UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
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Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934
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For Quarter Ending March 31, 2004
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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
incorporation or organization) Number)
ONE HANCOCK PLAZA, P.O. BOX 4019, GULFPORT, MISSISSIPPI 39502
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(Address of principal executive offices) (Zip Code)
(228) 868-4872
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13
or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable
date.
32,518,837 common shares were outstanding as of April 30, 2004 for financial statement purposes.
HANCOCK HOLDING COMPANY
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INDEX
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PART I. FINANCIAL INFORMATION PAGE NUMBER
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ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)--
March 31, 2004 and December 31, 2003 3
Condensed Consolidated Statements of Earnings (Unaudited) --
Three months Ended March 31, 2004 and 2003 4
Condensed Consolidated Statements of Common Stockholders' Equity and
Comprehensive Income (Unaudited) - Three Months Ended
March 31, 2004 and Year Ended December 31, 2003 5
Condensed Consolidated Statements of Cash Flows (Unaudited) --
Three months Ended March 31, 2004 and 2003 6
Notes to Unaudited Condensed Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 21
ITEM 4. Controls and Procedures 22
PART II. OTHER INFORMATION
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ITEM 2. Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity
Securities 23
ITEM 4. Submission of Matters to a Vote of Security Holders 23
ITEM 6. Exhibits and Reports on Form 8-K 24
SIGNATURES 25
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PART I FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(amounts in thousands)
(Unaudited)
March 31, December 31,
2004 2003*
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ASSETS:
Cash and due from banks (non-interest bearing) $ 163,849 $ 178,082
Interest-bearing time deposits with other banks 6,250 5,554
Securities available for sale, at fair value
(amortized cost of $1,193,274 and $1,115,404) 1,203,752 1,118,066
Securities held to maturity, at amortized cost
(fair value of $152,036 and $169,451) 145,752 159,983
Fed funds sold 71,934 5,734
Loans 2,533,135 2,459,143
Less: Allowance for loan losses (37,500) (36,750)
Unearned income (10,257) (10,499)
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Loans, net 2,485,378 2,411,894
Property and equipment, net of accumulated
depreciation of $73,342 and $72,034 72,313 73,332
Other real estate, net 4,994 5,439
Accrued interest receivable 21,324 23,125
Goodwill, net 54,510 49,100
Other intangible assets, net 11,196 8,131
Life insurance contracts 76,965 51,165
Other assets 47,449 60,753
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TOTAL ASSETS $ 4,365,666 $ 4,150,358
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing demand $ 650,867 $ 636,745
Interest-bearing savings, NOW, money market
and time 2,979,806 2,811,102
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Total deposits 3,630,673 3,447,847
Fed funds purchased 975 -
Securities sold under agreements to repurchase 163,159 150,096
Short-term notes - 9,400
Long-term notes 50,356 50,428
Other liabilities 72,934 57,706
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TOTAL LIABILITIES 3,918,097 3,715,477
CONVERTIBLE PREFERRED STOCK:
Preferred Stock - $20 par value, 50,000,000 shares authorized
and 1,658,187 issued at December 31, 2003; converted to - 37,067
common stock February 2004
COMMON STOCKHOLDERS' EQUITY:
Common Stock-$3.33 par value per share; 75,000,000
shares authorized, 32,251,840 and 33,216,240 issued,
respectively 110,729 55,305
Capital surplus 139,166 145,125
Retained earnings 201,898 247,001
Accumulated other comprehensive loss, net (1,232) (6,304)
Unearned compensation (2,150) (957)
Treasury stock (28,078 and 2,191,102 shares, respectively) (842) (42,356)
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TOTAL COMMON STOCKHOLDERS' EQUITY 447,569 397,814
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TOTAL LIABILITIES, PREFERRED STOCK
AND COMMON STOCKHOLDERS' EQUITY $ 4,365,666 $ 4,150,358
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* The balance sheet at December 31, 2003 has been derived from the audited balance sheet at that date.
See notes to unaudited condensed consolidated financial statements.
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
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(UNAUDITED)
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(amounts in thousands except per share)
Three Months Ended March 31,
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2004 2003
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INTEREST INCOME:
Loans, including fees $ 40,348 $ 38,368
U. S. Treasury securities 48 412
Obligations of U. S. government agencies 3,783 5,706
Obligations of states and political subdivisions 2,184 2,493
Mortgage-backed securities 3,900 1,474
CMOs 3,038 4,419
Federal funds sold 153 330
Other investments 388 414
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Total interest income 53,842 53,616
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INTEREST EXPENSE:
Deposits 12,440 14,618
Federal funds purchased and securities sold
under agreements to repurchase 342 371
Long-term notes and other interest 688 592
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Total interest expense 13,470 15,581
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NET INTEREST INCOME 40,372 38,035
Provision for loan losses 3,536 3,020
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 36,836 35,015
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NON-INTEREST INCOME
Service charges on deposit accounts 10,230 10,155
Other service charges, commissions and fees 7,151 5,154
Securities transactions gains 149 455
Gain on sale of branches 2,258 -
Other income 2,850 2,030
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Total non-interest income 22,638 17,794
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NON-INTEREST EXPENSE
Salaries and employee benefits 22,896 20,171
Net occupancy expense of premises 2,413 2,117
Equipment rentals, depreciation and maintenance 2,326 2,086
Amortization of intangibles 325 178
Other expense 11,302 8,439
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Total non-interest expense 39,262 32,991
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EARNINGS BEFORE INCOME TAXES 20,212 19,818
Income taxes 6,068 6,156
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NET EARNINGS 14,144 13,662
PREFERRED DIVIDEND REQUIREMENT - 663
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NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS $ 14,144 $ 12,999
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BASIC EARNINGS PER COMMON SHARE $ 0.44 $ 0.42
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DILUTED EARNINGS PER COMMON SHARE $ 0.43 $ 0.41
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DIVIDENDS PAID PER COMMON SHARE $ 0.125 $ 0.105
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WEIGHTED AVG. COMMON SHARES OUTSTANDING-BASIC 32,048 30,884
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WEIGHTED AVG. COMMON SHARES OUTSTANDING-DILUTED 32,632 33,512
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See notes to unaudited condensed consolidated financial statements
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
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AND COMPREHENSIVE INCOME
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UNAUDITED
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(amounts in thousands, except per share data)
Accumulated
Other
Comprehensive
Common Capital Retained Income Unearned Treasury
Stock Surplus Earnings (Loss), Net Compensation Stock
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Balance, January 1, 2003 $ 55,305 $ 145,950 $ 208,253 $ 10,049 $ (552) $ (31,492)
Net earnings 54,955
Cash dividends - $.44 per common (13,554)
Cash dividends - $1.60 per preferred (2,653)
Minimum pension liability adjustment, net (1,574)
Change in unrealized gain on
securities available for sale, net (14,779)
Transactions relating to restricted
stock grants, net (405)
Treasury stock transactions, net (825) (10,864)
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Balance, December 31, 2003 55,305 145,125 247,001 (6,304) (957) (42,356)
Net earnings 14,144
Cash dividends - $0.125 per common (3,942)
100% stock dividend 55,305 (55,305)
Preferred stock conversion (5,521) 42,624
Change in unrealized loss on
securities available for sale, net 5,072
Transactions relating to restricted
stock grants, net (1,193)
New shares issued 119
Treasury stock transactions, net (438) (1,110)
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Balance, March 31, 2004 $ 110,729 $ 139,166 $ 201,898 $ (1,232) $ (2,150) $ (842)
========== =========== ========== ============= ============ =========
See notes to unaudited condensed consolidated financial statements
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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UNAUDITED
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(amounts in thousands)
Three Months Ended March 31,
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2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 14,144 $ 13,662
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 1,655 1,682
Amortization of software 670 674
Provision for loan losses 3,536 3,020
Provision for losses on other real estate owned 95 8
Gain on sales of securities available for sale (149) (455)
Gain on sale of branches (2,300) -
Amortization of intangible assets 325 178
Decrease (increase) in interest receivable 2,000 (450)
Increase in accrued expenses 5,998 6,316
Increase (decrease) in other liabilities 9,463 (1,666)
Decrease in interest payable (708) (889)
Increase in unearned premiums 13,858 -
Decrease in miscellaneus receivable 14,207 -
Other, net (1,523) (7,673)
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Net cash provided by operating activities 61,271 14,407
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) in interest-bearing time deposits (696) (2,260)
Proceeds from maturities of securities held
to maturity 14,230 27,765
Proceeds from sales and maturities of securities
available for sale 210,936 385,456
Purchase of securities available for sale (287,136) (593,571)
Net (increase) decrease in federal funds sold (52,702) 9,146
Net increase in loans (57,509) (15,558)
Purchase of property, equipment and software, net (847) (2,775)
Proceeds from sales of other real estate 1,052 1,395
Premiums paid on bank owned life insurance contracts (25,000) -
Net cash paid in connection with sale transaction (22,351) -
Net cash (paid) received in connection purchase transaction (15,364) 38,933
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Net cash used in investing activities (235,387) (151,469)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 160,516 118,221
Dividends paid (3,942) (3,961)
Net increase in federal funds purchased and
securities sold under agreements to repurchase 14,038 13,790
Treasury stock transactions, net (1,110) (52)
Conversion of preferred stock to cash (147) -
Repayment of short-term note (9,400) -
Reductions of long-term notes (72) (160)
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Net cash provided by financing activities 159,883 127,838
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NET DECREASE IN CASH AND DUE FROM BANKS (14,233) (9,224)
CASH AND DUE FROM BANKS, BEGINNING 178,082 187,786
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CASH AND DUE FROM BANKS, ENDING $ 163,849 $ 178,562
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SUPPLEMENTAL INFORMATION:
Income taxes paid $ 2,687 $ 112
Interest paid 14,063 16,470
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Transfers from loans to other real estate $ 1,403 $ 1,828
See notes to unaudited condensed consolidated financial statements.
The accompanying unaudited condensed consolidated financial statements include the accounts of Hancock Holding Company, its wholly-owned banks, Hancock Bank, Hancock Bank of Louisiana and Hancock Bank of Florida and other subsidiaries. All material intercompany profits, transactions and balances have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the consolidated financial statements and notes thereto of Hancock Holding Company’s 2003 Annual Report to Shareholders.
COMPREHENSIVE EARNINGSFollowing is a summary of the Company’s comprehensive earnings for the three months ended March 31, 2004 and 2003.
(Amounts in thousands)
Three Months Ended March 31,
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2004 2003
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Net earnings $ 14,144 $ 13,662
Other comprehensive (loss) income
(net of income tax):
Unrealized holding gains (losses) on
securities available for sale, net of tax
of $2,215 and ($1,480), respectively 5,169 (3,295)
Reclassification adjustments for gains
included in earnings, net of tax
of ($59) and ($159), respectively (97) (296)
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Total Comprehensive Earnings $ 19,216 $ 10,071
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ACQUISITIONS
During March 2004, the Company acquired the majority of loans, securities and deposits of the former Guaranty National Bank of Tallahassee, Florida. The Office of the Comptroller of Currency closed all locations of Guaranty National on March 12, 2004. With the transaction, the Company acquired five locations with approximately $40.0 million in performing loans and approximately $69.1 million in deposits from the Federal Deposit Insurance Corporation (FDIC) for a premium of $13.6 million, or 20 % of acquired deposits. In accounting for the transaction, management considered it to be an "acquisition of business" and accordingly, accounted for it as a purchase under Statement of Financial Accounting Standards No. 141. Final allocation of asset fair values is pending receipt of an appraisal.
STOCK BASED COMPENSATIONThe Company applies the Accounting Practices Board (APB) Opinion No. 25 and related interpretations in accounting for its stock options. Accordingly, no compensation cost has been recognized. The Company has adopted the disclosure-only option under Statement of Financial Accounting Standards (SFAS) No. 123. Had compensation costs for the Company’s stock options been determined based on the fair value at the grant date, consistent with the method under SFAS No. 123, the Company’s net earnings and earnings per share would have been as indicated below:
(Amounts in thousands)
Three Months Ended March 31,
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2004 2003
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Net earnings available to common
stockholders:
As reported $ 14,144 $ 12,999
Deduct total stock based compensation
determined under the fair value method,
net of tax (145) (300)
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Pro forma net earnings available to
common stockholders $ 13,999 $ 12,699
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Basic earnings per share:
As reported $ 0.44 $ 0.42
Pro forma $ 0.44 $ 0.41
Diluted earnings per share:
As reported $ 0.43 $ 0.41
Pro forma $ 0.43 $ 0.40
STOCK SPLIT
On February 26, 2004 the Company’s Board of Directors declared a two-for-one stock split in the form of a 100% common stock dividend. The additional shares were payable March 18, 2004 to shareholders of record at the close of business on March 8, 2004.
All information concerning earnings per share, dividends per share, and number of shares outstanding has been adjusted to give effect to this split.
SELECTED FINANCIAL DATAThe following tables present selected comparative financial data. All share and per share data has been restated to reflect the 100% stock dividend made March 18, 2004.
(amounts in thousands, except per share data)
Three Months Ended March 31,
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2004 2003
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Per Common Share Data
Earnings per share:
Basic $0.44 $0.42
Diluted $0.43 $0.41
Cash dividends per share $0.125 $0.105
Book value per share (period end) $13.75 $12.72
Tangible book value per share (period end) $11.73 $10.80
Weighted average number of shares:
Basic 32,048 30,884
Diluted 32,632 33,512
Period end number of shares 32,558 30,870
Market data:
High closing price $32.00 $23.47
Low closing price $27.08 $21.40
Period end closing price $30.96 $21.53
Trading volume 2,745 2,843
(amounts in thousands, except per share data)
Three Months Ended March 31,
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2004 2003
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Performance Ratios
Return on average assets 1.33% 1.37%
Return on average common equity 13.01% 14.08%
Earning asset yield (Tax Equivalent ("TE")) 5.82% 6.05%
Total cost of funds 1.41% 1.71%
Net interest margin (TE) 4.41% 4.34%
Non-interest expense as a percent of total revenue (TE)
before amortization of purchased intangibles, gain on sale of
branches and securities transactions 62.34% 57.33%
Average common equity as a percent of average total assets 10.24% 9.73%
Leverage ratio (period end) 8.97% 9.05%
FTE Headcount 1,717 1,746
Asset Quality Information
Non-accrual loans $9,670 $11,949
Foreclosed assets $5,212 $5,230
Total non-performing assets $14,882 $17,179
Non-performing assets as a percent of loans and foreclosed assets 0.59% 0.81%
Accruing loans 90 days past due $5,011 $6,039
Accruing loans 90 days past due as a percent of loans 0.20% 0.28%
Non-performing assets + accruing loans 90 days past due
to loans and foreclosed assets 0.79% 1.09%
Net charge-offs $2,786 $3,020
Net charge-offs as a percent of average loans 0.45% 0.59%
Allowance for loan losses $37,500 $34,740
Allowance for loan losses as a percent of period end loans 1.49% 1.64%
Allowance for loan losses to NPAs + accruing loans 90 days past due 188.51% 149.63%
Provision for loan losses $3,536 $3,020
Provision for loan losses to net charge-offs 126.92% 100.00%
Average Balance Sheet
Total loans $2,477,971 $2,093,209
Securities 1,287,487 1,466,360
Short-term investments 75,311 140,805
Earning assets 3,840,769 3,700,374
Allowance for loan losses (36,927) (34,740)
Other assets 467,781 379,632
Total assets $4,271,623 $4,045,265
Non-interest bearing deposits $622,271 $582,992
Interest bearing transaction deposits 1,808,254 1,651,450
Time deposits 1,101,385 1,122,536
Total interest bearing deposits 2,909,639 2,773,986
Total deposits 3,531,911 3,356,978
Other borrowed funds 229,352 223,895
Other liabilities 64,080 33,726
Preferred stock 9,009 37,069
Common shareholders' equity 437,272 393,597
Total liabilities, preferred stock & common equity $4,271,623 $4,045,265
(amounts in thousands, except per share data)
Three Months Ended March 31,
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2004 2003
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Period end Balance Sheet
Commercial/real estate loans $1,319,388 $1,073,526
Mortgage loans 388,447 314,048
Direct consumer loans 483,019 495,388
Indirect consumer loans 275,810 190,719
Finance Company loans 56,216 47,657
Total loans 2,522,878 2,121,338
Securities 1,349,504 1,661,626
Short-term investments 78,185 40,371
Earning assets 3,950,567 3,823,335
Allowance for loan losses (37,500) (34,740)
Other assets 452,600 364,592
Total assets $4,365,666 $4,153,186
Non-interest bearing deposits $650,867 $611,901
Interest bearing transaction deposits 1,818,983 1,700,917
Time deposits 1,160,823 1,146,078
Total interest bearing deposits 2,979,806 2,846,995
Total deposits 3,630,673 3,458,895
Other borrowed funds 214,859 226,931
Other liabilities 72,566 37,526
Preferred stock - 37,069
Common shareholders' equity 447,569 392,765
Total liabilities, preferred stock & common equity $4,365,666 $4,153,186
Net Charge-Off Information
Net charge-offs:
Commercial/real estate loans $1,159 $741
Mortgage loans (1) 35
Direct consumer loans 637 1,251
Indirect consumer loans 442 588
Finance company loans 549 405
Total net charge-offs $2,786 $3,020
Net charge-offs to average loans:
Commercial/real estate loans 0.36% 0.28%
Mortgage loans 0.00% 0.05%
Direct consumer loans 0.53% 1.04%
Indirect consumer loans 0.66% 1.19%
Finance Company loans 3.98% 3.46%
Total net charge-offs to average loans 0.45% 0.59%
(amounts in thousands, except per share amounts)
Three Months Ended March 31,
--------------------------------
2004 2003
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Average Balance Sheet Composition
Percentage of earning assets/funding sources:
Loans 64.52% 56.57%
Securities 33.52% 39.63%
Short-term investments 1.96% 3.81%
Earning assets 100.00% 100.00%
Non-interest bearing deposits 16.20% 15.75%
Interest bearing transaction deposits 47.08% 44.63%
Time deposits 28.68% 30.34%
Total deposits 91.96% 90.72%
Other borrowed funds 5.97% 6.05%
Other net interest-free funding sources 2.07% 3.23%
Total funding sources 100.00% 100.00%
Loan mix:
Commercial/real estate loans 52.44% 50.72%
Mortgage loans 14.82% 14.07%
Direct consumer loans 19.67% 23.83%
Indirect consumer loans 10.83% 9.11%
Finance Company loans 2.24% 2.27%
Total loans 100.00% 100.00%
Average dollars (in thousands)
Loans $2,477,971 $2,093,209
Securities 1,287,487 1,466,360
Short-term investments 75,311 140,805
Earning assets $3,840,769 $3,700,374
Non-interest bearing deposits $622,271 $582,992
Interest bearing transaction deposits 1,808,254 1,651,450
Time deposits 1,101,385 1,122,536
Total deposits 3,531,911 3,356,978
Other borrowed funds 229,352 223,895
Other net interest-free funding sources 79,506 119,501
Total funding sources $3,840,769 $3,700,374
Loans:
Commercial/real estate loans $1,299,399 $1,061,644
Mortgage loans 367,320 294,611
Direct consumer loans 487,452 498,822
Indirect consumer loans 268,311 190,648
Finance Company loans 55,488 47,484
Total average loans $2,477,971 $2,093,209
SALE OF BRANCHES
On March 8, 2004, the Company completed the sale of four Louisiana branches to Sabine State Bank, resulting in a $2.3 million pre-tax gain. The branches that were sold were acquired in the 1999 American Security Bank purchase. The Company made a cash payment of approximately $20 million whereby approximately $19.7 million in loans were transferred and $42.9 million in deposits liabilities assumed by Sabine State Bank in this transaction.
On February 4, 2004 the Company completed the redemption/conversion of substantially all $37.1 million of the 8% Cumulative Convertible Preferred Stock issued in partial payment for the acquisition of Lamar Capital Corporation in July, 2001. The conversion factor was .6666 shares of Hancock Holding Company common stock for each share of the preferred stock. A total of 7,304 shares of the preferred stock was redeemed for cash at the contract price of $20.00 per share plus pro rated dividends of $0.1511 per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion provides management’s analysis of certain factors that have affected the Company’s financial condition and operating results during the periods included in the accompanying unaudited condensed consolidated financial statements.
CHANGES IN FINANCIAL CONDITIONThe Company manages liquidity through traditional funding sources of core deposits, federal funds, and maturities of loans and securities held to maturity and sales and maturities of securities available for sale.
The following liquidity ratios compare certain assets and liabilities to total deposits or total assets:
March 31, December 31,
2004 2003
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Total securities to total deposits 37.17% 37.07%
Total loans (net of unearned
income) to total deposits 69.49% 71.02%
Interest-earning assets
to total assets 90.49% 90.06%
Interest-bearing deposits
to total deposits 82.07% 81.53%
Loans and Allowance for Loan Losses
The following table sets forth, for the periods indicated, allowance for loan losses, amounts charged-off and recoveries of loans previously charged-off:
Three Months Ended March 31,
----------------------------------------
2004 2003
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Balance of allowance for loan losses
at beginning of period $ 36,750 $ 34,740
Provision for loan losses 3,536 3,020
Loans charged-off:
Commercial, Real Estate & Mortgage 2,407 1,103
Direct & Indirect Consumer 1,611 2,215
Finance Company 664 474
Demand Deposit Accounts 1,013 978
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Total charge-offs 5,695 4,770
---------------- ----------------
Recoveries of loans previously
charged-off:
Commercial, Real Estate & Mortgage 1,249 327
Direct & Indirect Consumer 503 601
Finance Company 115 69
Demand Deposit Accounts 1,042 753
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Total recoveries 2,909 1,750
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Net charge-offs 2,786 3,020
---------------- ----------------
Balance of allowance for loan losses
at end of period $ 37,500 $ 34,740
================ ================
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:
Three Months Ended March 31,
----------------------------------
2004 2003
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Ratios :
Net charge-offs to average net loans 0.45% 0.59%
Net charge-offs to period-end net loans 0.44% 0.59%
Allowance for loan losses to average net loans 1.51% 1.66%
Allowance for loan losses to period-end net loans 1.49% 1.64%
Net charge-offs to loan loss allowance 7.43% 8.69%
Loan loss provision to net charge-offs 126.92% 100.00%
Capital Resources
The Company continues to maintain an adequate capital position. The ratios as of March 31, 2004 and
December 31, 2003 are as follows:
March 31, December 31,
2004 2003
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Average equity to average assets (1) 10.24% 9.63%
Total capital to risk-weighted assets (2) 14.30% 14.88%
Tier 1 capital to risk-weighted assets (3) 13.05% 13.65%
Leverage capital to average total assets (4) 8.97% 9.29%
(1) Equity capital consists of common stockholder's equity (excluding unrealized gains/(losses)).
(2) Total capital consists of equity capital less intangible assets plus a limited amount of loan loss
allowance. Risk-weighted assets represent the assigned risk portion of all on and off-balance-sheet
assets. Based on Federal Reserve Board guidelines, assets are assigned a risk factor percentage from 0% to
100%. A minimum ratio of total capital to risk-weighted assets of 8% is required.
(3) Tier 1 capital consists of equity capital less intangible assets. A minimum ratio of tier 1 capital to
risk-weighted assets of 4% is required.
(4) Leverage capital consists of equity capital less goodwill and core deposit intangibles. Regulations
require a minimum 3% leverage capital ratio for an entity to be considered adequately capitalized
RESULTS OF OPERATIONSNet earnings increased approximately $500,000 or 4% for the first quarter of 2004 compared to the first quarter of 2003. Following is selected information for quarterly and year-to-date comparison:
Three Months Ended March 31,
-------------------------------
2004 2003
------------- --------------
Results of Operations:
Return on average assets 1.33 % 1.37 %
Return on average equity 13.01 % 14.08 %
Net Interest Income:
Yield on average interest-earning assets (TE) 5.82 % 6.05 %
Cost of average interest-bearing funds 1.73 % 2.11 %
------------- --------------
Net interest spread (TE) 4.09 % 3.94 %
============= ==============
Net interest margin (TE)
(net interest income on a tax-equivalent basis
divided by average interest-earning assets) 4.41 % 4.34 %
============= ==============
Net Interest Income
Net interest income (te) for the first quarter of 2004 increased $2.3 million, or 6%, from the first quarter of 2003, but was $710,000, or 2%, lower than the fourth quarter of 2003. The Company’s net interest margin (te) was 4.41% in the first quarter of 2004, 7 basis points wider than the same quarter a year ago, but 13 basis points narrower than the previous quarter.
Compared to the same quarter a year ago, the primary driver of the $2.3 million increase in net interest income (te) was a $140 million, or 4%, increase in average earning assets mainly from average loan growth of $385 million, or 18%. Average deposit growth of $175 million, or 5%, along with a net decrease in the securities portfolio of $179 million, or 12%, funded the Company’s loan growth and related increase in earning assets. This overall improvement in earning asset mix enabled the Company to maintain its loan to deposit ratio at 70% in both the first quarter of 2004 and the prior quarter. In addition, loans now comprise 65% of the Company’s earning asset base, as compared to 57% for the same quarter a year ago. The net interest margin (te) widened 7 basis points as the reduction in total funding costs (30 basis points) more than offset the decline in the yield on loans, securities and short-term investments (23 basis points).
The lower level of net interest income (te) (down $710,000, or 2%) and net interest margin (13 basis points) as compared to the previous quarter was primarily due to a 22 basis point decline in total loan yield, partially offset by a larger earning asset base (average earning assets were up $71 million from the prior quarter). Average loans grew $84 million, or 4%, from the previous quarter and were funded largely through average deposit growth. Average deposits were up $117 million, or 3%, from the prior quarter primarily due to a $119 million increase in interest-bearing transaction deposits. The loan to deposit ratio for the first quarter was unchanged at 70% in the current quarter as compared to the previous quarter. The yield on the Company’s $1.3 billion securities portfolio improved 6 basis points to 4.48%. The portfolio’s effective duration remains a relatively short 2.40 at March 31, 2004, a decrease from the 2.61 reported at December 31, 2003. Finally, the Company was able to reduce its overall funding costs by one basis point from the prior quarter, mostly through a 6 basis point reduction in the cost of interest-bearing deposits.
The following tables detail the components of the Company’s net interest spread and net interest margin.
Three Months Ended March 31, Three Months Ended March 31,
--------------------------------- ----------------------------------
2004 2003
--------------------------------- ----------------------------------
(dollars in thousands) Interest Volume Rate Interest Volume Rate
--------------------------------- ----------------------------------
Average Earning Assets
Commercial & real estate loans (TE) $17,925 $1,299,399 5.55% $16,188 $1,061,644 6.18%
Mortgage loans 5,196 367,320 5.66% 4,723 294,611 6.41%
Consumer loans 15,816 811,252 7.84% 15,691 736,954 8.64%
Loan fees & late charges 2,163 - 0.00% 2,381 - 0.00%
--------------------------------- ----------------------------------
Total loans (TE) 41,100 2,477,971 6.66% 38,983 2,093,209 7.54%
US treasury securities 48 10,118 1.93% 412 50,265 3.33%
US agency securities 3,783 371,647 4.07% 5,706 522,735 4.37%
CMOs 3,038 319,916 3.80% 4,419 544,997 3.24%
Mortgage backed securities 3,900 367,585 4.24% 1,474 109,890 5.37%
Municipals (TE) 3,286 183,969 7.14% 3,740 206,975 7.23%
Other securities 367 34,252 4.29% 336 31,498 4.33%
--------------------------------- ----------------------------------
Total securities (TE) 14,422 1,287,487 4.48% 16,087 1,466,360 4.39%
Fed funds sold 153 64,192 0.96% 330 113,667 1.18%
Cds with banks 8 5,626 0.54% 13 5,204 1.04%
Other short-term investments 13 5,493 0.97% 65 21,935 1.21%
--------------------------------- ----------------------------------
Total short-term investments 174 75,311 0.93% 408 140,805 1.18%
Average earning assets yield (TE) $55,696 $3,840,769 5.82% $55,479 $3,700,374 6.05%
Interest-Bearing Liabilities
Interest-bearing transaction deposits $ 3,838 $1,808,254 0.85% $5,118 $1,651,450 1.26%
Time deposits 8,602 1,101,385 3.14% 9,499 1,122,536 3.43%
--------------------------------- ----------------------------------
Total interest bearing deposits 12,440 2,909,639 1.72% 14,618 2,773,986 2.14%
Customer repos 338 169,830 0.80% 369 171,072 0.87%
Other borrowings 692 59,522 4.68% 594 52,823 4.56%
--------------------------------- ----------------------------------
Total borrowings 1,030 229,352 1.81% 963 223,895 1.74%
Total interest bearing liab cost $13,470 $3,138,992 1.73% $15,581 $2,997,881 2.11%
Noninterest-bearing deposits 622,271 582,992
Other net interest-free funding sources 79,506 119,501
Total Cost of Funds $13,470 $3,840,769 1.41% $15,581 $3,700,374 1.71%
Net Interest Spread (TE) $42,226 4.09% $39,898 3.94%
Net Interest Margin (TE) $42,226 $3,840,769 4.41% $39,898 $3,700,374 4.34%
The amount of the allowance for loan losses equals the cumulative total of the provisions for loan losses, reduced by actual loan charge-offs, and increased by allowances acquired in acquisitions and recoveries of loans previously charged-off. Provisions are made to the allowance to reflect the currently perceived risks of loss associated with the bank’s loan portfolio. A specific loan is charged-off when management believes, after considering, among other things, the borrower’s financial condition and the value of any collateral, that collection of the loan is unlikely.
The following information is useful in determining the adequacy of the loan loss allowance and loan loss provision. The ratios are calculated using average loan balances. (Amounts shown are in thousands.)
At and For the
-----------------------------------------
Three Months Ended March 31,
----------------------------------------
2004 2003
---------------- ------------------
Annualized net charge-offs to average loans 0.45% 0.59%
Annualized provision for loan losses to average
loans 0.57% 0.59%
Average allowance for loan losses to average loans 1.49% 1.66%
Gross charge-offs (1) $ 5,695 $ 4,770
Gross recoveries $ 2,909 $ 1,750
Non-accrual loans $ 9,670 $ 11,949
Accruing loans 90 days or more past due $ 5,011 $ 6,039
(1) Gross charge-offs were higher in 2004 primarily due to the removal of commercial credits that were deemed
uncollectible.
Non-Interest Income
Non-interest income for the first quarter of 2004 was up $4.8 million, or 27.2%, compared to the same quarter a year ago and was up $2.4 million, or 12%, compared to the fourth quarter of 2003. The primary factor impacting the higher levels of non-interest income as compared to the prior quarter, as well as the same quarter a year ago, were higher levels of insurance fees mostly related to the December 31, 2003 purchase of Magna Insurance Company and a $2.3 million pre-tax gain on the sale of four Louisiana branches. In addition, other income increased $1.1 million primarily due to recording income on bank owned life insurance contracts that were purchased during the third quarter of 2003.
The components of non-interest income for the three months ended March 31, 2004 and 2003 are presented in the following table.
Three Months Ended March 31,
--------------------------------
(dollars in thousands) 2004 2003
----------------- ------------
Service charges on deposit accounts $ 10,230 $ 10,155
Trust fees 1,985 1,940
Credit card merchant discount fees 861 801
Insurance fees 2,484 516
Investment & annuity fees 693 931
ATM fees 1,128 966
Secondary mortgage market operations 385 640
Other income 2,465 1,390
Gain on sale of branches 2,258 -
Securities transactions gains 149 455
----------------- ------------
Total non-interest income $ 22,638 $ 17,794
================= ============
There were no significant nonrecurring non-interest income items recorded in the first quarter of 2004 or 2003 that have not been disclosed above.
Non-Interest ExpenseOperating expenses for the first quarter of 2004 were $6.3 million, or 19%, higher compared to the same quarter a year ago and were $3.7 million, or 10%, higher than the previous quarter. The increases from the same quarter a year ago were reflected in higher personnel expense (up $2.7 million) and higher other operating expense (up $1.7 million). The Company increased its amortization ($1.3 million) related to several deferred compensation contracts, which primarily caused the variance in personnel expense. Other operating expense was higher than the same quarter a year ago primarily due to costs associated with Magna Insurance Company as well as a $250,000 charge related to an accrual for contingent legal liabilities. The increase from the prior quarter was mainly due to higher personnel expense (up $3.7 million). The comparison to the prior quarter was impacted by approximately $1.6 million of incentive compensation reversals effected in the fourth quarter of 2003.
The following table presents the components of non-interest expense for the three months ended March 31, 2004 and 2003.
Three Months Ended March 31,
-----------------------------
(dollars in thousands) 2004 2003
------------- ------------
Employee compensation $ 16,940 $ 16,293
Employee benefits 5,956 3,878
------------- ------------
Total personnel expense 22,896 20,171
------------- ------------
Equipment and data processing expense 4,322 3,782
Net occupancy expense 2,413 2,117
Postage and communications 2,081 2,138
Ad valorem and franchise taxes 813 737
Legal and professional services 1,385 830
Stationery and supplies 484 509
Amortization of intangible assets 325 178
Advertising 1,087 765
Deposit insurance and regulatory fees 211 218
Training expenses 128 141
Other real estate owned expense 231 207
Other expense 2,886 1,198
------------- ------------
Total non-interest expense $ 39,262 $ 32,991
============= ============
There were no significant non-interest expense items recorded in the first quarter of 2004 or 2003 that have not been disclosed above.
The effective federal income tax rate of the Company continues to be less than the statutory rate of 35%, due primarily to tax-exempt interest income. The amount of tax-exempt income earned during the first three months of 2004 was $3.3 million compared to $3.5 million for the comparable period in 2003.
Net Earnings Per Common ShareFollowing is a summary of the information used in the computation of earnings per common share (in thousands).
Three Months Ended March 31,
-----------------------------------
2004 2003
--------------- -----------------
Net earnings - used in computation of diluted
earnings per common share $ 14,144 $ 13,662
Preferred dividend requirement - 663
--------------- -----------------
Net earnings available to common stockholders -
used in computation of basic earnings
per common share $ 14,144 $ 12,999
=============== =================
Weighted average number of common shares
outstanding - used in computation of
basic earnings per common share 32,048 30,884
Effect of dilutive securities
Stock options 584 416
Convertible preferred stock - 2,212
--------------- -----------------
Weighted average number of common shares
outstanding plus effect of dilutive
securities - used in computation of
diluted earnings per common share 32,632 33,512
=============== =================
Off Balance Sheet Transactions
In the normal course of business, the Company enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded and involve, to varying degrees, elements of credit risk not reflected in the consolidated balance sheets. The contract amounts of these instruments reflect the Company’s exposure to credit loss in the event of non-performance by the other party on whose behalf the instrument has been issued. The Company undertakes the same credit evaluation in making commitments and conditional obligations as it does for on-balance-sheet instruments and may require collateral or other credit support for off-balance-sheet financial instruments.
At March 31, 2004 the Company had $510.5 million in unused loan commitments outstanding, of which approximately $313.0 million were at variable rates and the remainder was at fixed rates. A commitment to extend credit is an agreement to lend to a customer as long as the conditions established in the agreement have been satisfied. A commitment to extend credit generally has a fixed expiration date or other termination clauses and may require payment of a fee by the borrower. Since commitments often expire without being fully drawn, the total commitment amounts do not necessarily represent future cash requirements of the Company. The Company continually evaluates each customer’s credit worthiness on a case-by-case basis. Occasionally, a credit evaluation of a customer requesting a commitment to extend credit results in the Company obtaining collateral to support the obligation.
Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing a letter of credit is essentially the same as that involved in extending a loan. At March 31, 2004 the Company had $31.0 million in letters of credit issued and outstanding.
Tabular Disclosure of Contractual ObligationsThe following table shows all significant contractual obligations of the Company at March 31, 2004 according to payments due by period.
as of March 31, 2004
Payment due by period
----------------------------------------
(dollars in thousands) Less than 1-3 3-5 More than
Total 1 year years years 5 years
------------ ------------ ------------ ------------ ----------
Certificates of Deposit $1,160,823 $489,194 $365,406 $306,214 $9
Short-Term Debt Obligations 164,134 164,134 - - -
Long-Term Debt Obligations 50,356 76 25 50,023 232
Operating Lease Obligations 15,261 2,811 3,898 2,140 6,412
------------ ------------ ------------ ------------ ----------
Total $1,390,574 $656,215 $369,329 $358,377 $6,653
Recent Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") 132 (revised 2003) - Employers' Disclosures about Pensions and Other Postretirement Benefits-an amendment of FASB Statements No. 87, 88, and 106 and a replacement of FASB Statement No. 132.
In December 2003, the Financial Accounting Standards Board (“FASB”) issued SFAS 132 (revised 2003), which revises employers’ disclosures about pension plans and other postretirement benefits. It does not change the measurement or recognition of those plans required by SFAS 87, Employers’ Accounting for Pensions, SFAS 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and SFAS 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions. This Statement retains the disclosure requirements contained in SFAS 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, which it replaces. It requires additional disclosures to those in the original SFAS 132 about the assets, obligations, cash flows, investment strategy, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. This Statement is effective for financial statements ending after December 15, 2003.
FASB Interpretation ("FIN") 46 and 46R - Consolidation of Variable Interest Entities
In January 2003, the FASB issued FIN 46, which clarifies the application of Accounting Research Bulletin (“ARB”) 51, Consolidated Financial Statements, to certain entities (called variable interest entities) in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The disclosure requirements of this Interpretation were effective for all financial statements issued after January 31, 2003. The consolidation requirements applied to all variable interest entities created after January 31, 2003. This Interpretation was amended in October 2003 by FASB Staff Position (“FSP”) 46-6, Effective Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities. This FSP deferred the effective date for applying the provisions of FIN 46 for interests held by public companies in variable interest entities or potential variable interest entities created before February 1, 2003. As amended, public companies must apply the consolidation requirements to variable interest entities that existed prior to February 1, 2003 and remain in existence as of the end of annual or interim periods ending after December 15, 2003. In December 2003, FIN 46R was issued, which again deferred the effective date for interests held by public companies in special-purpose entities for periods ending after December 15, 2003, and for all other types of entities for periods ending after March 15, 2004. The Company adopted FIN 46 as prescribed. The effect of this Interpretation on the Consolidated Financial Statements was not material.
Statement of Position ("SOP") 03-3 - Accounting for Loans or Certain Debt Securities Acquired in a Transfer
In October 2003, the American Institute of Certified Public Accountants (“AICPA”) issued SOP 03-3, which addresses accounting for differences between contractual cash flows expected to be collected from an investor’s initial investment in loans or debt securities (loans) acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes such loans acquired in purchase business combinations and applies to all nongovernmental entities, including not-for-profit organizations. This SOP does not apply to loans originated by the entity. This SOP limits the yield that may be accreted (“accretable yield”) to the excess of the investor’s estimate of undiscounted expected principal, interest, and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. This SOP requires that the excess of contractual cash flows over cash flows expected to be collected (“nonaccretable difference”) not be recognized as an adjustment of yield, loss accrual, or valuation allowance. This SOP prohibits investors from displaying accretable yield and nonaccretable difference in the balance sheet. Subsequent increases in cash flows expected to be collected generally would be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected would be recognized as impairment. This SOP prohibits “carrying over” or creation of valuation allowances in the initial accounting of all loans acquired in a transfer that are within the scope of this SOP. The prohibition of the valuation allowance carryover applies to the purchase of an individual loan, a pool of loans, a group of loans, and loans acquired in a purchase business combination. This SOP is effective for loans acquired in fiscal years beginning after December 15, 2004. Management is currently assessing the potential impact of this SOP to the Consolidated Financial Statements.
Forward Looking InformationCongress 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 disclosures that protects the companies from unwarranted litigation if the actual results are different from management expectations. This report contains forward-looking statements and reflects management’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. These forward-looking statements are subject to a number of factors and uncertainties that could cause the Company’s actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe Company’s net earnings are dependent, in part, on its net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest-earning assets. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.
In an attempt to manage its exposure to changes in interest rates, management monitors the Company’s interest rate risk. The Company’s interest rate management policy is designed to produce a relatively stable net interest margin in periods of interest rate fluctuations. Interest sensitive assets and liabilities are those that are subject to maturity or repricing within a given time period. Management also reviews the Company’s securities portfolio, formulates investment strategies and oversees the timing and implementation of transactions to assure attainment of the Board’s objectives in the most effective manner. Notwithstanding the Company’s interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income and the fair value of the Company’s investment securities.
In adjusting the Company’s asset/liability position, the Board and management attempt to manage the Company’s interest rate risk while enhancing net interest margins. At times, depending on the level of general interest rates, the relationship between long and short-term interest rates, market conditions and competitive factors, the Board and management may determine to increase the Company’s interest rate risk position somewhat in order to increase its net interest margin. The Company’s results of operations and net portfolio values remain vulnerable to increases in interest rates and to fluctuations in the difference between long and short-term interest rates.
The Company also controls interest rate risk reductions by emphasizing non-certificate depositor accounts. The Board and management believe that a material portion of such accounts may be more resistant to changes in interest rates than are certificate accounts. At March 31, 2004 the Company had $264.8 million of regular savings and club accounts and $1.2 billion of money market and NOW accounts, representing 50.7% of total interest-bearing depositor accounts.
Even though permissible under the Asset Liability Management Policy approved by the Board of Directors, the Company is not currently engaged in the use of derivatives to control interest rate risk. Management and the Board of Directors review the need for such activities on a regular basis as part of its monthly interest rate risk analysis.
Interest rate risk is the most significant market risk affecting the Company. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company’s business activities.
As of March 31, 2004, there were no substantive changes from the net interest income at risk analysis presented by the Company as of December 31, 2003. The foregoing disclosures related to the market risk of the Company should be read in conjunction with the Company's audited consolidated financial statements, related notes and management's discussion and analysis for the year ended December 31, 2003 included in the Company's 2003 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURESThe Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2004, (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic filings under the Exchange Act.
Since the Evaluation Date, there have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect such controls.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
On February 4, 2004 the Company completed the redemption/conversion of substantially all $37.1 million
of the 8% Cumulative Convertible Preferred Stock issued in partial payment for the acquisition of Lamar Capital Corporation in
July, 2001. The conversion factor was .6666 shares of Hancock Holding Company common stock for each share
of the preferred stock. A total of 7,304 shares of the preferred stock was redeemed for cash at the contract price of $20.00 per
share plus pro rated dividends of $0.1511 per share.
In July 2000, the Company announced the execution of a stock buyback program that provides for the repurchase of
up to 10% of the Company's issued common stock. The program authorizes the repurchase of approximately 3,320,000
shares of the Company's issued common stock.
On February 26, 2004 the Company's Board of Directors declared a two-for-one stock split in the form of
a 100% common stock dividend. The additional shares were payable March 18, 2004 to shareholders of record at the
close of business on March 8, 2004.
All information concerning earnings per share, dividends per share, and number of shares outstanding has
been adjusted to give effect to this split.
Issuer Purchases of Equity Securities
The following table provides information with respect to purchases made by the issuer or any affiliated
purchaser of the issuer's equity securities.
(a) (b) (c) (d)
Total number of Maximum number
shares purchased of shares
Total number as a part of publicly that may yet be
of shares or Average Price announced plans purchased under
units purchased Paid per Share or programs(1) Plans or Programs
------------------ ----------------- -------------------- ---------------------
Jan. 1, 2004 - Jan. 31, 2004 39,754 $ 27.8400 39,754 950,870
Feb. 1, 2004 - Feb. 29, 2004 13,542(2) 28.5855 12,000 938,870
Mar. 1, 2004 - Mar. 31, 2004 77,827(3) 29.7752 - 938,870
------------------ ----------------- --------------------
Total 131,123 $ 29.0645 51,754
================== ================= ====================
(1) The Company publicly announced its stock buy-back program on July 18, 2000.
(2) 1,542 shares were purchased on the open market during February in order to satisfy obligations pursuant to
the Company's long-term incentive plan that was established in 1996.
(3) 77,827 shares were purchased on the open market during March in order to satisfy obligations pursuant to
the Company's long-term incentive plan that was established in 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A. The Company's Annual Meeting was held on February 26, 2004.
B. The Directors elected at the Annual Meeting held on February 26, 2004 were:
Votes Cast
----------
Affirmed Withheld
-------- --------
1. James B. Estabrook, Jr. 14,113,046 292,366
2. Robert W. Roseberry 14,268,064 137,349
3. Leo W. Seal, Jr. 14,266,636 138,777
Continuing Directors:
4. Frank E. Bertucci, Jr.
5. Joseph F. Boardman, Jr.
6. James H. Horne
7. Charles H. Johnson, Sr.
8. George A. Schloegel
9. Christine L. Smilek
C. KPMG was approved as the independent public accountants of the Company and the approval was made with a
favorable vote of 85%.
For Against Abstained
---------- -------- -----------
14,224,313 85,733 95,785
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
1. Exhibit 31 - Rule 13a-14(a) / 15d-14(a) Certifications
2. Exhibit 32 - Section 1350 Certifications
Reports on Form 8-K:
1. A Form 8-K was filed on January 6, 2004 for the purpose of announcing, by press release, that the
Company had completed the purchase of Magna Insurance Company on December 31, 2003.
2. A Form 8-K was filed on January 6, 2004 for the purpose of announcing, by press release, that the
Company had issued a notice of redemption to holders of its 8% Cumulative
Convertible Preferred Stock, Series A.
3. A Form 8-K was filed on January 22, 2004 for the purpose of announcing, by press release, that earnings
for year ended December 31, 2003 were up 8 %.
4. A Form 8-K was filed on January 26, 2004 for the purpose of announcing, by press release, that the
Company had dismissed Deloitte & Touche LLP as its independent auditors, after
Deloitte & Touche LLP completed the audit of the Company's financial statements for
the year ended December 31, 2003.
5. A Form 8-K was filed on January 26, 2004 for the purpose of announcing, by press release, that the
Company's Board of Directors had appointed KPMG LLP, a firm of independent
certified public accountants, as auditors for the fiscal year ending December 31,
2004, and until their successors are selected.
6. Due to a coding error, the Company filed a Form 8-K/A on February 5, 2004 for the purpose of amending
the Form 8K filed January 26, 2004, which announced the dismissal of Deloitte &
Touche LLP as its independent auditors.
7. Due to a coding error, the Company filed a Form 8-K/A on February 5, 2004 for the purpose of amending
the Form 8K filed January 26, 2004, which announced the appointment of KPMG LLP as
its independent auditors.
8. A Form 8-K/A was filed on February 13, 2004 for the purpose of amending the Form 8K filed January 26,
2004, which announced the dismissal of Deloitte & Touche LLP as its independent
auditors.
9. A Form 8-K was filed on February 24, 2004 for the purpose of announcing, by press release, that the
Company approved a regular first quarter 2004 common stock cash dividend of $0.25
per share, an increase of $0.02 per share, or 9 %.
10. A Form 8-K was filed on February 27, 2004 for the purpose of announcing, by press release, that the
Company had declared a two-for-one stock split in the form of a 100 % common stock
dividend.
11. A Form 8-K was filed on March 15, 2004 for the purpose of announcing, by press release, the Company's
acquisition of all deposit liabilities of the former Guaranty National Bank of
Tallahassee, Florida from the Federal Deposit Insurance Commission (FDIC).
12. A Form 8-K was filed on March 19, 2004 for the purpose of announcing, by press release, the Company's
acquisition of all approximately $40.0 million of performing loans of the former
Guaranty National Bank of Tallahassee, Florida from the Federal Deposit Insurance
Commission (FDIC).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
HANCOCK HOLDING COMPANY
--------------------------------------
Registrant
May 7, 2004 By:
- ----------------------- -------------------------------------
Date George A. Schloegel
Vice-Chairman of the Board &
Chief Executive Officer
May 7, 2004 By:
- ----------------------- -------------------------------------
Date Carl J. Chaney
Executive Vice President &
Chief Financial Officer