-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JGyZphfrWIFP+b8VxPoBEl1dTktP5CfUTLCQI4csNYqAdvf0J1njB2QVnMGHenBz t0+0/3YNrGVnsQxCft0rdg== 0001030798-97-000081.txt : 19970815 0001030798-97-000081.hdr.sgml : 19970815 ACCESSION NUMBER: 0001030798-97-000081 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK HOLDING CO CENTRAL INDEX KEY: 0000750577 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 640693170 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13089 FILM NUMBER: 97661097 BUSINESS ADDRESS: STREET 1: ONE HANCOCK PLZ STREET 2: P.O. BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39502 BUSINESS PHONE: 6018684605 MAIL ADDRESS: STREET 1: ONE HANCOCK PLZ STREET 2: P O BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39502 10-Q 1 HANCOCK HOLDING COMPANY FORM 10-Q SECURITIES AND EXCHANGE COMMISSION ---- Quarterly Report Pursuant to Section 13 or 15 (d) --X- of the Securities Exchange Act of 1934 ---- Transition Report Pursuant to Section 13 or 15(d) ---- of the Securities Exchange Act of 1934 For Quarter Ending June 30, 1997 Commission File Number 0-13089 HANCOCK HOLDING COMPANY MISSISSIPPI 64-0693170 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) ONE HANCOCK PLAZA, P.O. BOX 4019, GULFPORT, MISSISSIPPI 39502 (Address of principal executive offices) (Zip Code) (601) 868-4606 telephone number, including area code) NOT APPLICABLE name, address and fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO -------- ------- 10,909,769 Common Shares were outstanding as of July 31, 1997 for financial statement purposes. HANCOCK HOLDING COMPANY INDEX PART I. FINANCIAL INFORMATION PAGE NUMBER ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- June 30, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Earnings -- Three Months Ended June 30, 1997 and 1996 Six Months Ended June 30, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows -- Six Months Ended June 30, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 10 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12
HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) (Unaudited) June 30, December 31, ASSETS: 1997 1996 * ---------- ---------- Cash and due from banks (non-interest bearing) $ 137,906 $ 119,483 Interest-bearing time deposits with other banks 2,168 2,945 Securities available-for-sale (cost of $89,322 and $98,567) 88,476 97,595 Securities held-to-maturity (market value of $882,343 and $806,710) 880,997 803,998 Federal funds sold and securities purchased under agreements to resell 46,500 12,000 Loans, net of unearned income 1,203,001 1,173,967 Less: Reserve for loan losses (20,000) (19,800) ---------- ---------- Net loans 1,183,001 1,154,167 Property and equipment, at cost, less accumulated depreciation of $44,276 and $43,365 41,266 40,412 Other real estate 2,042 1,875 Accrued interest receivable 20,267 20,188 Other assets 39,818 36,919 ---------- ---------- TOTAL ASSETS $2,442,441 $2,289,582 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 445,790 $ 432,964 Interest-bearing savings, NOW, money market and other time 1,591,494 1,493,612 ---------- ---------- Total deposits 2,037,284 1,926,576 Federal funds purchased and securities sold under agreements to repurchase 111,126 87,609 Other liabilities 16,442 12,409 Long-term bonds 1,050 1,050 ---------- ---------- TOTAL LIABILITIES 2,165,902 2,027,644 ---------- ---------- STOCKHOLDERS' EQUITY: Common stock 36,655 36,255 Capital surplus 197,989 194,500 Undivided profits 42,445 31,816 Unrealized loss on securities available-for-sale (550) (633) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 276,539 261,938 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,442,441 $2,289,582 ========== ==========
* The balance sheet at December 31, 1996 has been taken from the audited balance sheet at that date. See notes to condensed consolidated financial statements.
HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED (Amounts in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, INTEREST INCOME: 1997 1996 1997 1996 ---------- ---------- ---------- --------- Interest and fees on loans $ 29,030 $ 26,101 $ 57,678 $ 51,858 Interest on: U. S. Treasury Securities 3,645 3,515 6,699 7,160 Obligations of other U.S. government agencies and corporations 9,189 8,594 18,350 17,108 Obligations of states and political subdivisions 991 890 1,926 1,734 Interest on federal funds sold and securities purchased under agreements to resell 474 1,460 1,160 3,534 Interest on time deposits and other 2,370 1,872 4,185 3,358 --------- --------- --------- --------- Total interest income 45,699 42,432 89,998 84,752 --------- --------- --------- --------- INTEREST EXPENSE: Interest on deposits 16,554 15,100 32,429 30,276 Interest on federal funds purchased and securities sold under agreements to repurchase 1,199 930 2,306 1,829 Interest on bonds and notes 30 74 51 151 --------- --------- --------- --------- Total interest expense 17,783 16,104 34,786 32,256 --------- --------- --------- --------- NET INTEREST INCOME 27,916 26,328 55,212 52,496 Provision for loan losses 1,509 797 2,344 1,801 --------- --------- --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 26,407 25,531 52,868 50,695 --------- --------- --------- --------- Non-Interest Income: Service charges on deposit accounts 4,507 4,153 8,898 8,356 Income from fiduciary activities 651 633 1,503 1,153 Securities gains(losses) (1) (34) 1 (34) Other 1,996 1,394 3,725 2,797 --------- --------- --------- --------- Total non-interest income 7,153 6,146 14,127 12,272 --------- --------- --------- --------- Non-Interest Expense: Salaries and employee benefits 11,034 10,389 22,224 20,770 Net occupancy expense of premises and equipment expense 3,487 3,761 6,947 7,604 Other 6,221 5,593 12,724 11,036 --------- --------- --------- --------- Total non-interest expense 20,742 19,743 41,895 39,410 --------- --------- --------- --------- EARNINGS BEFORE INCOME TAXES 12,818 11,934 25,100 23,557 INCOME TAXES 4,625 3,902 8,650 7,757 --------- --------- --------- --------- NET EARNINGS $ 8,193 $ 8,032 $ 16,450 $ 15,800 ========= ========= ========= ========= NET EARNINGS PER COMMON SHARE $ 0.76 $ 0.79 $ 1.52 $ 1.55 ========= ========= ========= ========= DIVIDENDS PAID PER COMMON SHARE $ 0.25 $ 0.22 $ .50 $ .44 ========= ========= ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,840 10,212 10,830 10,212 ========= ========= ========= =========
See notes to condensed consolidated financial statements.
HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (Amounts in thousands) Six Months Ended June 30, 1997 1996 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 16,450 $ 15,800 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 2,297 2,461 Provision for loan losses 2,344 1,801 Provision for losses on real estate owned 80 86 Gains (losses) on sales of securities 1 (34) Increase (decrease) in interest receivable 201 (80) Amortization of intangible assets 1,095 1,234 (Decrease) increase in interest payable (128) 643 Other, net 2,370 (404) --------- --------- Net cash provided by Operating Activities 24,710 21,507 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease (increase) in interest-bearing time deposits 973 (1,395) Proceeds from maturities of securities held-to-maturity 137,959 187,198 Purchase of securities held-to-maturity (213,717) (256,601) Proceeds from sales and maturities of securities available-for-sale 24,522 18,627 Purchase of securities available-for-sale (8,009) (17,053) Net (increase) decrease in federal funds sold and securities purchased under agreements to resell (32,000) 81,550 Net increase in loans (4,837) (34,089) Purchase of property and equipment, net (875) (2,314) Proceeds from sales of other real estate 511 447 Net cash paid in connection with purchase transaction (1,397) -- --------- --------- Net cash used in Investing Activities (96,870) (23,630) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 72,570 11,434 Dividends paid (5,504) (4,511) Net increase in federal funds purchased and securities sold under agreements to repurchase and other temporary funds 23,517 16,147 --------- --------- Net cash provided by Financing Activities 90,583 23,070 --------- --------- NET INCREASE IN CASH AND DUE FROM BANKS 18,423 20,947 CASH AND DUE FROM BANKS, BEGINNING 119,483 124,276 --------- --------- CASH AND DUE FROM BANKS, ENDING $ 137,906 $ 145,223 ========= =========
See notes to condensed consolidated financial statements. HANCOCK HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Six Months Ended June 30, 1997 and 1996) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Hancock Holding Company (the "Company"), its wholly-owned banks, Hancock Bank and Hancock Bank of Louisiana and other subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the consolidated financial statements and notes thereto of Hancock Holding Company's 1996 Annual Report to Shareholders. NEW ACCOUNTING STANDARDS In March 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings per Share". This Statement establishes standards for computing and presenting earnings per share ("EPS") and applies to all entities with publicly held common stock or potential common stock. This Statement replaces the presentation of primary EPS and fully diluted EPS with a presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Similar to fully diluted EPS, diluted EPS reflects the potential dilution of securities that could share in the earnings. This Statement is not expected to have a material effect on the Company's reported EPS amounts. Restatement of all prior period EPS data presented is required. This Statement is effective for the Company's consolidated financial statements for the year ending December 31, 1997. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income", effective for fiscal years beginning after December 15, 1997. This Statement requires that all items that are required to be recognized under accounting standards as components of comprehensive income be be reported in a financial statement that is displayed with the same prominence as other financial statements. This statement does not require a specific format for that financial statement but requires that an entity display an amount representing total comprehensive income for the period in that financial statement. This statement requires that an entity classify items of other comprehensive income by their nature in a financial statement. For example, other comprehensive income may include foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. In addition, the accumulated balance of other comprehensive income must be displayed separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. Reclassification of financial statements for earlier periods, provided for comparative purposes, is required. The Company has not determined the impact that the adoption of this new accounting standard will have on its consolidated financial statements. The Company will adopt this accounting standard on January 1, 1998, as required. ACQUISITION On January 17, 1997 the Company merged Hancock Bank of Louisiana, a wholly owned subsidiary of the Company with Southeast National Bank, Hammond, Louisiana (SOUTHEAST). The merger was consummated by the exchange of all outstanding common stock of SOUTHEAST in return for approximately $3,700,000 cash and approximately 120,000 shares of common stock of the Company. The merger was accounted for using the purchase method of accounting. SOUTHEAST had total assets of approximately $40,000,000 and stockholders equity of approximately $4,000,000 as of December 31, 1996 and net earnings of approximately $500,000 for the year then ended. PROPOSED ACQUISITION On July 15, 1997, the Company will acquire Commerce Corporation Inc., ("COMMERCE"), St. Francisville, Louisiana, which owns 100% of the stock of Bank of Commerce & Trust Company, for approximately $330,000 cash, 65,000 shares of common stock, and the assumption of COMMERCE debt owed to certain noteholders in the aggregate principal amount of $1,251,022. Immediately after the acquisition of COMMERCE, its wholly-owned subsidiary, Bank of Commerce & Trust Co., will be merged with and into Hancock Bank of Louisiana, a wholly-owned subsidiary of the Company. This transaction will be accounted for using the purchase method of accounting and will result in no changes or restatement of the Company's current or historical financial statements. Commerce had total assets of approximately $29,000,000 as of June 30, 1997 and net earnings of approximately $193,000 for the six month period then ended. HANCOCK HOLDING COMPANY The following discussion provides management's analysis of certain factors which have affected the Company's financial condition and operating results during the periods included in the accompanying condensed consolidated financial statements. CHANGES IN FINANCIAL CONDITION Liquidity The Company manages liquidity through traditional funding sources of core deposits, federal funds, and maturities of loans and securities held- to-maturity and sales of securities available-for-sale. The following liquidity ratios compare certain assets and liabilities to total deposits or total assets: June 30, March 31, December 31, 1997 1997 1996 -------- --------- ----------- Total securities to total deposits 47.59% 47.32% 46.80% Total loans (net of unearned discount) to total deposits 59.05% 58.62% 60.94% Interest-earning assets to total assets 90.94% 91.30% 91.30% Interest-bearing deposits to total deposits 78.12% 77.97% 77.53% Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate: June 30, March 31, December 31, 1997 1997 1996 -------- --------- ------------ Equity capital to total assets (1) 11.34% 11.11% 11.47% Total capital to risk-weighted assets (2) 19.87% 17.51% 19.02% Tier 1 Capital to risk-weighted assets (3) 18.90% 16.56% 18.03% Leverage Capital to total assets (4) 10.20% 9.94% 10.37% Property and equipment to equity capital 14.89% 15.28% 15.39% (1) Equity capital consists of stockholder's equity (common stock, capital surplus and undivided profits). (2) Total capital consists of equity capital less intangible assets plus a limited amount of loan loss reserves. Risk-weighted assets represent the assigned risk portion of all on and off-balance-sheet assets. Based on Federal Reserve Board guidelines, assets are assigned a risk factor percentage from 0% to 100%. A minimum ratio of total capital to risk-weighted assets of 8% is required. (3) Tier 1 capital consists of equity capital less intangible assets. A minimum ratio of tier 1 capital to risk-weighted assets of 4% is required. (4) Leverage capital consists of equity capital less goodwill and core deposit intangibles. The Federal Reserve Board currently requires bank holding companies rated Composite 1 under the BOPEC rating system to maintain a minimum 3% leverage capital ratio and all other bank holding companies not rated a Composite 1 under the BOPEC rating system to maintain a minimum 4% to 5% leverage capital ratio. RESULTS OF OPERATIONS Net Earnings Net earnings increased $650,000 or 4.1% for the first six months of 1997 compared to the first six months of 1996. The increase in earnings is attributable primarily to an increase in loan portfolio balances. Three Months Six Months Ended June 30, Ended June 30, ------------------- ----------------- 1997 1996 1997 1996 ------ ----- ------ ------ Results of Operations: Return on average assets 1.34% 1.39% 1.36% 1.37% Return on average equity 11.88% 14.15% 12.05% 14.09% Net Interest Income: Return on average interest-earning assets (tax equivalent) 8.33% 8.19% 8.29% 8.21% Cost of average interest-bearing funds 4.19% 4.11% 4.14% 4.11% ----- ----- ----- ----- Net interest spread 4.13% 4.08% 4.15% 4.10% ===== ===== ===== ===== Net yield on interest-earning assets (net interest income on a tax equivalent basis divided by average interest-earning assets) 5.13% 5.12% 5.13% 5.13% ===== ===== ===== =====
Provision for Loan Losses The amount of the reserve equals the cumulative total of the provisions for loan losses, reduced by actual loan charge-offs, and increased by reserves acquired in acquisitions and recoveries of loans previously charged-off. Provisions are made to the reserve to reflect the currently perceived risks of loss associated with the bank's loan portfolio. A specific loan is charged-off when management believes, after considering, among other things, the borrower's condition and the value of any collateral, that collection of the loan is unlikely. The following ratios are useful in determining the adequacy of the loan loss reserve and loan loss provision and are calculated using average loan balances. Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 1997 1996 1997 1996 ----- ----- ----- ------ Annualized net charge-offs to average loans 0.44% 0.20% 0.42% 0.22% Annualized provision for loan losses to average loans 0.50% 0.30% 0.39% 0.34% Average reserve for loan losses to average loans 1.65% 1.65% 1.67% 1.67%
Income Taxes The effective tax rate of the Company continues to be less than the statutory rate of 35%, due primarily to tax-exempt interest income. The amount of tax-exempt income earned during the first six months of 1997 was $2,280,000 compared to $2,121,000 for the comparable period in 1996. Income tax expense increased from $7,757,000 in the first six months of 1996 to $8,650,000 in the first six months of 1997. This increase is primarily due to increased earnings. Part II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit (27) Selected financial data. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HANCOCK HOLDING COMPANY Registrant August 14, 1997 By: /s/ Leo W. Seal, Jr. - ------------------------- ---------------------- Date Leo W. Seal, Jr. President and CEO August 14, 1997 By: /s/ George A. Schloegel - ------------------------ -------------------------- Date George A. Schloegel Vice-Chairman of the Board August 14, 1997 By: /s/ C. Stanley Bailey - ----------------------- ------------------------ Date C. Stanley Bailey Chief Financial Officer INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION 27 Financial Data Schedule EX-27 2 FDS HANCOCK HOLDING COMPANY 10-Q
9 1,000 6-MOS Dec-31-1997 Jan-01-1997 Jun-30-1997 137,906 2,168 46,500 0 88,476 880,997 882,343 1,203,001 (20,000) 2,442,441 2,037,284 111,126 16,442 1,050 0 0 36,655 239,884 2,442,441 57,678 26,975 5,345 89,998 32,429 34,786 55,212 2,344 1 41,895 25,100 25,100 0 0 16,450 1.52 1.52 5.13 3,409 6,127 0 0 19,800 3,570 1,061 20,000 20,000 0 2,000
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