Loan Declines fail to slow Hancock’s Q3 income surge

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Published: October 20,2010

Tags: Hancock Bank

GULFPORT — Gulfport-based Hancock Bank saw a third quarter drop in loan demand but still generated triple-digit income growth over the previous quarter.

Hancock Holding Co. reported third-quarter income of $14.9 million and a diluted earnings per share price of 40-cents. The net earnings marked a 129 percent surge from the second quarter, when net income came in at $5.5 million and earnings per share totaled 17 cents.

Return on average assets for the third quarter was 0.70 percent. Hancock said in a press statement after the close of markets Tuesday.

On a year-to-date basis, Hancock earned $35.2 million, with diluted earnings per share of 94-cents. Hancock’s year-to-date results include the impact of the company’s common stock offering and the F.D.I.C.-assisted acquisition of Peoples First Community Bank of Panama Beach, Fla., in December 2009, the bank said.

The most significant driver of the bank’s improved earnings from last quarter was reflected in an $8.3 million reduction in the provision for loan losses. The lower provision resulted from the absence of any need to add to last quarter’s specific reserve related to the Gulf Oil Spill ($5.2 million) and also a lower level of required reserve build related to the company’s loan portfolio ($2.5 million this quarter versus $5.4 million last quarter).

Hancock, which has a workforce of 1,699, also reduced operating expenses $4.1 million, or 5.6 percent, from last quarter. It attributed much of that expense decline to the absence of second quarter one-time merger costs related to the Peoples First acquisition.

For the quarter ended Sept. 30, Hancock’s average total loans were $4.98 billion, which represented an increase of $674.3 million, or 15.7 percent, from the same quarter a year ago but marked a decline of $32.9 million, or 0.7 percent, from the second quarter of 2010. The bank attributed this to a continued lessening of loan demand in its operating region.

The drop in loans may appear to have come suddenly but that is not what occurred, according to Hancock.
The increased level of average loans from the same quarter a year ago was primarily related to the acquisition of Peoples First loans with loss share coverage from the F.D.I.C.

Period-end loans were down $64.2 million, or 1.3 percent, from June 30, Hancock said.

The decrease in period-end loans was reflected in mortgage loans (down $44.8 million, or 6.1 percent), direct consumer loans (down $8.3 million or 1.1 percent), indirect consumer loans (down $7.2 million, or 2.2 percent), and finance company loans (down $4.1 million or 3.9 percent).

Hancock’s F.D.I.C. filings show it ended the second quarter of this year with non-current loans and leases of $101 million compared to $16 million in the same quarter of 2009. Of the $101 million in distressed loans, $43.2 million are loans guaranteed by the F.D.I.C. stemming from the takeover of the troubled Peoples First.

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