10-K/A

FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

(Mark One)

[ X ]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF            1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1999.

     OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF            1934 [NO FEE REQUIRED]

For the transition period from _________________________ to ___________________.

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, Gulfport, Mississippi                           39501
- -----------------------------------------     --------------------------------------------------
 (Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code      (228) 868-4727
                                                    ------------------------
Securities registered pursuant to Section 12(b) of the Act:


                                              Name of Each Exchange on
          Title of Each Class                    Which Registered
          -------------------                 -------------------------
                NONE                                  NONE

Securities registered pursuant to Section 12(g) of the Act:

                         COMMON STOCK, $3.33 PAR VALUE
- ------------------------------------------------------------------------------------------------
                              (Title of Class)

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be  contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.   X
      -----

         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
     -----         --------

Continued

The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 1, 2000, was approximately $313,910,000 (based on an average market price of $36.75). For purposes of this calculation only, shares held by non-affiliates are deemed to consist of (a) shares held by all shareholders other than directors and executive officers of the registrant plus (b) shares held by directors and officers as to which beneficial ownership has been disclaimed.

On December 31, 1999, the registrant had outstanding 10,873,341 shares of common stock for financial statement purposes.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Annual Report to Stockholders for the year ended December 31, 1999 are incorporated by reference into Part II of this report. Portions of the definitive Proxy Statement used in connection with the

Registrant’s Annual Meeting of Shareholders held on February 24, 2000, filed by the Registrant on January 31, 2000, are incorporated by reference into Part III of this report.

                                             CONTENTS


PART I

Item 1.  Business                                                           4
Item 2.  Properties                                                        39
Item 3.  Legal Proceedings                                                 40
Item 4.  Submission of Matters to a Vote of Security
                     Holders                                               41

PART II

Item 5.  Market for the Registrant's Common Stock
                     and Related Stockholder Matters                       41
Item 6.  Selected Financial Data                                           41
Item 7.  Management's Discussion and Analysis of
                     Financial Condition and Results of Operations         41
Item 7a. Quantitative and Qualitative Disclosures About
                     Market Risk                                           41
Item 8.  Financial Statements and Supplementary Data                       42
Item 9.  Changes in and Disagreements with Accountants
                     on Accounting and Financial Disclosure                42

PART III

Item 10. Directors and Executive Officers of the
                     Registrant                                            42
Item 11. Executive Compensation                                            44
Item 12. Security Ownership of Certain Beneficial
                     Owners and Management                                 44
Item 13. Certain Relationships and Related Transactions                    44

PART IV

Item 14. Exhibits, Financial Statement Schedules and
                     Reports on Form 8-K                                   45

PART I

ITEM 1 - BUSINESS

BACKGROUND AND CURRENT OPERATIONS

Background

General:

     Hancock Holding Company (the Company), organized in 1984 as a bank holding company registered under the Bank Holding Company Act of 1956, as amended, is headquartered in Gulfport, Mississippi. At December 31, 1999 the Company operated 94 banking offices and 134 automated teller machines (ATMs) in the states of Mississippi and Louisiana through two wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi (Hancock Bank MS) and Hancock Bank of Louisiana, Baton Rouge, Louisiana (Hancock Bank LA). Hancock Bank MS and Hancock Bank LA are referred to collectively as the "Banks".

      The Banks are community oriented and focus primarily on offering commercial, consumer and mortgage loans and deposit services to individuals and small to middle market businesses in their respective market areas. The Company's operating strategy is to provide its customers with the financial sophistication and breadth of products of a regional bank, while successfully retaining the local appeal and level of service of a community bank. At December 31, 1999, the Company had total assets of $3.0 billion and employed on a full-time equivalent basis 1,064 persons in Mississippi and 609 persons in Louisiana.

      Hancock Bank MS was originally chartered as Hancock County Bank in 1899. Since its organization, the strategy of Hancock Bank MS has been to achieve a dominant market share on the Mississippi Gulf Coast. Prior to a series of acquisitions begun in 1985, growth was primarily internal and was accomplished by concentrating branch expansions in areas of population growth where no dominant financial institution previously served the market area. Economic expansion on the Mississippi Gulf Coast has resulted primarily from growth of military and government-related facilities, tourism, port facility activities, industrial complexes and the gaming industry. Based on the most current available published data, Hancock Bank MS has the largest deposit market share in each of the four counties in which it operates: Harrison, Hancock, Jackson

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and Pearl River. With assets of $1.8 billion at December 31, 1999, Hancock Bank MS currently ranks as the fifth largest bank in Mississippi.

      In August 1990, the Company formed Hancock Bank LA to assume the deposit liabilities and acquire the consumer loan portfolio, corporate credit card portfolio and non-adversely classified securities portfolio of American Bank and Trust, Baton Rouge, Louisiana, (AmBank), from the Federal Deposit Insurance Corporation (FDIC). Economic expansion in East Baton Rouge Parish has resulted from growth in state government and related service industries, educational and medical complexes, petrochemical industries, port facility activities and transportation and related industries. With assets of $1.2 billion at December 31, 1999, Hancock Bank LA is one of the largest banks headquartered in East Baton Rouge Parish.

      Beginning with the 1985 acquisition of the Pascagoula-Moss Point Bank in Pascagoula, Mississippi, the Company has acquired approximately $1.2 billion in assets and approximately $1.1 billion in deposit liabilities through selected acquisitions or purchase and assumption transactions.

Recent Acquisition Activity:

      On January 13, 1995, the Company acquired First Denham Bancshares, Inc. (Bancshares) which owned 100% of the stock of First National Bank of Denham Springs (Denham), Denham Springs, Louisiana. The acquisition was in return for approximately $4.0 million cash and 890,000 shares (adjusted for a 15% stock dividend in 1996) of common stock of the Company. The acquisition was accounted for using the purchase method. Bancshares had total assets of approximately $111.0 million and stockholders' equity of approximately $11.3 million as of December 31, 1994 and net earnings of approximately $2.6 million for the year then ended. On August 15, 1996, Denham was merged into Hancock Bank LA.

      On February 1, 1995, the Company merged Hancock Bank LA with Washington Bank & Trust Company, Franklinton, Louisiana (Washington). The merger was consummated by the exchange of all outstanding common stock of Washington in return for approximately 624,000 shares (adjusted for a 15% stock dividend in 1996) of common stock of the Company. The merger was accounted for using the pooling-of-interests method; therefore, all prior years' financial information has been restated. Washington had total assets of approximately $86.1 million

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and stockholders' equity of approximately $12.4 million as of December 31, 1994, and net earnings of approximately $1.3 million for the year then ended.

      In November 1996, the Company acquired Community Bancshares, Inc., Independence, Louisiana, (Community) which owned 100% of the stock of Community State Bank. The acquisition was in return for approximately $5.0 million cash and 513,000 shares (adjusted for a 15% stock dividend in 1996) of common stock of the Company. The acquisition was accounted for using the purchase method. Community had total assets of approximately $91.0 million and stockholders' equity of approximately $11.0 million as of December 31, 1995 and net earnings of approximately $900,000 for the year then ended.

      On January 17, 1997, the Company acquired Southeast National Bank, Hammond, Louisiana (Southeast). The acquisition was in return for approximately $3.7 million cash and 121,000 shares of common stock of the Company. The acquisition was accounted for using the purchase method. Southeast had total assets of approximately $40.0 million and stockholders' equity of approximately $4.0 million as of December 31, 1996 and net earnings of approximately $500,000 for the year then ended.

      On July 15, 1997, the Company acquired Commerce Corporation, Inc., St Francisville, Louisiana (Commerce), which owned 100% of the stock of Bank of Commerce and Trust Company, for approximately $330,000 cash, 65,000 shares of common stock of the Company and the assumption of Commerce debt owed to certain individuals in the aggregate principal amount of $1,250,000. The transaction was accounted for using the purchase method. Commerce had total assets of approximately $29.0 million and stockholders' equity of approximately $800,000 as of December 31, 1996 and net earnings of approximately $260,000 for the year then ended.

      On January 15, 1999, Hancock Holding Company acquired American Security Bancshares of Ville Platte, Inc. (ASB), Ville Platte, Louisiana, the holding company of American Security Bank. The acquisition, accounted for using the purchase method, called for the exchange of ASB stock in return for approximately $15.2 million cash and 644,000 shares of common stock of the Company. ASB had total assets of approximately $230.0 million and stockholders' equity of approximately $21.0 million at December 31, 1998 and net earnings of approximately $2.0 million for the year then ended. The results of operations of ASB were included in the 1999 consolidated statements

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of earnings from the date of acquisition. The acquisition resulted in the recognition of goodwill amounting to approximately $21.9 million, which is being amortized over 15 years.

Current Operations

Loan Production and Credit Review:

      The Banks' primary lending focus is to provide commercial, consumer, leasing and real estate loans to consumers and to small and middle market businesses in their respective market areas. The Banks have no significant concentrations of loans to particular borrowers or loans to any foreign entities. Each loan officer has Board approved loan limits on the principal amount of secured and unsecured loans that can be approved for a single borrower without prior approval of a loan committee. All loans, however, must meet the credit underwriting standards and loan policies of the Banks.

      All loans over an individual loan officer's Board approved lending authority must be approved by the Bank's loan committee, the region's loan committee or by another loan officer with greater lending authority. Both the regional loan committee and the Bank's senior loan committee must review and approve any loan for a borrower whose total indebtedness exceeds the region's approved limit. Each loan file is reviewed by the Bank's loan operations quality assurance function, a component of its loan review system, to ensure proper documentation and asset quality.

Loan Review and Asset Quality:

      Each Bank's portfolio of loan relationships aggregating $250,000 or more is annually reviewed by the respective Bank to identify any deficiencies and to take corrective actions as necessary. Periodically, selected loan relationships aggregating less than $250,000 are reviewed. As a result of such reviews, each Bank places on its Watchlist loans requiring close or frequent review. All loans classified by a regulator are also placed on the Watchlist. All Watchlist and past due loans are reviewed monthly by the Banks' senior lending officers and by the Banks' Board of Directors.

      In addition, all loans to a particular borrower are reviewed, regardless of classification, each time such borrower requests a renewal or extension of

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any loan or requests a new loan. All lines of credit are reviewed annually before renewal. The Banks currently have mechanisms in place that allow for at least an annual review of the financial statements and the financial condition of all borrowers, except borrowers with secured installment and residential mortgage loans.

      Consumer loans which become 60 days delinquent are reviewed regularly by management. Generally, a consumer loan which is delinquent 120 days is in process of collection through repossession and liquidation of collateral or has been deemed currently uncollectible. Loans deemed currently uncollectible are charged-off against the allowance account. As a matter of policy, loans are placed on a nonaccrual status when the loan is 1) maintained on a cash basis due to the deterioration in the financial condition of the borrower, 2) payments, in full, of principal or interest are not expected or 3) the principal or interest has been in default for a period of 90 days, unless the loan is well secured and in the process of collection.

      The Banks follow the standard FDIC loan classification system. This system provides management with (1) a general view of the quality of the overall loan portfolio (each branch's loan portfolio and each commercial loan officer's loan portfolio) and (2) information on specific loans that may need individual attention.

      The Banks hold nonperforming assets, consisting of real property, vehicles and other items held for resale, which were acquired generally through the process of foreclosure. At December 31, 1999, the book value of real estate held for resale and other repossessed properties was approximately $3.3 million.

Securities Portfolio:

      The Banks maintain portfolios of securities consisting primarily of U.S. Treasury securities, U.S. government agency issues, mortgage-backed securities, CMOs and tax-exempt obligations of states and political subdivisions. The portfolios are designed to enhance liquidity while providing acceptable rates of return. Therefore, the Banks invest only in high grade investment quality securities with acceptable yields and generally with durations of less than 7 years.

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      The Banks' policies limit investments to securities having a rating of no less than "Baa" by Moody's Investors' Service, Inc., except for certain obligations of Mississippi or Louisiana counties and municipalities.

Deposits:

      The Banks have several programs designed to attract depository accounts offered to consumers and to small and middle market businesses at interest rates generally consistent with market conditions. Additionally, the Banks offer 134 ATMs: ATMs at the Company's banking offices and free-standing ATMs at other locations. As members of regional and international ATM networks such as "PULSE", "PLUS" and "CIRRUS", the Banks offer customers access to their depository accounts from regional, national and international ATM facilities. Deposit flows are controlled by the Banks primarily through pricing, and to a certain extent, through promotional activities. Management believes that the rates it offers, which are posted weekly on deposit accounts, are generally competitive with other financial institutions in the Banks' respective market areas.

Trust Services:

      The Banks, through their respective Trust Departments, offer a full range of trust services on a fee basis. The Banks act as executor, administrator or guardian in administering estates. Also provided are investment custodial services for individuals, businesses and charitable and religious organizations. In their trust capacities, the Banks provide investment management services on an agency basis and act as trustee for pension plans, profit sharing plans, corporate and municipal bond issues, living trusts, life insurance trusts and various other types of trusts created by or for individuals, businesses and charitable and religious organizations. As of December 31, 1999, the Trust Departments of the Banks had approximately $2.4 billion of assets under management, of which $1.5 billion were corporate accounts and the remaining balances were personal, employee benefit, estate and other trust accounts.

Operating Efficiency Strategy:

      The primary focus of the Company's operating strategy is to increase operating income and to reduce operating expense. The Company's operating efficiency ratio, excluding intangible amortization and securities

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gains, was 63.84% for the year ended December 31, 1999, compared to 61.62% for the prior year. In the latter part of 1999, management took steps to improve operating efficiencies after concentrating on income-producing strategies during the first half of the year. With management's efforts focused on cost containment, the number of full-time equivalent employees was reduced from a high at March 31, 1999 of 1,804 to 1,673 at December 31, 1999. Other initiatives, including the reengineering of certain back-office processes, were put into place with the intention of limiting non-interest expense growth in the year 2000.

Other Activities:

      Hancock Bank MS has 7 subsidiaries through which it engages in the following activities: providing consumer financing services; mortgage lending; owning, managing and maintaining certain real property; providing general insurance agency services; holding investment securities; marketing credit life insurance; and providing discount investment brokerage services. The income of these subsidiaries generally accounts for less than 10% of the Company's total annual income.

      In 1994, the Company began offering alternative investments through a third party vendor. The investment centers are now located in several branch locations in Mississippi and Louisiana to accommodate the investment needs of customers whose financial portfolio requirements fall outside the traditional commercial bank product line. During the current year, the investment sales force was internalized and the management structure reorganized in order to align sales actively with Company objectives.

      Hancock Bank MS also owns approximately 3,700 acres of timberland in Hancock County, Mississippi, most of which was acquired through foreclosure in the 1930's. Timber sales and oil and gas leases on this acreage generate less than 1% of the Company's annual income.

Competition:

      The deregulation of the financial services industry, the elimination of many previous distinctions between commercial banks and other financial institutions and legislation enacted in Mississippi, Louisiana and other

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states allowing state-wide branching, multi-bank holding companies and regional interstate banking has created a highly competitive environment for commercial banking in the Company's market area. The principal competitive factors in the markets for deposits and loans are interest rates paid and charged. The Company also competes through the efficiency, quality, range of services and products it provides, convenience of office and ATM locations and office hours.

      In attracting deposits and in its lending activities, the Company competes generally with other commercial banks, savings associations, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, mutual funds and insurance companies and other financial institutions. Many of these institutions have greater available resources than the Company.

SUPERVISION AND REGULATION Bank Holding Company Regulation

General:

      The Company is subject to extensive regulation by the Board of Governors of the Federal Reserve System (the Federal Reserve) pursuant to the Bank Holding Company Act of 1956, as amended (the Bank Holding Company Act). The Company also is required to file certain reports with, and otherwise comply with the rules and regulations of, the Securities and Exchange Commission (the Commission) under federal securities laws.

Federal Regulation:

      The Bank Holding Company Act generally prohibits the Company from engaging in activities other than banking, managing or controlling banks or other permissible subsidiaries. Acquiring or obtaining control of any company engaged in activities other than those activities determined by the Federal Reserve to be so closely related to banking, managing or controlling banks as to be proper incident thereto is also prohibited. In determining whether a particular activity is permissible, the Federal Reserve considers whether the performance of the activity can reasonably be expected to produce benefits to the public that outweigh possible adverse effects.

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For example: making, acquiring or servicing loans; leasing personal property; providing certain investment or financial advice; performing certain data processing services; acting as agent or broker in selling credit life insurance, and performing certain insurance underwriting activities have all been determined by regulations of the Federal Reserve to be permissible activities. The Bank Holding Company Act does not place territorial limitations on permissible bank-related activities of bank holding companies. Despite prior approval, however, the Federal Reserve has the power to order a holding company or its subsidiaries to terminate any activity or its control of any subsidiary when it has reasonable cause to believe that continuation of such activity or control of such subsidiary constitutes a serious risk to the financial safety, soundness or stability of any bank subsidiary of that holding company.

      The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve: (1) before it may acquire ownership or control of any voting shares of any bank if, after such acquisition, such bank holding company will own or control more than 5% of the voting shares of such bank, (2) before it or any of its subsidiaries other than a bank may acquire all of the assets of a bank, or (3) before it may merge with any other bank holding company. In reviewing a proposed acquisition, the Federal Reserve considers financial, managerial and competitive aspects. The future prospects of the companies and banks concerned and the convenience and needs of the community to be served must also be considered. The Federal Reserve also reviews the indebtedness to be incurred by a bank holding company in connection with the proposed acquisition to ensure that the holding company can service such indebtedness without adversely affecting the capital requirements of the holding company or its subsidiaries. The Bank Holding Company Act further requires that consummation of approved acquisitions or mergers must be delayed for a period of not less than 15 nor more than least 30 days following the date of approval. During such 15 to 30-day period, complaining parties may obtain a review of the Federal Reserve's order granting its approval by filing a petition in the appropriate United States Court of Appeals petitioning that the order be set aside.

      The Federal Reserve has adopted capital adequacy guidelines for use in its examination and regulation of bank holding companies. The regulatory capital of a bank holding company under applicable federal capital

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adequacy guidelines is particularly important in the Federal Reserve's evaluation of a bank holding company and any applications by the bank holding company to the Federal Reserve. If regulatory capital falls below minimum guideline levels, a bank holding company or bank may be denied approval to acquire or establish additional banks or non-bank businesses or to open additional facilities. In addition, a financial institution's failure to meet minimum regulatory capital standards can lead to other penalties, including termination of deposit insurance or appointment of a conservator or receiver for the financial institution. There are two measures of regulatory capital presently applicable to bank holding companies, (1) risk-based capital and (2) leverage capital ratios.

      The Federal Reserve rates bank holding companies by a component and composite 1-5 rating system. This system is designed to help identify institutions which require special attention. Financial institutions are assigned ratings based on evaluation and rating of their financial condition and operations. Components reviewed include capital adequacy, asset quality, management capability, the quality and level of earnings, and the adequacy of liquidity. Effective January 1, 1997, a sixth component was added to the rating system - sensitivity to market risk. This component addresses primarily the issue of a bank's sensitivity to interest rate fluctuations.

      The leverage ratios adopted by the Federal Reserve require all but the most highly rated bank holding companies to maintain Tier 1 Capital at 4% of total assets. Certain bank holding companies having a composite 1 rating and not experiencing or anticipating significant growth may satisfy the Federal Reserve guidelines by maintaining Tier 1 Capital of at least 3% of total assets. Tier 1 Capital for bank holding companies includes: stockholders' equity, minority interest in equity accounts of consolidated subsidiaries and qualifying perpetual preferred stock. In addition, Tier 1 Capital excludes goodwill and other disallowed intangibles. The Company's leverage capital ratio at December 31, 1999 was 9.50%.

      The risk-based capital guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets. Under the risk-based capital guidelines, assets are assigned to one of four risk categories; 0%, 20% 50% and 100%. As an example, U.S. Treasury securities are

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assigned to the 0% risk category while most categories of loans are assigned to the 100% risk category. A two-step process determines the risk weight of off-balance sheet items such as standby letters of credit. First, the amount of the off-balance sheet item is multiplied by a credit conversion factor of either 0%, 20%, 50% or 100%. The result is then assigned to one of the four risk categories. At December 31, 1999, the Company's off-balance sheet items aggregated $256.8 million; however, after the credit conversion these items represented $38.4 million of balance sheet equivalents.

      The primary component of risk-based capital is Tier 1 Capital, which for the Company is essentially equal to common stockholders' equity, less goodwill and other intangibles. Tier 2 Capital, which consists primarily of the excess of any perpetual preferred stock, mandatory convertible securities, subordinated debt and general allowances for loan losses, is a secondary component of risk-based capital. The risk-weighted asset base is equal to the sum of the aggregate dollar values of assets and off-balance sheet items in each risk category, multiplied by the weight assigned to that category. A ratio of Tier 1 Capital to risk-weighted assets of at least 4% and a ratio of Total Capital (Tier 1 and Tier 2) to risk-weighted assets of at least 8% must be maintained by bank holding companies. At December 31, 1999, the Company's Tier 1 and Total Capital ratios were 13.85% and 14.47%, respectively.

      The prior approval of the Federal Reserve must be obtained before the Company may acquire substantially all the assets of any bank, or ownership or control of any voting shares of any bank, if, after such acquisition, it would own or control, directly or indirectly, more than 5% of the voting shares of such bank. In no case, however, may the Federal Reserve approve an acquisition of any bank located outside Mississippi unless such acquisition is specifically authorized by the laws of the state in which the bank to be acquired is located. The banking laws of Mississippi presently permit out-of-state banking organizations to acquire Mississippi banking organizations, provided the out-of-state banking organization's home state grants similar privileges to banking organizations in Mississippi. This reciprocity privilege was restricted to banking organizations in specified geographic regions that encompassed the states of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas, Virginia and West Virginia. However, effective September 29, 1995, such regional limitation was expanded by the Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994 to a nationwide basis. In addition, Mississippi banking organizations were

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granted similar powers to acquire certain out-of-state financial institutions pursuant to the Interstate Bank Branching Act which was adopted in 1996. A bank holding company is additionally prohibited from engaging in non-banking activities, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in non-banking activities.

      With the passage of The Interstate Banking and Branching Efficiency Act of 1994, adequately capitalized and managed bank holding companies are permitted to acquire control of banks in any state, subject to federal regulatory approval, without regard to whether such a transaction is prohibited by the laws of any state. Beginning June 1, 1997, federal banking regulators may approve merger transactions involving banks located in different states, without regard to laws of any state prohibiting such transactions; except that, mergers may not be approved with respect to banks located in states that, before June 1, 1997, enacted legislation prohibiting mergers by banks located in such state with out-of-state institutions. Federal banking regulators may permit an out-of-state bank to open new branches in another state if such state has enacted legislation permitting interstate branching. The legislation further provides that a bank holding company may not, following an interstate acquisition, control more than 10% of nationwide insured deposits or 30% of deposits in the relevant state. States have the right to adopt legislation to lower the 30% limit. Additional provisions require that interstate activities conform to the Community Reinvestment Act.

      The Company is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the Company's consolidated net worth. The Federal Reserve may disapprove such a transaction if it determines that the proposal constitutes an unsafe or unsound practice, would violate any law, regulation, Federal Reserve order or directive or any condition imposed by, or written agreement with, the Federal Reserve.

      In November 1985, the Federal Reserve adopted its Policy Statement on Cash Dividends Not Fully Covered by Earnings (the Policy Statement). The Policy Statement sets forth various guidelines that the Federal Reserve believes that a bank holding company should follow in establishing its dividend policy. In general, the Federal Reserve stated that bank holding companies should pay dividends only out of current earnings. It also stated

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that dividends should not be paid unless the prospective rate of earnings retention by the holding company appears consistent with its capital needs, asset quality and overall financial condition.

      The activities of the Company are also restricted by the provisions of the Glass-Steagall Act of 1933 (the Act). The Act prohibits the Company from owning subsidiaries engaged principally in the issue, floatation, underwriting, public sale or distribution of securities.

      The Company is a legal entity separate and distinct from the Banks. There are various restrictions that limit the ability of the Banks to finance, pay dividends or otherwise supply funds to the Company or other affiliates. In addition, subsidiary banks of holding companies are subject to certain restrictions on any extension of credit to the bank holding company or any of its subsidiaries, on investments in the stock or other securities thereof and on the taking of such stock or securities as collateral for loans to any borrower. Further, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with extensions of credit, or leases or sales of property or furnishing of services.

Bank Regulation:

      The operations of the Banks are subject to state and federal statutes applicable to state banks and national banks, respectively, and the regulations of the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency (OCC), to the extent state banks are granted parity with national banks. Such statutes and regulations relate to, among other things, required reserves, investments, loans, mergers and consolidations, issuance of securities, payment of dividends, establishment of branches and other aspects of the Banks' operations.

      Hancock Bank MS is subject to regulation and periodic examinations by the FDIC and the State of Mississippi Department of Banking and Consumer Finance. Hancock Bank LA is subject to regulation and periodic examinations by the FDIC and the Office of Financial Institutions, State of Louisiana. These regulatory authorities examine such areas as reserves, loan and investment quality, management policies, procedures and

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practices and other aspects of operations. These examinations are designed for the protection of the Banks' depositors, rather than their stockholders. In addition to these regular examinations, the Company and the Banks must furnish periodic reports to their respective regulatory authorities containing a full and accurate statement of their affairs.

      As a result of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), a financial institution insured by the FDIC can be held liable for any losses incurred by, or reasonably expected to be incurred by, the FDIC in connection with (1) the default of a commonly controlled FDIC-insured financial institution or (2) any assistance provided by the FDIC to a commonly controlled financial institution in danger of default.

      The Banks are members of the FDIC, and their deposits are insured as provided by law by the Bank Insurance Fund (BIF). On December 19, 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) was enacted. The Federal Deposit Insurance Act, as amended by Section 302 of FDICIA, calls for risk-related deposit insurance assessment rates. The risk classification of an institution will determine its deposit insurance premium. Assignment to one of three capital groups, coupled with assignment to one of three supervisory sub-groups, determines which of the nine risk classifications is appropriate for an institution.

      Effective in the first quarter of 1996, the FDIC lowered banks' deposit insurance premiums from 4 to 31 cents per hundred dollars in insured deposits to a rate of 0 to 27 cents. The Banks have received a risk classification of 1A for assessment purposes. In 1997 an assessment for the Financing Corporation's debt service was added to the FDIC quarterly premium payment. That assessment averaged 1.19 cents per hundred dollars of insured deposits during 1999 and 2.12 for the first quarter of 2000. Total assessments paid to the FDIC amounted to $314 thousand in 1999. For the year ended December 31, 1999, premiums on OAKAR deposits from the 1991 acquisition of Peoples Federal Savings Association totaled $23,000.

      In general, FDICIA subjects banks and bank holding companies to significantly increased regulation and supervision. FDICIA increased the borrowing authority of the FDIC in order to re-capitalize the BIF, and the future borrowings are to be repaid by increased assessments on FDIC member banks. Other significant provisions

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of FDICIA require a new regulatory emphasis linking supervision to bank capital levels. Also, federal banking regulators are required to take prompt regulatory action with respect to depository institutions that fall below specified capital levels and to draft non-capital regulatory measures to assure bank safety.

      FDICIA contains a "prompt corrective action" section intended to resolve problem institutions at the least possible long-term cost to the deposit insurance funds. Pursuant to this section, the federal banking agencies are required to prescribe a leverage limit and a risk-based capital requirement indicating levels at which institutions will be deemed to be "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." In the case of a depository institution that is "critically undercapitalized" (a term defined to include institutions which still have positive net worth), the federal banking regulators are generally required to appoint a conservator or receiver.

      FDICIA further requires regulators to perform annual on-site bank examinations, places limits on real estate lending and tightens audit requirements. The new legislation eliminated the "too big to fail" doctrine, which protects uninsured deposits of large banks, and restricts the ability of undercapitalized banks to obtain extended loans from the Federal Reserve Board discount window. FDICIA also imposes new disclosure requirements relating to fees charged and interest paid on checking and deposit accounts. Most of the significant changes brought about by FDICIA required new regulations.

      In addition to regulating capital, the FDIC and the OCC have broad authority to prevent the development or continuance of unsafe or unsound banking practices. Pursuant to this authority, the FDIC and OCC have adopted regulations that restrict preferential loans and loan amounts to "affiliates" and "insiders" of banks, require banks to keep information on loans to major stockholders and executive officers and bar certain director and officer interlocks between financial institutions. The FDIC is also authorized to approve mergers, consolidations and assumption of deposit liability transactions between insured banks and between insured banks and uninsured banks or institutions to prevent capital or surplus diminution in such transactions where the resulting, continuing or assumed bank is an insured nonmember state bank, like Hancock Bank MS and Hancock Bank LA.

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      Although Hancock Bank MS and Hancock Bank LA are not members of the Federal Reserve System, they are subject to Federal Reserve regulations that require the Banks to maintain reserves against transaction accounts (primarily checking accounts). Because reserves generally must be maintained in cash or in noninterest-bearing accounts, the effect of the reserve requirements is to increase the cost of funds for the Banks. The Federal Reserve regulations currently require that reserves be maintained against net transaction accounts in the amount of 3% of the aggregate of such accounts up to $39.3 million, or, if the aggregate of such accounts exceeds $39.3 million, $1.179 million plus 10% of the total in excess of $39.3 million. This regulation is subject to an exemption from reserve requirements on a limited amount of an institution's transaction accounts.

      The foregoing is a brief summary of certain statutes, rules and regulations affecting the Company and the Banks. It is not intended to be an exhaustive discussion of all the statutes and regulations having an impact on the operations of such entities.

Recent Legislation:

      On November 12, 1999, President Clinton signed into law the Gramm-Leach-Billey Act on 1999 (the "Financial Services Modernization Act"). The Financial Services Modernization Act repeals the two affiliation provisions of the Glass-Steagall Act: Section 20, which restricted the affiliation of Federal Reserve Member Banks with firms "engaged principally" in specified securities activities; and Section 32, which restricts officer, director or other employee interlocks between a member bank and any company or person "primarily engaged" in specified securities activities. In addition, the Financial Services Modernization Act also contains provisions that expressly preempt any state law restricting the establishment of financial affiliations, primarily related to insurance. The general effect of the law is to establish a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms, and other financial service providers by revising and expanding the Bank Holding Company Act framework to permit a holding company system to engage in a full range of financial activities through a new entity known as a Financial Holding Company. "Financial activities" is broadly defined to include not only banking, insurance, and securities, but also merchant banking and additional activities that the Federal Reserve, in consultation with the Secretary of the Treasury, determines to be financial in nature, incidental to such financial activities, or complementary activities that to not pose a substantial risk to the safety and soundness of depository institutions of the financial system generally.

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        Generally, the Financial Services Modernization Act:

o        Repeals historical restrictions on, and eliminates many federal and state law barriers to, affiliations
             among bank, securities firms, insurance companies, and other financial service providers;

o        Provides a uniform framework for the functional regulation of the activities of banks, savings
             institutions, and their holding companies;

o        Broadens the activities that may be conducted by national banks, banking subsidiaries of bank holding
             companies, and their financial subsidiaries;

o        Provides an enhanced framework for protecting the privacy of consumer information;

o        Adopts a number of provisions related to the capitalization, membership, corporate governance, and other
             measures designed to modernize the Federal Home Loan Bank system;

o        Modifies the laws governing the implementation of the Community Reinvestment Act ("CRA"); and

o        Addresses a variety of other legal and regulatory issues affecting both day-to-day operations and
             long-term activities of financial institutions.

      The Financial Services Modernization Act also permits national banks to engage in expended activities through the formation of financial subsidiaries. A national bank may have a subsidiary engaged in any activity authorized for national banks directly or any financial activity, except for insurance underwriting, insurance investments, real estate investment or development or merchant banking, which may only be conducted through a subsidiary of a Financial Holding Company. Financial activities include all activities permitted under new sections of the Bank Holding Company Act or permitted by regulation.

      A national bank seeking to have a financial subsidiary, and each of its depository institution affiliates, must be "well-capitalized" and "well-managed". The total assets of all financial subsidiaries may not exceed the lesser of 45% of a bank's total assets, or $50 billion. A national bank must exclude from its assets and equity all equity investments, including retained earnings, in a financial subsidiary. The assets of

20 of 49

the subsidiary may not be consolidated with the bank’s assets. The bank must also have policies and procedures to assess financial subsidiary risk and protect the bank from such risks and potential liabilities.

      The Financial Services Modernization Act also includes a new section of the Federal Deposit Insurance Act governing subsidiaries of state banks that engage in "activities as principal that would only be permissible" for a nationally bank to conduct in a financial subsidiary. It expressly preserves the ability of a state bank to retain all existing subsidiaries. Because Mississippi permits commercial banks chartered by the state to engage in any activity permissible for national banks, the Bank will be permitted to form subsidiaries to engage in the activities authorized by the Financial Services Modernization Act. In order to form a financial subsidiary, a state bank must be well-capitalized and the state bank would be subject to the same capital deduction, risk management and affiliate transaction rules as applicable to national banks.

      The Bank's management has not determined at this time, but is examining its strategic business plan to determine whether, based on market conditions, the relative financial conditions of the Bank, regulatory capital requirements, general economic conditions and other factors, the Bank desires to utilize any of its expanded powers provided in the Financial Services Modernization Act.

      The Bank does not believe that the Financial Services Modernization Act will have a material adverse effect on the Bank's operations in the near-term. However, to the extent that it permits bank, securities firms, and insurance companies to affiliate, the financial services industry may experience further consolidation. The Financial Services Modernization Act is intended to grant community banks certain powers as a matter of right that larger institutions have accumulated on an ad hoc basis. Nevertheless, this act may have the result of increasing the amount of competition that the Company and the Banks face from larger institutions and other types of companies offering financial products, some of which may have substantially more financial resources than the Company and the Banks.

      Finally, additional bills may be introduced in the future in the United States Congress and state legislatures to alter the structure, regulation and competitive relationships of financial institutions. It cannot be predicted whether and what form any of these proposals will be adopted or the extent to which the business of the Company and the Banks may be affected thereby.

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Effect of Governmental Policies:

      The difference between the interest rate paid on deposits and other borrowings and the interest rate received on loans and securities comprise most of a bank's earnings. In order to mitigate the interest rate risk inherent in the industry, the banking business is becoming increasingly dependent on the generation of fee and service charge revenue.

      The earnings and growth of a bank may be affected by both general economic conditions and the monetary and fiscal policy of the United States Government and its agencies, particularly the Federal Reserve. The Federal Reserve sets national monetary policy such as seeking to curb inflation and combat recession. This is accomplished by its open-market operations in United States government securities, adjustments in the amount of reserves that financial institutions are required to maintain and adjustments to the discount rates on borrowings and target rates for federal funds transactions. The actions of the Federal Reserve in these areas influence the growth of bank loans, investments and deposits and also affect interest rates on loans and deposits. The nature and timing of any future changes in monetary policies and their potential impact on the Company cannot be predicted.

STATISTICAL INFORMATION

      The following tables and other material present certain statistical information regarding the Company. This information is not audited and should be read in conjunction with the Company's consolidated financial statements and the accompanying notes.

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY AND INTEREST RATES AND DIFFERENTIALS:

      Net interest income, the difference between interest income and interest expense, is the most significant component of the Banks' earnings. For internal analytical purposes, management adjusts net interest income to a "taxable equivalent" basis using a 35% federal tax rate on tax exempt items (primarily interest on municipal securities and loans).

      Another significant statistic in the analysis of net interest income is the effective interest differential, which is the difference between the average rate of interest earned on earning assets and the effective rate paid for all deposits and borrowed funds, noninterest-bearing as well as interest-bearing. Since

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a portion of the Bank’s deposits do not bear interest, such as demand accounts, the rate paid for all funds is lower than the rate on interest-bearing liabilities alone. The rate differential for the years 1999 and 1998 was 4.69% and 4.54%, respectively.

      Recognizing the importance of interest differential to total earnings, management places great emphasis on managing interest rate spreads. Although interest differential is affected by national, regional, and area economic conditions, including the level of loan demand and interest rates, there are opportunities to influence interest differential through appropriate loan and investment policies. These policies are designed to maximize interest differential while maintaining sufficient liquidity and availability of funds for purposes of meeting existing commitments and for investment in loans and other investment opportunities that may arise.

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        The following table shows interest income on interest-earning assets and related average yields earned
and interest expense on interest-bearing liabilities and related average rates paid for the periods indicated:


                                      Comparative Average Balances - Yields and Rates
                                      -----------------------------------------------

                                                                         Years Ended December 31,
                                  ------------------------------------------------------------------------------------------------
                                               1999                                1998                           1997
                                  -----------------------------       ---------------------------     ---------------------------
                                             Interest     FTE                    Interest   FTE                 Interest    FTE
                                  Average     Income/    Yield/       Average    Income/   Yield/     Average    Income/    Yield/
                                  Balance     Expense     Rate        Balance    Expense    Rate      Balance    Expense    Rate
                                  -------     -------     ----        -------    -------    ----      -------    -------    ----
                                                                    (amounts in thousands)
ASSETS
Interest-earning assets:
 Investment securities:
 U.S. Treasury                   $  180,578   $  10,059  5.57%    $  243,224   $  14,469   5.95%   $  240,539   $ 14,734    6.13%
 U.S. government obligations        414,784      25,176  6.07%       340,906      21,175   6.21%      395,994     26,333    6.65%
 Municipal obligations(1)           195,860      10,141  5.18%       137,584      10,562   7.68%       74,838      6,385    8.53%
 CMOs                               267,484      17,091  6.39%       212,043      13,631   6.43%      102,278      7,073    6.92%
 Mortgage-backed securities         167,550      10,045  6.00%       151,669       9,800   6.46%       62,493      4,415    7.06%
 Other securities                    20,544       1,144  5.57%        99,272       6,093   6.14%      108,061      6,919    6.40%
 Federal funds sold & securities
  purchased under agreements
  to resell                          25,268       1,290  5.11%        56,958       3,089   5.42%       50,256      2,733    5.44%
 Interest-bearing time deposits
  with other banks                       12           1  5.00%           413          33   7.99%          996         64    6.43%
                                  ---------     -------  ----      ---------     -------   ----     ---------    -------    ----
 Net loans (1)(2)(3)              1,452,305     138,389  9.53%     1,243,617     119,015   9.57%    1,201,381    115,468    9.61%
                                  ---------     -------  ----      ---------     -------   ----     ---------    -------    ----
 Total interest-earning
     assets/interest income (1)   2,724,385     213,336  7.83%     2,485,686     197,867   7.96%    2,236,836    184,124    8.23%

Noninterest-earning assets:
Less: Allowance for loan losses     (23,939)       ---    ---        (21,040)       ---     ---       (20,410)    ---        ---

 Cash and due from banks            141,652        ---    ---        114,935        ---     ---       119,271     ---        ---
 Property and equipment              54,179        ---                45,457        ---     ---        40,149     ---        ---
 Other assets                       101,216        ---                71,069        ---     ---        67,107     ---        ---
                                    -------     ------   -----        ------     -------   -----   ----------    -------    -----
 Total assets                    $2,997,493   $ 213,336  7.12%    $2,696,107   $ 197,867   7.34%   $2,442,953  $ 184,124    7.54%
                                 ==========   =========  ====     ==========   =========   ====    ==========  =========    ====
LIABILITIES AND STOCKHOLDERS'
  EQUITY
Interest-bearing liabilities:
 Deposits:
 Savings, NOW and money
   market                       $1,022,261    $ 30,556   2.99%       849,297   $  26,586   3.13%   $  746,665  $  20,714    2.77%
 Time                              920,718      46,254   5.02%       891,322      47,879   5.37%      834,147     45,436    5.45%
 Federal funds purchased            28,275       1,434   5.07%         3,773         179   4.74%        2,304        107    4.64%
 Securities sold under
  agreements to repurchase         137,877       5,542   4.02%       152,426       7,037   4.62%      118,855      5,277    4.44%
 Long-term bonds                     2,795         175   6.26%           586        6110    .41%        1,369        164   11.98%
 Capital notes                         500         ---   ---             500         ---    ---           ---        ---     ---
                                       ---      ------   -----     ---------      ------   -----    ---------     ------   -----
 Total interest-bearing
  liabilities/interest expense   2,112,426      83,961   3.97%     1,897,904      81,742   4.31%    1,703,340     71,698    4.21%

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Noninterest-bearing liabilities:
 Demand deposits                   562,419         ---    ---       493,218          ---     ---      453,218        ---   ---
 Other liabilities                  14,551         ---    ---        15,107          ---     ---       15,092        ---   ---
 Stockholders' equity              308,097                          289,878          ---     ---      271,303        ---   ---
                                   -------      ------  -----    ----------       ------    ----     --------     ------- -----
 Total liabilities &
  stockholders' equity          $2,997,493   $  83,961  2.80%    $2,696,107    $  81,742    3.03%  $2,442,953   $  71,698  2.93%
                                ==========   =========  ====     ==========    =========    ====   ==========   =========  ====

Interest-earning assets         $2,724,385                        2,485,686                        $2,236,836
Interest-bearing liabilities     2,112,426                        1,897,904                         1,703,340
Interest income (1)                            213,336                           197,867                        $ 184,124
Interest expense                                83,961                            81,742                           71,698
                                                ------                            ------                           ------
Interest income/interest-
  earning assets (1)                                    7.83%                               7.96%                          8.23%
Interest expense/interest-
  bearing liabilities                                   3.97%                               4.31%                          4.21%
Interest spread                                         3.86%                               3.65%                          4.02%
Net interest income (1)                      $ 129,375                         $ 116,125                         $112,426
                                             =========                         =========                         ========

Net interest margin (1)                                 4.75%                               4.67%                          5.03%



(1 )     Includes tax equivalent adjustments to interest income of $5.7 million, $4.2 million and  $2.7 million
         in 1999, 1998 and 1997, respectively, using an effective Federal income tax rate of 35% .

(2)      Interest income includes fees on loans of $3.5 million, $3.4 million and $3.0 million in 1999, 1998 and 1997, respectively.

(3)      Includes nonaccrual loans.  See "Nonperforming Assets."

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        The following table sets forth, for the periods indicated, a summary of the changes in interest income on
interest-earning assets and interest expense on interest-bearing liabilities relating to rate and volume
variances.  Changes that are not solely due to volume or rate are allocated to volume.

                                          Analysis of Changes in Net Interest Income
                                          ------------------------------------------

                                                                      Years Ended December 31,
                                  ---------------------------------------------------------------------------------------------
                                               1999                              1998                           1997
                                  -----------------------------      ----------------------------   ---------------------------
                                                       Total                                Total                          Total
                                   Changes Due to     Increase         Changes Due to      Increase     Changes Due to    Increase
                                   --------------                      --------------                   --------------
                                  Volume      Rate   (Decrease)       Volume       Rate   (Decrease)     Volume    Rate  (Decrease)
                                  ------      ----   ----------       ------       ----   ----------     ------    ----  ----------
                                                                        (in thousands)
INTEREST INCOME
 Investment securities:
 U.S. Treasury                   $( 3,724) $(   686)  $( 4,410)    $    167    $(   432)  $(   265)  $  1,192   $(   25)$   1,167
 U.S. government obligations      (   548)  (   456)   ( 1,004)     ( 3,663)    ( 1,495)   ( 5,158)     7,985    (8,172)  (   187)
 Municipal obligations (1)          4,476   ( 4,897)   (   421)       4,811     (   634)     4,177      1,270    (  336)      934
 CMOs                               3,567   (   107)     3,460        7,596     ( 1,038)     6,558        N/A       N/A       N/A
 Mortgage-backed securities         1,016   (   771)       245        6,296     (   911)     5,385        N/A       N/A       N/A
 Other securities                     270   (   214)        56      (   568)    (   258)   (   826)    (2,188)    5,449     3,261
 Federal funds sold & securities
 purchased under agreements
 to resell                        ( 1,721)  (    78)   ( 1,799)         365     (     9)       356    ( 2,943)       96   ( 2,847)
 Interest-bearing time deposits
 with other banks                 (    32)      ---    (    32)     (    37)          6    (    31)   (    31)        8   (    23)
 Net loans (1)                     19,955   (   581)    19,374        4,028     (   481)     3,547     11,692    (1,585)   10,107
                                   ------   -------     ------        -----     -------      -----     ------    ------    ------
 Total (1)                         23,259   ( 7,790)    15,469       18,995     ( 5,252)    13,743     16,977    (4,565)   12,412
                                   ------   -------     ------       ------     -------     ------     ------    ------    ------

INTEREST EXPENSE
 Deposits:
 Savings, NOW and money
 market                             5,401   ( 1,431)     3,970        2,889       2,983      5,872      1,489       224     1,713
 Time                               1,598   ( 3,223)   ( 1,625)       3,116     (   673)     2,443      2,972       840     3,812
 Federal funds purchased            1,162        93      1,255           69           3         72    (   438)   (    4)  (   442)
 Securities sold under
 agreements to repurchase         (   668)  (   827)   ( 1,495)       1,490         270      1,760      1,720        92     1,812
 Long-term bonds                      230   (   116)       114      (    94)    (     9)   (   103)   (    39)       38   (     1)
 Capital notes and other
      borrowings                      ---       ---        ---          ---         ---        ---        ---       ---       ---
                                    -----    ------      -----        -----       -----     ------      -----     -----     -----

 Total                              7,723   ( 5,504)     2,219        7,470       2,574     10,044      5,704     1,190     6,894
                                    -----   -------      -----        -----       -----     ------      -----     -----     -----

Increase (decrease) in
  net interest income (1)        $ 15,536  $( 2,286)$   13,250  $    11,525  $(   7,826) $   3,699  $  11,273   $(5,755) $  5,518
                                 ========  ======== ==========  ===========  ==========  =========  =========   =======  ========



(1)                                  Yields on tax-exempt loans and investments have been adjusted to a tax equivalent basis
utilizing a 35% effective Federal income tax rate.

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Interest Rate Sensitivity:

      To control interest rate risk, management regularly monitors the volume of interest sensitive assets compared with interest sensitive liabilities over specific time intervals. The Company's interest rate management policy is designed to reduce the exposure to changes in its net interest margin in periods of interest rate fluctuations. Interest rate risk is monitored, quantified and managed to produce an acceptable impact on short-term earnings.

      The interest sensitivity gap is the difference between total interest sensitive assets and liabilities in a given time period. At December 31, 1999, the Company's cumulative interest sensitivity gap in the one year interval was (23.44%). The percentage reflects a higher level of interest sensitive liabilities than assets repricing within one year. Generally, when rate sensitive liabilities exceed rate sensitive assets, the net interest margin is expected to be positively affected during periods of decreasing interest rates and negatively affected during periods of increasing rates.

      The following tables set forth the scheduled repricing or maturity of the Company's assets and liabilities at December 31, 1999 and December 31, 1998. The assumed prepayment of investments and loans were based on the Company's assessment of current market conditions on such dates. Estimates have been made for the repricing of savings, NOW and money market accounts. Actual prepayments and deposit withdrawals will differ from the following analysis due to variable economic circumstances and consumer behavior. Although assets and liabilities may have similar maturities or repricing periods, reactions will vary as to timing and degree of interest rate change.

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                                             Analysis of Interest Sensitivity at December 31, 1999
                                             -----------------------------------------------------
                                                     After Three
                                          Within       Through        One       After Five
                                          Three         Twelve      Through      Years and
                                          Months        Months     Five Years   Insensitive      Total
                                          ------        ------     ----------   -----------      -----
                                                           (amounts in thousands)

Net loans                               $ 440,737     $ 310,691     $ 741,659    $  48,434    $1,541,521
Securities and time deposits              105,977       129,407       535,547      377,791     1,148,722
Federal funds                               3,000            --            --           --         3,000
                                            -----      --------     ---------      -------     ---------
Total earning assets                    $ 549,714     $ 440,098    $1,277,206    $ 426,225    $2,693,243
                                        =========     =========    ==========    =========    ==========

                                            20.41%        16.34%        47.42%       15.83%       100.00%

Interest bearing deposits, excluding
  time deposits $100,000 and greater   $  491,941     $ 682,530    $  441,839    $     178    $1,616,488
Time deposits $100,000 and greater         87,681        94,700        71,566           --       253,947
Short-term borrowings                     213,773            --            --           --       213,773
Other borrowings                           50,130           404         2,180           --        52,714
                                           ------           ---         -----       ------        ------
Total interest-bearing funds              843,525       777,634       515,585          178     2,136,922
Non-interest bearing funds                     --            --            --      556,321       556,321
                                          -------       -------       -------      -------       -------
Funds supporting earning assets         $ 843,525     $ 777,634    $  515,585    $ 556,499    $2,693,243
                                        =========     =========    ==========    =========    ==========

                                            31.32%        28.87%        19.14%       20.66%       100.00%

Interest sensitivity gap                $(293,811)    $(337,536)    $ 761,621    $(130,274)           --
Cumulative gap                          $(293,811)    $(631,347)    $ 130,274           --            --
Percent of total earning assets            (10.91)%      (23.44)%        4.84%          --            --

                                            Analysis of Interest Sensitivity at December 31, 1998
                                            -----------------------------------------------------

                                                     After Three
                                          Within       Through        One       After Five
                                          Three         Twelve      Through      Years and
                                          Months        Months     Five Years   Insensitive      Total
                                          ------        ------     ----------   -----------      -----
                                                           (amounts in thousands)

Net loans                               $ 398,047     $ 286,996     $ 603,758    $  16,754    $1,305,555
Securities and time deposits              309,531       290,544       474,271      170,119     1,244,465
Federal funds                                  --            --            --           --            --
                                          -------       -------     ---------      -------     ---------
Total earning assets                    $ 707,578     $ 577,540    $1,078,029    $ 186,873    $2,550,020
                                        =========     =========    ==========    =========    ==========

                                            27.75%        22.65%        42.27%        7.33%       100.00%

Interest bearing deposits, excluding
  time deposits $100,000 and greater   $  486,125     $ 580,990    $  481,870    $     563    $1,549,548
Time deposits $100,000 and greater        122,930        92,138        63,290           --       278,358
Short-term borrowings                     140,207            --            --           --       140,207
Other borrowings                               --            --            --           --            --
                                          -------       -------       -------      -------     ---------
Total interest-bearing funds              749,262       673,128       545,160          563     1,968,113
Non-interest bearing funds                     --            --            --      581,907       581,907
                                          -------       -------       -------      -------       -------
Funds supporting earning assets         $ 749,262     $ 673,128    $  545,160    $ 582,470    $2,550,020
                                        =========     =========    ==========    =========    ==========

                                            29.38%        26.40%        21.38%       22.84%       100.00%

Interest sensitivity gap                $( 41,684)    $( 95,588)    $ 532,869    $(395,597)           --
Cumulative gap                          $( 41,684)    $(137,272)    $ 395,597           --            --
Percent of total earning assets            ( 1.63)%      ( 5.38)%       15.51%          --            --

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Income Taxes:

      The Company had income tax expense on earnings before cumulative effect of a change in accounting principle of $14.6 million and $14.4 million for the years ended December 31, 1999 and 1998, respectively. This represents effective income tax rates of 31.5% and 32.6% for the years ended December 31, 1999 and 1998, respectively.

Performance and Equity Ratios:

      The following table sets forth, for the periods indicated, the percentage of net earnings to average assets and average stockholders' equity, the percentage of common stock dividends declared per share to net earnings per share and the percentage of average stockholders' equity to average assets.

                                                             Years Ended December 31,
                                                             ------------------------
                                                              1999     1998     1997
                                                              ----     ----     ----
                                                                         %
                                                              -----------------------
Return on average assets, excluding cumulative
   effect of change in accounting principle                    1.06     1.11     1.25
Return on average assets                                       1.06     1.11     1.25
Return on avg. stockholders' equity, excluding cumulative
   effect of change in accounting principle                   10.29    10.28    11.29
Return on average stockholders' equity                        10.29    10.68    11.29
Dividend payout ratio, excluding cumulative effect
   of change in accounting principle                          34.36    35.84    35.46
Dividend payout ratio                                         34.36    34.48    35.46
Average stockholders' equity to average assets                10.28    10.75    11.11

Securities Portfolio:

      The Company generally purchases securities to be held to maturity, with a maturity schedule that provides ample liquidity. Securities classified as held-to-maturity are carried at amortized cost. Certain securities have been classified as available-for-sale based on management's internal assessment of the portfolio considering future liquidity, earning requirements and capital position. The Company increased its available-for-sale portfolio during 1999. Generally, securities with a market risk have been placed in this category. The December 31, 1999 amortized cost of the held-to-maturity portfolio was $509.3 million and the fair value was $498.5 million. The available-for-sale portfolio balance was $639.4 million at December 31, 1999.

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      The amortized cost of securities classified as available-for-sale at December 31, 1999, 1998 and 1997, were
as follows (in thousands):

                                                                      December 31,
                                                        ------------------------------------------------
                                                           1999                1998               1997
                                                           ----                ----               ----
U.S. Treasury                                            $ 84,341            $101,493           $ 54,637
U.S. government agencies                                  302,450             272,564             46,039
Municipal obligations                                      33,382               5,851              1,496
Mortgage-backed securities                                 70,465              31,652             27,538
CMOs                                                      151,693              45,347             21,427
Other debt securities                                      10,601                 ---              6,305
Equity securities                                           7,659               5,969              6,089
                                                            -----               -----              -----
                                                         $660,591            $462,876           $163,531
                                                         ========            ========           ========

        The amortized cost and yield of debt securities classified as available-for-sale at December 31, 1999, by
contractual maturity, were as follows (amounts in thousands):

                                                             Over One        Over Five
                                                One Year       Year            Years            Over
                                                   or        Through          Through            Ten
                                                  Less      Five Years        Ten Years         Years            Total
                                                  ----      ----------        ---------         -----            -----

U.S. Treasury                                 $ 41,689        $ 42,652        $   ---       $    ---         $  84,341
U.S. government agencies                        98,345         155,230          43,115          5,760          302,450
Municipal obligations                            1,717           7,077          11,973         12,615           33,382
Mortgage-backed securities                           1              63          15,036         55,365           70,465
CMOs                                               ---             ---          32,386        119,307          151,693
Other debt securities                              ---             ---             278         10,323           10,601
                                              --------        --------        --------      ---------        ---------
                                              $141,752        $205,022        $102,788       $203,370         $652,932
                                              ========        ========        ========       ========         ========

Weighted Average Yield                           5.53%           5.61%           5.97%          6.33%            5.87%


        The amortized cost of securities classified as held-to-maturity at December 31, 1999, 1998 and 1997 were
as follows (in thousands):

                                                                          December 31,
                                                         -----------------------------------------------
                                                            1999               1998               1997
                                                            ----               ----               ----
U.S. Treasury                                            $ 24,277            $114,506           $210,525
U.S. government agencies                                   95,409             200,149            267,437
Municipal obligations                                     165,891             167,997             88,062
Mortgage-backed securities                                 81,340             114,747            133,925
CMOs                                                      136,286             177,796            190,539
Other debt securities                                       6,103               6,054             25,874
                                                            -----               -----             ------
                                                         $509,306            $781,249           $916,362
                                                         ========            ========           ========

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        The amortized cost and yield of securities classified as held-to-maturity at December 31, 1999, by
contractual maturity, were as follows (amounts in thousands):


                                                   Over One        Over Five
                                         One Year   Year             Years           Over
                                            or     Through          Through           Ten
                                           Less   Five Years       Ten Years         Years          Total
                                         ------   ----------       ---------         -----          -----
U.S. Treasury                          $ 16,002   $  7,985        $    290         $   ---       $ 24,277
U.S. government agencies                 22,726     58,809          13,874             ---         95,409
Municipal obligations                     8,455     35,037          57,561          64,838        165,891
Mortgage-backed securities                  ---      4,619          39,624          37,097         81,340
CMOs                                        ---      3,029          45,278          87,979        136,286
Other debt securities                       ---      6,071             ---              32          6,103
                                       --------   --------        --------        --------       --------
                                       $ 47,183   $115,550        $156,627        $189,946       $509,306
                                       ========   ========        ========        ========       ========
Weighted Average Yield                    6.48%      5.95%           5.97%           5.91%          5.99%


     Loan Portfolio:

            The Banks' primary lending focus is to provide commercial, consumer and real estate
     loans to consumers and to small and middle market businesses in their respective market areas.
     Diversification in the loan portfolio is a means of reducing the risks associated with economic
     fluctuations.   The Banks have no significant concentrations of loans to particular borrowers or
     loans to any foreign entities.

            Loan underwriting standards and loan loss allowance maintenance further reduce the
     impact of credit risk to the Company.   Loans are underwritten on the basis of cash flow
     capacity and collateral market value.   Generally, real estate mortgage loans are made when the
     borrower produces sufficient cash flow capacity and equity in the property to offset historical
     market devaluations.   The loan loss allowance adequacy is tested quarterly based on historical
     losses through different economic cycles and projected future losses specifically identified.

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        The following table sets forth, for the periods indicated, the composition of the loan portfolio of the
Company:

                                                                       Loan Portfolio
                                                                       --------------

                                                                        December 31,
                                              ------------------------------------------------------------------------
                                                    1999          1998           1997            1996          1995
                                                    ----          ----           ----            ----          ----
                                                                       (in thousands)

Real estate:
  Residential mortgages 1-4 family             $  342,443     $  244,150     $  260,132      $  260,945     $  224,646
  Residential mortgages multifamily                18,939         12,220         10,881           7,642          9,674
  Home equity lines/loans                          29,549          8,815         10,814          10,169         11,825
  Construction and development                    136,179         73,789         55,454          55,585         41,602
  Nonresidential                                  309,488        143,445        139,332         131,578        127,027
Commercial, industrial and other                  214,041        224,686        177,379         169,061        176,942
Consumer                                          417,594        544,137        513,362         494,456        409,608
Lease financing and depository
  Institutions                                     24,727         17,324         16,327          15,881         13,811
Political subdivisions                             24,687         21,069         16,889          12,142         14,394
Credit cards and other revolving credit            40,789         40,649         44,785          41,311         32,104
                                                   ------         ------         ------          ------         ------
                                                1,558,436      1,330,284      1,245,355       1,198,770      1,061,633
  Less, unearned income                            16,915         24,729         24,726          24,803         26,656
                                                   ------         ------         ------          ------         ------
  Net loans                                    $1,541,521     $1,305,555     $1,220,629      $1,173,967     $1,034,977
                                               ==========     ==========     ==========      ==========     ==========




        The following table sets forth, for the periods indicated, the approximate contractual maturity by type of the
loan portfolio of the Company:

                                                          Loan Maturity Schedule
                                                          ----------------------

                                     December 31, 1999                            December 31, 1998
                            --------------------------------------       ---------------------------------------
                                      Maturity Range                               Maturity Range
                                      --------------                               --------------
                                      After One                                    After One
                             Within    Through   After Five               Within    Through  After Five
                            One Year  Five Years   Years      Total      One Year  Five Years   Years      Total
                            --------  ----------   -----      -----      --------  ----------   -----      -----
                                                                (in thousands)

Commercial, industrial and
  other                       93,968   $ 92,985  $ 27,088  $  214,041    $111,743   $ 97,029  $ 15,914  $  224,686
Real estate - construction    96,918     30,979     8,282     136,179      52,515     16,786     4,488      73,789
All other loans              366,084    619,399   222,763   1,208,228     351,366    457,742   222,701   1,031,809
                             -------    -------   -------   ---------     -------    -------   -------   ---------

Total loans                 $556,970   $743,363  $258,103  $1,558,436    $515,624   $571,557  $243,103  $1,330,284
                            ========   ========  ========  ==========    ========   ========  ========  ==========

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        The sensitivity to interest rate changes of that portion of the Company's loan portfolio that matures
after one year is shown below:

                                           Loan Sensitivity to Changes in Interest Rates
                                           ---------------------------------------------

                                                            December 31,
                                                            ------------
                                                        1999         1998
                                                        ----         ----
                                                          (in thousands)
Commercial, industrial, and real estate construction
  maturing after one year:
    Fixed rate                                       $  146,724    $  113,023
    Floating rate                                        12,610        21,194
Other loans maturing after one year:
    Fixed rate                                          795,859       648,566
    Floating rate                                        46,273        31,877
                                                         ------        ------

Total                                                $1,001,466    $  814,660
                                                     ==========    ==========


Nonperforming Assets:

        The following table sets forth non-performing assets by type for the periods indicated, consisting of
non-accrual loans, restructured loans and  real estate owned.  Loans past due 90 days or more and still accruing
are also disclosed.

                                                                    December 31,
                                           -------------------------------------------------------------------
                                                     1999       1998         1997        1996       1995
                                                     ----       ----         ----        ----       ----
                                                               (Amounts in thousands)
Non-accrual loans:
  Real estate                                     $ 5,129    $ 2,459      $ 2,869     $   753     $ 2,406
  Commercial, industrial and other                  1,236      1,023          650         169       1,144
  Consumer, credit card and other
     revolving credit                                 536      1,120          378       1,298       1,176
  Lease financing                                     ---        ---            1         ---         ---
  Depository institutions                             ---        ---          ---         ---         ---
  Political subdivisions                              ---        ---          ---         ---         ---
Restructured loans                                    152      1,380        1,134         685         611
                                                      ---      -----        -----         ---         ---
Total non-performing loans                          7,053      5,982        5,032       2,905       5,337
Acquired real estate owned                                       ---          435         147         140
Real estate owned and repossessions                 1,616      2,246        1,923       1,728         946
                                                    -----      -----        -----       -----         ---
Total non-performing assets                       $ 8,669    $ 8,228      $ 7,390     $ 4,780     $ 6,423
                                                  =======    =======      =======     =======     =======

Loans 90+ days past due and still accruing        $ 4,442    $ 2,907      $ 5,423     $ 8,361     $ 4,089
                                                  =======    =======      =======     =======     =======
Ratios (%):
  Non-performing loans to net loans                  0.46       0.46         0.41        0.25        0.52
  Non-performing assets to net loans and
    real estate owned                                0.56       0.63         0.61        0.41        0.62
  Non-performing loans to average net loans          0.49       0.48         0.42        0.27        0.53
  Allowance for loan losses to non-performing
   Loans                                           364.56     364.43       417.33      681.58      325.86

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      The amount of interest that would have been recorded on non-accrual loans had the loans not been classified as "non-accrual" was $462,000, $424,000, $220,000, $463,000 and $340,000 for the years ended December 31, 1999, 1998, 1997, 1996 and 1995, respectively.

      Interest actually received on non-accrual loans was not material. The amount of interest recorded on restructured loans did not differ significantly from the interest that would have been recorded under the original terms of those loans.

Analysis of Allowance for Loan Losses:

      The allowance for loan losses is a valuation account available to absorb losses on loans. All losses are charged to the allowance for loan losses when the loss actually occurs or when a determination is made that a loss is likely to occur; recoveries are credited to the allowance for loan losses at the time of receipt. Periodically during the year management estimates the probable level of future losses to determine whether the allowance is adequate to absorb reasonably foreseeable anticipated losses in the existing portfolio based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay and the estimated value of any underlying collateral and current economic conditions. All commercial loans in lending relationships with an aggregate balance of $250,000 or more are risk rated and evaluated on an individual basis, as well as, all consumer and mortgage real estate loans with a balance of $100,000 or more. All consumer and mortgage real estate loans under $100,000 are risk rated as pools of homogeneous loans and classified according to past due status. Commercial loans are reviewed for impairment at the time a loans is no longer current or at the time management is made aware of a degradation in a borrower's financial status or a deficiency in collateral. Loss factors recommended by the Banks' regulators are applied to loans graded by standard loan classifications in determining a general allowance. Unclassified loans are categorized and reserved for at the greater of a five-year average net charge-off ratio or a minimum threshold stated as a percentage of loans outstanding. The allowance for loan loss stated as a percentage of period end loans, used in conjunction with the evaluation of current and anticipated economic conditions, composition of the Company's present loans portfolio, and trends in both delinquencies and non-accruals, is a measurement standard utilized by management in determining the adequacy of the allowance. The unallocated portion of the allowance for loan losses is available to compensate for the uncertainties in estimating the potential losses.

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          The following table sets forth, for the periods indicated, average net loans outstanding, allowance for loan losses,
amounts charged-off and recoveries of loans previously charged-off:

                                                          At and For The Years Ended December 31,
                                                -----------------------------------------------------------
                                                   1999       1998         1997        1996        1995
                                                   ----       ----         ----        ----        ----
                                                                      (in thousands)

Net loans outstanding at end of period          $1,541,521 $1,305,555   $1,220,629  $1,173,967  $1,034,977
                                                ========== ==========   ==========  ==========  ==========

Average net loans outstanding                   $1,452,305 $1,243,617   $1,201,381  $1,083,165  $1,000,907
                                                ========== ==========   ==========  ==========  ==========

Balance of allowance for loan losses
  at beginning of period                        $   21,800 $   21,000   $   19,800  $   17,391  $   15,372
Loans charged-off:
  Real estate                                           85         26           22          73         210
  Commercial                                         3,112      1,076          997         975         636
  Consumer, credit cards and other
    revolving credit                                 6,769      6,008        7,145       5,417       4,524
  Lease financing                                        5         20           49           1          13
  Depository institutions                              ---        ---          ---         ---         ---
  Political subdivisions                               ---        ---          ---         ---         ---
                                                     -----      -----        -----       -----       -----
  Total charge-offs                                  9,971      7,130        8,213       6,466       5,383
                                                     -----      -----        -----       -----       -----
Recoveries of loans previously
  charged-off:
  Real estate                                            5          5            5         186          15
  Commercial                                           809        540          646         937         971
  Consumer, credit cards and other
    revolving credit                                 1,669      1,156        1,529         945         839
  Lease financing                                        1        ---            1         ---           5
  Depository institutions                              ---        ---          ---         ---         ---
  Political subdivisions                               ---        ---          ---         ---         ---
                                                     -----      -----        -----       -----       -----
  Total recoveries                                   2,484      1,701        2,181       2,068       1,830
                                                     -----      -----        -----       -----       -----
  Net charge-offs                                    7,487      5,429        6,032       4,398       3,553
  Provision for loan losses                          7,585      6,229        6,399       6,153       4,425
  Balance acquired through acquisition               3,815        ---          833         654       1,147
                                                     -----      -----          ---         ---       -----
  Balance of allowance for loan losses
    at end of period                            $   25,713 $   21,800   $   21,000  $   19,800  $   17,391
                                                ========== ==========   ==========  ==========  ==========


        The following table sets forth, for the periods indicated, certain ratios related to the Company's
charge-offs, allowance for loan losses and outstanding loans:
                                                                At and For The Years Ended December 31,
                                                     ----------------------------------------------------------
                                                            1999      1998      1997       1996      1995
                                                            ----      ----      ----       ----      ----
Ratios (%):
  Net charge-offs to average net loans                      0.52      0.44      0.50       0.41      0.35
  Net charge-offs to period-end net loans                   0.49      0.42      0.49       0.37      0.34
  Allowance for loan losses to average net loans            1.77      1.75      1.75       1.83      1.74
  Allowance for loan losses to period-end net loans         1.67      1.67      1.72       1.69      1.68
  Net charge-offs to loan loss allowance                   29.12     24.90     28.72      22.21     20.43
  Net charge-offs to loan loss provision                   98.71     87.16     94.26      71.47     80.29

      An allocation of the loan loss allowance by major loan category is set forth in the following table. Except for an increase in the outstanding loan portfolio balance, there were no relevant variations in loan concentrations, quality or terms. The allocation is not necessarily indicative of the category of future losses, and the full allowance at December 31, 1999 is available to absorb losses occurring in any category of loans.

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                                                                    December 31,
                       -----------------------------------------------------------------------------------------------------
                              1999                1998                 1997                 1996                1995
                       -----------------   -----------------    -----------------     --------------     -------------------
                       Allowance   % of    Allowance   % of     Allowance    % of     Allowance % of     Allowance     % of
                          for      Loans     for       Loans      for       Loans      for      Loans      for        Loans
                         Loan    to Total    Loan    to Total     Loan    to Total    Loan     to Total    Loan      to Total
                        Losses     Loans    Losses     Loans     Losses     Loans     Losses    Loans     Losses      Loans
                        ------     -----    ------     -----     ------     -----     ------    -----     ------      -----
                                                              (amounts in thousands)

Real estate            $ 4,300    53.68    $ 2,500     36.26    $ 2,500     38.30    $ 3,000   38.87    $ 2,000       39.08
Commercial, industrial
 `and other              7,900    16.71      7,000     19.78      5,900     16.91      5,750   16.44      5,250       19.32
Consumer                10,200    26.99      9,200     40.90      9,300     41.22      8,250   41.25      7,500       38.58
Credit card              1,000     2.62      1,000      3.06      1,200      3.57        800    3.44        500        3.02
Unallocated              2,353      ---      2,100       ---      2,100       ---      2,000     ---      2,141         ---
                         -----    -----      -----     -----      -----     -----      -----   -----      -----       -----

                       $25,753   100.00    $21,800    100.00    $21,000    100.00    $19,800  100.00     17,391      100.00
                       =======   ======    =======    ======    =======    ======    =======  ======     ======      ======


Depposits and Other Debt Instruments:

        The following table sets forth the distribution of the average deposit accounts for the periods
indicated and the weighted average interest rate paid on each category of deposits:

                                               1999                              1998                             1997
                                  ------------------------------    ------------------------------    -----------------------------
                                             Percent                           Percent                          Percent
                                  Average      of                   Average      of                   Average      of
                                  Balance    Deposits   Rate (%)    Balance    Deposits   Rate (%)    Balance   Deposits   Rate (%)
                                  -------    --------   --------    -------    --------   --------    -------   --------   --------
                                                                     (amounts in thousands)


 Non-interest bearing accounts $  562,419     22.45       ---    $  493,218     22.08       ---    $  453,218     22.28       ---
 NOW accounts                     402,185     16.05      2.91       323,017     14.46      3.09       306,120     15.05      2.52
 Money market and other
  savings accounts                620,076     24.75      3.04       526,280     23.56      3.16       440,545     21.66      2.95
 Time deposits                    920,718     36.75      5.02       891,322     39.90      5.37       834,147     41.01      5.45
                                  -------     -----                 -------     -----                 -------     -----

                               $2,505,398    100.00               $2,233,837    100.00             $2,034,030    100.00
                               ==========    ======               ==========    ======             ==========    ======

        The Banks traditionally price their deposits to position themselves competitively with the local
market.  The Banks' policy is not to accept brokered deposits.

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       Time certificates of deposit of $100,000 and greater at December 31, 1999 had maturities as follows:
                                                                  December 31, 1999
                                                                   (in thousands)

Three months or less                                                 $ 87,681
Over three through six months                                          35,713
Over six months through one year                                       58,987
Over one year                                                          71,566
                                                                       ------
Total                                                                $253,947
                                                                     ========

Short-Term Borrowings:

        The following table sets forth certain information concerning the Company's short-term borrowings, which
consist of federal funds purchased and Federal Home Loan Bank (“FHLB”) advances as well as securities sold under
agreements to repurchase.

                                                                                    Years Ended December 31,
                                                                            -----------------------------------------
                                                                                1999           1998           1997
                                                                                ----           ----           ----
                                                                                     (amounts in thousands)
Federal funds purchased and FHLB advances:
  Amount outstanding at period-end                                           $ 50,000       $    ---       $    ---
  Weighted average interest at period-end                                       5.85%           ---%           ---%
  Maximum amount at any month-end during period                                98,000       $ 53,850       $  5,875
  Average amount outstanding during period                                     28,275       $  3,773       $  2,304
  Weighted average interest rate during period                                  5.07%          4.74%          4.64%

Securities sold under agreements to repurchase:
  Amount outstanding at period-end                                          $ 213,773       $140,207       $170,534
  Weighted average interest at period-end                                       5.89%          3.80%          4.61%
  Maximum amount at any month end during-period                               213,773       $182,062       $172,827
  Average amount outstanding during period                                    136,255       $152,426       $118,855
  Weighted average interest rate during period                                  4.02%          4.62%          4.44%

Liquidity:

      Liquidity represents an institution's ability to provide funds to satisfy demands from depositors, borrowers and other commitments by either converting assets into cash or accessing new or existing sources of incremental funds. The principal sources of funds that provide liquidity are customer deposits, payments of interest and principal on loans, maturities in and sales of investment securities, earnings and borrowings. At December 31, 1999, cash and due from banks and securities available-for-sale were in excess of 26.3% of total deposits.

      The Company depends upon the dividends paid to it from the Banks as a principal source of funds for its debt service and dividend requirements. At December 31, 1999, the Banks had approximately $110 million available for dividends to the Company.

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Capital Resources:

        Risk-based and leverage capital ratios for the Company and the Banks for the periods indicated are shown
in the following table:

                                                           December 31,
                       --------------------------------------------------------------------------------------
                                    Risk-Based Capital Ratios                          Tier 1 Leverage
                       --------------------------------------------------------
                              Total                           Tier 1                         Ratio
                       ----------------------          ------------------------        ----------------------
                        1999           1998             1999          1998              1999           1998
                        ----           ----             ----          ----              ----           ----

Hancock Bank MS        17.62%         17.44%           16.37%        16.19%             9.71%          8.83%
Hancock Bank LA        15.77          19.46            14.52         18.21              9.34          10.46
Company                14.47          17.41            13.85         16.88              9.50           9.69

      Risk-based capital requirements are intended to make regulatory capital more sensitive to risk elements of the Company. Currently, the Company is required to maintain a minimum risk-based capital ratio of 8.0%, with not less than 4.0% in Tier 1 capital. In addition, the Company must maintain a minimum Tier 1 Leverage ratio (Tier 1 capital to total assets) of at least 3.0% based upon the regulator's latest composite rating of the institution.

Impact of Inflation:

      The Company's non-interest income and expenses can be affected by increasing rates of inflation; however, unlike most industrial companies, the assets and liabilities of financial institutions such as the Banks are primarily monetary in nature. Interest rates, therefore, have a more significant impact on the Banks' performance than the effect of general levels of inflation on the price of goods and services.

Forward Looking Statements

      Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about a company's anticipated future financial performance. This act provides a safe harbor for such disclosure which protects the companies from unwarranted litigation if actual results are different from management expectations. In addition to historical information, this report contains forward-looking statements and information which are based on management's beliefs, plans, expectations and assumptions and on information currently available to management. Forward-looking statements and information presented reflects management's views and estimates of future economic circumstances, industry conditions, Company performance and financial

38 of 49

results. The words “may”, “should”, “expect”, “anticipate”, “intend”, “plan”, “continue”, “believe”, “seek”, “estimate” and similar expressions used in this report that do not relate to historical facts and intended to identify forward-looking statements. These statements appear in a number of places in this report, including, but not limited to, statements found in Item 1 “Business” and in Item 7 “Management’s Discussion and Analysis”. All phases of the Company’s operations are subject to a number of risks and uncertainties. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in the report, including, without limitation, the portions referenced above, and the uncertainties set forth from time to time in the Company’s other public reports and filings and public statements, many of which are beyond the control of the Company, and any of which, or a combination of which, could materially affect the results of the Company’s operations and whether forward-looking statements made by the Company ultimately prove accurate.

ITEM 2 - PROPERTIES

     The Company's main offices are located at One Hancock Plaza, Gulfport, Mississippi. The building has fourteen stories, of which seven are utilized by the Company. The remaining seven stories are presently leased to outside parties. The building had been leased from the City of Gulfport in connection with an urban development revenue bond issue. The bonds matured and were paid in full during 1997. Hancock Bank MS, however, effectively has had ownership of the building since, under the terms of the bond documents, title to the facility reverts to Hancock Bank MS when all outstanding bonds have been paid. For this reason, the Company has historically carried the building as an asset and the bonds as a long term payable on its balance sheet. Upon the filing of certain documents, ownership will legally transfer to Hancock Bank MS.

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Title to the following banking offices in Mississippi and Louisiana is owned in fee (number of locations shown in parenthesis):

        Albany, LA               (1)       Independence, LA         (1)
        Alexandria, LA           (2)       Long Beach, MS           (2)
        Angie, LA                (1)       Loranger, LA             (1)
        Baker, LA                (1)       Lyman, MS                (1)
        Baton Rouge, LA         (13)       Mamou, LA                (1)
        Bay St. Louis, MS        (2)       Mandeville, LA           (1)
        Biloxi, MS               (3)       Moss Point, MS           (1)
        Bogalusa, LA             (1)       Mt. Hermon, LA           (1)
        Boyce, LA                (1)       Oakdale, LA              (1)
        Bunkie, LA               (1)       Ocean Springs, MS        (2)
        Denham Springs, LA       (3)       Pascagoula, MS           (4)
        D'Iberville, MS          (1)       Pass Christian, MS       (1)
        Escatawpa, MS            (1)       Picayune, MS             (2)
        Eunice, LA               (2)       Pineville, LA            (1)
        Franklinton, LA          (1)       Poplarville, MS          (1)
        Gautier, MS              (1)       St. Francisville, LA     (1)
        Glenmora, LA             (1)       Ville Platte, LA         (1)
        Gulfport, MS             (5)       Vancleave, MS            (1)
        Hineston, LA             (1)       Walker, LA               (1)
        Hammond, LA              (2)       Waveland, MS             (1)


        The following banking offices in Mississippi and Louisiana are leased under agreements with unexpired
terms of from four to forty-nine years including renewal options (number of locations shown in parenthesis):

        Baton Rouge, LA          (4)       Opelousas, LA            (1)
        Bay St. Louis, MS        (3)       Pascagoula, MS           (1)
        Biloxi, MS               (1)       Picayune, MS             (2)
        Diamondhead, MS          (1)       Ponchatoula, LA          (1)
        Gulfport, MS             (4)       Saucier, MS              (1)
        Hammond, LA              (1)       Slidell, LA              (1)
        Mandeville, LA           (1)       Springfield, LA          (1)
         Ville Platte, LA        (1)

In addition to the above, Hancock Bank MS owns land and other properties acquired through foreclosures of loan collateral. The major item is approximately 3,700 acres of timber land in Hancock County, Mississippi, which Hancock Bank MS acquired by foreclosure in the 1930's.

ITEM 3 - LEGAL PROCEEDINGS

      The Company is party to various legal proceedings arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, all such matters are adequately covered by insurance or, if not so covered, are not expected to have a material adverse effect on the financial statements of the Company.

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ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the quarter ended December 31, 1999.

PART II

ITEM 5 - MARKET FOR THE REGISTRANT’S COMMON STOCK

AND RELATED STOCKHOLDER MATTERS

     The information under the caption "Market Information" on page 9 of the Company's 1999 Annual Report to Stockholders is incorporated herein by reference.

ITEM 6 - SELECTED FINANCIAL DATA

      The information under the caption "Consolidated Summary of Selected Financial Information" on Page 7 of the Company's 1999 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on Pages 33 and 34 of the Company's 1999 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information under the caption "Quantitative and Qualitative Disclosures About Market Risk" on Pages 34 through 36 of the Company's 1999 Annual Report to Stockholders is incorporated herein by reference.

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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following consolidated financial statements of the Company and subsidiaries, and the independent auditors' report, appearing on Pages 14 through 32 of the Company's 1999 Annual Report to Stockholders is incorporated herein by reference:

        Consolidated Statements of Earnings on Page 15
        Consolidated Statements of Stockholders' Equity on Page 16
        Consolidated Statements of Comprehensive Earnings on Page 16
        Consolidated Statements of Cash Flows on Page 17
        Notes to Consolidated Financial Statements on Pages 18 through 31
        Independent Auditors' Report on Page 32

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

      There has been no change in the two most recent fiscal years nor has there been any disagreements with the Company's independent accountants and auditors on any matter of accounting principles or practices or financial statement disclosure.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     For information concerning directors who are not also executive officers of the registrant, see "Election of Directors" (Pages 3-7) in the Proxy Statement for the Annual Meeting of Shareholders held February 24, 2000, which was filed by the Registrant in definitive form with the Commission on January 31, 2000 and is incorporated herein by reference.

      Information concerning executive officers of the registrant is listed below.

Leo W. Seal, Jr.

      Director of the Company since 1984. President, Hancock Bank, Gulfport, Mississippi since 1963; President and Chief Executive Officer, Hancock Holding Company, since 1984; Advisory Director, Hancock Bank of Louisiana since 1993. Mr. Seal was employed by Hancock Bank in 1947. He was elected to the Board of Directors of Hancock Bank in 1961 and named President in 1963. In 1977, he was named President and Chief Executive Officer of Hancock Bank.

George A. Schloegel

      Director of Company since 1984. President, Hancock Bank, Gulfport, Mississipi, since 1990, Vice Chairman of the Board of Hancock Holding Company since 1984; Director of Hancock Bank of Louisiana, since 1990. Director of Mississippi Power Company, Gulfport, Mississippi . Mr. Schloegel was employed part-time with Hancock Bank from 1956-1959 and began full-time employment in 1962. He served in various capacities until being named President in 1990.

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A. Hartie Spence

      President, Hancock Bank of Louisiana since 1997, Chairman of the Board, Hancock Bank of Louisiana 1996. Prior to that Mr. Spence served as President, Calcasieu Marine National Bank, Calcasieu, Louisiana from 1987 to 1996.

Charles A. Webb, Jr.

      Executive Vice President and Secretary, Hancock Holding Company since 1992; Director Hancock Bank since 1995; Executive Vice President, Hancock Bank since 1977; Director, Hancock Bank of Louisiana since 1990. Mr. Webb was employed by Hancock Bank in 1948. He served as Vice President and Secretary of the Company from 1984 until 1992.

James R. Ginn

      Executive Vice President and Mississippi Region Head, Hancock Bank since 1996. Mr. Ginn joined Hancock Bank in 1962, and has served in the capacities of Assistant Cashier, Branch Officer and Division Coordinator.

Robert E. Easterly

      Executive Vice President and Chief Operating Officer, Hancock Bank of Louisiana since 1995; President and Chief Executive Officer, First National Bakn of Denham Springs from 1981-1996; Chairman of the Board, First National Bank of Denham Springs from 1993-1996; Director, Hancock Bank since 1995.

William T. Williams

      Executive Vice President and Chief Credit Officer, Hancock Holding Company since 1996. Prior to Hancock, Mr. Williams was Executive Vice President and Senior Commercial Loan Officer of National Bank of Commerce, Memphis, TN April, 1993 - August 1996.

Carl J. Chaney

      Senior Vice President and Chief Financial Officer, Hancock Holding Company since 1998. Prior to Mr. Chaney joining Hancock, he was Director and Shareholder of the Law Firm, Watkins Ludlam Winter & Stennis, P.A., Jackson Mississippi from 1995 to 1998, where he specialized in Investment Banking and Merger and Acquisitions in the Banking Industry.

John M. Hairston

      Senior Vice President and Chief Operating Officer, since 1997; Senior Operations Officer, 1994-1996, Hancock Holding Company; Manager, Financial Services Consulting, a Division of Anderson Consulting, headquartered in Chicago, Illinois.

Richard T. Hill

      Senior Vice President and Louisiana Retail Banking Executive, Hancock Bank of Louisiana, since June 1998; Executive Vice President and Retail Banking Executive, City National Bank (a subsidiary of First Commerce Corporation), November 1993 -June 1998.

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Clifton J. Saik

      Senior Vice President and Director, Trust and Financial Services Group, Hancock Bank since July 1998. Prior to coming to Hancock Bank, Mr. Saik served in the following capacities at First Commerce Corporation, New Orleans, Louisiana: Executive Vice President and Director, Card Services; CEO, Marquis Insurance Agency, L.L.C.; and Member, Marquis Investments, L.L.C. Management Committee, June 1997 - June 1998; Executive Vice President and Director, Trust and Retail Brokerage Services Group, Senior Vice President and Director, Trust Group; October 1994 to June 1997; Senior Vice President and Senior Trust Officer, October 1992 to October 1994.

Barbara P. Atchley

      Vice President and Corporate Director Human Resources, since June 1997. Prior to Mrs. Atchley's employment with Hancock, she served as Director of Human Resources for Provident Life and Accident, Chattanooga, Tenneessee, 1994 - 1997.

Robert G. Chatham

      Vice President and Auditor, Hancock Holding Company since 1995. Mr. Chatham was employed by Hancock Bank in 1979 as staff auditor, and served in various auditing capacities for the Company before being named as Bank Auditor in 1988.

ITEM 11 - EXECUTIVE COMPENSATION

      For information concerning this item see "Executive Compensation" (Pages 8-15) in the Proxy Statement for the Annual Meeting of Shareholders held February 24, 2000, which was filed by the Registrant in definitive form with the Commission on January 31, 2000 and is incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     For information concerning this item see "Security Ownership of Certain Beneficial Owners" (Pages 6 and 7) and "Security Ownership of Management" (Page 7) in the Proxy Statement for the Annual Meeting of Shareholders held February 24, 2000, which was filed by the Registrant in definitive form with the Commission on January 31, 2000 and is incorporated herein by reference.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     For information concerning this item see "Certain Transactions and Relationships" (Page-15) in the Proxy Statement for the Annual Meeting of Shareholders held February 24, 2000, which was filed by the Registrant in definitive form with the Commission on January 31, 2000 and is incorporated herein by reference.

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PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

Hancock Holding Company and Consolidated Subsidiaries
(a) 1. and 2. Consolidated Financial Statements:

        The following have been incorporated herein from the Company's 1999 Annual Report to Stockholders and are
incorporated herein by reference:

        - Independent Auditors' Report
        - Consolidated Balance Sheets as of December 31, 1999 and 1998
        - Consolidated Statements of Earnings for the three years ended December 31, 1999
        - Consolidated Statements of Stockholders' Equity for the three years ended December 31, 1999
        - Consolidated Statements of Comprehensive Earnings for the three years ended December 31, 1999
        - Consolidated Statements of Cash Flows for the three years ended December 31, 1999
        - Notes to Consolidated Financial Statements for the three years ended December 31, 1999

        All other financial statements and schedules are omitted as the required information is inapplicable or
the required information is presented in the consolidated financial statements or related notes.

(a) 3. Exhibits:

   (2.1)       Agreement and Plan of Merger dated May 30, 1985 among Hancock Holding Company, Hancock Bank and
               Pascagoula-Moss Point Bank (filed as Exhibit 2 to the Registrant's Form 8-K dated June 6, 1985 and
               incorporated herein by reference).

   (2.2)       Amendment dated July 9, 1985 to Agreement and Plan of Merger dated
               May 30, 1985 among Hancock Holding Company, Hancock Bank and Pascagoula-Moss Point Bank (filed as
               Exhibit 19 to Registrant's Form 10-Q for the quarter ended June 30, 1985 and incorporated herein
               by reference).

   (2.3)       Stock Purchase Agreement dated February 12, 1990 among Hancock Holding Company, Metropolitan
               Corporation and Metropolitan National Bank (filed as Exhibit 2.3 to Registrant's Form 10-K for the
               year ended December 31, 1989 and incorporated herein by reference).

   (2.4)       Modified Purchase and Assumption Agreement dated August 2, 1990, among Hancock Bank of Louisiana
               and the Federal Deposit Insurance Corporation, receiver of American Bank and Trust Company of
               Baton Rouge, Louisiana (filed as Exhibit 2.1 to the Registrant's Form 10-Q for the quarter ended
               June 30, 1990 and incorporated herein by reference).

    (2.5)      Agreement and Plan of Reorganization dated November 30, 1993 among Hancock Holding Company,
               Hancock Bank of Louisiana and First State Bank and Trust Company of East Baton Rouge Parish,
               Baker, Louisiana (filed as Exhibit 2.5 to the Registrant's Form 10-K dated December 31, 1993).

   (2.6)       Agreement and Plan of Reorganization dated July 6, 1994 among Hancock Holding Company and
               Washington Bancorp, Franklinton, Louisiana (filed as Exhibit 2 to the Registrant's Form S-4,
               Registration Number 33-56505, dated November 16, 1994).

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   (2.7)       Agreement and Plan of Reorganization dated August 20, 1994 among Hancock Holding Company and First
               Denham Bancshares, Inc., Denham Springs, Louisiana (filed as Exhibit 2 to the Registrant's Form
               S-4, Registration Number 33-56285, dated November 2, 1994).

   (2.8)       Agreement and Plan of Reorganization dated June 19, 1996 among Hancock Holding Company, Hancock
               Bank of Louisiana, Community Bancshares, Inc. and Community State Bank, Hammond Louisiana (filed
               as Exhibit 2 to the Registrant's Form S-4, Registration Number 333-11873, dated September 12,
               1996).

   (2.9)       Agreement and Plan of Reorganization dated July 31, 1997 among Hancock Holding Company, Hancock
               Bank of Louisiana and Southeast National Bank, Hammond, Louisiana (filed as Exhibit 2 to the
               Registrant's Form S-4, Registration Number 333-14223, dated October 16, 1996).

  (2.10)       Agreement and Plan of Reorganization dated February 28, 1997 among Hancock Holding Company,
               Hancock Bank of Louisiana and Commerce Corporation, St. Francisville, Louisiana (filed as Exhibit
               2 to the Registrant's Form S-4, Registration Number 323-26577, dated May 6, 1997).

  (2.11)       Amended and Restated Agreement and Plan of Reorganization dated October 15, 1998 among Hancock
               Holding Company, Hancock Bank of Louisiana and American Security Bancsharesof Ville Platte, Inc.,
               Ville Platte, Louisiana (filed as Exhibit 2 to the Registrant's Form S-4, Registration Number
               333-67181, dated November 12, 1998).

   (3.1)       Amended and Restated Articles of Incorporation dated November 8, 1990 (filed as Exhibit 3.1 to the
               Registrant's Form 10-K for the year ended December 31, 1990 and incorporated herein by reference).

   (3.2)       Amended and Restated Bylaws dated November 8, 1990 (filed as Exhibit 3.2 to the Registrant's Form
               10-K for the year ended December 31, 1990 and incorporated herein by reference).

   (3.3)       Articles of Amendment to the Articles of Incorporation of Hancock Holding Company, dated October
               16, 1991 (filed as Exhibit 4.1 to the Registrant's Form 10-Q for the quarter ended September 30,
               1991).

   (3.4)       Articles of Correction, filed with Mississippi Secretary of State on November 15, 1991 (filed as
               Exhibit 4.2 to the Registrant's Form
               10-Q for the quarter ended September 30, 1991).

   (3.5)       Articles of Amendment to the Articles of Incorporation of Hancock Holding Company, adopted
               February 13, 1992 (filed as Exhibit 3.5 to the Registrant's Form 10-K for the year ended December
               31, 1992 and incorporated herein by reference).

   (3.6)       Articles of Correction, filed with Mississippi Secretary of State on March 2, 1992 (filed as
               Exhibit 3.6 to the Registrant's Form 10-K for the year ended December 31, 1992 and incorporated
               herein by reference).

   (3.7)       Articles of Amendment to the Articles of Incorporation adopted February 20, 1997 (filed as Exhibit
               3.7 to the Registrant's Form 10-K for the year ended December 31, 1996 and incorporated herein by
               reference).

   (4.1)       Specimen stock certificate (reflecting change in par value from $10.00 to $3.33, effective March
               6, 1989) (filed as Exhibit 4.1 to the Registrant's Form 10-Q for the quarter ended March 31, 1989
               and incorporated herein by reference).

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   (4.2)       By executing this Form 10-K, the Registrant hereby agrees to deliver to the Commission upon
               request copies of instruments defining the rights of holders of long-term debt of the Registrant
               or its consolidated subsidiaries or its unconsolidated subsidiaries for which financial statements
               are required to be filed, where the total amount of such securities authorized thereunder does not
               exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated
               basis.

  (10.1)       1996 Long Term Incentive Plan (filed as Exhibit 10.1 to the Registrant's Form 10-K for the year
               ended December 31, 1995, and incorporated herein by reference).

  (10.2)       Description of Hancock Bank Executive Supplemental Reimbursement Plan, as amended (filed as
               Exhibit 10.2 to the Registrant's Form 10-K for the year ended December 31, 1996, and incorporated
               herein by reference).

  (10.3)       Description of Hancock Bank Automobile Plan (filed as Exhibit 10.3 to the Registrant's Form 10-K
               for the year ended December 31, 1996, and incorporated herein by reference).

  (10.4)       Description of Deferred Compensation Arrangement for Directors (filed as Exhibit 10.4 to the
               Registrant's Form 10-K for the year ended December 31, 1996, and incorporated herein by reference).

  (10.5)       Site Lease Agreement between Hancock Bank and City of Gulfport, Mississippi dated as of March 1,
               1989 (filed as Exhibit 10.4 to the Registrant's Form 10-K for the year ended December 31, 1989 and
               incorporated herein by reference).

  (10.6)       Project Lease Agreement between Hancock Bank and City of Gulfport, Mississippi dated as of March
               1, 1989 (filed as Exhibit 10.5 to the Registrant's Form 10-K for the year ended December 31, 1989
               and incorporated herein by reference).

  (10.7)       Deed of Trust dated as of March 1, 1989 from Hancock Bank to Deposit Guaranty National Bank as
               trustee (filed as Exhibit 10.6 to the Registrant's Form 10-K for the year ended December 31, 1989
               and incorporated herein by reference).

  (10.8)       Trust Indenture between City of Gulfport, Mississippi and Deposit Guaranty National Bank dated as
               of March 1, 1989 (filed as Exhibit 10.7 to the Registrant's Form 10-K for the year ended December
               31, 1989 and incorporated herein by reference).

  (10.9)       Guaranty Agreement dated as of March 1, 1989 from Hancock Bank to Deposit Guaranty National Bank
               as trustee (filed as Exhibit 10.8 to the Registrant's Form 10-K for the year ended December 31,
               1989 and incorporated herein by reference).

 (10.10)       Bond Purchase Agreement dated as of February 23, 1989 among Hancock Bank, J. C. Bradford & Co. and
               City of Gulfport, Mississippi (filed as Exhibit 10.9 to the Registrant's Form 10-K for the year
               ended December 31, 1989 and incorporated herein by reference).

  (13)         Annual Report to Stockholders for year ending December 31, 1999 furnished for the information of
               the Commission only and not deemed "filed" except for those portions which are specifically
               incorporated herein by reference).

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  (21)         Subsidiaries of the Registrant.

                               Jurisdiction              Holder of
Name                         of Incorporation        Outstanding Stock (1)
- ----                         ----------------        ---------------------
Hancock Bank                    Mississippi          Hancock Holding Company
Hancock Bank of Louisiana       Louisiana            Hancock Holding Company
Hancock Bank Securities
  Corporation                   Mississippi          Hancock Bank
Hancock Insurance Agency        Mississippi          Hancock Bank
Hancock Investment Services,
  Inc.                          Mississippi          Hancock Bank
Town Properties, Inc.           Mississippi          Hancock Bank
The Gulfport Building, Inc.
 of Mississippi                 Mississippi          Hancock Bank
Harrison Finance Company        Mississippi          Hancock Bank
Hancock Mortgage Corporation    Mississippi          Hancock Bank and
                                                     Hancock Bank Securities
                                                     Corporation
Harrison Life Insurance         Mississippi          79% owned by Hancock
 Company                                             Bank

   (1)         All are 100% owned except as indicated.

  (23)         Independent Auditors' Consent

  (27)         Financial Data Schedule.

(b) Reports on Form 8-K:
               No reports on Form 8-K were filed during the last quarter of the period covered by this report.

(c):
               The response to this portion of Item 14 is submitted as a separate section of this report.

(d):
               Not applicable.

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               Pursuant to the requirements of Section 13 or 15(d) 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


DATE   March 28, 2000                    /s/ Leo W. Seal, Jr.
       --------------                    --------------------
                                       By Leo W. Seal, Jr., President and
                                          Chief Executive Officer

               Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/ Leo W. Seal, Jr.             President, Chief Executive   March 28, 2000
- -----------------------------    Officer (Principal Executive
 Leo W. Seal, Jr.                Officer) and Director


/s/ Joseph F. Boardman, Jr.     Director,                     March 28, 2000
- -----------------------------   Chairman of the Board
 Joseph F. Boardman, Jr.


/s/ George A. Schloegel         Director,                     March 28, 2000
- -----------------------------   Vice Chairman of the Board
 George A. Schloegel


 /s/ Dr. Homer C. Moody, Jr.     Director,                    March 28, 2000
- -----------------------------    Vice Chairman of the Board
 George A. Schloegel


 /s/ Charles H. Johnson          Director                     March 28, 2000
- -----------------------------
 Charles H. Johnson


 /s/ Victor Mavar                Director                     March 28, 2000
- -----------------------------
 Victor Mavar


 /s/ Carl J. Chaney              Sr. Vice President and       March 28, 2000
- -----------------------------    Chief Financial Officer
 Carl J. Chaney                  (Principal Financial and
                                 Accounting Officer)

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EX-13

                                          HANCOCK HOLDING COMPANY AND SUBSIDIARIES
                                                    FINANCIAL HIGHLIGHTS
(amounts in thousands, except per share data)

                                                                       At and For the Years Ended December 31,
                                                                 --------------------------------------------------
                                                                       1999              1998           % Change
                                                                 --------------    -------------       ------------
Earnings Data:
  Net interest income                                             $   123,713      $     111,917          10.54
  Provision for loan losses                                             7,585              6,229          21.77
  Earnings before income taxes and cumulative
    effect of accounting change                                        46,298             44,237           4.66
  Net earnings                                                         31,710             30,960           2.42

Per Share Data:
  Earnings before cumulative effect of accounting change:
     Basic                                                         $     2.91       $       2.79           4.30
     Diluted                                                             2.91               2.78           4.68
  Net earnings:
     Basic                                                               2.91               2.90           0.34
     Diluted                                                             2.91               2.89           0.69
  Cash dividends paid                                                    1.00               1.00             --
  Book value (period end)                                               28.55              27.29           4.62
  Weighted average number of shares outstanding                        10,887             10,693           1.81
  Number of shares outstanding                                         10,873             10,508           3.47

Balance Sheet Data (period end):
  Securities                                                       $1,148,722         $1,244,369          (7.69)
  Loans, net of unearned income                                     1,541,521          1,305,555          18.07
  Allowance for loan losses                                            25,713             21,800          17.95
  Total assets                                                      2,991,874          2,814,695           6.29
  Total deposits and deposit-related liabilities                    2,611,427          2,514,798           3.84
  Long-term notes                                                       2,714                 --         100.00
  Total stockholders' equity                                          310,427            286,807           8.24

Balance Sheet Data (average):
  Securities                                                       $1,246,800         $1,184,698           5.24
  Loans, net of unearned income                                     1,452,305          1,243,617          16.78
  Allowance for loan losses                                            23,939             21,040          13.78
  Total assets                                                      2,997,493          2,696,107          11.18
  Total deposits and deposit-related liabilities                    2,671,550          2,390,036          11.78
  Long-term notes                                                       2,795                586         376.96
  Total stockholders' equity                                          308,097            289,878           6.29

Performance Ratios (%):
  Return on average assets                                               1.06               1.15          (7.83)
  Return on average assets, excluding
    cumulative effect of accounting change                               1.06               1.11          (4.50)
  Return on average equity                                              10.29              10.68          (3.65)
  Return on average equity, excluding cumulative
    effect of accounting change                                         10.29              10.28           0.10
  Allowance for loan losses to period-end loans                          1.67               1.67             --
  Allowance for loan losses to non-performing loans                    364.56             364.43           0.04
  Net chargeoffs to average loans                                        0.52               0.44          18.18
  Net interest margin (1)                                                4.75               4.67           1.71

Regulatory Capital Ratios (%):                                                                         Requirement
                                                                                                       -----------
  Tier I leveraged                                                        9.50              9.69           3.00
  Tier I risk-based                                                      13.85             16.88           4.00
  Total risk-based                                                       14.47             17.41           8.00

(1) Fully taxable equivalent basis (FTE).

1

                                                     HANCOCK HOLDING COMPANY AND SUBSIDIARIES
                                               CONSOLIDATED SUMMARY OF SELECTED FINANCIAL INFORMATION

  (amounts in thousands, except per share data)
                                                              At and For the Years Ended December 31,
                                             ------------------------------------------------------------------------------
                                                 1999             1998             1997             1996             1995
                                             ------------------------------------------------------------------------------

Interest Income:
  Loans                                        $133,420         $118,502         $115,038         $104,961          $95,213
  Federal funds sold                              1,290            3,090            2,733            5,580            5,820
  Other investments                              72,964           72,067           63,688           58,863           58,083
                                                -------          -------          -------          -------          -------
    Total interest income                       207,674          193,659          181,459          169,404          159,116
                                                -------          -------          -------          -------          -------

Interest Expense:
  Deposits                                       76,810           74,464           66,150           60,625           57,612
  Federal funds purchased, securities sold
    under agreements to repurchase and advances   6,961            7,217            5,383            4,013            3,082
  Bonds, notes and other                            190               61              165              166              468
                                                -------          -------          -------          -------          -------
    Total interest expense                       83,961           81,742           71,698           64,804           61,162
                                                -------          -------          -------          -------          -------
    Net Interest Income                         123,713          111,917          109,761          104,600           97,954
  Provision for loan losses                       7,585            6,229            6,399            6,154            4,425
                                                -------          -------          -------          -------          -------
   Net interest income after provision
    for loan losses                             116,128          105,688          103,362           98,446           93,529
  Non-interest income                            45,612           32,331           32,168           28,421           26,709
  Non-interest expense                          115,442           93,782           87,554           80,094           80,156
                                                -------          -------          -------          -------          -------
   Earnings before income taxes and
     cumulative effect of accounting change      46,298           44,237           47,976           46,773           40,082
  Income taxes                                   14,588           14,428           17,352           15,170           13,065
                                                -------          -------          -------          -------          -------
   Earnings before cumulative effect
     of accounting change                        31,710           29,809           30,624           31,603           27,017
   Cumulative effect of accounting change            --            1,151               --               --               --
                                                -------          -------          -------          -------          -------
    Net Earnings                              $  31,710        $  30,960        $  30,624         $ 31,603        $  27,017
                                                =======          =======          =======          =======          =======

  Weighted average number of shares*:
   Basic                                         10,887           10,693           10,870           10,277           10,181
   Diluted                                       10,902           10,705           10,877           10,277           10,181

Per Common Share*:
  Earnings before cumulative effect
    of accounting change:
    Basic                                        $ 2.91          $  2.79         $   2.82          $  3.08          $  2.65
    Diluted                                        2.91             2.78             2.82             3.08             2.65
  Net earnings:
    Basic                                          2.91             2.90             2.82             3.08             2.65
    Diluted                                        2.91             2.89             2.82             3.08             2.65
  Cash dividends paid                              1.00             1.00             1.00             0.88             0.84

Return on average assets                           1.06%            1.15%            1.25%            1.38%            1.22%
Dividend payout                                   34.36%           34.48%           35.46%           28.57%           31.70%

Balance Sheet Data:
  Total assets                              $ 2,991,874       $2,814,695      $ 2,537,957      $ 2,289,582       $2,234,286
  Total deposits and deposit-related
    liabilities                               2,611,427        2,514,798        2,233,181        2,014,185        1,991,069
  Long-term bonds and notes                       2,714               --            1,279            1,050            2,035
  Stockholders' equity                          310,427          286,807          288,573          261,938          224,179


*  Per common share data is based on the weighted average number of shares after giving retroactive effect for a 15% stock dividend in
   December 1996. Actual cash dividends paid in 1996 and 1995 were $1.00 and $0.96, respectively.

2

HANCOCK HOLDING COMPANY AND SUBSIDIARIES
DESCRIPTION OF BUSINESS

     Hancock Holding Company (the Company) is a bank holding company headquartered in Gulfport, Mississippi with total consolidated assets of approximately $3.0 billion at December 31, 1999. The Company operates a total of 94 banking offices and 134 automated teller machines (ATMs) in the states of Mississippi and Louisiana through two wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi and Hancock Bank of Louisiana, Baton Rouge, Louisiana (the Banks).

     The Banks are community oriented and focus primarily on offering commercial, consumer and mortgage loans in addition to deposit services to individuals and small to middle market businesses in their respective market areas. The Company's operating strategy is to provide its customers with the financial sophistication and breadth of products of a regional bank, while successfully retaining the local appeal and level of service of a community bank.

Summary of Quarterly Operating Results
(in thousands, except per share data)

                                                         1999                                          1998
                                     ------------------------------------------     -------------------------------------------
                                       First      Second     Third      Fourth        First     Second      Third      Fourth
                                     ------------------------------------------     -------------------------------------------

Interest income (1)                  $52,612      $53,105   $53,649    $53,970      $48,589   $ 48,809    $49,863      $50,608
Interest expense                     (21,170)     (20,998)  (20,626)   (21,167)     (19,217)   (20,796)   (21,223)     (20,506)
                                      -------      -------   ------    -------       ------    -------     ------      -------
Net interest income                   31,442       32,107    33,023     32,803       29,372     28,013     28,640       30,102
Provision for loan losses             (1,420)      (1,621)   (1,918)    (2,626)      (1,359)      (929)    (1,203)      (2,738)
Non-interest income                   10,016       10,912    11,762     12,922        7,311      8,287      8,147        8,586
Non-interest expense                 (27,820)     (28,213)  (29,740)   (29,669)     (22,270)   (21,717)   (24,314)     (25,481)
Taxable equivalent adjustment         (1,360)      (1,400)   (1,401)    (1,501)        (846)    (1,032)    (1,124)      (1,208)
                                      -------      -------    ------    -------      -------    -------    -------      -------
  Earnings before income taxes and
    cumulative effect of
    accounting change                 10,858       11,785    11,726     11,929       12,208     12,622     10,146        9,261
Income taxes                          (3,227)      (3,975)   (3,882)    (3,504)      (4,155)    (4,087)    (3,297)      (2,889)
                                      ------       -------   -------    -------      -------    -------    -------      -------
  Earnings before cumulative effect
    of accounting change               7,631        7,810     7,844      8,425        8,053      8,535      6,849        6,372
  Cumulative effect of accounting
    change                                --           --        --         --           --         --         --        1,151
                                      ------       -------   -------    -------      -------    -------    -------      -------
    Net earnings                      $7,631       $7,810    $7,844     $8,425       $8,053     $8,535     $6,849       $7,523
                                      ======       =======   =======    =======      =======    =======    =======      =======

Basic earnings per share:
  Before cumulative effect of
    accounting change               $   0.70     $   0.72 $    0.72  $    0.77     $   0.74   $   0.78   $   0.66     $   0.61
  Net earnings                          0.70         0.72      0.72       0.77         0.74       0.78       0.66         0.72
Diluted earnings per share:
  Before cumulative effect of
    accounting change                   0.70         0.72      0.72       0.77         0.74       0.78       0.65         0.61
  Net earnings                          0.70         0.72      0.72       0.77         0.74       0.78       0.65         0.72

(1) Fully taxable equivalent basis (FTE).

3

Market Information

      The Company's common stock trades on the Nasdaq Stock Market under the symbol "HBHC" and is quoted in publications under "HancHd". The following table sets forth the high and low sale prices of the Company's common stock as reported on the Nasdaq Stock Market. These prices do not reflect retail markups, markdowns or commissions.

                                                                                                         Cash
                                                                 High                 Low              Dividends
                                                               --------------------------------------------------

1999
     1st quarter                                                $ 48.00             $ 41.00              $0.25
     2nd quarter                                                  47.00               42.00               0.25
     3rd quarter                                                  45.00               37.75               0.25
     4th quarter                                                  41.50               37.12               0.25

1998
     1st quarter                                                 $62.75             $ 58.88              $0.25
     2nd quarter                                                  63.50               52.50               0.25
     3rd quarter                                                  55.50               45.25               0.25
     4th quarter                                                  49.50               40.88               0.25

      There were 5,661 holders of record of common stock of the Company at January 3, 2000 and 11,072,770 shares issued. On January 3, 2000, the high and low sale prices of the Company's common stock as reported on the Nasdaq Stock Market were $40.375 and $37.875, respectively. The principal source of funds to the Company to pay cash dividends are the dividends received from the Banks. Consequently, dividends are dependent upon earnings, capital needs, regulatory policies and statutory limitations affecting the Banks. Federal and state banking laws and regulations restrict the amount of dividends and loans a bank may make to its parent company. Dividends paid to the Company by Hancock Bank are subject to approval by the Commissioner of Banking and Consumer Finance of the State of Mississippi. Dividends paid by Hancock Bank of Louisiana are subject to approval by the Commissioner of Financial Institutions for the State of Louisiana. The Company’s management does not expect regulatory restrictions to affect its policy of paying cash dividends. Although no assurance can be given that Hancock Holding Company will continue to declare and pay regular quarterly cash dividends on its common stock, the Company has paid regular cash dividends since 1937.

Acquisitions

     On February 1, 1995, the Company merged Hancock Bank of Louisiana with Washington Bank and Trust Company (Washington), Franklinton, Louisiana. This merger was accounted for using the pooling of interests method and all prior years' financial information has been restated.

     On January 13, 1995, the Company acquired First Denham Bancshares, Inc., Denham Springs, Louisiana, which owned 100% of the stock of First National Bank of Denham Springs (Denham). On November 15, 1996, the Company acquired Community Bancshares, Inc. (Community), Independence, Louisiana, which owned 100% of the stock of Community State Bank. On January 17, 1997, the Company acquired Southeast National Bank (Southeast), Hammond, Louisiana, and on July 15, 1997, the Company acquired Commerce Corporation, Inc. (Commerce), St. Francisville, Louisiana, which owned 100% of the stock of Bank of Commerce and Trust Company. American Security Bancshares of Ville Platte, Inc., Ville Platte, Louisiana (ASB), which owned 100% of the stock of American Security Bank, was acquired by the Company on January 15, 1999. The transactions were accounted for using the purchase method of accounting and the results of operations since acquisition are included in the consolidated statements of earnings. The excess of the purchase price over the value of net tangible assets acquired in each transaction was assigned to goodwill and is being amortized over 15 years.

4

                                                    HANCOCK HOLDING COMPANY AND SUBSIDIARIES
                                                          CONSOLIDATED BALANCE SHEETS


                                                                                  December 31,
                                                                ----------------------------------------------
                                                                      1999                         1998
                                                                -------------------        -------------------
Assets:
 Cash and due from banks                                         $156,738,459               $   161,293,659
 Interest-bearing time deposits with other banks                      100,000                        96,000
 Securities available for sale
   (amortized cost of $660,591,000 and $462,876,000)              639,415,961                   463,120,442
 Securities held to maturity
   (fair value of $498,467,000 and $790,379,000)                  509,306,344                   781,248,857
 Federal funds sold                                                 3,000,000                            --
 Loans                                                          1,558,435,659                 1,330,283,979
   Less:
      Allowance for loan losses                                   (25,712,557)                  (21,800,000)
      Unearned income                                             (16,915,072)                  (24,729,271)
                                                               ---------------              ----------------
         Loans, net                                             1,515,808,030                 1,283,754,708
 Property and equipment, net                                       55,007,662                    44,546,636
 Other real estate                                                  1,616,490                     2,245,711
 Accrued interest receivable                                       23,805,308                    23,798,439
 Goodwill and other intangibles, net                               44,512,562                    26,449,170
 Other assets                                                      42,563,268                    28,141,852
                                                             ----------------              ----------------
   Total Assets                                               $ 2,991,874,084                $2,814,695,474
                                                             ================              ================

Liabilities and Stockholders' Equity:
 Deposits:
   Non-interest bearing demand                                   $527,218,971                  $546,684,623
   Interest-bearing savings, NOW,
     money market and time                                      1,870,434,519                 1,827,905,922
                                                          -------------------          -------------------
     Total deposits                                             2,397,653,490                 2,374,590,545
 Securities sold under agreements to repurchase                   213,773,219                   140,207,246
 Federal Home Loan Bank advance                                    50,000,000                            --
 Other liabilities                                                 17,305,727                    13,090,483
 Long-term notes                                                    2,714,220                            --
                                                          -------------------           -------------------
   Total Liabilities                                            2,681,446,656                 2,527,888,274
 Commitments and contingencies (notes 12 and 13)                           --                            --
 Stockholders' equity:
   Common stock - $3.33 par value per share;
     75,000,000 shares authorized, 11,072,770 shares issued        36,872,324                    36,872,324
 Capital surplus                                                  196,047,463                   200,536,282
 Retained earnings                                                 92,153,278                    71,498,714
 Unrealized (loss) gain on securities available
   for sale, net of deferred taxes                                (13,764,053)                      158,878
 Unearned compensation                                               (808,203)                   (1,009,949)
 Treasury stock, 1,906 shares in 1999 and 402,409
   shares in 1998, at cost                                            (73,381)                  (21,249,049)
                                                          -------------------           -------------------
   Total Stockholders' Equity                                     310,427,428                   286,807,200
                                                          -------------------           -------------------
   Total Liabilities and Stockholders' Equity                  $2,991,874,084                $2,814,695,474
                                                          ===================           ===================

See notes to consolidated financial statements.

5

                                                     HANCOCK HOLDING COMPANY AND SUBSIDIARIES
                                                       CONSOLIDATED STATEMENTS OF EARNINGS

                                                                        Years Ended December 31,
                                                         ---------------------------------------------------

                                                              1999               1998              1997
                                                         ---------------------------------------------------
Interest Income:
 Loans                                                    $133,420,326       $118,502,095     $115,037,735
 U.S. Treasury securities                                   10,059,273         14,469,447       14,732,898
 Obligations of U.S. government agencies                    25,175,384         26,180,328       26,210,546
 Obligations of states and political subdivisions            9,448,205          6,864,952        4,150,309
 Mortgage-backed securities                                 10,044,833          9,799,653        4,415,564
 CMOs                                                       17,091,380         13,631,324        7,072,602
 Federal funds sold                                          1,290,135          3,089,792        2,733,341
 Other investments                                           1,145,199          1,120,961        7,105,941
                                                            ----------        -----------     ------------
   Total interest income                                   207,674,735        193,658,552      181,458,936
                                                            ----------        -----------     ------------
Interest Expense:
 Deposits                                                   76,809,975         74,463,671       66,149,396
 Federal funds purchased, securities sold
   under agreements to repurchase and advances               6,975,740          7,216,677        5,383,358
 Long-term bonds, and other notes                              175,667             61,483          165,449
                                                            ----------        -----------     ------------
   Total interest expense                                   83,961,382         81,741,831       71,698,203
                                                            ----------        -----------     ------------
  Net Interest Income                                      123,713,353        111,916,721      109,760,733
 Provision for loan losses                                   7,585,294          6,228,965        6,399,481
                                                            ----------        -----------     ------------
  Net interest income after provision for loan losses      116,128,059        105,687,756      103,361,252
Non-Interest Income:
 Service charges on deposit accounts                        24,978,788         19,164,074       18,528,677
 Other service charges, commissions and fees                17,739,001         10,161,475        9,775,185
 Securities gains, net                                          66,937            167,139          278,651
 Other                                                       2,827,518          2,838,834        3,586,377
                                                            ----------        -----------     ------------
   Total non-interest income                                45,612,244         32,331,522       32,168,890
                                                            ----------        -----------     ------------
Non-Interest Expense:
 Salaries and employee benefits                             61,595,623         50,832,743       46,472,455
 Net occupancy expense of premises                           7,267,740          5,559,608        4,882,277
 Equipment rentals, depreciation and maintenance             9,538,585          7,707,028        7,259,428
 Amortization of intangibles                                 3,775,255          2,404,914        2,281,666
 Other                                                      33,264,877         27,278,170       26,658,497
                                                            ----------        -----------     ------------
   Total non-interest expense                              115,442,080         93,782,463       87,554,323
                                                            ----------        -----------     ------------
 Earnings before income taxes and cumulative effect
   of accounting change                                     46,298,223         44,236,815       47,975,819
Income taxes                                                14,588,153         14,427,427       17,351,400
                                                            ----------        -----------     ------------
  Earnings before cumulative effect of accounting change    31,710,070         29,809,388       30,624,419
Cumulative effect of accounting change                              --          1,150,811               --
                                                            ----------        -----------     ------------
   Net Earnings                                          $  31,710,070      $  30,960,199     $ 30,624,419
                                                            ==========        ===========     ============

 Basic earnings per common share:
 Before cumulative effect of accounting change               $    2.91         $     2.79       $     2.82
 Cumulative effect of accounting change                             --               0.11               --
                                                            ----------        -----------     ------------
   Net Earnings                                              $    2.91           $   2.90        $    2.82
                                                            ==========        ===========     ============

 Diluted earnings per common share:
 Before cumulative effect of accounting change              $     2.91           $   2.78         $   2.82
 Cumulative effect of accounting change                             --               0.11               --
                                                            ----------        -----------     ------------
   Net Earnings                                             $     2.91          $    2.89        $    2.82
                                                            ==========        ===========     ============

See notes to consolidated financial statements.

6

                                                      HANCOCK HOLDING COMPANY AND SUBSIDIARIES
                                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                           Years Ended December 31, 1999, 1998 and 1997

- -----------------------------------------------------------------------------------------------------------------------------------

                                                                                            Unrealized
                                        Common Stock                                        Gain (Loss)
                               ____________________________                                on Securities
                                      Shares                    Capital        Retained    Available For      Unearned     Treasury
                                      Issued       Amount       Surplus        Earnings     Sale, Net       Compensation    Stock
                               ----------------------------------------------------------------------------------------------------


Balance, January 1, 1997             10,887,302  $36,254,716 $194,499,422    $31,816,568    $(632,761)          $--            $--
Net earnings                                                                  30,624,419
Cash dividends - $1.00 per share                                             (11,039,887)
Change in unrealized gain (loss) on
securities available for sale, net                                                            698,503
Acquisition of Southeast accounted
for as a purchase                       120,900      402,597    3,486,530
Acquisition of Commerce accounted
for as a purchase                        64,568      215,011    2,780,546
Transactions relating to restricted
stock grants, net
                                                                                                           (532,467)
                                      ---------    ---------   ----------     ----------    ---------      --------       ---------
Balance, December 31, 1997           11,072,770   36,872,324  200,766,498     51,401,100       65,742      (532,467)             --
 Net earnings                                                                 30,960,199
Cash dividends - $1.00 per share                                             (10,862,585)
Change in unrealized gain (loss) on
securities available for sale, net                                                             93,136
Transactions relating to restricted
stock grants, net                                                                                          (477,482)
Purchase of treasury stock, net                                  (230,216)                                              (21,249,049)
                                      ---------    ---------   ----------     ----------    ---------      --------       ---------
Balance, December 31, 1998           11,072,770   36,872,324  200,536,282     71,498,714      158,878    (1,009,949)    (21,249,049)
Net earnings                                                                  31,710,070
Cash dividends - $1.00 per share                                             (11,055,506)
Change in unrealized gain (loss) on
securities available for sale, net                                                        (13,922,931)
Transactions relating to restricted
stock grants, net                                                                                           201,746
Issuance of treasury stock, net                                (4,488,819)                                               21,175,668
                                      ---------    ---------   ----------     ----------    ---------      --------       ---------
Balance, December 31, 1999           11,072,770  $36,872,324 $196,047,463   $ 92,153,278 $(13,764,053)    $(808,203)       $(73,381)
                                      =========    =========   ==========     ==========    =========      ========       =========


                                                 HANCOCK HOLDING COMPANY AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS


                                                                         Years Ended December 31,
                                                           ----------------------------------------------------
                                                                1999              1998               1997
                                                           ----------------------------------------------------
Net earnings                                                 $31,710,070        30,960,199        $30,624,419
Other comprehensive earnings (loss):
Unrealized gain (loss) on securities
available for sale, net:
Unrealized holding gains (losses)
     arising during the year                                 (13,916,931)          114,136            879,503
     Less reclassification adjustment for
      gains included in net earnings                              (6,000)          (21,000)          (181,000)
                                                             ------------      ------------       ------------
Total other comprehensive earnings (loss)                    (13,922,931)           93,136            698,503

                                                             ------------      ------------       ------------
Total Comprehensive Earnings                                 $17,787,139       $31,053,335         $31,322,922
                                                             ============      ============       ============

See notes to consolidated financial statements.

7

                                                 HANCOCK HOLDING COMPANY AND SUBSIDIARIES
                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                           Years Ended December 31,
                                                           ---------------------------------------------------
                                                                 1999              1998               1997
                                                           ---------------------------------------------------
Cash Flows from Operating Activities:
   Net earnings                                              $ 31,710,070      $ 30,960,199      $ 30,624,419
   Adjustments to reconcile net earnings to
      net cash provided by operating activities:
      Depreciation and software amortization                    7,693,612         5,188,749         4,705,432
      Provision for loan losse                                  7,585,294         6,228,965         6,399,481
      Provision for deferred income taxes                      (2,039,000)         (435,000)         (395,000)
      Cumulative effect of accounting change
             (before income taxes)                                     --        (1,863,662)               --
      Securities gains, net                                       (66,937)         (167,139)         (278,651)
      Decrease (increase) in interest receivable                1,373,210        (2,821,561)         (282,032)
      Amortization of intangible assets                         3,775,255         2,404,914         2,281,666
      (Decrease) increase in  interest payable                    (52,540)          847,700            14,102
      Other, net                                               (3,730,918)       (6,894,964)        1,140,190

                                                                  --------          ---------       -----------
     Net cash provided by operating activities                 46,248,046        33,448,201        44,209,607
                                                                  --------          ---------       -----------

Cash Flows from Investing Activities:
   Net (increase) decrease in interest-bearing time deposits       (4,000)        1,971,500        (2,056,716)
   Proceeds from maturities of securities held to maturity    350,002,513       225,302,135       261,488,556
   Purchase of securities held to maturity                    (79,243,000)      (99,464,050)     (359,318,934)
   Proceeds from sales and maturities of trading
      and available-for-sale securities                       207,189,122        83,297,803        31,441,417
   Purchase of securities available for sale                 (330,963,660)     (375,620,262)      (97,379,020)
   Net decrease (increase) in federal funds sold                4,825,000        35,500,000       (18,525,000)
   Net increase in loans                                     (135,992,653)      (91,010,541)      (11,363,057)
   Purchase of property, equipment and software, net           (8,688,754       (12,675,267)       (5,206,091)
   Proceeds from sales of other real estate                     1,098,664           802,512         1,737,568
   Net cash received in connection with
      business acquisitions                                    23,927,000                --         2,288,000
                                                                 --------         ---------       -----------
Net cash provided (used) by investing activities               32,150,232      (231,896,170)     (196,893,277)
                                                                 --------         ---------       -----------

Cash Flows from Financing Activities:
   Net (decrease) increase in deposits                       (183,514,994)      311,942,900        75,490,602
   Dividends paid                                             (11,055,506)      (10,862,585)      (11,039,887)
   Purchase of treasury stock, net                            (11,484,087)      (22,857,810)               --
   Repayments of long-term bonds and notes                       (464,864)       (1,279,402)       (1,050,000)
   Net increase (decrease) in federal funds purchased,
      securities sold under agreements to repurchase
      and other temporary fund                                 73,565,973       (30,326,372)       82,924,580

   Proceeds from Federal Home Loan Bank advance                50,000,000                --                --
                                                                 --------         ---------       -----------
Net cash (used) provided by financing activities              (82,953,478)      246,616,731       146,325,295
                                                                 -------          ---------       -----------
Net (decrease) increase in cash and due from banks             (4,555,200)       48,168,762        (6,358,375)
      Cash and due from banks, beginning                      161,293,659       113,124,897       119,483,272
                                                                 --------         ---------       -----------
Cash and due from banks, ending                             $ 156,738,459      $161,293,659      $113,124,897
                                                                 ========         =========       ===========


Supplemental Information
   Income taxes paid                                          $14,839,133      $ 16,460,355       $16,410,052
   Interest paid                                               84,013,922        80,894,131        71,684,101

See notes to consolidated financial statements.

8

HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

     Hancock Holding Company (the Company) is a bank holding company headquartered in Gulfport, Mississippi operating in the states of Mississippi and Louisiana through two wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi and Hancock Bank of Louisiana, Baton Rouge, Louisiana (the Banks). The Banks are community oriented and focus primarily on offering commercial, consumer and mortgage loans and deposit services to individuals and small to middle market businesses in their respective market areas. The Company's operating strategy is to provide its customers with the financial sophistication and breadth of products of a regional bank, while successfully retaining the local appeal and level of service of a community bank.

Summary of Significant Accounting Policies

     The accounting and reporting policies of the Company conform with generally accepted accounting principles and general practices within the banking industry. The following is a summary of the more significant of those policies.

     Consolidation-The consolidated financial statements of the Company include the accounts of the Company, the Banks and other subsidiaries. Significant intercompany transactions and balances have been eliminated in consolidation.

     Comprehensive Income-Comprehensive income includes net earnings and other comprehensive income which, in the case of the Company, includes only unrealized gains and losses on securities available for sale.

     Use of Estimates-In preparing the financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. The determination of the allowance for loan losses is a material estimate that is particularly subject to significant change.

     Cash-For the purpose of presentation in the statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption "Cash and due from banks".

     Securities-Securities have been classified into one of three categories: trading, available-for-sale, or held-to-maturity. Management determines the appropriate classification of debt securities at the time of purchase and reevaluates this classification periodically. Trading account securities are held for resale in anticipation of short-term market movements. Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Securities not classified as held to maturity or trading are classified as available for sale.

     With the exception of securities reclassified from held to maturity to trading and subsequently sold upon adoption of Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS No.133) during 1998, the Company had no trading account securities during the three years ended December 31, 1999.

     Held-to-maturity securities are stated at amortized cost. Available-for-sale securities are stated at fair value with unrealized gains and losses, net of income taxes, reported as a separate component of stockholders' equity until realized.

     The amortized cost of debt securities classified as held to maturity or available for sale is adjusted for amortization of premiums and accretion of discounts to maturity or, in the case of mortgage-backed securities, over the estimated life of the security. Amortization, accretion and accrued interest are included in interest income on securities. Realized gains and losses, and declines in value judged to be other than temporary, are included in net securities gains and losses. Gains and losses on the sale of securities available for sale are determined using the specific-identification method.

     Derivative Instruments-Effective October 1, 1998, the Company adopted SFAS No. 133. The Statement was issued in June 1998 and required the Company to recognize all derivatives as either assets or liabilities in the Company's balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specially designated as a hedge. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. Further, SFAS No. 133 permitted, at the time of implementation, the reclassification of securities currently classified as held to maturity without calling into question the Company's original intent.

     The Company is not currently engaged in any significant activities with derivatives; therefore, management believes that the impact of the adoption of this Statement is not significant. However, at the time of implementation of this Statement, the Company reclassified a portion of its held-to-maturity portfolio to trading securities. The securities that were

9

transferred to trading had an amortized cost of $5,126,000 and unrealized gross gains of $1,864,000 ($1,151,000 net of income taxes) at October 1, 1998. This amount is reported as a cumulative effect of accounting change in the 1998 consolidated statement of earnings. These securities were sold in 1998 subsequent to the transfer.

      Loans-Certain loan origination fees and certain direct origination costs are deferred and recognized as an adjustment to the yield on the related loan. Interest on loans is recorded to income as earned. Where doubt exists as to collectibility of a loan, the accrual of interest is discontinued, all unpaid accrued interest is reversed and payments subsequently received are applied first to principal. Interest income is recorded after principal has been satisfied and as payments are received.

     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 include troubled debt restructurings, and performing and non-performing major loans for which full payment of principal or interest is not expected. Non-major homogenous loans, which are evaluated on an overall basis, generally include all loans under $500,000. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price or the fair value of its collateral. If the recorded investment in the impaired loan exceeds the measure of fair value, a valuation allowance is required as a component of the allowance for loan losses. Changes to the valuation allowance are recorded as a component of the provision for loan losses.

     Generally, loans of all types which become 90 days delinquent are deemed currently uncollectible unless such loans are in the process of collection through repossession or foreclosure. Loans deemed currently uncollectible are charged off against the allowance account. As a matter of policy, loans are placed on a non-accrual status when doubt exists as to collectibility.

     Allowance for Loan Losses-The allowance for loan losses is a valuation account available to absorb losses on loans. All losses are charged to the allowance for loan losses when the loss actually occurs or when a determination is made that a loss is likely to occur; recoveries are credited to the allowance for loan losses at the time of receipt. Periodically during the year management estimates the probable level of losses to determine whether the allowance is adequate to absorb reasonably foreseeable, anticipated losses in the existing portfolio based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay, the estimated value of any underlying collateral and current economic conditions. The allowance for loan losses is increased by charges to expense and decreased by loan chargeoffs (net of recoveries).

     Property and Equipment-Property and equipment are recorded at amortized cost. Depreciation is computed principally by the straight-line method based on the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the term of the lease or the asset's useful life.

     Other Real Estate-Other real estate acquired through foreclosure and bank acquisitions is stated at the fair market value at the date of acquisition, net of the costs of disposal. When a reduction to fair market value at the time of foreclosure is required, it is charged to the allowance for loan losses. Any subsequent adjustments are charged to expense.

     Intangible Assets-Intangible assets include the values assigned to core deposits of acquired banks which are being amortized over lives ranging from six to seven years using accelerated methods and goodwill which is being amortized over fifteen years. Accumulated amortization of intangible assets amounted to approximately $12.6 million and $8.8 million at December 31, 1999 and 1998, respectively.

     Trust Fees-Trust fees are recorded as earned.

     Income Taxes-Provisions for income taxes are based on taxes payable or refundable for the current year (after exclusion of nontaxable income such as interest on state and municipal securities) and deferred taxes on temporary differences between the amount of taxable income and pretax financial income. Deferred taxes on temporary differences are calculated at the currently enacted tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

     Stock Based Compensation-The Company applies APB Opinion No. 25 and related interpretations in accounting for its stock options. The pro forma disclosures required by Statement of Financial Accounting Standards No. 123 "Accounting for Stock Based Compensation" (SFAS No. 123) are included in Note 10.

     Basic and Diluted Earnings Per Common Share-Basic earnings per share (EPS) excludes dilution and is computed by dividing earnings by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

     Reclassifications-Certain prior year amounts have been reclassified to conform with the 1999 presentation.

10

NOTE 2 - ACQUISITIONS

      On January 17, 1997, the Company acquired Southeast National Bank (Southeast), Hammond, Louisiana for approximately $3,700,000 cash and 121,000 shares of common stock of the Company. On July 15, 1997, the Company acquired Commerce Corporation, Inc. (Commerce), St. Francisville, Louisiana, which owned 100% of the stock of Bank of Commerce and Trust Company, for approximately $330,000 cash, 65,000 shares of the Company's common stock and the assumption of Commerce debt owed to certain individuals in the aggregate principal amount of $1,250,000. On January 15, 1999, Hancock Holding Company acquired American Securities Bancshares of Ville Platte, Inc.(ASB), Ville Platte, Louisiana which owned 100% of the stock of American Security Bank for approximately $15,200,000 cash and 644,000 shares of common stock of the Company. These transactions were accounted for using the purchase method of accounting and the results of operations since the date of acquisition are included in the consolidated statements of earnings. The excess of the purchase price over the value of the net tangible assets acquired was assigned to goodwill and is being amortized over 15 years.

     The following unaudited pro forma consolidated results of operations give effect to the acquisitions of Southeast and Commerce as though they had occurred on January 1, 1997 and ASB as of January 1, 1998 (in thousands, except per share data):

                                                                          Years Ended December 31,
                                                             ----------------------------------------------
                                                                 1999               1998            1997
                                                             ------------       ------------    -----------

Interest income                                               $ 208,362          $ 208,359       $ 182,688
Interest expense                                                (84,331)           (89,104)        (72,162)
Provision for loan losses                                        (7,610)            (8,811)         (6,565)
                                                              ----------         ----------      ----------
Net interest income after provision for loan losse              116,421            110,444         103,961

Net earnings                                                    $31,318            $30,867         $30,643
Basic earnings per common share                                    2.87               2.72            2.81
Diluted earnings per common share                                  2.87               2.71            2.81

     The unaudited pro forma information is not necessarily indicative either of results of operations that would have occurred had the purchases been made as of January 1, 1997 or January 1, 1998, as appropriate, or of future results of operations of the combined companies.

     In connection with the 1999 and 1997 acquisitions, liabilities were assumed as follows (in thousands):

                                                                      1999              1997
                                                                 ------------      ------------

Fair value of all assets, excluding cash                           $214,573          $68,815
Cash acquired, net of amount paid                                    23,927            2,288
Market value of common stock issued                                 (28,006)          (6,885)
                                                                 ------------      ------------
Liabilities assumed                                                $210,494         $ 64,218
                                                                 ============      ============

NOTE 3 - SECURITIES

     The amortized cost and fair value of securities classified as available for sale were as follows (in thousands):

                                                  December 31, 1999                      December 31, 1998
                        ------------------------------------------------------------------------------------------------------
                                          Gross        Gross                                   Gross         Gross
                           Amortized    Unrealized   Unrealized    Fair        Amortized    Unrealized    Unrealized     Fair
                             Cost         Gains        Losses      Value         Cost          Gains         Losses      Value
                        -------------  ------------ ----------- ----------     ----------    ----------    ---------  --------
U.S. Treasury               $84,341         $8         $ 875      $83,474       $101,493        $692          $23    $102,162
U.S. government agencies    302,450         --        12,326      290,124        272,564         288          518     272,334
Municipal obligations        33,382        121         1,475       32,028          5,851         101           35       5,917
Mortgage-backed securities   70,465         88         1,561       68,992         31,652          79          395      31,336
CMOs                        151,693         --         5,128      146,565         45,347          92           37      45,402
Other debt securities        10,601         --            27       10,574             --          --           --          --
Equity securities             7,659         --            --        7,659          5,969          --           --       5,969
                            -------    -------       -------      -------        -------     -------      -------     -------
                           $660,591       $217       $21,392    $ 639,416      $ 462,876     $ 1,252      $ 1,008   $ 463,120
                            =======    =======       =======      =======        =======     =======      =======     =======

11

      The amortized cost and fair value of debt securities classified as available for sale at December 31, 1999, by contractual maturity, were as follows (in thousands):

                                                                       Amortized Cost       Fair Value
                                                                      ---------------------------------
Due in one year or less                                                   $141,754           $138,079
Due after one year through five years                                      205,021            198,476
Due after five years through ten years                                     102,788             98,277
Due after ten years                                                        203,369            196,925
                                                                        ----------          ---------
                                                                          $652,932           $631,757
                                                                        ==========          =========


     The amortized cost and fair value of securities classified as held to maturity were as follows (in thousands):

                                      December 31, 1999                                 December 31, 1998
                     -------------------------------------------------------------------------------------------------------------

                                           Gross       Gross                                     Gross       Gross
                           Amortized     Unrealized  Unrealized    Fair            Amortized   Unrealized  Unrealized    Fair
                             Cost          Gains       Losses      Value             Cost        Gains       Losses      Value
                           ---------      --------  --------     ---------        ----------    ---------   --------   ----------
U.S. Treasury               $24,277         $ 105        $2       $24,380         $ 114,506       $1,043        $--     $115,549
U.S. government agencies     95,409            5      2,794        92,620           200,149        2,250         97      202,302
Municipal obligations       165,891          597      5,282       161,206           167,997        4,136         73      172,060
Mortgage-backed securities   81,340          195      1,411        80,124           114,747          851        177      115,421
CMOs                        136,286           93      2,345       134,034           177,796        1,346        150      178,992
Other debt securities         6,103            1          1         6,103             6,054            1         --        6,055
                             ------        -----     ------        ------            ------       ------     ------       ------
                           $509,306        $ 996    $11,835      $498,467          $781,249       $9,627       $497     $790,379
                             ======        =====     ======        ======            ======       ======     ======       ======


     The amortized cost and fair value of securities classified as held to maturity at December 31, 1999, by contractual maturity, were as
follows (in thousands):

                                                                      Amortized Cost           Fair Value
                                                                    ---------------------------------------
Due in one year or less                                                   $47,184               $46,788
Due after one year through five years                                     115,548               113,827
Due after five years through ten years                                    156,629               153,572
Due after ten years                                                       189,945               184,280
                                                                       ----------             ---------
                                                                       $ 509, 306              $498,467
                                                                       ==========             =========

     Proceeds from sales of available-for-sale securities were $18,693,000 in 1999, $19,222,000 in 1998 and $12,919,000 in 1997. Gross gains of $9,000 in 1999, $540,000 in 1998 and $321,000 in 1997 and gross losses of $508,000 in 1998 and $42,000 in 1997 were realized on such sales. Gross gains of $58,000 and $135,000 were recognized on held-to-maturity securities called during 1999 and 1998, respectively.

     Securities with an amortized cost of approximately $598,998,000 at December 31, 1999 and $547,491,000 at December 31, 1998, were pledged primarily to secure public deposits and securities sold under agreements to repurchase.

     The Company's collateralized mortgage obligations (CMOs) generally consist of first and second tranche sequential pay and/or planned amortization class (PAC) instruments.

NOTE 4 - LOANS

     Loans consisted of the following (in thousands):

                                                                                December 31,
                                                           ------------------------------------------------
                                                                     1999                      1998
                                                           -----------------------    ---------------------

  Real estate loans - primarily mortgage                       $    599,455              $    482,423
  Commercial and industrial loans                                   298,179                   245,755
  Loans to individuals for household, family
  and other consumer expenditures                                   634,547                   583,208
  Leases                                                             24,727                    17,324
  Other loans                                                         1,528                     1,574
                                                                -----------               -----------
                                                                 $1,558,436                $1,330,284
                                                                ===========               ===========

12

The Company generally makes loans in its market areas of South Mississippi and Southern Louisiana. Loans are made in the normal course of business to its directors, executive officers and their associates on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons. Such loans did not involve more than normal risk of collectibility. The balance of loans outstanding to the Company’s directors, executive officers and their affiliates at December 31, 1999 and 1998 was approximately $3,745,000 and $2,898,000, respectively.

     Changes in the allowance for loan losses were as follows (in thousands):

                                                         Years Ended December 31,
                                       ----------------------------------------------------------
                                             1999                 1998                 1997
                                       ---------------        -------------      ----------------
Balance at January 1                       $21,800              $21,000              $19,800
Balance acquired through acquisitions        3,815                   --                  833
Recoveries                                   2,484                1,701                2,181
Loans charged off                           (9,971)              (7,130)              (8,213)
Provision charged to operating expense       7,585                6,229                6,399
                                         ----------          -----------          -----------
Balance at December 31                     $25,713              $21,800              $21,000
                                         ==========          ===========          ===========

     Non-accrual and renegotiated loans amounted to approximately 0.46% of total loans at December 31, 1999 and December 31, 1998. In addition, the Company's other individually evaluated impaired loans amounted to approximately 0.23% and 0.45% of total loans at December 31, 1999 and 1998, respectively. Related reserve amounts were not significant and there was no significant change in these amounts during the years ended December 31, 1999, 1998, or 1997. The amount of interest not accrued on these loans did not have a significant effect on earnings in 1999, 1998 or 1997.

     Transfers from loans to other real estate amounted to approximately $764,000, $656,000 and $1,894,000 in 1999, 1998 and 1997, respectively. Valuation allowances associated with other real estate amounted to $1,199,000, $1,088,000 and $812,000 at December 31, 1999, 1998 and 1997, respectively.

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment, stated at cost less accumulated depreciation and amortization, consisted of the following (in thousands):

                                                                          December 31,
                                                            -------------------------------------
                                                                 1999                     1998
                                                            -------------------------------------

Land, buildings and leasehold improvements                     $ 57,608                $ 49,414
Furniture, fixtures and equipment                                53,667                  46,245
                                                            ------------             -----------
                                                                111,275                  95,659
Accumulated depreciation and amortization                       (56,267)                (51,112)
                                                            ------------             -----------
                                                                $55,008                $ 44,547
                                                            ============             ===========

NOTE 6 - FEDERAL HOME LOAN BANK ADVANCE

     At December 31, 1999, the Company had a $50,000,000 advance outstanding under a $147,000,000 line of credit with the Federal Home Loan Bank of Dallas. This advance bears interest at 5.85% and is due January 21, 2000. The advance is collateralized by a blanket floating lien on the Company's residential first mortgage loans.

NOTE 7 - STOCKHOLDERS' EQUITY

     Basic and diluted earnings per common share were based on the weighted average number of shares outstanding of approximately 10,887,000 and 10,902,000 in 1999, 10,693,000 and 10,705,000 in 1998 and 10,870,000 and 10,877,000 in 1997. Outstanding amounts reflect reductions for treasury stock and 162,200 shares of stock owned by subsidiaries.

     Stockholders' equity of the Company includes the undistributed earnings of the bank subsidiaries. Dividends are payable only out of undivided profits or current earnings. Moreover, dividends to the Company's stockholders can generally be paid only from dividends paid to the Company by the Banks. Consequently, dividends are dependent upon earnings, capital needs, regulatory policies and statutory limitations affecting the Banks. Federal and state banking laws and regulations restrict the amount of dividends and loans a bank may make to its parent company. With respect to Hancock Bank, dividends paid are subject to approval by the Commissioner of Banking and Consumer Finance of the State of Mississippi and with respect to Hancock Bank of

13

Louisiana, dividends paid are subject to approval by the Commissioner of Financial Institutions for the State of Louisiana. The amount of capital of the subsidiary banks available for dividends at December 31, 1999 was approximately $110 million. The Company and its bank subsidiaries are required to maintain certain minimum capital levels. At December 31, 1999 and 1998, the Company and the Banks were in compliance with their respective statutory minimum capital requirements. Following is a summary of the actual capital levels at December 31, 1999 and 1998 (amounts in thousands):

                                                                                                            To be Well
                                                                              Required for               Capitalized Under
                                                                             Minimum Capital             Prompt Corrective
                                                   Actual                       Adequacy                 Action Provisions
                                       ------------------------------------------------------------------------------------------

                                            Amount        Ratio %        Amount         Ratio %        Amount         Ratio %
                                       ------------------------------------------------------------------------------------------

At December 31, 1999
  Total capital (to risk weighted assets)
   Company                                $ 292,071        14.47      $  161,600         8.00       $      N/A            N/A
   Hancock Bank                             187,527        17.62          85,150         8.00          106,438          10.00
   Hancock Bank of Louisiana                116,573        15.7           59,100         8.00           73,900          10.00

   Tier I capital (to risk weighted assets)
   Company                                $ 279,678        13.85      $   88,800         4.00        $     N/A            N/A
   Hancock Bank                             174,214        16.37          42,575         4.00           63,862           6.00
   Hancock Bank of Louisiana                107,302        14.52          29,600         4.00           44,400           6.00

   Tier I leveraged capital
   Company                                $ 279,678         9.50      $   88,300         3.00        $     N/A            N/A
   Hancock Bank                             174,214         9.71          53,832         3.00           89,720           5.00
   Hancock Bank of Louisiana                107,302         9.34          34,500         3.00           57,500           5.00


                                                                                                       To be Well
                                                                          Required for              Capitalized Under
                                                                         Minimum Capital            Prompt Corrective
                                               Actual                       Adequacy                Action Provisions
                                       ----------------------------------------------------------------------------------
                                          Amount     Ratio %          Amount          Ratio %       Amount       Ratio %
                                       ---------------------      ---------------------------    ------------------------
At December 31, 1998
  Total capital (to risk weighted assets)
  Company                                $277,846     17.41         $ 122,600          8.00         $   N/A         N/A
  Hancock Bank                            172,127     17.44            79,000          8.00          98,700       10.00
  Hancock Bank of Louisiana               105,864     19.46            43,600          8.00          54,400       10.00

  Tier I capital (to risk weighted assets)
  Company                               $ 258,663     16.88          $ 61,300          4.00         $   N/A         N/A
  Hancock Bank                            159,771     16.19            39,500          4.00          59,300        6.00
  Hancock Bank of Louisiana                99,053     18.21            21,800          4.00          32,700        6.00

  Tier I leveraged capital
  Company                               $ 258,663      9.69          $ 80,100          3.00         $   N/A         N/A
  Hancock Bank                            159,771      8.83            54,400          3.00          90,600        5.00
  Hancock Bank of Louisiana                99,053     10.46            28,500          3.00          47,400        5.00

     Risk-based capital requirements are intended to make regulatory capital more sensitive to risk elements of the Company. Currently, the Company and its bank subsidiaries are required to maintain a minimum risk-based capital ratio of 8.0%, with not less than 4.0% in Tier 1 capital. In addition, the Company and its bank subsidiaries must maintain a minimum Tier 1 leveraged ratio (Tier 1 capital to total average assets) of at least 3.0% based upon the regulators latest composite rating of the institution.

     The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) required each federal banking agency to implement prompt corrective actions for institutions that it regulates. The rules provide that an institution is "well capitalized" if its total risk-based capital ratio is 10.0% or greater, its Tier 1 risked-based capital ratio is 6.0% or greater, its leveraged ratio is 5.0% or greater and the institution is not subject to a capital directive. Under this regulation, each of the subsidiary banks were deemed to be "well capitalized" as of December 31, 1999 and 1998 based upon the most recent notifications from their regulators. There are no conditions or events since those notifications that management believes would change these classifications.

14

NOTE 8 - INCOME TAXES

     Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities were as follows (in thousands):

                                                                            December 31,
                                                              --------------------------------------
                                                                      1999                  1998
                                                              --------------------------------------

Deferred tax assets:
Unrealized loss on securities available for sale                    $ 7,411                   $ --
Post-retirement benefit obligation                                    1,408                  1,167
Allowance for loan losses                                             8,300                  6,200
Other real estate valuation allowances                                  268                    420
Deferred compensation                                                 1,090                    746
Lease accounting                                                        330                    344
Other                                                                   599                    292
                                                                   ----------             -----------
                                                                     19,406                  9,169
                                                                   ----------             -----------

Deferred tax liabilities:
Property and equipment depreciation                                  (3,960)                (3,234)
Prepaid pension                                                      (1,322)                (1,206)
Unrealized gain on securities available for sale                        --                     (85)
Discount accretion on securities                                     (1,512)                (1,567)
                                                                   ----------             -----------
                                                                     (6,794)                (6,092)
                                                                   ----------             -----------
Net deferred tax asset                                             $ 12,612                $ 3,077
                                                                   ==========             ===========


       Income taxes consisted of the following components (in thousands):

                                                         Years Ended December 31,
                                              ---------------------------------------------
                                                    1999           1998            1997
                                                  ----------    ----------     ----------
Currently payable                                  $16,627       $ 14,862        $17,746
Deferred                                            (2,039)          (435)          (395)
                                                   ---------      --------      ---------
                                                  $ 14,588       $ 14,427       $ 17,351
                                                   =========      ========      =========

     The reason for differences in income taxes reported compared to amounts computed by applying the statutory income tax rate of 35% to earnings before income taxes were as follows (in thousands):

                                                                              Years Ended December 31,
                                                             -----------------------------------------------------------------
                                                                  1999                 1998                  1997
                                                             -----------------------------------------------------------------
                                                             Amount         %       Amount         %      Amount           %
                                                             -----------------------------------------------------------------
Taxes computed at statutory rate                            $ 16,204        35    $ 15,483         35    $ 16,792          35
Increases (decreases) in taxes resulting from:
  State income taxes, net of federal income tax benefit          283         1         410          1         550           1
  Tax-exempt interest                                         (3,260)       (7)     (2,380)        (5)     (1,501)         (3)
Goodwill amortization                                          1,300         3         840          2         831           2
  Other, net                                                      61        --          74         --         679           1
                                                            --------   --------   --------   --------    --------    --------
Income tax expense                                         $  14,588         32   $ 14,427         33    $ 17,351          36
                                                            ========   ========   ========   ========    ========    ========


     The income tax provisions related to other items included in the Statements of Comprehensive Earnings were as follows (in thousands):

                                                                       Years Ended December 31,
                                                           -------------------------------------------------
                                                                1999                 1998             1997
                                                           -------------------------------------------------

Unrealized holdings gains (losses)                            $ (7,493)              $ 60            $ 473
Less reclassification adjustments                                   (3)               (11)             (98)
                                                            -----------           --------        ---------
Total other comprehensive earnings (loss)                     $ (7,496)             $  49            $ 375
                                                            ===========           ========        =========

15

NOTE 9 - EMPLOYEE BENEFIT PLANS

     The Company has a noncontributory pension plan covering substantially all salaried full-time employees who have been employed by the Company the required length of time. The Company's current policy is to contribute annually the minimum amount that can be deducted for federal income tax purposes. The benefits are based upon years of service and employee's compensation during the last five years of employment. Data relative to the pension plan follows (in thousands):

                                                          Years Ended December 31,
                                                         ---------------------------
                                                            1999              1998
                                                         ---------------------------
Change in Benefit Obligation:
Benefit obligation at beginning of year                  $ 29,120          $ 26,742
Service cost                                                1,183             1,041
Interest cost                                               1,986             2,018
Actuarial loss                                                 67               588
Benefits paid                                              (1,486)           (1,269)
                                                        ----------        ----------
Benefit obligation at end of year                          30,870            29,120
                                                        ----------        ----------

Change in Plan Assets:
Fair value of plan assets at
beginning of year                                          28,791            26,524
Actual return on plan assets                                2,343             2,249
Employer contributions                                      1,537             1,486
Benefits paid                                              (1,486)           (1,268)
Expenses                                                     (248)             (200)
                                                        ----------        ----------
Fair value of plan assets at end of year                   30,937            28,791
                                                        ----------        ----------

Funded (unfunded) status                                       67              (329)
                                                        ----------        ----------
Unrecognized portion of net obligation being
amortized over 15 years                                        91               137
Unrecognized net actuarial loss                             2,963             3,072
Unrecognized prior service cost                               476               567
                                                        ----------        ----------
Prepaid pension cost included in other assets              $3,597            $3,447
                                                        ==========        ==========


Rate assumptions at December 31:
     Discount rate                                        7.25%          7.00%
     Expected return on plan assets                       8.00%          8.00%
     Rate of compensation increase                        3.00%          3.00%


                                                           Years Ended December 31,
                                              ------------------------------------------------
                                                     1999           1998            1997
                                                  ----------     ----------      ----------
Net pension expense included the following
  (income) expense components:
Service cost  benefits earned during the period      $1,183        $1,041           $ 942
Interest cost on projected benefit obligation         1,986         2,018           1,871
Return on plan assets                                (2,343)       (2,249)         (3,091)
Amortization of prior service cost                       92            92              92
Net amortization and deferral                           174           244           1,386
                                                  ----------    ----------      ----------
Net pension expense                                 $ 1,092       $ 1,146         $ 1,200
                                                  ==========    ==========      ==========

     The Company sponsors two defined benefit post-retirement plans, other than the pension plan, that cover full-time employees who have reached 45 years of age. One plan provides medical benefits and the other provides life insurance benefits. The post-retirement health care plan is contributory, with retiree contributions adjusted annually and subject to certain

16

employer contribution maximums; the life insurance plan is non-contributory. Data relative to these post-retirement benefits, none of which have been funded, were as follows (in thousands):

                                                               Years Ended December 31,
                                                              -------------------------
                                                                 1999           1998
                                                              ----------     ----------
Change in Benefit Obligation:
Benefit obligation at beginning of year                         $6,238        $5,509
Service cost                                                       397           293
Interest cost                                                      412           374
Actuarial (gain) loss                                             (667)          324
Benefits paid                                                     (286)         (262)
                                                             ----------    ----------
  Benefit obligation at end of year                              6,094         6,238

Fair value of plan assets                                           --            --
Amount unfunded                                                 (6,094)       (6,238)

Unrecognized transition obligation being
  amortized over 20 years                                         1,680        1,863
Unrecognized net actuarial loss                                     318          976
Accrued post-retirement benefit cost                            $(4,096)    $ (3,399)
                                                            ============    =========
Rate assumptions at December 31:
Discount rate                                                      7.75%        6.50%


                                                                    Years Ended December 31,
                                                              -------------------------------------

                                                                  1999          1998          1997
                                                               ---------    ----------     ----------

Net Periodic Post-Retirement Benefit Cost:
Amortization of unrecognized net loss                                $30         $12           $--
Service cost  benefits attributed to service during the year         397         293           233
Interest costs on accumulated post-retirement benefit obligation     412         375           357
Amortization of transition obligation over 20 years                  143         143           143
                                                                  ------      ------        ------
  Net periodic post-retirement benefit cost                         $982       $ 823          $733
                                                                  ======      ======        ======

     For measurement purposes in 1999, a 7.5% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2000. The rate was assumed to decrease gradually to 5.5% for 5 years and remain at that level thereafter. In 1998, rates of 8.0% and 5.5% were assumed and in 1997, rates of 8.5% and 5.5% were assumed. The health care cost trend rate assumption has an effect on the amounts reported. To illustrate, increasing the assumed health care cost trend rates by 1% in each year would increase the accumulated post-retirement benefit obligation at December 31, 1999 by $768,000 and the aggregate of the service and interest cost components of net periodic post-retirement benefit cost for the year then ended by $133,000. A 1% decrease in the rate would decrease those items by $646,000 and $109,000, respectively.

     The Company has a noncontributory profit sharing plan covering substantially all salaried full-time employees who have been employed the required length of time. Contributions are made at the discretion of the Board of Directors and amounted to $504,000 in 1999, $569,000 in 1998 and $568,500 in 1997.

     In addition, the Company has an employee stock purchase plan that is designed to provide the employees of the Company a convenient means of purchasing common stock of the Company. Substantially all salaried, full-time employees, with the exception of Leo W. Seal, Jr., who have been employed by the Company the required length of time are eligible to participate. The Company contributes an amount equal to 25% of each participant's contribution, which contribution cannot exceed 5% of the employee's base pay. The Company's contribution amounted to $116,300 in 1999, $101,300 in 1998 and $84,500 in 1997.

     The post-retirement plans relating to health care payments and life insurance and the stock purchase plan are not guaranteed and are subject to immediate cancellation and/or amendment. These plans are predicated on future Company profit levels that will justify their continuance. Overall health care costs are also a factor in the level of benefits provided and continuance of these post-retirement plans. There are no vested rights under the post-retirement health or life insurance plans.

NOTE 10 - EMPLOYEE STOCK PLANS

     In February 1996, the stockholders of the Company approved the Hancock Holding Company 1996 Long-Term Incentive Plan (the Plan) to provide incentives and awards for employees of the Company and its subsidiaries. Awards as

17

defined in the Plan include, with limitations, stock options (including restricted stock options), restricted and performance shares, and performance stock awards, all on a stand-alone, combination or tandem basis. A total of 5,000,000 common shares can be granted under the Plan with an annual grant maximum of 1% of the Company's outstanding common stock (as reported for the fiscal year ending immediately prior to such plan year). The exercise price is equal to the market price on the date of grant, except for certain of those granted to major shareholders where the option price is 110% of the market price.

     On December 21, 1999, options to purchase 86,526 shares were granted, of which 84,150 are exercisable at $38.25 per share and 2,376 are exercisable at $42.075 per share. Options totaling 84,150 are exercisable at a vesting rate of 25% per year on the anniversary date of grant and 2,376 are exercisable six months after the date of grant.

     On December 24, 1998, options to purchase 72,125 shares were granted, of which 70,036 are exercisable at $43.50 per share and 2,089 are exercisable at $47.85 per share. Options totaling 70,036 are exercisable at a vesting rate of 25% per year on the anniversary of the date of grant and 2,089 are exercisable six months after the date of grant.

     On December 11, 1997, options to purchase 62,375 were granted, of which 60,860 shares are exercisable at $60.00 per share and 1,515 are exercisable at $66.00 per share. Options totaling 46,773 were exercisable on the first anniversary of the date of grant and 15,602 options were exercisable six months after the date of grant.

     On December 15, 1996, options to purchase 35,250 shares were granted, of which 32,978 are exercisable at $40.00 per share and 2,272 are exercisable at $44.00 per share. Options totaling 25,250 were exercisable on the first anniversary of the date of grant and 10,000 options were exercisable six months after the date of grant. The options generally expire ten years after the date of grant.

     Following is a summary of the transactions:

                                                            Number of        Average           Exercise
                                                             Options      Exercise Price      of Options
                                                           Outstanding      Per Share          Aggregate
                                                           -----------    --------------      ------------
Balance January 1, 1997                                       35,250          $40.26           $1,419,000
Granted                                                       62,375           60.15            3,752,000
Cancelled                                                     (1,300)          40.00              (52,000)
                                                            ---------       ---------         ------------
Balance December 31, 1997                                     96,325           53.14            5,119,000
Granted                                                       72,125           43.63            3,146,525
Exercised                                                     (8,500)          40.00             (340,000)
Cancelled                                                     (4,425)          60.00             (265,500)
                                                            ---------       ---------         ------------
Balance December 31, 1998                                    155,525           49.25            7,660,025
Granted                                                       86,526           38.35            3,318,681
Cancelled                                                     (1,775)          60.00             (106,500)
                                                            ---------       ---------         ------------
Balance December 31, 199                                     240,276          $45.25          $10,872,206
                                                            =========       =========         ============

     At December 31, 1999 options on 101,173 shares were exercisable at $40.00 to $60.00 per share, with a weighted average price of $52.04 per share. At December 31, 1998 options on 83,400 shares were exercisable at $40.00 to $60.00 per share, with a weighted average exercise price of $54.12 per share. The weighted average remaining contractual life of options outstanding at December 31, 1999 was 8.75 years.

     The Company has adopted the disclosure-only option under SFAS No. 123. The weighted average fair value of options granted during 1999, 1998 and 1997 was $12.20, $13.48 and $20.36, respectively. Had compensation costs for the Company's stock options been determined based on the fair value at the grant date consistent with the method under SFAS No. 123, the Company's net earnings and earnings per share would have been as indicated below:

                                                                       Years Ended December 31,
                                                               -----------------------------------------
                                                                  1999          1998             1997
                                                               ----------    ----------       ----------
Net earnings (in thousands):
As reported                                                   $ 31,710        $ 30,960         $ 30,624
Pro forma                                                       31,496          29,936           30,220

Basic earnings per share:
As reported                                                     $ 2.91           $2.90            $2.82
Pro forma                                                         2.89            2.80             2.78

Diluted earnings per share:
As reported                                                     $ 2.91           $2.89            $2.82
Pro forma                                                         2.89            2.80             2.78

18

The fair value of the options granted under the Company’s stock option plans during the years ended December 31, 1999, 1998 and 1997 was estimated using the Black-Scholes Pricing Model with the following assumptions used: dividend yield of 2.4%, 1.9% and 1.6%, expected volatility of 25%, 24% and 25%, risk-free interest rates of 6.2%, 4.9% and 5.5%, respectively and expected lives of 8 years in 1999, 1998 and 1997.

     During 1999, the Company granted 434 restricted shares which vest at 12, 18 and 24 month intervals and 11,827 shares which vest at the end of three years. During 1998, the Company granted 12,070 restricted shares which vest at 12, 18 and 24 month intervals, and 7,050 shares were granted which vest at the end of three years. The Company granted 12,300 restricted shares during 1997 which vest at the end of three years. Vesting is contingent upon continued employment by the Company. On December 31, 1999, 37,716 of these grants were not vested. The 1999 shares had respective market values of $38.25 and $42.075 at the date of grant. The 1998 shares had respective market values of $46.00 and $43.50 at the dates of grant. The 6,100 and 6,200 shares granted in 1997 had respective market values of $42.00 and $60.00 per share at the dates of grant. Compensation expense related to the grants totaled $630,000 for 1999, $308,000 for 1998 and $96,000 for 1997. The remaining unearned compensation of $808,000 is being amortized over the life of the grants.

NOTE 11 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate:

     Cash, Short-Term Investments and Federal Funds Sold-For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

     Securities-For securities, fair value equals quoted market price, if available. If a quoted market price is not available, a reasonable estimate of fair value is used.

     Loans-The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans with the same remaining maturities would be made to borrowers with similar credit ratings.

     Deposits-The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

     Short-Term Borrowings and Long-Term Notes-Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

     Commitments-The fair value of commitments to extend credit was not significant.

The estimated fair values of the Company's financial instruments were as follows (in thousands):

                                                                             December 31,
                                                   ----------------------------------------------------------------------

                                                                 1999                               1998
                                                   ----------------------------------------------------------------------
                                                       Carrying            Fair           Carrying            Fair
                                                        Amount             Value           Amount             Value
                                                   ----------------------------------------------------------------------
Financial assets:
     Cash, short-term investments and federal
      funds sold                                     $   159,838      $   159,838      $    161,390      $   161,390
     Securities available for sale                       639,416          639,416           463,120          463,120
     Securities held to maturity                         509,306          498,407           781,249          790,379
     Loans, net of unearned income                     1,541,521        1,542,738         1,305,555        1,308,412
      Less: allowance for loan losses                    (25,713)         (25,713)          (21,800)         (21,800)
                                                     -----------       -----------       -----------      -----------
        Loans, net                                     1,515,808        1,517,025         1,283,755        1,286,612


Financial liabilities:
     Deposit                                         $ 2,397,653      $ 2,398,858      $  2,374,591      $ 2,375,718
     Securities sold under agreements to repurchase      213,773          213,773           140,207          140,207
     Federal Home Loan Bank advances                      50,000           50,000                --               --
     Long-term notes                                       2,714            2,714                --               --

19

NOTE 12 - OFF-BALANCE SHEET RISK

     In the normal course of business, the Company enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded and involve, to varying degrees, elements of credit risk not reflected in the consolidated balance sheets. The contract amounts of these instruments reflect the Company's exposure to credit loss in the event of non-performance by the other party on whose behalf the instrument has been issued. The Company undertakes the same credit evaluation in making commitments and conditional obligations as it does for on-balance-sheet instruments and may require collateral or other credit support for off-balance-sheet financial instruments. These obligations are summarized below (in thousands):

                                                                December 31,
                                                   -----------------------------------
                                                       1999                    1998
                                                   -----------------------------------

Commitments to extend credit                       $ 439,718               $ 244,135
Letters of credit                                     18,148                  13,425

     Approximately $254,000,000 and $172,000,000 of commitments to extend credit at December 31, 1999 and 1998, respectively, were at variable rates and the remainder were at fixed rates. A commitment to extend credit is an agreement to lend to a customer as long as the conditions established in the agreement have been satisfied. A commitment to extend credit generally has a fixed expiration date or other termination clauses and may require payment of a fee by the borrower. Since commitments often expire without being fully drawn, the total commitment amounts do not necessarily represent future cash requirements of the Company. The Company continually evaluates each customer's credit worthiness on a case-by-case basis. Occasionally, a credit evaluation of a customer requesting a commitment to extend credit results in the Company obtaining collateral to support the obligation.

     Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing a letter of credit is essentially the same as that involved in extending a loan.

NOTE 13 - CONTINGENCIES

     The Company is party to various legal proceedings arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, all such matters are adequately covered by insurance or, if not so covered, are not expected to have a material adverse effect on the financial statements of the Company.

NOTE 14 - SUPPLEMENTAL INFORMATION

     The following is selected supplemental information (in thousands):
                                                                       Years Ended December 31,
                                                           ---------------------------------------------
                                                                1999           1998            1997
                                                             ----------     ----------      ----------

Other service charges, commissions and fees:
         Trust fees                                           $ 4,445         $ 3,071        $ 2,946
         Investment commissions and fees                        3,328             508            376
Other non-interest expense:
         Postage                                              $ 3,857         $ 3,312        $ 3,051
         Communication                                          4,692           3,405          3,184
         Data processing                                        5,026           3,562          3,823
         Professional fees                                      2,906           2,889          2,485
         Taxes and licenses                                     2,401           1,873          1,909
         Printing and supplies                                  2,459           2,131          2,001
         Marketing                                              2,750           1,961          1,790

20

NOTE 15 - SEGMENT REPORTING

     The Company's primary segments are geographically divided into the Mississippi (MS) and Louisiana (LA) markets. Each segment offers the same products and services but are managed separately due to different pricing, product demand and consumer markets. Both segments offer commercial, consumer and mortgage loans and deposit services. Following is selected information for the Company's segments (in thousands):

                                                                 Years Ended December 31,
                                     ------------------------------------------------------------------------------------
                                                  1999                        1998                        1997
                                     ------------------------------------------------------------------------------------
                                            MS            LA           MS           LA            MS              LA
                                     ------------------------------------------------------------------------------------

Interest income                         $122,626       $80,366     $122,813       $67,271      $112,294       $66,299
Interest expense                          53,171        30,945       56,896        24,789        48,349        23,350
                                       ----------     ---------    ---------     ---------    ----------     ---------
Net interest income                       69,455        49,421       65,917        42,482        63,945        42,949
Provision for loan losses                  2,295         4,626        2,731         2,854         1,929         4,260
Non-interest income                        21,72         19,86       18,822        13,261        18,524        13,711
Depreciation and amortization              5,013         2,474        3,517         1,671         3,118         1,587
Other non-interest expense                53,674        47,051       48,661        36,727        46,003        34,893
                                       ----------     ---------    ---------     ---------    ----------     ---------

Earnings before income taxes and
cumulative effect of accounting change    30,201        15,136       29,830         14,49         31,419       15,920
Income taxes                               8,637         5,519        9,390         5,062         11,209        6,347
                                       ----------     ---------    ---------     ---------    ----------     ---------

Earnings before cumulative effect
of accounting change                      21,564         9,617       20,440         9,429         20,210        9,573
Cumulative effect of accounting change        --            --        1,151            --             --           --
                                       ----------     ---------    ---------     ---------    ----------     ---------

Net earnings                             $21,564       $ 9,617      $21,591        $9,429        $20,210       $9,573
                                       ==========     =========    =========     =========    ==========     =========


                                                                       Years Ended December 31,
                                                          ------------------------------------------------
                                                                1999             1998            1997
                                                          ------------------------------------------------

Net Interest Income:
MS                                                             $69,455          $65,917         $63,945
LA                                                              49,421           42,482          42,949
Other                                                            4,837            3,518           2,866
                                                            -----------        ---------       ---------
Consolidated net interest income                              $123,713         $111,917        $109,760
                                                            ===========        =========       =========

Net Earnings:
MS                                                             $21,564          $21,591         $20,210
LA                                                               9,617            9,429           9,573
Other                                                              529              (60)            841
                                                            -----------        ---------       ---------
Consolidated net earnings                                      $31,710          $30,960         $30,624
                                                            ===========        =========       =========

Assets:
MS                                                          $1,826,006       $1,833,064      $1,612,805
LA                                                           1,216,238        1,003,620         937,060
Other                                                           31,172           27,487          30,043
Intersegment                                                   (81,542)         (49,476)        (41,951)
                                                            -----------       ----------       ---------
Consolidated assets                                         $2,991,874       $2,814,695      $2,537,957
                                                            ===========       ==========      ==========

21

NOTE 16 - SUMMARIZED FINANCIAL INFORMATION OF HANCOCK HOLDING COMPANY (PARENT COMPANY ONLY)

                                                         Balance Sheets

                                                                         December 31,
                                                         -----------------------------------------------
                                                               1999                           1998
                                                         -----------------------------------------------
Investment in subsidiaries                                 $312,282,926                   $285,464,704
Other                                                           430,788                      1,342,496
                                                         --------------                  -------------
                                                           $312,713,714                   $286,807,200
                                                         ==============                  =============


Liabilities and Stockholders' Equity:
Due to subsidiaries                                          $2,286,286                      $      --
Stockholders' equity                                        310,427,428                    286,807,200
                                                         --------------                  -------------
                                                           $312,713,714                   $286,807,200
                                                           ============                   ============


                                                       Statements of Earnings

                                                                         Years Ended December 31,
                                                          -------------------------------------------------
                                                               1999               1998             1997
                                                          -------------------------------------------------

Dividends received from subsidiaries                       $35,368,193        $36,555,000      $17,150,000
Equity in earnings of subsidiaries greater than
  (less than) dividends received                            (1,914,920)        (5,209,781)      14,793,067
Interest and other expenses                                 (1,823,036)        (1,689,631)      (1,847,491)
Income tax credit                                               79,833            153,800          528,843
                                                           ------------        -----------      -----------

Earnings before cumulative effect of
  accounting change                                         31,710,070         29,809,388       30,624,419
Cumulative effect of accounting change                              --          1,150,811               --
                                                           ------------        -----------      -----------
Net earnings                                               $31,710,070        $30,960,199      $30,624,419
                                                           ============        ===========      ===========


                                                       Statements of Cash Flows

                                                                       Years Ended December 31,
                                                          -------------------------------------------------
                                                              1999              1998              1997
                                                          -------------------------------------------------

Cash flows from operating activities - principally
dividends received from subsidiaries                      $36,868,662        $35,952,990      $15,116,205
Cash flows from investing  activities - principally
business acquisitions                                     (15,176,495)                --       (4,062,524)
Cash flows from financing activities:
Dividends paid                                            (11,055,506)       (10,862,585)     (11,039,887)
Purchase of treasury stock                                (11,484,047)       (22,857,810)              --
Repayment of note                                                  --         (1,279,402)              --
                                                         -------------      -------------      -----------
Net cash used by financing activities                     (22,539,553)       (34,999,797)     (11,039,887)
                                                         -------------      -------------      -----------
Net (decrease) increase in cash                              (847,386)           953,193           13,794
Cash, beginning                                             1,124,294            171,101          157,307
                                                         -------------      -------------      -----------
Cash, ending                                                 $276,908         $1,124,294         $171,101
                                                         =============      ==============      ==========

22

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Hancock Holding Company
Gulfport, Mississippi

We have audited the accompanying consolidated balance sheets of Hancock Holding Company and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of earnings, comprehensive earnings, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Hancock Holding Company and subsidiaries as of December 31, 1999 and 1998 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, in 1998 the Company changed its method of accounting for derivative instruments to conform with the Statement of Financial Accounting Standards No. 133 and in conjunction therewith reclassified certain securities from its held-to-maturity portfolio to trading securities.

Deloitte & Touche LLP
New Orleans, Louisiana
January 18, 2000

23

HANCOCK HOLDING COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

For the Years Ended December 31, 1999 and 1998

     The Company's net earnings were $31.7 million, or $2.91 per share, for the year ended December 31, 1999, compared to $31.0 million, or $2.90 per share, for the year ended December 31, 1998. Reflecting a 10.5% increase from the prior year, net interest income totaled $123.7 million for the current annual period. The Company's net interest margin increased from 4.67% reported in 1998 to 4.75% in 1999. Yields on interest-earning assets decreased to 7.83% in 1999 compared to 7.96% in 1998 and rates on interest-bearing liabilities decreased to 3.98% in 1999 compared to 4.31% the prior year. Subdued decreases in asset yield were partially due to the loan portfolio, which increased as a percentage of total interest-earning assets in 1999 and experienced only a slight decrease in yield to 9.53% during the current year compared to 9.57% in 1998. Average loan balances, which yield a higher rate of interest than investments, increased to $1.4 billion during 1999, compared to $1.2 billion during 1998. Deposit pricing initiatives implemented during the year contributed to the decrease in the Company’s cost of funds. The provision for loan losses increased 21.8% to $7.6 million for the year ended December 31, 1999, compared to $6.2 million for the same period a year ago. Net charge offs for the current year totaled $7.5 million and included losses amounting to $1.1 million on two loans acquired from American Security Bank (ASB) through merger on January 15, 1999. Non-interest income for the year ended December 31, 1999 increased to $45.6 million, compared to $32.3 million for the year ended December 31, 1998. This increase was primarily due to an increased customer base and several deposit pricing initiatives implemented during the second quarter of the current year. The Company’s emphasis on building new Trust relationships resulted in an increase of $1.4 million in trust fees which totaled $4.4 million for the year ended December 31, 1999. Investment sales commissions and fees earned by the Company totaled $3.3 million for the current annual period. This increase in commissions was primarily the result of internalizing the investment services subsidiary’s sales force and offering a broader array of products to the Banks’ customer base. Non-interest expense for the year ended December 31, 1999 increased to $115.4 million, compared to $93.8 million in 1998. Personnel increases during the current year can be attributed to increased benefit cost and an increased number of employees. Due to 13 additional full service retail branches in new market areas and the expansion of several lines of business, such as Trust and finance company operations, the Company added to its work force during the year. Similar expense increases occurred in occupancy, equipment, supply, communication and other costs. Data processing expense increased to $5.0 million for the year ended December 31, 1999, compared to $3.6 million, primarily due to the costs associated with the 1999 implementation of a new sales platform system. Additional direct expenses of approximately $900,000 were incurred as the result of the merger and data processing conversion of ASB. Amortization of intangibles increased $1.4 million due to the amortization of goodwill associated with the current year’s acquisition of ASB. The Company’s recent focus has been on expense control and management is committed to address concerns for this trend into the Year 2000.

For the Years Ended December 31, 1998 and 1997

The Company's net earnings were $31.0 million, or $2.90 per share, for the year ended December 31, 1998, compared to $30.6 million, or $2.82 per share, for the year ended December 31, 1997. The $2.2 million increase in net interest income for 1998 was primarily due to volume increases which were somewhat offset by lower yields on interest earning assets and a slightly higher cost of funds. The Company's net interest margin on a fully taxable equivalent basis decreased to 4.67% in 1998, compared to 5.03% in 1997, partially due to repricing of and investment in interest-earning assets during a period of short-term market interest rate declines and a deposit growth that surpassed the Company's loan growth. The provision for loan losses decreased to $6.2 million in the current year, compared to $6.4 million in the prior year, due to decreased loan charge-offs. Operating expenses, primarily compensation costs, increased as the Company concentrated on news lines of business and broadened its market area.

FINANCIAL CONDITION

Securities

     The Company generally purchases securities with a maturity schedule that provides ample liquidity. Certain securities have been classified as available for sale based on management's internal assessment of the portfolio after considering the Company's liquidity requirements and the portfolio's exposure to changes in market interest rates and prepayment activity. The December 31, 1999 carrying value of the held-to-maturity portfolio was $509.3 million and the market value was $498.5 million. The available-for-sale portfolio had a carrying value of $639.4 million and a cost of $660.6 million at December 31, 1999. The rise in overall interest rates during 1999 had a negative effect on the fair value of securities. Management is not aware of any permanent impairment of its securities. Investment in securities increased approximately $95.6 million during the year, primarily due to the acquisition of ASB.

Loans

     Loans, net of unearned income, increased $236.0 million to $1.5 billion at December 31, 1999, compared to the balances a year prior. Approximately $104.0 million of this increase was due to the acquisition of ASB. The Company generally makes loans in its market areas of South Mississippi and South Louisiana. The majority of the loan origination activity during the

24

current year was in small to middle market commercial loans and personal consumer loans. Loans outstanding and originated by the Company's expanding finance company subsidiary increased approximately $9.5 million, or 84.3%, at December 31, 1999, compared to the subsidiary's outstanding loans on December 31, 1998. Non-accruing and restructured loans were $7.1 million, or 0.46%, of the outstanding loans at December 31, 1999. Included in non-accruing loans was a $1.1 million commercial loan outstanding from a borrower currently in bankruptcy but for which management believes there is sufficient collateral.

Deposits and Deposit-Related Liabilities

     Deposits increased slightly to $2.4 billion at December 31, 1999, compared to the balance at December 31, 1998. Non-interest bearing demand accounts decreased 3.6%, to $527.2 million in 1999. Decreases to transaction accounts were partially offset by increases in savings, certificates of deposits and securities sold under agreements to repurchase. Certificates of deposit of $100,000 or more outstanding at December 31, 1999 amounted to $253.9 million. Deposits and deposit-related liabilities are the Company's primary source of funds supporting its earning asset base.

LIQUIDITY

     Liquidity represents the Company's ability to provide funds to satisfy demands from depositors, borrowers and other commitments by either converting assets to cash or accessing new or existing funds. The principal sources of funds which provide liquidity are customer deposits, payments of principal and interest on loans, maturities and sales of securities, earnings and borrowings. The Company has an unused line of credit with the Federal Home Loan Bank of nearly $100 million and has borrowing capacity at the Federal Reserve's Discount Window in excess of $100 million. At December 31, 1999, cash and due from banks and securities available for sale were 33.2% of total deposits.

CAPITAL RESOURCES

     Composite ratings by the respective regulatory authorities of the Company and the Banks establish minimum capital levels. Currently, the Company and the Banks are required to maintain minimum Tier I leverage ratios of at least 3%, subject to increase up to 5%, depending on the composite rating. At December 31, 1999, the Company's and the Banks' capital balances were in excess of current regulatory minimum requirements.

YEAR 2000

     In 1996 the Company began addressing all the systems and business methods requiring modifications to accommodate the turn of the century. Identification of the Company's major Year 2000 issues and replacement of certain systems were completed in 1999 which resolved the issues of which management was aware. Written assurances of expected Year 2000 readiness was requested from all material third party vendors, including, but not limited to, correspondent banks, software providers and utility companies. If any of the companies providing services, software or equipment to the Company failed to adequately address possible Year 2000 issues at a reasonable cost, the result could have had a significant adverse effect on the Company's business and operational results. The readiness of all third parties, including customers and suppliers, was inherently uncertain and could not be assured. The Company also recognized the importance of its customers' need to address Year 2000 issues. Relationships considered material to the Company's financial position were identified and appropriate documentation from borrowers received.

     Testing of information systems and review of property equipment functions, including those slated for replacement or vendor upgrade, was completed in February 1999. In addition to testing required by regulatory agencies, which included fully integrated systems testing, the Company completed a second test of all mission critical systems in September 1999. Contingency plans for the most reasonably likely worst-case scenarios were completed and issues regarding material equipment and applications failure were addressed. Contingency plans for liquidity needs due to potentially significant deposit withdrawals during the fourth quarter of 1999 were also complete.

      As of January 10, 2000 the Company has not experienced any system errors other than those typically encountered and corrected by banks daily. Management is not aware of any significant issues related to Year 2000 that adversely affect the Company's vendors or borrowers at this time. The Company plans to continue to monitor and assess operating systems for possible remaining uncertainties.

     Management dedicated resources to address the issues associated with the turn of the century. The total amount of expenditures for Year 2000 compliance, including those incurred since 1997, and those anticipated during the next twelve months, is expected to be approximately $4.0 million (before income taxes).

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's net income is dependent on its net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest-earning assets. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net income.

25

In an attempt to manage its exposure to changes in interest rates, management monitors the Company's interest rate risk. The Company's interest rate management policy is designed to produce a relatively stable net interest margin in periods of interest rate fluctuations. Interest sensitive assets and liabilities are those that are subject to maturity or repricing within a given time period. Management also reviews the Company’s securities portfolio, formulates investment strategies and oversees the timing and implementation of transactions to assure attainment of the Board’s objectives in the most effective manner. Notwithstanding the Company’s interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income.

     In adjusting the Company's asset/liability position, the Board and management attempt to manage the Company's interest rate risk while enhancing net interest margins. At times, depending on the level of general interest rates, the relationship between long and short-term interest rates, market conditions and competitive factors, the Board and management may determine to increase the Company's interest rate risk position somewhat in order to increase its net interest margin. The Company's results of operations and net portfolio values remain vulnerable to increases in interest rates and to fluctuations in the difference between long and short-term interest rates.

     The Company also attempts to limit interest rate risk by emphasizing non-certificate depositor accounts. The Board and management believe that such accounts carry a lower interest cost than certificate accounts and that a material portion of such accounts may be more resistant to changes in interest rates. At December 31, 1999, the Company had $311 million of regular savings and club accounts and $648 million of money market and NOW accounts, representing 51.3% of total interest-bearing depositor accounts.

     One approach used to quantify interest rate risk is the net portfolio value ("NPV") analysis. NPV includes shareholder equity of the Company as reported in the financial statements, adjusted for changes in the carrying value of investments, loans and certificates of deposit, when considering changes in market values on a pre-tax basis. In essence, this analysis calculates the difference between the present value of liabilities and the present value of expected cash flows from assets and off-balance sheet contracts. The following table sets forth, at December 31, 1999 and 1998, an analysis of the Company's interest rate risk as measured by the estimated changes in NPV resulting from an instantaneous and sustained parallel shift in the yield curve (+ or - 400 basis points, measured in 100 basis point increments).

                                   1999                                             1998
                  --------------------------------------------------------------------------------------------
                                      Estimated Increase                                  Estimated Increase
  Change in                           (Decrease) in NPV                                   (Decrease) in NPV
  Interest          Estimated      ________________________            Estimated        ______________________
   Rates            NPV Amount        Amount       Percent             NPV Amount           Amount     Percent
- ------------      -------------    ----------    ----------           ------------      ------------  --------
(basis points)                                         (amounts in thousands)

   +400              $79,033        $(205,832)     (72.3)               $105,291         $(188,460)     (64.2)
   +300              126,105         (158,760)     (55.7)                148,425          (145,326)     (49.5)
   +200              175,719         (109,146)     (38.3)                192,969          (100,782)     (34.3)
   +100              227,875          (56,990)     (20.0)                238,923           (54,828)     (18.7)
     --              284,865                                             293,751                --         --
   -100              330,670           45,805       16.1                 331,661            37,910       12.9
   -200              353,151           68,286       24.0                 337,171            43,420       14.8
   -300              376,280           91,415       32.1                 344,122            50,371       17.1
   -400              400,057          115,192       40.4                 352,514            58,763       20.0

     Certain assumptions in assessing the interest rate risk were employed in preparing data for the Company included in the preceding table. These assumptions relate to interest rates, loan prepayment rates, deposit decay rates and the market values of certain assets under the various interest rate scenarios. It was also assumed that delinquency rates will not change as a result of changes in interest rates although there can be no assurance that this will be the case. Even if interest rates change in the designated amounts, there can be no assurance that the Company's assets and liabilities would perform as anticipated. In addition, a change in U. S. Treasury rates in the designated amounts accompanied by a change in the shape of the U. S. Treasury yield curve would cause significantly different changes to the NPV than indicated above.

     As with any method of measuring interest rate risk, certain shortcomings are inherent in the methods of analysis presented. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable rate loans, have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Finally, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase. The Company considers all of these factors in monitoring its exposure to interest rate risk.

26

     The Company does not currently engage in trading activities or use derivative instruments to control interest rate risk. Even though such activities may be permitted with the approval of the Board of Directors, the Company does not intend to engage in such activities in the immediate future.

     Interest rate risk is the most significant market risk affecting the Company. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company's business activities.

FORWARD-LOOKING STATEMENTS

     Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about a company's anticipated future financial performance. This act provides a safe harbor for such disclosure which protects the companies from unwarranted litigation if actual results are different from management expectations. This report contains forward-looking statements and reflects management's current views and estimates of future economic circumstances, industry conditions, Company performance and financial results. These forward-looking statements are subject to a number of factors and uncertainties which could cause the Company's actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements.

CORPORATE INFORMATION

27

EX-23

Exhibit (23)


INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in the Registration Statements of Hancock Holding Company on Form
S-8 (No. 2-99863) and on Form S-3 (No. 33-31782) of our report dated January 18, 2000 incorporated by reference
in this Annual Report on Form 10-K for the year ended December 31, 1999.



DELOITTE & TOUCHE LLP
New Orleans, Louisiana
March 27, 2000

EX-27

 


<ARTICLE>                                                    9
<LEGEND>
Exhibit 27
Selected Financial Data

THIS SCHEDULE  CONTAINS  SUMMARY  FINANCIAL  INFORMATION  EXTRACTED FROM HANCOCK
HOLDING COMPANY'S  DECEMBER 31, 1999 CONSOLIDATED  BALANCE SHEETS,  CONSOLIDATED
STATEMENTS  OF  EARNINGS  AND  CONSOLIDATED  STATEMENTS  OF CASH  FLOWS  AND THE
ASSOCIATED  NOTES TO THE CONSOLIDATED  FINANCIAL  STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY TO BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER>                                             1,000

                                  
<PERIOD-TYPE>                        12-MOS
<FISCAL-YEAR-END>                                  DEC-31-1999
<PERIOD-START>                                     JAN-01-1999
<PERIOD-END>                                       DEC-31-1999
<CASH>                                                 156,738
<INT-BEARING-DEPOSITS>                                     100
<FED-FUNDS-SOLD>                                         3,000
<TRADING-ASSETS>                                             0
<INVESTMENTS-HELD-FOR-SALE>                            639,416
<INVESTMENTS-CARRYING>                                 509,306
<INVESTMENTS-MARKET>                                   498,467
<LOANS>                                              1,541,521
<ALLOWANCE>                                           (25,713)
<TOTAL-ASSETS>                                       2,991,874
<DEPOSITS>                                           2,397,653
<SHORT-TERM>                                           263,773
<LIABILITIES-OTHER>                                     17,306
<LONG-TERM>                                              2,714
<COMMON>                                                36,872
<PREFERRED-MANDATORY>                                        0
<PREFERRED>                                                  0
<OTHER-SE>                                             273,555
<TOTAL-LIABILITIES-AND-EQUITY>                       2,991,874
<INTEREST-LOAN>                                        133,420
<INTEREST-INVEST>                                       74,254
<INTEREST-OTHER>                                             1
<INTEREST-TOTAL>                                       207,675
<INTEREST-DEPOSIT>                                      74,464
<INTEREST-EXPENSE>                                      83,961
<INTEREST-INCOME-NET>                                  123,713
<LOAN-LOSSES>                                            7,585
<SECURITIES-GAINS>                                          67
<EXPENSE-OTHER>                                        115,442
<INCOME-PRETAX>                                         46,298
<INCOME-PRE-EXTRAORDINARY>                              31,710
<EXTRAORDINARY>                                              0
<CHANGES>                                                    0
<NET-INCOME>                                            31,710
<EPS-BASIC>                                               2.91
<EPS-DILUTED>                                             2.91
<YIELD-ACTUAL>                                            4.75
<LOANS-NON>                                              7,053
<LOANS-PAST>                                             4,442
<LOANS-TROUBLED>                                             0
<LOANS-PROBLEM>                                              0
<ALLOWANCE-OPEN>                                        21,800
<CHARGE-OFFS>                                            9,971
<RECOVERIES>                                             1,484
<ALLOWANCE-CLOSE>                                       25,713
<ALLOWANCE-DOMESTIC>                                    25,713
<ALLOWANCE-FOREIGN>                                          0
<ALLOWANCE-UNALLOCATED>                                  2,353