Hancock Holding in Gulfport, Miss., reported higher quarterly profit despite lingering energy exposure and a hit tied to tax reform legislation.

The $27 billion-asset company said in a press release Wednesday that its fourth-quarter earnings rose by 7% from a year earlier, to $55.4 million, or 64 cents a share. The results included a $19.5 million charge tied to revaluing the company’s deferred tax asset.

Comparisons from a year earlier were also skewed by Hancock’s acquisition of branches, loans and deposits that once belonged to First NBC in New Orleans. That bank failed in April.

Net interest income increased by 24% to $208 million. Total loans rose by 13.4% to $19 billion, while the net interest margin widened by 22 basis points to 3.48%.

Hancock continues to diversify away from energy lending. The company’s energy portfolio shrank by nearly 7% from the end of the third quarter, to $1.1 billion. Energy loans made up 5.6% of total loans at Dec. 31.

The company said it has absorbed 80% of the roughly $95 million in energy-related net chargeoffs it expects to take place during the current cycle. Any additional impact “will be manageable,” the release said.

The loan-loss provision increased slightly, to $15 million.

Noninterest income increased by 6% to $69.7 million, including higher ATM fees and more service charges on deposit accounts.

Noninterest expense rose by 7.5% to $168 million, which included higher personnel and occupancy costs. Still, Hancock lowered its efficiency ratio to 56.6% from 62.82% a year earlier.

“We are extremely proud of a notable quarter to finish a strong year of improving performance,” John Hairston, Hancock’s president and CEO, said in the release. “We end 2017 on a positive note and enter the new year with opportunities to continue building upon that success.”

Hancock has slowly returned to M&A. In addition to First NBC, the company agreed in December to buy Capital One Financial’s trust and asset management business. Hancock has said that the acquisition, which it expects to close in the second quarter, should be immediately accretive to its earnings per share.

Hancock Holding CEO John Hairston.
Hancock has entered 2018 "with opportunities to continue building" on gains made last year, CEO John Hairston said.

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