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Hancock Holding Company anno^..ces earnings for second quarter 2008
July 22. 2008 — Addl —
•	Allowance for Loan Losses: Hancock recorded a provision for loan losses of $2.8 million in the second quarter which, when combined with the quarter’s net charge-offs of $2.5 million, resulted in a $0.3 million increase in the allowance for loan losses between March 31, 2008, and June 30, 2008. This increase was necessary to adjust the allowance to the level dictated by the Company’s reserving methodologies. The Company’s allowance for loan losses was $53.3 million at June 30, 2008, up $0.3 million from the $53.0 million reported at March 31, 2008. The ratio of the allowance for loan losses as a percent of period-end loans was 1.41 percent at June 30, 2008, as compared to the 1.46 percent reported at March 31, 2008. The Company’s first quarter increase in the allowance for loan losses of $6.4 million anticipated deterioration in certain credits reflected in this quarter’s increase in non-accrual loans. Management believes the June 30, 2008, allowance level is adequate.
•	Loans: For the quarter ended June 30, 2008, Hancock’s average total loans were $3.71 billion, which represented an increase of $340.5 million, or 10.1 percent, from the quarter ended June 30, 2007. Period-end loans were up $148.8 million, or 4.1 percent, compared to March 31, 2008. Average total loans were up $73.3 million, or 8.1 percent annualized, from the first quarter of 2008. Of that increase, approximately $30.7 million was in Louisiana, $23.4 million in Alabama, and $19.2 million in Florida.
•	Deposits: Period-end deposits for the second quarter were $5.02 billion, up $43.1 million, or 0.9 percent, from June 30, 2007, and were down $122.8 million, or 2.4 percent, from March 31, 2008. Average deposits were down $85.1 million, or 6.8 percent annualized, from the first quarter of 2008. The decreases in average deposits were in time deposits (down $161.6 million) and public fund deposits (down $15.8 million). These decreases were offset by increases in non-interest-bearing deposits (up $21.7 million) and interest-bearing transaction deposits (up $70.6 million).
•	Net Interest Income: Net interest income (te) for the second quarter increased $0.8 million, or 1.5 percent, from the second quarter of 2007, and increased $1.7 million from the first quarter of 2008, or 12.8 percent annualized. The net interest margin (te) of 3.90 percent was 27 basis points narrower than the same quarter a year ago. Growth in average earning asset levels were strong compared to the same quarter a year ago with an increase of $435.8 million, or 8.4 percent, mostly reflected in higher average loans (up $340.5 million, or 10.1 percent). With short-term interest rates down significantly from a year ago, the Company’s loan yield fell 106 basis points, pushing the yield on average earning assets down 74 basis points. However, total funding costs over the past year were down only 47 basis points. Compared to the prior quarter, the net interest margin (te) widened 10 basis points, mostly due to a significant reduction in the Company’s funding costs. The Company’s total cost of funds was down 35 basis points compared to the previous quarter with rates on time deposits down 61 basis points. Over $609 million of time deposits matured in the second quarter at a weighted rate of 4.72 percent. The Company was able to retain and re-price 79 percent of those maturing deposits into lower rate CDs. As the interest rate environment stabilizes, the Company’s net interest margin will continue to widen and return to a more normalized level.
•	Non-interest income: Non-interest income, excluding securities transactions, for the second quarter was up $0.7 million, or 2.2 percent, compared to the same quarter a year ago and was also up $0.7 million, or 2.2 percent, compared to the previous quarter. The primary factors impacting the higher levels of noninterest income (excluding securities transactions), as compared to the same quarter a year ago, were higher levels of service charge income (up $408 thousand, or 3.9 percent), investment and annuity fees (up $709 thousand or 35.2 percent), trust revenue (up $451 thousand, or 11.0 percent), and debit card fees (up $329 thousand or 23.1 percent). These increases were offset by decreases in insurance fees (down $774 thousand or 15.4 percent), other income (down $346 thousand or 8.9 percent), and secondary mortgage market operations (down $363 thousand or 32.5 percent). The increase in noninterest income (excluding securities transactions) for the second quarter compared to the prior quarter was primarily due to increases in trust fees (up $400 thousand or 9.6 percent), and debit card fees (up $344 thousand or 13.6 percent).
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