GULFPORT, Miss., Jan. 18, 2011 (GLOBE NEWSWIRE) -- Hancock Holding Company (Nasdaq:HBHC) today announced financial results for the fourth quarter and year ended December 31, 2010.
For the fourth quarter of 2010 net income increased 14.6 percent over the preceding third quarter of 2010 to $17.0 million and advanced 27.9 percent over the 2009's fourth quarter, excluding certain non-recurring merger items associated with that quarter's acquisition of Peoples First Community Bank. Fully diluted earnings per share for the fourth quarter of 2010 were $0.46, compared to $0.40 for the 2010's third quarter and $0.37 for the same quarter a year ago, excluding merger related items. Hancock's return on average assets increased to 0.83 percent for the fourth quarter of 2010, from 0.70 percent for 2010's third quarter.
Net income for the full 2010 year amounted to $52.2 million, down 7.3 percent from 2009's net income of $56.3 million, excluding merger related items. Diluted earnings per share for 2010 were $1.40, versus $1.70 last year, excluding merger related items. Hancock's return on average assets for 2010 was 0.62 percent and 0.80 percent for 2009, excluding merger related items. The company's pre-tax, pre-provision income for 2010 increased 6.4 percent to $142.9 million over the prior year period. Pre-tax pre-provision income is total revenue less non-interest expense and excludes one-time merger items and securities transactions.
On December 22, 2010, Hancock Holding Company entered into a definitive agreement with Whitney Holding Corporation ("Whitney"), parent company of New Orleans-based Whitney Bank, for Whitney to merge into Hancock. The transaction is expected to be completed in the second quarter of 2011, subject to customary closing conditions and regulatory approval. Following the merger, Hancock expects to retain its strong capital position after an expected common stock raise of approximately $200 million, and anticipates repurchasing all of Whitney's TARP preferred stock and warrants held by the U.S. Treasury, subject to regulatory approval.
Hancock's President and Chief Executive Officer Carl J. Chaney said, "The merger with Whitney will combine two of the Gulf South's most respected financial services institutions and creates an unprecedented opportunity to enhance shareholder value and strengthen the financial options available to our customers across the combined company's footprint. Both Hancock and Whitney were founded on similar core values more than a century ago to serve people throughout the Gulf South region. We are excited to meld two institutions with comparable business philosophies and common commitment to our region's heritage and future."
"Upon completion of the transaction, our business footprint will grow dramatically in Hancock's current Louisiana, Mississippi, Alabama and Florida markets, and we will expand into dynamic new regions such as Houston and Tampa-St. Petersburg," Chaney said. "Combined, the company will have approximately $20 billion in assets, $12 billion in loans and $16 billion in deposits. Customers will be served by more than 300 branch locations and have access to nearly 400 ATMs. Based upon assets, Hancock will become the 32nd largest bank headquartered in America."
Principal drivers of Hancock's improved 2010 fourth quarter earnings were reflected in a wider net interest margin, up 21 basis points to 4.06 percent, along with a significantly lower provision for loan losses, down $4.9 million, or 29.9 percent. The wider net interest margin drove a $2.1 million, or 12 percent annualized, increase in net interest income. The lower provision for loan losses was primarily due to a continued improvement in the company's overall asset quality. Net charge-offs showed significant improvement from prior quarters with a decrease of $4.0 million, or 29.1 percent, from the 2010 third quarter. Net charge-offs were 0.78 percent of average loans and were down 32 basis points, compared with the preceding third quarter's 1.10 percent. For the 2010 fourth quarter, non-performing assets as a percent of loans and foreclosed assets improved to 3.17 percent from the prior quarter's 3.55 percent but were up from 1.97 percent as of December 31, 2009.
"We see continued improvement in our asset quality measures, and combined with the favorable economic outlook for our operating region, along with our announcement about the Whitney merger, we are excited about the coming year," Chaney added.
Highlights & Key Operating Items from Hancock's Fourth Quarter Results
Balance Sheet & Capital
Total assets at December 31, 2010, were $8.14 billion, down $101.0 million, or 1.2 percent, from $8.24 billion at September 30, 2010. Compared to December 31, 2009, total assets decreased $558.8 million, or 6.4 percent. Hancock continues to remain very well capitalized with total equity of $856.5 million at December 31, 2010, up $18.9 million, or 2.3 percent, from December 31, 2009. The company's tangible common equity ratio stood at an enviable 9.69 percent at December 31, 2010.
For the quarter ended December 31, 2010, Hancock's average total loans were $4.95 billion, which represented an increase of $576.3 million, or 13.2 percent, from the same quarter a year ago but were down $24.4 million, or 0.5 percent, from the third quarter of 2010 due to a continued lessening of loan demand in the company's operating region. The increased level of average loans from the same quarter a year ago was primarily due to the Peoples First acquisition in December 2009 with an increase in commercial and real estate loans of $309.3 million, or 11.1 percent, and mortgage loans of $231.8 million, or 49.3 percent. Period-end loans increased $49.5 million, or 1.0 percent, from September 30, 2010. The increase in period-end loans reflected a 2.6 percent increase in commercial and real estate loans, up $79.3 million, and a 2.5 percent increase, or $17.7 million, in direct consumer loans, offset by a 4.9 percent, or $34.2 million, decrease in mortgage loans, and a 4.0 percent decline, or $13.0 million, in indirect consumer loans.
Period-end deposits for the fourth quarter were $6.78 billion, up $66.9 million, or 1.0 percent, from the prior quarter, but were down 5.8 percent, from December 31, 2009. The $420.1 million reduction in period-end deposits was caused by a $535.8 million, or 18.0 percent, decrease in time deposits offset by a 5.0 percent increase, or $53.9 million, in noninterest bearing deposits and a 5.7 percent increase, or $107.8 million, in interest-bearing transaction deposits. The $420.1 million reduction was primarily related to expected run-off in Peoples First time deposits. Prior to the acquisition, Peoples First deposit pricing was very aggressive in order to attract deposits and their deposit rates were considerably higher than comparable banks. Average deposits were down 1.7 percent, or $113.2 million, from the third quarter of 2010 but were up 19.7 percent, or $1.1 billion, from December 31, 2009 due to the Peoples First acquisition. The $113.2 million reduction in average deposits from third quarter was in time deposits, which were down $174.7 million, or 6.6 percent, and interest bearing and public fund time deposits, which were down $32.9 million, or 2.9 percent, offset primarily by an increase of $33.6 million, or 1.7 percent, in interest-bearing transaction deposits and $60.9 million, or 5.7 percent, in noninterest-bearing deposits. Hancock's overall funding mix improved in the fourth quarter of 2010 with total transaction deposits (non-interest and interest-bearing) as a percent of total deposits at 46 percent, up from 44 percent from the prior quarter.
Net charge-offs for 2010's fourth quarter were $9.8 million, or 0.78 percent of average loans, down from the $13.8 million, or 1.10 percent, of average loans reported for the third quarter of 2010. Total net charge-offs for 2010 of $50.7 million represented a slight increase from 2009 net charge-offs of $50.3 million. Non-performing assets as a percent of total loans and foreclosed assets were 3.17 percent at December 31, 2010, down from 3.55 percent at September 30, 2010. The total dollar value of non-performing assets was down $17.3 million, or 9.8 percent, between September 30, 2010, and December 31, 2010. Approximately $12.6 million of loans, of which $8.7 million were on non-accrual status, were designated as troubled debt restructuring (TDR) at December 31, 2010. Non-accrual loans decreased $20.6 million, while other real estate owned (ORE) increased $1.4 million compared to the prior quarter. Loans 90 days past due or greater (accruing) as a percent of period-end loans decreased 12 basis points from September 30, 2010, to 0.03 percent at December 31, 2010.
Hancock recorded a provision for loan losses for the fourth quarter of $11.4 million. The company's allowance for loan losses was $82.0 million at December 30, 2010, and $79.7 million at September 30, 2010. The ratio of the allowance for loan losses as a percent of period-end loans was 1.65 percent at December 31, 2010, compared to 1.62 percent at September 30, 2010. Hancock's reserving methodologies required the company to increase the allowance for loan losses by $2.3 million in the fourth quarter. In the fourth quarter of 2010, the company reversed $1.0 million of the $5.2 million specific reserve accrued in the second quarter of 2010 for the Gulf Oil Spill. Hancock is continuing to monitor the impact the Gulf Oil Spill is having on the company's affected markets. The $1.0 million reversal was offset by an increase of $2.6 million in the company's legacy loan portfolio and an increase of $0.7 million related to credit cards in the company's acquired loan portfolio.
Additional asset quality information (inclusive and exclusive of the covered assets of Peoples First) is provided in the following table:
Net Interest Income
Net interest income (taxable equivalent or te) for the fourth quarter increased $8.1 million, or 12.7 percent, while the net interest margin of 4.06 percent was 10 basis points wider than the same quarter a year ago. Growth in average earning assets was strong, compared with the same quarter a year ago with an increase of $636.7 million, or 9.9 percent, mostly reflected in higher average loans, up $576.3 million, or 13.2 percent, and short-term investments, up $108.0 million, or 21.7 percent, offset by a decrease of $47.6 million or 3.1 percent, in securities.
The company's loan yield decreased 20 basis points over the prior year's fourth quarter, while the yield on securities decreased 82 basis points, pushing the yield on average earning assets down 35 basis points. However, total funding costs over the same quarter a year ago were down 45 basis points.
Compared to the prior quarter, the net interest margin (te) was wider by 21 basis points, and the level of net interest income was up $2.1 million, or 3.0 percent. The $2.1 million increase was due to a $0.9 million increase in loan interest income and a decrease in interest expense of $2.4 million offset by a decrease in income from securities of $1.2 million. The yield on average earning assets was up 10 basis points from last quarter at 4.97 percent, while the total cost of funds decreased 11 basis points.
Non-interest income for the fourth quarter was down $28.3 million, or 44.7 percent, compared with the same quarter a year ago and decreased $0.1 million, or 0.4 percent, compared with the previous quarter. The decrease from the fourth quarter of 2009 was largely due to a $31.5 million, or 86.5 percent, decrease in other income that was primarily related to the $33.6 million gain on the December 2009 acquisition of Peoples First and by a decrease in service charges on deposit accounts of $1.6 million, or 13.8 percent. The overall decrease from the same quarter a year ago was partly offset by increases in secondary mortgage operations, up $1.7 million, or 120.8 percent; ATM fees, up $0.8 million, or 40.0 percent; trust fees, up $0.4 million, or 9.8 percent; investment and annuity fees, up $0.7 million, or 40.4 percent; insurance fees, up $0.4 million, or 13.3 percent, and debit and merchant fees, up $0.8 million, or 28 percent.
The slight decrease in non-interest income compared to the prior quarter was due to a decrease of $1.1 million, or 10.1 percent, in service charges on deposit accounts; lower investment and annuity fees, down $0.6 million, or 19.7 percent, offset by increases in secondary mortgage market operations of $0.6 million, or 23.7 percent; and other income, which was up $0.5 million, or 11.0 percent.
Operating Expense & Taxes
Operating expenses for the fourth quarter were up $7.6 million, or 11.9 percent, compared to the same quarter a year ago, and were $3.2 million, or 4.7 percent, higher than the previous quarter. The increase from the same quarter a year ago was reflected in a 9.6 percent increase, or $3.1 million, in higher personnel expense; a 13.8 percent increase, or $3.2 million, in other operating expense; a 16.6 percent increase, or $0.9 million, in occupancy expense; and increased equipment expense of $0.4 million, or 15.9 percent. The increases were primarily due to the acquisition of Peoples First. The increase from the prior quarter was due to a 10.6 percent increase, or $2.6 million, in other operating expense (mostly related to higher professional fees and higher ORE expenses); higher occupancy expense of $0.3 million, or 5.6 percent; and an 8.4 percent increase in equipment expense, up $0.2 million.
For the twelve months ended December 31, 2010, and 2009, the effective income tax rates were approximately 16 percent and 23 percent, respectively. Because of the reduced level of pre-tax income in 2010, the tax exempt interest income and the utilization of tax credits had a significant impact on the effective tax rate. The source of the tax credits for 2010 and 2009 resulted from investments in New Market Tax Credits, Qualified Bond Credits and Work Opportunity Tax Credits.
About Hancock Holding Company
Hancock Holding Company — parent company of Hancock Bank (Mississippi), Hancock Bank of Louisiana, and Hancock Bank of Alabama — had assets of approximately $8.1 billion as of December 31, 2010. Founded in 1899, Hancock Bank consistently ranks as one of the country's strongest, safest financial institutions, according to BauerFinancial, Inc. More corporate information and e-banking are available at .
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"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about companies' anticipated future financial performance. This act provides a safe harbor for such disclosure, which protects the companies from unwarranted litigation if actual results are different from management expectations. This release contains forward-looking statements and reflects management's current views and estimates of future economic circumstances, industry conditions, company performance, and financial results. These forward-looking statements are subject to a number of factors and uncertainties which could cause the Company's actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements.
CONTACT: Carl J. Chaney, President and Chief Executive Officer Michael M. Achary, E.V.P. and Chief Financial Officer Paul D. Guichet, V.P. Investor Relations 800.522.6542 or 228.563.6559