<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---- Quarterly Report Pursuant to Section 13 or 15 (d)
X of the Securities Exchange Act of 1934
----
---- Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
----
For Quarter Ending March 31, 1996
-------------------------------------------------------------
Commission File Number 0-13089
---------------------------------------------------------
HANCOCK HOLDING COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSISSIPPI 64-0693170
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
ONE HANCOCK PLAZA, P.O. BOX 4019, GULFPORT, MISSISSIPPI 39502
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(601) 868-4606
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- ---------------------------------------------------------------------------
(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
---------- ----------
8,880,857 Common Shares were outstanding as of April 29, 1996 for financial
statement purposes.
Page 1 of 11
<PAGE> 2
HANCOCK HOLDING COMPANY
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
- ------------------------------ -----------
<S> <C>
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets --
March 31, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Earnings --
Three Months Ended March 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows --
Three Months Ended March 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial
Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 9
PART II. OTHER INFORMATION
- ---------------------------
ITEM 4. Submission of Matters to a Vote 10
of Security Holders
ITEM 6. Exhibits and Reports on Form 8-K 10
</TABLE>
SIGNATURES 11
Page 2 of 11
<PAGE> 3
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
ASSETS: 1996 1995 *
---------- ----------
<S> <C> <C>
Cash and due from banks (non-interest bearing) $ 141,360 $ 124,276
Interest-bearing time deposits with other banks 2,750 1,550
Securities available-for-sale (cost of $111,659
and $109,297) 111,514 109,777
Securities held-to-maturity (market value of $821,557
and $749,497) 810,435 738,529
Federal funds sold and securities purchased under
agreements to resell 135,350 153,725
Loans, net of unearned income 1,045,810 1,034,978
Less: Reserve for loan losses (17,427) (17,391)
---------- ----------
Net loans 1,028,383 1,017,587
Property and equipment, at cost,
less accumulated depreciation of $40,204 and $37,640 38,683 38,746
Other real estate 1,007 1,086
Accrued interest receivable 23,069 19,360
Other assets 29,461 29,650
---------- ----------
TOTAL ASSETS $2,322,012 $2,234,286
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing demand $ 466,848 $ 468,446
Interest-bearing savings, NOW, money market
and other time 1,520,740 1,459,235
---------- ----------
Total deposits 1,987,588 1,927,681
Federal funds purchased and securities sold under
agreements to repurchase 83,640 66,585
Other liabilities 19,464 13,806
Long-term bonds 2,035 2,035
---------- ----------
TOTAL LIABILITIES 2,092,727 2,010,107
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock 30,043 30,043
Capital surplus 130,000 130,000
Undivided profits 69,336 63,824
Unrealized (loss) gain on securities available-for-sale (94) 312
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 229,285 224,179
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,322,012 $2,234,286
========== ==========
</TABLE>
* The balance sheet at December 31, 1995 has been taken from the audited
balance sheet at that date.
See notes to condensed consolidated financial statements.
Page 3 of 11
<PAGE> 4
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
UNAUDITED
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
INTEREST INCOME: 1996 1995
--------- ---------
<S> <C> <C>
Interest and fees on loans $ 25,757 $ 23,488
Interest on:
U. S. Treasury Securities 3,645 3,524
Obligations of other U.S. government agencies
and corporations 8,514 7,634
Obligations of states and political subdivisions 844 870
Interest on federal funds sold and securities
purchased under agreements to resell 2,074 1,248
Interest on time deposits and other 1,486 1,522
--------- ---------
Total interest income 42,320 38,286
--------- ---------
INTEREST EXPENSE:
Interest on deposits 15,176 13,479
Interest on federal funds purchased and securities
sold under agreements to repurchase 899 565
Interest on bonds and notes 77 137
--------- ---------
Total interest expense 16,152 14,181
--------- ---------
NET INTEREST INCOME 26,168 24,105
Provision for loan losses 1,004 175
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 25,164 23,930
--------- ---------
Non-Interest Income:
Service charges on deposit accounts 4,203 3,523
Income from fiduciary activities 520 598
Securities gains (losses) --- (50)
Other 1,403 1,543
--------- ---------
Total non-interest income 6,126 5,614
--------- ---------
Non-Interest Expense:
Salaries and employee benefits 10,381 9,815
Net occupancy expense of premises
and equipment expense 3,843 2,933
Other 5,443 6,674
--------- ---------
Total non-interest expense 19,667 19,422
--------- ---------
EARNINGS BEFORE INCOME TAXES 11,623 10,122
INCOME TAXES 3,855 3,342
--------- ---------
NET EARNINGS $ 7,768 $ 6,780
========= =========
NET EARNINGS PER COMMON SHARE $ 0.87 $ 0.76
========= =========
DIVIDENDS PAID PER COMMON SHARE $ 0.25 $ 0.23
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,880 8,879
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 11
<PAGE> 5
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 7,768 $ 6,780
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 1,188 1,104
Provision for loan losses 1,004 175
Provision for losses on real estate owned 80 28
Losses on sales of securities -- 50
Decrease (increase) in interest receivable (3,709) 971
Amortization of intangible assets 615 575
Increase in interest payable 418 4,038
Other, net 2,332 (289)
--------- ---------
Net cash provided by Operating Activities 9,696 13,432
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing
time deposits (1,200) 200
Proceeds from sales and maturities of securities
held-to-maturity 118,193 51,765
Purchase of securities held-to-maturity (190,099) (36,592)
Proceeds from sales and maturities of securities
available-for-sale 11,781 1,500
Purchase of securities available-for-sale (13,518) (375)
Net (increase) decrease in federal funds sold and
securities purchased under agreements to resell 18,375 (77,575)
Net (increase) decrease in loans (9,865) 2,710
Purchase of property and equipment, net (1,125) (1,020)
Proceeds from sales of other real estate 139 412
Net cash received in connection with purchase
transaction -- 7,872
--------- ---------
Net cash used in Investing Activities (67,319) (51,103)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 59,907 45,716
Dividends paid (2,255) (2,075)
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase
and other temporary funds 17,055 (8,863)
--------- ---------
Net cash provided by Financing Activities 74,707 34,778
--------- ---------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 17,084 (2,893)
CASH AND DUE FROM BANKS, BEGINNING 124,276 120,532
--------- ---------
CASH AND DUE FROM BANKS, ENDING $ 141,360 $ 117,639
</TABLE> ========= =========
See notes to condensed consolidated financial statements.
Page 5 of 11
<PAGE> 6
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
(Three Months Ended March 31, 1996 and 1995)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying Unaudited Condensed Consolidated Financial Statements
include the accounts of Hancock Holding Company, its wholly-owned banks,
Hancock Bank, Hancock Bank of Louisiana and First National Bank of Denham
Springs and other subsidiaries. Intercompany profits, transactions and
balances have been eliminated in consolidation.
The accompanying Unaudited Condensed Consolidated Financial Statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for interim
periods are not necessarily indicative of the results that may be expected for
the entire year. For further information, refer to the consolidated financial
statements and notes thereto of Hancock Holding Company's 1995 Annual Report to
Shareholders.
RECENT CHANGES IN FINANCIAL ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," which requires the investment portfolio to be
classified into one of three reporting categories, held-to-maturity,
available-for-sale or trading. The Company's adoption of this statement in
1994 did not have a material effect on its financial statements.
Page 6 of 11
<PAGE> 7
HANCOCK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides management's analysis of certain
factors which have affected the Company's financial condition and operating
results during the periods included in the accompanying condensed consolidated
financial statements.
CHANGES IN FINANCIAL CONDITION
Liquidity
The Company manages liquidity through traditional funding sources of
core deposits, federal funds, and maturities of loans and securities
held-to-maturity and sales of securities available-for-sale.
The following liquidity ratios compare certain assets and liabilities to
total deposits or total assets:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------- --------
<S> <C> <C>
Total securities to total deposits 46.39% 44.01%
Total loans (net of unearned
discount) to total deposits 52.62% 53.69%
Interest-earning assets
to total assets 90.69% 91.24%
Interest-bearing deposits
to total deposits 76.51% 75.70%
</TABLE>
Capital Resources
The Company continues to maintain an adequate capital position, as the
following ratios indicate:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------- --------
<S> <C> <C>
Equity capital to total assets (1) 9.88% 10.02%
Total capital to risk-weighted assets (2) 18.99% 18.64%
Tier 1 Capital to risk-weighted 18.03% 17.69%
assets (3)
Leverage Capital to total assets (4) 9.47% 9.28%
Property and equipment to equity capital 16.86% 17.31%
</TABLE>
(1) Equity capital consists of stockholder's equity (common stock, capital
surplus and undivided profits).
Page 7 of 11
<PAGE> 8
(2) Total capital consists of equity capital less intangible assets
plus a limited amount of loan loss reserves. Risk-weighted assets
represent the assigned risk portion of all on and off-balance-sheet
assets. Based on Federal Reserve Board guidelines, assets are assigned a
risk factor percentage from 0% to 100%. A minimum ratio of total
capital to risk-weighted assets of 8% is required.
(3) Tier 1 capital consists of equity capital less intangible assets. A
minimum ratio of tier 1 capital to risk- weighted assets of 4% is
required.
(4) Leverage capital consists of equity capital less goodwill and core
deposit intangibles. The Federal Reserve Board currently requires bank
holding companies rated Composite 1 under the BOPEC rating system to
maintain a minimum 3% leverage capital ratio and all other bank holding
companies not rated a Composite 1 under the BOPEC rating system to
maintain a minimum 4% to 5% leverage capital ratio.
RESULTS OF OPERATIONS
Net Earnings
Net earnings increased $988,000 or 15% for the first quarter of 1996
compared to the first quarter of 1995. The increase in earnings is
attributable to an increase in loan portfolio balances, an increased net
interest margin and lower operating expenses due to FDIC premium insurance
reductions.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
Results of Operations:
Return on average assets 1.36% 1.26%
Return on average equity 13.70% 12.88%
Net Interest Income:
Return on average interest-earning assets
(tax equivalent) 8.24% 7.94%
Cost of average interest-bearing funds 4.11% 3.76%
------ ------
Net interest spread 4.13% 4.18%
===== =====
Net yield on interest-earning assets
(net interest income on a tax equivalent basis
divided by average interest-earning assets) 5.14% 5.05%
===== =====
</TABLE>
Provision for Loan Losses
The amount of the reserve equals the cumulative total of the provisions
for loan losses, reduced by actual loan charge-offs, and increased by reserves
acquired in acquisitions and recoveries of loans previously charged-off.
Provisions are made to the reserve to reflect the currently perceived risks of
loss associated with the bank's loan portfolio. A specific loan is charged-off
when management believes, after considering, among other things, the borrower's
condition and the value of any
Page 8 of 11
<PAGE> 9
collateral, that collection of the loan is unlikely.
The following ratios are useful in determining the adequacy of the loan
loss reserve and loan loss provision and are calculated using average loan
balances.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
Annualized net charge-offs to average loans 0.37% 0.11%
Annualized provision for loan losses to average 0.39% 0.07%
loans
Average reserve for loan losses to average loans 1.69% 1.65%
</TABLE>
Income Taxes
The effective tax rate of the Company continues to be less than the
statutory rate of 35%, due primarily to tax- exempt interest income. The
amount of tax-exempt income earned during the first three months of 1996 was
$1,057,000 compared to $1,078,000 for the comparable period in 1995. Income
tax expense increased from $3,342,000 in the first three months of 1995 to
$3,855,000 in the first three months of 1996. This increase is primarily due
to increased earnings.
Page 9 of 11
<PAGE> 10
Part II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A. Annual Meeting held February 22, 1996.
B. Directors elected at the Annual Meeting held February 22, 1996:
<TABLE>
<CAPTION>
Votes Cast
--------------------
Affirmed Withheld
-------- --------
<S> <C> <C> <C>
1. Joseph F. Boardman, Jr. 7,166,834.7 3,323.4
2. Charles H. Johnson 7,161,318.2 8,839.9
3. Thomas W. Milner, Jr. 7,145,507.8 24,650.3
Continuing Directors:
4. L.A. Koenenn, Jr.
5. Dr. Homer C. Moody, Jr.
6. George A. Schloegel
7. James B. Estabrook, Jr.
8. Victor Mavar
9. Leo W. Seal, Jr.
</TABLE>
C. (1) Approval of Deloitte & Touche LLP as the independent public
accountants of the Company. 7,168,432.2 affirmative votes,
1,027.9 negative and 697.9 abstained.
C.(2) Approval of the Hancock Holding Company 1996 Long-Term Incentive
Plan. 7,041,665.5 affirmative votes, 23,683.1 negative and
96,294.4 abstained.
D. None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit (27) Selected financial data.
Page 10 of 11
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HANCOCK HOLDING COMPANY
Registrant
May 13, 1996 By: /s/ LEO W. SEAL, JR.
- -------------------- -----------------------------------
Date Leo W. Seal, Jr.
President and CEO
May 13, 1996 By: /s/ GEORGE A. SCHLOEGEL
- -------------------- -----------------------------------
Date
George A. Schloegel
Vice-Chairman of the Board
May 13, 1996 By: /s/ STAN BAILEY
- -------------------- -----------------------------------
Date Stan Bailey
Chief Financial Officer
Page 11 of 11
<PAGE> 12
EXHIBIT INDEX
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit (27) Selected financial data.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 141,360
<INT-BEARING-DEPOSITS> 2,750
<FED-FUNDS-SOLD> 135,350
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 111,514
<INVESTMENTS-CARRYING> 810,435
<INVESTMENTS-MARKET> 821,557
<LOANS> 1,045,810
<ALLOWANCE> 17,427
<TOTAL-ASSETS> 2,322,012
<DEPOSITS> 1,987,588
<SHORT-TERM> 83,640
<LIABILITIES-OTHER> 19,464
<LONG-TERM> 2,035
<COMMON> 30,043
0
0
<OTHER-SE> 199,242
<TOTAL-LIABILITIES-AND-EQUITY> 2,322,012
<INTEREST-LOAN> 25,757
<INTEREST-INVEST> 15,077
<INTEREST-OTHER> 1,486
<INTEREST-TOTAL> 42,320
<INTEREST-DEPOSIT> 15,176
<INTEREST-EXPENSE> 16,152
<INTEREST-INCOME-NET> 26,168
<LOAN-LOSSES> 1,004
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 19,667
<INCOME-PRETAX> 11,623
<INCOME-PRE-EXTRAORDINARY> 11,623
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,768
<EPS-PRIMARY> 0.87
<EPS-DILUTED> 0.87
<YIELD-ACTUAL> 5.14
<LOANS-NON> 5,421
<LOANS-PAST> 4,702
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 17,391
<CHARGE-OFFS> 1,310
<RECOVERIES> 342
<ALLOWANCE-CLOSE> 17,427
<ALLOWANCE-DOMESTIC> 17,427
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,200
</TABLE>
