Hancock Holding Co.
) reported second-quarter operating earnings of 59 cents per share,
in-line with the Zacks Consensus Estimate. The result, however,
compared favorably with the year-ago figure of 55 cents.
Lower operating expenses, decline in provision for loan losses as
well as improved credit quality acted as tailwinds. However, the
pressure on top line continued with a fall in both non-interest
income and net interest income. Both capital and profitability
ratios were mixed bags.
Net income was $40.0 million, down 14.7% from the prior-year
Hancock Holding Company - Earnings Surprise |
Performance in Detail
Hancock's total revenue came in at $223.7 million, down 5.4% from
the prior-year quarter. However, it was in-line with the Zacks
Net interest income (taxable equivalent) declined 2.6% from the
year-ago quarter to $167.3 million. Moreover, net interest margin
(NIM) fell 18 basis points (bps) from the prior-year quarter to
Non-interest income was $56.4 million, down 11.7% from the
prior-year quarter. The decline was mainly due to a decrease in all
the components except a rise in trust fees, bank card & ATM
fees, and other income.
Total operating expenses were $144.7 million, down 10.8% year over
year. The fall was due to decline in all components.
Total loans amounted to $12.9 billion as of Jun 30, 2014, up 10.3%
year over year. Further, total deposits amounted to $15.2 billion,
up 0.6% year over year.
Credit quality was strong during the quarter. Net charge-offs from
the non-covered loan portfolio were $4.1 million or 0.13% of
average total loans, compared with $7.0 million or 0.24% of average
total loans in the year-ago quarter. Moreover, total nonperforming
assets were $157.5 million, down 27.2% year over year.
Further, net provision for loan losses was $7.0 million, down 19.0%
from the prior-year quarter.
Capital and Profitability Ratios
Both capital and profitability ratios represented a mixed bag. As
of Jun 30, 2014, Tier 1 leverage ratio was 9.61%, up from 8.96% as
of Jun 30, 2013. However, Tier 1 risk-based capital ratio was
11.93%, declining marginally from 12.00% as of Jun 30, 2013.
Return on average assets was 0.84%, down from 0.99% as of Jun 30,
2013. However, as of Jun 30, 2014, tangible common equity ratio was
9.29%, up from 8.52% as of Jun 30, 2013.
Capital Deployment Activities
In early May 2014, the company reached the final settlement of
accelerated share repurchase (ASR) transaction, with approximately
590,000 shares received. As a result, the Board of Directors
authorized a new common stock buyback program in Jul for up to 5%,
or approximately 4 million shares of the company's common stock.
The buyback authorization will expire on Dec 31, 2015.
The pressure on Hancock's top line will likely persist, given the
sluggish economic recovery and a still low interest rate scenario.
Nevertheless, the company's cost-containment measures and efficient
organic growth strategies should continue to drive profitability in
the quarters ahead.
At present, Hancock carries a Zacks Rank #3 (Hold).
Among other banks, Bank of the Ozarks, Inc. (
) reported earnings per share of 34 cents in second-quarter 2014,
beating the Zacks Consensus Estimate by a penny. BancorpSouth,
) second-quarter 2014 earnings per share came in at 33 cents, in
line with the Zacks Consensus Estimate. HomeTrust Bancshares, Inc.
) is scheduled to report on Aug 4.
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