Hancock Holding's (HBHC) shares tumbled Friday morning after the Gulfport, Miss., company reported that its first-quarter earnings fell short of expectations as its allowance for loan losses rose.
The $19.3 billion-asset company said Thursday that it earned $18.5 million, up 21% from a year earlier but down 3% from the fourth quarter. Earnings per share totaled 21 cents, one-third of what analysts polled by Thomson Reuters had predicted.
Hancock's allowance for loan losses rose 51% from a year earlier and 14% from the fourth quarter, to $142.3 million. Most of the increase related to its acquisition of the failed Peoples First Community Bank, which is covered under Federal Deposit Insurance Corp. loss-sharing agreements.
Additionally, the company recorded $33.9 million in pre-tax merger related costs as it completed the core systems conversion of Whitney Holding in mid-March and also finished its operational integration. Hancock completed the acquisition of New Orleans-based Whitney in June. During the fourth quarter, Hancock had $40.2 million in merger-related costs.
Noninterest income surged 80%, to $61.5 million, from a year earlier. Hancock said that caps on debit card interchange fees from the Dodd-Frank Act were not applied to its customers' transactions during the first quarter as previously anticipated. Instead, management expects these restrictions to become effective in the third quarter and will result in a $2 million per quarter loss in fee income.
Net interest income totaled $179.2 million, more than double from a year earlier but down about 1% from the fourth quarter.
Hancock's shares were trading at $33.05 Friday morning, down almost 9% from Thursday's closing.
