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Hancock Holding Company 10-Q 2007

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32.1
  5. Ex-32.2
  6. Ex-32.2
 
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
 
For the quarterly period ended September 30, 2007
 
OR
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________________ to ________________________
 
Commission File Number      0-13089
 
HANCOCK HOLDING COMPANY

(Exact name of registrant as specified in its charter)
     
Mississippi   64-0693170

 
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification Number)
     
One Hancock Plaza, P.O. Box 4019, Gulfport, Mississippi   39502

 
(Address of principal executive offices)   (Zip Code)
 
(228) 868-4000

 (Registrant’s telephone number, including area code)
 
NOT APPLICABLE

(Former name, address and fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
    
  Yes  x        No  o
   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
   
Large accelerated filer x Accelerated filer o Non-accelerated filer o
   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
   
  Yes  o        No  x
   

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

31,608,403 common shares were outstanding as of October 31, 2007 for financial statement purposes.




Hancock Holding Company

Index

 
Part I.   Financial Information   Page Number  
       
 
           
ITEM 1.   Financial Statements
Condensed Consolidated Balance Sheets —
September 30, 2007 (unaudited) and December 31, 2006
  1  
           
    Condensed Consolidated Statements of Income (unaudited) —
Three and nine months ended September 30, 2007 and 2006
  2  
           
    Condensed Consolidated Statements of Stockholders’ Equity
(unaudited) – Nine months ended September 30, 2007 and 2006
  3  
           
    Condensed Consolidated Statements of Cash Flows (unaudited) —
Nine months ended September 30, 2007 and 2006
  4  
           
    Notes to Condensed Consolidated Financial Statements (unaudited) —
September 30, 2007
  5-22  
           
ITEM 2.   Management’s Discussion and Analysis of Financial Condition and
Results of Operations
  23-33  
           
ITEM 3.   Quantitative and Qualitative Disclosures about Market Risk   34  
           
ITEM 4.   Controls and Procedures   34  
       
Part II.   Other Information  
           
ITEM 1A.   Risk Factors   35  
           
ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds   35  
           
ITEM 4.   Submission of Matters to a Vote of Security Holders   36  
           
ITEM 6.   Exhibits   36  
           
Signatures       37  



Part I. Financial Information

Item 1. Financial Statements

Hancock Holding Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)

 
September 30,
2007
(unaudited)
  December 31,
2006
 
 
 
 
ASSETS        
     Cash and due from banks (non-interest bearing) $ 155,524   $ 190,114  
     Interest-bearing time deposits with other banks   11,898     10,197  
     Federal funds sold   87,278     212,242  
     Trading securities   1,634      
     Securities available for sale, at fair value
        (amortized cost of $1,690,428 and $1,916,944)
  1,680,216     1,903,658  
     Loans held for sale   17,698     16,946  
     Loans   3,530,139     3,267,058  
        Less: allowance for loan losses   (45,901 )   (46,772 )
                  unearned income   (16,846 )   (17,420 )
 
 
 
        Loans, net   3,467,392     3,202,866  
     Property and equipment, net of accumulated
        depreciation of $93,293 and $85,397
  192,719     143,462  
     Other real estate, net   1,183     568  
     Accrued interest receivable   33,247     32,984  
     Goodwill, net   62,277     62,277  
     Other intangible assets, net   8,827     10,355  
     Life insurance contracts   114,640     110,751  
     Reinsurance receivables   33,338     38,042  
     Deferred tax asset, net   17,419     16,544  
     Other assets   20,763     13,559  
 
 
 
           Total assets $ 5,906,053   $ 5,964,565  
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY            
     Deposits:            
        Non-interest bearing demand $ 891,842   $ 1,057,358  
        Interest-bearing savings, NOW, money market
           and time
  4,107,707     3,973,633  
 
 
 
              Total deposits   4,999,549     5,030,991  
     Federal funds purchased       3,800  
     Securities sold under agreements to repurchase   206,963     218,591  
     Long-term notes   251     258  
     Policy reserves and liabilities   76,876     93,669  
     Other liabilities   64,439     58,846  
 
 
 
           Total liabilities   5,348,078     5,406,155  
Stockholders’ Equity            
     Common Stock-$3.33 par value per share; 350,000,000
        shares authorized, 31,785,742 and 32,666,052 issued
        and outstanding, respectively
  105,847     108,778  
     Capital surplus   104,792     139,099  
     Retained earnings   368,450     334,546  
     Accumulated other comprehensive loss, net   (21,114 )   (24,013 )
 
 
 
           Total stockholders’ equity   557,975     558,410  
 
 
 
  
           Total liabilities and stockholders’ equity $ 5,906,053   $ 5,964,565  
 
 
 
 
See notes to unaudited condensed consolidated financial statements.

1



Hancock Holding Company and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
Interest income:                
  Loans, including fees $ 65,911   $ 60,034   $ 189,965   $ 169,633  
  Securities - taxable   18,822     26,422     58,546     73,909  
  Securities - tax exempt   1,538     1,649     4,736     5,000  
  Federal funds sold   1,376     1,117     4,964     8,618  
  Other investments   14     11     96     66  
 
 
 
 
 
      Total interest income   87,661     89,233     258,307     257,226  
 
 
 
 
 
   
Interest expense:                        
  Deposits   34,729     28,936     99,452     78,845  
  Federal funds purchased and securities sold
    under agreements to repurchase
  1,866     3,115     5,550     6,368  
  Long-term notes and other interest expense   27     87     39     931  
  Capitalized interest   (155 )   (150 )   (872 )   (247 )
 
 
 
 
 
      Total interest expense   36,467     31,988     104,169     85,897  
 
 
 
 
 
   
Net interest income   51,194     57,245     154,138     171,329  
Provision for (reversal of) loan losses, net   1,554     (20,000 )   4,002     (20,705 )
 
 
 
 
 
Net interest income after provision for
     (reversal of) loan losses
  49,640     77,245     150,136     192,034  
 
 
 
 
 
   
Noninterest income:                        
  Service charges on deposit accounts   11,085     9,719     30,747     26,826  
  Other service charges, commissions and fees   13,860     11,881     41,705     37,118  
  Securities gains, net   34     110     74     228  
  Other income   5,540     4,027     14,114     12,515  
 
 
 
 
 
      Total noninterest income   30,519     25,737     86,640     76,687  
 
 
 
 
 
   
Noninterest expense:                        
  Salaries and employee benefits   28,531     27,059     79,932     79,661  
  Net occupancy expense   4,731     2,882     13,273     10,015  
  Equipment rentals, depreciation and maintenance   2,814     2,647     7,855     8,131  
  Amortization of intangibles   412     445     1,219     1,626  
  Other expense   18,708     17,304     53,913     51,241  
 
 
 
 
 
      Total noninterest expense   55,196     50,337     156,192     150,674  
 
 
 
 
 
   
Net income before income taxes   24,963     52,645     80,584     118,047  
Income tax expense   7,224     16,614     23,292     38,006  
 
 
 
 
 
Net income $ 17,739   $ 36,031   $ 57,292   $ 80,041  
 
 
 
 
 
Basic earnings per share $ 0.55   $ 1.11   $ 1.77   $ 2.46  
 
 
 
 
 
Diluted earnings per share $ 0.55   $ 1.08   $ 1.74   $ 2.41  
 
 
 
 
 
Dividends paid per share $ 0.240   $ 0.240   $ 0.720   $ 0.655  
 
 
 
 
 
Weighted avg. shares outstanding-basic   32,005     32,566     32,299     32,500  
 
 
 
 
 
Weighted avg. shares outstanding-diluted   32,492     33,333     32,847     33,274  
 
 
 
 
 
 
See notes to unaudited condensed consolidated financial statements.

2



Hancock Holding Company and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share and per share data)

 
        Capital
Surplus
  Retained
Earnings
  Accumulated
Other
Comprehensive
Loss, net
  Unearned
Compensation
  Total  
Common Stock
Shares   Amount
 
 
 
 
 
 
 
 
Balance, January 1, 2006   32,301,123   $ 107,563   $ 129,222   $ 262,055   $ (22,066 ) $ (2,343 ) $ 474,431  
Comprehensive income                                          
      Net income per consolidated
        statements of income
              80,041             80,041  
      Net change in fair value of
        securities available for sale,
         net of tax
                  (1,651 )       (1,651 )
                                     
 
            Comprehensive income                                       78,390  
Cash dividends paid ($0.655 per
   common share)
              (21,429 )           (21,429 )
Common stock issued, long-term
  incentive plan including income tax
  benefit of $233
  322,218     1,073     8,044                 9,117  
Compensation expense, long-term
  incentive plan
          2,977                 2,977  
SFAS No. 123(R) reclass of unearned
  compensation
          (2,343 )           2,343      
Repurchase/retirement of
   common stock
  (39,393 )   (131 )   (4,238 )               (4,369 )
   
 
 
 
 
 
 
 
Balance, September 30, 2006   32,583,948   $ 108,505   $ 133,662   $ 320,667   $ (23,717 ) $   $ 539,117  
   
 
 
 
 
 
 
 
  
Balance, January 1, 2007   32,666,052   $ 108,778   $ 139,099   $ 334,546   $ (24,013 ) $   $ 558,410  
Comprehensive income                                          
      Net income per consolidated
        statements of income
              57,292             57,292  
       Recognized pension and other
        employee benefit plan costs
                  626         626  
      Net change in fair value of
        securities available for sale,
        net of tax
                  2,273         2,273  
                                     
 
            Comprehensive income                                       60,191  
Cash dividends paid ($0.720 per
   common share)
              (23,388 )           (23,388 )
Common stock issued, long-term
  incentive plan, including income
   tax  benefit of $169
  123,629     412     1,048                 1,460  
Compensation expense, long-term
   incentive plan
          1,664                 1,664  
Repurchase/retirement of
   common stock
  (1,003,939 )   (3,343 )   (37,019 )               (40,362 )
   
 
 
 
 
 
 
 
Balance, September 30, 2007   31,785,742   $ 105,847   $ 104,792   $ 368,450   $ (21,114 ) $   $ 557,975  
   
 
 
 
 
 
 
 
 
See notes to unaudited condensed consolidated financial statements.

3



Hancock Holding Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

 
Nine Months Ended
September 30,
2007 2006
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:        
       Net income $ 57,292   $ 80,041  
           Adjustments to reconcile net income to net
               cash provided by operating activities:
           
                   Depreciation and amortization   9,484     7,042  
                   Provision for (reversal of) loan losses, net   4,002     (20,705 )
                   Provision for (gains) losses on other real estate owned, net   (2 )   170  
                   Gain on sales of ORE   (725 )   (22 )
                   Deferred tax expense (benefit)   (2,334 )   9,332  
                   Increase in cash surrender value of life insurance contracts   (3,889 )   (2,869 )
                   Gain on sales/paydowns of securities available for sale, net   (57 )   (228 )
                   Loss on disposal of other assets   62     2  
                   Gain on sale of loans held for sale   (508 )   (512 )
                   Loss on trading securities   137      
                   Accretion of securities premium/discount, net   (2,025 )   (9,050 )
                   Amortization of mortgage servicing rights   264     422  
                   Amortization of intangible assets   1,219     1,626  
                   Stock-based compensation expense   1,664     2,977  
                   Increase in accrued interest receivable   (263 )   (4,421 )
                   Increase (decrease) in accrued expenses   227     (19,024 )
                   Decrease in other liabilities   (721 )   (680 )
                   Increase in interest payable   143     1,114  
                   Decrease in policy reserves and liabilities   (16,793 )   (9,081 )
                   Decrease in reinsurance receivable   4,704     8,831  
                   Increase in other assets   (4,000 )   (2,718 )
                   Proceeds from sale of loans held for sale   200,595     175,431  
                   Originations of loans held for sale   (200,839 )   (169,398 )
                   (Purchase of) Proceeds from sale of trading securities, net   (10 )    
                   Excess tax benefit from share based payments   (169 )   (233 )
                   Other, net   336     (571 )
 
 
 
           Net cash provided by operating activities   47,794     47,476  
 
 
 
  
CASH FLOWS FROM INVESTING ACTIVITIES:            
       Net increase in interest-bearing time deposits   (1,701 )   (1,121 )
       Proceeds from sales of securities available for sale   8,985     10,654  
       Proceeds from maturities of securities available for sale   978,181     624,509  
       Purchases of securities available for sale   (759,068 )   (971,672 )
       Net decrease in federal funds sold   124,964     336,444  
       Net increase in loans   (269,876 )   (164,260 )
       Purchases of property and equipment   (56,217 )   (52,242 )
       Proceeds from sales of property and equipment   55     250  
       Premiums paid on life insurance contracts       (20,000 )
       Proceeds from sales of other real estate   1,460     2,086  
 
 
 
           Net cash provided by (used in) investing activities   26,783     (235,352 )
 
 
 
  
CASH FLOWS FROM FINANCING ACTIVITIES:            
       Net (decrease) increase in deposits   (31,442 )   10,744  
       Net (decrease) increase in federal funds purchased and
           securities sold under agreements to repurchase
  (15,428 )   173,721  
       Repayments of long-term notes   (7 )   (50,002 )
       Dividends paid   (23,388 )   (21,429 )
       Proceeds from exercise of stock options   1,291     8,884  
       Repurchase/retirement of common stock   (40,362 )   (4,136 )
       Excess tax benefit from stock option exercises   169     233  
 
 
 
           Net cash (used in) provided by financing activities   (109,167 )   118,015  
 
 
 
NET DECREASE IN CASH AND DUE FROM BANKS   (34,590 )   (69,861 )
CASH AND DUE FROM BANKS, BEGINNING   190,114     271,104  
 
 
 
CASH AND DUE FROM BANKS, ENDING $ 155,524   $ 201,243  
 
 
 
SUPPLEMENTAL INFORMATION:            
       Income taxes paid $ 23,478   $ 48,491  
       Interest paid, including capitalized interest
           of $872 and $247, respectively
  104,026     79,174  
       Restricted stock issued to employees of Hancock   251     2,500  
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
           
       Transfers from loans to other real estate $ 1,348   $ 1,264  
       Financed sale of foreclosed property       294  
 
See notes to unaudited condensed consolidated financial statements.

4



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

     The condensed consolidated financial statements of Hancock Holding Company and all majority-owned subsidiaries (the “Company”) included herein are unaudited; however, they include all adjustments all of which are of a normal recurring nature which, in the opinion of management, are necessary to present fairly the Company’s Condensed Consolidated Balance Sheets at September 30, 2007 and December 31, 2006, the Company’s Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 and the Company’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2007 and 2006. Although the Company believes the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to the Company’s organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2006 and the notes thereto included in the Company’s Annual Report on Form 10-K. The results of operations for the nine months ended September 30, 2007 are not necessarily indicative of the results expected for the full year.

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to allowance for loan losses, investments, intangible assets and goodwill, property and equipment, income taxes, insurance, employment benefits and contingent liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

     Certain reclassifications have been made to conform prior year financial information to the current period presentation. These reclassifications had no material impact on the condensed consolidated financial statements.

Critical Accounting Policies

       There have been no material changes or developments in the Company’s evaluation of accounting estimates and underlying assumptions or methodologies that the Company believes to be Critical Accounting Policies and Estimates as disclosed in our Form 10-K, for the year ended December 31, 2006.

2. Securities

      Available for Sale Securities

 
 
        For the nine months ended September 30, 2007, a subsidiary of the Company, Magna Insurance Company, sold thirty securities out of its portfolio to provide liquidity for surrenders of annuities for Magna Insurance Company. These securities had a gross loss of $37,164. The net gain on available for sale securities related sales and paydowns was $56,711.

5



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

3. Loans and Allowance for Loan Losses

     Loans, net of unearned income, totaled $3.5 billion and $3.2 billion at September 30, 2007 and December 31, 2006, respectively. The Company also held $17.7 million and $16.9 million in loans held for sale at September 30, 2007 and December 31, 2006, respectively, carried at lower of cost or fair value. These loans are originated on a best-efforts basis, whereby a commitment by a third party to purchase the loan has been received concurrent with the Banks’ commitment to the borrower to originate the loan.

        In some instances, loans are placed on nonaccrual status. All accrued but uncollected interest related to the loan is deducted from income in the period the loan is assigned a nonaccrual status. For such period as a loan is in nonaccrual status, any cash receipts are applied first to principal, second to expenses incurred to cause payment to be made and lastly to the recovery of any reversed interest income and interest that would be due and owing subsequent to the loan being placed on nonaccrual status.

        The Company’s investments in impaired loans at September 30, 2007 and December 31, 2006 were $33.0 million and $26.8 million, respectively. The amount of interest that was not recognized on nonaccrual loans would not have had a material effect on earnings for the three and nine months ended September 30, 2007 and September 30, 2006.

        Nonaccrual loans and foreclosed assets, which make up total non-performing assets, amounted to approximately 0.28% and 0.13% of total loans at September 30, 2007 and December 31, 2006, respectively. Interest recognized on nonaccrual loans is immaterial to the Company’s operating results.

        The following table presents, for the periods indicated, non-performing assets:

 
September 30, 2007   December 31, 2006  
 
 
 
  (In thousands)  
Non-accrual loans $ 8,500   $ 3,500  
Foreclosed assets   1,374     681  
 
 
 
Total non-performing assets $ 9,874   $ 4,181  
 
 
 

6



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

3.  Loans and Allowance for Loan Losses (continued)

The following table sets forth, for the periods indicated, allowance for loan losses, amounts charged-off and recoveries of loans previously charged-off (in thousands):

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
Balance of allowance for loan losses
  at beginning of period
$ 46,227   $ 70,960   $ 46,772   $ 74,558  
Provision for (reversal of) loan losses, net   1,554     (20,000 )   4,002     (20,705 )
Loans charged-off:                        
     Commercial, real estate and mortgage   602     1,525     2,083     3,209  
     Direct and indirect consumer   921     1,113     3,315     4,551  
     Finance company   917     555     2,198     1,414  
     Demand deposit accounts   1,170     3,165     2,611     5,848  
 
 
 
 
 
  Total charge-offs   3,610     6,358     10,207     15,022  
 
 
 
 
 
Recoveries of loans previously
  charged-off:
                       
     Commercial, real estate and mortgage   659     636     2,034     3,261  
     Direct and indirect consumer   422     423     1,351     1,468  
     Finance company   158     133     425     463  
     Demand deposit accounts   491     2,558     1,524     4,329  
 
 
 
 
 
  Total recoveries   1,730     3,750     5,334     9,521  
 
 
 
 
 
  Net charge-offs   1,880     2,608     4,873     5,501  
 
 
 
 
 
  Balance of allowance for loan losses
    at end of period
$ 45,901   $ 48,352   $ 45,901   $ 48,352  
 
 
 
 
 
 
        The following table presents the makeup of allowance for loan losses by:
 
September 30, 2007   December 31, 2006  
 
 
 
  (In thousands)  
Balance of allowance for loan losses          
     Non-impaired $ 38,060   $ 38,986  
     Impaired   7,841     7,786  
 
 
 
Total allowance for loan losses $ 45,901   $ 46,772  
 
 
 
 
        As of September 30, 2007 and December 31, 2006, the Company had $18.9 million and $17.2 million, respectively, in loans carried at fair value.

7



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

3.  Loans and Allowance for Loan Losses (continued)

    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
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
Ratios :                
  Net charge-offs to average net loans (annualized)   0.21 %   0.34 %   0.19 %   0.24 %
  Net charge-offs to period-end net loans (annualized)   0.21 %   0.33 %   0.18 %   0.23 %
  Allowance for loan losses to average net loans   1.32 %   1.57 %   1.36 %   1.60 %
  Allowance for loan losses to period-end net loans   1.31 %   1.55 %   1.31 %   1.55 %
  Net charge-offs to loan loss allowance   4.10 %   5.39 %   10.62 %   11.37 %

8



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

4. Goodwill and Other Intangible Assets

     Goodwill represents costs in excess of the fair value of net assets acquired in connection with purchase business combinations. In accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 142 Goodwill and Other Intangibles (“SFAS 142”), the Company tests its goodwill for impairment annually. No impairment charges were recognized as of September 30, 2007. The carrying amount of goodwill was $62.3 million as of September 30, 2007 and December 31, 2006.

     The following tables present information regarding the components of the Company’s identifiable intangible assets, and related amortization for the dates indicated (in thousands):

 
As of
September 30, 2007
As of
December 31, 2006


Gross Carrying
Amount
Accumulated
Amortization
Net Gross Carrying
Amount
Accumulated
Amortization
Net
 
 
 
 
 
 
 
Amortizable intangible assets:                        
  
      Core deposit intangibles $ 14,137   $ 8,197   $ 5,940   $ 14,137   $ 7,290   $ 6,847  
  
      Value of insurance business acquired   3,767     1,701     2,066     3,767     1,459     2,308  
  
      Non-compete agreements   368     234     134     368     179     189  
  
      Trade name   100     45     55     100     30     70  
 
 
 
 
 
 
 
           Total $ 18,372   $ 10,177   $ 8,195   $ 18,372   $ 8,958   $ 9,414  
 
 
 
 
 
 
 
                         
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
Aggregate amortization expense for:                
  
      Core deposit intangibles $ 302   $ 341   $ 907   $ 1,024  
  
      Value of insurance businesses acquired   87     79     242     496  
  
      Non-compete agreements   18         55     81  
  
      Trade name   5     25     15     25  
 
 
 
 
 
           Total $ 412   $ 445   $ 1,219   $ 1,626  
 
 
 
 
 

9



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

4.  Goodwill and Other Intangible Assets (continued)

     The remaining amortization expense for the core deposit intangibles in 2007 is estimated to be approximately $303,000. The amortization expense for core deposit intangibles is estimated to be approximately $1.114 million in 2008, $1.114 million in 2009, $1.114 million in 2010, $0.909 million in 2011 and the remainder of $1.386 million thereafter. The amortization of the value of business acquired, non-compete agreements and trade name are expected to approximate $110,000 for the remainder of 2007, $404,000 in 2008, $370,000 in 2009, $311,000 in 2010, $268,000 in 2011 and the remainder of $792,000 thereafter. The weighted-average amortization period used for intangibles is 10 years.

5.  Mortgage Banking (including Mortgage Servicing Rights)

     The Company adopted SFAS 156, Accounting for Servicing of Financial Assets (“SFAS No. 156”) on January 1, 2007 without material impact. SFAS No. 156 requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable, and permits an entity to subsequently measure those servicing assets and servicing liabilities at fair value. Under SFAS No. 156, the Company decided to continue to use the amortization method instead of adopting the fair value measurement method. Management has determined that it has one class of servicing rights – mortgage servicing rights – which are based on the type of loan. The following are the risk characteristics of the underlying financial assets used to stratify servicing assets for purposes of measuring impairment: interest rate, type of product (fixed versus variable), duration and asset quality. The fair values of the mortgage servicing rights were $1.8 million and $2.2 million as of September 30, 2007 and December 31, 2006, respectively. The fair value was based upon Bloomberg prepayment speeds for the performing portion of the portfolio and actual prepayment speeds for the watch list portion of the portfolio. The following table shows the amounts (in thousands) of contractually specified fees for the three and nine months ended September 30, 2007 and 2006, respectively:

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
                         
Servicing fees $ 152   $ 177   $ 478   $ 586  
Late fees   18     14     51     28  
Ancillary fees   4         15     14  
 
 
 
 
 
     Total $ 174   $ 191   $ 544   $ 628  
 
 
 
 
 

10



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

5.  Mortgage Banking (including Mortgage Servicing Rights) (continued)

         The gross carrying amount of mortgage servicing rights is equal to the net carrying amount. There were no valuation allowances on the mortgage servicing rights portfolio as of September 30, 2007 or December 31, 2006.

        The changes in the carrying amounts of mortgage servicing rights as of September 30, 2007 and as of December 31, 2006 are as follows (in thousands):

 
  Net Carrying
Amount
   
   
   
  Balance as of December 31, 2005 $ 1,576    
  Additions   21    
  Disposals   (107 )  
  Amortization   (549 )  
   
   
  Balance as of December 31, 2006   941    
  Additions   7    
  Disposals   (52 )  
  Amortization   (264 )  
   
   
  Balance as of September 30, 2007 $ 632    
   
   
 
           Amortization of servicing rights is estimated to be approximately $82,000 for the remainder of 2007, $221,000 in 2008, $154,000 in 2009, $100,000 in 2010, $53,000 in 2011, and the remainder of $22,000 thereafter.

11



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

6. Earnings Per Share

     Following is a summary of the information used in the computation of earnings per common share (in thousands):

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
Net income - used in computation of
      earnings per share
$ 17,739   $ 36,031   $ 57,292   $ 80,041  
 
 
 
 
 
                         
Weighted average number of shares
      outstanding - used in computation of basic
      earnings per share
  32,005     32,566     32,299     32,500  
                         
Effect of dilutive securities
      Stock options and restricted stock awards
  487     767     548     774  
 
 
 
 
 
                         
Weighted average number of shares
      outstanding plus effect of dilutive
      securities - used in computation of
      diluted earnings per share
  32,492     33,333     32,847     33,274  
 
 
 
 
 
 
There were 0 and 49,852 anti-dilutive share-based incentives outstanding for the three and nine months ended September 30, 2007, respectively. There were 31,925 and 67,911 anti-dilutive share-based incentives outstanding for the three and nine months ended September 30, 2006, respectively.

12



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

7. Stock-Based Payment Arrangements

Stock Option Plans

     At September 30, 2007, the Company had two stock option plans. The 1996 Hancock Holding Company Long-Term Incentive Plan (the “1996 Plan”) that was approved by the Company’s shareholders in 1996 was designed to provide annual incentive stock awards. Awards as defined in the 1996 Plan include, with limitations, stock options (including restricted stock options), restricted and performance shares, and performance stock awards, all on a stand-alone, combination or tandem basis. A total of fifteen million (15,000,000) common shares can be granted under the 1996 Plan with an annual grant maximum of two percent (2%) of the Company’s outstanding common stock as reported for the fiscal year ending immediately prior to such plan year. Grants of restricted stock awards are limited to one-third of the grant totals.

     The exercise price is equal to the market price on the date of grant, except for certain of those granted to major stockholders where the option price is 110% of the market price. Option awards generally vest based on five years of continuous service and have ten-year contractual terms. The Company’s policy is to issue new shares upon share option exercise and upon restricted stock award vesting. The 1996 Long-Term Incentive Plan expired in 2006 and no additional awards may be granted under the 1996 Plan.

     In March of 2005, the stockholders of the Company approved Hancock Holding Company’s 2005 Long-Term Incentive Plan (the “2005 Plan”). The 2005 Plan is designed to enable employees and directors to obtain a proprietary interest in the Company and to attract and retain outstanding personnel. The 2005 Plan provides that awards for up to an aggregate of five million (5,000,000) shares of the Company’s common stock may be granted during the term of the 2005 Plan. The 2005 Plan limits the number of shares for which awards may be granted during any calendar year to two percent (2%) of the outstanding Company’s common stock as reported for the fiscal year ending immediately prior to such plan year.

     The fair value of each option award is estimated on the date of grant using Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock and other factors. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

 
  Nine Months Ended
September 30,
  2007 2006
   
 
   
  Expected volatility   30.89 %   29.87 %  
  Expected dividends   2.52 %   1.61% - 1.96 %  
  Expected term (in years)   9     5 - 8    
  Risk-free rates   5.10 %   4.30% - 4.54 %  

13



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

7. Stock-Based Payment Arrangements (continued)

   A summary of option activity under the plans for the nine months ended September 30, 2007, and changes during the nine months then ended is presented below:

 
Options   Number of
Shares
  Weighted-
Average
Exercise
Price ($)
  Weighted-
Average
Remaining
Contractual
Term
(Years)
  Aggregate
Intrinsic
Value ($000)
 

 
 
 
 
 
  
Outstanding at January 1, 2007     1,511,261   $ 27.04     6.6        
Granted     2,535   $ 38.11     9.7        
Exercised     (144,297 ) $ 15.45     3.7   $ 4,013,774  
Forfeited or expired     (13,639 ) $ 37.57     7.4        
   
                   
Outstanding at September 30, 2007     1,355,860   $ 28.01     6.1   $ 16,261,500  
   
 
 
 
 
Exercisable at September 30, 2007     1,095,285   $ 24.99     5.6   $ 16,632,731  
   
 
 
 
 
Share options expected to vest     227,681   $ 41.50     8.4     N/A  
   
 
 
 
 
 

   The total intrinsic value of options exercised during the nine months ended September 30, 2007 and 2006 was $4.0 million and $8.2 million, respectively.

     A summary of the status of the Company’s nonvested shares as of September 30, 2007, and changes during the nine months ended September 30, 2007, is presented below:

 
  Number of
Shares
  Weighted-
Average
Grant-Date
Fair Value ($)
   
   
 
   
  
  Nonvested at January 1, 2007   522,570   $ 22.83    
  Granted   8,953   $ 33.28    
  Vested   (70,560 ) $ 18.44    
  Forfeited   (12,198 ) $ 24.30    
   
         
  Nonvested at September 30, 2007   448,765   $ 23.69    
   
         
 
        As of September 30, 2007, there was $5.2 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a weighted-average period of 2.9 years. The total fair value of shares which vested during the nine months ended September 30, 2007 and 2006 was $1.3 million and $.53 million, respectively.

14



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

8. Retirement Plans

     Net periodic benefits cost includes the following components for the three and nine months ended September 30, 2007 and 2006:

 
Pension Benefits Other Post-retirement Benefits


Three Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
Service cost $ 663,956   $ 575,934   $ 68,500   $ 78,750  
                         
Interest cost   958,450     874,760     102,000     98,500  
                         
Expected return on plan assets   (1,051,435 )   (966,840 )        
                         
Amortization of prior service cost           (13,250 )   (13,250 )
                         
Amortization of net loss   284,636     265,527     19,550     29,000  
                         
Amortization of transition obligation           1,250     1,250  
 
 
 
 
 
Net periodic benefit cost $ 855,607   $ 749,381   $ 178,050   $ 194,250  
 
 
 
 
 
                 
Pension Benefits Other Post-retirement Benefits


Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
Service cost $ 1,991,869   $ 1,727,802   $ 205,500   $ 236,250  
                         
Interest cost   2,875,350     2,624,280     306,000     295,500  
                         
Expected return on plan assets   (3,154,305 )   (2,900,520 )        
                         
Amortization of prior service cost           (39,750 )   (39,750 )
                         
Amortization of net loss   845,734     796,581     187,701     87,000  
                         
Amortization of transition obligation           3,750     3,750  
 
 
 
 
 
Net periodic benefit cost $ 2,558,648   $ 2,248,143   $ 663,201   $ 582,750  
 
 
 
 
 
 
     The Company anticipates that it will contribute $4.6 million to its pension plan and approximately $565,000 to its post-retirement benefits in 2007. During the first nine months of 2007, the Company contributed approximately $3.0 million to its pension plan and approximately $433,000 for post-retirement benefits.

15



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

9.  Other Service Charges, Commission and Fees, and Other Income

 
          Components of other service charges, commission and fees are as follows:
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
  (In thousands)  
Trust fees $ 3,892   $ 3,174   $ 11,708   $ 9,662  
Credit card merchant discount fees   2,025     1,744     5,975     5,316  
Income from insurance operations   4,256     4,145     13,657     13,900  
Investment and annuity fees   2,253     1,595     6,249     4,450  
ATM fees   1,434     1,223     4,116     3,790  
 
 
 
 
 
  Total other service charges, commissions
    and fees
$ 13,860   $ 11,881   $ 41,705   $ 37,118  
 
 
 
 
 
 
        Components of other income are as follows:
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
  (In thousands)  
Secondary mortgage market operations $ 935   $ 1,018   $ 2,962   $ 2,583  
Income from bank owned life insurance   1,246     1,115     3,665     2,870  
Outsourced check income   550     762     1,837     2,133  
Other   2,809     1,132     5,650     4,929  
 
 
 
 
 
   Total other income $ 5,540   $ 4,027   $ 14,114   $ 12,515  
 
 
 
 
 
 

10. Other Expense

          Components of other expense are as follows:

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007 2006 2007 2006
 
 
 
 
 
  (In thousands)  
Data processing expense $ 4,509   $ 3,632   $ 12,355   $ 8,189  
Postage and communications   2,616     1,936     7,564     6,881  
Ad valorem and franchise taxes   1,016     519     2,664     2,680  
Legal and professional services   3,482     3,641     11,572     9,506  
Stationery and supplies   483     519     1,614     1,604  
Advertising   1,796     1,985     5,390     5,091  
Deposit insurance and regulatory fees   257     257     766     550  
Training expenses   112     106     447     418  
Other fees   1,068     1,144     2,444     3,396  
Annuity expense   420     1,075     1,222     3,826  
Claims paid   447     560     1,345     1,564  
Other expense   2,502     1,930     6,530     7,536  
 
 
 
 
 
   Total other expense $ 18,708   $ 17,304   $ 53,913   $ 51,241  
 
 
 
 
 

16



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

11. Income Taxes

     The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, An Interpretation of FASB Statement No. 109  (“FIN 48”), on January 1, 2007 and determined that there was no need to make an adjustment to retained earnings due to the adoption of this Interpretation. The total balance of unrecognized tax benefits at September 30, 2007, was $30,044. The Company does not expect that unrecognized tax benefits will significantly increase or decrease within the next 12 months.

     It is the Company’s policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense. As of September 30, 2007, $3,571 in interest has been accrued on the Company’s balance sheet.

     The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various returns in the states where its banking offices are located. Its filed income tax returns are no longer subject to examination by taxing authorities for years before 2004.

12. Segment Reporting

     The Company’s primary segments are geographically divided into the Mississippi (MS), Louisiana (LA), Florida (FL) and Alabama (AL) markets. Each segment offers the same products and services but is managed separately due to different pricing, product demand, and consumer markets. Each segment offers commercial, consumer and mortgage loans and deposit services. In the following tables, the column “Other” includes additional consolidated subsidiaries of the Company: Hancock Investment Services, Inc. and subsidiaries, Hancock Insurance Agency, Inc. and subsidiaries, Harrison Finance Company, Magna Insurance Company and subsidiary and three real estate corporations owning land and buildings that house bank branches and other facilities.


17



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

12. Segment Reporting (continued)

     Following is selected information for the Company’s segments (in thousands):

 
Three Months Ended September 30, 2007  
MS   LA   FL   AL   Other   Eliminations   Consolidated  

 
 
 
 
 
 
 
Interest income $ 45,388   $ 37,917   $ 2,379   $ 237   $ 6,635   $ (4,895 ) $ 87,661  
Interest expense   20,186     17,703     1,277     151     1,930     (4,780 )   36,467  
 
 
 
 
 
 
 
      Net interest income   25,202     20,214     1,102     86     4,705     (115 )   51,194  
Provision for (reversal of ) loan losses   (1,043 )   518     889     103     1,087         1,554  
Noninterest income   13,804     9,754     236     14     6,721     (10 )   30,519  
Depreciation and amortization   2,322     873     119     19     117         3,450  
Other noninterest expense   23,469     17,771     1,459     385     8,714     (52 )   51,746  
 
 
 
 
 
 
 
Net income (loss) before
   income taxes
  14,258     10,806     (1,129 )   (407 )   1,508     (73 )   24,963  
Income tax expense (benefit)   4,013     2,854     (382 )   (126 )   865         7,224  
 
 
 
 
 
 
 
      Net income (loss) $ 10,245   $ 7,952   $ (747 ) $ (281 ) $ 643   $ (73 ) $ 17,739  
 
 
 
 
 
 
 
  
Total assets $ 3,227,798   $ 2,594,664   $ 158,669   $ 28,111   $ 818,740   $ (921,929 ) $ 5,906,053  
 
 
 
 
 
 
 
  
Total interest income from
  affiliates
$ 4,895   $   $   $   $   $ (4,895 ) $  
  
Total interest income from
  external customers
$ 40,493   $ 37,917   $ 2,379   $ 237   $ 6,635   $   $ 87,661  
  
Amortization & (accretion) of
  securities
$ 2   $ (72 ) $ 10   $   $ 7   $   $ (53 )
                                           
Three Months Ended September 30, 2006  
MS   LA   FL   AL   Other   Eliminations   Consolidated  

 
 
 
 
 
 
 
Interest income $ 49,909   $ 35,789   $ 2,044   $   $ 5,935   $ (4,444 ) $ 89,233  
Interest expense   19,515     14,434     739         1,628     (4,328 )   31,988  
 
 
 
 
 
 
 
 
      Net interest income   30,394     21,355     1,305         4,307     (116 )   57,245  
Provision for (reversal of ) loan losses   (15,294 )   (4,706 )                   (20,000 )
Noninterest income   11,681     8,179     117         5,776     (16 )   25,737  
Depreciation and amortization   1,474     609     76         124         2,283  
Other noninterest expense   22,984     15,404     1,429         8,248     (11 )   48,054  
 
 
 
 
 
 
 
 
Net income (loss) before
   income taxes
  32,911     18,227     (83 )       1,711     (121 )   52,645  
Income tax expense (benefit)   10,931     5,195     (96 )       584         16,614  
 
 
 
 
 
 
 
 
      Net income (loss) $ 21,980   $ 13,032   $ 13   $   $ 1,127   $ (121 ) $ 36,031  
 
 
 
 
 
 
 
 
  
Total assets $ 3,655,470   $ 2,405,757   $ 139,009   $   $ 780,778   $ (859,349 ) $ 6,121,665  
 
 
 
 
 
 
 
 
  
Total interest income from
  affiliates
$ 4,262   $   $ 66   $   $ 116   $ (4,444 ) $  
  
Total interest income from
  external customers
$ 45,647   $ 35,789   $ 1,978   $   $ 5,819   $   $ 89,233  
  
Amortization & (accretion) of
  securities
$ (2,529 ) $ (284 ) $ 13   $   $ 13   $   $ (2,787 )

18



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

12. Segment Reporting (continued)

 
Nine Months Ended September 30, 2007  
MS   LA   FL   AL   Other   Eliminations   Consolidated  

 
 
 
 
 
 
 
Interest income $ 135,819   $ 110,715   $ 7,228   $ 671   $ 19,056   $ (15,182 ) $ 258,307  
Interest expense   59,143     50,204     3,771     177     5,711     (14,837 )   104,169  
 
 
 
 
 
 
 
 
      Net interest income   76,676     60,511     3,457     494     13,345     (345 )   154,138  
Provision for (reversal of ) loan losses   (552 )   1,565     566     224     2,199         4,002  
Noninterest income   38,123     27,416     624     15     20,495     (33 )   86,640  
Depreciation and amortization   6,458     2,337     323     25     341         9,484  
Other noninterest expense   66,083     51,019     4,165     788     25,016     (363 )   146,708  
 
 
 
 
 
 
 
 
Net income (loss) before
   income taxes
  42,810     33,006     (973 )   (528 )   6,284     (15 )   80,584  
Income tax expense (benefit)   12,496     8,743     (469 )   (172 )   2,694         23,292  
 
 
 
 
 
 
 
 
      Net income (loss) $ 30,314   $ 24,263   $ (504 ) $ (356 ) $ 3,590   $ (15 ) $ 57,292  
 
 
 
 
 
 
 
 
  
Total assets $ 3,227,798   $ 2,594,664   $ 158,669   $ 28,111   $ 818,740   $ (921,929 ) $ 5,906,053  
 
 
 
 
 
 
 
 
  
Total interest income from
  affiliates
$ 15,133   $   $   $ 49   $   $ (15,182 ) $  
  
Total interest income from
  external customers
$ 120,686   $ 110,715   $ 7,228   $ 622   $ 19,056   $   $ 258,307  
  
Amortization & (accretion) of
  securities
$ (1,046 ) $ (1,040 ) $ 32   $   $ 29   $   $ (2,025 )
                                           
Nine Months Ended September 30, 2006  
MS   LA   FL   AL   Other   Eliminations   Consolidated  

 
 
 
 
 
 
 
Interest income $ 144,840   $ 100,812   $ 5,633   $   $ 15,611   $ (9,670 ) $ 257,226  
Interest expense   51,682     37,521     1,777         4,273     (9,356 )   85,897  
 
 
 
 
 
 
 
 
      Net interest income   93,158     63,291     3,856         11,338     (314 )   171,329  
Provision for (reversal of ) loan losses   (16,705 )   (4,188 )   43         145         (20,705 )
Noninterest income   33,931     23,551     337         18,961     (93 )   76,687  
Depreciation and amortization   4,600     1,866     225         351         7,042  
Other noninterest expense   68,118     47,005     3,741         24,801     (33 )   143,632  
 
 
 
 
 
 
 
 
Net income (loss) before
   income taxes
  71,076     42,159     184         5,002     (374 )   118,047  
Income tax expense (benefit)   23,751     12,415     (17 )       1,857         38,006  
 
 
 
 
 
 
 
 
      Net income (loss) $ 47,325   $ 29,744   $ 201   $   $ 3,145   $ (374 ) $ 80,041  
 
 
 
 
 
 
 
 
  
Total assets $ 3,655,470   $ 2,405,757   $ 139,009   $   $ 780,778   $ (859,349 ) $ 6,121,665  
 
 
 
 
 
 
 
 
  
Total interest income from
  affiliates
$ 9,091   $ 6   $ 259   $   $ 314   $ (9,670 ) $  
  
Total interest income from
  external customers
$ 135,749   $ 100,806   $ 5,374   $   $ 15,297   $   $ 257,226  
  
Amortization & (accretion) of
  securities
$ (8,192 ) $ (944 ) $ 40   $   $ 46   $   $ (9,050 )

19



Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

13. New Accounting Pronouncements

    In November 2007, the SEC issued Staff Accounting Bulletin No. 109, Written Loan Commitments Recorded at Fair Value Through Earnings (“SAB No. 109”). SAB No. 109 rescinds SAB No. 105’s prohibition on inclusion of expected net future cash flows related to loan servicing activities in the fair value measurement of a written loan commitment. SAB No. 109 also applies to any loan commitments for which fair value accounting is elected under SFAS No. 159. SAB No. 109 is effective prospectively for derivative loan commitments issued or modified in fiscal quarters beginning after December 15, 2007. The Company is currently assessing the financial impact of adopting SAB No. 109.

    In June 2007, the Financial Accounting Standards Board (“FASB”) ratified Emerging Issues Task Force (“EITF”) Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Award. The objective of this issue is to determine the accounting for the income tax benefits of dividend or dividend equivalents when the dividends or dividend equivalents are: (a) linked to equity-classified nonvested shares or share units or equity-classified outstanding share options and (b) charged to retained earnings under FASB Statement No. 123 (Revised 2004), Share-Based Payment. The Task Force reached a consensus that EITF No. 06-11 should be applied prospectively to the income tax benefits of dividends on equity-classified employee share-based payment awards that are declared in fiscal years beginning after September 15, 2007. Management is currently evaluating the requirements of EITF No. 06-11 but does not expect the impact to be significant.

     In March 2007, the FASB ratified EITF No. 06-10, Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements. One objective of EITF No. 06-10 is to determine whether a liability for future benefits under a collateral assignment split-dollar life insurance arrangement that provides a benefit to an employee that extends into postretirement periods should be recognized in accordance with SFAS No. 106 or APB Opinion 12, as appropriate, based on the substantive agreement with the employee. Another objective of EITF No. 06-10 is to determine how the asset arising from a collateral assignment split-dollar life insurance arrangement should be recognized and measured. EITF No. 06-10 is effective for fiscal years beginning after December 15, 2007. Management is currently evaluating the requirements of EITF No. 06-10 but does not expect the impact to be significant.

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment SFAS No. 115 (“SFAS No. 159”) which permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS No. 159 are elective; however, the amendment to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. The FASB’s stated objective in issuing this standard is as follows: “to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.” The fair value option established by SFAS No. 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings (or another performance indicator if the business entity does not report earnings) at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. The Company will adopt the provisions of SFAS No. 159 in the first quarter of 2008, as required but does not expect the impact to be significant.


20



     Hancock Holding Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements – (Continued)
(Unaudited)

13. New Accounting Pronouncements (continued)

     In September 2006, the FASB issued Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 106, and 132(R) (“SFAS No. 158”). This pronouncement requires an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its balance sheet. SFAS No. 158 also requires an employer to recognize changes in that funded status in the year in which the changes occur through comprehensive income effective for fiscal years ending after December 15, 2006. In addition, this statement requires an employer to measure the funded status of a plan as of its year-end balance sheet date effective for fiscal years ending after December 15, 2008. The Company adopted the requirement to recognize the funded status of the benefit plans and related disclosure requirements as of December 31, 2006. The Company is currently evaluating the requirements of SFAS No. 158 related to the measurement date and has not yet determined the impact of adoption on the Company’s consolidated financial statements.

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) which defines fair value, establishes a framework for measuring fair value under accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company will be required to adopt SFAS No. 157 in the first quarter of fiscal year 2008. Management is currently evaluating the requirements of SFAS No. 157 but does not expect the impact to be significant.

        In September 2006, the FASB ratified the consensus the EITF reached regarding EITF No. 06-5, Accounting for Purchases of Life Insurance - Determining the Amount that Could Be Realized in Accordance with FASB Technical Bulletin 85-4. EITF No. 06-5 concluded that a policyholder should consider any additional amounts included in the contractual terms of the life insurance policy in determining the “amount that could be realized under the insurance contract.” For group policies with multiple certificates or multiple policies with a group rider, the Task Force also tentatively concluded that the amount that could be realized should be determined at the individual policy or certificate level, i.e., amounts that would be realized only upon surrendering all of the policies or certificates would not be included when measuring the assets. The Company adopted EITF No. 06-5 effective January 1, 2007. The adoption of EITF No. 06-5 has not had a material impact on the Company’s financial condition or results of operations.

        In September 2005, the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (“SOP 05-1”). SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. The Company adopted SOP 05-1 effective January 1, 2007. The adoption of SOP 05-1 has not had a material impact on the Company’s financial condition or results of operations.


21



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview  

     General

     The following discussion should be read in conjunction with our financial statements included with this report and our financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2006 included in our Annual Report on Form 10-K. Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements are based on certain assumptions we consider reasonable. For information about these assumptions, you should refer to the section below entitled “Forward-Looking Statements.”

     We were organized in 1984 as a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and are headquartered in Gulfport, Mississippi. We currently operate more than 140 banking and financial services offices and more than 130 automated teller machines (ATMs) in the states of Mississippi, Louisiana, Florida and Alabama through four wholly-owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi (Hancock Bank MS), Hancock Bank of Louisiana, Baton Rouge, Louisiana (Hancock Bank LA), Hancock Bank of Florida, Tallahassee, Florida (Hancock Bank FL) and Hancock Bank of Alabama, Mobile, Alabama (Hancock Bank AL). Hancock Bank MS, Hancock Bank LA, Hancock Bank FL and Hancock Bank AL 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. Our operating strategy is to provide our 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 September 30, 2007, we had total assets of $5.9 billion and employed on a full-time equivalent basis 1,319 persons in Mississippi, 571 persons in Louisiana, 49 persons in Florida and 27 persons in Alabama.

        Net income for the third quarter of 2007 totaled $17.7 million, a decrease of $18.3 million, or 51%, from the third quarter of 2006. Diluted earnings per share for the third quarter of 2007 were $0.55, a decrease of $0.56 from the same quarter a year ago. Return on average assets for the third quarter of 2007 was 1.21% compared to 2.36% for the third quarter of 2006. Return on average common equity was 12.58% compared to 27.58% for the same quarter a year ago.

        Net income for 2006 was affected by several items related to the impact of Hurricane Katrina, which made landfall in our operating region on August 29, 2005. In the third quarter of 2006, we reversed $20.0 million from the storm-related allowance for loan losses due to better than expected loss experience with storm-impacted credits, adding $13.0 million in after-tax earnings and $.39 in diluted earnings per share to the third quarter of 2006.

RESULTS OF OPERATIONS

Net Interest Income

     Net interest income (te) for the third quarter decreased $5.7 million, or 10%, from the third quarter of 2006. The primary driver of the $5.7 million decrease in net interest income (te) was a $250 million, or 5%, decrease in average earning assets mainly to fund a reduction in total borrowings of $98.6 million, or 32%, and a decrease in average deposits of $114.1 million, or 2%. The decrease in borrowings and deposits was generally attributable to the regional post-Katrina economy. Our net interest margin (te) was 4% in the third quarter, 23 basis points narrower than the same quarter a year ago as the increase in the average earning asset yield (21 basis points) did not offset the increase in total funding costs (45 basis points). See tables on pages 25-30 for details.


22



Provision for Loan Losses

          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 recoveries of loans previously charged-off. 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. Provisions are made to the allowance to reflect the currently perceived risks of loss associated with our loan portfolio. Management utilizes quantitative methodologies and modeling to determine the adequacy of the allowance for loan and lease losses and is of the opinion that the allowance at September 30, 2007 is adequate.

      Annualized net charge-offs, as a percent of average loans, were 0.21% for the third quarter of 2007, compared to 0.34% in the third quarter of 2006.

        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 in thousands).

 
  At and for the  
Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
2007   2006   2007   2006  

 
 
 
 
Annualized net charge-offs to average loans   0.21 %   0.34 %   0.19 %   0.24 %
  
Annualized provision (recovery) for loan losses
      to average loans
  0.18 %   (2.60 %)   0.16 %   (0.92 %)
  
Average allowance for loan losses to average loans   1.33 %   1.99 %   1.38 %   2.32 %
  
Gross charge-offs $ 3,610   $ 6,358   $ 10,207   $ 15,022  
  
Gross recoveries $ 1,730   $ 3,750   $ 5,334   $ 9,521  
  
Non-accrual loans $ 8,500   $ 5,179   $ 8,500   $ 5,179  
  
Accruing loans 90 days or more past due $ 3,819   $ 3,626   $ 3,819   $ 3,626  
 

     Accruing loans 90 days or more past due increased $193,000 from September 30, 2006. Since December 31, 2005, accruing loans 90 days or more past due, net of deferrals, have decreased $21.8 million to $3.8 million at September 30, 2007. In the third quarter of 2006, we reversed $20.0 million from the storm-related allowance for loan losses due to better than expected loss experience with storm-impacted credits, adding $13.0 million in after-tax earnings and $.39 in diluted earnings per share to the third quarter of 2006. This decrease is related to improved ability of certain borrowers to meet their regular payments after Hurricane Katrina.

Noninterest Income

        Noninterest income (excluding securities transactions) for the third quarter was up $4.9 million, or 19%, compared to the same quarter a year ago. The primary factors impacting the higher levels of non-interest income (excluding securities transactions) as compared to the same quarter a year ago, were higher levels of service charge income (up $1.4 million, or 14%), trust fees (up $0.7 million, or 23%), investment and annuity fees (up $0.7 million, or 29%) and other income (up $1.6 million, or 35%).

        The components of noninterest income for the three and nine months ended September 30, 2007 and 2006 are presented in the following table:


23



Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
2007   2006   2007   2006  
 
 
 
 
 
(In thousands)  
Service charges on deposit accounts $ 11,085   $ 9,719   $ 30,747   $ 26,826  
Trust fees   3,892     3,174     11,708     9,662  
Credit card merchant discount fees   2,025     1,744     5,975     5,316  
Income from insurance operations   4,256     4,145     13,657     13,900  
Investment and annuity fees   2,253     1,595     6,249     4,450  
ATM fees   1,434     1,223     4,116     3,790  
Secondary mortgage market operations   935     1,018     2,962     2,583  
Other income   4,605     3,009     11,152     9,932  




   Total other noninterest income   30,485     25,627     86,566     76,459  
Securities transactions gains, net   34     110     74     228  




   Total noninterest income $ 30,519   $ 25,737   $ 86,640   $ 76,687  




 

Noninterest Expense

     Operating expenses for the third quarter were $4.9 million, or 10%, higher compared to the same quarter a year ago. The increase from the same quarter a year ago was reflected in higher levels of occupancy expense (up $1.8 million), personnel expense (up $1.5 million) and other operating expense (up $1.4 million).

     The following table presents the components of noninterest expense for the three and nine months ended September 30, 2007 and 2006.

 
Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
2007   2006   2007   2006  
 
 
 
 
 
(In thousands)  
Employee compensation $ 22,575   $ 21,790   $ 63,195   $ 64,429  
Employee benefits   5,956     5,269     16,737     15,232  




      Total salaries and employee benefits   28,531     27,059     79,932     79,661  




Equipment and data processing expense   7,323     6,279     20,209     16,320  
Net occupancy expense   4,731     2,882     13,273     10,015  
Postage and communications   2,616     1,936     7,564     6,881  
Ad valorem and franchise taxes   1,016     519     2,664     2,680  
Legal and professional services   3,482     3,641     11,572     9,506  
Stationery and supplies   483     519     1,614     1,604  
Amortization of intangible assets   412     445     1,219     1,626  
Advertising   1,796     1,985     5,390     5,091  
Deposit insurance and regulatory fees   257     257     766     550  
Training expenses   112     106     447     418  
Other real estate owned expense   7     93     (633 )   (242 )
Other expense   4,430     4,616     12,175     16,564  




   Total noninterest expense $ 55,196   $ 50,337   $ 156,192   $ 150,674  




 

Income Taxes

      Our effective federal income tax rate continues to be less than the statutory rate of 35% due primarily to tax-exempt interest income. For the nine months ended September 30, 2007 and 2006, the effective federal income tax rates were approximately 29% and 32%, respectively. The decrease in the effective rate in 2007 is due primarily to the increase in the percentage of tax-exempt interest income as it relates to book income. The total amount of tax-exempt income earned during the first nine months of 2007 was $12.7 million compared to $10.9 million for the comparable period in 2006. Tax-exempt income for nine months ended September 30, 2007 consisted of $4.8 million from securities and $7.9 million from loans and leases. Tax-exempt income for the


24



first nine months of 2006 consisted of $5.0 million from securities and $5.9 million from loans and leases.

Selected Financial Data

      The following tables contain selected financial data comparing our consolidated results of operations for the three and nine months ended September 30, 2007 and 2006.

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2007   2006   2007   2006  

 
 
 
 
Per Common Share Data
(In thousands, except per share data)  
Earnings per share:                
    Basic $ 0.55   $ 1.11   $ 1.77   $ 2.46  
    Diluted $ 0.55   $ 1.08   $ 1.74   $ 2.41  
Cash dividends per share $ 0.240   $ 0.240   $ 0.720   $ 0.655  
Book value per share (period end) $ 17.55   $ 16.64   $ 17.55   $ 16.64  
Weighted average number of shares:                        
    Basic   32,005     32,566     32,299     32,500  
    Diluted (1)   32,492     33,333     32,847     33,274  
Period end number of shares   31,786     32,584     31,786     32,584  
Market data:                        
    High price $ 43.90   $ 56.79   $ 54.09   $ 57.19  
    Low price $ 32.78   $ 49.71   $ 32.78   $ 37.75  
    Period end closing price $ 40.08   $ 53.55   $ 40.08   $ 53.55  
    Trading volume   10,290     8,135     30,485     20,883  
   
(1)
There were 0 and 49,852 anti-dilutive share-based incentives outstanding for the three and nine months ended September 30, 2007, respectively. There were 31,925 and 67,911 anti-dilutive share-based incentives outstanding for the three and nine months ended September 30, 2006, respectively.

25



Three Months Ended
September 30,
Nine Months Ended
September 30,
2007   2006   2007   2006  

 
 
 
 
Performance Ratios
(dollar amounts in thousands)  
Return on average assets   1.21%     2.36%     1.31%     1.77%  
Return on average common equity   12.58%     27.58%     13.63%     21.42%  
Earning asset yield (Tax Equivalent (“TE”))   6.81%     6.60%     6.74%     6.36%  
Total cost of funds   2.75%     2.30%     2.65%     2.08%  
Net interest margin (TE)   4.06%     4.29%     4.09%     4.28%  
Common equity (period end) as a percent of
  total assets (period end)
  9.45%     8.86%     9.45%     8.86%  
Leverage ratio (period end)   8.82%     8.15%     8.82%     8.15%  
FTE Headcount   1,966     1,788     1,966     1,788  
                         
Asset Quality Information                        
Non-accrual loans $ 8,500   $ 5,179   $ 8,500   $ 5,179  
Foreclosed assets $ 1,374   $ 970   $ 1,374   $ 970  
Total non-performing assets $ 9,874   $ 6,149   $ 9,874   $ 6,149  
Non-performing assets as a percent of loans and
 foreclosed assets
  0.28%     0.20%     0.28%     0.20%  
Accruing loans 90 days past due $ 3,819   $ 3,626   $ 3,819   $ 3,626  
Accruing loans 90 days past due as a percent of loans   0.11%     0.12%     0.11%     0.12%  
Non-performing assets + accruing loans 90 days
   past due to loans and foreclosed assets
  0.39%     0.31%     0.39%     0.31%  
Net charge-offs $ 1,880   $ 2,608   $ 4,873   $ 5,501  
Net charge-offs as a percent of average loans   0.21%     0.34%     0.19%     0.24%  
Allowance for loan losses $ 45,901   $ 48,352   $ 45,901   $ 48,352  
Allowance for loan losses as a percent
   of period end loans
  1.31%     1.55%     1.31%     1.55%  
Allowance for loan losses to NPAs + accruing
   loans 90 days past due
  335.22%     494.65%     335.22%     494.65%  
Provision for (reversal of) loan losses $ 1,554     ($ 20,000 ) $ 4,002     ($ 20,705 )
                         
Average Balance Sheet                        
Total loans $ 3,470,282   $ 3,080,441   $ 3,378,789   $ 3,015,434  
Securities   1,668,279     2,334,242     1,743,641     2,254,068  
Short-term investments   120,116     94,026     139,323     255,265  




Earning assets   5,258,677     5,508,709     5,261,753     5,524,767  
Allowance for loan losses   (46,216 )   (61,525 )   (46,475 )   (69,840 )
Other assets   624,566     602,833     610,249     590,642  




Total assets $ 5,837,027   $ 6,050,017   $ 5,825,527   $ 6,045,569  




                         
Noninterest bearing deposits $ 893,455   $ 1,098,716   $ 942,360   $ 1,158,844  
Interest bearing transaction deposits   1,383,851     1,590,318     1,445,384     1,666,689  
Interest bearing public fund deposits   823,316     791,825     806,476     780,947  
Time deposits   1,837,292     1,571,129     1,730,787     1,494,748  




Total interest bearing deposits   4,044,459     3,953,272     3,982,647     3,942,384  




Total deposits   4,937,914     5,051,988     4,925,007     5,101,228  
Other borrowed funds   206,072     304,686     203,025     267,666  
Other liabilities   133,695     175,093     135,396     177,183  
Stockholders’ equity   559,346     518,250     562,099     499,492  




Total liabilities & stockholders’ equity $ 5,837,027   $ 6,050,017   $ 5,825,527   $ 6,045,569  





26



Three Months Ended
September 30,
Nine Months Ended
September 30,
2007   2006   2007   2006  

 
 
 
 
Period end Balance Sheet
(dollar amounts in thousands)  
Commercial/real estate loans $ 2,090,992   $ 1,800,643   $ 2,090,992   $ 1,800,643  
Mortgage loans   432,154     416,691     432,154     416,691  
Direct consumer loans   494,667     471,837     494,667     471,837  
Indirect consumer loans   380,561     350,013     380,561     350,013  
Finance company loans   114,919     83,278     114,919     83,278  




Total loans   3,513,293     3,122,462     3,513,293     3,122,462  
Loans held for sale   17,698     18,700     17,698     18,700  
Securities   1,681,850     2,303,396     1,681,850     2,303,396  
Short-term investments   99,176     74,903     99,176     74,903  




Earning assets   5,312,017     5,519,461     5,312,017     5,519,461  
Allowance for loan losses   (45,901 )   (48,352 )   (45,901 )   (48,352 )
Other assets   639,937     650,556     639,937     650,556  




Total assets $ 5,906,053   $ 6,121,665   $ 5,906,053   $ 6,121,665  




Noninterest bearing deposits $ 891,842   $ 1,062,392   $ 891,842   $ 1,062,392  
Interest bearing transaction deposits   1,357,835     1,510,785     1,357,835     1,510,785  
Interest bearing public funds deposits   837,073     795,927     837,073     795,927  
Time deposits   1,912,799     1,631,504     1,912,799     1,631,504  




Total interest bearing deposits   4,107,707     3,938,216     4,107,707     3,938,216  




Total deposits   4,999,549     5,000,608     4,999,549     5,000,608  
Other borrowed funds   216,481     430,827     216,481     430,827  
Other liabilities   132,048     148,129     132,048     148,129  
Stockholders' equity   557,975     542,101     557,975     542,101  




Total liabilities & stockholders’ equity $ 5,906,053   $ 6,121,665   $ 5,906,053   $ 6,121,665  




Net Charge-Off Information                        
Net charge-offs (recoveries):                        
Commercial/real estate loans   ($ 58 ) $ 522   $ 47     ($ 628 )
Mortgage loans       367     1     576  
Direct consumer loans   864     1,003     1,835     3,264  
Indirect consumer loans   314     294     1,216     1,338  
Finance company loans   760     422     1,774     951  




Total net charge-offs $ 1,880   $ 2,608   $ 4,873   $ 5,501  




Net charge-offs to average loans:                        
Commercial/real estate loans   -0.01 %   0.12 %   0.00 %   -0.05 %
Mortgage loans   0.00 %   0.34 %   0.00 %   0.19 %
Direct consumer loans   0.70 %   0.85 %   0.50 %   0.93 %
Indirect consumer loans   0.33 %   0.34 %   0.45 %   0.51 %
Finance company loans   2.74 %   2.11 %   2.34 %   1.77 %




Total net charge-offs to average net loans   0.21 %   0.34 %   0.19 %   0.24 %





27



Three Months Ended
September 30,
Nine Months Ended
September 30,
2007   2006   2007   2006  

 
 
 
 
Average Balance Sheet Composition
(dollar amounts in thousands)  
Percentage of earning assets/funding sources:                        
Loans   65.99%     55.92%     64.21%     54.58%  
Securities   31.73%     42.37%     33.14%     40.80%  
Short-term investments   2.28%     1.71%     2.65%     4.62%  




Earning assets   100.00%     100.00%     100.00%     100.00%  




Non-interest bearing deposits   16.99%     19.95%     17.91%     20.98%  
Interest bearing transaction deposits   26.32%     28.87%     27.47%     30.16%  
Interest bearing public funds deposits   15.66%     14.37%     15.33%     14.14%  
Time deposits   34.93%     28.52%     32.89%     27.06%  




Total deposits   93.90%     91.71%     93.60%     92.34%  
Other borrowed funds   3.92%     5.53%     3.86%     4.84%  
Other net interest-free funding sources   2.18%     2.76%     2.54%     2.82%  




Total funding sources   100.00%     100.00%     100.00%     100.00%  




Loan mix:                        
Commercial/real estate loans   59.25%     57.11%     58.98%     56.76%  
Mortgage loans   12.66%     13.75%     12.82%     13.75%  
Direct consumer loans   14.16%     15.28%     14.44%     15.53%  
Indirect consumer loans   10.77%     11.28%     10.77%     11.58%  
Finance company loans   3.16%     2.58%     2.99%     2.38%  




Total loans   100.00%     100.00%     100.00%     100.00%  




Average dollars                        
Loans $ 3,470,282   $ 3,080,441   $ 3,378,789   $ 3,015,434  
Securities   1,668,279     2,334,242     1,743,641     2,254,068  
Short-term investments   120,116     94,026     139,323     225,265  




Earning assets $ 5,258,677   $ 5,508,709   $ 5,261,753   $ 5,494,767  




Non-interest bearing deposits $ 893,455   $ 1,098,716   $ 942,360   $ 1,158,844  
Interest bearing transaction deposits   1,383,851     1,590,318     1,445,384     1,666,689  
Interest bearing public funds deposits   823,316     791,825     806,476     780,947  
Time deposits   1,837,292     1,571,129     1,730,787     1,494,748  




Total deposits   4,937,914 &nb