Hancock Holding in Gulfport, Miss., reported an increase in quarterly earnings despite ongoing challenges with energy loans.

The $27 billion-asset company said in a press release late Tuesday that its second-quarter profit rose 11.4% from a year earlier, to $52.3 million, or 60 cents a share.

The results reflected the company’s March purchase of nine branches and roughly $1.3 billion in loans from First NBC Bank in New Orleans. Hancock gained more branches, deposits and assets from First NBC when that bank failed in late April.

Energy remains a big focus at Hancock, which reduced its exposure by 17% from a year earlier, to $1.2 billion in loans. Energy loans made up 6.7% of total loans on March 31. About 56% of Hancock’s energy loans are considered criticized, while a tenth are on nonaccrual status.

Hancock Holding CEO John Hairston.
Hancock Holding, led by CEO John Hairston, posted stronger earnings that reflected its purchase of the failed First NBC Bank.

Though Hancock said it believes its energy issues are manageable, it warned that more chargeoffs should be expected. The release said reserve-based credits are showing signs of improvement, given a stabilization in oil prices, and that the company expects “improvement in land-based services and non-drilling services in the Gulf of Mexico to follow.”

Hancock’s overall loan-loss provision fell by 13% to roughly $15 million.

Net interest income rose 21% to $199.7 million. Total loans increased by 15% to $18.5 billion, while the net interest margin widened by 18 basis points to 3.43%. Construction and land development loans rose by 49% to $1.3 billion. Residential mortgages increased by 23.6% to $2.5 billion.

Noninterest income rose by 6% to $67.5 million, led by a nearly 15% increase in bank and ATM fees.

Noninterest expenses rose 21.5% to $183.5 million, though $10.6 million in expenses were tied to the First NBC acquisitions and a decision to terminate loss-share agreements tied to previous failed-bank deals. Personnel expenses rose 14.2% to $96.2 million.

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