Hancock Holding Co. in Gulfport, Miss., reported late Tuesday that its net income increased nearly 28% in the fourth quarter from a year earlier.

Asset quality and earnings also showed improvement as the $8.14 billion-asset company prepares to buy its larger competitor, Whitney Holding Co. in New Orleans. The deal was announced Dec. 22.

Hancock's fourth-quarter net income rose 14.6% from a quarter earlier, to $17 million, or 46 cents a share. Analysts on average had expected the company to earn 40 cents a share, according to Thomson Reuters.

The company's 2010 earnings fell 7.3% from 2009, to $52.2 million. The results excluded merger-related expenses from its December 2009 government-assisted acquisition of Peoples First Community Bank in Panama City, Fla.

Asset quality improved from the previous quarter. Hancock's loan-loss provision fell 30% from the third quarter and 28% from a year earlier, to $11.4 million.

Hancock's nonperforming assets dropped to 3.17% of total assets at Dec. 31, compared with 3.55% at Sept. 30. The ratio was higher than a year earlier, when it stood at 1.97%.

Total loans edged up 1% from the third quarter, but slipped 3% from a year earlier, to $4.96 billion. Gains in commercial lending offset declines in certain consumer areas. The net interest margin expanded 21 basis points from the third quarter and 10 basis points from a year earlier, to 4.06%.

Jeff Davis, an analyst at Guggenheim Securities LLC, wrote in a Wednesday note to clients that the results were an "upside surprise." Davis drew attention to the margin expansion, which he attributed to the failed-bank purchase from the Federal Deposit Insurance Corp.

Carl Chaney, Hancock's president and chief executive, was upbeat in the press release announcing the quarterly results. "We see continued improvement in our asset-quality measures," Chaney said. "Combined with the favorable economic outlook for our operating region, along with our announcement about the Whitney merger, we are excited about the coming year."

Hancock's all-stock deal for the $11.5 billion-asset Whitney is valued at $1.5 billion. Hancock still plans to raise $200 million in capital in conjunction with the purchase. The capital should boost the tangible common equity ratio to 8% after the completion of the deal.

Hancock plans to repay Whitney's $300 million investment from the Treasury Department under the Troubled Asset Relief Program. Hancock reiterated on Tuesday that it expects to close the deal in the second quarter.

Whitney is set to report its results Jan. 27.

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