News/Press Releases

FOR IMMEDIATE RELEASE
July 22, 2008

Hancock Holding Company announces earnings for second quarter 2008

Highlights and key operating items from Hancock's second quarter earnings are as follows:


• Net Income and Returns: Hancock's net income for the second quarter of 2008 was $21.0 million compared to $20.3 million for the same quarter a year ago, an increase of $0.7 million, or 3.3 percent, and an increase of $0.9 million, or 4.6 percent over the prior quarter. Return on average assets for the quarter was 1.36 percent compared to 1.30 percent for 2008's first quarter. Return on average common equity was 14.51 percent compared to 14.13 percent for the prior quarter.
  
  
• Net Charge-offs and Non-performing Assets: Net charge-offs for the second quarter of 2008 were $2.5 million, or 0.27 percent of average loans, down $438 thousand from the $2.9 million, or 0.32 percent of average loans, reported for the first quarter of 2008. The majority of the decrease in net charge-offs as compared to the first quarter was reflected in commercial real estate loans. Non-performing assets as a percent of total loans and foreclosed assets was 0.52 percent at June 30, 2008, compared to 0.46 percent at March 31, 2008. The Company did report an increase in non-accrual loans of $5.1 million and a reduction of ORE of $1.9 million as compared to the first quarter. The majority of the increase reported in non-accrual loans was reflected in one builder relationship in the Tallahassee market. The relationship in question was adequately reserved at June 30, 2008. Loans 90 days past due or greater (accruing) as a percent of period end loans increased 8 basis points from March 31, 2008, to 0.17 percent at June 30, 2008.
  
  
• Allowance for Loan Losses: Hancock recorded a provision for loan losses of $2.8 million in the second quarter which, when combined with the quarter's net charge-offs of $2.5 million, resulted in a $0.3 million increase in the allowance for loan losses between March 31, 2008, and June 30, 2008. This increase was necessary to adjust the allowance to the level dictated by the Company's reserving methodologies. The Company's allowance for loan losses was $53.3 million at June 30, 2008, up $0.3 million from the $53.0 million reported at March 31, 2008. The ratio of the allowance for loan losses as a percent of period-end loans was 1.41 percent at June 30, 2008, as compared to the 1.46 percent reported at March 31, 2008. The Company's first quarter increase in the allowance for loan losses of $6.4 million anticipated deterioration in certain credits reflected in this quarter's increase in non-accrual loans. Management believes the June 30, 2008, allowance level is adequate.
  
  
• Loans: For the quarter ended June 30, 2008, Hancock's average total loans were $3.71 billion, which represented an increase of $340.5 million, or 10.1 percent, from the quarter ended June 30, 2007. Period-end loans were up $148.8 million, or 4.1 percent, compared to March 31, 2008. Average total loans were up $73.3 million, or 8.1 percent annualized, from the first quarter of 2008. Of that increase, approximately $30.7 million was in Louisiana, $23.4 million in Alabama, and $19.2 million in Florida.
  
  
• Deposits: Period-end deposits for the second quarter were $5.02 billion, up $43.1 million, or 0.9 percent, from June 30, 2007, and were down $122.8 million, or 2.4 percent, from March 31, 2008. Average deposits were down $85.1 million, or 6.8 percent annualized, from the first quarter of 2008. The decreases in average deposits were in time deposits (down $161.6 million) and public fund deposits (down $15.8 million). These decreases were offset by increases in non-interest-bearing deposits (up $21.7 million) and interest-bearing transaction deposits (up $70.6 million).
  
  
• Net Interest Income: Net interest income (te) for the second quarter increased $0.8 million, or 1.5 percent, from the second quarter of 2007, and increased $1.7 million from the first quarter of 2008, or 12.8 percent annualized. The net interest margin (te) of 3.90 percent was 27 basis points narrower than the same quarter a year ago. Growth in average earning asset levels were strong compared to the same quarter a year ago with an increase of $435.8 million, or 8.4 percent, mostly reflected in higher average loans (up $340.5 million, or 10.1 percent). With short-term interest rates down significantly from a year ago, the Company's loan yield fell 106 basis points, pushing the yield on average earning assets down 74 basis points. However, total funding costs over the past year were down only 47 basis points. Compared to the prior quarter, the net interest margin (te) widened 10 basis points, mostly due to a significant reduction in the Company's funding costs. The Company's total cost of funds was down 35 basis points compared to the previous quarter with rates on time deposits down 61 basis points. Over $609 million of time deposits matured in the second quarter at a weighted rate of 4.72 percent. The Company was able to retain and re-price 79 percent of those maturing deposits into lower rate CDs. As the interest rate environment stabilizes, the Company's net interest margin will continue to widen and return to a more normalized level.
  
  
• Non-interest income: Non-interest income, excluding securities transactions, for the second quarter was up $0.7 million, or 2.2 percent, compared to the same quarter a year ago and was also up $0.7 million, or 2.2 percent, compared to the previous quarter. The primary factors impacting the higher levels of non-interest income (excluding securities transactions), as compared to the same quarter a year ago, were higher levels of service charge income (up $408 thousand, or 3.9 percent), investment and annuity fees (up $709 thousand or 35.2 percent), trust revenue (up $451 thousand, or 11.0 percent), and debit card fees (up $329 thousand or 23.1 percent). These increases were offset by decreases in insurance fees (down $774 thousand or 15.4 percent), other income (down $346 thousand or 8.9 percent), and secondary mortgage market operations (down $363 thousand or 32.5 percent). The increase in non-interest income (excluding securities transactions) for the second quarter compared to the prior quarter was primarily due to increases in trust fees (up $400 thousand or 9.6 percent), and debit card fees (up $344 thousand or 13.6 percent).
  
  
• Operating expense: Operating expenses for the second quarter were $0.2 million, or 0.4 percent, lower compared to the same quarter a year ago, but were $2.1 million, or 4.1 percent, higher than the previous quarter. The decrease from the same quarter a year ago was reflected in lower other operating expenses (down $2.6 million) which was offset by higher levels of personnel expense (up $2.2 million) and occupancy expense (up $233 thousand), somewhat reflective of the Company's on-going rebuilding efforts in the wake of the storm of 2005, but also due to the recent facilities opened in expansion markets (Mobile, Pensacola, and New Orleans). The increase in operating expense from last quarter was due to personnel expense (up $1.4 million), occupancy expense (up $101 thousand), and other operating expense (up $679 thousand). These increases were offset by a decrease in equipment expense (down $124 thousand). Full-time equivalent headcount at June 30, 2008, was up 26 from March 31, 2008, and was down 41 compared to June 30, 2007.