<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Hancock Holding Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Judy H. Galloway
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
(LOGO)
HANCOCK HOLDING COMPANY
One Hancock Plaza
Gulfport, Mississippi 39501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that, pursuant to call of its Directors, the
Annual Meeting of Shareholders of Hancock Holding Company (the "Company") will
be held at HANCOCK BANK, One Hancock Plaza, Gulfport, Mississippi, on February
24, 1994, at 5:00 P.M., local time, for the purpose of considering and voting
upon the following matters:
1. To elect three (3) Directors to hold office for a term of three (3)
years or until their successors are elected and qualified.
2. To approve the appointment of Deloitte & Touche as the independent
public accountants of the Company.
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only those shareholders of record at the close of business on December
31, 1993, shall be entitled to notice of, and to vote at, the meeting or any
adjournments thereof.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE,
SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY. IF YOU DO ATTEND THE MEETING,
YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
Date: January 25, 1994 __________________________________
Leo W. Seal, Jr.
President
<PAGE> 3
HANCOCK HOLDING COMPANY
One Hancock Plaza
Gulfport, Mississippi 39501
(601) 868-4000
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of Hancock Holding Company, Gulfport, Mississippi (the
"Company" or "HHC"), of Proxies for the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at Hancock Bank, One Hancock Plaza, Gulfport,
Mississippi, on February 24, 1994, at 5:00 P.M., local time, and any
adjournment thereof, for the purposes stated below. It is anticipated that the
Proxy Statement and Proxy first will be sent or given to shareholders on
January 25, 1994.
Holders of record of the Company's Common Stock, par value $3.33 per
share (the "Common Stock"), as of December 31, 1993 (the "Record Date") are
entitled to vote at the meeting or any adjournments thereof. Each share of
Common Stock entitles the holder thereof to one (1) vote on each matter
presented at the Annual Meeting for Shareholder approval. On December 31,
1993, there were 7,023,829 shares of Common Stock entitled to vote. Of this
total, 937,229.3 shares of the Common Stock were held in various trust accounts
by the Trust Department of the Company's wholly-owned subsidiary, Hancock Bank,
in a fiduciary capacity as trustee, under terms that permit the Trust
Department to vote the shares (either by itself or jointly with others). It is
expected that these 937,229.3 shares will be voted in favor of the elections of
the nominees listed on page 4 and the appointment of Deloitte & Touche.
Shareholders of the Company do not have cumulative voting rights with
respect to the election of Directors at the Annual Meeting. A shareholder has
the right to vote the number of shares owned by him in the election of each
Director. With respect to the election of three (3) Directors to hold office
for a term of three (3) years, the nominees receiving the most votes, up to
three (3), will be elected. If the proxy is marked to vote for the three (3)
Directors as a group, one vote will be cast for each Director for each share
entitled to vote. If any shareholder wishes to vote for fewer than three (3)
Directors, he may line through or otherwise strike out the name of any
nominee.
Pursuant to Mississippi Law and the Company's Bylaws, Directors are
elected by a plurality of the votes cast in the election of Directors. A
"plurality" means that the individuals with the largest number of favorable
votes are elected as Directors, up to the maximum number of Directors to be
chosen at the meeting.
1
<PAGE> 4
Pursuant to Mississippi law and the Company's Bylaws, action on a
matter (other than the election of Directors) is approved if the votes cast
favoring the action exceed the votes cast opposing the action, unless the
Company's Articles of Incorporation or Mississippi law specifically requires a
greater number of affirmative votes on a particular matter. Broker non-votes
and shareholder abstentions are not counted in determining whether or not a
matter has been approved by shareholders.
The selection of Deloitte & Touche as the Company's Auditors for the
fiscal year ending December 31, 1994 will be ratified if more votes are cast at
the Annual Meeting favoring the appointment than opposing it.
Any person giving a Proxy has the right to revoke it at any time before
it is exercised. A shareholder may revoke his Proxy (1) by personally
appearing at the Annual Meeting, (2) by written notification to the Company
which is received prior to the exercise of the Proxy or (3) by a subsequent
Proxy executed by the person executing the prior Proxy and presented at the
Annual Meeting. All properly executed Proxies, if not revoked, will be voted
as directed on all matters proposed by the Board of Directors, and, if the
shareholder does not direct to the contrary, the shares will be voted "FOR"
each of the proposals described below. Solicitation of Proxies will be
primarily by mail. Officers, Directors, and employees of Hancock Bank and
Hancock Bank of Louisiana (hereinafter referred to collectively as the "Banks")
also may solicit Proxies personally. The Company will reimburse brokers and
other persons holding stock in their names, or in the names of nominees, for
their expenses for sending Proxy material to principals and obtaining their
Proxies. The cost of soliciting Proxies will be borne by the Company.
ELECTION OF DIRECTORS
The Board of Directors, by a vote of a majority of the full Board, has
nominated the persons named below for election to serve as Directors. The term
of each of the three (3) newly-elected Directors will expire at the Annual
Meeting of Shareholders in 1997 and when his successor has been elected and
qualified.
The Company's Articles of Incorporation provide for a Board of at least
nine (9) Directors classified into three (3) classes of Directors. At each
Annual Meeting, each class of Directors whose term has expired will be elected
to hold office until the third succeeding Annual Meeting and until their
successors have been elected and qualified. These staggered terms of service
by Directors of the Company may make it more difficult for the Company's
shareholders to effect a change in the
2
<PAGE> 5
majority of the Company's Directors since replacement of a majority of the
Board of Directors will normally require two (2) Annual Meetings of
Shareholders. Accordingly, this provision may have the effect of discouraging
hostile attempts to gain control of the Company, but is applicable to all
elections of Directors.
It is the intent of the persons named in the Proxy to vote such Proxy
"FOR" the election of the nominees listed below, unless otherwise specified in
the Proxy. In the event that any such nominee should be unable to accept the
office of Director, which is not anticipated, it is intended that the persons
named in the Proxy will vote for the election of such person in the place of
such nominee as the Board of Directors may recommend.
Nominations for election to the Board of Directors, other than those
made by or at the direction of the Board of Directors, may be made by a
shareholder by delivering written notice to the Company's secretary not less
than fifty (50) nor more than ninety (90) days prior to the meeting at which
Directors are to be elected, provided that the Company has mailed the first
notice of the meeting at least sixty (60) days prior to the meeting date. If
the Company has not given such notice, shareholder nominations must be
submitted within ten (10) days following the earlier of (i) the date that
notice of the date of the meeting was first mailed to the shareholders or (ii)
the date on which public disclosure of such date was made. The shareholder's
notice must set forth as to each nominee (i) the name, age, business address,
and residence address of such nominee; (ii) the principal occupation or
employment of such nominee; (iii) the class and number of shares of the
Company's Common Stock which are beneficially owned by such nominee; and (iv)
any other information relating to such nominee that may be required under
federal securities laws to be disclosed in solicitations of proxies for the
election of Directors. The shareholder's notice must also set forth as to the
shareholder giving the notice (i) the name and address of such shareholder and
(ii) the class and amount of such shareholder's beneficial ownership of the
Company's Common Stock. If the information supplied by the shareholder is
deficient in any material aspect or if the foregoing procedure is not followed,
the chairman of the annual meeting may determine that such shareholder's
nomination should not be brought before the meeting and that such nominee shall
not be eligible for election as a Director of the Company.
3
<PAGE> 6
INFORMATION CONCERNING NOMINEES
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Ownership of Common
Name, Age, Principal Occupation for the Director Common Stock Stock
Last Five Years and Bank or Company of Company as of December Beneficially
Offices Currently Held Since 20, 1993(a) Owned(a)
--------------------------------------- ---------- ----------------- ------------
<S> <C> <C> <C>
For a Three (3) Year Term Expiring in 1997
- ------------------------------------------
L. A. Koenenn, Jr. (74) . . . . . . . . . . . . . . 1988 3,548(1) .05%
Public Accountant, Gulfport, Mississippi
Dr. Homer C. Moody, Jr. (69) . . . . . . . . . . . 1984 9,424(2) .1%
Retired Doctor of Veterinary Medicine,
Poplarville, Mississippi
George A. Schloegel (53) . . . . . . . . . . . . . 1984 90,100.7(3) 1.3%
President, Hancock Bank, Gulfport,
Mississippi, since 1990; Vice Chairman of
the Board, Hancock Holding Company,
since 1984; Director, Hancock Bank of
Louisiana since 1990
</TABLE>
INFORMATION CONCERNING CONTINUING DIRECTORS
<TABLE>
<CAPTION>
Term
Expires
-------
<S> <C> <C> <C> <C>
A. F. Dantzler (78) . . . . . . . . . . . . . . . . . 1985 44,694(4) .6% 1995
President and Chief Executive Officer of Fuel
Services, Inc. (Chevron Jobber; Oil Field
Vessels), Pascagoula, Mississippi
Victor Mavar (67) . . . . . . . . . . . . . . . . . . 1993 8,926.9 .1% 1995
President of Mavar, Inc. (Real Estate Firm),
Biloxi, Mississippi
Leo W. Seal, Jr. (69) . . . . . . . . . . . . . . . . 1984 1,107,120.9(5) 15.8% 1995
Chief Executive Officer, Hancock Bank,
Gulfport, Mississippi, since 1963; President
and Chief Executive Officer, Hancock
Holding Company, since 1984; Advisory
Director, Hancock Bank of Louisiana since
1993
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Ownership of Common
Name, Age, Principal Occupation for the Director Common Stock Stock
Last Five Years and Bank or Company of Company as of December Beneficially Term
Offices Currently Held Since 20, 1993 (a) Owned(a) Expires
--------------------------------------- ---------- ----------------- ------------ -------
<S> <C> <C> <C>
Joseph F. Boardman, Jr.(64) . . . . . . . . . . . . 1984 8,800(6) .1% 1996
Retired Director of Coast Materials Company
(Ready Mixed Concrete Business), Gulfport,
Mississippi; Chairman of the Board, Hancock
Holding Company, Gulfport, Mississippi,
since 1987
Charles H. Johnson(60) . . . . . . . . . . . . . . 1987 6,147.7(7) .09% 1996
President, Charles H. Johnson, Inc.
(Residential General Contracting Business),
Waveland, Mississippi; President, Universal
Warehouse, Inc., (Mini-Storage Business),
Waveland, Mississippi
Thomas W. Milner, Jr.(80) . . . . . . . . . . . . . 1984 2,948 .04% 1996
Retired Vice Chairman of the Board, Hancock
Bank, Gulfport, Mississippi
</TABLE>
INFORMATION CONCERNING EXECUTIVE OFFICERS
<TABLE>
<S> <C> <C>
A. Bridger Eglin(50) . . . . . . . . . . . . . . . 803 .01%
President, Hancock Bank of Louisiana
since 1991; Director, Hancock Bank of
Louisiana since 1991(10)
Theresa Johnson(66) . . . . . . . . . . . . . . . 1,086 .01%
Executive Vice President, Hancock Bank
since 1985; Executive Vice President and
Chief Financial Officer Hancock Holding
Company since 1992
Charles A. Webb, Jr.(63) . . . . . . . . . . . . 6,596.4(8) .09%
Executive Vice President, Chief Credit Officer
and Secretary, Hancock Holding Company
since 1992; Executive Vice President, Hancock
Bank since 1977; Director, Hancock Bank of
Louisiana since 1991
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP 1,290,185.6(9) 18.4%
</TABLE>
5
<PAGE> 8
__________
(a) Constitutes sole ownership unless otherwise indicated.
(1) Represents 3,548 shares held in L.A., Jr. and Mae D. Koenenn Revocable
Trust. Mr. Koenenn has the sole power to vote and dispose of these
shares.
(2) Includes 8,160 shares owned jointly by Dr. Moody and his wife and 504
shares owned jointly with his children and 504 shares owned jointly by
his wife and children.
(3) Includes 32,740 shares owned jointly by Mr. Schloegel and his wife; 84
shares owned by Mr. Schloegel's minor child; 1,696.8 shares held for
Mr. Schloegel's account in the Company's Employee Stock Purchase Plan;
626.9 shares held in a self-directed IRA for Mr. Schloegel; and 156.7
shares held in a self-directed IRA for his wife.
(4) Includes 3,000 shares owned by Mr. Dantzler's wife, and 35,694 shares
held in a trust of which Mr. Dantzler serves as trustee and has sole
voting rights and power of disposition. Does not include 6,000 shares
held in his adult son's trust to which he has voting authority.
Mr. Dantzler is not a beneficiary of these trusts. Mr. Dantzler
disclaims beneficial owership of these 44,694 shares.
(5) Includes 1,880.9 shares owned by Mr. Seal's wife, and excludes 378,108
shares held in a fiduciary capacity by the Hancock Bank's Trust
Department as to which Mr. Seal has sole voting rights but no power of
disposition. Mr. Seal's Sister and her children are beneficiaries of
these trusts. Mr. Seal disclaims beneficial ownership of these
378,108 shares.
(6) Includes 400 shares owned by Mr. Boardman's wife.
(7) Includes 539.4 shares owned by Mr. Johnson's wife.
(8) Includes 6,052 shares owned jointly with Mr. Webb's wife.
(9) All of the Directors and executive officers of the Company as a group
(consisting of twelve (12) persons) beneficially owned, in the
aggregate, 1,712,987.6 shares (24.4%) of Common Stock of the Company,
including the shares as to which beneficial ownership has been
disclaimed above.
(10) See "Executive Officers" for Mr. Eglin's principal occupations for the
last five (5) years.
None of the Directors is a director of another company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934 or subject to the reporting requirements of Section 15(d) of the Act, or
registered as an investment company under the Investment Company Act of 1940,
except Leo W. Seal, Jr., who is a director of Mississippi Power Company,
Gulfport, Mississippi.
6
<PAGE> 9
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche, a firm of
independent certified public accountants, as auditors for the fiscal year
ending December 31, 1994, and until their successors are selected. Deloitte &
Touche and its predecessor, Touche Ross & Company, have been auditors for the
Company since it commenced business in 1984, for Hancock Bank since 1981 and
Hancock Bank of Louisiana since 1990.
The Company has been advised that neither the firm nor any of its
partners has any direct or any material indirect financial interest in the
securities of the Company or any of its subsidiaries, except as auditors and
consultants on accounting procedures and tax matters. The Board does not
anticipate that representatives of Deloitte & Touche will attend the Annual
Meeting.
Although not required to do so, the Board of Directors has chosen to
submit its appointment of Deloitte & Touche for ratification by the Company's
shareholders. It is the intention of the persons named in the Proxy to vote
such Proxy FOR the ratification of this appointment. If this proposal does not
pass, the Board of Directors will reconsider the matter. The proposal will be
ratified if the votes cast favoring the appointment exceed the votes cast
opposing it.
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the number of
shares of Common Stock of the Company held as of December 20, 1993 by the only
shareholders who are known to management to be the beneficial owners of more
than five percent (5%) of the Company's outstanding shares:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
<S> <C> <C>
Hancock Bank Trust Department 937,229.3(1) 13.3%
One Hancock Plaza
Gulfport, Mississippi 39501
Leo W. Seal, Jr. 1,107,120.9(2) 15.8%
408 North Beach Boulevard
Bay St. Louis, Mississippi 39520
_______________
<FN>
(1) Consists of shares held and voted by the Hancock Bank Trust Department
as trustee for 141 different accounts. Within these 141 accounts, the
Trust Department has sole voting rights on 917,659.8 shares, shared
voting rights on 0 shares and no power to vote 95,088.7 shares. The
Trust Department has the sole right to dispose of 863,785.1 shares,
shared right to dispose of 311 shares and no authority to dispose of
148,652.3 shares.
</TABLE>
7
<PAGE> 10
(2) Includes 1,880.9 shares owned by Mr. Seal's wife, and excludes 378,108
shares held in three (3) trusts by Hancock Bank's Trust Department (not
included in the 937,229.3 shares shown above as beneficially owned by
the Trust Department) as to which Mr. Seal has sole voting rights, but
no power of disposition. Mr. Seal's sister and her children are the
beneficiaries of these trusts.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee currently composed of Messrs.
Boardman, Koenenn and Mavar. The Audit Committee was formed in October 1991 in
connection with the listing of the Company's Common Stock on the NASDAQ
National Market System. The Audit Committee oversees the operations of the
Company's Audit Department and makes recommendations to the Board of Directors
concerning the independent accountants for the Company and its subsidiaries.
The Audit Committee met eleven (11) times during 1993.
The Company has a Loan Review Committee which meets monthly and is
currently composed of the following members: Joseph F. Boardman, Jr., A. F.
Dantzler, Charles H. Johnson and Charles A. Webb, Jr. It met twelve (12) times
during 1993.
The Company has a Compensation Committee which determines the salary of
the executive officers of the Company. It met one time during 1993 and is
composed of J. F. Boardman, Jr., A. F. Dantzler, Donald Green, Charles H.
Johnson, L. A. Koenenn, Jr., Victor Mavar, T. W. Milner, Jr., Dr. H. C. Moody,
Victor Mavar, George A. Schloegel and Leo W. Seal, Jr.
Hancock Holding Company does not have a Nominating Committee.
Hancock Bank has, among other committees, an Investment Committee which
meets monthly and a Salary Committee. The Salary Committee is composed of six
members who determine wages and compensation for Bank officers and other
employees. George A. Schloegel and Leo W. Seal, Jr., both of whom are
Directors of the Company, are two of the six members. The Salary Committee of
Hancock Bank met five (5) times during the year ended December 31, 1993.
The Board of Directors of the Company met a total of thirteen (13)
times during the year ended December 31, 1993. During 1993, all Directors
attended 75 percent or more of the aggregate of the total number of meetings of
the Board of Directors and the total number of meetings held by committees on
which they served.
8
<PAGE> 11
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company and the Banks as of December 31, 1993:
<TABLE>
<CAPTION>
NAME (AGE) PRESENT POSITION
---------- ----------------
<S> <C>
Joseph F. Boardman, Jr. (64) Director since 1984; Chairman of the Board
since 1987
George A. Schloegel (53) Director since 1984; Vice Chairman of the
Board since 1984; President, Hancock Bank
since 1990; Director, Hancock Bank of
Louisiana since 1990
Leo W. Seal, Jr. (69) Director since 1984; President and Chief
Executive Officer since 1984; Chairman and
Chief Executive Officer, Hancock Bank since 1990
Charles A. Webb, Jr. (63) Executive Vice President, Chief Credit Officer
and Secretary, Hancock Holding Company since
1992; Executive Vice President of Hancock Bank
since 1977; Director, Hancock Bank of
Louisiana since 1990
A. Bridger Eglin (50) President, Hancock Bank of Louisiana since
1991; Director, Hancock Bank of Louisiana
since 1991
Theresa Johnson (66) Executive Vice President, Hancock Bank since
1985; Executive Vice President and Chief
Financial Officer, Hancock Holding Company
since 1992
</TABLE>
- ------------
Mr. Boardman is a retired director and President of Coast Materials
Company, which sells ready-mixed concrete, and is located in Gulfport,
Mississippi. He was elected Chairman of the Company in 1987.
Mr. Schloegel was employed part-time with Hancock Bank from 1956-1959
and began full-time employment in 1962. He served in various capacities until
being named President in 1990. Mr. Schloegel serves as Vice Chairman of the
Company and President of Hancock Bank Securities Corporation, a subsidiary of
Hancock Bank. He is a member of the Boards of Directors of Hancock Bank and
Hancock Bank of Louisiana.
Mr. Seal was employed by Hancock Bank in 1947. He was
elected to the Board of Directors in 1961 and named President of Hancock Bank
in 1963. In 1977, he was named President and Chief Executive Officer of
Hancock Bank. In 1990, he became Chairman and Chief Executive Officer of
Hancock Bank. He is currently serving as President and Chief Executive Officer
of the Company and also serves as an Advisory Director of Hancock Bank of
Louisiana.
9
<PAGE> 12
Mr. Webb served as Vice President and Secretary of the Company from
1984 until 1992, when he became Executive Vice President, Chief Credit Officer
and Secretary. He has served as Executive Vice President of Hancock Bank since
1977 and as a Director of Hancock Bank of Louisiana since 1990.
Mr. Eglin has served as President of Hancock Bank of Louisiana since
1991. Prior to that, he served for a brief time as Commissioner of Financial
Institutions for the State of Louisiana. From 1989 to 1990 he served as First
Assistant to the Secretary of the State of Louisiana. Mr. Eglin was President
of Baton Rouge Bank and Trust Company, Baton Rouge, Louisiana from 1986 to 1988
and Executive Director of that institution from 1988 to 1989.
Ms. Johnson joined Hancock Bank in 1985 following the acquisition of
Pascagoula Moss Point Bank.
No family relationships exist among the executive officers of the
Company or the Banks.
SUMMARY MANAGEMENT COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
Other
Annual All Other
Compen- Compen-
Name and sation sation(5)
Principal Position Year Salary($) Bonus($) ($) ($)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Leo W. Seal, Jr. 1993 85,000 15,000 560(1) 2,547
CEO, Hancock Bank 18,000(2)
President & CEO, HHC 4,506(3)
7,560(4)
1992 60,000 0 560(1) 1,349
18,000(2)
1,321(3)
7,560(4)
1991 60,000 0 2,085(1) 551
18,000(2)
7,560(4)
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
Annual Compensation
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
Other
Annual All Other
Compen- Compen-
Name and sation sation(5)
Principal Position Year Salary($) Bonus($) ($) ($)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George A. Schloegel 1993 185,000 35,000 1,181(1) 7,774
President, Hancock Bank 5,000(3)
Vice Chairman, HHC 1,728(4)
1992 169,615 25,000 1,095(1) 5,855
3,744(2)
1,256(3)
1,728(4)
1991 153,229 20,000 874(1) 3,290
4,518(2)
482(3)
1,728(4)
Charles A. Webb, Jr. 1993 122,500 24,000 1,743(1) 3,681
Ex. V.P., Hancock Bank 5,000(2)
Ex. V.P., & Sec. and 4,212(4)
Chief Credit Officer, HHC 1992 115,588 20,000 1,495(1) 2,600
5,000(2)
4,212(4)
1991 105,461 15,000 1,290(1) 952
5,000(2)
4,212(4)
Theresa Johnson 1993 117,500 10,000 321(1) 3,541
Ex. V.P., Hancock Bank 7,560(4)
Ex. V.P., & CFO, HHC 1992 115,000 3,500 751(1) 2,498
7,560(4)
1991 112,500 2,500 496(1) 905
4,212(4)
A. Bridger Eglin 1993 116,500 9,000 1,523(1) 1,873
President, Hancock Bank 373(4)
of Louisiana 1992 110,231 7,500 832(1) 965
205(4)
1991 67,981 1,000 208(1) N/A
89(4)
</TABLE>
11
<PAGE> 14
1) Automobile compensation.
2) Deferred compensation.
3) Executive supplemental plan.
4) Cost of excess life insurance.
5) Includes stock purchase plan contribution and profit sharing plan
contribution.
Directors' Fees
Directors of the Company who are not also full-time employees of
Hancock Bank or Hancock Bank of Louisiana (i.e., all Directors except Messrs.
Seal and Schloegel) receive $275 for each regular Board meeting attended and
$200 for each special Board meeting attended. Mr. Dantzler, however, receives
a consultant fee of $400 per month but no retainer or additional compensation
for attendance at Board meetings. Directors may elect to defer the receipt of
their Directors' fees for a specified period of time. Directors who choose
such deferral also receive a $20,000 term life insurance policy. During 1993,
Messrs. Milner and Johnson participated in this deferral program. Directors of
the Company who are not full-time employees of Hancock Bank or Hancock Bank of
Louisiana and are also Directors of one of the Banks, receive an additional
$275 for each meeting of the Bank's Board of Directors attended, provided that
such meetings are not held on the same day as meetings of the Company.
Directors of the Company who are not full-time employees of Hancock Bank or
Hancock Bank of Louisiana and are members of a Bank committee, also receive
$225 for each committee meeting attended and $100 for each Gulfport loan
meeting.
Pension Plan
Hancock Bank, along with some of its affiliated companies, maintains a
non-contributory integrated pension plan and trust agreement (the "Pension
Plan") covering all full-time salaried employees (including executive officers
of the Company who are also employees of the Banks) who have completed one (1)
year of service and have attained age 21. Employees become participants in the
Pension Plan on the January 1 or July 1 following the satisfaction of the
eligibility requirements.
The benefit formula was modified by an amendment and restatement of the
Pension Plan dated December 31, 1992. Under this formula, a participant
accrues his benefit under the Pension Plan on the basis of his years of service
with the Bank and its affiliated companies, his years of participation in the
Pension Plan, his average annual compensation (calculated by using his base
compensation for the five consecutive years of service that produce the highest
average), and Social Security laws and amounts. His benefit accrues in
increments based on his years of participation at any time of determination and
the number of years of participation he would have at his normal retirement age
(that is, the date on which the participant has attained age 65 but not earlier
than the fifth anniversary of the first day of the Pension Plan year (January 1
- - December 31) during which the participant commenced participation in the
Pension Plan).
A participant's normal retirement date is the first day of the month
coincident with or immediately preceding his normal retirement age. A
participant is eligible to elect early retirement after he has either (1)
completed fifteen years of service and attained age 55 or (2) completed twelve
years of service and attained age 62.
12
<PAGE> 15
A participant becomes vested in his accrued benefit under the Pension
Plan upon the earlier of attainment of his normal retirement age or the
completion of five years of service. A participant with a vested accrued
benefit will be entitled to receive a retirement benefit upon termination of
his employment. In some situations, distributions may be delayed until the
participant attains his normal or early retirement date. The spouse or other
beneficiary of a vested participant who dies while employed will be eligible
for a survivor benefit.
The normal form of benefit under the Pension Plan (1) for unmarried
participants generally is a ten year certain and life annuity and (2) for
married participants generally is a joint and 50% survivor annuity which is the
actuarial equivalent of the unmarried participant's normal form. A participant
may elect certain specified optional forms of distribution.
The Pension Plan provides for the Banks and other participating
companies to make all contributions to the Pension Plan in amounts sufficient
to fund benefit payments and to satisfy legal funding requirements. All
contributions are held in a trust fund of which Hancock Bank is the trustee.
Pension costs were $1,075,347.00 for 1993.
The table set forth below shows the estimated annual base payments
payable under the present benefit formula to persons retiring upon attainment
of age 65 in 1993 in the indicated earnings classifications and with the
indicated number of years of service for purposes of computing retirement
benefits.
Pension Plan Table(1)(2)(3)
<TABLE>
<CAPTION>
Years of Service
---------------------------------------------------------------------
Remuneration 15 20 25 30 35 40 45
- ------------ -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 11,813 16,050 20,288 24,525 28,763 33,000 36,250
$100,000 24,413 33,150 41,888 50,625 59,363 68,100 74,600
$150,000 37,013 50,250 63,488 76,725 89,963 103,200(4) 112,950(4)
$200,000 49,613 67,350 85,088 102,825(4) 120,563(4) 138,300(4) 151,300(4)
$250,000 52,651 71,473 90,296 109,118(4) 127,941(4) 146,763(4) 160,547(4)
__________
<FN>
(1) Assuming continued employment, the years of service at age 65 for
Mr. Schloegel will be 46 years; for Mr. Seal was 42; for Ms. Johnson
was 45; for Mr. Webb will be 47; and for Mr. Egin will be 17.
(2) Earnings covered by the Pension Plan consist of basic salary and do not
include bonuses. The benefit amounts are not subject to reduction for
social security benefits, but social security amounts were taken into
account under the benefit formula.
(3) This table reflects the normal form of benefit under the Pension Plan
which is a ten year certain and life annuity.
</TABLE>
13
<PAGE> 16
(4) The annual amount exceeds the IRC Section 415 limit of $104,077 for a
ten year certain and life annuity. The Section 415 is indexed, so
that these amounts may eventually be paid.
Compensation covered by the Pension Plan is found in the Salary column
of the Summary Management Compensation Table for the executive officers of the
Company. It covers the three years listed in the Table and 1989 and 1990.
Covered compensation for named executive officers as of the end of the
last calendar year is: Seal $62,800; Schloegel $158,200; Webb $108,200; Eglin
$111,333; and Johnson $104,780.
Executive Supplemental Reimbursement Plan
Hancock Bank maintains an executive Supplemental Reimbursement Plan
("ESR Plan") for members of the Bank's Management Committee. Currently, Leo W.
Seal, Jr., George A. Schloegel and Charles A. Webb are three of the six members
of the Management Committee. Under the ESR Plan, Hancock Bank will pay or
reimburse each participating committee member for up to $5,000 of expenses that
the committee member incurs during each calendar year for life insurance,
education, residential security system and club dues. If the amount paid or
reimbursed for a committee member is less than $5,000 for a calendar year, the
unused portion will be contributed to a deferred compensation account for all
members except Leo W. Seal, Jr. An administrative committee of at least three
persons appointed by the Board of Directors of Hancock Bank administers and
interprets the plan and has sole discretion to award any benefit to committee
members.
Bank Automobile Plan
Hancock Bank has a Bank Automobile Plan for the members of the
Management Committee. The members are given the use of Bank automobiles for
Bank business during the day and are permitted to take them home at night and
on weekends for their personal use.
Stock Purchase Plan
The Company maintains an Employee Stock Purchase Plan (the "ESPP") that
is designed to provide the employees of the Company, the Banks and certain
subsidiaries of Hancock Bank a convenient means of purchasing Common Stock of
the Company. All employees (except Leo W. Seal, Jr.) of the Company, the
Banks, and the other participating subsidiaries, who have completed two or more
years of continuous full-time, or five or more years of continuous part-time,
employment with the Company, the Banks, or the participating subsidiaries, and
are 21 years of age, are eligible to participate in the ESPP.
Each employee of the Company, the Banks or a participating subsidiary
who qualifies to and does participate in the ESPP (a "Participant") is
permitted to authorize payroll deductions, which may not exceed 5% of the
Participant's base salary for the pay period. At the end of each plan year
(January 1 through December 31), the participating company employing a
Participant who is still employed at that time, contributes an amount equal to
25% of such Participant's payroll deductions for that plan year.
14
<PAGE> 17
Employee and Company contributions are forwarded to Hancock Bank's
Trust Department, which uses the funds to purchase shares of the Company's
Common Stock through brokers or dealers or directly from individuals (including
officers, directors or employees of the Company, the Banks or the participating
subsidiaries) at the prevailing market price in the Gulfport, Mississippi
over-the-counter market on the date of such purchase. Brokerage commissions,
service charges and other transactional costs associated with the purchase of
shares by the Plan, if any, are paid by the Plan from its assets (and therefore
are borne indirectly by the Plan Participants). Administrative fees and
expenses are paid by the Company. Purchases are made in the name of the ESPP
at such times and in such amounts as the Bank's Trust Department deems
appropriate, and shares are allocated to each Participant as of June 30 and
December 31 of each year. A Participant may withdraw the Common Stock and cash
held in his Hancock Bank account at any time (but only once in a plan year
without penalty).
For 1993, Hancock Bank contributed $2,096 under the Plan on behalf of
George A. Schloegel, and Hancock Bank of Louisiana contributed $650 on behalf
of Bridger Eglin. These are the only two executive officers of the
Company who participate in the Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report reflects the Company's compensation philosophy for all
executive officers, as endorsed by the Board of Directors and the Compensation
Committee. The Committee, comprised of the Company Directors and two advisory
directors, named below, determines annual base salary adjustments and annual
bonus awards. There are two interlocking Committee and Board member
relationships which are disclosed elsewhere under "Compensation Committee
Interlocks and Insider Participation."
In determining the compensation to be paid to the Company's executive
officers in 1993, the Compensation Committee employed compensation policies
designed to align the compensation with the Company's overall business
strategy, values and management initiatives. These policies are intended to
reward executives for long-term strategic management and the enhancement of
shareholder value and support a performance-oriented environment that rewards
achievement of internal goals.
Additionally, the Company subscribes to and participates in the Wyatt
Data Services/Cole Survey for Financial Institutions Compensation and the
Mississippi and Louisiana Bankers Associations' surveys, which provide the
Committee with comparative compensation data from the Company's market areas
and its peer groups. This information is used by the Committee to make sure
that it is providing compensation opportunities comparable to its peer group,
thereby allowing the Company to retain talented executive officers who
contribute to the Company's overall and long-term success.
Mr. Seal's compensation is reflective of his philosophy and heritage.
His father, who served as Hancock Bank's President from 1932 until his demise
in 1963, instilled in Mr. Seal a sense of responsibility as to their own
compensation. Hence, like his father before him, Mr. Seal's relatively low
salary, in comparison to the other executive officers of the Company, is the
result of Mr. Seal's express wishes and it is in no way a reflection of his
performance or ability as CEO or his value to the Company.
15
<PAGE> 18
Submitted by the Company's Compensation Committee:
J. F. Boardman, Jr. L. A. Koenenn, Jr. Vertis G. Ramsay
A. F. Dantzler Victor Mavar George A. Schloegel
Donald R. Green T. W. Milner, Jr. Leo W. Seal, Jr.
Charles H. Johnson Dr. H. C. Moody, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Leo W. Seal, Jr. and George A. Schloegel both served on the
Compensation Committee of the Company for 1993. Although Mr. Seal, the
Company's Chief Executive Officer, and Mr. Schloegel, the Company's Vice
Chairman, served on the Committee, neither participated in any decisions
regarding his own compensation as an executive officer other than on Mr. Seal's
expressed wishes described in the aforementioned paragraph.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Directors, officers and principal shareholders of the Company and their
associates have been customers of the Banks from time to time in the ordinary
course of business and additional transactions may be expected to take place in
the future. All loans to such persons were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than
the normal risk of collectability or embody other unfavorable features. At
December 31, 1993, the aggregate amount of such loans and extensions of credit
outstanding was approximately $4.3 million.
Leo W. Seal, Jr., serves as President of Hancock Insurance Agency
("Hancock Insurance"), for which he receives no fees or other compensation.
For the year ended December 31, 1993, the Company paid Hancock Insurance
$764,104 in premiums for general insurance products, which sum constituted
approximately 24% of the gross consolidated revenues of Hancock Insurance for
the year ended December 31, 1993. Management believes that the terms of the
insurance transactions between the Company and Hancock Insurance were no less
favorable to the Company than if the transactions had been made with
nonaffiliates.
FIVE YEAR SHAREHOLDER RETURN COMPARISION
The Securities and Exchange Commission requires that the Company
include in its Proxy Statement a line graph presentation comparing cumulative,
five-year shareholder returns on an indexed basis with a performance indicator
of the overall stock market and either a nationally recognized industry
standard or an index of peer companies selected by the Company. The broad
market index used in the graph is the NASDAQ Market Index. The peer group
index is the Media General Financial Services Industry Group 045-East South
Central Banks and a list of the companies included in the index follows the
graph.
16
<PAGE> 19
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG HANCOCK HOLDING COMPANY,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
HANCOCK NASDAQ PEER GROUP
HOLDING CO. MARKET INDEX INDEX
----------- ------------ ----------
<S> <C> <C> <C>
1989 . . . . . . . . $ 91.16 $112.89 $104.81
1990 . . . . . . . . 78.89 91.57 92.42
1991 . . . . . . . . 114 117.56 151.19
1992 . . . . . . . . 161.15 118.71 156.82
1993 . . . . . . . . 187.03 142.4 165.75
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1989
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1993
<PAGE> 20
MG Industry Group 045-East South Central Banks:
<TABLE>
<CAPTION>
<S> <C>
AmSouth Bancorporation First Alabama Bancshares, Inc.
Bancfirst Corporation Alabama First American Corporation, Tennessee
Banco Central Hispano S.A. First City Bancorp, Inc.
BancorpSouth First Fed Financial, Kentucky
Bank of Nashville, Tennessee First Tennessee National Corporation
Cardinal Bancshares, Inc. Grenada Sunburst System Corporation
CBT Corporation Hancock Holding Company
Colonial BancGroup Class A Kentucky Enterprise Bancorp
Community Bancshares Tennessee Leader Financial Corporation
Compass Bancshares, Inc. Liberty National Bancorp, Inc.
Deposit Guaranty Corporation Mid-America Bankcorp
Farmers Capital Bank Corporation National Commerce Bancorporation
Peoples First Corporation
Peoples Holding Company
Pikeville National
S.Y. Bancorp, Inc.
South Alabama Bancorp
SouthTrust Corporation
Tennessee Bancorp, Inc.
Trans Financial Bancorp, Inc.
Trustmark Corporation
Union Planters Corporation
</TABLE>
17
<PAGE> 21
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than those specifically set forth in the Notice of Annual
Meeting of Shareholders, nor does it know of any matters to be brought before
the Annual Meeting by others. If, however, any other matters properly come
before the Annual Meeting, it is the intention of the persons named in the
accompanying Proxy to vote such Proxy in accordance with the judgment of the
Board on any such matters.
The Annual Report of the Company for the fiscal year ended December 31,
1993 is enclosed. The Annual Report is not to be regarded as proxy soliciting
material. Any shareholder who has not received an Annual Report may obtain one
from the Company. The Company also will provide, on request, without charge,
copies of its Annual Report on Form 10-K for the year ended December 31, 1993,
as filed with the Securities and Exchange Commission. Shareholders wishing to
receive a copy of the Annual Report on Form 10-K are directed to write to
George A. Schloegel, Vice Chairman, at the address of the Company.
PROPOSALS FOR 1995 ANNUAL MEETING
Any shareholder who wishes to present a proposal at the Company's next
Annual Meeting and who wishes to have the proposal included in the Company's
Proxy Statement and form of proxy for the meeting, must submit the proposal to
the undersigned at the address of the Company not later than September 20,
1994.
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE.
By Order of the Board of Directors
Dated January 25, 1994
______________________________
Leo W. Seal, Jr.
President
18
<PAGE> 22
PROXY FOR ANNUAL MEETING
HANCOCK HOLDING COMPANY, GULFPORT, MISSISSIPPI
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS that the undersigned shareholder of
HANCOCK HOLDING COMPANY, GULFPORT, MISSISSIPPI, does hereby nominate,
constitute, and appoint Leo W. Seal, Jr., Thomas W. Milner, Jr., and J.F.
Boardman, Jr. as proxies or any of them (with full power of substitution), and
hereby authorizes them to represent and vote, as designated below, all the
shares of Hancock Holding Company held of record by the undersigned on December
31, 1993, at the annual meeting of its stockholders to be held at HANCOCK
BANK, One Hancock Plaza, Gulfport, Mississippi, on February 24, 1994, or any
adjournments thereof, with all the powers the undersigned would possess if
personally present, as follows:
1. The election of the following 3 persons as directors, to serve until the
Annual Meeting in 1997 or until each person's successor has been elected and
qualified. (INSTRUCTION: AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE WITHHELD
BY LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE).
L. A. KOENENN, JR. DR. HOMER C. MOODY, JR. GEORGE A. SCHLOEGEL
For all nominees except as indicated ______________
Withhold authority to vote for all nominees _______________
2. Proposal to approve the appointment of Deloitte & Touche as the independent
public accountants of the Company.
For _______ Against _______ Abstain ______
3. In their descretion, Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
For _______ Against _______ Abstain ______
<PAGE> 23
This Proxy, when properly executed, will be voted in accordance with
the specific indication above, IN THE ABSENCE OF SUCH INDICATION, THIS PROXY
WILL BE VOTED "FOR" THE NOMINEES LISTED IN PROPOSAL 1, and ''FOR'' PROPOSAL 2.
If any other matters shall properly come before the meeting, it is the
intention of the persons named as proxy holders to vote on such matters in
accordance with their judgment.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
MAY BE REVOKED PRIOR TO ITS EXERCISE.
DATED: _____________________ 1994
Signature _______________________
Signature _______________________
When signing as attorney, executor,
trustee, or guardian, please give
full title. If more than one
trustee, all should sign. All joint
owners must sign.
Number of shares: _________________
IF YOU PLAN TO ATTEND THE MEETING,
PLEASE PLACE A CHECK MARK
HERE ____________. WHETHER OR
NOT YOU PLAN TO ATTEND, PLEASE
SIGN AND RETURN AT ONCE.
<PAGE> 24
Index to Exhibits
Exhibit 13 -- Form of Annual Report for Hancock Holding Company for the period
ended December 31, 1993.
<PAGE> 1
TABLE OF CONTENTS
TO OUR STOCKHOLDERS 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF BUSINESS 6
CONSOLIDATED SUMMARY OF 7
SELECTED FINANCIAL INFORMATION
OUTDOOR RECREATION SECTION 8
CONSOLIDATED BALANCE SHEETS 18
CONSOLIDATED STATEMENTS 19
OF EARNINGS
CONSOLIDATED STATEMENTS 20
OF STOCKHOLDERS' EQUITY
CONSOLIDATED STATEMENTS 21
OF CASH FLOW
NOTES TO CONSOLIDATED 22
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT 31
MANAGEMENT'S DISCUSSION AND 32
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OFFICERS 34
GLOSSARY 36
<PAGE> 2
TO OUR STOCKHOLDERS
The twelve month period that ended December 31 saw America's commercial banking
industry experience a most unusual year. In general, in spite of sluggish loan
demand and a record flow of dollars from the public into the stock market and
mutual funds, the vast majority of the nation's banks realized good earnings.
For your Banks (Hancock of MS and Hancock of LA), 1993 was another very good
year. Efforts on the part of the Officers and Staff to implement existing
programs, as well as the introduction of several new products and services,
resulted in the loan portfolio averaging 7 1/2% higher than the previous year,
while deposits' average for the year was about 8 1/2% greater, and year-end
total assets were in excess of $1.8 billion.
Undoubtedly, you will be pleased with our after-tax earnings, which ended up a
little over $22 million for $3.08 per share versus $2.74 for 1992. On the
strength of these earnings, an extra fourth quarter dividend of 22 cents, in
addition to the regular dividend, was paid, for a total of 90 cents per share
for the year.
It should be of further interest to you as shareholders to know that your
equity is now in excess of $143 million, which provides a capital ratio of
approximately 8%, exceeding most banks of similar size across the country.
To improve our ability to serve the public, we opened a facility at the U.S.
Navy Retirement Center in Mississippi City, relocated our Edgewater Branch at
the request of Mall management, and also installed a second Automatic Teller
Machine in a separate mall location. Throughout both service areas we replaced
50 of the older model ATM's and installed 13 new ones, including ones at the
Waveland, D'Iberville and Navy CB Base Branches, plus built a free-standing
unit in Harrison County at the intersection of Dedeaux and Three Rivers Roads
north of I-10.
We also made a significant investment in a new main-frame computer system,
which provides us with the most up-to-date hardware and software for integrated
data processing that is available in the market today. This new equipment
should serve us into the 21st century, and has already enabled us to
consolidate most of the Louisiana and Mississippi branches and customer service
operations into one location, resulting in more efficiency and lower costs.
Our wholly-owned Hancock Mortgage Corporation, specializing in long-term FHA,
VA and conventional loans, experienced a very successful
3
<PAGE> 3
beginning year in the Louisiana market. We are now looking forward to
commencing long-term mortgage operations in Mississippi. Both of these
functions should generate additional income for 1994.
Loan-by-Phone was another innovation that began in 1993, whereby customers use
their telephone to arrange a loan from 8 a.m. to 6 p.m. daily and 9 a.m. to
noon on Saturdays, and then go to the nearest branch to close the loan.
With the continued growth and expansion of our Louisiana operation, we were
privileged to add two successful businessmen in the persons of J.B. Olinde, a
Baton Rouge entrepreneur engaged in several business pursuits, and Jose R.
"Rick" Tarajano, a highly regarded industrial contractor, to the Hancock Bank
of Louisiana Board.
Looking forward, unemployment is at its lowest level in a decade on the
Mississippi Coast, construction, hotel/motel, automobile and casino businesses
are enjoying considerable activity, and with the outlook for even further
impact from increased Port tonnage, tourism and the gaming industry, we hope to
have another good year in our Mississippi market. At the same time, indications
are that the Greater Baton Rouge area expects 1994 to be similar to 1993, with
about the same industrial outlook, but continued increased activity in real
estate and residential construction; hence, we anticipate more progress in our
Louisiana service area, too.
As we enter the new year, we should report that plans are progressing rapidly
to provide facilities where our customers may purchase mutual funds and other
non-traditional bank investments throughout the Banks' branching system.
Progress toward the merger announced in November with First State Bank of
Baker, Louisiana, a successful, well established $80 million institution just
north of Baton Rouge, is moving right along with applications now in the hands
of the various regulatory authorities whose approval is required. Upon passage,
it will provide us several additional geographical locations in the Louisiana
market.
While 1993, in nearly all respects, was one of the most notable in the Bank's
long history, it was not without its sadder moments as we witnessed the passing
of Vertis Ramsay, Pascagoula, and Dr. C.D. Taylor, Pass Christian, two of our
long-time, very capable Directors, as well as Yvonne Dedeaux, one of our
Officers who managed our Central Information Department.
As we enter our 95th year in the banking business, our Directors, Officers and
Staff thank you for the opportunity to serve you and appreciate the confidence
you evidence in us through your stock ownership and your referrals of business.
We also pledge to you our continuing efforts to move the institution forward in
a manner that we trust you will find favorable and to your liking, as well as
continue to embody our creed and reputation for an institution that is known
for its STRENGTH, STABILITY & INTEGRITY.
/s/ J.F. BOARDMAN, JR.
4 J.F. Boardman, Jr.
Chairman
/s/ GEORGE A. SCHLOEGEL
George A. Schloegel
Vice Chairman
/s/ LEO W. SEAL, JR.
Leo W. Seal, Jr.
President and CEO
<PAGE> 4
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
Amounts in thousands (except per share data)
<TABLE>
<CAPTION>
1993 1992 % CHANGE
------------ ------------ -----------
<S> <C> <C> <C>
EARNINGS STATEMENT DATA:
Net interest income $ 77,904 $ 74,325 4.8
Provision for loan losses 4,231 7,655 (44.7)
Earnings before income taxes 31,786 25,861 22.9
Net earnings 22,116 19,211 15.1
PER SHARE DATA:
Net earnings $ 3.15 $ 2.74 15.0
Cash dividends paid 0.90 0.68 32.4
Book value (period end) 20.48 18.25 12.2
Weighted average shares outstanding 7,023 7,023 0.0
Shares outstanding 12/31 7,023 7,023 0.0
BALANCE SHEET DATA (PERIOD END):
Securities $ 729,180 $ 721,361 10.8
Net loans 871,809 776,101 12.3
Reserve for loan losses 14,028 13,275 5.7
Total assets 1,821,050 1,735,192 4.9
Total deposits 1,615,595 1,550,844 4.2
Long-term debt and capital notes 4,300 5,115 (15.9)
Total stockholders' equity 143,826 128,170 12.2
BALANCE SHEET DATA (AVERAGE FOR THE YEAR):
Securities $ 748,711 $ 688,213 8.8
Net loans 783,773 731,048 7.2
Reserve for loan losses 14,302 12,322 16.1
Total assets 1,788,720 1,658,918 7.8
Total deposits 1,598,280 1,473,994 8.4
Long-term debt and capital notes 4,979 5,275 (5.6)
Total stockholders' equity 137,536 121,267 13.4
PERFORMANCE RATIOS:
Return on average assets 1.24 1.16 6.9
Return on average stockholders' equity 16.08 15.84 15.2
Reserve for loan losses to average net loans 1.82 1.68 8.3
Reserve for loan losses to nonperforming loans 264.33 220.88 19.8
Net charge-offs to average net loans 0.64 0.80 (20.0)
Net interest margin 4.87 5.09 (4.3)
</TABLE>
<TABLE>
<CAPTION>
REQUIRED MINIMUM
----------------
<S> <C> <C> <C>
CAPTIAL RATIOS (%):
Primary capital 7.90 7.74 --
Tier 1 leverage 7.62 7.03 4% - 5%
Tier 1 risk-based 14.49 14.09 4%
Total risk-based 15.42 15.62 8%
</TABLE>
5
<PAGE> 5
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
DESCRIPTION OF BUSINESS
Hancock Holding Company (the "Company") is a bank holding company
headquartered in Gulfport, Mississippi with total consolidated assets of
approximately $1.8 billion at December 31, 1993. The Company operates a total of
54 banking offices and 80 automated teller machines ("ATMs") (34 of which are
free-standing) in the states of Mississippi and Louisiana through two
wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi and Hancock
Bank of Louisiana, Baton Rouge, Louisiana.
The Banks are community oriented and focus primarily on offering
commercial, consumer and mortgage loans and deposit services to individuals and
small to middle market businesses in their respective market areas. The
Company's operating strategy is to provide its customers with the financial
sophistication and breadth of products of a regional bank, while successfully
retaining the local appeal and level of service of a community bank.
SUMMARY OF QUARTERLY OPERATING RESULTS
<TABLE>
<CAPTION>
1993 1992
--------------------------------------------- ------------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
--------- --------- --------- --------- --------- --------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income $ 19,798 $ 19,905 $ 19,225 $ 18,976 $ 17,040 $ 18,111 $ 18,812 $ 20,362
Provision for loan losses 1,530 1,326 197 1,178 1,500 1,922 2,041 2,192
Earnings before income taxes 8,554 8,254 8,477 6,501 5,859 5,630 6,961 7,411
Net earnings 5,923 5,755 5,808 4,630 4,434 4,230 4,842 5,705
Net earnings per share 0.84 0.82 0.83 0.66 0.63 0.60 0.69 0.82
</TABLE>
MARKET INFORMATION
The Company's Common Stock trades on the NASDAQ National Market System
under the symbol "HBHC" and is listed in the newspaper under NASDAQ market
quotations under "HancHd." The following table sets forth the high and low last
sale prices of the Company's Common Stock as reported on the NASDAQ National
Market System. These prices do not reflect retail mark-ups, mark-downs or
commissions.
<TABLE>
<CAPTION>
HIGH BID LOW BID CASH
OR LAST OR LAST DIVIDENDS
SALE PRICE SALE PRICE PAID
---------- ---------- ---------
<S> <C> <C> <C>
1992
1st Quarter $22.75 $19.75 $0.15
2nd Quarter $25.00 $20.50 $0.15
3rd Quarter $27.75 $24.75 $0.15
4th Quarter $30.75 $24.75 $0.23
1993
1st Quarter $28.75 $28.25 $0.17
2nd Quarter $35.00 $30.50 $0.17
3rd Quarter $32.75 $28.75 $0.17
4th Quarter $34.50 $32.00 $0.39
</TABLE>
On January 14, 1994, the high and low last sale prices of the Company's
common stock as reported on the NASDAQ National Market System were $33.00 and
$31.75, respectively.
The principal source of funds to the Company to pay cash dividends are
the earnings of the Bank subsidiaries. Consequently, dividends are dependent
upon earnings, capital needs, regulatory policies and other policies affecting
the Banks. For example, federal and state banking laws and regulations restrict
the amount of dividends and loans a bank may make to its parent company.
Dividends paid to the Company by Hancock Bank are subject to approval by the
Commissioner of Banking and Consumer Finance of the State of Mississippi. The
Company's management does not expect regulatory restrictions to affect its
policy of paying cash dividends, although no assurance can be given that Hancock
Holding Company will continue to declare and pay regular quarterly cash
dividends on its common stock. However, since 1937, the Company or its
predecessor has paid regular cash dividends without interruption.
6
<PAGE> 6
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF SELECTED FINANCIAL INFORMATION
Amounts In Thousands (except for share and per share data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $ 74,209 $ 73,941 $ 77,299 $ 62,256 $ 48,782
Income on Federal Funds Sold 3,075 3,124 5,983 6,129 1,618
Interest and Dividends on Investments 45,897 49,562 41,471 33,633 30,296
---------- ---------- ---------- ---------- ----------
TOTAL INTEREST INCOME 123,181 126,627 124,753 102,018 80,696
INTEREST EXPENSE:
Interest on Deposits 43,833 50,327 63,239 57,606 47,931
Interest on Federal Funds Purchased 1,021 1,408 3,366 3,671 1,304
Interest on Bonds and Notes 423 567 2,141 1,382 596
---------- ---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE 45,277 52,302 68,746 62,659 49,831
NET INTEREST INCOME 77,904 74,325 56,007 39,359 30,865
Provision for Loan Losses 4,231 7,655 4,686 2,939 3,355
---------- ---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 73,673 66,670 51,321 36,420 27,510
Other Income 19,768 19,480 19,950 13,064 10,798
Other Expenses 61,655 60,289 54,883 40,023 31,918
---------- ---------- ---------- ---------- ----------
Earnings before Income Taxes (Credit) 31,786 25,861 16,388 9,461 6,390
Income Taxes (Credit) 9,670 6,650 4,000 1,490 (250)
---------- ---------- ---------- ---------- ----------
NET EARNINGS $ 22,116 $ 19,211 $ 12,388 $ 7,971 $ 6,640
========== ========== ========== ========== ==========
PER COMMON SHARE:
Net Earnings $ 3.15 $ 2.74 $ 2.21 $ 1.46 $ 1.21
Cash Dividends 0.90 0.68 0.60 0.57 0.55
Stock Splits and Dividends 2 for 1
Weighted Average Number
of Shares 7,023,000 7,023,000 5,595,000 5,466,000 5,466,000
RETURN ON AVERAGE ASSETS 1.24% 1.16% 0.84% 0.69% 0.72%
BALANCE SHEET DATA DECEMBER 31:
Total Assets $1,821,050 1,735,192 1,554,536 $1,405,002 $ 980,604
Total Deposits 1,615,595 1,550,844 1,367,792 1,220,934 824,489
Total Long-Term Debt and Capital Notes 4,300 5,115 6,880 25,350 7,275
Stockholders' Equity 143,826 128,170 113,840 80,252 75,516
</TABLE>
On June 4, 1990, the Company acquired Metropolitan National Bank (MNB),
pursuant to a merger of MNB into Hancock Bank. On August 2, 1990, a
newly-created subsidiary of the Company, Hancock Bank of Louisiana, acquired
certain assets and deposit liabilities of American Bank & Trust Company
(AMBANK), Baton Rouge, Louisiana, a failed institution. On August 9, 1991,
Hancock Bank acquired certain assets and assumed the deposit liabilities of
Peoples Federal Savings Association (PEOPLES). These acquisitions have been
accounted for as purchases and the results of operations since the dates of
acquisition have been included in the consolidated statements of earnings.
7
<PAGE> 7
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1993 1992
--------------- ---------------
<S> <C> <C>
ASSETS:
Cash and due from banks (non-interest bearing) $ 90,544,403 $ 99,472,480
Interest bearing time deposits with other banks 1,875,001 4,875,001
Securities held for sale - (market value of $28,836,000) 28,244,000 --
Investment Securities - (market value of $714,754,000 and $737,557,000) 700,935,962 721,360,933
Federal funds sold and securities purchased under agreements to resell 85,500,000 79,000,000
Loans 885,837,920 797,660,419
Less:
Reserve for loan losses (14,028,158) (13,275,161)
Unearned income (25,710,324) (21,559,200)
--------------- ---------------
Loans, Net 846,099,438 762,826,058
Property and equipment 34,997,577 35,113,998
Other real estate 654,459 1,327,370
Accrued interest receivable 13,799,949 15,289,306
Other assets 18,399,564 15,927,075
--------------- ---------------
TOTAL ASSETS $ 1,821,050,353 $ 1,735,192,221
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing demand $ 346,307,348 $ 318,946,144
Interest bearing savings, NOW, money market and other time 1,269,287,887 1,231,898,250
--------------- ---------------
Total Deposits 1,615,595,235 1,550,844,394
Federal funds purchased and securities sold under agreements to repurchase 45,798,931 36,390,981
Other liabilities 11,529,912 14,671,698
Capital notes 480,000 480,000
Long-term bonds and notes 3,820,000 4,635,000
--------------- ---------------
TOTAL LIABILITIES 1,677,224,078 1,607,022,073
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Common stock - $3.33 par value per share; authorized 20,000,000 shares
authorized, 7,177,966 shares issued and outstanding 23,902,625 23,902,625
Capital surplus 95,130,500 81,130,500
Undivided profits 24,793,150 23,137,023
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 143,826,275 128,170,148
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,821,050,353 $ 1,735,192,221
=============== ===============
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 8
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 74,209,279 $ 73,940,807 $ 77,298,426
Interest on:
U.S. Treasury Securities 16,056,255 19,749,117 21,740,052
Obligations of other U.S. Government agencies
and corporations 21,919,860 20,824,658 12,740,689
Obligations of states and political subdivisions 3,120,480 4,059,923 4,720,853
Interest on federal funds sold and securities purchased
under agreements to resell 3,075,363 3,123,807 5,982,690
Interest on time deposits and other 4,800,246 4,928,531 2,269,985
------------- ------------- -------------
Total interest income 123,181,483 126,626,843 124,752,695
------------- ------------- -------------
INTEREST EXPENSE:
Interest on deposits 43,832,977 50,326,792 63,239,175
Interest on federal funds purchased and securities
sold under agreements to repurchase 1,021,161 1,407,842 3,366,423
Interest on bonds and notes 423,666 566,861 2,140,378
------------- ------------- -------------
Total interest expense 45,277,804 52,301,495 68,745,976
------------- ------------- -------------
NET INTEREST INCOME 77,903,679 74,325,348 56,006,719
Provision for loan losses 4,230,983 7,654,996 4,686,138
------------- ------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 73,672,696 66,670,352 51,320,581
------------- ------------- -------------
NON-INTEREST INCOME:
Service charges on deposit accounts 10,448,854 10,731,508 8,872,375
Other service charges, commissions and fees 5,682,187 4,999,283 5,089,838
Securities gains 216,983 632,580 1,236,838
Other 3,420,243 3,116,494 4,751,365
------------- ------------- -------------
Total non-interest income 19,768,267 19,479,865 19,950,416
------------- ------------- -------------
NON-INTEREST EXPENSE:
Salaries and employee benefits 30,623,211 28,528,492 25,773,437
Net occupancy expense of premises 3,020,522 3,358,815 3,417,415
Equipment rentals, depreciation and maintenance 6,471,618 6,765,037 5,988,228
Other 21,539,314 21,636,418 19,703,450
------------- ------------- -------------
Total non-interest expense 61,654,665 60,288,762 54,882,530
------------- ------------- -------------
EARNINGS BEFORE INCOME TAXES 31,786,298 25,861,455 16,388,467
INCOME TAXES 9,670,000 6,650,000 4,000,000
------------- ------------- -------------
NET EARNINGS $ 22,116,298 $ 19,211,455 $ 12,388,467
============= ============= =============
NET EARNINGS PER COMMON SHARE $ 3.15 $ 2.74 $ 2.21
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 9
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------
SHARES CAPITAL UNDIVIDED
ISSUED AMOUNT SURPLUS PROFITS
------ ------ ------- --------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1991 5,625,466 $ 18,732,800 $ 46,633,600 $ 14,885,637
Net earnings 12,388,467
Cash dividends - $.60 per share (3,467,521)
Sale of common stock 1,552,500 5,169,825 19,496,900
Transfer from undivided profits 2,000,000 (2,000,000)
--------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1991 7,177,966 23,902,625 68,130,500 21,806,583
Net earnings 19,211,455
Cash dividends - $.68 per share (4,881,015)
Transfer from undivided profits 13,000,000 (13,000,000)
--------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1992 7,177,966 23,902,625 81,130,500 23,137,023
Net earnings 22,116,298
Cash dividends - $.90 per share (6,460,171)
Transfer from undivided profits 14,000,000 (14,000,000)
--------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1993 7,177,966 $ 23,902,625 $ 95,130,500 $ 24,793,150
========= ============= ============= =============
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 10
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------
1993 1992 1991
---------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 22,116,298 $ 19,211,455 $ 12,388,467
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 3,794,739 3,883,980 3,685,098
Provision for loan losses 4,230,983 7,654,996 4,686,138
Provision for losses on other real estate owned 157,996 652,984 229,328
Deferred income taxes (credit) 70,000 (350,000) 400,000
Gain on sales of securities (216,983) (632,580) (1,236,838)
Decrease (increase) in interest receivable 1,489,357 1,488,003 (2,252,547)
Amortization of intangibles assets 1,513,500 1,655,700 1,832,309
Decrease in interest payable (362,639) (1,587,662) (1,136,000)
Other - net (6,835,136) 4,987,219 2,885,681
------------- ------------- --------------
Net cash provided by Operating Activities 25,958,115 36,964,095 21,481,636
------------- ------------- --------------
Cash Flows from Investing Activities:
Net (increase) decrease in interest bearing
time deposits (10,474,873) (4,000,001) 6,618,400
Proceeds from maturities of securities 236,153,527 319,389,207 252,505,536
Proceeds from sales of securities 9,014,692 65,448,000 59,767,000
Purchase of securities (249,770,265) (499,981,819) (483,082,491)
Net (increase) decrease in federal funds sold and
securities sold under agreements
to repurchase (6,500,000) (22,600,000) 76,750,000
Net increase in loans (87,289,448) (32,596,069) (35,486,804)
Purchase of loans (7,800,000)
Purchase of property and equipment, net (3,678,318) (2,899,725) (3,550,353)
Proceeds from sale of other real estate 300,000 500,000 400,000
Net cash received in connection with acquisitions -- -- 23,263,345
------------- ------------- --------------
Net cash used in Investing Activities (112,244,685) (176,740,407) (110,615,367)
------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 75,225,714 183,052,144 107,834,305
Dividends paid (6,460,171) (4,881,015) (3,467,521)
Repayments of long-term bonds and notes (815,000) (1,765,000) (18,470,000)
Sale of common stock -- -- 24,666,725
Net increase (decrease) in federal funds purchased,
securities sold under agreements to repurchase
and other temporary funds 9,407,950 (17,116,796) (10,181,427)
------------- ------------- --------------
Net cash provided by Financing Activities 77,358,493 159,289,333 100,382,082
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS (8,928,077) 19,513,021 11,248,351
CASH AND DUE FROM BANKS, BEGINNING 99,472,480 79,959,459 68,711,108
------------- ------------- --------------
CASH AND DUE FROM BANKS, ENDING $ 90,544,403 $ 99,472,480 $ 79,959,459
============= ============= ==============
</TABLE>
See notes to consolidated financial statements.
21
<PAGE> 11
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE CONSOLIDATED FINANCIAL STATEMENTS include the accounts of the
Hancock Holding Company (Company), its wholly-owned banks, Hancock Bank
(Mississippi) and Hancock Bank of Louisiana and other subsidiaries.
Intercompany profits, transactions and balances have been eliminated in
consolidation.
INTEREST on commercial and real estate mortgage loans is recorded as
income daily based upon the principal amount outstanding. Unearned income on
installment loans is credited to operations based on a method which
approximates the interest method. Where doubt exists as to collectibility of a
loan, the accrual of interest is terminated and payments received are applied
first to principal. Interest income is recorded after principal has been
satisfied and as payments are received.
INVESTMENT SECURITIES are carried at net amortized cost. The Company
carries these investments at amortized cost because it has the ability and
intent to hold them to maturity. Securities held for sale are carried at the
lower of net amortized cost or market value. These securities are generally
acquired with the intent to hold them to maturity but may be sold under certain
circumstances. Gains and losses on the sales of securities are computed on the
specific identification method. The related income tax provisions on securities
gains were $75,000 in 1993, $215,000 in 1992, $420,000 in 1991.
PROPERTY AND EQUIPMENT are recorded at cost. Depreciation is computed
principally by the straight-line method based on the estimated useful lives of
the related assets. Leasehold improvements are amortized over the shorter of
the term of the lease or the asset's useful life.
INTANGIBLE ASSETS, which include the values assigned to the core
deposits of acquired banks, are being amortized over lives ranging from six to
seven years using accelerated methods and goodwill which is being amortized
over fifteen years using an accelerated method.
OTHER REAL ESTATE acquired through foreclosure and bank acquisitions is
stated at the lower of cost or fair market value, net of the costs of disposal.
When a reduction to fair market value is required it is charged to the reserve
for loan losses at the time of foreclosure and any subsequent adjustments are
charged to expense. Transfers from loans to other real estate amounted to
approximately $780,000, $1,900,000 and $3,400,000 in 1993, 1992 and 1991,
respectively. Loans made in connection with the sale of other real estate
amounted to approximately $1,200,000, $2,200,000 and $2,700,000 in 1993, 1992
and 1991, respectively.
LONG-TERM BOND ISSUANCE COSTS are being amortized over the term of the
bonds.
TRUST FEES are recorded when received which is the general practice within
the banking industry.
INCOME TAXES are accounted for using the liability method beginning in
1993. In prior years income taxes were accounted for using the deferred method
and alternative minimum tax credits were utilized to reduce income taxes in the
year allowed.
THE RESERVE FOR LOAN LOSSES is a valuation reserve available for losses
incurred on loans. All losses are charged to the reserve for loan losses when
the loss actually occurs or when a determination is made that a loss is likely
to occur. Recoveries are credited to the reserve at the time of recovery.
Periodically during the year management estimates the likely level of future
losses to determine whether the reserve for loan losses is adequate to absorb
reasonably anticipated losses in the existing portfolio based upon management#s
knowledge of the loan portfolio and current and expected economic conditions.
Based on these estimates, an amount is charged to the provision for loan losses
and credited to the reserve for loan losses in order to adjust the reserve to a
level determined to be adequate to absorb future losses.
CASH AND CASH equivalents have been defined as those amounts included in
the balance sheet caption "Cash and due from banks."
22
<PAGE> 12
B. ACQUISITION
On August 9, 1991, Hancock Bank acquired certain assets and assumed the
deposit liabilities of Peoples Federal Savings Association (PEOPLES), a failed
savings institution in Bay St. Louis, Mississippi. The acquisition of the
PEOPLES assets and liabilities has been accounted for as a purchase and the
results of operations since August 9, 1991 are included in the consolidated
statements of earnings. The premium paid and the amount of intangible assets
acquired were not significant. PEOPLES has been merged into Hancock Bank. In
connection with the acquisition, liabilities were assumed as follows (in
thousands):
<TABLE>
<S> <C>
Fair value of tangible and intangible assets, excluding cash $ 15,737
Cash acquired, net of amount paid 23,263
---------
Liabilities assumed $ 39,000
=========
</TABLE>
C. SECURITIES HELD FOR SALE AND INVESTMENT SECURITIES
The book and market values of securities held for sale were as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-------------------------------------------------------
GROSS GROSS
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----- ---------- ---------- ------
<S> <C> <C> <C> <C>
CMO's $ 27,314 $ 791 $ 209 $ 27,896
Municipal obligations 930 10 -- 940
--------- ------- ------- ----------
$ 28,244 $ 801 $ 209 $ 28,836
========= ======= ======= ==========
</TABLE>
The book value and market value of the securities held for sale at December 31,
1993, by estimated maturity, were as follows (in thousands):
<TABLE>
<CAPTION>
BOOK VALUE MARKET VALUE
---------- ------------
<S> <C> <C>
Due in one year or less $ 4,001 $ 4,001
Due after one year through five years 19,616 19,642
Due after five years through ten years 4,627 5,193
--------- ---------
$ 28,244 $ 28,836
========= =========
</TABLE>
The book and market values of the investment securities were as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1993 DECEMBER 31, 1992
-------------------------------------------- ----------------------------------------------
GROSS GROSS GROSS GROSS
BOOK UNREALIZED UNREALIZED MARKET BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE VALUE GAINS LOSSES VALUE
----- ---------- ---------- ------ ----- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S.Treasury Securities $ 279,461 $ 6,048 $ 104 $ 285,405 $ 249,087 $ 6,452 $ 29 $ 255,510
Other U.S. Gov. obligations 192,400 4,526 346 196,580 215,550 4,243 473 219,320
Municipal obligations 35,383 3,272 459 38,196 45,467 3,615 512 48,570
Other securities 13,316 3 76 13,243 11,278 125 356 11,047
Mortgage-backed securities 93,205 1,639 2,583 92,261 62,563 2,575 672 64,466
CMO's 87,171 2,148 250 89,069 137,416 1,858 630 138,644
--------- -------- -------- --------- --------- -------- ------- ----------
$ 700,936 $ 17,636 $ 3,818 $ 714,754 $ 721,361 $ 18,868 $ 2,672 $ 737,557
========= ======== ======== ========= ========= ======== ======= ==========
</TABLE>
The book value and market value of investment securities at December 31, 1993,
by contractual maturity, were as follows (in thousands):
<TABLE>
<CAPTION>
BOOK VALUE MARKET VALUE
---------- ------------
<S> <C> <C>
Due in one year or less $ 257,587 $ 263,803
Due after one year through five years 240,880 242,774
Due after five years through ten years 93,495 95,034
Due after ten years 108,974 113,143
----------- -----------
$ 700,936 $ 714,754
=========== ===========
</TABLE>
23
<PAGE> 13
Proceeds from sales of securities were $9,015,000 in 1993, $65,448,000
in 1992 and $59,767,000 in 1991. Gross gains of $244,000 in 1993, $654,000 in
1992 and $1,264,000 in 1991 and gross losses of $27,000 in 1993, $21,000 in
1992 and $27,000 in 1991 were realized on those sales. At December 31, 1993,
the Company reclassified securities with a book value of $28,244,000 from
investment securities to securities held-for-sale.
Securities with a book value of approximately $335,000,000 at December
31, 1993, and $300,000,000 at December 31, 1992, were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other
purposes as required or permitted by law.
The Company's collateralized mortgage obligations (CMO's) generally
consist of first and second tranche sequential pay and/or planned amortization
class (PAC) instruments. Interest income on CMO's and mortgage-backed
securities is generally included with interest on obligations of other U.S.
Government agencies and corporations due to their guarantees of underlying
mortgages.
The Financial Accounting Standards Board has issued Statement of
Financial Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities which is effective in 1994. This Statement requires
securities to be classified into one of three reporting categories
(held-to-maturity, available-for-sale, or trading). Securities classified as
held-to-maturity are carried at amortized cost.Those classified as
available-for-sale are carried at market value with the unrealized gain or loss
(net of income tax effect) reflected as a component of stockholder's equity.
Those classified as trading are carried at market value with the unrealized
gain or loss reflected in the statement of earnings.
The Company has not yet completed its review of Statement No. 115
relative to its securities portfolio but does not believe that the adoption of
the Statement will have a material effect on its financial statements.
D. LOANS
Loans consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
---- ----
<S> <C> <C>
Real estate loans - primarily mortgage $ 336,597 $ 320,673
Commercial and industrial loans 149,544 146,426
Loans to individuals for household, family and
other consumer expenditures 380,682 311,184
Leases 6,673 6,079
Other loans 12,342 13,298
---------- ----------
$ 885,838 $ 797,660
========== ==========
</TABLE>
Changes in the reserve for loan losses are as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Balance at January 1 $ 13,275 $ 11,492 $ 11,689
Recoveries 1,551 1,034 896
Loans charged off (5,029) (6,906) (5,779)
Provision charged to operating expense 4,231 7,655 4,686
--------- --------- ----------
Balance at December 31 $ 14,028 $ 13,275 $ 11,492
========= ========= ==========
</TABLE>
The Company generally makes loans in its market areas of South
Mississippi and East Baton Rouge Parish, Louisiana. Loans are made in the normal
course of business to its directors and executive officers, and their associates
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons.
Such loans did not involve more than normal risk of collectibility or contain
other unfavorable features. The balance of loans to related parties at December
31, 1993, was approximately $5,000,000.
Nonaccrual and renegotiated loans amounted to approximately 1% of total
loans at December 31, 1993 and 1992. The amount of interest not accrued on these
loans did not have a significant effect on earnings in 1993, 1992 or 1991.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of Certain
Loans, which requires the present value of expected future cash flows of
impaired loans be discounted at the loan's effective interest rate. The Company
does not anticipate that the adoption of this Statement in 1995 will have a
significant effect on its financial condition or results of operations.
24
<PAGE> 14
E. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation
and amortization as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1992
---- ----
<S> <C> <C>
Land, buildings and leasehold improvements $ 35,522 $ 36,531
Furniture, fixtures and equipment 29,414 25,367
---------- ----------
64,936 61,898
Less accumulated depreciation and amortization (29,938) (26,784)
---------- ----------
$ 34,998 $ 35,114
========== ==========
</TABLE>
F. CAPITAL NOTES
The capital notes issued by Hancock Bank are 5% term notes due December
31,1994. These capital notes are subordinated to the claims of the depositors
and other creditors of the Bank. There are no restrictive provisions of the
capital note agreement.
G. LONG-TERM BONDS
Long-term bonds consist of Urban Development Refunding Revenue Bonds,
with interest at 7% to 7.25%. Interest is payable semi-annually with principal
payable annually in installments ranging from $865,000 due November 1, 1994 to
$1,050,000 due November 1, 1997.
<TABLE>
<S> <C> <C>
Principal payments are payable as follows (in thousands): 1994 $ 865
1995 920
1996 985
1997 1,050
--------
$ 3,820
========
</TABLE>
The Urban Development Refunding Revenue Bonds are obligations of Hancock
Bank and are collateralized by land and buildings with a book value of
$12,000,000. The Bank has deposited with the bond trustee U.S. Treasury
securities whose principal maturities and interest payments will be sufficient
to service all future principal and interest payments due on the Urban
Development Refunding Revenue Bonds.
H. STOCKHOLDERS' EQUITY
On October 15, 1991, the Company's Board of Directors approved a
two-for-one split in the form of a 100% stock dividend paid on November 4, 1991.
On the same date the Company's stockholders approved an increase in the number
of authorized shares to 20,000,000. The "Consolidated Statement of Stockholders'
Equity" has been restated to give retroactive effect to this split.
On November 28, 1991, the Company sold 1,552,500 shares of its common
stock in a public offering at $17 per share. After underwriting discount and
expenses, the Company realized net proceeds of approximately $24,700,000 from
the stock sale.
Earnings per common share is based on the weighted average number of
shares outstanding of approximately 7,023,000 in 1993 and 1992, and 5,595,000 in
1991, after giving retroactive effect to the two-for-one stock split, reduced by
shares of stock owned by subsidiaries. At December 31, 1993 these subsidiaries
owned 154,000 shares of stock.
Stockholders' equity of the Company includes the undistributed earnings
of the subsidiary Banks. Dividends are payable only out of undivided profits or
current earnings. Moreover, dividends to the Company's stockholders can
generally be paid only from dividends paid to the Company by the Banks which,
with respect to Hancock Bank are subject to approval by the Commissioner of
Banking and Consumer Finance of the State of Mississippi. The amount of retained
earnings of the subsidiary banks available for dividends at December 31, 1993
was approximately $50,000,000.
The Company and its Bank subsidiaries are required to maintain certain
minimum capital levels. At December 31, 1993, the Company and the Banks were in
compliance with their respective statutory minimum capital requirements.
Following is a summary of the minimum required consolidated capital levels and
the actual amounts at December 31, 1993:
<TABLE>
<CAPTION>
REQUIRED MINIMUM ACTUAL
---------------- ------
<S> <C> <C>
Tier 1 leverage 4% - 5% 8%
Tier 1 Risk-based 4% 14%
Total Risk-based 8% 15%
</TABLE>
25
<PAGE> 15
I. INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method as required
by Statement of Financial Accounting Standard No. 109. Prior years have not
been restated. The cumulative effect of this accounting change did not have a
significant effect on the Company's financial statements and was recorded in
income tax expense in the year ended December 31, 1993.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities as
of December 31, 1993 are as follows (in thousands):
<TABLE>
<S> <C>
Deferred tax assets:
Postretirement benefit obligation $ 279
Reserve for loan losses not currently deductible 4,122
Reserve for other real estate not currently deductible 342
Deferred compensation 521
Lease accounting 522
Other 47
--------
5,833
--------
Deferred tax liabilities:
Tax over book depreciation (3,113)
Core deposit intangible (2,365)
Prepaid pension (154)
Market discount accretion (331)
--------
(5,963)
--------
Net deferred tax liability $ (130)
========
</TABLE>
Income taxes consists of the following components (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Currently payable $ 9,600 $ 7,000 $ 3,600
Deferred 70 (350) 400
--------- --------- ---------
$ 9,670 $ 6,650 $ 4,000
========= ========= =========
</TABLE>
Deferred income taxes resulted from the following (in thousands):
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Accelerated depreciation $ 100 $ 500
Provision for loan losses (800) (800)
AMT credit restoration (100) 200
Other - net 450 500
------- -------
$ (350) $ 400
======= =======
</TABLE>
26
<PAGE> 16
Income taxes amounted to less than the amounts computed by applying the
U.S. Federal income tax rate of 35% in 1993 and 34% in 1992 and 1991 to
earnings before income taxes. The reasons for these differences are as follows
(in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
-------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate $ 11,125 35 $ 8,790 34 $ 5,572 34
Increases (decreases) in taxes resulting from:
Tax exempt interest income (1,200) (4) (1,600) (6) (1,884) (12)
Alternative minimum tax -- (980) (4) (100) (1)
Miscellaneous items - net (255) (1) 440 2 412 3
--------- -- --------- -- --------- ---
Income tax expense $ 9,670 30 $ 6,650 26 $ 4,000 24
========= == ========= == ========= ==
</TABLE>
The Tax Reform Act of 1986 generally became effective with respect to
the Company in 1987. The Act provides for an alternative minimum tax (AMT)
which decreased the tax otherwise payable by the Company by $1,000,000 in 1992
and $500,000 in 1991.
J. EMPLOYEE BENEFIT PLANS
The Company has a non-contributory pension plan covering substantially
all salaried full-time employees who have been employed by the Company the
required length of time. The Company's current policy is to contribute annually
the minimum amount that can be deducted for federal income tax purposes. The
benefits are based upon years of service and employee's compensation during the
last five years of employment. Data relative to the pension plan follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1992
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 16,403 $ 14,179
========== ==========
Accumulated benefit obligation $ 16,471 $ 14,240
========== ==========
Projected benefit obligation for service rendered to date $ (19,246) $ (17,449)
Plan assets at fair value 17,465 15,964
---------- ----------
Projected benefit obligation in excess of plan assets (1,781) (1,485)
Remaining unrecognized portion of net obligation being amortized over 15 years 366 411
Unrecognized prior service cost 1,026 1,118
Unrecognized net loss from past experience different from that assumed 2,207 1,518
---------- ----------
Prepaid pension cost included in other assets $ 1,818 $ 1,562
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net pension expense included the following (income) expense components:
Service cost - benefits earned during the period $ 698 $ 757 $ 464
Interest cost on projected benefit obligation 1,369 1,218 1,052
Return on plan assets (1,158) (1,454) (1,504)
Net amortization and deferral (89) 235 336
--------- --------- ---------
Net pension expense $ 820 $ 756 $ 348
========= ========= =========
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation were 7.75% and 4%, respectively, in 1993 and 8% and 4% respectively,
in 1992. The expected rate of return on plan assets was 8% in 1993 and 10% in
1992. The plan's assets consist primarily of U.S. government and agency
obligations, certificates of deposit and other fixed income obligations.
During 1992 the Company adopted Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Postretirement Benefits Other Than
Pensions. This Statement requires accrual of postretirement benefits (such as
health care benefits) during the years an employee provides services. The costs
of these benefits were previously expensed on a pay-as-you-go basis. The
adoption of this Statement decreased 1992 net earnings by $250,000 ($.04 per
share).
27
<PAGE> 17
The Company sponsors two defined benefit postretirement plans other
than the pension plan that cover full time employees who have reached 45 years
of age. One plan provides medical benefits and the other provides life
insurance benefits. The postretirement health care plan is contributory, with
retiree contributions adjusted annually and subject to certain employer
contribution maximums; the life insurance plan in noncontributory.The actuarial
and recorded liabilities for these postretirement benefits, none of which have
been funded, are as follow at December 31, 1993, (in thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retirees $ 1,888 $ 1,378
Fully eligible active plan participants 826 792
Other active plan participants 1,161 993
--------- ---------
3,875 3,163
Unrecognized transition obligation (2,579) (2,770)
Unrecognized net (loss) gain (499) --
--------- ---------
Accrued postretirement benefit cost $ 797 $ 393
========= =========
</TABLE>
Net periodic postretirement benefit cost for 1993 and 1992 included
the following components (in thousands):
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Amortization of Unrecognized Net Gain $ (5) $ --
Service cost-benefits attributed to service during the year 162 165
Interest costs on accumulated postretirement benefit obligations 254 237
Amortization of transition obligation over 20 years 143 146
--------- ---------
Net periodic postretirement benefit cost $ 554 548
========= =========
</TABLE>
For measurement purposes in 1993, a 12% annual rate of increase in the
per capita cost of covered health care benefits was assumed for 1993. The rate
was assumed to decrease gradually to 5.5% for 2006 and remain at that level
thereafter. In 1992, rates of 12% and 6% were assumed. The health care cost
trend rate assumption has an affect on the amounts reported. To illustrate,
increasing the assumed health care cost trend rates by 1% in each year would
increase the accumulated postretirement benefit obligation as of December 31,
1993 by $52,000 and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended by $6,000.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7% in 1993 and 8.75% in 1992.
The Company has a non-contributory profit sharing plan covering
substantially all salaried full-time employees who have been employed the
required length of time. Contributions are made at the discretion of the Board
of Directors and amounted to $450,000 in 1993, $346,000 in 1992, and $117,000
in 1991.
In addition, the Company has an employee stock purchase plan that is
designed to provide the employees of the Company a convenient means of
purchasing common stock of the Company. Substantially all salaried, full time
employees , with the exception of Leo W. Seal, Jr., who have been employed by
the Company the required length of time are eligible to participate if they so
elect. The Company contributes an amount equal to 25% of each participant's
contribution, which contribution cannot exceed 5% of his base pay. The
Company's contribution amounted to $45,000 in 1993, $45,000 in 1992, and
$37,000 in 1991.
The postretirement plans relating to health care payments, life
insurance and the stock purchase plan are not guaranteed and are subject to
immediate cancellation and/or amendment. These plans are predicated on future
Company profit levels that will justify their continuance. Overall health care
costs are also a factor in the level of benefits provided and continuance of
these postretirement plans. There are no vested rights under the postretirement
health or life insurance plans.
The Financial Accounting Standards Board has also issued Statement of
Financial Accounting Standards No. 112, Employers' Accounting for Post
Employment Benefits which requires the accrual of certain post employment
benefits other than pension and health care. The Company does not anticipate
that the adoption of this Statement in 1994 will have a significant effect on
its financial condition or results of operations.
K. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value:
CASH, SHORT-TERM INVESTMENTS AND FEDERAL FUNDS SOLD -- For those
short-term instruments, the carrying amount is a reasonable estimate of fair
value.
SECURITIES -- For securities, fair value equals quoted market price, if
available. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar securities.
28
<PAGE> 18
LOANS -- The fair value of loans is estimated by discounting the future
cash flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities.
DEPOSITS -- The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand at the reporting
date. The fair value of fixed-maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining maturities.
LONG-TERM BONDS AND NOTES -- Rates currently available to the Company
for debt with similar terms and remaining maturities are used to estimate fair
value of existing debt.
COMMITTMENTS -- The fair value of committments to extend credit was not
significant.
The estimated fair values of the Company's financial instruments are
as follows at December 31, 1993 and 1992 (in thousands):
<TABLE>
<CAPTION>
1993 1992
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Financial assets:
Cash, short-term investments and federal funds sold $ 177,919 $ 177,919 $ 183,347 $ 183,347
Securities held-for-sale 28,244 28,836 -- --
Investment securities 700,936 714,754 721,361 737,557
Loans 860,127 868,500 776,101 789,000
Less: reserve for loan losses (14,028) (14,028) (13,275) (13,275)
----------- ----------- ----------- -----------
Loans, net of reserve 846,099 854,472 762,826 775,725
Financial liabilities:
Deposits 1,615,595 1,618,000 1,550,844 1,559,000
Federal Funds purchased, etc. 45,799 45,799 36,391 36,391
Long-term bonds and notes 4,300 4,600 5,115 5,600
</TABLE>
L. COMMITMENTS AND CONTINGENCIES
In the normal course of business, there are various commitments and
contingent liabilities, such as commitments to extend credit and outstanding
letters of credit, which are not reflected in the accompanying consolidated
financial statements. Outstanding letters of credit amounted to approximately
$7,000,000 at December 31, 1993, and $5,400,000 at December 31, 1992. No losses
are anticipated as a result of these transactions. Commitments to extend credit
amounted to approximately $200,000,000 at December 31, 1993 and $150,000,000 at
December 31, 1992, and most are at variable rates. The agreements to extend
credit generally include provisions which allow the Company to terminate its
obligations under certain circumstances.
The Bank is required to maintain certain reserves at the Federal
Reserve Bank. This requirement approximated $40,000,000 and $37,000,000 at
December 31, 1993 and 1992, respectively.
M. SUPPLEMENTAL INFORMATION
The following is selected supplemental information for the years ended
December 31, 1993, 1992, and 1991(in thousands) :
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Trust fee income $ 2,600 $ 2,300 $ 2,600
Deposit insurance premium expense 3,450 3,200 2,650
Postage expense 1,610 1,644 1,618
Interest paid 45,600 53,900 69,900
Income taxes paid 10,000 7,600 3,000
</TABLE>
29
<PAGE> 19
N. SUMMARIZED FINANCIAL INFORMATION OF HANCOCK HOLDING COMPANY (PARENT COMPANY
ONLY)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1993 1992
---- ----
<S> <C> <C>
ASSETS:
Investment in subsidiaries $ 143,623,923 $ 127,884,758
Other 202,412 693,702
--------------- ---------------
143,826,335 $ 128,578,460
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accrued expenses $ 54 $ 408,312
Stockholders' equity 143,826,281 128,170,148
--------------- ---------------
$ 143,826,335 $ 128,578,460
=============== ===============
</TABLE>
STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Dividends received from subsidiary $ 6,343,450 $ 5,428,570 $ 3,841,918
Excess equity in earnings of subsidiaries over dividends received 15,739,162 14,037,989 9,882,824
Interest and other (expenses) income 56,738 (375,104) (2,016,275)
Income tax credit (expense) (23,052) 120,000 680,000
-------------- ------------- -------------
Net earnings $ 22,116,298 $ 19,211,455 $ 12,388,467
============== ============= =============
</TABLE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities -- principally
dividends from subsidiary $ 6,291,142 $ 5,409,484 $ 1,790,803
-------------- ------------- -------------
Cash Flows Invested in Subsidiaries -- -- (5,000,000)
-------------- ------------- -------------
Cash Flows from Financing Activities:
Sale of common stock -- -- 24,666,725
Prepayments of notes payable -- (1,000,000) (17,750,000)
Dividends paid (6,460,169) (4,881,015) (3,467,521)
-------------- ------------- -------------
Net cash provided by (used in) financing activities (6,460,169) (5,881,015) 3,449,204
-------------- ------------- -------------
Net (decrease) increase in cash (169,027) (471,531) 240,007
Cash, Beginning 282,372 753,903 513,896
-------------- ------------- -------------
Cash, Ending $ 113,345 $ 282,372 $ 753,903
============== ============= =============
</TABLE>
O. PROPOSED ACQUISITION
In November 1993, the Company agreed to merge Hancock Bank of Louisiana,
a wholly owned subsidiary of the Company with First State Bank and Trust Company
of Baker Louisiana (BAKER). The merger will be consummated by the exchange of
all outstanding common stock of BAKER in return for approximately 520,000
shares of common stock of the Company. Completion of the merger is contingent
upon approval by BAKER's shareholders, the Louisiana Commissioner of Financial
Institutions and the Federal Deposit Insurance Corporation. It is intended that
the merger will be accounted for using the pooling of interests method. BAKER
had total assets of $82,000,000 and stockholders equity of $11,500,000 as of
December 31, 1993 and net earnings of $1,250,000 for the year then ended.
30
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS AND STOCKHOLDERS
HANCOCK HOLDING COMPANY
GULFPORT, MISSISSIPPI
We have audited the accompanying consolidated balance sheets of Hancock
Holding Company and subsidiaries as of December 31, 1993 and 1992, and the
related statements of earnings, stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Hancock Holding Company and
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
As discussed in Note J to the consolidated financial statements, in
1992 the Company changed its method of accounting for post retirement benefits
other than pensions to conform with Statement of Financial Accounting Standards
No. 106.
DELOITTE & TOUCHE
Certified Public Accountants
New Orleans, Louisiana
January 14, 1994
31
<PAGE> 21
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
The Company's net income increased to $22.1 million, $3.15 per share,
for the year ended December 31, 1993, compared to $19.2 million, or $2.74 per
share, for the year ended December 31, 1992. The $2.9 million increase in net
income was attributable primarily to deposit growth which funded additional
earning assets and a lower level of loan charge offs. Growth in earning assets
resulted in a $3.5 million increase in net interest income. A 26% decline in
non performing asset balances and a lower level of loan charge offs in 1993
allowed the Company to reduce its loan loss provision by $3.4 from $7.6 million
in 1992 to $4.2 million in 1993. The reserve for loan loss balance was 1.82% of
average loans in 1993 and represented 264% of non performing asset balances at
December 31, 1993. The net interest margin declined from 5.09% in 1992 to 4.87%
in 1993. Since the Company's balance sheet is liability sensitive, deposits
reprice before loans and investment securities, stable or rising interest rates
will negatively impact the net interest margin.
FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
The Company's net income increased to $19.2 million, $2.74 per share,
for the year ended December 31, 1992, compared to $124 million, or $2.21 per
share, for the year ended December 31, 1991. The increase in net income was
attributable primarily to a $18.3 million increase in net interest income. The
Company's balance sheet is liability sensitive in the one year interval
therefore, declining interest rates positively impacted the net interest
margin, increasing net income over the prior year. The net interest margin
improved 70 basis points to 5.09% in 1992 from 4.39% in 1991. The Company's
provision for loan losses increased by $3.0 million; of that provision, $1.8
million increased our reserve balances. The current year's provision for loan
losses reflects the increase of $19.7 million in average loans outstanding and
raised our reserve balance to 1.7% of outstanding loans.
FINANCIAL CONDITION
SECURITIES
The Company generally purchases securities to be held to maturity, with
a maturity schedule that provides ample liquidity. Investment securities are
carried at net amortized cost. However, during 1993, certain securities were
reclassified as held for sale. These securities were generally acquired with
the intent to hold to maturity but may be sold under certain circumstances.
Securities sold during 1993 were or would have been in the held-for-sale
classification. The December 31, 1993 book value of the consolidated portfolio
was $729.2 million and the market value was $743.6 million.
LOANS
The Company's loan portfolio represented 48.7% of its December 31, 1993
earning asset base. Average loans outstanding in 1993 increased 7.2% over the
1992 level. The Company's net loan portfolio totaled $860 million at December
31, 1993, compared to $776 million at December 31, 1992. Non-performing loans
were $4.7 million or 0.55% of net loans of December 31, 1993 compared to $6.0
million or 0.77% at December 31, 1992. Restructured loan balances were
insignificant. The amount of interest not accrued on non-performing loans did
not significantly effect earnings in 1993 or 1992.
DEPOSITS
The total deposits at the end of 1993 were $1,615.6 million compared to
$1,550.8 million at December 31, 1992, representing 4.2% increase. Time deposit
balances increased 26% compared to a 7% growth in savings, now and money
market accounts. Deposits are the Company's primary source of funds supporting
the earning asset base.
32
<PAGE> 22
LIQUIDITY
Liquidity represents the Company's ability to provide funds to satisfy
demands from depositors, borrowers and other commitments by either converting
assets to cash or accessing new or existing sources of funds. The principal
sources of funds which provide liquidity are customer deposits, payments of
principal and interest on loans, maturities and sales of securities, earnings
and borrowings. At December 31, 1993, cash and due from banks, securities,
federal funds sold and repurchase agreements were 56.0% of total deposits, as
compared to 58.3% at December 31, 1992.
CAPITAL RESOURCES
Currently, the Company and the Banks are required to maintain minimum
risk-based capital ratios of 8%, with not less than 4% in Tier 1 capital.
Additionally, the Company and the Banks must maintain minimum Tier 1 leverage
ratios of at least 3%, subject to increase to at least 4% to 5%, depending on
the composite rating by the respective regulatory authorities of the Company
and the Banks. As of December 31, 1993, the Company and the Banks capital
balances were in excess of current regulatory minimum requirements.
RECENT CHANGES IN FINANCIAL ACCOUNTING STANDARDS
During 1992, the Company adopted Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Postretirement Benefits Other Than
Pensions. This Statement requires accrual of postretirement benefits (such as
health care benefits) during the years an employee provides services. The costs
of these benefits were previously expensed on a pay-as-you-go basis. The
adoption of this Statement decreased net earnings by $250,000 (0.04 per share)
in 1992.
Effective January 1, 1993, the Company changed its method of accounting
for income taxes for the deferred method to the liability method as required by
Statement of Financial Accounting Standard No. 109. Prior years have not been
restated. The cumulative effect of this accounting change did not have a
significant effect on the Company's financial statements and was recorded in
income tax expense in the year ended December 31, 1993.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 112, Employers' Accounting for Post Employment
Benefits which requires the accrual of certain post employment benefits other
than pension and health care. The Company does not anticipate that the adoption
of this Statement in 1994 will have a significant effect on its financial
condition or results of operations.
The Financial Accounting Stardards Board issued Statement of Financial
Accounting Standards No. 114, Accounting by Creditors for Impairment of Certain
Loans, which requires the present value of expected future cash flows of
impaired loans be discounted at the loan's effective interest rate. The Company
does not anticipate that the adoption of this Statement in 1995 will have a
significant effect on its financial condition or results of operations.
The Financial Accounting Standards Board has issued Statement of
Financial Standards No. 115 Accounting for Certain Investments in Debt and
Equity Securities which is effective in 1994. This Statement requires the
investment portfolio to be classified into one of three reporting categories,
held-to-maturity, available-for-sale, or trading. The Company has not yet
completed its review of Statement No. 115 relative to its securities portfolio
but does not believe that the adoption of the Statement will have a material
effect on its financial statements.
FORM 10-K ANNUAL REPORT
HANCOCK HOLDING COMPANY FILES AN ANNUAL REPORT WITH THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K. A COPY OF THE REPORT FILED ON FORM 10-K, WHEN
COMPLETED, WILL BE SENT FREE OF CHARGE TO ANY SHAREHOLDER BY WRITING TO: GEORGE
A. SCHLOEGEL, VICE-CHAIRMAN, HANCOCK HOLDING COMPANY, P.O. BOX 4019, GULFPORT,
MS 39502.
33
<PAGE> 23
GLOSSARY OF FINANCIAL TERMS
BOOK VALUE PER SHARE -- Total stockholders' equity divided by common shares
outstanding.
CHARGE-OFFS -- Loan balances written off against the reserve for possible loan
losses, once a loan is deemed to be uncollectible.
CORE DEPOSITS -- Deposits that are traditionally stable, including all deposits
other than time deposits of $100,000 or more.
EARNING ASSETS -- Interest-or dividend-bearing assets, including loans and
securities.
EARNINGS PER SHARE -- Net income divided by weighted average common shares
outstanding.
FEDERAL FUNDS -- Generally one-day loans of excess reserves from one bank to
another. When a bank buys (borrows) federal funds, these funds are called
"federal funds purchased." When it sells (lends) them, they are called "federal
funds sold."
FORECLOSED ASSETS -- Property, including OREO, acquired because the borrower
defaulted on the loan.
LEVERAGE RATIO -- A ratio of equity to assets adjusted for goodwill and other
disallowed intangibles.
NET INTEREST INCOME -- The difference between interest income on earning assets
and interest expense on interest-bearing liabilities.
NET INTEREST MARGIN -- Taxable-equivalent net interest income as a percentage of
average earning assets for the period.
NET INTEREST SPREAD -- The difference between the yield on earning assets and
the cost of funds.
NON-PERFORMING ASSETS -- Non-performing loans plus foreclosed assets.
NON-PERFORMING LOANS -- Loans which interest income is not currently recognized
because of the borrower's financial problems (non-accrual loans), or loans
which have been restructured.
OTHER REAL ESTATE OWNED (OREO) -- Real estate which the bank takes or to which
it assumes title in order to sell the property, obtained as the result of a
loan default.
PROVISION FOR LOAN LOSSES -- A charge against current-period earnings which
reflects actual and expected loan losses.
RESERVE FOR LOAN LOSSES -- A balance sheet account which is an estimation of
future loan losses. The provision for possible loan losses is added to the
reserve account each quarter. Charge-offs decrease the reserve. Recoveries on
loans previously charged off increase the reserve.
RETURN ON ASSETS -- Net income as a percentage of average total assets for the
period. The return on assets measures profitability in terms of how efficiently
assets are being utilized.
RETURN ON EQUITY -- Net income as a percentage of average total equity. The
return on equity measures profitability in terms of how efficiently equity or
capital is being invested.
RISK-BASED CAPITAL -- The amount of capital (Tier 1 plus Tier 2 capital)
required by federal regulatory standards, based on a risk-weighting of assets.
For example, more capital is required for an unsecured loan than for
investments in U.S. Treasury securities. The minimum ratio of capital to
risk-weighted assets is 8%.
TAXABLE-EQUIVALENT BASIS -- The result of adding to income earned on tax-free
loans and investments the amount necessary to make yields comparable to yields
on taxable assets.
TIER 1 CAPITAL -- Common stockholders' equity less goodwill and other disallowed
intangibles.
TIER 2 CAPITAL -- Tier 1 Capital, plus reserve for possible loan losses (limited
to a certain percentage of risk-weighted assets).
36
