The collapse in oil prices hammered fourth-quarter profits at Hancock Holding as the Gulfport, Miss., sharply boosted its loan-loss provision address weakness in its energy loan book.
Net income at the $23 billion-asset holding company for Hancock Bank and Whitney Bank fell 62% to $15.3 million, versus the same period in 2014. Earnings per share fell 60% to 19 cents.
Hancock cited two reasons for the decline — a $43 million increase in its loan-loss allowance as a result of energy-sector weakness, and a $9.1 million decrease in purchase accounting income.
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Hancock Holding in Gulfport, Miss., will increase its allowance for loan losses by $42 million to cover weakness in energy-related credits.
December 17 -
There is a growing belief that reserves for energy loans should represent 5% of a bank's exposure to the sector. Three banks have already announced plans to move in that direction, prompting speculation as to which other lenders will be next.
January 13 -
Regions Financial in Birmingham, Ala., reported double-digit earnings growth in the fourth quarter as gains in both fee income and loan balances helped to offset a sharply higher loan-loss provision related to weakness in its energy portfolio.
January 15
Hancock had disclosed in
Net interest income fell 1.5% year over year to $158.4 million. The loan-loss provision swelled to $50.2 million from $9.7 million. The net interest margin compressed to 3.21%.
Total loans rose 12%, to $15.2 billion, from a year earlier. Hancock noted that it is attempting to decrease its concentration of energy loans and in the recent quarter it recorded loan growth in equipment finance, private banking, indirect auto lending and mortgages.
Fee income rose 4.7% to 59.7 million on higher bank card and ATM fees and investment and annuity fees.
Noninterest expense rose 8.3% to $156 million on higher salaries. The efficiency ratio worsened 522 basis points to 67.63%.
