FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to .
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Commission file number 0-13089
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Hancock Holding Company
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(Exact name of registrant as specified in its charter)
Mississippi 64-0693170
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
One Hancock Plaza, Gulfport, Mississippi 39501
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (228) 868-4727
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
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NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $3.33 PAR VALUE
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(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
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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
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The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 1, 2001, was approximately $323,291,000 (based on an average market price of $38.25). For purposes of this calculation only, shares held by non-affiliates are deemed to consist of (a) shares held by all shareholders other than directors and executive officers of the registrant plus (b) shares held by directors and officers as to which beneficial ownership has been disclaimed.
On December 31, 2000, the registrant had outstanding 10,739,806 shares of common stock for financial statement purposes.
Portions of the Registrant's Annual Report to Stockholders for the year ended December 31, 2000 are incorporated by reference into Part I and Part II of this report.
Portions of the definitive Proxy Statement used in connection with the Registrant's Annual Meeting of Shareholders held on February 22, 2001, filed by the Registrant on January 22, 2001, are incorporated by reference into Part III of this report.
CONTENTS
PART I
Item 1. Business 4
Item 2. Properties 32
Item 3. Legal Proceedings 33
Item 4. Submission of Matters to a Vote of Security Holders 33
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters 33
Item 6. Selected Financial Data 33
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 33
Item 7a Quantitative and Qualitative Disclosures About
Market Risk 33
Item 8. Financial Statements and Supplementary Data 34
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 34
PART III
Item 10. Directors and Executive Officers of the
Registrant 34
Item 11. Executive Compensation 36
Item 12. Security Ownership of Certain Beneficial
Owners and Management 36
Item 13. Certain Relationships and Related Transactions 36
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 36
Hancock Holding Company (the Company), organized in 1984 as a bank holding company registered under the Bank Holding Company Act of 1956, as amended, is headquartered in Gulfport, Mississippi. At December 31, 2000 the Company operated 91 banking offices and 130 automated teller machines (ATMs) in the states of Mississippi and Louisiana through two wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi (Hancock Bank MS) and Hancock Bank of Louisiana, Baton Rouge, Louisiana (Hancock Bank LA). Hancock Bank MS and Hancock Bank LA are referred to collectively as the "Banks".
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. At December 31, 2000, the Company had total assets of $3.0 billion and employed on a full-time equivalent basis 1,075 persons in Mississippi and 515 persons in Louisiana.
Hancock Bank MS was originally chartered as Hancock County Bank in 1899. Since its organization, the strategy of Hancock Bank MS has been to achieve a dominant market share on the Mississippi Gulf Coast. Prior to a series of acquisitions begun in 1985, growth was primarily internal and was accomplished by concentrating branch expansions in areas of population growth where no dominant financial institution previously served the market area. Economic expansion on the Mississippi Gulf Coast has resulted primarily from growth of military and government-related facilities, tourism, port facility activities, industrial complexes and the gaming industry. Based on the most current available published data, Hancock Bank MS has the largest deposit market share in each of the four counties in which it operates: Harrison, Hancock, Jackson and Pearl River. With assets of $1.8 billion at December 31, 1999, Hancock Bank MS currently ranks as the fifth largest bank in Mississippi.
In August 1990, the Company formed Hancock Bank LA to assume the deposit liabilities and acquire the consumer loan portfolio, corporate credit card portfolio and non-adversely classified securities portfolio of American Bank and Trust, Baton Rouge, Louisiana, (AmBank), from the Federal Deposit Insurance Corporation (FDIC). Economic expansion in East Baton Rouge Parish has resulted from growth in state government and related service industries, educational and medical complexes, petrochemical industries, port facility activities and transportation and related industries. With assets of $1.3 billion at December 31, 2000, Hancock Bank LA is one of the largest banks headquartered in East
Baton Rouge Parish.
Beginning with the 1985 acquisition of the Pascagoula-Moss Point Bank in Pascagoula, Mississippi, the Company has acquired approximately $1.2 billion in assets and approximately $1.1 billion in deposit liabilities through selected acquisitions or purchase and assumption transactions.
In November 1996, the Company acquired Community Bancshares, Inc., Independence, Louisiana, (Community) which owned 100% of the stock of Community State Bank. The acquisition was in return for approximately $5.0 million cash and 513,000 shares (adjusted for a 15% stock dividend in 1996) of common stock of the Company. The acquisition was accounted for using the purchase method. Community had total assets of approximately $91.0 million and stockholders' equity of approximately $11.0 million as of December 31, 1995 and net earnings of approximately $900,000 for the year then ended.
On January 17, 1997, the Company acquired Southeast National Bank, Hammond, Louisiana (Southeast). The acquisition was in return for approximately $3.7 million cash and 121,000 shares of common stock of the Company. The acquisition was accounted for using the purchase method. Southeast had total assets of approximately $40.0 million and stockholders' equity of approximately $4.0 million as of December 31, 1996 and net earnings of approximately $500,000 for the year then ended.
On July 15, 1997, the Company acquired Commerce Corporation, Inc., St Francisville, Louisiana (Commerce), which owned 100% of the stock of Bank of Commerce and Trust Company, for approximately $330,000 cash, 65,000 shares of common stock of the Company and the assumption of Commerce debt owed to certain individuals in the aggregate principal amount of $1,250,000. The transaction was accounted for using the purchase method. Commerce had total assets of approximately $29.0 million and stockholders' equity of approximately $800,000 as of December 31, 1996 and net earnings of approximately $260,000 for the year then ended.
On January 15, 1999, Hancock Holding Company acquired American Security Bancshares of Ville Platte, Inc. (ASB), Ville Platte, Louisiana, the holding company of American Security Bank. The acquisition, accounted for using the purchase method, called for the exchange of ASB stock in return for approximately $15.2 million cash and 644,000 shares of common stock of the Company. ASB had total assets of approximately $230.0 million and stockholders' equity of approximately $21.0 million at December 31, 1998 and net earnings of approximately $2.0 million for the year then ended. The results of operations of ASB were included in the 1999 consolidated statements of earnings from the date of acquisition. The acquisition resulted in the recognition of goodwill amounting to approximately $21.9 million, which is being amortized over 15 years.
The Banks' primary lending focus is to provide commercial, consumer, leasing and real estate loans to consumers and to small and middle market businesses in their respective market areas. The Banks have no significant concentrations of loans to particular borrowers or loans to any foreign entities. Each loan officer has Board approved loan limits on the principal amount of secured and unsecured loans that can be approved for a single borrower without prior approval of a loan committee. All loans, however, must meet the credit underwriting standards and loan policies of the Banks.
All loans over an individual loan officer's Board approved lending authority must be approved by the Bank's loan committee, the region's loan committee or by another loan officer with greater lending authority. Both the regional loan committee and the Bank's senior loan committee must review and approve any loan for a borrower whose total indebtedness exceeds the region's approved limit. Each loan file is reviewed by the Bank's loan operations quality assurance function, a component of its loan review system, to ensure proper documentation and asset quality.
Each Bank's portfolio of loan relationships aggregating $250,000 or more is annually reviewed by the respective Bank to identify any deficiencies and to take corrective actions as necessary. Periodically, selected loan relationships aggregating less than $250,000 are reviewed. As a result of such reviews, each Bank places on its Watchlist loans requiring close or frequent review. All loans classified by a regulator are also placed on the Watchlist. All Watchlist and past due loans are reviewed monthly by the Banks' senior lending officers and by the Banks' Board of Directors.
In addition, all loans to a particular borrower are reviewed, regardless of classification, each time such borrower requests a renewal or extension of any loan or requests a new loan. All lines of credit are reviewed annually before renewal. The Banks currently have mechanisms in place that allow for at least an annual review of the financial statements and the financial condition of all borrowers, except borrowers with secured installment and residential mortgage loans.
Consumer loans which become 60 days delinquent are reviewed regularly by management. Generally, a consumer loan which is delinquent 120 days is in process of collection through repossession and liquidation of collateral or has been deemed currently uncollectible. Loans deemed currently uncollectible are charged-off against the allowance account. As a matter of policy, loans are placed on a nonaccrual status when the loan is 1) maintained on a cash basis due to the deterioration in the financial condition of the borrower, 2) payments, in full, of principal or interest are not expected or 3) the principal or interest has been in default for a period of 90 days, unless the loan is well secured and in the process
of collection.
The Banks follow the standard FDIC loan classification system. This system provides management with (1) a general view of the quality of the overall loan portfolio (each branch's loan portfolio and each commercial loan officer's loan portfolio) and (2) information on specific loans that may need individual attention.
The Banks hold nonperforming assets, consisting of real property, vehicles and other items held for resale, which were acquired generally through the process of foreclosure. At December 31, 2000, the book value of real estate held for resale and other repossessed properties was approximately $3.3 million.
The Banks maintain portfolios of securities consisting primarily of U.S. Treasury securities, U.S. government agency issues, mortgage-backed securities, CMOs and tax-exempt obligations of states and political subdivisions. The portfolios are designed to enhance liquidity while providing acceptable rates of return. Therefore, the Banks invest only in high grade investment quality securities with acceptable yields and generally with durations of less than 7 years.
The Banks' policies limit investments to securities having a rating of no less than "Baa" by Moody's Investors' Service, Inc., except for certain obligations of Mississippi or Louisiana counties and municipalities.
The Banks have several programs designed to attract depository accounts offered to consumers and to small and middle market businesses at interest rates generally consistent with market conditions. Additionally, the Banks offer 126 ATMs: ATMs at the Company's banking offices and free-standing ATMs at other locations. As members of regional and international ATM networks such as "PULSE", "PLUS" and "CIRRUS", the Banks offer customers access to their depository accounts from regional, national and international ATM facilities. Deposit flows are controlled by the Banks primarily through pricing, and to a certain extent, through promotional activities. Management believes that the rates it offers, which are posted weekly on deposit accounts, are generally competitive with other financial institutions in the Banks' respective market areas.
The Banks, through their respective Trust Departments, offer a full range of trust services on a fee basis. The Banks act as executor, administrator or guardian in administering estates. Also provided are investment custodial services for individuals, businesses and charitable and religious organizations. In their trust capacities, the Banks provide investment management services on an agency basis and act as trustee for pension plans, profit sharing plans, corporate and municipal bond issues, living trusts, life insurance trusts and various other types of trusts created by or for individuals, businesses and charitable and religious organizations. As of December 31, 2000, the Trust Departments of the Banks had approximately $2.9 billion of assets under management, of which $1.7 billion were corporate accounts and the remaining balances were personal, employee benefit, estate and other trust accounts.
The primary focus of the Company's operating strategy is to increase shareholder value through superior returns on a wide range of financial services offered to our customers throughout our operating region. The Company's operating efficiency ratio, excluding intangible amortization and securities gains, was 58.50% for the year ended December 31, 2000, compared to 63.84% for the prior year. Excluding the impact of the gain realized on the sale of the majority of the Company's credit card portfolio, the efficiency ratio for 2000 was 59.74%. In the latter part of 1999, management took steps to improve operating efficiencies after concentrating on income-producing strategies during the first half of the year. With management's efforts focused on cost containment, the number of full-time equivalent employees was reduced from a high at March 31, 1999 of 1,804 to 1,590 at December 31, 2000. Other initiatives, including the reengineering of certain back-office processes, were put into place with the intention of limiting non-interest expense growth in the year 2000.
Hancock Bank MS has 7 subsidiaries through which it engages in the following activities: providing
consumer financing services; mortgage lending; owning, managing and maintaining certain real property; providing general insurance agency services; holding investment securities; marketing credit life insurance; and providing discount investment brokerage services. The income of these subsidiaries generally accounts for less than 10% of the Company’s total net earnings.
In 1994, the Company began offering alternative investments through a third party vendor. The investment centers are now located in several branch locations in Mississippi and Louisiana to accommodate the investment needs of customers whose financial portfolio requirements fall outside the traditional commercial bank product line. During 1999, the investment sales force was internalized and the management structure reorganized in order to align sales actively with Company objectives.
Hancock Bank MS also owns approximately 3,700 acres of timberland in Hancock County, Mississippi, most of which was acquired through foreclosure in the 1930's. Timber sales and oil and gas leases on this acreage generate less than 1% of the Company's annual income.
The deregulation of the financial services industry, the elimination of many previous distinctions between commercial banks and other financial institutions and legislation enacted in Mississippi, Louisiana and other states allowing state-wide branching, multi-bank holding companies and regional interstate banking has created a highly competitive environment for commercial banking in the Company's market area. The principal competitive factors in the markets for deposits and loans are interest rates paid and charged. The Company also competes through the efficiency, quality, range of services and products it provides, convenience of office and ATM locations and office hours.
In attracting deposits and in its lending activities, the Company competes generally with other commercial banks, savings associations, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms, mutual funds and insurance companies and other financial institutions. Many of these institutions have greater available resources than the Company.
The Company is subject to extensive regulation by the Board of Governors of the Federal Reserve System (the Federal Reserve) pursuant to the Bank Holding Company Act of 1956, as amended (the Bank Holding Company Act). The Company also is required to file certain reports with, and otherwise
comply with the rules and regulations of, the Securities and Exchange Commission (the Commission) under federal securities laws.
The Bank Holding Company Act generally prohibits the Company from engaging in activities other than banking, managing or controlling banks or other permissible subsidiaries. Acquiring or obtaining control of any company engaged in activities other than those activities determined by the Federal Reserve to be so closely related to banking, managing or controlling banks as to be proper incident thereto is also prohibited. In determining whether a particular activity is permissible, the Federal Reserve considers whether the performance of the activity can reasonably be expected to produce benefits to the public that outweigh possible adverse effects. For example: making, acquiring or servicing loans; leasing personal property; providing certain investment or financial advice; performing certain data processing services; acting as agent or broker in selling credit life insurance, and performing certain insurance underwriting activities have all been determined by regulations of the Federal Reserve to be permissible activities. The Bank Holding Company Act does not place territorial limitations on permissible bank-related activities of bank holding companies. Despite prior approval, however, the Federal Reserve has the power to order a holding company or its subsidiaries to terminate any activity or its control of any subsidiary when it has reasonable cause to believe that continuation of such activity or control of such subsidiary constitutes a serious risk to the financial safety, soundness or stability of any bank subsidiary of that holding company.
The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve: (1) before it may acquire ownership or control of any voting shares of any bank if, after such acquisition, such bank holding company will own or control more than 5% of the voting shares of such bank, (2) before it or any of its subsidiaries other than a bank may acquire all of the assets of a bank, or (3) before it may merge with any other bank holding company. In reviewing a proposed acquisition, the Federal Reserve considers financial, managerial and competitive aspects. The future prospects of the companies and banks concerned and the convenience and needs of the community to be served must also be considered. The Federal Reserve also reviews the indebtedness to be incurred by a bank holding company in connection with the proposed acquisition to ensure that the holding company can service such indebtedness without adversely affecting the capital requirements of the holding company or its subsidiaries. The Bank Holding Company Act further requires that consummation of approved acquisitions or mergers must be delayed for a period of not less than 15 nor more than least 30 days following the date of approval. During such 15 to 30-day period, complaining parties may obtain a review of the Federal Reserve's order granting its approval by filing a petition in the appropriate United States Court of Appeals petitioning that the order be set aside.
The Federal Reserve has adopted capital adequacy guidelines for use in its examination and regulation of bank holding companies. The regulatory capital of a bank holding company under applicable federal capital adequacy guidelines is particularly important in the Federal Reserve's evaluation of a bank
holding company and any applications by the bank holding company to the Federal Reserve. If regulatory capital falls below minimum guideline levels, a bank holding company or bank may be denied approval to acquire or establish additional banks or non-bank businesses or to open additional facilities. In addition, a financial institution’s failure to meet minimum regulatory capital standards can lead to other penalties, including termination of deposit insurance or appointment of a conservator or receiver for the financial institution. There are two measures of regulatory capital presently applicable to bank holding companies, (1) risk-based capital and (2) leverage capital ratios.
The Federal Reserve rates bank holding companies by a component and composite 1-5 rating system. This system is designed to help identify institutions which require special attention. Financial institutions are assigned ratings based on evaluation and rating of their financial condition and operations. Components reviewed include capital adequacy, asset quality, management capability, the quality and level of earnings, and the adequacy of liquidity. Effective January 1, 1997, a sixth component was added to the rating system - sensitivity to market risk. This component addresses primarily the issue of a bank’s sensitivity to interest rate fluctuations.
The leverage ratios adopted by the Federal Reserve require all but the most highly rated bank holding companies to maintain Tier 1 Capital at 4% of total assets. Certain bank holding companies having a composite 1 rating and not experiencing or anticipating significant growth may satisfy the Federal Reserve guidelines by maintaining Tier 1 Capital of at least 3% of total assets. Tier 1 Capital for bank holding companies includes: stockholders' equity, minority interest in equity accounts of consolidated subsidiaries and qualifying perpetual preferred stock. In addition, Tier 1 Capital excludes goodwill and other disallowed intangibles. The Company's leverage capital ratio at December 31, 2000 was 10.20%.
The risk-based capital guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off- balance sheet exposure and to minimize disincentives for holding liquid assets. Under the risk-based capital guidelines, assets are assigned to one of four risk categories; 0%, 20% 50% and 100%. As an example, U.S. Treasury securities are assigned to the 0% risk category while most categories of loans are assigned to the 100% risk category. A two-step process determines the risk weight of off-balance sheet items such as standby letters of credit. First, the amount of the off-balance sheet item is multiplied by a credit conversion factor of either 0%, 20%, 50% or 100%. The result is then assigned to one of the four risk categories. At December 31, 2000, the Company's off-balance sheet items aggregated $401.5 million; however, after the credit conversion these items represented $74.0 million of balance sheet equivalents.
The primary component of risk-based capital is Tier 1 Capital, which for the Company is essentially equal to common stockholders' equity, less goodwill and other intangibles. Tier 2 Capital, which consists primarily of the excess of any perpetual preferred stock, mandatory convertible securities, subordinated debt and general allowances for loan losses, is a secondary component of risk-based capital. The risk-
weighted asset base is equal to the sum of the aggregate dollar values of assets and off-balance sheet items in each risk category, multiplied by the weight assigned to that category. A ratio of Tier 1 Capital to risk-weighted assets of at least 4% and a ratio of Total Capital (Tier 1 and Tier 2) to risk-weighted assets of at least 8% must be maintained by bank holding companies. At December 31, 2000, the Company's Tier 1 and Total Capital ratios were 15.95% and 17.20%, respectively.
The prior approval of the Federal Reserve must be obtained before the Company may acquire substantially all the assets of any bank, or ownership or control of any voting shares of any bank, if, after such acquisition, it would own or control, directly or indirectly, more than 5% of the voting shares of such bank. In no case, however, may the Federal Reserve approve an acquisition of any bank located outside Mississippi unless such acquisition is specifically authorized by the laws of the state in which the bank to be acquired is located. The banking laws of Mississippi presently permit out-of-state banking organizations to acquire Mississippi banking organizations, provided the out-of-state banking organization's home state grants similar privileges to banking organizations in Mississippi. This reciprocity privilege was restricted to banking organizations in specified geographic regions that encompassed the states of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas, Virginia and West Virginia. However, effective September 29, 1995, such regional limitation was expanded by the Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994 to a nationwide basis. In addition, Mississippi banking organizations were granted similar powers to acquire certain out-of-state financial institutions pursuant to the Interstate Bank Branching Act which was adopted in 1996. A bank holding company is additionally prohibited from engaging in non-banking activities, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in non-banking activities.
With the passage of The Interstate Banking and Branching Efficiency Act of 1994, adequately capitalized and managed bank holding companies are permitted to acquire control of banks in any state, subject to federal regulatory approval, without regard to whether such a transaction is prohibited by the laws of any state. Beginning June 1, 1997, federal banking regulators may approve merger transactions involving banks located in different states, without regard to laws of any state prohibiting such transactions; except that, mergers may not be approved with respect to banks located in states that, before June 1, 1997, enacted legislation prohibiting mergers by banks located in such state with out-of- state institutions. Federal banking regulators may permit an out-of-state bank to open new branches in another state if such state has enacted legislation permitting interstate branching. The legislation further provides that a bank holding company may not, following an interstate acquisition, control more than 10% of nationwide insured deposits or 30% of deposits in the relevant state. States have the right to adopt legislation to lower the 30% limit. Additional provisions require that interstate activities conform to the Community Reinvestment Act.
The Company is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the
preceding 12 months, is equal to 10% or more of the Company’s consolidated net worth. The Federal Reserve may disapprove such a transaction if it determines that the proposal constitutes an unsafe or unsound practice, would violate anylaw, regulation, Federal Reserve order or directive or any condition imposed by, or written agreement with, the Federal Reserve.
In November 1985, the Federal Reserve adopted its Policy Statement on Cash Dividends Not Fully Covered by Earnings (the Policy Statement). The Policy Statement sets forth various guidelines that the Federal Reserve believes that a bank holding company should follow in establishing its dividend policy. In general, the Federal Reserve stated that bank holding companies should pay dividends only out of current earnings. It also stated that dividends should not be paid unless the prospective rate of earnings retention by the holding company appears consistent with its capital needs, asset quality and overall financial condition.
The activities of the Company are also restricted by the provisions of the Glass-Steagall Act of 1933 (the Act). The Act prohibits the Company from owning subsidiaries engaged principally in the issue, floatation, underwriting, public sale or distribution of securities.
The Company is a legal entity separate and distinct from the Banks. There are various restrictions that limit the ability of the Banks to finance, pay dividends or otherwise supply funds to the Company or other affiliates. In addition, subsidiary banks of holding companies are subject to certain restrictions on any extension of credit to the bank holding company or any of its subsidiaries, on investments in the stock or other securities thereof and on the taking of such stock or securities as collateral for loans to any borrower. Further, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with extensions of credit, or leases or sales of property or furnishing of services.
The operations of the Banks are subject to state and federal statutes applicable to state banks and national banks, respectively, and the regulations of the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency (OCC), to the extent state banks are granted parity with national banks. Such statutes and regulations relate to, among other things, required reserves, investments, loans, mergers and consolidations, issuance of securities, payment of dividends, establishment of branches and other aspects of the Banks' operations.
Hancock Bank MS is subject to regulation and periodic examinations by the FDIC and the State of Mississippi Department of Banking and Consumer Finance. Hancock Bank LA is subject to regulation and periodic examinations by the FDIC and the Office of Financial Institutions, State of Louisiana. These regulatory authorities examine such areas as reserves, loan and investment quality, management policies, procedures and practices and other aspects of operations. These examinations are designed for
the protection of the Banks’ depositors, rather than their stockholders. In addition to these regular examinations, the Company and the Banks must furnish periodic reports to their respective regulatory authorities containing a full and accurate statement of their affairs.
As a result of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), a financial institution insured by the FDIC can be held liable for any losses incurred by, or reasonably expected to be incurred by, the FDIC in connection with (1) the default of a commonly controlled FDIC-insured financial institution or (2) any assistance provided by the FDIC to a commonly controlled financial institution in danger of default.
The Banks are members of the FDIC, and their deposits are insured as provided by law by the Bank Insurance Fund (BIF). On December 19, 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) was enacted. The Federal Deposit Insurance Act, as amended by Section 302 of FDICIA, calls for risk-related deposit insurance assessment rates. The risk classification of an institution will determine its deposit insurance premium. Assignment to one of three capital groups, coupled with assignment to one of three supervisory sub-groups, determines which of the nine risk classifications is appropriate for an institution.
Effective in the first quarter of 1996, the FDIC lowered banks' deposit insurance premiums from 4 to 31 cents per hundred dollars in insured deposits to a rate of 0 to 27 cents. The Banks have received a risk classification of 1A for assessment purposes. In 1997 an assessment for the Financing Corporation's debt service was added to the FDIC quarterly premium payment. That annual assessment averaged 2.12 cents per hundred dollars of insured deposits during 2000 and 1.96 (annualized) for the first quarter of 2001. Total assessments paid to the FDIC amounted to $488 thousand in 2000. For the year ended December 31, 2000, premiums on OAKAR deposits from the 1991 acquisition of Peoples Federal Savings Association totaled $7,600.
In general, FDICIA subjects banks and bank holding companies to significantly increased regulation and supervision. FDICIA increased the borrowing authority of the FDIC in order to re-capitalize the BIF, and the future borrowings are to be repaid by increased assessments on FDIC member banks. Other significant provisions of FDICIA require a new regulatory emphasis linking supervision to bank capital levels. Also, federal banking regulators are required to take prompt regulatory action with respect to depository institutions that fall below specified capital levels and to draft non-capital regulatory measures to assure bank safety.
FDICIA contains a "prompt corrective action" section intended to resolve problem institutions at the least possible long-term cost to the deposit insurance funds. Pursuant to this section, the federal banking agencies are required to prescribe a leverage limit and a risk-based capital requirement indicating levels at which institutions will be deemed to be "well capitalized," "adequately capitalized," "undercapitalized,"
“significantly undercapitalized” and “critically undercapitalized.” In the case of a depository institution that is “critically undercapitalized” (a term defined to include institutions which still have positive net worth), the federal banking regulators are generally required to appoint a conservator or receiver.
FDICIA further requires regulators to perform annual on-site bank examinations, places limits on real estate lending and tightens audit requirements. The new legislation eliminated the “too big to fail” doctrine, which protects uninsured deposits of large banks, and restricts the ability of undercapitalized banks to obtain extended loans from the Federal Reserve Board discount window. FDICIA also imposes new disclosure requirements relating to fees charged and interest paid on checking and deposit accounts. Most of the significant changes brought about by FDICIA required new regulations.
In addition to regulating capital, the FDIC and the OCC have broad authority to prevent the development or continuance of unsafe or unsound banking practices. Pursuant to this authority, the FDIC and OCC have adopted regulations that restrict preferential loans and loan amounts to "affiliates" and "insiders" of banks, require banks to keep information on loans to major stockholders and executive officers and bar certain director and officer interlocks between financial institutions. The FDIC is also authorized to approve mergers, consolidations and assumption of deposit liability transactions between insured banks and between insured banks and uninsured banks or institutions to prevent capital or surplus diminution in such transactions where the resulting, continuing or assumed bank is an insured nonmember state bank, like Hancock Bank MS and Hancock Bank LA.
Although Hancock Bank MS and Hancock Bank LA are not members of the Federal Reserve System, they are subject to Federal Reserve regulations that require the Banks to maintain reserves against transaction accounts (primarily checking accounts). Because reserves generally must be maintained in cash or in noninterest-bearing accounts, the effect of the reserve requirements is to increase the cost of funds for the Banks. The Federal Reserve regulations currently require that reserves be maintained against net transaction accounts in the amount of 3% of the aggregate of such accounts up to $37.3 million, or, if the aggregate of such accounts exceeds $37.3 million, $1.119 million plus 10% of the total in excess of $37.3 million. This regulation is subject to an exemption from reserve requirements on a limited amount of an institution's transaction accounts.
The foregoing is a brief summary of certain statutes, rules and regulations affecting the Company and the Banks. It is not intended to be an exhaustive discussion of all the statutes and regulations having an impact on the operations of such entities.
On November 12, 1999, President Clinton signed into law the Gramm-Leach-Billey Act on 1999 (the "Financial Services Modernization Act"). The Financial Services Modernization Act repeals the two affiliation provisions of the Glass-Steagall Act: Section 20, which restricted the affiliation of Federal Reserve Member Banks with firms "engaged principally" in specified securities activities; and Section 32, which restricts officer, director or other employee interlocks between a member bank and any company or person "primarily engaged" in specified securities activities. In addition, the Financial Services Modernization Act also contains provisions that expressly preempt any state law restricting the establishment of financial affiliations, primarily related to insurance. The general effect of the law is to establish a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms, and other financial service providers by revising and expanding the Bank Holding Company Act framework to permit a holding company system to engage in a full range of financial activities through a new entity known as a Financial Holding Company. "Financial activities" is broadly defined to include not only banking, insurance, and securities, but also merchant banking and additional activities that the Federal Reserve, in consultation with the Secretary of the Treasury, determines to be financial in nature, incidental to such financial activities, or complementary activities that to not pose a substantial risk to the safety and soundness of depository institutions of the financial system generally.
Generally, the Financial Services Modernization Act:
| • | Repeals historical restrictions on, and eliminates many federal and state law barriers to, affiliations among bank, securities firms, insurance companies, and other financial service providers; |
| • | Provides a uniform framework for the functional regulation of the activities of banks, savings institutions, and their holding companies; |
| • | Broadens the activities that may be conducted by national banks, banking subsidiaries of bank holding companies, and their financial subsidiaries; |
| • | Provides an enhanced framework for protecting the privacy of consumer information; |
| • | Adopts a number of provisions related to the capitalization, membership, corporate governance, and other measures designed to modernize the Federal Home Loan Bank system; |
| • | Modifies the laws governing the implementation of the Community Reinvestment Act ("CRA"); and |
| • | Addresses a variety of other legal and regulatory issues affecting both day-to-day operations and long-term activities of financial institutions. |
The Financial Services Modernization Act also permits national banks to engage in expended activities through the formation of financial subsidiaries. A national bank may have a subsidiary engaged in any activity
authorized for national banks directly or any financial activity, except for insurance underwriting, insurance investments, real estate investment or development or merchant banking, which may only be conducted through a subsidiary of a Financial Holding Company. Financial activities include all activities permitted under new sections of the Bank Holding Company Act or permitted by regulation.
A national bank seeking to have a financial subsidiary, and each of its depository institution affiliates, must be "well-capitalized" and "well-managed". The total assets of all financial subsidiaries may not exceed the lesser of 45% of a bank's total assets, or $50 billion. A national bank must exclude from its assets and equity all equity investments, including retained earnings, in a financial subsidiary. The assets of the subsidiary may not be consolidated with the bank's assets. The bank must also have policies and procedures to assess financial subsidiary risk and protect the bank from such risks and potential liabilities.
The Financial Services Modernization Act also includes a new section of the Federal Deposit Insurance Act governing subsidiaries of state banks that engage in "activities as principal that would only be permissible" for a nationally bank to conduct in a financial subsidiary. It expressly preserves the ability of a state bank to retain all existing subsidiaries. Because Mississippi permits commercial banks chartered by the state to engage in any activity permissible for national banks, the Bank will be permitted to form subsidiaries to engage in the activities authorized by the Financial Services Modernization Act. In order to form a financial subsidiary, a state bank must be well-capitalized and the state bank would be subject to the same capital deduction, risk management and affiliate transaction rules as applicable to national banks.
The Bank's management has not determined at this time, but is examining its strategic business plan to determine whether, based on market conditions, the relative financial conditions of the Bank, regulatory capital requirements, general economic conditions and other factors, the Bank desires to utilize any of its expanded powers provided in the Financial Services Modernization Act.
The Bank does not believe that the Financial Services Modernization Act will have a material adverse effect on the Bank's operations in the near-term. However, to the extent that it permits bank, securities firms, and insurance companies to affiliate, the financial services industry may experience further consolidation. The Financial Services Modernization Act is intended to grant community banks certain powers as a matter of right that larger institutions have accumulated on an ad hoc basis. Nevertheless, this act may have the result of increasing the amount of competition that the Company and the Banks face from larger institutions and other types of companies offering financial products, some of which may have substantially more financial resources than the Company and the Banks.
Finally, additional bills may be introduced in the future in the United States Congress and state legislatures to alter the structure, regulation and competitive relationships of financial institutions. It cannot be predicted whether and what form any of these proposals will be adopted or the extent to which the business of the Company and the Banks may be affected thereby.
The difference between the interest rate paid on deposits and other borrowings and the interest rate received on loans and securities comprise most of a bank's earnings. In order to mitigate the interest rate risk inherent in the industry, the banking business is becoming increasingly dependent on the generation of fee and service charge revenue.
The earnings and growth of a bank may be affected by both general economic conditions and the monetary and fiscal policy of the United States Government and its agencies, particularly the Federal Reserve. The Federal Reserve sets national monetary policy such as seeking to curb inflation and combat recession. This is accomplished by its open- market operations in United States government securities, adjustments in the amount of reserves that financial institutions are required to maintain and adjustments to the discount rates on borrowings and target rates for federal funds transactions. The actions of the Federal Reserve in these areas influence the growth of bank loans, investments and deposits and also affect interest rates on loans and deposits. The nature and timing of any future changes in monetary policies and their potential impact on the Company cannot be predicted.
STATISTICAL INFORMATIONThe following tables and other material present certain statistical information regarding the Company. This information is not audited and should be read in conjunction with the Company's consolidated financial statements and the accompanying notes.
Net interest income, the difference between interest income and interest expense, is the most significant component of the Banks' earnings. For internal analytical purposes, management adjusts net interest income to a "taxable equivalent" basis using a 35% federal tax rate on tax exempt items (primarily interest on municipal securities and loans).
Another significant statistic in the analysis of net interest income is the effective interest differential, which is the difference between the average rate of interest earned on earning assets and the effective rate paid for all deposits and borrowed funds, noninterest-bearing as well as interest-bearing. Since a portion of the Bank's deposits do not bear interest, such as demand accounts, the rate paid for all funds is lower than the rate on interest-bearing liabilities alone. The rate differential for the years 2000 and 1999 was 4.70% and 4.73%, respectively.
Recognizing the importance of interest differential to total earnings, management places great emphasis on managing interest rate spreads. Although interest differential is affected by national, regional, and area economic conditions, including the level of loan demand and interest rates, there are opportunities to influence interest differential through appropriate loan and investment policies. These policies are designed to maximize interest differential while
maintaining sufficient liquidity and availability of funds for purposes of meeting existing commitments and for investment in loans and other investment opportunities that may arise.
"Table 7 - Summary of Average Balance Sheets, Net Interest Income (TE) & Interest Rates" included under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 35 through 43 of the Company's 2000 Annual Report to Stockholders is incorporated herein by reference.
Information regarding the changes in interest income on interest-earning assets and interest expense on interest- bearing liabilities relating to rate and volume variances is included in "Table 8 - Summary of Changes in Net Interest Income (TE)" included under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 35 through 43 of the Company's 2000 Annual Report to Stockholders is incorporated herein by reference.
To control interest rate risk, management regularly monitors the volume of interest sensitive assets compared with interest sensitive liabilities over specific time intervals. The Company's interest rate management policy is designed to reduce the exposure to changes in its net interest margin in periods of interest rate fluctuations. Interest rate risk is monitored, quantified and managed to produce an acceptable impact on short-term earnings.
The interest sensitivity gap is the difference between total interest sensitive assets and liabilities in a given time period. At December 31, 2000, the Company's cumulative interest sensitivity gap in the one year interval was (4.45%). The percentage reflects a higher level of interest sensitive liabilities than assets re-pricing within one year. Generally, when rate sensitive liabilities exceed rate sensitive assets, the net interest margin is expected to be positively affected during periods of decreasing interest rates and negatively affected during periods of increasing rates.
The following tables set forth the scheduled re-pricing or maturity of the Company's assets and liabilities at December 31, 2000 and December 31, 1999. The assumed prepayment of investments and loans were based on the Company's assessment of current market conditions on such dates. Estimates have been made for the re-pricing of savings, NOW and money market accounts. Actual prepayments and deposit withdrawals will differ from the following analysis due to variable economic circumstances and consumer behavior. Although assets and liabilities may have similar maturities or re-pricing periods, reactions will vary as to timing and degree of interest rate change.
Analysis of Interest Sensitivity at December 31, 2000
After Three
Within Through One After Five
Three Twelve Through Years and
Months Months Five Years Insentitive Total
-------------------- ---------------- ---------------- --------------- -----------------
(amounts in thousands)
Net loans $ 573,007 $ 322,47 $ 707,316 $ 97,04 $ 1,699,841
Securities and time deposits 52,444 147,578 513,454 280,619 994,095
Federal funds 59,000 - - - 59,000
Interest-bearing time deposits 3,877 - - - 3,877
-------------------- ---------------- ---------------- --------------- -----------------
Total earning assets $ 688,328 $ 470,049 $ 1,220,770 $ 377,666 $ 2,756,813
==================== ================ ================ =============== =================
24.97% 17.05% 44.28% 13.70% 100.00%
Interest bearing deposits, excluding
time deposits $100,000 and greater $ 557,199 $ 366,939 $ 547,008 $ 191,856 1,663,002
Time deposits $100,000 and greater 69,245 142,648 100,139 - 312,032
Short-term borrowings 144,561 - - - 144,561
Other borrowings 138 432 1,607 - 2,177
-------------------- ---------------- ---------------- --------------- -----------------
Total interest-bearing funds 771,143 510,019 648,754 191,856 2,121,772
Net non-interest bearing funds - - - 635,041 635,041
-------------------- ---------------- ---------------- --------------- -----------------
Funds supporting earning assets $ 771,143 $ 510,019 $ 648,754 $ 826,897 $ 2,756,813
==================== ================ ================ =============== =================
27.97% 18.50% 23.53% 29.99% 100.00%
Interest sensitivity gap $ (82,815) $ (39,970) $ 572,016 $ (449,231)
Cumulative gap $ (82,815) $ (122,785) $ 449,231 $ -
Percent of total earning assets (3.00)% (4.45)% 16.30% 0.00%
Analysis of Interest Sensitivity at December 31, 1999
After Three
Within Through One After Five
Three Twelve Through Years and
Months Months Five Years Insentitive Total
-------------------- ---------------- ---------------- --------------- -----------------
(amounts in thousands)
Net loans $ 440,736 $ 310,691 $ 741,659 $ 48,435 $ 1,541,521
Securities and time deposits 105,977 129,407 535,547 377,791 1,148,722
Federal funds 3,000 - - - 3,000
-------------------- ---------------- ---------------- --------------- -----------------
Total earning assets $ 549,713 $ 440,098 $ 1,277,206 $ 426,226 $ 2,693,243
==================== ================ ================ =============== =================
20.41% 16.34% 47.42% 15.83% 100.00%
Interest bearing deposits, excluding
time deposits $100,000 and greater $ 491,941 $ 682,530 $ 441,839 $ 178 $ 1,616,488
Time deposits $100,000 and greater 87,681 94,700 71,566 - 253,947
Short-term borrowings 213,773 - - - 213,773
Other borrowings 50,130 404 2,180 - 52,714
-------------------- ---------------- ---------------- --------------- -----------------
Total interest-bearing funds 843,525 777,634 515,585 178 2,136,922
Net non-interest bearing funds - - - 556,321 556,321
-------------------- ---------------- ---------------- --------------- -----------------
Funds supporting earning assets $ 843,525 $ 777,634 $ 515,585 $ 556,499 $ 2,693,243
==================== ================ ================ =============== =================
31.32% 28.87% 19.14% 20.66% 100.00%
Interest sensitivity gap $ (293,812) $ (337,536) $ 761,621 $ (130,273)
Cumulative gap $ (293,812) $ (631,348) $ 130,273 $ -
Percent of total earning assets (10.91)% (23.44)% 4.84% 0.00%
The Company had income tax expense of $16.9 million and $14.6 million for the years ended December 31, 2000 and 1999, respectively. This represents an effective income tax rate of 31.5% for the each of those years.
Information regarding performance and equity ratios is contained in the "Financial Highlights" on pages 5 through 6 of the Company's 2000 Annual Report to Stockholders incorporated herein by reference.
The Company generally purchases securities to be held to maturity, with a maturity schedule that provides ample liquidity. Securities classified as held-to-maturity are carried at amortized cost. Certain securities have been classified as available-for-sale based on management's internal assessment of the portfolio considering future liquidity, earning requirements and capital position.
The December 31, 2000 amortized cost of the held-to-maturity portfolio was $417.8 million and the fair value was $418.6 million. The available-for-sale portfolio balance was $576.3 million at December 31, 2000.
The amortized cost of securities classified as available-for-sale at December 31, 1999, 1998 and 1997, were as follows (in thousands):
December 31,
------------------------------------------------------------------
2000 1999 1998
--------------------- -------------------- --------------------
U.S. Treasury $ 77,054 $ 84,341 $ 101,493
U.S. government agencies 265,029 302,450 272,564
Municipal obligations 36,400 33,382 5,851
Mortgage-backed securities 48,841 70,465 31,652
CMOs 137,170 151,693 45,347
Other debt securities 6,140 10,601 -
Equity securities 7,932 7,659 5,969
--------------------- -------------------- --------------------
$ 578,566 $ 660,591 $ 462,876
===================== ==================== ====================
The amortized cost, yield and fair value of debt securities classified as available-for-sale at
December 31, 2000, by contractual maturity, were as follows (amounts in thousands):
Over One Over Five
One Year Year Years Over Weighted
or Through Through Ten Fair Average
Less Five Years Ten Years Years Total Value Yield
---------------- -------------- --------------- -------------- ------------- ------------- --------
U.S. Treasury $ 77,054 $ - $ - $ - $ 77,054 $ 77,173 5.78%
U.S. government 55,256 172,386 31,828 5,559 265,029 263,866 5.88
agencies
Municipal obligations 1,044 9,050 13,418 12,888 36,400 36,396 4.84%
Mortgage-backed 12 1 12,420 36,408 48,841 48,707 6.47%
securities
CMOs - 23,670 6.19%
- 113,500 137,170 136,288
Other debt securities - 182 5,958 7.01%
- 6,140 5,956
-------------- -------------- --------------- -------------- ------------- ------------- ---------
$ 133,366 $ 181,437 $ 81,518 $ 174,313 $ 570,634 $ 568,386 5.94%
================ ============== =============== ============== ============= ============= =========
Fair Value $ 133,276 $ 180,718 $ 81,181 $ 173,211 $ 568,386
Weighted Average Yield 5.80% 5.78% 5.99% 6.19% 5.94%
The amortized cost of securities classified as held-to-maturity at December 31, 2000, 1999 and 1998
were as follows (in thousands):
December 31,
------------------------------------------ ----------------------
2000 1999 1998
------------------- --------------------- ----------------------
U.S. Treasury $ 8,292 $ 24,277$ $ 114,506
U.S. government agencies 71,286 95,409 200,149
Municipal obligations 159,977 165,891 167,997
Mortgage-backed securities 69,896 81,340 114,747
CMOs 102,167 136,286 177,796
Other debt securities 6,159 6,103 6,054
------------------ ------------------ ------------------------
$ 417,777 $ 509,306 $ 781,249
================== ================== ========================
The amortized cost, yield and fair value of securities classified as held-to-maturity at December 31, 2000, by
contractual maturity, were as follows (amounts in thousands):
Over One Over Five
One Year Year Years Over Weighted
or Through Through Ten Fair Average
Less Five Years Ten Years Years Total Value Yield
--------------- ------------- -------------- ------------- -------------- ------------ ------------
U.S. Treasury $ 8,001 $ - $ 291 $ - $ 8,292 $ 8,348 6.75%
U.S. government agencies 21,563 43,944 5,779 - 71,286 71,224 6.44%
Municipal obligations 9,685 37,024 63,070 50,198 159,977 160,813 4.84%
Mortgage-backed securities 437 3,996 31,324 34,139 69,896 70,151 6.58%
CMOs - 5,281 29,884 67,002 102,167 101,918 6.50%
Other debt securities - 6,055 - 104 6,159 6,159 5.54%
--------------- ------------- -------------- ------------- -------------- ------------ -----------
$ 39,686 $ 96,300 $ 130,348 $151,443 $ 417,777 $ 418,613 5.85%
=============== ============= ============== ============= ============== ============ ===========
Fair Value $ 39,810 $ 96,606 $ 131,061 $151,136 $ 418,613
Weighted Average Yield 6.23% 5.71% 5.75% 5.94% 5.85%
The Banks' primary lending focus is to provide commercial, consumer and real estate loans to consumers and to small and middle market businesses in their respective market areas. Diversification in the loan portfolio is a means of reducing the risks associated with economic fluctuations. The Banks have no significant concentrations of loans to particular borrowers or loans to any foreign entities.
Loan underwriting standards and loan loss allowance maintenance further reduce the impact of credit risk to the Company. Loans are underwritten on the basis of cash flow capacity and collateral market value. Generally, real estate mortgage loans are made when the borrower produces sufficient cash flow capacity and equity in the property to offset historical market devaluations. The loan loss allowance adequacy is tested quarterly based on historical losses through different economic cycles and projected future losses specifically identified.
The following table sets forth, for the periods indicated, the composition of the loan portfolio of the Company:
Loan Portfolio
--------------
December 31,
------------------ ----------------- -------------------- ---------------- ------------------
2000 1999 1998 1997 1996
------------------ ---------------- ----------------- ---------------- ----------------
(in thousands)
Real estate:
Residential mortgages 1-4 family $ 410,716 $ 342,443 $ 244,150 $ 260,132 $ 260,945
Residential mortgages multifamily 20,510 18,939 12,220 10,881 7,642
Home equity lines/loans 42,644 29,549 8,815 10,814 10,169
Construction and development 171,009 136,179 73,789 55,454 55,585
Nonresidential 328,005 309,488 143,445 139,332 131,578
Commercial, industrial and other 281,701 214,041 224,686 177,379 169,061
Consumer 396,112 417,594 544,137 513,362 494,456
Lease financing and depository
Institutions 27,394 24,727 17,324 16,327 15,881
Political subdivisions 21,755 24,687 21,069 16,889 12,142
Credit cards and other revolving 11,393 40,789 40,649 44,785 -
credit
------------------ ---------------- ----------------- ---------------- ----------------
1,711,239 1,558,436 1,330,284 1,245,355 1,157,459
Less, unearned income 11,398 16,915 24,729 24,726 24,803
------------------ ---------------- ----------------- ---------------- ----------------
Net loans $ 1,699,841 $ 1,541,521 $ 1,305,555 $ 1,220,629 $ 1,132,656
================== ================ ================= ================ ================
The following table sets forth, for the periods indicated, the approximate contractual maturity by type of the
loan portfolio of the Company:
Loan Maturity Schedule
December 31, 2000 December 31, 1999
-------------------------------------------------- --------------------------------------------------
Maturity Range Maturity Range
-------------------------------------------------- --------------------------------------------------
After One After One
Within Through After Five Within Through After Five
One Year Five Years Years Total One Year Five Years Years Total
----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------
(in thousands)
-----------
Commercial, industrial and
other $ 127,56 $ 117,959 $ 36,182 $ 281,701 $ 93,968 $ 92,985 $ 27,088 $ 214,041
Real estate - construction 133,923 29,262 7,824 171,009 96,918 30,979 8,282 136,179
All other loans 449,766 88,779 219,984 1,258,529 366,084 619,369 222,763 1,208,216
----------- ----------- ----------- ------------ ----------- ------------ ----------- ----------
Total loans $711,249 $ 736,000 $ 263,990 $ 1,711,239 $ 556,970 $ 743,333 $ 258,133 $1,558,436
=========== =========== =========== ============ =========== ============ =========== ==========
The sensitivity to interest rate changes of that portion of the Company's loan portfolio that matures after one
year is shown below:
Loan Sensitivity to Changes in Interest Rates
---------------------------------------------
December 31,
------------------------------------------------------
2000 1999
------------------------ ---------------------------
(in thousands)
Commercial, industrial, and real estate construction
maturing after one year:
Fixed rate $ 170,631 $ 146,724
Floating rate 20,596 12,610
Other loans maturing after one year:
Fixed rate 754,859 795,859
Floating rate 53,904 46,273
------------------------ ---------------------------
Total $ 999,990 $ 1,001,466
======================== ===========================
The following table sets forth nonperforming assets by type for the periods indicated, consisting of nonaccrual loans, restructured loans and real estate owned. Loans past due 90 days or more and still accruing are also disclosed.
December 31,
--------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------- ---------------- ---------------- ---------------- --------------
(Amounts in thousands)
Nonaccrual loans:
Real estate $ 7,856 $ 5,129 $ 2,459 $ 2,869 $ 753
Commercial, industrial and other 2,296 1,236 1,023 650 169
Consumer, credit card and other
revolving credit 30 536 1,120 378 1,298
Lease financing - - - 1 -
Depository institutions - - - - -
Political subdivisions - - - - -
Restructured loans - 152 1,380 1,134 685
------------- ---------------- ---------------- ---------------- --------------
Total nonperforming loans 10,182 7,053 5,982 5,032 2,905
Acquired real estate owned - - - 435 147
Real estate owned and repossessions 1,492 1,616 2,246 1,923 1,728
------------- ---------------- ---------------- ---------------- --------------
Total nonperforming assets $ 11,674 $ 8,669 $ 8,228 $ 7,390 $ 4,780
============= ================ ================ ================ ==============
Loans 90+ days past due and still accruing $ 9,277 $ 4,442 $ 2,907 $ 5,423 $ 8,361
============= ================ ================ ================ ==============
Ratios (%):
Nonperforming loans to net loans 0.60 0.46 0.46 0.41 0.25
Nonperforming assets to net loans and
real estate owned 0.69 0.56 0.63 0.61 0.41
Nonperforming loans to average net loans 0.63 0.49 0.48 0.42 0.27
Allowance for loan losses to nonperforming
Loans 281 365 367 313 435
The amount of interest that would have been recorded on nonaccrual loans had the loans not been classified as "nonaccrual" was $686,000, $462,000, $424,000, $220,000 and $463,000 for the years ended December 31, 2000, 1999, 1998, 1997 and 1996, respectively.
Interest actually received on nonaccrual loans was not material. The amount of interest recorded on restructured loans did not differ significantly from the interest that would have been recorded under the original terms of those loans.
The allowance for loan losses is a valuation account available to absorb losses on loans. All losses are charged to the allowance 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 allowance for loan losses at the time of receipt. Periodically during the year management estimates the probable level of future losses to determine whether the allowance is adequate to absorb reasonably foreseeable anticipated losses in the existing portfolio based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay and the estimated value of any underlying collateral and current economic conditions. All commercial loans in lending relationships with an aggregate balance of $250,000 or more are risk rated and evaluated on an individual basis, as
well as, all consumer and mortgage real estate loans with a balance of $100,000 or more. All consumer and mortgage real estate loans under $100,000 are risk rated as pools of homogeneous loans and classified according to past due status. Commercial loans are reviewed for impairment at the time a loans is no longer current or at the time management is made aware of a degradation in a borrower’s financial status or a deficiency in collateral. Loss factors recommended by the Banks’ regulators are applied to loans graded by standard loan classifications in determining a general allowance. Unclassified loans are categorized and reserved for at the greater of a five-year average net charge-off ratio or a minimum threshold stated as a percentage of loans outstanding. The allowance for loan loss stated as a percentage of period end loans, used in conjunction with the evaluation of current and anticipated economic conditions, composition of the Company’s present loans portfolio, and trends in both delinquencies and nonaccruals, is a measurement standard utilized by management in determining the adequacy of the allowance. The unallocated portion of the allowance for loan losses is available to compensate for the uncertainties in estimating the potential losses.
The following table sets forth, for the periods indicated, average net loans outstanding, allowance for loan
losses, amounts charged-off and recoveries of loans previously charged-off:
At and For The Years Ended December 31,
-----------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------- -------------- -------------- -------------- --------------
(in thousands)
Net loans outstanding at end of period $1,699,841 $1,541,521 $1,305,555 $1,220,629 $1,173,967
===================== ============== ============== ============== ==============
Average net loans outstanding $1,611,046 $1,452,305 $1,243,617 $1,201,381 $1,083,165
===================== ============== ============== ============== ==============
Balance of allowance for loan losses
at beginning of period $25,713 $21,800 $21,000 $19,800 $17,391
Loans charged-off:
Real estate 80 85 26 22 73
Commercial 2,380 3,112 1,076 997 975
Consumer, credit cards and other
revolving credit 8,508 6,769 6,008 7,145 5,417
Lease financing 34 5 20 49 1
Depository institutions 0 0 0 0 0
Political subdivisions 0 0 0 0 0
--------------------- -------------- -------------- -------------- --------------
Total charge-offs 11,002 9,971 7,130 8,213 6,466
--------------------- -------------- -------------- -------------- --------------
Recoveries of loans previously
charged-off:
Real estate 1 5 5 5 186
Commercial 462 809 540 646 937
Consumer, credit cards and other
revolving credit 2,046 1,669 1,156 1,529 945
Lease financing 0 1 0 1 0
Depository institutions 0 0 0 0 0
Political subdivisions 0 0 0 0 0
--------------------- -------------- -------------- -------------- --------------
Total recoveries 2,509 2,484 1,701 2,181 2,068
--------------------- -------------- -------------- ---------------- --------------
Net charge-offs 8,493 7,487 5,429 6,032 4,398
Provision for loan losses 11,531 7,585 6,229 6,399 6,153
Balance acquired through acquisition
& other (147) 3,815 0 833 654
--------------------- -------------- -------------- -------------- --------------
Balance of allowance for loan losses
at end of period $28,604 $25,713 $21,800 $21,000 $19,800
===================== ============== ============== ============== ==============
The following table sets forth, for the periods indicated, certain ratios related to the Company's charge-offs,
allowance for loan losses and outstanding loans:
At and For The Years Ended December 31,
------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
Ratios (%):
Net charge-offs to average net loans 0.53 0.52 0.44 0.50 0.41
Net charge-offs to period-end net loans 0.50 0.49 0.42 0.49 0.37
Allowance for loan losses to average net loans 1.78 1.77 1.75 1.75 1.83
Allowance for loan losses to period-end net loans 1.68 1.67 1.67 1.72 1.69
Net charge-offs to loan loss allowance 29.69 29.12 24.90 28.72 22.21
Net charge-offs to loan loss provision 73.65 98.71 87.16 94.26 71.47
An allocation of the loan loss allowance by major loan category is set forth in the following table. Except for an increase in the outstanding loan portfolio balance, there were no relevant variations in loan concentrations, quality or terms. The allocation is not necessarily indicative of the category of future losses, and the full allowance at December 31, 2000 is available to absorb losses occurring in any category of loans.
December 31,
-----------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------- -------------------- -------------------- -------------------- ---------------------
Allowance % of Allowance % of Allowance % of Allowance % of Allowance % of
for Loans for Loans for Loans for Loans for Loans
Loan to Total Loan to Total Loan to Total Loan to Total Loan to Total
Losses Loans Losses Loans Losses Loans Losses Loans Losses Loans
--------- --------- --------- --------- --------- --------- --------- -------- --------- ---------
(amounts in thousands)
Real estate $5,700 57.26 $4,300 53.68 $2,500 36.26 $2,500 38.30 $3,000 38.87
Commercial, industrial
and other 8,200 19.39 7,900 16.71 7,000 19.78 5,900 16.91 5,750 16.44
Consumer 10,744 22.64 10,200 26.99 9,200 40.90 9,300 41.22 8,250 41.25
Credit card 700 0.71 1,000 2.62 1,000 3.06 1,200 3.57 800 3.44
Unallocated 3,260 - 2,313 - 2,100 - 2,100 - 2,000 -
--------- --------- --------- --------- --------- --------- --------- -------- --------- ---------
$28,604 100.00 $25,713 100.00 $21,800 100.00 $21,000 100.00 $19,800 100.00
========= ========= ========= ========= ========= ========= ========= ======== ========= =========
Deposits and Other Debt Instruments:
The following table sets forth the distribution of the average deposit accounts for the periods indicated and the
weighted average interest rate paid on each category of deposits:
2000 1999 1998
--------------------------------- --------------------------------- -----------------------------
Percent Percent Percent
Average of Average of Average of
Balance Deposits Rate Balance Deposits Rate Balance Deposits Rate
(%) (%) (%)
------------ ---------- -------- ----------- ---------- -------- ---------- --------- --------
(amounts in thousands)
Non-interest bearing accounts $ 537,057 21.67 - $ 562,552 22.45 - $ 493,218 22.08 -
NOW accounts 219,511 8.86 2.30 234,231 9.35 2.91 432,093 19.34 3.09
Money market and other - - -
savings accounts 761,855 30.75 3.62 788,030 31.45 3.04 417,204 18.68 3.16
Time deposits 959,493 38.72 5.62 920,718 36.75 5.02 891,322 39.90 5.37
------------ ---------- ------------ ---------- ----------- ----------
$2,477,916 100.00 $2,505,531 100.00 $2,233,837 100.00
============ ========== ============= ========== =========== ==========
The Banks traditionally price their deposits to position themselves competitively with the local market. The
Banks' policy is not to accept brokered deposits.
Time certificates of deposit of $100,000 and greater at December 31, 2000 had maturities as follows:
December 31, 2000
-----------------
(in thousands)
Three months or less $ 69,245
Over three through six months 69,650
Over six months through one year 72,998
Over one year 100,139
----------------------------
Total $ 312,032
============================
The following table sets forth certain information concerning the Company's short-term borrowings, which consist of federal funds purchased and Federal Home Loan Bank ("FHLB") advances as well as securities sold under agreements to repurchase.
Years Ended December 31,
-----------------------------------------------------
2000 1999 1998
--------------- ----------------- ---------------
(amounts in thousands)
Federal funds purchased and FHLB advances:
Amount outstanding at period-end $0 $50,000 $0
Weighted average interest at period-end 0.00% 5.85% 0.00%
Maximum amount at any month-end during period 17,700 98,000 $53,850
Average amount outstanding during period 41,282 28,275 $3,773
Weighted average interest rate during period 5.89% 5.07% 4.74%
Securities sold under agreements to repurchase:
Amount outstanding at period-end $144,561 $213,773 $140,207
Weighted average interest at period-end 5.42% 5.89% 3.80%
Maximum amount at any month end during-period 180,767 213,773 $182,062
Average amount outstanding during period 157,633 136,255 $152,426
Weighted average interest rate during period 4.46% 4.02% 4.62%
Liquidity represents an institution's ability to provide funds to satisfy demands from depositors, borrowers and other commitments by either converting assets into cash or accessing new or existing sources of incremental funds. The principal sources of funds that provide liquidity are customer deposits, payments of interest and principal on loans, maturities in and sales of investment securities, earnings and borrowings. At December 31, 2000, cash and due from banks and securities available-for-sale were in excess of 28.2% of total deposits.
The Company depends upon the dividends paid to it from the Banks as a principal source of funds for its debt service and dividend requirements. At December 31, 2000, the Banks had approximately $130 million available for dividends to the Company.
The information under the caption "Notes to Consolidated Financial Statements" on page 25, Note 7 - Stockholders' Equity is incorporated herein by reference.
The Company's non-interest income and expenses can be affected by increasing rates of inflation; however, unlike most industrial companies, the assets and liabilities of financial institutions such as the Banks are primarily monetary in nature. Interest rates, therefore, have a more significant impact on the Banks' performance than the effect of general levels of inflation on the price of goods and services.
Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about a company's anticipated future financial performance. This act provides a safe harbor for such disclosure which protects the companies from unwarranted litigation if actual results are different from management expectations. In addition to historical information, this report contains forward-looking statements and information which are based on management's beliefs, plans, expectations and assumptions and on information currently available to management. Forward-looking statements and information presented reflects management's views and estimates of future economic circumstances, industry conditions, Company performance and financial results. The words "may", "should", "expect", "anticipate", "intend", "plan", "continue", "believe", "seek", "estimate" and similar expressions used in this report that do not relate to historical facts and intended to identify forward-looking statements. These statements appear in a number of places in this report, including, but not limited to, statements found in Item 1 "Business" and in Item 7 "Management's Discussion and Analysis". All phases of the Company's operations are subject to a number of risks and uncertainties. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in the report, including, without limitation, the portions referenced above, and the uncertainties set forth from time to time in the Company's other public reports and filings and public statements, many of which are beyond the control of the Company, and any of which, or a combination of which, could materially affect the results of the Company's operations and whether forward-looking statements made by the Company ultimately prove accurate.
The Company's main offices are located at One Hancock Plaza, Gulfport, Mississippi. The building has fourteen stories, of which seven are utilized by the Company. The remaining seven stories are presently leased to outside parties.
Title to the following banking offices in Mississippi and Louisiana is owned in fee (number of locations shown in
parenthesis):
Albany, LA (1) Independence, LA (1)
Alexandria, LA (2) Long Beach, MS (2)
Baker, LA (1) Loranger, LA (1)
Baton Rouge, LA (13) Lyman, MS (1)
Bay St. Louis, MS (2) Mamou, LA (1)
Biloxi, MS (3) Mandeville, LA (1)
Bogolusa, LA (1) Moss Point, MS (1)
Boyce, LA (1) Oakdale, LA (1)
Bunkie, LA (1) Ocean Springs, MS (2)
Denham Springs, LA (3) Pascagoula, MS (4)
D'Iberville, MS (1) Pass Christian, MS (1)
Escatawpa, MS (1) Picayune, MS (2)
Eunice, LA (2) Pineville, LA (1)
Franklinton, LA (1) Poplarville, MS (1)
Gautier, MS (1) St. Francisville, LA (1)
Glenmora, LA (1) Ville Platte, LA (1)
Gulfport, MS (5) Vancleave, MS (1)
Hineston, LA (1) Walker, LA (1)
Hammond, LA (2) Waveland, MS (1)
The following banking offices in Mississippi and Louisiana are leased under agreements with unexpired terms of
from four to forty-nine years including renewal options (number of locations shown in parenthesis):
Baton Rouge, LA (4) Opelousas, LA (1)
Bay St. Louis, MS (3) Pascagoula, MS (1)
Biloxi, MS (1) Picayune, MS (2)
Diamondhead, MS (1) Ponchatoula, LA (1)
Gulfport, MS (4) Saucier, MS (1)
Hammond, LA (1) Slidell, LA (1)
Mandeville, LA (1) Springfield, LA (1)
Ville Platte, LA (1)
In addition to the above, Hancock Bank MS owns land and other properties acquired through foreclosures of
loan collateral. The major item is approximately 3,700 acres of timber land in Hancock County, Mississippi, which
Hancock Bank MS acquired by foreclosure in the 1930's
The Company is party to various legal proceedings arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, all such matters are adequately covered by insurance or, if not so covered, are not expected to have a material adverse effect on the financial statements of the Company.
There were no matters submitted to a vote of security holders during the quarter ended December 31, 2000.
The information under the caption "Market Information" on page 7 of the Company's 2000 Annual Report to Stockholders is incorporated herein by reference.
The information under the caption "Financial Highlights" on pages 5 and 6 of the Company's 2000 Annual Report to Stockholders is incorporated herein by reference.
The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on Pages 35 through 43 of the Company's 2000 Annual Report to Stockholders is incorporated herein by reference.
The information under the caption "Asset/Liability Management" on pages 38 and 39 of the Company's 2000 Annual Report to Stockholders is incorporated herein by reference.
The following consolidated financial statements of the Company and subsidiaries, and the independent auditors' report, appearing on Pages 5 through 43 of the Company's 2000 Annual Report to Stockholders is incorporated herein by reference:
Financial Highlights on Pages 5 and 6
Consolidated Balance Sheets on Page 16
Consolidated Statements of Earnings on Page 17
Consolidated Statements of Stockholders' Equity on Page 18
Consolidated Statements of Comprehensive Earnings on Page 18
Consolidated Statements of Cash Flows on Page 19
Notes to Consolidated Financial Statements on Pages 20 through 33
Independent Auditors' Report on Page 34
Management's Discussion and Analysis of Financial Condition
And Results of Operations on Pages 35 through 43
There has been no change in the two most recent fiscal years nor has there been any disagreements with the Company's independent accountants and auditors on any matter of accounting principles or practices or financial statement disclosure.
For information concerning directors who are not also executive officers of the registrant, see "Election of Directors" (Pages 3-7) in the Proxy Statement for the Annual Meeting of Shareholders held February 22, 2001, which was filed by the Registrant in definitive form with the Commission on January 22, 2001 and is incorporated herein by reference.
Information concerning executive officers of the registrant is listed below.
Leo W. Seal, Jr.Director of the Company since 1984. President, Hancock Bank, Gulfport, Mississippi since 1963; President and Chief Executive Officer, Hancock Holding Company, 1984; through 2000, Advisory Director, Hancock Bank of Louisiana since 1993. Mr. Seal was employed by Hancock Bank in 1947. He was elected to the Board of Directors of Hancock Bank in 1961 and named President in 1963. In 1977, he was named President and Chief Executive Officer of Hancock Bank.
George A. SchloegelDirector of Company since 1984. President and Chief Executive Officer, Hancock Holding Company since 2000. President, Hancock Bank, Gulfport, Mississipi, 1990, Vice Chairman of the Board of Hancock Holding Company since 1984. Director of Hancock Bank of Louisiana, since 1990. Director of Mississippi Power Company, Gulfport, Mississippi. 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.
President, Hancock Bank of Louisiana since 1997, Chairman of the Board, Hancock Bank of Louisiana 1996. Prior to that Mr. Spence served as President, Calcasieu Marine National Bank, Calcasieu, Louisiana from 1987 to 1996.
Charles A. Webb, Jr.Executive Vice President and Secretary, Hancock Holding Company since 1992; Director Hancock Bank since 1995; Executive Vice President, Hancock Bank since 1977; Director, Hancock Bank of Louisiana since 1990. Mr. Webb was employed by Hancock Bank in 1948. He served as Vice President and Secretary of the Company from 1984 until 1992.
James R. GinnExecutive Vice President and Mississippi Region Head, Hancock Bank since 1996. Mr. Ginn joined Hancock Bank in 1962, and has served in the capacities of Assistant Cashier, Branch Officer and Division Coordinator.
Robert E. EasterlyExecutive Vice President and Chief Operating Officer, Hancock Bank of Louisiana since 1995; President and Chief Executive Officer, First National Bank of Denham Springs from 1981-1996; Chairman of the Board, First National Bank of Denham Springs from 1993-1996; Director, Hancock Bank since 1995.
Carl J. ChaneySenior Vice President and Chief Financial Officer, Hancock Holding Company since 1998. Prior to Mr. Chaney joining Hancock, he was Director and Shareholder of the Law Firm, Watkins Ludlam Winter & Stennis, P.A., Jackson Mississippi from 1995 to 1998, where he specialized in Investment Banking and Merger and Acquisitions in the Banking Industry.
John M. HairstonSenior Vice President and Chief Operating Officer, since 1997; Senior Operations Officer, 1994-1996, Hancock Holding Company; Manager, Financial Services Consulting, a Division of Anderson Consulting, headquartered in Chicago, Illinois.
Richard T. HillSenior Vice President and Louisiana Retail Banking Executive, Hancock Bank of Louisiana, since June 1998; Executive Vice President and Retail Banking Executive, City National Bank (a subsidiary of First Commerce Corporation), November 1993 -June 1998.
Clifton J. SaikSenior Vice President and Director, Trust and Financial Services Group, Hancock Bank since July 1998. Prior to coming to Hancock Bank, Mr. Saik served in the following capacities at First Commerce Corporation, New Orleans, Louisiana: Executive Vice President and Director, Card Services; CEO, Marquis Insurance Agency, L.L.C.; and Member, Marquis Investments, L.L.C. Management Committee, June 1997 - June 1998; Executive Vice President and Director, Trust and Retail Brokerage Services Group, Senior Vice President and Director, Trust Group; October 1994 to June 1997; Senior Vice President and Senior Trust Officer, October 1992 to October 1994.
Vice President and Corporate Director Human Resources, since June 1997. Prior to Mrs. Atchley's employment with Hancock, she served as Director of Human Resources for Provident Life and Accident, Chattanooga, Tenneessee, 1994 - 1997.
Robert G. ChathamVice President and Auditor, Hancock Holding Company since 1995. Mr. Chatham was employed by Hancock Bank in 1979 as staff auditor, and served in various auditing capacities for the Company before being named as Bank Auditor in 1988.
For information concerning this item see "Executive Compensation" (pges 11-18) in the Proxy Statement for the Annual Meeting of Shareholders held February 22, 2001, which was filed by the Registrant in definitive form with the Commission on January 22, 2001 and is incorporated herein by reference.
For information concerning this item see "Security Ownership of Certain Beneficial Owners" (pge 9) and "Security Ownership of Management" (page 10) in the Proxy Statement for the Annual Meeting of Shareholders held February 22, 2001, which was filed by the Registrant in definitive form with the Commission on January 22, 2001 and is incorporated herein by reference.
For information concerning this item see "Certain Transactions and Relationships" (Page-18) in the Proxy Statement for the Annual Meeting of Shareholders held February 22, 2001, which was filed by the Registrant in definitive form with the Commission on January 22, 2001 and is incorporated herein by reference.
The following have been incorporated herein from the Company's 1999 Annual Report to Stockholders and are incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 2000 and 1999 and
Consolidated Statements of Earnings for the three years ended December 31, 2000
Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2000
Consolidated Statements of Comprehensive Earnings for the three years ended December 31, 2000
Consolidated Statements of Cash Flows for the three years ended December 31, 2000
Notes to Consolidated Financial Statements for the three years ended December 31, 2000
Financial Highlights at and as of each of the five years ended December 31, 2000
All other financial statements and schedules are omitted as the required information is inapplicable or the required information is presented in the consolidated financial statements or related notes.
(a) 3. Exhibits:
- ---------------
(2.1) Agreement and Plan of Merger dated May 30, 1985 among Hancock Holding Company, Hancock Bank
and Pascagoula-Moss Point Bank (filed as Exhibit 2 to the Registrant's Form 8-K dated June 6, 1985 and
incorporated herein by reference).
(2.2) Amendment dated July 9, 1985 to Agreement and Plan of Merger dated
May 30, 1985 among Hancock Holding Company, Hancock Bank and Pascagoula-Moss Point Bank (filed
as Exhibit 19 to Registrant's Form 10-Q for the quarter ended June 30, 1985 and incorporated herein by
reference).
(2.3) Stock Purchase Agreement dated February 12, 1990 among Hancock Holding Company, Metropolitan
Corporation and Metropolitan National Bank (filed as Exhibit 2.3 to Registrant's Form 10-K for the year
ended December 31, 1989 and incorporated herein by reference).
(2.4) Modified Purchase and Assumption Agreement dated August 2, 1990, among Hancock Bank of Louisiana
and the Federal Deposit Insurance Corporation, receiver of American Bank and Trust Company of Baton
Rouge, Louisiana (filed as Exhibit 2.1 to the Registrant's Form 10-Q for the quarter ended June 30, 1990
and incorporated herein by reference).
(2.5) Agreement and Plan of Reorganization dated November 30, 1993 among Hancock Holding Company,
Hancock Bank of Louisiana and First State Bank and Trust Company of East Baton Rouge Parish, Baker,
Louisiana (filed as Exhibit 2.5 to the Registrant's Form 10-K dated December 31, 1993).
(2.6) Agreement and Plan of Reorganization dated July 6, 1994 among Hancock Holding Company and
Washington Bancorp, Franklinton, Louisiana (filed as Exhibit 2 to the Registrant's Form S-4, Registration
Number 33-56505, dated November 16, 1994).
(2.7) Agreement and Plan of Reorganization dated August 20, 1994 among Hancock Holding Company and
First Denham Bancshares, Inc., Denham Springs, Louisiana (filed as Exhibit 2 to the Registrant's Form S-
4, Registration Number 33-56285, dated November 2, 1994).
(2.8) Agreement and Plan of Reorganization dated June 19, 1996 among Hancock Holding Company,
Hancock Bank of Louisiana, Community Bancshares, Inc. and Community State Bank, Hammond
Louisiana (filed as Exhibit 2 to the Registrant's Form S-4, Registration Number 333-11873, dated
September 12, 1996).
(2.9) Agreement and Plan of Reorganization dated July 31, 1997 among Hancock Holding Company, Hancock
Bank of Louisiana and Southeast National Bank, Hammond, Louisiana (filed as Exhibit 2 to the
Registrant's Form S-4, Registration Number 333-14223, dated October 16, 1996).
(2.10) Agreement and Plan of Reorganization dated February 28, 1997 among Hancock Holding Company,
Hancock Bank of Louisiana and Commerce Corporation, St. Francisville, Louisiana (filed as Exhibit 2 to
the Registrant's Form S-4, Registration Number 323-26577, dated May 6, 1997).
(2.11) Amended and Restated Agreement and Plan of Reorganization dated October 15, 1998 among Hancock
Holding Company, Hancock Bank of Louisiana and American Security Bancsharesof Ville Platte, Inc.,
Ville Platte, Louisiana (filed as Exhibit 2 to the Registrant's Form S-4, Registration Number 333-67181,
dated November 12, 1998).
(3.1) Amended and Restated Articles of Incorporation dated November 8, 1990 (filed as Exhibit 3.1 to the
Registrant's Form 10-K for the year ended December 31, 1990 and incorporated herein by reference).
(3.2) Amended and Restated Bylaws dated November 8, 1990 (filed as Exhibit 3.2 to the Registrant's Form 10-
K for the year ended December 31, 1990 and incorporated herein by reference).
(3.3) Articles of Amendment to the Articles of Incorporation of Hancock Holding Company, dated October 16,
1991 (filed as Exhibit 4.1 to the Registrant's Form 10-Q for the quarter ended September 30, 1991).
(3.4) Articles of Correction, filed with Mississippi Secretary of State on November 15, 1991 (filed as Exhibit 4.2
to the Registrant's Form
10-Q for the quarter ended September 30, 1991).
(3.5) Articles of Amendment to the Articles of Incorporation of Hancock Holding Company, adopted February
13, 1992 (filed as Exhibit 3.5 to the Registrant's Form 10-K for the year ended December 31, 1992 and
incorporated herein by reference).
(3.6) Articles of Correction, filed with Mississippi Secretary of State on March 2, 1992 (filed as Exhibit 3.6 to
the Registrant's Form 10-K for the year ended December 31, 1992 and incorporated herein by reference).
(3.7) Articles of Amendment to the Articles of Incorporation adopted February 20, 1997 (filed as Exhibit 3.7 to
the Registrant's Form 10-K for the year ended December 31, 1996 and incorporated herein by reference).
(4.1) Specimen stock certificate (reflecting change in par value from $10.00 to $3.33, effective March 6, 1989)
(filed as Exhibit 4.1 to the Registrant's Form 10-Q for the quarter ended March 31, 1989 and incorporated
herein by reference).
(4.2) By executing this Form 10-K, the Registrant hereby agrees to deliver to the Commission upon request
copies of instruments defining the rights of holders of long-term debt of the Registrant or its consolidated
subsidiaries or its unconsolidated subsidiaries for which financial statements are required to be filed,
where the total amount of such securities authorized thereunder does not exceed 10 percent of the total
assets of the Registrant and its subsidiaries on a consolidated basis.
(10.1) 1996 Long Term Incentive Plan (filed as Exhibit 10.1 to the Registrant's Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference).
(10.2) Description of Hancock Bank Executive Supplemental Reimbursement Plan, as amended (filed as Exhibit
10.2 to the Registrant's Form 10-K for the year ended December 31, 1996, and incorporated herein by
reference).
(10.3) Description of Hancock Bank Automobile Plan (filed as Exhibit 10.3 to the Registrant's Form 10-K for the
year ended December 31, 1996, and incorporated herein by reference).
(10.4) Description of Deferred Compensation Arrangement for Directors (filed as Exhibit 10.4 to the Registrant's
Form 10-K for the year ended December 31, 1996, and incorporated herein by reference).
(10.5) Site Lease Agreement between Hancock Bank and City of Gulfport, Mississippi dated as of March 1,
1989 (filed as Exhibit 10.4 to the Registrant's Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.6) Project Lease Agreement between Hancock Bank and City of Gulfport, Mississippi dated as of March 1,
1989 (filed as Exhibit 10.5 to the Registrant's Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.7) Deed of Trust dated as of March 1, 1989 from Hancock Bank to Deposit Guaranty National Bank as
trustee (filed as Exhibit 10.6 to the Registrant's Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.8) Trust Indenture between City of Gulfport, Mississippi and Deposit Guaranty National Bank dated as of
March 1, 1989 (filed as Exhibit 10.7 to the Registrant's Form 10-K for the year ended December 31, 1989
and incorporated herein by reference).
(10.9) Guaranty Agreement dated as of March 1, 1989 from Hancock Bank to Deposit Guaranty National Bank
as trustee (filed as Exhibit 10.8 to the Registrant's Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
(10.10) Bond Purchase Agreement dated as of February 23, 1989 among Hancock Bank, J. C. Bradford & Co.
and City of Gulfport, Mississippi (filed as Exhibit 10.9 to the Registrant's Form 10-K for the year ended
December 31, 1989 and incorporated herein by reference).
(13) Annual Report to Stockholders for year ending December 31, 2000 furnished for the information of the
Commission only and not deemed "filed" except for those portions which are specifically incorporated
herein by reference).
(21) Proxy Statement for the Registrant's Annual Meeting of Shareholders on February 22, 2001 (deemed "filed" for the
purposes of this Form 10-K only for those portions which are specifically incorporated herein by
reference).
(22) Subsidiaries of the Registrant. (Filed as Exhibit 22 to the Registrant's Form 10-K for the year ended
December 31, 2000 and incorporated herein by reference.)
(23) Independent Auditors' Consent
(b) Reports on Form 8-K:
- ------------------------
No reports on Form 8-K were filed during the last quarter of the period covered by this report.
(c):
- ---
Not applicable.
(d):
- ---
Not applicable.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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
DATE March 27, 2001 /s/ George A. Schloegel
---------------------- --------------------------------------
by George A. Schloegel, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Leo W. Seal, Jr. Director March 27, 2001
- ----------------------------------
Leo W. Seal, Jr.
Director, March 27, 2001
- ----------------------------
Joseph F. Boardman, Jr. Chairman of the Board
/s/ George A. Schloegel President, Chief Executive March 27, 2001
- ------------------------------
George A. Schloegel Officer, Director,
Vice Chairman of the Board
Director March 27, 2001
- ------------------------------
Thomas W. Milner, Jr.
Director March 27, 2001
- ----------------------------
Dr. Homer C. Moody, Jr.
Director March 27, 2001
- ----------------------------
James B. Estabrook, Jr.
Director March 27, 2001
- ------------------------------
Charles H. Johnson
/s/ L. A. Koenenn, Jr. Director March 27, 2001
- -------------------------------
L. A. Koenenn, Jr.
Director March 27, 2001
- -----------------------------------
Victor Mavar
/s/ Christine L. Smilek Director March 27, 2001
- --------------------------------
Christine L. Smilek
/s/ Frank E. Bertucci Director March 27, 2001
- ---------------------------------
Frank E. Bertucci
(signatures continued) /s/ James H. Horne Director March 27, 2001 - --------------------------------- James H. Horne /s/ Carl J. Chaney Sr. Vice President and March 27, 2001 - ----------------------------------- Carl J. Chaney Chief Financial Officer