UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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 incorporation or organization)	(I.R.S. Employer Identification Number)

One Hancock Plaza, P.O. Box 4019, Gulfport, Mississippi	39502
(Address of principal executive offices)	(Zip Code)

(228) 868-4000

(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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  x          No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o          No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

36,822,569 common shares were outstanding as of October 30, 2009 for financial statement purposes.

Hancock Holding Company

Index

Part I.  Financial Information		Page Number
ITEM 1.	Financial Statements
	Condensed Consolidated Balance Sheets -- September 30, 2009 (unaudited) and December 31, 2008	1
	Condensed Consolidated Statements of Income (unaudited) -- Three and nine months ended September 30, 2009 and 2008	2
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) – Nine months ended September 30, 2009 and 2008	3
	Condensed Consolidated Statements of Cash Flows (unaudited) -- Nine months ended September 30, 2009 and 2008	4
	Notes to Condensed Consolidated Financial Statements (unaudited) -- September 30, 2009	5-20
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21-35
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	35
ITEM 4.	Controls and Procedures	36
Part II.  Other Information
ITEM 1A.	Risk Factors	36
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 4.	Submission of Matters to a Vote of Security Holders	36
ITEM 6.	Exhibits	36
Signatures		37

Part I. Financial Information

Item 1. Financial Statements

Hancock Holding Company and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	September 30, 2009 (unaudited)			December 31, 2008
ASSETS
Cash and due from banks (non-interest bearing)	$	142,967		$	199,775
Interest-bearing deposits with other banks		16,291			11,355
Federal funds sold		41			175,166
Other short-term investments		359,555			362,895
Trading securities		1,400			2,201
Securities available for sale, at fair value (amortized cost of $1,441,030 and $1,651,499)		1,499,889			1,679,756
Loans held for sale		33,869			22,290
Loans		4,265,124			4,264,149
Less: allowance for loan losses		(63,850	)		(61,725	)
unearned income		(12,928	)		(14,859	)
Loans, net		4,188,346			4,187,565
Property and equipment, net of accumulated depreciation of $111,189 and $101,050		198,998			205,912
Other real estate, net		9,644			5,195
Accrued interest receivable		29,494			33,067
Goodwill		62,277			62,277
Other intangible assets, net		5,315			6,363
Life insurance contracts		149,779			144,959
Deferred tax asset, net		-			5,819
Other assets		107,185			62,659
Total assets	$	6,805,050		$	7,167,254
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand	$	912,092		$	962,886
Interest-bearing savings, NOW, money market and time		4,508,063			4,968,051
Total deposits		5,420,155			5,930,937
Federal funds purchased		1,200			-
Securities sold under agreements to repurchase		555,094			505,932
Other short-term borrowings		47,000			-
Long-term notes		765			638
Deferred income tax payable		6,105			-
Other liabilities		119,979			120,248
Total liabilities		6,150,298			6,557,755
Stockholders' Equity
Common stock - $3.33 par value per share; 350,000,000 shares authorized, 31,876,575 and 31,769,679 issued and outstanding, respectively		106,149			105,793
Capital surplus		105,537			101,210
Retained earnings		431,475			411,579
Accumulated other comprehensive loss, net		11,591			(9,083	)
Total stockholders' equity		654,752			609,499
Total liabilities and stockholders' equity	$	6,805,050		$	7,167,254

See notes to unaudited condensed consolidated financial statements.

1

Hancock Holding Company and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2009		2008			2009		2008
Interest income:
Loans, including fees	$	61,146	$	62,353		$	180,471	$	184,376
Securities - taxable		16,643		20,493			53,669		60,508
Securities - tax exempt		1,099		1,203			3,232		3,902
Federal funds sold		-		52			5		1,759
Other investments		870		31			3,934		91
Total interest income		79,758		84,132			241,311		250,636
Interest expense:
Deposits		19,205		25,523			65,262		81,654
Federal funds purchased and securities sold under agreements to repurchase		2,731		3,772			8,064		11,531
Long-term notes and other interest expense		68		62			94		89
Total interest expense		22,004		29,357			73,420		93,274
Net interest income		57,754		54,775			167,891		157,362
Provision for loan losses, net		13,495		8,064			38,756		19,669
Net interest income after provision for loan losses		44,259		46,711			129,135		137,693
Noninterest income:
Service charges on deposit accounts		11,795		11,108			33,540		32,777
Other service charges, commissions and fees		14,248		15,093			42,619		46,851
Securities gains, net		61		(79	)		61		5,999
Other income		4,304		3,993			17,748		12,747
Total noninterest income		30,408		30,115			93,968		98,374
Noninterest expense:
Salaries and employee benefits		29,113		28,664			88,590		81,326
Net occupancy expense		5,144		5,188			15,215		14,491
Equipment rentals, depreciation and maintenance		2,397		2,711			7,514		8,405
Amortization of intangibles		354		360			1,064		1,089
Other expense		18,741		18,560			57,430		52,495
Total noninterest expense		55,749		55,483			169,813		157,806
Net income before income taxes		18,918		21,343			53,290		78,261
Income tax expense		3,700		5,338			10,295		21,215
Net income	$	15,218	$	16,005		$	42,995	$	57,046
Basic earnings per share	$	0.48	$	0.51		$	1.35	$	1.81
Diluted earnings per share	$	0.47	$	0.50		$	1.34	$	1.79
Dividends paid per share	$	0.24	$	0.24		$	0.72	$	0.72
Weighted avg. shares outstanding-basic		31,857		31,471			31,828		31,402
Weighted avg. shares outstanding-diluted		32,058		31,905			32,003		31,826

See notes to unaudited condensed consolidated financial statements.

2

Hancock Holding Company and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share and per share data)

	Shares		Common Stock Amount		Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Loss, net			Total
Balance, January 1, 2008		31,294,607	$	104,211	$	87,122	$	377,481		$	(14,627	)	$	554,187
Comprehensive income
Net income per consolidated statements of income		-		-		-		57,046			-			57,046
Net change in unfunded accumulated benefit obligation, net of tax		-		-		-		-			639			639
Net change in fair value of securities available for sale, net of tax		-		-		-		-			(270	)		(270	)
Comprehensive income														57,415
Change in pension  measurement date		-		-		-		(815	)		-			(815	)
Cash dividends declared ($0.72 per common share)		-		-		-		(22,776	)		-			(22,776	)
Common stock issued, long-term incentive plan, including income tax benefit of $3,795		407,499		1,357		9,481		-			-			10,838
Compensation expense, long-term incentive plan		-		-		1,986		-			-			1,986
Balance, September 30, 2008		31,702,106	$	105,568	$	98,589	$	410,936		$	(14,258	)	$	600,835
Balance, January 1, 2009		31,769,679	$	105,793	$	101,210	$	411,579		$	(9,083	)	$	609,499
Comprehensive income
Net income per consolidated statements of income		-		-		-		42,995			-			42,995
Net change in unfunded accumulated benefit obligation, net of tax		-		-		-		-			1,360			1,360
Net change in fair value of securities available for sale, net of tax		-		-		-		-			19,314			19,314
Comprehensive income														63,669
Cash dividends declared ($0.72 per common share)		-		-		-		(23,099	)		-			(23,099	)
Common stock issued, long-term incentive plan, including income tax benefit of $390		106,896		356		1,968		-			-			2,324
Compensation expense, long-term incentive plan		-		-		2,359		-			-			2,359
Balance, September 30, 2009		31,876,575	$	106,149	$	105,537	$	431,475		$	11,591		$	654,752

See notes to unaudited condensed consolidated financial statements.

3

Hancock Holding Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	42,995		$	57,046
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,873			11,851
Provision for loan losses		38,756			19,669
Loss in connection with  other real estate owned		493			103
Deferred tax benefit		(176	)		(3,437	)
Increase in cash surrender value of life insurance contracts		(4,820	)		(5,393	)
Gain on sales/paydowns of securities available for sale, net		(61	)		(2,646	)
Gain on sale or disposal of other assets		(1,689	)		(677	)
Gain on sale of loans held for sale		(483	)		(474	)
Gain on trading securities		-			(3,353	)
Net accretion of securities premium/discount		221			1,407
Amortization of mortgage servicing rights		131			161
Amortization of intangible assets		1,063			1,089
Stock-based compensation expense		2,359			1,986
Decrease in accrued interest receivable		3,573			4,753
Increase in accrued expenses		8,713			6,435
Increase in other liabilities		1,597			1,537
Decrease in interest payable		(2,003	)		(3,135	)
Decrease in policy reserves and liabilities		(7,317	)		(9,810	)
Decrease in reinsurance receivable		2,467			6,418
Increase in cash collateral on secured repos		(35,600	)		-
Increase in federal home loan bank stock		(6,546	)		-
Increase in other assets		(3,731	)		(5,017	)
Proceeds from sale of loans held for sale		286,142			159,076
Originations of loans held for sale		(297,238	)		(156,209	)
Proceeds from paydowns of securities held for trading		-			7,635
Excess tax benefit from share based payments		(390	)		(3,795	)
Other, net		654			(197	)
Net cash provided by operating activities		40,983			85,023
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in interest-bearing time deposits		(4,936	)		(2,161	)
Proceeds from sales of securities available for sale		7,643			3,326
Proceeds from maturities of securities available for sale		503,571			800,357
Purchases of securities available for sale		(303,287	)		(857,164	)
Proceeds from maturities of short term investments		1,444,998			-
Purchase of short term investments		(1,438,774	)		(133,270	)
Net (increase) decrease in federal funds sold		175,125			(45,155	)
Net increase in loans		(49,409	)		(490,582	)
Purchases of property and equipment		(5,969	)		(19,580	)
Proceeds from sales of property and equipment		2,686			1,851
Proceeds from sales of other real estate		4,930			4,673
Net cash (used in) provided by investing activities		336,578			(737,705	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits		(510,782	)		405,261
Net increase in federal funds purchased and securities sold under agreements to repurchase		50,362			247,195
Proceeds from issuance of short-term notes		985,444			-
Repayment of short-term notes		(938,444	)		-
Repayments of long-term notes		(174	)		(115	)
Dividends paid		(23,099	)		(22,776	)
Proceeds from exercise of stock options		1,934			7,043
Excess tax benefit from stock option exercises		390			3,795
Net cash (used in) provided by financing activities		(434,369	)		640,403
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS		(56,808	)		(12,279	)
CASH AND DUE FROM BANKS, BEGINNING		199,775			182,615
CASH AND DUE FROM BANKS, ENDING	$	142,967		$	170,336
SUPPLEMENTAL INFORMATION:
Restricted stock issued to employees of Hancock		128			560
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Transfers from loans to other real estate	$	12,521		$	5,002
Financed sale of foreclosed property		2,649			400
Transfers from trading securities to available for sale securities		-			190,802
Due from broker sale of securities		-			(61,259	)

See notes to unaudited condensed consolidated financial statements.

4

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements of Hancock Holding Company and all majority-owned subsidiaries (the “Company”) included herein are unaudited; however, they include all adjustments all of which are of a normal recurring nature which, in the opinion of management, are necessary to present fairly the Company’s Condensed Consolidated Balance Sheets at September 30, 2009 and December 31, 2008, the Company’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2009 and 2008, the Company’s Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008.   The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.  Although the Company believes the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to the Company’s organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s 2008 Annual Report on Form 10-K. The results of operations for the nine months ended September 30, 2009 are not necessarily indicative of the results expected for the full year.

Use of Estimates

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles.  The accounting principles we follow and the methods for applying these principles conform with accounting principles generally accepted in the United States of America and with general practices followed by the banking industry which requires management to make estimates and assumptions about future events.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources.  On an ongoing basis, the Company evaluates its estimates, including those related to the allowance for loan losses, intangible assets and goodwill, income taxes, pension and postretirement benefit plans and contingent liabilities.  These estimates and assumptions are based on our best estimates and judgments.  We evaluate estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.  We adjust such estimates and assumptions when facts and circumstances dictate.  Illiquid credit markets, volatile equity markets, rising unemployment levels and declines in consumer spending have combined to increase the uncertainty inherent in such estimates and assumptions.  Allowance for loan losses, deferred income taxes, and goodwill are potentially subject to material changes in the near term.  Actual results could differ significantly from those estimates.

Certain reclassifications have been made to conform prior year financial information to the current period presentation. These reclassifications had no material impact on the unaudited condensed consolidated financial statements.

During the second quarter, the Company corrected an error within other income that was immaterial to current and prior years and increased net income by approximately $1.1 million after taxes.

Critical Accounting Policies

There have been no material changes or developments in the Company’s evaluation of accounting estimates and underlying assumptions or methodologies that the Company believes to be Critical Accounting Policies and Estimates as disclosed in our Form 10-K, for the year ended December 31, 2008.

5

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

2. Fair Value

The Financial Accounting Standards Board (FASB) issued authoritative guidance that establishes a framework for measuring fair value under generally accepted accounting principles (GAAP), clarifies the definition of fair valuewithin that framework, and expands disclosures about the use of fair value measurements.The guidance defines a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair value giving preference to quoted prices in active markets (level 1) and the lowest priority to unobservable inputs such as a reporting entity’s own data (level 3).Level 2inputs includequoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.Available for sale securities classified as level 1 within the valuation hierarchy include U.S. Treasury securities, obligations of U.S. Government-sponsored agencies, and other debt and equity securities.  Level 2 classified available for sale securities include mortgage-backed debt securities, collateralized mortgage obligations, and state and municipal bonds.

The Company adopted the provisions of the guidance for nonfinancial assets and nonfinancial liabilities on January 1, 2009.

Fair Value of Assets and Liabilities Measured on a Recurring Basis

The following tables present for each of the fair value hierarchy levels the Company’s financial assets and liabilities that are measured at fair value (in thousands) on a recurring basis at September 30, 2009 and December 31, 2008.

	As of September 30, 2009
	Level 1		Level 2		Net Balance
Assets
Available for sale securities:
Debt securities issued by the U.S. Treasury and other government corporations and agencies	$	147,114	$	-	$	147,114
Debt securities issued by states of the United States and political subdivisions of the states		-		172,519		172,519
Corporate debt securities		17,144		-		17,144
Residential mortgage-backed securities		-		1,007,406		1,007,406
Collateralized mortgage obligations		-		155,521		155,521
Equity securities		185		-		185
Trading securities:
Equity securities		1,400		-		1,400
Short-term investments		359,555		-		359,555
Loans carried at fair value		-		39,458		39,458
Total assets	$	525,398	$	1,374,904	$	1,900,302
Liabilities
Swaps	$	-	$	2,479	$	2,479
Total Liabilities	$	-	$	2,479	$	2,479

6

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

2. Fair Value (continued)

	As of December 31, 2008
	Level 1		Level 2		Net Balance
Assets
Available for sale securities:
Debt securities issued by the U.S. Treasury and other government corporations and agencies	$	264,309	$	-	$	264,309
Debt securities issued by states of the United States and political subdivisions of the states		-		151,805		151,805
Corporate debt securities		25,916		-		25,916
Residential mortgage-backed securities		-		1,041,806		1,041,806
Collateralized mortgage obligations		-		195,771		195,771
Equity securities		149		-		149
Trading securities:
Equity securities		2,201		-		2,201
Short-term investments		362,895		-		362,895
Loans carried at fair value		-		29,232		29,232
Total assets	$	655,470	$	1,418,614	$	2,074,084
Liabilities
Swaps	$	-	$	4,123	$	4,123
Total Liabilities	$	-	$	4,123	$	4,123

Fair Value of Assets Measured on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis and, therefore, are not included in the above table.  Impaired loans are level 2 assets measured using appraisals from external parties of the collateral less any prior liens or based on recent sales activity for similar assets in the property’s market.  Other real estate owned are level 2 properties recorded at the balance of the loan or at estimated fair value less estimated selling costs, whichever is less, at the date acquired.  Fair values are determined by sales agreement or appraisal.  Inputs include appraisal values on the properties or recent sales activity for similar assets in the property’s market.  The following table presents for each of the fair value hierarchy levels the Company’s financial assets that are measured at fair value (in thousands) on a nonrecurring basis at September 30, 2009.

	As of September 30, 2009
	Level 1		Level 2		Net Balance
Assets
Impaired loans	$	-	$	62,373	$	62,373
Other real estate owned		-		9,644		9,644
Total assets	$	-	$	72,017	$	72,017

7

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

2. Fair Value (continued)

The following methods and assumptions were used to estimate the fair value regarding disclosures about fair value of financial instruments 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 - Estimated fair values for securities are based on quoted market prices where available.  If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments.

Loans, Net of Unearned Income - The fair value of loans is estimated by discounting the future cash flows using the current rates for similar loans with the same remaining maturities.

Accrued Interest Receivable and Accrued Interest Payable– The carrying amounts are a reasonable estimate of their fair values.

Deposits – The guidance requires that the fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing checking and savings accounts, be assigned fair values equal to amounts payable upon demand (carrying amounts).  The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Federal Funds Purchased - For these short-term liabilities, the carrying amount is a reasonable estimate of fair value.

Securities Sold under Agreements to Repurchase, Other Short-term Borrowings and Federal Funds Purchased – For these short-term liabilities, the carrying amount is a reasonable estimate of fair value.

Long-Term Notes - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value.  The fair value is estimated by discounting the future contractual cash flows using current market rates at which similar notes over the same remaining term could be obtained.

Commitments - The fair value of loan commitments and letters of credit approximate the fees currently charged for similar agreements or the estimated cost to terminate or otherwise settle similar obligations.  The fees associated with these financial instruments, or the estimated cost to terminate, as applicable are immaterial.

8

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

2. Fair Value (continued)

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

	September 30, 2009				December 31, 2008
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash, interest-bearing deposits, federal funds sold	$	518,854	$	518,854	$	749,191	$	749,191
Securities and short-term investments		1,501,289		1,501,289		1,681,957		1,681,957
Loans, net of unearned income		4,286,065		4,418,552		4,271,580		4,625,130
Accrued interest receivable		29,494		29,494		33,067		33,067
Financial liabilities:
Deposits	$	5,420,155	$	5,460,728	$	5,930,937	$	5,990,883
Federal funds purchased		1,200		1,200		-		-
Securities sold under agreements to repurchase		555,094		555,094		505,932		505,932
Other short-term borrowings		47,000		47,000		-		-
Long-term notes		765		765		638		638
Accrued interest payable		5,320		5,320		6,322		6,322

3. Loans and Allowance for Loan Losses

Loans, net of unearned income, totaled $4.3 billion at September 30, 2009 compared to $4.2 billion at December 31, 2008.  The Company also held $33.9 million and $22.3 million in loans held for sale at September 30, 2009 and December 31, 2008, respectively, carried at lower of cost or fair value.  These loans are originated on a best-efforts basis, whereby a commitment by a third party to purchase the loan has been received concurrent with the Banks’ commitment to the borrower to originate the loan.

In some instances, loans are placed on nonaccrual status.  All accrued but uncollected interest related to the loan is deducted from income in the period the loan is assigned a nonaccrual status.  For such period as a loan is in nonaccrual status, any cash receipts are applied first to principal, second to expenses incurred to cause payment to be made and lastly to the recovery of any reversed interest income and interest that would be due and owing subsequent to the loan being placed on nonaccrual status.  Nonaccrual loans and foreclosed assets, which make up total non-performing assets, amounted to approximately 1.06% and 0.83% of total loans at September 30, 2009 and December 31, 2008, respectively.

The amount of interest that would have been recognized on nonaccrual loans for the three and nine months ended September 30, 2009 was approximately $0.8 million and $2.0 million, respectively.  Interest recovered on nonaccrual loans that were recorded in net income for the three and nine months ended September 30, 2009 was $0.03 million and $0.2 million, respectively.

9

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

3. Loans and Allowance for Loan Losses (continued)

The following table presents information on loans evaluated for possible impairment loss:

	September 30, 2009		December 31, 2008
Impaired loans	(In thousands)
Requiring a loss allowance	$	31,146	$	15,089
Not requiring a loss allowance		39,534		7,015
Total recorded investment in impaired loans		70,680		22,104
Impairment loss allowance required	$	8,307	$	7,317

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
	(In thousands)
Balance of allowance for loan losses at beginning of period	$	63,850	$	53,300	$	61,725	$	47,123
Provision for loan losses, net		13,495		8,064		38,756		19,669
Loans charged-off:
Commercial, real estate and mortgage		10,691		1,821		28,481		3,838
Direct and indirect consumer		2,028		1,522		5,712		4,192
Finance company		1,355		1,100		4,078		3,297
Demand deposit accounts		688		690		1,912		1,972
Total charge-offs		14,762		5,133		40,183		13,299
Recoveries of loans previously charged-off:
Commercial, real estate and mortgage		338		86		692		608
Direct and indirect consumer		472		375		1,334		1,329
Finance company		203		188		615		626
Demand deposit accounts		254		320		911		1,144
Total recoveries		1,267		969		3,552		3,707
Net charge-offs		13,495		4,164		36,631		9,592
Balance of allowance for loan losses at end of period	$	63,850	$	57,200	$	63,850	$	57,200

10

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

4. Earnings Per Share

The Company adopted the FASB’s authoritative guidance regarding the determination of whether instruments granted in share-based payment transactions are participating securities.  This guidance provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of earnings per share pursuant to the two-class method.  This guidance was effective January 1, 2009, and upon adoption the company was required to retrospectively adjust its earnings per share data including any amounts related to interim periods, summaries of earnings and selected financial data.

Following is a summary of the information used in the computation of earnings per common share (in thousands), using the two-class method:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
Numerator:
Net income to common shareholders	$	15,218	$	16,005	$	42,995	$	57,046
Net income allocated to participating securities -- basic and diluted		47		50		142		151
Net income allocated to common shareholders - basic and diluted	$	15,171	$	15,955	$	42,853	$	56,895
Denominator:
Weighted-average common shares - basic		31,857		31,471		31,828		31,402
Dilutive potential common shares		201		434		175		424
Weighted average common shares - diluted		32,058		31,905		32,003		31,826
Earnings per common share:
Basic	$	0.48	$	0.51	$	1.35	$	1.81
Diluted	$	0.47	$	0.50	$	1.34	$	1.79

There were no anti-dilutive share-based incentives outstanding for the three and nine months ended September 30, 2009 and September 30, 2008.

5. Share-Based Payment Arrangements

Stock Option Plans

Hancock maintains incentive compensation plans that incorporate share-based compensation.  These plans have been approved by the Company’s shareholders.  Detailed descriptions of these plans were included in note 10 to the consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2008.  No options were granted in the first nine months of 2009.

11

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

5. Share-Based Payment Arrangements (Continued)

A summary of option activity under the plans for the nine months ended September 30, 2009, and changes during the nine months then ended is presented below:

Options	Number of Shares			Weighted- Average Exercise Price ($)		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2009		1,013,677		$	33.75		6.2
Granted		-		$	-
Exercised		(59,958	)	$	20.99			$	1,137
Forfeited or expired		(29,104	)	$	39.04
Outstanding at September 30, 2009		924,615		$	34.42		5.8	$	4,670
Exercisable at September 30, 2009		596,404		$	30.82		4.5	$	4,668
Share options expected to vest		328,211		$	40.95		8.1	$	-

The total intrinsic value of options exercised during the nine months ended September 30, 2009 and 2008 was $1.1 million and $10.8 million, respectively.

A summary of the status of the Company’s nonvested shares as of September 30, 2009, and changes during the nine months ended September 30, 2009, is presented below:

	Number of Shares			Weighted- Average Grant-Date Fair Value ($)
Nonvested at January 1, 2009		621,621		$	22.59
Granted		27,375		$	42.73
Vested		(92,016	)	$	21.07
Forfeited		(8,438	)	$	27.10
Nonvested at September 30, 2009		548,542		$	23.79

As of September 30, 2009, there was $8.4 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans.  That cost is expected to be recognized over a weighted-average period of 3.27 years.  The total fair value of shares which vested during the nine months ended September 30, 2009 and 2008 was $1.9 million and $1.7 million, respectively.

12

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

6. Retirement Plans

Net periodic benefits cost includes the following components for the three and nine months ended September 30, 2009 and 2008:

	Pension Benefits						Other Post-retirement Benefits
	Three Months Ended September 30,
	2009			2008			2009			2008
	(In thousands)
Service cost	$	777		$	657		$	28		$	41
Interest cost		1,208			1,129			142			122
Expected return on plan assets		(968	)		(1,208	)		-			-
Amortization of prior service cost		-			-			(13	)		(13	)
Amortization of net loss		662			237			74			37
Amortization of transition obligation		-			-			1			1
Net periodic benefit cost	$	1,679		$	815		$	232		$	188

	Pension Benefits						Other Post-retirement Benefits
	Nine Months Ended September 30,
	2009			2008			2009			2008
	(In thousands)
Service cost	$	2,330		$	1,970		$	85		$	122
Interest cost		3,625			3,388			424			367
Expected return on plan assets		(2,904	)		(3,623	)		-			-
Amortization of prior service cost		-			-			(40	)		(40	)
Amortization of net loss		1,986			710			222			110
Amortization of transition obligation		-			-			4			4
Net periodic benefit cost	$	5,037		$	2,445		$	695		$	563

The Company anticipates that it will contribute $6.4 million to its pension plan and approximately $1.4 million to its post-retirement benefits in 2009.  During the first nine months of 2009, the Company contributed approximately $1.6 million to its pension plan and approximately $0.3 million for post-retirement benefits.

13

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

7. Other Service Charges, Commission and Fees, and Other Income

Components of other service charges, commission and fees are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
	(In thousands)
Trust fees	$	4,008	$	4,330	$	11,189	$	13,080
Credit card merchant discount fees		2,845		2,805		8,309		8,229
Income from insurance operations		3,526		3,819		11,026		12,419
Investment and annuity fees		2,007		2,421		6,559		7,957
ATM fees		1,862		1,718		5,536		5,166
Total other service charges, commissions and fees	$	14,248	$	15,093	$	42,619	$	46,851

Components of other income are as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2009			2008		2009			2008
	(In thousands)
Secondary mortgage market operations	$	1,482		$	817	$	4,467		$	2,347
Income from bank owned life insurance		1,322			1,553		4,591			4,577
Outsourced check income		(24	)		28		(44	)		263
Letter of credit fees		343			312		1,015			852
Gain on sale of property and equipment		14			14		1,374			677
Other		1,167			1,269		6,345			4,031
Total other income	$	4,304		$	3,993	$	17,748		$	12,747

8. Other Expense

Components of other expense are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
	(In thousands)
Data processing expense	$	4,660	$	4,709	$	13,999	$	13,547
Postage and communications		2,313		2,396		6,239		6,995
Ad valorem and franchise taxes		780		622		2,313		2,746
Legal and professional services		2,749		3,447		7,866		9,275
Stationery and supplies		490		366		1,398		1,344
Advertising		1,301		2,187		3,729		5,437
Deposit insurance and regulatory fees		2,335		880		10,279		1,895
Training expenses		116		123		295		476
Other fees		913		1,017		2,909		2,999
Annuity expense		183		231		649		1,345
Claims paid		330		292		907		946
Other expense		2,571		2,290		6,847		5,490
Total other expense	$	18,741	$	18,560	$	57,430	$	52,495

14

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

9. Income Taxes

The Company adopted the FASB’s authoritative guidance regarding accounting for uncertainty in income taxeson January 1, 2007.  There were no material uncertain tax positions as of September 30, 2009 and December 31, 2008.  The Company does not expect that unrecognized tax benefits will significantly increase or decrease within the next 12 months.

It is the Company’s policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense.  The interest accrual is considered immaterial to the Company’s consolidated balance sheet as of September 30, 2009 and December 31, 2008.

The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various returns in the states where its banking offices are located.  Its filed income tax returns are no longer subject to examination by taxing authorities for years before 2005.

10. Segment Reporting

The Company’s primary segments are geographically divided into the Mississippi (MS), Louisiana (LA), Florida (FL) and Alabama (AL) markets. Each segment offers the same products and services but is managed separately due to different pricing, product demand, and consumer markets.  Each segment offers commercial, consumer and mortgage loans and deposit services. In the following tables, the column “Other” includes additional consolidated subsidiaries of the Company: Hancock Investment Services, Inc. and subsidiaries, Hancock Insurance Agency, Inc. and subsidiaries, Harrison Finance Company, Magna Insurance Company and three real estate corporations owning land and buildings that house bank branches and other facilities.

15

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

10. Segment Reporting (continued)

Following is selected information for the Company’s segments (in thousands):

	Three Months Ended September 30, 2009
	MS			LA		FL			AL			Other		Eliminations			Consolidated
Interest income	$	34,671		$	34,282	$	4,332		$	2,184		$	5,879	$	(1,590	)	$	79,758
Interest expense		13,455			6,929		1,163			657			1,275		(1,475	)		22,004
Net interest income		21,216			27,353		3,169			1,527			4,604		(115	)		57,754
Provision for loan losses		4,033			3,496		2,708			1,934			1,324		-			13,495
Noninterest income		12,167			11,456		472			572			5,750		(9	)		30,408
Depreciation and amortization		2,566			857		127			78			130		-			3,758
Other noninterest expense		21,615			20,692		1,849			1,154			6,706		(25	)		51,991
Net income before income taxes		5,169			13,764		(1,043	)		(1,067	)		2,194		(99	)		18,918
Income tax expense (benefit)		(5	)		3,911		(606	)		(391	)		791		-			3,700
Net income (loss)	$	5,174		$	9,853	$	(437	)	$	(676	)	$	1,403	$	(99	)	$	15,218
Total assets	$	3,543,470		$	2,836,119	$	484,083		$	168,974		$	910,594	$	(1,138,190	)	$	6,805,050
Total interest income from affiliates	$	1,590		$	-	$	-		$	-		$	-	$	(1,590	)	$	-
Total interest income from external customers	$	33,081		$	34,282	$	4,332		$	2,184		$	5,879	$	-		$	79,758

	Three Months Ended September 30, 2008
	MS		LA		FL			AL			Other		Eliminations			Consolidated
Interest income	$	39,458	$	37,316	$	2,384		$	1,473		$	6,574	$	(3,073	)	$	84,132
Interest expense		17,474		11,731		1,196			675			1,239		(2,958	)		29,357
Net interest income		21,984		25,585		1,188			798			5,335		(115	)		54,775
Provision for loan losses		1,732		3,686		1,285			355			1,006		-			8,064
Noninterest income		14,551		9,660		320			176			5,417		(9	)		30,115
Depreciation and amortization		2,714		881		133			78			144		-			3,950
Other noninterest expense		23,649		18,055		1,917			1,247			6,690		(25	)		51,533
Net income before income taxes		8,440		12,623		(1,827	)		(706	)		2,912		(99	)		21,343
Income tax expense (benefit)		1,964		3,331		(713	)		(261	)		1,017		-			5,338
Net income (loss)	$	6,476	$	9,292	$	(1,114	)	$	(445	)	$	1,895	$	(99	)	$	16,005
Total assets	$	3,676,308	$	2,875,801	$	229,917		$	130,568		$	849,616	$	(1,017,448	)	$	6,744,762
Total interest income from affiliates	$	3,070	$	-	$	-		$	-		$	3	$	(3,073	)	$	-
Total interest income from external customers	$	36,388	$	37,316	$	2,384		$	1,473		$	6,571	$	-		$	84,132

16

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

10. Segment Reporting (continued)

Following is selected information for the Company’s segments (in thousands):

	Nine Months Ended September 30, 2009
	MS		LA		FL			AL			Other		Eliminations			Consolidated
Interest income	$	104,994	$	104,023	$	12,562		$	6,180		$	18,203	$	(4,651	)	$	241,311
Interest expense		44,505		23,164		4,154			2,128			3,775		(4,306	)		73,420
Net interest income		60,489		80,859		8,408			4,052			14,428		(345	)		167,891
Provision for loan losses		10,534		12,745		5,355			5,786			4,336		-			38,756
Noninterest income		40,290		31,598		1,164			1,190			19,753		(27	)		93,968
Depreciation and amortization		8,261		2,601		381			233			396		-			11,872
Other noninterest expense		64,561		61,951		5,882			3,975			21,646		(74	)		157,941
Net income before income taxes		17,423		35,160		(2,046	)		(4,752	)		7,803		(298	)		53,290
Income tax expense (benefit)		1,261		9,514		(1,647	)		(1,715	)		2,882		-			10,295
Net income (loss)	$	16,162	$	25,646	$	(399	)	$	(3,037	)	$	4,921	$	(298	)	$	42,995
Total assets	$	3,543,470	$	2,836,119	$	484,083		$	168,974		$	910,594	$	(1,138,190	)	$	6,805,050
Total interest income from affiliates	$	4,630	$	-	$	9		$	-		$	12	$	(4,651	)	$	-
Total interest income from external customers	$	100,364	$	104,023	$	12,553		$	6,180		$	18,191	$	-		$	241,311

	Nine Months Ended September 30, 2008
	MS		LA		FL			AL			Other		Eliminations			Consolidated
Interest income	$	120,392	$	108,577	$	6,826		$	3,311		$	19,979	$	(8,449	)	$	250,636
Interest expense		54,604		37,334		3,596			1,649			4,195		(8,104	)		93,274
Net interest income		65,788		71,243		3,230			1,662			15,784		(345	)		157,362
Provision for loan losses		6,628		7,666		1,556			1,002			2,817		-			19,669
Noninterest income		41,855		35,280		883			481			19,900		(25	)		98,374
Depreciation and amortization		8,072		2,687		358			299			435		-			11,851
Other noninterest expense		65,186		49,921		5,031			3,447			22,461		(91	)		145,955
Net income before income taxes		27,757		46,249		(2,832	)		(2,605	)		9,971		(279	)		78,261
Income tax expense (benefit)		6,844		12,954		(1,391	)		(950	)		3,758		-			21,215
Net income (loss)	$	20,913	$	33,295	$	(1,441	)	$	(1,655	)	$	6,213	$	(279	)	$	57,046
Total assets	$	3,676,308	$	2,875,801	$	229,917		$	130,568		$	849,616	$	(1,017,448	)	$	6,744,762
Total interest income from affiliates	$	8,389	$	8	$	4		$	-		$	48	$	(8,449	)	$	-
Total interest income from external customers	$	112,003	$	108,569	$	6,822		$	3,311		$	19,931	$	-		$	250,636

17

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

11. New Accounting Pronouncements

In September 2009, the Financial Accounting Standards Board (FASB) issued guidance that permits companies to determine the fair value of a liability using the perspective of an investor that holds the related obligation as an asset.  In the absence of a quoted market price in an active market for an identical liability, which generally would not be available because liabilities are not exchange-traded as liabilities, companies may apply approaches that use the quoted price of an investment in the identical liability or similar liabilities traded as assets or other valuation techniques consistent with the fair value measurement principles.  The new guidance is effective for interim and annual periods beginning after August 26, 2009, and applies to all fair value measurements of liabilities required by generally accepted accounting principles.  The adoption of the guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In June 2009, the FASB issued authoritative guidance for the FASB accounting standards codification (Codification) and the hierarchy of generally accepted accounting principles (U.S. GAAP). The guidance establishes the Codification to become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The guidance and the Codification are effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The Company adopted the provisions of the guidance, as required, and determined that the impact to the Company’s financial condition or results of operations was immaterial.

In May 2009, the FASB issued authoritative guidance establishing general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  The guidance provides the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  The guidance is effective for interim or annual financial periods ending after June 15, 2009, and shall be applied prospectively.  The impact on the Company’s financial condition or results of operations is dependent on the extent of any future subsequent events.  See Note 12 for disclosure of the Company’s stock offering that occurred on October 26, 2009.  The Company performed a review through November 5, 2009, and determined that the stock offering was the only transaction that met the criteria of a subsequent event.

In April 2009, the FASB issued guidance determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly.  This guidance affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell the asset in an orderly transaction; includes additional factors for determining whether there has been a significant decrease in market activity for an asset when the market is inactive; eliminates the presumption that all transactions are distressed unless proven otherwise requiring an entity to base its conclusion on the weight of evidence; and requires an entity to disclose a change in valuation technique resulting from application of the guidance and to quantify its effects, if practicable.  The guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009.  The adoption of the guidance in the second quarter did not have a material impact on the Company’s financial condition or results of operations.

18

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

11. New Accounting Pronouncements (continued)

In April 2009, the FASB issued authoritative guidance regarding recognition and presentation of other-than-temporary impairmentsthat changes existing guidance for determining whether an impairment is other than temporary to debt securities; replaces the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a requirement that management assert: (a) it does not have the intent to sell the security and (b) it is more likely than not it will not have to sell the security before recovery of its cost basis; requires that an entity recognize noncredit losses on held-to-maturity debt securities in other comprehensive income and amortize the amount over the remaining life of the security in a prospective manner by offsetting the recorded value of the asset unless the security is subsequently sold or there are credit losses; requires an entity to present the total other-than-temporary impairment in the statement of earnings with an offset for the amount recognized in other comprehensive income; and at adoption, requires an entity to record a cumulative-effect adjustment as of the beginning of the period of adoption to reclassify the noncredit component of a previously recognized other-than-temporary impairment from retained earnings to accumulated other comprehensive income if the entity does not intend to sell the security and it is more likely than not that the entity will be required to sell the security before recovery.  The authoritative guidance is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009.  The adoption of the guidance in the second quarter did not have a material impact on the Company’s financial condition or results of operations.

In April 2009, the FASB issued guidance for interim disclosures about fair value of financial instruments.  Under this guidance, a publicly traded company shall include disclosures about the fair value of its financial instruments whenever it issues summarized financial information for interim reporting periods.  In addition, an entity shall disclose in the body or in the accompanying notes of its summarized financial information for interim reporting periods and in its financial statements for annual reporting periods the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position.  The guidance is effective for interim periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009.  The adoption of the guidance in the second quarter did not have a material impact on the Company’s financial condition or results of operations.

In February 2009, the FASB issued authoritative guidance regarding accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies, that amends provisions related to the initial recognition and measurement, subsequent measurement and disclosure of assets and liabilities arising from contingencies in a business combination.  The guidance is effective for all business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  The impact on the Company’s financial condition or results of operations is dependent on the extent of future business combinations.

In January 2009, FASB issued guidance toreplace the requirement to use market participant assumptions when determining future cash flows and, instead, requires an assessment of whether it is probable that there has been an adverse change in estimated cash flows.  It requires an entity to consider all available information relevant to the collectability of the security, including information about past events, current conditions, and reasonable and supportable forecasts when developing estimates of future cash flows.  The guidance is effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively.  The adoption of the guidance did not have a material impact on the Company’s financial condition or results of operations.

19

Hancock Holding Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements – (Continued)

(Unaudited)

11. New Accounting Pronouncements (continued)

In December 2008, the FASB issued authoritative guidance for employers’ disclosures about postretirement benefit plan assets, which provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan.  The objectives of the disclosures are to provide users of financial statements with an understanding of how investment allocation decisions are made; the major categories of plan assets; the inputs and valuation techniques used to measure fair value of plan assets; the effect of fair value measurements using significant unobservable inputs (level 3) on changes in plan assets for the period; and significant concentrations on risk within plan assets.  The guidance is effective for fiscal years ending after December 15, 2009.  The Company is assessing the impact of adopting the guidance, but does not expect the impact to be material to the Company’s financial condition or results of operations.

In June 2008, the FASB issued authoritative guidance for determining whether instruments granted in share-based payment transactions are participating securities,which provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of earnings per share pursuant to the two-class method.  The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years.  Upon adoption, a company is required to retrospectively adjust its earnings per share data including any amounts related to interim periods, summaries of earnings and selected financial data.  The adoption of the guidance during the first quarter of 2009 did not have a material impact on the Company’s financial condition or results of operations.

In April 2008, the FASB issued authoritative guidance for the determination of the useful life of intangible assets,which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under previous guidance for determining goodwill and other intangible assets.  The intent of the guidance is to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset under U.S. generally accepted accounting principles.  This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2008.  The adoption of the guidance during the first quarter of 2009 did not have a material impact on the Company’s financial condition or results of operations.

In February 2008, the FASB issued authoritative guidance which deferred the effective date for one year for certain nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) and was effective January 1, 2009.  The adoption of the guidance during the first quarter of 2009 did not have a material impact on the Company’s financial condition or results of operations.

12. Subsequent Event

On October 26, 2009, the Company issued and sold 4,945,000 shares of the Company’s common stock, pursuant to an underwritten public offering.  This amount included 645,000 shares issued pursuant to the exercise of the underwriters’ over-allotment option.  Gross proceeds of the sale of the stock totaled $175.5 million.  Net proceeds after discounts and estimated expenses totaled $167.3 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

General

The following discussion should be read in conjunction with our financial statements included with this report and our financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2008 Annual Report on Form 10-K. Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements are based on certain assumptions we consider reasonable. For information about these assumptions, you should refer to the section below entitled “Forward-Looking Statements.”

We were organized in 1984 as a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and are headquartered in Gulfport, Mississippi.  We currently operate more than 150 banking and financial services offices and more than 130 automated teller machines (ATMs) in the states of Mississippi, Louisiana, Florida and Alabama through four wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi (Hancock Bank MS), Hancock Bank of Louisiana, Baton Rouge, Louisiana (Hancock Bank LA), Hancock Bank of Florida, Tallahassee, Florida (Hancock Bank FL) and Hancock Bank of Alabama, Mobile, Alabama (Hancock Bank AL).  Hancock Bank MS, Hancock Bank LA, Hancock Bank FL and Hancock Bank AL are referred to collectively as the “Banks.”  Hancock Bank subsidiaries include Hancock Investment Services, Hancock Insurance Agency, and Harrison Finance Company.

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.  Our operating strategy is to provide our 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 September 30, 2009, we had total assets of $6.8 billion and employed on a full-time equivalent basis 1,252 persons in Mississippi, 562 persons in Louisiana, 50 persons in Florida and 39 persons in Alabama.

RESULTS OF OPERATIONS

Net income for the third quarter of 2009 totaled $15.2 million, a decrease of $0.8 million, or 4.9%, from the third quarter of 2008.  Diluted earnings per share for the third quarter of 2009 were $0.47, a decrease of $0.03 from the same quarter a year ago.  Return on average assets for the third quarter of 2009 was 0.87% compared to 1.00% for the third quarter of 2008.

Our third quarter net income was significantly impacted by a higher level of net charge-offs and non-performing assets due to the ongoing recession and continued rise in unemployment.  Net charge-offs for 2009’s third quarter were $13.5 million, or 1.24 percent of average loans, compared to $4.2 million, or 0.42% of average loans in the third quarter of 2008.  Of the overall increase in net charge-offs of $9.3 million, $8.6 million was reflected in commercial loans and the balance of $0.7 million in consumer loan categories.  The higher level of commercial net charge-offs were largely confined to land development and commercial real estate credits in various parts of our four state footprint.  Non-performing assets increased $21.3 million while other real estate owned increased $7.6 million from the third quarter of 2008.

Total assets increased $60.3 million, or 0.9% compared to September 30, 2008.  Period-end loans increased $179.3 million, or 4.4%, from the same quarter a year ago.  Period-end deposits increased $5.4 million, or 0.1%, from September 30, 2008.  We also remain very well capitalized with total equity of $654.8 million at September 30, 2009, up $53.9 million, or 9.0%, from September 30, 2008.

21

Net Interest Income

Net interest income (te) for the third quarter increased $3.3 million, or 5.8 percent, while the net interest margin (te) of 3.86 percent was 13 basis points narrower than the same quarter a year ago.  Growth in average earning assets was strong compared to the same quarter a year ago with an increase of $519.3 million, or 9.0 percent, reflected in higher average loans (up $348.4 million) and short-term investments (up $457.9 million) partially offset by lower securities (down $286.9 million).  With short-term interest rates down significantly from the same quarter a year ago, our loan yield fell 61 basis points, pushing the yield on average earning assets down 76 basis points.  However, total funding costs over the same quarter a year ago were down 64 basis points.

Provision for Loan Losses

The amount of the allowance for loan losses equals the cumulative total of the provision for loan losses, reduced by actual loan charge-offs, and increased by recoveries of loans previously charged-off.  A specific loan is charged-off when management believes, after considering, among other things, the borrower's financial condition and the value of any collateral, that collection of the loan is unlikely. Provisions are made to the allowance to reflect incurred losses associated with our loan portfolio.  We recorded a provision for loan losses of $13.5 million in the third quarter which is a $5.4 million increase in the provision for loan losses compared to $8.1 million for the quarter ended September 30, 2008.  This increase was necessary to adjust the allowance to the level dictated by the Company’s reserving methodologies.  The provision remains elevated due to the ongoing recession and continued rise in unemployment. 

Allowance for Loan Losses and Asset Quality

At September 30, 2009, the allowance for loan losses was $63.9 million compared with $61.7 million at December 31, 2008, an increase of $2.2 million.  The increase in the allowance for loan losses through the first nine months of 2009 is primarily attributed to an increased estimated provision for pooled loan loss analysis based on our historical charge-off, delinquency, and non-accrual quarterly history.  We do not offer subprime home mortgage loans, and therefore, our increased reserve is not associated with those high risk loans.  The only higher risk loans we offer are through our finance company but those loans are immaterial to our loan portfolio.    Management utilizes quantitative methodologies and modeling to determine the adequacy of the allowance for loan and lease losses.  Within the allowance for loan losses modeling, adequate segregation of geographic and specific loan types are documented and analyzed for appropriate risk metrics.  We maintain a continuous credit quality policy that establishes acceptable loan-to-value thresholds on the front end underwriting process.  Residential home values are continuously monitored by each market.  As of September 30, 2009, mortgage real estate loans were approximately 11.42% of the total loan portfolio (excluding loans held for sale).  A detailed description of our methodology was included in our annual report on Form 10-K for the year ended December 31, 2008.  Management believes the September 30, 2009 allowance level is adequate.

Net charge-offs, as a percent of average loans, were 1.24% for the third quarter of 2009, compared to 0.42% in the third quarter of 2008.  The majority of the increase in net charge-offs, as compared to the same time last year, was caused by the weakening local real estate markets, mostly in commercial real estate loans.  Of the overall increase in net charge-offs of $27.0 million, $24.2 million was reflected in commercial loans, $2.5 million in consumer loan categories, with the balance of $0.3 million in mortgage loans.  The higher level of commercial net charge-offs were largely confined to land development and commercial real estate credits across all markets.

Nonaccrual loans were $35.6 million at September 30, 2009, an increase of $13.7 million, from $21.9 million at September 30, 2008.  This increase is due to the weakening real estate markets across all markets due to the ongoing recession.   

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The following information is useful in determining the adequacy of the loan loss allowance and loan loss provision.  The ratios are calculated using average loan balances (amounts in thousands).

	At and for the
	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Net charge-offs to average loans (annualized)		1.24	%		0.42	%		1.14	%		0.34	%
Provision for loan losses to average loans (annualized)		1.24	%		0.81	%		1.21	%		0.70	%
Allowance for loan losses to average loans		1.48	%		1.45	%		1.49	%		1.52	%
Gross charge-offs	$	14,762		$	5,133		$	40,183		$	13,299
Gross recoveries	$	1,267		$	969		$	3,552		$	3,707
Non-accrual loans	$	35,558		$	21,875		$	35,558		$	21,875
Accruing loans 90 days or more past due	$	7,766		$	6,082		$	7,766		$	6,082

Noninterest Income

Noninterest income for the third quarter of 2009 was up $0.3 million, or 1%, compared to the same quarter a year ago.  Service charges on deposit accounts were up $0.7 million, or 6% because of increased overdrafts and secondary mortgage market operations income was up $0.7 million, or 81% due to increased volume of secondary market loans.  Because of the historically low rate environment, the refinancing of current loans increased during the first nine months of 2009.  These increases were partially offset by decreases in investment and annuity fees (down $0.4 million or 17%) because of decreased production, and trust fees (down $0.3 million or 7%) because of reduced market values of accounts due to poor economic conditions.  Noninterest income for the first nine months of 2009 was down $4.4 million, or 5%, compared to the first nine months of 2008 for the same reasons stated above additionally offset by a $1.4 million decrease in income from insurance operations that occurred mostly in the first quarter due to a decrease in credit life premium production.   Also contributing to the reduction of noninterest income from the first nine months of last year were securities transaction gains of $6.0 million in the first quarter of 2008.  We received proceeds from the VISA IPO which resulted in a $2.8 million realized securities gain and we had a $3.2 million net gain for a fair value adjustment of a transfer on trading securities we reclassified from trading  to available for sale because we intended to hold them for a longer period of time.

The components of noninterest income for the three and nine months ended September 30, 2009 and 2008 are presented in the following table:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
	(In thousands)
Service charges on deposit accounts	$	11,795		$	11,108		$	33,540		$	32,777
Trust fees		4,008			4,330			11,189			13,080
Credit card merchant discount fees		2,845			2,805			8,309			8,229
Income from insurance operations		3,526			3,819			11,026			12,419
Investment and annuity fees		2,007			2,421			6,559			7,957
ATM fees		1,862			1,718			5,536			5,166
Secondary mortgage market operations		1,482			817			4,467			2,347
Income from bank owned life insurance		1,322			1,553			4,591			4,577
Outsourced check income		(24	)		28			(44	)		263
Letter of credit fees		343			312			1,015			852
Gain on sale of property and equipment		14			14			1,374			677
Other income		1,167			1,269			6,345			4,031
Securities transactions gains, net		61			(79	)		61			5,999
Total noninterest income	$	30,408		$	30,115		$	93,968		$	98,374

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Noninterest Expense

Operating expenses for the third quarter of 2009 were $0.3 million, or 0.5%, higher compared to the same quarter a year ago.  The main increase from the same quarter a year ago was reflected in higher levels of deposit insurance and regulatory fees which were up $1.5 million, or 165%, due to a higher FDIC assessment rate and increased fees due to insurance on noninterest bearing transaction accounts. Total personnel expense also increased $0.5 million, or 2%, due to increased pension and postretirement expense. There were also some offsets to the increase in operating expenses over the same quarter a year ago.  Legal and professional services expense was down $0.7 million, or 20%, due to a reduction in other professional services and reduced commissions paid in Magna Insurance Company and advertising expense was down $0.9 million, or 41%.  Operating expenses for the first nine months of 2009 were $12.0 million, or 8%, higher compared to the first nine months of 2008.  Deposit insurance and regulatory fees increased $8.4 million due to a $3.4 million FDIC special assessment in the second quarter of 2009 and increased fees due to insurance on noninterest bearing transaction accounts.  Personnel expense increased $7.3 million primarily to lower deferrals of salary loan origination costs and increased pension expense.  These increases were partially offset by decreases in advertising ($1.7 million or 31%), legal and professional services ($1.4 million or 15%) and postage and communication ($0.8 million or 11%).

The following table presents the components of noninterest expense for the three and nine months ended September 30, 2009 and 2008.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
	(In thousands)
Employee compensation	$	22,688	$	24,392	$	68,926	$	65,575
Employee benefits		6,425		4,272		19,664		15,751
Total personnel expense		29,113		28,664		88,590		81,326
Equipment and data processing expense		7,057		7,420		21,513		21,952
Net occupancy expense		5,144		5,188		15,215		14,491
Postage and communications		2,313		2,396		6,239		6,995
Ad valorem and franchise taxes		780		622		2,313		2,746
Legal and professional services		2,749		3,447		7,866		9,275
Stationery and supplies		490		366		1,398		1,344
Amortization of intangible assets		354		360		1,064		1,089
Advertising		1,301		2,187		3,729		5,437
Deposit insurance and regulatory fees		2,335		880		10,279		1,895
Training expenses		116		123		295		476
Other real estate owned expense, net		307		265		885		397
Insurance expense		492		421		1,400		1,595
Other fees		913		1,017		2,909		2,999
Non loan charge-offs		729		81		953		288
Other expense		1,556		2,046		5,165		5,501
Total noninterest expense	$	55,749	$	55,483	$	169,813	$	157,806

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Income Taxes

For the nine months ended September 30, 2009 and 2008, the effective income tax rates were approximately 19% and 27%, respectively.  Because of the reduced level of pretax income in 2009, the tax exempt interest income and the utilization of tax credits had a significant impact on the effective tax rate.  The total amount of tax-exempt income earned during the first nine months of 2009 was $15.6 million compared to $13.5 million in the comparable period in 2008.  Tax-exempt income for the nine months ended September 30, 2009 consisted of $3.8 million from securities and $11.8 million from loans and leases.  Tax-exempt income for the first nine months of 2008 consisted of $4.4 million from securities and $9.1 million from loans and leases.  The total amount of tax credits earned during the first nine months of 2009 was $3.3 million compared to $2.3 million in the comparable period in 2008. The source of the tax credits for 2009 resulted from investments in New Market Tax Credits, Qualified Zone Activity Bonds Credits, Work Opportunity Tax Credits, related to hiring individuals in the Go Zone, and Historic Tax Credits.

Selected Financial Data

The following tables contain selected financial data comparing our consolidated results of operations for the three and nine months ended September 30, 2009 and 2008.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
Per Common Share Data	(In thousands, except per share data)
Earnings per share:
Basic	$	0.48	$	0.51	$	1.35	$	1.81
Diluted	$	0.47	$	0.50	$	1.34	$	1.79
Cash dividends per share	$	0.24	$	0.24	$	0.72	$	0.72
Book value per share (period-end)	$	20.54	$	18.95	$	20.54	$	18.95
Weighted average number of shares:
Basic		31,857		31,471		31,828		31,402
Diluted (1)		32,058		31,905		32,003		31,826
Period-end number of shares		31,877		31,702		31,877		31,702
Market data:
High price	$	42.38	$	68.42	$	45.56	$	68.42
Low price	$	29.90	$	33.34	$	22.51	$	33.34
Period-end closing price	$	37.57	$	51.00	$	37.57	$	51.00
Trading volume		11,676		23,562		46,790		55,296

(1) There were no anti-dilutive share-based incentives outstanding for the three and nine months ended September 30, 2009 and September 30, 2008.

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Performance Ratios	(dollar amounts in thousands)
Return on average assets		0.87	%		1.00	%		0.81	%		1.22	%
Return on average common equity		9.38	%		10.90	%		9.06	%		13.16	%
Earning asset yield (tax equivalent ("TE"))		5.26	%		6.02	%		5.26	%		6.11	%
Total cost of funds		1.39	%		2.03	%		1.54	%		2.21	%
Net interest margin (TE)		3.86	%		3.99	%		3.71	%		3.90	%
Common equity (period-end)  as a percent of total assets (period-end)		9.62	%		8.91	%		9.62	%		8.91	%
Leverage ratio (period-end)		8.33	%		8.66	%		8.33	%		8.66	%
FTE headcount		1,903			1,941			1,903			1,941
Asset Quality Information
Non-accrual loans	$	35,558		$	21,875		$	35,558		$	21,875
Foreclosed assets	$	9,775		$	2,197		$	9,775		$	2,197
Total non-performing assets	$	45,333		$	24,072		$	45,333		$	24,072
Non-performing assets as a percent of loans and foreclosed assets		1.06	%		0.59	%		1.06	%		0.59	%
Accruing loans 90 days past due	$	7,766		$	6,082		$	7,766		$	6,082
Accruing loans 90 days past due as a percent of loans		0.18	%		0.15	%		0.18	%		0.15	%
Non-performing assets + accruing loans 90 days past due to loans and foreclosed assets		1.25	%		0.74	%		1.25	%		0.74	%
Net charge-offs	$	13,495		$	4,164		$	36,631		$	9,592
Net charge-offs as a percent of average loans		1.24	%		0.42	%		1.14	%		0.34	%
Allowance for loan losses	$	63,850		$	57,200		$	63,850		$	57,200
Allowance for loan losses as a percent of period-end loans		1.50	%		1.40	%		1.50	%		1.40	%
Allowance for loan losses to NPAs + accruing loans 90 days past due		120.25	%		189.69	%		120.25	%		189.69	%
Provision for loan losses	$	13,495		$	8,064		$	38,756		$	19,669
Average Balance Sheet
Total loans	$	4,301,651		$	3,953,235		$	4,288,186		$	3,768,626
Securities		1,478,755			1,765,702			1,570,025			1,777,036
Short-term investments		486,035			28,161			496,413			94,810
Earning assets		6,266,441			5,747,098			6,354,624			5,640,472
Allowance for loan losses		(63,850	)		(54,786	)		(63,075	)		(51,739	)
Other assets		774,676			682,316			769,949			681,645
Total assets	$	6,977,267		$	6,374,628		$	7,061,498		$	6,270,378
Noninterest bearing deposits	$	931,188		$	869,881		$	933,412		$	869,655
Interest bearing transaction deposits		1,459,377			1,408,013			1,473,179			1,410,665
Interest bearing public fund deposits		1,223,272			1,062,127			1,365,265			990,498
Time deposits		1,946,975			1,763,609			1,952,805			1,766,541
Total interest bearing deposits		4,629,624			4,233,749			4,791,249			4,167,704
Total deposits		5,560,812			5,103,630			5,724,661			5,037,359
Other borrowed funds		655,556			587,939			589,025			546,695
Other liabilities		117,326			98,913			113,108			107,460
Common stockholders' equity		643,573			584,146			634,704			578,864
Total liabilities & common stockholders' equity	$	6,977,267		$	6,374,628		$	7,061,498		$	6,270,378

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	Nine Months Ended September 30,
	2009			2008
Period-end Balance Sheet	(dollar amounts in thousands)
Commercial/real estate loans	$	2,740,722		$	2,547,732
Mortgage loans		402,930			421,254
Direct consumer loans		598,291			556,548
Indirect consumer loans		400,459			430,414
Finance company loans		109,794			116,995
Total loans		4,252,196			4,072,943
Loans held for sale		33,869			16,565
Securities		1,501,289			1,659,423
Short-term investments		375,887			306,866
Earning assets		6,163,241			6,055,797
Allowance for loan losses		(63,850	)		(57,200	)
Other assets		705,659			746,165
Total assets	$	6,805,050		$	6,744,762
Noninterest bearing deposits	$	912,092		$	866,414
Interest bearing transaction deposits		1,453,032			1,371,400
Interest bearing public funds deposits		1,108,164			1,231,529
Time deposits		1,946,867			1,945,452
Total interest bearing deposits		4,508,063			4,548,381
Total deposits		5,420,155			5,414,795
Other borrowed funds		614,751			635,069
Other liabilities		115,392			94,063
Common stockholders' equity		654,752			600,835
Total liabilities & common stockholders' equity	$	6,805,050		$	6,744,762

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Net Charge-Off Information	(dollar amounts in thousands)
Net charge-offs:
Commercial/real estate loans	$	10,176		$	1,556		$	27,236		$	2,990
Mortgage loans		177			179			553			240
Direct consumer loans		821			650			2,646			1,680
Indirect consumer loans		1,169			867			2,733			2,011
Finance company loans		1,152			912			3,463			2,671
Total net charge-offs	$	13,495		$	4,164		$	36,631		$	9,592
Net charge-offs to average loans:
Commercial/real estate loans		1.47	%		0.25	%		1.34	%		0.17	%
Mortgage loans		0.16	%		0.17	%		0.17	%		0.08	%
Direct consumer loans		0.54	%		0.47	%		0.59	%		0.42	%
Indirect consumer loans		1.13	%		0.84	%		0.87	%		0.68	%
Finance company loans		4.15	%		3.12	%		4.14	%		3.12	%
Total net charge-offs to average net loans		1.24	%		0.42	%		1.14	%		0.34	%

27

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Average Balance Sheet Composition	(dollar amounts in thousands)
Percentage of earning assets/funding sources:
Loans		68.64	%		68.79	%		67.48	%		66.81	%
Securities		23.60	%		30.72	%		24.71	%		31.51	%
Short-term investments		7.76	%		0.49	%		7.81	%		1.68	%
Earning assets		100.00	%		100.00	%		100.00	%		100.00	%
Noninterest bearing deposits		14.86	%		15.14	%		14.70	%		15.42	%
Interest bearing transaction deposits		23.29	%		24.50	%		23.18	%		25.01	%
Interest bearing public funds deposits		19.52	%		18.48	%		21.48	%		17.56	%
Time deposits		31.07	%		30.68	%		30.73	%		31.32	%
Total deposits		88.74	%		88.80	%		90.09	%		89.31	%
Other borrowed funds		10.46	%		10.23	%		9.27	%		9.69	%
Other net interest-free funding sources		0.80	%		0.97	%		0.64	%		1.00	%
Total funding sources		100.00	%		100.00	%		100.00	%		100.00	%
Loan mix:
Commercial/real estate loans		63.68	%		62.06	%		63.16	%		61.49	%
Mortgage loans		10.20	%		10.82	%		10.39	%		10.97	%
Direct consumer loans		14.03	%		13.81	%		14.04	%		14.04	%
Indirect consumer loans		9.53	%		10.37	%		9.80	%		10.47	%
Finance company loans		2.56	%		2.94	%		2.61	%		3.03	%
Total loans		100.00	%		100.00	%		100.00	%		100.00	%
Average dollars
Loans	$	4,301,651		$	3,953,235		$	4,288,186		$	3,768,626
Securities		1,478,755			1,765,702			1,570,025			1,777,036
Short-term investments		486,035			28,161			496,413			94,810
Earning assets	$	6,266,441		$	5,747,098		$	6,354,624		$	5,640,472
Noninterest bearing deposits	$	931,188		$	869,881		$	933,412		$	869,655
Interest bearing transaction deposits		1,459,377			1,408,013			1,473,179			1,410,665
Interest bearing public funds deposits		1,223,272			1,062,127			1,365,265			990,498
Time deposits		1,946,975			1,763,609			1,952,805			1,766,541
Total deposits		5,560,812			5,103,630			5,724,661			5,037,359
Other borrowed funds		655,556			587,939			589,025			546,695
Other net interest-free funding sources		50,073			55,529			40,938			56,418
Total funding sources	$	6,266,441		$	5,747,098		$	6,354,624		$	5,640,472
Loans:
Commercial/real estate loans	$	2,739,518		$	2,453,154		$	2,708,380		$	2,317,134
Mortgage loans		438,659			427,752			445,549			413,453
Direct consumer loans		603,394			546,079			601,926			529,153
Indirect consumer loans		410,035			410,110			420,404			394,610
Finance company loans		110,045			116,140			111,927			114,276
Total average loans	$	4,301,651		$	3,953,235		$	4,288,186		$	3,768,626

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The following tables detail the components of our net interest spread and net interest margin.

	Three Months Ended September 30,							Three Months Ended September 30,
	2009							2008
(dollars in thousands)	Interest		Volume		Rate			Interest		Volume		Rate
Average earning assets
Commercial & real estate loans (TE)	$	36,909	$	2,739,518		5.35	%	$	36,289	$	2,453,154		5.89	%
Mortgage loans		6,334		438,659		5.78	%		6,366		427,752		5.95	%
Consumer loans		20,086		1,123,474		7.09	%		21,237		1,072,329		7.88	%
Loan fees & late charges		224		-		0.00	%		455		-		0.00	%
Total loans (TE)		63,553		4,301,651		5.87	%		64,347		3,953,235		6.48	%
US treasury securities		60		11,007		2.16	%		53		11,334		1.86	%
US agency securities		1,384		134,487		4.12	%		3,751		333,434		4.50	%
CMOs		1,968		153,511		5.13	%		1,786		141,355		5.05	%
Mortgage backed securities		12,278		983,394		4.99	%		13,917		1,066,233		5.22	%
Municipals (TE)		2,295		169,893		5.40	%		2,280		163,796		5.57	%
Other securities		349		26,463		5.27	%		557		49,550		4.50	%
Total securities (TE)		18,334		1,478,755		4.96	%		22,344		1,765,702		5.06	%
Total short-term investments		870		486,035		0.71	%		83		28,161		1.18	%
Average earning assets yield (TE)	$	82,757	$	6,266,441		5.26	%	$	86,774	$	5,747,098		6.02	%
Interest bearing liabilities
Interest bearing transaction deposits	$	1,605	$	1,459,377		0.44	%	$	3,193	$	1,408,013		0.90	%
Time deposits		13,543		1,946,975		2.76	%		15,579		1,763,609		3.51	%
Public funds		4,057		1,223,272		1.32	%		6,750		1,062,127		2.53	%
Total interest bearing deposits		19,205		4,629,624		1.65	%		25,522		4,233,749		2.40	%
Total borrowings		2,799		655,556		1.69	%		3,835		587,939		2.59	%
Total interest bearing liability cost	$	22,004	$	5,285,180		1.65	%	$	29,357	$	4,821,688		2.42	%
Noninterest bearing deposits				931,188							869,881
Other net interest-free funding sources				50,073							55,529
Total Cost of Funds	$	22,004	$	6,266,441		1.39	%	$	29,357	$	5,747,098		2.03	%
Net Interest Spread (TE)	$	60,753				3.60	%	$	57,417				3.60	%
Net Interest Margin (TE)	$	60,753	$	6,266,441		3.86	%	$	57,417	$	5,747,098		3.99	%

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	Nine Months Ended September 30,							Nine Months Ended September 30,
	2009							2008
(dollars in thousands)	Interest		Volume		Rate			Interest		Volume		Rate
Average earning assets
Commercial & real estate loans (TE)	$	106,946	$	2,708,380		5.28	%	$	107,094	$	2,317,134		6.17	%
Mortgage loans		19,200		445,549		5.75	%		18,451		413,453		5.95	%
Consumer loans		60,720		1,134,257		7.16	%		63,737		1,038,039		8.20	%
Loan fees & late charges		757		-		0.00	%		523		-		0.00	%
Total loans (TE)		187,623		4,288,186		5.84	%		189,805		3,768,626		6.73	%
US treasury securities		156		11,155		1.88	%		243		11,361		2.86	%
US agency securities		5,399		176,971		4.07	%		13,118		382,046		4.58	%
CMOs		6,387		169,443		5.03	%		5,356		144,882		4.93	%
Mortgage backed securities		38,699		1,024,012		5.04	%		39,002		1,008,197		5.16	%
Municipals (TE)		6,949		161,678		5.73	%		7,141		179,992		5.29	%
Other securities		1,051		26,766		5.21	%		1,650		50,558		4.35	%
Total securities (TE)		58,641		1,570,025		4.98	%		66,510		1,777,036		4.99	%
Total short-term investments		3,939		496,413		1.06	%		1,850		94,810		2.61	%
Average earning assets yield (TE)	$	250,203	$	6,354,624		5.26	%	$	258,165	$	5,640,472		6.11	%
Interest bearing liabilities
Interest bearing transaction deposits	$	5,657	$	1,473,179		0.51	%	$	10,418	$	1,410,665		0.99	%
Time deposits		43,772		1,952,805		3.00	%		52,123		1,766,541		3.94	%
Public funds		15,833		1,365,265		1.55	%		19,112		990,498		2.58	%
Total interest bearing deposits		65,262		4,791,249		1.82	%		81,653		4,167,704		2.62	%
Total borrowings		8,158		589,025		1.85	%		11,621		546,695		2.84	%
Total interest bearing liability cost	$	73,420	$	5,380,274		1.82	%	$	93,274	$	4,714,399		2.64	%
Noninterest bearing deposits				933,412							869,655
Other net interest-free funding sources				40,938							56,418
Total Cost of Funds	$	73,420	$	6,354,624		1.54	%	$	93,274	$	5,640,472		2.21	%
Net Interest Spread (TE)	$	176,783				3.43	%	$	164,891				3.47	%
Net Interest Margin (TE)	$	176,783	$	6,354,624		3.71	%	$	164,891	$	5,640,472		3.90	%

LIQUIDITY

Liquidity Management

Liquidity management encompasses our ability to ensure that funds are available to meet the cash flow requirements of depositors and borrowers, while also ensuring that we have adequate cash flow to meet our various needs, including operating, strategic and capital.  Our principal source of liquidity is dividends from our subsidiary banks.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities of investment securities and occasional sales of various assets.  Short-term investments such as federal funds sold, securities purchased under agreements to resell and maturing interest-bearing deposits with other banks are additional sources of funding.

30

The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and non-interest-bearing deposit accounts.  Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings are additional sources of liquidity and represent our incremental borrowing capacity.  Our short-term borrowing capacity includes an approved line of credit with the Federal Home Loan Bank of $317 million and borrowing capacity at the Federal Reserve’s Discount Window in excess of $146 million.

For the nine months ended September 30, 2009, the Company sold available for sale securities for gross gains of $309,173 and gross losses of $247,645 for a net gain of $61,528.  The Company sold these securities in order to take advantage of the low interest rate environment and the tightening of the interest rate spreads for non-treasury securities.  For the nine months ended September 30, 2008, the Company sold available for sale securities for a net gain of $2.6 million.  Included in the net gain was a $2.8 million gross gain on the sale of securities as a result of the VISA IPO that occurred in the first quarter of 2008.  This was offset by gross losses of $1.1 million and gross gains of $0.9 million that occurred in the second and third quarter of 2008 due to the sale of several investments which experienced a deterioration of credit quality.  In addition, in the second quarter of 2009, we had a $1.3 million sale of land held for sale.

The following liquidity ratios at September 30, 2009 and December 31, 2008 compare certain assets and liabilities to total deposits or total assets:

	September 30, 2009			December 31, 2008
Total securities to total deposits		27.70	%		28.36	%
Total loans (net of unearned income) to total deposits		78.45	%		71.65	%
Interest-earning assets to total assets		90.57	%		90.73	%
Interest-bearing deposits to total deposits		83.17	%		83.77	%

On October 26, 2009, the Company issued and sold 4,945,000 shares of the Company’s stock pursuant to an underwritten public offering for net proceeds after discounts and estimated expenses of $167.3 million.  This amount included 645,000 shares issued pursuant to the exercise of the underwriters’ over-allotment option.  The 4.9 million additional shares increases the Company’s total issued shares to 37.7 million.  Although the issuance of the common stock in October 2009 did not have a dilutive effect on the per share results of operations for the three and nine months ended September 30, 2009 and 2008, the outstanding shares will affect per share results for the fourth quarter, as well as for the year ended December 31, 2009.  The Company intends to use the net proceeds from this offering for general corporate purposes, which may include financing future acquisition opportunities.

CONTRACTUAL OBLIGATIONS

Payments due from us under specified long-term and certain other binding contractual obligations were scheduled in our annual report on Form 10-K for the year ended December 31, 2008. The most significant obligations, other than obligations under deposit contracts and short-term borrowings, were for operating leases for banking facilities.  There have been no material changes since year end.

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CAPITAL RESOURCES

We continue to be well capitalized.  The ratios as of September 30, 2009 and December 31, 2008 are as follows:

	September 30, 2009			December 31, 2008
Common equity (period-end) as a percent of total assets (period-end)		9.62	%		8.50	%
Regulatory ratios:
Total capital to risk-weighted assets (1)		12.30	%		11.86	%
Tier 1 capital to risk-weighted assets (2)		11.13	%		10.66	%
Leverage capital to average total assets (3)		8.33	%		8.06	%

(1) Total capital consists of equity capital less intangible assets plus a limited amount of allowance for loan losses.  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.

(2) 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.

(3) Leverage capital consists of equity capital less goodwill and core deposit intangibles.  Regulations require a minimum 3% leverage capital ratio for an entity to be considered adequately capitalized.

BALANCE SHEET ANALYSIS

Goodwill

Goodwill represents costs in excess of the fair value of net assets acquired in connection with purchase business combinations.  In accordance with FASB authoritative guidance, goodwill is not amortized but tested for impairment on an annual basis, or more often if events or circumstances indicate there may be impairment.  Management reviews goodwill for impairment based on our four primary reporting segments as shown in the segment footnote 10.  We analyze goodwill using market capitalization to book value comparison.  The last test was conducted as of September 30, 2008.  No impairment charges were recognized as of September 30, 2009.  The carrying amount of goodwill was $62.3 million as of September 30, 2009 and December 31, 2008.

Earnings Assets

Earning assets serve as the primary revenue streams for us and are comprised of securities, loans, federal funds sold, and other short-term investments.  At September 30, 2009, average earning assets were $6.4 billion, or 90% of total assets, compared with $5.6 billion or 90% of total assets at September 30, 2008.  This increase resulted mostly from modest increases in the loan portfolios and short-term investments.

32

Securities

Our investment in securities was $1.5 billion at September 30, 2009 and $1.7 billion at December 31, 2008.  The vast majority of securities in our portfolio are U.S. Treasury and U.S. government agency securities and mortgage-backed securities issued or guaranteed by U.S. government agencies.   We also maintain portfolios of securities consisting of CMOs and tax-exempt obligations of states and political subdivisions.  The portfolios are designed to enhance liquidity while providing acceptable rates of return.  Therefore, we invest only in high quality securities of investment grade quality and with a target duration, for the overall portfolio, generally between two to five years.  Our policies limit investments to securities having a rating of no less than “Baa”, or its equivalent by a Nationally Recognized Statistical Rating Agency, except for certain obligations of Mississippi, Louisiana, Florida or Alabama counties, parishes and municipalities.

Loans

We held $4.3 billion in loans at September 30, 2009 and $4.2 billion at December 31, 2008.Our primary lending focus is to provide commercial, consumer, commercial leasing and real estate loans to consumers and to small and middle market businesses in their respective market areas.  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.  At September 30, 2009, our average total loans were $4.3 billion, compared to $3.8 billion at September 30, 2008.  The $519.6 million, or 13.8%, increase resulted from growth mostly in commercial and real estate loans and due to branch expansions.  Commercial and real estate loans comprised 63% of the average loan portfolio at September 30, 2009 compared to 62% at September 30, 2008.  Included in this category are commercial real estate loans, which are secured by properties, used in commercial or industrial operations.

Other Earning Assets

Federal funds sold, CDs in banks, and other short-term investments averaged $496.4 million at September 30, 2009, compared to $94.8 million at September 30, 2008.  The increase was primarily in other short-term investments.  We utilize these products as a short-term investment alternative whenever we have excess liquidity.

Interest Bearing Liabilities

Interest bearing liabilities include our interest bearing deposits as well as borrowings.  Deposits represent our primary funding source.  We continue our focus on multiple account, core deposit relationships and strategic placement of time deposit campaigns to stimulate overall deposit growth.  Borrowings consist primarily of sales of securities under repurchase agreements.

Deposits

Total deposits were $5.4 billion at September 30, 2009 and $5.9 billion at December 31, 2008.  Average interest bearing deposits at September 30, 2009 were $4.8 billion, an increase of $623.5 million over September 30, 2008.  The increase was primarily in public fund deposits. We 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.  We traditionally price our deposits to position competitively within the local market. Deposit flows are controlled primarily through pricing, and to a certain extent, through promotional activities.

Borrowings

Our borrowings consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances and other borrowings.  Total borrowings at September 30, 2009 were $604.1 million compared to $506.6 million at December 31, 2008.  The increase was primarily in FHLB advances and securities sold under agreements to repurchase.

33

Off-Balance Sheet Arrangements

Loan Commitments and Letters of Credit

In the normal course of business, we enter into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of our customers.  Such instruments are not reflected in the accompanying condensed consolidated financial statements until they are funded and involve, to varying degrees, elements of credit risk not reflected in the condensed consolidated balance sheets.  The contract amounts of these instruments reflect our exposure to credit loss in the event of non-performance by the other party on whose behalf the instrument has been issued.  We undertake the same credit evaluation in making commitments and conditional obligations as we do for on-balance-sheet instruments and may require collateral or other credit support for off-balance-sheet financial instruments.

At September 30, 2009, we had $868.3 million in unused loan commitments outstanding, of which approximately $637.1 million were at variable rates, with the remainder 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 our future cash requirements.  We continually evaluate 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 our obtaining collateral to support the obligation.

Letters of credit are conditional commitments issued by us 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.  At September 30, 2009, we had $99.8 million in letters of credit issued and outstanding.

The following table shows the commitments to extend credit and letters of credit at September 30, 2009 according to expiration date.

	Expiration Date
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(dollars in thousands)
Commitments to extend credit	$	868,254	$	521,060	$	58,074	$	67,070	$	222,050
Letters of credit		99,797		69,549		13,186		17,062		-
Total	$	968,051	$	590,609	$	71,260	$	84,132	$	222,050

Our liability associated with letters of credit is not material to our condensed consolidated financial statements.

Critical Accounting Policies and Estimates

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles.  The accounting principles we follow and the methods for applying these principles conform with accounting principles generally accepted in the United States of America and with general practices followed by the banking industry which requires management to make estimates and assumptions about future events.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources.  On an ongoing basis, we evaluate our estimates, including those related to the allowance for loan losses, intangible assets and goodwill, income taxes, pension and postretirement benefit plans and contingent liabilities.  These estimates and assumptions are based on our best estimates and judgments.  We evaluate estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.  We adjust such estimates and assumptions when facts and circumstances dictate.  Illiquid credit markets, volatile equity markets, rising unemployment levels and declines in consumer spending have combined to increase the uncertainty inherent in such estimates and assumptions.  Allowance for loan losses, deferred income taxes, and goodwill are potentially subject to material changes in the near term.  Actual results could differ significantly from those estimates.

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New Accounting Pronouncements

See Note 11 to our Condensed Consolidated Financial Statements included elsewhere in this report.

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 disclosures that protects the companies from unwarranted litigation if the 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 that could cause our actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Our net income is dependent, in part, on our 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.  Interest rate risk sensitivity is the potential impact of changing rate environments on both net interest income and cash flows.  In an attempt to manage our exposure to changes in interest rates, management monitors interest rate risk and administers an interest rate risk management policy designed to produce a relatively stable net interest margin in periods of interest rate fluctuations.

Notwithstanding our interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income and the fair value of our investment securities.  As of September 30, 2009, the effective duration of the securities portfolio was 1.73 years.  A rate increase (aged, over 1 year) of 100 basis points would move the effective duration to 2.31 years, while a reduction in rates of 100 basis points would result in an effective duration of 0.73 years.

In adjusting our asset/liability position, the Board and management attempt to manage our interest rate risk while enhancing net interest margins.  This measurement is done primarily by running net interest income simulations.  The net interest income simulations run at September 30, 2009 indicate that we are asset sensitive as compared to the stable rate environment.  Exposure to instantaneous changes in interest rate risk for the current quarter is presented in the following table.

Net Interest Income (te) at Risk
Change in interest rate (basis point)	Estimated increase (decrease) in net interest income
-100	-8.94%
Stable	0.00%
+100	2.64%

The foregoing disclosures related to our market risk should be read in conjunction with our audited consolidated financial statements, related notes and management’s discussion and analysis for the year ended December 31, 2008 included in our 2008 Annual Report on Form 10-K.

35

Item 4. Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officers and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officers and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to timely alert them to material information relating to us (including our consolidated subsidiaries) required to be included in our Exchange Act filings.

Our management, including the Chief Executive Officers and Chief Financial Officer, identified no change in our internal control over financial reporting that occurred during the nine month period ended September 30, 2009, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II.  OTHER INFORMATION

Item 1A.  Risk Factors

There have been no material changes from the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2008.  The risks described may not be the only risks facing the Company.  Additional risks and uncertainties not currently known to the Company or that are currently considered to not be material also may materially adversely affect the Company’s business, financial condition, and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

There were no purchases made by the issuer or any affiliated purchaser of the issuer’s equity securities for the nine months ended September 30, 2009.

Item 4.  Submission of Matters to a Vote of Security Holders.

None.

Item 6.  Exhibits.

(a)  Exhibits:

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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
By:	/s/ Carl J. Chaney
	Carl J. Chaney
	President & Chief Executive Officer
	/s/ John M. Hairston
	John M. Hairston
	Chief Executive Officer & Chief Operating Officer
	/s/ Michael M. Achary
	Michael M. Achary
	Chief Financial Officer
Date:	November 5, 2009

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Index to Exhibits

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.