Hancock Holding in Gulfport, Miss., will increase its allowance for loan losses by $42 million to cover weakness in energy-related credits.

The $21.6 billion-asset company said the allowance for its $1.6 billion energy-loan portfolio will stand at "just under 5%" as of Dec. 31. The allowance for energy loans was $35.2 million, or 2.12%, as of Sept. 30.

"The depth and duration of the current energy cycle is now deeper and longer than what we and many others originally expected," Chief Executive John Hairston said in a Thursday news release. "Recent economic and geopolitical events have caused the price of oil to decline even further, and there are no indications that there will be a quick recovery."

Hancock also estimated that it will record between $50 million and $75 million of chargeoffs from energy loans, spread over the remainder of the cycle. Hancock expects to record about $3.5 million in chargeoffs in the fourth quarter.

Hancock's energy-loan portfolio will make up about 10% of its total loan portfolio at Dec. 31, a decline from 11% at the end of the third quarter. Hancock's exposure to the energy sector includes loans to three major categories: upstream, midstream and support services.

Hancock estimated that its fourth-quarter provision for losses on all loans will be between $48 million and $52 million.

Hancock is scheduled to report fourth-quarter earnings on Jan. 21, after the close of trading. It will host a conference call to discuss earnings on Jan. 22.

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