Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity

Note 11. Stockholders’ Equity

Common Stock Offering

In April 2011, Hancock completed an underwritten public offering of the Company’s common stock. The underwriters purchased 6,958,143 shares at a public offering price of $32.25 per share. The net proceeds to the Company after deducting offering expenses and underwriting discounts totaled $214 million. The proceeds of the offering were used for general corporate purposes, including the enhancement of the Company’s capital position and the purchase of Whitney Holding Corporation’s TARP preferred stock and warrant in connection with the Whitney acquisition. The number and value of Company common shares exchanged in the Whitney transaction are discussed in Note 2.

Accumulated Other Comprehensive Income (Loss)

AOCI includes unrealized gains and losses on available for sale (“AFS”) securities. Unrealized gain (loss) on AFS securities also includes unrealized gains on AFS securities that were transferred to held to maturity securities in the first quarter of 2012. Such amounts 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. 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 losses on the cash flow hedge of the variable-rate term loan agreement described in Note 6 will be reclassified into income over the life of the debt. Gains and losses in AOCI are net of deferred income taxes.

A rollforward of the components of accumulated other comprehensive income (loss) is included as follows (in thousands):

	Available for Sale Securities			Held to Maturity Securities Transferred from AFS			Employee Benefit Plans			Loss on Effective Cash Flow Hedges			Total
Balance, December 31, 2009	$	28,386		$	—		$	(25,388	)	$	—		$	2,998
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)		(1,760	)		—			(6,437	)		—			(8,197	)
Reclassification adjustment for net losses realized and included in earnings		—			—			2,535			—			2,535
Income tax expense (benefit)		(606	)		—			(1,439	)		—			(2,045	)
Balance, December 31, 2010		27,232			—			(27,851	)		—			(619	)
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)		52,300			—			(94,848	)		(107	)		(42,655	)
Reclassification adjustment for net losses realized and included in earnings		91			—			2,832			—			2,923
Income tax expense (benefit)		19,145			—			(32,944	)		(42	)		(13,841	)
Balance, December 31, 2011		60,478			—			(86,923	)		(65	)		(26,510	)
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)		6,076			—			2,566			(502	)		8,140
Transfer of net unrealized gain from AFS to HTM, net of cummulative tax effect		(24,598	)		24,598			—			—			—
Reclassification adjustment for net losses realized and included in earnings		(1,441	)		—			7,457			311			6,327
Amortization of unrealized net gain on securities transferred to held-to-maturity		—			(8,752	)		—			—			(8,752	)
Income tax expense (benefit)		1,661			(3,244	)		3,788			(75	)		2,130
Balance, December 31, 2012	$	38,854		$	19,090		$	(80,688	)	$	(181	)	$	(22,925	)

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 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 asets (leverage ratio). Both the Company and its bank subsidiaries 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%.

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 must also consider other subjective and quantitative measures of risk associated with an institution. The subsidiary banks were 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 these classifications. At December 31, 2012 and 2011, the Company and the Banks 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 Banks together with corresponding regulatory capital requirements at December 31, 2012 and 2011 (amounts in thousands):

	Actual				Required for Minimum Capital Adequacy				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio %		Amount		Ratio %		Amount		Ratio %
At December 31, 2012
Total capital (to risk weighted assets)
Company	$	1,881,558		14.28	$	1,053,781		8.00	$	n/a		n/a
Hancock Bank		643,202		14.39		357,687		8.00		447,109		10.00
Whitney Bank		1,242,608		14.25		697,528		8.00		871,910		10.00
Tier 1 capital (to risk weighted assets)
Company	$	1,666,042		12.65	$	526,890		4.00	$	n/a		n/a
Hancock Bank		586,623		13.12		178,843		4.00		268,265		6.00
Whitney Bank		1,122,341		12.87		348,764		4.00		523,146		6.00
Tier 1 leverage capital
Company	$	1,666,042		9.10	$	549,185		3.00	$	n/a		n/a
Hancock Bank		586,623		9.13		192,733		3.00		321,221		5.00
Whitney Bank		1,122,341		9.24		364,540		3.00		607,567		5.00
At December 31, 2011
Total capital (to risk weighted assets)
Company	$	1,783,037		13.59	$	1,049,495		8.00	$	n/a		n/a
Hancock Bank		437,225		14.21		246,072		8.00		307,590		10.00
Whitney Bank		1,277,591		12.76		801,025		8.00		1,001,281		10.00
Tier 1 capital (to risk weighted assets)
Company	$	1,506,218		11.48	$	524,748		4.00	$	n/a		n/a
Hancock Bank		397,900		12.94		123,036		4.00		184,554		6.00
Whitney Bank		1,091,770		10.90		400,512		4.00		600,769		6.00
Tier 1 leverage capital
Company	$	1,506,218		8.17	$	553,318		3.00	$	n/a		n/a
Hancock Bank		397,900		8.15		146,408		3.00		244,013		5.00
Whitney Bank		1,091,770		8.19		399,725		3.00		666,208		5.00

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 subsidiary banks may distribute to Hancock without prior regulatory approval, as well as the amount of loans they may make to the Company. Dividends paid by Hancock Bank are subject to approval by the Commissioner of Banking and Consumer Finance of the State of Mississippi and those paid by Whitney Bank are subject to approval by the Commissioner of Financial Institutions of the State of Louisiana.