Hancock Holding Company
Financial Highlights
Operating Income (a)
(in millions)
$194.1
(unaudited, amounts in thousands, except per share data)
Income Data
$188.0
$2.32
‘14
‘14
$54.3
$1.46
$2.13
$2.22
$2.02
‘12
‘13
‘12
‘13
‘10
‘10
‘11
‘11
$184.0
$133.2
Operating Diluted EPS (a)
I I I I I
I I I I I
I I I I I
I I I I I
Return on Equity-Operating (a)
Return on Assets-Operating (a)
7.7% 7.9%
0.97%
0.90%
6.3%
7.4%
0.64%
‘11
‘11
‘10
‘12
‘10
‘12
‘13
‘13
‘14
‘14
7.8%
0.99% 1.00%
Net income
Operating income (a)
Core Income (b)
Net interest income (te)*
Per Common Share Data
Net income—diluted
Operating income—diluted (a)
Core income—diluted (b)
Book value (end of period)
Tangible book value (end of period)
Cash dividends paid
Period-End Balance Sheet Data
Total securities
Total loans
Total earning assets
Total assets
Total deposits
Total common stockholders’ equity
Key Ratios
2014
2013
$
$
175,722
194,145
159,191
665,341
2.10
2.32
1.90
30.74
21.37
0.96
$
$
163,356
187,990
121,100
691,141
1.93
2.22
1.43
29.49
19.94
0.96
$ 3,826,454
13,895,276
18,544,930
20,747,266
16,572,831
2,472,402
$ 4,033,124
12,324,817
16,651,295
19,009,251
15,360,516
2,425,069
Return on average assets
Return on average assets, operating (a)
Return on average common equity
Return on average common equity, operating (a)
Net interest margin (te)*
Core net interest margin (c)
(cid:40)(cid:73)(cid:403)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:53)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:11)(cid:71)(cid:12)(cid:3)
Allowance for loan losses to period-end loans
Tangible common equity ratio
Leverage ratio
(cid:3)
0.90%
1.00%
7.10%
7.84%
3.87%
3.33%
(cid:25)(cid:21)(cid:17)(cid:19)(cid:22)(cid:8)(cid:3)
0.93%
8.59%
9.17%
0.86%
0.99%
6.84%
7.88%
4.20%
3.39%
(cid:25)(cid:24)(cid:17)(cid:20)(cid:26)(cid:8)
1.08%
9.00%
9.34%
(cid:3)
(cid:3)(cid:3)(cid:3)(cid:3)(cid:43)(cid:68)(cid:81)(cid:70)(cid:82)(cid:70)(cid:78)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:58)(cid:75)(cid:76)(cid:87)(cid:81)(cid:72)(cid:92)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:45)(cid:88)(cid:81)(cid:72)(cid:3)(cid:23)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:20)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:374)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)
(cid:3)(cid:3)(cid:3)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:337)(cid:86)(cid:3)(cid:373)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:17)
*Tax Equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.
(a) Net income less tax-effected nonoperating expense items and securities gains/losses. Management believes that
(cid:3)(cid:3)(cid:3)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:88)(cid:86)(cid:72)(cid:73)(cid:88)(cid:79)(cid:3)(cid:373)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:69)(cid:72)(cid:70)(cid:68)(cid:88)(cid:86)(cid:72)(cid:3)(cid:76)(cid:87)(cid:3)(cid:72)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:81)(cid:74)(cid:82)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)
(b) Operating income excluding tax-effected purchase accounting adjustments. Management believes that reporting
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management is successfully executing its strategic initiatives.
(c) Reported net interest income (te) excluding net purchase accounting adjustments, expressed as a percentage
of average earning assets
(d) Noninterest expense as a percent of total revenue (te) before amortization of purchased intangibles, securities
transactions, and nonoperating expense items
To Our Shareholders
In 2013 Hancock Holding Company announced an updated strategic
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replace declining purchase accounting income from recent mergers
with quality core results.
(cid:55)(cid:75)(cid:82)(cid:88)(cid:86)(cid:68)(cid:81)(cid:71)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:68)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:403)(cid:89)(cid:72)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:86)(cid:87)(cid:72)(cid:68)(cid:71)(cid:76)(cid:79)(cid:92)(cid:3)(cid:69)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:3)
(cid:87)(cid:82)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:17)(cid:3)(cid:41)(cid:85)(cid:82)(cid:81)(cid:87)(cid:16)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:68)(cid:70)(cid:78)(cid:16)(cid:82)(cid:73)(cid:403)(cid:70)(cid:72)(cid:3)(cid:87)(cid:72)(cid:68)(cid:80)(cid:86)(cid:3)(cid:70)(cid:79)(cid:68)(cid:85)(cid:76)(cid:403)(cid:72)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:82)(cid:70)(cid:88)(cid:86)(cid:3)
(cid:69)(cid:92)(cid:3)(cid:74)(cid:72)(cid:82)(cid:74)(cid:85)(cid:68)(cid:83)(cid:75)(cid:92)(cid:15)(cid:3)(cid:86)(cid:72)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:72)(cid:87)(cid:3)(cid:74)(cid:82)(cid:68)(cid:79)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:68)(cid:89)(cid:72)(cid:3)(cid:80)(cid:82)(cid:81)(cid:72)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:86)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:3)(cid:85)(cid:82)(cid:69)(cid:88)(cid:86)(cid:87)(cid:3)(cid:87)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)
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(cid:403)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:76)(cid:80)(cid:83)(cid:79)(cid:72)(cid:85)(cid:15)(cid:3)(cid:72)(cid:68)(cid:86)(cid:76)(cid:72)(cid:85)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:72)(cid:87)(cid:87)(cid:72)(cid:85)(cid:3)(cid:90)(cid:68)(cid:92)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:92)(cid:82)(cid:88)(cid:85)(cid:3)
(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:42)(cid:88)(cid:79)(cid:73)(cid:3)(cid:54)(cid:82)(cid:88)(cid:87)(cid:75)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:17)
John Hairston
President & CEO
(cid:58)(cid:72)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:15)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:82)(cid:83)(cid:76)(cid:81)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)
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Guiding Opportunity. Business leaders serving on the company’s board of directors
are (back row, from left) Terry Hall, Randy Hanna, Tom Olinde, King Milling,
John Hairston, Robert Roseberry, bank advisory director George Schloegel,
Anthony Topazi; (front row, from left) Frank Bertucci, Eric Nickelsen, Hardy Fowler,
Jim Horne, Jim Estabrook, Christy Pickering, and Jerry Levens.
(cid:44)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:71)(cid:3)(cid:53)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)
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(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:15)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:88)(cid:85)(cid:81)(cid:15)(cid:3)(cid:72)(cid:81)(cid:75)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:17)
(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:68)(cid:78)(cid:72)(cid:3)(cid:68)(cid:90)(cid:68)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:331)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:72)(cid:87)(cid:75)(cid:82)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:88)(cid:86)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:72)(cid:3)(cid:403)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:90)(cid:82)(cid:3)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)
(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:68)(cid:3)(cid:80)(cid:72)(cid:85)(cid:74)(cid:72)(cid:85)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:69)(cid:72)(cid:79)(cid:76)(cid:72)(cid:89)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:15)(cid:3)(cid:85)(cid:68)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:15)(cid:3)
(cid:87)(cid:72)(cid:79)(cid:79)(cid:3)(cid:68)(cid:3)(cid:70)(cid:79)(cid:72)(cid:68)(cid:85)(cid:72)(cid:85)(cid:15)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:68)(cid:79)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:92)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:333)(cid:86)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:72)(cid:86)(cid:86)(cid:17)
(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:7)(cid:22)(cid:27)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:22)(cid:20)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:11)(cid:40)(cid:51)(cid:54)(cid:12)(cid:3)(cid:74)(cid:85)(cid:72)(cid:90)(cid:3)(cid:7)(cid:19)(cid:17)(cid:23)(cid:26)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:15)(cid:3)(cid:88)(cid:83)(cid:3)(cid:22)(cid:22)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)(cid:17)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:74)(cid:85)(cid:72)(cid:90)(cid:3)
(cid:7)(cid:20)(cid:17)(cid:25)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:20)(cid:22)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:17)(cid:3)(cid:56)(cid:83)(cid:3)(cid:7)(cid:20)(cid:17)(cid:21)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:27)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:12)(cid:15)(cid:3)(cid:71)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:86)(cid:3)(cid:73)(cid:88)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)
most of that loan growth.
1
EPS ROA
$0.56 $0.55
$0.56 $0.55
$0.34
$0.36 $0.34
$0.39
$0.58
$0.59
$0.59
$0.56
$0.49 $0.50
$0.45 $0.46
$0.22 $0.19
$0.22
1.03%
0.99% 0.99% 0.97%
1.05% 1.04%
1.00%
0.92%
0.80% 0.82% 0.84% 0.82%
0.62% 0.64% 0.61%
0.70%
0.41%
0.35% 0.38%
$0.16 $0.13 $0.13 $0.10
$0.06
0.27% 0.25%
0.22%
0.16%
0.10%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
"PAA Gap"
Core EPS
Operating EPS
"PAA Gap"(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)Core ROA
Operating ROA
Core Value. The gap between operating results and core numbers—the better
picture for true performance—should close in 2015.
(cid:55)(cid:82)(cid:71)(cid:68)(cid:92)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)
(cid:81)(cid:68)(cid:85)(cid:85)(cid:82)(cid:90)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:7)(cid:19)(cid:17)(cid:19)(cid:25)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:15)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:3)(cid:7)(cid:19)(cid:17)(cid:21)(cid:21)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)
(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:74)(cid:82)(cid:17)(cid:3)(cid:49)(cid:82)(cid:90)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:68)(cid:83)(cid:3)(cid:76)(cid:81)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)
(cid:7)(cid:24)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:53)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:11)(cid:53)(cid:50)(cid:36)(cid:12)(cid:3)(cid:76)(cid:86)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:20)(cid:19)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)(cid:3)
(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)(cid:80)(cid:68)(cid:85)(cid:74)(cid:76)(cid:81)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:92)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:10)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:15)(cid:3)
(cid:86)(cid:87)(cid:68)(cid:92)(cid:72)(cid:71)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:3)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:15)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:25)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)
(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:80)(cid:72)(cid:87)(cid:85)(cid:76)(cid:70)(cid:86)(cid:3)(cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:71)(cid:15)(cid:3)(cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:72)(cid:73)(cid:403)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:71)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:22)(cid:19)(cid:19)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)
(cid:37)(cid:92)(cid:3)(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:73)(cid:88)(cid:79)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:90)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:3)
(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:16)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)(cid:3)(cid:92)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:85)(cid:72)(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)
concurrent $50 million decline in pre-tax purchase accounting income.
(cid:58)(cid:72)(cid:3)(cid:90)(cid:72)(cid:79)(cid:70)(cid:82)(cid:80)(cid:72)(cid:71)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:79)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:7)(cid:21)(cid:20)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17)
Straightforward Structure
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differences and current market share.
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Mike Achary
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Joe Exnicios
Whitney Bank President
Shane Loper
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Concierge Banking. The company is introducing upscale
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the best in virtual and face-to-face banking.
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and create more opportunities for strong core deposits.
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commercial clients through our credit card and treasury management
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1.5 million shares of Hancock
Holding Company stock under
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as appropriate.
Oil Impact
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our stock price stems from market
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25 Years Strong. BauerFinancial, Inc.,
has recognized the company’s strong
capital and common sense way of doing
business for 101 consecutive quarters.
Oil Business. The company has weathered industry cycles with some of
the world’s most successful energy businesses since 1934.
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(cid:76)(cid:81)(cid:87)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:83)(cid:72)(cid:81)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:403)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:86)(cid:3)(cid:11)(cid:37)(cid:41)(cid:38)(cid:12)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)
(cid:68)(cid:3)(cid:69)(cid:72)(cid:87)(cid:87)(cid:72)(cid:85)(cid:15)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:335)(cid:70)(cid:82)(cid:81)(cid:70)(cid:76)(cid:72)(cid:85)(cid:74)(cid:72)(cid:336)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:68)(cid:70)(cid:75)(cid:3)(cid:87)(cid:82)(cid:3)(cid:403)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:82)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)
(cid:82)(cid:83)(cid:72)(cid:81)(cid:72)(cid:71)(cid:3)(cid:87)(cid:90)(cid:82)(cid:3)(cid:37)(cid:41)(cid:38)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:41)(cid:79)(cid:82)(cid:85)(cid:76)(cid:71)(cid:68)(cid:3)(cid:11)(cid:51)(cid:82)(cid:81)(cid:87)(cid:72)(cid:3)(cid:57)(cid:72)(cid:71)(cid:85)(cid:68)(cid:3)(cid:37)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:68)(cid:85)(cid:68)(cid:86)(cid:82)(cid:87)(cid:68)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:81)(cid:72)(cid:3)
(cid:76)(cid:81)(cid:3)(cid:43)(cid:82)(cid:88)(cid:86)(cid:87)(cid:82)(cid:81)(cid:15)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:90)(cid:68)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:37)(cid:41)(cid:38)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)
(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:3)
(cid:81)(cid:72)(cid:87)(cid:90)(cid:82)(cid:85)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:21)(cid:19)(cid:19)(cid:3)(cid:73)(cid:88)(cid:79)(cid:79)(cid:16)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:69)(cid:85)(cid:68)(cid:81)(cid:70)(cid:75)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:79)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:22)(cid:19)(cid:19)(cid:3)(cid:36)(cid:55)(cid:48)(cid:86)(cid:3)
(cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:43)(cid:68)(cid:81)(cid:70)(cid:82)(cid:70)(cid:78)(cid:3)(cid:37)(cid:68)(cid:81)(cid:78)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:58)(cid:75)(cid:76)(cid:87)(cid:81)(cid:72)(cid:92)(cid:3)(cid:37)(cid:68)(cid:81)(cid:78)(cid:3)(cid:70)(cid:79)(cid:76)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:333)(cid:86)(cid:3)(cid:403)(cid:89)(cid:72)(cid:16)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:73)(cid:82)(cid:82)(cid:87)(cid:83)(cid:85)(cid:76)(cid:81)(cid:87)(cid:17)
(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:76)(cid:79)(cid:3)(cid:69)(cid:72)(cid:74)(cid:68)(cid:81)(cid:3)(cid:73)(cid:68)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:403)(cid:70)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)
(cid:55)(cid:75)(cid:68)(cid:81)(cid:78)(cid:86)(cid:74)(cid:76)(cid:89)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:76)(cid:93)(cid:72)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)
(cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:86)(cid:17)(cid:3)(cid:60)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:333)(cid:86)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:72)(cid:71)(cid:3)(cid:7)(cid:20)(cid:17)(cid:26)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)
(cid:82)(cid:85)(cid:3)(cid:20)(cid:21)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:86)(cid:15)(cid:3)(cid:68)(cid:87)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:16)(cid:72)(cid:81)(cid:71)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:17)(cid:3)
(cid:40)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:79)(cid:72)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:90)(cid:72)(cid:3)(cid:76)(cid:81)(cid:75)(cid:72)(cid:85)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)
(cid:58)(cid:75)(cid:76)(cid:87)(cid:81)(cid:72)(cid:92)(cid:3)(cid:37)(cid:68)(cid:81)(cid:78)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:25)(cid:19)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:15)(cid:3)
(cid:58)(cid:75)(cid:76)(cid:87)(cid:81)(cid:72)(cid:92)(cid:3)(cid:81)(cid:88)(cid:85)(cid:87)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:75)(cid:76)(cid:83)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:74)(cid:82)(cid:3)(cid:69)(cid:68)(cid:70)(cid:78)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)
(cid:44)(cid:81)(cid:3)(cid:73)(cid:68)(cid:70)(cid:87)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:86)(cid:87)(cid:76)(cid:79)(cid:79)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:403)(cid:85)(cid:86)(cid:87)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:70)(cid:79)(cid:76)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)
(cid:68)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:71)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:20)(cid:28)(cid:22)(cid:23)(cid:17)(cid:3)
3
(cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:69)(cid:88)(cid:76)(cid:79)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:71)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)
(cid:79)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:74)(cid:72)(cid:82)(cid:74)(cid:85)(cid:68)(cid:83)(cid:75)(cid:92)(cid:15)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:87)(cid:92)(cid:83)(cid:72)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:17)(cid:3)
(cid:43)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:76)(cid:70)(cid:68)(cid:79)(cid:79)(cid:92)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:70)(cid:79)(cid:76)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:90)(cid:72)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:73)(cid:88)(cid:79)(cid:3)
(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:78)(cid:81)(cid:82)(cid:90)(cid:3)(cid:90)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:71)(cid:82)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:87)(cid:68)(cid:92)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:78)(cid:76)(cid:81)(cid:71)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:85)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:92)(cid:70)(cid:79)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:82)(cid:74)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:70)(cid:79)(cid:76)(cid:72)(cid:81)(cid:87)(cid:86)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:73)(cid:88)(cid:79)(cid:79)(cid:92)(cid:3)
weathered similar conditions for six-plus decades.
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current portfolio. We may see downgrades to risk ratings in future
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oil price and the duration of this cycle.
115 Years & Forward
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who put their trust in us.
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work for the past four years.
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goals and dreams.
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(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:3)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:92)(cid:82)(cid:88)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:92)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:403)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:43)(cid:68)(cid:81)(cid:70)(cid:82)(cid:70)(cid:78)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:17)(cid:3)(cid:3)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:76)(cid:81)(cid:70)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:72)(cid:70)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:15)
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Super-Celebration. Marking its 115th birthday in 2014, the bank has
championed Gulf South opportunity since the late 1800s.
Focus on Success. Seasoned executives guide the company's Gulf South banking leadership,
including (back row, from left) Mike Dickerson, Mike Achary, Shane Loper, John Hairston,
Joe Exnicios, Ed Francis, Clif Saik, Joy Phillips; (front row, from left) Gerry Dugal, Rudi
Thompson, Mike Otero, Suzanne Thomas, Sam Kendricks, Cindy Collins, and Steve Barker.
(cid:23)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014.
OR
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-13089
Hancock Holding Company
(Exact name of registrant as specified in its charter)
Mississippi
(State or other jurisdiction of incorporation or organization)
64-0693170
(I.R.S. Employer Identification Number)
One Hancock Plaza, Gulfport, Mississippi
(Address of principal executive offices)
39501
(Zip Code)
(228) 868-4727
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
(Title of Class)
COMMON STOCK, $3.33 PAR VALUE
(Name of Exchange on Which Registered)
The NASDAQ Stock Market, LLC
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act. Yes ‘ No È
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 È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,
if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). Yes È No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. È
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 È
Non-accelerated filer ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes ‘ No È
The aggregate market value of the voting stock held by nonaffiliates of the registrant as of February 20, 2015 was
$2.9 billion based upon the closing market price on NASDAQ on June 30, 2014. For purposes of this calculation
only, shares held by nonaffiliates are deemed to consist of (a) shares held by all shareholders other than directors
and executive officers of the registrant plus (b) shares held by directors and officers as to which beneficial
ownership has been disclaimed.
‘
Accelerated filer
Smaller reporting company ‘
On January 31, 2015, the registrant had 80,436,669 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for our annual meeting of shareholders to be filed with the Securities
and Exchange Commission (“SEC” or “The Commission”) are incorporated by reference into Part III of this
report.
Hancock Holding Company
Form 10-K
Index
PART I
BUSINESS
ITEM 1.
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2.
ITEM 3.
ITEM 4. MINE SAFETY DISCLOSURES
PROPERTIES
LEGAL PROCEEDINGS
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
SELECTED FINANCIAL DATA
ITEM 6.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.
ITEM 9.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 14.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1
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[THIS PAGE INTENTIONALLY LEFT BLANK]
PART I
ITEM 1. BUSINESS
ORGANIZATION AND RECENT DEVELOPMENTS
Hancock Holding Company (which we refer to as Hancock or the Company) is a financial services company that
provides a comprehensive network of full-service financial choices to the Gulf South region through its bank
subsidiary, Whitney Bank, a Mississippi state bank. Whitney Bank operates under two century-old brands:
“Hancock Bank” in Mississippi, Alabama and Florida and “Whitney Bank” in Louisiana and Texas.
Hancock was organized in 1984 as a bank holding company registered under the Bank Holding Company Act of
1956, as amended. In 2002, the Company qualified as a financial holding company giving it broader powers. The
corporate headquarters of the Company is in Gulfport, Mississippi.
Prior to March 31, 2014, Hancock was the parent company of two wholly-owned bank subsidiaries, Hancock
Bank and Whitney Bank. On March 31, 2014, Hancock consolidated the legal charters of its two subsidiary
banks and renamed the consolidated entity Whitney Bank. Whitney Bank continues to do business under the
original regional brand names, Hancock Bank and Whitney Bank. Hancock Bank, Whitney Bank, and the
recently consolidated Whitney Bank are referred to collectively as the “Bank” throughout this document.
At December 31, 2014, the Company had 3,794 employees on a full-time equivalent basis. Our balance sheet,
with $20.7 billion in assets, has grown substantially over the past several years. Historically, our growth was
primarily through internal branch expansions into areas of population that were not served by a dominant
financial institution and through several small acquisitions. However, the substantial growth we have had in the
last several years is primarily attributable to our acquisition of two sizeable institutions, which significantly
expanded the geographic scope of the overall organization.
• On December 18, 2009, we acquired the assets and assumed the liabilities of Panama City, Florida
based Peoples First Community Bank (Peoples First) in a transaction with financial assistance from the
Federal Deposit Insurance Corporation (FDIC). This acquisition added approximately $2 billion in
assets. The loans from this transaction were covered by two loss share agreements between the FDIC
and the Company that provide significant protection against loan losses. At December 31, 2014, $197
million of loans are still covered by one of the loss share agreements.
• On June 4, 2011, we acquired all of the outstanding common stock of Whitney Holding Corporation
(Whitney), a bank holding company based in New Orleans, Louisiana, in a stock and cash transaction.
The acquisition added $11.7 billion in assets, $6.5 billion in loans, and $9.2 billion in deposits.
Our growth since the Whitney acquisition has been organic through the expansion of products that are targeted
across the Company’s footprint.
NATURE OF BUSINESS AND MARKETS
The Bank operates across the Gulf South region comprised of southern Mississippi; southern and central
Alabama; southern Louisiana; the northern, central, and panhandle regions of Florida; and Houston, Texas. The
Bank offers a broad range of traditional and online community banking services to commercial, small business
and retail customers, providing a variety of transaction and savings deposit products, treasury management
services, investment brokerage services, secured and unsecured loan products, (including revolving credit
facilities), and letters of credit and similar financial guarantees. The Bank also provides trust and investment
management services to retirement plans, corporations and individuals.
We also offer other services through several nonbank subsidiaries. Hancock Investment Services, Inc. provides
discount investment brokerage services, annuity products, and life insurance. Hancock Insurance Agency
provides general insurance agency services, including life and title insurance. Harrison Finance Company
1
provides consumer financing services. We also have several special purpose subsidiaries that operate and sell
certain foreclosed assets. Total revenue from nonbank subsidiaries accounted for less than ten percent of our
consolidated revenue in 2014.
In April, 2014, Hancock sold its property and casualty and group benefits lines of business within its subsidiary
insurance agencies. Hancock established a referral program through which the Bank can continue providing
clients with these services. Although the lines of business divested represented approximately half of the
Company’s 2013 insurance revenue, they did not have a material impact on operating results.
Our operating strategy is to provide customers with the financial sophistication and range of products of a
regional bank, while successfully retaining the commercial appeal and level of service of a community bank.
The main industries along the Gulf Coast are energy and related service industries, military and government-
related facilities, educational and medical complexes, petrochemical industries, port facility activities and
transportation and related industries, tourism and related service industries, and the gaming industry.
We will continue to evaluate future acquisition opportunities that have the potential to increase shareholder
value. In-market expansion is our first priority. However, we would also consider strategic opportunities in new
markets that would expand our geographic and industry diversity, such as Texas locations outside the Houston
area and northern Alabama.
Acquisitions and continued organic growth have diversified our sources of revenue and enhanced core deposit
funding. Hancock’s size and scale enables us to attract and retain high quality associates. We remain focused on
maintaining two hallmarks of our past culture: a strong balance sheet and a commitment to excellent credit
quality.
Additional information is available at www.hancockbank.com and www.whitneybank.com.
Loan Production, Underwriting Standards and Credit Review
The Bank’s primary lending focus is to provide commercial, consumer and real estate loans to consumers, to
small and middle market businesses, and to corporate clients in the markets served by the Bank. We seek to
provide quality loan products that are attractive to the borrower and profitable to Hancock. We look to build
strong, profitable client relationships over time and maintain a strong presence and position of influence in the
communities we serve. Through our relationship-based approach we have developed a deep knowledge of our
customers and the markets in which they operate. The Company continually works to improve the consistency of
its lending processes across our banking footprint, to strengthen the underwriting criteria we employ to evaluate
new loans and loan renewals, and to diversify our loan portfolio in terms of type, industry and geographical
concentration. We believe that these measures better position Hancock to meet the credit needs of businesses and
consumers in the markets it serves while it pursues a balanced strategy of loan profitability, loan growth and loan
quality.
The following describes the underwriting procedures of the lending function and presents our principal categories
of loans. The results of our lending activities and the relative risk of the loan portfolio are discussed in “Part II—
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report.
The Bank has a set of loan policies, underwriting standards and key underwriting functions designed to achieve a
consistent approach. These underwriting standards address:
•
•
•
collateral requirements;
guarantor requirements (including policies on financial statements, tax returns, and guarantees);
requirements regarding appraisals and their review;
2
•
•
•
•
•
loan approval hierarchy;
standard consumer and small business credit scoring underwriting criteria (including credit score
thresholds, maximum maturity and amortization, loan-to-value limits, global debt service coverage,
and debt to income limits);
commercial real estate and commercial and industrial underwriting guidelines (including minimum
debt service coverage ratio, maximum amortization, minimum equity requirements, maximum loan-to-
value ratios);
lending limits;
and credit approval authorities.
Additionally, we consistently monitor our loan concentration policy to review limits and manage our exposures
within specified concentration tolerances, including those to particular borrowers, foreign entities, industries and
property types for commercial real estate. This policy calls for portfolio risk management and reporting, the
monitoring of large borrower concentration limits and systematic tracking of large commercial loans and our
portfolio mix. We continue to monitor our concentration of commercial real estate and energy-related loans to
ensure the mix is consistent with our risk tolerance. The Company defines concentration as the total of funded
and unfunded commitments (excluding loans acquired in the People’s First transaction covered under loss-
sharing agreements with the FDIC) as a percentage of total Bank capital (as defined for risk-based capital ratios).
The Company had the following industry concentrations as of December 31, 2014:
• Non-owner occupied commercial real estate — 148%
• Mining, Oil and Gas — 146%
• Manufacturing — 61%
• Construction — 42%
• Retail Trade — 41%
• Healthcare — 35%
• Wholesale Trade — 41%
• Transportation and Warehousing — 31%
Our underwriting process is structured to require oversight that is proportional to the size and complexity of the
lending relationship. We delegate designated relationship managers and credit officers loan authority that can be
utilized to approve credit commitments for a single borrowing relationship. The limit of delegated authority is
based upon the experience, skill, and training of the relationship manager or credit officer. Certain types and size
of loans and relationships must be approved by either one of the Bank’s centralized underwriting units or the
Bank’s executive loan committee.
Loans are underwritten in accordance with the underwriting standards and loan policies of the Bank. Loans are
underwritten primarily on the basis of the borrower’s ability to make debt service payments timely, and
secondarily on collateral value. Generally, real estate secured loans and mortgage loans are made when the
borrower produces evidence of the ability to make debt service timely along with appropriate equity in the
property. Appropriate and regulatory compliant third party valuations are required at the time of origination for
real estate secured loans.
Loan portfolio data is presented as either originated, acquired, or FDIC acquired loans because these segments
use different accounting and allowance methodologies. Loans reported as “originated” include both loans
originated for investment and acquired-performing loans where the discount (premium) has been fully amortized
(accreted). Loans reported as “acquired” are those purchased in the Whitney acquisition on June 4, 2011. Loans
reported as “FDIC acquired” are those purchased in the December 2009 acquisition of Peoples First, which were
3
covered by loss share agreements between the FDIC and the Company that afford significant loss protection
against loan losses from the Peoples First loan portfolio. The non-single family portfolio of the loss share
agreement expired on December 31, 2014. Within these categories, we have commercial, residential mortgage
and consumer loans.
Commercial
The Bank offers a variety of commercial loan services to a diversified customer base over a range of industries,
including energy, wholesale and retail trade in various durable and nondurable products, manufacturing of such
products, marine transportation and maritime construction, financial and professional services, and agricultural
production. Commercial loans are categorized as commercial non-real estate, construction and land development,
and commercial real estate loans.
Commercial non-real estate loans, both secured and unsecured, are made available to businesses for working
capital (including financing of inventory and receivables), business expansion, and the purchase of equipment
and machinery. These loans are primarily made based on the identified cash flows of the borrower and, if
secured, on the underlying collateral. Most commercial non-real estate loans are secured by the assets being
financed or other business assets such as accounts receivable or inventory and may incorporate a personal or
corporate guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans
secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially
dependent on the ability of the borrower to collect amounts due from its customers.
The Bank makes construction and land development loans to builders and real estate developers for the
acquisition, development and construction of business and residential-purpose properties. Acquisition and
development loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity
analysis of real estate absorption and lease rates, and financial analysis of the developers and property owners.
Construction loans are generally based upon cost estimates and the projected value of the completed project. The
Bank monitors the construction process to mitigate or identify risks as they arise. Construction loans often
involve the disbursement of substantial funds with repayment largely dependent on the success of the ultimate
project. Sources of repayment for these types of construction loans may be pre-committed permanent loans from
approved long-term lenders, sales of developed property, or an interim loan commitment from the Bank until
permanent financing is obtained. These loans are typically closely monitored by on-site inspections and are
considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to
interest rate changes, governmental regulation of real property, general economic conditions, and the availability
of long-term financing to take out the construction loan. The Bank also makes owner occupied loans for the
acquisition, development and improvements of real property to commercial customers to be used in their
business operations. These loans are underwritten subject to normal commercial and industrial credit standards
and are generally subject to project tracking processes, similar to those required for the non-owner occupied
loans.
Commercial real estate loans consist of commercial mortgages on both income-producing and owner-occupied
properties. We have executed a strategy to increase the proportion of loans secured by owner-occupied properties
in recent years and reduce the number of speculative real estate projects. Loans secured by income-producing
properties are viewed primarily as cash flow loans and undergo the analysis and underwriting process of a
commercial and industrial loan, as well as that of a real estate loan. Repayment of non-owner occupied loans is
generally dependent on the successful operation of the income-producing property securing the loan. Commercial
real estate loans may be adversely affected by conditions in the real estate markets or in the general economy.
The properties securing the Bank’s commercial real estate portfolios are diverse in terms of type and geographic
location. We monitor and evaluate commercial real estate loans based on collateral, geography and risk grade
criteria. Many of the markets within the footprint have shown signs of improvement in values over the past 12
months. However, commercial real estate lending can represent an area of elevated risk, so we actively monitor
this segment of the portfolio.
4
Residential Mortgage
A portion of the Bank’s lending activities consists of the origination of both fixed-rate and adjustable-rate home
loans, although we re-sell most longer-term fixed-rate loans that we originate in the secondary mortgage market
on a best-efforts basis. The sale of mortgage loans allows the Bank to manage the interest rate risks related to
such lending operations.
Consumer
Consumer loans include second mortgage home loans, home equity lines of credit and non-residential consumer
purpose loans. Non-residential consumer loans include both direct and indirect loans. Direct non-residential
consumer loans are made to finance automobiles, recreational vehicles, boats, and other personal (secured and
unsecured) and deposit account secured loans. An indirect non-residential loan is automobile financing provided
to the consumer through an agreement with automobile dealerships. Consumer loans are attractive because they
typically have a shorter term, provide granularity of size for the overall portfolio, and produce a higher overall
yield. The Bank also has a small portfolio of credit card receivables issued on the basis of applications received
through referrals from the Bank’s branches and other marketing efforts. The Bank approves consumer loans
based on employment and financial information submitted by prospective borrowers as well as credit reports
collected from various credit agencies. Financial stability and credit history of the borrower are the primary
factors the Bank considers in granting such loans. The availability of collateral is also a factor considered in
making such loans. The geographic area of the borrower is another consideration, with preference given to
borrowers in the Bank’s primary market areas.
A small consumer finance portfolio is maintained by Harrison Finance Company. The portfolio has a higher
credit risk profile than the Bank’s consumer portfolio, but carries a higher yield.
Securities Portfolio
Our investment portfolio primarily consists of U.S. agency debt securities, U.S. agency mortgage-related
securities and obligations of states and municipalities classified as available for sale and held to maturity. The
Company considers the available for sale portfolio as one of its many sources of liquidity available to fund our
operations. Investments are made in accordance with an investment policy approved by the Board of Directors.
The investment portfolio is tested under multiple stressed interest rate scenarios, the results of which are used to
manage our interest rate risk position. The rate scenarios include regulatory and management agreed upon
instantaneous and ramped rate movements that may be up to plus 500 basis points. The combined portfolio has a
target effective duration of two to five. The effective duration provides a measure of the Company’s portfolio
price sensitivity to a 100 bases point change in interest rates.
We also utilize a significant portion of the securities portfolio to secure certain deposits and other liabilities
requiring collateralization. However to maintain an adequate level of liquidity, we limit the percentage of
securities that can be pledged in order to keep a portion of securities available for sale. The securities portfolio
can also be pledged to increase our line of credit availability at the Federal Home Loan Bank of Dallas, although
we have not had to do so.
The investments subcommittee of the asset\liability committee (ALCO) is responsible for evaluating issues
related to the management of the investment portfolio. The investments subcommittee is also responsible for the
development of investment strategies for the consideration and approval of the ALCO. Final authority and
responsibility for all aspects of the conduct of investment activities rests with the board risk committee, all in
accordance with the overall guidance and limitations of the investment policy.
Deposits
The Bank has several programs designed to attract depository accounts from consumers and small and middle
market businesses at interest rates generally consistent with market conditions. Deposits are the most significant
funding source for the Company’s interest-earning assets. Deposits are attracted principally from clients within
5
our retail branch network through the offering of a broad array of deposit products to individuals and businesses,
including noninterest-bearing demand deposit accounts, interest-bearing transaction accounts, savings accounts,
money market deposit accounts, and time deposit accounts. Terms vary among deposit products with respect to
commitment periods, minimum balances, and applicable fees. Interest paid on deposits represents the largest
component of our interest expense. Interest rates offered on interest-bearing deposits are determined based on a
number of factors, including, but not limited to, (1) interest rates offered in local markets by competitors,
(2) current and expected economic conditions, (3) anticipated future interest rates, (4) the expected amount and
timing of funding needs, and (5) the availability and cost of alternative funding sources. Deposit flows are
controlled by the Bank primarily through pricing, and to a lesser extent, through promotional activities.
Management believes that the rates that it offers, which are posted weekly on deposit accounts, are generally
competitive with other financial institutions in the Bank’s respective market areas. Client deposits are attractive
sources of funding because of their stability and low relative cost. Deposits are regarded as an important part of
the overall client relationship and provide opportunities to cross-sell other bank services.
The Bank also holds public funds as deposits. The Bank’s strategy for acquiring public funds, as with any type of
deposit, is determined by ALCO’s Funding and Liquidity Sub-Committee while pricing decisions are determined
by ALCO’s Deposit Pricing Sub-committee. Typically many public fund deposits are allocated based upon the
rate of interest offered and the ability of the bank to provide collateralization. The Bank can influence the level of
its public fund deposits through pricing decisions. Public deposits typically require the pledging of collateral,
most commonly marketable securities. This is taken into account when determining the level of interest to be
paid on public deposits. The pledging of collateral, monitoring and management reporting represents additional
operational requirements for the Bank. Public fund deposits are more volatile because they tend to be price
sensitive and have high balances. Public funds have not historically presented any special risks to the Bank.
Public funds are only one of many possible sources of liquidity that the Bank has available to draw upon as part
of its liquidity funding strategy as set by ALCO.
The Bank accepted brokered deposits in 2014 as part of their contingency funding plan (“CFP”). The Company
issued three-month brokered CDs through third-party intermediaries as test issuances under the CFP. However,
brokered deposits have not been used as a long-term funding source. Under the Federal Deposit Insurance
Corporation Improvement Act of 1991 (“FDICIA”), we may continue to accept brokered deposits as long as we
are “well-capitalized” or “adequately-capitalized”.
Trust Services
The Bank, through its trust department, offers a full range of trust services on a fee basis. In its trust capacities,
the Bank provides investment management services on an agency basis and acts as trustee for pension plans,
profit sharing plans, corporate and municipal bond issues, living trusts, life insurance trusts and various other
types of trusts created by or for individuals, businesses, and charitable and religious organizations. As of
December 31, 2014, the trust departments of the Bank had approximately $15.3 billion of assets under
administration compared to $14.1 billion as of December 31, 2013. As of December 31, 2014, administered
assets include investment management and investment advisory agency accounts totaling $4.5 billion, corporate
trust accounts totaling $4.5 billion, and the remaining balances were personal, employee benefit, estate and other
trust accounts.
COMPETITION
The financial services industry is highly competitive in our market area. The principal competitive factors in the
markets for deposits and loans are interest rates and fee structures associated with the various products offered. We
also compete through the efficiency, quality, and range of services and products we provide, as well as the
convenience provided by an extensive network of customer access channels including local branch offices, ATMs,
online banking, and telebanking centers. In attracting deposits and in our lending activities, we generally compete
with other commercial banks, savings associations, credit unions, mortgage banking firms, consumer finance
companies, securities brokerage firms, mutual funds and insurance companies, and other financial institutions.
6
AVAILABLE INFORMATION
We make available free of charge, on or through our website www.hancockbank.com, our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and amendments to such filings, as soon as
reasonably practicable after each is electronically filed with, or furnished to, the SEC. You may read and copy
any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC
20549. Information on the operation of the Public Reference Room may be obtained by calling the Commission
at 1-800-SEC-0330. The SEC maintains a website that contains the Company’s reports, proxy and information
statements, and the Company’s other SEC filings. The address of the SEC’s website is www.sec.gov.
Information appearing on the Company’s website is not part of any report that it files with the SEC.
SUPERVISION AND REGULATION
Bank Holding Company Regulation
The Company is subject to extensive regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”) pursuant to the Bank Holding Company Act of 1956, as amended (the “Bank Holding
Company Act”). The Company is also required to file certain reports with, and otherwise comply with the rules
and regulations of the SEC under federal securities laws.
Federal Regulation
The Company is registered with the Federal Reserve as a bank holding company and has elected to be treated as
a financial holding company under the Bank Holding Company Act. As such, the Company and its subsidiaries
are subject to the supervision, examination and reporting requirements of the Bank Holding Company Act and
the regulations of the Federal Reserve.
The Bank Holding Company Act generally prohibits a corporation that owns a federally insured financial
institution (“bank”) from engaging in activities other than banking, managing or controlling banks or other
subsidiaries engaging in permissible activities. Also prohibited is acquiring or obtaining control of more than 5%
of the voting interests of any company that engages in activities other than those activities determined by the
Federal Reserve to be so closely related to banking, managing or controlling banks as to be proper incident
thereto. In determining whether a particular activity is permissible, the Federal Reserve considers whether the
performance of the activity can reasonably be expected to produce benefits to the public that outweigh possible
adverse effects. Examples of activities that the Federal Reserve has determined to be permissible are making,
acquiring or servicing loans; leasing personal property; providing certain investment or financial advice;
performing certain data processing services; acting as agent or broker in selling credit life insurance; and
performing certain insurance underwriting activities. The Bank Holding Company Act does not place territorial
limits on permissible bank-related activities of bank holding companies. Even with respect to permissible
activities, however, the Federal Reserve has the power to order a holding company or its subsidiaries to terminate
any activity or its control of any subsidiary when the Federal Reserve has reasonable cause to believe that
continuation of such activity or control of such subsidiary would pose a serious risk to the financial safety,
soundness or stability of any bank subsidiary of that holding company.
The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the
Federal Reserve before it: (1) acquires ownership or control of any voting shares of any bank if, after such
acquisition, such bank holding company will own or control more than 5% of the voting shares of such bank,
(2) or any of its non-bank subsidiaries acquire all of the assets of a bank, (3) merges with any other bank holding
company, or (4) engages in permissible non-banking activities. In reviewing a proposed covered acquisition, the
Federal Reserve considers a bank holding company’s financial, managerial and competitive posture. The future
prospects of the companies and banks concerned and the convenience and needs of the community to be served
are also considered. The Federal Reserve also reviews the indebtedness to be incurred by a bank holding
company in connection with the proposed acquisition to ensure that the bank holding company can service such
7
indebtedness without adversely affecting its ability, and the ability of its subsidiaries, to meet their respective
regulatory capital requirements. The Bank Holding Company Act further requires that consummation of
approved bank holding company or bank acquisitions or mergers must be delayed for a period of not less than 15
or more than 30 days following the date of Federal Reserve approval. During such 15 to 30-day period, the
Department of Justice has the right to review the competitive aspects of the proposed transaction. The
Department of Justice may file a lawsuit with the relevant United States Court of Appeals seeking an injunction
against the proposed acquisition.
As described above, the prior approval of the Federal Reserve must be obtained before the Company may acquire
substantially all of the assets of any bank, or ownership or control of any voting shares of any bank, if, after such
acquisition, it would own or control, directly or indirectly, more than 5% of the voting shares of such bank. The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Riegle-Neal Act”) permits
adequately capitalized and managed bank holding companies to acquire control of banks in any state, subject to
federal regulatory approval, without regard to whether such a transaction is prohibited by the laws of any state.
The Riegle-Neal Act further provides that a bank holding company may not, following an interstate acquisition,
control more than 10% of nationwide insured deposits or 30% of deposits within any state in which the acquiring
bank operates. States have the right to adopt legislation to lower the 30% limit, although no states within the
Company’s current market area have done so. Additional provisions require that interstate activities conform to
the Community Reinvestment Act, which is intended to encourage depository institutions to help meet the credit
needs of the communities in which they operate, including low-and moderate-income neighborhoods, consistent
with safe and sound operations.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) authorizes
national and state banks to establish de novo branches in other states to the same extent a bank chartered in those
states would be so permitted.
The Gramm-Leach-Bliley Act of 1999 (the “Financial Services Modernization Act”) established a
comprehensive framework that permits affiliations among qualified bank holding companies, commercial banks,
insurance companies, securities firms, and other financial service providers by revising and expanding the Bank
Holding Company Act framework to permit a holding company to engage in a full range of financial activities
through a financial holding company.
Capital Requirements
General Risk-Based and Leverage-Based Capital Requirements
The Federal Reserve has adopted capital adequacy guidelines for use in its examination and regulation of bank
holding companies and financial holding companies. The regulatory capital of a bank holding company or
financial holding company under applicable federal capital adequacy guidelines is particularly important in the
Federal Reserve’s evaluation of the overall safety and soundness of the bank holding company or financial
holding company and are important factors considered by the Federal Reserve in evaluating any applications
made by such holding company to the Federal Reserve. If regulatory capital falls below minimum guideline
levels, a financial holding company may lose its status as a financial holding company and a bank holding
company or bank may be denied approval to acquire or establish additional banks or non-bank businesses or to
open additional facilities.
Additionally, each bank subsidiary of a financial holding company as well as the holding company itself must be
well capitalized and well managed as determined by the subsidiary bank’s principal federal regulator, which in
the case of the Bank, is the FDIC. To be considered well managed, the bank and holding company must have
received at least a satisfactory composite rating and a satisfactory management rating at its most recent
examination. The Federal Reserve rates bank holding companies through a confidential component and
composite 1-5 rating system, with a composite rating of 1 being the highest rating and 5 being the lowest. This
system is designed to help identify institutions requiring special attention. Financial institutions are assigned
8
ratings based on evaluation and rating of their financial condition and operations. Components reviewed include
capital adequacy, asset quality, management capability, the quality and level of earnings, the adequacy of
liquidity and sensitivity to interest rate fluctuations. As of December 31, 2014, the Company and the Bank were
both well capitalized and well managed.
A financial holding company that becomes aware that it or a subsidiary bank has ceased to be well capitalized or
well managed must notify the Federal Reserve and enter into an agreement to cure the identified deficiency. If
the deficiency is not cured timely, the Federal Reserve Board may order the financial holding company to divest
its banking operations. Alternatively, to avoid divestiture, a financial holding company may cease to engage in
the financial holding company activities that are unrelated to banking or otherwise impermissible for a bank
holding company.
There are two measures of regulatory capital applicable to holding companies in 2014: (1) leverage capital ratio
and (2) risk-based capital ratios.
Tier 1 leverage capital ratio
Risk-based capital ratios
Tier 1 capital
Total risk-based capital (Tier 1 plus Tier 2)
Minimum
Company
at
12/31/2014
3.00%
9.17%
4.00%
8.00%
11.23%
12.30%
The essential difference between the leverage capital ratio and the risk-based capital ratios is that the latter
identify and weight both balance sheet and off-balance sheet risks. Tier 1 capital generally includes common
equity, retained earnings, qualifying minority interests (issued by consolidated depository institutions or foreign
bank subsidiaries), accounts of consolidated subsidiaries and an amount of qualifying perpetual preferred stock,
limited to 50% of Tier 1 capital. In calculating Tier 1 capital, goodwill and other disallowed intangibles and
disallowed deferred tax assets and certain other assets are excluded. Tier 2 capital is a secondary component of
risk-based capital, consisting primarily of perpetual preferred stock that may not be included as Tier 1 capital,
mandatory convertible securities, certain types of subordinated debt and an amount of the allowance for loan
losses (limited to 1.25% of risk weighted assets).
The risk-based capital guidelines are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies, to take into account off-balance sheet
exposure and to minimize disincentives for holding liquid assets. Under the risk-based capital guidelines, assets
are assigned to one of four risk categories: 0%, 20%, 50% and 100%. For example, U.S. Treasury securities are
assigned to the 0% risk category while most categories of loans are assigned to the 100% risk category. Off-
balance sheet exposures such as standby letters of credit are risk-weighted and all or a portion thereof are
included in risk-weighted assets based on an assessment of the relative risks that they present. The risk-weighted
asset base is equal to the sum of the aggregate dollar values of assets and off-balance sheet items in each risk
category, multiplied by the weight assigned to that category.
Basel III Capital Requirements Effective January 1, 2015
On July 2, 2013, the Company’s and the Bank’s primary federal regulators—the Federal Reserve and the
FDIC—adopted final rules implementing the Basel III framework, which substantially revises the leverage and
risk-based capital requirements currently applicable to bank holding companies and depository institutions.
These final rules are based on international capital accords of the Basel Committee on Banking Supervision (the
“Basel Committee”).
9
The new rules address both the components of capital and other issues affecting the numerator in banking
institutions’ regulatory capital ratios, as well as the risk weights and other issues affecting the denominator,
replacing the existing Basel I-derived risk weighting approach with a more risk-sensitive approach based, in part,
on the standardized approach in the Basel Committee’s 2004 “Basel II” capital accords. Regarding the
denominator, under the final rules, the Company, among other items, will be required to increase the risk weights
applied to certain high volatility commercial real estate loans and to certain loans past due. Additionally, the
Company will be required to risk weight at 20% the conversion factors for commitments with an original
maturity of one year or less that are not unconditionally cancellable at any time. Regarding the numerator under
the final rules, NOLs and tax credits carried forward will be deducted from Tier 1 capital. Additionally, there are
deductions and adjustments to capital for goodwill and other intangibles as well as deductions and adjustments to
capital by the amount that the carrying value of certain assets exceeds 10% of capital. Examples of these assets
are deferred tax assets, mortgage servicing rights, significant investments in unconsolidated subsidiaries,
investments in certain capital instruments of financial entities and unrealized gains on cash flow hedges included
in accumulated other comprehensive income arising from hedges not carried at fair market value on the balance
sheet. Under the final rules, some banks, including the Bank, are given a one-time “opt out” in which they may
elect to filter certain volatile accumulated other comprehensive income (“AOCI”) components from inclusion in
regulatory capital. The AOCI opt-out election must be made on the institution’s first Call Report, FR Y-9C or
FR Y-9SP, as applicable, filed after January 1, 2015. The Company intends to timely elect to opt out.
The final rules established a new category of capital measure, Common Equity Tier 1 capital, which includes a
limited number of capital instruments from the existing definition of Tier 1 Capital, as well as raised minimum
thresholds for Tier 1 Leverage capital (100 basis points), and Tier 1 Risk-based capital (200 basis points).
Additionally, the final rules introduced a capital conservation buffer of Common Equity Tier 1, Tier 1 Risk-based
and Total Risk-based capital ratios above the minimum risk-based capital requirements. The buffer must be
maintained to avoid limitations on capital distributions and limitations on discretionary bonus payments to
executive officers. Each of the minimum capital ratios takes effect in 2015, with the capital conservation buffer
set to be phased in beginning in 2016 and implemented in full by 2019. Based on estimated capital ratios using
Basel III definitions, the Company and the Bank currently exceed all capital requirements of the new rule,
including the fully phased-in conservation buffer.
Basel III Capital Adequacy Ratios
Effective January 1, 2015
Minimum Capital Plus
Capital Conservation Buffer
Minimum Well-Capitalized
2016
4.00%
5.00%
N/A
2017
N/A
2018
2019
N/A
N/A
Tier I leverage capital ratio
Risk-based capital ratios
Common equity Tier I capital
Tier I capital
Total risk-based capital (Tier 1 plus Tier 2)
4.50%
6.00%
8.00%
6.50%
8.00%
10.00%
5.125% 5.75% 6.375% 7.00%
6.625% 7.25% 7.875% 8.50%
8.625% 9.25% 9.875% 10.50%
Federal Reserve Oversight
The Company is required to give the Federal Reserve prior written notice of any purchase or redemption of its
outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the
net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or
more of the Company’s consolidated net worth. The Federal Reserve may disapprove such a transaction if it
determines that the proposed redemption or stock purchase would constitute an unsafe or unsound practice,
would violate any law, regulation, Federal Reserve order or directive or any condition imposed by, or written
agreement with, the Federal Reserve.
10
The Federal Reserve has issued “Policy Statement on Cash Dividends Not Fully Covered by Earnings (the
“Policy Statement”) which sets forth various guidelines that the Federal Reserve believes a bank holding
company should follow in establishing its dividend policy. In general, the Federal Reserve stated that bank
holding companies should pay dividends only out of current earnings. The Federal Reserve also stated that
dividends should not be paid unless the prospective rate of earnings retention by the holding company appears
consistent with its capital needs, asset quality and overall financial condition.
The Company is required to file annual and quarterly reports with the Federal Reserve, and such additional
information as the Federal Reserve may require pursuant to the Bank Holding Company Act. The Federal
Reserve may examine a bank holding company or any of its subsidiaries.
Additional Federal Regulatory Issues
In June 2010, the federal banking agencies issued joint guidance on executive compensation designed to help
ensure that a banking organization’s incentive compensation policies do not encourage imprudent risk taking and
are consistent with the safety and soundness of the organization. In addition, the Dodd-Frank Act requires those
agencies, along with the Commission, to adopt rules to require reporting of incentive compensation and to
prohibit certain compensation arrangements. The federal banking agencies and the Commission proposed such
rules in April 2011. In addition, in June 2012, the Commission issued final rules to implement the Dodd-Frank
Act’s requirement that the Commission direct the national securities exchanges to adopt certain listing standards
related to the compensation committee of a company’s board of directors as well as its compensation advisers.
The Company is a legal entity separate and distinct from the Bank. There are various restrictions that limit the
ability of the Bank to finance, pay dividends or otherwise supply funds to the Company or other affiliates. In
addition, subsidiary banks of holding companies are subject to certain restrictions under Section 23A and B of
the Federal Reserve Act on any extension of credit to the bank holding company or any of its subsidiaries, on
investments in the stock or other securities thereof and on the taking of such stock or securities as collateral for
loans to any borrower. Further, a bank holding company and its subsidiaries are prohibited from engaging in
certain tie-in arrangements in connection with extensions of credit, leases or sales of property, or furnishing of
services.
Stress Testing
The Dodd-Frank Act requires stress testing of bank holding companies and banks, such as the Company and the
Bank, that have more than $10 billion but less than $50 billion of consolidated assets (“medium-sized
companies”). Additional stress testing is required for banking organizations having $50 billion or more of assets.
Medium-sized companies, including the Company and the Bank, are required to conduct annual company-run
stress tests under rules the federal bank regulatory agencies issued in October 2012.
Stress tests analyze the potential impact of scenarios on the consolidated earnings, balance sheet and capital of a
bank holding company or depository institutions over a designated planning horizon of nine quarters, taking into
account the organization’s current condition, risks, exposures, strategies, and activities, and such factors as the
regulators may request of a specific organization. These are tested against baseline, adverse, and severely adverse
economic scenarios specified by the Federal Reserve for the Company and by the FDIC for the Bank.
Each banking organization’s board of directors and senior management are required to approve and review the
policies and procedures of their stress-testing processes as frequently as economic conditions or the condition of
the organization may warrant, and at least annually. They are also required to consider the results of the stress
test in the normal course of business, including the banking organization’s capital planning (including dividends
and share buybacks), assessment of capital adequacy and maintaining capital consistent with its risks, and risk
management practices. The results of the stress tests are provided to the applicable federal banking agencies.
Public disclosure of stress test results is required beginning in 2015. The Company is in the process of preparing
its latest stress tests for the Company and the Bank.
11
Bank Regulation
On March 31, 2014, Whitney Bank (headquartered in New Orleans, Louisiana) was merged into Hancock Bank
(headquartered in Gulfport, Mississippi) under the charter and articles of incorporation of Hancock Bank. The
consolidated entity was renamed Whitney Bank. Whitney Bank does business under the brand names “Hancock
Bank” in Mississippi, Alabama and Florida, and “Whitney Bank” in Louisiana and Texas.
The operation of the Bank is subject to state and federal statutes applicable to state banks and the regulations of
the Federal Reserve, the FDIC and the Consumer Financial Protection Bureau (“CFPB”). The operation of the
Bank may also be subject to applicable Office of the Comptroller of the Currency (“OCC”) regulation to the
extent state banks are granted parity with national banks. Such statutes and regulations relate to, among other
things, required reserves, investments, loans, mergers and consolidations, issuances of securities, payments of
dividends, establishment of branches, consumer protection and other aspects of the Bank’s operations.
The Bank is subject to regulation and periodic examinations by the CFPB, FDIC and the Mississippi Department
of Banking and Consumer Finance (the “MDBCF”). These regulatory authorities routinely examine the Bank’s
reserves, loan and investment quality, consumer compliance, management policies, procedures and practices and
other aspects of operations. These examinations are designed to protect the Bank’s depositors, rather than our
shareholders. In addition to these regular examinations, the Company and the Bank must furnish periodic reports
to their respective regulatory authorities containing a full and accurate statement of their affairs.
The Dodd-Frank Act has removed many limitations on the Federal Reserve’s authority to examine banks that are
subsidiaries of bank holding companies. Under the Dodd-Frank Act, the Federal Reserve is generally permitted
to examine bank holding companies and their subsidiaries, provided that the Federal Reserve must rely on reports
submitted directly by the institution and examination reports of the appropriate regulators (such as the FDIC and
the MDBCF) to the fullest extent possible; must provide reasonable notice to, and consult with, the appropriate
regulators before commencing an examination of a bank holding company subsidiary; and, to the fullest extent
possible, must avoid duplication of examination activities, reporting requirements, and requests for information.
The Dodd-Frank Act also established the CFPB. The CFPB is funded by the Federal Reserve and, in consultation
with the Federal banking agencies, makes rules relating to consumer protection. The CFPB has the authority,
should it wish to do so, to rewrite virtually all of the consumer protection regulations governing banks, including
those implementing the Truth in Lending Act, the Real Estate Settlement Procedures Act (“RESPA”), the Truth
in Savings Act, the Electronic Funds Transfer Act, the Equal Credit Opportunity Act, the Home Mortgage
Disclosure Act, the S.A.F.E. Mortgage Licensing Act, the Fair Credit Reporting Act (except Sections 615(e) and
628), the Fair Debt Collection Practices Act, and the Gramm-Leach-Bliley Act (sections 502 through 509 relating
to privacy), among others. The Bank is subject to direct supervision and examination by the CFPB in respect of
the foregoing consumer protection acts and regulations.
The Bank is a member of the FDIC, and its deposits are insured as provided by law by the Deposit Insurance
Fund (the “DIF”). The deposits of the Bank are insured up to applicable limits and the Bank is subject to deposit
insurance assessments to maintain the DIF. The FDIC utilizes a risk-based assessment system that imposes
insurance premiums based upon a risk matrix that takes into account a bank’s capital level and supervisory
rating.
Effective January 1, 2007, the FDIC began imposing deposit assessment rates based on the risk category of the
bank, with Risk Category I being the lowest risk category and Risk Category IV being the highest risk category.
The Dodd-Frank Act changed the method of calculation for FDIC insurance assessments. Prior to
implementation of the Dodd-Frank Act, the assessment base was based upon domestic deposits minus a few
allowable exclusions, such as pass-through reserve balances. Under the Dodd-Frank Act, assessments are
calculated based upon the depository institution’s average consolidated total assets, less its average amount of
tangible equity. In addition to providing for the required change in assessment base, the FDIC’s final deposit
insurance regulations implementing the Dodd-Frank Act provisions eliminated the assessment adjustments based
12
on unsecured debt, secured liabilities, and brokered deposits; added a new adjustment for holding unsecured debt
issued by another insured depository institution; and lowered the initial base assessment rate schedule in order to
collect approximately the same amount of revenue under the new base as under the old base, among other
changes.
The base assessment rates range from 5 to 35 basis points, with the initial assessment rates subject to adjustments
which could increase or decrease the total base assessment rates. The adjustments include (1) a decrease for long-
term unsecured debt, including most senior and subordinated debt and, for small institutions, a portion of Tier 1
capital; and (2) for Non-Risk Category I institutions, an increase for brokered deposits above a threshold amount.
The basic limit on federal deposit insurance coverage is $250,000 per depositor.
Since the first quarter of 2000, all institutions with deposits insured by the FDIC have been required to pay
assessments to fund interest payments on bonds issued by the Financing Corporation (the “FICO”), a mixed-
ownership government corporation established to recapitalize a predecessor to the DIF. The FICO assessment
rate is adjusted quarterly to reflect changes in the assessment bases of the fund based on quarterly Call Report
and Thrift Financial Report submissions. The current annualized assessment rate is 0.600 basis points, or
approximately 0.150 basis points per quarter. These assessments will continue until the FICO bonds mature in
2017 through 2019.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the “FDICIA”) subjects banks and bank
holding companies to increased regulation and supervision, including a regulatory emphasis that links
supervision to bank capital levels. Also, federal banking regulators are required to take prompt regulatory action
with respect to depository institutions that fall below specified capital levels and to draft non-capital regulatory
measures to assure bank safety.
FDICIA contains a “prompt corrective action” section intended to address problem institutions at the least
possible long-term cost to the DIF. Pursuant to this section, the federal banking agencies are required to prescribe
a leverage limit and a risk-based capital requirement indicating levels at which institutions will be deemed to be
“well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically
undercapitalized.” In the case of a depository institution that is “critically undercapitalized” (a term defined to
include institutions which still have positive net worth), the federal banking regulators are generally required to
appoint a conservator or receiver.
FDICIA further requires regulators to perform annual on-site bank examinations, places limits on real estate
lending and tightens audit requirements. The legislation attempted to eliminate the “too big to fail” doctrine,
which protects uninsured deposits of large banks and restricts the ability of undercapitalized banks to obtain
extended loans from the Federal Reserve Board discount window. FDICIA also imposes disclosure requirements
relating to fees charged and interest paid on checking and deposit accounts.
In addition to regulating capital, the FDIC has broad authority to prevent the development or continuance of
unsafe or unsound banking practices. Pursuant to this authority, the FDIC has adopted regulations that restrict
preferential loans and loan amounts to “affiliates” and “insiders” of banks, require banks to keep information on
loans to major shareholders and executive officers and bar certain director and officer interlocks between
financial institutions. The FDIC is also authorized to approve mergers, consolidations and assumption of deposit
liability transactions between insured banks and between insured banks and uninsured banks or institutions to
prevent capital or surplus diminution in such transactions where the resulting, continuing or assumed bank is an
insured nonmember state bank.
Although the Bank is not a member of the Federal Reserve, it is subject to Federal Reserve regulations that
require the Bank to maintain reserves against transaction accounts (primarily checking accounts). The Federal
Reserve regulations currently require that reserves be maintained against net transaction accounts. On
January 23, 2014, the Federal Reserve regulations were revised to require that reserves be maintained against net
transaction accounts in the amount of 3% of the aggregate of such accounts up to $103.6 million, and, if the
13
aggregate of such accounts exceeds $103.6 million, 10% of the total in excess of $103.6 million. This regulation
is subject to an exemption from reserve requirement on $14.5 million of an institution’s transaction accounts.
The Financial Services Modernization Act also permits national banks, and through state parity statutes, state
banks, to engage in expanded activities through the formation of financial subsidiaries. A state bank may have a
subsidiary engaged in any activity authorized for state banks directly or any financial activity, except for
insurance underwriting, insurance investments, real estate investment or development, or merchant banking, each
of which may only be conducted through a subsidiary of a financial holding company. Financial activities include
all activities permitted under new sections of the Bank Holding Company Act or permitted by regulation.
A state bank seeking to have a financial subsidiary, and each of its depository institution affiliates, must be “well-
capitalized” and “well-managed.” The total assets of all financial subsidiaries may not exceed the lesser of 45%
of a bank’s total assets, or $50 billion. A state bank must exclude from its assets and equity all equity
investments, including retained earnings, in a financial subsidiary. The assets of the financial subsidiary may not
be consolidated with the bank’s assets. The bank must also have policies and procedures to assess financial
subsidiary risk and protect the bank from such risks and potential liabilities.
The Financial Services Modernization Act also added a new section of the Federal Deposit Insurance Act
governing subsidiaries of state banks that engage in “activities as principal that would only be permissible” for a
national bank to conduct in a financial subsidiary. It expressly preserves the ability of a state bank to retain all
existing subsidiaries. Because Mississippi permits commercial banks chartered by the state to engage in any
activity permissible for national banks, the Bank will be permitted to form subsidiaries to engage in the activities
authorized by the Financial Services Modernization Act if it so chooses. In order to form a financial subsidiary, a
state bank must be well-capitalized, and the state bank would be subject to the same capital deduction, risk
management and affiliate transaction rules as applicable to national banks.
In 2001, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the “USA Patriot Act”) was signed into law. The USA Patriot Act broadened
the application of anti-money laundering regulations to apply to additional types of financial institutions, such as
broker-dealers, and strengthened the ability of the U.S. government to detect and prosecute international money
laundering and the financing of terrorism. The principal provisions of Title III of the USA Patriot Act require that
regulated financial institutions, including banks: (i) establish an anti-money laundering program that includes
training and audit components; (ii) comply with regulations regarding the verification of the identity of any
person seeking to open an account; (iii) take additional required precautions with non-U.S. owned accounts; and
(iv) perform certain verification and certification of money laundering risk for their foreign correspondent
banking relationships. The USA Patriot Act also expanded the conditions under which funds in a U.S. interbank
account may be subject to forfeiture and increased the penalties for violation of anti-money laundering
regulations. Failure of a financial institution to comply with the USA Patriot Act’s requirements could have
serious legal and reputational consequences for the institution. The Bank has adopted policies, procedures and
controls to address compliance with the requirements of the USA Patriot Act under the existing regulations and
will continue to revise and update its policies, procedures and controls to reflect changes required by the USA
Patriot Act and implementing regulations.
Other Regulatory Matters
Risk-retention rules. Under the final risk-retention rules, banks that sponsor the securitization of asset-backed
securities and residential-mortgage backed securities are required to retain 5% of any loan they sell or securitize,
except for mortgages that meet low-risk standards to be developed by regulators.
Limitation on federal preemption. Limitations have been imposed on the ability of national bank regulators to
preempt state law. Formerly, the national bank and federal thrift regulators possessed preemption powers with
regard to transactions, operating subsidiaries and general civil enforcement authority. These preemption
14
requirements have been limited by the Dodd-Frank Act, which will likely impact state banks by limiting the
future scope of approval of activities that would otherwise be subject to the approval of the OCC.
Changes to regulation of bank holding companies. Under the Dodd-Frank Act, bank holding companies must be
well-capitalized and well-managed to engage in interstate transactions. In the past, only the subsidiary banks
were required to meet those standards. The Federal Reserve Board’s “source of strength doctrine” has now been
codified, mandating that bank holding companies such as the Company serve as a source of strength for their
subsidiary banks, such that the bank holding company must be able to provide financial assistance in the event
the subsidiary bank experiences financial distress.
Mortgage Rules. During 2013, the CFPB finalized a series of rules related to the extension of residential
mortgage loans made by banks. Among these rules are requirements that a bank make a good faith determination
that a borrower has the ability to repay a mortgage loan prior to extending such credit, a requirement that certain
mortgage loans contain escrow payments, new appraisal requirements, and specific rules regarding how loan
originators may be compensated and the servicing of residential mortgage loans. The implementation of these
new rules began in January 2014.
Volcker Rule. In December 2013, the Federal Reserve, the FDIC, the OCC, the Commission, and the Commodity
Futures Trading Commission issued the “Prohibitions And Restrictions On Proprietary Trading And Certain
Interests In, And Relationships With, Hedge Funds And Private Equity Funds,” commonly referred to as the
Volcker Rule, which regulates and restricts investments which may be made by banks. The Volcker Rule was
adopted to implement a portion of the Dodd-Frank Act and new Section 13 of the Bank Holding Company Act,
which prohibits any banking entity from engaging in proprietary trading or from acquiring or retaining an
ownership interest in, or sponsoring or having certain relationships with, a hedge fund or private equity fund
(“covered funds”), subject to certain exemptions.
Debit Interchange Fees
Interchange fees, or “swipe” fees, are fees that merchants pay to credit card companies and card-issuing banks
such as the Bank for processing electronic payment transactions on their behalf. The maximum permissible
interchange fee that an issuer may receive for an electronic debit transaction is the sum of 21 cents per
transaction and 5 basis points multiplied by the value of the transaction, subject to an upward adjustment of 1
cent if an issuer certifies that it has implemented policies and procedures reasonably designed to achieve the
fraud-prevention standards set forth by the Federal Reserve.
In addition, the legislation prohibits card issuers and networks from entering into exclusive arrangements
requiring that debit card transactions be processed on a single network or only two affiliated networks, and
allows merchants to determine transaction routing. The Federal Reserve rule limiting debit interchange fees has
significantly reduced our debit card interchange revenues.
Summary
The foregoing is a brief summary of certain statutes, rules and regulations affecting the Company and the Bank.
It is not intended to be an exhaustive discussion of all statutes and regulations having an impact on the operations
of such entities.
Increased regulation generally has resulted in increased legal and compliance expense.
Finally, additional bills may be introduced in the future in the U.S. Congress and state legislatures to alter the
structure, regulation and competitive relationships of financial institutions. It cannot be predicted whether and in
what form any of these proposals will be adopted or the extent to which the business of the Company and the
Bank may be affected thereby.
15
Effect of Governmental Monetary and Fiscal Policies
The difference between the interest rate paid on deposits and other borrowings and the interest rate received on
loans and securities comprises most of a bank’s earnings. In order to mitigate the interest rate risk inherent in the
industry, the banking business is becoming increasingly dependent on the generation of fee and service charge
revenue.
The earnings and growth of a bank will be affected by both general economic conditions and the monetary and
fiscal policy of the U.S. government and its agencies, particularly the Federal Reserve. The Federal Reserve sets
national monetary policy such as seeking to curb inflation and combat recession. This is accomplished by its
open-market operations in U.S. government securities, adjustments in the amount of reserves that financial
institutions are required to maintain and adjustments to the discount rates on borrowings and target rates for
federal funds transactions. The actions of the Federal Reserve in these areas influence the growth of bank loans,
investments and deposits and also affect interest rates on loans and deposits. The nature and timing of any future
changes in monetary policies and their potential impact on the Company cannot be predicted.
16
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages, positions and business experience of our executive officers:
Name
Age Position
John M. Hairston
51
Michael M. Achary
Michael K. Dickerson
Joseph S. Exnicios
54
48
59
Edward G. Francis
48
Samuel B. Kendricks
55
D. Shane Loper
48
President and Chief Executive Officer since 2014; Chief Executive Officer since
2006 and Chief Operating Officer (since 2008) of the Company from 2008 to
2011; Director of the Company since 2006.
Executive Vice President since 2008; Chief Financial Officer since 2007.
Executive Vice President since 2014; Chief Risk Officer Since 2013. Senior Vice
President since 2007.
President, Whitney Bank since 2011; Senior Executive Vice President and Chief
Risk Officer of Whitney Holding Corporation and Whitney National Bank from
2009 to 2011; Executive Vice President of Whitney Holding Corporation and
Whitney National Bank from 2004 to 2009.
Executive Vice President since 2008; Chief Commercial Banking Officer since
2010; Executive – Commercial Banking from 2008 to 2010; Senior Commercial
Lending Officer from 2003 to 2008.
Executive Vice President since 2011; Chief Credit Officer since 2010; Chief
Credit Policy Officer from 2009 to 2010; Senior Regional Credit Officer from
2008 to 2009.
Executive Vice President since 2008; Chief Administrative Officer since 2013;
Chief Risk Officer from 2012 to 2013; Chief Risk and Administrative Officer
from 2010 to 2012.
Joy Lambert Phillips
59
Executive Vice President since 2009; Corporate Secretary since June 2011;
General Counsel since 1999.
Clifton J. Saik
61
Suzanne C. Thomas
59
Executive Vice President since 2002; Chief Wealth Management Officer since
2010; Executive, Wealth Management from 2007 to 2010; Director of Trust from
1998 to 2011.
Executive Vice President and Chief Credit Officer of Whitney Bank since 2011;
Chief Wholesale Credit Officer since 2012; Executive Vice President and Chief
Credit Officer of Whitney Holding Corporation and Whitney National Bank from
2010 to 2011; Senior Vice President of Whitney National Bank from 2001 to
2009.
Stephen E. Barker
58
Chief Accounting Officer, Hancock Holding Company since 2011; Senior Vice
President and Comptroller, Whitney National Bank from 2000 to 2011.
ITEM 1A. RISK FACTORS
We face a number of significant risks and uncertainties in connection with our operations. Our business, results
of operations and financial condition could be materially adversely affected by the factors described below.
While we describe each risk separately, some of these risks are interrelated and certain risks could trigger the
applicability of other risks described below. Also, the risks and uncertainties described below are not the only
ones that we may face. Additional risks and uncertainties not presently known to us, or that we currently do not
consider significant, could also potentially impair, and have a material adverse effect on, our business, results of
operations and financial condition.
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Risks Related to Economic and Market Conditions
We may be vulnerable to certain sectors of the economy and to economic conditions both generally and locally
across the specific markets in which we operate.
A substantial portion of our loan portfolio is secured by real estate. While the commercial real estate markets are
stable throughout much of the Gulf South, the real estate markets for residential properties have been mixed. In
weak economies, or in areas where real estate market conditions are distressed, we may experience a higher than
normal level of nonperforming real estate loans, the collateral value of the portfolio and the revenue stream from
those loans could come under stress, and additional provisions for the allowance for loan and lease losses could
be necessitated. Our ability to dispose of foreclosed real estate at prices at or above the respective carrying values
could also be impaired, causing additional losses.
Recent trends in the energy sector also present concerns. The oil and gas industry is a significant component of
the economy in several of our core markets. The oil and gas industry is particularly sensitive to certain industry-
specific economic factors, the most important of which are worldwide demand for, and supply of, oil and gas.
When demand is soft relative to supply, commodity prices decline and overall levels of activity in the sector,
including the level of capital expenditures, weaken. Moreover, given the importance of the energy industry to the
economies of Louisiana and Texas, when the energy sector is under stress, the performance of other business and
commercial segments of those local economies may be affected.
Our financial performance may also be adversely affected by other macroeconomic factors that affect the U.S.
economy. Recovery from the recent recession has been slow. There are continuing concerns about the overall
health of the European economy (including Russia), as well as other global financial markets, all of which could
hinder the performance of the U.S. economy and affect the stability of global financial markets. Additionally,
because our operations are concentrated in the Gulf South region of the U.S., unfavorable economic conditions in
that market could significantly affect the demand for our loans and other products, the ability of borrowers to
repay loans and the value of collateral securing loans.
Certain changes in interest rates, mortgage origination, inflation, deflation, or the financial markets could
affect our results of operations, demand for our products and our ability to deliver products efficiently.
Our assets and liabilities are primarily monetary in nature and we are subject to significant risks tied to changes
in interest rates that are highly sensitive to many factors that are beyond our control. Our ability to operate
profitably is largely dependent upon net interest income. Net interest income is the primary component of our
earnings and is affected by both local external factors such as economic conditions in the Gulf South and local
competition for loans and deposits, as well as broader influences such as federal monetary policy and market
interest rates. Unexpected movement in interest rates markedly changing the slope of the current yield curve
could cause our net interest margins to decrease, subsequently reducing net interest income. In addition, such
changes could adversely affect the valuation of our assets and liabilities.
Loan originations, and potentially loan revenues, could be adversely impacted by sharply rising interest rates. If
market rates of interest were to increase, it would increase debt service requirements for some of our borrowers;
adversely affect those borrowers’ ability to pay as contractually obligated; potentially reduce loan demand or
result in additional delinquencies or charge-offs; and increase the cost of our deposits, which are a primary
source of funding.
We are also subject to the following risks:
•
the mortgage rules issued by the CFPB implemented in 2014 could limit our ability to originate
mortgages to borrowers that do not meet or are unable to meet the standards set forth in the mortgage
regulations and potentially adversely impact our mortgage revenues;
18
•
•
an underperforming stock market could adversely affect wealth management fees associated with
managed securities portfolios and could also reduce brokerage transactions, therefore reducing
investment brokerage revenues; and
an unanticipated increase in inflation could cause our operating costs related to salaries and benefits,
technology, and supplies to increase at a faster pace than revenues.
The fair market value of our securities portfolio and the investment income from these securities also fluctuate
depending on general economic and market conditions. In addition, actual net investment income and/or cash
flows from investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities,
may differ from those anticipated at the time of investment as a result of interest rate fluctuations.
The financial soundness and stability of other financial institutions could adversely affect us.
Our ability to engage in routine funding transactions could be adversely affected by the actions and financial
soundness and stability of other financial institutions as a result of credit, trading, clearing or other relationships
between such institutions. We routinely execute transactions with counterparties in the financial industry,
including brokers and dealers, commercial banks and other institutional clients. As a result, defaults by, and even
rumors regarding, other financial institutions, or the financial services industry generally, could impair our ability
to effect such transactions and could lead to losses or defaults by us. In addition, a number of our transactions
expose us to credit risk in the event of default of a counterparty or client. Additionally, our credit risk may be
increased if the collateral we hold in connection with such transactions cannot be realized or can only be
liquidated at prices that are not sufficient to cover the full amount of our financial exposure. Any such losses
could have a material adverse effect on our financial condition and results of operations.
Changes in the policies of monetary authorities and other government action could adversely affect our
profitability.
Our financial performance is affected by credit policies of monetary authorities, particularly the Federal Reserve.
The instruments of monetary policy employed by the Federal Reserve include open market transactions in U.S.
government securities, changes in the discount rate or the federal funds rate on bank borrowings and changes in
reserve requirements against bank deposits. In view of changing conditions in the national economy and in the
money markets, we cannot predict the potential impact of future changes in interest rates, deposit levels, and loan
demand on our business and earnings. Furthermore, the actions of the U.S. government and other governments
may result in currency fluctuations, exchange controls, market disruption, material decreases in the values of
certain of our financial assets and other adverse effects.
Governmental responses to market disruptions may be inadequate and may have unintended consequences.
Although Congress and financial regulators continue to implement measures designed to assure greater stability
in the financial markets, the overall impact of these efforts on the financial markets is unclear. In addition, the
Dodd-Frank Act has resulted in significant changes to the banking industry as a whole which, depending on how
its provisions are implemented by the agencies, could adversely affect our business.
In addition, we compete with a number of financial services companies that are not subject to the same degree of
regulatory oversight. The impact of the existing regulatory framework and any future changes to it could
negatively affect our ability to compete with these institutions, which could have a material adverse effect on our
results of operations and prospects.
We may need to rely on the financial markets to provide needed capital.
Our common stock is listed and traded on the NASDAQ Global Select Market. If our capital resources prove in
the future to be inadequate to meet our capital requirements, we may need to raise additional debt or equity
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capital. The loss of confidence in financial institutions over the past several years may increase our cost of capital
and if conditions in the capital markets are not favorable, we may be constrained in raising capital. We maintain
a consistent analyst following; therefore, downgrades in our prospects by one or more of our analysts may cause
our stock price to fall and significantly limit our ability to access the markets for additional capital requirements.
An inability to raise additional capital on acceptable terms when and if needed could have a material adverse
effect on our business, financial condition or results of operations.
The interest rates or preferred dividend rates that we pay on our securities are also influenced by, among other
things, the credit ratings that we, our affiliates and/or our securities receive from recognized rating agencies. Our
credit ratings are based on a number of factors, including our financial strength and some factors not entirely
within our control such as conditions affecting the financial services industry generally, and remain subject to
change at any time. A downgrade to the credit rating of us or our affiliates could affect our ability to access the
capital markets, increase our borrowing cost and negatively impact our profitability. A downgrade to us, our
affiliates or our securities could create obligations or liabilities to us under the terms of our outstanding securities
that could increase our costs or otherwise have a negative effect on our results of operations or financial
condition. Additionally, a downgrade to the credit rating of any particular security issued by us or our affiliates
could negatively affect the ability of the holders of that security to sell the securities and the prices at which any
such securities may be sold.
Because our decision to incur debt and issue securities in future offerings will depend on market conditions and
other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future
offerings and debt financings. Further, market conditions could require us to accept less favorable terms for the
issuance of our securities in the future.
Risks Related to the Financial Services Industry
We must maintain adequate sources of funding and liquidity.
Effective liquidity management is essential for the operation of our business. We require sufficient liquidity to
support our operations and fund outstanding liabilities, as well as meet regulatory requirements. Our access to
sources of liquidity in amounts adequate to fund our activities on terms that are acceptable to us could be
impaired by factors that affect us specifically or the financial services industry or economy generally. Factors
that could detrimentally impact our access to liquidity sources include an economic downturn that affects the
geographic markets in which our loans and operations are concentrated, or any material deterioration of the credit
markets. Our access to deposits may also be affected by the liquidity needs of our depositors and the loss of
deposits to alternative investments. Although we have historically been successful in replacing maturing deposits
and advances as necessary, we might not be able to duplicate that success in the future, especially if a large
number of our depositors were to withdraw their amounts on deposit. A failure to maintain an adequate level of
liquidity could materially and adversely affect our business, financial condition and results of operations.
We may rely on the mortgage secondary market from time to time to provide liquidity.
From time to time, we have sold to certain agencies certain types of mortgage loans that meet their conforming
loan requirements in order to reduce our interest rate risk and provide liquidity. There is a risk that these agencies
will limit or discontinue their purchases of loans that are conforming due to capital constraints, a change in the
criteria for conforming loans or other factors. Additionally, various proposals have been made to reform the U.S.
residential mortgage finance market, including the role of the agencies. The exact effects of any such reforms are
not yet known, but may limit our ability to sell conforming loans to the agencies. If we are unable to continue to
sell conforming loans to the agencies, our ability to fund, and thus originate, additional mortgage loans may be
adversely affected, which would in turn adversely affect our results of operations.
Greater loan losses than expected may adversely affect our earnings.
We are exposed to the risk that our borrowers will be unable to repay their loans in accordance with their terms
and that any collateral securing the payment of their loans may not be sufficient to assure repayment. Credit risk
20
is inherent in our business and any material level of credit failure could have a material adverse effect on our
operating results. Our credit risk with respect to our real estate and construction loan portfolio relates principally
to the creditworthiness of our corporate borrowers and the value of the real estate pledged as security for the
repayment of loans. Our credit risk with respect to our commercial and consumer loan portfolio will depend on
the general creditworthiness of businesses and individuals within our local markets.
We make various assumptions and judgments about the collectability of our loan portfolio and provide an
allowance for estimated loan losses based on a number of factors. This process requires difficult, subjective and
complex judgments, including analysis of economic or market conditions that might impair the ability of
borrowers to repay their loans. If our assumptions or judgments prove to be incorrect, the allowance for loan
losses may not be sufficient to cover actual loan losses. We may have to increase our allowance in the future in
response to the request of one of our primary banking regulators, to adjust for changing conditions and
assumptions, or as a result of any deterioration in the quality of our loan portfolio. Losses in excess of the
existing allowance or any provisions for loan losses taken to increase the allowance will reduce our net income
and could materially adversely affect our financial condition and results of operations. Future provisions for loan
losses may vary materially from the amounts of past provisions.
Failure to comply with the terms of loss sharing arrangements with the FDIC may result in significant losses.
Any failure to comply with the terms of any loss share agreements that we have with the FDIC, or to properly
service the loans and foreclosed assets covered by loss share agreements, may cause individual loans, large pools
of loans or other covered assets to lose eligibility for reimbursement from the FDIC. This could result in material
losses that are currently not anticipated and could adversely affect our financial condition, results of operations or
liquidity.
We depend on the accuracy and completeness of information about clients and counterparties.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we rely in
substantial part on information furnished by or on behalf of clients and counterparties, including financial
statements and other financial information. We also may rely on representations of clients and counterparties as
to the accuracy and completeness of that information and, with respect to financial statements, on reports of
independent auditors if made available. If this information is inaccurate, we may be subject to financial losses,
regulatory action, reputational harm or other adverse effects with respect to our business, financial condition and
results of operations.
We are subject to a variety of risks in connection with any sale of loans we may conduct.
From time to time we may sell all or a portion of one of more loan portfolios, and in connection therewith we
may make certain representations and warranties to the purchaser concerning the loans sold and the procedures
under which those loans have been originated and serviced. If any of these representations and warranties are
incorrect, we may be required to indemnify the purchaser for any related losses, or we may be required to
repurchase part or all of the affected loans. We may also be required to repurchase loans as a result of borrower
fraud or in the event of early payment default by the borrower on a loan we have sold. If we are required to make
any indemnity payments or repurchases and do not have a remedy available to us against a solvent counterparty
to the loan or loans, we may not be able to recover our losses resulting from these indemnity payments and
repurchases. Consequently, our results of operations may be adversely affected.
Risks Related to Our Operations
We must attract and retain skilled personnel.
Our success depends, in substantial part, on our ability to attract and retain skilled, experienced personnel.
Competition for qualified candidates in the activities and markets that we serve is intense. If we are not able to
21
hire or retain these key individuals, we may be unable to execute our business strategies and may suffer adverse
consequences to our business, financial condition and results of operations.
If we are unable to attract and retain qualified employees, or do so at rates necessary to maintain our competitive
position, or if compensation costs required to attract and retain employees increase materially, our business and
results of operations could be materially adversely affected.
A failure in our operational systems or infrastructure, or those of third parties, could impair our liquidity,
disrupt our businesses, result in the unauthorized disclosure of confidential information, damage our
reputation and cause financial losses.
Our ability to adequately conduct and grow our business is dependent on our ability to create and maintain an
appropriate operational and organizational control infrastructure. Operational risk can arise in numerous ways
including employee fraud, theft or malfeasance; customer fraud; and control lapses in bank operations and
information technology. Because the nature of the financial services business involves a high volume of
transactions, certain errors may be repeated or compounded before they are discovered. Our dependence on our
employees and automated systems, including the automated systems used by acquired entities and third parties,
to record and process transactions may further increase the risk that technical failures or tampering of those
systems will result in losses that are difficult to detect. We are also subject to disruptions of our operating
systems arising from events that are wholly or partially beyond our control. In addition, products, services and
processes are continually changing and we may not fully appreciate or identify new operational risks that may
arise from such changes. Failure to maintain an appropriate operational infrastructure can lead to loss of service
to customers, additional expenditures related to the detection and correction of operational failures, reputational
damage and loss of customer confidence, legal actions, and noncompliance with various laws and regulations.
We continuously monitor our operational and technological capabilities and make modifications and
improvements when we believe it will be cost effective to do so. However, there are inherent limits to such
capabilities. In some instances, we may build and maintain these capabilities ourselves. We also outsource some
of these functions to third parties. These third parties may experience errors or disruptions that could adversely
impact us and over which we may have limited control. Third parties may fail to properly perform services or
comply with applicable laws and regulations, and replacing third party providers could entail significant delay
and expense. We also face risk from the integration of new infrastructure platforms and/or new third party
providers of such platforms into existing businesses.
An interruption or breach in our information systems or infrastructure, or those of third parties, could disrupt
our business, result in the unauthorized disclosure of confidential information, damage our reputation and
cause financial losses.
Our business is dependent on our ability to process and monitor a large number of transactions on a daily basis
and to securely process, store and transmit confidential and other information on our computer systems and
networks. We rely heavily on our information and communications systems and those of third parties who
provide critical components of our information and communications infrastructure. These systems are critical to
the operation of our business and essential to our ability to perform day-to-day operations. Our financial,
accounting, data processing or other information systems and facilities, or those of third parties on whom we
rely, may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our
control, such as a spike in transaction volume, cyber-attack or other unforeseen catastrophic events, which may
adversely affect our ability to process transactions or provide services.
Although we make continuous efforts to maintain the security and integrity of our information systems and have
not experienced a significant, successful cyber-attack, threats to information systems continue to evolve and there
can be no assurance that our security efforts and measures, or those of third parties on whom we rely, will
continue to be effective. The risk of a security breach or disruption, particularly through cyber-attack or cyber
22
intrusion, has increased as the number, intensity and sophistication of attempted attacks and intrusions from
around the world have increased. Threats to our information systems may originate externally from third parties
such as foreign governments, organized crime and other hackers, outsourced or infrastructure-support providers
and application developers, or may originate internally. In addition, customers may use computers, smartphones
and other mobile devices not protected by our control systems to access our products and services, including
through bank kiosks or other remote locations. As a financial institution, we face a heightened risk of a security
breach or disruption from attempts to gain unauthorized access to our and our customers’ data and financial
information, whether through cyber-attack, cyber intrusion over the internet, malware, computer viruses,
attachments to e-mails, spoofing, phishing, or spyware.
As a result, our information, communications and related systems, software and networks may be vulnerable to
breaches or other significant disruptions that could: (1) disrupt the proper functioning of our networks and
systems, which could in turn disrupt our operations and those of certain of our customers; (2) result in the
unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or
otherwise valuable information of ours or our customers, including account numbers and other financial
information; (3) result in a violation of applicable privacy and other laws, subjecting us to additional regulatory
scrutiny and exposing us to civil litigation and possible financial liability; (4) require significant management
attention and resources to remedy the damages that result; and (5) harm our reputation or impair our customer
relationships. The occurrence of such failures, disruptions or security breaches could have a negative impact on
our results of operations, financial condition and cash flows. To date we have not experienced an attack that has
impacted our results of operations, financial condition and cash flows. However, “denial of service” attacks have
recently been launched against a number of other large financial services institutions. Such attacks adversely
affected the performance of certain institutions’ websites, and, in some instances, prevented customers from
accessing secure websites for consumer and commercial applications. Future attacks could prove to be even more
disruptive and damaging, and as threats continue to evolve, we may not be able to anticipate or prevent all such
attacks.
Natural and man-made disasters could affect our ability to operate.
Our market areas are susceptible to hurricanes. Natural disasters, such as hurricanes, and man-made disasters,
such as oil spills in the Gulf of Mexico, can disrupt our operations; result in significant damage to our properties
or properties and businesses of our borrowers, including property pledged as collateral; interrupt our ability to
conduct business; and negatively affect the local economies in which we operate.
We cannot predict whether or to what extent damage caused by future hurricanes and other disasters will affect
our operations or the economies in our market areas, but such events could cause a decline in loan originations, a
decline in the value or destruction of properties securing the loans and an increase in the risk of delinquencies,
foreclosures or loan losses.
We are exposed to reputational risk.
Negative public opinion can result from our actual or alleged conduct in activities, such as lending practices, data
security practices, corporate governance policies and decisions, and acquisitions, any of which may inflict
damage to our reputation. Additionally, actions taken by government regulators and community organizations
may also damage our reputation. Negative public opinion could adversely affect our ability to attract and retain
customers and can expose us to litigation and regulatory action.
Returns on pension plan assets may not be adequate to cover future funding requirements.
Investments in the portfolio of our defined benefit pension plan may not provide adequate returns to fully fund
benefits as they come due, thus causing higher annual plan expenses and requiring additional contributions by us.
23
The value of our goodwill and other intangible assets may decline in the future.
A significant decline in our expected future cash flows, a significant adverse change in the business climate,
slower growth rates or a significant and sustained decline in the price of our common stock may necessitate our
taking charges in the future related to the impairment of our goodwill. Future regulatory actions could also have a
material impact on assessments of goodwill for impairment.
Adverse events or circumstances could impact the recoverability of our intangible assets including loss of core
deposits, significant losses of credit card accounts and/or balances, increased competition or adverse changes in
the economy. To the extent these intangible assets are deemed unrecoverable, a non-cash impairment charge
would be recorded, which could have a material adverse effect on our results of operations.
Risks Related to Our Business Strategy
We are subject to industry competition which may have an impact upon our success.
Our profitability depends on our ability to compete successfully in a highly competitive market for banking and
financial services, and we expect competition to intensify. Certain of our competitors are larger and have more
resources than we do. We face competition in our regional market areas from other commercial banks, savings
associations, credit unions, mortgage banking firms, consumer finance companies, securities brokerage firms,
mutual funds and insurance companies, and other financial institutions that offer similar services. Some of our
nonbank competitors are not subject to the same extensive supervision and regulation to which we or the Bank
are subject, and may accordingly have greater flexibility in competing for business. Over time, certain sectors of
the financial services industry have become more concentrated, as institutions involved in a broad range of
financial services have been acquired by other firms. These developments could result in our competitors gaining
greater capital and other resources, or being able to offer a broader range of products and services with more
geographic range.
Another competitive factor is that the financial services market, including banking services, is undergoing rapid
changes with frequent introductions of new technology-driven products and services. Our future success may
depend, in part, on our ability to use technology competitively to provide products and services that provide
convenience to customers and create additional efficiencies in our operations. The widespread adoption of new
technologies could require us to make substantial capital expenditures to modify or adapt our systems to remain
competitive and offer new products and services. We may not be successful in introducing new products and
services in response to industry trends or developments in technology, or those new products may not be
accepted by customers.
If we are unable to successfully compete for new customers and to retain our current customers, our business,
financial condition or results of operations may also be adversely affected, perhaps materially. In particular, if we
experience an outflow of deposits as a result of our customers desiring to do business with our competitors, we
may be forced to rely more heavily on borrowings and other sources of funding to operate our business and meet
withdrawal demands, thereby adversely affecting our net interest margin.
Our future growth and financial performance may be negatively affected if we are unable to successfully
execute our growth plans, which may include acquisitions and de novo branching.
We may not be able to continue our organic, or internal, growth, which depends upon economic conditions, our
ability to identify appropriate markets for expansion, our ability to recruit and retain qualified personnel, our
ability to fund growth at a reasonable cost, sufficient capital to support our growth initiatives, competitive
factors, banking laws, and other factors.
We may seek to supplement our internal growth through acquisitions. We cannot predict the number, size or
timing of acquisitions, or whether any such acquisition will occur at all. Our acquisition efforts have traditionally
24
focused on targeted banking entities in markets in which we currently operate and markets in which we believe
we can compete effectively. However, as consolidation of the financial services industry continues, the
competition for suitable acquisition candidates may increase. We may compete with other financial services
companies for acquisition opportunities, and many of these competitors have greater financial resources than we
do and may be able to pay more for an acquisition than we are able or willing to pay.
We also may be required to use a substantial amount of our available cash and other liquid assets, or seek
additional debt or equity financing, to fund future acquisitions. Such events could make us more susceptible to
economic downturns and competitive pressures, and additional debt service requirements may impose a
significant burden on our results of operations and financial condition. If we are unable to locate suitable
acquisition candidates willing to sell on terms acceptable to us, or we are otherwise unable to obtain additional
debt or equity financing necessary for us to continue making acquisitions, we would be required to find other
methods to grow our business and we may not grow at the same rate we have in the past, or at all.
We must generally satisfy several conditions, including receiving federal regulatory approval, before we can
acquire a bank or bank holding company. In determining whether to approve a proposed bank acquisition, federal
bank regulators will consider, among other factors, the effect of the acquisition on competition, financial
condition, and future prospects. The regulators also review current and projected capital ratios and levels; the
competence, experience, and integrity of management and its record of compliance with laws and regulations;
the convenience and needs of the communities to be served (including the acquiring institution’s record of
compliance under the Community Reinvestment Act) and the effectiveness of the acquiring institution in
combating money laundering activities. We cannot be certain when or if, or on what terms and conditions, any
required regulatory approvals will be granted. We may also be required to sell banks or branches as a condition
to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce
the benefit of any acquisition. Additionally, federal and/or state regulators may charge us with regulatory and
compliance failures of an acquired business that occurred prior to the date of acquisition, and such failures may
result in the imposition of formal or informal enforcement actions.
We cannot assure you that we will be able to successfully consolidate any business or assets we acquire with our
existing business. The integration of acquired operations and assets may require substantial management effort,
time and resources and may divert management’s focus from other strategic opportunities and operational
matters. Acquisitions may not perform as expected when the transaction was consummated and may be dilutive
to our overall operating results. Specifically, acquisitions could result in higher than expected deposit attrition,
loss of key employees or other consequences that could adversely affect our ability to maintain relationships with
customers and employees. We may also sell or consider selling one or more of our businesses. Such a sale would
generally be subject to certain federal and/or state regulatory approvals, and may not be able to generate gains on
sale or related increases in shareholder’s equity commensurate with desirable levels.
In addition to the acquisition of existing financial institutions, as opportunities arise, we plan to continue de novo
branching as a part of our internal growth strategy and possibly enter into new markets through de novo
branching. De novo branching and any acquisition carry numerous risks, including the following:
•
•
•
•
•
•
the inability to obtain all required regulatory approvals;
significant costs and anticipated operating losses associated with establishing a de novo branch or a
new bank;
the inability to secure the services of qualified senior management;
the failure of the local market to accept the services of a new bank owned and managed by a bank
holding company headquartered outside of the market area of the new bank;
economic downturns in the new market;
the inability to obtain attractive locations within a new market at a reasonable cost; and
25
•
the additional strain on management resources and internal systems and controls.
We have experienced to some extent many of these risks with our de novo branching to date.
Changes in retail distribution strategies and consumer behavior may adversely impact our investments in bank
premises, equipment and other assets and may lead to increased expenditures to change our retail distribution
channel.
We have significant investments in bank premises and equipment for our branch network. Advances in
technology such as ecommerce, telephone, internet and mobile banking, and in-branch self-service technologies
including automated teller machines and other equipment, as well as an increasing customer preference for these
other methods of accessing our products and services, could decrease the value of our branch network or other
retail distribution physical assets and may cause us to change our retail distribution strategy, close and/or sell
certain branches or parcels of land held for development and restructure or reduce our remaining branches and
work force. These actions could lead to losses on these assets or could adversely impact the carrying value of any
long-lived assets and may lead to increased expenditures to renovate, reconfigure or close a number of our
remaining branches or to otherwise reform our retail distribution channel.
Risks Related to the Legal and Regulatory Environment
We are subject to regulation by various federal and state entities.
We are subject to the regulations of the Commission, the Federal Reserve, the FDIC, the CFPB and the MDBCF.
New regulations issued by these agencies may adversely affect our ability to carry on our business activities. We
are subject to various federal and state laws, and certain changes in these laws and regulations may adversely
affect our operations. Other than the federal securities laws, the laws and regulations governing our business are
intended primarily for the protection of our depositors, our customers, the financial system and the FDIC
insurance fund, not our shareholders or other creditors. Further, we must obtain approval from our regulators
before engaging in certain activities, and our regulators have the ability to compel us to, or restrict us from,
taking certain actions entirely, such as increasing dividends, entering into merger or acquisition transactions,
acquiring or establishing new branches, and entering into certain new businesses. Noncompliance with certain of
these regulations may impact our business plans, including our ability to branch, offer certain products, or
execute existing or planned business strategies.
The U.S. government responded to the 2008 financial crisis at an unprecedented level by introducing various
actions and passing legislation such as the Dodd-Frank Act that place increased focus and scrutiny on the
financial services industry. The Dodd-Frank Act contains various provisions designed to enhance the regulation
of depository institutions and prevent the recurrence of a financial crisis such as occurred in 2008-2009. New
regulations from the CFPB, which was established by the Dodd-Frank Act, such as the Ability to Repay Rules,
may materially raise the risk of consummating consumer credit transactions. The full impact on our business and
operations will not be fully known for years until regulations implementing the statute are fully implemented and
applied. The new rules issued in the wake of the Dodd-Frank Act may have a material impact on our operations,
particularly through increased compliance costs resulting from possible future consumer and fair lending
regulations.
Additionally, the rules implementing the “Basel III” regulatory capital reforms and changes required by the
Dodd-Frank Act may have significant impacts on our regulatory capital levels. Basel III and its regulations will
require bank holding companies and banks to undertake significant activities to demonstrate compliance with the
new and higher capital standards. Compliance with these rules impose additional costs on banking entities and
their holding companies. The need to maintain more and higher quality capital as well as greater liquidity going
forward could limit our business activities and our ability to maintain dividends. In addition, the new liquidity
standards could require us to increase our holdings of highly liquid short-term investments, thereby reducing our
26
ability to invest in longer-term, potentially higher yielding assets. We may also be required to pay significantly
higher deposit insurance premiums if the number of bank failures or the cost of resolving failed banks increase.
For additional information regarding the Dodd-Frank Act, Basel III and other regulations to which our business is
subject, see “Supervision and Regulation.”
Any of the laws or regulations to which we are subject, including tax laws, regulations or their interpretations,
may be modified or changed from time to time, and we cannot be assured that such modifications or changes will
not adversely affect us. Failure to appropriately comply with any such laws or regulations could result in
sanctions by regulatory authorities, civil monetary penalties or damage to our reputation, all of which could
adversely affect our business, financial condition or results of operations.
Changes in accounting policies or in accounting standards could materially affect how we report our financial
condition and results of operations.
The preparation of consolidated financial statements in conformity with the accounting rules and regulations of
the Commission and the Financial Accounting Standards Board (the “FASB”) and with U.S. generally accepted
accounting principles (“GAAP”) requires management to make significant estimates and assumptions that affect
our financial statements by affecting the value of our assets or liabilities and results of operations. Some of our
accounting policies are critical because they require management to make difficult, subjective and complex
judgments about matters that are inherently uncertain and because materially different amounts may be reported
if different estimates or assumptions are used. If such estimates or assumptions underlying our financial
statements are incorrect, our financial condition and results of operations could be adversely affected.
From time to time, the FASB and the Commission change the financial accounting and reporting standards or the
interpretation of such standards that govern the preparation of our external financial statements. These changes
are beyond our control, can be difficult to predict, may require extraordinary efforts or additional costs to
implement and could materially impact how we report our financial condition and results of operations.
Additionally, it is possible, though unlikely, that we could be required to apply a new or revised standard
retrospectively, resulting in the restatement of prior period financial statements in material amounts.
We and other financial institutions have been the subject of increased litigation, investigations and other
proceedings which could result in legal liability and damage to our reputation.
We and certain of our directors, officers and subsidiaries may be named from time to time as defendants in
various class actions and other litigation relating to our business and activities. Past, present and future litigation
has included or could include claims for substantial compensatory and/or punitive damages or claims for
indeterminate amounts of damages. We are also involved from time to time in other reviews, investigations and
proceedings (both formal and informal) by governmental, law enforcement and self-regulatory agencies
regarding our business. These matters could result in adverse judgments, settlements, fines, penalties,
injunctions, amendments and/or restatements of our Commission filings and/or financial statements,
determinations of material weaknesses in our disclosure controls and procedures or other relief. Like other
financial institutions and companies, we are also subject to risk from employee misconduct, including non-
compliance with policies and improper use or disclosure of confidential information. Substantial legal liability or
significant regulatory action against us, as well as matters in which we are involved that are ultimately
determined in our favor, could materially adversely affect our business, financial condition or results of
operations, cause significant reputational harm to our business, divert management attention from the operation
of our business and/or result in additional litigation.
In addition, in recent years, a number of judicial decisions have upheld the right of borrowers to sue lending
institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally,
lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual,
of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower
resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders. In the
future, we could become subject to claims based on this or other evolving legal theories.
27
Risks Related to Our Common Stock
Securities issued may be senior to our common stock and may have a dilutive effect.
Our common stock ranks junior to all of our existing and future indebtedness with respect to distributions and
liquidation. In addition, future issuances of equity securities, including pursuant to outstanding options, could
dilute the interests of our existing shareholders, including you, and could cause the market price of our common
stock to decline. The issuance of any additional shares of common or preferred stock could be substantially
dilutive to shareholders of our common stock. Moreover, to the extent that we issue restricted stock units,
phantom shares, stock appreciation rights, options or warrants to purchase our common stock in the future and
those stock appreciation rights, options or warrants are exercised or as the restricted stock units vest, our
shareholders may experience further dilution.
Holders of our shares of common stock do not have preemptive rights. Additionally, sales of a substantial
number of shares of our common stock in the public markets and the availability of those shares for sale could
adversely affect the market price of our common stock.
Our ability to deliver and pay dividends depends primarily upon the results of operations of our subsidiaries,
and we may not pay dividends in the future.
We are a bank holding company that conducts substantially all of our operations through our subsidiary Bank. As
a result, our ability to make dividend payments on our common stock will depend primarily upon the receipt of
dividends and other distributions from the Bank.
The ability of the Bank to pay dividends or make other payments to us, as well as our ability to pay dividends on
our common stock, is limited by the Bank’s obligation to maintain sufficient capital and by other general
regulatory restrictions on its dividends, which have tightened since the financial crisis. The Federal Reserve has
stated that bank holding companies should not pay dividends from sources other than current earnings. If these
requirements are not satisfied, we will be unable to pay dividends on our common stock.
We may also decide to limit the payment of dividends even when we have the legal ability to pay them in order
to retain earnings for use in our business, which could adversely affect the market value of our common stock.
There can be no assurance of whether or when we may pay dividends in the future.
Anti-takeover provisions in our amended articles of incorporation and bylaws, Mississippi law, and our
Shareholder Rights Plan could make a third party acquisition of us difficult and may adversely affect share
value.
Our amended articles of incorporation and bylaws contain provisions that make it more difficult for a third party
to acquire us (even if doing so might be beneficial to our shareholders) and for holders of our securities to receive
any related takeover premium for their securities. In addition, under our Shareholder Rights Plan, “rights” are
issued to all Company common shareholders that, if activated upon an attempted unfriendly acquisition, would
allow our shareholders to buy our common stock at a reduced price, thereby minimizing the risk of any potential
hostile takeover.
We are also subject to certain provisions of state and federal law and our articles of incorporation that may make
it more difficult for someone to acquire control of us. Under federal law, subject to certain exemptions, a person,
entity, or group must notify the federal banking agencies before acquiring 10% or more of the outstanding voting
stock of a bank holding company, including our shares. Banking agencies review the acquisition to determine if it
will result in a change of control. The banking agencies have 60 days to act on the notice, and take into account
several factors, including the resources of the acquirer and the antitrust effects of the acquisition. Additionally, a
bank holding company must obtain the prior approval of the Federal Reserve before, among other things,
28
acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank. There are also
Mississippi statutory provisions and provisions in our articles of incorporation that may be used to delay or block
a takeover attempt. As a result, these statutory provisions and provisions in our articles of incorporation could
result in our being less attractive to a potential acquirer and limit the price that investors might be willing to pay
in the future for shares of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The Company’s main office, which is the headquarters of the holding company, is located at One Hancock Plaza,
in Gulfport, Mississippi. The Bank makes portions of their main office facilities and certain other facilities
available for lease to third parties, although such incidental leasing activity is not material to the Company’s
overall operations.
The Company operates 235 full service banking and financial services offices and 283 automated teller machines
across a Gulf south corridor comprising south Mississippi; southern and central Alabama; southern Louisiana;
the northern, central, and Panhandle regions of Florida; and Houston, Texas. The Company owns approximately
49% of these facilities, and the remaining banking facilities are subject to leases, each of which we consider
reasonable and appropriate for its location. We ensure that all properties, whether owned or leased, are
maintained in suitable condition. We also evaluate our banking facilities on an ongoing basis to identify possible
under-utilization and to determine the need for functional improvements, relocations, closures or possible sales.
The Bank and subsidiaries of the Bank hold a variety of property interests acquired in settlement of loans.
ITEM 3. LEGAL PROCEEDINGS
We and our subsidiaries are party to various legal proceedings arising in the ordinary course of business. We do
not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a
material adverse effect on our consolidated financial position or liquidity.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
29
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company’s common stock trades on the NASDAQ Global Select Market under the ticker symbol “HBHC”.
The following table sets forth the high and low sale prices of the Company’s common stock as reported on the
NASDAQ Global Select Market. These prices do not reflect retail mark-ups, mark-downs or commissions.
2014
2013
4th quarter
3rd quarter
2nd quarter
1st quarter
4th quarter
3rd quarter
2nd quarter
1st quarter
High
Sale
Low
Sale
Cash
Dividends
Paid
$35.67
36.47
37.86
38.50
$37.12
33.85
30.93
33.59
$28.68
31.25
32.02
32.66
$30.09
29.00
25.00
29.37
$0.24
0.24
0.24
0.24
$0.24
0.24
0.24
0.24
There were 9,885 active holders of record of the Company’s common stock at January 31, 2015 and 80,436,669
shares outstanding. On January 31, 2015, the high and low sale prices of the Company’s common stock as
reported on the NASDAQ Global Select Market were $26.66 and $25.79, respectively.
The principal sources of funds to the Company to pay cash dividends are the dividends received from Whitney
Bank, Gulfport, Mississippi. Consequently, dividends are dependent upon the Bank’s earnings, capital needs,
regulatory policies as well as statutory and regulatory limitations. Federal and state banking laws and regulations
restrict the amount of dividends and loans a bank may make to its parent company. Dividends paid to the
Company by Whitney Bank are subject to approval by the Commissioner of Banking and Consumer Finance of
the State of Mississippi. We do not expect regulatory restrictions to affect our ability to pay cash dividends.
Although no assurance can be given that Hancock Holding Company will continue to declare and pay regular
quarterly cash dividends on its common stock, the Bank has paid regular cash dividends since 1937 and Hancock
Holding Company has paid regular cash dividends since its organization.
Stock Performance Graph
The following performance graph and related information are neither “soliciting material” nor “filed” with the
SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of
1933 or the Securities Exchange Act of 1934, each as amended, except to the extent the Company specifically
incorporates it by reference into such filing.
30
The performance graph compares the cumulative five-year shareholder return on the Company’s common stock,
assuming an investment of $100 on December 31, 2009 and the reinvestment of dividends thereafter, to that of
the common stocks of United States companies reported in the Nasdaq Total Return Index and the common
stocks of the KBW Regional Banks Total Return Index. The KBW Regional Banks Total Return Index (KRX) is
a proprietary stock index of Keefe, Bruyette & Woods, Inc., that tracks the returns of 50 regional banking
companies throughout the United States.
Comparison of 5 Year Cumulative Total Return
300
250
200
150
100
50
0
2009
2010
Hancock Holding Company
2011
2012
NASDAQ Composite-Total Returns
2013
KBW Regional Banks Index
2014
Issuer Purchases of Equity Securities
The Board of Directors authorized a new common stock buyback program on July 24, 2014 for up to 5%, or
approximately 4 million shares, of the Company’s common stock issued and outstanding. The shares may be
repurchased in the open market or in privately negotiated transactions from time to time, depending upon market
conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange
Commission. The buyback authorization will expire December 31, 2015. During the year, the Company
repurchased 1.5 million shares at an average price of $31.13 per share under the 2014 buyback program.
Jul 1, 2014—Jul 31, 2014
Aug 1, 2014—Aug 31, 2014
Sep 1, 2014—Sep 30, 2014
Dec 1, 2014—Dec 31, 2014
Total
Total number
of shares or
units purchased
—
221,729
83,534
1,224,279
1,529,542
Average
price
paid
per share
$ —
32.41
33.29
30.75
$31.13
Total number of
shares purchased
as a part of publicly
announced plans
or programs
Maximum number
of shares
that may yet be
purchased under
plans or programs
—
221,729
83,534
1,224,279
1,529,542
4,093,149
3,871,420
3,787,886
2,563,607
The Company’s board of directors approved a stock repurchase program on April 30, 2013 that authorized the
repurchase of up to 5% of the Company’s outstanding common stock. On May 8, 2013 Hancock entered into an
accelerated share repurchase (ASR) transaction with Morgan Stanley & Co. LLC (Morgan Stanley). In the ASR
transaction, the Company paid $115 million to Morgan Stanley and received from them initially 2.8 million
shares of Hancock common stock and received an additional 0.6 million upon final settlement on May 5, 2014.
The 2013 program was superseded by the 2014 program.
31
ITEM 6. SELECTED FINANCIAL DATA
The following tables set forth certain selected historical consolidated financial data and should be read in
conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and the consolidated Financial Statements and Notes thereto included elsewhere herein.
(in thousands, except per share data)
2014
2013
2012
2011
2010
Year Ended December 31,
Income Statement:
Interest income
Interest income (te)
Interest expense
Net interest income (te)
Provision for loan losses
Noninterest income excluding securities transactions
Securities transactions gains/(losses)
Operating expense (excluding amortization of
intangibles)
Amortization of intangibles
Income before income taxes
Income tax expense
Net income
Securities transactions gains/(losses)
Nonoperating expense items
Merger-related expenses
Sub-debt early redemption costs
Expense & efficiency initiative and other items
Total nonoperating expense items
Taxes on adjustments
Total adjustments (net of taxes)
Operating income (a)
$692,813
703,460
38,119
$722,210
732,620
41,479
$762,549
774,134
51,682
$592,204
604,130
70,971
$352,558
364,385
82,345
665,341
33,840
227,999
—
579,869
26,797
242,187
66,465
691,141
32,734
246,038
105
648,804
29,470
215,866
52,510
722,452
54,192
252,195
1,552
681,000
32,067
197,355
45,613
533,159
38,732
206,427
(91)
577,463
16,551
94,823
18,064
282,040
65,991
136,949
—
276,532
2,728
61,911
9,705
$175,722
$163,356
$151,742
$ 76,759
$ 52,206
—
105
1,552
(91)
—
—
—
25,686
25,686
7,263
18,423
—
—
38,003
38,003
13,264
24,634
45,789
5,336
—
51,125
17,350
32,223
86,762
—
—
86,762
30,398
56,455
3,167
—
—
3,167
1,108
2,059
$194,145
$187,990
$183,965
$133,214
$ 54,265
Purchase accounting adjustments (net of taxes)
Core income (b)
34,954
$159,191
66,890
$121,100
60,587
$123,378
34,249
$ 98,965
12,454
$ 41,811
Common Share Data:
Earnings per share:
Basic earnings per share
Diluted earnings per share
Operating earnings per share: (a)
Basic operating earnings per share
Diluted operating earnings per share
Core earnings per share: (b)
Basic operating earnings per share
Diluted operating earnings per share
Cash dividends paid
Book value per share (period-end)
Tangible book value per share (period-end)
$
$
$
2.10
2.10
2.32
2.32
1.90
1.90
0.96
30.74
21.37
1.93
1.93
2.22
2.22
1.43
1.43
0.96
29.49
19.94
$
$
1.77
1.75
2.15
2.13
1.43
1.43
0.96
28.91
19.27
1.16
1.15
2.03
2.02
1.50
1.49
0.96
27.95
17.76
1.41
1.40
1.47
1.46
1.13
1.12
0.96
23.22
21.18
(a) Net income less tax-effected nonoperating expense items and securities gains/losses. Management believes
that this is a useful financial measure because it enables investors to assess ongoing operations.
(b) Operating income excluding tax-effected purchase accounting adjustments. Management believes that
reporting on core income provides a useful measure of financial performance that helps investors determine
whether management is successfully executing its strategic initiatives.
32
(in thousands)
2014
2013
2012
2011
2010
At and For the Years Ended December 31,
Period-End Balance Sheet Data:
Total loans, net of unearned income
Loans held for sale
Securities
Short-term investments
Total earning assets
Allowance for loan losses
Goodwill
Other intangible assets, net
Other assets
Total assets
Noninterest-bearing deposits
Interest-bearing transaction and savings
deposits
Interest-bearing public fund deposits
Time deposits
Total interest-bearing deposits
Total deposits
Short-term borrowings
Long-term debt
Other liabilities
Stockholders’ equity
$13,895,276
20,252
3,826,454
802,948
$12,324,817
24,515
4,033,124
268,839
$11,577,802
50,605
3,716,460
1,500,188
$11,177,026
72,378
4,496,900
1,184,419
$4,957,164
21,866
1,488,885
639,164
18,544,930
16,651,295
16,845,055
16,930,723
7,107,079
(128,762)
621,193
132,810
1,577,095
(133,626)
625,675
159,773
1,706,134
(136,171)
628,877
189,409
1,937,315
(124,881)
651,162
211,075
2,106,017
(81,997)
61,631
13,203
1,038,411
$20,747,266
$19,009,251
$19,464,485
$19,774,096
$8,138,327
$ 5,945,208
$ 5,530,253
$ 5,624,127
$ 5,516,336
$1,127,246
6,531,628
1,982,616
2,113,379
10,627,623
16,572,831
1,151,573
374,371
176,089
2,472,402
6,162,959
1,571,532
2,095,772
9,830,263
15,360,516
657,960
385,826
179,880
2,425,069
6,038,002
1,580,260
2,501,799
10,120,061
15,744,188
639,133
396,589
231,297
2,453,278
5,602,963
1,620,260
2,974,020
10,197,243
15,713,579
1,044,455
353,891
295,008
2,367,163
1,995,082
1,216,701
2,436,690
5,648,473
6,775,719
374,848
376
130,836
856,548
Total liabilities & stockholders’ equity
$20,747,266
$19,009,251
$19,464,485
$19,774,096
$8,138,327
Average Balance Sheet Data:
Total loans, net of unearned income
Loans held for sale
Securities (a)
Short-term investments
Total earning assets
Allowance for loan losses
Goodwill and other intangible assets
Other assets
$12,938,869
16,540
3,816,724
423,359
$11,700,218
24,986
4,140,051
578,613
$11,238,690
46,049
4,063,817
771,523
$ 8,479,846
34,175
3,074,373
955,325
$4,993,485
12,268
1,559,019
698,042
17,195,492
(129,642)
768,047
1,602,930
16,443,868
(137,897)
799,996
1,823,051
16,120,079
(136,257)
820,887
2,130,660
12,543,719
(102,784)
498,463
1,782,673
7,262,814
(73,190)
58,778
1,177,832
Total assets
$19,436,827
$18,929,018
$18,935,369
$14,722,071
$8,426,234
Noninterest-bearing deposits
Interest-bearing transaction and savings
deposits
Interest-bearing public fund deposits
Time deposits
Total interest-bearing deposits
Total deposits
Short-term borrowings
Long-term debt
Other liabilities
Stockholders’ equity
$ 5,641,792
$ 5,393,955
$ 5,251,391
$ 3,400,064
$1,076,829
6,173,683
1,530,972
2,053,546
9,758,201
15,399,993
1,005,680
379,692
176,514
2,474,948
5,962,114
1,410,679
2,350,488
9,723,281
15,117,236
806,082
389,153
229,983
2,386,564
5,827,370
1,451,459
2,579,963
9,858,792
15,110,183
843,798
338,875
241,710
2,400,803
4,100,381
1,314,633
2,901,475
8,316,489
11,716,553
789,022
211,976
203,403
1,801,117
1,940,470
1,163,993
2,736,206
5,840,669
6,917,498
492,275
23,351
127,400
865,710
Total liabilities & stockholders’ equity
$19,436,827
$18,929,018
$18,935,369
$14,722,071
$8,426,234
(a) Average securities does not include unrealized holding gains/losses on available for sale securities.
33
($ in thousands)
Performance Ratios:
Return on average assets
Return on average assets—operating (a)
Return on average common equity
Return on average common equity—operating (a)
Return on average tangible common equity
Return on average tangible common equity—operating (a)
Earning asset yield (tax equivalent - te)
Total cost of funds
Net interest margin (te)
Core net interest margin (te)(b)
Noninterest income excluding securities transactions as a percent
of total revenue(te)
Efficiency ratio (c)
Average loan/deposit ratio
FTE employees (period-end)
Capital Ratios:
Common stockholders’ equity to total assets
Tangible common equity ratio
Tier 1 leverage (d)
Asset Quality Information:
Nonaccrual loans (e)
Restructured loans
Total nonperforming loans
Year Ended December 31,
2014
2013
2012
2011
2010
0.90%
1.00%
7.10%
7.84%
10.30%
11.37%
4.09%
0.22%
3.87%
3.33%
25.52%
62.03%
84.02%
3,794
0.86%
0.99%
6.84%
7.88%
10.30%
11.85%
4.45%
0.25%
4.20%
3.39%
26.25%
65.17%
77.56%
3,978
0.80%
0.97%
6.32%
7.66%
9.72%
11.78%
4.80%
0.32%
4.48%
3.74%
25.88%
64.63%
74.68%
4,235
0.52%
0.90%
4.26%
7.40%
5.98%
10.37%
4.82%
0.57%
4.25%
3.84%
27.91%
66.35%
72.67%
4,736
0.62%
0.64%
6.03%
6.27%
6.62%
6.88%
5.01%
1.13%
3.88%
3.67%
32.69%
65.24%
72.36%
2,271
11.92%
8.59%
9.17%
12.76%
9.00%
9.34%
12.60%
8.77%
9.10%
11.97%
7.96%
8.17%
10.52%
9.69%
9.65%
$ 79,537
8,971
$ 99,686
9,272
$137,615
16,437
$103,270
14,003
$120,986
3,929
88,508
108,958
154,052
117,273
124,915
Other real estate (ORE) and foreclosed assets
59,569
76,979
102,072
159,751
33,277
Total nonperforming assets
$148,077
$185,937
$256,124
$277,024
$158,192
Nonperforming assets to loans + ORE and foreclosed assets
Accruing loans 90 days past due (f)
Accruing loans 90 days past due as a percent of loans
Nonperforming assets + accruing loans 90 days past due to loans +
foreclosed assets
Net charge-offs—non-FDIC acquired
Net charge-offs—FDIC acquired
Net charge-offs—non-FDIC acquired to average loans
Allowance for loan losses
Allowance for loan losses to period-end loans
Allowance for loan losses to nonperforming loans and accruing
1.06%
1.50%
2.19%
2.44%
3.17%
$
4,825
$ 10,387
$ 13,244
$
5,880
$
1,492
0.03%
0.08%
0.11%
0.05%
0.03%
1.10%
1.58%
2.31%
2.50%
3.19%
$ 17,119
2,501
$
0.13%
$ 24,309
2,355
$
0.21%
$ 55,031
$ 26,069
$ 33,805
$ 11,475
$ 50,682
$ —
0.49%
0.40%
1.01%
$128,762
$133,626
$136,171
$124,881
$ 81,997
0.93%
1.08%
1.18%
1.12%
1.65%
loans 90 days past due
137.96% 111.97%
81.40% 101.40%
64.87%
(a) Excludes tax-effected nonoperating expense items and securities transactions. See operating income calculation previously in
Selected Financial Data.
(b) Reported taxable equivalent (te) net interest income, excluding net purchase accounting adjustments, expressed as a percentage
of average earning assets.
(c) Noninterest expense as a percent of total revenue (te) before amortization of purchased intangibles, securities transactions, and
nonoperating expense items.
(d) Calculated as Tier 1 capital divided by average total assets for leverage capital purposes.
(e)
Included in nonaccrual loans are $7.0 million, $15.7 million, $3.0 million, $2.5 million, and $8.7 million of nonaccruing
restructured loans at December 31, 2014, 2013, 2012, 2011, and 2010, respectively. Total excludes acquired credit-impaired
loans with an accretable yield.
(f) Nonaccrual loans and accruing loans past due 90 days or more do not include acquired-impaired loans with an accretable yield.
34
Supplemental Asset Quality Information
(in thousands)
2014
Nonaccrual loans (c)
Restructured loans
Total nonperforming loans
ORE and foreclosed assets (d)
Total non-performing assets
Accruing loans 90 days past due
Allowance for loan losses
2013
Nonaccrual loans (c)
Restructured loans
Total nonperforming loans
ORE and foreclosed assets (d)
Total non-performing assets
Accruing loans 90 days past due
Allowance for loan losses
2012
Nonaccrual loans (c)
Restructured loans
Total nonperforming loans
ORE and foreclosed assets (d)
Total non-performing assets
Accruing loans 90 days past due
Allowance for loan losses
2011
Nonaccrual loans (c)
Restructured loans
Total nonperforming loans
ORE and foreclosed assets (d)
Total non-performing assets
Accruing loans 90 days past due
Allowance for loan losses
2010
Nonaccrual loans (c)
Restructured loans
Total nonperforming loans
ORE and foreclosed assets (d)
Total non-performing assets
Accruing loans 90 days past due
Allowance for loan losses
Originated
Loans
Acquired
Loans (a)
FDIC
Acquired
Loans (b)
Total
$ 71,296
8,971
80,267
40,148
$ 6,139
—
6,139
—
$ 2,102
—
2,102
19,421
$ 79,537
8,971
88,508
59,569
$120,415
$ 6,139
$21,523
$148,077
$
4,564
$ 97,701
$
$
261
477
$ —
$30,584
$
4,825
$128,762
$ 74,341
8,765
83,106
51,240
$134,346
$
3,298
$ 78,885
$103,429
11,673
115,102
75,771
$190,873
$ 13,244
$ 78,774
$ 83,306
14,003
97,309
115,769
$21,801
507
22,308
—
$22,308
$ 7,089
$ 1,647
$30,086
4,764
34,850
—
$34,850
$ —
788
$
$ 1,118
—
1,118
—
$ 3,544
—
3,544
25,739
$ 99,686
9,272
108,958
76,979
$29,283
$185,937
$ —
$53,094
$ 10,387
$133,626
$ 4,100
—
4,100
26,301
$137,615
16,437
154,052
102,072
$30,401
$256,124
$ —
$56,609
$ 13,244
$136,171
$18,846
—
18,846
43,982
$103,270
14,003
117,273
159,751
$213,078
$ 1,118
$62,828
$277,024
$
5,880
$ 83,246
$ —
$ —
$ —
$41,635
$
5,880
$124,881
$ 75,700
3,929
79,629
17,595
$ 97,224
$
1,492
$ 81,325
$ —
—
—
—
$ —
$ —
$ —
$45,286
—
45,286
15,682
$120,986
3,929
124,915
33,277
$60,968
$158,192
$ —
672
$
$
1,492
$ 81,997
(a) Loans which have been acquired and no allowance brought forward in accordance with acquisition accounting. Acquired-performing loans in
pools with fully accreted purchase fair value discounts are reported as originated loans, resulting in changes in classification between periods.
(b) Loans acquired in an FDIC-assisted transaction. Non-single family loss share agreement expired at 12/31/14. As of 12/31/14, $196.7 million in
(c)
loans remain covered by the FDIC single family loss share agreement, providing considerable protection against credit risk.
Included in nonaccrual loans are $7.0 million, $15.7 million, $3.0 million, $2.5 million, and $8.7 million of nonaccruing restructured loans at
December 31, 2014, 2013, 2012, 2011, and 2010, respectively. Total excludes acquired credit-impaired loans with an accretable yield.
(d) ORE received in settlement of FDIC acquired loans is included with ORE from originated loans. ORE received in settlement of FDIC acquired
loans includes $7.1 million of assets that remain covered under the single family FDIC loss share agreement, until the agreement expires.
35
Loans Outstanding
(in thousands)
2014
Commercial non-real estate loans
Construction and land development loans
Commercial real estate loans
Residential mortgage loans
Consumer loans
Total loans
Change in loan balance from previous year
2013
Commercial non-real estate loans
Construction and land development loans
Commercial real estate loans
Residential mortgage loans
Consumer loans
Total loans
Change in loan balance from previous year
2012
Commercial non-real estate loans
Construction and land development loans
Commercial real estate loans
Residential mortgage loans
Consumer loans
Total loans
Change in loan balance from previous year
2011
Commercial non-real estate loans
Construction and land development loans
Commercial real estate loans
Residential mortgage loans
Consumer loans
Total loans
Change in loan balance from previous year
2010
Commercial non-real estate loans
Construction and land development loans
Commercial real estate loans
Residential mortgage loans
Consumer loans
Total loans
Change in loan balance from previous year
Originated
Loans
Acquired
Loans (a)
FDIC
Acquired
Loans (b)
Total
$ 5,917,728
1,073,964
2,428,195
1,704,770
1,685,542
$12,810,199
$ 3,316,067
$ 4,113,837
752,381
2,022,528
1,196,256
1,409,130
$ 9,494,132
$ 2,386,911
$ 2,713,385
665,673
1,548,402
827,985
1,351,776
$ 7,107,221
$ 2,219,491
$
$
120,137
21,123
688,045
2,378
985
832,668
6,195
$ 6,044,060
11,674
1,106,761
27,808
3,144,048
187,033
1,894,181
19,699
1,706,226
$13,895,276
$ 252,409
$
$(1,639,351) $(106,257) $ 1,570,459
$
926,997
142,931
967,148
315,340
119,603
$ 2,472,019
$(1,482,739) $(157,157) $
$ 23,390
20,229
53,165
209,018
52,864
$ 358,666
$ 5,064,224
915,541
3,042,841
1,720,614
1,581,597
$12,324,817
747,015
$ 1,690,643
295,151
1,279,546
486,444
202,974
$ 3,954,758
$(1,663,095) $(155,620) $
$ 29,260
28,482
95,146
263,515
99,420
$ 515,823
$ 4,433,288
989,306
2,923,094
1,577,944
1,654,170
$11,577,802
400,776
$ 1,525,409
540,806
1,259,757
487,147
1,074,611
$ 4,887,730
739,717
$
$ 2,236,758
603,371
1,656,515
734,669
386,540
$ 5,617,853
$ 5,617,853
$ 3,800,230
$ 38,063
1,263,005
118,828
2,998,923
82,651
1,507,498
285,682
1,607,370
146,219
$ 671,443
$11,177,026
$(137,708) $ 6,219,862
$
$ 1,046,431
495,590
1,231,414
366,183
1,008,395
$ 4,148,013
$
$
(15,192) $
$ 1,081,621
— $ 35,190
652,857
157,267
—
1,413,287
181,873
—
659,689
293,506
—
1,149,710
141,315
—
— $ 809,151
$ 4,957,164
— $(141,819) $ (157,011)
(a) Loans which have been acquired and no allowance brought forward in accordance with acquisition
accounting. Acquired-performing loans in pools with fully accreted purchase fair value discounts are
reported as originated loans, resulting in changes in classification between periods.
(b) Loans acquired in an FDIC-assisted transaction. Non-single family loss share agreement expired at
12/31/14. As of 12/31/14, $196.7 million in loans remain covered by the FDIC single family loss share
agreement, providing considerable protection against credit risk.
36
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The purpose of this discussion and analysis is to focus on significant changes and events in the financial
condition and results of operations of Hancock Holding Company and our subsidiaries during 2014 and selected
prior periods. This discussion and analysis is intended to highlight and supplement financial and operating data
and information presented elsewhere in this report, including the consolidated financial statements and related
notes.
FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of section 27A of the Securities Act of
1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and we intend such
forward-looking statements to be covered by the safe harbor provisions therein and are including this statement
for purposes of invoking these safe-harbor provisions. Forward-looking statements provide projections of results
of operations or of financial condition or state other forward-looking information, such as expectations about
future conditions and descriptions of plans and strategies for the future. Forward-looking statements that we may
make include, but may not be limited to, comments with respect to future levels of economic activity in our
markets, including the impact of volatility of oil and gas prices on our energy portfolio and associated loan loss
reserves and the downstream impact on businesses that support the energy sector, especially in the Gulf Coast
region, loan growth expectations, deposit trends, credit quality trends, net interest margin trends, future expense
levels, success of revenue-generating initiatives, projected tax rates, future profitability, improvements in
expense to revenue (efficiency) ratio, purchase accounting impacts such as accretion levels, the impact of the
branch rationalization process, details of the common stock buyback, possible repurchases of shares under stock
buyback programs, and the financial impact of regulatory requirements. Hancock’s ability to accurately project
results, predict the effects of future plans or strategies, or predict market or economic developments is inherently
limited. Although Hancock believes that the expectations reflected in its forward-looking statements are based on
reasonable assumptions, actual results and performance could differ materially from those set forth in the
forward-looking statements. Factors that could cause actual results to differ from those expressed in Hancock’s
forward-looking statements include, but are not limited to, those risk factors outlined in Item 1A.
You are cautioned not to place undue reliance on these forward-looking statements. Hancock does not intend,
and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of
differences in actual results, changes in assumptions or changes in other factors affecting such statements, except
as required by law.
NON-GAAP FINANCIAL MEASURES
Throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations,
management uses several non-GAAP financial measures including Operating Income, Core Income, and Core
Net Interest Margin. These measures are provided to assist the reader with better understanding the Company’s
financial condition and results of operations.
We define Operating Income as net income less tax-effected nonoperating expense items and securities gains/
losses. Management believes this is a useful financial measure as it enables investors to assess ongoing
operations and compare the Company’s fundamental operational performance from period to period. A
reconciliation of Net Income to Operating Income is included in the financial tables in Item 6, Selected Financial
Data. The components of nonoperating expense are further discussed in the Noninterest Expense section of this
item.
We define Core Income as Operating Income excluding the tax-effected purchase accounting adjustments. A
reconciliation of Operating Income to Core Income is included in the financial tables in Item 6, Selected
Financial Data. We define Core Net Interest Margin as reported taxable equivalent (te) net interest income
37
excluding net purchase accounting adjustments, expressed as a percentage of average earning assets. A
reconciliation of Reported Net Interest Margin to Core Net Interest Margin is included in the Net Interest Income
section of this item. Management believes that Core Income and Core Net Interest Margin provide a useful
measure to investors regarding the Company’s performance period over period as well as providing investors
with assistance in understanding the success management has experienced in executing its strategic initiatives.
EXECUTIVE OVERVIEW
Recent Economic and Industry Developments
The Federal Reserve publishes its Summary of Commentary on Current Economic Conditions (the “Beige
Book”) eight times a year. The most recent Federal Reserve Beige Book report, released January 14, 2015,
indicates improvement and expansion of economic activity throughout most of Hancock’s market areas.
However, activity at energy-related businesses, which are concentrated mainly in Hancock’s south Louisiana and
Houston, Texas market areas, reported a slight decline in activity. This decline is expected to continue until oil
prices recover. Tourism and convention activity, which is important to several of the Company’s market areas,
showed expanding levels of activity in both leisure and business travel, and is expected to continue to grow in
2015 based on advanced booking reports. Retail sales for the 2014 holiday season were positive, and motor
vehicle sales continued to grow. Manufacturing activity has strengthened, with an increase in employment and
orders of production. Manufacturers within the Company’s footprint expect growth in production to be slower
than the past several years, but still remain higher than the long-term trend.
The real estate market for residential properties was flat to slightly down compared to the prior Beige Book,
released December 3, 2014. Home sales are expected to remain flat or increase slightly over the next few months.
New home construction activity has remained flat. Most builders had a positive outlook, expecting new home
sales to be flat or show a slight increase. Commercial construction activity has improved modestly, with demand
for apartment construction showing strong growth.
Employment levels were mixed. Some areas reported slight gains in jobs, while others reported flat employment
levels with some scattered layoffs. Pricing pressures remained stable in most industries. However, some skilled
and professional positions are seeing above-average wage increases and higher starting pay due to competition.
The Beige Book also noted that some companies were having to increase starting pay in order to retain their
employees.
Loan demand across most of the markets that Hancock serves has increased slightly since the last Beige Book
report, but competition for quality borrowers remains. Consumer lending and business outside the oil and gas
industry increased. Commercial real estate continued to grow as a result of increased demand for multifamily
housing. The outlook for increased growth remained positive but with some concern that lower oil prices may
slow growth in Texas for 2015.
The overall U.S. economy continued to expand, with almost all regions showing modest to moderate growth
rates. Confidence in the prospect of a higher rate of sustained growth is improving for businesses and consumers
alike, although uncertainties remain about such matters as the health of the international economy and the
implications of pending or proposed changes in U.S. fiscal and tax policies and regulations.
Highlights of 2014 Financial Results
Net income for the year ended December 31, 2014 was $175.7 million, compared to $163.4 million in 2013. This
increase was mainly due to reducing and controlling expenses. Diluted earnings per share for 2014 were $2.10, a
$0.17 increase from 2013. Operating income, which excludes tax-effected nonoperating expenses and securities
gains and losses, totaled $194.1 million, a $6.2 million, or 3.3% increase over 2013. Diluted earnings per share
on operating income were $2.32 for 2014, a $0.10 improvement over 2013. Core income, which the Company
defines as operating income excluding tax-effected purchase accounting adjustments, increased $38.1 million, or
31%, from 2013.
38
Hancock’s return on average assets (ROA) for 2014 was 0.90% compared to 0.86% for 2013, while the operating
ROA was 1.00% in 2014, compared to 0.99% in 2013.
The year-over-year net income increase reflects the positive impact of a number of strategic initiatives that
management implemented to reduce costs and replace decreasing levels of purchase accounting adjustments with
a more sustainable source of earnings. Management announced an expense and efficiency initiative in 2013 that
was designed to reduce overall annual operating expense levels by $50 million as compared to annualized
expenses for the first quarter of 2013 by the fourth quarter of 2014. The Company achieved the targeted
reduction to expenses in 2014, as operating expenses decreased $56.6 million from 2013, and improved operating
efficiency over 300 basis points to 62.03%. In addition to expense reductions, management has implemented a
number of revenue initiatives that resulted in an increase in net interest income, excluding purchase accounting
adjustments, of $15.6 million, or 3%, in 2014, as compared to 2013. This increase was a direct result of a $1.2
billion, or 11%, increase in average loan balances and a more favorable average earning asset mix. The company
has set a longer-term sustainable efficiency ratio target of 57% - 59% for 2016, which management hopes to
achieve through continued expense control and increased revenues.
Reported net interest income (te) in 2014 totaled $665.4 million, a $25.7 million, or 4%, decrease from 2013,
which is the result of a $41.3 million decrease in net purchase accounting accretion. The reported net interest
margin decreased 33 basis points (bps) to 3.87% in 2014. The core net interest margin, which is calculated
excluding total net purchase accounting adjustments, decreased a modest 6 bps to 3.33% in 2014.
The provision for loan losses was $33.8 million in 2014 compared to $32.7 million in 2013, with the provision
taken in each year primarily driven by loans not covered under FDIC loss-sharing agreements. Net charge-offs
from the non-FDIC acquired portfolio during 2014 were $17.1 million, or 0.13% of average total loans. This
compares to the net non-FDIC acquired charge-offs of $24.3 million, or 0.21% of average total loans, in 2013.
At December 31, 2014, the allowance for loan losses was $128.8 million, or 0.93% of period-end loans, down
$4.9 million from the previous year-end. A $17.6 million increase in the allowance for the originated and
acquired portfolios was offset by a $22.5 million decrease in the impaired reserve on the FDIC acquired portfolio
as the FDIC acquired portfolio had significant reductions in projected losses. The determination of allowances
for FDIC acquired loans and other acquired-impaired loans is discussed in Note 1 to the consolidated financial
statements.
At December 31, 2014, loans in the Company’s energy segment totaled approximately $1.7 billion, or 12% of
total loans. The energy segment is comprised of credits to both the E&P industry and support industries. During
the fourth quarter of 2014, management reviewed all energy credits $1 million and greater and applied stress
testing modeling to the various segments of the energy related portfolio. Based on current conditions,
management determined that no additional reserve build was required for the energy portfolio at December 31,
2014. Should pricing pressures on oil continue, management believes the Company could experience downward
pressure on risk ratings for individual credits that could lead to additional provision expense in future quarters.
However, this will depend upon a number of factors including the severity and duration of the cycle. Based on its
review and assessment of information currently available, management believes that although downgrades may
occur, they do not foresee significant additional losses at this stage.
Nonperforming assets including nonaccrual loans, restructured loans, other real estate and foreclosed assets
totaled $148.1 million at December 31, 2014, a decrease of $37.9 million, or 20%, from December 31, 2013. The
Company’s nonperforming asset ratio representing nonperforming assets as a percentage of total loans, other real
estate and foreclosed properties decreased 44 basis points to 1.06% between December 31, 2013 and
December 31, 2014.
Total assets at December 31, 2014 were $20.7 billion, up about 9% from the prior year-end. Total loans increased
$1.6 billion, or 13% during 2014, and were up $1.7 billion, or 14%, excluding the FDIC acquired portfolio.
During 2014, net growth was experienced in all loan categories across the Company’s entire footprint.
39
At December 31, 2014, total deposits were $16.6 billion, up about 8% from the end of 2013, as all deposit
categories showed an increase. Noninterest-bearing demand deposits increased almost 8% and comprised 36% of
total deposits at December 31, 2014.
The Company’s tangible common equity ratio was 8.59% at December 31, 2014, down 41 bps from the previous
year-end due to asset growth and share repurchases further discussed in the Capital Resources section of this item.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income (te) is the primary component of our earnings and represents the difference, or spread,
between revenue generated from interest-earning assets and the interest expense related to funding those assets.
For analytical purposes, net interest income is adjusted to a taxable equivalent basis using a 35% federal tax rate
on tax exempt items (primarily interest on municipal securities and loans).
Net interest income (te) for 2014 totaled $665 million, a $26 million, or 4%, decrease from 2013 as interest and
fees on loans declined $28 million, mainly due to a $41.4 million decrease in net purchase accounting accretion.
Excluding purchase accounting accretion, net interest income (te) increased by $15.6 million due to a $752
million increase in average earning assets, an improved earning asset mix, and a 3 bps decrease in the cost of
funding earning assets. Management has implemented a number of strategic initiatives to increase sustainable
interest income to replace the decreasing amount of interest income from purchase accounting accretion. These
initiatives include, among other items, hiring experienced middle market commercial lenders in growing markets
such as Houston, expanding the Company’s product base in specialty and lease financing and opening business
banking centers specifically designed for commercial customers. These initiatives contributed to a $1.2 billion
increase in average loans between 2013 and 2014.
The reported net interest margin declined 33 bps to 3.87% in 2014. The net interest margin is the ratio of net
interest income (te) to average earnings assets. The core margin was approximately 3.33% in 2014, down 6 bps
from 2013. The declining trend of the core margin moderated in 2014 after experiencing more significant
decreases in prior years.
The overall reported yield on earning assets was 4.09% in 2014, down 36 bps from 2013. The reported loan
portfolio yield was 4.71% in 2014 compared to 5.45% in 2013. Excluding the impact from purchase accounting
accretion, the loan yield decreased 26 bps. The reported tax equivalent yield on the investment securities
portfolio increased 17 bps from 2013, reflecting higher yields in CMOs and mortgage-backed securities from a
decrease in premium amortization as prepayments decreased. The mix of average earning assets improved in
2014, as the proportion of loans increased to 75% of earnings assets compared to 71% in 2013 with
corresponding declines in both investment securities and short-term investments. The decline in these portfolios
resulted from a management decision to fund a portion of the Company’s loan growth from repayments and
maturities of investment securities.
The cost of funding earning assets declined to 0.22% in 2014, down 3 bps from 2013. The overall rate paid on
interest-bearing deposits declined 1 bp from 2013 to 0.24% in 2014 as the Company was able to replace
approximately $211.6 million of higher cost time deposits and public fund deposits with lower cost interest-
bearing transaction and saving deposits. Borrowing costs decreased 37 bps from 1.45% in 2013 to 1.08% in
2014. This decrease was mainly attributable to a June 2014 early redemption of $115 million in fixed rate
repurchase obligations bearing an average rate of 3.43%. The early redemption reduced borrowing costs by
approximately $1.8 million during the second half of 2014. Interest-free funding sources, including noninterest-
bearing demand deposits, funded almost 35% of average earnings assets in 2014 and 34% in 2013.
Net interest income (te) for 2013 was down $31.4 million, or 4%, from 2012 as interest and fees on loans
declined $37.6 million. The reported net interest margin declined 28 bps to 4.20% in 2013. The core margin was
3.39% in 2013, down 35 bps from 2012. The core margin was relatively stable during 2013 after decreasing
throughout 2012, mainly from a decline in the core yields on the loan and securities portfolios.
40
The overall reported yield on earning assets in 2013 was down 35 bps from 2012 as the reported loan portfolio
yield declined 56 bps. Loan growth in commercial loans during 2013 was in very competitively priced segments.
The reported yield on the mainly fixed-rate portfolio of investment securities declined 12 bps from 2012,
reflecting lower yields available on the reinvestment of maturities and repayments. The mix of average earning
assets improved moderately in 2013, as the proportion of loans increased to 71.2% of earnings assets compared
to 69.7% in 2012 with a corresponding decline in short-term investments.
The cost of funding earning assets declined to 0.25% in 2013, down 7 bps from 2012. The overall rate paid on
interest-bearing deposits declined 8 bps from 2012 to 0.25% in 2013. This decrease was due primarily to the
impact of the sustained low rate environment on deposit rates in general and on the re-pricing of time deposits in
particular. The mix of funding sources improved during 2013, as higher-cost time deposits continued to decrease
as a percentage of total deposits, and interest-bearing transaction and savings deposits increased. Interest-free
sources, including noninterest-bearing demand deposits, funded almost 34% of average earnings assets in 2013
compared to 32% in 2012.
The factors contributing to the changes in net interest income (te) for 2014, 2013, and 2012 are presented in
Tables 1 and 2. Table 1 shows average balances and related interest and rates and provides a reconciliation of
reported and core NIM. Table 2 details the effects of changes in balances (volume) and rates on net interest
income in 2014 and 2013.
41
TABLE 1. Summary of Average Balances, Interest and Rates (te)(a)
($ in millions)
Assets
Interest-Earnings Assets:
Loans (te) (b)
Loans held for sale
Investment securities:
2014
Years Ended December 31,
2013
2012
Average
Balance
Interest Rate
Average
Balance
Interest Rate
Average
Balance
Interest Rate
$12,938.9 $610.0 4.71% $11,700.2 $637.8 5.45% $11,238.7 $675.4 6.01%
16.5
0.7 4.28
25.0
0.9 3.53
46.0
1.4 3.41
U.S. Treasury and government agency
securities
CMOs and mortgage-backed securities
Obligations of states and political
subdivisions:
taxable
nontaxable (te)
Other securities
Total investment in securities (te) (c)
Federal funds sold and short-term investments
Total earning assets (te)
145.2
3,450.9
2.3 1.62
79.6 2.31
28.1
3,870.2
0.6 2.16
81.3 2.10
99.1
3,696.4
2.1 2.12
81.1 2.19
101.6
104.8
14.2
3,816.7
423.4
17,195.5
3.6 3.52
5.9 5.66
0.3 2.22
91.7 2.40
1.0 0.23
87.1
146.2
8.5
4,140.1
578.6
703.4 4.09% 16,443.9
3.3 3.73
7.1 4.85
0.2 2.44
92.5 2.23
1.4 0.24
59.8
200.7
7.9
4,063.9
771.5
732.6 4.45% 16,120.1
2.8 4.73
9.0 4.48
0.4 4.43
95.4 2.35
1.9 0.25
774.1 4.80%
Non-earning assets:
Other assets
Allowance for loan losses
Total assets
Liabilities and Stockholders’ Equity
Interest-bearing Liabilities:
2,370.9
(129.6)
$19,436.8
2,623.0
(137.9)
$18,929.0
2,951.6
(136.3)
$18,935.4
Interest-bearing transaction and savings deposits $ 6,173.7 $
Time deposits
Public funds
Total interest-bearing deposits
Repurchase agreements
Other interest-bearing liabilities
Long-term debt
Total interest-bearing liabilities
Noninterest-bearing:
Demand deposits
Other liabilities
Stockholders’ equity
2,053.5
1,531.0
9,758.2
688.7
317.0
379.7
11,143.6
6.7 0.11% $ 5,962.1 $
2,350.5
12.8 0.62
1,410.7
3.7 0.24
9,723.3
23.2 0.24
763.3
1.9 0.27
42.7
0.5 0.15
12.5 3.30
389.2
38.1 0.34% 10,918.5
6.0 0.10% $ 5,827.3 $
2,580.0
14.9 0.63
1,451.5
3.3 0.23
9,858.8
24.2 0.25
760.9
4.4 0.58
82.9
0.1 0.21
12.8 3.28
338.9
41.5 0.38% 11,041.5
7.4 0.13%
21.2 0.82
4.1 0.29
32.7 0.33
5.9 0.78
0.1 0.14
12.9 3.80
51.6 0.47%
5,641.8
176.5
2,474.9
5,393.9
230.0
2,386.6
5,251.4
241.7
2,400.8
Total liabilities & stockholders’
equity
$19,436.8
$18,929.0
$18,935.4
Net interest income and margin (te)
Net earning assets and spread
Interest cost of funding earning assets
$665.3 3.87%
$691.1 4.20%
$ 6,051.9
3.75% $ 5,525.4
0.22%
4.07% $ 5,078.6
0.25%
$722.5 4.48%
4.33%
0.32%
(a) Tax equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.
(b)
(c) Average securities do not include unrealized holding gains or losses on available for sale securities.
Includes nonaccrual loans
42
Reconciliation of Reported Net Interest Margin to Core Margin
($ in millions)
Net interest income (te)
Purchase accounting adjustments
Loan discount accretion
Bond premium amortization
CD premium accretion
Total net purchase accounting adjustments
Net interest income (te)—core
Average earning assets
Net interest margin—reported
Net purchase accounting adjustments
Net interest margin—core
Years Ended December 31,
2013
2012
2014
$
665.3
$
691.1
$
722.5
97.7
(5.4)
0.2
92.5
572.8
$
144.7
(11.5)
0.7
133.9
557.2
$
141.2
(24.5)
2.7
119.4
603.1
$
$17,195.5
$16,443.9
$16,120.1
3.87%
0.54%
3.33%
4.20%
0.81%
3.39%
4.48%
0.74%
3.74%
TABLE 2. Summary of Changes in Net Interest Income (te)(a) (b)
(in thousands)
Interest Income (te)
Loans (te) (c)
Loans held for sale
Investment securities:
U.S. Treasury and government agency
securities
CMOs and mortgage-backed securities
Obligations of states and political
subdivisions:
Taxable
Nontaxable (te)
Other securities
Total investment in securities (te)
Federal funds sold and short-term investments
Total interest income (te)
Interest-bearing transaction and savings
deposits
Time deposits
Public funds
Total interest-bearing deposits
Repurchase agreements
Other interest-bearing liabilities
Long-term debt
Total interest expense
Net interest income (te) variance
2014 Compared to 2013
2013 Compared to 2012
Due to
Change in
Volume
Rate
Total
Increase
(Decrease)
Due to
Change in
Volume
Rate
Total
Increase
(Decrease)
$63,516
(337)
$(91,296) $(27,780) $26,948
(710)
(174)
163
$(64,575) $(37,627)
(491)
219
1,931
(9,264)
(189)
7,476
1,742
(1,788)
(1,534)
3,730
36
(3,495)
(1,498)
235
515
(2,215)
127
(8,906)
(356)
53,917
(196)
1,065
(20)
8,136
(82)
(83,079)
319
(1,150)
107
(770)
(438)
(29,162)
1,106
(2,595)
28
735
(468)
26,505
(682)
699
(167)
(3,609)
(53)
(68,018)
424
(1,896)
(139)
(2,874)
(521)
(41,513)
218
(1,855)
287
(1,350)
(399)
419
(312)
(1,642)
$55,559
514
(235)
119
398
(2,171)
(30)
85
(1,718)
166
(1,768)
(114)
(1,716)
18
(70)
1,775
7
$(81,361) $(25,802) $26,498
732
(2,090)
406
(952)
(2,570)
389
(227)
(3,360)
(1,354)
(1,520)
(6,347)
(4,579)
(865)
(751)
(8,566)
(6,850)
(1,485)
(1,503)
(29)
41
(123)
(1,898)
(10,210)
(10,203)
$(57,808) $(31,310)
(a) Tax equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.
(b) Amounts shown as due to changes in either volume or rate includes an allocation of the amount that reflects
the interaction of volume and rate changes. This allocation is based on the absolute dollar amounts of
change due solely to changes in volume or rate.
Includes nonaccrual loans.
(c)
43
Provision for Loan Losses
The provision for loan losses was $33.8 million in 2014 compared to a provision of $32.7 million in 2013. The
provision for non-FDIC acquired loans in 2014 was $34.8 million, compared to $25.3 million in 2013. The
provision for the FDIC acquired portfolio was a net credit of almost $1 million, compared to a provision of $7.5
million in 2013. The decrease in the FDIC acquired portfolio provision was primarily due to reductions in
expected losses.
The section on the “Allowance for Loan and Lease Losses” provides additional information on changes in the
allowance for loans losses and general credit quality. Certain differences in the determination of the allowance
for loan losses for originated loans and for acquired performing loans and acquired impaired loans (which
includes all covered loans) are described in Note 1 to the consolidated financial statements.
Noninterest Income
Noninterest income for 2014 totaled $228 million, an $18.1 million, or 7%, decrease from 2013. Decreases
related to increased amortization of the FDIC loss share receivable, reduced fees resulting from the sale of certain
insurance business lines in the second quarter, and a decrease in income from secondary mortgage operations
were the primary factors in the decline in noninterest income.
Table 3 presents the components of noninterest income for the prior three years along with the percentage
changes between years:
TABLE 3. Noninterest Income
($ in thousands)
2014
% Change
2013
% Change
2012
Service charges on deposit accounts
Trust fees
Bank card and ATM fees
Investment and annuity fees
Secondary mortgage market operations
Insurance commissions and fees
(Amortization) accretion of loss share receivable
Income from bank-owned life insurance
Credit-related fees
Income from derivatives
Gain on sales of assets
Safety deposit box income
Other miscellaneous income
Securities transactions gains, net
Total noninterest income
$ 77,006
44,826
45,031
20,291
8,036
9,473
(12,102)
10,314
11,121
1,645
1,279
1,830
9,249
—
$227,999
(3)% $ 79,000
38,186
17
45,939
(2)
19,574
4
12,543
(36)
15,804
(40)
(2,239)
(441)
11,223
(8)
8,724
27
4,675
(65)
1,932
(34)
1,923
(5)
8,754
6
105
(100)
1% $ 78,246
32,736
17
49,112
(6)
18,033
9
16,488
(24)
15,692
1
(145)
5,000
11,163
1
6,681
31
3,600
30
4,366
(56)
2,006
(4)
9,072
(4)
1,552
(93)
(7)% $246,143
(3)% $253,747
Amortization on the FDIC loss share receivable increased $9.9 million in 2014 from the prior year. The current
year’s $12.1 million amortization of the FDIC loss share receivable reflects a reduction in the amount of
expected reimbursements under the loss sharing agreements due to lower loss projections for the related FDIC
acquired loan pools. Accounting for amortization of the loss share receivable is described in Note 1 to the
consolidated financial statements. Management expects a lower level of amortization in future periods as the
FDIC loss share coverage on the non-single family portfolio expired in December 2014. The loss share
agreement covering the single family portfolio expires in December 2019.
Fees from secondary mortgage operations totaled $8.0 million in 2014, down $4.5 million, or 36%, from a year-
earlier. Secondary mortgage operations fee income is generated from selling certain types of originated single
44
family mortgage loans into the secondary market, in order to provide mortgage products for our customers while
managing interest rate risk and liquidity. These loans are originated by the Company through its branch network.
The Company typically sells its longer-term fixed-rate loans while retaining in the portfolio the majority of its
adjustable rate loans as well as loans generated through certain programs to support customer relationships
including programs for high net worth individuals and non-builder construction loans. During 2014, single family
loan originations decreased 24% as refinancing activity was down almost 57% from 2013, consistent with
national trends. The decline in fee income in 2014 reflects a 36% reduction in loans sold into the secondary
market from the lower level of originations.
Trust and investment and annuity fees totaled $65.1 million in 2014, a 7.4 million, or 13%, increase over 2013.
Trust revenue was positively impacted by strong sales of our Hancock Horizon mutual funds via national
distribution channels and increased new business from our Personal Trust, Institutional Trust and Retirement
Services lines of businesses. Revenues from these lines increased $6.8 million, or 20%, from 2013.
Bank card and ATM fees totaled $45.0 million in 2014, down less than 2% compared to 2013. Included in bank
card and ATM fees are fees from credit card, debit card and ATM transactions, and merchant service fees.
Commercial card fees were up $2.4 million, or 41% as a result of various strategic initiatives during 2014 to
increase card usage, including specific commercial card enhancements. This increase is offset by a decrease in
ATM fee income due in part to the closing of approximately 50 branches in 2013 and 2014 as part of the
Company’s branch rationalization program.
During the second quarter of 2014, the Company sold its property and casualty and group benefits insurance
intermediary business. The business lines sold contributed approximately 50% of the Company 2013 insurance
commissions and fees. As a result of the sale, insurance commissions and fees were down $6.3 million, or 40%
compared to 2013.
Service charges on deposit accounts were down $2.0 million, or 3% from 2013, primarily due to a decrease in
overdraft charges. The Company implemented a number of initiatives in 2014 to grow deposit balances and the
related service charges as part of its general strategy of growing revenue. Management believes these initiatives
will result in an increased level of service charges over time.
Credit-related fee income increased $2.4 million, or 27% in 2014 as compared to 2013. These fees primarily
consist of standby letter of credit unused loan commitment fees. This growth in fee income is a result of the
increase in lending activity during 2014.
Noninterest income for 2013 compared to 2012, was down $7.6 million, or 3%, as the favorable impact of
increases in trust, and investment and annuity income, was offset by declines in bankcard and ATM fees, income
from secondary mortgage operations and accretion of the FDIC loss share receivable.
Trust and investment and annuity fees totaled $57.8 million in 2013, up $7.0 million, or 14%, from 2012 due to
improved stock market values and new business.
Bank card and ATM fees totaled $45.9 million in 2013, a $3.2 million, or 6% decrease from 2012, reflecting the
full impact of restrictions on debit card interchange rates arising from the implementation of the Durbin
amendment to the Dodd-Frank Act. This decline was partially offset by an increase in merchant processing
revenue starting in the third quarter of 2012 that was related to the reacquisition of the Company’s merchant
business and a change in the terms of the servicing agreement.
Fees from secondary mortgage operations totaled $12.5 million in 2013, down $3.9 million, or 24%, from a year
earlier, reflecting a slowdown in mortgage loan activity in the last half of 2013, mainly due to the impact of
higher longer-term interest rates. The decline also reflects a lower level of loans sold as a result of a strategic
decision to retain more residential mortgages on the balance sheet.
Amortization of the FDIC loss share receivable increased $7.2 million from 2012 to 2013. Amortization, or
negative accretion, of $2.2 million in 2013 reflects a reduction in the expected amount of reimbursements under
the loss sharing agreements due to lower loss projections for the related FDIC acquired loan pools.
45
Noninterest Expense
Noninterest expense for 2014 totaled $606.7 million, down $71.6 million, or 11%, compared to 2013. Excluding
nonoperating expenses noninterest expense decreased $59.3 million, or 9%, to $581.0 million in 2014 compared
to 2013. The decrease in expenses is a result of the Company’s general expense reduction strategic initiative
implemented in early 2013. The focus of the strategic expense initiative was to reduce quarterly operating
expense by $12.5 million ($50 million annualized) between the first quarter of 2013 and the fourth quarter of
2014. The Company achieved its expense reduction target in the second quarter of 2014. The strategic initiatives
included, among other items, a branch rationalization program that resulted in closing or selling over 50 branches
since January 1, 2013, a bank charter consolidation, selling certain insurance business lines, increasing
automation through enhancing systems, and restructuring various support units within the organization to
enhance operating efficiency. Although management will continue to look for potential expense reduction
opportunities, it believes that expenses may marginally increase in the short-term as the Company implements a
number of revenue enhancing strategic initiatives.
Nonoperating expenses, primarily related to the expense and efficiency initiatives noted above and merger-
related activities, totaled $25.7 million in 2014 and $38.0 million in 2013.
Table 4 presents the components of noninterest expense for the prior three years, along with the percentage
changes between years. The first schedule of Table 4 presents operating expenses by component and the second
schedule identifies nonoperating expenses by component.
Total personnel expense totaled $320.5 million in 2014, a $26.8 million, or 8%, decrease from 2013. The $13.2
million, or 5%, decrease in employee compensation was related to the expense and efficiency initiative as the
number of full-time equivalent employees at December 31, 2014 was down by almost 200 to 3,794. In addition to
the reduction in salary costs, employee benefits expense was down $13.6 million, or 21%, primarily from
actuarial gains in 2013 related to higher long-term interest rates at year-end 2013 and strong plan asset
performance. Also contributing to the reduction in benefit costs was the decrease in the number of full-time
equivalent employees.
Occupancy and equipment expenses decreased a combined $8.4 million, or 12% from 2013, primarily due to the
branch closures noted above.
Data processing expense was up $2.9 million, or 6%, primarily related to increased debit and credit card activity.
Professional services expense decreased $8.4 million, or 25%, from 2013 primarily from a $2.5 million reduction
in legal and other professional fees related to special credits and a $1 million reduction in outside accounting and
auditing expense as the Company has begun to transition its internal audit function in-house. Deposit insurance
and regulatory fees decreased $3.0 million or 20% from 2013 due, in part, to the charter consolidation.
Other real estate expense decreased $5.3 million, or 66%, from 2013 as the Company has experienced a much
lower level of valuation adjustments and losses on disposal of properties as real estate prices stabilized.
Nonoperating expenses decreased $12.3 million, or 32%, from 2013. These expenses are incurred in connection
with the Company’s ongoing expense and efficiency initiative. They include such items, among others, as lease
buy-outs, branch and equipment disposition costs and severance packages from the branch rationalization
project, settlement of an FDIC assessment related to loss claim reimbursement amounts, early termination fees
on repurchase obligations, and severance costs associated with organizational restructuring. The decrease from
2013 to 2014 represents a reduction in these types of expenses as a majority of the initiatives related to the
branch rationalization project were completed during 2013 and early 2014, including the cost associated with the
closing or selling of approximately 38 branches in 2013, as compared to 15 in 2014.
46
TABLE 4. Noninterest Expense
($ in thousands)
Employee compensation
Employee benefits
Total personnel expense
Net occupancy expense
Equipment expense
Data processing expense
Professional services expense
Amortization of intangibles
Telecommunications and postage
Deposit insurance and regulatory fees
Other real estate expense, net
Advertising
Ad valorem and franchise taxes
Printing and supplies
Insurance expense
Travel
Entertainment and contributions
Tax credit investment amortization
Other expense
Total noninterest expense (excluding nonoperating
expense)
Nonoperating expense
Total noninterest expense
The components of nonoperating expense:
(in thousands)
Personnel
Net occupancy expense
Equipment expense
Data processing expense
Professional services expense
Telecommunications and postage
Advertising
Printing and supplies
Travel
Entertainment and contributions
Tax credit investment amortization
Other expense
Total nonoperating expense
2014
% Change
2013
% Change
2012
$269,249
51,253
(5)% $282,420
64,847
(21)
(1)% $284,962
71,772
(10)
320,502
43,476
16,862
51,279
25,755
26,797
14,640
11,872
2,758
8,702
10,492
4,310
3,919
4,057
5,762
8,817
20,980
580,980
25,686
(8)
(11)
(15)
6
(25)
(9)
(16)
(20)
(66)
(15)
8
(16)
(4)
(13)
9
22
(18)
(9)
(32)
347,267
48,847
19,885
48,364
34,114
29,470
17,432
14,914
8,036
10,281
9,727
5,112
4,094
4,663
5,265
7,219
25,581
640,271
38,003
(3)
(9)
(9)
3
3
(8)
(17)
0
(34)
26
17
(22)
(25)
(6)
(3)
21
5
(3)
(26)
356,734
53,856
21,862
46,819
33,021
32,067
21,062
14,902
12,250
8,155
8,321
6,534
5,494
4,987
5,426
5,974
24,478
661,942
51,125
$606,666
(11)% $678,274
(5)% $713,067
2014
2013
2012
$ 7,794
120
91
90
7,466
36
235
240
9
—
—
9,605
$ 9,215
7
141
3
5,243
—
118
—
53
—
3,562
19,661
$ 9,450
611
2,235
3,116
24,436
375
5,360
957
771
623
—
3,191
$25,686
$38,003
$51,125
Other expense includes branch closure write-downs and disposition expense in 2014 and 2013, and $3.5 million
in early termination fees on repurchase obligations in 2014.
Noninterest expense for 2013 decreased $34.8 million, or 5%, compared to 2012. Excluding nonoperating
expenses related primarily to the expense and efficiency initiative and merger-related activities, which totaled
$38.0 million in 2013 and $51.1 million in 2012, noninterest expense decreased $21.7 million, or 3%, to $640.3
47
million in 2013 compared to 2012. The overall decrease is primarily related to cost savings realized from the
successful integration of Whitney’s operations, including the impact of the core systems conversion and
consolidations of the branch networks and back-office operations. Cost savings resulting from the Company’s
expense and efficiency initiative began having a favorable effect in the last half of 2013 and continued into 2014.
Total personnel expense decreased $9.5 million, or 3%, in 2013 compared to the prior year. Full-time equivalent
employees were 3,978 at December 31, 2013, compared to 4,235 at December 31, 2012.
Occupancy and equipment expense decreased by a combined $7.0 million in 2013 due to the decreases associated
with the conversion and consolidations. Other expense categories that experienced declines from 2012 related to
the conversion and consolidations included telecommunications and postage, printing and supplies and insurance
expense.
ORE expense totaled $8.0 million in 2013, a $4.2 million, or 34%, decline from 2012 as the prior year included
valuation losses on ORE acquired from Whitney and unreimbursed losses on covered loans moving through the
foreclosure process.
Income Taxes
The Company provided for income tax expense at an effective rate of 27% in 2014, 24% in 2013 and 23% in
2012. Management expects the effective tax rate for 2015 to be in the range of 27% to 29%. Hancock’s effective
tax rates have varied from the 35% federal statutory rate primarily because of tax-exempt income and its
participation in programs that award tax credits. Interest income on bonds issued by or loans to state and
municipal governments and authorities, and earnings from the bank-owned life insurance program are the major
components of tax-exempt income. The main source of tax credits has been investments in tax-advantaged
securities and tax credit projects. These investments are made primarily in the markets the Company serves and
are directed at tax credits issued under the Qualified Zone Academy Bonds (QZAB), Qualified School
Construction Bonds (QSCB), as well as Federal and State New Market Tax Credit (NMTC) and Low-Income
Housing Tax Credit (LIHTC) programs. The investments generate tax credits which reduce current and future
taxes and are recognized when earned as a benefit in the provision for income taxes. Table 5 reconciles reported
income tax expense to that computed at the statutory federal tax rate for each year in the three-year period ended
December 31, 2014.
TABLE 5. Income Taxes
(In thousands)
Taxes computed at statutory rate
Tax credits:
QZAB/QSCB
NMTC—Federal and State
LIHTC
Other tax credits
Total tax credits
State income taxes, net of federal income tax benefit
Tax-exempt interest
Bank owned life insurance
Goodwill reduction related to asset sale
Other, net
Income tax expense
48
Years Ended December 31,
2014
2013
2012
$ 84,766
$ 75,553
$ 69,074
(3,171)
(12,954)
(452)
—
(16,577)
4,649
(6,301)
(3,554)
1,112
2,370
(3,176)
(10,594)
(925)
(1,048)
(15,743)
2,352
(6,487)
(3,926)
—
761
(3,368)
(7,742)
(1,677)
(874)
(13,661)
(78)
(7,127)
(4,005)
—
1,410
$ 66,465
$ 52,510
$ 45,613
The Company invests in Federal NMTC projects related to tax credit allocations that have been awarded to its
wholly-owned Community Development Entity (CDE) as well as projects that utilize credits awarded to
unrelated CDEs. From 2008 through 2014, the Company’s CDE was awarded three allocations totaling $148
million. These awards are expected to generate tax credits totaling $57.7 million over their seven-year
compliance periods.
The Company intends to continue making investments in tax credit projects, though its ability to access new
credits will depend upon, among other factors, federal and state tax policies and the level of competition for such
credits. Based only on tax credit investments that have been made to date, the Company expects to realize tax
credits over the next three years totaling $12.9 million, $10.1 million and $9.0 million for 2015, 2016 and 2017,
respectively.
SEGMENT REPORTING
On March 31, 2014, the Company combined its two state bank charters into one charter. Due to the charter
change and consistent with its stated strategy that is focused on providing a consistent package of community
banking products and services throughout a contiguous market area, the Company has identified its overall
banking operations as its only reportable segment. Please see Note 18 for further information.
BALANCE SHEET ANALYSIS
Investment Securities
Our investment in securities was $3.8 billion at December 31, 2014, compared to $4.0 billion at December 31,
2013. The investment security portfolio is managed by ALCO to assist in the management of interest rate risk
and liquidity while providing an acceptable rate of return to the Company.
Our securities portfolio consists mainly of residential mortgage-backed securities and CMOs that are issued or
guaranteed by U.S. government agencies. We invest only in high quality securities of investment grade quality
with a targeted duration, for the overall portfolio, generally between two and five. At December 31, 2014, the
average maturity of the portfolio was 4.38 years with an effective duration of 3.51 and a weighted-average yield
of 2.29%. At December 31, 2013, the average maturity of the portfolio was 3.97 years with an effective duration
of 3.93 and a weighted-average yield of 2.28%.
There were no investments in securities of a single issuer, other than U.S. Treasury and U.S. government agency
securities and mortgage-backed securities issued or guaranteed by U.S. government agencies that exceeded 10%
of stockholders’ equity. We do not invest in subprime or “Alt A” home mortgage loans. Investments classified as
available for sale are carried at fair value with held to maturity securities carried at amortized cost. Unrealized
holding gains on available for sale securities are excluded from net income and are recognized, net of tax, in
other comprehensive income and in accumulated other comprehensive income, a separate component of
stockholders’ equity, until realized.
At December 31, 2014, securities available for sale totaled $1.6 billion and securities held to maturity totaled
$2.2 billion compared to $1.4 billion and $2.6 billion, respectively, at December 31, 2013. During the third
quarter of 2013, approximately $1.0 billion of securities available for sale were reclassified as securities held to
maturity. See Note 2 to the consolidated financial statements for further discussion of this reclassification.
49
The amortized cost of securities at December 31, 2014 and 2013 was as follows:
TABLE 6. Securities by Type
(in thousands)
Available for sale securities
U.S. Treasury and government agency securities
Municipal obligations
Mortgage-backed securities
CMOs
Corporate debt securities
Equity securities
Held to maturity securities
U.S. Treasury and government agency securities
Municipal obligations
Mortgage-backed securities
CMOs
December 31,
2014
2013
$ 300,207
13,995
1,217,293
88,093
3,500
8,673
$
504
35,809
1,262,633
96,369
3,500
9,965
$1,631,761
$1,408,780
$
—
180,615
899,923
1,085,751
$ 100,000
193,189
1,003,327
1,314,836
$2,166,289
$2,611,352
Securities are classified according to their final contractual maturities without consideration of scheduled and
unscheduled principal amortization, potential prepayments or call options. Accordingly, actual maturities will
differ from their reported contractual maturities. The expected average maturity years presented in the tables
includes scheduled principal payments and assumptions for prepayments.
The amortized cost, yield and fair value of debt securities at December 31, 2014, by final contractual maturity,
were as follows:
TABLE 7. Debt Securities—Maturities by Type
(in thousands)
Available for sale
U.S. Treasury and government
agency securities
Municipal obligations
Mortgage-backed securities
CMOs
Other debt securities
Contractual Maturity
Over One
Year
Through
Five Years
Over Five
Years
Through
Ten Years
Over
Ten
Years
One Year
or Less
Total
Fair Value
Weighted
Average
Yield (te)
Expected
Average
Maturity
Years
$300,034 $
1,250
—
—
2,000
108
12,745
51,743
88,093
1,500
$
65 $
—
236,396
—
—
— $ 300,207 $ 300,508
14,176
—
1,245,564
929,154
86,864
—
3,500
—
13,995
1,217,293
88,093
3,500
1.52% 0.1
2.47% 1.9
2.76% 4.8
1.90% 3.6
1.78% 0.7
Total debt securities
$303,284 $154,189
$236,461 $ 929,154 $1,623,088 $1,650,612
2.47% 3.8
Fair Value
$303,589 $154,534
$244,535 $ 947,954 $1,650,612
Weighted Average Yield
1.53%
2.20%
3.04%
2.69%
2.47%
Held to maturity
Municipal obligations
Mortgage-backed securities
CMOs
$ 13,775 $ 83,995
—
—
155,842
369,357
$ 75,010 $
21,831
18,907
7,835 $ 180,615 $ 182,887
923,658
899,923
1,079,795
1,085,751
878,092
541,645
3.93% 5.6
1.81% 5.8
2.20% 3.9
Total debt securities
$169,617 $453,352
$115,748 $1,427,572 $2,166,289 $2,186,340
2.17% 4.8
Fair Value
$170,786 $446,039
$115,194 $1,454,320 $2,186,340
Weighted Average Yield
2.28%
2.27%
2.80%
2.08%
2.17%
50
Loan Portfolio
Total loans at December 31, 2014 were $13.9 billion, an increase of $1.6 billion, or 13%, from December 31,
2013. During 2014, net growth occurred in each loan category. All markets across the franchise reported growth
during the year, with south Louisiana, Houston, and central Florida generating approximately two-thirds of the
Company’s net loan growth.
The composition of our loan portfolio distinguished among loans originated, acquired and FDIC acquired for the
periods indicated, follows:
Table 8. Loans Outstanding by Type
(In thousands)
Originated loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
2014
2013
2012
2011
2010
December 31,
$ 5,917,728
$ 4,113,837
$ 2,713,385
$ 1,525,409
$1,046,431
1,073,964
2,428,195
1,704,770
1,685,542
752,381
2,022,528
1,196,256
1,409,130
665,673
1,548,402
827,985
1,351,776
540,806
1,259,757
487,147
1,074,611
495,590
1,231,414
366,183
1,008,395
Total originated loans
$12,810,199
$ 9,494,132
$ 7,107,221
$ 4,887,730
$4,148,013
Acquired loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
Total acquired loans
FDIC acquired loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
$
120,137
$
926,997
$ 1,690,643
$ 2,236,758
$
$
$
21,123
688,045
2,378
985
142,931
967,148
315,340
119,603
295,151
1,279,546
486,444
202,974
603,371
1,656,515
734,669
386,540
832,668
$ 2,472,019
$ 3,954,758
$ 5,617,853
6,195
$
23,390
$
29,260 $
38,063
11,674
27,808
187,033
19,699
20,229
53,165
209,018
52,864
28,482
95,146
263,515
99,420
118,828
82,651
285,682
146,219
$
$
—
—
—
—
—
—
35,190
157,267
181,873
293,506
141,315
Total FDIC acquired loans
$
252,409
$
358,666
$
515,823
$
671,443
$ 809,151
Total loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
$ 6,044,060
$ 5,064,224
$ 4,433,288
$ 3,800,230
$1,081,621
1,106,761
3,144,048
1,894,181
1,706,226
915,541
3,042,841
1,720,614
1,581,597
989,306
2,923,094
1,577,944
1,654,170
1,263,005
2,998,923
1,507,498
1,607,370
652,857
1,413,287
659,689
1,149,710
Total loans
$13,895,276
$12,324,817
$11,577,802
$11,177,026
$4,957,164
Originated loans include all loans not included in the acquired and FDIC acquired loan portfolios described
below. Acquired loans are those purchased in the Whitney acquisition on June 4, 2011, including loans that were
performing satisfactorily at the date (acquired-performing) and loans acquired with evidence of credit
51
deterioration (acquired-impaired). Acquired-performing loans are transferred to originated loans at the time the
purchase accounting discount is fully accreted. Purchased loans acquired in a business combination are recorded
at estimated fair value on their purchase date without carryover of any allowance for loan losses. Certain
differences in the accounting for originated loans and for acquired performing and acquired impaired loans
(which include all FDIC acquired loans) are described in Note 3 to the consolidated financial statements.
FDIC acquired loans are loans acquired in the December 2009 acquisition of Peoples First, which were covered
by loss share agreements between the FDIC and the Company. Total FDIC acquired loans at December 31, 2014
were down $106 million from December 31, 2013. These reductions reflect repayments, charge-offs and
foreclosures. The non-single family loss share agreement expired at December 31, 2014. As of December 31,
2014, $196.7 million in loans remain covered by the FDIC single family loss share agreement, providing
considerable protection against credit risk. The FDIC acquired portfolio will continue to decline over time.
Originated commercial non-real estate loans were up $1.8 billion since December 31, 2013. The net increase
reflected activity with both new and existing customers, including certain activity with relationships acquired in
the Whitney acquisition, as well as transfers from the acquired-performing loan portfolio. While most markets
across the Company’s footprint reported commercial non-real estate growth, the most significant activity was
concentrated in the Company’s market areas in Louisiana, Houston, Texas, and central Florida.
The Company’s commercial non-real estate customer base is diversified over a range of industries, including oil
and gas (O&G), wholesale and retail trade in various durable and nondurable products and the manufacture of
such products, marine transportation and maritime construction, financial and professional services, and
agricultural production. Loans outstanding to O&G industry customers totaled approximately $1.7 billion at
December 31, 2014. $1.07 billion, or 62%, of the O&G portfolio is with customers who provide transportation
and other onshore and offshore services and products to support exploration and production activities. The
remaining $648 million, or 38%, is to customers engaged in O&G exploration and production, 90% of which is
supported by proved developed producing reserves. These customers are diversified across 12 primary basins in
the U.S. and the Gulf of Mexico and by product line with approximately 60% in oil and 40% in gas. Our
commercial non-real estate lending is mainly to middle-market and smaller commercial entities, although we
occasionally participate in larger shared-credit loan facilities with businesses well known to the relationship
officers and operating in the Company’s market areas. Shared credits funded at December 31, 2014 totaled
approximately $1.8 billion, of which approximately $1 billion was with O&G customers.
During the fourth quarter, the Company reviewed all energy credits $1 million and greater, and applied stress test
modeling to the various segments of the energy related portfolio. Based on current conditions no additional
reserve build was required for the energy portfolio at December 31, 2014. Should pricing pressures on oil
continue, there may be some downward pressure on risk ratings of individual credits that could lead to additional
provision expense in future quarters. However, this will depend on the severity and duration of this low ebb of
the cycle. Management believes that although downgrades may occur, they do not foresee significant additional
losses at this stage.
Originated construction and development (C&D) and commercial real estate (CRE) loans, which include loans
on both income-producing and owner-occupied properties, increased a combined $727 million during 2014, with
$282 million of net growth in the fourth quarter. This increase reflects the funding of existing commitments as
well as new business across the Company’s footprint and covers a variety of retail, multi-family residential,
commercial and other projects.
Originated residential mortgages were up $509 million during 2014, and originated consumer loans increased
$276 million over this period. The increase in mortgage loans is due to the Company’s desire to keep mortgage
loans meeting certain criteria, such as private banking loans and one-time close construction loans in its portfolio.
52
The portfolio of acquired Whitney loans has declined $1.6 billion since December 31, 2013, with an $807 million
decline in the commercial non-real estate category, $401 million in the C&D and CRE categories, and $432
million in the residential mortgage and consumer loans categories. These declines reflect maturities, monthly
amortization and transfers of acquired performing loans to the originated category. There were no significant
trends underlying the reduction in the commercial non-real estate category, and, as noted earlier, the Company
continues its relationship with many of the commercial customers who have paid down their loans since the
acquisition. Other reductions in acquired C&D and CRE categories as well as the residential mortgage and
consumer categories reflected mainly normal repayment and refinancing activity.
The following table shows average loans by category for each of the prior three years and the effective taxable-
equivalent yield the percentage of total loans:
Table 9. Average Loans
($ in thousands)
Total loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total loans
Years Ended December 31,
2014
2013
2012
Balance
Yield
(te)
Pct of
total
Balance
Yield
(te)
Pct of
total
Balance
Yield
(te)
Pct of
total
8%
$ 5,401,992 3.68% 41% $ 4,612,208 4.08% 39% $ 4,000,744 4.61% 36%
1,047,753 6.44%
8% 1,157,064 7.23% 10%
3,058,355 5.36% 24% 2,899,317 5.50% 25% 2,897,317 6.25% 26%
1,791,859 4.61% 14% 1,638,103 6.16% 14% 1,532,178 7.11% 14%
1,638,910 5.78% 13% 1,585,353 6.51% 14% 1,651,387 6.99% 15%
$12,938,869 4.71% 100% $11,700,218 5.45% 100% $11,238,690 6.00% 100%
965,237 8.91%
The following table sets forth, for the periods indicated, the approximate contractual maturity by type of the loan
portfolio:
TABLE 10. Loans Maturities by Type
December 31, 2014
(in thousands)
Total loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgage loans
Consumer loans
Total loans
Maturity Range
Within
One Year
After One
Through
Five Years
After Five Years
Total
$1,511,183
476,303
361,942
116,455
117,491
$2,583,374
$3,456,993
410,854
1,598,189
92,058
682,583
$6,240,677
$1,075,884
219,604
1,183,917
1,685,668
906,152
$5,071,225
$ 6,044,060
1,106,761
3,144,048
1,894,181
1,706,226
$13,895,276
The sensitivity to interest rate changes of that portion of our loan portfolio that matures after one year is shown
below:
TABLE 11. Loans Sensitivity to Changes in Interest Rates
(in thousands)
Total loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgage loans
Consumer loans
Total loans
53
December 31, 2014
Fixed rate
Floating
rate
Total
$1,722,980
263,094
1,832,870
1,029,394
808,721
$5,657,059
$2,809,897
367,364
949,236
748,332
780,014
$5,654,843
$ 4,532,877
630,458
2,782,106
1,777,726
1,588,735
$11,311,902
Nonperforming Assets
The following table sets forth nonperforming assets by type for the periods indicated, consisting of nonaccrual
loans, troubled debt restructurings and other real estate owned (ORE) and foreclosed assets. Loans past due 90
days or more and still accruing are also disclosed. In the following table, commercial loans encompass
commercial non-real estate loans, construction and land development loans and commercial real estate loans.
In the following discussion and tables, certain disaggregated information was not available for the commercial
non-real estate, construction and land development and commercial real estate loan categories for years prior to
2012. In these instances, combined information for these categories is provided under the caption “commercial
loans.”
TABLE 12. Nonperforming Assets
(in thousands)
Loans accounted for on a nonaccrual basis:
Commercial loans
Commercial non-real estate loans
Commercial non-real estate loans—
restructured
Total commercial non-real estate loans
Construction and land development loans
Construction and land development loans—
restructured
Total construction and land
development loans
Commercial real estate loans
Commercial real estate loans—restructured
Total commercial real estate loans
Residential mortgage loans
Residential mortgage loans—restructured
Total residential mortgage loans
Consumer loans
Total nonaccrual loans
Total restructured loans—still accruing
Commercial loans
Commercial non-real estate loans
Construction and land development loans
Commercial real estate loans
Residential mortgage loans
Consumer loans
Total restructured loans—still accruing
ORE and foreclosed assets
Total nonperforming assets*
Loans 90 days past due still accruing
Ratios:
Nonperforming assets to loans plus
ORE and foreclosed assets
Allowance for loan losses to nonperforming
loans and accruing loans 90 days past due
Loans 90 days past due still accruing to loans
2014
2013
2012
2011
2010
December 31,
$ — $ — $ — $ 73,255
—
21,511
14,248
8,705
$ 92,296
—
1,263
15,511
5,187
4,654
13,359
8,770
1,756
23,267
29,623
—
73,255
—
—
92,296
—
2,378
7,930
11,608
—
—
7,565
26,017
2,602
28,619
21,348
746
22,094
5,748
$ 79,537
424
4,905
3,580
54
8
8,971
59,569
$148,077
4,825
$
16,700
37,369
3,091
40,460
22,255
—
22,255
6,912
$ 99,686
—
2,323
3,298
3,144
507
—
9,272
76,979
$185,937
$ 10,387
41,231
46,969
1,050
48,019
17,285
1,364
18,649
6,449
$137,615
—
6,722
6,236
2,930
549
—
16,437
102,072
$256,124
$ 13,244
—
—
—
—
25,043
—
25,043
4,972
$103,270
12,812
—
—
—
1,191
—
14,003
159,751
$277,024
5,880
$
—
—
—
—
21,489
409
21,898
6,791
$120,985
3,301
—
—
—
629
—
3,930
33,277
$158,192
1,492
$
1.06%
1.50%
2.19%
2.44%
3.17%
137.96% 111.97%
0.08%
0.03%
81.40% 101.40%
0.05%
0.11%
64.87%
0.03%
* Includes total nonaccrual loans, total restructured loans—still accruing and ORE and foreclosed assets
54
Nonperforming assets totaled $148.1 million at December 31, 2014, compared to $185.9 million at December 31,
2013. Nonperforming assets as a percent of total loans and ORE and foreclosed assets was 1.06% at
December 31, 2014, compared to 1.50% at December 31, 2013. Nonperforming loans exclude loans from the
Whitney and Peoples First acquired credit-impaired portfolios that are accreting interest income.
Nonaccrual loans were $79.5 million at December 31, 2014, a decrease of $20.1 million from December 31,
2013. The majority of the decrease occurred in commercial real estate and construction and land development
loans. FDIC acquired loans accounted for using the cost recovery method and reported as nonaccrual totaled $2.1
million and $3.5 million at December 31, 2014 and 2013, respectively. Acquired-performing loans subsequently
placed in nonaccrual status totaled $6.1 million at December 31, 2014 and $21.8 million at December 31, 2013.
Loans modified in troubled debt restructurings (TDRs) totaled $16.0 million at December 31, 2014 compared to
$24.9 million at December 31, 2013. These totals included $7.0 million and $15.7 million, respectively, of loans
reported in nonaccrual loans. TDRs arise when a borrower is experiencing, or is expected to experience, financial
difficulties in the near-term and, consequently, a modification that would otherwise not be considered is granted
to the borrower. Certain loans modified in a TDR may continue to accrue interest, depending on the individual
facts and circumstances of the borrower.
ORE and foreclosed assets decreased a net $17.4 million during 2014 totaling $59.6 million at year end. At
December 31, 2014, the Company’s balance of ORE and foreclosed properties included approximately
$17 million from the transfer of branches closed as a result of the Company’s ongoing branch rationalization
initiative and $7 million in properties covered under the FDIC single family loss share agreement. The decrease
from the prior year are a result of a stable to improving economy that has allowed the Company to dispose of
ORE and foreclosed assets at a rate faster than new foreclosures have occurred.
Allowance for Loan and Lease Losses
Management, with Audit Committee oversight, is responsible for maintaining an effective loan review system,
and internal controls, which include an effective risk rating system that identifies, monitors, and addresses asset
quality problems in an accurate and timely manner. The allowance is evaluated for adequacy on at least a
quarterly basis. For a discussion of this process, see Note 1 to the consolidated financial statements located in
Item 8 of this annual report on Form 10-K.
At December 31, 2014, the allowance for loan losses was $128.8 million compared with $133.6 million at
December 31, 2013. The $4.9 million decrease is comprised of a $17.6 million increase in the allowance for
loans in originated and acquired portfolios offset by a $22.5 million decrease in the impairment reserve on the
FDIC acquired portfolio. The increase in the allowance for loans in the originated and acquired portfolio is due to
a combination of a $1.7 billion increase in the portfolio balance and a $69 million increase in commercial non-
real estate loans classified as substandard (see Note 3 to the consolidated financial statement). This increase in
substandard loans is attributable to a small number of loans, primarily located in Louisiana and on the
Mississippi Gulf Coast that were downgraded for specific reasons related to the individual credit. Management
believes these downgrades are isolated and not indicative of any deteriorating credit trend related to a specific
industry or geography. The decrease in the impairment reserve for the FDIC acquired portfolio is due to an
increase in the expected cash flows from the portfolio.
The ratio of the allowance for loan losses as a percent of period-end loans was 0.93% at December 31, 2014,
compared to 1.08% at December 31, 2013. The ratio of the allowance for loan losses as a percent of period-end
loans for the originated and acquired portfolio increased 5 bps from December 31, 2013, to December 31, 2014,
while the ratio of the impairment reserve to as a percent of period-end loans for the FDIC acquired portfolio
decreased 269 bps from 14.8% at December 31, 2013 to 12.1% at December 31, 2014.
55
As explained in Note 1 to the consolidated financial statements, one item that management considers in
estimating its allowance for loans is current business and economic conditions. During the second half of 2014,
the price of West Texas Intermediate crude oil decreased from approximately $106 per barrel on June 30, 2014,
to approximately $53 per barrel on December 31, 2014, potentially negatively impacting the Company’s $1.7
billion oil and gas (O&G) portfolio. As a result of this price decrease, management completed an in-depth
analysis of its O&G loan portfolio during the fourth quarter of 2014 in an effort to both understand the potential
impact the price decrease has on its customers and determine if any additional allowance was needed specifically
for the O&G portfolio.
As part of the analysis, management reviewed all energy credits $1 million and greater and stress tested various
segments of the energy related portfolio. Further, as it relates to the Reserve Based Lending Portfolio, the review
exercise included a review of customers’ balance sheets, leverage ratios, collateral values, hedges in place, the
break-even extraction costs in basins where business was being conducted and historical performance through
previous cycles. Management has concluded that no additional reserves are required for the energy portfolio at
December 31, 2014. Should pricing pressures on oil continue, there could be some downward pressure on risk
ratings that could lead to additional provision expense in future periods. However, this will depend on the
severity and duration of this cycle. Management believes that although downgrades may occur, they do not
foresee significant additional losses at this stage.
The Company recorded a total provision for loan losses during 2014 of $33.8 million, compared to $32.7 million
in 2013. The majority of the provision in both years was for non-FDIC acquired loans, $34.8 million in 2014,
compared to $25.3 million in 2013. The Company recorded a $20 million decrease in impairment expense on
certain pools of FDIC acquired loans, with a related decrease of $19.1 million in the FDIC loss share receivable.
The net impact on provision expense from the FDIC acquired portfolio was a $1.0 million credit in 2014,
compared to $7.5 million expense in 2013.
Net charge-offs from the non-FDIC acquired loan portfolio during 2014 were $17.1 million, or 0.13%, of average
total loans. This compares to net non-FDIC acquired charge-offs of $24.3 million, or 0.21% of average total
loans, for the year ended December 31, 2013. Net charge-offs on the FDIC acquired portfolio totaled $2.5 million
in 2014 compared to $2.4 million in 2013.
56
The following table sets forth activity in the allowance for loan losses for the periods indicated. In the tables,
commercial loans encompass commercial non-real estate loans, construction and land development loans and
commercial real estate loans for years where the detail is not available.
TABLE 13. Summary of Activity in the Allowance for Loan Losses
(in thousands)
Allowance for loan losses at beginning of period
Loans charged-off:
Non-FDIC acquired loans:
Commercial
Commercial non real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total non-FDIC acquired charge-offs
FDIC acquired loans:
Commercial
Commercial non real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total FDIC acquired charge-offs
Total charge-offs
Recoveries of loans previously charged-off:
Non-FDIC acquired loans:
Commercial
Commercial non real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total non-FDIC acquired recoveries
FDIC acquired loans:
Commercial
Commercial non real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total FDIC acquired recoveries
Total recoveries
Net charge-offs—non-FDIC acquired
Net charge-offs—FDIC acquired
Total net charge-offs
Provision for loan losses before FDIC benefit—FDIC acquired
(Benefit) attributable to FDIC loss share agreement
Provision for loan losses non-FDIC acquired loans
Provision for loan losses, net
(Decrease) increase in FDIC loss share receivable
Allowance for loan losses at end of period
Ratios:
At and For The Years Ended December 31,
2014
$133,626
2013
$136,171
2012
$124,881
2011
$ 81,997
2010
$66,050
—
6,813
4,770
3,579
2,285
14,055
31,502
—
221
148
5,350
1,008
1,270
7,997
39,499
—
3,047
4,000
1,678
644
5,014
14,383
—
6,671
10,312
5,525
2,297
18,094
42,899
—
1,071
1,244
4,414
1,532
1,250
9,511
52,410
—
5,790
1,676
3,359
1,936
5,829
18,590
42,277
—
—
—
6,275
16,208
64,760
29,947
—
—
—
—
1,094
31,041
95,801
5,375
—
—
—
324
4,030
9,729
43,654
—
—
—
2,634
12,500
58,788
11,100
—
—
—
—
375
11,475
70,263
20,006
—
—
—
1,091
3,887
24,984
39,393
—
—
—
4,615
14,258
58,266
—
—
—
—
—
—
—
58,266
3,491
—
—
—
740
3,353
7,584
—
485
3,138
1,441
1
431
5,496
19,879
17,119
2,501
19,620
(20,010)
19,084
34,766
33,840
(19,084)
$128,762
—
90
735
6,158
13
160
7,156
25,746
24,309
2,355
26,664
(1,160)
8,615
25,279
32,734
(8,615)
$133,626
4,894
—
—
—
—
78
4,972
14,701
55,031
26,069
81,100
41,021
(38,198)
51,369
54,192
38,198
$136,171
—
—
—
—
—
—
—
24,984
33,804
11,475
45,279
52,437
(49,431)
35,726
38,732
49,431
$124,881
—
—
—
—
—
—
—
7,584
50,682
—
50,682
672
(638)
65,957
65,991
638
$81,997
Gross charge-offs—non-FDIC acquired to average loans
Recoveries—non-FDIC acquired to average loans
Net charge-offs—non-FDIC acquired to average loans
Allowance for loan losses to period-end loans
0.24%
0.11%
0.13%
0.93%
0.37%
0.16%
0.21%
1.08%
0.57%
0.09%
0.49%
1.18%
0.69%
0.29%
0.40%
1.12%
1.16%
0.15%
1.01%
1.65%
57
An allocation of the loan loss allowance by major loan category is set forth in the following table. The increase in the
allowance for commercial non real estate loans is attributable to the portfolio growth and risk rating changes discussed
above. The changes in the allowance allocated to the residential mortgage and consumer categories in 2012 and 2013
reflect mainly changes in the estimate of impairment on pools of FDIC acquired loans within these categories.
TABLE 14. Allocation of Loan Loss by Category
2014
2013
December 31,
2012
2011
2010
Allowance
for
Loan
Losses
% of
Total
Allowance
Allowance
for
Loan
Losses
% of
Total
Allowance
Allowance
for
Loan
Losses
% of
Total
Allowance
Allowance
for
Loan
Losses
% of
Total
Allowance
Allowance
for
Loan
Losses
% of
Total
Allowance
$ —
—
$ —
—
$ 77,969
72
$ 78,414
72
$56,859
63
51,169
6,421
21,082
28,660
21,430
40
5
16
22
17
37,017
8,845
31,612
34,881
21,271
28
7
23
26
16
—
—
—
39,080
19,122
$128,762
100
$133,626
100
$136,171
—
—
—
14
14
100
—
—
—
13,918
32,549
$124,881
—
—
—
14
14
100
—
—
—
4,626
20,512
$81,997
—
—
—
14
23
100
($ in thousands)
Total loans:
Commercial
Commercial non real
estate
Construction and
land development
Commercial real
estate
Residential
mortgages
Consumer
Short-Term Investments
Short-term liquidity investments, including interest-bearing bank deposits and federal funds sold, increased $534.1
million from December 31, 2013 to a total of $802.9 million at December 31, 2014. The increase occurred in interest-
bearing bank deposits. Short-term liquidity assets are held to ensure funds are available to meet the cash flow needs of
both borrowers and depositors.
Deposits
Total deposits at December 31, 2014 were $16.6 billion, up $1.2 billion, or 8%, from December 31, 2013 with
increases in several categories as the Bank embarked on a deposit growth initiative in the second quarter of 2014.
Noninterest-bearing demand deposits (DDAs) at December 31, 2014 totaled $5.9 billion, a $415 million, or 8%,
increase from the prior year-end. The proportion of DDAs in the overall deposit mix remained at 36% at the end of
both 2014 and 2013. Interest-bearing transaction and savings accounts increased $369 million, or 6%, primarily due to
an increase in business money market accounts. Interest-bearing public fund deposits at December 31, 2014 increased
$411 million, or 26%, compared to December 31, 2013 as a direct result of one component of the Company’s deposit
growth initiatives, which specifically targeted these deposits. Seasonal cash inflows to public entities in the fourth
quarter of each year, typically results in higher balances than at other times during the year with subsequent reductions
beginning in the first quarter of the following year. Average total deposits for 2014 compared to the prior year were up
$283 million, or 2%. Increases in the other deposit categories far surpassed the decrease in time deposits, which
continue to decline in the current low rate environment. Management expects customers will continue to hold funds in
no or low-cost transaction accounts until rates begin to rise.
58
Table 15 shows average balances and weighted-average rates paid on deposits for each year in the three-year
period ended December 31, 2014 as well as the percentage of total deposits for each category. Table 16 shows
the maturities of time certificates of deposits at December 31, 2014.
TABLE 15. Average Deposits
($ in millions)
Balance
Rate Mix
Balance
Rate Mix
Balance
Rate Mix
2014
2013
2012
Interest-bearing deposits:
Interest-bearing transaction deposits
Money market deposits
Savings deposits
Overnight treasury management
deposits
Time deposits (including Public Funds
$ 3,297.6 0.13% 21% $ 3,441.1 0.13% 22% $ 3,300.1 0.17% 22%
2,676.6 0.18
1,619.0 0.02
17
11
2,258.5 0.18
1,600.0 0.02
15
11
2,385.2 0.22
1,508.4 0.04
16
10
417.0 0.28
3
386.0 0.28
3
167.9 0.29
1
CDs)
1,748.0 0.69
11
2,037.7 0.69
13
2,497.2 0.84
16
Total interest-bearing deposits
9,758.2 0.25% 63
9,723.3 0.25% 64
9,858.8 0.33% 65
Noninterest-bearing demand deposits
5,641.8
37
5,394.2
36
5,251.4
Total deposits
$15,400.0
100% $15,117.5
100% $15,110.2
35
100%
TABLE 16. Maturity of Time Certificates of Deposit greater than or equal to $250,000*
(in thousands)
Three months
Over three months through six months
Over six months through one year
Over one year
Total
December 31
2014
$120,514
108,531
128,064
161,687
$518,796
* Includes public fund time deposits
Short-Term Borrowings
The following table sets forth certain information concerning our short-term borrowings, which consist of federal
funds purchased, securities sold under agreements to repurchase and borrowings from the Federal Home Loan
Bank (FHLB). Customer repurchase agreements are a significant source of such borrowings in each year. These
agreements are offered mainly to commercial customers to assist them with their ongoing cash management
strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for
corporate or investment purposes. While customer repurchase agreements provide a recurring source of funds to
the Bank, the amounts available over time can be volatile.
The weighted-average interest rate paid on securities sold under agreements to repurchase decreased 31 bps from
0.58% in 2013 to 0.27% in 2014. This decrease is primarily attributable to the June 2014 early redemption of
$115 million in fixed rate repurchase obligations with an average rate of 3.43%. The early redemption reduced
borrowing costs by approximately $1.8 million during the second half of 2014.
59
TABLE 17. Short-Term Borrowings
($ in thousands)
Federal funds purchased:
Amount outstanding at period-end
Average amount outstanding during period
Maximum amount at any month-end during period
Weighted-average interest at period-end
Weighted-average interest rate during period
Securities sold under agreements to repurchase:
Amount outstanding at period-end
Average amount outstanding during period
Maximum amount at any month-end during period
Weighted-average interest at period-end
Weighted-average interest rate during period
FHLB borrowings:
Amount outstanding at period-end
Average amount outstanding during period
Maximum amount at any month-end during period
Weighted-average interest at period-end
Weighted-average interest rate during period
Loan Commitments and Letters of Credit
Years Ended December 31,
2014
2013
2012
$ 12,000
12,196
12,000
$
7,725
32,960
37,320
$
25,704
30,137
33,964
0.13%
0.25%
0.13%
0.22%
0.37%
0.22%
$624,573
688,704
816,617
$650,235
763,259
797,615
$ 613,429
760,938
1,005,014
0.03%
0.27%
0.64%
0.58%
0.72%
0.78%
$515,000
304,781
565,000
0.12%
0.15%
$
$ —
9,863
—
—
0.18%
—
32,571
—
—
0.16%
In the normal course of business, the Bank enters into financial instruments, such as commitments to extend
credit and letters of credit, to meet the financing needs of their customers. Such instruments are not reflected in
the accompanying consolidated financial statements until they are funded, although they expose the Bank to
varying degrees of credit risk and interest rate risk in much the same way as funded loans.
Commitments to extend credit include revolving commercial credit lines, non-revolving loan commitments
issued mainly to finance the acquisition and development of construction of real property or equipment, and
credit card and personal credit lines. The availability of funds under commercial credit lines and loan
commitments generally depends on whether the borrower continues to meet credit standards established in the
underlying contract and has not violated other contractual conditions. Loan commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and
personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number
of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire,
and the total commitment amounts do not necessarily represent future cash requirements of the Company.
A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s
financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of
credit primarily to provide credit enhancement to their customers’ other commercial or public financing
arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.
The contract amounts of these instruments reflect the Company’s exposure to credit risk. The Bank undertakes
the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-
balance sheet instruments and may require collateral or other credit support.
60
The following table shows the commitments to extend credit and letters of credit at December 31, 2014 and 2013
according to expiration date.
TABLE 18. Loan Commitments and Letters of Credit
(in thousands)
December 31, 2014
Commitments to extend credit
Letters of credit
Total
(in thousands)
December 31, 2013
Commitments to extend credit
Letters of credit
Total
Total
Less than 1
year
1-3 years
3-5 years
More than
5 years
Expiration Date
$5,700,546
414,408
$2,727,328
254,295
$1,115,936
58,490
$1,311,249
98,140
$546,033
3,483
$6,114,954
$2,981,623
$1,174,426
$1,409,389
$549,516
Total
Less than 1
year
1-3 years
3-5 years
More than
5 years
Expiration Date
$5,234,929
422,284
$2,655,094
303,780
$1,095,854
31,299
$ 982,599
83,812
$501,382
3,393
$5,657,213
$2,958,874
$1,127,153
$1,066,411
$504,775
ENTERPRISE RISK MANAGEMENT
The risk philosophy of the Company is to proactively manage risks to capture opportunities and maximize
shareholder value. The Company balances revenue generation and profitability with the inherent risks of its
business activities. Enterprise risk management helps protect shareholder value by assessing, monitoring, and
managing the risks associated with our businesses. Strong risk management practices enhance decision-making,
facilitate successful implementation of new initiatives, and, where appropriate, support acceptance of greater
levels of well-managed risk to drive growth and achieve strategic objectives. The Company’s risk management
culture integrates a board-approved risk appetite with senior management direction and governance to facilitate
the execution of the Company’s strategic plan. This integration ensures the daily management of risks by
business lines and continuous corporate monitoring of the levels of risk in each business line and across the
Company. The Company makes changes to its enterprise risk management program and risk governance
framework as described here at the direction of senior management and the Board of Directors to capture
opportunities and to respond to changes in its strategic, business, and operational environments.
Risk Categories and Definitions
Consistent with other participants in the financial services industry, the primary risk exposures of the Company
are credit, market, liquidity, operational, legal, reputational, and strategic. The Company has adopted these seven
risk categories as outlined by the Federal Reserve Board and other bank regulators to govern the risk
management of banks and bank holding companies. The company assigns oversight responsibility for these
categories within its risk committee governance structure. The risk categories are:
•
Credit risk arises from a borrower or counterparty’s failure or inability to perform or repay an
obligation.
• Market risk resulting from adverse movements in market rates or prices, such as interest rates, foreign
exchange rates, or equity prices.
•
Liquidity risk arising from our inability to meet our obligations as they come due because of an
inability to liquidate assets or obtain adequate funding, or from an inability to easily unwind or offset
specific exposures without significantly lowering market prices on our products because of inadequate
market depth or market disruptions.
61
•
•
•
•
Operational risk arising from inadequate information systems, operational problems, breaches in
internal controls, fraud, or unforeseen catastrophes that result in unexpected losses.
Legal risk arising from unenforceable contracts, lawsuits, or adverse judgments that disrupt or
otherwise negatively affect the operations or condition of the Company.
Reputational risk arising from negative publicity about the Company’s business practices, whether true
or not, may cause a decline in the customer base, costly litigation, or revenue reductions. The Company
also recognizes its reputation with shareholders and associates are important factors of reputational
risk.
Strategic risk to current or anticipated earnings, capital or the Company’s value arising from adverse
business decisions, improper implementation of those decisions, or lack of responsiveness to change in
the banking industry and operating environment.
Risk Committee Governance Structure
Effective risk management governance requires active oversight, participation, and interaction by senior
management and the board of directors. Our enterprise risk management framework uses a tiered risk/reward
committee structure to facilitate the timely discussion of significant risks, issues and risk mitigation strategies to
inform management and the Board’s decision making. Additionally, the committee structure provides ongoing
oversight and facilitates escalation within assigned portfolios. Risk committees exist at the board, governance
and asset portfolio levels.
•
•
•
Board committees. The Company’s Board of Directors has established a Board Risk Committee and
Credit Risk Management Subcommittee to oversee the effective establishment of a risk governance
framework, independent Loan Review assurance function, ensure the corporate risk profile is within its
risk appetite, and direct changes or make recommendations to the Board of Directors when determined
necessary. Additionally, the Board of Directors has established an Audit Committee to provide
independent assurance on the effectiveness of these matters and the Company’s internal control
environment. The Board Risk Committee is chaired by an independent director who meets the risk
management qualifications outlined in the Dodd-Frank Act.
Governance committees. The Capital Committee (CAPCO) of the Company serves as the senior level
management risk/reward committee and oversees the business strategy, organizational structure, capital
planning, and liquidity strategies for the Company. CAPCO directly oversees the strategic and
reputation risk categories, which include litigation strategy and the development of Stress Testing
capabilities within the Company’s risk governance framework. CAPCO drives business strategy
development and execution, provides corporate financial oversight, and is responsible for portfolio risk
committee oversight. They provide oversight of the portfolio risk/reward committees to ensure tactics
to address business strategy changes are properly vetted and adopted, and protect the company’s
reputation.
Portfolio committees. The Company has three portfolio risk/reward committees focusing on credit
(CREDCO), market and liquidity (ALCO), and operational and legal (OPCO) risk categories. These
committees review and monitor the risk categories in a portfolio context ensuring risk assessment and
management processes are being effectively executed to identify and manage risk, and direct changes
or escalation when needed. The committees also monitor the risk portfolios for changes to the
Company’s risk profile as well as ensure the risk portfolio is performing within the board-approved
risk appetite. Portfolio committees report to CAPCO.
Risk Leadership and Organization
The risk management function of the Company, which includes the Chief Risk Officer, is led by the President of
Whitney Bank. The Chief Risk Officer provides overall vision, direction and leadership regarding our enterprise
risk management program. The Chief Risk Officer exercises independent judgment and reporting of risk through
62
a direct working relationship with the Board Risk Committee, and the Credit Review Manager has the same role
with the Credit Risk Management Subcommittee. The functional areas reporting to the Chief Risk Officer are the
enterprise risk management program office, operational risk management, model validation, loan review,
regulatory relations, legal, corporate insurance and the enterprise-wide compliance program. The Chief Risk
Officer also works closely with the Chief Internal Auditor to provide assurance to the board and senior
management regarding risk management controls and their effectiveness. The Chief Internal Auditor reports to
the Board’s Audit Committee to assure independence of the internal audit function.
Credit Risk
The Bank’s primary lending focus is to provide commercial, consumer, and real estate loans to consumers, to
small and middle market businesses, to corporate clients in their respective market areas, and to state, county,
and municipal government entities. Diversification in the loan portfolio is a means to reduce the risks associated
with economic fluctuations. The Bank has no significant concentrations of loans to individual borrowers or
foreign entities.
The Bank monitors real estate lending concentrations throughout the year, and currently does not have a
commercial real estate concentration, as defined by interagency guidelines. In light of the prevailing national
housing market recovery, improving local market demand, favorable price appreciation in many markets, and
positive (albeit slow) economic growth, the Company has begun to increase its exposure to residential
construction/development lending; however, these lending activities will continue to be closely monitored for
any potential signs of market weakness.
Managing collateral is an essential component of managing the Bank’s real estate-related credit risk exposure.
For real estate-secured loans, third party valuations are obtained at the time of origination, and updated if it is
determined that the collateral value has deteriorated or if the loan is deemed to be a problem loan. Property
valuations are ordered through, and reviewed by, the Banks’ appraisal department. The property valuation, along
with anticipated selling costs, are used to determine if there is loan impairment, leading to a recommendation for
partial charge off or appropriate allowance allocation.
The Bank maintains an active Credit Review function to help ensure that developing credit concerns are
identified and addressed in a timely manner. Further, an active Watch List Review process is in place as part of
the Bank’s problem loan management strategy, and a list of loans 90 days past due and still accruing is reviewed
with management (including the Chief Credit Officer) at least monthly. Recommendations flow from all of the
above activities with the goal of recognizing nonperforming loans and determining the appropriate accrual status.
Asset/Liability Management
Asset liability management consists of quantifying, analyzing and controlling interest rate risk (IRR) to maintain
stability in net interest income under varying interest rate environments. The principal objective of asset liability
management is to maximize net interest income while operating within acceptable risk limits established for
interest rate risk and maintaining adequate levels of liquidity. Our net earnings are materially dependent on our
net interest income.
IRR on the Company’s balance sheet consists of re-price, option, yield curve, and basis risks. Re-price risk
results from differences in the maturity or re-pricing of asset and liability portfolios. Option risk arises from
“embedded options” present in many financial instruments such as loan prepayment options, deposit early
withdrawal options and interest rate options. These options allow customers opportunities to benefit when market
interest rates change, which typically results in higher costs or lower revenue for the Company. Yield curve risk
refers to the risk resulting from unequal changes in the spread between two or more rates for different maturities
for the same instrument. Basis risk refers to the potential for changes in the underlying relationship between
market rates and indices, which subsequently result in a narrowing of the profit spread on an earning asset or
63
liability. Basis risk is also present in administered rate liabilities, such as savings accounts, negotiable order of
withdrawal accounts, and money market accounts where historical pricing relationships to market rates may
change due to the level or directional change in market interest rates.
ALCO manages our IRR exposures through pro-active measurement, monitoring, and management actions.
ALCO strives to maintain levels of IRR within limits approved by the board of directors through a risk
management policy that is designed to produce a stable net interest margin in periods of interest rate fluctuation.
Accordingly, the Company’s interest rate sensitivity and liquidity are monitored on an ongoing basis by its
ALCO, which oversees market risk management and establishes risk measures, limits and policy guidelines for
managing the amount of interest rate risk and its effect on net interest income and capital. A variety of measures
are used to provide for a comprehensive view of the magnitude of interest rate risk, the distribution of risk, the
level of risk over time and the exposure to changes in certain interest rate relationships.
The Company utilizes an asset/liability model as the primary quantitative tool in measuring the amount of
interest rate risk associated with changing market rates. The model is used to perform net interest income,
economic value of equity, and GAP analyses. The model quantifies the effects of various interest rate scenarios
on projected net interest income and net income over the next 12 months and 24 month periods. The model
measures the impact on net interest income relative to a base case scenario of hypothetical fluctuations in interest
rates over the next 24 months. These simulations incorporate assumptions regarding balance sheet growth and
mix, pricing and the repricing and maturity characteristics of the existing and projected balance sheet. The impact
of interest rate derivatives, such as interest rate swaps, caps and floors, is also included in the model. Other
interest rate-related risks such as prepayment, basis and option risk are also considered.
Net Interest Income at Risk
Net interest income at risk measures the risk of a change in earnings due to changes in interest rates. The
following table presents an analysis of our interest rate risk as measured by the estimated changes in net interest
income resulting from an instantaneous and sustained parallel shift in the yield curve at December 31, 2014.
Shifts are measured in 100 basis point increments in a range of as much as +500 bps (+ 300 through +100 bps
presented in Table 19) from base case. Base case encompasses key assumptions for asset/liability mix, loan and
deposit growth, pricing, prepayment speeds, deposit decay rates, securities portfolio cash flows and reinvestment
strategy, and the market value of certain assets. The base case scenario assumes that the current interest rate
environment is held constant throughout the 24-month forecast period; the instantaneous shocks are performed
against that yield curve.
TABLE 19. Net Interest Income (te) at Risk
Change in
Interest
Rates
Estimated Increase
(Decrease) in NII
Year 1
Year 2
(basis points)
+ 100
+ 200
+ 300
Note: Decrease in interest rates discontinued in current rate environment
1.10% 3.26%
2.76% 6.73%
4.27% 9.79%
These scenarios are instantaneous shocks that assume balance sheet management will mirror base case. Should
the yield curve begin to rise or fall, management has strategies available to maximize earnings opportunities or
offset the negative impact to earnings. For example, in a rising rate environment, deposit pricing strategies could
be adjusted to offer more competitive rates on long and medium-term CDs and less competitive rates on short-
term CDs. Another opportunity at the start of such a cycle would be reinvesting the securities portfolio cash
flows into short-term or floating-rate securities. On the loan side the Company can make more floating-rate loans
64
that tie to indices that re-price more frequently, such as LIBOR (London interbank offered rate) and make fewer
fixed-rate loans. Finally, there are a number of hedge strategies by which management could use derivatives,
including swaps and purchased ceilings, to lock in net interest margin protection.
Even if interest rates change in the designated amounts, there can be no assurance that our assets and liabilities
would perform as anticipated. Additionally, a change in the U.S. Treasury rates in the designated amounts
accompanied by a change in the shape of the U.S. Treasury yield curve would cause significantly different
changes to NII than indicated above. Strategic management of our balance sheet and earnings is fluid and would
be adjusted to accommodate these movements. As with any method of measuring interest rate risk, certain
shortcomings are inherent in the methods of analysis presented above. For example, although certain assets and
liabilities may have similar maturities or periods to re-pricing, they may react in different degrees to changes in
market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag behind changes in market rates.
Certain assets such as adjustable-rate loans have features which restrict changes in interest rates on a short-term
basis and over the life of the asset. Also, the ability of many borrowers to service their debt may decrease in the
event of an interest rate increase. We consider all of these factors in monitoring exposure to interest rate risk.
Liquidity
Liquidity management is focused on ensuring that funds are available to meet the cash flow requirements of our
depositors and borrowers, while also meeting the operating, capital and strategic cash flow needs of the
Company, the Bank and other subsidiaries. Hancock develops its liquidity management strategies and measures
and monitors liquidity risk as part of its overall asset/liability management process.
TABLE 20. Liquidity Metrics
Free securities / total securities
Noncore deposits / total deposits
Wholesale funds / core deposits
Average loans / Average deposits
2014
2013
2012
12.60% 21.81% 27.00%
93.95% 94.57% 94.32%
6.97%
7.19%
84.02% 77.56% 74.68%
9.80%
The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities
of investment securities and occasional sales of various assets. Short-term investments such as federal funds sold,
securities purchased under agreements to resell and interest-bearing deposits with the Federal Reserve Bank or
with other commercial banks are additional sources of liquidity to meet cash flow requirements. As shown in
Table 20 above, our ratios of free securities to total securities were 12.6% and 21.8%, respectively, at
December 31, 2014 and 2013. Free securities represent securities that are not pledged for any purpose, and
include unpledged securities assigned to short-term dealer repo agreements or to the Federal Reserve Bank
discount window. Management has established an internal target for this ratio of 15%. Although the ratio is
below target level at December 31, 2014 due to security pledging requirements for the seasonal increase in public
fund deposits, management believes this shortfall is only temporary and the Company has sufficient free
securities to meet its liquidity needs. The decrease in this ratio from the prior year is due to the increase in public
funds that require pledging as well as the Company’s position to use repayments and maturities of the investment
security portfolio to fund a portion of loan growth in 2014.
The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and
noninterest-bearing deposit accounts. At December 31, 2014, deposits totaled $16.6 billion, an increase of $1.2
billion, or 8% from December 31, 2013. Core deposits represent total deposits less CDs of $250,000 or more,
brokered deposits, and overnight treasury management deposits. Core deposits comprised a very healthy 93.95%
of total deposits at December 31, 2014, down slightly from 94.57% a year earlier. The Company did not have any
brokered deposits outstanding at December 31, 2014, and $60 million at December 31, 2013. The Company has
established a minimum 50% target for the ratio of core deposits to total deposits.
65
The Company’s loan to deposit ratio (average loans outstanding divided by average deposits) was 77.56% for
2014, up from 77.40% in 2013 as the growth in average loans exceeded the growth in average deposits for the
year. The loan to deposit ratio measures the amount of funds the Company lends out for each dollar of deposits
on hand. The Company has established an internal target for the loan to deposit ratio of 85%.
Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings are
additional sources of liquidity to meet short-term funding requirements. Wholesale funds, which represent short-
term borrowings and long-term debt, were 9.80% of core deposits at December 31, 2014 and 7.19% at
December 31, 2013.
In addition to the sources of liquidity discussed above, the Bank has lines of credit with the FHLB that are
secured by blanket pledges of certain mortgage loans. At December 31, 2014, the Bank had borrowed $515
million from the FHLB and had approximately $2.8 billion available under these lines. There were no
borrowings outstanding from the FHLB at December 31, 2013. The Bank also has unused borrowing capacity at
the Federal Reserve’s discount window of approximately $1.9 billion. The Company did not have any
outstanding borrowings with the Federal Reserve at either December 31, 2014, or December 31, 2013.
Cash generated from operations is another important source of funds to meet liquidity needs. The consolidated
statements of cash flows present operating cash flows and summarize all significant sources and uses of funds for
each of the three years in the period ended December 31, 2014.
Dividends received from the Bank have been the substantial source of funds available to the Company for the
payment of dividends to our stockholders and for servicing any debt issued by the holding company. The
liquidity management process recognizes the various regulatory provisions that can limit the amount of dividends
that the Bank can distribute to the Company, as described in Note 10 to the consolidated financial statements. It
is the Company’s policy to maintain cash or other unencumbered liquid assets at the holding company to provide
liquidity sufficient to fund six quarters of anticipated stockholder dividends.
CONTRACTUAL OBLIGATIONS
The following table summarizes all significant contractual obligations at December 31, 2014, according to
payments due by period. Obligations under deposit contracts and short-term borrowings are not included. The
maturities of time deposits are in Table 16. Purchase obligations represent legal and binding contracts to
purchase services and goods that cannot be settled or terminated without paying substantially all of the
contractual amounts.
TABLE 21. Contractual Obligations
(in thousands)
Long-term debt obligations
Capital lease obligations
Operating lease obligations
Purchase obligations
Total
CAPITAL RESOURCES
Payment due by period
Total
$435,638
8
82,037
98,514
Less than
1 year
$204,141
7
13,074
51,834
1-3 years
3-5 years
More than
5 years
$163,379
1
22,942
30,380
$24,468
$43,650
—
17,718
13,123
—
28,303
3,177
$616,197
$269,056
$216,702
$55,309
$75,130
A strong capital position, which is vital to continued profitability, also promotes depositor and investor
confidence and provides a solid foundation for future growth and flexibility in addressing strategic opportunities.
Stockholders’ equity totaled $2.47 billion at December 31, 2014, up $47 million from December 31, 2013 as net
income of $176 million was partially offset by $80 million in dividends and $48 million used to effect stock
66
repurchases as discussed below. Our tangible common equity ratio decreased to 8.59% at the end of 2014,
compared to 9.00% at December 31, 2013 primarily as a result of 2014 balance sheet growth. It is the Company’s
intent to maintain a tangible common equity ratio of at least 8.00%. The primary quantitative measures that
regulators use to gauge capital adequacy are the ratios of total and Tier 1 regulatory capital to risk-weighted
assets (risk-based capital ratios) and the ratio of Tier 1 capital to average total assets (leverage ratio). Both the
Company and the Bank are required to maintain minimum risk-based capital ratios of 8.0% total regulatory
capital and 4.0% Tier 1 capital. The minimum leverage ratio is 3% for bank holding companies and banks that
meet certain specified criteria, including having the highest supervisory rating. All other are required to maintain
a leverage ratio of at least 4.0%. The Company and the Bank have established internal targets for its total risk-
based capital ratio, Tier 1 risk-based capital ratio and leverage ratio of 11.5%, 9.5% and 7.0%, respectively. At
December 31, 2014, our capital balances were well in excess of current regulatory minimum requirements and
internal targets. The following table shows the Company’s regulatory ratios for the past five years. Note 10 to the
consolidated financial statements provides additional information about the Bank’s regulatory capital ratios. The
Company and the Bank have been categorized as “well capitalized” in the most recent notices received from our
regulators.
The Company’s regulatory capital ratios remained strong at December 31, 2014. Tier 1 and total risk-weighted
asset ratios were 11.23% and 12.30%, respectively. The declines in these ratios compared to 2013 reflect the
share repurchase program and the increase in risk-weighted assets resulting from loan growth. The decrease in
the leverage ratio was due to total assets growing by 9% during 2014.
On July 2, 2013 the Federal Reserve Board finalized its rule implementing the Basel III regulatory capital
framework and related Dodd-Frank Act changes. The interim final rule strengthens the definition of regulatory
capital, increases risk-based capital requirements, and makes selected changes to the calculation of risk-weighted
assets. The rule sets the Basel III minimum regulatory capital requirements for all organizations. It includes a
new common equity Tier 1 ratio of 4.5% of risk-weighted assets, raises the minimum Tier 1 capital ratio from
4.0% to 6.0% of risk-weighted assets and sets a new conservation buffer of 2.5% of risk-weighted assets. The
final rule is effective for the Company on January 1, 2015; however, the rule allows for transition periods for
certain changes, including the conservation buffer. Based on estimated capital ratios using Basel III definitions,
the Company and the Bank currently exceed all capital requirements of the new rule, including the fully phased-
in conservation buffer.
TABLE 22. Risk-Based Capital and Capital Ratios
(In thousands)
Tier 1 regulatory capital
Tier 2 regulatory capital
2014
2013
2012
2011
2010
$ 1,777,348
168,362
$ 1,685,058
192,774
$ 1,666,042
215,516
$ 1,506,218
276,819
$ 782,301
64,240
Total regulatory capital
$ 1,945,710
$ 1,877,832
$ 1,881,558
$ 1,783,037
$ 846,541
Risk-weighted assets
$15,822,448
$14,325,757
$13,172,259
$13,118,693
$5,099,630
Ratios
Leverage (Tier 1 capital to average
assets)
Tier 1 capital to risk-weighted
assets
Total capital to risk-weighted
assets
Common stockholders’ equity to
total assets
Tangible common equity to total
assets
9.17%
9.34%
9.10%
8.17%
9.65%
11.23%
11.76%
12.65%
11.48%
15.34%
12.30%
13.11%
14.28%
13.59%
16.60%
11.92%
12.76%
12.60%
11.97%
10.52%
8.59%
9.00%
8.77%
7.96%
9.69%
67
STOCK REPURCHASE PROGRAM
The Board of Directors authorized a new common stock buyback program on July 24, 2014 for up to 5%, or
approximately 4 million shares, of the Company’s common stock issued and outstanding. The shares may be
repurchased in the open market or in privately negotiated transactions from time to time, depending upon market
conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange
Commission. The buyback authorization will expire December 31, 2015. During the year, the Company
repurchased 1.5 million shares at an average price of $31.13 per share under the 2014 buyback program.
The Company’s board of directors approved a stock repurchase program on April 30, 2013 that authorizes the
repurchase of up to 5% of the Company’s outstanding common stock. On May 8, 2013 Hancock entered into an
accelerated share repurchase (ASR) transaction with Morgan Stanley & Co. LLC (Morgan Stanley). In the ASR
transaction, the Company paid $115 million to Morgan Stanley and initially received from them approximately
2.8 million shares of Hancock common stock. The final number of shares delivered to the Company in the ASR
transaction was based generally on the volume-weighted-average price per share of the Hancock common stock
during the term of the ASR agreement less a specified discount and on the amount paid at inception to Morgan
Stanley, subject to certain possible adjustments in accordance with the terms of the ASR agreement. On May 4,
2014, final settlement of the ASR agreement occurred with the receipt of an additional 0.6 million shares. The
2013 program was superseded by the 2014 program.
See Item 5 in Part II of this document for additional discussion of the Company’s common stock buyback
program.
FOURTH QUARTER RESULTS
Net income for the fourth quarter of 2014 was $40.1 million, or $0.48 per diluted common share, compared to
$46.6 million, or $0.56, and $34.7 million, or $0.41, respectively in the third quarter of 2014 and the fourth
quarter of 2013. The following discussion highlights recent factors impacting Hancock’s results of operations
and financial position.
Highlights of the Company’s fourth quarter of 2014 results:
•
•
•
•
•
•
•
Net loan growth of $547 million, or 16% linked-quarter annualized
Net deposit growth of $836 million, or 21% linked-quarter annualized
An increase of $1.2 million in core revenue and a $1.1 million decline in operating expense offset half
of the $4.7 million decline in purchase accounting income
Over the past 2 quarters, growth in core revenue and declines in operating expense offset
approximately 90% of the decline in purchase accounting items
Solid capital levels with a tangible common equity (TCE) ratio of 8.59%, after using approximately
$38 million of capital during the quarter to repurchase stock
Return on average assets (ROA) (operating) 0.92%; core ROA 0.82%
Total assets grew $761 million and totaled approximately $21 billion at year-end 2014
Total loans at December 31, 2014 were $13.9 billion, an increase of $547 million, or 4%, from September 30,
2014. During the fourth quarter, approximately two-thirds of the average net loan growth came from commercial
lending lines of business, with minimal growth in the energy sector over the past several months. Many of the
markets across the Company’s footprint reported net loan growth during the quarter, with the majority of the
growth in south Louisiana, Houston, and central Florida markets. Excluding the FDIC acquired portfolio, which
declined approximately $28 million during the fourth quarter, total loans were up $575 million, or 4%, from
September 30, 2014.
68
Total deposits at December 31, 2014 were $16.6 billion, up $836 million, or 5%, from September 30, 2014. The
fourth quarter increase reflected year-end seasonality of both commercial and public fund customers.
Historically, both Hancock and Whitney customers have built deposits at year-end, particularly in demand
deposits, with some of those deposits being withdrawn in the first quarter.
Noninterest-bearing demand deposits (DDAs) totaled $5.9 billion at December 31, 2014, up $79 million, or 1%,
compared to September 30, 2014. DDAs comprised 36% of total period-end deposits at December 31, 2014.
Interest-bearing transaction and savings deposits totaled $6.5 billion at year-end 2014, up $206 million, or 3%,
compared to September 30, 2014.
Time deposits (CDs) and interest-bearing public fund deposits totaled $4.1 billion at December 31, 2014, up
$551 million, or 16%, from September 30, 2014. Public fund deposits typically reflect higher balances toward
year-end with subsequent reductions beginning in the first quarter.
Hancock recorded a total provision for loan losses for the fourth quarter of 2014 of $9.7 million, slightly up from
the third quarter of 2014. The provision for non-FDIC acquired loans was $9.9 million in both the fourth and
third quarters of 2014. Net charge-offs from the non-FDIC acquired loan portfolio were $2.6 million, or 0.08%,
of average total loans on an annualized basis in the fourth quarter of 2014, compared to $6.4 million, or 0.19%,
of average total loans, for the third quarter of 2014.
Net interest income (te) for the fourth quarter of 2014 was $163.6 million, down from $166.2 million in the third
quarter of 2014. Average earning assets were $17.9 billion in the fourth quarter of 2014, up $587 million, or 3%,
from the third quarter of 2014. The net interest margin (te) was 3.63% for the fourth quarter of 2014, down 18
bps from 3.81% in the third quarter of 2014. The core margin of 3.27% decreased 5 bps during the fourth quarter.
A decline in the core loan yield (-3 bps) and an increase in the cost of funds (+2 bps) were the main drivers of the
margin compression. An improved earning asset mix and increased loan volumes were drivers of the increase in
core net interest income.
Noninterest income totaled $57.0 million for the fourth quarter of 2014, down $1.0 million, or 2%, from the third
quarter of 2014. Included in the total is a reduction of $2.1 million related to the amortization of the FDIC
indemnification asset, compared to a reduction of $2.8 million in the third quarter or 2014. Excluding the impact
of this item, core noninterest income decreased by approximately $1.6 million linked-quarter.
Noninterest expense for the fourth quarter of 2014 totaled $153.7 million, including $9.7 million in nonoperating
expenses. Excluding these costs, operating expense for the fourth quarter of 2014 totaled $144.1 million, down
$1.1 million, or less than 1%, from the third quarter of 2014, which included $3.9 million in nonoperating
expenses. Excluding nonoperating costs, there was a $0.5 million, or less than 1%, decrease in personnel
expense. Occupancy and equipment expense totaled $14.6 million in the fourth quarter of 2014, down $0.7
million, or 5%, from the third quarter of 2014.
The effective income tax rate for the fourth quarter of 2014 was 26% for both the fourth and third quarters of
2014. Management expects the effective income tax rate to approximate 27-29% in 2015. The effective income
tax rate continues to be less than the federal statutory rate of 35% due primarily to tax-exempt income and tax
credits.
The summary of quarterly financial information appearing in Item 8 of this annual report on Form 10-K provides
selected comparative financial information for each of the four quarters on 2014 and 2013.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
The accounting principles we follow and the methods for applying these principles conform with accounting
principles generally accepted in the United States of America and with general practices followed by the banking
industry. The significant accounting principles and practices we follow are described in Note 1 to the
consolidated financial statements. These principles and practices require management to make estimates and
69
assumptions about future events that affect the amounts reported in the consolidated financial statements and
accompanying notes. We evaluate the estimates and assumptions we make on an ongoing basis to help ensure the
resulting reported amounts reflect management’s best estimates and judgments given current facts and
circumstances. The following discusses certain critical accounting policies that involve a higher degree of
judgment and complexity in producing estimates that may significantly affect amounts reported in the
consolidated financial statements and notes.
Acquisition Accounting
Acquisitions are accounted for under the purchase method of accounting. Purchased assets, including identifiable
intangible assets, and assumed liabilities are recorded at their respective acquisition date fair values. Management
applies various valuation methodologies to these assets and liabilities which often involve a significant degree of
judgment, particularly when liquid markets do not exist for the particular item being valued. Examples of such
items include loans, deposits, identifiable intangible assets and certain other assets and liabilities acquired or
assumed in business combinations. Management uses significant estimates and assumptions to value such items,
including, among others, projected cash flows, repayment rates, default rates and losses assuming default,
discount rates, and realizable collateral values. The purchase date valuations and any subsequent adjustments also
determine the amount of goodwill or bargain purchase gain recognized in connection with the business
combination. Certain assumptions and estimates must be updated regularly in connection with the ongoing
accounting for purchased loans. Valuation assumptions and estimates may also have to be revisited in connection
with periodic assessments of possible value impairment, including impairment of goodwill, intangible assets and
certain other long-lived assets. The use of different assumptions could produce significantly different valuation
results, which could have material positive or negative effects on the Company’s results of operations.
Allowance for Loan Losses
The allowance for loan and lease losses (ALLL) is a valuation account available to absorb losses on loans. The
ALLL is established and maintained at an amount sufficient to cover the estimated credit losses inherent in the
loan and lease portfolios of the Company as of the date of the determination. Credit losses arise not only from
credit risk, but also from other risks inherent in the lending process including, but not limited to, collateral risk,
operational risk, concentration risk, and economic risk. As such, all related risks of lending are considered when
assessing the adequacy of the allowance for loan and lease losses. Quarterly, management estimates inherent
losses in the portfolio based on a number of factors, including the Company’s past loan loss and delinquency
experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to
repay, the estimated value of any underlying collateral and current economic conditions.
The analysis and methodology for estimating the ALLL for originated and acquired performing loans include two
primary elements. A loss rate analysis that incorporates a historical loss rate as updated for current conditions is
used for loans collectively evaluated for impairment, and a specific reserve analysis is used for loans individually
evaluated for impairment.
The loss rate analysis includes several subjective inputs including portfolio segmentation, portfolio risk ratings,
historical look-back and loss emergence periods. Management considers the appropriateness of these critical
assumptions as part of its allowance review. The loss rate analysis is supplemented by a review of qualitative
factors that considers whether future results may differ from the historical-based loss rate analysis. Such factors
include, but are not limited to, problem loan trends, changes in loan profiles and volumes, changes in lending
policies and procedures, current economic and business conditions and credit concentrations. While qualitative
data related for these factors is used where available, there is a high level of judgment applied assumptions that
are susceptible to significant change.
For loans impaired that are individually evaluated, a specific allowance is calculated as the shortfall between the
loan’s value and its recorded investment. The loan’s value is measured by either the loan’s observable market
70
price, the fair value of the collateral of the loan (less liquidation costs) if it is collateral dependent, or by the
present value of expected future cash flows discounted at the loan’s effective interest rate. Theses estimate are
also highly subjective and actual results could differ.
During the second quarter of 2013, management revised the methodology for the loss-rate analysis for the
originated and acquired-performing loan portfolios to establish a more granular stratification of the major loan
segments to enhance the homogeneity of the loan classes, include portfolio risk ratings in loss-rate analysis, and
lengthen the loss emergence period for the commercial lending portfolio. In the fourth quarter of 2014, the
portfolio segmentation was further adjusted to reduce volatility from thin data segments and to be more in line a
revised management structure. These changes did not result in a material impact to the allowance for loan loss.
There were no changes in the methodology for the specific reserve analysis for loans individually evaluated for
impairment or acquired credit-impaired loans.
Accounting for Retirement Benefits
Management makes a variety of assumptions in applying principles that govern the accounting for benefits under
the Company’s defined benefit pension plans and other postretirement benefit plans. These assumptions are
essential to the actuarial valuation that determines the amounts recognized and certain disclosures it makes in the
consolidated financial statements related to the operation of these plans. Two of the more significant assumptions
concern the expected long-term rate of return on plan assets and the rate needed to discount projected benefits to
their present value. Changes in these assumptions impact the cost of retirement benefits recognized in net income
and comprehensive income. Certain assumptions are closely tied to current conditions and are generally revised
at each measurement date. For example, the discount rate is reset annually with reference to market yields on
high quality fixed-income investments. Other assumptions, such as the rate of return on assets, are determined, in
part, with reference to historical and expected conditions over time and are not as susceptible to frequent
revision. Holding other factors constant, the cost of retirement benefits will move opposite to changes in either
the discount rate or the rate of return on assets. Note 11 to the consolidated financial statements provides further
discussion on the accounting for Hancock’s retirement and employee benefit plans and the estimates used in
determining the actuarial present value of the benefit obligations and the net periodic benefit expense.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 to our consolidated financial statements that appears in Item 8 of this Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required for this item is included in the section entitled “Asset/Liability Management” in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” that appears in
Item 7 of this Form 10-K and is incorporated here by reference.
71
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company’s unaudited quarterly results for 2014 and 2013 are presented below.
Summary of Quarterly Results
(Unaudited)
(In thousands, except per share data)
Interest income (te)
Interest expense
Net interest income (te)
Taxable equivalent adjustment
Net interest income
Provision for loan losses
Noninterest income
Operating expense
Nonoperating expense items
Income before income taxes
Income tax expense
Net income
Nonoperating expense items (net of taxes)
Operating income (a)
Purchase accounting adjustments (net of taxes)
Core income (b)
Period end balance sheet data
Total assets
Earning assets
Loans
Deposits
Stockholders’ equity
Average balance sheet data
Total assets
Earning assets
Loans
Deposits
Stockholders’ equity
Ratios
Return on average assets
Return on average common equity
Net interest margin (te)
Net interest margin—core (te)
Earnings per share:
Basic
Diluted
Operating earnings per share: (a)
Basic
Diluted
Core earnings per share: (b)
Basic
Diluted
Cash dividends per common share
Market data:
High sales price
Low sales price
Period-end closing price
Trading volume
2014
$
$
$
First
Second
Third
Fourth
$
177,776
(9,578)
168,198
(2,636)
165,562
(7,963)
56,699
(146,982)
—
67,316
(18,201)
176,555
(9,223)
167,332
(2,554)
164,778
(6,691)
56,398
(144,727)
(12,131)
57,627
(17,665)
49,115
$
39,962
— $
49,115
11,373
37,742
9,613
49,575
10,839
38,736
$
$
$
$
$
$
175,390
(9,160)
166,230
(2,689)
163,541
(9,468)
57,941
(145,192)
(3,887)
62,935
(16,382)
46,553
2,526
49,079
7,903
41,176
173,739
(10,158)
163,581
(2,768)
160,813
(9,718)
56,961
(144,080)
(9,667)
54,309
(14,217)
40,092
6,284
46,376
4,839
41,537
$19,004,170
16,622,104
12,527,937
15,274,774
2,462,534
$19,349,431
17,023,990
12,884,056
15,245,227
2,492,582
$19,985,950
17,748,600
13,348,574
15,736,694
2,509,342
$20,747,266
18,544,930
13,895,276
16,572,831
2,472,402
$19,055,107
16,740,353
12,379,316
15,269,143
2,435,980
$19,039,264
16,791,744
12,680,861
15,060,581
2,463,385
$19,549,947
17,324,444
13,102,108
15,371,209
2,489,948
$20,090,372
17,911,143
13,578,223
15,892,507
2,509,509
1.05%
8.18%
4.06%
3.37%
0.58
0.58
0.58
0.58
0.45
0.45
0.24
38.50
32.66
36.65
31,328
$
$
$
$
$
$
$
$
0.84%
6.51%
3.99%
3.35%
0.48
0.48
0.59
0.59
0.46
0.46
0.24
37.86
32.02
35.32
27,432
$
$
$
$
$
$
$
$
0.94%
7.42%
3.81%
3.32%
0.56
0.56
0.59
0.59
0.49
0.49
0.24
36.47
31.25
32.05
25,553
$
$
$
$
$
$
$
$
0.79%
6.34%
3.63%
3.27%
0.48
0.48
0.56
0.56
0.50
0.50
0.24
35.67
28.68
30.70
36,396
$
$
$
$
$
$
$
$
(a) Net income less tax-effected nonoperating expense items and securities gains/losses. Management believes that this is a useful financial measure
because it enables investors to assess ongoing operations.
(b) Operating income excluding tax-effected purchase accounting adjustments. Management believes that reporting on core income provides a useful
measure of financial performance that helps investors determine whether management is successfully executing its strategic initiatives.
72
Summary of Quarterly Results (continued)
(Unaudited)
(In thousands, except per share data)
Interest income (te)
Interest expense
Net interest income (te)
Taxable equivalent adjustment
Net interest income
Provision for loan losses
Noninterest income
Operating expense
Nonoperating expense items
Income before income taxes
Income tax expense
Net income
Nonoperating expense items (net of taxes)
Operating income (a)
Purchase accounting adjustments (net of taxes)
Core income (b)
Period end balance sheet data
Total assets
Earning assets
Loans
Deposits
Stockholders’ equity
Average balance sheet data
Total assets
Earning assets
Loans
Deposits
Stockholders’ equity
Ratios
Return on average assets
Return on average common equity
Net interest margin (te)
Net interest margin—core (te)
Earnings per share
Basic
Diluted
Operating earnings per share: (a)
Basic
Diluted
Core earnings per share: (b)
Basic
Diluted
Cash dividends per common share
Market data:
High sales price
Low sales price
Period-end closing price
Trading volume
2013
$
$
$
First
Second
Third
Fourth
$
187,998
(11,257)
176,741
(2,726)
174,015
(9,578)
60,187
(159,602)
—
65,022
(16,446)
$
182,292
(10,470)
171,822
(2,643)
169,179
(8,257)
63,897
(162,250)
—
62,569
(15,707)
184,221
(10,109)
174,112
(2,582)
171,530
(7,569)
63,057
(161,318)
(20,887)
44,813
(11,611)
48,576
$
46,862
$
33,202
— $
— $
48,576
19,346
29,230
46,862
16,517
30,345
13,577
46,779
18,101
28,678
$
$
$
178,109
(9,643)
168,466
(2,459)
166,007
(7,331)
58,999
(157,097)
(17,116)
43,462
(8,746)
34,716
11,057
45,773
12,926
32,847
$19,064,123
16,655,531
11,482,762
15,253,351
2,477,100
$18,934,301
16,448,565
11,681,497
15,155,938
2,345,340
$18,801,846
16,339,431
11,734,472
15,054,871
2,356,442
$19,009,251
16,651,295
12,324,817
15,360,516
2,425,069
$19,152,651
16,517,702
11,529,928
15,312,690
2,448,010
$19,022,832
16,500,215
11,623,209
15,211,363
2,405,069
$18,796,027
16,384,635
11,821,395
15,021,685
2,338,945
$18,739,091
16,376,587
11,922,379
14,915,677
2,355,768
1.03%
8.05%
4.32%
3.41%
0.56
0.56
0.56
0.56
0.34
0.34
0.24
33.59
29.37
30.92
29,469
$
$
$
$
$
$
$
$
0.99%
7.82%
4.17%
3.38%
0.55
0.55
0.55
0.55
0.36
0.36
0.24
30.93
25.00
30.07
38,599
$
$
$
$
$
$
$
$
0.70%
5.63%
4.23%
3.37%
0.40
0.40
0.56
0.56
0.34
0.34
0.24
33.85
29.00
31.38
29,711
$
$
$
$
$
$
$
$
0.74%
5.85%
4.09%
3.40%
0.41
0.41
0.55
0.55
0.39
0.39
0.24
37.12
30.09
36.68
27,816
$
$
$
$
$
$
$
$
(a) Net income less tax-effected nonoperating expense items and securities gains/losses. Management believes that this is a useful financial measure
because it enables investors to assess ongoing operations.
(b) Operating income excluding tax-effected purchase accounting adjustments. Management believes that reporting on core income provides a useful
measure of financial performance that helps investors determine whether management is successfully executing its strategic initiatives.
73
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Hancock Holding Company has prepared the consolidated financial statements and other
information in our Annual Report in accordance with accounting principles generally accepted in the United
States of America and is responsible for its accuracy. The financial statements necessarily include amounts that
are based on management’s best estimates and judgments.
In meeting its responsibility, management relies on internal accounting and related control systems. The internal
control systems are designed to ensure that transactions are properly authorized and recorded in the Company’s
financial records and to safeguard the Company’s assets from material loss or misuse. Such assurance cannot be
absolute because of inherent limitations in any internal control system.
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in the Rule 13(a) – 15(f) under the Securities Exchange Act of 1934.
Under the supervision and with the participation of management, including the Company’s principal executive
officer and principal financial officer, the Company conducted an evaluation of the effectiveness of internal
control over financial reporting based on the framework in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management also
conducted an assessment of requirements pertaining to Section 112 of the Federal Deposit Insurance Corporation
Improvement Act. This section relates to management’s evaluation of internal control over financial reporting,
including controls over the preparation of financial statements in accordance with the instructions to the
Consolidated Financial Statements for Bank Holding Companies (Form FR Y-9C) and in compliance with laws
and regulations. Our evaluation included a review of the documentation of controls, evaluations of the design of
the internal control system and tests of the effectiveness of internal controls.
The Company’s internal control over financial reporting as of December 31, 2014 was audited by
PricewaterhouseCoopers, LLP, an independent registered public accounting firm, as stated in their accompanying
report which expresses an unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2014.
Based on the Company’s evaluation under the framework in Internal Control – Integrated Framework (2013),
management concluded that internal control over financial reporting was effective as of December 31, 2014.
John M. Hairston
President &
Chief Executive Officer
February 27, 2015
Michael M. Achary
Chief Financial Officer
February 27, 2015
74
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
of Hancock Holding Company:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,
comprehensive income, stockholders’ equity and cash flows present fairly, in all material respects, the financial
position of Hancock Holding Company (the “Company”) and its subsidiaries at December 31, 2014 and
December 31, 2013, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2014, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company’s management is responsible for these financial statements, for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on these financial statements and on the Company’s internal control over
financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and
whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. Our audits of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Management’s assessment and our audit of the
Company’s internal control over financial reporting also included controls over the preparation of financial
statements in accordance with the instructions to the Consolidated Financial Statements for Bank Holding
Companies (Form FR Y-9C) to comply with the reporting requirements of Section 112 of the Federal Deposit
Insurance Corporation Improvement Act (FDICIA). A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 27, 2015
75
Hancock Holding Company and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
Assets:
Cash and due from banks
Interest-bearing bank deposits
Federal funds sold
Securities available for sale, at fair value (amortized cost of $1,631,761 and
$1,408,780)
Securities held to maturity (fair value of $2,186,340 and $2,576,584)
Loans held for sale
Loans
Less: allowance for loan losses
Loans, net
Property and equipment, net of accumulated depreciation of $193,527 and
$172,798
Prepaid expense
Other real estate, net
Accrued interest receivable
Goodwill
Other intangible assets, net
Life insurance contracts
FDIC loss share receivable
Deferred tax asset, net
Other assets
Total assets
Liabilities and Stockholders’ Equity:
Deposits:
Noninterest-bearing demand
Interest-bearing savings, NOW, money market and time
Total deposits
Short-term borrowings
Long-term debt
Accrued interest payable
Other liabilities
Total liabilities
Stockholders’ equity:
Common stock-$3.33 par value per share; 350,000,000 shares authorized,
80,426,485 and 82,237,162 outstanding, respectively
Capital surplus
Treasury shares at cost—7,053,028 and 5,160,509 shares, respectively
Retained earnings
Accumulated other comprehensive (loss), net
Total stockholders’ equity
December 31,
2014
2013
$
$
356,455
801,576
1,372
348,440
267,236
1,604
1,660,165
2,166,289
20,252
13,895,276
(128,762)
1,421,772
2,611,352
24,515
12,324,817
(133,626)
13,766,514
12,191,191
398,384
28,277
58,415
47,501
621,193
132,810
426,617
60,272
74,335
126,839
432,346
65,220
76,668
42,977
625,675
159,773
381,437
113,834
89,708
155,503
$20,747,266
$19,009,251
$ 5,945,208
10,627,623
$ 5,530,253
9,830,263
16,572,831
15,360,516
1,151,573
374,371
4,204
171,885
657,960
385,826
4,353
175,527
18,274,864
16,584,182
267,820
1,689,291
(158,131)
723,496
(50,074)
273,850
1,647,467
(89,035)
628,166
(35,379)
2,472,402
2,425,069
stockholders’ equity Total liabilities and stockholders’ equity
$20,747,266
$19,009,251
See accompanying notes to consolidated financial statements.
76
Hancock Holding Company and Subsidiaries
Consolidated Statements of Income
(In thousands, except share data)
Interest income:
Loans, including fees
Loans held for sale
Securities-taxable
Securities-tax exempt
Federal funds sold and other short term investments
Total interest income
Interest expense:
Deposits
Short-term borrowings
Long-term debt and other interest expense
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income:
Service charges on deposit accounts
Trust fees
Bank card and ATM fees
Investment and annuity fees
Secondary mortgage market operations
Insurance commissions and fees
(Amortization) accretion of loss share receivable
Other income
Securities gains, net
Total noninterest income
Noninterest expense:
Compensation expense
Employee benefits
Personnel expense
Net occupancy expense
Equipment expense
Data processing expense
Professional services expense
Amortization of intangibles
Telecommunications and postage
Deposit insurance and regulatory fees
Other real estate expense, net
Other expense
Total noninterest expense
Income before income taxes
Income taxes
Net income
Basic earnings per common share
Diluted earnings per common share
See accompanying notes to consolidated financial statements.
77
Years Ended December 31,
2014
2013
2012
$601,466
708
85,806
3,873
960
$629,882
882
85,426
4,621
1,399
$667,014
1,373
86,402
5,841
1,919
692,813
722,210
762,549
23,223
2,361
12,535
38,119
24,175
4,542
12,762
41,479
32,741
6,005
12,936
51,682
654,694
33,840
680,731
32,734
710,867
54,192
620,854
647,997
656,675
77,006
44,826
45,031
20,291
8,036
9,473
(12,102)
35,438
—
79,000
38,186
45,939
19,574
12,543
15,804
(2,239)
37,231
105
78,246
32,736
49,112
18,033
16,488
15,692
5,000
36,888
1,552
227,999
246,143
253,747
276,881
51,415
291,225
65,257
293,783
72,401
328,296
356,482
366,184
43,596
16,953
51,369
33,221
26,797
14,676
11,872
2,758
77,128
48,854
20,026
48,367
39,357
29,470
17,432
14,914
8,036
95,336
54,467
24,097
49,935
57,457
32,067
21,437
14,902
12,250
80,271
606,666
678,274
713,067
242,187
66,465
215,866
52,510
197,355
45,613
$175,722
$163,356
$151,742
$
$
2.10
2.10
$
$
1.93
1.93
$
$
1.77
1.75
Hancock Holding Company and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
Net income
Other comprehensive income before income taxes
Net change in unrealized (loss) gain
Reclassification adjustment for net losses realized and included in earnings
Accretion (amortization) of unrealized net gain (loss) on securities transferred
to held to maturity
Other comprehensive (loss) income before income taxes
Income tax (benefit) expense
Other comprehensive (loss) income net of income taxes
Comprehensive income
See accompanying notes to consolidated financial statements.
Years Ended December 31,
2014
2013
2012
$175,722
$163,356
$151,742
(26,311)
390
(22,772)
8,527
8,140
6,418
3,297
(6,371)
(8,752)
(22,624)
(7,929)
(20,616)
(8,162)
(14,695)
(12,454)
5,806
2,221
3,585
$161,027
$150,902
$155,327
78
Hancock Holding Company and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
Common Stock
Shares
(In thousands, except share and per
share data)
Balance, December 31, 2011 84,705,496 $282,069 $1,679,818 $476,970
— 151,742
Net income
—
—
Other comprehensive income
Cash dividends declared
Amount
—
—
—
—
Capital
Surplus
Retained
Earnings
($0.96 per common share)
Common stock activity, long-
—
—
— (82,690)
term incentive plan
142,300
474
(11,301)
—
Balance, December 31, 2012 84,847,796 $282,543 $1,668,517 $546,022
— 163,356
Net income
Other comprehensive income
—
—
Cash dividends declared
—
—
—
—
($0.96 per common share)
Common stock activity, long-
—
—
— (81,212)
term incentive plan
Purchase of common stock
207,006
(2,817,640)
690
(9,383)
(21,050)
—
—
—
Balance, December 31, 2013 82,237,162 $273,850 $1,647,467 $628,166
— 175,722
Net income
Other comprehensive income
—
—
Cash dividends declared
—
—
—
—
Accumulated
Other
Comprehensive
Income (Loss), net
Treasury
Stock
Total
$(26,510)
—
3,585
$ (45,184) $2,367,163
151,742
3,585
—
—
—
—
$(22,925)
—
(12,454)
—
—
—
—
(82,690)
24,305
13,478
(20,879) $2,453,278
163,356
(12,454)
(81,212)
37,461
(105,617)
17,101
(115,000)
$(35,379)
—
(14,695)
$ (89,035) $2,425,069
175,722
(14,695)
—
—
($0.96 per common share)
Common stock activity, long-
—
—
— (80,392)
term incentive plan
Purchase of common stock
309,087
(2,119,764)
1,029
(7,059)
41,824
—
—
—
—
—
—
—
(80,392)
(28,537)
(40,559)
14,316
(47,618)
Balance, December 31, 2014 80,426,485 $267,820 $1,689,291 $723,496
$(50,074)
$(158,131) $2,472,402
See accompanying notes to consolidated financial statements.
79
Hancock Holding Company and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Years Ended December 31,
2014
2013
2012
$
175,722
$
163,356
$ 151,742
Depreciation and amortization
Provision for loan losses
(Gain) loss on other real estate owned
Deferred tax expense
Increase in cash surrender value of life insurance
contracts
Gain on sales of securities, net
Writedowns on closed branch transfers to other real
estate owned
(Gain) loss on disposal of other assets
Net decrease in loans held for sale
Net amortization of securities premium/discount
Amortization of intangible assets
Amortization (accretion) of FDIC loss share receivable
Stock-based compensation expense
(Decrease) increase in interest payable and other
liabilities
Net payments from FDIC
Decrease (increase) in FDIC loss share receivable
Decrease (increase) in other assets
Other, net
30,310
33,840
(105)
23,537
32,063
32,734
4,329
40,920
32,856
54,192
8,353
32,465
(11,774)
—
(11,223)
(105)
(12,807)
(1,552)
2,132
(1,282)
18,234
16,977
26,798
12,102
13,958
(15,235)
14,395
5,723
11,082
(3,986)
12,809
235
29,103
31,970
29,635
2,239
13,079
29,553
61,765
(9,117)
(724)
10,911
4,586
51
21,991
49,887
32,067
(5,000)
11,019
(58,289)
114,976
(45,284)
52,155
(376)
Net cash provided by operating activities
352,428
473,532
443,032
80
Hancock Holding Company and Subsidiaries
Consolidated Statements of Cash Flows—(Continued)
(In thousands)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale
Proceeds from maturities of securities available for sale
Purchases of securities available for sale
Proceeds from maturities of securities held to maturity
Purchases of securities held to maturity
Net (increase) decrease in interest-bearing bank deposits
Net decrease (increase) in federal funds sold and short term
investments
Net increase in loans
Purchase of life insurance contracts
Purchases of property, equipment and intangible assets
Proceeds from sales of property and equipment
Proceeds from sales of other real estate
Net cash paid for divestiture of branches
Other, net
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits
Net increase (decrease) in short-term borrowings
Repayments of long-term debt
Issuance of long-term debt
Dividends paid
Repurchase of common stock
Proceeds from exercise of stock options
Years Ended December 31,
2014
2013
2012
$
1,455
283,982
(512,088)
442,559
(1,031)
(534,340)
$
178
592,147
(1,074,744)
503,654
(481,513)
1,231,749
$
48,336
1,081,193
(285,825)
432,331
(560,324)
(314,763)
232
(1,622,867)
(30,000)
(20,449)
12,235
59,752
—
10,101
(1,910,459)
1,212,315
493,613
(35,360)
21,000
(80,392)
(47,618)
2,488
(401)
(834,933)
—
(32,029)
1,698
92,662
—
(2,965)
(1,006)
(507,530)
—
(42,979)
6,270
120,083
—
6,481
(4,497)
(17,733)
(383,672)
18,827
(35,278)
24,515
(81,212)
(115,000)
2,734
30,609
(405,321)
(192,087)
232,720
(82,690)
—
2,014
Net cash provided by (used in) financing activities
1,566,046
(569,086)
(414,755)
NET INCREASE (DECREASE) IN CASH AND DUE FROM
BANKS
CASH AND DUE FROM BANKS, BEGINNING
CASH AND DUE FROM BANKS, ENDING
SUPPLEMENTAL INFORMATION
Income taxes paid (refunded)
Interest paid
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans
Transfers from available for sale securities to held to maturity
securities
See accompanying notes to consolidated financial statements.
8,015
348,440
(100,051)
448,491
10,544
437,947
356,455
$
348,440
$ 448,491
24,114
38,268
$
24,052
41,996
$ (24,237)
57,370
$
$
$
31,371
$
51,461
$
76,128
—
1,039,979
1,523,585
81
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements
DESCRIPTION OF BUSINESS
Hancock Holding Company (which we refer to as Hancock or the Company) is a financial services company that
provides a comprehensive network of full-service financial choices to the Gulf South region through its bank
subsidiary, Whitney Bank, a Mississippi state bank. Whitney Bank operates under brands: “Hancock Bank” in
Mississippi, Alabama and Florida and “Whitney Bank” in Louisiana and Texas. Hancock was organized in 1984
as a bank holding company registered under the Bank Holding Company Act of 1956, as amended. In 2002, the
Company qualified as a financial holding company giving it broader powers. The corporate headquarters of the
Company is in Gulfport, Mississippi. Prior to March 31, 2014, Hancock was the parent company of two wholly-
owned bank subsidiaries, Hancock Bank and Whitney Bank. On March 31, 2014, Hancock consolidated the legal
charters of its two subsidiary banks and renamed the consolidated entity Whitney Bank. Hancock Bank, Whitney
Bank, and the recently consolidated Whitney Bank are referred to collectively as the “Bank” throughout this
document.
The Bank offers a broad range of traditional and online community banking services to commercial, small
business and retail customers, providing a variety of transaction and savings deposit products, treasury
management services, investment brokerage services, secured and unsecured loan products, (including revolving
credit facilities), and letters of credit and similar financial guarantees. The Bank also provides trust and
investment management services to retirement plans, corporations and individuals.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the U.S. (U.S. GAAP) and those generally practiced within the banking industry. The following is a
summary of the more significant accounting policies.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and all other entities in which the
Company has a controlling interest. Significant inter-company transactions and balances have been eliminated in
consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation.
Use of Estimates
The accounting principles the Company follows and the methods for applying these principles conform with U.S.
GAAP and with general practices followed by the banking industry. These accounting principles and practices
require management to make estimates and assumptions about future events that affect the amounts reported in
the consolidated financial statements and the accompanying notes. Actual results could differ from those
estimates.
Fair Value Accounting
U.S. GAAP requires the use of fair values in determining the carrying values of certain assets and liabilities in
the financial statements, as well as for specific disclosures about certain assets and liabilities.
Accounting guidance established a fair value hierarchy that prioritizes the inputs to these valuation techniques
used to measure fair value giving preference to quoted prices in active markets (level 1) and the lowest priority to
unobservable inputs such as a reporting entity’s own data or information or assumptions developed from this data
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
(level 3). Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for
identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as
interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
Acquisition Accounting
Acquisitions are accounted for under the purchase method of accounting. Purchased assets, including identifiable
intangibles, and assumed liabilities are recorded at their respective acquisition date fair values. If the fair value of
net assets purchased exceeds the consideration given, a bargain purchase gain is recognized. If the consideration
given exceeds the fair value of the net assets received, goodwill is recognized. Fair values are subject to
refinement for up to one year after the closing date of an acquisition as information relative to closing date fair
values becomes available. Purchased loans acquired in a business combination are recorded at estimated fair
value on their purchase date with no carryover of the related allowance for loan losses. See the Acquired Loans
section below for accounting policy regarding loans acquired in a business combination.
All identifiable intangible assets that are acquired in a business combination are recognized at fair value on the
acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual or other
legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or exchanged
separately from the entity).
Securities
Securities are classified as trading, held to maturity or available for sale. Management determines the appropriate
classification of debt and equity securities at the time of purchase and re-evaluates this classification periodically
as conditions change that could require reclassification.
Available for sale securities are stated at fair value. Unrealized holding gains and unrealized holding losses, other
than those determined to be other than temporary, are reported net of tax in other comprehensive income and in
accumulated other comprehensive income until realized.
Securities that the Company both positively intends and has the ability to hold to maturity are classified as
securities held to maturity and are carried at amortized cost. The intent and ability to hold are not considered
satisfied when a security is available to be sold in response to changes in interest rates, prepayment rates,
liquidity needs or other reasons as part of an overall asset/liability management strategy.
Premiums and discounts on securities, both those held to maturity and those available for sale, are amortized and
accreted to income as an adjustment to the securities’ yields using the effective interest method. Realized gains
and losses on securities, including declines in value judged to be other than temporary, are reported net as a
component of noninterest income. The cost of securities sold is specifically identified for use in calculating
realized gains and losses.
Loans
Originated loans
Loans reported as “originated” include both loans originated for investment and acquired-performing loans
where the discount (premium) has been fully accreted (amortized). Originated loans are reported at the principal
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
balance outstanding net of unearned income. Interest on loans and accretion of unearned income, including
deferred loan fees, are computed in a manner that approximates a level yield on recorded principal. Interest on
loans is recognized in income as earned.
The accrual of interest on an originated loan is discontinued when, in management’s opinion, it is probable that
the borrower will be unable to meet payment obligations as they become due, as well as when required by
regulatory provisions. When accrual of interest is discontinued on a loan, all unpaid accrued interest is reversed
and payments subsequently received are applied first to recover principal. Interest income is recognized for
payments received after contractual principal has been satisfied. Loans are returned to accrual status when all the
principal and interest contractually due are brought current and future payment performance is reasonably
assured.
Acquired loans
Loans reported as “acquired” are those loans that were purchased in the 2011 Whitney Holding Corporation
acquisition. These loans were recorded at estimated fair value at the acquisition date with no carryover of the
related allowance for loan losses. The Whitney acquired loans were segregated between those considered to be
performing (“acquired-performing”) and those with evidence of credit deterioration (“acquired-impaired”) based
on such factors as past due status, nonaccrual status and credit risk ratings (rated substandard or worse). The
acquired loans were further segregated into loan pools designed to facilitate the development of expected cash
flows to be used in estimating fair value to facilitate purchase accounting. Acquired-performing loans are
accounted for under ASC 310-20 and acquired-impaired loans are accounted for under ASC 310-30.
Acquired-performing loans were segregated into pools based on common risk characteristics such as loan type,
credit risk ratings, and contractual interest rate and repayment terms. The major loan types included commercial
and industrial loans not secured by real estate, real estate construction and land development loans, commercial
real estate loans, residential mortgage loans, and consumer loans, with further segregation within certain loan
types as needed. Expected cash flows, both principal and interest, from each pool were estimated based on key
assumptions covering such factors as prepayments, default rates, and severity of loss given a default. These
assumptions were developed using both historical experience and the portfolio characteristics at acquisition as
well as available market research. The fair value estimate for each acquired-performing pool was based on the
estimate of expected cash flows from the pool discounted at prevailing market rates.
The difference at the acquisition date between the fair value and the contractual amounts due of an acquired-
performing loan pool (the “fair value discount”) is accreted into income over the estimated life of the pool.
Acquired-performing loans are placed on nonaccrual status and reported as nonperforming or past due using the
same criteria applied to the originated portfolio.
The acquired-impaired loans were segregated into pools by identifying loans with common credit risk profiles
and were based primarily on characteristics such as loan type and market area in which originated. The major
loan types included commercial and industrial loans not secured by real estate, real estate construction and land
development loans, commercial real estate loans, and residential mortgage loans, with further segregation within
certain loan types as needed. The acquired-impaired loans were further disaggregated by geographic region in
recognition of the differences in general economic conditions affecting borrowers in certain states. The fair value
estimate for each pool of acquired-impaired loans was based on the estimate of expected cash flows from the
pool discounted at prevailing market rates.
The excess of estimated cash flows expected to be collected from an acquired-impaired loan pool over the pool’s
carrying value is referred to as the accretable yield and is recognized in interest income using an effective yield
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
method over the expected life of the loan pool. Each pool of acquired-impaired loans is accounted for as a single
asset with a single composite interest rate and an aggregate expectation of cash flows. Acquired-impaired loans
in pools with an accretable yield and expected cash flows that are reasonably estimable are considered to be
accruing and performing even though collection of contractual payments on loans within the pool may be in
doubt, because the pool is the unit of accounting. Acquired-impaired loans are generally not subject to individual
evaluation for impairment and are not reported with impaired loans or troubled debt restructurings even if they
would otherwise qualify for such treatment.
FDIC acquired loans and the related loss share receivable
Loans reported as “FDIC acquired” are loans purchased in the 2009 acquisition of Peoples First Community
Bank (Peoples First) that were covered by two loss share agreements between the FDIC and the Company. These
loans are accounted for as acquired-impaired loans as described above in the section on acquired loans. The
Company treated all loans for the Peoples First acquisition as impaired based on the significant amount of
deteriorating and nonperforming loans comprised mainly of adjustable rate mortgages and home equity loans
located in Florida. The loss share receivable is measured separately from the related covered loans as it is not
contractually embedded in the loans and is not transferrable should the loans be sold. The fair value of the loss
share receivable at acquisition was estimated by discounting expected reimbursements for losses from the loans
covered by the loss share agreements, including appropriate consideration of possible true-up payments to the
FDIC at the expiration of the agreements.
The loss share receivable is reviewed and updated prospectively as loss estimates related to covered loan pools
change. Increases in expected reimbursements under the loss sharing agreement will lead to an increase in the
loss share receivable. A decrease in expected reimbursements is reflected first as a reversal of any previously
recorded increase in the loss share receivable on the covered loan pool with the remainder reflected as a
reduction in the loss share receivable’s accretion rate. Increases and decreases in the loss share receivable related
to changes in loss estimates result in reductions in or additions to the provision for loan losses, which serves to
offset the impact on the provision from impairments or impairment reversals recognized on the underlying
covered loan pool. The excess (or shortfall) of expected claims as compared to the carrying value of the loss
share receivable is accreted (amortized) into noninterest income over the shorter of the remaining life of the
covered loan pool or the life of the loss share agreement. The impact on operations of a reduction in the loss
share receivable’s accretion rate is associated with an increase in the accretable yield on the underlying loan pool.
The loss share receivable is reduced as cash is received from the FDIC related to losses incurred on covered
assets.
Loans Held for Sale
Residential mortgage loans originated for sale are classified as loans held for sale and carried at the lower of cost
or market. Forward sales commitments on a best-efforts basis are entered into with third parties concurrently
with rate lock commitments made to prospective borrowers. At times, management may decide to sell loans that
were not originated for that purpose. Those loans are reclassified as held for sale when that decision is made and
also carried at the lower of cost or market.
Troubled Debt Restructurings
Troubled debt restructurings (TDRs) occur when a borrower is experiencing, or is expected to experience,
financial difficulties in the near-term and a modification in loan terms is granted that would otherwise not have
been considered.
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
Troubled debt restructurings can result in loans remaining on nonaccrual, moving to nonaccrual, or continuing to
accrue, depending on the individual facts and circumstances of the borrower. All loans whose terms have been
modified in a TDR, including both commercial and retail loans, are initially considered “impaired.” When
measuring impairment on a TDR, the loan’s value is determined by either the present value of expected cash
flows calculated using the loan’s effective interest rate before the restructuring, or the loan’s observable market
price or the fair value of the collateral if the loan is collateral dependent. If the value as determined is less than
the recorded investment in the loan, the difference is charged-off through the allowance for loan and lease losses.
Modified acquired-impaired loans are not removed from their accounting pool and accounted for as a TDR even
if those loans would otherwise be deemed TDRs.
Allowance for Loan Losses
Originated loans
The ALLL is a valuation account available to absorb losses on loans. The ALLL is established and maintained at
an amount sufficient to cover estimated credit losses inherent in the loan and lease portfolios of the Company as
of the date of the determination. Credit losses arise not only from credit risk, but also from other risks inherent in
the lending process including, but not limited to, collateral risk, operational risk, concentration risk, and
economic risk. As such, all related risks of lending are considered when assessing the adequacy of the allowance
for loan and lease losses. Quarterly, management estimates inherent losses in the portfolio based on a number of
factors, including the Company’s past loan loss and delinquency experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrowers’ ability to repay, the estimated value of any underlying
collateral and current economic conditions.
The analysis and methodology for estimating the ALLL include two primary elements. A loss rate analysis which
incorporates a historical loss rate as updated for current conditions is used for loans collectively evaluated for
impairment, and a specific reserve analysis is used for loans individually evaluated for impairment. For the loss
rate analysis, the Company segments loans into commercial non-real estate, construction and land development,
commercial real estate, residential mortgage and consumer. Both quantitative and qualitative factors are applied
at the detailed portfolio segments. Commercial loans (commercial non-real estate, construction and land
development, and commercial real estate) are further subdivided by risk rating, while retail loans (residential
mortgage and consumer) are further subdivided by delinquency. The Company uses loss emergence periods
developed based on historical experience, which is currently eighteen-months for commercial loans and twelve-
months for retail loans. Historical loss rates are calculated using a weighted average of the most recent three loss
emergence periods. As circumstances dictate, management will make adjustments to the overall loss rate to
reflect differences in current conditions as compared to those during the historical loss period. Conditions to be
considered include problem loan trends, current business and economic conditions, credit concentrations, lending
policies and procedures, lending staff, collateral values, loan profiles and volumes, loan review quality, and
changes in competition and regulations.
The Company considers a loan to be impaired when, based upon current information and events, it believes it is
probable all amounts due according to the contractual terms of the loan agreement will not be collected. A loan is
not considered impaired due to a delay in payment if all amounts due, including interest accrued at the
contractual interest rate for the period of delay, is expected to be collected. Impaired loans include troubled debt
restructurings, and performing and nonperforming loans. When a loan is determined to be impaired, the amount
of impairment is recognized by creating a specific allowance for any shortfall between the loan’s value and its
recorded investment. The loan’s value is measured by either the loan’s observable market price, the fair value of
the collateral of the loan (less liquidation costs) if it is collateral dependent, or by the present value of expected
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
future cash flows discounted at the loan’s effective interest rate. Any loans individually analyzed for impairment
are not incorporated into the pool analysis to avoid double counting. The Company limits the specific reserve
analysis to include all impaired commercial, commercial real estate and mortgage loans with balances of $1
million or greater and all loans classified as troubled debt restructurings.
It is the policy of the Company to promptly charge off all commercial and residential mortgage loans, or portions
of loans, when available information reasonably confirms that they are wholly or partially uncollectible. Prior to
recognizing a loss, asset value is established based on an assessment of the value of the collateral securing the
loan, the borrower’s and the guarantor’s ability and willingness to pay and the status of the account in bankruptcy
court, if applicable. Consumer loans are generally charged down when the loan is 90 days past due for unsecured
loans or 120 days past due for secured loans, unless the loan is clearly both well secured and in the process of
collection. Loans are charged down to the fair value of the collateral, if any, less estimated selling costs. Loans
are charged off against the allowance for loan losses with subsequent recoveries added back to the allowance.
Acquired and FDIC acquired loans
Allowance for acquired-performing loans is evaluated at each reporting date subsequent to acquisition. An
allowance is determined for each loan pool using a methodology similar to that described above for originated
loans and then compared to the remaining fair value discount for that pool. If the allowance is greater than the
discount, the excess is recognized as an addition to the allowance through a provision for loan losses. If the
allowance is less than the discount, no additional allowance is recognized.
For acquired-impaired, including those acquired in the FDIC-assisted transaction, estimated cash flows expected
to be collected are recast at each reporting date for each loan pool. These evaluations require the continued use
and updating of key assumptions and estimates such as default rates, loss severity given default and prepayment
speed assumptions, similar to those used for the initial fair value estimate. Management judgment must be
applied in developing these assumptions. If the present value of expected cash flows for a pool is less than its
carrying value, impairment is recognized by an increase in the allowance for loan losses and a charge to the
provision for loan losses. If the present value of expected cash flows for a pool is greater than its carrying value,
any previously established allowance for loan losses is reversed and any remaining difference increases the
accretable yield which will be taken into interest income over the remaining life of the loan pool. Acquired-
impaired loans are generally not subject to individual evaluation for impairment and are not reported with
impaired loans or troubled debt restructurings, even if they would otherwise qualify for such treatment.
Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation is
charged to expense over the estimated useful lives of the assets, which are up to 39 years for buildings and three
to ten years for furniture and equipment. Amortization expense for software is generally charged over three
years, or seven years for core systems. Leasehold improvements are amortized over the terms of the respective
leases or the estimated useful lives of the improvements, whichever is shorter.
Gains and losses related to retirement or disposition of property and equipment are recorded in other income
under noninterest income on the consolidated statements of income. The Company continually evaluates whether
events and circumstances have occurred that indicate that such long-lived assets have been impaired.
Measurement of any impairment of such long-lived assets is based on those assets’ fair values.
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
Other Real Estate
Other real estate owned includes real property that has been acquired in satisfaction of loans and property no
longer used in the Bank’s business. These assets are recorded at the estimated fair value less the estimated cost of
disposition and carried at the lower of either cost or market. Fair value is based on independent appraisals and
other relevant factors. Any initial reduction in the carrying amount of a loan to the fair value of the collateral
received less selling costs is charged to the allowance for loan losses. Other real estate is revalued on an annual
basis or more often if market conditions necessitate. Subsequent losses on the periodic revaluation of the
property are charged to current earnings, as are revenues from and costs of operating and maintaining the
properties and gains or losses recognized on their disposition. Improvements made to properties are capitalized if
the expenditures are expected to be recovered upon the sale of the properties.
Goodwill and Other Intangible Assets
Goodwill, which represents the excess of cost over the fair value of the net assets of an acquired business, is not
amortized but tested for impairment on an annual basis, or more often if events or circumstances indicate there
may be impairment. Impairment is defined as the amount by which the implied fair value of the goodwill
contained in any reporting unit is less than the goodwill’s carrying value. Impairment losses would be charged to
operating expense. Management reviews goodwill for impairment by first comparing the estimated fair value of
the reporting unit to its carrying value. If the reporting unit’s fair value is less than its carrying value, an estimate
of the implied fair value of the unit’s goodwill is compared to its carrying value. The Company uses a present
value technique to estimate fair value which incorporates assumptions that market participants would use in their
estimates of fair value, such as assumptions about the economic environment, expected net interest margins,
growth rates, and the interest rate at which cash flows are discounted.
Other identifiable intangible assets with finite lives, such as core deposit intangibles and trade name, are initially
recorded at fair value and are generally amortized over the periods benefited. These assets are evaluated for
impairment similar to long-lived assets.
Bank-Owned Life Insurance
Bank-owned life insurance (BOLI) is long-term life insurance on the lives of certain current and past employees
where the insurance policy benefits and ownership are retained by the employer. Its cash surrender value is an
asset that the Company uses to partially offset the future cost of employee benefits. The cash value accumulation
on BOLI is permanently tax deferred if the policy is held to the insured person’s death and certain other
conditions are met.
Derivative Instruments and Hedging Activities
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair
value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate
a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has
satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the
exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk,
such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of
the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered
cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition
on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that
88
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted
transactions in a cash flow hedge. Changes in the fair value of derivatives to which hedge accounting does not
apply are recognized immediately in earnings, otherwise it is included in other comprehensive income. Note 5
describes the derivative instruments currently used by the Company and discloses how these derivatives impact
Hancock’s financial position and results of operations.
Income Taxes
Income taxes are accounted for using the asset and liability method. Current tax liabilities or assets are
recognized for the estimated income taxes payable or refundable on tax returns to be filed with respect to the
current year. Deferred tax assets and liabilities are based on temporary differences between the financial
statement carrying amounts and the tax bases of the Company’s assets and liabilities. Deferred tax assets and
liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be realized or settled. Valuation allowances are established against
deferred tax assets if, based on all available evidence, it is more likely than not that some or all of the assets will
not be realized. The benefit of a position taken or expected to be taken in a tax return is recognized when it is
more likely than not that the position will be sustained on its technical merits.
The Company invests in projects that yield tax credits issued under the Qualified Zone Academy Bonds (QZAB),
Qualified School Construction Bonds (QSCB), Federal and State New Market Tax Credit (NMTC), and Low-
Income Housing Tax Credit (LIHTC) programs. Returns on these investments are generated through the receipt
of federal and state tax credits. The tax credits are recorded as a reduction to the income tax provision in the year
that they are earned. Tax credits from QZAB and QSCB bonds are generally earned over the life of the bonds in
lieu of interest income. Credits on Federal NMTC investments are earned over the 7 year compliance period
beginning with the year of investment. Credits on State NMTC investments are generally earned over a 3 to 5
year period depending upon the specific state program. Tax credits are earned over a 10 year period for Low-
Income Housing investments beginning with the year in which rental activity begins. These tax credits, if not
used in the tax return for the year when the credits are first available for use, can be carried forward for 20 years.
For those investments where the return of the principal is not expected, the equity investment is amortized over
the life of the tax compliance period as a component of noninterest expense.
Retirement Benefits
The Company sponsors defined benefit pension plans and certain other defined benefit postretirement plans for
eligible employees. The amounts reported in the consolidated financial statements with respect to these plans are
based on actuarial valuations that incorporate various assumptions regarding future experience under the plans.
Note 11 discusses the actuarial assumptions and provides information about the liabilities or assets recognized
for the funded status of the Company’s obligations under these plans, the net benefit expense charged to current
operations, and the amounts recognized as a component of other comprehensive income and accumulated other
comprehensive income.
Share-Based Payment Arrangements
The grant date fair value of equity instruments awarded to employees and directors establishes the cost of the
services received in exchange, and the cost associated with awards that are expected to vest is recognized over
the requisite service period.
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
Revenue Recognition
The largest source of revenue for the Company is interest revenue. Interest revenue is recognized on an accrual
basis driven by written contracts, such as loan agreements or securities contracts. Loan origination fees are
amortized over the life of the loan. Other credit-related fees, including letter of credit fees, are recognized in
noninterest income when earned. The Company recognizes commission revenue and brokerage, exchange and
clearance fees on a trade-date basis. Other types of noninterest revenue such as service charges on deposits and
trust revenues, are accrued and recognized into income as services are provided and the amount of fees earned
can be reasonably determined.
Earnings Per Share
Hancock calculates earnings per share using the two-class method. The two-class method allocates net income to
each class of common stock and participating security according to the common dividends declared and
participation rights in undistributed earnings. Participating securities currently consist of unvested share-based
payment awards that contain nonforfeitable rights to dividends or dividend equivalents.
Basic earnings per common share is computed by dividing income applicable to common shareholders by the
weighted-average number of common shares outstanding for the applicable period. Shares outstanding are
adjusted for restricted shares issued to employees under the long-term incentive compensation plan and for
certain shares that will be issued under the directors’ compensation plan. Diluted earnings per common share is
computed using the weighted-average number of common shares outstanding increased by the number of shares
in which employees would vest under performance-based stock awards and stock unit awards based on expected
performance factors and by the number of additional shares that would have been issued if potentially dilutive
stock options were exercised, each as determined using the treasury stock method.
Statements of Cash Flows
The Company considers only cash on hand, cash items in process of collection and balances due from financial
institutions as cash and cash equivalents for purposes of the consolidated statements of cash flows.
Reportable Segment Disclosures
Accounting standards require that information be reported about a company’s operating segments using a
“management approach.” Reportable segments are identified in these standards as those revenue-producing
components for which separate financial information is produced internally and which are subject to evaluation
by the chief operating decision maker in deciding how to allocate resources to segments. On March 31, 2014, the
Company combined its two state bank charters into one charter. Due to the charter change and consistent with its
stated strategy that is focused on providing a consistent package of community banking products and services
throughout a coherent market area, the Company has identified its overall banking operations as its only
reportable segment. Because the overall banking operations comprise substantially all of the consolidated
operations, no separate segment disclosures are presented.
Other
Assets held by the Bank in a fiduciary capacity are not assets of the Bank and are not included in the consolidated
balance sheets.
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2014, the FASB issued an Accounting Standard Update (ASU) to address the diversity in practice
regarding the classification and measurement of foreclosed loans which were part of a government-sponsored
loan guarantee program (e.g. HUD, FHA, VA). The ASU outlines certain criteria that, if met, the loan
(residential or commercial) should be derecognized and a separate other receivable should be recorded upon
foreclosure at the amount of the loan balance (principal and interest) expected to be recovered from the
guarantor. This ASU is effective for annual reporting periods beginning after December 15, 2014, including
interim periods within that reporting period. Early adoption is permitted, provided the entity has adopted ASU
2014-04. The guidance is not expected to have a material impact on the Company’s financial condition or results
of operations.
In June 2014, the FASB issued an ASU regarding repurchase-to-maturity transactions, repurchase financings,
and disclosures. Under the new standard, repurchase-to-maturity transactions will be reported as secured
borrowings, and transferors will no longer apply the current “linked” accounting model to repurchase agreements
executed contemporaneously with the initial transfer of the underlying financial asset with the same counterparty.
Public business entities are generally required to apply the accounting changes and comply with the enhanced
disclosure requirements for periods beginning after December 15, 2014 and interim periods beginning after
March 15, 2015. A public business entity may not early adopt the standard’s provisions. The adoption of this
guidance is not expected to have a material impact on the Company’s financial condition or results of operations.
In May 2014, the FASB issued an ASU regarding revenue from contracts with customers affecting any entity that
enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of
nonfinancial assets unless those contracts are within the scope of other standards. The core principle of this
standard is that an entity should recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. The standard will be effective for the Company for periods beginning after
December 15, 2016. The Company is currently assessing this pronouncement and adoption of this guidance is not
expected to have a material impact on the Company’s financial condition or results of operations.
In January 2014, the FASB issued an ASU on reclassification of residential real estate collateralized consumer
mortgage loans upon foreclosure. The new ASU clarifies when an in substance repossession or foreclosure
occurs – that is, when a creditor should be considered to have received physical possession of residential real
estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized
and the real estate property recognized. The new ASU requires a creditor to reclassify a collateralized consumer
mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower
voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu
of foreclosure or similar legal agreement. The ASU is effective for interim and annual reporting periods
beginning after December 15, 2014. The adoption of this guidance is not expected to have a material impact on
the Company’s financial condition or results of operations.
In January 2014, the FASB issued an ASU in order to provide guidance on accounting for investments in flow-
through limited liability entities that manage or invest in affordable housing projects that qualify for low-income
housing tax credit (“LIHTC”). Through the Company’s investments in these entities, the Company receives tax
credits and/or tax deductions from operating losses, which are allowable on the Company’s filed income tax
returns over the life of the project beginning with the first year the tax credits are earned. The ASU is effective
beginning with the Company’s first quarter ending March 31, 2015, with early adoption permitted. If adopted,
the provisions of ASU No. 2014-01 would be applied retrospectively to all financial statement periods presented.
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HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies and Recent Accounting Pronouncements (continued)
The Company does not anticipate that the potential accounting policy change to the proportional amortization
method would be material to the financial condition, results of operations, or liquidity of the Company. The
expanded disclosures required by this ASU will be incorporated in the Company’s future consolidated financial
statements upon adoption.
Note 2. Securities
The amortized cost and fair value of securities classified as available for sale and held to maturity follow:
Securities Available for Sale
in thousands
U.S. Treasury and government
agency securities
Municipal obligations
Mortgage-backed securities
CMOs
Corporate debt securities
Equity securities
Securities Held to Maturity
in thousands
U.S. Treasury and government
agency securities
Municipal obligations
Mortgage-backed securities
CMOs
December 31, 2014
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Amortized
Cost
December 31, 2013
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
$ 300,207 $
13,995
1,217,293
88,093
3,500
8,673
372
186
31,094
—
—
891
$
71
5
2,823
1,229
—
11
$ 300,508 $
14,176
35,809
1,245,564 1,262,633
96,369
3,500
9,965
86,864
3,500
9,553
2
177
24,402
—
—
785
25
10,077
2,244
—
27
505
35,961
1,276,958
94,125
3,500
10,723
504 $
$
1 $
$1,631,761 $32,543
$4,139
$1,660,165 $1,408,780 $25,366
$12,374 $1,421,772
December 31, 2014
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Amortized
Cost
December 31, 2013
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
$
— $ — $ — $
180,615
899,923
1,085,751
3,416
23,897
5,590
1,144
162
11,546
— $ 100,000
182,887
193,189
923,658 1,003,327
1,079,795 1,314,836
$ 316
919
296
1,062
$ — $ 100,316
187,672
998,952
1,289,644
6,436
4,671
26,254
$2,166,289 $32,903
$12,852 $2,186,340 $2,611,352
$2,593
$37,361 $2,576,584
During the third quarter of 2013, approximately $1.0 billion of securities available for sale were reclassified as
securities held to maturity. Management determined that the reclassified securities were not needed for liquidity
purposes and that the Company had the ability and intent to hold the securities to maturity. The reclassified
securities consisted of mortgage-backed securities and collateral mortgage obligations (CMOs). The securities
were transferred at fair value on the date of their reclassification, which became the cost basis for the securities
held to maturity. The unrealized net holding loss on the available for sale securities on the date of transfer totaled
approximately $56.8 million, and continued to be reported, net of tax, as a component of accumulated other
comprehensive income. This net unrealized loss is being accreted to interest income over the remaining life of
the securities as a yield adjustment. There were no gains or losses recognized as a result of this transfer.
92
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Securities (continued)
The following table presents the amortized cost and fair value of debt securities at December 31, 2014 by
contractual maturity. Actual maturities will differ from contractual maturities because of rights to call or repay
obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed
securities and CMOs.
in thousands
Debt Securities Available for Sale
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Amortized
Cost
Fair
Value
$ 303,284
154,189
236,461
929,154
$ 303,589
154,534
244,535
947,954
Total available for sale debt securities
$1,623,088
$1,650,612
in thousands
Debt Securities Held to Maturity
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Total held to maturity securities
Amortized
Cost
Fair
Value
$ 169,617
453,352
115,748
1,427,572
$ 170,786
446,039
115,195
1,454,320
$2,166,289
$2,186,340
The Company held no securities classified as trading at December 31, 2014 or 2013.
The details for securities classified as available for sale with unrealized losses as of December 31, 2014 follow:
Available for sale
in thousands
U.S. Treasury and government agency
securities
Municipal obligations
Mortgage-backed securities
CMOs
Equity securities
Losses < 12 months
Losses 12 months or >
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
$ 99,950
2,995
38,955
—
5,998
$147,898
$ 70
5
163
—
10
$248
$
121
—
125,641
86,864
3
$
1
—
2,660
1,229
1
$100,071
2,995
164,596
86,864
6,001
$
71
5
2,823
1,229
11
$212,629
$3,891
$360,527
$4,139
93
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Securities (continued)
The details for securities classified as available for sale with unrealized losses as of December 31, 2013 follow:
Available for sale
in thousands
U.S. Treasury and government agency
securities
Municipal obligations
Mortgage-backed securities
CMOs
Equity securities
Losses < 12 months
Losses 12 months or >
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
$
205
7,975
376,350
94,125
3,282
$
1
25
7,164
2,244
26
$ — $ — $
—
49,061
—
3
—
2,913
—
1
205
7,975
425,411
94,125
3,285
$
1
25
10,077
2,244
27
$481,937
$9,460
$49,064
$2,914
$531,001
$12,374
The details for securities classified as held to maturity with unrealized losses as of December 31, 2014 follow:
Held to maturity
in thousands
Municipal obligations
Mortgage-backed securities
CMOs
Losses < 12 months
Losses 12 months or >
Total
Fair
Value
$
4,316
—
119,222
$123,538
Gross
Unrealized
Losses
$ 12
—
616
$628
Fair
Value
$ 58,105
95,522
540,607
Gross
Unrealized
Losses
$ 1,132
162
10,930
Fair
Value
$ 62,421
95,522
659,829
Gross
Unrealized
Losses
$ 1,144
162
11,546
$694,234
$12,224
$817,772
$12,852
The details for securities classified as held to maturity with unrealized losses as of December 31, 2013 follow:
Held to maturity
in thousands
Municipal obligations
Mortgage-backed securities
CMOs
Losses < 12 months
Losses 12 months or >
Total
Fair
Value
$ 131,499
950,288
947,061
Gross
Unrealized
Losses
$ 6,311
4,671
25,088
Fair
Value
Gross
Unrealized
Losses
Fair
Value
$
2,878
—
175,633
$ 125
—
1,166
$ 134,377
950,288
1,122,694
Gross
Unrealized
Losses
$ 6,436
4,671
26,254
$2,028,848
$36,070
$178,511
$1,291
$2,207,359
$37,361
The unrealized losses relate to changes in market rates on fixed-rate debt securities since the respective purchase
date. In all cases, the indicated impairment would be recovered by the security’s maturity date or possibly earlier
if the market price for the security increases with a reduction in the yield required by the market. None of the
unrealized losses relate to the marketability of the securities or the issuer’s ability to meet contractual obligations.
94
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Securities (continued)
The Company has adequate liquidity and, therefore, does not plan to and, more likely than not, will not be
required to sell these securities before recovery of the indicated impairment. Accordingly, the unrealized losses
on these securities have been determined to be temporary.
Proceeds from sales of securities available for sale were approximately $1.5 million in 2014, $0.2 million in
2013, and $48 million in 2012. Realized gross gains and losses, computed through specific identification, were
insignificant.
Securities with carrying values totaling approximately $3.2 billion at December 31, 2014 and $3.1 billion at
December 31, 2013 were pledged primarily to secure public deposits or sold under agreements to repurchase.
Note 3. Loans
The Company generally makes loans in its market areas of south Mississippi, southern and central Alabama,
south Louisiana, the Houston, Texas area and the northern, central and panhandle regions of Florida. The
distinction between the originated, acquired and FDIC acquired loans presented here and certain significant
accounting policies relevant to each category are discussed in detail in Note 1. Loans acquired in an FDIC-
assisted transaction include non-single family loans covered by loss a share agreement that expired at
December 31, 2014. As of December 31, 2014, $196.7 million of FDIC acquired loans remain covered by the
single family loss share agreement, providing considerable protection against credit risk.
95
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
Loans, net of unearned income, consisted of the following:
(In thousands)
Originated loans: (a)
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total originated loans
Acquired loans: (a)
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total acquired loans
FDIC acquired loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
December 31,
2014
December 31,
2013
$ 5,917,728
1,073,964
2,428,195
1,704,770
1,685,542
$ 4,113,837
752,381
2,022,528
1,196,256
1,409,130
$12,810,199
$ 9,494,132
$
$
$
120,137
21,123
688,045
2,378
985
$
926,997
142,931
967,148
315,340
119,603
832,668
$ 2,472,019
6,195
11,674
27,808
187,033
19,699
$
23,390
20,229
53,165
209,018
52,864
Total FDIC acquired loans
$
252,409
$
358,666
Total loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total loans
$ 6,044,060
1,106,761
3,144,048
1,894,181
1,706,226
$ 5,064,224
915,541
3,042,841
1,720,614
1,581,597
$13,895,276
$12,324,817
(a) Originated loans at December 31, 2014 includes $1.2 billion of loans that were reported as
acquired-performing at December 31, 2013, as the discount (premium) was fully accreted
(amortized).
The Bank makes loans in the normal course of business to directors and executive officers of the Company and
the Bank and to their associates. Loans to such related parties are made on substantially the same terms,
including interest rates and collateral requirements, as those prevailing at the time for comparable transactions
with unrelated parties and do not involve more than normal risk of collectability when originated. Balances of
loans to the Company’s directors, executive officers and their associates at December 31, 2014 and 2013 were
approximately $16.2 million and $61.1 million, respectively. Related party loan activity for 2014 includes new
loans of $12.9 million, repayments of $12.9 million, and a net balance reduction of ($44.9 million) related to
changes in directors and executive officers and their associates.
96
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
The following schedules show activity in the allowance for loan losses for 2014 and 2013 by portfolio segment
and the corresponding recorded investment in loans as of December 31, 2014 and December 31, 2013.
(In thousands)
Originated loans (a)
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net provision for loan losses
Ending balance
Ending balance:
Individually evaluated for
impairment
Collectively evaluated for
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Collectively evaluated for
impairment
Acquired loans (a)
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net provision for loan losses
Ending balance
Ending balance:
Individually evaluated for
impairment
Amounts related to acquired-
impaired loans
Collectively evaluated for
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Acquired-impaired loans
Collectively evaluated for
impairment
Commercial
non-real
estate
Construction
and land
development
Commercial
real estate
Residential
mortgages
Consumer
Total
Twelve Months Ended December 31, 2014
$
$
$
33,091 $
(6,813)
3,047
20,933
50,258 $
6,180 $
(4,770)
4,000
3
5,413 $
20,649 $
(3,579)
1,678
(2,204)
16,544 $
6,892 $
(2,285)
644
2,800
8,051 $
12,073 $
(14,055)
5,014
14,403
17,435 $
78,885
(31,502)
14,383
35,935
97,701
14 $
19 $
11 $
330 $
3 $
377
50,244
5,394
16,533
7,721
17,432
97,324
$5,917,728 $1,073,964 $2,428,195 $1,704,770 $1,685,542 $12,810,199
3,987
8,250
12,121
2,656
6
27,020
5,913,741
1,065,714
2,416,074
1,702,114
1,685,536
12,783,179
$
$
$
1,603 $
—
—
(1,603)
— $
10 $
—
—
(10)
— $
34 $
—
—
443
477 $
— $
—
—
—
— $
— $
—
—
—
— $
1,647
—
—
(1,170)
477
— $
— $
477 $
— $
— $
477
—
—
—
—
—
—
—
—
—
—
—
—
$ 120,137 $
21,123 $ 688,045 $
2,378 $
985 $
832,668
—
8,446
—
19,681
2,691
29,777
—
2,378
111,691
1,442
655,577
—
—
985
—
2,691
61,267
768,710
(a) Originated loans at December 31, 2014 includes $1.2 billion of loans that were reported as acquired-
performing at December 31, 2013, as the discount (premium) was fully accreted (amortized).
97
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
(In thousands)
FDIC acquired loans
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net provision for loan losses
Decrease in FDIC loss share
receivable
Ending balance
Ending balance:
Individually evaluated for
impairment
Amounts related to
acquired-impaired loans
Collectively evaluated for
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Acquired-impaired loans
Collectively evaluated for
impairment
Total loans
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net provision for loan
losses
Decrease in FDIC loss share
receivable
Ending balance
Ending balance:
Individually evaluated for
impairment
Amounts related to
acquired-impaired loans
Collectively evaluated for
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Acquired-impaired loans
Collectively evaluated for
impairment
Commercial
non-real
estate
Construction
and land
development
Commercial
real estate
Residential
mortgages
Consumer
Total
Twelve Months Ended December 31, 2014
$
$
$
2,323 $
(221)
485
(83)
2,655 $
(148)
3,138
(208)
10,929 $
(5,350)
1,441
(139)
27,989 $
(1,008)
1
(299)
9,198 $
(1,270)
431
(196)
53,094
(7,997)
5,496
(925)
(1,593)
911 $
(4,429)
1,008 $
(2,820)
4,061 $
(6,074)
20,609 $
(4,168)
3,995 $
(19,084)
30,584
— $
— $
— $
— $
— $
—
911
—
1,008
4,061
20,609
3,995
30,584
—
—
—
—
—
$
6,195 $
11,674 $
27,808 $ 187,033 $
19,699 $
252,409
—
6,195
—
—
11,674
—
27,808
—
187,033
—
19,699
—
252,409
—
—
—
—
—
$
$
$
37,017 $
(7,034)
3,532
8,845 $
(4,918)
7,138
31,612 $
(8,929)
3,119
34,881 $
(3,293)
645
21,271 $
(15,325)
5,445
133,626
(39,499)
19,879
19,247
(215)
(1,900)
2,501
14,207
33,840
(1,593)
51,169 $
(4,429)
6,421 $
(2,820)
21,082 $
(6,074)
28,660 $
(4,168)
21,430 $
(19,084)
128,762
14 $
19 $
488 $
330 $
3 $
854
911
50,244
1,008
5,394
4,061
20,609
3,995
16,533
7,721
17,432
30,584
97,324
$6,044,060 $1,106,761 $3,144,048 $1,894,181 $1,706,226 $13,895,276
3,987
14,641
8,250
31,355
14,812
57,585
2,656
189,411
6
20,684
29,711
313,676
6,025,432
1,067,156
3,071,651
1,702,114
1,685,536
13,551,889
98
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
(In thousands)
Originated loans:
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net provision for loan losses
Ending balance
Ending balance:
Individually evaluated for
Commercial
non-real
estate
Construction
and land
development
Commercial
real estate
Residential
mortgages
Year Ended December 31, 2013
Consumer
Total
$
$
20,775
(6,671)
5,790
13,197
$ 11,415
(10,312)
1,676
3,401
26,959 $
(5,525)
3,359
(4,144)
6,406 $
(2,297)
1,936
847
13,219 $
(18,094)
5,829
11,119
78,774
(42,899)
18,590
24,420
$
33,091
$
6,180
$
20,649 $
6,892 $
12,073 $
78,885
impairment
$
477
$
22
$
268 $
1 $
— $
768
Collectively evaluated for
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Collectively evaluated for
impairment
Acquired loans:
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net Provision for loan losses
Increase in FDIC loss share
receivable
Ending balance
Ending balance:
Individually evaluated for
impairment
Amounts related to acquired-
impaired loans
Collectively evaluated for
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Acquired-impaired loans
Collectively evaluated for
impairment
32,614
6,158
20,381
6,891
12,073
78,117
$4,113,837
$752,381
$2,022,528 $1,196,256 $1,409,130 $9,494,132
5,294
10,599
14,029
605
—
30,527
4,108,543
741,782
2,008,499
1,195,651
1,409,130
9,463,605
$
$
$
788
—
—
815
—
$ — $
—
—
10
— $
—
—
34
— $
—
—
—
— $
—
—
—
—
—
—
—
788
—
—
859
—
1,603
$
10
$
34 $
— $
— $
1,647
— $ — $
— $
— $
— $
—
1,603
—
10
—
34
—
—
—
—
—
—
1,647
$ 926,997
$142,931
$ 967,148 $ 315,340 $ 119,603 $2,472,019
2,141
19,094
728
17,335
2,338
26,058
505
5,494
—
94
5,712
68,075
905,762
124,868
938,752
309,341
119,509
2,398,232
99
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
(In thousands)
FDIC acquired loans:
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net provision for loan losses
(Decrease) increase in FDIC
loss share receivable
Ending balance
Ending balance:
Individually evaluated for
impairment
Amounts related to acquired-
impaired loans
Collectively evaluated for
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Acquired-impaired loans
Collectively evaluated for
impairment
Commercial
non-real
estate
Construction
and land
development
Commercial
real estate
Residential
mortgages
Consumer
Total
Twelve Months Ended December 31, 2013
$
$
$
$
2,162
(1,071)
90
1,263
$
5,623
(1,244)
735
(1,566)
9,433 $
(4,414)
6,158
(785)
30,471 $
(1,532)
13
5,343
8,920 $
(1,250)
160
3,200
(121)
2,323
$
(893)
2,655
$
537
10,929 $
(6,306)
27,989 $
(1,832)
9,198 $
56,609
(9,511)
7,156
7,455
(8,615)
53,094
— $ — $
— $
— $
— $
—
2,323
2,655
10,929
27,989
9,198
53,094
—
—
—
—
—
—
$
23,390
$ 20,229
$
53,165 $ 209,018 $
52,864 $
358,666
—
23,390
—
20,229
—
53,165
—
209,018
—
52,864
—
358,666
—
—
—
—
—
—
Total loans:
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Net provision for loan losses
(Decrease) increase in FDIC
loss share receivable
Ending balance
Ending balance:
Individually evaluated for
impairment
Amounts related to acquired-
impaired loans
Collectively evaluated for
$
$
$
impairment
Loans:
Ending balance:
Individually evaluated for
impairment
Acquired-impaired loans
Collectively evaluated for
impairment
$
23,725
(7,742)
5,880
15,275
$ 17,038
(11,556)
2,411
1,845
36,392 $
(9,939)
9,517
(4,895)
36,877 $
(3,829)
1,949
6,190
22,139 $
(19,344)
5,989
14,319
136,171
(52,410)
25,746
32,734
(121)
37,017
$
(893)
8,845
$
537
31,612 $
(6,306)
34,881 $
(1,832)
21,271 $
(8,615)
133,626
477
$
22
$
268 $
1 $
— $
768
2,323
34,217
2,655
6,168
10,929
27,989
9,198
53,094
20,415
6,891
12,073
79,764
$5,064,224
$915,541
$3,042,841 $1,720,614 $1,581,597 $12,324,817
7,435
42,484
11,327
37,564
16,367
79,223
1,110
214,512
—
52,958
36,239
426,741
5,014,305
866,650
2,947,251
1,504,992
1,528,639
11,861,837
100
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
FDIC Loss Share Receivable
The receivable arising from the loss-sharing agreements (referred to as the “FDIC loss share receivable” on our
consolidated statements of financial condition) is measured separately from the FDIC acquired loan portfolio
because the agreements are not contractually part of the covered loans and are not transferable should the
Company choose to dispose of the loans. The following schedule shows activity in the loss share receivable for
2014 and 2013:
(In thousands)
Balance, January 1
(Amortization) accretion
Charge-offs, write-downs and other (recoveries) losses
External expenses qualifying under loss share agreement
Changes due to changes in cash flow projections
Settlement of disallowed claims
Net payments from FDIC
Balance, December 31
Years Ended December 31,
2014
2013
$113,834
(12,102)
(2,245)
4,532
(19,084)
(10,268)
(14,395)
$177,844
(2,239)
(1,619)
9,117
(7,504)
—
(61,765)
$ 60,272
$113,834
Note 1 to the consolidated financial statements discusses the accounting for the loss share receivable. The loss
share agreement covering the non-single family FDIC acquired portfolio expired in December 2014. The loss
share agreement covering the single family portfolio expires in December 2019.
101
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
The following table shows the composition of nonaccrual loans by portfolio segment and class. Acquired-
impaired and certain covered loans are considered to be performing due to the application of the accretion
method and are excluded from the table. FDIC acquired loans accounted for using the cost recovery method do
not have an accretable yield and are included below as nonaccrual loans. Acquired-performing loans that have
subsequently been placed on nonaccrual status are also included below.
(In thousands)
Originated loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total originated loans
Acquired loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total acquired loans
FDIC acquired loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total FDIC acquired loans
Total loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total loans
December 31,
2014
December 31,
2013
$15,511
6,462
22,047
21,702
5,574
$71,296
$ —
—
6,139
—
—
$ 6,139
$10,148
13,171
32,772
13,449
4,802
$74,342
$ 3,209
1,990
6,525
8,262
1,814
$21,800
$ —
$
1,103
433
392
174
2
1,539
1,163
544
296
$ 2,102
$ 3,544
$15,511
7,565
28,619
22,094
5,748
$79,537
$13,359
16,700
40,460
22,255
6,912
$99,686
The estimated amount of interest that would have been recorded on nonaccrual loans had the loans not been
classified as nonaccrual in 2014, 2013 and 2012, was $3.6 million, $5.4 million and $7.8 million, respectively.
Interest actually received on nonaccrual loans during 2014, 2013 and 2012 was $1.5 million, $3.0 million and
$2.6 million, respectively.
Nonaccrual loans include loans modified in troubled debt restructurings (TDRs) of $7.0 million and $15.7
million, respectively, at December 31, 2014 and 2013. Total TDRs, both accruing and nonaccruing, were $16.0
million at December 31, 2014 and $24.9 million at December 31, 2013. Modified acquired-impaired loans are
not removed from their accounting pool and accounted for as TDRs, even if those loans would otherwise be
deemed TDRs.
102
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
The table below details the TDRs that occurred during 2014 and 2013 by portfolio segment and TDRs that
subsequently defaulted within twelve months of modification. All are individually evaluated for impairment.
($ in thousands)
Originated loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total originated loans
Acquired loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total acquired loans
FDIC acquired loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total FDIC acquired loans
Total loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total loans
2014
2013
Number
of
Contracts
Outstanding Recorded
Investment
Pre-
Modification
Post-
Modification
Number
of
Contracts
Outstanding Recorded
Investment
Pre-
Modification
Post-
Modification
1
—
3
7
1
12
—
—
—
—
—
—
—
—
—
—
—
—
1
—
3
7
1
12
$
29
—
4,488
1,961
8
$
29
—
4,446
1,090
8
$6,486
$5,573
$ —
—
—
—
—
$ —
$ —
—
—
—
—
$ —
$ —
—
—
—
—
$ —
$ —
—
—
—
—
$ —
$
29
—
4,488
1,961
8
$
29
—
4,446
1,090
8
$6,486
$5,573
1
—
4
1
—
6
—
—
1
1
—
2
—
—
—
—
—
—
1
—
5
2
—
8
$ 926
—
1,332
456
—
$2,714
$ —
—
512
514
—
$1,026
$ —
—
—
—
—
$ —
$ 926
—
1,844
970
—
$3,740
$ 909
—
1,157
330
—
$2,396
$ —
—
472
503
—
$ 975
$ —
—
—
—
—
$ —
$ 909
—
1,629
833
—
$3,371
103
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
Troubled Debt Restructurings That
Subsequently Defaulted:
($ in thousands)
Originated loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total originated loans
Acquired loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total acquired loans
FDIC acquired loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total FDIC acquired loans
Total loans:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total loans
2014
2013
Number of
Contracts
Recorded
Investment
Number of
Contracts
Recorded
Investment
$ 909
—
—
263
—
$1,172
$ —
—
—
—
—
$ —
$ —
—
—
—
—
$ —
$ 909
—
—
263
—
$1,172
—
—
6
1
—
7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6
1
—
7
$ —
—
2,487
254
—
$2,741
$ —
—
—
—
—
$ —
$ —
—
—
—
—
$ —
$ —
—
2,487
254
—
$2,741
1
—
—
1
—
2
—
—
—
—
—
—
—
—
—
—
—
—
1
—
—
1
—
2
104
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
Those loans that are determined to be impaired and $1 million or greater and all TDRs are individually evaluated
for impairment. The tables below present loans that are individually evaluated for impairment disaggregated by
class at December 31, 2014 and 2013:
December 31, 2014
(In thousands)
Originated loans:
With no related allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
With an allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total originated loans
Acquired loans:
With no related allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
With an allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total acquired loans
Recorded
Investment
Unpaid
Principal
Balance
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$ 3,003
3,345
8,467
—
—
14,815
984
4,905
3,654
2,656
6
12,205
3,987
8,250
12,121
2,656
6
$27,020
$ 3,646
6,486
10,575
—
—
20,707
984
4,906
3,654
3,311
6
12,861
4,630
11,392
14,229
3,311
6
$33,568
$ — $ —
—
—
—
—
—
—
—
—
—
—
—
—
2,691
—
—
2,691
—
—
2,720
—
—
2,720
—
—
2,691
—
—
$ 2,691
—
—
2,720
—
—
$ 2,720
$—
—
—
—
—
—
14
19
11
330
3
377
14
19
11
330
3
$377
$—
—
—
—
—
—
—
—
477
—
—
477
—
—
477
—
—
$477
$ 1,209
3,330
8,461
88
—
13,088
5,522
6,660
7,500
2,204
1
21,887
6,732
9,990
15,961
2,292
1
$34,976
$
357
121
311
88
—
877
1,059
1,037
1,357
—
—
3,453
1,416
1,158
1,668
88
—
$ 4,330
$ 51
142
331
3
—
527
99
137
109
50
—
395
150
279
439
53
—
$921
$—
—
—
—
—
—
122
56
75
—
—
253
122
56
75
—
—
$253
105
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
December 31, 2014
(In thousands)
Total loans:
With no related allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
With an allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total loans
December 31, 2013
(in thousands)
Originated loans:
With no related allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
With an allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total originated loans
Recorded
Investment
Unpaid
Principal
Balance
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$ 3,003
3,345
8,467
—
—
14,815
984
4,905
6,345
2,656
6
14,896
3,987
8,250
14,812
2,656
6
$29,711
$ 3,646
6,486
10,575
—
—
20,707
984
4,906
6,374
3,311
6
15,581
4,630
11,392
16,949
3,311
6
$36,288
$—
—
—
—
—
—
14
19
488
330
3
854
14
19
488
330
3
$854
$ 1,566
3,451
8,772
176
—
13,965
6,581
7,697
8,857
2,204
1
25,340
8,147
11,148
17,629
2,380
1
$39,305
$
51
142
331
3
—
527
221
193
184
50
—
648
272
335
515
53
—
$1,175
Recorded
Investment
Unpaid
Principal
Balance
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$
329
4,101
5,321
—
—
9,751
4,965
6,498
8,708
605
—
20,776
5,294
10,599
14,029
605
—
$30,527
$
442
5,131
7,458
—
—
13,031
5,303
8,343
9,090
620
—
23,356
5,745
13,474
16,548
620
—
$36,387
$—
—
—
—
—
—
477
22
268
1
—
768
477
22
268
1
—
$768
$
235
2,780
15,886
262
1,013
20,176
8,936
2,549
19,683
228
1,025
32,421
9,171
5,329
35,569
490
2,038
$52,597
$
18
82
374
—
—
474
180
—
460
—
—
640
198
82
834
—
—
$1,114
106
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
December 31, 2013
(In thousands)
Acquired loans:
With no related allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
With an allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Recorded
Investment
Unpaid
Principal
Balance
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$ 2,141
728
2,338
505
—
$ 3,275
1,142
2,634
507
—
5,712
7,558
—
—
—
—
—
—
2,141
728
2,338
505
—
—
—
—
—
—
—
3,275
1,142
2,634
507
—
$—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
865
296
1,339
407
—
2,907
2,747
157
2,663
845
—
6,412
3,612
453
4,002
1,252
—
$
8
3
49
—
—
60
63
—
—
—
—
63
71
3
49
—
—
Total acquired loans
$ 5,712
$ 7,558
$—
$ 9,319
$ 123
Total loans:
With no related allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
With an allowance recorded:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
Total:
Commercial non-real estate
Construction and land development
Commercial real estate
Residential mortgages
Consumer
$ 2,470
4,829
7,659
505
—
$ 3,717
6,273
10,092
507
—
15,463
20,589
$—
—
—
—
—
—
4,965
6,498
8,708
605
—
5,303
8,343
9,090
620
—
20,776
23,356
7,435
11,327
16,367
1,110
—
9,020
14,616
19,182
1,127
—
477
22
268
1
—
768
477
22
268
1
—
$ 1,100
3,076
17,225
669
1,013
23,083
11,683
2,706
22,346
1,073
1,025
38,833
12,783
5,782
39,571
1,742
2,038
$
26
85
423
—
—
534
243
—
460
—
—
703
269
85
883
—
—
Total loans
$36,239
$43,945
$768
$61,916
$1,237
107
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
The following table presents the age analysis of past due loans at December 31, 2014 and December 31, 2013.
FDIC acquired and acquired-impaired loans with an accretable yield are considered to be current in the following
delinquency table:
December 31, 2014
(In thousands)
Originated loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
Total
Acquired loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
30-59 days
past due
60-89 days
past due
Greater than
90 days
past due
Total
past due
Current
Total
Loans
Recorded
investment
> 90 days
and
accruing
$ 4,380 $ 1,742
$ 8,560
$ 14,682 $ 5,903,046 $ 5,917,728 $ 630
6,620
6,527
14,730
8,422
1,532
2,964
3,261
2,450
4,453
13,234
11,208
4,365
12,605
22,725
29,199
15,237
1,061,359
2,405,470
1,675,571
1,670,305
1,073,964
2,428,195
1,704,770
1,685,542
142
696
1,199
1,897
$40,679 $11,949
$41,820
$ 94,448 $12,715,751 $12,810,199 $4,564
$ — $ — $ — $ — $
120,137 $
120,137 $ —
111
3,861
—
—
—
282
—
—
282
—
1,591
—
—
111
5,734
—
—
21,012
682,311
2,378
985
21,123
688,045
2,378
985
—
261
—
—
$ 1,591
$
5,845 $
826,823 $
832,668 $ 261
Total
$ 3,972 $
FDIC acquired loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
Total
Total loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
$ — $ — $ — $ — $
6,195 $
6,195 $ —
—
—
—
1
$
1 $
—
—
272
—
272
1,103
433
—
34
1,103
433
272
35
10,571
27,375
186,761
19,664
11,674
27,808
187,033
19,699
—
—
—
—
$ 1,570
$
1,843 $
250,566 $
252,409 $ —
$ 4,380 $ 1,742
$ 8,560
$ 14,682 $ 6,029,378 $ 6,044,060 $ 630
6,731
10,388
14,730
8,423
1,532
3,246
3,533
2,450
5,556
15,258
11,208
4,399
13,819
28,892
29,471
15,272
1,092,942
3,115,156
1,864,710
1,690,954
1,106,761
3,144,048
1,894,181
1,706,226
142
957
1,199
1,897
Total
$44,652 $12,503
$44,981
$102,136 $13,793,140 $13,895,276 $4,825
108
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
December 31, 2013
(In thousands)
Originated loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
Total
Acquired loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
30-59 days
past due
60-89 days
past due
Greater than
90 days
past due
Total
past due
Current
Total
Loans
Recorded
investment
> 90 days
and
accruing
$11,645 $ 1,203
$ 4,803
$ 17,651 $ 4,096,186 $ 4,113,837 $
521
5,877
8,178
12,410
8,798
1,264
5,744
3,870
1,913
5,970
14,620
3,540
3,823
13,111
28,542
19,820
14,534
739,270
1,993,986
1,176,436
1,394,596
752,381
2,022,528
1,196,256
1,409,130
—
420
—
2,357
$46,908 $13,994
$32,756
$ 93,658 $ 9,400,474 $ 9,494,132 $ 3,298
$ 1,982 $ 2,332
$ 1,467
$
5,781 $
921,216 $
926,997 $
541
862
3,742
5,632
1,029
1,529
1,345
2,698
120
1,161
9,026
5,503
1,013
3,552
14,113
13,833
2,162
139,379
953,035
301,507
117,441
142,931
967,148
315,340
119,603
541
5,853
72
82
Total
$13,247 $ 8,024
$18,170
$ 39,441 $ 2,432,578 $ 2,472,019 $ 7,089
FDIC acquired loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
Total
Total loans:
Commercial non-real estate
Construction and land
development
Commercial real estate
Residential mortgages
Consumer
$ — $ — $ — $ — $
23,390 $
23,390 $ —
—
—
—
—
—
—
—
—
1,539
675
3
—
1,539
675
3
—
18,690
52,490
209,015
52,864
20,229
53,165
209,018
52,864
—
—
—
—
$ — $ — $ 2,217
$
2,217 $
356,449 $
358,666 $ —
$13,627 $ 3,535
$ 6,270
$ 23,432 $ 5,040,792 $ 5,064,224 $ 1,062
6,739
11,920
18,042
9,827
2,793
7,089
6,568
2,033
8,670
24,321
9,046
4,836
18,202
43,330
33,656
16,696
897,339
2,999,511
1,686,958
1,564,901
915,541
3,042,841
1,720,614
1,581,597
541
6,273
72
2,439
Total
$60,155 $22,018
$53,143
$135,316 $12,189,501 $12,324,817 $10,387
109
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
The following table presents the credit quality indicators of the Company’s various classes of loans at
December 31, 2014 and December 31, 2013.
Commercial Non-Real Estate Credit Exposure
Credit Risk Profile by Internally Assigned Grade
(In thousands)
Grade:
Pass
Pass-Watch
Special Mention
Substandard
Doubtful
Total
December 31, 2014
December 31, 2013
Originated Acquired FDIC acquired
Total
Originated Acquired FDIC acquired
Total
$
$5,577,827 $111,847
715
350
7,225
—
174,742
52,962
112,153
44
2,027
1,120
—
3,017
31
$5,691,701 $3,990,318 $846,135
44,105
19,914
16,125
718
176,577
53,312
122,395
75
46,734
41,812
34,278
695
$ 10,477
9
2,897
9,662
345
$4,846,930
90,848
64,623
60,065
1,758
$5,917,728 $120,137
$
6,195
$6,044,060 $4,113,837 $926,997
$ 23,390
$5,064,224
Construction Credit Exposure
Credit Risk Profile Based on Payment Activity
(In thousands)
Grade:
Pass
Pass-Watch
Special Mention
Substandard
Doubtful
Total
December 31, 2014
December 31, 2013
Originated Acquired FDIC acquired
Total
Originated Acquired FDIC acquired
Total
$1,012,128 $ 14,377
432
129
6,185
—
21,516
7,097
33,223
—
$
2,468
532
319
8,355
—
$1,028,973 $ 709,261 $112,773
1,907
9,409
18,842
—
22,480
7,545
47,763
—
7,817
3,926
31,377
—
$ — $ 822,034
10,950
13,611
61,718
7,228
1,226
276
11,499
7,228
$1,073,964 $ 21,123
$ 11,674
$1,106,761 $ 752,381 $142,931
$ 20,229
$ 915,541
Commercial Real Estate Credit Exposure
Credit Risk Profile by Internally Assigned Grade
(In thousands)
Grade:
Pass
Pass-Watch
Special Mention
Substandard
Doubtful
Total
December 31, 2014
December 31, 2013
Originated Acquired FDIC acquired
Total
Originated Acquired FDIC acquired
Total
$2,241,391 $641,966
11,142
8,113
26,824
—
61,589
21,543
103,651
21
$
4,139
4,547
1,319
17,803
—
$2,887,496 $1,864,116 $896,578
9,530
19,798
41,242
—
77,278
30,975
148,278
21
49,578
15,785
93,033
16
$
1,678
10,266
1,999
31,350
7,872
$2,762,372
69,374
37,582
165,625
7,888
$2,428,195 $688,045
$ 27,808
$3,144,048 $2,022,528 $967,148
$ 53,165
$3,042,841
Residential Mortgage Credit Exposure
Credit Risk Profile Based on Payment Activity and Accrual Status
(In thousands)
Performing
Nonperforming
Total
December 31, 2014
December 31, 2013
Originated Acquired FDIC acquired
Total
Originated Acquired FDIC acquired
Total
$1,681,868 $
22,902
2,378
—
$186,641
392
$1,870,887 $1,182,266 $307,006
8,334
23,294
13,990
$208,473
545
$1,697,742
22,872
$1,704,770 $
2,378
$187,033
$1,894,181 $1,196,256 $315,340
$209,018
$1,720,614
Consumer Credit Exposure
Credit Risk Profile Based on Payment Activity and Accrual Status
(In thousands)
Performing
Nonperforming
Total
December 31, 2014
December 31, 2013
Originated Acquired FDIC acquired
Total
Originated Acquired FDIC acquired
Total
$1,678,069 $
7,473
$1,685,542 $
985
—
985
$ 19,525
174
$1,698,579 $1,401,688 $117,707
1,896
7,442
7,647
$ 52,554
310
$1,571,949
9,648
$ 19,699
$1,706,226 $1,409,130 $119,603
$ 52,864
$1,581,597
110
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
Loan review uses a risk-focused continuous monitoring program that provides for an independent, objective and
timely review of credit risk within the Company.
Below are the definitions of the Company’s internally assigned grades:
Commercial:
•
•
•
•
Pass - loans properly approved, documented, collateralized, and performing which do not reflect
an abnormal credit risk.
Pass - Watch - credits in this category are of sufficient risk to cause concern. This category is
reserved for credits that display negative performance trends. The “Watch” grade should be
regarded as a transition category.
Special mention - a criticized asset category defined as having potential weaknesses that deserve
management’s close attention. If left uncorrected, these potential weaknesses may, at some future
date, result in the deterioration of the repayment prospects for the credit or the institution’s credit
position. Special mention credits are not considered part of the Classified credit categories and do
not expose an institution to sufficient risk to warrant adverse classification.
Substandard - an asset that is inadequately protected by the current sound worth and paying
capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-
defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized
by the distinct possibility that the institution will sustain some loss if the deficiencies are not
corrected.
• Doubtful - an asset that has all the weaknesses inherent in one classified Substandard with the
added characteristic that the weaknesses make collection nor liquidation in full, on the basis of
currently existing facts, conditions, and values, highly questionable and improbable.
• Loss - credits classified as Loss are considered uncollectable and are charged off promptly once so
classified.
Residential and Consumer:
•
Performing - loans on which payments of principal and interest are less than 90 days past due.
• Nonperforming - a nonperforming loan is a loan that is in default or close to being in default and
there are good reasons to doubt that payments will be made in full. All loans rated as nonaccrual
loans are also classified as nonperforming.
111
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Loans (continued)
Changes in the carrying amount of acquired-impaired loans and accretable yield are presented in the following
table for the years ended December 31, 2014 and 2013:
December 31, 2014
December 31, 2013
FDIC acquired
Acquired
FDIC acquired
Acquired
Carrying
Amount
of Loans
Accretable
Yield
Carrying
Amount
of Loans
Accretable
Yield
Carrying
Amount
of Loans
Accretable
Yield
Carrying
Amount
of Loans
Accretable
Yield
$ 358,666 $122,715 $ 68,075 $131,370 $ 515,823 $115,594 $ 141,201 $203,186
(47,330)
(32,855) (189,987)
(43,061)
32,830
(43,379)
(1,071) (50,178)
(19,131) 43,379
(1,298) (116,187)
43,061
(125,388)
19,131
(32,830)
—
(1,137)
—
(203)
— (17,433)
—
3,894
—
11,412
— 19,735
—
58,682
—
14,681
(In thousands)
Balance at beginning of
period
Payments received, net
Accretion
(Decrease)/increase in
expected cash flows
based on actual cash
flow and changes in
cash flow assumptions
Net transfers from
nonaccretable difference
to accretable yield
Balance at end of period
$ 252,409 $112,788 $ 61,276 $ 74,668 $ 358,666 $122,715 $ 68,075 $131,370
Loans Held for Sale
Loans held for sale totaled $20.3 million and $24.5 million, respectively, at December 31, 2014 and 2013.
Substantially all loans held for sale are residential mortgage loans originated on a best-efforts basis, whereby a
commitment by a third party to purchase the loan has been received concurrent with the Bank’s commitment to
the borrower to originate the loan.
Note 4. Long-Term Debt
Long-term debt consisted of the following:
(in thousands)
Subordinated notes payable
Term note payable
Other long-term debt
Total long-term debt
December 31,
2014
2013
$ 98,011
149,600
126,760
$ 98,011
184,800
103,015
$374,371
$385,826
During the second quarter of 2012, the Company initiated a tender offer for up to $75 million of Whitney Bank’s
subordinated debt. The 5.875% fixed-rate subordinated notes maturing in April 2017 had been issued by Whitney
National Bank and were assumed by Hancock in the Whitney acquisition. During 2012, the Company
repurchased approximately $52 million of these notes and incurred approximately $5.3 million in costs, including
a premium of $5.1 million, which was included in noninterest expense. As of December 31, 2014, 40% of the
balance of the subordinated notes qualifies as capital in the calculation of certain regulatory capital ratios. The
qualifying amount will be further reduced by 20% in the second quarter of each year through maturity.
112
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Long-Term Debt (continued)
On December 21, 2012, the Company entered into a three-year term loan agreement that provides for a $220
million term loan facility, all of which was borrowed on the closing date. The agreement also provides for up to
$50 million in additional borrowings under the loan facility, subject to obtaining additional commitments from
existing or new lenders and satisfaction of certain other conditions. Amounts borrowed under the loan facility
bear interest at a variable rate based on LIBOR plus 1.875% per annum. The loan agreement requires quarterly
principal payments of $8.8 million, and outstanding borrowings may be prepaid in whole or in part at any time
prior to the December 21, 2015 maturity date without premium or penalty.
The Company must satisfy certain financial covenants and is subject to other restrictions customary in financings
of this nature, none of which is expected to adversely impact the operations of the Company. The financial
covenants cover, among other things, the maintenance of minimum levels for regulatory capital ratios,
consolidated net worth, consolidated return on assets, and holding company liquidity and dividend capacity, and
specify a maximum ratio of consolidated nonperforming assets to consolidated total loans and other real estate,
calculated without FDIC-covered assets. The Company was in compliance with all covenants as of December 31,
2014.
Substantially all of the other long-term debt consists of borrowings associated with tax credit fund activities.
These borrowings mature at various dates beginning in 2015 through 2052.
Note 5. Derivatives
Risk Management Objective of Using Derivatives
The Company enters into derivative financial instruments to manage risks related to differences in the amount,
timing, and duration of the Company’s known or expected cash receipts and its known or expected cash
payments, currently related to our variable rate borrowing. The Bank has also entered into interest rate derivative
agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these
customer derivatives in order to minimize their net risk exposure resulting from such agreements. The Bank also
enters into risk participation agreements under which they may either sell or buy credit risk associated with a
customer’s performance under certain interest rate derivative contracts related to loans in which participation
interests have been sold to or purchased from other banks.
113
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Derivatives (continued)
Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the notional amounts and fair values of the Company’s derivative financial instruments
as well as their classification on the consolidated balance sheets as of December 31, 2014 and December 31,
2013.
(in thousands)
Derivatives designated as
hedging instruments:
Interest rate swaps
Derivatives not designated
as hedging instruments:
Interest rate swaps (2)
Risk participation
agreements
Forward commitments
to sell residential
mortgage loans
Interest rate-lock
commitments on
residential
mortgage loans
Foreign exchange
forward contracts
Notional Amounts
Assets
Liabilities
Type of
Hedge
December 31,
2014
December 31,
2013
December 31,
2014
December 31,
2013
December 31,
2014
December 31,
2013
Fair Values (1)
Cash Flow $ 300,000 $ — $ —
$ 300,000 $ — $ —
$ —
$ —
$
$
592
592
$ —
$ —
N/A
$ 747,754 $650,667
$17,806
$14,147
$18,419
$13,777
N/A
80,438
19,736
125
2
208
2
N/A
52,238
45,910
80
326
250
115
N/A
N/A
33,068
25,956
111
56
44
107
89,432
21,299
1,310
1,048
1,347
1,005
$1,002,930 $763,568
$19,432
$15,579
$20,268
$15,006
(1) Derivative assets and liabilities are reported with other assets or other liabilities, respectively, in the consolidated
balance sheets.
(2) The notional amount represents both the customer accommodation agreements and offsetting agreements with
unrelated financial institutions.
Cash Flow Hedges of Interest Rate Risk
The Company is party to an interest rate swap agreement with a notional amount of $300 million under which the
Company receives interest at a variable rate and pays at a fixed rate. The derivative instrument represented by
this swap agreement was designated as and qualifies as a cash flow hedge of the Company’s forecasted variable
cash flows for a pool of variable rate loans. The swap agreement expires in January 2017.
During the term of the swap agreement, the effective portion of changes in the fair value of the derivative
instrument is recorded in accumulated other comprehensive income (“AOCI”) and subsequently reclassified into
earnings in the periods that the hedged forecasted variable-rate interest payments affects earnings. The impact on
AOCI was insignificant during 2014. There was no ineffective portion of the change in fair value of the
derivative recognized directly in earnings.
114
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Derivatives (continued)
Derivatives Not Designated as Hedges
Customer interest rate derivative program
The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking
customers to facilitate their risk management strategies. The Bank enters into offsetting agreements with
unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because
the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in
the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.
Risk participation agreements
The Bank also enters into risk participation agreements under which it may either assume or sell credit risk
associated with a borrower’s performance under certain interest rate derivative contracts. In those instances
where the Bank has assumed credit risk, it is not a direct counterparty to the derivative contract with the borrower
and have entered into the risk participation agreement because it is a party to the related loan agreement with the
borrower. In those instances in which the Bank has sold credit risk, it is the sole counterparty to the derivative
contract with the borrower and has entered into the risk participation agreement because other banks participate
in the related loan agreement. The Bank manages their credit risk under risk participation agreements by
monitoring the creditworthiness of the borrower, based on its normal credit review process.
Mortgage banking derivatives
The Bank also enters into certain derivative agreements as part of their mortgage banking activities. These
agreements include interest rate lock commitments on prospective residential mortgage loans and forward
commitments to sell these loans to investors on a best efforts delivery basis.
Customer foreign exchange forward contract derivatives
The Bank enters into foreign exchange forward derivative agreements, primarily forward currency contracts, with
commercial banking customers to facilitate their risk management strategies. The Bank manages its risk exposure
from such transactions by entering into offsetting agreements with unrelated financial institutions. Because the
foreign exchange forward contract derivatives associated with this program do not meet hedge accounting
requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are
recognized directly in earnings.
Effect of Derivative Instruments on the Income Statement
The effect of the Company’s derivative financial instruments on the income statement was immaterial for the
years ended December 31, 2014, 2013 and 2012.
Credit Risk-Related Contingent Features
Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to
terminate the contracts in certain circumstances, such as the downgrade of the Bank’s credit ratings below
specified levels, a default by the Bank on its indebtedness, or the failure of the Bank to maintain specified
minimum regulatory capital ratios or its regulatory status as a well-capitalized institution. These derivative
agreements also contain provisions regarding the posting of collateral by each party. As of December 31, 2014,
the aggregate fair value of derivative instruments with credit-risk-related contingent features that were in a net
liability position was $7.3 million, for which the Bank had posted collateral of $18.3 million.
115
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Derivatives (continued)
Offsetting Assets and Liabilities
Offsetting information in regards to derivative assets and liabilities subject to master netting agreements at
December 31, 2014 and December 31, 2013 is presented in the following tables:
As of December 31, 2014
(in thousands)
Derivative Assets
Repurchase, securities borrowing,
and similar arrangements
Total
Derivative Liabilities
Reverse repurchase, securities
lending, and similar arrangements
—
Total
$18,627
As of December 31, 2013
(in thousands)
Derivative Assets
Repurchase, securities borrowing,
and similar arrangements
Total
Derivative Liabilities
Reverse repurchase, securities
—
$14,149
$13,779
lending, and similar arrangements
—
Total
$13,779
Gross
Amounts
Offset in
the
Statement
of Financial
Position
Net
Amounts
Presented
in the
Statement
of Financial
Position
Gross
Amounts
Recognized
Gross Amounts Not Offset in the
Statement of Financial Position
Financial
Instruments Cash Collateral
Net
Amount
$17,931
$—
$17,931
$936
$ —
$16,995
—
$17,931
$18,627
—
$—
$—
—
$—
—
$17,931
$18,627
—
$18,627
—
$936
$936
—
$936
—
—
$ —
$16,995
$17,343
$
348
—
—
$17,343
$
348
Gross
Amounts
Offset in
the
Statement
of Financial
Position
Net
Amounts
Presented
in the
Statement
of Financial
Position
Gross
Amounts
Recognized
Gross Amounts Not Offset in the
Statement of Financial Position
Financial
Instruments Cash Collateral
Net
Amount
$14,149
$—
$14,149
$3,462
$ —
$10,687
—
—
$14,149
$3,462
—
$ —
—
$10,687
$13,779
$3,462
$7,406
$ 2,911
—
—
—
—
$13,779
$3,462
$7,406
$ 2,911
—
$—
$—
—
$—
116
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6. Property and Equipment
Property and equipment consisted of the following:
(in thousands)
Land and land improvements
Buildings and leasehold improvements
Furniture, fixtures and equipment
Software
Assets under development
Accumulated depreciation and amortization
Property and equipment, net
December 31,
2014
2013
$ 86,039
348,450
90,244
57,305
9,873
591,911
(193,527)
$ 398,384
$ 98,064
356,618
90,948
51,924
7,590
605,144
(172,798)
$ 432,346
Depreciation and amortization expense was $30.3 million, $32.1 million and $32.9 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
Note 7. Goodwill and Other Intangible Assets
Goodwill represents the excess of the consideration exchanged over the fair value of the net assets acquired in
purchase business combinations. The Company tests goodwill for impairment annually and no impairment
charges were identified in the most recent test performed in the fourth quarter of 2014 using data as of
September 30, 2014. No goodwill impairment charges were recognized during 2014, 2013, or 2012. The
following table provides a reconciliation of goodwill:
(in thousands)
Goodwill balance at December 31, 2012
Reductions:
Deferred tax purchase accounting adjustment made during 2013
Goodwill balance at December 31, 2013
Reductions:
Goodwill attributable to certain insurance business lines sold during 2014
Goodwill balance at December 31, 2014
$628,877
(3,202)
$625,675
(4,482)
$621,193
Identifiable intangible assets with finite lives are amortized over the periods benefited and are evaluated for
impairment similar to other long-lived assets. In 2014, the Company eliminated the $0.2 million remaining
carrying value of the insurance business acquired intangible in conjunction with the sale of certain insurance
business lines. The carrying value of intangible assets subject to amortization was as follows:
(in thousands)
Core deposit intangibles
Credit card and trust relationships
Non-compete agreements
Trade name
Merchant processing relationships
December 31, 2014
Purchase
Value
Accumulated
Amortization
Carrying
Value
$198,002
22,400
400
11,722
10,000
$242,524
$ 85,254
10,366
400
9,334
4,360
$109,714
$112,748
12,034
—
2,388
5,640
$132,810
117
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Goodwill and Other Intangible Assets (continued)
(in thousands)
Core deposit intangibles
Credit card and trust relationships
Value of insurance business acquired
Non-compete agreements
Trade name
Merchant processing relationships
(in thousands)
Aggregate amortization expense for:
Core deposit intangibles
Credit card and trust relationships
Value of insurance business acquired
Non-compete agreements
Trade name
Merchant processing relationships
December 31, 2013
Purchase
Value
Accumulated
Amortization
Carrying
Value
$198,002
22,400
2,431
400
11,722
10,000
$244,955
$65,357
7,800
2,232
300
6,729
2,764
$85,182
$132,645
14,600
199
100
4,993
7,236
$159,773
Years Ended December 31,
2014
2013
2012
$19,897
2,566
34
100
2,605
1,595
$21,905
2,819
148
200
2,605
1,793
$23,642
3,072
158
100
4,124
971
$26,797
$29,470
$32,067
The weighted-average remaining life of core deposit intangibles is 11 years. The weighted-average remaining life
of other identifiable intangibles is 8 years.
The following table shows estimated amortization expense of other intangible assets for the five succeeding years
and thereafter, calculated based on current amortization schedules (in thousands):
2015
2016
2017
2018
2019
Thereafter
Note 8. Time Deposits
The maturity of time deposits at December 31, 2014:
(in thousands)
2015
2016
2017
2018
2019
Thereafter
Total time deposits
118
$ 24,333
19,962
17,975
15,981
13,447
41,112
$132,810
2014
$1,660,864
425,377
125,880
19,566
23,759
5,919
$2,261,365
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Time Deposits (continued)
Certificates of deposits of $250,000 or more totaled approximately $519 million at December 31, 2014 and $472
million at December 31, 2013. Other time deposits of $250,000 or more consisted primarily of balances in
treasury-management deposit products for commercial and certain other larger deposit customers. Balances
maintained in such products totaled $484 million and $363 million at December 31, 2014 and 2013, respectively.
Most of these deposits mature on a daily basis.
Note 9. Short-Term Borrowings
The following table presents information concerning short-term borrowings:
(In thousands)
Federal funds purchased:
December 31,
2014
2013
Amount outstanding at period-end
Average amount outstanding during period
Maximum amount at any month-end during period
Weighted-average interest at period-end
Weighted-average interest rate during period
$ 12,000
12,196
12,000
$
7,725
32,960
37,320
0.13%
0.25%
0.13%
0.22%
Securities sold under agreements to repurchase:
Amount outstanding at period-end
Average amount outstanding during period
Maximum amount at any month-end during period
Weighted-average interest at period-end
Weighted-average interest rate during period
$624,573
688,704
816,617
$650,235
763,259
797,615
0.03%
0.27%
0.64%
0.58%
FHLB borrowings:
Amount outstanding at period-end
Average amount outstanding during period
Maximum amount at any month-end during period
Weighted-average interest at period-end
Weighted-average interest rate during period
$515,000
304,781
565,000
0.12%
0.15%
$ —
9,863
—
—
0.18%
The Bank borrows funds on a secured basis by selling securities under agreements to repurchase, mainly in
connection with treasury-management services offered to their deposit customers. Customer repurchase
agreements generally mature daily. The Bank has the ability to exercise legal authority over the underlying
securities. Federal funds purchased represent unsecured borrowings from other banks, generally on an overnight
basis.
The Bank has a line of credit with the Federal Home Loan Bank (FHLB) that is secured by a blanket pledge of
certain mortgage loans. At December 31, 2014, the amount available under this line was approximately $2.8
billion, with the balance outstanding of $515 million. The Bank also has borrowing capacity at the Federal
Reserve’s discount window of approximately $1.9 billion. No amounts were borrowed under this line at year-end
2014 or 2013.
Note 10. Stockholders’ Equity
Stock Repurchase Program
On July 16, 2014, the Company’s board of directors approved a stock repurchase plan that authorized the
repurchase of up to 5%, or approximately 4 million shares, of its currently outstanding common stock. The
119
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Stockholders’ Equity (continued)
approved plan allows the Company to repurchase its common shares either in the open market in compliance
with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, or in privately negotiated
transactions with non-affiliated sellers or as otherwise determined by the Company in one or more transactions,
from time to time until December 31, 2015. Under this plan, we have purchased 1,529,542 shares of our common
stock at an average price of $31.13 per share through December 31, 2014.
The Company’s board of directors approved a stock repurchase program on April 30, 2013 that authorized the
repurchase of up to 5% of the Company’s outstanding common stock. On May 8, 2013 Hancock entered into an
accelerated share repurchase (ASR) transaction with Morgan Stanley & Co. LLC (Morgan Stanley). In the ASR
transaction, the Company paid $115 million to Morgan Stanley and initially received from them approximately
2.8 million shares of Hancock common stock in 2013. On May 5, 2014, the final settlement of the ASR
agreement occurred at which time the Company received an additional 0.6 million shares from Morgan Stanley.
The number of shares delivered to the Company in this ASR transactions was based generally on the volume-
weighted average price per share of the Hancock common stock during the term of the ASR agreement less a
specified discount and on the amount paid at inception to Morgan Stanley, subject to certain adjustments in
accordance with the terms of the ASR agreement. The 2013 program was superseded by the 2014 program.
Accumulated Other Comprehensive Income (Loss)
A rollforward of the components of accumulated other comprehensive income (loss) is included as follows:
(in thousands)
Balance, December 31, 2011
Net change in unrealized gain (loss)
Transfer of net unrealized gain from AFS to HTM, net
of cumulative tax effect
Reclassification adjustment for net losses realized and
included in earnings
Amortization of unrealized net gain on securities
transferred to held to maturity
Income tax expense (benefit)
Balance, December 31, 2012
Net change in unrealized gain (loss)
Transfer of net unrealized loss from AFS to HTM, net
of cumulative tax effect
Reclassification adjustment for net losses realized and
included in earnings
Amortization of unrealized net gain on securities
transferred to held to maturity
Income tax expense (benefit)
Balance, December 31, 2013
Net change in unrealized gain (loss)
Reclassification adjustment for net losses realized and
included in earnings
Amortization of unrealized net gain on securities
transferred to held to maturity
Income tax expense (benefit)
Balance, December 31, 2014
Available
for Sale
Securities
$ 60,478
6,076
Held to
Maturity
Securities
Transferred
from AFS
$ — $(86,923)
2,566
Employee
Benefit
Plans
—
(24,598)
24,598
—
(1,441)
—
7,548
Loss on
Effective
Cash
Flow
Hedges
$ (65)
(502)
—
311
Total
$(26,510)
8,140
—
6,418
—
1,661
$ 38,854
(105,270)
(8,752)
(3,244)
$ 19,090
—
—
3,879
$(80,688)
82,502
—
(75)
$(181)
(4)
(8,752)
2,221
$(22,925)
(22,772)
36,208
(36,208)
—
(105)
—
8,331
—
(38,576)
8,263
15,413
$
(6,371)
(2,300)
—
32,598
$(21,189) $(22,453)
(41,132)
—
—
301
—
8,527
—
116
(6,371)
(8,162)
$ — $(35,379)
(26,311)
(592)
—
—
390
—
390
—
5,675
$ 18,001
3,297
1,182
—
(14,569)
$(19,074) $(48,626)
—
(217)
$(375)
3,297
(7,929)
$(50,074)
120
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Stockholders’ Equity (continued)
Accumulated other comprehensive income (loss) (AOCI) is reported as a component of stockholders’ equity.
AOCI includes unrealized gains and losses on available for sale (“AFS”) securities and unrealized gains/losses on
AFS securities that were transferred to held to maturity securities in the first quarter of 2012 and the third quarter
of 2013. Such amounts on the transferred securities will be amortized over the estimated remaining life of the
security as an adjustment to yield, offsetting the related amortization of the net premium created in the transfer.
Subject to certain thresholds, unrealized losses on employee benefit plans will be reclassified into income as
pension and post retirement costs are recognized over the remaining service period of plan participants.
Accumulated gains/losses on the cash flow hedge of the variable-rate loans described in Note 5 will be
reclassified into income over the life of the hedge. Gains and losses in AOCI are net of deferred income taxes.
The following table shows the line items in the consolidated income statements affected by amounts reclassified
from accumulated other comprehensive income:
Twelve Months Ended December 31,
Amount reclassified from AOCI (in thousands)
Gains and losses on sale of AFS securities
Tax effect
Net of tax
Amortization/accretion of unrealized net
gain/loss on securities transferred to HTM
Tax effect
Net of tax
Amortization of defined benefit pension and
post-retirement items
Tax effect
Net of tax
Gains and losses on cash flow hedges
Tax effect
Net of tax
2014
$ —
—
—
2013
Increase (decrease) in affected line
item in the income statement
$ (105)
(37)
Securities gains (losses)
Income taxes
(68) Net income
$3,297
1,154
$(6,371)
(2,230)
Interest income
Income taxes
2,143
(4,141) Net income
$ 390
137
$ 8,331
2,916
(a) Employee benefits expense
Income taxes
253
5,415
Net income
$ —
—
—
$
301
105
196
Interest expense
Income taxes
Net income
Total reclassifications, net of tax
$2,396
$ 1,402
Net income
(a) These accumulated other comprehensive income components are included in the computation of net
periodic pension and post-retirement cost that is reported with employee benefits expense (see footnote 11
for additional details).
Note: Tax effect calculated using 35% rate.
Regulatory Capital
Measures of regulatory capital are an important tool used by regulators to monitor the financial health of
financial institutions. The primary quantitative measures used to gauge capital adequacy are the Tier 1 and total
regulatory capital to risk-weighted assets (risk-based capital ratios) and the Tier 1 capital to average total assets
(leverage ratio). Both the Company and the bank subsidiary are required to maintain minimum risk-based capital
ratios of 8.0% total regulatory capital and 4.0% Tier 1 capital. The minimum leverage ratio is 3.0% for bank
holding companies and banks that meet certain specified criteria, including having the highest supervisory rating.
All others are required to maintain a leverage ratio of at least 4.0%.
121
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Stockholders’ Equity (continued)
To evaluate capital adequacy, regulators compare an institution’s regulatory capital ratios with their agency
guidelines, as well as with the guidelines established as part of the uniform regulatory framework for prompt
corrective supervisory action toward financial institutions. The framework for prompt corrective action
categorizes capital levels into one of five classifications rating from well-capitalized to critically under-
capitalized. For an institution to be eligible to be classified as well capitalized its total risk-based capital ratios
must be at least 10.0% for total capital and 6.0% for Tier 1 capital, and its leverage ratio must be at least 5.0%. In
reaching an overall conclusion on capital adequacy or assigning a classification under the uniform framework,
regulators also consider other subjective and quantitative measures of risk associated with an institution. The
Bank was deemed to be well capitalized based upon the most recent notifications from their regulators. There are
no conditions or events since those notifications that management believes would change the classifications. At
December 31, 2014 and 2013, the Company and the Bank were in compliance with all of their respective
minimum regulatory capital requirements.
Following is a summary of the actual regulatory capital amounts and ratios for the Company and the Bank
together with corresponding regulatory capital requirements at December 31, 2014 and 2013:
Actual
Required for Minimum
Capital Adequacy
To Be Well Capitalized
Under Prompt
Corrective Action
Provisions
Amount
Ratio %
Amount
Ratio %
Amount
Ratio %
($ in thousands)
At December 31, 2014
Total capital (to risk weighted assets)
Company
Whitney Bank *
$1,945,710
1,925,175
12.30
12.20
$1,265,796
1,262,439
8.00
8.00
n/a
$1,578,049
n/a
10.00
Tier 1 capital (to risk weighted assets)
Company
Whitney Bank *
Tier 1 leverage capital
Company
Whitney Bank *
At December 31, 2013
Total capital (to risk weighted assets)
Company
Hancock Bank
Whitney Bank
Tier 1 capital (to risk weighted assets)
Company
Hancock Bank
Whitney Bank
Tier 1 leverage capital
Company
Hancock Bank
Whitney Bank
$1,777,348
1,756,813
11.23
11.13
$ 632,898
631,220
4.00
4.00
n/a
$ 946,829
$1,777,348
1,756,813
9.17
9.13
$ 581,263
577,493
3.00
3.00
n/a
$ 962,488
n/a
6.00
n/a
5.00
$1,877,832
636,871
1,187,699
13.11
13.48
12.25
$1,146,061
378,093
775,709
$1,685,058
577,280
1,088,339
11.76
12.21
11.22
$ 573,030
189,047
387,854
$1,685,058
577,280
1,088,339
9.34
9.01
9.02
$ 541,066
192,137
361,878
8.00
8.00
8.00
4.00
4.00
4.00
3.00
3.00
3.00
n/a
$ 472,617
969,636
n/a
10.00
10.00
n/a
$ 283,570
581,782
n/a
$ 320,228
603,129
n/a
6.00
6.00
n/a
5.00
5.00
* (Consolidated charter effective 3/31/2014)
122
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Stockholders’ Equity (continued)
Regulatory Restrictions on Dividends
Regulatory policy statements provide that generally bank holding companies should pay dividends only out of
current operating earnings and that the level of dividends must be consistent with current and expected capital
requirements. Dividends received from its subsidiary banks have been the primary source of funds available to
the Company for the payment of dividends to Hancock’s stockholders. Federal and state banking laws and
regulations restrict the amount of dividends the Bank may distribute to Hancock without prior regulatory
approval, as well as the amount of loans it may make to the Company. Dividends paid by Whitney Bank are
subject to approval by the Commissioner of Banking and Consumer Finance of the State of Mississippi.
Note 11. Retirement Benefit Plans
The Company offers a qualified defined benefit pension plan covering all eligible associates. Eligibility is based
on minimum age and service-related requirements. The Company makes contributions to the qualified pension
plans in amounts sufficient to meet funding requirements set forth in federal employee benefit and tax laws, plus
such additional amounts as the Company may determine to be appropriate. Hancock does not anticipate making a
contribution to the pension plan during 2015.
Certain legacy Whitney associates were also covered by an unfunded nonqualified defined benefit pension plan
that provides retirement benefits to designated executive officers. Accrued benefits under the nonqualified plan
covering certain legacy Whitney associates were frozen as of December 31, 2012 and no future benefits will be
accrued under this plan. These benefits are calculated using the qualified plan’s formula, but without applying the
restrictions imposed on qualified plans by certain provisions of the Internal Revenue Code. Benefits that become
payable under the nonqualified plan supplement amounts paid from the qualified plan. The Whitney plan has
been closed to new participants since 2008, and benefit accruals have been frozen for all participants other than
those who met certain vesting, age and years of service criteria as of December 31, 2008.
The Company also offers a defined contribution retirement benefit plan (401(k) plan) that covers substantially all
associates who have been employed 60 days and meet certain other requirements and employment classification
criteria. The Company matches 100% of the first 1% of compensation saved by a participant, and 50% of the
next 5% of compensation saved. Newly eligible associates are automatically enrolled at an initial 3% savings rate
unless the associate actively opts out of participation in the plan.
The expense of the Company’s matching contributions to the 401(k) plan was $7.1 million in 2014, $7.0 million
in 2013, and $6.1 million in 2012. The discretionary profit-sharing contribution under the legacy Whitney plan
was $2.9 million for 2012.
The Company also sponsors defined benefit postretirement plans for both legacy Hancock and legacy Whitney
associates. The Hancock plans provide health care and life insurance benefits to retiring associates who
participate in medical and/or group life insurance benefit plans for active associates at the time of retirement and
have reached 55 years of age with ten years of service or age 65 with five years of service. The postretirement
health care plan is contributory, with retiree contributions adjusted annually and subject to certain employer
contribution maximums. Neither Hancock plan is available to associates hired on or after January 1, 2000.
The legacy Whitney plans offer health care and life insurance benefit plans for retirees and their eligible
dependents. Participant contributions are required under the health plan. Currently, these plans restrict eligibility
for postretirement health benefits to retirees already receiving benefits as of the plan amendments in 2007 and to
those active participants who were eligible to receive benefits as of December 31, 2007. Life insurance benefits
are currently only available to associates who retired before December 31, 2007.
123
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Retirement Benefit Plans (continued)
The Company assumed certain trends in health care costs in the determination of the benefit obligations. At
December 31, 2014, the plans assumed a 7.5% increase in the pre- and post-Medicare age health costs for 2015,
declining over a period of five years to a 5.0% annual rate. At December 31, 2014, the RP 2014 Bottom Quartile
mortality projection scale was used. Scale BB was used in 2013 and Scale AA was employed in 2012. Otherwise,
the plan assumptions were substantially the same in 2013 all years.
The following tables detail the changes in the benefit obligations and plan assets of the defined benefit for the
years ended December 31, 2014 and 2013 as well as the funded status of the plans at each year end and the
amounts recognized in the Company’s balance sheets. The Company uses a December 31 measurement date for
all defined benefit pension plans and other postretirement benefit plans.
(in thousands)
Change in benefit obligation
Benefit obligation:
at beginning of year
Service cost
Interest cost
Actuarial loss
Plan participants’ contributions
Benefits paid
Benefit obligation, end of year
Change in plan assets
Fair value of plan assets:
at beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Benefit payments
Expenses
Fair value of plan assets, end of year
2014
2013
2014
2013
Pension benefits
Other Post-
retirement benefits
$412,608
12,920
19,251
29,738
—
(17,606)
$437,104
16,118
16,678
(41,591)
—
(15,701)
$ 31,592
126
1,140
(3,467)
1,300
(2,323)
$ 37,831
215
1,317
(5,563)
1,355
(3,563)
456,911
412,608
28,368
31,592
437,829
17,826
1,123
—
(17,606)
(464)
379,133
63,695
11,123
—
(15,701)
(421)
—
—
1,023
1,300
(2,323)
—
—
—
2,208
1,355
(3,563)
—
438,708
437,829
—
—
Funded status at end of year—net (liability) asset
$ (18,203) $ 25,221
$(28,368) $(31,592)
Amounts recognized in accumulated other comprehensive loss
Unrecognized loss:
at beginning of year
Amount of (loss)/gain recognized during the year
Net actuarial loss/(gain)
Unrecognized loss at end of year
$ 28,285
(26)
44,599
$111,794
(6,570)
(76,939)
$ 7,189
(364)
(3,467)
$ 14,513
(1,761)
(5,563)
$ 72,858
$ 28,285
$ 3,358
$ 7,189
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
456,911
426,073
438,708
412,608
379,607
437,829
124
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Retirement Benefit Plans (continued)
The following table shows net periodic benefit cost included in expense and the changes in the amounts
recognized in accumulated other comprehensive income during 2014 and 2013. Recognition of the net actuarial
loss included in accumulated other comprehensive income is not required when the loss is less than ten percent of
the projected benefit obligation or fair value of plan assets. Accordingly, Hancock will not recognize a material
amount of the losses at December 31, 2014 as a component of net pension expense in 2015.
($ in thousands)
Net periodic benefit cost
Service cost
Interest cost
Expected return on plan assets
Amortization of net loss/ prior service cost
Recognized net amortization and deferral
Years Ended December 31,
2014
2013
2012
2014
2013
2012
Pension benefits
Other post-retirement benefits
$ 12,920
19,251
(32,222)
26
$ 16,118
16,678
(27,928)
6,570
$ 12,989
17,206
(25,398)
6,582
$
126
1,140
—
364
—
1,630
$
215
1,317
—
1,761
—
3,293
$ 192
1,337
—
918
—
2,447
Net periodic benefit cost
(25)
11,438
11,379
Other changes in plan assets and benefit
obligations recognized in other
comprehensive income, before taxes
Net (loss)/gain recognized during the year
Net actuarial loss/(gain)
Amortization of prior service cost
Total recognized in other comprehensive
income
Total recognized in net periodic benefit cost
(26)
44,599
—
(6,570)
(76,939)
—
(6,582)
(7,001)
—
(364)
(3,467)
—
(1,761)
(5,563)
—
(966)
4,435
48
44,573
(83,509)
(13,583)
(3,831)
(7,324)
3,517
and other comprehensive income
$ 44,548
$(72,071) $ (2,204) $(2,201) $(4,031) $5,964
Discount rate for benefit obligations
Discount rate for net periodic benefit cost
Expected long-term return on plan assets
Rate of compensation increase
4.11%
4.73%
7.50%
scaled*
4.73%
3.82%
7.50%
4.00%
* Graded scale, declining from 7.00% at age 20 to 2.00% at age 60
3.82% 4.02% 4.58% 3.69%
4.32% 4.58% 3.69% 4.18%
7.50%
3.73%
n/a
n/a
n/a
n/a
n/a
n/a
The long term rate of return on plan assets is determined by using the weighted-average of historical real returns
for major asset classes based on target asset allocations. At December 31, 2014, the discount rate was calculated
by matching expected future cash flows to the Wells Fargo Pension Discount Curve Liability Index. At
December 31, 2013, this calculation used the Citigroup Pension Discount Curve Liability Index.
The following shows expected plan benefit payments over the next ten years:
(in thousands)
2015
2016
2017
2018
2019
2020-2024
Pension
Post-retirement
Total
$ 18,617
19,744
20,744
21,863
22,505
128,044
$231,517
$ 1,554
1,503
1,406
1,397
1,430
7,391
$14,681
$ 20,171
21,247
22,150
23,260
23,935
135,435
$246,198
125
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Retirement Benefit Plans (continued)
The expected benefit payments are estimated based on the same assumptions used to measure the Company’s
benefit obligations at December 31, 2014.
The following table illustrates the effect on the annual periodic postretirement benefit costs and postretirement
benefit obligation of a 1% increase or 1% decrease in the assumed health care cost trend rates from the rates
assumed at December 31, 2014:
(in thousands)
Aggregated service and interest cost
Postretirement benefit obligation
1% Decrease
in Rates
$ 1,115
25,046
Assumed
Rates
$ 1,266
28,366
1% Increase
in Rates
$ 1,451
32,412
The fair values of pension plan assets at December 31, 2014 and 2013, by asset category, are shown in the
following tables:
Fair Value Measurements by Asset Category / Fund
Total
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(in thousands)
Fair Value Measurements at December 31, 2014
Cash and cash-equivalents:
Cash and equivalents
$ 10,243
$ 10,243
$ —
$ —
Total cash and cash-equivalents
10,243
10,243
—
—
Fixed income:
US government and agency securities
Municipal securities
Emerging market debt fund
Foreign bonds, notes and debentures
Hancock Horizon Core Bond Fund
Corporate debt
Total fixed income
Real Assets:
Real assets fund
Total cash and cash-equivalents
Equity:
Hancock Horizon Quantitative Long/Short Fund
Hancock Horizon Diversified International Fund
Hancock Horizon Burkenroad Small Cap Fund
Hancock Horizon Growth Fund
Hancock Horizon Value Fund
Equity securities
Mineral Interests
Total equity
Total
15,518
33,980
19,505
2,588
51,529
62,429
185,549
24,151
24,151
5,603
62,750
9,296
26,469
30,321
84,325
1
1,082
—
—
—
—
—
1,082
24,151
24,151
5,603
62,750
9,296
26,469
30,321
84,325
—
218,765
218,764
14,436
33,980
—
2,588
51,529
62,429
164,962
—
—
19,505
—
—
—
19,505
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
1
$438,708
$254,240
$164,962
$19,506
126
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Retirement Benefit Plans (continued)
Fair Value Measurements by Asset Category / Fund
Total
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(in thousands)
Fair Value Measurements at December 31, 2013
Cash and cash-equivalents:
Cash and equivalents
Hancock Horizon Government Money Market Fund
Total cash and cash-equivalents
Fixed income:
US government and agency securities
Municipal securities
Hancock Horizon Core Bond Fund
Corporate debt
Total fixed income
Equity:
Hancock Horizon Quantitative Long/Short Fund
Hancock Horizon Diversified International Fund
Hancock Horizon Burkenroad Small Cap Fund
Hancock Horizon Growth Fund
Hancock Horizon Value Fund
Hancock Horizon Diversified Income Fund
Equity securities
Total Equity
TOTAL
$
5,683
9,531
15,214
$
5,683
9,531
15,214
$ —
—
—
$—
—
—
21,485
40,476
59,674
43,440
165,075
6,593
26,072
4,108
27,847
34,216
8,758
149,946
257,540
4,383
—
6,923
11,306
6,593
26,072
4,108
27,847
34,216
8,758
149,946
257,540
17,102
40,476
59,674
36,517
153,769
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$437,829
$284,060
$153,769
$—
The percentage allocations of the plan assets by asset category and corresponding target allocations at
December 31, 2014 and 2013 follow:
Asset category
Equity securities
Fixed income securities
Real Assets
Cash equivalents
Plan Assets
at December 31,
Target Allocation at
December 31,
2014
2013
2014
2013
50%
42%
6%
2%
59% 30 - 60% 30 - 70%
38% 25 - 65% 25 - 65%
0% 0 - 10% 0 - 10%
0 - 5%
3%
0 - 5%
100% 100%
Plan assets are invested in long-term strategies and evaluated within the context of a long-term investment
horizon. Plan assets will be diversified across multiple asset classes so as to minimize the risk of large losses.
Short-term fluctuations in value will be considered secondary to long-term results. The Company employs a total
return approach whereby a diversified mix of asset class investments are used to maximize the long-term return
of plan assets for an acceptable level of risk. Risk tolerance is established through careful consideration of the
plan liabilities, plan funded status and the Company’s financial condition. The investment performance of the
127
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Retirement Benefit Plans (continued)
plan is regularly monitored to ensure that appropriate risk levels are being taken and to evaluate returns versus a
suitable market benchmark. The benefits investment committee meets periodically to review the policy, strategy,
and performance of the plans.
Note 12. Share-Based Payment Arrangements
Hancock maintains incentive compensation plans that incorporate share-based payment arrangements for
associates and directors. The current plan under which share-based awards may be granted, the 2014 Long Term
Incentive Plan (the “2014 Plan”), was approved by the Company’s stockholders at the 2014 annual meeting as a
successor to the Company’s 2005 Long-Term Incentive Plan (the “2005 Plan”). Certain share-based awards
remain outstanding under the 2005 Plan and prior equity incentive compensation plans, but no future awards may
be granted thereunder.
The Compensation Committee of the Company’s Board of Directors administers the equity incentive plans,
makes determinations with respect to participation by employees or directors and authorizes the share-based
awards. Under the 2014 Plan, participants may be awarded stock options (including incentive stock options for
associates), restricted shares, performance stock awards and stock appreciation rights, all on a stand-alone,
combination or tandem basis. To date, the Committee has awarded stock options, tenure-based restricted shares
and performance stock awards under the 2014 Plan and the prior equity incentive plans.
Under the 2014 Plan, future awards may be granted for the issuance of an aggregate of 1,796,357 shares of the
Company’s common stock, plus the number of any shares of the Company’s common stock for which awards
under the 2005 Plan are cancelled, expired, forfeited or settled in cash. The 2014 Plan limits the number of shares
for which awards may be granted to any participant during any calendar year to 100,000 shares. The Company
may use authorized unissued shares or shares held in treasury to satisfy awards under the 2014 Plan.
At December 31, 2014 there were 1.7 million shares available for future issuance under equity compensation
plans (including 170,935 shares under the Company’s 2010 Employee Stock Ownership Plan).
For the years ended December 31, 2014, 2013 and 2012 total share-based compensation recognized in income
was $14.0 million, $13.1 million and $11.0 million, respectively. The total recognized tax benefit related to the
share-based compensation was $4.9 million, $4.6 million and $3.9 million, respectively, for 2014, 2013 and
2012.
A summary of option activity for 2014 is presented below:
Options
Outstanding at January 1, 2014
Granted
Exercised
Cancelled/Forfeited
Expired
Outstanding at December 31, 2014
Exercisable at December 31, 2014
Weighted-
Average
Remaining
Contractual
Term
(Years)
Aggregate
Intrinsic
Value
($000)
4.2
3.7
$221
$107
Number of
Shares
1,332,656
—
(81,842)
(197,974)
(113,447)
939,393
781,529
Weighted-
Average
Exercise
Price ($)
$38.85
—
30.40
36.06
63.41
$37.21
$38.62
128
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Share-Based Payment Arrangements (continued)
The number of shares subject to the outstanding options reflected above include shares to be issued upon the
exercise of options that were assumed by the Company in the acquisition of Whitney Holding Corporation.
The exercise price for stock options is set at the closing market price of the Company’s stock on the date
immediately preceding the date of grant, except for the exercise price of certain options granted to major
stockholders which is set at 110% of the market price. Option awards generally vest equally over five years of
continuous service and have ten-year contractual terms.
The total intrinsic value of options exercised during 2014, 2013 and 2012 was $0.4 million, $0.6 million, and
$0.8 million, respectively.
The weighted-average grant-date fair values of options awarded during 2012 were $8.43. There were no options
granted in 2014 or 2013. The fair value of each option award was estimated as of the grant date using the Black-
Scholes-Merton option-pricing model. The significant assumptions made in applying the option-pricing model
are noted in the following table. Expected volatilities are based on implied volatilities from traded options on the
Company’s stock, historical volatility of the Company’s stock and other factors. The expected term of options
granted was derived from the output of the option valuation model and represents the period of time that options
granted are expected to be outstanding.
Expected volatility
Expected dividends
Expected term (in years)
Risk-free rates
There were no options granted in 2013.
2012
38.64%
3.23%
6.58
1.78%
A summary of the status of the Company’s nonvested restricted and performance shares as of December 31, 2014
and changes during 2014 are presented below:
Nonvested at January 1, 2014
Granted
Vested
Cancelled/Forfeited
Nonvested at December 31, 2014
Number of
Shares
1,981,820
608,856
(391,859)
(158,518)
2,040,299
Weighted-
Average
Grant-Date
Fair Value ($)
$31.75
34.42
32.76
32.75
$32.27
As of December 31, 2014, there was $32.8 million of total unrecognized compensation related to nonvested
restricted shares expected to vest. This compensation is expected to be recognized in expense over a weighted-
average period of 3.7 years. The total fair value of shares which vested during 2014 and 2013 was $12.8 million
and $3.2 million, respectively.
In 2014, Hancock granted 69,857 performance shares with an average fair value of $38.14 per share to key
members of executive and senior management. The number of 2014 performance shares that ultimately vest, if any,
at the end of the three-year required service period will be based on the relative rank of Hancock’s three-year total
129
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Share-Based Payment Arrangements (continued)
shareholder return (TSR) among the TSRs of a peer group of fifty regional banks. The maximum number of
performance shares that could vest is 200% of the target award. The fair value of the awards at the grant date was
determined using a Monte Carlo simulation method. Compensation expense for these performance shares will be
recognized on a straight-line basis over the service period.
Note 13. Fair Value of Financial Instruments
The Financial Accounting Standards Board (FASB) defines fair value as the exchange price that would be
received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the measurement date. The FASB’s guidance
also established a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair
value, giving preference to quoted prices in active markets for identical assets or liabilities (level 1) and the
lowest priority to unobservable inputs such as a reporting entity’s own data (level 3). Level 2 inputs include
quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in
markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Fair Value of Assets Measured on a Recurring Basis
The following table presents for each of the fair-value hierarchy levels the Company’s financial assets and
liabilities that are measured at fair value (in thousands) on a recurring basis in the consolidated balance sheets.
(in thousands)
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities
Municipal obligations
Corporate debt securities
Mortgage-backed securities
Collateralized mortgage obligations
Equity securities
December 31, 2014
Level 1
Level 2
Total
$ —
—
—
—
—
9,553
$ 300,508
14,176
3,500
1,245,564
86,864
—
$ 300,508
14,176
3,500
1,245,564
86,864
9,553
Total available for sale securities
9,553
1,650,612
1,660,165
Derivative assets (1)
—
19,432
19,432
Total recurring fair value measurements – assets
$9,553
$1,670,044
$1,679,597
Liabilities
Derivative liabilities (1)
Total recurring fair value measurements – liabilities
$ —
$ —
$
$
20,860
20,860
$
$
20,860
20,860
(1) For further disaggregation of derivative assets and liabilities, see Note 5 – Derivatives
130
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Fair Value of Financial Instruments (continued)
(in thousands)
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities
Municipal obligations
Corporate debt securities
Mortgage-backed securities
Collateralized mortgage obligations
Equity securities
December 31, 2013
Level 1
Level 2
Total
$
505
—
—
—
—
10,723
$
—
35,961
3,500
1,276,958
94,125
—
$
505
35,961
3,500
1,276,958
94,125
10,723
Total available for sale securities
11,228
1,410,544
1,421,772
Derivative assets (1)
—
15,579
15,579
Total recurring fair value measurements – assets
$11,228
$1,426,123
$1,437,351
Liabilities
Derivative liabilities (1)
Total recurring fair value measurements – liabilities
$ —
$ —
$
$
15,006
15,006
$
$
15,006
15,006
(1) For further disaggregation of derivative assets and liabilities, see Note 5 – Derivatives
Securities classified as level 1 within the valuation hierarchy include U.S. Treasury securities and certain other
debt and equity securities. Level 2 classified securities include U.S. Treasury securities, obligations of U.S.
Government-sponsored agencies, residential mortgage-backed securities and collateralized mortgage obligations
that are issued or guaranteed by U.S. government agencies, and state and municipal bonds. The level 2 fair value
measurements for investment securities are obtained quarterly from a third-party pricing service that uses
industry-standard pricing models. Substantially all of the model inputs were observable in the marketplace or can
be supported by observable data.
The Company invests only in high quality securities of investment grade quality with a targeted duration, for the
overall portfolio, generally between two to five. Company policies limit investments to securities having a rating
of not less than “Baa” or its equivalent by a nationally recognized statistical rating agency. There were no
transfers between valuation hierarchy levels during the periods shown.
The fair value of derivative financial instruments, which are predominantly interest rate swaps, is obtained from a
third-party pricing service that uses an industry-standard discounted cash flow model that relies on inputs,
LIBOR swap curves and Overnight Index swap rate curves, observable in the marketplace. To comply with the
accounting guidance, credit valuation adjustments are incorporated in the fair values to appropriately reflect
nonperformance risk for both the Company and the counterparties. Although the Company has determined that
the majority of the inputs used to value the derivative instruments fall within level 2 of the fair value hierarchy,
the credit value adjustments utilize level 3 inputs, such as estimates of current credit spreads. The Company has
determined that the impact of the credit valuation adjustments is not significant to the overall valuation of these
derivatives. As a result, the Company has classified its derivative valuations in their entirety in level 2 of the fair
value hierarchy. The Company’s policy is to measure counterparty credit risk quarterly for all derivative
instruments subject to master netting arrangements consistent with how market participants would price the net
risk exposure at the measurement date.
131
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Fair Value of Financial Instruments (continued)
The Company also has certain derivative instruments associated with the Bank’s mortgage-banking activities.
These derivative instruments include interest rate lock commitments on prospective residential mortgage loans
and forward commitments to sell these loans to investors on a best efforts delivery basis. The fair value of these
derivative instruments is measured using observable market prices for similar instruments and is classified as a
level 2 measurement.
Fair Value of Assets Measured on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis. Collateral-dependent impaired
loans are level 2 assets measured at the fair value of the underlying collateral based on third-party appraisals that
take into consideration market-based information such as recent sales activity for similar assets in the property’s
market.
Other real estate owned, including both foreclosed property and surplus banking property, are level 3 assets that
are adjusted to fair value, less estimated selling costs, upon transfer to other real estate owned. Subsequently,
other real estate owned is carried at the lower of carrying value or fair value less estimated selling costs. Fair
values are determined by sales agreement or third-party appraisals as discounted for estimated selling costs,
information from comparable sales, and marketability of the property.
The following table presents for each of the fair value hierarchy levels the Company’s financial assets that are
measured at fair value on a nonrecurring basis:
(in thousands)
Collateral dependent impaired loans
Other real estate owned
Total nonrecurring fair value measurements
(in thousands)
Collateral dependent impaired loans
Other real estate owned
Total nonrecurring fair value measurements
Level 1
December 31, 2014
Level 2
Level 3
$30,204
—
$ —
29,715
$—
—
$—
$—
—
$—
$30,204
$29,715
$59,919
Level 1
December 31, 2013
Level 2
Level 3
$24,392
—
$ —
34,105
$24,392
$34,105
$58,497
Total
$30,204
29,715
Total
$24,392
34,105
Accounting guidance from the FASB requires the disclosure of estimated fair value information about certain
on-and off-balance sheet financial instruments, including those financial instruments that are not measured and
reported at fair value on a recurring basis. The significant methods and assumptions used by the Company to
estimate the fair value of financial instruments are discussed below.
Cash, Short – Term Investments and Federal Funds Sold – for those short-term instruments, the carrying amount
is a reasonable estimate of fair value.
Securities – the fair value measurement for securities available for sale was discussed earlier. The same
measurement techniques were applied to the valuation of securities held to maturity.
Loans, Net – the fair value measurement for certain impaired loans was discussed earlier. For the remaining
portfolio, fair values were generally estimated by discounting scheduled cash flows using discount rates
determined with reference to current market rates at which loans with similar terms would be made to borrowers
with similar credit quality.
132
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Fair Value of Financial Instruments (continued)
Loans Held For Sale – these loans are recorded at fair value and carried at the lower of cost of market. The
carrying amount is considered a reasonable estimate of fair value.
Accrued Interest Receivable and Accrued Interest Payable – the carrying amounts are a reasonable estimate of
fair values.
Deposits – the accounting guidance requires that the fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, interest-bearing checking and savings accounts, be assigned fair values
equal to amounts payable upon demand (carrying amounts). The fair value of fixed-maturity certificates of
deposit is estimated using the rates currently offered for deposits of similar remaining maturities.
Federal Funds Purchased, Securities Sold under Agreements to Repurchase, and FHLB Borrowings – for these
short-term liabilities, the carrying amount is a reasonable estimate of fair value.
Long-Term Debt – the fair value is estimated by discounting the future contractual cash flows using current
market rates at which debt with similar terms could be obtained.
Derivative Financial Instruments – the fair value measurement for derivative financial instruments was discussed
earlier.
The estimated fair values of the Company’s financial instruments were as follows:
(in thousands)
Financial assets:
Cash, interest-bearing bank deposits, and
federal funds sold
Available for sale securities
Held to maturity securities
Loans, net
Loans held for sale
Accrued interest receivable
Derivative financial instruments
Financial liabilities:
Deposits
Federal funds purchased
Securities sold under agreements to
repurchase
FHLB Borrowings
Long-term debt
Accrued interest payable
Derivative financial instruments
Level 1
December 31, 2014
Level 2
Level 3
Total
Fair Value
Carrying
Amount
$1,159,403
9,553
—
—
—
47,501
—
$
— $
1,650,612
2,186,340
30,204
20,252
—
19,432
— $ 1,159,403
1,660,165
—
2,186,340
—
13,702,631
13,672,427
20,252
—
47,501
—
19,432
—
$ 1,159,403
1,660,165
2,166,289
13,766,514
20,252
47,501
19,432
$
— $
12,000
— $16,398,878
—
—
$16,398,878
12,000
$16,572,831
12,000
624,573
515,000
—
4,204
—
—
—
346,379
—
20,860
—
—
—
—
—
624,573
515,000
346,379
4,204
20,860
624,573
515,000
374,371
4,204
20,860
133
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Fair Value of Financial Instruments (continued)
(in thousands)
Financial assets:
Cash, interest-bearing bank deposits, and
federal funds sold
Available for sale securities
Held to maturity securities
Loans, net
Loans held for sale
Accrued interest receivable
Derivative financial instruments
Financial liabilities:
Deposits
Federal funds purchased
Securities sold under agreements to
repurchase
Long-term debt
Accrued interest payable
Derivative financial instruments
Note 14. Commitments and Contingencies
Credit Related
December 31, 2013
Level 1
Level 2
Level 3
Total
Fair Value
Carrying
Amount
— $
$
$617,280
11,228
—
—
—
42,977
—
1,410,544
2,576,584
24,392
24,515
—
15,579
— $
—
—
12,023,330
—
—
—
617,280
1,421,772
2,576,584
12,047,722
24,515
42,977
15,579
$
617,280
1,421,772
2,611,352
12,191,191
24,515
42,977
15,579
$ — $
7,725
— $15,352,024
—
—
$15,352,024
7,725
$15,360,516
7,725
650,235
—
4,353
—
—
385,557
—
15,006
—
—
—
—
650,235
385,557
4,353
15,006
650,235
385,826
4,353
15,006
In the normal course of business, the Bank enters into financial instruments, such as commitments to extend
credit and letters of credit, to meet the financing needs of their customers. Such instruments are not reflected in
the accompanying consolidated financial statements until they are funded, although they expose the Bank to
varying degrees of credit risk and interest rate risk in much the same way as funded loans.
Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued
mainly to finance the acquisition and development or construction of real property or equipment, and credit card
and personal credit lines. The availability of funds under commercial credit lines and loan commitments
generally depends on whether the borrower continues to meet credit standards established in the underlying
contract and has not violated other contractual conditions. Loan commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal
credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of
commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and
the total commitment amounts do not necessarily represent future cash requirements of the Company.
A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s
financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of
credit primarily to provide credit enhancement to their customers’ other commercial or public financing
arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.
134
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 14. Commitments and Contingencies (continued)
The contract amounts of these instruments reflect the Company’s exposure to credit risk. The Company
undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it
does for on-balance sheet instruments and may require collateral or other credit support. These off-balance sheet
financial instruments are summarized below:
(in thousands)
Commitments to extend credit
Letters of credit
Legal Proceedings
December 31,
2014
2013
$5,700,546
414,408
$5,234,929
422,284
The Company is party to various legal proceedings arising in the ordinary course of business. Management does
not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a
material adverse effect on the consolidated financial position or liquidity of the Company.
Other Contingencies
In connection with the 2011 Whitney acquisition, the Company recorded a $58.0 million liability for contingent
payments to certain employees for arrangements that were in existence prior to acquisition. The following table
presents the changes in the liability for 2014 and 2013.
(in thousands)
Balance, January 1
Adjustments
Cash Payments
Balance, December 31
2014
2013
$ 8,661
(1,690)
(6,971)
$ 8,165
2,765
(2,269)
$ —
$ 8,661
Lease Commitments
The Company currently is obligated under a number of non-cancelable operating leases for buildings and
equipment. Certain of these leases have escalation clauses and renewal options. Future minimum lease payments
for non-cancelable operating leases with initial terms in excess of one year were as follows at December 31,
2014:
(in thousands)
2015
2016
2017
2018
2019
Thereafter
Total minimum lease payments
Operating
Leases
$11,766
11,856
11,064
9,782
7,917
28,293
$80,678
Rental expense approximated $11.4 million, $12.9 million and $14.3 million for the years ended December 31,
2014, 2013, and 2012, respectively.
135
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15. Other Noninterest Income and Other Noninterest Expense
The components of other noninterest income and other noninterest expense are as follows:
(in thousands)
Other noninterest income:
Income from bank-owned life insurance
Credit-related fees
Income from derivatives
Gain on sales of assets
Safety deposit box income
Other miscellaneous income
Total other noninterest income
Other noninterest expense:
Advertising
Ad valorem and franchise taxes
Printing and supplies
Insurance expense
Travel
Entertainment and contributions
Tax credit investment amortization
Other miscellaneous expense
Years Ended December 31,
2014
2013
2012
$10,314
11,121
1,645
1,279
1,830
9,249
$11,223
8,724
4,675
1,932
1,923
8,754
$11,163
6,681
3,600
4,366
2,006
9,072
$35,438
$37,231
$36,888
$ 8,937
10,492
4,550
3,919
4,066
5,762
8,817
30,585
$10,399
9,727
5,112
4,094
4,716
5,265
10,781
45,242
$13,515
8,321
7,491
5,494
5,758
6,049
5,974
27,669
Total other noninterest expense
$77,128
$95,336
$80,271
Other miscellaneous expense as shown in the table above includes nonoperating items totaling $9.6 million in
2014, $19.7 million in 2013 and $3.2 million in 2012. Details of the 2014 items are further discussed below:
FDIC Settlement
During the second quarter of 2014, the Company recorded a $10.3 million expense for the settlement of an
assessment by the FDIC related to its targeted review of certain previously paid loss claim reimbursement
amounts. The assessment demanded repayment of these amounts due to the FDIC’s disagreement with the
manner in which certain assets were administered and losses were calculated. During the third quarter, the
settlement was paid and the FDIC resumed payment of claims.
Sale of Insurance Business
In April 2014, the Company sold its property and casualty and group benefits insurance intermediary business.
The lines of business being divested represent approximately half of the Company’s 2013 insurance commissions
and fees. A gain of $9.4 million was recorded on the sale based on a $15.5 million sales price less the related
tangible and intangible assets.
Branch Closures
During 2014, the Company recorded $4.6 million in write-downs related to the 2014 closure of 15 branch
locations in Mississippi, Florida and Louisiana as part of its ongoing branch rationalization process.
136
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15. Other Noninterest Income and Other Noninterest Expense (continued)
Reverse Repurchase Obligations Early Termination Fee
During the second quarter of 2014, the Company recorded $3.5 million in fees related to the early termination of
reverse repurchase obligations.
Note 16. Income Taxes
Income tax expense included in net income consisted of the following components:
(in thousands)
Included in net income
Current federal
Current state
Total current provision
Deferred federal
Deferred state
Total deferred provision
Total included in net income
Included in shareholders’ equity
Deferred tax related to retirement benefits
Deferred tax related to securities
Deferred tax related to derivatives and hedging
Years Ended December 31,
2014
2013
2012
$ 41,441
1,487
$ 14,797
(3,207)
$11,195
1,953
42,928
21,483
2,054
23,537
11,590
37,403
3,517
40,920
13,148
34,219
(1,754)
32,465
$ 66,465
$ 52,510
$45,613
(14,681)
6,857
(217)
$ 32,749
(40,876)
116
$ 3,788
(1,583)
(75)
Total included in shareholders’ equity
$ (8,041)
$ (8,011)
$ 2,130
Temporary differences arise between the tax bases of assets or liabilities and their carrying amounts for financial
reporting purposes. The expected tax effects when these differences are resolved are recorded currently as
deferred tax assets or liabilities.
137
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Income Taxes (continued)
Significant components of the Company’s deferred tax assets and liabilities were as follows:
(in thousands)
Deferred tax assets:
Allowance for loan losses
Employee compensation and benefits
Loan purchase accounting adjustments
Tax credit carryforward
Securities
State net operating loss
Other
Gross deferred tax assets
Federal valuation allowance
State valuation allowance
Subtotal valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Fixed assets & intangibles
Securities
Deferred gain on acquisition
FDIC indemnification asset
Other
Gross deferred tax liabilities
Net deferred tax asset (liability)
December 31,
2014
2013
$ 57,667
50,361
35,094
35,553
—
1,535
18,702
$ 64,389
31,293
75,595
41,083
6,432
1,535
21,611
198,912
241,938
—
(1,529)
(1,529)
—
(1,531)
(1,531)
197,383
240,407
(88,062)
(724)
—
(18,769)
(15,493)
(93,952)
—
(4,407)
(37,775)
(14,565)
(123,048)
(150,699)
$ 74,335
$ 89,708
Reported income tax expense differed from amounts computed by applying the statutory income tax rate of 35%
to earnings before income taxes because of the following factors:
($ in thousands)
Taxes computed at statutory rate
Increases (decreases) in taxes resulting from:
Years Ended December 31,
2014
2013
2012
Amount %
Amount %
Amount %
$ 84,766
35% $ 75,553
35% $ 69,074
35%
State income taxes, net of federal income tax benefit
Tax-exempt interest
Bank owned life insurance
Tax credits
Other, net
4,649
(6,301)
(3,554)
(16,577)
3,482
2,352
2%
(6,487)
-3%
-1%
(3,926)
-7% (15,743)
761
1%
(78)
1%
(7,127)
-3%
-2%
(4,005)
-7% (13,661)
1,410
0%
0%
-4%
-2%
-7%
1%
Income tax expense
$ 66,465
27% $ 52,510
24% $ 45,613
23%
As of December 31, 2014, the Company had approximately $36 million in federal tax credit carryforwards that
originated in the tax years from 2008 through 2014 and that begin expiring in 2028. The Company had
approximately $29 million in state net operating loss carryforwards that originated in the tax years 2002 through
2014 and that begin expiring in 2017. A valuation allowance has been established for the state net operating loss
carryforwards. The impact of this valuation allowance is immaterial to the financial statements.
138
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Income Taxes (continued)
The tax benefit of a position taken or expected to be taken in a tax return should be recognized when it is more
likely than not that the position will be sustained on its technical merits. The liability for unrecognized tax
benefits was immaterial at December 31, 2014 and 2013. The Company does not expect the liability for
unrecognized tax benefits to change significantly during 2014. Hancock recognizes interest and penalties, if any,
related to income tax matters in income tax expense, and the amounts recognized during 2014, 2013 and 2012
were insignificant.
The Company invests in Federal NMTC projects related to tax credit allocations that have been awarded to its
wholly-owned Community Development Entity (CDE) as well as projects that utilize credits awarded to
unrelated CDEs. From 2008 through 2014, the Company’s CDE was awarded three allocations totaling $148
million. These awards are expected to generate tax credits totaling $57.7 million over their seven-year
compliance periods.
The Company intends to continue making investments in tax credit projects, though its ability to access new
credits will depend upon, among other factors, federal and state tax policies and the level of competition for such
credits. Based only on tax credit investments that have been made, the Company expects to realize tax credits
over the next three years totaling $12.9 million, $10.1 million and $9.0 million for 2015, 2016 and 2017,
respectively.
The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various
state returns. Generally, the returns for years prior to 2011 are no longer subject to examination by taxing
authorities.
Note 17. Earnings Per Share
Hancock calculates earnings per share using the two-class method. The two-class method allocates net income to
each class of common stock and participating security according to common dividends declared and participation
rights in undistributed earnings. Participating securities consist of unvested share-based payment awards that
contain nonforfeitable rights to dividends or dividend equivalents.
A summary of the information used in the computation of earnings per common share follows:
($ in thousands, except per share amounts)
Numerator:
Net income to common shareholders
Net income allocated to participating securities –
basic and diluted
Years Ended December 31,
2014
2013
2012
$175,722
$163,356
$151,742
3,631
3,105
1,557
Net income allocated to common shareholders – basic
and diluted
$172,091
$160,251
$150,185
Denominator:
Weighted-average common shares – basic
Dilutive potential common shares
Weighted average common shares – diluted
Earnings per common share:
Basic
Diluted
81,804
230
82,034
83,066
101
83,167
84,767
821
85,588
$
$
2.10
2.10
$
$
1.93
1.93
$
$
1.77
1.75
139
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Earnings Per Share (continued)
Potential common shares consist of employee and director stock options. These potential common shares do not
enter into the calculation of diluted earnings per share if the impact would be anti-dilutive, i.e., increase earnings
per share or reduce a loss per share. Weighted-average anti-dilutive potential common shares totaled 621,327 for
the twelve months ended December 31, 2014, 916,756 for the twelve months ended December 31, 2013, and
1,057,925 for the twelve months ended December 31, 2012.
Note 18. Segment Reporting
Accounting standards require that information be reported about a company’s operating segments using a
“management approach.” Reportable segments are identified in these standards as those revenue-producing
components for which separate financial information is produced internally and which are subject to evaluation
by the chief operating decision maker in deciding how to allocate resources to segments. On March 31, 2014, the
Company combined its two state bank charters into one charter. Due to the charter change and consistent with its
stated strategy that is focused on providing a consistent package of community banking products and services
across all markets, the Company has identified its overall banking operations as its only reportable segment.
Because the overall banking operations comprise substantially all of the consolidated operations, no separate
segment disclosures are presented.
Note 19. Condensed Parent Company Information
The following condensed financial statements reflect the accounts and transactions of Hancock Holding
Company only:
Condensed Balance Sheets
(in thousands)
Assets:
Cash
Securities available for sale
Investment in bank subsidiaries
Investment in non-bank subsidiaries
Due from subsidiaries and other assets
Liabilities and Stockholders’ Equity:
Long term debt
Other liabilities
Stockholders’ equity
December 31,
2014
2013
$
44,771
97,423
2,452,529
3,202
24,896
$
66,338
107,017
2,408,389
5,319
24,091
$2,622,821
$2,611,154
$ 149,600
819
2,472,402
$ 184,800
1,285
2,425,069
$2,622,821
$2,611,154
140
HANCOCK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 19. Condensed Parent Company Information (continued)
Condensed Statements of Income
(in thousands)
Operating Income
From subsidiaries
Cash dividends received from bank subsidiaries
Non-cash dividend from bank subsidiary in restructuring
Dividends received from non-bank subsidiaries
Equity in earnings of subsidiaries greater than (less than) dividends
received
Total operating income
Other (expense) income, net
Income tax expense (benefit)
Net income
Condensed Statements of Cash Flows
(in thousands)
Cash flows from operating activities—principally dividends received from
subsidiaries
Net cash provided by operating activities
Cash flows from investing activities
Contribution of capital to subsidiary
Loans to nonbank subsidiaries, net of repayments
Purchase of available for sale securities
Proceeds from principal paydowns of securities available for sale
Other, net
Net cash used by investing activities
Cash flows from financing activities:
Proceeds from issuance of long term debt
Repayment of long term debt
Dividends paid to stockholders
Stock transactions, net
Years Ended December 31,
2014
2013
2012
$124,000
$249,000
—
—
—
2,990
$ 25,000
225,000
150
58,358
(82,203)
(94,486)
182,358
(10,035)
(3,399)
169,787
(10,335)
(3,904)
155,664
(6,673)
(2,751)
$175,722
$163,356
$151,742
Years Ended December 31,
2014
2013
2012
$ 126,491
$ 257,251
$ 18,789
126,491
257,251
18,789
—
—
—
12,664
—
12,664
(870)
—
—
18,685
(5,630)
(955)
1,684
(77,058)
47,305
—
12,185
(29,024)
—
(35,200)
(80,392)
(45,130)
—
(35,200)
(81,673)
(112,266)
217,933
(140,000)
(83,151)
13,479
Net cash provided by (used by) financing activities
(160,722)
(229,139)
8,261
Net increase (decrease) in cash
Cash, beginning of year
Cash, end of year
(21,567)
66,338
40,297
26,041
(1,974)
28,015
$ 44,771
$ 66,338
$ 26,041
141
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended (the Exchange Act). The rules refer to our controls and other procedures that
are designed to ensure that information required to be disclosed in reports that we file or submit under the
Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our
management, including our principal executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.
Management, including our principal executive officer and principal financial officer, has performed an
evaluation of the effectiveness of our disclosure controls and procedures and based on that evaluation, our
principal executive officer and principal financial officer have concluded that our disclosure controls and
procedures were effective as of December 31, 2014.
Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act, designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles. The Company’s management,
with the participation of its principal executive and principal financial officers, evaluated the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2014 based on the framework set forth in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Management also conducted an assessment of requirements pertaining to Section 112 of
the Federal Deposit Insurance Corporation Improvement Act. This section relates to management’s evaluation of
internal control over financial reporting, including controls over the preparation of the schedules equivalent to the
basic financial statements in accordance with the instructions to the Consolidated Financial Statements for Bank
Holding Companies (Form Y-9 C) and compliance with specific laws and regulations. Our evaluation included a
review of the documentation of controls, evaluations of the design of the internal control system and tests of the
effectiveness of internal controls.
PricewaterhouseCoopers, LLP, the independent registered public accounting firm that audited the Company’s
financial statements included in Item 8 of this annual report on Form 10-K, has issued an attestation report on the
Company’s internal control over financial reporting, which is included in Item 8 of this annual report on Form
10-K.
Based on the foregoing evaluation, management concluded that the Company’s internal control over financial
reporting was effective as of December 31, 2014.
There was no change in the Company’s internal control over financial reporting that occurred during the fourth
quarter of 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
142
ITEM 9B. OTHER INFORMATION
Hancock Holding Company (the Company) will hold its Annual Meeting of Shareholders of common stock on
Tuesday, April 28, 2015, at 10:00 a.m. local time at One Hancock Plaza, 2510 14th Street, Gulfport, Mississippi.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning our directors will appear in our definitive proxy statement to be filed with the Securities
and Exchange Commission for our 2015 annual meeting of shareholders under the captions “Information About
Director Nominees” and “Information About Incumbent Directors.” Information concerning compliance with
Section 16(a) of the Exchange Act will appear in our proxy statement under the caption “Section 16(a) Beneficial
Ownership Reporting Compliance.” Information concerning our code of business ethics for officers and
associates, our code of ethics for financial officers, and our code of ethics for directors will appear in our proxy
statement under the caption “Transactions with Related Persons.” Information concerning our audit committee
will appear in our proxy statement under the caption “Board of Directors and Corporate Governance – Audit
Committee.” Such information is incorporated herein by reference. The information required by Item 10
regarding our executive officers appears in a separately captioned heading in Item 1 of Part I.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning our executive compensation will appear in our definitive proxy statement relating to our
2015 annual meeting of shareholders under the caption “Executive Compensation.” Information concerning our
compensation committee interlocks and insider participation and our compensation committee report will appear
in our proxy statement under the caption “Compensation Committee Interlocks and Insider Participation” and
“Compensation Committee Report,” respectively. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Information concerning ownership of certain beneficial owners and management will appear in our definitive
proxy statement relating to our 2015 annual meeting of shareholders under the caption “Security Ownership of
Certain Beneficial Owners and Management.” Such information is incorporated herein by reference.
Number of securities to
be issued upon
exercise of outstanding
options, warrants and
rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a)) (3)
(c)
Plan Category
Equity compensation plans approved
by security holders
Equity compensation plans not
approved by security holders
1,081,737(1)
35.34(2)
61,343(4)
63.90(4)
Total
1,143,080
1,732,811
—
1,732,811
(1)
Includes 75,778 shares potentially issuable upon the vesting of outstanding restricted share units and 13,378
shares potentially issuable upon the vesting of outstanding performance share units that represent awards
deferred into our Nonqualified Deferred Compensation Plan. This includes 114,531 performance stock
awards at 100% of target. If the highest level of performance conditions is met, the total performance shares
would be 218,950 and the total performance shares units would be 26,756.
(2) The weighted average exercise price relates only to the exercise of outstanding options included in
column (a)
143
(3)
Includes 1,561,876 shares remaining available for issuance under the 2014 Long-Term Incentive Plan and
170,935 shares remaining available for issuance under the Company’s 2010 Employee Stock Purchase Plan,
as amended.
(4) Represents securities to be issued upon the exercise of options that were assumed by the Company in the
acquisition of Whitney Holding Corporation.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Information concerning certain relationships and related transactions will appear in our definitive proxy
statement relating to our 2015 annual meeting of shareholders under the caption “Transactions with Related
Persons.” Information concerning director independence will appear in our proxy statement under the caption
“Board of Directors and Corporate Governance.” Such information is incorporated herein by reference.
144
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information concerning principal accountant fees and services will appear in our definitive proxy statement
relating to our 2015 annual meeting of shareholders under the caption “Independent Registered Public
Accounting Firm.” Such information is incorporated herein by reference.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
1.
The following consolidated financial statements of Hancock Holding Company and subsidiaries are
filed as part of this report under Item 8 – Financial Statements and Supplementary Data:
Consolidated balance sheets – December 31, 2014 and 2013
Consolidated statements of income – Years ended December 31, 2014, 2013, and 2012
Consolidated statements of changes in stockholders’ equity– Years ended December 31, 2014,
2013, and 2012
Consolidated statements of cash flows –Years ended December 31, 2014, 2013, and 2012
Notes to consolidated financial statements – December 31, 2014 (pages 67 to 127)
2.
Financial schedules required to be filed by Item 8 of this form, and by Item 15(d) below:
The schedules to the consolidated financial statements set forth by Article 9 of Regulation S-X are not
required under the related instructions or are inapplicable and therefore have been omitted.
3.
Exhibits required to be filed by Item 601 of Regulation S-K, and by Item 15(b) below.
(b) Exhibits:
All other financial statements and schedules are omitted as the required information is inapplicable or the
required information is presented in the consolidated financial statements or related notes.
(a) 3. Exhibits:
145
Exhibit
Number
**2.1
4.1
4.2
4.3
*10.1
*10.2
*10.3
*10.4
*10.5
*10.6
*10.7
*10.8
EXHIBIT INDEX
Description
Composite Articles of Incorporation of the Company.
Specimen stock certificate of the Company (reflecting change in par value from $10.00 to
$3.33, effective March 6, 1989) (filed as Exhibit 4 to the Company’s registration statement on
Form S-8 (File No. 333-11831) filed with the Commission on September 12, 1996 and
incorporated herein by reference).
By executing this Form 10-K, the Company hereby agrees to deliver to the Commission upon
request copies of instruments defining the rights of holders of long-term debt of the Company
or its consolidated subsidiaries or its unconsolidated subsidiaries for which financial
statements are required to be filed, where the total amount of such securities authorized
thereunder does not exceed 10 percent of the total assets of the Company and its subsidiaries
on a consolidated basis.
Shareholder Rights Agreement, dated February 21, 1997, between the Company and Hancock
Bank, as Rights Agent (filed as Exhibit 1 to the Company’s registration statement on
Form 8-A12G (File No. 0-13089) filed with the Commission on February 27, 1997 and
incorporated herein by reference) as extended by Amendment No. 1 to Rights Agreement,
dated February 19, 2007, between the Company and Hancock Bank (filed with the
Commission as Exhibit 4.1 to the Company’s Form 8-K (File No. 0-13089) filed with the
Commission on February 20, 2007 and incorporated herein by reference).
1996 Long Term Incentive Plan (filed as Exhibit A to the Company’s Definitive Proxy
Statement on Schedule 14A (File No. 0-13089) filed with the Commission on January 23,
1996 and incorporated herein by reference).
Amended and Restated 2005 Long-Term Incentive Plan dated December 18, 2008 and
effective January 1, 2009 (filed as Exhibit 10.2 to the Company’s Form 10-K for the year
ended December 31, 2012 (File No. 0-13089) filed with the Commission and incorporated
herein by reference).
Amendment to Amended and Restated 2005 Long-Term Incentive Plan dated May 24, 2012
and effective January 1, 2012 (filed as Exhibit 10.3 to the Company’s Form 10-K for the year
ended December 31, 2012 (File No. 0-13089) filed with the Commission and incorporated
herein by reference).
2014 Long Term Incentive Plan (filed as Exhibit 10.1 to the Company’s Form 8-K
(File No. 0-13089) filed with the Commission on April 21, 2014 and incorporated herein by
reference).
Form of 2011 Performance Stock Award Agreement (filed as Exhibit 10.4 to the Company’s
Form 10-K for the year ended December 31, 2012 (File No. 0-13089) filed with the
Commission and incorporated herein by reference).
Form of 2011 Incentive Stock Option Agreement for Section 16 individuals
(filed as Exhibit 10.5 to the Company’s Form 10-K for the year ended December 31, 2012
(File No. 0-13089) filed with the Commission and incorporated herein by reference).
Form of 2011 Restricted Stock Award Agreement for Section 16 individuals (filed as Exhibit
10.6 to the Company’s Form 10-K for the year ended December 31, 2012 (File No. 0-13089)
filed with the Commission and incorporated herein by reference).
Form of 2012 and 2013 Restricted Stock Agreement (filed as Exhibit 10.2 to the Company’s
Form 8-K (File No. 0-13089) filed with the Commission on February 14, 2013 and
incorporated herein by reference).
Exhibit
Number
*10.9
*10.10
Description
Form of 2014 Restricted Stock Award Agreement (filed as Exhibit 10.4 to the Company’s
Form 10-Q for the quarter ended June 30, 2014 (File No. 0-13089) filed with the Commission
and incorporated herein by reference).
Form of Performance Stock Award Agreement for 2012, 2013 and 2014 (filed as Exhibit 10.3
to the Company’s Form 8-K (File No. 0-13089) filed with the Commission on February 14,
2013 and incorporated herein by reference).
***10.11
Nonqualified Deferred Compensation Plan, amended and restated effective January 1, 2015.
10.12
*10.13
*10.14
10.15
*10.16
*10.17
*10.18
*10.19
Purchase and Assumption Agreement, dated December 18, 2009, among the Federal Deposit
Insurance Corporation, in its capacity as receiver of Peoples First Community Bank, Panama
City Florida, Hancock Bank and the Federal Deposit Insurance Corporation acting in its
corporate capacity (filed as Exhibit 10.8 to the Company’s Form 10-K for the year ended
December 31, 2009 (File No. 0-13089) filed with the Commission and incorporated herein by
reference).
2010 Employee Stock Purchase Plan (filed as Exhibit 99.1 to the Company’s Form 8-K filed
with the Commission on January 5, 2011 (File No. 0-13089) and incorporated herein by
reference).
Amendment to 2010 Employee Stock Purchase Plan, dated December 15, 2011 and effective
January 1, 2011 (filed as Exhibit 10.15 to the Company’s Form 10-K for the year ended
December 31, 2012 (File No. 0-13089) filed with the Commission and incorporated herein by
reference).
Term Loan Agreement, dated December 21, 2012, among the Company, certain lenders from
time to time party thereto, Suntrust Bank (as administrative agent) and U.S. Bank National
Association (as syndication agent) (filed as Exhibit 10.1 to the Company’s Form 8-K (File No.
0-13089) filed with the Commission on December 28, 2012 and incorporated herein by
reference).
Retention Agreement, dated March 1, 2011, between Whitney Bank (as successor in interest to
Hancock Bank of Louisiana) and Joseph S. Exnicios (filed as Exhibit 10.13 to the Company’s
Form 10-K for the year ended December 31, 2011 (File No. 0-13089) filed with the
Commission and incorporated herein by reference).
Retention Agreement, dated March 31, 2011, between Whitney Bank (as successor in interest
to Hancock Bank of Louisiana) and Suzanne Thomas (filed as Exhibit 10.14 to the Company’s
Form 10-K for the year ended December 31, 2011 (File No. 0-13089) filed with the
Commission and incorporated herein by reference).
Executive Incentive Plan (filed as Exhibit 10.20 to the Company’s Form 10-K for the year
ended December 31, 2013 (File No. 0-13089) filed with the Commission and incorporated
herein by reference).
Form of Change in Control Employment Agreement between the Company and each of
Messrs. Chaney, Hairston, Achary, Hill, Loper and Saik effective June 16, 2014 (filed as
Exhibit 10.1 to the Company’s Form 8-K (File No. 0-13089) filed with the Commission on
June 20, 2014 and incorporated herein by reference).
***10.20
*10.21
Term Life Insurance Plan and Summary Plan Description, adopted by the Company effective
July 1, 2014.
Retirement and Restrictive Covenant Agreement between Carl J. Chaney and the Company,
dated as of November 13, 2014 (filed as Exhibit 10.1 to the Company’s Form 8-K
(File No. 0-13089) filed with the Commission on November 14, 2014 and incorporated herein
by reference).
Exhibit
Number
***10.22
**21.1
**23.1
**31.1
**31.2
**32.1
**32.2
**99.1
**99.2
Separation and Restrictive Covenant Agreement, between Richard T. Hill and the Company,
dated as of December 30, 2014.
Description
Subsidiaries of the Company.
Consent of PricewaterhouseCoopers, LLP.
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act of 1934, as amended.
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act of 1934, as amended.
Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Chief Executive Officer Certification—IFR Section 30.15.
Chief Financial Officer Certification—IFR Section 30.15.
**101.INS
XBRL Instance Document.
**101.SCH
XBRL Schema Document.
**101.CAL
XBRL Calculation Document.
**101.LAB
XBRL Label Link Document.
**101.PRE
XBRL Presentation Linkbase Document.
**101.DEF
XBRL Definition Linkbase Document.
Compensatory plan or arrangement.
*
** Filed with this Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 27, 2015
Date
February 27, 2015
Date
HANCOCK HOLDING COMPANY
Registrant
By: /s/ John M. Hairston
John M. Hairston
President & Chief Executive Officer
Director
By: /s/ Michael M. Achary
Michael M. Achary
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ James B. Estabrook, Jr
James B. Estabrook, Jr.
/s/ Frank E. Bertucci
Frank E. Bertucci
/s/ Hardy B. Fowler
Hardy B. Fowler
/s/ Terence E. Hall
Terence E. Hall
/s/ Randall W. Hanna
Randall W. Hanna
/s/ James H. Horne
James H. Horne
/s/ Jerry L. Levens
Jerry L. Levens
Chairman of the Board, Director
February 27, 2015
Director
Director
Director
Director
Director
Director
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
(signatures continued)
/s/ R. King Milling
R. King Milling
/s/ Eric J. Nickelsen
Eric J. Nickelsen
/s/ Thomas H. Olinde
Thomas H. Olinde
/s/ Christine L. Pickering
Christine L. Pickering
/s/ Robert W. Roseberry
Robert W. Roseberry
Anthony J. Topazi
Anthony J. Topazi
Director
Director
Director
Director
Director
Director
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Corporate Information
Annual Meeting
The annual meeting of stockholders
will be held at 10:00 a.m. local time,
Tuesday, April 28, 2015, One Hancock Plaza,
Gulfport, Mississippi.
(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:50)(cid:73)(cid:403)(cid:70)(cid:72)(cid:86)
One Hancock Plaza
2510 14th Street
Gulfport, MS 39501
(228)868-4000
1-800-522-6542
(cid:36)(cid:73)(cid:403)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)
Whitney Bank*
Hancock Insurance Agency
Hancock Investment Services, Inc.
Harrison Finance Company
*Doing business as Hancock Bank in Mississippi, Alabama,
and Florida and Whitney Bank in Louisiana and Texas
Common Stock
The company’s Common Stock is traded
on the NASDAQ Global Select Market
under the symbol HBHC.
Stockholder Information
Stockholders seeking information may
call the Transfer Agent at (228)563-7652, email
shareholderservices@hancockbank.com, access
on the company website www.hancockbank.
com—click on the Investor Relations tab then
click the Shareholder Services box, or write:
(cid:3)
Hancock Bank
Corporate Trust Services
(cid:51)(cid:82)(cid:86)(cid:87)(cid:3)(cid:50)(cid:73)(cid:403)(cid:70)(cid:72)(cid:3)(cid:37)(cid:82)(cid:91)(cid:3)(cid:23)(cid:19)(cid:20)(cid:28)
Gulfport, MS 39502-4019
Dividend Reinvestment
and Stock Purchase Plan
Stockholders seeking full details
about the plan may call (228)563-7657, email
shareholderservices@hancockbank.com, access
on the company website www.hancockbank.com—
click on the Investor Relations tab then click the
Shareholder Services box, or write:
Hancock Bank
Corporate Trust Services
(cid:51)(cid:82)(cid:86)(cid:87)(cid:3)(cid:50)(cid:73)(cid:403)(cid:70)(cid:72)(cid:3)(cid:37)(cid:82)(cid:91)(cid:3)(cid:23)(cid:19)(cid:20)(cid:28)
Gulfport, MS 39502-4019
Cash Dividend Direct Deposit
Stockholders may elect to have their Hancock
Holding Company dividends directly deposited
into a checking, savings, or money market
account. This service provides a safe, convenient
method of receiving dividends and is offered at
no cost to stockholders. To obtain more information
and an enrollment form, call (228)563-7672,
(cid:3)
email shareholderservices@hancockbank.com,
access on the company website
www.hancockbank.com—click
on the Investor Relations tab then
click the Shareholder Services box, or write:
(cid:3)
Hancock Bank
Corporate Trust Services
(cid:51)(cid:82)(cid:86)(cid:87)(cid:3)(cid:50)(cid:73)(cid:403)(cid:70)(cid:72)(cid:3)(cid:37)(cid:82)(cid:91)(cid:3)(cid:23)(cid:19)(cid:20)(cid:28)
Gulfport, MS 39502-4019
Financial Information
Copies of Hancock Holding Company
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to the Securities and Exchange Commission
on Form 10-K, are available without charge
upon request to:
Trisha Voltz Carlson
Senior Vice President
Investor Relations Manager
Hancock Holding Company
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Gulfport, MS 39502-4019
(cid:3)
trisha.carlson@hancockbank.com
Earnings releases and other information
on the company are available on the
company website www.hancockbank.com.
Click on the Investor Relations tab.
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Board of Directors
· John M. Hairston
President & CEO
· Michael M. Achary
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· Stephen E. Barker
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· Cindy S. Collins
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· Michael K. Dickerson
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· Gerald S. Dugal
Treasurer
· Joseph S. Exnicios
President
Whitney Bank
· Edward G. Francis
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· Samuel B. Kendricks
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· D. Shane Loper
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· Michael Otero
Chief Internal Auditor
· Joy Lambert Phillips
General Counsel &
Corporate Secretary
· Clifton J. Saik
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· Suzanne C. Thomas
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· Rudi Hall Thompson
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· Frank E. Bertucci
· James B. Estabrook, Jr.*
· Hardy B. Fowler
· John M. Hairston
· Terence E. Hall
· Randall W. Hanna
· James H. Horne
· Jerry L. Levens
· R. King Milling
· Eric J. Nickelsen
· Thomas H. Olinde
· Christine L. Pickering
· Robert W. Roseberry
· Anthony J. Topazi
*Independent Chairman of the Board
One Hancock Plaza · Post Office Box 4019
Gulfport, Mississippi 39502
hancockbank.com
whitneybank.com
P60462