-----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, FcLlPZo1FNnPxswwBEMisCFh9rF8m3mywVD4WbAdz4uuN6Sy7kdZcObpBOjehW9l it0vrNefbH6RTZgXVGwuoA== 0001030798-97-000126.txt : 19971117 0001030798-97-000126.hdr.sgml : 19971117 ACCESSION NUMBER: 0001030798-97-000126 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK HOLDING CO CENTRAL INDEX KEY: 0000750577 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 640693170 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13089 FILM NUMBER: 97718738 BUSINESS ADDRESS: STREET 1: ONE HANCOCK PLZ STREET 2: P.O. BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39502 BUSINESS PHONE: 6018684605 MAIL ADDRESS: STREET 1: ONE HANCOCK PLZ STREET 2: P O BOX 4019 CITY: GULFPORT STATE: MS ZIP: 39502 10-Q 1 HANCOCK HOLDING COMPANY 10-Q FOR 9/30/97 PERIOD UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ---- Quarterly Report Pursuant to Section 13 or 15 (d) -X-- of the Securities Exchange Act of 1934 ---- Transition Report Pursuant to Section 13 or 15(d) ---- of the Securities Exchange Act of 1934 For Quarter Ending September 30, 1997 Commission File Number 0-13089 HANCOCK HOLDING COMPANY (Exact name of registrant as specified in its charter) MISSISSIPPI 64-0693170 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) ONE HANCOCK PLAZA, P.O. BOX 4019, GULFPORT, MISSISSIPPI 39502 (Address of principal executive offices) (Zip Code) (601) 868-4606 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, address and fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO 10,903,669 Common Shares were outstanding as of September 30, 1997 for financial statement purposes. Page 1 of 12 CONTENTS PART I. FINANCIAL INFORMATION PAGE NUMBER ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- September 30, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Earnings -- Three Months Ended September 30, 1997 and 1996 Nine Months Ended September 30, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows -- Nine Months Ended September 30, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 - 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 Page 2 of 12
HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) (Unaudited) September 30, December 31, ASSETS: 1997 1996 * ------------ ------------ Cash and due from banks (non-interest bearing) $ 122,446 $ 119,483 Interest-bearing time deposits with other banks 2,168 2,945 Securities available-for-sale (cost of $121,825 and $98,567) 121,007 97,595 Securities held-to-maturity (market value of $884,739 and $806,710) 877,978 803,998 Federal funds sold and securities purchased under agreements to resell 3,000 12,000 Loans, net of unearned income 1,219,079 1,173,967 Less: Reserve for loan losses (20,652) (19,800) ----------- ----------- Net loans 1,198,427 1,154,167 Property and equipment, at cost, less accumulated depreciation of $45,151 and $43,365 41,665 40,412 Other real estate 2,329 1,875 Accrued interest receivable 19,730 20,188 Other assets 42,165 36,919 ----------- ---------- TOTAL ASSETS $ 2,430,915 $ 2,289,582 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing demand $ 438,084 $ 432,964 Interest-bearing savings, NOW, money market and other time 1,592,068 1,493,612 ----------- ----------- Total deposits 2,030,152 1,926,576 Federal funds purchased and securities sold under agreements to repurchase 98,133 87,609 Other liabilities 18,111 12,409 Long-term bonds 1,050 1,050 ----------- ----------- TOTAL LIABILITIES 2,147,446 2,027,644 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock 36,870 36,255 Capital surplus 200,769 194,500 Undivided profits 46,368 31,816 Unrealized loss on securities available-for-sale (538) (633) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 283,469 261,938 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,430,915 $ 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.
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED (Amounts in thousands except per share data) Three Months Ended September 30, Nine Months Ended September 30, INTEREST INCOME: 1997 1996 1997 1996 --------- --------- --------- ------- Interest and fees on loans $ 29,745 $ 27,159 $ 87,423 $ 79,011 Interest on: U. S. Treasury Securities 3,913 3,378 10,612 10,532 Obligations of other U.S. government agencies and corporations 8,679 8,824 27,030 25,932 Obligations of states and political subdivisions 1,064 880 2,990 2,614 Interest on federal funds sold and securities purchased under agreements to resell 700 1,087 1,860 4,621 Interest on time deposits and other 2,255 1,810 6,440 5,180 --------- --------- --------- --------- Total interest income 46,356 43,138 136,355 127,890 --------- --------- --------- --------- INTEREST EXPENSE: Interest on deposits 16,814 15,091 49,243 45,367 Interest on federal funds purchased and securities sold under agreements to repurchase 1,237 899 3,542 2,728 Interest on bonds and notes 107 (11) 160 140 --------- --------- --------- --------- Total interest expense 18,158 15,979 52,945 48,235 --------- --------- --------- --------- NET INTEREST INCOME 28,198 27,159 83,410 79,655 Provision for loan losses 2,993 1,036 5,337 2,837 --------- --------- --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 25,205 26,123 78,073 76,818 --------- --------- --------- --------- Non-Interest Income: Service charges on deposit accounts 4,775 4,129 13,673 12,485 Income from fiduciary activities 703 594 2,206 1,747 Securities gains (losses) 70 70 72 36 Other 2,093 1,802 5,817 4,599 --------- --------- --------- --------- Total non-interest income 7,641 6,595 21,768 18,867 --------- --------- --------- --------- Non-Interest Expense: Salaries and employee benefits 11,982 10,624 34,206 31,394 Net occupancy expense of premises and equipment expense 3,577 3,555 10,525 11,159 Other 6,810 6,534 19,533 17,570 --------- --------- --------- --------- Total non-interest expense 22,369 20,713 64,264 60,123 --------- --------- --------- --------- EARNINGS BEFORE INCOME TAXES 10,477 12,005 35,577 35,562 INCOME TAXES 3,790 3,923 12,440 11,680 --------- --------- --------- --------- NET EARNINGS $ 6,687 $ 8,082 $ 23,137 $ 23,882 ========= ========= ========= ========= NET EARNINGS PER COMMON SHARE $ 0.61 $ 0.79 $ 2.13 $ 2.34 ========= ========= ========= ========= DIVIDENDS PAID PER COMMON SHARE $ 0.25 $ 0.22 $ 0.75 $ 0.66 ========= ========= ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,899 10,212 10,857 10,212 ========= ========= ========= ========= See notes to condensed consolidated financial statements.
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (Amounts in thousands) Nine Months Ended September 30, 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 23,137 $ 23,882 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 2,567 3,567 Provision for loan losses 5,336 2,836 Provision for losses on real estate owned 300 118 Gains on sales of securities (72) (36) Decrease (Increase) in interest receivable 955 (212) Amortization of intangible assets 1,685 1,810 Increase in interest payable 420 66 Other, net 1,496 (4,792) --------- --------- Net cash provided by Operating Activities 35,824 27,239 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net (decrease)increase in interest-bearing time deposits (973) 1,395 Proceeds from sales and maturities of securities held-to-maturity 180,789 243,179 Purchase of securities held-to-maturity (253,214) (303,986) Proceeds from sales and maturities of securities available-for-sale 8,776 28,610 Purchase of securities available-for-sale (19,309) (17,604) Net decrease in federal funds sold and securities purchased under agreements to resell 12,000 103,225 Net increase decrease in loans (4,061) (84,149) Purchase of property and equipment, net (1,929) (3,283) Proceeds from sales of other real estate 1,263 688 Net cash disbursed in connection with purchase transactions (1,725) --- --------- --------- Net cash used in Investing Activities (78,383) (31,925) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 41,320 16,150 Dividends paid (8,272) (6,766) Net increase in federal funds purchased and securities sold under agreements to repurchase and other temporary funds 12,474 13,661 --------- --------- Net cash provided by Financing Activities 45,522 23,045 --------- --------- NET INCREASE IN CASH AND DUE FROM BANKS 2,963 18,359 CASH AND DUE FROM BANKS, BEGINNING 119,483 124,276 --------- --------- CASH AND DUE FROM BANKS, ENDING $ 122,446 $ 142,635 ========= ========= See notes to condensed consolidated financial statements.
Page 5 of 12 HANCOCK HOLDING COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (Nine Months Ended September 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. RECENT CHANGES IN FINANCIAL 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 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 the comprehensive income by their nature in a financial statement. For example, other comprehensive income may include foreign currency items, minimum Page 6 of 12 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. ACQUISITIONS On January 17, 1997 the Company merged Hancock Bank of Louisiana, a wholly owned subsidiary of the Company with Southeast National Bank, Hammond, Louisiana (SOUTHEAST). The merger was consummated by the exchange of all outstanding common stock of SOUTHEAST in return for approximately $3,700,000 cash and approximately 120,000 shares of common stock of the Company. The merger was accounted for using the purchase method. SOUTHEAST had total assets of approximately $40,000,000 and stockholders' equity of approximately $4,000,000 as of December 31, 1996 and net earnings of approximately $500,000 for the year then ended. 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 and 65,000 shares of common stock and the assumption of COMMERCE debt owed to certain individuals in the aggregate principal amount of $1,251,022. Immediately after the acquisition of COMMERCE, its wholly owned subsidiary, Bank Commerce and Trust Co., was merged with and into Hancock Bank of Louisiana, a wholly owned subsidiary of the Company. This transaction was 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. Page 7 of 12 HANCOCK HOLDING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion provides management's analysis of certain factors which have affected the Company's financial condition and operating results during the periods included in the accompanying condensed consolidated financial statements. CHANGES IN FINANCIAL CONDITION Liquidity The Company manages liquidity through traditional funding sources of core deposits, federal funds, and maturities of loans and securities held- to-maturity and sales of securities available-for-sale.
The following liquidity ratios compare certain assets and liabilities to total deposits or total assets: Sept.30, June 30, March 31, December 31, 1997 1997 1997 1996 ------ -------- --------- ----------- Total securities to total deposits 49.21% 47.59% 47.32% 46.80% Total loans (net of unearned discount) to total deposits 60.05% 59.05% 58.62% 60.94% Interest-earning assets to total assets 91.46% 90.94% 91.30% 91.30% Interest-bearing deposits to total deposits 78.42% 78.12% 77.97% 77.53% Capital Resources The Company continues to maintain an adequate capital position, as the following ratios indicate: Sept. 30, June 30, March 31, December 31, 1997 1997 1997 1996 -------- ------- -------- ----------- Equity capital to total assets (1) 11.68% 11.34% 11.11% 11.47% Total capital to risk-weighted assets (2) 19.98% 19.87% 19.63% 19.02% Tier 1 Capital to risk-weighted assets (3) 19.01% 18.90% 18.66% 18.03% Leverage Capital to total assets (4) 10.46% 10.20% 10.27% 10.37% Property and equipment to equity capital 14.67% 14.89% 15.28% 15.39% Page 8 of 12 (1) Equity capital consists of stockholders' 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 decreased $745,000, or 3.1% for the first nine months of 1997 compared to the first nine months of 1996. The decrease in earnings is attributable to a higher level of loan loss provision and non-interest expense. Three Months Nine Months Ended Sept. 30, Ended Sept. 30, ------------------- -------------------- 1997 1996 1997 1996 ------ ------ ------ ------ Results of Operations: Return on average assets 1.07% 1.21% 1.28% 1.39% Return on average equity 9.47% 12.71% 11.51% 14.04% Net Interest Income: Return on average interest-earning assets (tax equivalent) 8.29% 8.29% 8.34% 8.23% Cost of average interest-bearing funds 4.29% 4.16% 4.18% 4.10% ----- ----- ----- ----- Net interest spread 4.04% 4.13% 4.16% 4.13% ===== ===== ===== ===== Net interest margin (net interest income on a tax equivalent basis divided by average interest-earning assets) 5.09% 5.14% 5.15% 5.17% ===== ===== ===== =====
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 Page 9 of 12 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 Nine Months Ended Sept. 30, Ended Sept. 30, -------------------- ------------------- 1997 1996 1997 1996 ------ ----- ----- ---- Annualized net charge-offs to average loans 0.93% 0.39% 0.59% 0.32% Annualized provision for loan losses to average loans 0.99% 0.38% 0.59% 0.35% Average reserve for loan losses to average loans 1.69% 1.62% 1.68% 1.65%
Income Taxes The effective federal tax rate of the Company is slightly less than the statutory rate of 35%, due primarily to tax-exempt interest income. The amount of tax-exempt income earned during the first nine months of 1997 was $3,542,000 compared to $3,195,000 for the comparable period in 1996. Income tax expense increased from $11,680,000 in the first nine months of 1996 to $12,440,000 in the first nine months of 1997. This increase results from income taxes due to the State of Mississippi as a result of utilization of previous years' NOL carryforwards, and additional federal taxes due from the settlement of Internal Revenue Service audit issues for the years 1994 and 1995. Page 10 of 12 Part II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Selected financial data. Page 11 of 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HANCOCK HOLDING COMPANY Registrant November 14, 1997 By: /s/ Leo W. Seal, Jr. Date Leo W. Seal, Jr. President and CEO November 14, 1997 By: /s/ George A. Schloegel Date George A. Schloegel Vice-Chairman of the Board November 14, 1997 By: /s/ C. Stanley Bailey Date C. Stanley Bailey Chief Financial Officer Page 12 of 12 EX-27 2 HHC 10-Q 9/30/97 FDS
9 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 122,446 2,945 3,000 0 121,007 877,978 884,739 1,219,079 (20,652) 2,430,915 2,030,152 98,133 18,111 1,050 36,870 0 0 247,137 2,430,915 87,423 42,492 6,440 136,355 49,243 52,944 83,410 5,337 72 64,265 35,577 35,577 0 0 23,137 2.13 2.13 5.15 5,308 3,446 0 0 19,800 6,795 1,478 20,652 20,652 0 2,000
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