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Hancock release Q2 data

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Hancock Holding Company (Nasdaq:HBHC) today announced its financial results for the second quarter of 2014.

© Mike Hodges

Operating income for the second quarter of 2014 was $49.6 million or $.59 per diluted common share, compared to $49.1 million, or $.58 in the first quarter of 2014. Operating income was $46.9 million, or $.55, in the second quarter of 2013. We define our operating income as net income excluding tax-effected securities transactions gains or losses and nonoperating expense items.

Hancock’s management believes that operating income provides a useful measure of financial performance that helps investors compare the company’s fundamental operations over time. The financial tables include a reconciliation of net income to operating income.

In the second quarter of 2014 net income was $40.0 million, or $.48 per diluted common share. Net income reflects the impact of certain nonoperating expenses of $12.1 million. Nonoperating expenses are detailed in the slide presentation accompanying the release. There were no adjustments between operating income and net income for the first quarter of 2014 and second quarter of 2013.

Highlights of the company’s second quarter of 2014 results:

– Ongoing improvement in the overall quality of earnings (replacing declining purchase accounting income with core results); core net interest income (TE) increased approximately $700,000 linked-quarter; core net interest margin (NIM) narrowed 2 basis points (bps) (we define our core results as reported results less the impact of net purchase accounting adjustments); core noninterest income increased approximately $1.0 million (after adjusting for the impact from purchase accounting items and normalizing for the sale of selected insurance lines in early second quarter 2014)
– Operating expenses declined $2.3 million linked-quarter, or 1.5%, exceeding the company’s expense management goals; however, management expects increases in operating expense in the near-term as investments are made in revenue-generating initiatives
– Efficiency ratio declined slightly to just under 62%; the company continues working on its goal of lowering the efficiency ratio to below 60%
– Approximately $383 million, or 13%, linked-quarter annualized net loan growth, and approximately $1.3 billion, or 12%, year-over-year loan growth (each excluding the FDIC-covered portfolio)
– Purchase accounting loan accretion declined $1.6 million linked-quarter; management expects sizeable quarterly declines in both the third and fourth quarters of 2014
– Continued improvement in asset quality metrics
– Return on average assets (ROA) (operating) of 1.04% compared to 1.05% in the first quarter of 2014 and 0.99% in the second quarter a year ago

“The quarter’s results reflected solid performance across the company as we continued to improve the quality of our earnings by replacing purchase accounting income with core earnings,” said Hancock’s President and Chief Executive Officer Carl J. Chaney. “The double-digit loan growth, improvements in core revenue, reduced operating expense, improved asset quality and capital strength reflected in the second quarter’s numbers, contributed to the board’s decision and confidence in authorizing another common stock buyback. We remain focused on executing and achieving the strategic initiatives currently underway, with the ultimate goal of enhancing shareholder value.”

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