 Gulf South Bank
Conference
May 13, 2013
Gulf South Bank
Conference
May 13, 2013
Exhibit 99.1 |
 Carl Chaney
President & CEO
2 |
 Forward-Looking
Statements
Forward-Looking
Statements
Certain of the statements or information included in this presentation
may constitute forward-looking statements.
Forward-looking statements include projections of revenue, costs, results of operations or
financial condition or statements regarding future market conditions or
our potential plans and strategies for the future.
Forward-looking statements that we may make include, but may not be limited to, comments
with respect to future levels of economic activity in our
markets, loan growth, deposit trends, credit quality
trends, future sales of nonperforming assets, net interest margin
trends, future expense levels and the ability to achieve
reductions in non-interest expense or other cost savings, projected tax rates, future
profitability, improvements in expense to revenue (efficiency) ratio,
purchase accounting impacts such as accretion levels, the impact
of the branch rationalization process, uses of capital and the financial impact
of regulatory requirements. Hancock’s ability to accurately
project results or predict the effects of future plans or
strategies is inherently limited. We believe that the
expectations reflected or implied by any forward-looking statements are based on
reasonable
assumptions,
but
actual
results
and
performance
could
differ
materially
from
those
set
forth
in
the forward-looking statements. Factors that could cause
actual results or outcomes to differ from those expressed in the
Company's forward-looking statements include, but are not limited to, those outlined in
Hancock's
SEC
filings,
including
the
“Risk
Factors”
section
of
the
Company’s
10-K
for
the
year
ended
December 31, 2012 and most recent form 10-Q.
Hancock undertakes no obligation to update or revise any
forward-looking statements, and you are cautioned not to
place undue reliance on such forward-looking statements. 3
|
 •
Diversified footprint across the Gulf South
•
2 well-known Gulf Coast brands
•
Loyal customer base and attractive deposit funding
•
Diversified revenue stream with strong earnings momentum
•
Leading market share in key MSAs
•
Louisiana and Houston economies are best performing markets within
our footprint
A Premier Gulf South
Financial Services Franchise
Whitney Bank
Hancock Bank
4 |
 #1
Most Improved Metro in the USA [Wall Street Journal]
#1 Growing Metro Area for Employment
[Brookings Inst.]
#1 Metro for IT Job Growth in the USA
[Forbes]
#1 Most Improved State in the U.S.
[Chief Executive magazine]
#1 State for Economic Growth Potential
[Business Facilities]
Recent Accolades For
Recent Accolades For
New Orleans and LA
New Orleans and LA
5
Source: GNO, Inc. |
 •
Net income $48.6 million or $.56
per diluted common share
•
ROA 1.03%
•
ROTCE 12.04%
•
Continued to build strong capital
levels
•
Improved asset quality metrics
•
Expenses in line with guidance
•
Recent balance sheet decline related
mainly to seasonal trends in deposits
and loan demand
•
Challenges from operating
environment & headwinds continue
Fundamentals Remain Solid
Fundamentals Remain Solid
Compared to Peers
Compared to Peers
6
* A reconciliation of net income to operating income and pre-tax,
pre-provision income is included in the appendix.
** Noninterest expense as a percent of total revenue (TE) before
amortization of purchased intangibles, securities transactions and merger expenses.
|
 Sam Kendricks
Chief
Credit
Officer
7 |
 Growth Continues In C&I
Growth Continues In C&I
Portfolio, Energy Lending
Portfolio, Energy Lending
•
Total loans $11.5B; down $95 million, or less than 1%
linked-quarter
•
Seasonal reductions in demand from some C&I customers
in the first quarter
•
New loan activity in many markets across the footprint,
especially Houston, Florida and Louisiana
•
Loans outstanding to oil & gas industry customers totaled
$960 million, or approximately 8% of total loans, at
March 31, 2013
•
Based on current levels of activity, management expects
some success in achieving net loan growth in future
quarters.
Period-end balances. As of March 31, 2013
8
Total Loan Mix 3/31/13
Energy Portfolio Mix |
 Whitney Portfolio Continues
Whitney Portfolio Continues
Solid Performance
Solid Performance
•
FAS 91 mark accreted into earnings over the life of the portfolio
•
Credit impaired mark available for charge-offs; if not needed for
charge-offs then accreted into income
•
Quarterly reviews of accretion levels and portfolio performance will
impact reported margin 9
$s in millions
Credit
Impaired
(SOP 03-3)
Performing
(FAS 91)
Total
Whitney loan mark at acquisition
(as adjusted in 4Q11)
$284
$187
$471
Acquired portfolio loan balances at acquisition
$818
$6,101
$6,919
Discount at acquisition
34.7%
3.1%
6.8%
Remaining Whitney loan mark at 3/31/13
$188
$68
$255
Remaining acquired portfolio loan balances at
3/31/13
$317
$3,565
$3,882
Acquired loan charge-offs from acquisition thru
3/31/13
$27
$6
$33
Discount at 3/31/13
59.2%
1.9%
6.6%
As of March 31, 2013 |
 Peoples First Loan Mark Used
Peoples First Loan Mark Used
For Charge-Offs
For Charge-Offs
•
FDIC covered loan portfolio
•
Entire loan mark available for charge-offs; if not needed for
charge-offs then accreted into income
•
Quarterly reviews of accretion levels and portfolio performance will
impact reported margin •
FDIC loss share receivable totaled $153 million at March 31, 2013
Balance reflects the total amount expected to be collected from the
FDIC 10
$s in millions
Credit Impaired
(SOP 03-3)
Peoples First loan mark at acquisition (12/2009)
$509
Charge-offs from acquisition thru 3/31/13
$387
Accretion since acquisition date
$71
Remaining loan mark at 3/31/13
$91
Impairment reserve at 3/31/13
$62
Remaining acquired portfolio loan balances at 3/31/13
$568
Discount & allowance at 3/31/13
26.9%
As of March 31, 2013 |
 •
Provision for loan losses was $9.6 million, down $18.5 million from
4Q12 •
4Q12 includes $13.7 million related to the bulk loan sale
•
1Q13 includes $6.6 million impact from FDIC-covered loan
portfolio •
1Q13 includes $3.0 million for the non-covered loan
portfolio •
Linked-quarter decrease related to a lower level of non-covered
charge-offs and the impact of a slowdown in newly identified
impaired loans •
Do not expect to maintain lower level of non-covered provision in
the near term •
Non-covered net charge-offs totaled $6.6 million, or
0.23% •
4Q12 included $16.2 million related to the bulk loan sale
•
Linked-quarter decrease reflects a lower level of gross
charge-offs and a higher than normal level of recoveries •
Do
not
expect
to
maintain
higher
level
of
recoveries
in
the
near
term
•
Allowance for loan losses/loans 1.20%
•
Excluding the impact of the Whitney acquired loans and FDIC covered
loans, allowance for loan losses was 1.02%
Improved Asset Quality Metrics
Improved Asset Quality Metrics
11
As of March 31, 2013 |
 •
Nonperforming assets totaled $229 million, a decrease of $27 million
linked-quarter
•
Nonaccrual loans down $6.5 million
•
Restructured loans increased $2.1 million
•
ORE and foreclosed assets down $22.4 million
•
Management will continue to
evaluate the costs and benefits of
NPL and ORE sale
opportunities as part of its
normal credit risk management
process
Improved Asset Quality Metrics
Improved Asset Quality Metrics
12
$s in millions
Excludes covered portfolio and gross of the Whitney loan mark
As of March 31, 2013
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
Criticized Loans
(Special Mention, Substandard, Doubtful) |
 13
|
 Strong Core Deposit
Strong Core Deposit
Funding
Funding
•
Total deposits $15.3 billion, down
approximately $500 million linked-quarter
•
Decrease related mainly to seasonal trends
and maturity of $100 million of brokered
CDs
•
Funding mix remained strong
–
Noninterest-bearing demand deposits (DDA) comprised
36% of total period-end deposits
–
Shift continued from CDs to no or low cost deposits
–
Cost of funds 28bps
•
Approximately $1.6B in CDs maturing over
the next 4 quarters at average rate of .38%
Period-end balances. As of March 31, 2013
14 |
 Net Interest Margin Impacted By
Net Interest Margin Impacted By
Earning Asset Repricing
Earning Asset Repricing
•
Reported net interest margin (NIM) 4.32%, down 16bps
linked-quarter •
Core NIM compressed 20bps
–
Continued repricing of earning assets causing NIM compression
–
Average rate on new loans booked in 1Q13
in the range of 3.0%-3.5% ;
–
New securities purchased in 1Q13 at an
average rate of 1.68%
•
Compression of 5-10 bps in the core margin
is expected in the near term
•
All else equal, and adjusting for the volatility
related to loan accretion, compression of the
reported margin of 10-20 bps is
anticipated in the near term
As of March 31, 2013
15
•
Increase in net purchase accounting adjustments,
mainly from the Whitney transaction,
positively impacted net interest income (NII), NIM, EPS
•
Higher than expected accretion in 1Q13 added
approximately $7.5 million to NII, or $.06 to EPS
•
Absent additional accretion, and all else equal,
quarterly EPS $.06 lower than reported 1Q13
|
 Core NIM Compression Related
Core NIM Compression Related
to Lower Earning Asset Yields
to Lower Earning Asset Yields
16
*Core loan yields exclude purchase accounting accretion
•
NIM compression mitigation
strategies in place
•
Main focus on additional loan
volumes, enhanced loan mix,
better pricing
•
C&I
•
Owner-occupied CRE
•
Consumer
•
Continual deployment of excess
liquidity
•
Lower cost of funds where
possible |
 Expected Annual Impact of Purchase
Expected Annual Impact of Purchase
Accounting Adjustments
Accounting Adjustments
•
Net purchase accounting adjustments
will be ‘sizeable’
part of earnings for
the next few years
•
Post 2015, diminishing levels of
purchase accounting adjustments
also expected
•
Revenue includes loan accretion,
securities amortization, CD accretion
•
Amortization of intangibles mainly
related to the Whitney acquisition
$s in millions
Impact of Purchase Accounting Adjustments and Efficiency Initiative
2012-2015 (2013-2015 projections will be updated
quarterly; subject to volatility) 17
$124
$113
$86
$72
$31
$29
$27
$24
$93
$85
$59
$48
$0
$25
$50
$75
$100
$125
2012
2013
2014
2015
Revenue impact
Amortization of intangibles
Pre
-
tax impact PAA |
 Efficiency & Process
Efficiency & Process
Improvement Initiative
Improvement Initiative
•
Announced an efficiency and process improvement initiative
•
Part of the Company’s updated long-term Strategic Plan
•
Most effective way of operating the consolidated organization
Short-term efficiency improvements
Long-term process improvement
•
Committed to reducing non-interest expense in future years by
$50 million compared to annualized 2013 expense
•
Designed to reduce overall annual expense levels over the
next 7 quarters
50% attainment by 1Q14
100% attainment by 4Q14
•
Will include reviews of front and back office areas as well as branch
network and current business models
•
Longer-term sustainable efficiency ratio target of 57%-59%
set for 2016
•
Expect to incur one-time costs in implementing the initiative
18
$s in millions
1Q13 non-interest
expense
$160
Annualized 1Q13
non-interest expense
$640
1Q14 non-interest
expense projection
$153
4Q14 non-interest
expense projection
$147
** Noninterest expense as a percent of total revenue (TE) before
amortization of purchased intangibles, sub debt redemption
costs, securities transactions and merger expenses |
 Efficiency Improvements Will Offset Loss
Efficiency Improvements Will Offset Loss
of Purchase Accounting Adjustments
of Purchase Accounting Adjustments
$s in millions
Impact of Purchase Accounting Adjustments and Efficiency Initiative
2012-2015 (2013-2015 projections will be updated
quarterly; subject to volatility) 19 |
 Carl Chaney
President & CEO
20 |
 •
Have reviewed each market for commercial and/or retail line
of business focus
•
Will close between 40-45 branches across the 5-state footprint
during 3Q13 and 4Q13
•
Expect
to
incur
one-time
costs
of
between
$18
-
$22
million
related to branch closures
•
Very little impact in core markets of Greater New Orleans
and MS Gulf Coast
Strategic Review of Markets and
Line of Business Focus
Whitney Bank
Hancock Bank
21 |
 •
TCE ratio 9.14% at March 31, 2013
•
Have reviewed opportunities to
deploy excess capital and liquidity in
the best interest of the Company and
its shareholders
•
Announced stock buyback of up
to 5% of outstanding common stock
•
Completed accelerated share repurchase
of approximately 2.8 million shares as of
May 9, 2013
•
Total transaction amount of $115 million
•
Remaining shares to be repurchased
within 12 months
•
Proforma TCE ratio as of
3/31/13…..8.56%
Solid Capital Levels
Solid Capital Levels
22 |
 Strong
Strong
Opportunities
Opportunities
Two premier Gulf South franchises
Successful merger, integration, retention of
customers, associates
Today, one strong, consolidated company
History of effective capital management
Superior liquidity
Conservative credit culture
Enhanced earnings potential
Well positioned for future growth
Focused on shareholder value creation
23 |
 Appendix
24 |
 Non-GAAP
Reconciliation
Non-GAAP
Non-GAAP
Reconciliation
Reconciliation
25
(a) Net income less tax-effected merger costs, debt early redemption costs, and securities
gains/losses. Management believes that this is a useful financial measure because it
enables investors to assess ongoing operations. (b) Pre-tax pre-provision
profit (PTPP) is total revenue less noninterest expense, merger items, and securities transactions. Management believes that PTPP profit is a useful
financial measure because it enables investors and others to assess the Company’s ability
to generate capital to cover credit losses through a credit cycle. (amounts
in thousands) (unaudited)
3/31/2013
12/31/2012
3/31/2012
Income Statement
Interest income
$185,272
$191,140
$191,716
Interest income (TE)
187,998
194,075
194,665
Interest expense
11,257
11,275
15,428
Net interest income (TE)
176,741
182,800
179,237
Provision for loan losses
9,578
28,051
10,015
Noninterest income excluding
securities transactions
60,187
64,308
61,494
Securities transactions gains/(losses)
-
623
12
Noninterest expense
159,602
157,920
205,463
Income before income taxes
65,022
58,825
22,316
Income tax expense
16,446
11,866
3,821
Net income
$48,576
$46,959
$18,495
Merger-related expenses
-
-
33,913
Securities transactions gains/(losses)
-
623
12
Taxes on adjustments
-
(218)
11,865
Operating income (a)
$48,576
$46,554
$40,531
Difference between interest income and interest income (TE)
$2,726
$2,935
$2,949
Provision for loan losses
9,578
28,051
10,015
Merger-related expenses
-
-
33,913
Less securities transactions gains/(losses)
-
623
12
Income tax expense
16,446
11,866
3,821
Pre-tax, pre-provision profit (PTPP) (b)
$77,326
$89,188
$69,181
Three Months Ended |
 Gulf South Bank
Conference
May 13, 2013
Gulf South Bank
Conference
May 13, 2013 |