000079.txt : 19980515 0001030798-98-000079.hdr.sgml : 19980515 ACCESSION NUMBER: 0001030798-98-000079 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 000-13089 FILM NUMBER: 98621391 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 10-Q FOR 3/31/98 PERIOD UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q --X- 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, 1998 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 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 ----- -------- 10,910,570 Common Shares were outstanding as of April 29, 1998 for financial statement purposes. Page 1 of 13 HANCOCK HOLDING COMPANY INDEX PART I. FINANCIAL INFORMATION PAGE NUMBER ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- March 31, 1998 and December 31, 1997 3 Condensed Consolidated Statements of Earnings -- Three Months Ended March 31, 1998 and 1997 4 Condensed Consolidated Statements of Cash Flows -- Three Months Ended March 31, 1998 and 1997 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 13
HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) Unaudited) March 31, December 31, ASSETS: 1998 1997 * ------------ ------------- Cash and due from banks (non-interest bearing) $ 116,032 $ 113,125 Interest-bearing time deposits with other banks 596 2,068 Securities available-for-sale (cost of $269,950 and $163,531) 269,715 163,633 Securities held-to-maturity (market value of $917,105 and $924,958) 908,579 916,362 Federal funds sold and securities purchased under agreements to resell 79,511 35,500 Loans, net of unearned income 1,226,178 1,220,630 Less: Reserve for loan losses (21,109) (21,000) ------------ ----------- Net loans 1,205,069 1,199,630 Property and equipment, at cost, less accumulated depreciation of $47,531 and $46,285 42,659 42,810 Other real estate 2,412 2,357 Accrued interest receivable 20,748 20,977 Other assets 46,842 41,495 ------------ ----------- TOTAL ASSETS $ 2,692,163 $ 2,537,957 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 467,481 $ 462,731 Interest-bearing savings, NOW, money market and other time 1,727,703 1,599,917 ------------ ----------- Total deposits 2,195,184 2,062,648 Federal funds purchased and securities sold under agreements to repurchase 184,527 170,534 Other liabilities 17,541 14,923 Long-term bonds 1,279 1,279 ------------ ----------- TOTAL LIABILITIES 2,398,531 2,249,384 ------------ ----------- STOCKHOLDERS' EQUITY: Common stock 36,872 36,872 Capital surplus 200,153 200,766 Undivided profits 57,246 51,401 Unrealized (loss) gain on securities available-for-sale (153) 66 Unearned Compensation (486) (532) ------------ ----------- TOTAL STOCKHOLDERS' EQUITY 293,632 288,573 ------------ ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,692,163 $ 2,537,957 =========== =========== * The balance sheet at December 31, 1997 has been taken from the audited balance sheet at that date. See notes to condensed consolidated financial statements.
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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: 1998 1997 ----------- ------------ Interest and fees on loans $ 29,589 $ 28,648 Interest on: U. S. Treasury Securities 3,757 3,054 Obligations of other U.S. government agencies and corporations 7,057 9,161 Obligations of states and political subdivisions 1,347 935 Interest on federal funds sold and securities purchased under agreements to resell 1,347 686 Interest on time deposits and other 4,845 1,816 ----------- ------------ Total interest income 47,942 44,300 ----------- ------------ INTEREST EXPENSE: Interest on deposits 17,420 15,875 Interest on federal funds purchased and securities sold under agreements to repurchase 1,796 1,106 Interest on bonds and notes 32 22 ----------- ------------ Total interest expense 19,248 17,003 ----------- ------------ NET INTEREST INCOME 27,694 27,297 Provision for loan losses 1,359 836 ----------- ------------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 27,335 26,461 ----------- ------------ Non-Interest Income: Service charges on deposit accounts 4,656 4,391 Income from fiduciary activities 636 852 Securities gains (losses) (63) 2 Other 1,883 1,729 ----------- ------------ Total non-interest income 7,112 6,974 ----------- ------------ Non-Interest Expense: Salaries and employee benefits 11,866 11,190 Net occupancy expense of premises and equipment expense 2,812 3,460 Other 7,561 6,503 ----------- ------------ Total non-interest expense 22,239 21,153 ----------- ------------ EARNINGS BEFORE INCOME TAXES 12,208 12,282 INCOME TAXES 4,155 4,025 ----------- ------------ NET EARNINGS $ 8,053 $ 8,257 =========== ============ NET EARNINGS PER COMMON SHARE $ 0.74 $ 0.76 =========== ============ DIVIDENDS PAID PER COMMON SHARE $ 0.25 $ 0.25 =========== ============ WEIGHTED AVERAGE NUMBER OF COMMON 10,917 10,816 SHARES OUTSTANDING =========== ============ See notes to condensed consolidated financial statements.
Page 4 of 13 HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (Amounts in thousands) Three Months Ended March 31, 1998 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 8,053 $ 8,257 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 1,280 1,139 Provision for loan losses 1,359 865 Provision for losses on real estate owned 83 80 Losses on sales of securities 63 ( 2) Decrease (increase) in interest receivable ( 229) 801 Amortization of intangible assets 598 542 Increase (decrease) in interest payable 767 ( 280) Other, net ( 5,560) 2,818 --------- --------- Net cash provided by Operating Activities 6,414 14,220 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease in interest-bearing time deposits 1,472 804 Proceeds from sales and maturities of securities held-to-maturity 100,973 65,561 Purchase of securities held-to-maturity ( 93,190) (139,069) Proceeds from sales and maturities of securities available-for-sale 22,062 19,107 Purchase of securities available-for-sale (128,144) ( 1,000) Net decrease in federal funds sold and securities purchased under agreements to resell ( 44,011) ( 53,000) Net (increase) decrease in loans ( 5,439) 1,866 Purchase of property and equipment, net ( 1,130) ( 822) Proceeds from sales of other real estate 139 278 Net cash paid in connection with purchase transaction ( 1,397) Net cash used in Investing Activities (147,268) (107,672) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 132,536 79,123 Dividends paid ( 2,769) ( 2,752) Net increase in federal funds purchased and securities sold under agreements to repurchase and other temporary funds 13,994 25,767 --------- --------- Net cash provided by Financing Activities 143,761 102,138 --------- --------- NET INCREASE IN CASH AND DUE FROM BANKS 2,907 8,686 CASH AND DUE FROM BANKS, BEGINNING 113,125 119,483 --------- --------- CASH AND DUE FROM BANKS, ENDING $ 116,032 $ 128,169 ========== ========= See notes to condensed consolidated financial statements. Page 5 of 13 HANCOCK HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Three Months Ended March 31, 1998 and 1997) 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 1997 Annual Report to Shareholders. RECENT CHANGES IN FINANCIAL ACCOUNTING STANDARDS The Company adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" (SFAS 130) effective January 1, 1998. SFAS 130 establishes standards for reporting and display of comprehensive income and its major components. Comprehensive income includes net income and other comprehensive income which, in the case of the Company, only includes unrealized gains and losses on investments available for sale. Following is a summary of the Company's comprehensive income for the three months ended March 31, 1998 and 1997. (Amounts in thousands) Three Months Ended March 31, 1998 1997 ------------ ---------- Net Earnings $ 8,053 $ 8,257 Other Comprehensive Income (net of income tax): Unrealized Holding (Losses)/Gains ( 219) 51 ------------ ----------- Comprehensive Income $ 7,834 $ 8,308 ============ =========== In June 1997, the Financial Accounting Standards Board issued SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" which establishes annual and interim reporting standards for an enterprise's operating segments and related disclosures about its products, services, geographic areas Page 6 of 13 and major customers. Adoption of these statements will not impact the Company's consolidated financial position, results of operations or cash flows, and any effect will be limited to the form and content of its disclosures. Both statements became effective for fiscal years beginning after December 15, 1997. The Company is in the process of reviewing its operating segments. PROPOSED ACQUISITION In April 1998, the Company entered into an Agreement for the acquisition of American Security Bancshares of Ville Platte, Inc. (American Security), Ville Platte, Louisiana and its subsidiary, American Security Bank (ASB). The merger will be consummated by the exchange of all outstanding shares of American Security stock in return for approximately 990,000 shares of common stock of the Company. Completion of the merger is contingent upon approval by American Security's shareholders and appropriate regulatory authorities. It is anticipated that ASB will initially remain a separate wholly-owned subsidiary of the Company. It is intended that the merger will be accounted for using the pooling of interests method. American Security had total assets of approximately $230,000,000 as of December 31, 1997 and net earnings of approximately $2,775,000 for the year then ended. Page 7 of 14 HANCOCK HOLDING COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS 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, 1998 1997 --------- ------------ Total securities to total deposits 53.68% 52.36% Total loans (net of unearned discount) to total deposits 55.86% 59.18% Interest-earning assets to total assets 92.29% 92.13% Interest-bearing deposits to total deposits 78.70% 77.57% Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate: March 31, December 31, 1998 1997 --------- ------------ Equity capital to total assets (1) 10.91% 11.37% Total capital to risk-weighted assets (2) 19.34% 19.18% Tier 1 Capital to risk-weighted 18.83% 18.22% assets (3) Leverage Capital to total assets (4) 9.87% 10.24% Property and equipment to equity capital 14.52% 14.84% (1) Equity capital consists of stockholder's equity (common stock, capital surplus and undivided profits). Page 8 of 13 (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 $204,000 or 2.5% for the first quarter of 1998 compared to the first quarter of 1997. The decrease in earnings is attributable, in part, to an increase in the loan loss provision charged to income resulting from the Company taking a more aggressive stance in the monitoring of loans and potential future collectibility. The Company has also accrued additional income tax expense to more closely match this liability with the period in which it is incurred. Three Months Ended March 31, 1998 1997 --------- ------------ Results of Operations: Return on average assets 1.23% 1.38% Return on average equity 11.25% 12.21% Net Interest Income: Return on average interest-earning assets (tax equivalent) 8.10% 8.29% Cost of average interest-bearing funds 4.19% 4.09% Net interest spread 3.91% 4.20% ====== ====== Net yield on interest-earning assets (net interest income on a tax equivalent basis divided by average interest-earning assets) 4.91% 5.15% ====== ====== 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 Page 9 of 13 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, 1998 1997 --------- ------------ Annualized net charge-offs to average loans 0.41% 0.40% Annualized provision for loan losses to average 0.45% 0.28% loans Average reserve for loan losses to average loans 1.74% 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 1998 was $1,572,000 compared to $1,115,000 for the comparable period in 1997. Income tax expense increased from $4,025,000 in the first three months of 1997 to $4,155,000 in the first three months of 1998. Page 10 of 13 Part II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A. Annual Meeting held February 19, 1998. B. Directors elected at the Annual Meeting held February 19, 1998: Votes Cast Affirmed Withheld 1. James B. Estabrook, Jr. 8,569,389.7 8,798.4 2. Victor Mavar 8,567,290.5 10,897.6 3. Leo W. Seal, Jr. 8,574,010.7 4,177.4 Continuing Directors: 4. Joseph F. Boardman, Jr. 5. Charles H. Johnson 6. Thomas W. Milner, Jr. 7. L. A. Koennen, Jr. 8. Dr. Homer C. Moody 9. George A. Schloegel C.(1) Approval of Deloitte & Touche LLP as the independent public accountants of the Company. Approval was made with a favorable vote of 99.8% ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit (27) Selected financial data. Page 11 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 14, 1998 By: /s/ Leo W. Seal, Jr. Date Leo W. Seal, Jr. President and CEO May 14, 1998 By: /s/ George A. Schloegel Date George A. Schloegel Vice-Chairman of the Board May 14, 1998 By: /s/ Carl J. Chaney Date Carl J. Chaney Chief Financial Officer Page 12 of 13 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 14, 1998 By: Date Leo W. Seal, Jr. President and CEO May 14, 1998 By: Date George A. Schloegel Vice-Chairman of the Board May 14, 1998 By: Date Carl J. Chaney Chief Financial Officer Page 12 of 13 EX-27 2 HHC 10-Q 3/31/98 FDS
9 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 116,032 596 79,511 0 269,715 908,579 917,105 1,226,178 (21,109) 2,692,163 2,195,184 184,527 17,541 1,279 36,872 0 0 256,760 2,632,163 29,589 11,913 4,845 47,942 17,420 19,248 27,694 1,359 (63) 22,238 12,208 12,208 0 0 8,053 0.74 0.74 4.91 4,407 4,534 0 0 21,000 1,602 352 21,109 21,109 0 2,000
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