UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2016~~2017


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36827

HANCOCK HOLDING COMPANY

(Exact name of registrant as specified in its charter)


Mississippi	64-0693170
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Hancock Plaza, 2510 14th Street, Gulfport, Mississippi	39501
(Address of principal executive offices)	(Zip Code)

(228) 868-4000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, address and fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See ~~definition~~the definitions of “large accelerated filer”, “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

~~77,574,054~~85,180,800 common shares were outstanding as of November ~~1, 2016.~~3, 2017.

Table of Contents

Hancock Holding Company

Index


Part I. Financial Information		Page Number
ITEM 1.	Financial Statements
	Consolidated Balance Sheets (unaudited) – September 30, ~~2016 (unaudited)~~2017 and December 31, ~~2015~~2016		1 5
	Consolidated Statements of Income (unaudited) -– Three and ~~nine months ended~~Nine Months Ended September 30, ~~2016~~2017 and ~~2015~~2016		2 6
	Consolidated Statements of Comprehensive Income (unaudited) – Three and ~~nine months ended~~Nine Months Ended September 30, ~~2016~~2017 and ~~201~~20165		3 7
	Consolidated Statements of Changes in Stockholders’ Equity - (unaudited) – Nine ~~months ended~~Months Ended September 30, ~~2016~~2017 and ~~201~~20165		4 8
	Consolidated Statements of Cash Flows (unaudited) - Nine ~~months ended~~Months Ended September 30, ~~2016~~2017 and ~~2015~~2016		5 9
	Notes to Consolidated Financial Statements (unaudited) – September 30, ~~2016~~2017		610
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		33 35
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		55 58
ITEM 4.	Controls and Procedures		55 59
Part II. Other Information
ITEM 1.	Legal Proceedings		56 59
ITEM 1A.	Risk Factors		56 59
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		56 59
ITEM 3.	Default on Senior Securities		N/A
ITEM 4.	Mine Safety Disclosures		N/A
ITEM 5.	Other Information		N/A
ITEM 6.	Exhibits		57 60
Signatures

Table of Contents

Hancock Holding Company

Glossary of Defined Terms

AFS – available for sale securities

AOCI – accumulated other comprehensive income

ASC – Accounting Standards Codification

ASU – Accounting Standards Update

ATM - automatic teller machine

Bank – Whitney Bank

Basel II - Basel Committee's 2004 Regulatory Capital Framework (Second Accord)

Basel III - Basel Committee's 2010 Regulatory Capital Framework (Third Accord)

Basel Committee - Basel Committee on Banking Supervision

Beige Book - Federal Reserve’s Summary of Commentary on Current Economic Conditions

bp(s) – basis point(s)

C&I – commercial and industrial loans

CD – certificate of deposit

CDE – Community Development Entity

CMO – Collateralized Mortgage Obligation

Company – Hancock Holding Company and its wholly-owned subsidiaries

CRE – commercial real estate

Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act

FASB – Financial Accounting Standards Board

FDIC – Federal Deposit Insurance Corporation

Federal Reserve Bank – The 12 banks that are the operating arms of the U.S. central bank. They implement the

policies of the Federal Reserve Board and also conduct economic research.

Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes

monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed

by the President subject to Senate confirmation, and serve 14-year terms.

Federal Reserve System – The 12 Federal Reserve Banks, with each one serving member banks in its own district.

This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the

credit structure.

FHLB – Federal Home Loan Bank

FNBC – First NBC Bank

FNBC I – acquired selected assets and liabilities from FNBC under agreement dated March 10, 2017

FNBC II – acquired selected assets and liabilities from the FDIC as receiver for FNBC under agreement dated April 28, 2017

GAAP – Generally Accepted Accounting Principles in the United States of America

Hancock – Hancock Holding Company

Hancock Bank – Whitney Bank does business as Hancock Bank in Mississippi, Alabama, and Florida

HTM – held to maturity securities

LIBOR – London Interbank Offered Rate

LIHTC – Low Income Housing Tax Credit

MD&A – management’s discussion and analysis of financial condition and results of operations

NAICS – North American Industry Classification System

n/m – not meaningful

OCI – other comprehensive income

OFI – Louisiana Office of Financial Institutions

ORE – other real estate defined as foreclosed and surplus real estate

Parent Company – Hancock Holding Company

PCI – purchased credit impaired loans

Repos – securities sold under agreements to repurchase

SEC – U.S. Securities and Exchange Commission

Table of Contents

Securities Act – Securities Act of 1933, as amended

te – taxable equivalent adjustment

TDR – troubled debt restructuring (as defined in ASC 310-40)

TSR – total shareholder return

U.S. Treasury – The United States Department of the Treasury

Whitney Bank – wholly-owned subsidiary of Hancock Holding Company, through which Hancock conducts its banking operations

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

Hancock Holding Company and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



	September 30,		December 31,		September 30,		December 31,
(in thousands, except share data)	2016		2015
(in thousands, except per share data)					2017		2016
ASSETS		unaudited
Cash and due from banks	$	329,872	$	303,874	$	333,775	$	372,689
Interest-bearing bank deposits		128,028		564,671		105,428		77,235
Federal funds sold		892		884		6,297		942
Securities available for sale, at fair value (amortized cost of $2,370,621 and $2,086,745)		2,414,680		2,093,404
Securities held to maturity (fair value of $2,482,540 and $2,375,851)		2,428,432		2,370,388
Securities available for sale, at fair value (amortized cost of $2,879,343 and $2,562,000)						2,855,278		2,516,908
Securities held to maturity (fair value of $2,768,148 and $2,470,117)						2,769,274		2,500,220
Loans held for sale		42,545		20,434		23,236		34,064
Loans		16,070,821		15,703,314		18,786,285		16,752,151
Less: allowance for loan losses		(236,061)		(181,179)		(223,122)		(229,418)
Loans, net		15,834,760		15,522,135		18,563,163		16,522,733
Property and equipment, net of accumulated depreciation of $227,075 and $209,763		363,656		377,015
Property and equipment, net of accumulated depreciation of $226,410 and $231,127						365,145		361,612
Prepaid expenses		18,842		17,560		25,084		18,038
Other real estate, net		19,097		26,256		21,154		18,884
Accrued interest receivable		59,000		54,068		78,011		65,887
Goodwill		621,193		621,193		739,403		621,193
Other intangible assets, net		92,523		107,538		96,525		87,757
Life insurance contracts		478,602		434,550		539,232		480,406
FDIC loss share receivable		18,030		29,868		—		16,219
Deferred tax asset, net		73,419		75,830		83,615		104,435
Other assets		185,159		213,937		212,135		176,080
Total assets	$	23,108,730	$	22,833,605	$	26,816,755	$	23,975,302
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Liabilities
Deposits
Noninterest-bearing	$	7,543,041	$	7,276,127	$	7,896,384	$	7,658,203
Interest-bearing		11,342,436		11,072,785		13,637,475		11,766,063
Total deposits		18,885,477		18,348,912		21,533,859		19,424,266
Short-term borrowings		1,075,956		1,423,644		1,737,151		1,225,406
Long-term debt		463,710		490,145		331,179		436,280
Accrued interest payable		9,919		6,609		9,014		9,574
Other liabilities		184,541		151,152		342,277		160,008
Total liabilities		20,619,603		20,420,462		23,953,480		21,255,534
Stockholders' equity
Common Stock - $3.33 par value per share; 350,000,000 shares authorized, 77,570,515 and 77,496,429 outstanding		258,310		258,063
Common stock						291,358		291,358
Capital surplus		1,697,147		1,684,101		1,721,477		1,698,253
Treasury shares at cost - 9,246,656 and 9,319,082 shares		(228,701)		(226,370)
Retained earnings		818,060		777,944		948,591		850,689
Accumulated other comprehensive loss, net		(55,689)		(80,595)		(98,151)		(120,532)
Total stockholders' equity		2,489,127		2,413,143		2,863,275		2,719,768
Total liabilities and stockholders' equity	$	23,108,730	$	22,833,605	$	26,816,755	$	23,975,302
Common shares authorized (par value of $3.33 per share)						350,000		350,000
Common shares issued						87,495		87,495
Common shares outstanding						84,767		84,235

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Income

(Unaudited)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended				Nine Months Ended
									September 30,				September 30,
(in thousands, except per share data)	2016		2015		2016		2015		2017		2016		2017		2016
Interest income:
Loans, including fees	$	155,761	$	146,398	$	466,591	$	435,270	$	199,702	$	155,761	$	566,663	$	466,591
Loans held for sale		323		176		731		494		216		323		669		731
Securities-taxable		21,782		23,631		68,788		66,095		26,616		21,782		74,385		68,788
Securities-tax exempt		3,780		839		8,593		2,564		5,608		3,780		16,643		8,593
Short-term investments		507		285		1,597		913		574		507		3,048		1,597
Total interest income		182,153		171,329		546,300		505,336		232,716		182,153		661,408		546,300
Interest expense:
Deposits		12,590		8,933		36,926		23,680		21,789		12,590		52,972		36,926
Short-term borrowings		1,040		273		2,942		631		4,425		1,040		11,598		2,942
Long-term debt		5,010		5,293		15,114		14,246		3,645		5,010		12,573		15,114
Total interest expense		18,640		14,499		54,982		38,557		29,859		18,640		77,143		54,982
Net interest income		163,513		156,830		491,318		466,779		202,857		163,513		584,265		491,318
Provision for loan losses		18,972		10,080		96,204		22,842		13,040		18,972		43,982		96,204
Net interest income after provision for loan losses		144,541		146,750		395,114		443,937		189,817		144,541		540,283		395,114
Noninterest income:
Service charges on deposit accounts		18,716		18,619		55,493		53,842		21,444		18,716		60,711		55,493
Trust fees		11,512		11,345		34,825		34,340		10,742		11,512		33,459		34,825
Bank card and ATM fees		11,808		11,637		35,110		34,688		13,390		11,808		39,545		35,110
Investment and annuity fees		4,289		6,149		14,265		16,037		5,570		4,289		15,440		14,265
Secondary mortgage market operations		4,917		3,413		12,005		9,695		4,157		4,917		11,965		12,005
Insurance commissions and fees		1,088		2,238		3,635		6,587		660		1,088		2,499		3,635
Amortization of FDIC loss share receivable		(1,539)		(1,564)		(4,678)		(4,034)		—		(1,539)		(2,427)		(4,678)
Other income		11,866		8,370		32,768		26,139		11,152		11,866		36,901		32,768
Securities transactions		351		4		1,465		337		—		351		—		1,465
Total noninterest income		63,008		60,211		184,888		177,631		67,115		63,008		198,093		184,888
Noninterest expense:
Compensation expense		70,290		71,187		213,524		206,754		82,242		70,290		237,486		213,524
Employee benefits		12,873		12,968		42,591		41,472		12,499		12,873		44,019		42,591
Personnel expense		83,163		84,155		256,115		248,226		94,741		83,163		281,505		256,115
Net occupancy expense		10,068		11,222		30,818		34,203		12,448		10,068		36,285		30,818
Equipment expense		3,349		3,598		10,203		11,623		3,779		3,349		11,457		10,203
Data processing expense		14,590		13,844		43,167		41,412		16,798		14,590		48,993		43,167
Professional services expense		6,584		7,656		21,917		31,978		10,062		6,584		31,691		21,917
Amortization of intangibles		4,886		6,027		15,015		18,493		6,070		4,886		16,532		15,015
Telecommunications and postage		3,284		3,485		9,917		10,607		3,876		3,284		11,081		9,917
Deposit insurance and regulatory fees		5,969		4,225		17,415		12,033		7,883		5,969		21,356		17,415
Other real estate expense, net		(5,214)		422		(4,096)		1,379
Other real estate (income) expense, net										199		(5,214)		(2,329)		(4,096)
Other expense		22,379		16,559		55,561		53,671		21,760		22,379		68,057		55,561
Total noninterest expense		149,058		151,193		456,032		463,625		177,616		149,058		524,628		456,032
Income before income taxes		58,491		55,768		123,970		157,943		79,316		58,491		213,748		123,970
Income taxes		11,772		14,602		26,505		41,789		20,414		11,772		53,565		26,505
Net income	$	46,719	$	41,166	$	97,465	$	116,154	$	58,902	$	46,719	$	160,183	$	97,465
Earnings per common share-basic	$	0.59	$	0.52	$	1.23	$	1.45	$	0.68	$	0.59	$	1.85	$	1.23
Earnings per common share-diluted	$	0.59	$	0.52	$	1.23	$	1.45	$	0.68	$	0.59	$	1.85	$	1.23
Dividends paid per share	$	0.24	$	0.24	$	0.72	$	0.72	$	0.24	$	0.24	$	0.72	$	0.72
Weighted average shares outstanding-basic		77,550		77,928		77,525		78,452		84,749		77,550		84,577		77,525
Weighted average shares outstanding-diluted		77,677		78,075		77,653		78,609		84,980		77,677		84,818		77,653

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2016

2015

2016

2015
Net income

$
46,719

$
41,166

$
97,465

$
116,154
Other comprehensive income:

Net change in unrealized (loss) gain on available for sale securities and hedges

(5,604)

15,131

39,997

2,174
Reclassification adjustment for net losses realized and included in earnings

1,158

802

2,960

2,208
Valuation adjustment for employee benefit plans

(6,347)

4,963

(6,347)

(959)
Amortization of unrealized net loss on securities transferred to held to maturity

1,108

1,023

2,736

2,609
Other comprehensive (loss) income before income taxes

(9,685)

21,919

39,346

6,032
Income tax (benefit) expense

(3,537)

8,002

14,440

2,125
Other comprehensive (loss) income net of income taxes

(6,148)

13,917

24,906

3,907
Comprehensive income

$
40,571

$
55,083

$
122,371

$
120,061



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2017		2016		2017		2016
Net income	$	58,902	$	46,719	$	160,183	$	97,465
Other comprehensive income:
Net change in unrealized gain/loss on securities available for sale and hedges		5,949		(5,604)		19,794		39,997
Reclassification of net losses realized and included in earnings		1,374		1,158		4,479		2,960
Valuation adjustment for pension plan amendment		—		—		17,315		—
Other valuation adjustments for employee benefit plans		1,597		(6,347)		(9,185)		(6,347)
Amortization of unrealized net loss on securities transferred to held to maturity		977		1,108		2,726		2,736
Other comprehensive income/loss before income taxes		9,897		(9,685)		35,129		39,346
Income tax expense (benefit)		3,609		(3,537)		12,748		14,440
Other comprehensive income/loss net of income taxes		6,288		(6,148)		22,381		24,906
Comprehensive income	$	65,190	$	40,571	$	182,564	$	122,371

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)



								Accumulated													Accumulated
								Other													Other
								Comprehensive													Comprehensive
	Common Stock			Capital		Retained		Income (Loss),		Treasury				Common Stock			Capital		Retained		Income (Loss),
(in thousands, except share data)	Shares	Amount		Surplus		Earnings		net		Stock		Total
Balance, December 31, 2014	80,426,485	$	267,820	$	1,689,291	$	723,496	$	(50,074)	$	(158,131)	$	2,472,402
Net income	—		—		—		116,154		—		—		116,154
Other comprehensive income	—		—		—		—		3,907		—		3,907
Comprehensive income	—		—		—		116,154		3,907		—		120,061
Cash dividends declared ($0.72 per common share)	—		—		—		(57,881)		—		—		(57,881)
Common stock activity, long-term incentive plan	224,399		747		21,612		—		—		(12,544)		9,815
Purchase of common stock under stock buyback program	(3,131,886)		(10,429)		—		—		—		(80,407)		(90,836)
Balance, September 30, 2015	77,518,998	$	258,138	$	1,710,903	$	781,769	$	(46,167)	$	(251,082)	$	2,453,561

(in thousands, except per share data)														Shares Issued	Amount		Surplus		Earnings		net			Total
Balance, December 31, 2015	77,496,429	$	258,063	$	1,684,101	$	777,944	$	(80,595)	$	(226,370)	$	2,413,143	87,491	$	291,346	$	1,424,448	$	777,944	$	(80,595)	$	2,413,143
Net income	—		—		—		97,465		—		—		97,465	—		—		—		97,465		—		97,465
Other comprehensive income	—		—		—		—		24,906		—		24,906	—		—		—		—		24,906		24,906
Comprehensive income	—		—		—		97,465		24,906		—		122,371	—		—		—		97,465		24,906		122,371
Cash dividends declared ($0.72 per common share)	—		—		—		(57,349)		—		—		(57,349)	—		—		—		(57,349)		—		(57,349)
Common stock activity, long-term incentive plan	47,547		159		13,209		—		—		(3,227)		10,141	2		6		10,135		—		—		10,141
Issuance of stock from dividend reinvestment	26,539		88		(163)		—		—		896		821	—		—		821		—		—		821
Balance, September 30, 2016	77,570,515	$	258,310	$	1,697,147	$	818,060	$	(55,689)	$	(228,701)	$	2,489,127	87,493	$	291,352	$	1,435,404	$	818,060	$	(55,689)	$	2,489,127

Balance, December 31, 2016														87,495	$	291,358	$	1,698,253	$	850,689	$	(120,532)	$	2,719,768
Net income														—		—		—		160,183		—		160,183
Other comprehensive income														—		—		—		—		22,381		22,381
Comprehensive income														—		—		—		160,183		22,381		182,564
Cash dividends declared ($0.72 per common share)														—		—		—		(62,400)		—		(62,400)
Common stock activity, long-term incentive plan														—		—		20,910		119		—		21,029
Issuance of stock from dividend reinvestment and stock purchase plan														—		—		2,314		—		—		2,314
Balance, September 30, 2017														87,495	$	291,358	$	1,721,477	$	948,591	$	(98,151)	$	2,863,275

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2016		2015		2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	97,465	$	116,154	$	160,183	$	97,465
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,350		21,533		20,942		21,350
Provision for loan losses		96,204		22,842		43,982		96,204
Gain on other real estate owned		(5,145)		(521)		(1,865)		(5,145)
Deferred tax (benefit) expense		(14,713)		11,895
Deferred tax expense (benefit)						8,072		(14,713)
Increase in cash surrender value of life insurance contracts		(8,807)		(7,700)		(10,855)		(8,807)
(Gain) loss on disposal of other assets		(6,014)		1,626		1,662		(6,014)
Net (increase) decrease in loans held for sale		(21,698)		498		11,583		(21,698)
Net amortization of securities premium/discount		20,836		15,456		24,119		20,836
Amortization of intangible assets		15,015		18,493		16,532		15,015
Amortization of FDIC indemnification asset		4,678		4,034		2,427		4,678
Stock-based compensation expense		10,555		9,469		12,370		10,555
Increase (decrease) in interest payable and other liabilities		8,502		(6,753)		(5,038)		8,946
Net payments (to) from FDIC for loss share claims		(436)		14,667
Net cash receipts from (payments to) FDIC for loss share claims						2,300		(436)
Decrease in FDIC loss share receivable		3,487		6,309		8,613		3,487
Decrease (increase) in other assets		40,693		(9,980)
Increase in payable to FDIC for loan servicing						180,882		—
Decrease in other assets						11,446		40,693
Other, net		6,572		4,768		17,723		6,572
Net cash provided by operating activities		268,544		222,790		505,078		268,988
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities		141,716		9,287
Proceeds from sales of securities available for sale						213,877		141,716
Proceeds from maturities of securities available for sale		298,810		755,663		249,270		298,810
Purchases of securities available for sale		(720,241)		(1,286,443)		(578,690)		(720,241)
Proceeds from maturities of securities held to maturity		307,633		439,410		276,073		307,633
Purchases of securities held to maturity		(371,657)		(658,226)		(554,442)		(371,657)
Net decrease in short-term investments		436,635		608,534		331,746		436,635
Proceeds from sales of loans		166,922		—		—		166,922
Net increase in loans		(591,696)		(882,702)		(725,228)		(591,696)
Purchase of life insurance contracts		(40,000)		—		(50,000)		(40,000)
Purchases of property and equipment		(10,817)		(19,529)		(16,086)		(10,817)
Proceeds from sales of property and equipment		677		13,607		389		677
Proceeds from sales of other real estate		20,709		39,612		15,357		20,709
Net cash paid for FNBC I acquisition						(322,708)		—
Net cash received for FNBC II acquisition						799,509		—
Other, net		(3,651)		(8,603)		(28,976)		(3,651)
Net cash used in investing activities		(364,960)		(989,390)		(389,909)		(364,960)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		536,581		867,117		181,084		536,581
Net decrease in short-term borrowings		(347,688)		(102,391)		(84,890)		(347,688)
Repayments of long-term debt		(16,796)		(31,621)		(198,690)		(16,796)
Net proceeds from issuance of long-term debt		6,796		149,153		124		6,796
Dividends paid		(57,349)		(57,881)		(62,400)		(57,349)
Purchase of common stock under stock buyback program		—		(90,836)
Taxes paid related to net share settlement of equity awards						(3,235)		(444)
Proceeds from exercise of stock options		49		347		11,610		49
Issuance of stock from dividend reinvestment		821		—
Net cash provided by financing activities		122,414		733,888
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS		25,998		(32,712)
Proceeds from dividend reinvestment and stock purchase plan						2,314		821
Net cash provided by (used in) financing activities						(154,083)		121,970
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS						(38,914)		25,998
CASH AND DUE FROM BANKS, BEGINNING		303,874		356,455		372,689		303,874
CASH AND DUE FROM BANKS, ENDING	$	329,872	$	323,743	$	333,775	$	329,872
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans	$	12,012	$	12,997	$	4,770	$	12,012

See notes to unaudited consolidated financial statements.

Table of Contents

~~Hancock Holding Company and Subsidiaries~~HANCOCK HOLDING COMPANY AND SUBSIDIARIES

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements include the accounts of Hancock Holding Company and all other entities in which it has a controlling interest (the “Company”). The financial statements include all adjustments that are, in the opinion of management, necessary to ~~present~~ fairly state the Company’s financial condition, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented. The Company has also evaluated all subsequent events for potential recognition and disclosure through the date of the filing of this Quarterly Report on Form 10-Q. Some financial information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. Financial information reported in these financial statements is not necessarily indicative of the Company’s financial condition, results of operations, or cash flows for any other interim or annual period.

Certain prior period amounts have been reclassified to conform to the current period presentation. Beginning in the second quarter of 2016, the presentation of loan disclosures has been modified from prior filings as discussed in Note 3 – Loans and Allowance for Loan Losses. Effective January 1, 2016, the Company retrospectively adopted accounting guidance intended to simplify the presentation of debt issuance costs by requiring that costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Historically, debt issuance costs were reported in the “Other Assets”Select Stockholders’ Equity line items in the Consolidated Balance Sheets and Statements of ~~Cash Flows. All historical periods~~Changes in Stockholders’ Equity have been ~~restated~~modified to simplify the presentation as discussed in Note 7 – Stockholders’ Equity. Presentation of derivatives contracts cleared through a central clearing counterparty has been revised prospectively to reflect netting of variation margin as settlements to the ~~revised~~derivative assets and liabilities rather than collateral, effective January 3, 2017, as discussed in Note 6 – Derivatives. These changes in presentation ~~and new required disclosures. The adoption of this guidance~~ did not have a material impact on the Company’s financial condition or operating results.

Use of Estimates

The accounting principles the Company follows and the methods for applying these principles conform ~~with~~to GAAP and ~~with~~ general practices followed by the banking industry. These accounting principles require management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Critical Accounting Policies and Estimates

There were no material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, ~~2015.~~ 2016. Refer to Note 14 – Recent Accounting Pronouncements for a discussion of accounting standards adopted in 2017.

2. Acquisitions

On March 10, 2017, the Company, through its banking subsidiary, Whitney Bank (“Whitney”), completed the acquisition of certain assets and liabilities, including nine branches, from First NBC Bank (“FNBC”), referred to as the FNBC I transaction. Whitney paid approximately $323 million in cash consideration ($326 million cash paid net of $3 million in branch cash acquired), including a $41.6 million transaction premium for the earnings stream acquired.

On April 28, 2017, the Louisiana Office of Financial Institutions (“OFI”) closed FNBC and appointed the FDIC as receiver. Whitney entered into a purchase and assumption agreement with the FDIC, referred to as the FNBC II transaction. Pursuant to the agreement, Whitney acquired selected assets and liabilities of the former FNBC, including substantially all of the transaction and savings deposits, and continued to operate its 29 branch locations (24 in Louisiana and five in Florida). Whitney also had the option to purchase (or assume the leases for) the branch and non-branch locations, including furniture, fixtures, and equipment subsequent to the date of the transaction. This option was exercised for seven branch locations. Whitney paid a premium of $35 million to the FDIC for the earnings stream acquired and received approximately $800 million in cash ($642 million from the FDIC for the net liabilities assumed and $158 million in branch cash acquired).

The FNBC I and FNBC II transactions were accounted for as business combinations and therefore, assets acquired and liabilities assumed were recorded at estimated fair values on the acquisition dates.

Table of Contents

The following table sets forth the preliminary acquisition date fair value of the assets acquired and liabilities assumed, the consideration paid or received, and the resulting goodwill recorded in each of the FNBC I and FNBC II transactions, and in the aggregate. The Company recorded certain purchase accounting adjustments and a cash settlement with the FDIC during the third quarter of 2017. The Company expects to finalize acquisition date fair values and the resulting goodwill in the fourth quarter of 2017.


		FNBC I		FNBC II
(in thousands)		March 10, 2017		April 28, 2017		Total
ASSETS
Cash and due from banks	$	2,856	$	157,932	$	160,788
Interest-bearing time deposits with other banks		—		382,622		382,622
Fed funds sold and other short-term investments		—		148		148
Securities		—		213,877		213,877
Total loans		1,211,523		165,577		1,377,100
Property and equipment		11,837		8,988		20,825
Accrued interest receivable		2,969		885		3,854
Identifiable intangible assets		3,900		21,400		25,300
Other assets		63		4,150		4,213
Total identifiable assets		1,233,148		955,579		2,188,727

LIABILITIES
Deposits		398,171		1,530,338		1,928,509
Short-term borrowings		510,749		85,886		596,635
Long-term debt		93,120		—		93,120
Other liabilities		1,607		3,079		4,686
Total liabilities		1,003,647		1,619,303		2,622,950
Net identifiable assets acquired (liabilities assumed)		229,501		(663,724)		(434,223)

Consideration (Paid) Received		(325,564)		641,577		316,013
Goodwill	$	96,063	$	22,147	$	118,210

The loans acquired were recorded at estimated fair value at the acquisition dates with no carryover of the related allowance for loan losses. Substantially all of the loans acquired were considered to be performing (“purchased credit performing”) based on such factors as past due status and nonaccrual status, and were accounted for under Accounting Standards Codification (“ASC”) 310-20. The unpaid principal balance of the performing loans acquired totaled $1.4 billion, of which $31.7 million is not expected to be collected. The difference at the acquisition dates between the fair value and the contractual amounts due (the “fair value discount”) of $41.0 million will be accreted into income over the estimated lives of the loan pools established in the valuation. Loans with an unpaid principal balance of $39.9 million and a fair value of $23.4 million were considered to be purchased credit impaired and were accounted for under ASC 310-30 using the cost recovery method; as such, the related fair value discount of $16.5 million will not be accreted into income.

The Company assumed approximately $604 million of borrowings in the FNBC I transaction, consisting of both short-term and long-term Federal Home Loan Bank (“FHLB”) borrowings. The short-term borrowings consisted of $460 million in variable rate term notes, of which $200 million mature in 2025 and $260 million mature in 2026. These notes reprice quarterly and may be repaid at the Company’s option, either in full or in part, on any quarterly repricing date. Also included in short-term borrowings are $51 million in fixed rate term notes. The long-term borrowings include $93.1 million in fixed rate term notes, of which $88 million mature in 2018, $3.2 million mature in 2019, and $1.9 million mature in 2023. Short-term borrowings assumed in the FNBC II transaction consisted of securities sold under repurchase agreements. No long-term borrowings were assumed in the FNBC II transaction.

Identifiable intangible assets consist of core deposit intangibles totaling $25.3 million that are being amortized using sum of years’ digits over the asset’s life of eight years for the FNBC I transaction and eleven years for the FNBC II transaction. Goodwill totaling $118 million represents the excess of the consideration paid over the fair value of the net assets acquired, or the excess of the fair value of the net liabilities assumed over the consideration received. It is comprised of estimated future economic benefits arising from these transactions that cannot not be individually identified or do not qualify for separate recognition. These benefits include increased market share in the Greater New Orleans and Florida Panhandle market areas, expected earnings streams, and operational efficiencies that the Company believes will result from these business combinations. The tax basis of the goodwill generated from these transactions is expected to be deductible for federal income tax purposes.


Goodwill balance at December 31, 2016	$	621,193
Additions:
Initial goodwill recorded in FNBC I transaction		95,568
Measurement period adjustments - FNBC I transaction		495
Initial goodwill recorded in FNBC II transaction		23,009
Measurement period adjustments - FNBC II transaction		(862)
Goodwill balance at September 30, 2017	$	739,403

Table of Contents

The operating results of the Company for the three and nine months ended September 30, 2017 include the results from the operations acquired in the FNBC transactions since the respective acquisition dates. Estimating reliable historical financial information is impracticable as only selected components of the businesses, as historically operated, were acquired. A number of post-acquisition events, including the consolidation of certain branch locations and the integration of operations, cash and investments acquired make quantifying discrete earnings contributions of the businesses acquired impracticable. As such, neither supplemental pro forma financial information of the combined entity, nor revenue and earnings contributed by the businesses acquired since the dates of acquisition are presented.

The Company incurred merger-related costs in connection with the FNBC I and FNBC II transactions. The following table reflects the merger-related costs for the three and nine months ended September 30, 2017 for both the FNBC I and FNBC II transactions combined. The Company does not expect to incur any additional merger-related costs related to the FNBC transactions in any subsequent period.


(in thousands)		Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Personnel expense	$	2,120	$	3,662
Net occupancy and equipment expense		500		777
Professional services expense		2,854		9,681
Data processing expense		929		974
Other real estate		-		(1,511)
Advertising expense		358		1,389
Other expense		2,132		4,398
Total merger-related expenses	$	8,893	$	19,370

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

2.3. Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available for sale and held to maturity follow.



Securities Available for Sale	Securities Available for Sale																	Securities Available for Sale
(in thousands)		September 30, 2016								December 31, 2015									September 30, 2017								December 31, 2016
				Gross		Gross						Gross		Gross							Gross		Gross						Gross		Gross
		Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
		Cost		Gains		Losses		Value		Cost		Gains		Losses		Value			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
US Treasury and government agency securities		$	20,604	$	67	$	—	$	20,671	$	135	$	—	$	1	$	134
U.S. Treasury and government agency securities																			$	75,019	$	29	$	1,606	$	73,442	$	56,751	$	—	$	1,923	$	54,828
Municipal obligations			214,403		3,024		409		217,018		39,410		235		38		39,607			246,805		534		4,661		242,678		253,228		113		11,186		242,155
Residential mortgage-backed securities			1,737,812		38,204		91		1,775,925		1,750,168		19,387		11,182		1,758,373			1,795,397		9,701		11,672		1,793,426		1,620,191		10,592		19,428		1,611,355
Commercial mortgage-backed securities			172,525		687		103		173,109		—		—		—		—			584,503		569		16,719		568,353		425,750		—		23,159		402,591
Collateralized mortgage obligations			220,912		2,344		—		223,256		291,085		140		2,192		289,033			174,119		114		354		173,879		202,580		490		591		202,479
Corporate debt securities			3,500		—		—		3,500		3,500		—		—		3,500			3,500		—		—		3,500		3,500		—		—		3,500
Equity securities			865		336		—		1,201		2,447		358		48		2,757
		$	2,370,621	$	44,662	$	603	$	2,414,680	$	2,086,745	$	20,120	$	13,461	$	2,093,404		$	2,879,343	$	10,947	$	35,012	$	2,855,278	$	2,562,000	$	11,195	$	56,287	$	2,516,908

Securities Held to Maturity

(in thousands)

September 30, 2016

December 31, 2015

Gross

Gross

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

Losses

Value

Cost

Gains

Losses

Value
US Treasury and government agency securities

$
50,000

$
860

$
—

$
50,860

$
50,000

$
—

$
410

$
49,590
Municipal obligations

541,839

11,182

1,462

551,559

185,890

3,475

1,166

188,199
Residential mortgage-backed securities

903,703

36,200

—

939,903

1,014,135

15,585

1,589

1,028,131
Collateralized mortgage obligations

932,890

8,767

1,439

940,218

1,120,363

2,244

12,676

1,109,931

$
2,428,432

$
57,009

$
2,901

$
2,482,540

$
2,370,388

$
21,304

$
15,841

$
2,375,851

Table of Contents



Securities Held to Maturity
(in thousands)	September 30, 2017								December 31, 2016
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency securities	$	50,000	$	—	$	63	$	49,937	$	50,000	$	—	$	44	$	49,956
Municipal obligations		725,484		7,677		7,396		725,765		648,093		2,147		20,175		630,065
Residential mortgage-backed securities		760,158		8,896		776		768,278		862,162		4,329		3,068		863,423
Commercial mortgage-backed securities		75,688		—		2,592		73,096		75,739		—		4,038		71,701
Collateralized mortgage obligations		1,157,944		2,476		9,348		1,151,072		864,226		1,420		10,674		854,972
	$	2,769,274	$	19,049	$	20,175	$	2,768,148	$	2,500,220	$	7,896	$	37,999	$	2,470,117

The following table presents the amortized cost and estimated fair value of debt securities available for sale and held to maturity at September 30, ~~2016~~2017 by contractual maturity. Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateralized mortgage obligations.



(in thousands)	Amortized		Fair		Amortized		Fair
Debt Securities Available for Sale	Cost		Value		Cost		Value
Due in one year or less	$	4,864	$	4,900	$	5,392	$	5,425
Due after one year through five years		47,593		48,597		46,852		47,394
Due after five years through ten years		609,897		621,549		1,097,850		1,082,709
Due after ten years		1,707,402		1,738,433		1,729,249		1,719,750
Total available for sale debt securities	$	2,369,756	$	2,413,479	$	2,879,343	$	2,855,278

	Amortized		Fair		Amortized		Fair
Debt Securities Held to Maturity	Cost		Value		Cost		Value
Due in one year or less	$	14,982	$	15,019	$	10,081	$	10,123
Due after one year through five years		135,330		138,737		108,164		108,726
Due after five years through ten years		510,536		517,652		837,353		833,465
Due after ten years		1,767,584		1,811,132		1,813,676		1,815,834
Total held to maturity securities	$	2,428,432	$	2,482,540
Total held to maturity debt securities					$	2,769,274	$	2,768,148

The Company held no securities classified as trading at September 30, ~~2016~~2017 or December 31, ~~2015.~~2016.

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The ~~details~~fair value and gross unrealized losses for securities classified as available for sale with unrealized losses for the periods indicated follow.



Available for Sale
September 30, 2017	Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	52,866		1,606	$	—	$	—	$	52,866	$	1,606
Municipal obligations		145,441		2,286		66,640		2,375		212,081		4,661
Residential mortgage-backed securities		1,255,266		11,514		5,360		158		1,260,626		11,672
Commercial mortgage-backed securities		465,596		15,366		30,151		1,353		495,747		16,719
Collateralized mortgage obligations		66,149		201		5,565		153		71,714		354
	$	1,985,318	$	30,973	$	107,716	$	4,039	$	2,093,034	$	35,012

Available for Sale

September 30, 2016

Losses < 12 months

Losses 12 months or >

Total

Gross

Gross

Gross

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized
(in thousands)

Value

Losses

Value

Losses

Value

Losses
Municipal obligations

$
69,801

409

$
—

—

$
69,801

$
409
Residential mortgage-backed securities

6,653

55

4,534

36

11,187

91
Commercial mortgage-backed securities

31,640

103

—

—

31,640

103
Collateralized mortgage obligations

6,910

—

—

—

6,910

—

$
115,004

$
567

$
4,534

$
36

$
119,538

$
603

Table of Contents



Available for Sale
December 31, 2015	Losses < 12 months				Losses 12 months or >				Total
December 31, 2016													Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross				Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses
US Treasury and government agency securities	$	—	$	—	$	82	$	1	$	82	$	1
U.S. Treasury and government agency securities													$	54,788	$	1,923	$	—	$	—	$	54,788	$	1,923
Municipal obligations		8,296		38		—		—		8,296		38		228,588		11,186		—		—		228,588		11,186
Residential mortgage-backed securities		831,156		8,257		116,126		2,925		947,282		11,182		1,087,644		19,359		3,738		69		1,091,382		19,428
Commercial mortgage-backed securities														402,591		23,159		—		—		402,591		23,159
Collateralized mortgage obligations		208,397		1,257		33,138		935		241,535		2,192		83,701		591		—		—		83,701		591
Equity securities		20		1		1,473		47		1,493		48
	$	1,047,869	$	9,553	$	150,819	$	3,908	$	1,198,688	$	13,461	$	1,857,312	$	56,218	$	3,738	$	69	$	1,861,050	$	56,287

The ~~details~~fair value and gross unrealized losses for securities classified as held to maturity with unrealized losses for the periods indicated follow.



Held to maturity
September 30, 2016	Losses < 12 months				Losses 12 months or >				Total
September 30, 2017													Losses < 12 months				Losses 12 months or >				Total
			Gross				Gross				Gross				Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities													$	49,938	$	63	$	—	$	—	$	49,938	$	63
Municipal obligations	$	98,295	$	1,035	$	11,843	$	427	$	110,138	$	1,462		275,874		2,975		98,976		4,421		374,850		7,396
Residential mortgage-backed securities														254,743		776		—		—		254,743		776
Commercial mortgage-backed securities														73,096		2,592		—		—		73,096		2,592
Collateralized mortgage obligations		119,172		146		132,960		1,293		252,132		1,439		559,859		3,852		232,697		5,496		792,556		9,348
	$	217,467	$	1,181	$	144,803	$	1,720	$	362,270	$	2,901	$	1,213,510	$	10,258	$	331,673	$	9,917	$	1,545,183	$	20,175



Held to maturity
December 31, 2015	Losses < 12 months				Losses 12 months or >				Total
December 31, 2016													Losses < 12 months				Losses 12 months or >				Total

			Gross				Gross				Gross				Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	45,590	$	410	$	—	$	—	$	45,590	$	410	$	49,956	$	44	$	—	$	—	$	49,956	$	44
Municipal obligations		22,652		301		48,727		865		71,379		1,166		494,470		19,706		11,750		469		506,220		20,175
Residential mortgage-backed securities		349,635		1,589		—		—		349,635		1,589		278,369		3,068		—		—		278,369		3,068
Commercial mortgage-backed securities														71,701		4,038		—		—		71,701		4,038
Collateralized mortgage obligations		516,330		2,894		370,756		9,782		887,086		12,676		618,739		7,296		115,375		3,378		734,114		10,674
	$	934,207	$	5,194	$	419,483	$	10,647	$	1,353,690	$	15,841	$	1,513,235	$	34,152	$	127,125	$	3,847	$	1,640,360	$	37,999

The unrealized losses primarily relate to changes in market rates on ~~fixed-rate~~fixed rate debt securities since the respective purchase dates. In all cases, the indicated impairment on these debt securities would be recovered no later than the security’s maturity date or possibly earlier if the market price for the security increases with a reduction in the yield required by the market. None of the unrealized losses relate to the marketability of the securities or the ~~issuer’s ability~~issuers’ abilities to meet contractual obligations. The Company believes it has adequate liquidity and, therefore, does not plan to and, more likely than not, will not be required to sell these securities before recovery of the indicated impairment. Accordingly, the unrealized losses on these securities have been determined to be temporary.

Proceeds from the sales of securities were approximately $213.9 million with no gross gain or loss and $141.7 million with ~~an associated realized~~a gross gain of $1.5 million and ~~$9.3 million with an associated gain of $0.3 million~~no loss for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Securities with carrying values totaling ~~$3.7~~$3.6 billion and $3.8 billion at September 30, ~~2016~~2017 and ~~$3.5 billion at~~ December 31, ~~2015~~2016, respectively, were pledged as collateral primarily to secure public deposits or securities sold under agreements to repurchase.

4. Loans and Allowance for Loan Losses

The Company generally makes loans in its market areas of south Mississippi, southern and central Alabama, south Louisiana, the Houston, Texas area and the northern, central and panhandle regions of Florida. Loans, net of unearned income, by portfolio are

814

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~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~3. Loans and Allowance for Loan Losses~~

The presentation of loan disclosures has been modified from prior filings to eliminate segmentation of Acquired (2011 Whitney Holding Corporation transaction) and FDIC Acquired (2009 Peoples First Community Bank transaction) due to the significantly reduced size of these portfolios. The revised presentation reflects purchased credit impaired (“PCI”) loan information in select tables. PCI loans include the total FDIC Acquired portfolio and the portion of the Acquired portfolio deemed credit impaired at acquisition. In addition, the revised presentation includes further segmentation of the commercial real estate portfolio between owner occupied and income producing loans due to the significant differences in risk characteristics of these loans and to conform more closely to regulatory concentration segments and general industry practices. All prior period information has been reclassified to conform to the current period presentation.

~~Loans, net of unearned income, by portfolio are~~ presented in the table below.



	September 30,		December 31,		September 30,		December 31,
(in thousands)	2016		2015		2017		2016

Commercial non-real estate	$	7,133,928	$	6,995,824	$	8,129,429	$	7,613,917
Commercial real estate - owner occupied		1,901,825		1,859,469		2,076,014		1,906,821
Total commercial & industrial		9,035,753		8,855,293		10,205,443		9,520,738
Commercial real estate - income producing		1,990,309		1,553,082		2,511,808		2,013,890
Construction and land development		946,592		1,151,950		1,373,048		1,010,879
Residential mortgages		2,037,162		2,049,524		2,596,692		2,146,713
Consumer		2,061,005		2,093,465		2,099,294		2,059,931
Total loans	$	16,070,821	$	15,703,314	$	18,786,285	$	16,752,151

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following briefly describes the composition of each loan category.

Commercial and industrial

Commercial and industrial loans are made available to businesses for working capital (including financing of inventory and receivables), business expansion, to facilitate the acquisition of a business, and the purchase of equipment and machinery, including equipment leasing. These loans are primarily made based on the identified cash flows of the borrower and, when secured, have the added strength of the underlying collateral.

Commercial non-real estate loans may be secured by the assets being financed or other business assets such as accounts receivable, inventory, ownership or commodity interests, and may incorporate a personal or corporate guarantee; however, some short-term loans may be made on an unsecured basis, including a small portfolio of corporate credit cards, generally issued as a part of overall customer relationships.

Commercial real estate – owner occupied loans consist of commercial mortgages on properties where repayment is generally dependent on the cash flow from the ongoing operations and activities of the borrower. Like commercial non-real estate, these loans are primarily made based on the identified cash flows of the borrower, but also have the added strength of the value of underlying real estate collateral.

Commercial real estate – income producing

Commercial real estate – income producing loans consist of loans secured by commercial mortgages on properties where the loan is made to real estate developers or investors and repayment is dependent on the sale, refinance, or income generated from the operation of the property. Properties financed include retail, office, multifamily, senior housing, hotel/motel, skilled nursing facilities and other commercial properties.

Construction and land development

Construction and land development loans are made to facilitate the acquisition, development, improvement and construction of both commercial and residential-purpose properties. Such loans are made to builders and investors where repayment is expected to be made from the sale, refinance or operation of the property or to businesses to be used in their business operations. This portfolio also includes a small amount of residential construction loans and loans secured by raw land not yet under development.

Residential Mortgages

Residential mortgages consist of closed-end loans secured by first liens on 1- 4 family residential properties. The portfolio includes both fixed and adjustable rate loans, although most ~~longer-term, fixed-rate~~longer term, fixed rate loans originated are sold in the secondary mortgage market.

Consumer

Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans include both direct and indirect loans. Direct nonresidential consumer loans are made to finance the purchase of personal property, including automobiles, recreational vehicles and boats, and for other personal purposes (secured and unsecured), and deposit account secured loans. Indirect nonresidential consumer loans include automobile financing provided to the consumer through an agreement with automobile dealerships. Consumer loans also include a small portfolio of credit card receivables issued on the basis of applications received through referrals from the Bank’s branches, online and other marketing efforts.

1015

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~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Allowance for Loan Losses

The following schedule shows activity in the allowance for loan losses by portfolio class for the nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, as well as the corresponding recorded investment in loans at the end of each period.



			Commercial				Commercial												Commercial				Commercial
	Commercial		real estate-		Total		real estate-		Construction								Commercial		real estate-		Total		real estate-		Construction
		non-real	owner		commercial &		income		and land		Residential							non-real	owner		commercial &		income		and land		Residential
(in thousands)	estate		occupied		industrial		producing		development		mortgages		Consumer		Total		estate		occupied		industrial		producing		development		mortgages		Consumer		Total
																	Nine Months Ended September 30, 2017
	Nine Months Ended September 30, 2016


Allowance for loan losses:
Beginning balance	$	109,428	$	9,858	$	119,286	$	6,041	$	5,642	$	25,353	$	24,857	$	181,179	$	147,052	$	11,083	$	158,135	$	13,509	$	6,271	$	25,361	$	26,142	$	229,418
Purchased credit impaired activity:
Charge-offs		—		(28)		(28)		(1)		(18)		(91)		(8)		(146)		—		—		—		—		(77)		(102)		(153)		(332)
Recoveries		76		163		239		2		98		33		112		484		5		110		115		—		49		23		72		259
Net provision for loan losses		54		(140)		(86)		(436)		(253)		1,685		(1,633)		(723)		(27)		(220)		(247)		(54)		(124)		175		(192)		(442)
(Decrease) increase in FDIC loss share receivable		(2)		—		(2)		—		—		(3,341)		316		(3,027)
Decrease in FDIC loss share receivable																		(47)		—		(47)		—		—		(2,344)		(135)		(2,526)
Non-purchased credit impaired activity:
Charge-offs		(27,504)		(1,660)		(29,164)		(191)		(827)		(908)		(17,403)		(48,493)		(35,247)		(527)		(35,774)		(160)		(593)		(2,383)		(22,691)		(61,601)
Recoveries		2,709		287		2,996		673		1,422		497		4,272		9,860		6,437		337		6,774		655		1,001		316		5,176		13,922
Net provision for loan losses		74,500		2,303		76,803		4,862		(216)		964		14,514		96,927		15,922		2,776		18,698		540		54		3,988		21,144		44,424
Ending balance	$	159,261	$	10,783	$	170,044	$	10,950	$	5,848	$	24,192	$	25,027	$	236,061	$	134,095	$	13,559	$	147,654	$	14,490	$	6,581	$	25,034	$	29,363	$	223,122
Ending balance:
Allowance:
Individually evaluated for impairment	$	20,665	$	223	$	20,888	$	57	$	6	$	94	$	85	$	21,130	$	20,880	$	477	$	21,357	$	1,321	$	1	$	406	$	405	$	23,490
Amounts related to purchased credit impaired loans		574		1,088		1,662		279		484		15,949		1,334		19,708		417		784		1,201		199		254		12,795		863		15,312
Collectively evaluated for impairment		138,022		9,472		147,494		10,614		5,358		8,149		23,608		195,223		112,798		12,298		125,096		12,970		6,326		11,833		28,095		184,320
Total allowance	$	159,261	$	10,783	$	170,044	$	10,950	$	5,848	$	24,192	$	25,027	$	236,061	$	134,095	$	13,559	$	147,654	$	14,490	$	6,581	$	25,034	$	29,363	$	223,122
Loans:
Individually evaluated for impairment	$	235,039	$	6,458	$	241,497	$	7,655	$	2,062	$	3,864	$	1,485	$	256,563	$	271,024	$	6,351	$	277,375	$	14,295	$	480	$	8,942	$	1,306	$	302,397
Purchased credit impaired loans		11,534		16,417		27,951		8,087		8,436		145,273		12,045		201,792		20,186		13,021		33,207		5,353		6,670		123,244		7,637		176,111
Collectively evaluated for impairment		6,887,355		1,878,950		8,766,305		1,974,567		936,094		1,888,025		2,047,475		15,612,466		7,838,219		2,056,642		9,894,861		2,492,160		1,365,898		2,464,506		2,090,351		18,307,777
Total loans	$	7,133,928	$	1,901,825		9,035,753	$	1,990,309	$	946,592	$	2,037,162	$	2,061,005	$	16,070,821	$	8,129,429	$	2,076,014	$	10,205,443	$	2,511,808	$	1,373,048	$	2,596,692	$	2,099,294	$	18,786,285



			Commercial				Commercial
	Commercial		real estate-		Total		real estate-		Construction
	non-real		owner		commercial &		income		and land		Residential
(in thousands)	estate		occupied		industrial		producing		development		mortgages		Consumer		Total
	Nine Months Ended September 30, 2016
Allowance for loan losses:
Beginning balance	$	109,428	$	9,858	$	119,286	$	6,041	$	5,642	$	25,353	$	24,857	$	181,179
Purchased credit impaired activity:
Charge-offs		—		(28)		(28)		(1)		(18)		(91)		(8)		(146)
Recoveries		76		163		239		2		98		33		112		484
Net provision for loan losses		54		(140)		(86)		(436)		(253)		1,685		(1,633)		(723)
(Decrease) increase in FDIC loss share receivable		(2)		—		(2)		—		—		(3,341)		316		(3,027)
Non-purchased credit impaired activity:
Charge-offs		(27,504)		(1,660)		(29,164)		(191)		(827)		(908)		(17,403)		(48,493)
Recoveries		2,709		287		2,996		673		1,422		497		4,272		9,860
Net provision for loan losses		74,500		2,303		76,803		4,862		(216)		964		14,514		96,927
Ending balance	$	159,261	$	10,783	$	170,044	$	10,950	$	5,848	$	24,192	$	25,027	$	236,061
Ending balance:
Allowance:
Individually evaluated for impairment	$	20,665	$	223	$	20,888	$	57	$	6	$	94	$	85	$	21,130
Amounts related to purchased credit impaired loans		574		1,088		1,662		279		484		15,949		1,334		19,708
Collectively evaluated for impairment		138,022		9,472		147,494		10,614		5,358		8,149		23,608		195,223
Total allowance	$	159,261	$	10,783	$	170,044	$	10,950	$	5,848	$	24,192	$	25,027	$	236,061
Loans:
Individually evaluated for impairment	$	235,039	$	6,458	$	241,497	$	7,655	$	2,062	$	3,864	$	1,485	$	256,563
Purchased credit impaired loans		11,534		16,417		27,951		8,087		8,436		145,273		12,045		201,792
Collectively evaluated for impairment		6,887,355		1,878,950		8,766,305		1,974,567		936,094		1,888,025		2,047,475		15,612,466
Total loans	$	7,133,928	$	1,901,825	$	9,035,753	$	1,990,309	$	946,592	$	2,037,162	$	2,061,005	$	16,070,821

1116

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~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Commercial

Commercial

Commercial

real estate-

Total

real estate-

Construction

non-real

owner

commercial &

income

and land

Residential

(in thousands)

estate

occupied

industrial

producing

development

mortgages

Consumer

Total

Nine Months ended September 30, 2015

Allowance for loan losses:

Beginning balance

$
51,169

$
13,536

$
64,705

$
7,546

$
6,421

$
28,660

$
21,430

$
128,762
Purchased credit impaired activity:

Charge-offs

(1,425)

(379)

(1,804)

(2,353)

(406)

(748)

(140)

(5,451)
Recoveries

1,699

937

2,636

20

896

5

185

3,742
Net provision for loan losses

(950)

(1,614)

(2,564)

994

235

1,181

(1,232)

(1,386)
Increase (decrease) in FDIC loss share receivable

314

(396)

(82)

919

(6)

(2,718)

(97)

(1,984)
Non-purchased credit impaired activity:

Charge-offs

(3,068)

(664)

(3,732)

(464)

(1,483)

(1,451)

(10,431)

(17,561)
Recoveries

2,589

249

2,838

386

2,006

578

3,418

9,226
Net provision for loan losses

13,594

2,436

16,030

(1,915)

(289)

283

10,119

24,228
Ending balance

$
63,922

$
14,105

$
78,027

$
5,133

$
7,374

$
25,790

$
23,252

$
139,576
Ending balance:

Allowance:

Individually evaluated for impairment

$
5,588

$
2,723

$
8,311

$
187

$
21

$
96

$
3

$
8,618
Amounts related to purchased credit impaired loans

549

1,304

1,853

885

1,727

18,329

2,711

25,505
Collectively evaluated for impairment

57,785

10,078

67,863

4,061

5,626

7,365

20,538

105,453
Total allowance

$
63,922

$
14,105

$
78,027

$
5,133

$
7,374

$
25,790

$
23,252

$
139,576
Loans:

Individually evaluated for impairment

$
75,345

$
21,465

$
96,810

$
12,520

$
2,053

$
903

$
157

$
112,443
Purchased credit impaired loans

13,158

21,674

34,832

15,280

16,336

170,033

13,424

249,905
Collectively evaluated for impairment

6,257,491

1,800,015

8,057,506

1,456,432

1,067,196

1,842,853

1,976,715

14,400,702
Total loans

$
6,345,994

$
1,843,154

8,189,148

$
1,484,232

$
1,085,585

$
2,013,789

$
1,990,296

$
14,763,050

Impaired Loans

The following table shows the composition of nonaccrual loans by portfolio class. Purchased credit impaired loans accounted for in pools with an accretable yield are considered to be performing and are excluded from the table.



	September 30,		December 31,		September 30,		December 31,
(in thousands)	2016		2015		2017		2016
Commercial non-real estate	$	240,298	$	88,743	$	188,982	$	249,037
Commercial real estate - owner occupied		15,331		10,001		14,305		14,413
Total commercial & industrial		255,629		98,744		203,287		263,450
Commercial real estate - income producing		9,318		10,815		14,360		13,954
Construction and land development		4,930		17,294		3,292		4,550
Residential mortgages		21,181		23,799		34,674		23,665
Consumer		11,752		9,061		14,063		12,351
Total loans	$	302,810	$	159,713	$	269,676	$	317,970

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Nonaccrual loans include nonaccruing loans modified in troubled debt restructurings (“TDRs”) of ~~$48.2~~$119.3 million and ~~$8.8~~$81.9 million at September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. Total TDRs, both accruing and nonaccruing, were ~~$56.3~~$216.0 million as of September 30, ~~2016~~2017 and ~~$13.1~~$121.7 million at December 31, ~~2015.~~2016. All TDRs are individually evaluated for impairment.

The table below details by portfolio class TDRs that were modified during the nine months ended September 30, ~~2016~~2017 and ~~September 30, 2015 by portfolio class.~~2016.



	Nine Months Ended												Nine Months Ended
($ in thousands)		September 30, 2016						September 30, 2015						September 30, 2017						September 30, 2016
			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification				Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
			Outstanding		Outstanding				Outstanding		Outstanding				Outstanding		Outstanding				Outstanding		Outstanding
		Number of	Recorded		Recorded			Number of	Recorded		Recorded			Number of	Recorded		Recorded			Number of	Recorded		Recorded
Troubled Debt Restructurings:		Contracts	Investment		Investment		Contracts		Investment		Investment			Contracts	Investment		Investment		Contracts		Investment		Investment
Commercial non-real estate		17	$	57,915	$	57,915		—	$	—	$	—		50	$	135,926	$	135,926		17	$	57,915	$	57,915
Commercial real estate - owner occupied		—		—		—		—		—		—		4		3,734		3,734		—		—		—
Total commercial & industrial		17		57,915		57,915		—		—		—		54		139,660		139,660		17		57,915		57,915
Commercial real estate - income producing		—		—		—		1		482		482		5		5,684		5,684		—		—		—
Construction and land development		—		—		—		—		—		—		—		—		—		—		—		—
Residential mortgages		6		532		532		4		185		185		13		2,068		2,068		6		532		532
Consumer		—		—		—		1		20		20		1		40		42		—		—		—
Total loans		23	$	58,447	$	58,447		6	$	687	$	687		73	$	147,452	$	147,454		23	$	58,447	$	58,447

The TDRs modified during the nine months ended September 30, ~~2016~~2017 reflected in the table above include $96.1 million of loans with extended amortization terms or other payment concessions, $50.1 million of loans with significant covenant waivers and $1.3 million with other modifications. The TDRs modified during the nine months ended September 30, 2016 include $43.4 million of loans with extended amortization terms or other payment concessions, $14.7 million of loans with significant covenant waivers and $0.4 million ~~with~~of other modifications. ~~The~~

No TDRs recorded during the nine months ended September 30, ~~2015 include $0.7 million of loans with extended terms or other payment concessions~~2017 and ~~$0.1 million of other modifications.~~

~~No TDRs that~~2016 subsequently defaulted within twelve months of ~~modification were recorded in the nine months ended September 30, 2016 or 2015.~~

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

modification.

The tables below present loans that are individually evaluated for impairment disaggregated by portfolio class at September 30, ~~2016~~2017 and December 31, ~~2015.~~2016. Loans individually evaluated for impairment include TDRs and loans that are determined to be impaired and have aggregate relationship balances of $1 million or more.

September 30, 2016

Recorded investment

Recorded investment

Unpaid

(in thousands)

without an allowance

with an allowance

principal balance

Related allowance
Commercial non-real estate
$
118,527

$
116,512

$
247,732

$
20,665
Commercial real estate - owner occupied

4,351

2,107

6,850

223
Total commercial & industrial

122,878

118,619

254,582

20,888
Commercial real estate - income producing

5,654

2,001

7,882

57
Construction and land development

1,228

834

2,905

6
Residential mortgages

2,908

956

4,382

94
Consumer

—

1,485

1,485

85
Total loans
$
132,668

$
123,895

$
271,236

$
21,130

December 31, 2015

Recorded investment

Recorded investment

Unpaid

(in thousands)

without an allowance

with an allowance

principal balance

Related allowance
Commercial non-real estate
$
34,788

$
46,834

$
84,988

$
19,031
Commercial real estate - owner occupied

4,747

661

5,931

23
Total commercial & industrial

39,535

47,495

90,919

19,054
Commercial real estate - income producing

3,038

8,085

11,363

1,382
Construction and land development

12,461

1,765

14,784

392
Residential mortgages

—

895

1,405

127
Consumer

—

152

152

33
Total loans
$
55,034

$
58,392

$
118,623

$
20,988

Three Months Ended

September 30, 2016
September 30, 2015

Average

Interest

Average

Interest

recorded

income

recorded

income
(in thousands)

investment

recognized

investment

recognized
Commercial non-real estate

$
233,913

$
155

$
53,862

$
3
Commercial real estate - owner occupied

6,374

10

21,584

16
Total commercial & industrial

240,287

165

75,446

19
Commercial real estate - income producing

7,729

24

12,601

15
Construction and land development

1,655

—

3,207

7
Residential mortgages

2,466

3

1,136

1
Consumer

826

2

137

—
Total loans

$
252,963

$
194

$
92,527

$
42



	September 30, 2017
		Recorded investment		Recorded investment		Unpaid
(in thousands)		without an allowance		with an allowance		principal balance		Related allowance
Commercial non-real estate	$	92,583	$	178,441	$	276,879	$	20,880
Commercial real estate - owner occupied		3,599		2,752		6,353		477
Total commercial & industrial		96,182		181,193		283,232		21,357
Commercial real estate - income producing		5,160		9,135		14,451		1,321
Construction and land development		464		16		1,445		1
Residential mortgages		6,311		2,630		11,961		406
Consumer		1		1,305		1,308		405
Total loans	$	108,118	$	194,279	$	312,397	$	23,490

1417

Table of Contents



	December 31, 2016
		Recorded investment		Recorded investment		Unpaid
(in thousands)		without an allowance		with an allowance		principal balance		Related allowance
Commercial non-real estate	$	150,650	$	120,612	$	295,445	$	28,187
Commercial real estate - owner occupied		4,261		2,007		6,646		246
Total commercial & industrial		154,911		122,619		302,091		28,433
Commercial real estate - income producing		10,447		4,929		15,708		466
Construction and land development		1,106		832		2,903		38
Residential mortgages		2,877		1,470		4,865		91
Consumer		—		2,154		2,155		267
Total loans	$	169,341	$	132,004	$	327,722	$	29,295

~~Hancock Holding Company~~The tables below present the average balances and ~~Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~interest income for total impaired loans for the three and nine months ended September 30, 2017 and 2016. Interest income recognized represents interest on accruing loans modified in a TDR.



	Three Months Ended
	September 30, 2017				September 30, 2016
	Average		Interest		Average			Interest
	recorded		income		recorded			income
(in thousands)	investment		recognized		investment			recognized
Commercial non-real estate	$	260,640	$	872	$	233,913	$	155
Commercial real estate - owner occupied		6,916		24		6,374		10
Total commercial & industrial		267,556		896		240,287		165
Commercial real estate - income producing		14,604		35		7,729		24
Construction and land development		663		1		1,655		—
Residential mortgages		6,204		7		2,466		3
Consumer		1,179		4		826		2
Total loans	$	290,206	$	943	$	252,963	$	194



	Nine Months Ended								Nine Months Ended
	September 30, 2016				September 30, 2015				September 30, 2017				September 30, 2016
	Average		Interest		Average			Interest	Average		Interest		Average			Interest
	recorded		income		recorded			income	recorded		income		recorded			income
(in thousands)	investment		recognized		investment			recognized	investment		recognized		investment			recognized
Commercial non-real estate	$	197,382	$	1,002	$	31,570	$	6	$	251,129	$	1,806	$	197,382	$	1,002
Commercial real estate - owner occupied		6,015		39		14,836		40		5,895		46		6,015		39
Total commercial & industrial		203,397		1,041		46,406		46		257,024		1,852		203,397		1,041
Commercial real estate - income producing		8,624		67		10,905		56		14,449		112		8,624		67
Construction and land development		7,821		—		4,762		66		1,216		1		7,821		—
Residential mortgages		1,444		7		1,837		20		4,449		12		1,444		7
Consumer		348		4		101		3		1,644		9		348		4
Total loans	$	221,634	$	1,119	$	64,011	$	191	$	278,782	$	1,986	$	221,634	$	1,119

Table of Contents

Aging Analysis

The tables below present the age analysis of past due loans by portfolio class at September 30, ~~2016~~2017 and December 31, ~~2015.~~2016. Purchased credit impaired loans accounted for in pools with an accretable yield are considered to be current.



													Recorded														Recorded
					Greater than								investment						Greater than								investment
	30-59 days		60-89 days		90 days		Total				Total		> 90 days and		30-59 days		60-89 days		90 days		Total				Total		> 90 days and
September 30, 2016	past due		past due		past due		past due		Current		Loans		still accruing
September 30, 2017															past due		past due		past due		past due		Current		Loans		still accruing
(in thousands)
Commercial non-real estate	$	15,501	$	24,566	$	63,794	$	103,861	$	7,030,067	$	7,133,928	$	543	$	31,634	$	3,880	$	104,334	$	139,848	$	7,989,581	$	8,129,429	$	24,400
Commercial real estate - owner occupied		3,006		1,115		7,257		11,378		1,890,447		1,901,825		—		18,579		303		8,950		27,832		2,048,182		2,076,014		767
Total commercial & industrial		18,507		25,681		71,051		115,239		8,920,514		9,035,753		543		50,213		4,183		113,284		167,680		10,037,763		10,205,443		25,167
Commercial real estate - income producing		1,873		225		4,421		6,519		1,983,790		1,990,309		—		1,540		3,731		5,676		10,947		2,500,861		2,511,808		2,907
Construction and land development		1,069		1,565		7,358		9,992		936,600		946,592		3,501		5,018		1,031		2,861		8,910		1,364,138		1,373,048		417
Residential mortgages		23,067		6,771		11,541		41,379		1,995,783		2,037,162		—		39,081		10,575		24,415		74,071		2,522,621		2,596,692		41
Consumer		15,650		5,402		7,609		28,661		2,032,344		2,061,005		889		15,574		7,426		7,710		30,710		2,068,584		2,099,294		318
Total	$	60,166	$	39,644	$	101,980	$	201,790	$	15,869,031	$	16,070,821	$	4,933	$	111,426	$	26,946	$	153,946	$	292,318	$	18,493,967	$	18,786,285	$	28,850



													Recorded														Recorded
					Greater than								investment						Greater than								investment
	30-59 days		60-89 days		90 days		Total				Total		> 90 days and		30-59 days		60-89 days		90 days		Total				Total		> 90 days and
December 31, 2015	past due		past due		past due		past due		Current		Loans		still accruing
December 31, 2016															past due		past due		past due		past due		Current		Loans		still accruing
(in thousands)
Commercial non-real estate	$	17,406	$	1,468	$	25,007	$	43,881	$	6,951,943	$	6,995,824	$	3,060	$	19,722	$	1,909	$	68,505	$	90,136	$	7,523,781	$	7,613,917	$	384
Commercial real estate - owner occupied		5,898		802		6,646		13,346		1,846,123		1,859,469		535		3,008		581		6,310		9,899		1,896,922		1,906,821		52
Total commercial & industrial		23,304		2,270		31,653		57,227		8,798,066		8,855,293		3,595		22,730		2,490		74,815		100,035		9,420,703		9,520,738		436
Commercial real estate - income producing		871		603		6,382		7,856		1,545,226		1,553,082		499		838		50		5,026		5,914		2,007,976		2,013,890		216
Construction and land development		19,886		436		4,043		24,365		1,127,585		1,151,950		1,230		694		171		5,300		6,165		1,004,714		1,010,879		1,563
Residential mortgages		18,657		4,360		11,840		34,857		2,014,667		2,049,524		163		24,599		8,816		14,369		47,784		2,098,929		2,146,713		1
Consumer		16,309		4,432		8,645		29,386		2,064,079		2,093,465		2,166		18,621		7,441		9,147		35,209		2,024,722		2,059,931		823
Total	$	79,027	$	12,101	$	62,563	$	153,691	$	15,549,623	$	15,703,314	$	7,653	$	67,482	$	18,968	$	108,657	$	195,107	$	16,557,044	$	16,752,151	$	3,039

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Credit Quality Indicators

The following tables present the credit quality indicators by segments and portfolio class of loans at September 30, ~~2016~~2017 and December 31, ~~2015.~~2016.



	September 30, 2016												September 30, 2017
(in thousands)	Commercial non-real estate		Commercial real estate - owner-occupied		Total commercial & industrial		Commercial real estate - income producing		Construction and land development		Total commercial		Commercial non-real estate		Commercial real estate - owner-occupied		Total commercial & industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	5,899,626	$	1,721,031	$	7,620,657	$	1,876,423	$	904,550	$	10,401,630	$	6,941,591	$	1,840,553	$	8,782,144	$	2,327,685	$	1,278,648	$	12,388,477
Pass-Watch		180,467		42,727		223,194		69,773		21,945		314,912		345,073		83,808		428,881		107,568		73,538		609,987
Special Mention		196,408		32,046		228,454		6,100		198		234,752		122,023		41,270		163,293		12,802		7,484		183,579
Substandard		827,476		106,021		933,497		38,000		19,899		991,396		717,436		110,383		827,819		63,744		13,378		904,941
Doubtful		29,951		—		29,951		13		—		29,964		3,306		—		3,306		9		—		3,315
Total	$	7,133,928	$	1,901,825	$	9,035,753	$	1,990,309	$	946,592	$	11,972,654	$	8,129,429	$	2,076,014	$	10,205,443	$	2,511,808	$	1,373,048	$	14,090,299

	December 31, 2015												December 31, 2016
(in thousands)	Commercial non-real estate		Commercial real estate - owner-occupied		Total commercial & industrial		Commercial real estate - income producing		Construction and land development		Total commercial		Commercial non-real estate		Commercial real estate - owner-occupied		Total commercial & industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	6,260,863	$	1,718,725	$	7,979,588	$	1,502,484	$	1,095,296	$	10,577,368	$	6,364,348	$	1,719,114	$	8,083,462	$	1,873,644	$	968,505	$	10,925,611
Pass-Watch		168,589		31,764		200,353		14,717		6,841		221,911		203,311		47,676		250,987		78,309		22,592		351,888
Special Mention		211,230		41,147		252,377		5,905		12,297		270,579		181,763		40,299		222,062		22,492		4,142		248,696
Substandard		355,098		67,833		422,931		29,960		37,516		490,407		846,793		99,732		946,525		39,434		15,640		1,001,599
Doubtful		44		—		44		16		—		60		17,702		—		17,702		11		—		17,713
Total	$	6,995,824	$	1,859,469	$	8,855,293	$	1,553,082	$	1,151,950	$	11,560,325	$	7,613,917	$	1,906,821	$	9,520,738	$	2,013,890	$	1,010,879	$	12,545,507

September 30, 2016

December 31, 2015
(in thousands)

Residential mortgage

Consumer

Total

Residential mortgage

Consumer

Total

Performing

$
2,015,981

$
2,048,364

$
4,064,345

$
2,025,563

$
2,082,238

$
4,107,801

Nonperforming

21,181

12,641

33,822

23,961

11,227

35,188

Total

$
2,037,162

$
2,061,005

$
4,098,167

$
2,049,524

$
2,093,465

$
4,142,989

Table of Contents



	September 30, 2017						December 31, 2016
(in thousands)	Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total
Performing	$	2,561,977	$	2,084,913	$	4,646,890	$	2,123,048	$	2,046,757	$	4,169,805
Nonperforming		34,715		14,381		49,096		23,665		13,174		36,839
Total	$	2,596,692	$	2,099,294	$	4,695,986	$	2,146,713	$	2,059,931	$	4,206,644

Below are the definitions of the Company’s internally assigned grades:

Commercial:

Pass – loans properly approved, documented, collateralized, and performing which do not reflect an abnormal credit risk.

Pass-Watch – credits in this category ~~have heightened~~are of sufficient risk ~~factors~~to cause concern. This category is reserved for credits that ~~warrant additional monitoring; however, these risk factors have not manifested themselves as potential weaknesses.~~display negative performance trends. The “Watch” grade should be regarded as a transition category.

Special Mention – a criticized asset category defined as having potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the credit or the institution’s credit position. Special mention credits are not considered part of the Classified credit categories and do not expose the institution to sufficient risk to warrant adverse classification.

Substandard – an asset that is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Doubtful – an asset that has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection ~~nor~~or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss – credits classified as Loss are considered uncollectable and are charged off promptly once so classified.

Residential and Consumer:

Performing – loans on which payments of principal and interest are less than 90 days past due.

Nonperforming – a nonperforming loan is a loan that is in default or close to being in default and there are good reasons to doubt that payments will be made in full. All loans rated as nonaccrual loans are also classified as nonperforming.

Purchased ~~credit impaired loans and the related FDIC loss share receivable~~

Credit Impaired Loans purchased in the 2009 acquisition of Peoples First Community Bank (“Peoples First”) were covered by two loss share agreements between the FDIC and the Company. The loss share agreement covering the non-single family portfolio expired in December 2014 and is now in a three year recovery period where 80% of recoveries on reimbursed losses are shared with the FDIC. The loss share agreement covering the single family portfolio expires in December 2019. As of September 30, 2016 and September 30, 2015, loans totaling $152.3 million and $177.5 million, respectively, were covered by the single family loss share agreement.

The receivable arising from the loss share agreements (referred to as the “FDIC loss share receivable” on our consolidated statements of financial condition) is measured separately from the covered loans because the agreements are not contractually part of the loans and are not transferable should the Company choose to dispose of the loans.

~~The following schedule shows activity in the loss share receivable for the nine months ended September 30, 2016 and 2015.~~

Nine Months Ended

September 30,

September 30,
(in thousands)

2016

2015
Beginning Balance

$
29,868

$
60,272
Amortization

(4,678)

(4,034)
Charge-offs, write-downs and other recoveries

(5,569)

(6,733)
External expenses qualifying under loss share agreement

1,000

1,035
Changes due to changes in cash flow projections

(3,027)

(1,984)
FDIC resolution of denied claims

—

(1,854)
Net payments to (from) FDIC

436

(14,667)
Ending balance

$
18,030

$
32,035

Changes in the carrying amount of purchased credit impaired loans and related accretable yield are presented in the following table for the nine months ended September 30, 2017 and the year ended December 31, 2016.



	September 30, 2017				December 31, 2016
	Carrying				Carrying
	Amount		Accretable		Amount		Accretable
(in thousands)	of Loans		Yield		of Loans		Yield
Balance at beginning of period	$	190,915	$	113,686	$	225,838	$	129,488
Addition of cost recovery loans		23,431		—		—		—
Payments received, net		(51,040)		(6,651)		(55,194)		(11,024)
Accretion		12,805		(12,805)		20,271		(20,271)
Increase in expected cash flows based on actual cash flows and changes in cash flow assumptions		—		4,149		—		5,358
Net transfers from nonaccretable difference to accretable yield		—		8,095		—		10,135
Balance at end of period	$	176,111	$	106,474	$	190,915	$	113,686

Loans Acquired in an FDIC-Assisted Transaction and the Related FDIC Loss Share Receivable

Loans purchased in the 2009 acquisition of Peoples First Community Bank were covered by two loss share agreements between the FDIC and the Company. In the third quarter of 2017, the Company terminated the agreements with the FDIC on the remaining covered loan balances totaling $154 million at June 30, 2017. The indemnification asset was written down to the final settlement amount of $3.2 million in the second quarter of 2017. The final cash settlement was received from the FDIC in July 2017.

1720

Table of Contents

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following schedule shows activity in the FDIC loss share receivable for the nine months ended September 30, ~~2016~~2017 and ~~the year ended December 31, 2015.~~2016.

September 30, 2016

December 31, 2015

Carrying

Carrying

Amount

Accretable

Amount

Accretable

(in thousands)

of Loans

Yield

of Loans

Yield

Balance at beginning of period

$
225,838

$
129,488

$
313,685

$
187,456

Payments received, net

(39,446)

(7,575)

(115,847)

(21,978)

Accretion

15,400

(15,400)

28,000

(28,000)

Increase (decrease) in expected cash flows based on actual cash flows and changes in cash flow assumptions

—

5,352

—

(4,238)

Net transfers to (from) nonaccretable difference to accretable yield

—

10,675

—

(3,752)

Balance at end of period

$
201,792

$
122,540

$
225,838

$
129,488



	September 30,		September 30,
(in thousands)	2017		2016
Beginning Balance	$	16,219	$	29,868
Amortization		(2,427)		(4,678)
Charge-offs, write-downs and other recoveries		(2,442)		(5,569)
External expenses qualifying under loss share agreements		79		1,000
Adjustment due to changes in cash flow projections		(2,526)		(3,027)
Net payments to FDIC		934		436
Write-down for termination of loss share agreements		(6,603)		—
Cash received from FDIC for final settlement of agreements		(3,234)		—
Ending balance	$	—	$	18,030

Residential Mortgage Loans in Process of Foreclosure

Included in loans are ~~$9.2~~$8.0 million and ~~$7.4~~$10.1 million of consumer loans secured by single family residential real estate that are in process of foreclosure as of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. ~~Of these loans, $2.8 million and $4.1 million, respectively, are covered by the FDIC loss share agreement.~~ Loans in process of foreclosure include those for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction. In addition to the single family residential real estate loans in process of ~~foreclosure,~~forecislosure, the Company also held ~~$4.5~~$2.5 million and ~~$9.3~~$3.1 million of foreclosed single family residential properties in other real estate owned as of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. ~~Of these foreclosed properties, $0.9 million and $1.6 million as of September 30, 2016 and December 31, 2015, respectively, are also covered by the FDIC loss share agreement.~~

4.5. Securities Sold under Agreements to Repurchase

Included in short-term borrowings ~~at September 30, 2016 was $335.9 million of~~are customer securities sold under agreements to repurchase (“repurchase agreements”) that mature daily and ~~were~~are secured by U.S. agency ~~securities.~~securities totaling $512.0 million and $358.1 million at September 30, 2017 and December 31, 2016, respectively. The Company borrows funds on a secured basis by selling securities under agreements to repurchase, mainly in connection with treasury management services offered to its deposit customers. As the Company maintains effective control over assets sold under agreements to repurchase, the securities continue to be carried on the consolidated statements of financial condition. Because the Company acts as borrower transferring assets to the counterparty, and the agreements mature daily, the Company’s risk is limited.

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~5. Long-Term Debt~~

Effective January 1, 2016, the Company retrospectively adopted accounting guidance intended to simplify the presentation of debt issuance costs by requiring that costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Historically, debt issuance costs were reported in the “Other Assets” line items in the Consolidated Balance Sheets and Statements of Cash Flows. All historical periods have been restated to reflect the revised presentation and new required disclosures are reflected below. The adoption of this guidance did not have a material impact on the Company’s financial condition or operating results.

~~Long-term debt consisted of the following.~~

September 30,

December 31,
(in thousands)

2016

2015
Subordinated notes payable, maturing June 2045

$
150,000

$
150,000
Subordinated notes payable, maturing April 2017

95,511

98,011
Term note payable, maturing December 2018

111,575

125,000
Other long-term debt

112,266

122,988
Less unamortized debt issuance costs

(5,642)

(5,854)
Total long-term debt less unamortized debt issuance costs

$
463,710

$
490,145

~~Long-term debt with its related unamortized debt issuance cost at September 30, 2016 is presented in the following table.~~

Unamortized

Debt

Issuance
(in thousands)

Principal

Costs
Subordinated notes payable, maturing June 2045

$
150,000

$
5,000
Subordinated notes payable, maturing April 2017

95,511

-
Term note payable, maturing December 2018

111,575

642
Other long-term debt

112,266

-
Total

$
469,352

5,642

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

6. Derivatives

Risk Management Objective of Using Derivatives

The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments, currently related to select pools of variable rate ~~loans.~~loans and fixed rate brokered deposits. The Bank ~~has~~ also ~~entered~~enters into interest rate derivative agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these customer derivatives in order to minimize its net risk exposure resulting from such agreements. The Bank also enters into risk participation agreements under which it may either sell or buy credit risk associated with a customer’s performance under certain interest rate derivative contracts related to loans in which participation interests have been sold to or purchased from other banks.

Table of Contents

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the notional or contractual amounts and fair values of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, ~~2016~~2017 and December 31, ~~2015.~~

2016. Effective January 3, 2017, the Company’s central clearing counterparty amended its rulebook to legally characterize variation margin accounts as settlements, rather than being reflected separately as collateral. As a result of that change, the Company began prospectively reflecting derivative assets and liabilities net of the central clearing counterparty derivative margin account.



						Fair Values (1)
		Notional Amounts				Assets				Liabilities						September 30, 2017					December 31, 2016
	Type of	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,					Derivative (1)						Derivative (1)
(in thousands)	Hedge	2016		2015		2016		2015		2016		2015		Type of Hedge		Notional or Contractual Amount	Assets		Liabilities		Notional or Contractual Amount		Assets		Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps														Cash Flow	$	875,000	$	—	$	7,924	$	1,100,000	$	—	$	7,787
Interest rate swaps	Cash Flow	$	1,100,000	$	500,000	$	1,135	$	—	$	254	$	281	Fair Value		363,000		—		823		—		—		—
		$	1,100,000	$	500,000	$	1,135	$	—	$	254	$	281		$	1,238,000	$	—	$	8,747	$	1,100,000	$	—	$	7,787
Derivatives not designated as hedging instruments:
Interest rate swaps (2)	N/A	$	905,662	$	780,871	$	33,732	$	20,622	$	35,447	$	21,007	N/A	$	1,172,752	$	16,855	$	17,420	$	979,391	$	18,405	$	18,362
Risk participation agreements	N/A		86,839		83,430		97		83		215		162	N/A		109,556		34		108		84,732		50		105
Forward commitments to sell residential mortgage loans	N/A		102,495		55,128		88		263		997		336	N/A		93,809		91		669		75,676		900		221
Interest rate-lock commitments on residential mortgage loans	N/A		60,757		38,853		532		243		33		167	N/A		71,786		534		71		46,840		189		228
Foreign exchange forward contracts	N/A		29,700		44,068		970		2,040		953		2,015	N/A		55,081		2,465		2,423		56,152		771		729
		$	1,185,453	$	1,002,350	$	35,419	$	23,251	$	37,645	$	23,687			1,502,984		19,979		20,691		1,242,791		20,315		19,645
Total derivatives															$	2,740,984	$	19,979	$	29,438	$	2,342,791	$	20,315	$	27,432
Less: netting adjustment (3)																		(2,780)		(16,747)				—		—
Total derivative assets/liabilities																	$	17,199	$	12,691			$	20,315	$	27,432

(1)

Derivative assets and liabilities are reported ~~with~~at fair value in other assets or other liabilities, respectively, in the consolidated balance sheets.

(2)

The notional amount represents both the customer accommodation agreements and offsetting agreements with unrelated financial institutions.

(3)

Represents balance sheet netting of derivative assets and liabilities for variation margin collateral held or placed with the same central clearing counterparty. See offsetting assets and liabilities for further information.

Cash Flow Hedges of Interest Rate Risk

The Company is party to ~~eight~~various interest rate swap agreements designated and qualifying as cash flow hedges of the Company’s forecasted variable cash flows for pools of variable rate loans. For each agreement, the Company receives interest at a fixed rate and pays at a variable rate. The ~~eight~~notional amounts of the swap agreements at September 30, 2017 expire as follows: ~~notional amount of $300~~$250 million ~~expires~~ in ~~January 2017; notional amount of~~2019; $200 million ~~expires~~ in ~~June 2017; three contracts each with notional amounts of $100 million expire in April 2018, 2019,~~ 2020; and ~~three contracts each with notional amounts of $100~~$425 million ~~expire~~ in ~~September 2018, 2019, 2020.~~2022.

During the terms of the swap agreements, the effective portion of changes in the fair value of the derivative instruments are recorded in Accumulated Other Comprehensive Income (“AOCI”) and subsequently reclassified into earnings in the periods that the hedged forecasted ~~variable-rate~~variable rate interest payments affect earnings. The impact on AOCI is reflected in Note 7.7- Shareholders’ Equity. There was virtually no ineffective portion of the change in fair value of the ~~derivative~~derivatives recognized directly in earnings during the three or nine months ended September 30, 2017 and 2016.

Fair Value Hedges of Interest Rate Risk

During 2017, the Company entered into interest rate swap agreements that modify the Company’s exposure to interest rate risk by effectively converting a portion of the Company’s brokered certificates of deposit from fixed rates to variable rates. The maturities and call features of these interest rate swaps match the features of the hedged deposits. As interest rates fall, the decline in the value of the certificates of deposit is offset by the increase in the value of the interest rate swaps. Conversely, as interest rates rise, the value of the underlying hedged deposits increases, but the value of the interest rate swaps decreases, resulting in no impact on earnings. Interest expense is adjusted by the difference between the fixed and floating rates for the period the swaps are in effect. Hedge ineffectiveness on these transactions results in an increase or decrease in noninterest income.

Table of Contents

Derivatives Not Designated as Hedges

Customer interest rate derivative program

The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking customers to facilitate their risk management strategies. The Bank enters into offsetting agreements with unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because the interest rate derivatives associated with this program do not meet hedge

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

Risk participation agreements

The Bank also enters into risk participation agreements under which it may either assume or sell credit risk associated with a borrower’s performance under certain interest rate derivative contracts. In those instances where the Bank has assumed credit risk, it is not a direct counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because it is a party to the related loan agreement with the borrower. In those instances in which the Bank has sold credit risk, it is the sole counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because other banks participate in the related loan agreement. The Bank manages its credit risk under risk participation agreements by monitoring the creditworthiness of the borrower, based on the Bank’s normal credit review process.

Mortgage banking derivatives

The Bank also enters into certain derivative agreements as part of ~~their~~its mortgage banking activities. These agreements include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis.

Customer foreign exchange forward contract derivatives

The Bank enters into foreign exchange forward derivative agreements, primarily forward foreign currency contracts, with commercial banking customers to facilitate their risk management strategies. The Bank manages its risk exposure from such transactions by entering into offsetting agreements with unrelated financial institutions. Because the foreign exchange forward contract derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

Effect of Derivative Instruments on the Income Statement

Derivative instrument income consisting primarily of customer interest rate swap fees, net of fair value adjustments, is reflected in the income statement in other noninterest income, totaling ~~$1.7~~$1.3 million and ~~$1.5~~$4.4 million for the three and nine months ended September 30, ~~2016~~2017, respectively, and ~~2015,~~$1.3 million and $1.7 million for the three and nine months ended September 30, 2016, respectively. The impact to interest income from cash flow hedges was ~~$1.7~~($0.1) million and ~~$1.5~~($0.2) million for the three and nine months ended September 30, 2017, respectively and $0.7 million and $1.7 million for the three and nine months ended September 30, 2016, respectively. For the three and ~~2015, respectively.~~nine months ended September 30, 2017, the fair value hedges entered into during the period reduced interest expense on deposits by $0.2 million and $0.6 million, respectively, and had minimal impact on noninterest income due to ineffectiveness.

Credit ~~risk-related~~Risk-Related Contingent Features

Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in certain circumstances, such as ~~the~~a downgrade of the Bank’s credit ratings below specified levels, a default by the Bank on its indebtedness, or the failure of the Bank to maintain specified minimum regulatory capital ratios or its regulatory status as a well-capitalized institution. These derivative agreements also contain provisions regarding the posting of collateral by each party. As of September 30, ~~2016,~~2017, the aggregate fair value of derivative instruments with credit risk-related contingent features that were in a net liability position was ~~$36.3 million, for which the Bank had posted collateral of $37.5~~$16.6 million.

2123

Table of Contents

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Offsetting Assets and Liabilities

The Bank’s derivative instruments towith certain counterparties contain legally enforceable netting provisions that allow for net settlement of multiple transactions to a single amount, which may be positive, negative, or zero. Agreements with certain bilateral counterparties require both parties to maintain collateral in the event that the fair values of derivative instruments exceed established exposure thresholds. For centrally cleared derivatives, the Company is subject to initial margin posting and daily variation margin exchange with the central clearinghouses. As noted above, effective January 3, 2017, the Company began to reflect its derivative assets and liabilities net of the central clearing party variation margin account in the Statement of Income. Offsetting information in regards to all derivative assets and liabilities, including accrued interest, subject to these master netting agreements at September 30, ~~2016~~2017 and December 31, ~~2015~~2016 is presented in the following tables.



(in thousands)			Gross Amounts Offset in		Net Amounts Presented in		Gross Amounts Not Offset in the Statement of Financial Position								Gross Amounts		Net Amounts		Gross Amounts Not Offset in the Statement of Income
Description	Gross Amounts Recognized		the Statement of Financial Position		the Statement of Financial Position		Financial Instruments		Cash Collateral		Net Amount		Gross Amounts Recognized		Offset in the Statement of Income		Presented in the Statement of Income		Financial Instruments		Cash Collateral		Net Amount
As of September 30, 2016
As of September 30, 2017
Derivative Assets	$	1,352	$	—	$	1,352	$	1,352	$	—	$	—	$	5,271	$	(3,942)	$	1,329	$	1,329	$	—	$	—

Derivative Liabilities	$	36,267	$	—	$	36,267	$	1,352	$	37,451	$	(2,536)	$	21,889	$	(16,322)	$	5,567	$	1,329	$	7,318	$	(3,080)



(in thousands)			Gross Amounts Offset in		Net Amounts Presented in		Gross Amounts Not Offset in the Statement of Financial Position							��	Gross Amounts		Net Amounts		Gross Amounts Not Offset in the Statement of Income
Description	Gross Amounts Recognized		the Statement of Financial Position		the Statement of Financial Position		Financial Instruments		Cash Collateral		Net Amount		Gross Amounts Recognized		Offset in the Statement of Income		Presented in the Statement of Income		Financial Instruments		Cash Collateral		Net Amount
As of December 31, 2015
As of December 31, 2016
Derivative Assets	$	224	$	—	$	224	$	224	$	—	$	—	$	4,788	$	—	$	4,788	$	4,788	$	—	$	—

Derivative Liabilities	$	21,034	$	—	$	21,034	$	224	$	23,482	$	(2,672)	$	26,846	$	—	$	26,846	$	4,788	$	19,095	$	2,963

The Company has excess collateral compared to total exposure due to initial margin requirements for day-to-day rate volatility.

7. Stockholders’ Equity

~~Stock Repurchase Program~~

~~On August 28, 2015,~~The presentation of the ~~Company’s Board~~components of ~~Directors approved a~~stockholders’ equity was modified from prior filings to consolidate treasury stock ~~repurchase plan that authorized~~into surplus in the ~~repurchase~~Consolidated Balance Sheets and Statements of upChanges in Stockholders’ Equity in order to ~~5%, or approximately 3.9 million~~simplify the presentation. Additional information on treasury stock is reflected in the common shares outstanding section below.

Common Shares Outstanding

Common shares outstanding excludes treasury shares of its outstanding common stock. The approved plan allowed the Company to repurchase its common shares either in the open market in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions with non-affiliated sellers or as otherwise determined by the Company from time to time until it expired on1.0 million and 1.3 million at September 30, ~~2016. Under this plan, the Company repurchased 741,393 shares~~2017 and December 31, 2016, respectively, with a first-in-first-out cost basis of ~~its common stock~~$17.6 million and $24.1 million at ~~an average price of $27.44 per share through~~ September 30, ~~2016. There were no shares~~2017 and December 31, 2016, respectively. Shares outstanding also excludes unvested restricted share awards of ~~common stock repurchased under this plan in 2016.~~1.7 million and 2.0 million at September 30, 2017 and December 31, 2016, respectively.

Table of Contents

Accumulated Other Comprehensive Income (Loss)

The components of AOCI and changes in those components are presented in the following table.



	Available		HTM Securities
	for Sale		Transferred		Employee		Cash
(in thousands)	Securities		from AFS		Benefit Plans		Flow Hedges		Total
Balance, December 31, 2015	$	4,268	$	(16,795)	$	(67,890)	$	(178)	$	(80,595)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain		38,835		—		—		1,162		39,997
Reclassification of net (gain) loss realized and included in earnings		(1,435)		—		4,395		—		2,960
Valuation adjustment for employee benefit plans		—		—		(6,347)		—		(6,347)
Amortization of unrealized net loss on securities transferred to HTM		—		2,736		—		—		2,736
Income tax expense (benefit)		13,701		1,029		(714)		424		14,440
Balance, September 30, 2016	$	27,967	$	(15,088)	$	(69,128)	$	560	$	(55,689)
Balance, December 31, 2016	$	(28,679)	$	(14,392)	$	(72,501)	$	(4,960)	$	(120,532)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)		21,026		—		—		(1,232)		19,794
Reclassification of net losses realized and included in earnings		—		—		4,144		335		4,479
Valuation adjustment for pension plan amendment (a)		—		—		17,315		—		17,315
Other valuation adjustments for employee benefit plan		—		—		(9,185)		—		(9,185)
Amortization of unrealized net loss on securities transferred to HTM		—		2,726		—		—		2,726
Income tax expense (benefit)		7,649		1,012		4,416		(329)		12,748
Balance, September 30, 2017	$	(15,302)	$	(12,678)	$	(64,643)	$	(5,528)	$	(98,151)

(a)

For further discussion of the pension plan amendment, see Note 11 – Retirement Plans.

AOCI is reported as a component of stockholders’ equity. AOCI can include, among other items, unrealized holding gains and losses on securities available for sale (“AFS”), gains and losses associated with pension or other ~~post retirement~~post-retirement benefits that are not recognized immediately as a component of net periodic benefit cost, and gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges. Net unrealized gains/losses on AFS securities reclassified as securities held to maturity (“HTM”) also continue to be reported as a component of AOCI and will be amortized over the estimated remaining life of the securities as an adjustment to interest income. ~~The components~~Subject to certain thresholds, unrealized losses on employee benefit plans will be reclassified into income as pension and post-retirement costs are recognized over the remaining service period of plan participants. Accumulated gains/losses on the cash flow hedge of the variable rate loans described in Note 6 will be reclassified into income over the life of the hedge. Gains (losses) in AOCI are ~~reported~~ net of ~~related tax effects.~~

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~The components of AOCI and changes in those components are presented in the following table.~~

Available

HTM Securities

Loss on

for Sale

Transferred

Employee

Effective Cash

(in thousands)

Securities

from AFS

Benefit Plans

Flow Hedges

Total
Balance, December 31, 2014

$
18,001

$
(19,074)

$
(48,626)

$
(375)

$
(50,074)
Other comprehensive income before income taxes:

Net change in unrealized gain

163

—

—

2,011

2,174
Reclassification of net (gain) losses realized and included in earnings

(165)

—

2,373

—

2,208
Valuation adjustment for employee benefit plans

—

—

(959)

—

(959)
Amortization of unrealized net loss on securities transferred to HTM

—

2,609

—

—

2,609
Income tax (benefit) expense

(73)

953

513

732

2,125
Balance, September 30, 2015

$
18,072

$
(17,418)

$
(47,725)

$
904

$
(46,167)
Balance, December 31, 2015

$
4,268

$
(16,795)

$
(67,890)

$
(178)

$
(80,595)
Other comprehensive income before income taxes:

Net change in unrealized gain

38,835

—

—

1,162

39,997
Reclassification of net (gain) losses realized and included in earnings

(1,435)

—

4,395

—

2,960
Valuation adjustment for employee benefit plans

—

—

(6,347)

(6,347)
Amortization of unrealized net loss on securities transferred to HTM

—

2,736

—

—

2,736
Income tax expense (benefit)

13,701

1,029

(714)

424

14,440
Balance, September 30, 2016

$
27,967

$
(15,088)

$
(69,128)

$
560

$
(55,689)

deferred income taxes.

The following table shows the line items inof the consolidated statements of income ~~statements~~ affected by amounts reclassified from ~~accumulated other comprehensive income.~~AOCI.



	Nine Months Ended					Nine Months Ended
Amount reclassified from AOCI (a)	September 30,				Affected line item on	September 30,				Affected line item on
(in thousands)		2016		2015	the income statement		2017		2016	the statement of income
Gain on sale of AFS securities	$	1,435	$	165	Securities transactions	$	—	$	1,435	Securities transactions
Tax effect		(502)		(58)	Income taxes		—		(502)	Income taxes
Net of tax		933		107	Net income		—		933	Net income
Amortization of unrealized net loss on securities transferred to HTM		(2,736)		(2,609)	Interest income		(2,726)		(2,736)	Interest income
Tax effect		1,029		953	Income taxes		1,012		1,029	Income taxes
Net of tax		(1,707)		(1,656)	Net income		(1,714)		(1,707)	Net income
Amortization of defined benefit pension and post-retirement items		(4,395)		(2,373)	Employee benefits expense (b)		(4,144)		(4,395)	Employee benefits expense (b)
Tax effect		1,538		831	Income taxes		1,491		1,538	Income taxes
Net of tax		(2,857)		(1,542)	Net income		(2,653)		(2,857)	Net income
Amortization of loss on terminated cash flow hedges							(335)		—	Interest income
Tax effect							123		—	Income taxes
Net of tax							(212)		—	Net income
Total reclassifications, net of tax	$	(3,631)	$	(3,091)	Net income	$	(4,579)	$	(3,631)	Net income

(a)

Amounts in parenthesis indicate reduction in net income.

(b)

These ~~accumulated other comprehensive income~~AOCI components are included in the computation of net periodic pension and post-retirement cost that is reported with employee benefits expense (see Note 11 – Retirement Plans for additional details).

2325

Table of Contents

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

8. Other Noninterest Income

Components of other noninterest income are as ~~follows.~~follows:

��



	Three Months Ended				Nine Months Ended

	September 30,				September 30,				Three Months Ended				Nine Months Ended
									September 30,				September 30,
(in thousands)	2016		2015		2016		2015		2017		2016		2017		2016
Income from bank-owned life insurance	$	4,097	$	2,451	$	11,148	$	7,788	$	3,097	$	4,097	$	8,632	$	11,148
Credit related fees		2,685		2,718		7,309		7,786		2,521		2,685		8,297		7,309
Derivative income		1,347		74		1,741		1,486		1,339		1,347		4,484		1,741
Net gain on sale of assets		991		418		4,557		363		400		991		4,465		4,557
Safety deposit box income		424		441		1,315		1,356		424		424		1,264		1,315
Other miscellaneous		2,322		2,268		6,698		7,360		3,371		2,322		9,759		6,698
Total other noninterest income	$	11,866	$	8,370	$	32,768	$	26,139	$	11,152	$	11,866	$	36,901	$	32,768

9. Other Noninterest Expense

Components of other noninterest expense are as ~~follows.~~

follows:



	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands)	2016		2015		2016		2015		2017		2016		2017		2016
Advertising	$	2,859	$	2,856	$	7,909	$	7,154	$	3,910	$	2,859	$	11,971	$	7,909
Ad valorem and franchise taxes		2,268		2,868		6,911		8,319		3,387		2,268		9,942		6,911
Printing and supplies		1,134		1,193		3,310		3,568		1,421		1,134		3,929		3,310
Insurance expense		803		794		2,467		2,644		671		803		2,295		2,467
Travel expense		1,022		1,419		3,050		3,946		1,226		1,022		3,635		3,050
Entertainment and contributions		1,686		1,634		5,319		5,009		2,322		1,686		6,087		5,319
Tax credit investment amortization		861		2,161		4,437		6,352		1,212		861		3,637		4,437
Loss share termination										—		—		6,603		—
Other miscellaneous		11,746		3,634		22,158		16,679		7,611		11,746		19,958		22,158
Total other noninterest expense	$	22,379	$	16,559	$	55,561	$	53,671	$	21,760	$	22,379	$	68,057	$	55,561

10. Earnings Per Share

~~Hancock~~The Company calculates earnings per share using the two-class method. The two-class method allocates net income to each class of common stock and participating security according to common dividends declared and participation rights in undistributed earnings. Participating securities consist of unvested ~~stock-based~~stock based payment awards that contain nonforfeitable rights to dividends or dividend equivalents.

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

A summary of the information used in the computation of earnings per common share follows.



	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands, except per share data)	2016		2015		2016		2015		2017		2016		2017		2016
Numerator:
Net income to common shareholders	$	46,719	$	41,166	$	97,465	$	116,154	$	58,902	$	46,719	$	160,183	$	97,465
Net income allocated to participating securities - basic and diluted		1,101		840		2,334		2,541		1,244		1,101		3,566		2,334
Net income allocated to common shareholders - basic and diluted	$	45,618	$	40,326	$	95,131	$	113,613	$	57,658	$	45,618	$	156,617	$	95,131
Denominator:
Weighted-average common shares - basic	$	77,550	$	77,928	$	77,525	$	78,452	$	84,749	$	77,550	$	84,577	$	77,525
Dilutive potential common shares		127		147		128		157		231		127		241		128
Weighted-average common shares - diluted	$	77,677	$	78,075	$	77,653	$	78,609	$	84,980	$	77,677	$	84,818	$	77,653
Earnings per common share:
Basic	$	0.59	$	0.52	$	1.23	$	1.45	$	0.68	$	0.59	$	1.85	$	1.23
Diluted	$	0.59	$	0.52	$	1.23	$	1.45	$	0.68	$	0.59	$	1.85	$	1.23

Table of Contents

Potential common shares consist of employee and director stock options. These potential common shares do not enter into the calculation of diluted earnings per share if the impact would be anti-dilutive, i.e., increase earnings per share or reduce a loss per share. Weighted average anti-dilutive potential common shares totaled 1,380 and 11,057, respectively, for the three and nine months ended September 30, 2017. Weighted-average anti-dilutive potential common shares totaled 317,893 and ~~761,113,~~578,863, respectively, for the three ~~months ended September 30, 2016~~ and ~~September 30, 2015. Weighted-average anti-dilutive potential common shares totaled 578,863 and 815,765, respectively, for the~~ nine months ended September 30, ~~2016 and September 30, 2015.~~2016.

11. Retirement Plans

~~The~~

During the second quarter of 2017, the Company ~~has~~amended both the Hancock Holding Company Pension Plan and Trust Agreement (“Pension Plan”), a qualified defined benefit plan, and the Hancock Holding Company 401(k) Savings Plan and Trust Agreement (“401(k) Plan”), a defined contribution plan. The Pension Plan was amended to exclude any individual hired or rehired by the Company after June 30, 2017 from eligibility to participate. The Pension Plan amendment further provides that the accrued benefits of each participant in the Pension Plan whose combined age plus years of service as of January 1, 2018 totals less than 55 will be frozen as of January 1, 2018 and will not thereafter increase. As a result of the plan amendments, pension ~~plan covering all~~assets and the benefit obligations were re-measured as of June 30, 2017. The impact of the amendment to the benefit obligation was a reduction of $17.3 million. As of June 30, 2017, pension assets totaled $537.6 million and the benefit obligation totaled $476.9 million.

The 401(k) Plan was amended for participants whose benefits are frozen under the Pension Plan, to add an enhanced Company contribution beginning January 1, 2018, in the amount of 2%, 4% or 6% of such participant’s eligible ~~employees. Eligibility is~~compensation, based on ~~minimum age-related~~the participant’s age and ~~service-related requirements as well as job classification. Accrued benefits under~~years of service with the Company. The 401(k) Plan’s amendment further provides that the Company will contribute to the benefit of those associates of the Company hired or rehired after June 30, 2017 and those associates of the Company never enrolled in the Pension Plan an additional basic contribution in an amount equal to 2% of the associate’s eligible compensation beginning January 1, 2018. Participants will vest in the new basic and enhanced Company contributions upon completion of three years of service.

The Company also has a nonqualified defined benefit plan covering certain legacy Whitney employees ~~were~~that was frozen as of December 31, 2012 and no future benefits ~~will be~~are accrued under this plan.

The Company ~~also~~ sponsors defined benefit postretirement plans for both legacy Hancock and legacy Whitney employees that provide health care and life insurance benefits. Benefits under the Hancock plan are not available to employees hired on or after January 1, 2000. Benefits under the Whitney plan are restricted to retirees who were already receiving benefits at the time of plan amendments in 2007 or active participants who were eligible to receive benefits as of December 31, 2007.

The following tables show the components of net periodic benefits cost included in expense for the plans for the periods indicated.



					Other Post-								Other Post-
(in thousands)	Pension Benefits				retirement Benefits				Pension Benefits				retirement Benefits

Three Months Ended September 30, 2016	2016		2015		2016		2015
Three months Ended September 30, 2017									2017		2016		2017		2016
Service cost	$	3,611	$	3,383	$	45	$	23	$	3,769	$	3,611	$	17	$	45
Interest cost		4,022		4,672		204		174		4,056		4,022		155		204
Expected return on plan assets		(8,554)		(8,207)		—		—		(9,652)		(8,554)		—		—
Amortization of net loss		1,426		842		53		(40)
Net periodic benefit cost	$	505	$	690	$	302	$	157
Amortization of net loss and prior service costs										1,167		1,426		(128)		53
Net periodic benefit cost (reduction of cost)									$	(660)	$	505	$	44	$	302

Nine Months Ended September 30, 2016
Nine months ended September 30, 2017
Service cost	$	10,487	$	10,128	$	119	$	95	$	11,612	$	10,487	$	112	$	119
Interest cost		13,033		13,963		613		717		12,470		13,033		514		613
Expected return on plan assets		(25,999)		(24,626)		—		—		(27,978)		(25,999)		—		—
Amortization of net loss		4,320		2,328		75		45
Amortization of net loss and prior service costs										4,368		4,320		(224)		75
Net periodic benefit cost	$	1,841	$	1,793	$	807	$	857	$	472	$	1,841	$	402	$	807

No contribution to the pension plans is required in ~~2016~~2017 to meet minimum funding requirements, and the Company has no plans to make a contribution in the current year.

2527

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~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The Company also provides a defined contribution 401(k) retirement benefit plan. Under the plan, the Company matches 100% of the first 1% of compensation saved by a participant, and 50% of the next 5% of compensation saved.

12. Share-Based Payment Arrangements

Hancock maintains incentive compensation plans that provide for awards of share-based compensation to employees and directors. These plans have been approved by the Company’s shareholders. Detailed descriptions of these plans were included in Note 16 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. Effective January 1, 2017, the Company prospectively adopted accounting guidance intended to improve the accounting for employee share-based payments. The Company elected to account for forfeitures as they occur. The adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations.

A summary of option activity for the nine months ended September 30, ~~2016~~2017 is presented ~~below.~~below:



				Weighted						Weighted
				Average						Average
		Weighted		Remaining				Weighted		Remaining
		Average		Contractual	Aggregate			Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic		Number of	Exercise		Term	Intrinsic
Options	Shares	Price		(Years)	Value ($000)		Shares	Price		(Years)	Value ($000)
Outstanding at January 1, 2016	745,806	$	37.55
Outstanding at January 1, 2017							456,258	$	35.91	—	$	3,734
Exercised/Released	(1,660)		29.73				(335,758)		34.58	—		4,111
Cancelled/Forfeited	(66,345)		35.25				(538)		32.09	—		6
Expired	(150,847)		46.06				(16,675)		68.18	—		—
Outstanding at September 30, 2016	526,954	$	35.42	3.81	$	582
Exercisable at September 30, 2016	483,199	$	35.93	3.67	$	469
Outstanding at September 30, 2017							103,287	$	35.06	2.92	$	1,383
Exercisable at September 30, 2017							103,287	$	35.06	2.92	$	1,383

The total intrinsic value of options exercised for the nine months ended September 30, ~~2016~~2017 was $4.1 million. There was minimal ~~compared to $0.2 million~~intrinsic value of options exercised for the nine months ended September 30, ~~2015.~~2016.

The restricted and performance shares in the table below are subject to service requirements. A summary of the status of the Company’s nonvested restricted and performance shares as of September 30, ~~2016~~2017 and changes during the nine months ended September 30, ~~2016,~~2017, is presented in the following table.



			Weighted			Weighted
			Average			Average
	Number of		Grant Date	Number of		Grant Date
	Shares		Fair Value	Shares		Fair Value
Nonvested at January 1, 2016	2,196,145	$	30.97
Nonvested at January 1, 2017				2,152,119	$	32.15
Granted	106,403		25.15	63,127		42.16
Vested	(71,184)		30.98	(209,440)		30.23
Forfeited	(207,932)		30.92	(54,493)		32.36
Nonvested at September 30, 2016	2,023,432	$	30.63
Nonvested at September 30, 2017				1,951,313	$	32.67

As of September 30, ~~2016,~~2017, there ~~were $33.6~~was $40.1 million of total unrecognized compensation expense related to nonvested restricted and performance shares expected to vest. This compensation is expected to be recognized in expense over a weighted average period of ~~3.1~~3 years. The total fair value of shares which vested during the nine months ended September 30, 2017 and 2016 ~~and 2015~~ was ~~$2.2~~$10.1 million and ~~$7.6~~$2.2 million, respectively.

During the nine months ended September 30, ~~2016,~~2017, the Company granted ~~35,587~~23,489 performance shares subject to a total shareholder return (“TSR”) performance metric with a grant date fair value of ~~$24.42~~$42.92 per share and ~~35,587~~23,489 performance shares subject to a core earnings per share performance metric with a grant date fair value of ~~$22.58~~$38.26 per share to key members of executive management. The number of performance shares subject to TSR that ultimately vest at the end of the three-year performance period, if any, will be based on the relative rank of the Company’s three-year TSR among the TSRs of a peer group of 44 regional banks. The fair value of the performance shares subject to TSR at the grant date was determined using a Monte Carlo simulation method. The number of performance shares subject to core earnings per share that ultimately vest will be based on the Company’s attainment of certain core earnings per share goals over the two-year performance period. The maximum number of performance shares that could vest is 200% of the target award. Compensation expense for these performance shares is recognized on a ~~straight-line~~straight line basis over the three-year service period.

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~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

13. Fair Value

The Financial Accounting Standards Board (“FASB”) defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The FASB’s guidance also ~~established~~establishes a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair value, giving preference to quoted prices in active markets for identical assets or liabilities (“level 1”) and the lowest priority to unobservable inputs such as a reporting entity’s own data (“level 3”). Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Fair Value of Assets and Liabilities Measured on a Recurring Basis

The following tables present for each of the fair value hierarchy levels the Company’s assets and liabilities that are measured at fair value on a recurring basis in the consolidated balance sheets.



	September 30, 2016						September 30, 2017
(in thousands)	Level 1		Level 2		Total		Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	—	$	20,671	$	20,671	$	—	$	73,442	$	—	$	73,442
Municipal obligations		—		217,018		217,018		—		242,678		—		242,678
Corporate debt securities		—		3,500		3,500		—		3,500		—		3,500
Residential mortgage-backed securities		—		1,775,925		1,775,925		—		1,793,426		—		1,793,426
Commercial mortgage-backed securities		—		173,109		173,109		—		568,353		—		568,353
Collateralized mortgage obligations		—		223,256		223,256		—		173,879		—		173,879
Equity securities		1,201		—		1,201
Total available for sale securities		1,201		2,413,479		2,414,680		—		2,855,278		—		2,855,278
Derivative assets (1)		—		36,554		36,554		—		17,199		—		17,199
Total recurring fair value measurements - assets	$	1,201	$	2,450,033	$	2,451,234	$	—	$	2,872,477	$	—	$	2,872,477
Liabilities
Derivative liabilities (1)	$	—	$	37,899	$	37,899	$	—	$	12,691	$	—	$	12,691
Total recurring fair value measurements - liabilities	$	—	$	37,899	$	37,899	$	—	$	12,691	$	—	$	12,691

(1)

For further disaggregation of derivative assets and liabilities, see Note 6 - Derivatives.



	December 31, 2015						December 31, 2016
(in thousands)	Level 1		Level 2		Total		Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	—	$	134	$	134	$	—	$	54,828	$	—	$	54,828
Municipal obligations		—		39,607		39,607		—		242,155		—		242,155
Corporate debt securities		—		3,500		3,500		—		3,500		—		3,500
Residential mortgage-backed securities		—		1,758,373		1,758,373		—		1,611,355		—		1,611,355
Commercial mortgage-backed securities								—		402,591		—		402,591
Collateralized mortgage obligations		—		289,033		289,033		—		202,479		—		202,479
Equity securities		2,757		—		2,757
Total available for sale securities		2,757		2,090,647		2,093,404		—		2,516,908		—		2,516,908
Derivative assets (1)		—		23,251		23,251		—		20,315		—		20,315
Total recurring fair value measurements - assets	$	2,757	$	2,113,898	$	2,116,655	$	—	$	2,537,223	$	—	$	2,537,223
Liabilities
Derivative liabilities (1)	$	—	$	23,968	$	23,968	$	—	$	27,432	$	—	$	27,432
Total recurring fair value measurements - liabilities	$	—	$	23,968	$	23,968	$	—	$	27,432	$	—	$	27,432

(1)

For further disaggregation of derivative assets and liabilities, see Note 6 - Derivatives.

Securities classified as level ~~1 within the valuation hierarchy include equity securities with fair value measurements obtained from quoted market prices on an active market. Level~~ 2 ~~classified securities~~ include obligations of U.S. Government agencies and U.S.

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Government-sponsored agencies, residential mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies, and state and municipal bonds. The level 2 fair value measurements for investment securities are obtained quarterly from a third-party pricing service that uses industry-standard pricing models. Substantially all of the model inputs are observable in the marketplace or can be supported by observable data.

Table of Contents

The Company invests only in securities of investment grade quality with a targeted duration, for the overall portfolio, generally between two and five years. Company policies generally limit investments to U.S. agency securities and municipal securities determined to be investment grade according to an internally generated score which generally includes a rating of not less than “Baa” or its equivalent by a nationally recognized statistical rating agency. ~~There were no transfers between valuation hierarchy levels during the periods shown.~~

The fair value of derivative financial instruments, which are predominantly customer interest rate swaps, is obtained from a third-party pricing service that uses an industry-standard discounted cash flow model that relies on inputs, LIBOR swap curves and Overnight Index swap rate curves, observable in the marketplace. To comply with the accounting guidance, credit valuation adjustments are incorporated in the fair values to appropriately reflect nonperformance risk for both the Company and the counterparties. Although the Company has determined that the majority of the inputs used to value the derivative instruments fall within level 2 of the fair value hierarchy, the credit value adjustments utilize level 3 inputs, such as estimates of current credit spreads. The Company has determined that the impact of the credit valuation adjustments is not significant to the overall valuation of these derivatives. As a result, the Company has classified its derivative valuations in their entirety in level 2 of the fair value hierarchy. The Company’s policy is to measure counterparty credit risk quarterly for all derivative instruments, including those subject to master netting arrangements consistent with how market participants would price the net risk exposure at the measurement date.

The Company also has certain derivative instruments associated with the Bank’s ~~mortgage-banking~~mortgage banking activities. These derivative instruments include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis. The fair value of these derivative instruments is measured using observable market prices for similar instruments and is classified as a level 2 measurement.

The Company’s policy is to recognize transfers between valuation hierarchy levels as of the end of a reporting period. There were no transfers between levels during the periods shown.

Fair Value of Assets Measured on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Collateral-dependent impaired loans are level 2 assets measured at the fair value of the underlying collateral based on independent third-party appraisals that take into consideration market-based information such as recent sales activity for similar assets in the property’s market.

Other real estate owned, including both foreclosed property and surplus banking property, are level 3 assets that are adjusted to fair value, less estimated selling costs, upon transfer to other real estate owned. Subsequently, other real estate owned is carried at the lower of carrying value or fair value less estimated selling costs. Fair values are determined by sales agreement or third-party appraisals as discounted for estimated selling costs, information from comparable sales, and marketability of the property.

The fair value information presented below is not as of the period-end, rather it was as of the date the fair value adjustment was recorded during the twelve months for each of the dates presented below, and excludes nonrecurring fair value measurements of assets no longer on the balance sheet.

The following tables present the Company’s financial assets that are measured at fair value on a nonrecurring basis for each of the fair value hierarchy levels.



	September 30, 2016								September 30, 2017
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	126,401	$	—	$	126,401	$	—	$	129,230	$	—	$	129,230
Other real estate owned		—		—		14,626		14,626		—		—		6,810		6,810
Total nonrecurring fair value measurements	$	—	$	126,401	$	14,626	$	141,027	$	—	$	129,230	$	6,810	$	136,040



	December 31, 2015								December 31, 2016
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	93,602	$	—	$	93,602	$	—	$	169,888	$	—	$	169,888
Other real estate owned		—		—		17,206		17,206		—		—		13,968		13,968
Total nonrecurring fair value measurements	$	—	$	93,602	$	17,206	$	110,808	$	—	$	169,888	$	13,968	$	183,856

~~Table of Contents~~

~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Accounting guidance from the FASB requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring basis. The significant methods and assumptions used by the Company to estimate the fair value of financial instruments are discussed below.

Cash, Short‑Term Investments and Federal Funds Sold -– For these short‑term instruments, the carrying amount is a reasonable estimate of fair value.

Securities – The fair value measurement for securities available for sale was discussed earlier in the note. The same measurement techniques were applied to the valuation of securities held to maturity.

Table of Contents

Loans, Net -– The fair value measurement for certain impaired loans was discussed earlier in the note. For the remaining portfolio, fair values were generally determined by discounting scheduled cash flows using discount rates determined with reference to current market rates at which loans with similar terms would be made to borrowers of similar credit quality.

Loans Held for Sale – These loans are recorded at fair value and carried at the lower of cost or market. The carrying amount is considered a reasonable estimate of fair value.

Deposits -– The accounting guidance requires that the fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing checking and savings accounts, be assigned fair values equal to amounts payable upon demand (“carrying amounts”). The fair value of ~~fixed-maturity~~fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Securities Sold under Agreements to Repurchase, Federal Funds Purchased, and ~~Federal Home Loan Bank (“FHLB”)~~FHLB Borrowings -– For these short-term liabilities, the carrying amount is a reasonable estimate of fair value.

Long-Term Debt -– The fair value is estimated by discounting the future contractual cash flows using current market rates at which debt with similar terms could be obtained.

Derivative Financial Instruments – The fair value measurement for derivative financial instruments was discussed earlier in the note.

The following tables present the estimated fair values of the Company’s financial instruments by fair value hierarchy levels and the corresponding carrying amount at September 30, ~~2016~~2017 and December 31, ~~2015.~~2016.



	September 30, 2016										September 30, 2017
							Total Fair		Carrying								Total Fair		Carrying
(in thousands)	Level 1		Level 2		Level 3		Value		Amount		Level 1		Level 2		Level 3		Value		Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold	$	458,792	$	—	$	—	$	458,792	$	458,792	$	445,500	$	—	$	—	$	445,500	$	445,500
Available for sale securities		1,201		2,413,479		—		2,414,680		2,414,680		—		2,855,278		—		2,855,278		2,855,278
Held to maturity securities		—		2,482,540		—		2,482,540		2,428,432		—		2,768,148		—		2,768,148		2,769,274
Loans, net		—		126,401		15,926,313		16,052,714		15,834,760		—		129,230		18,300,747		18,429,977		18,563,163
Loans held for sale		—		42,545		—		42,545		42,545		—		23,236		—		23,236		23,236
Derivative financial instruments		—		36,554		—		36,554		36,554		—		17,199		—		17,199		17,199
Financial liabilities:
Deposits	$	—	$	—	$	18,885,148	$	18,885,148	$	18,885,477	$	—	$	—	$	21,523,649	$	21,523,649	$	21,533,859
Federal funds purchased		1,250		—		—		1,250		1,250		1,150		—		—		1,150		1,150
Securities sold under agreements to repurchase		335,894		—		—		335,894		335,894		512,001		—		—		512,001		512,001
FHLB borrowings		738,812		—		—		738,812		738,812
FHLB short-term borrowings												1,224,000		—		—		1,224,000		1,224,000
Long-term debt		—		468,091		—		468,091		463,710		—		330,909		—		330,909		331,179
Derivative financial instruments		—		37,899		—		37,899		37,899		—		12,691		—		12,691		12,691



	December 31, 2016
							Total Fair		Carrying
(in thousands)	Level 1		Level 2		Level 3		Value		Amount
Financial assets:
Cash, interest-bearing bank deposits, and federal funds sold	$	450,866	$	—	$	—	$	450,866	$	450,866
Available for sale securities		—		2,516,908		—		2,516,908		2,516,908
Held to maturity securities		—		2,470,117		—		2,470,117		2,500,220
Loans, net		—		169,888		16,326,961		16,496,849		16,522,733
Loans held for sale		—		34,064		—		34,064		34,064
Derivative financial instruments		—		20,315		—		20,315		20,315
Financial liabilities:
Deposits	$	—	$	—	$	19,430,939	$	19,430,939	$	19,424,266
Federal funds purchased		2,275		—		—		2,275		2,275
Securities sold under agreements to repurchase		358,131		—		—		358,131		358,131
FHLB short-term borrowings		865,000		—		—		865,000		865,000
Long-term debt		—		435,747		—		435,747		436,280
Derivative financial instruments		—		27,432		—		27,432		27,432

2931

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~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

December 31, 2015

Total Fair

Carrying
(in thousands)

Level 1

Level 2

Level 3

Value

Amount
Financial assets:

Cash, interest-bearing bank deposits, and federal funds sold

$
869,429

$
—

$
—

$
869,429

$
869,429
Available for sale securities

2,757

2,090,647

—

2,093,404

2,093,404
Held to maturity securities

—

2,375,851

—

2,375,851

2,370,388
Loans, net

—

93,602

15,334,201

15,427,803

15,522,135
Loans held for sale

—

20,434

—

20,434

20,434
Derivative financial instruments

—

23,251

—

23,251

23,251
Financial liabilities:

Deposits

$
—

$
—

$
18,327,425

$
18,327,425

$
18,348,912
Federal funds purchased

10,100

—

—

10,100

10,100
Securities sold under agreements to repurchase

513,544

—

—

513,544

513,544
FHLB borrowings

900,000

—

—

900,000

900,000
Long-term debt

—

488,711

—

488,711

490,145
Derivative financial instruments

—

23,968

—

23,968

23,968

14. Recent Accounting Pronouncements

Accounting Standards Adopted in ~~2016~~2017

In ~~February 2015,~~March 2017, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued Accounting Standards Update (“ASU”) ~~2015-02 “Consolidation (Topic 810)~~2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): ~~Amendments~~Premium Amortization on Purchased Callable Debt Securities,” which amends the amortization period for certain purchased callable debt securities held at a premium. The amendments require the premium to be amortized to the ~~Consolidation Analysis” that changed~~earliest call date. The amendments do not, however, require an accounting change for securities held at a discount; instead, the ~~analysis that a reporting entity must perform~~discount continues to ~~determine whether it should consolidate certain types of legal entities.~~be amortized to maturity. The amendments in this ASU ~~(1) modify~~more closely align the ~~evaluation~~amortization period of ~~whether limited partnerships~~premiums and ~~similar legal entities~~discounts to expectations incorporated in market pricing on the underlying securities. These amendments are variable interest entities (VIEs) or voting interest entities; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this update were effective ~~for public business entities~~ for fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2015.~~2018. The Company ~~performed~~early adopted this amendment in the ~~consolidation analysis using~~second quarter of 2017 and, in accordance with the ~~new guidelines effective as of January 1, 2016.~~standards, the Company began amortizing the premium for certain purchased callable debt securities to the earliest call date. The adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations.

In ~~April 2015,~~March 2016, the FASB issued ASU ~~2015-03, “Interest~~2016-09, “Compensation - ~~Imputation~~Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” to improve the accounting for employee share-based payments. Several aspects of ~~Interest (Subtopic 835-30): Simplifying~~ the ~~Presentation~~accounting for share-based payment award transactions are simplified, including income tax consequences; classification of ~~Debt Issuance Costs~~awards as either equity or liabilities; and classification on the statement of cash flows. The amendments were effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted the guidance effective January 1, 2017. In accordance with the standard, the Company elected to ~~simplify presentation~~account for forfeitures of ~~debt issuance costs by requiring that debt issuance costs related~~stock-based compensation as they occur and will reclassify dividends paid on forfeited shares to ~~a recognized debt liability be presented~~compensation expense from retained earnings. Classification of shares forfeited for taxes are reflected in the ~~balance sheet~~statement of cash flows as a ~~direct deduction from~~financing rather than operating activity, with all historical periods restated. In addition, the ~~carrying amount of that debt liability, consistent with debt discounts. The guidance~~Company began recognizing excess tax benefits and tax deficiencies during the period in this ASU does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Therefore, the FASB issued ASU 2015-15, “Interest—Imputation of Interest (Subtopic 835-30) - Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting)” to clarify the SEC staff position that they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowingsincome (rather than in equity) on ~~the line-of-credit arrangement. We adopted ASU 2015-03 and ASU 2015-15 on the first day of 2016 as required by the guidance and applied it retrospectively to the first day of 2012. Our adoption~~a prospective basis. Adoption of this guidance did not have a material impact on the Company’s financial condition or results of ~~operations. We retrospectively adjusted~~operations; however, the ~~balance sheet, statement~~prospective change in treatment of ~~cash flows, long-term debt note~~excess tax benefits resulted in a reduction in income tax expense of approximately $0.2 million and ~~selected financial data. The effect~~$2.0 million for the three and nine months periods ended September 30, 2017, respectively, and could result in volatility of future earnings, depending on changes in the ~~change on the financial statement line items of Other Assets and Long-term Debt was immaterial (See Note 5).~~

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~~Hancock Holding Company and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~Company’s stock price.

In April 2015, the FASB issued ASU 2015-05, Subtopic 350-40 “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” that provides guidance to customers about how to account for a cloud computing arrangement depending on whether or not it includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance did not change GAAP for a customer’s accounting for service contracts. For public business entities, the amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company elected to adopt this guidance prospectively to all arrangements entered into or materially modified on or after the first day of 2016, as required by the guidance. The adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)” that removed the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient and remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company early adopted this guidance with the issuance of its benefit plan financials and it did not have a material impact on the Company’s financial condition or results of operations.

In September 2015, the FASB issued ASU 2015-16 “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” that eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new standard should be applied prospectively to measurement period adjustments that occur after the effective date. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations.

Issued but Not Yet Adopted Accounting Standards

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” with the objective of improving financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The update provides changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the update. All transition requirements and elections are to be applied to hedging relationships existing on the date of adoption, and the effect of the adoption should be reflected as of the beginning of the fiscal year of adoption. The Company is currently assessing all potential impacts of adoption of this update and is considering early adoption effective January 1, 2018.

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting,” which seeks to provide clarity, reduce diversity in practice, and reduce complexity when applying the guidance regarding a change to the terms of conditions of a share-based payment award. Specifically, an entity is to account for the effects of a modification, unless all of the following are satisfied: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement is used) of the original award immediately before the original award is modified; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or as a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments are effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The Company does not expect the adoption of this guidance to have a material impact on its financial condition or results of operations.

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs,” to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments also allow only the service cost component to be eligible for capitalization when applicable. These amendments are effective for public business entities for annual periods beginning after December

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15, 2017, including interim periods within those annual periods. Disclosures of the nature of and reason for the change in accounting principle are required in the first interim and annual periods of adoption. The amendments should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. Refer to Note 11 – Retirement Plans – for detail on the components of net periodic pension and post-retirement benefit costs. Application of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU No. 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. This ASU is effective for public business entities that are SEC filers for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The ASU should be applied using a prospective method. Application of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805) – Clarifying the Definition of a Business,” which addresses stakeholders’ concerns that the current definition of a business is applied too broadly and analyzing transactions under the current definition is difficult and costly. Under the amended guidance, a transaction is initially subject to a screening process to determine whether a “set” (i.e. an integrated set of assets and activities) qualifies as a business. Under the screen, if substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or in a group of similar identifiable assets, the set is deemed not to be a business. Further evaluation is required only if the transferred set does not meet the screen. Under the further evaluation, to be considered a business, a set must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create output. The amendment also narrows the definition of the term “output” so that it is consistent with the manner in which outputs are described in Topic 606, Revenue from Contracts with Customers. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early application is permitted under certain circumstances. The amendments should be applied prospectively on or after the effective date. Adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other than Inventory,” which addresses stakeholders’ concerns that the limited amount of authoritative guidance has led to diversity in practice and is a source of complexity in financial reporting and results in an unfaithful representation of the economics of an intra-entity asset transfer. The amendment eliminates the exception to the United States generally accepted accounting principle (“U.S. GAAP”) of comprehensive recognition of current and deferred income taxes that prohibits recognizing current and deferred income tax consequences for an intra-equity asset transfer (excluding the transfer of inventory) until the asset has been sold to an outside party. The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. Adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on eight specific cash flow issues, including debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned), life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. ~~The Company is currently assessing~~Adoption of this ~~pronouncement~~guidance will not have a material impact on the Company’s financial condition or results of operations, and the Company does not expect a material impact to the presentation of ~~adoption.~~its Statement of Cash Flows.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credits Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU, more commonly referred to as Current Expected Credit

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Losses, or CECL, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques currently applied ~~today~~ will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. In addition, the ASU amends the accounting for credit losses on ~~available-for-sale~~ debt securities and purchased financial assets with credit deterioration. The ASU is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2019.~~2019, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. Early application is permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has begun the process of implementation and currently is ~~currently assessing this pronouncement~~not planning to early adopt. The Company expects the guidance will result in an increase in the allowance for loan losses given the change from covering losses inherent in the portfolio to covering losses over the remaining expected life of the portfolio and the ~~impact of adoption.~~

~~In March 2016,~~nonaccretable difference on purchased credit impaired loans moving to an allowance (offset by an increase in the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” to improve the accounting for employee share-based payments. Several aspectscarrying value of the ~~accounting~~related loans). The guidance will also result in the establishment of an allowance for ~~share-~~

~~Table~~credit loss on held to maturity debt securities. The amount of ~~Contents~~

~~Hancock Holding Company~~the increase in these allowances will be impacted by the portfolio composition and ~~Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~based payment award transactions are simplified, including income tax consequences; classification of awards~~quality at the adoption date as ~~either equity or liabilities;~~well as economic conditions and classification on the statement of cash flows. The amendments are effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Company is currently assessing this pronouncement and the impact of adoption. forecasts at that time.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” that provides new lease accounting guidance. Under the guidance, lessees (with the exception of short-term leases) will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely unchanged. Lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities ~~should~~are required to apply the amendments for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently assessing this pronouncement and the impact of ~~adoption.~~adoption by reviewing its existing lease contracts and service contracts that may include embedded leases. The Company expects a gross-up of its Consolidated Balance Sheets as a result of recognizing lease liabilities and right of use assets; the extent of such is under evaluation. The Company does not expect material changes to its consolidated results of operations.

In January 2016, the FASB issued an ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial ~~Liabilities”~~Liabilities,” that improves the recognition and measurement of financial instruments through targeted changes to existing GAAP. It requires equity investments (except those that are accounted for under the equity method of accounting or result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It also requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently assessing this ~~pronouncement,~~pronouncement; however, the adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” affecting any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Most revenue associated with financial instruments, including interest and loan origination fees, is outside the scope of the guidance. Gains and losses on investment securities, derivatives, and sales of financial instruments are also excluded from the scope. Subsequent to issuance of the revenue recognition guidance, the FASB has issued several updates that deferred by one year the effective date for revenue recognition guidance; clarified its guidance for performing the principal-versus-agent analysis; clarified guidance for identifying performance obligations allowing entities to ignore immaterial promised goods and services in the context of a contract with a customer and other clarifying ~~guidance.~~guidance and technical corrections. Entities can elect to adopt the guidance either on a full or modified retrospective basis. Full retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the earliest comparative period presented. Modified retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance. The standard will be effective for the Company for annual reporting periods beginning after December 15, 2017. The Company ~~does not plan~~will adopt this guidance on January 1, 2018 and plans to ~~early adopt~~use the ~~guidance.~~modified retrospective approach. The Company ~~is in~~has inventoried its contracts with customers and has evaluated a material portion of those contracts for compliance with the ~~process~~standard. The Company has not yet identified any material changes to the timing of ~~evaluating~~revenue recognition. Based on the ~~transition method election and the impact~~analysis performed to date, adoption of ~~the guidance to noninterest income and on presentation and disclosures. This~~this guidance is not expected to have a material impact on ~~the Company’s~~its financial condition or results of operations. The Company is continuing to evaluate disaggregation for select categories of revenue in the scope of the guidance. Upon adoption, the Company will provide qualitative disclosures of its performance obligations related to revenue recognition.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~OVERVIEW~~

FORWARD-LOOKING STATEMENTS

This ~~discussion includes non-GAAP~~report contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided therein. Forward looking statements that we may make include statements regarding balance sheet and revenue growth; the provision for loan losses, loan growth expectations, management’s predictions about charge-offs for loans, including energy related credits, the impact of changes in oil and gas prices on our energy portfolio, and the downstream impact on businesses that support the energy sector, especially in the Gulf Coast region; the impact of the First NBC transactions on our performance and financial ~~measures~~condition, including our ability to successfully integrate the business; deposit trends; credit quality trends; net interest margin trends; future expense levels; success of revenue-generating initiatives; the effectiveness of derivative financial instruments and hedging activities to manage risk; projected tax rates; future profitability; improvements in expense to revenue (efficiency) ratio; purchase accounting impacts such as accretion levels; and the financial impact of regulatory requirements. Also, any statement that does not describe ~~Hancock’s performance. An overview~~historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in other periodic reports that we file with the SEC.

OVERVIEW

Non-GAAP Financial Measures

Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used and the reasons why management believes they are useful and important in understanding the Company’s financial condition and results of operations is included in the “Critical Accounting Policies and Estimates” section below. The reconciliationsto describe our performance. A reconciliation of those measures to GAAP measures are provided inwithin the appropriate sections ~~within~~of this Item. The following is a summary of these non-GAAP measures and an explanation as to why they are deemed useful.

~~Recent Economic~~Consistent with Securities and Exchange Commission Industry ~~Developments~~Guide 3, we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (“te”) basis. The te basis adjusts for the tax-favored status of net interest income from certain loans and investments using a federal tax rate of 35% to increase tax-exempt interest income to a taxable-equivalent basis. We believe this measure to be the preferred industry measurement of net interest income, and it enhances comparability of net interest income arising from taxable and tax-exempt sources.

~~Energy Industry Impact~~Over the past several quarters we have disclosed our focus on strategic initiatives that were designed to replace declining levels of purchase accounting income with improvement in core income, which we define as income excluding net purchase accounting income. We present core income non-GAAP measures including core net interest income and core net interest margin, core revenue and core pre-tax, pre-provision net revenue. These measures are provided to assist the reader with a better understanding of our performance period over period as well to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives.

~~WTI Crude Oil prices were generally stable during~~We define Core Net Interest Income as net interest income (te) excluding net purchase accounting accretion resulting from the ~~third quarter~~fair market value adjustments related to acquired operations. We define Core Net Interest Margin as reported core net interest income, annualized, expressed as a percentage of ~~2016 trading mostly in~~average earning assets.

We define Core Revenue as core net interest income and noninterest income less the $40 to $50 per barrel range after trading as low as $26 per barrel during the first quarter of 2016. The September 30, 2016 closing price of approximately $48 per barrel was virtually flat with June 30, 2016, but still down approximately 54% from July 2014. Like WTI Crude Oil prices, natural gas prices continued to improve during the third quarter after trading at relatively depressed levels during the past 24 months. The stabilization of energy prices during the past two quarters has led to an increase in U.S. drilling activity. At September 30, 2016, industry monitor Baker Hughes reported 522 active rigs, up 100, or 24%, from June 30, 2016, but still almost 75% below the September 30, 2014 total of 1,931. This downturn in crude oil and natural gas prices and resulting drilling activity over the past two years has had a substantial negative effect on a large number of energy-related companies, including a numberamortization of the ~~Company’s customers, impacting our recent financial performance~~FDIC loss share receivable related to loans acquired in an FDIC assisted transaction and credit metrics. Even with improving oil prices and recent increase in drilling activity, management expects a lag in the recovery of energy service and support credits. This is reflected by an increase in criticized energy loans at September 30, 2016, where the majority of risk downgrades were in non-drilling support credits. Our expectation is that reserve-based lending credits will show signs of improvement first, followed by land-based services, and finally non-drilling services in the Gulf of Mexico where our customers operate. other nonoperating revenues.

~~At September 30, 2016,~~We define Core Pre-Provision Net Revenue as core revenue less noninterest expense, excluding intangible amortization and other nonoperating items. Management believes that core pre-tax, pre-provision net revenue is a useful financial measure because it enables investors and others to assess the Company’s ~~loans~~ability to ~~energy-related customers totaled approximately $1.4 billion, or 9% of its total loan portfolio. Total criticized loans in the energy portfolio increased approximately $95 million from June 30, 2016~~generate capital to $893 million, or approximately 64% of the total energy portfolio. Criticized loans are defined as those which are risk rated special mention, substandard or doubtful, and include both accruing and nonaccrual loans. The linked-quarter increase in criticized loans is mainly related to an $86 million increase in the energy support sector of our overall energy portfolio. Nonperforming energy loans totaled $199 million, up approximately $2 million from June 30, 2016. Despite the increase in criticized loans, energy loans past due 30 days or more, including both performing and nonaccrual loans, decreased $24 million, or 30%, from June 30, 2016 to $56 million at September 30, 2016. The recent increase in energy prices has benefited the upstream sector more than the support sector and management expectscover credit losses through a lag on the turnaround timing for the support sector which could result in continued downgrades and an increase in nonperforming loans. The allowance for the energy portfolio increased to $118 million from $111 million at June 30, 2016, and now totals 8.5% of the energy portfolio, up from 7.5% at June 30, 2016. At September 30, 2016, the Company’s total allowance for loan losses was $236 million compared to $181 million at December 31, 2015. credit cycle.

Management continues to work with our energy-related customers to weather this difficult cycle. We continue to make prudently underwritten loans to qualified energy-related companies, while reducing our overall concentration of energy-related credits by focusing loan growth efforts on other specifically targeted areas. Energy-related loans decreased $81 million between June 30, 2016 and September 30, 2016. The linked-quarter net decrease in the energy portfolio included approximately $141 million in payoffs and paydowns and $5 million in charge-offs, partially offset by approximately $65 million in draws on existing lines. At September 30, 2016, the Company has approximately $692 million in unfunded commitments to its energy-related customers. The availability of these funds generally requires the borrower to meet credit standards, maintain collateral values established in the underlying contract and not be in violation of any other contractual conditions.

The Company’s energy-related loan portfolio is diversified across a number of industries. It is comprised of loans to customers involved in both exploration and production and support services. Approximately $900 million, or 67%, of the energy portfolio is with customers who provide support services, including transportation, supply fabrication and other onshore and offshore services and products to exploration and production activities. The remaining $500 million, or 33%, is to customers engaged in oil and gas exploration and production, 90% of which is supported by proved developed producing reserves. These customers are diversified across 12 primary basins in the U.S. and the Gulf of Mexico and by product line with approximately 60% in oil and 40% in gas. Borrowing base redeterminations for reserve-based loans are completed twice a year. During the fourth quarter, these credits will be reviewed and adjustments made to overall commitment levels. Reserve-based lending commitments were reduced by approximately 20% on average in the spring redetermination cycle due to continued low commodity prices.

Management continues to closely monitor the impact that the prolonged decrease in energy-related activity will have on the ability of the Company’s energy-related customers to service their debt. Part of the ongoing monitoring includes a review of customers’ balance

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~~sheets, leverage ratios, collateral values~~Acquisitions

On March 10, 2017, we, through our wholly-owned subsidiary, Whitney Bank (“Whitney”), completed a transaction with First NBC Bank (“FNBC”), whereby Whitney acquired approximately $1.2 billion in loans (net of fair value discount or “loan mark”), nine branch locations with $398 million in deposits, and ~~other critical lending metrics. As new information becomes available,~~assumed $604 million in FHLB borrowings. The operational conversion of the Company could have additional risk rating downgrades. Management believes that if further risk rating downgrades occur, they could lead to additional loan loss provisions, a higher allowance for loan losses, and additional charge-offs. While management expects additional charge-offsbranch locations occurred in the ~~portfolio, we continue~~second quarter of 2017, along with the simultaneous closure of 10 overlapping branches. This transaction is referred to ~~believe~~as the ~~impact~~FNBC I transaction throughout this document.

On April 28, 2017, Whitney entered into a purchase and assumption agreement with the FDIC (“Agreement”), which acted as the receiver for the Louisiana Office of Financial Institutions (OFI) following the ~~energy cycle on~~OFI’s closure of FNBC. This transaction is referred to as the ~~Company will be manageable~~FNBC II transaction throughout this document. Pursuant to the Agreement, Whitney acquired selected assets and ~~capital will remain solid. Management estimates that net charge-offs~~liabilities of FNBC from ~~energy-related credits could approximate $65~~the FDIC and continued to ~~$95 million over~~operate the ~~duration of the cycle. During~~29 former FNBC branch locations until systems conversion, which occurred in July 2017. In the third quarter of ~~2016,~~2017, Whitney exercised its option to acquire seven former FNBC locations and closed and consolidated 25 overlapping branch locations.

Under the Agreement, Whitney received approximately $642 million in cash from the FDIC, and acquired/assumed the following assets and liabilities:

Approximately $1.6 billion in deposits and customer repurchase agreements at an average cost of 0.92%

Approximately $165 million in performing loans (mainly single-family residential mortgages) with a 4.5% average yield

Approximately $214 million in securities and $540 million in cash and other liquid assets

Approximately $9 million in property, plant and equipment, comprised primarily of branch locations

The terms of the Agreement require the FDIC to indemnify Whitney against certain liabilities of FNBC and its affiliates not assumed or otherwise purchased by Whitney. Neither the Company ~~recorded net charge-offs~~nor Whitney Bank acquired any assets, common stock, preferred stock or debt, or assumed any other obligations, of approximately $5 million on energy-related credits. Since November 2014, the start of the current cycle, the Company has recorded approximately $30 million in net charge-offs on energy-related credits.First NBC Bank Holding Company.

~~Additionally, management is closely monitoring the impact the decreased level of drilling activity is having on the local economies~~Management believes these low risk in-market transactions strengthen our position in the ~~Company’s energy-dependent markets, particularly as it relates~~Greater New Orleans area and are financially compelling, which will help us achieve our long term goals.

For additional information on both transactions, see Notes to ~~our consumer~~Unaudited Consolidated Financial Statements – Note 2 – Acquisitions.

Recent Economic and commercial real estate portfolios. Although the Company has not experienced any significant issues in these portfolios, we could experience some credit degradation during the remainder of 2016 and into the first half of 2017, particularly in the consumer portfolio, which may require an increase in our allowance for loan losses.Industry Developments

Current Economic Environment

Most of Hancock’s market area ~~reflected~~experienced a modest to moderate expansion in economic activity during the third quarter of 2017, according to the Federal Reserve’s Summary of Commentary on Current Economic Conditions (“Beige Book”). ~~However, energy-related~~Energy related businesses operating mainly in Hancock’s south Louisiana and Houston, Texas markets ~~remained depressed despite an improvement~~continued to expand, but at a slightly slower rate in the third quarter. Although inventories decreased as a result of Hurricane Harvey, drilling ~~business activity.~~

~~The real estate markets~~activity has returned to pre-hurricane levels. Overall growth in oil and gas production continued, but oilfield services firms noted weaker demand growth. Drilling activity is expected to decline slightly by the end of 2017, and demand for ~~residential properties reported slow and steady growth across the Company’s footprint~~oilfield services is softening outside of the ~~Houston area during~~Permian Basin. However, six-month outlooks for 2018 were optimistic relative to the ~~third quarter. Sales of lower-priced homes remained strong, but demand slowed for moderate~~last reporting period, and high-priced homes. Apartment demand was strong in all markets excluding Houston, where increasing supply put pressure on rent prices and occupancy levels. New home sales and construction activity are expected to remain flat or improve slightly over the next three months in all of our markets.uncertainty has moderated.

The commercial real estate market continued to improve in most of our footprint, with growing demand for ~~office~~multi-family construction. In the Houston market, apartment leasing activity picked up, occupancy rose and ~~industrial space in certain market areas.~~rent concessions diminished following Hurricane Harvey. Commercial construction activity also increased in these sectors. Continued improvement is expected in the commercial real estate ~~market. However,~~market in 2018.

The residential real estate market has a varied outlook, with new home starts and closings expected to be behind schedule for the remainder of the year in our Houston market due to Hurricane Harvey. Residential real estate contracts signaled modest growth and construction activity was slightly up from the year-ago level in the rest of our markets. Builders expect homes sales to be flat over the next three months, while brokers anticipate slightly higher sales. Construction activity is expected to match or marginally surpass the ~~exception to this positive outlook with an overabundance of availability as sublease space continued to spike.~~current pace over the next three months.

~~The Beige Book reported both retail~~Retail sales activity and consumer spending ~~were mixed with merchants expecting~~outlook was positive. There is an expected increase in building materials in the hurricane impacted areas. In Houston, there is also increased demand for warehouses from building supply companies. Auto sales surged and are expected to remain ~~flat~~elevated from replacement activity due to the hurricanes. Employment growth was steady, with challenges continuing in filling construction, information technology, finance, transportation and nursing positions. Wage growth remained steady, with the exception of wage pressures for highly skilled positions and rising wages in the construction industry. Due to the impact of Hurricane Harvey, finding and hiring workers may be more difficult over the next several months. Auto sales declined throughout the Company’s footprint. Tourism and hospitality activity had increased since the summer and outlooks for the rest of the year remained positive. Wages and employment remained steady, while some firms experienced difficulty finding qualified workers to fill various job levels. Shortages of healthcare and construction workers persisted. Energy companies indicated that layoffs had subsided and they were trying to retain their remaining talent.

Loan demand across the geographic markets that Hancock serves were mixed, with some areas reporting strong loan activity, while others noted declines. Energy-related companies continued to report challenges in obtaining credit. Banking individuals surveyedsix months in the October 19, 2016 Beige Book reported that consumer confidence and credit issues had improved since the September 7, 2016 Beige Book report. Individuals surveyed in the Beige Book remained cautiously optimistic with a more positive economic outlook than in the previous survey.Houston market.

~~Highlights of Third Quarter 2016 Financial Results~~

Net income in the third quarter of 2016 was $46.7 million, or $0.59 per diluted common share, compared to $46.9 million, or $0.59 per diluted common share, in the second quarter of 2016. Net income was $41.2 million, or $0.52 per diluted common share, in the third quarter of 2015. Although linked-quarter earnings were stable, there were slight changes in the various components as a $1.8 million increase in the provision for loan losses was generally offset by lower operating expenses and a lower effective tax rate. The $5.6 million increase in third quarter 2016 net income compared to third quarter 2015 is mainly due to a $6.7 million increase in net interest income driven by a $1.8 billion increase in average earning assets, a $2.8 million increase in noninterest income from strategic initiatives implemented during 2015 and 2016, and a $2.1 million decrease in expense. An $8.9 million increase in the loan loss provision, mostly related to the energy portfolio, partially offset the revenue increase.

Net income for the nine months ended September 30, 2016 was $97.5 million, or $1.23 per diluted common share, compared to $116.2 million, or $1.45 per diluted common share, for the nine months ended September 30, 2015. The decrease was mainly due to a $73.4 million increase in provision for loan losses mostly related to the energy portfolio. This was partially offset by a $24.5 million increase in net interest income, a $7.3 million increase in noninterest income and a $7.6 million reduction in noninterest expense. Included in net income for the nine months ended September 30, 2016 and 2015 was the negative impact from nonoperating expenses totaling $5.0 million and $16.2 million, respectively.

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~~The total allowance~~Overall economic reports indicate that loan demand continued to increase, however at a more sluggish pace than during the prior period with growth in commercial real estate loans, but with decreases in demand for residential real estate loans and consumer loans. While we experienced loan ~~losses~~growth across the our markets compared to the prior quarter, with loan volume increases primarily in commercial real estate and mortgage loans, maintaining that level of growth will be challenging with the slow down of demand in our markets. Overall, the economic outlook remains positive, as most businesses expect activity to increase over the next year.

Highlights of Third Quarter 2017 Financial Results

Net income for the third quarter of 2017 was ~~$236.1~~$58.9 million, ~~at September 30, 2016, up $10.0~~or $.68 per diluted common share (EPS), compared to $52.3 million, from June 30, 2016 and $96.5 million from September 30, 2015. The ratio of the allowance for loan losses to period-end loans was 1.47% at September 30, 2016, up from 1.41% at June 30, 2016, and 0.95% at September 30, 2015. The increaseor $.60 EPS in the ~~allowance from September 30, 2015 is primarily attributable to the energy portfolio. The allowance for credits in the energy portfolio totaled $118.3~~second quarter of 2017 and $46.7 million, or 8.5% of energy loans, at September 30, 2016, up from $111.1 million, or 7.5% of energy loans, at June 30, 2016, and $35.2 million, or 2.1%, at September 30, 2015. The allowance maintained on the portion of the loan portfolio that was not purchased credit impaired (“PCI”) increased $9.9 million linked quarter, totaling $216.4 million, while the allowance on the PCI loan portfolio increased $0.1 million linked quarter.

During August of 2016, the Baton Rouge metropolitan area, one of the Company’s major markets, experienced historic and unprecedented flooding. Management does not expect the flooding to have a significant impact on the Company’s credit losses. However, the Company suffered significant damage to five of its locations. Operating expense$.59 EPS, in the third quarter of ~~2016 includes an accrual for $2.5 million, mainly representing the property and contents insurance deductible for the damaged locations.~~

~~Core pre-tax, pre-provision income, tax-equivalent (“te”) (“core PTPP”) was $86.0 million for the~~2016. The third quarter of ~~2016, compared to $85.2~~2017 includes nonoperating expenses of approximately $11.4 million in($.08 per share impact), while the second quarter of ~~2016 and $70.4~~2017 included $10.6 million of nonoperating expenses ($.08 per share). The nonoperating expenses in both quarters were mainly related to the two previously disclosed FNBC transactions. There were no nonoperating expenses in the third quarter of ~~2015. Management believes core PTPP~~2016.

Highlights of Our Third Quarter 2017 Results (Compared to Second Quarter 2017):

Includes a full quarter impact from the FNBC II transaction (April 28, 2017)

Reported earnings increased $6.6 million, or 13%

Loans increased $312 million, or 7% linked quarter annualized

Allowance for loan losses of $223 million, up $1.3 million, with coverage to total loans of 1.19% down slightly from 1.20%

Energy loans declined $97 million and comprise 6.0% of total loans, down from 6.7%; allowance for the energy portfolio totals $79.8 million, or 7.1% of energy loans; energy net charge-offs were $3.6 million in third quarter

Core pre-provision net revenue (PPNR) of $111.1 million, up $9.5 million, or 9%

Net interest margin (NIM) of 3.44%, up 1 basis point (bp); core NIM up 3 bps to 3.32%

Operating expenses totaled $166.2 million, down $6.6 million

Efficiency ratio declined to 57.5%

Return on average assets (ROA) up 9 bps to 0.88%; excluding nonoperating expense ROA increased 10 bps to 0.99%

Tangible common equity (TCE) ratio increased 15 bps to 7.80%

The FNBC I and II transactions continue to positively impact our franchise by expanding our customer base and strengthening the market position in our footprint. As noted in the prior quarter, these transactions also temporarily added cost. In addition to merger-related costs identified as nonoperating items, second quarter results also included other nonpermanent costs estimated at $7 million, or $0.05 per share, to separately operate the 29 branches FNBC had at the time of its closure. These expenses were eliminated during the third quarter through systems conversions and the consolidation of overlapping branches, resulting in a more normalized expense level for the current quarter.

The active hurricane season brought severe weather to several areas in our footprint, with Harvey impacting Texas and Southwest Louisiana, Irma impacting Florida, and Nate impacting coastal Mississippi and Alabama. Despite the widespread coverage of our market, the Company experienced minimal impact to facilities and operations and we do not expect any significant change to the credit quality of the loan portfolio as a result of the storms.

The Company recently announced the intent to consolidate the Hancock Bank and Whitney Bank brands during the first half of 2018, subject to regulatory approval. The Company intends to operate as Hancock Whitney Corporation, with the wholly owned bank subsidiary operating as Hancock Whitney Bank. The brand consolidation is a ~~useful financial measure as it enables investors~~natural progression of our business that allows the simplification of certain operations and ~~others to assess~~sets the ~~ability~~stage for continued growth across all the markets we serve, while honoring the legacies of the ~~Company~~iconic brands of Hancock and Whitney that have existed since 1899 and 1883, respectively. We expect to ~~generate~~incur additional costs for re-branding during the first and second quarters of 2018, including capital to cover credit losses during a credit cycle. For the nine months ended September 30 2016, core PTPP is up $48.6 million, or 24% compared to the same period in 2015. The Company has established as one of its 2016 strategic objectives a core PTPP of $323.4 million representing a 25% increase over 2014 core PTPP of $258.7 million. The Company believes it is on track to exceedexpenditures for new signage for our ~~2016 goal. Through September 30, 2016, core PTPP totaled $247.7 million, or 77% of our goal for 2016. The table below provides a reconciliation of the non-GAAP measure core PTPP to GAAP-related~~ financial ~~statement line items.~~centers.

Three Months Ended

Nine Months Ended

September 30,
June 30,
September 30,

September 30,
September 30,
(in millions)

2016

2016
2015

2016
2015
Net interest income

$
163.5

$
165.0

$
156.8

$
491.3

$
466.8
Tax-equivalent (te) adjustment (a)

6.8

6.2

3.3

18.3

9.4
Net interest income (te) (a)

170.3

171.2

160.1

509.6

476.2
Noninterest income

63.0

63.7

60.2

184.9

177.6
Purchase accounting adjustments - revenue

(3.1)

(3.8)

(4.7)

(10.8)

(25.5)
Core revenue (te) (a)

230.2

231.1

215.6

683.7

628.3
Noninterest expense

(149.1)

(150.9)

(151.2)

(456.0)

(463.6)
Intangible amortization

4.9

5.0

6.0

15.0

18.5
Nonoperating items

—

—

—

5.0

15.9
Core pre-tax, pre-provision income (te) (a)

$
86.0

$
85.2

$
70.4

$
247.7

$
199.1

Table of Contents

~~(a)~~

~~Tax equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.~~

RESULTS OF OPERATIONS

Net Interest Income

Net interest income (te) for the third quarter of ~~2016~~2017 was ~~$170.3~~$211.4 million, ~~virtually unchanged~~a $3.2 million, or 2% increase from the second quarter of ~~2016.~~2017. Core net interest income ~~(te)~~ was ~~also virtually flat.~~

up $4.2 million. Net interest income (te) for the third quarter of ~~2016~~2017 increased ~~$10.2~~$41.1 million, or 6%24%, compared to the third quarter of ~~2015. Core net interest income (te) was up $12.0 million, or 8%, due to interest earned on a $1.8 billion increase in average earning assets.~~

~~Net interest income (te) for the first nine months of~~ 2016, ~~totaled $509.6 million, a $33.4 million, or 7%, increase from the first nine months of 2015. Excluding a $14.0 million decrease in purchase accounting accretion,~~while core net interest income was up $47.4 million for the first nine months of 2016 compared to the same period of 2015. Interest earned on loans, excluding purchase accounting accretion, increased $52.0 million as average total loan balances grew $1.8 billion, or 13%. Total interest earned on investment securities increased $12.0 million from both a $512.0$38.4 million, or ~~12%,~~23%. The linked quarter increase ~~in average investment securities and~~is primarily attributable to a ~~9 bp~~full quarter impact from the June 2017 Federal Reserve rate increase ~~in yields resulting from~~partially offset by an ~~improved investment portfolio mix as the average balance~~approximately $1.4 million increase, or 2 bps on NIM, of ~~higher yielding municipal securities increased $319 million.~~interest reversals on nonaccrual loans.

The reported net interest margin was ~~3.20%~~3.44% for the third quarter of ~~2016, down 5 bps~~2017, up 1 bp from the second quarter of ~~2016, and 8 bps from the third quarter of 2015.~~2017. The core net interest margin for the third quarter of ~~2016~~2017 was ~~3.12% or~~3.32%, up 3 bps ~~below~~from the second quarter of 2017. The core loan yield, excluding purchase accounting adjustments, was up 5 bps. Offsetting this improvement was a 4 bp increase in the cost of funds. The increase in the cost of funds was primarily related to both the Federal Reserve rate hike in June and higher cost deposits acquired in the FNBC II transaction.

Compared to the third quarter of 2016, the net interest margin increased 24 bps and the core margin was up 20 bps. The major factors in these increases are largely the same as for the comparison to the second quarter of 2017, primarily the impact of the FNBC transactions and the three Federal Reserve interest rate hikes.

Net interest income (te) for the nine months ended September 30, 2017 totaled $609.7 million, a $100.1 million, or 20%, increase from the same period in 2016. Core net interest income was up $95.3 million. Interest earned on loans, excluding purchase accounting accretion, increased $98.8 million as average total loans grew $2.1 billion, or 13%, due to both organic loan growth and the addition of the portfolios acquired in the FNBC transactions. A $693.7 million, or 15%, increase in average investment securities and a 14 bps increase in the yield resulted in an $18 million increase in interest earned on investment securities. Higher-yielding municipal securities comprised approximately 18% of the investment securities portfolio.

The reported net interest margin for the nine months ended September 30, 2017 was 3.41%, up 18 bps from the nine months ended September 30, 2016. Core margin was 3.30%, up 17 bps from the same period in 2016.

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2016, driven by a 3 bp decrease in the loan yield and a 4 bp decrease in the yield on securities. The 3 bp decrease in loan yield was mainly attributable to the impact of nonaccruing loans. The security yield decrease resulted from an increased level of premium amortization on the mortgage-backed security portfolio as repayments increased due to mortgage activity associated with the lower interest rate environment in the second and third quarters. Compared to the third quarter of 2015, the core interest margin decreased 3 bps. The major factors in this decline were a 3 bp decrease in the loan yield and a 5 bp increase in the cost of funds. The cost of funds increase was driven by a 13 bp increase in the cost of interest-bearing deposits resulting from the Company’s strategic initiatives to fund loan growth with deposits.

The overall reported yield on earning assets was 3.55% in the third quarter of 2016, down 5 bps from the second quarter of 2016 and 2 bps from the third quarter of 2015. The linked-quarter decrease resulted from a 4 bp decrease in the loan yield and a 4 bp decrease in the yield on the investment portfolio as noted above. The decrease from third quarter 2015 was primarily the result of a lower loan yield resulting from a decline in net purchase accounting accretion, partially offset by a 9 bp improvement in the yield on the securities portfolio. A $477 million increase in higher-yielding municipal securities improved the mix of the portfolio. The cost of funding earning assets was unchanged from the second quarter of 2016 and up 5 bps from the third quarter of 2015.

The reported net interest margin for the first nine months of 2016 was 3.23% compared to 3.37% in 2015, while the core net interest margin declined to 3.13% in 2016 compared to 3.16% in 2015. Changes in net interest income (te) and the net interest margin between the year-to-date periods generally resulted from the same factors that affected the quarterly comparisons.

The following tables detail the components of our net interest income and net interest margin.



																				Three months ended

	Three Months Ended																			September 30, 2017						June 30, 2017						September 30, 2016
	September 30, 2016						June 30, 2016						September 30, 2015
(dollars in millions)	Volume		Interest		Rate		Volume		Interest		Rate		Volume		Interest		Rate			Volume		Interest		Rate		Volume		Interest		Rate		Volume		Interest		Rate
Average earning assets
Commercial & real estate loans (te) (a)	$	11,948.1	$	114.4	3.81	%	$	11,990.7	$	115.0	3.86	%	$	10,608.2	$	104.4		3.91	%	$	13,945.8	$	151.3	4.31	%	$	13,890.1	$	148.4	4.29	%	$	11,948.1	$	114.4		3.81	%
Residential mortgage loans		2,019.8		20.2	4.01			2,015.3		20.7	4.12			1,978.0		20.2		4.08			2,549.3		25.1	3.94			2,399.4		22.2	3.71			2,019.8		20.2		4.01
Consumer loans		2,055.6		26.7	5.18			2,053.9		26.2	5.12			1,925.3		24.5		5.04			2,096.1		29.4	5.57			2,080.0		29.3	5.64			2,055.6		26.7		5.18
Loan fees & late charges				(0.8)						(0.6)						0.1					—		(0.5)	—			—		(0.2)	—			—		(0.8)		—
Total loans (te) (a) (b)		16,023.5		160.5	3.99			16,059.9		161.3	4.03			14,511.5		149.2		4.09			18,591.2		205.3	4.39			18,369.5		199.7	4.36			16,023.5		160.5		3.99
Loans held for sale		38.7		0.3	3.34			29.1		0.2	3.43			17.2		0.2		4.07			21.7		0.2	3.97			22.4		0.2	4.22			38.7		0.3		3.34
US Treasury and government agency securities		60.1		0.3	1.73			50.0		0.2	1.68			166.8		0.6		1.55			125.6		0.7	2.08			125.9		0.7	2.08			60.1		0.3		1.73
Mortgage-backed securities and collateralized mortgage obligations		3,965.4		20.6	2.08			4,062.3		22.0	2.16			4,052.0		22.0		2.17			4,575.0		25.3	2.21			4,068.4		22.8	2.23			3,965.4		20.6		2.08
Municipals (te) (a)		677.1		6.7	3.95			531.4		5.5	4.13			200.3		2.3		4.52			975.4		9.2	3.80			983.0		9.3	3.81			677.1		6.7		3.95
Other securities		4.6		—	2.51			5.0		—	1.89			6.4		—		1.59			3.8		—	1.94			64.4		0.3	1.91			4.6		—		2.51
Total securities (te) (a) (c)		4,707.2		27.6	2.34			4,648.7		27.7	2.38			4,425.5		24.9		2.25			5,679.8		35.2	2.48			5,241.7		33.1	2.52			4,707.2		27.6		2.34
Total short-term investments		428.0		0.5	0.47			409.3		0.5	0.47			479.1		0.3		0.24			194.7		0.6	1.17			704.5		1.7	0.99			428.0		0.5		0.47
Total earning assets (te) (a)	$	21,197.4	$	188.9	3.55	%	$	21,147.0	$	189.7	3.60	%	$	19,433.3	$	174.6		3.57	%	$	24,487.4	$	241.3	3.92	%	$	24,338.1	$	234.7	3.87	%	$	21,197.4	$	188.9		3.55	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	6,732.8	$	4.5	0.27	%	$	6,779.6	$	4.7	0.28	%	$	7,270.1	$	3.7		0.20	%	$	8,097.4	$	8.4	0.41	%	$	8,047.4	$	8.1	0.40	%	$	6,732.8	$	4.5		0.27	%
Time deposits		2,446.3		5.6	0.91			2,556.7		5.7	0.90			2,171.7		3.8		0.70			2,711.6		7.7	1.12			2,575.7		6.5	1.01			2,446.3		5.6		0.91
Public funds		2,253.6		2.5	0.44			2,302.1		2.2	0.39			1,839.0		1.4		0.31			2,764.9		5.7	0.82			2,539.5		3.8	0.59			2,253.6		2.5		0.44
Total interest-bearing deposits		11,432.7		12.6	0.44			11,638.4		12.6	0.44			11,280.8		8.9		0.31			13,573.9		21.8	0.64			13,162.6		18.4	0.56			11,432.7		12.6		0.44
Short-term borrowings		1,366.2		1.0	0.30			1,351.2		0.9	0.27			1,050.8		0.3		0.10			1,909.4		4.5	0.92			2,232.8		4.2	0.77			1,366.2		1.0		0.30
Long-term debt		468.1		5.0	4.28			471.9		5.0	4.26			499.1		5.3		4.21			339.5		3.6	4.29			428.3		3.9	3.61			468.1		5.0		4.28
Total borrowings		1,834.3		6.0	1.32			1,823.1		5.9	1.30			1,549.9		5.6		1.42			2,248.9		8.1	1.43			2,661.1		8.1	1.22			1,834.3		6.0		1.32
Total interest-bearing liabilities		13,267.0		18.6	0.56	%		13,461.5		18.5	0.55	%		12,830.7		14.5		0.45	%		15,822.8		29.9	0.75	%		15,823.7		26.5	0.67	%		13,267.0		18.6		0.56	%
Net interest-free funding sources		7,930.4						7,685.5						6,602.6							8,664.6						8,514.4						7,930.4
Total cost of funds	$	21,197.4	$	18.6	0.35	%	$	21,147.0	$	18.5	0.35	%	$	19,433.3	$	14.5		0.30	%	$	24,487.4	$	29.9	0.48	%	$	24,338.1	$	26.5	0.44	%	$	21,197.4	$	18.6		0.35	%
Net interest spread (te) (a)			$	170.3	2.99	%			$	171.2	3.05	%			$	160.1		3.13	%			$	211.4	3.17	%			$	208.2	3.19	%			$	170.3		2.99	%
Net interest margin	$	21,197.4	$	170.3	3.20	%	$	21,147.0	$	171.2	3.25	%	$	19,433.3	$	160.1		3.28	%	$	24,487.4	$	211.4	3.44	%	$	24,338.1	$	208.2	3.43	%	$	21,197.4	$	170.3		3.20	%

(a)

~~Tax~~Taxable equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.

(b)

Includes nonaccrual loans.

(c)

Average securities do not include unrealized holding gains/losses on available for sale securities.

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	Nine Months Ended												Nine Months Ended
		September 30, 2016						September 30, 2015						September 30, 2017						September 30, 2016
(dollars in millions)		Volume		Interest	Rate			Volume		Interest	Rate			Volume		Interest	Rate			Volume		Interest	Rate
Average earning assets
Commercial & real estate loans (te) (a)	$	11,884.2	$	341.1	3.83	%	$	10,415.4	$	312.8	4.01	%	$	13,634.7	$	430.1	4.22	%	$	11,884.2	$	341.1	3.83	%
Residential mortgage loans		2,031.2		62.2	4.09			1,937.4		60.6	4.17			2,379.6		68.7	3.85			2,031.2		62.2	4.09
Consumer loans		2,062.1		79.2	5.13			1,822.8		69.5	5.10			2,078.3		85.3	5.49			2,062.1		79.2	5.13
Loan fees & late charges				(2.2)						0.4				—		(0.9)	—			—		(2.2)	—
Total loans (te) (a) (b)		15,977.5		480.3	4.01			14,175.6		443.3	4.18			18,092.6		583.2	4.31			15,977.5		480.3	4.01
Loans held for sale		27.6		0.7	3.54			18.6		0.5	3.54			21.8		0.7	4.09			27.6		0.7	3.54
US Treasury and government agency securities		53.4		0.7	1.70			246.9		2.9	1.56			122.6		1.9	2.07			53.4		0.7	1.70
Mortgage-backed securities and collateralized mortgage obligations		4,053.2		65.4	2.15			3,664.2		60.2	2.19			4,208.4		70.1	2.22			4,053.2		65.4	2.15
Municipals (te) (a)		516.5		15.8	4.08			197.2		6.7	4.56			967.0		27.7	3.82			516.5		15.8	4.08
Other securities		5.2		0.1	2.06			8.0		0.2	3.00			24.0		0.3	1.92			5.2		0.1	2.06
Total securities (te) (a) (c)		4,628.3		82.0	2.36			4,116.3		70.0	2.27			5,322.0		100.0	2.50			4,628.3		82.0	2.36
Total short-term investments		452.0		1.6	0.47			537.0		0.9	0.23			435.1		3.0	0.94			452.0		1.6	0.47
Total earning assets (te) (a)	$	21,085.4	$	564.6	3.58	%	$	18,847.5	$	514.7	3.65	%	$	23,871.5	$	686.9	3.84	%	$	21,085.4	$	564.6	3.58	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	6,775.9	$	13.9	0.27	%	$	6,814.1	$	8.4	0.16	%	$	7,685.2	$	21.0	0.37	%	$	6,775.9	$	13.9	0.27	%
Time deposits		2,420.7		16.3	0.90			2,205.6		11.3	0.68			2,543.9		19.3	1.01			2,420.7		16.3	0.90
Public funds		2,243.1		6.8	0.40			1,848.3		4.0	0.29			2,618.2		12.6	0.64			2,243.1		6.8	0.40
Total interest-bearing deposits		11,439.7		37.0	0.43			10,868.0		23.7	0.29			12,847.3		52.9	0.55			11,439.7		37.0	0.43
Short-term borrowings		1,427.2		2.9	0.28			956.2		0.6	0.09			2,089.0		11.7	0.75			1,427.2		2.9	0.28
Long-term debt		474.4		15.1	4.25			473.8		14.2	4.02			408.2		12.6	4.11			474.4		15.1	4.25
Total borrowings		1,901.6		18.0	1.27			1,430.0		14.8	1.39			2,497.2		24.3	1.29			1,901.6		18.0	1.27
Total interest-bearing liabilities		13,341.3		55.0	0.55	%		12,298.0		38.5	0.42	%		15,344.5		77.2	0.67	%		13,341.3		55.0	0.55	%
Net interest-free funding sources		7,744.1						6,549.5						8,527.0						7,744.1
Total cost of funds	$	21,085.4	$	55.0	0.35	%	$	18,847.5	$	38.5	0.28	%	$	23,871.5	$	77.2	0.43	%	$	21,085.4	$	55.0	0.35	%
Net interest spread (te) (a)			$	509.6	3.03	%			$	476.2	3.23	%			$	609.7	3.17	%			$	509.6	3.03	%
Net interest margin	$	21,085.4	$	509.6	3.23	%	$	18,847.5	$	476.2	3.37	%	$	23,871.5	$	609.7	3.41	%	$	21,085.4	$	509.6	3.23	%

(a)

~~Tax~~Taxable equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.

(b)

Includes nonaccrual loans.

(c)

Average securities do not include unrealized holding gains/losses on available for sale securities.

Due to the significant ~~unsustainable~~ contribution from purchase accounting accretion related to ~~the 2009 Peoples First Community Bank and 2011 Whitney Holding Company acquisitions,~~assets acquired in business combinations, management believes that non-GAAP measures of core net interest income and core net interest margin provide investors with meaningful financial measures of the Company’s performance over time. The following table provides a reconciliation of reported and core net interest income and reported and core net interest margin.



	Three Months Ended									Nine Months Ended
																Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,			September 30,			June 30,			September 30,			September 30,			September 30,
(dollars in millions)	2016			2016			2015			2016			2015			2017			2017			2016			2017			2016
Net interest income																$	202.8		$	199.7		$	163.5		$	584.3		$	491.3
Taxable-equivalent adjustment (te) (a)																	8.6			8.6			6.8			25.4			18.3
Net interest income (te) (a)	$	170.3		$	171.2		$	160.1		$	509.6		$	476.2			211.4			208.3			170.3			609.7			509.6
Purchase accounting adjustments
Loan discount accretion		5.2			5.8			7.3			17.4			32.4			7.7			8.8			5.2			21.5			17.4
Bond premium amortization		(0.6)			(0.6)			(0.9)			(1.9)			(2.9)			(0.4)			(0.4)			(0.6)			(1.2)			(1.9)
Net purchase accounting accretion		4.6			5.2			6.4			15.5			29.5			7.3			8.4			4.6			20.3			15.5
Core net interest income (te) (a)	$	165.7		$	166.0		$	153.7		$	494.1		$	446.7		$	204.1		$	199.9		$	165.7		$	589.4		$	494.1
Average earning assets	$	21,197.4		$	21,147.0		$	19,433.3		$	21,085.4		$	18,847.5		$	24,487.4		$	24,338.1		$	21,197.4		$	23,871.5		$	21,085.4
Net interest margin - reported		3.20	%		3.25	%		3.28	%		3.23	%		3.37	%		3.44	%		3.43	%		3.20	%		3.41	%		3.23	%
Net purchase accounting adjustments		0.08	%		0.10	%		0.13	%		0.10	%		0.21	%		0.12	%		0.14	%		0.08	%		0.11	%		0.10	%
Core net interest margin (te) (a)		3.12	%		3.15	%		3.15	%		3.13	%		3.16	%
Core net interest margin																	3.32	%		3.29	%		3.12	%		3.30	%		3.13	%

(a)

~~Tax~~Taxable equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.

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Provision for Loan Losses

During the third quarter of ~~2016, the Company~~2017, we recorded a total provision for loan losses of ~~$19.0~~$13.0 million, ~~up $1.8~~down $1.9 million from the second quarter of ~~2016~~2017 and ~~up $8.9~~down $5.9 million from the third quarter of ~~2015. The increase from~~2016. For the ~~third quarter of 2015 is largely due to~~nine months ended September 30, 2017, we recorded a ~~$6.1 million increase in net charge-offs, $4.4 million of which is related to energy credits. The~~total provision for ~~the PCI portfolio was a credit~~loan losses of ~~$0.4~~$44.0 million, compared to $96.2 million for ~~both~~ the ~~three~~nine months ended September 30, 2016, and 2015. For the three months ended June 30, 2016, the provision for the PCI portfolio was $0.2 million. The credits to provision for the PCI portfolio were primarily due to reductions in expected losses in the remaining portfolio related to the Peoples First Community Bank purchase.

For the first nine months of 2016, the total provision for loan losses was $96.2 million, up from $22.8 million for the same period in 2015. The increase over the prior year is mainly due to an additionalwhich included $50 million in provision expense related to the energy ~~portfolio recorded in the first quarter of 2016. Based on currently available information, management expects the provision~~portfolio.

Provision for loan losses ~~will approximate $12 to $17~~reflects net charge-offs from the non-purchased credit impaired loan portfolio totaling $11.8 million, ~~for~~which represents 0.25% of average total loans on an annualized basis in the ~~fourth~~third quarter of ~~2016.~~2017, compared to $6.0 million, or 0.13% of average total loans in the second quarter of 2017. Net charges-offs from energy credits in the third quarter of 2017 includes gross charges of $7.6 million, net of recoveries totaling $4.0 million. There were no charges-offs related to energy credits in the second quarter of 2017.

Our company conducts business in several markets impacted by recent hurricanes. However, very few of our clients experienced significant flooding, damage or disruption. As a result, our credit quality measures do not include any specific or additional provisionary expenses related to the impact from those storms.

The section in ~~“Item~~Item 2. ~~Management’s~~“Management's Discussion and Analysis of Financial Condition and Results of Operations -– Allowance for Loan Losses and Asset Quality” provides additional information on changes in the allowance for loan losses and general credit quality. Certain differences in the determination of the allowance for loan losses for originated loans and for PCI loans, including loans covered under a loss share agreement with the FDIC are described in Note 3 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Noninterest Income

Noninterest income totaled ~~$63.0~~$67.1 million for the third quarter of ~~2016,~~2017, down ~~slightly~~$0.4 million, or 1%, from the second quarter of ~~2016~~2017 and up ~~$2.8~~$4.1 million, or 5%7%, compared to the third quarter of ~~2015. Increases~~2016. Decreases in ~~secondary mortgage market operations and~~ derivative income, trust fees, insurance commissions and fees, credit related fees and bank card and ATM fees were partially offset by ~~declines~~an increase in ~~investment and annuity fees, income from bank-owned life insurance and trust fees were the primary factors~~services charges. Included in the ~~linked-quarter variance.~~second quarter of 2017 is amortization of $1.3 million related to the FDIC indemnification asset. As a result of the termination of the loss share agreements in the second quarter of 2017, the amortization was eliminated beginning in the third quarter of 2017. Compared to the third quarter of ~~2015,~~2016, increases in ~~secondary mortgage market operations, income from bank-owned life insurance~~service charges, bank card and ~~derivative income~~ATM, investment and annuity fees were partially offset by decreases in ~~investment~~income from bank-owned life insurance, trust fees, secondary mortgage market operations and ~~annuity fees, and insurance commissions.~~gains on sale of assets. Included in the third quarter of 2016 is $1.5 million in amortization related to the FDIC indemnification asset of the loss share agreements. Noninterest income totaled ~~$184.9~~$198.1 million for the first nine months of ~~2016,~~2017, up ~~$7.3~~$13.2 million, or 4%7%, from the first nine months of ~~2015.~~2016. Included in the first nine months of the 2017 is a $4.4 million gain related to sale of selected Hancock Horizon funds, classified as nonoperating.

The components of noninterest income are presented in the following table for the indicated periods.



	Three Months Ended						Nine Months Ended				Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,				September 30,		June 30,		September 30,		September 30,
(in thousands)	2016		2016		2015		2016		2015		2017		2017		2016		2017		2016
Service charges on deposit accounts	$	18,716	$	18,394	$	18,619	$	55,493	$	53,842	$	21,444	$	20,061	$	18,716	$	60,711	$	55,493
Trust fees		11,512		12,089		11,345		34,825		34,340		10,742		11,506		11,512		33,459		34,825
Bank card and ATM fees		11,808		11,954		11,637		35,110		34,688		13,390		13,687		11,808		39,545		35,110
Investment and annuity fees		4,289		5,043		6,149		14,265		16,037		5,570		5,271		4,289		15,440		14,265
Secondary mortgage market operations		4,917		4,176		3,413		12,005		9,695		4,157		4,241		4,917		11,965		12,005
Insurance commissions and fees		1,088		1,240		2,238		3,635		6,587		660		1,174		1,088		2,499		3,635
Amortization of FDIC loss share receivable		(1,539)		(1,526)		(1,564)		(4,678)		(4,034)		—		(1,327)		(1,539)		(2,427)		(4,678)
Income from bank-owned life insurance		4,097		4,501		2,451		11,148		7,788		3,097		2,883		4,097		8,632		11,148
Credit related fees		2,685		2,267		2,718		7,309		7,786		2,521		2,898		2,685		8,297		7,309
Derivative income		1,347		533		74		1,741		1,486		1,339		2,680		1,347		4,484		1,741
Net gain (loss) on sale of assets		991		1,801		418		4,557		363
Net gain on sale of assets												400		(60)		991		113		4,557
Safety deposit box income		424		413		441		1,315		1,356		424		391		424		1,264		1,315
Other miscellaneous		2,322		2,041		2,268		6,698		7,360		3,371		4,082		2,322		9,759		6,698
Securities transactions		351		768		4		1,465		337		—		—		351		—		1,465
Total noninterest operating income											$	67,115	$	67,487	$	63,008	$	193,741	$	184,888
Nonoperating income items												—		—		—		4,352		—
Total noninterest income	$	63,008	$	63,694	$	60,211	$	184,888	$	177,631	$	67,115	$	67,487	$	63,008	$	198,093	$	184,888

Service charges on deposits totaled $18.7 million for the third quarter of 2016, up slightly from both the second quarter of 2016 and the third quarter of 2015. The linked-quarter increase was due to an increase in consumer overdraft fees while the increase compared to the third quarter of 2015 was due to growth in fees from commercial products.

Bank card and ATM fees totaled $11.8 million for the quarter ended September 30, 2016, compared to $12.0 million in the second quarter of 2016. Compared to the third quarter of 2015, bank card and ATM fees were up $0.2 million, or 1%.

~~Secondary mortgage market operations fee income increased $0.7 million, or 18%, from the second quarter of 2016, and $1.5 million,~~

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Service charges on deposits totaled $21.4 million for the third quarter of 2017, up $1.4 million, or ~~44%~~7%, ~~compared~~from the second quarter of 2017 and up $2.7 million, or 15%, from the third quarter of 2016. These increases were primarily due to an increase in consumer overdraft fees and new sustained overdraft fees.

Bank card and ATM fees totaled $13.4 million for the third quarter of 2017, down $0.3 million, or 2%, from the second quarter of 2017 due to the waiver of fees for customers in hurricane impacted areas. Compared to the third quarter of ~~2015. These increases are mainly related~~2016, bank card and ATM fees were up $1.6 million, or 13%, due to increased loan production resulting from a combination of the addition of several new mortgage originators hired in the fourth quarter of 2015 and first quarter of 2016 and a lower interest rate environment for mortgage related products. activity.

Mortgage loan originations for the third quarter of ~~2016 were up 13% over~~2017 totaled $330 million, compared to $361 million in the second quarter of 2017 and ~~49% over~~$384 million in the third quarter of ~~2015. For the year,~~2016. Income from secondary mortgage ~~loan originations are up 34%~~market operations was relatively flat compared to the ~~same period in 2015.~~ second quarter of 2017 and down $0.8 million, or 15%, from the third quarter of 2016.

Trust fees decreased ~~$0.6~~$0.8 million, or 5%7%, linked quarter due to seasonal income related to tax preparation fees earned in the second ~~quarter.~~quarter 2017. For the ~~year,~~first nine months of 2017, trust fees ~~totaled $34.8 million, up $0.5~~decreased $1.4 million, or 1%4%, compared to the ~~same period in 2015.~~first nine months of 2016. This decrease was primarily due to the sale of certain Hancock Horizon funds.

Investment and annuity fees increased $0.3 million, or 6%, compared to second quarter 2017 and ~~insurance commissions and fees totaled $5.4~~increased $1.3 million, ~~in the~~or 30%, compared to third quarter 2016. The increases are mainly due to corporate underwriting fees and an overall appreciation in asset value as a result of ~~2016,~~favorable market conditions.

Income from bank-owned life insurance increased $0.2 million, or 7%, compared to the second quarter of 2017, but was down ~~$0.9~~$1.0 million, ~~linked quarter and down $3.0 million~~or 24%, compared to the third quarter of ~~2015. Investment and annuity fees were down due to a change in~~2016. For the ~~mix~~first nine months of products sold. In the current interest rate environment, customer demand for longer-term annuity products has been replaced for shorter duration products which result in a lower up-front commission. Additionally, the Company has shifted its focus more towards recurring products that pay no up-front commissions but generate additional revenue over time. Insurance commissions were down compared to the third quarter of 2015, when the Company elected to exit its title insurance operation to focus on more profitable areas. The title insurance operation contributed approximately $1 million in fee2017, income ~~quarterly.~~

~~Income~~ from bank-owned life insurance ~~was down $0.4~~decreased $2.5 million, or 9%23%, ~~linked quarter, and up $1.6 million, or 67%~~ compared to the ~~third~~first nine months of 2016. The decrease for the first nine months of 2017 compared to the first nine months of 2016 was due to a lower level of gains on death benefit claims, partially offset by an increase in income due to an additional $50 million investment in bank-owned policies in the second quarter of 2015. For the year, income from bank owned life-insurance totaled $11.1 million, up $3.4 million, or 43%, from the nine months ended September 30, 2015. The increases over the third quarter of 2015 and the nine months ended September 30, 2015 were both due to increases in the amount of bank-owned policies and the proceeds from death benefit claims.2017.

Income on our customer interest rate derivative program resulted in a $1.3 million net gain for the third quarter of ~~2016~~2017 compared to ~~a $0.5~~net gains of $2.7 million ~~net gain~~ in the second quarter of ~~2016~~2017 and ~~a $0.1~~$1.3 million ~~net gain in~~for the third quarter of ~~2015.~~2016. This income iscan be volatile ~~in nature~~ and is dependent upon both customer sales activity and market value adjustments due to interest rate movement.

~~Net gain on sale~~

Other miscellaneous income totaled $3.4 million in the third quarter of ~~assets mainly consists~~2017, down $0.7 million linked quarter and up $1.0 million compared to the third quarter of 2016. Other miscellaneous fee income for third quarter 2017 included $0.7 million of income from investments in Small Business Investment Companies. The second quarter 2017 included a $1.1 million co-arranger fee related to a health care credit facility and $0.7 million in additional income from the sale of ~~certain specifically identified portfolio mortgage loan products that were sold for asset/liability management purposes. Further sales are not anticipated~~the investment in ~~the foreseeable future.~~ a Small Business Investment Company. While this income is part of our normal operations, it can be unpredictable as to timing.

Noninterest Expense

Noninterest expense for the third quarter of ~~2016~~2017 was ~~$149.1~~$177.6 million, down ~~$1.9~~$5.9 million, or 1%3%, from the second quarter of ~~2016,~~2017, and ~~down $2.1~~up $28.6 million, or 1%19%, from the third quarter of ~~2015. Total~~2016. For the nine months ended September 30, 2017, noninterest expense ~~for the first nine months of 2016~~ was ~~$456.0~~$524.6 million, a ~~$7.6 million,~~$68.6, or ~~2%, decrease from~~15% increase over the ~~first nine months of 2015.~~same period in 2016. Excluding nonoperating expense items, noninterest expense for the ~~first~~ nine months ~~of 2016~~ended September 30, 2017 totaled ~~$451.1~~$496.2 million, ~~an increase of $3.7~~up $45.1 million, or ~~less than 1% from 2015.~~ 10%, over 2016.

~~There were no nonoperating~~As previously stated, our company conducts business in several markets impacted by recent hurricanes. However, very few of our locations experienced damage or disruption. As a result, our reported results do not include any material expenses in the third or second quarter of 2016, and none in the third quarter of 2015. Nonoperating expenses totaled $5.0 million year-to-date 2016 compared to $16.2 million in 2015. Year-to-date 2016 nonoperating expenses were almost all related to ~~separation costs included in personnel expenses. The nonoperating expenses in 2015 included items related to branch closings and asset dispositions as part of~~ the ~~Company’s branch rationalization process, the resolution of FDIC denied loss share claims and investments in technology to enhance the Company’s risk management processes.~~

The following discussion of the components of noninterest expenses excludes nonoperating expenses for each period. A summary of nonoperating expenses by major category is included in the second table below.

Personnel expense totaled $83.2 million for the third quarter of 2016. This total was down approximately $1 million, or 1%, compared to both linked quarter and the third quarter of 2015. The linked-quarter decrease is mainly seasonal and related to benefits. The decreaseimpact from the third quarter of 2015 is related to cost controls implemented in late 2015 and early 2016, which included a reduction of 116 full time equivalent positions over the past year. In the first nine months of 2016, personnel expenses totaled $252.1 million, a $5.3 million, or 2% increase over 2015, primarily related to increased incentive accruals.

Occupancy and equipment expenses totaled $13.4 million in the third quarter of 2016, down slightly linked quarter and down $1.4 million, or 9%, compared to the third quarter of 2015. This decrease is attributable to a number of cost control measures implemented during the past eighteen months, including eliminating excess space through consolidation of certain back office areas and more efficient space planning. Year-to-date occupancy and equipment expenses totaled $41.0 million, down $4.8 million compared to the first nine months of 2015.

Other real estate expense recorded a net credit of $5.2 million in the third quarter of 2016, compared to expense of approximately $0.4 million in both the second quarter of 2016 and the third quarter of 2015. The $5.2 million net credit includes a $5.3 million gain from the foreclosure and disposition of a large property that had been acquired in the Peoples First Community Bank acquisition.those storms.

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~~All other~~Nonoperating expenses ~~excluding amortization~~incurred in 2017 primarily include merger-related costs associated with the FNBC transactions and $6.6 million of ~~intangibles and nonoperating~~ expense ~~items, totaled $52.8 million for the third quarter of 2016, a $4.9 million, or 10%, increase from~~due to the second quarter 2017 termination of ~~2016. These expenses totaled $45.8 million~~a FDIC loss share agreements associated with the Peoples First transaction in the third quarter of 2015. For the first nine months of 2016, all other expenses, excluding amortization of intangibles and nonoperating expense items totaled $147.3 million, a $12.3 million, or 9% increase over the same period of 2015. The major components of the increases compared to prior periods were a $4.0 million expense related to an early contract termination and $2.5 million in flood-related expenses as noted earlier in “Highlights of Third Quarter 2016 Financial Results.”

Also contributing to the current period increase in year-to-date other expense compared to the first nine months of 2015 was a $5.4 million, or 45%, increase in deposit insurance and regulatory fees due to asset growth and an increased level of criticized assets.

2009. The components of noninterest expense and nonoperating expense are presented in the following tables for the indicated periods.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,
(in thousands)

2016

2016

2015

2016

2015
Operating expense

Compensation expense

$
70,290

$
70,233

$
71,187

$
209,961

$
205,505
Employee benefits

12,873

14,004

12,968

42,180

41,300
Personnel expense

83,163

84,237

84,155

252,141

246,805
Net occupancy expense

10,068

10,394

11,222

30,818

34,149
Equipment expense

3,349

3,080

3,598

10,203

11,610
Data processing expense

14,590

14,370

13,844

43,167

41,306
Professional services expense

6,584

7,712

7,656

21,736

20,067
Amortization of intangibles

4,886

5,005

6,027

15,015

18,493
Telecommunications and postage

3,284

3,272

3,485

9,917

10,606
Deposit insurance and regulatory fees

5,969

6,049

4,225

17,415

12,033
Other real estate expense, net

(5,214)

350

422

(4,419)

1,379
Advertising

2,859

2,693

2,856

7,909

7,140
Ad valorem and franchise taxes

2,268

2,340

2,868

6,911

8,319
Printing and supplies

1,134

1,065

1,193

3,310

3,568
Insurance expense

803

829

794

2,467

2,644
Travel expense

1,022

1,079

1,419

3,050

3,944
Entertainment and contributions

1,686

2,001

1,634

5,319

5,009
Tax credit investment amortization

861

1,833

2,161

4,437

6,352
Other miscellaneous

11,746

4,633

3,634

21,658

13,960
Total operating expense

$
149,058

$
150,942

$
151,193

$
451,054

$
447,384
Nonoperating expense items

—

—

—

4,978

16,241
Total noninterest expense

$
149,058

$
150,942

$
151,193

$
456,032

$
463,625



	Three Months Ended						Nine Months Ended				Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,				September 30,		June 30,		September 30,		September 30,
(in thousands)	2016		2016		2015			2016		2015	2017		2017		2016		2017		2016
Nonoperating expense
Operating expense
Compensation expense	$	—	$	—	$	—	$	3,563	$	1,249	$	80,358	$	80,876	$	70,290	$	234,239	$	209,961
Employee benefits		��		—		—		411		172		12,263		15,334		12,873		43,604		42,180
Personnel expense		—		—		—		3,974		1,421		92,621		96,210		83,163		277,843		252,141
Net occupancy expense		—		—		—		—		54		12,101		12,969		10,068		35,832		30,818
Equipment expense		—		—		—		—		13		3,626		3,799		3,349		11,133		10,203
Data processing expense		—		—		—		—		106		15,869		16,755		14,590		48,019		43,167
Professional services expense		—		—		—		181		11,911		7,208		8,153		6,584		22,010		21,736
Amortization of intangibles												6,070		5,757		4,886		16,532		15,015
Telecommunications and postage		—		—		—		—		1		3,848		3,698		3,284		11,013		9,917
Other real estate expense, net		—		—		—		323		—
Other expense		—		—		—		500		2,735
Total nonoperating expenses	$	—	$	—	$	—	$	4,978	$	16,241
Deposit insurance and regulatory fees												7,563		6,983		5,969		21,036		17,415
Other real estate (income) expense, net												199		(1,004)		(5,214)		(818)		(4,419)
Advertising												3,552		4,083		2,859		10,582		7,909
Ad valorem and franchise taxes												3,387		3,519		2,268		9,942		6,911
Printing and supplies												1,248		1,324		1,134		3,746		3,310
Insurance expense												671		807		803		2,295		2,467
Travel expense												1,188		1,206		1,022		3,438		3,050
Entertainment and contributions												2,016		1,974		1,686		5,757		5,319
Tax credit investment amortization												1,212		1,213		861		3,637		4,437
Other miscellaneous												3,844		5,407		11,746		14,158		21,658
Total operating expense											$	166,223	$	172,853	$	149,058	$	496,155	$	451,054
Nonoperating expense items												11,393		10,617		—		28,473		4,978
Total noninterest expense											$	177,616	$	183,470	$	149,058	$	524,628	$	456,032


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,
(in thousands)	2017		2017		2016			2017		2016
Nonoperating expense
Personnel expense	$	2,120	$	1,435	$	—	$	3,662	$	3,974
Net occupancy and equipment expense		500		276		—		777		—
Professional services expense		2,854		2,200		—		9,681		181
Other real estate (income) expense, net		—		(1,511)		—		(1,511)		323
Advertising		358		901		—		1,389		—
Write-down related to FDIC loss share termination		—		6,603				6,603		—
Other expense		5,561		713		—		7,872		500
Total nonoperating expenses	$	11,393	$	10,617	$	—	$	28,473	$	4,978

The following discussion of the components of operating expenses excludes nonoperating items for each period.

There were minimal nonpermanent costs related to the FNBC transactions during the third quarter of 2017, while there were approximately $7 million during the second quarter of 2017. As noted earlier, nonpermanent costs included costs of operating former FNBC branches and maintaining separate operations to serve customers following the FNBC II transaction. These expenses were temporarily elevated until we worked through systems conversions and consolidation of overlapping branches early in the third quarter of 2017.

Personnel expense totaled $92.6 million for the third quarter of 2017, down $3.6 million, or 4%, from the previous quarter due to a decrease in the number of former FNBC employees, and lower pension costs. Year over year, personnel expense was up $9.5 million, or 11%, due to additional employees from the FNBC transactions, as well as merit increases.

Occupancy and equipment expenses totaled $15.7 million in the third quarter of 2017, down $1.0 million, or 6%, from the second quarter of 2017 and up $2.3 million, or 17%, compared to the third quarter of 2016 primarily due to the addition of FNBC locations.

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ORE expense for the third quarter of 2017 was $0.2 million compared to net gains on ORE dispositions of $1.0 million in the linked quarter and $5.2 million in the third quarter of 2016. Management believes the current quarter reflects a more typical level of ORE expense.

All other expenses, excluding amortization of intangibles and nonoperating expense items, totaled $51.6 million for the third quarter of 2017, down $3.5 million, or 6%, from the second quarter of 2017, and down $1.2 million, or 2% compared to the third quarter of 2016. The decreases from the prior quarter were primarily seen in the professional services, data processing and advertising categories as the second quarter included $2.2 million of nonpermanent operating costs related to FNBC transactions. The increases from the third quarter of 2016 include data processing, regulatory fees, and ad valorem taxes, primarily related to the FNBC transactions.

Income Taxes

The effective income tax rate for the third quarter of ~~2016~~2017 was approximately ~~20%~~25.7%, compared to ~~23%~~24.0% in the ~~first~~second quarter of 2017 and ~~second quarters of 2016 and 26%~~20.1% in the third quarter of ~~2015. The expected~~2016. Management expects the effective tax rate for the ~~2016 year decreased from the expected rate used in the first and second quarters primarily~~fourth quarter of 2017 to be approximately 21% to 22% due to the ~~Company’s increased investment~~change in ~~bonds~~accounting treatment for stock-based compensation and ~~loans generating tax-exempt interest~~the vesting of awards. The adoption of the new accounting standard for employee stock-based compensation results in excess tax benefits from stock-based compensation having a direct impact on income tax expense, and ~~lower than originally expected pre-tax earnings for 2016 mostly due to the elevated provision for energy related credits. Management expects the~~therefore lowers our effective tax ~~rates for 2016~~rate. The impact upon our effective tax rate will vary from quarter to quarter depending upon the Company’s share price and the number of shares vesting during the period. For the third quarter of 2017, excess tax benefits from stock-based compensation decreased income tax expense by $0.2 million. The Company currently estimates that vesting of restricted stock awards in the fourth quarter of 2017 will ~~approximate 21% to 22% and 25% to 27%, respectively.~~ result in an additional income tax benefit of approximately $3.6 million, based on the share price at September 30, 2017.

The Company’s effective tax rate varies from the 35% federal statutory rate primarily because of tax-exempt income and tax credits, as well as the ~~use of tax credits.~~impact from employee share based compensation as noted above. Interest income on bonds issued by or loans to state and municipal governments and authorities, and earnings from the ~~bank-owned life insurance~~BOLI program are the major components of tax-exempt income. The main ~~source~~sources of tax credits ~~has~~have been investments in ~~tax-advantaged~~tax advantaged securities and tax credit projects. These investments are made primarily in the markets the Company serves and are directed at tax credits issued under the Qualified Zone Academy Bonds (“QZAB”), Qualified School Construction Bonds (“QSCB”), and Federal and State New ~~Market~~Markets Tax Credit (“NMTC”~~) and Low-Income Housing Tax Credit (“LIHTC”~~) programs. The investments generate tax credits, which reduce current and future taxes and are recognized when earned as a benefit in the provision for income taxes.

During 2008, 2011 and 2013, the Bank’s Community Development Entity (CDE) was awarded three federal NMTC allocations totaling $148 million. In addition to investing in federal and state NMTC projects through its own CDE, the Bank has invested in projects in other unrelated CDEs. Since 2008, the BankThe Company has invested in NMTC projects ~~generating~~through investments in its own Community Development Entity (“CDE”), as well as, other unrelated CDEs. These investments will generate approximately $104 million in federal and state tax credits. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years.

The Company intends to continue making investments in tax credit projects and qualified bonds. However, its ability to access new credits will depend upon, among other factors, federal and state tax policies and the level of competition for such credits. Based on tax credit investments that have been made to date, the Company expects to realize benefits from federal and state tax credits totaling ~~$9.3~~$7.8 million, ~~$7.5~~$5.6 million and ~~$5.6~~$3.2 million for ~~2017,~~ 2018, 2019, and ~~2019,~~2020, respectively.

The following table reconciles reported income tax expense to that computed at the statutory federal tax rate for the indicated periods.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,
(in thousands)

2016

2016

2015

2016

2015
Taxes computed at statutory rate

$
20,472

$
21,184

$
19,519

$
43,389

$
55,280
Tax credits:

QZAB/QSCB

(689)

(681)

(730)

(2,067)

(2,191)
NMTC - Federal and State

(1,920)

(2,009)

(2,430)

(5,759)

(6,831)
LIHTC

6

24

(25)

18

(73)
Total tax credits

(2,603)

(2,666)

(3,185)

(7,808)

(9,095)
State income taxes, net of federal income tax benefit

567

762

911

1,621

2,381
Tax-exempt interest

(3,818)

(3,407)

(1,908)

(10,278)

(5,401)
Bank owned life insurance

(1,517)

(1,573)

(858)

(3,980)

(2,725)
Impact from interim estimated effective tax rate

(1,468)

(879)

(43)

3,035

855
Other, net

139

197

166

526

494
Income tax expense

$
11,772

$
13,618

$
14,602

$
26,505

$
41,789

Accounting standards for income taxes require income tax provisions for interim periods to be based on the estimated effective tax rate for the year. The estimated annual effective tax rate is applied to year-to-date pretax book income to compute the year-to-date income tax provision. Income taxes for the current interim period are equal to the difference between the year-to-date income taxes as computed at the latest interim period date, less year-to-date income taxes as determined at the end of the previous interim period. Application of the requirements for accounting for income taxes in interim periods can result in a variation in the customary relationship between income tax expense and pretax accounting income, which is reflected as “Impact from interim estimated effective tax rate” in the table above.



	Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,
(in thousands)	2017		2017		2016		2017		2016
Taxes computed at statutory rate	$	27,761	$	24,074	$	20,472	$	74,812	$	43,389
Tax credits:
QZAB/QSCB		(643)		(643)		(689)		(1,928)	��	(2,067)
NMTC - Federal and State		(1,679)		(1,679)		(1,920)		(5,037)		(5,759)
LIHTC		—		—		6		—		18
Total tax credits		(2,322)		(2,322)		(2,603)		(6,965)		(7,808)
State income taxes, net of federal income tax benefit		1,167		1,133		567		3,143		1,621
Tax-exempt interest		(4,629)		(4,719)		(3,818)		(14,021)		(10,278)
Bank-owned life insurance		(1,248)		(1,046)		(1,517)		(3,241)		(3,980)
Impact from interim estimated effective tax rate		(471)		821		(1,468)		2,230		3,035
Employee share-based compensation		(202)		(1,367)		—		(2,003)		—
Other, net		358		(58)		139		(390)		526
Income tax expense	$	20,414	$	16,516	$	11,772	$	53,565	$	26,505

On November 2, 2017, the House Ways and Means Committee released a 429-page “Tax Cuts and Jobs Act of 2017” (HR 1). The bill proposes to lower business and individual tax rates, modernize US international tax rules, and simplify the tax law, with significant

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impacts on numerous sectors of the economy. As disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on From 10-K for the year ended December 31, 2016, future changes in the tax laws could significantly impact our income tax expense, deferred tax asset balance, and the amount of taxes payable. Current proposals to decrease the federal statutory tax rate, if enacted, could result in a decrease to our deferred tax asset with a corresponding non-cash increase to income tax expense or a decrease to capital that could be material. We may also be adversely impacted by modifications or adjustments in the determination of taxable income or utilization of tax credits.

Selected Financial Data

The following tables contain selected financial data as of the dates and for the periods indicated.



	Three Months Ended						Nine Months Ended				Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,				September 30,		June 30,		September 30,		September 30,
	2016		2016		2015		2016		2015		2017		2017		2016		2017		2016
Common Share Data
Earnings per share:
Basic	$	0.59	$	0.59	$	0.52	$	1.23	$	1.45	$	0.68	$	0.60	$	0.59	$	1.85	$	1.23
Diluted	$	0.59	$	0.59	$	0.52	$	1.23	$	1.45	$	0.68	$	0.60	$	0.59	$	1.85	$	1.23
Cash dividends paid	$	0.24	$	0.24	$	0.24	$	0.72	$	0.72	$	0.24	$	0.24	$	0.24	$	0.72	$	0.72
Book value per share (period-end)	$	32.09	$	31.77	$	31.65	$	32.09	$	31.65	$	33.78	$	33.21	$	32.09	$	33.78	$	32.09
Tangible book value per share (period-end)	$	22.89	$	22.50	$	22.18	$	22.89	$	22.18	$	23.92	$	23.27	$	22.89	$	23.92	$	22.89
Weighted average number of shares (000s):
Basic		77,550		77,523		77,928		77,525		78,452		84,749		84,614		77,550		84,577		77,525
Diluted		77,677		77,680		78,075		77,653		78,609		84,980		84,867		77,677		84,818		77,653
Period-end number of shares (000s)		77,571		77,538		77,519		77,571		77,519		84,767		84,738		77,571		84,767		77,571
Market data:
High sales price	$	32.94	$	27.84	$	32.47	$	32.94	$	32.98	$	50.40	$	52.94	$	32.94	$	52.94	$	32.94
Low sales price	$	24.49	$	21.93	$	25.20	$	20.01	$	24.96	$	41.05	$	42.70	$	24.49	$	41.05	$	20.01
Period-end closing price	$	32.43	$	26.11	$	27.05	$	32.43	$	27.05	$	48.45	$	49.00	$	32.43	$	48.45	$	32.43
Trading volume (000s) (a)		42,809		41,668		44,705		140,796		136,733		33,243		39,035		42,809		117,397		140,796

(a)

Trading volume is based on the total volume as determined by NASDAQ on the last day of the quarter.

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	Three Months Ended						Nine Months Ended
											Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,				September 30,		June 30,		September 30,		September 30,
(in thousands)	2016		2016		2015		2016		2015		2017		2017		2016		2017		2016
Income Statement:
Interest income	$	182,153	$	183,506	$	171,329	$	546,300	$	505,336	$	232,716	$	226,177	$	182,153	$	661,408	$	546,300
Interest income (te) (a)		188,937		189,702		174,633		564,623		514,684		241,295		234,741		188,937		686,849		564,623
Interest expense		18,640		18,537		14,499		54,982		38,557		29,859		26,460		18,640		77,143		54,982
Net interest income (te) (a)		170,297		171,165		160,134		509,641		476,127		211,436		208,281		170,297		609,706		509,641
Provision for loan losses		18,972		17,196		10,080		96,204		22,842		13,040		14,951		18,972		43,982		96,204
Noninterest income		63,008		63,694		60,211		184,888		177,631		67,115		67,487		63,008		198,093		184,888
Noninterest expense (excluding amortization of intangibles)		144,172		145,937		145,166		441,017		445,132		171,546		177,713		144,172		508,096		441,017
Amortization of intangibles		4,886		5,005		6,027		15,015		18,493		6,070		5,757		4,886		16,532		15,015
Income before income taxes		58,491		60,525		55,768		123,970		157,943		79,316		68,783		58,491		213,748		123,970
Income tax expense		11,772		13,618		14,602		26,505		41,789		20,414		16,516		11,772		53,565		26,505
Net income	$	46,719	$	46,907	$	41,166	$	97,465	$	116,154	$	58,902	$	52,267	$	46,719	$	160,183	$	97,465

~~(a) For~~ ~~analytical~~ ~~purposes, management adjusts net interest income to a “taxable equivalent” basis using a 35% federal tax rate on tax exempt items.~~



	Three Months Ended						Nine Months Ended				Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,				September 30,		June 30,		September 30,		September 30,
	2016		2016		2015		2016		2015		2017		2017		2016		2017		2016
Performance Ratios
Return on average assets	0.80	%	0.82	%	0.76	%	0.56	%	0.74	%	0.88	%	0.79	%	0.80	%	0.82	%	0.56	%
Return on average common equity	7.52	%	7.76	%	6.70	%	5.33	%	6.37	%	8.23	%	7.52	%	7.52	%	7.69	%	5.33	%
Return on average tangible common equity	10.58	%	11.04	%	9.60	%	7.55	%	9.16	%	11.68	%	10.69	%	10.58	%	10.77	%	7.55	%
Earning asset yield (te) (a)	3.55	%	3.60	%	3.57	%	3.58	%	3.65	%	3.92	%	3.87	%	3.55	%	3.84	%	3.58	%
Total cost of funds	0.35	%	0.35	%	0.30	%	0.35	%	0.28	%	0.48	%	0.44	%	0.35	%	0.43	%	0.35	%
Net interest margin (te) (a)	3.20	%	3.25	%	3.28	%	3.23	%	3.37	%	3.44	%	3.43	%	3.20	%	3.41	%	3.23	%
Noninterest income to total revenue (te) (a)	27.01	%	27.12	%	27.32	%	26.62	%	27.13	%	24.09	%	24.47	%	27.01	%	24.52	%	26.62	%
Efficiency ratio (b)	61.80	%	62.14	%	65.88	%	62.78	%	65.64	%	57.50	%	60.59	%	61.80	%	59.70	%	62.78	%
Average loan/deposit ratio	85.64	%	85.80	%	83.82	%	86.04	%	83.93	%	87.08	%	87.76	%	85.64	%	88.18	%	86.04	%
FTE employees (period-end)	3,747		3,723		3,863		3,747		3,863		3,979		4,162		3,747		3,979		3,747
Capital Ratios
Common stockholders' equity to total assets	10.77	%	10.68	%	11.36	%	10.77	%	11.36	%	10.68	%	10.57	%	10.77	%	10.68	%	10.77	%
Tangible common equity ratio (c)	7.93	%	7.81	%	8.24	%	7.93	%	8.24	%	7.80	%	7.65	%	7.93	%	7.80	%	7.93	%

(a) ~~For analytical purposes, management adjusts net interest income to a “taxable equivalent” basis~~Tax equivalent (te) amounts are calculated using a ~~35%~~marginal federal income tax rate ~~on tax exempt items~~of 35%.

(b) The efficiency ratio is noninterest expense to total net interest (te) and noninterest income, excluding amortization of purchased intangibles and nonoperating ~~expense.~~items.

(c) The tangible common equity ratio is common ~~shareholders’~~stockholders’ equity less intangible assets divided by total assets less intangible assets.

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	Three Months Ended									Nine Months Ended						Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,			September 30,			September 30,			June 30,			September 30,			September 30,			September 30,
($ in thousands)	2016			2016			2015			2016			2015			2017			2017			2016			2017			2016
Asset Quality Information
Nonaccrual loans (a)	$	302,810		$	265,722		$	166,945		$	302,810		$	166,945		$	269,676		$	238,219		$	302,810		$	269,676		$	302,810
Restructured loans - still accruing		8,059			35,974			5,779			8,059			5,779			96,735			90,502			8,059			96,735			8,059
Total nonperforming loans		310,869			301,696			172,724			310,869			172,724			366,411			328,721			310,869			366,411			310,869
Other real estate (ORE) and foreclosed assets		19,806			23,374			33,599			19,806			33,599			21,219			18,049			19,806			21,219			19,806
Total nonperforming assets	$	330,675		$	325,070		$	206,323		$	330,675		$	206,323		$	387,630		$	346,770		$	330,675		$	387,630		$	330,675
Accruing loans 90 days past due (a)	$	4,933		$	7,982		$	5,876		$	4,933		$	5,876		$	28,850		$	18,390		$	4,933		$	28,850		$	4,933
Net charge-offs - non-purchased credit impaired		9,531			7,803			3,471			38,633			8,335			11,783			5,985			9,531			47,679			38,633
Net charge-offs - purchased credit impaired		(124)			(147)			(1,328)			(338)			1,709			—			(45)			(124)			73			(338)
Allowance for loan losses		236,061			226,086			139,576			236,061			139,576			223,122			221,865			236,061			223,122			236,061
Provision for loan losses		18,972			17,196			10,080			96,204			22,842			13,040			14,951			18,972			43,982			96,204
Ratios:
Nonperforming assets to loans, ORE and foreclosed assets		2.06	%		2.02	%		1.39	%		2.06	%		1.39	%		2.06	%		1.88	%		2.06	%		2.06	%		2.06	%
Accruing loans 90 days past due to loans		0.03	%		0.05	%		0.04	%		0.03	%		0.04	%		0.15	%		0.10	%		0.03	%		0.15	%		0.03	%
Nonperforming assets + accruing loans 90 days past due to loans, ORE and foreclosed assets		2.09	%		2.07	%		1.43	%		2.09	%		1.43	%		2.21	%		1.97	%		2.09	%		2.21	%		2.09	%
Net charge-offs - non-purchase credit impaired to average loans		0.24	%		0.20	%		0.09	%		0.32	%		0.08	%
Net charge-offs - non-purchased credit impaired to average loans																	0.25	%		0.13	%		0.24	%		0.35	%		0.32	%
Allowance for loan losses to period-end loans		1.47	%		1.41	%		0.95	%		1.47	%		0.95	%		1.19	%		1.20	%		1.47	%		1.19	%		1.47	%
Allowance for loan losses to nonperforming loans + accruing loans 90 days past due		74.75	%		73.01	%		78.15	%		74.75	%		78.15	%		56.45	%		63.92	%		74.75	%		56.45	%		74.75	%

(a)

Nonaccrual loans and accruing loans past due 90 days or more do not include purchased credit impaired loans with an accretable yield. Included in nonaccrual loans are ~~$48.2~~$119.7 million, ~~$34.8~~$96.3 million, and ~~$4.9~~$48.2 million in restructured loans at September 30, ~~2016,~~2017, June 30, ~~2016,~~2017, and September 30, ~~2015, respectively. Purchased credit impaired loans include loans covered by an FDIC loss share agreement totaling $152.3 million, $160.0 million and $177.5 million as of September 30,~~ 2016, ~~June 30, 2016, and September 30, 2015,~~ respectively.




	September 30,		June 30,		March 31,		December 31,		September 30,
(in thousands)	2017		2017		2017		2016		2016
Period-End Balance Sheet
Total loans, net of unearned income (a)	$	18,786,285	$	18,473,841	$	18,204,868	$	16,752,151	$	16,070,821
Loans held for sale		23,236		26,787		20,883		34,064		42,545
Securities		5,624,552		5,668,836		5,001,273		5,017,128		4,843,112
Short-term investments		111,725		126,428		51,273		78,177		128,920
Earning assets		24,545,798		24,295,892		23,278,297		21,881,520		21,085,398
Allowance for loan losses		(223,122)		(221,865)		(213,550)		(229,418)		(236,061)
Goodwill		739,403		740,265		716,761		621,193		621,193
Other intangible assets, net		96,525		101,694		86,952		87,757		92,523
Other assets		1,658,151		1,714,583		1,616,566		1,614,250		1,545,677
Total assets	$	26,816,755	$	26,630,569	$	25,485,026	$	23,975,302	$	23,108,730
Noninterest-bearing deposits	$	7,896,384	$	7,887,867	$	7,722,279	$	7,658,203	$	7,543,041
Interest-bearing transaction and savings deposits		7,893,546		8,402,133		7,162,760		6,910,466		6,620,373
Interest-bearing public funds deposits		2,762,048		2,537,030		2,595,263		2,563,758		2,394,148
Time deposits		2,981,881		2,615,785		2,441,718		2,291,839		2,327,915
Total interest-bearing deposits		13,637,475		13,554,948		12,199,741		11,766,063		11,342,436
Total deposits		21,533,859		21,442,815		19,922,020		19,424,266		18,885,477
Short-term borrowings		1,737,151		1,810,907		2,121,932		1,225,406		1,075,956
Long-term debt		331,179		407,876		525,082		436,280		463,710
Other liabilities		351,291		155,009		152,370		169,582		194,460
Stockholders' equity		2,863,275		2,813,962		2,763,622		2,719,768		2,489,127
Total liabilities & stockholders' equity	$	26,816,755	$	26,630,569	$	25,485,026	$	23,975,302	$	23,108,730

4447

Table of Contents

Three Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,
(in thousands)

2016

2016

2016

2015

2015
Period-End Balance Sheet

Total loans, net of unearned income (a)

$
16,070,821

$
16,035,796

$
15,978,124

$
15,703,314

$
14,763,050
Loans held for sale

42,545

42,297

24,001

20,434

19,764
Securities

4,843,112

4,806,370

4,667,837

4,463,792

4,548,922
Short-term investments

128,920

153,159

151,551

565,555

194,414
Earning assets

21,085,398

21,037,622

20,821,513

20,753,095

19,526,150
Allowance for loan losses

(236,061)

(226,086)

(217,794)

(181,179)

(139,576)
Goodwill

621,193

621,193

621,193

621,193

621,193
Other intangible assets, net

92,523

97,409

102,414

107,538

113,229
Other assets (c)

1,545,677

1,533,652

1,482,044

1,532,958

1,481,797
Total assets

$
23,108,730

$
23,063,790

$
22,809,370

$
22,833,605

$
21,602,793
Noninterest-bearing deposits

$
7,543,041

$
7,151,416

$
7,108,598

$
7,276,127

$
6,075,558
Interest-bearing transaction and savings deposits

6,620,373

6,754,513

7,043,484

6,767,881

7,360,677
Interest-bearing public funds deposits

2,394,148

2,354,234

2,152,903

2,253,645

1,768,133
Time deposits

2,327,915

2,556,706

2,351,165

2,051,259

2,235,580
Total interest-bearing deposits

11,342,436

11,665,453

11,547,552

11,072,785

11,364,390
Total deposits

18,885,477

18,816,869

18,656,150

18,348,912

17,439,948
Short-term borrowings

1,075,956

1,095,107

1,100,787

1,423,644

1,049,182
Long-term debt (c)

463,710

468,028

471,245

490,145

491,820
Other liabilities

194,460

220,421

160,148

157,761

168,282
Stockholders' equity

2,489,127

2,463,365

2,421,040

2,413,143

2,453,561
Total liabilities & stockholders' equity

$
23,108,730

$
23,063,790

$
22,809,370

$
22,833,605

$
21,602,793



	Three Months Ended						Nine Months Ended				Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,				September 30,		June 30,		September 30,		September 30,		September 30,
(in thousands)	2016		2016		2015		2015		2015		2017		2017		2016		2017		2016
Average Balance Sheet
Total loans, net of unearned income (a)	$	16,023,458	$	16,059,846	$	14,511,474	$	15,977,526	$	14,175,611	$	18,591,219	$	18,369,446	$	16,023,458	$	18,092,622	$	15,977,526
Loans held for sale		38,687		29,053		17,233		27,561		18,567		21,723		22,389		38,687		21,815		27,561
Securities (b)		4,707,224		4,648,807		4,425,546		4,628,330		4,116,270		5,679,841		5,241,735		4,707,224		5,321,974		4,628,330
Short-term investments		428,037		409,323		479,084		452,028		536,961		194,643		704,560		428,037		435,066		452,028
Earning assets		21,197,406		21,147,029		19,433,337		21,085,445		18,847,409		24,487,426		24,338,130		21,197,406		23,871,477		21,085,445
Allowance for loan losses		(228,603)		(220,679)		(132,634)		(210,913)		(131,001)		(224,537)		(216,851)		(228,603)		(222,623)		(210,913)
Goodwill and other intangible assets		716,097		721,031		737,361		721,056		743,785		837,107		826,097		716,097		798,050		721,056
Other assets ~~(c)~~		1,517,890		1,491,210		1,437,879		1,496,117		1,472,703		1,577,577		1,578,877		1,517,890		1,546,910		1,496,117
Total assets	$	23,202,790	$	23,138,591	$	21,475,943	$	23,091,705	$	20,932,896	$	26,677,573	$	26,526,253	$	23,202,790	$	25,993,814	$	23,091,705
Noninterest-bearing deposits	$	7,277,568	$	7,079,426	$	6,032,680	$	7,130,762	$	6,022,034	$	7,775,913	$	7,769,932	$	7,277,568	$	7,670,517	$	7,130,762
Interest-bearing transaction and savings deposits		6,732,815		6,779,565		7,270,061		6,775,870		6,814,057		8,097,370		8,047,426		6,732,815		7,685,213		6,775,870
Interest-bearing public fund deposits		2,253,588		2,302,096		1,838,952		2,243,078		1,848,340		2,764,961		2,539,424		2,253,588		2,618,215		2,243,078
Time deposits		2,446,265		2,556,668		2,171,740		2,420,717		2,205,574		2,711,574		2,575,779		2,446,265		2,543,834		2,420,717
Total interest-bearing deposits		11,432,668		11,638,329		11,280,753		11,439,665		10,867,971		13,573,905		13,162,629		11,432,668		12,847,262		11,439,665
Total deposits		18,710,236		18,717,755		17,313,433		18,570,427		16,890,005		21,349,818		20,932,561		18,710,236		20,517,779		18,570,427
Short-term borrowings		1,366,236		1,351,227		1,050,801		1,427,199		956,228		1,909,365		2,232,845		1,366,236		2,089,024		1,427,199
Long-term debt ~~(c)~~		468,100		471,924		499,077		474,435		473,804		339,535		428,292		468,100		408,191		474,435
Other liabilities		185,820		167,680		173,564		174,826		173,675		240,338		145,989		185,820		192,376		174,826
Stockholders' equity		2,472,398		2,430,005		2,439,068		2,444,818		2,439,184		2,838,517		2,786,566		2,472,398		2,786,444		2,444,818
Total liabilities & stockholders' equity	$	23,202,790	$	23,138,591	$	21,475,943	$	23,091,705	$	20,932,896	$	26,677,573	$	26,526,253	$	23,202,790	$	25,993,814	$	23,091,705

(a)

Includes nonaccrual loans.

(b)

Average securities do not include unrealized holding gains/losses on available for sale securities.

Reconciliation of reported to core net interest income (te) and core net interest margin


	Three months ended									Nine months ended
		September 30,			June 30,			September 30,			September 30,			September 30,
($ in thousands)		2017			2017			2016			2017			2016
Net interest income	$	202,857		$	199,717		$	163,513		$	584,265		$	491,318
Tax-equivalent adjustment (te)(a)		8,579			8,564			6,784			25,441			18,323
Net interest income (te)	$	211,436		$	208,281		$	170,297		$	609,706		$	509,641
Purchase accounting adjustments
Net loan discount accretion (b)		7,711			8,801			5,206			21,529			17,443
Net investment premium amortization (c)		(364)			(398)			(581)			(1,216)			(1,936)
Net purchase accounting adjustments		7,347			8,403			4,625			20,313			15,507
Net interest income (te) - core	$	204,089		$	199,878		$	165,672		$	589,393		$	494,134
Average earning assets	$	24,487,426		$	24,338,130		$	21,197,406		$	23,871,477		$	21,085,445
Net interest margin - reported		3.44	%		3.43	%		3.20	%		3.41	%		3.23	%
Net purchase accounting adjustments		0.12	%		0.14	%		0.08	%		0.11	%		0.10	%
Net interest margin - core		3.32	%		3.29	%		3.12	%		3.30	%		3.13	%

Table of Contents

Core revenue (te) and core pre-tax, pre-provision net revenue (te)


	Three months ended						Nine months ended
		September 30,		June 30,		September 30,			September 30,		September 30,
(in thousands)		2017		2017		2016			2017		2016
Net interest income	$	202,857	$	199,717	$	163,513		$	584,265	$	491,318
Noninterest income		67,115		67,487		63,008			198,093		184,888
Total revenue	$	269,972	$	267,204	$	226,521		$	782,358	$	676,206
Tax-equivalent adjustment (a)		8,579		8,564		6,784			25,441		18,323
Purchase accounting adjustments - revenue (d)		(7,347)		(7,076)		(3,088)			(17,886)		(10,830)
Nonoperating revenue		—		—		—			(4,352)		—
Core revenue (te)	$	271,204	$	268,692	$	230,217		$	785,561	$	683,699
Noninterest expense		(177,616)		(183,470)		(149,058)			(524,628)		(456,032)
Intangible amortization		6,070		5,757		4,886			16,532		15,015
Nonoperating expense		11,393		10,617		—			28,473		4,978
Core pre-tax, pre-provision net revenue (te)	$	111,051	$	101,596	$	86,045		$	305,938	$	247,660

(a)

Taxable equivalent (te) amounts are calculated using a marginal federal income tax rate of 35%.

(b)

Includes net loan discount accretion arising from business combinations.

(c)

~~Prior periods have been restated to reclassify debt issuance costs~~Includes net investment premium amortization arising from ~~other assets to net against the related debt.~~business combinations.

(d)

Includes net loan discount accretion and net investment premium amortization as defined in (b) and (c) and amortization of the FDIC loss share receivable related to an FDIC assisted transaction.

4549

Table of Contents

LIQUIDITY

Liquidity management is focused on ensuring that funds are available to meet the cash flow requirements of our depositors and borrowers, while also meeting the operating, capital and strategic cash flow needs of the Company, the Bank and other subsidiaries. Hancock develops its liquidity management strategies and measures and regularly monitors liquidity risk as part of its overall asset/liability management process.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, as well as maturities and repayments of investment securities. Short-term investments such as federal funds sold, securities purchased under agreements to resell and interest-bearing deposits with the Federal Reserve Bank or with other commercial banks are additional sources of liquidity to meet cash flow requirements. Free securities represent unpledged securities that can be sold or used as collateral for borrowings, and include unpledged securities assigned to short-term dealer repurchase agreements or to the Federal Reserve Bank discount window. As shown in the table below, our ratio of free securities to total securities was 36.61% at September 30, 2017, compared to 33.57% at June 30, 2017 and 23.97% at September 30, ~~2016, compared to 28.39% at June 30, 2016 and 33.68%~~2016. The total of pledged securities at September 30, ~~2015. The decrease from~~2017 was down $203.8 million compared to June 30, 2017 as collateral related to seasonal public fund tax deposits was released. Total securities at September 30, ~~2015 is mainly attributable to pledging requirements related to a $626 million, or 35%, increase in public fund deposits resulting from certain deposit growth initiatives implemented in 2015.~~

2017 were $0.8 billion higher than at September 30, 2016.



	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,		June 30,		March 31,		December 31,		September 30,
Liquidity Metrics	2016		2016		2016		2015		2015		2017		2017		2017		2016		2016
Free securities / total securities	23.97	%	28.39	%	25.47	%	20.29	%	33.68	%	36.61	%	33.57	%	20.29	%	23.46	%	23.97	%
Core deposits / total deposits	93.03	%	91.99	%	92.95	%	94.90	%	93.50	%	91.70	%	93.05	%	92.93	%	93.22	%	93.03	%
Wholesale funds / core deposits	8.76	%	9.03	%	9.07	%	10.99	%	9.48	%	10.47	%	11.12	%	14.30	%	9.18	%	8.76	%
Quarter-to-date average loans /quarter-to-date average deposits	85.64	%	85.80	%	86.69	%	85.28	%	83.82	%	87.08	%	87.76	%	89.90	%	86.31	%	85.64	%

The liability portion of the balance sheet provides liquidity mainly through the Company’s ability to use cash sourced from various customers’ interest-bearing and noninterest-bearing deposit and sweep accounts. Core deposits consist of total deposits excluding certificates of deposits (“CDs”) of $250,000 or more and brokered ~~deposits, and balances in sweep time deposit products used by commercial customers.~~deposits. The ratio of core deposits to total deposits was 91.70% at September 30, 2017, compared to 93.05% at June 30, 2017 and 93.03% at September 30, ~~2016, compared to 91.99% at June 30, 2016 and 93.50 %~~2016. Core deposits totaled $19.7 billion at September 30, ~~2015.~~2017, a decrease of $0.2 billion from June 30, 2017, and up $2.2 billion from September 30, 2016. The increase from September 30, 2016 was primarily due to the FNBC transactions. Brokered deposits totaled ~~$758 million~~$1.1 billion as of September 30, ~~2016,~~2017, a ~~$201 million decrease from~~$0.3 billion, or 42%, increase compared to June 30, ~~2016,~~2017 and ~~up $376 million compared to~~ September 30, ~~2015.~~2016. The ~~Company will~~Company’s use of brokered deposits onas a ~~temporary basis to support its short-term~~ funding ~~requirements,~~source is subject to ~~very~~ strict parameters regarding the ~~terms~~amount, term and interest rate.

Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings from customers provide additional sources of liquidity to meet short-term funding requirements. Besides funding from customer sources, ~~our short-term borrowing capacity includes an approved~~the Bank has a line of credit with the FHLB that is secured by blanket pledges of ~~$3.1~~certain mortgage loans. At September 30, 2017, the Bank had borrowings of approximately $1.2 billion and had approximately $3.0 billion available under this line. The Bank also has unused borrowing capacity at the Federal Reserve’s discount window of ~~$1.7 billion~~approximately $2.2 billion. The Company did not have outstanding borrowings with the Federal Reserve at ~~September 30, 2016.~~ any date in the last twelve months.

Wholesale funds, which are comprised of short-term borrowings and long-term debt, were ~~8.76%~~10.47% of core deposits at September 30, ~~2016,~~2017, compared to ~~9.03%~~11.12% at June 30, ~~2016~~2017 and ~~9.48%~~8.76% at September 30, ~~2015.~~2016. The linked quarter decrease ~~from September 30, 2015~~ primarily ~~reflects~~related to a ~~$1.3 billion~~$0.2 million decrease in both wholesale funds and core deposits. The year over year increase was primarily due to an increase in ~~core deposits.~~FHLB borrowings. FHLB borrowings totaled ~~$739 million~~$1.2 billion at September 30, ~~2016~~2017 compared to ~~$675 million~~$1.3 billion at June 30, ~~2016. FHLB borrowings were $900 million at year end 2015~~2017 and ~~$600 million~~$0.7 billion at September 30, ~~2015. No amounts had been borrowed at the Federal Reserve’s discount window in any period. See the discussion on “Balance Sheet Analysis - Deposits”~~2016. The Company has established an internal target for ~~more information.~~wholesale funds to be less than 25% of core deposits.

Another key measure the Company uses to monitor its liquidity position is the loan-to-deposit ratio (average loans outstanding for the reporting period divided by average deposits outstanding). The loan-to-deposit ratio measures the amount of funds the Company lends out for each dollar of deposits on hand. The Company’s loan-to-deposit ratio for the third quarter of ~~2016~~2017 was ~~85.64%~~87.08%, ~~down slightly from the second quarter of 2016,~~compared to 87.76% at June 30, 2017 and ~~an increase of 182 bps from~~85.64% at September 30, ~~2015. The increase in the loan-to-deposit ratio from September 30, 2015 was the result of 10% average loan growth outpacing 8% deposit growth.~~2016. The Company has established ~~an internal~~a target range for ~~the~~its loan-to-deposit ratio ~~from~~of 83% to 87%.

Cash generated from operations is another important source of funds to meet liquidity needs. The consolidated statements of cash flows present operating cash flows and summarize all significant sources and uses of funds for the nine months ended September 30, ~~2016~~2017 and ~~2015.~~2016.

Dividends received from the Bank have been the primary source of funds available to the Parent Company for the payment of dividends to our stockholders and for servicing ~~debt issued by the parent company.~~its debt. The liquidity management process takes into account the various regulatory provisions that can limit the amount of dividends the Bank can distribute to the Parent Company. The Parent Company maintains cash and other liquid assets ~~at the parent company~~ to provide liquidity in an amount sufficient to fund a minimum of at least six quarters of anticipated common stockholder dividends.

4650

Table of Contents

CAPITAL RESOURCES

Stockholders’ equity totaled ~~$2.5~~$2.9 billion at September 30, ~~2016,~~2017, up ~~$26~~$49 million, or ~~1% compared to~~2% from June 30, ~~2016~~2017 and up ~~$76~~$374 million, or 3%15%, from ~~year end.~~September 30, 2016. The tangible common equity ratio was 7.80% at September 30, 2017, compared to 7.65% at June 30, 2017 and 7.93% at September 30, ~~2016, compared~~2016. The increase in the ratio from prior quarter is due to ~~7.81% at June 30, 2016 and 8.24% at September 30, 2015.~~net tangible earnings. The decline in the ratio from ~~last year~~prior periods was ~~primarily~~ due to ~~$1.5 billion~~the effect of the assets acquired in ~~asset growth.~~the FNBC transactions, which was partially offset by the $259 million stock issuance in the fourth quarter of 2016. The Company has established an internal target for the tangible common equity ratio of at least 8.00%. However, management will allow the Company’s tangible common equity ratio to drop below 8.00% on a temporary basis if it believes that the shortfall can be replenished through normal operations. Management expects the tangible common equity ratio at December 31, 2016, to decrease slightly compared to September 30, 2016 due to the fourth quarter 2016 annual pension fund liability valuation, but expects the tangible common equity ratio to return to a level in excess of its 8.00% target during 2017.

On August 28, 2015, the Company’s Board of Directors approved a stock repurchase plan that authorized the repurchase of up to 5%, or approximately 3.9 million shares of its outstanding common stock. The approved plan allowed the Company to repurchase its common shares either in the open market in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions with non-affiliated sellers or as otherwise determined by the Company from time to time until its expiration date on September 30, 2016. Under this plan, the Company repurchased 741,393 shares of its common stock at an average price of $27.44 per share. There were no share repurchases under the plan in 2016.

~~At September 30, 2016, the~~The regulatory capital ratios of the Company and the Bank as of September 30, 2017 improved from June 30, 2017. While the ratios were lower in the third quarter of 2017 relative to December 31, 2016 as a result the FNBC transactions, all remain well in excess of current regulatory minimum ~~requirements, as indicated in the table below.~~requirements. The Company and the Bank have been categorized as “well-capitalized” in the most recent notices received from our ~~regulators and both~~regulators. Both entities currently exceed all capital requirements of the new Basel III requirements, ~~which were effective January 1, 2015,~~ including the fully phased-in conservation buffer. Bank ratios reflect a $240 million capital contribution in the first quarter of 2017 to support the FNBC I transaction. See the Supervision and Regulation section in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 for further discussion of the Company’s capital requirements.

The following table shows the regulatory capital ratios for the Company and the Bank as calculated under current rules for the indicated periods.




	Well-		September 30,		June 30,		March 31,		December 31,		September 30,		Well-		September 30,		June 30,		March 31,		December 31,		September 30,
	Capitalized		2016		2016		2016		2015		2015		Capitalized		2017		2017		2017		2016		2016
Total capital (to risk weighted assets)
Hancock Holding Company	10.00	%	12.15	%	11.96	%	11.75	%	11.86	%	12.32	%	10.00	%	11.84	%	11.76	%	11.91	%	13.21	%	12.15	%
Whitney Bank	10.00	%	11.81	%	11.70	%	11.56	%	11.73	%	12.04	%	10.00	%	11.35	%	11.33	%	11.52	%	11.57	%	11.81	%
Tier 1 common equity capital (to risk weighted assets)
Hancock Holding Company	6.50	%	10.09	%	9.94	%	9.69	%	9.96	%	10.56	%	6.50	%	10.10	%	10.01	%	10.16	%	11.26	%	10.09	%
Whitney Bank	6.50	%	10.56	%	10.48	%	10.30	%	10.64	%	11.13	%	6.50	%	10.31	%	10.28	%	10.49	%	10.39	%	10.56	%
Tier 1 capital (to risk weighted assets)
Hancock Holding Company	8.00	%	10.09	%	9.94	%	9.69	%	9.96	%	10.56	%	8.00	%	10.10	%	10.01	%	10.16	%	11.26	%	10.09	%
Whitney Bank	8.00	%	10.56	%	10.48	%	10.30	%	10.64	%	11.13	%	8.00	%	10.31	%	10.28	%	10.49	%	10.39	%	10.56	%
Tier 1 leverage capital
Hancock Holding Company	5.00	%	8.35	%	8.22	%	8.14	%	8.55	%	8.85	%	5.00	%	8.34	%	8.21	%	8.79	%	9.56	%	8.35	%
Whitney Bank	5.00	%	8.76	%	8.69	%	8.68	%	9.16	%	9.36	%	5.00	%	8.53	%	8.44	%	9.09	%	8.83	%	8.76	%

Regulatory definitions:

(1)

Tier 1 common equity capital generally includes common equity and retained earnings, reduced by goodwill and other disallowed intangibles, disallowed deferred tax assets and certain other assets.

(2)

Tier 1 capital consists of Tier 1 common equity capital plus non-controlling interest in equity of consolidated subsidiaries and a limited amount of qualifying perpetual preferred stock.

(3)

Total capital consists of Tier 1 capital plus perpetual preferred stock not qualifying as Tier 1 capital, mandatory convertible securities, certain types of subordinated debt and a limited amount of allowances for credit losses.

(4)

The risk-weighted asset base is equal to the sum of the aggregate value of assets and credit-converted off-balance sheet items in each risk category as specified in regulatory guidelines, multiplied by the weight assigned by the guidelines to that category.

(5)

The Tier 1 leverage capital ratio is Tier 1 capital divided by average total assets reduced by the deductions for Tier 1 capital noted above.

4751

Table of Contents

BALANCE SHEET ANALYSIS

Securities

~~Investment~~Investments in securities totaled ~~$4.8~~$5.6 billion at September 30, ~~2016,~~2017, up ~~$37~~$44 million, or 1%, from June 30, ~~2016~~2017 and ~~$294~~up $781 million from September 30, 2015. During the third quarter of 2016, the Company purchased approximately $317 million of mortgage-backed securities and municipal securities at an average yield of 2.54%. Included in the third quarter purchase were $175 million of U.S. government agency-guaranteed commercial mortgage-backed securities.2016. At September 30, ~~2016,~~2017, securities available for sale totaled ~~$2.4~~$2.8 billion and securities held to maturity totaled ~~$2.4~~$2.8 billion.

The securities portfolio consists mainly of residential and commercial mortgage-backed securities and collateralized mortgage obligations issued or guaranteed by U.S. government agencies. The portfolio is designed to enhance liquidity while providing an acceptable rate of return. The Company invests only in high quality ~~securities of~~ investment grade ~~quality~~securities with a targeted effective duration for the overall portfolio of between two and five years. The effective duration calculates the price sensitivity to changes in interest rates. At September 30, ~~2016,~~2017, the average maturity of the portfolio was ~~5.06~~5.57 years with an effective duration of ~~3.78~~4.64 years and a nominal weighted-average yield of ~~2.33%~~2.36%. Management simulations indicate that the effective duration would increase to ~~4.37~~4.90 years with a 100 bpbps increase in the yield curve and to ~~4.62~~5.05 years with a 200 bpbps increase. At December 31, ~~2015,~~2016, the average maturity of the portfolio was ~~4.90~~5.79 years with an effective duration of ~~3.89~~5.07 years and a nominal weighted-average yield of ~~2.27%~~2.35%. ~~An improved mix~~The average maturity of ~~higher-yielding municipal securities~~the portfolio at September 30, 2016 was ~~offset by additional premium amortization on mortgage related securities~~5.06 years, while the duration was 3.78 years, and ~~resulted in no change to~~ the nominal weighted average ~~security portfolio~~ yield ~~between December 31, 2015 and September 30, 2016.~~was 2.28%.

Loans

Total loans at September 30, ~~2016~~2017 were ~~$16.1~~$18.8 billion, up ~~slightly~~approximately $312 million, or 1.7%, from June 30, ~~2016, and up $1.3 billion, or 9%, compared to September 30, 2015.~~2017. Loans to ~~energy-related~~energy related companies ~~declined approximately $81~~decreased $97 million ~~linked quarter. Excluding the energy portfolio, loans would have increased 3% linked-quarter annualized. The Company reported net~~as we continue to decrease our concentration. There was commercial loan growth ~~during~~throughout the ~~quarter~~markets in ~~areas such as healthcare lending,~~our footprint and in our mortgage and equipment finance ~~and mortgage lending. These business~~ lines ~~represent targeted growth areas identified as part~~ of ~~the Company’s revenue-generating initiatives.~~business.

The ~~Company’s~~following table shows the composition of our loan portfolio:



	September 30,		June 30,		March 31,		December 31,		September 30,
(in thousands)	2017		2017		2017		2016		2016
Total loans:
Commercial non-real estate	$	8,129,429	$	8,093,104	$	8,074,287	$	7,613,917	$	7,133,928
Commercial real estate - owner occupied		2,076,014		2,078,332		2,047,451		1,906,821		1,901,825
Total commercial and industrial		10,205,443		10,171,436		10,121,738		9,520,738		9,035,753
Commercial real estate - income producing		2,511,808		2,401,673		2,505,104		2,013,890		1,990,309
Construction and land development		1,373,048		1,313,522		1,252,667		1,010,879		946,592
Residential mortgages		2,596,692		2,493,923		2,266,263		2,146,713		2,037,162
Consumer		2,099,294		2,093,287		2,059,096		2,059,931		2,061,005
Total loans	$	18,786,285	$	18,473,841	$	18,204,868	$	16,752,151	$	16,070,821

Our commercial customer base is diversified over a range of industries, including energy, healthcare, wholesale and retail trade in various durable and nondurable products and the manufacture of such products, marine transportation and maritime construction, financial and professional services, and agricultural production.

Table of Contents

The following tables provide detail of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS codes, and property type concentrations of our commercial real estate – income producing portfolios.



	September				June 30,				March 31,				December 31,				September 30,
	2017				2017 (b)				2017				2016				2016
			Pct of				Pct of				Pct of				Pct of				Pct of
($ in thousands)	Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total
Commercial & industrial loans:
Real Estate and Rental and Leasing	$	1,134,451	12	%	$	1,116,117	11	%	$	1,119,937	11	%	$	975,821	10	%	$	980,484	11	%
Mining, Quarrying, and Oil and Gas Extraction (a)		1,074,822	11			1,131,279	11			1,211,006	12			1,320,294	14			1,311,480	15
Health Care and Social Assistance		1,023,939	10			1,084,644	11			1,076,164	11			1,010,135	11			953,900	10
Public Administration		832,638	8			848,543	8			839,005	8			796,742	8			717,629	8
Manufacturing (a)		726,339	7			769,161	8			769,118	8			729,926	8			637,194	7
Retail Trade (a)		761,418	7			774,414	8			755,059	8			682,775	7			632,175	7
Finance and Insurance		559,092	5			503,551	5			478,473	5			507,339	5			451,469	5
Wholesale Trade (a)		513,086	5			492,910	5			490,569	5			486,940	5			461,133	5
Construction		564,444	6			521,926	5			519,663	5			478,926	5			447,206	5
Transportation and Warehousing (a)		563,263	6			569,923	6			556,468	5			468,377	5			428,936	5
Educational Services		438,247	4			434,955	4			428,248	4			421,035	4			421,114	5
Professional, Scientific, and Technical Services (a)		356,560	3			371,055	4			362,610	4			340,323	4			339,642	4
Other Services (except Public Administration)		349,711	3			348,080	3			342,155	3			308,802	3			292,669	3
Accommodation and Food Services		340,551	3			305,421	3			338,241	3			270,693	3			295,625	3
Other (a)		966,882	10			899,457	8			835,022	8			722,610	8			665,097	7
Total commercial & industrial loans	$	10,205,443	100	%	$	10,171,436	100	%	$	10,121,738	100	%	$	9,520,738	100	%	$	9,035,753	100	%

(a) The Company's energy related lending portfolio includes certain balances within each of these selected industry categories as the definition is based on source of revenue. The energy related lending portfolio totaled $1.1 billion, $1.2 billion, $1.4 billion, $1.4 billion, and $1.4 billion, at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.

(b) June 30, 2017 reflects reclassifications from the previous filing for the FNBC transactions.

At September 30, ~~2016,~~2017, commercial and industrial (“C&I”) loans, including both non-real estate and owner occupied real estate secured loans, totaled approximately $9$10.2 billion, an increase of ~~$180~~$34.0 million, or 2%0.3%, from ~~December 31, 2015.~~June 30, 2017. Included in C&I are ~~$1.4~~$1.1 billion in ~~energy-related~~energy related loans, which are comprised of credits to both the exploration and production segment and the support services segment. Energy related loans comprised ~~8.7%~~6.0% of total loans at September 30, ~~2016. The $81 million linked-quarter decrease~~2017, down from 12.4% in fourth quarter of 2014, the beginning of the downturn of the energy ~~portfolio resulted from payoffs~~cycle. Payoffs and paydowns of approximately ~~$141~~$142 million and charge-offs of approximately $5$8 million were partially offset by approximately ~~$65~~$52 million ofin draws on existing ~~lines.~~lines of credit. Management has a strategic target to bring the level of energy loans to total loans to 5%.

The Bank lends mainly to ~~middle-market~~middle market and smaller commercial entities, although it participates in larger ~~shared-credit~~shared credit loan facilities. Shared national credits funded at September 30, ~~2016~~2017 totaling approximately ~~$2.1~~$2.0 billion, or ~~13%~~11% of total loans, were down ~~approximately $102~~$75 million compared to June 30, 2017 and down $41 million from ~~June~~September 30, ~~2016 and up $43 million from December 31, 2015.~~2016. Approximately ~~$917~~$718 million of shared national credits were with ~~energy-related~~energy related customers at September 30, ~~2016,~~2017, down approximately ~~$62~~$72 million from June 30, ~~2016~~2017 and down ~~$39~~$199 million from ~~December 31, 2015.~~September 30, 2016.

Commercial real estate – income producing loans totaled approximately $2$2.5 billion at September 30, ~~2016,~~2017, an increase of ~~$437~~$110 million, or ~~28%~~5%, from ~~December 31, 2015. Construction and land development loans, totaling approximately $0.9 billion at September~~June 30, ~~2016, decreased approximately $205 million from December 31, 2015.~~2017. The ~~year-to-date change~~majority of the increase in commercial real estate – income producing loans was related to the hotel/motel and ~~construction and land development loans partially resulted from the transfer upon completion of a number of construction permanent loans from construction to~~retail property type. The following table details commercial real estate – income ~~producing.~~

~~Residential mortgages and consumer loans decreased $12 million and $32 million, respectively, during~~producing by property types for the ~~first nine months of 2016.~~last five quarters.



	September 30,				June 30,				March 31,				December 31,				September 30,
	2017				2017 (a)				2017				2016				2016
			Pct of				Pct of				Pct of				Pct of				Pct of
($ in thousands)	Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total
Commercial real estate - income producing loans:
Retail	$	550,720	22	%	$	511,708	22	%	$	565,673	23	%	$	466,168	22	%	$	483,026	24	%
Office		472,169	19			481,626	20			482,121	19			371,029	19			382,191	19
Multifamily		339,656	13			347,583	15			444,188	18			346,612	17			314,539	16
Industrial		299,796	12			296,996	12			307,170	12			289,482	14			292,037	15
Hotel/Motel		327,048	13			269,985	11			268,138	11			179,016	9			129,209	6
Other		522,419	21			493,775	21			437,814	17			361,583	19			389,307	20
Total commercial real estate - income producing loans	$	2,511,808	100	%	$	2,401,673	100	%	$	2,505,104	100	%	$	2,013,890	100	%	$	1,990,309	100	%

(a) June 30, 2017 reflects reclassifications from the previous filings for the FNBC transactions.

4853

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Construction and land development loans, totaling approximately $1.4 billion at September 30, 2017, increased approximately $60 million from June 30, 2017. Residential mortgages and consumer loans increased $103 million and $6 million respectively, during the third quarter of 2017.

Allowance for Loan Losses and Asset Quality

The Company's total allowance for loan losses was ~~$236.1~~$223.1 million at September 30, ~~2016,~~2017, compared to ~~$181.2~~$221.9 million at ~~December 31, 2015. The allowance maintained on the non-purchased credit impaired portion of the loan portfolio totaled $216.4 million, a $9.9 million linked-quarter increase.~~June 30, 2017. The ratio of the allowance for loan losses to period-end loans ~~was 1.47% at September 30, 2016,~~decreased 1 bp to 1.19%, compared to ~~1.41%~~1.20% at June 30, ~~2016.~~2017. The ~~third quarter~~ increase in allowance is primarily driven by higher non-energy reserves due to continued growth and diversification of that portfolio. Energy prices improved compared the prior quarter and have remained relatively stable. Energy exposure and criticized loan levels continued to decline in all portfolios. Management believes the allowance ~~reflects increases~~level for the energy portfolio, as built in ~~reserves across all portfolios, including increases of $7 million in energy-related loans, $2 million in retail loans and $1 million in non-energy commercial loans.~~

~~During the third quarter of 2016, Hancock recorded a total provision for loan losses of $19.0 million, up $1.8 million from $17.2 million in the second quarter of 2016.~~ previous quarters, remains adequate.

Net charge-offs from the non-purchased credit impaired loan portfolio were ~~$9.5~~$11.8 million, or ~~0.24%~~0.25%, of average total loans on an annualized basis in the third quarter of ~~2016 compared to $7.8~~2017, up from $6.0 million, or ~~0.20%~~0.13%, of average total loans in the second quarter of ~~2016. Increased losses occurred~~2017. Net charge-offs to energy credits in ~~all portfolios, due to both higher~~the third quarter of 2017 totaled $3.6 million, consisting of gross charge-offs of ~~$1.1~~$7.6 million, ~~and lower~~net of recoveries of ~~$0.6~~$4.0 million. ~~Energy losses~~There were ~~slightly higher~~no charges-offs related to energy credits in ~~third~~the second quarter ~~2016 at $4.4~~of 2017. Third quarter residential mortgage charge-offs were up $1.4 million compared to ~~$4.0 million in~~ second quarter ~~2016.~~ 2017 due largely to a single credit and not necessarily indicative of a portfolio trend. Consumer loan charge-offs also increased $1.1 million compared to second quarter, however, was lower than first and fourth quarters of 2017 and 2016, respectively.

The following table provides a breakout of the Company’s allowance for loan ~~losses~~loss for the energy portfolio, allocated by sector, atas of September 30, ~~2016.~~2017.



(in millions)	Outstanding Balance		Allocated Allowance for Loan and Lease Losses		Allowance for Loan and Lease Losses as a % of Loans			Outstanding Balance		Allocated Allowance for Loan and Lease Losses		Allowance for Loan and Lease Losses as a % of Loans
Upstream (reserve-based lending)	$	458	$	24		5.2	%	$	380	$	18.2		4.8	%
Midstream		79		1		1.9			55		0.7		1.2
Support - drilling		172		25		14.4			153		12.8		8.4
Support - nondrilling		691		68		9.9			545		48.1		8.8
Total	$	1,400	$	118		8.5	%	$	1,133	$	79.8		7.0	%

Management continues to closely monitor the impact that the sustained decrease in oil and natural gas prices will have on the ability of the Company’s ~~energy-related~~energy related customers to service their debt. Part of the ongoing monitoring includes a review of customers’ balance sheets, leverage ratios, collateral values and other critical lending metrics. As previously noted, even with improving oil prices, management expects a continued lag in the recovery of energy service and support credits. Many reserve based lending credits are showing signs of improvement given the stabilization of oil prices. We continue to expect lagging improvement in the support sector, with the expectation for land based services to recover more quickly than drilling and non-drilling services that support offshore production. As new information becomes available, additional risk rating downgrades could occur, which could lead to additional loan loss provisions, a higher allowance for loan losses, and additional charge-offs. Management believes that any additional losses will be manageable and that capital will remain solid. Based upon information currently available, management ~~estimates~~is maintaining the estimate that net charge-offs from ~~energy-related~~energy related credits could approximate $65 million to $95 million over the duration of the cycle, which started in the fourth quarter of 2014. To date, the Company has recorded approximately ~~$30~~$68 million in ~~energy-related~~energy related net charge-offs since the start of the ~~cycle.~~cycle including the net charge-off of $3.6 million in the current quarter. See Item 7 in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 for further discussion of ~~the Company’s~~our energy portfolio and its potential impact on the allowance for loan losses.

4954

Table of Contents

The following table sets forth activity in the allowance for loan losses for the periods ~~indicated.~~indicated:



	Three Months Ended									Nine Months Ended						Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,						September 30,			June 30,			September 30,			September 30,
(in thousands)	2016			2016			2015			2016			2015			2017			2017			2016			2017			2016
Allowance for loan losses at beginning of period	$	226,086		$	217,794		$	131,087		$	181,179		$	128,762		$	221,865		$	213,550		$	226,086		$	229,418		$	181,179
Loans charged-off:
Non-purchased credit impaired loans:
Non-purchased credit impaired loans (a):
Commercial non real estate		5,292			4,545			853			27,504			3,068			9,029			1,427			5,292			35,247			27,504
Commercial real estate - owner-occupied		461			416			286			1,660			664			10			488			461			527			1,660
Total commercial & industrial		5,753			4,961			1,139			29,164			3,732			9,039			1,915			5,753			35,774			29,164
Commercial real estate - income producing		—			76			317			191			464			—			153			—			160			191
Construction and land development		235			482			655			827			1,483			479			77			235			593			827
Residential mortgages		316			417			159			908			1,451			1,693			401			316			2,383			908
Consumer		6,135			5,425			3,702			17,403			10,431			7,584			6,568			6,135			22,691			17,403
Total non-purchased credit impaired charge-offs		12,439			11,361			5,972			48,493			17,561			18,795			9,114			12,439			61,601			48,493
Purchased credit impaired loans:
Commercial non real estate		—			—			326			—			1,425			—			—			—			—			—
Commercial real estate - owner-occupied		—			—			364			28			379			—			—			—			—			28
Total commercial & industrial		—			—			690			28			1,804			—			—			—			—			28
Commercial real estate - income producing		—			—			—			1			2,353			—			—			—			—			1
Construction and land development		—			—			121			18			406			19			4			—			77			18
Residential mortgages		68			23			580			91			748			16			27			68			102			91
Consumer		—			8			—			8			140			—			14			—			153			8
Total purchased credit impaired charge-offs		68			31			1,391			146			5,451			35			45			68			332			146
Total charge-offs		12,507			11,392			7,363			48,639			23,012			18,830			9,159			12,507			61,933			48,639
Recoveries of loans previously charged-off:
Non-purchased credit impaired loans:
Non-purchased credit impaired loans (a):
Commercial non real estate		907			993			538			2,709			2,589			4,621			880			907			6,437			2,709
Commercial real estate - owner-occupied		49			197			114			287			249			94			43			49			337			287
Total commercial & industrial		956			1,190			652			2,996			2,838			4,715			923			956			6,774			2,996
Commercial real estate - income producing		405			124			95			673			386			257			23			405			655			673
Construction and land development		297			520			698			1,422			2,006			285			268			297			1,001			1,422
Residential mortgages		17			179			129			497			578			54			154			17			316			497
Consumer		1,233			1,545			927			4,272			3,418			1,701			1,761			1,233			5,176			4,272
Total non-purchased credit impaired recoveries		2,908			3,558			2,501			9,860			9,226			7,012			3,129			2,908			13,922			9,860
Purchased credit impaired loans:
Commercial non real estate		68			5			1,685			76			1,699			3			—			68			5			76
Commercial real estate - owner-occupied		43			85			472			163			937			17			18			43			110			163
Total commercial & industrial		111			90			2,157			239			2,636			20			18			111			115			239
Commercial real estate - income producing		—			1			20			2			20			—			—			—			—			2
Construction and land development		45			18			490			98			896			10			16			45			49			98
Residential mortgages		30			2			3			33			5			4			14			30			23			33
Consumer		6			67			49			112			185			1			42			6			72			112
Total purchased credit impaired recoveries		192			178			2,719			484			3,742			35			90			192			259			484
Total recoveries		3,100			3,736			5,220			10,344			12,968			7,047			3,219			3,100			14,181			10,344
Net charge-offs - non-purchased credit impaired loans		9,531			7,803			3,471			38,633			8,335			11,783			5,985			9,531			47,679			38,633
Net charge-offs - purchased credit impaired loans		(124)			(147)			(1,328)			(338)			1,709			—			(45)			(124)			73			(338)
Total net charge-offs		9,407			7,656			2,143			38,295			10,044			11,783			5,940			9,407			47,752			38,295
Provision for loan losses before FDIC benefit - purchased credit impaired loans		(6)			(1,059)			115			(3,750)			(3,370)			180			(912)			(6)			(2,968)			(3,750)
Benefit attributable to FDIC loss share agreement		(410)			1,248			(552)			3,027			1,984			—			696			(410)			2,526			3,027
Provision for loan losses non-purchased credit impaired loans		19,388			17,007			10,517			96,927			24,228			12,860			15,167			19,388			44,424			96,927
Provision for loan losses, net		18,972			17,196			10,080			96,204			22,842			13,040			14,951			18,972			43,982			96,204
Increase (decrease) in FDIC loss share receivable		410			(1,248)			552			(3,027)			(1,984)			—			(696)			410			(2,526)			(3,027)
Allowance for loan losses at end of period	$	236,061		$	226,086		$	139,576		$	236,061		$	139,576		$	223,122		$	221,865		$	236,061		$	223,122		$	236,061
Ratios:
Gross charge-offs - non-purchased credit impaired to average loans		0.31	%		0.28	%		0.16	%		0.41	%		0.17	%		0.40	%		0.20	%		0.31	%		0.46	%		0.41
Recoveries - non-purchased credit impaired to average loans	��	0.07	%		0.09	%		0.07	%		0.08	%		0.09	%		0.15	%		0.07	%		0.07	%		0.10	%		0.08
Net charge-offs - non-purchased credit impaired to average loans		0.24	%		0.20	%		0.09	%		0.32	%		0.08	%		0.25	%		0.13	%		0.24	%		0.35	%		0.32
Allowance for loan losses to period-end loans		1.47	%		1.41	%		0.95	%		1.47	%		0.95	%		1.19	%		1.20	%		1.47	%		1.19	%		1.47

(a)

Non-purchased credit impaired loans includes originated and acquired loans.

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The following table sets forth nonperforming assets by type for the periods indicated, consisting of nonaccrual loans, troubled debt restructurings and foreclosed and surplus ORE and other foreclosed assets. Loans past due 90 days or more and still accruing are also disclosed.



	September 30,			December 31,			September 30,			December 31,
(in thousands)	2016			2015			2017			2016
Loans accounted for on a nonaccrual basis: (a)
Commercial non-real estate	$	195,807		$	83,677		$	76,933		$	170,703
Commercial non-real estate - restructured		44,491			5,066			112,049			78,334
Total commercial non-real estate		240,298			88,743			188,982			249,037
Commercial real estate - owner occupied		14,298			8,841			13,704			13,432
Commercial real estate - owner-occupied - restructured		1,033			1,160			601			981
Total commercial real estate - owner-occupied		15,331			10,001			14,305			14,413
Total commercial & industrial		255,629			98,744			203,287			263,450
Commercial real estate - income producing		8,342			10,225			8,766			13,147
Commercial real estate - income producing - restructured		976			590			5,594			807
Total commercial real estate - income producing		9,318			10,815			14,360			13,954
Construction and land development		3,927			15,993			3,137			3,652
Construction and land development - restructured		1,003			1,301			155			898
Total construction and land development		4,930			17,294			3,292			4,550
Residential mortgage		20,488			23,082			33,495			22,814
Residential mortgage - restructured		693			717			1,179			851
Total residential mortgage		21,181			23,799			34,674			23,665
Consumer		11,752			9,061			13,946			12,351
Consumer - restructured								117			—
Total consumer								14,063			12,351
Total nonaccrual loans	$	302,810		$	159,713		$	269,676		$	317,970
Restructured loans - still accruing:
Commercial non-real estate	$	3,938		$	—		$	89,913		$	32,887
Commercial real estate - owner occupied		572			1,638			1,600			493
Total commercial & industrial		4,510			1,638			91,513			33,380
Commercial real estate - income producing		3,024			2,473			3,864			5,939
Construction and land development		19			20			—			—
Residential mortgage		263			106			971			259
Consumer		243			60			387			240
Total restructured loans - still accruing		8,059			4,297			96,735			39,818
Total nonperforming loans		310,869			164,010			366,411			357,788
ORE and foreclosed assets		19,806			27,133			21,219			18,943
Total nonperforming assets (b)	$	330,675		$	191,143		$	387,630		$	376,731
Loans 90 days past due still accruing	$	4,933		$	7,653		$	28,850		$	3,039
Total restructured loans	$	56,255		$	13,131		$	216,430		$	121,689
Ratios:
Nonperforming assets to loans plus ORE and foreclosed assets		2.06	%		1.22	%		2.06	%		2.25	%
Allowance for loan losses to nonperforming loans and accruing loans 90 days past due		74.75	%		105.54	%		56.45	%		63.58	%
Loans 90 days past due still accruing to loans		0.03	%		0.05	%		0.15	%		0.02	%

(a)

Nonaccrual loans and accruing loans past due 90 days or more do not include ~~PCI~~acquired credit-impaired loans ~~accounted for in pools with an accretable yield.~~which were written down to fair value upon acquisition and accrete interest income the remaining life of the loan.

(b)

Includes total nonaccrual loans, total restructured loans - still accruing and ORE and foreclosed assets.

Nonperforming assets totaled ~~$331~~$388 million at September 30, 2017, up $11 million, or 3%, from December 31, 2016, up $6$41 million, or 12%, from June 30, ~~2016~~2017 and ~~$140~~up $57 million from ~~December 31, 2015. Nonperforming loans increased approximately $147 million from December 31, 2015, of which approximately $129 million is attributable to the energy portfolio.~~September 30, 2016. During the third quarter of ~~2016,~~2017, total nonperforming loans increased approximately $38 million, and up $9 million ~~while~~compared to December 31, 2016. Most of the increase in nonperforming loans linked quarter was in nonenergy commercial, with approximately $13 million of the increase in the energy portfolio. ORE and other foreclosed assets ~~decreased~~increased approximately ~~$4 million.~~$3 million in the third quarter of 2017, due mostly to the transfer of consolidated bank-owned facilities. Nonperforming assets as a percent of total loans, ORE and other foreclosed assets was 2.06% at September 30, ~~2016,~~2017, up 418 bps from June 30, 2017. This ratio was at 2.25% at December 31, 2016 and ~~up 84 bps from December 31, 2015.~~2.06% at September 30, 2016.

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Short-Term Investments

Short-term liquidity assets are held to ensure funds are available to meet the cash flow needs of both borrowers and depositors. Short-term liquidity investments, including interest-bearing bank deposits and federal funds sold, were ~~$129~~$112 million at September 30, ~~2016.~~2017. This ~~total was down $24~~represents a decrease of $15 million and $17 million from ~~prior quarter~~June 30, 2017 and ~~down $437 million from December 31, 2015.~~September 30, 2016, respectively. These assets are highly volatile on a daily basis depending upon movement in customer loan and deposit accounts. Average short-term investments of ~~$428~~$195 million for the third quarter of ~~2016~~2017 were ~~up $19~~down $510 million compared to the second quarter of ~~2016, but~~2017, and down ~~$16~~$233 million ~~or 4%,~~ compared to the ~~fourth~~third quarter of ~~2015.~~2016. Year-to-date average short-term investments were $435 million, a decrease of $17 million from the same period in 2016. See the Liquidity section above for further discussion regarding the Company’s management of its short-term investment portfolio and ~~its~~the impact ~~on the Company’s~~upon its liquidity in general.

Deposits

Total deposits were ~~$18.9~~$21.5 billion at September 30, ~~2016,~~2017, up ~~slightly~~$91 million, or less than 1% from June 30, ~~2016,~~2017, and up ~~$537 million, or 3%, from December 31, 2015. Total deposits increased $1.4~~$2.6 billion, or 8%14%, from September 30, ~~2015.~~2016. Average deposits for the third quarter of ~~2016~~2017 were ~~$18.7~~$21.3 billion, ~~unchanged~~up $417 million, or 2%, from the second quarter of ~~2016~~2017 and up ~~$1.4~~$2.6 billion, or 14%, from the third quarter of ~~2015.~~2016. The ~~growth is primarily attributable to~~deposits assumed in the ~~deposit growth initiatives implemented during 2015 and, compared to 2015, greater utilization~~FNBC transactions made up $1.6 billion of the ~~Company’s brokered~~increase in both deposits ~~program. Because of seasonality throughout~~and average deposits over the ~~year, year-over-year comparisons of deposit levels are more useful than those compared to the prior year end.~~third quarter 2016.

Noninterest-bearing demand deposits were ~~$7.5~~$7.9 billion at September 30, ~~2016,~~2017, up ~~$392~~$9 million, or less than 1%, linked quarter, and $353 million, or 5%, ~~linked quarter, and were up $1.5 billion year-over-year. In~~year over year. The FNBC transactions added noninterest-bearing demand deposits of $259 million, compared to the ~~fourth~~third quarter of 2015, the Company redesigned its deposit product offerings, resulting in a transfer of approximately $1.2 billion of balances from interest-bearing transaction accounts to noninterest-bearing demand deposits. Management believes that the benefits included in the new suite of consumer products will minimize migration to other interest-bearing products in a rising interest rate environment. 2016. Noninterest-bearing demand deposits comprised ~~almost 40%~~37% of total deposits at September 30, ~~2016, compared to 38% at~~2017 and June 30, ~~2016,~~2017, and ~~35%~~40% at September 30, ~~2015.~~ 2016.

Interest-bearing transaction and savings accounts of ~~$6.6~~$7.9 billion at September 30, ~~2016,~~2017 decreased ~~$134~~$509 million, or 2%6%, compared to ~~the second quarter. Excluding the $1.2~~June 30, 2017 and $1.3 billion, ~~of deposits transferred to noninterest-bearing accounts, these deposits were up almost $500 million~~or 19%, compared to September 30, ~~2015, mainly as a result~~2016. The majority of the ~~deposit initiatives.~~ increase over the third quarter of 2016 was related to the FNBC transactions.

Interest-bearing public fund deposits totaled ~~$2.4~~$2.8 billion at September 30, ~~2016, up slightly~~2017, down $225 million, or 9% from June 30, ~~2016. This category was~~2017 and up ~~$141~~$368 million, or ~~6% compared to December 31, 2015 and up $626 million, or 35%~~15% compared to September 30, ~~2015. These deposits are seasonal in nature with normal quarterly fluctuations.~~

2016. Time deposits other than public funds totaled ~~$2.3~~$3.0 billion at September 30, ~~2016. The $229~~2017 up $366 million ~~decrease~~ from June 30, ~~2016 was primarily due to a decrease~~2017, which includes an increase in brokered ~~CDs. As discussed in the Liquidity section, the Company uses brokered deposits, subject to strict parameters regarding terms and rates, as a short-term funding source.~~CD’s of $317 million.

Short-Term Borrowings

At September 30, ~~2016,~~2017, short-term borrowings totaled ~~$1.1~~$1.7 billion, down ~~$19~~$74 million from June 30, ~~2016,~~2017, as FHLB borrowings ~~increased $64~~decreased $28 million, ~~or 9%,~~ and securities sold under agreements to repurchase decreased $74 million, or 18%. Compared to year-end 2015, short-term borrowings were down $348 million, or 24%. FHLB borrowings decreased $161 million, or 18%, and securities sold under agreements to repurchase decreased $178 million, or 35%.increased $30 million. Short-term borrowings ~~at the end of the current quarter were up $27~~increased $661 million from September 30, ~~2015.~~ 2016, due to both an increase in the Company’s FHLB borrowings and the assumption of $511 million in short-term FHLB borrowings as part of the FNBC I transaction. The Company used a portion of the excess liquidity acquired in the FNBC II transaction to pay down FHLB debt.

Average quarter-to-date short-term borrowings of ~~$1.4~~$1.9 billion in the third quarter of ~~2016~~2017 were ~~relatively flat~~down $323 million, or 14% compared to the second quarter of ~~2016. Year-to-date, average short-term borrowings in 2016 were~~2017, and up ~~$471~~$543 million, ~~in order~~or 40% compared to ~~help fund~~ the ~~$2.2 billion increase in average earning assets.~~third quarter of 2016. Customer repurchase agreements and FHLB borrowings are the major sources of short-term borrowings. Customer repurchase agreements are offered mainly to commercial customers to assist them with their cash management strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for corporate or investment purposes. While customer repurchase agreements provide a recurring source of funds to the Bank, the amounts available over time can be volatile. FHLB borrowings are funds from the Federal Home Loan Bank that are collateralized by single family and commercial real estate loans included in the ~~bank’s~~Bank’s loan portfolio, subject to specific criteria.

Long-Term Debt

At September 30, 2017, long-term debt totaled $331 million, down $77 million from June 30, 2017. The Company was in compliance with all contractual covenants, as amended, related to long-term debt as of September 30, 2017.

OFF-BALANCE SHEET ARRANGEMENTS

Loan Commitments and Letters of Credit

In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of their customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans. Under regulatory capital guidelines, the Company must include unfunded commitments meeting certain criteria in its risk-weighted capital calculation.

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Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and has not violated other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent future cash requirements of the Company.

A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of credit primarily to provide credit enhancement to its customers’ other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.

The contract amounts of these instruments reflect the Company's exposure to credit risk. The Company undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support.

The following table shows the commitments to extend credit and letters of credit at September 30, ~~2016~~2017 according to expiration date.



													Expiration Date
			Expiration Date
			Less than		1-3		3-5		More than				Less than		1-3		3-5		More than
(in thousands)	Total		1 year		years		years		5 years		Total		1 year		years		years		5 years
Commitments to extend credit	$	5,821,347	$	2,755,772	$	1,322,794	$	960,599	$	782,182	$	6,651,407	$	2,991,344	$	1,571,652	$	1,177,179	$	911,232
Letters of credit		331,919		231,932		81,186		18,801		—		356,374		310,052		35,539		10,651		132
Total	$	6,153,266	$	2,987,704	$	1,403,980	$	979,400	$	782,182	$	7,007,781	$	3,301,396	$	1,607,191	$	1,187,830	$	911,364

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no material changes or developments with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2015, except as noted under Goodwill Impairment Testing below.~~2016.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with those generally practiced within the banking industry which require management to make estimates and assumptions about future events. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, and the resulting estimates form the basis for making judgments about the carrying values of certain assets and liabilities not readily apparent from other sources. Actual results could differ significantly from those estimates.

~~Goodwill Impairment Testing~~

Goodwill, which represents the excess of cost over the fair value of the net assets of an acquired business, is not amortized but is assessed for impairment on an annual basis, or more often if events or circumstances indicate there may be impairment. The impairment test compares the estimated fair value of a reporting unit with its net book value. The Company has assigned all goodwill to one reporting unit that represents overall banking operations. The fair value of the reporting unit is based on valuation techniques that market participants would use in an acquisition of the whole unit, such as estimated discounted cash flows, the quoted market price of Hancock’s stock adjusted for a control premium and observable average price-to-earnings and price-to-book multiples of our competitors. If the unit’s fair value is less than its carrying value, an estimate of the implied fair value of the goodwill is compared to the goodwill’s carrying value and any impairment recognized.

The Company completed its annual impairment test of goodwill as of September 30, 2015 and concluded that there was no impairment of goodwill. We updated our annual test as of December 31, 2015 due to a number of events occurring during the fourth quarter of 2015 indicating the potential for impairment. The Company again concluded there was no impairment (see Critical Accounting Policies and Significant Estimates section of the Company’s Annual Report on Form 10K for the year ended December 31, 2015). Due to the continued challenges in the energy sector, the Company has tested for goodwill impairment quarterly during 2016 with the most recent test as of September 30, 2016. Each test in 2016 resulted in no goodwill impairment.

Consistent with December 31, 2015, the Company used multiple approaches to measure its fair value at September 30, 2016. These included an income approach using the discounted net present value of estimated future cash flows, a transaction or price-to-book multiple approach using the actual price paid by similar companies in recent acquisition transactions and a market capitalization

~~Table of Contents~~

~~approach using both the Company’s actual market capitalization at September 30, 2016 and an estimated market capitalization using a price-to-earnings multiple based on the Company’s 2017 forecast.~~

The results from each of the approaches were relatively similar with little disparity and were combined and weighted to derive an estimated fair market value for the Company. Equal weightings were assigned to each of the four approaches. The weighted average of the four approaches resulted in a fair market value approximately 16% higher than net book value at September 30, 2016.

Each of the valuation techniques used by the Company requires significant assumptions. Depending upon the specific approach, assumptions are made concerning the economic environment, expected net interest margins, growth rates, discount rates for cash flows, control premiums, price-to-earnings multiples, and price-to-book multiples. Also, assumptions are made to determine the appropriate individual weighting to be used for each approach in determining the fair market value. Changes to any one of these assumptions could result in significantly different results.

~~Non-GAAP Financial Measures~~

Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used to describe Hancock’s performance. A reconciliation of those measures to GAAP measures are provided above within the appropriate section of this Item.

Consistent with Securities and Exchange Commission Industry Guide 3, the Company presents net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (“te”) basis. The te basis adjusts for the tax-favored status of net interest income from certain loans and investments using a federal tax rate of 35% to increase tax-exempt interest income to a taxable-equivalent basis. The Company believes this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.

Over the past several quarters we have disclosed our focus on strategic initiatives that were designed to replace declining levels of purchase accounting income from acquisitions with improvement in core income, which the Company defines as income excluding net purchase accounting income. The Company presents core income non-GAAP measures including core net interest income and core net interest margin, core revenue and core pre-tax, pre-provision profit. These measures are provided to assist the reader with a better understanding of the Company’s performance period over period as well as providing investors with assistance in understanding the success management has experienced in executing its strategic initiatives.

~~We define~~ ~~Core Net Interest Income~~ ~~as net interest income excluding net purchase accounting accretion resulting from the fair market value adjustments related to acquired operations. We define~~ ~~Core Net Interest Margin~~ ~~as reported core net interest income (te), annualized, expressed as a percentage of average earning assets.~~

~~We define~~ ~~Core Revenue~~ ~~as core net interest income (te) and noninterest income less the amortization of the FDIC loss share receivable related to loans acquired in an FDIC assisted transaction.~~

~~We define~~ ~~Core Pre-Tax, Pre-Provision Income~~ as core revenue less noninterest expense, excluding nonoperating items. Management believes that core pre-tax, pre-provision profit is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 14 to our Consolidated Financial Statements included elsewhere in this report.

~~FORWARD-LOOKING STATEMENTS~~

This report contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements that we may make include statements regarding balance sheet and revenue growth, the provision for loans losses, loan growth expectations, management’s predictions about charge-offs for loans, including energy related credits, the impact of volatility of oil and gas prices on our energy portfolio, and the downstream impact on businesses that support the energy sector, especially in the Gulf Coast region, deposit trends, credit quality trends, net interest margin trends, future expense levels, success of revenue-generating initiatives, projected tax rates, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts such as accretion levels, possible repurchases of shares under stock buyback programs, and the financial impact of regulatory requirements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and

~~Table of Contents~~

“could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015 and in other periodic reports that we file with the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our net income is materially dependent on ~~our~~ net interest income. The Company’s primary market risk is interest rate risk ~~that~~which stems from uncertainty with respect to absolute and relative levels of future market interest rates that affect our financial products and services. In ~~an attempt~~order to manage ~~our exposure~~the exposures to interest rate risk, management measures the sensitivity of ~~our~~ net interest income and cash flows under various market interest rate scenarios, establishes interest rate risk management policies and implements asset/liability management strategies designed to produce a relatively stable net interest margin under varying rate environments.

The Company measures its interest rate sensitivity primarily by running various net interest income simulations. The Company’s balance sheet is asset sensitive over a two-year period due to ~~rising interest rates under various shock scenarios.~~a larger volume of rate sensitive assets than rate sensitive liabilities. The model measures annual net interest income sensitivity relative to a base case scenario and incorporates assumptions regarding balance sheet growth and the mix of earning assets and funding sources as well as pricing, ~~re-pricing~~repricing and maturity characteristics of the existing and projected balance sheet.

Table of Contents

The table below presents the results of simulations run as of September 30, ~~2016~~2017 for year 1 and year 2, assuming the indicated instantaneous and sustained parallel shift in the yield curve at the measurement date. ~~These~~The results ~~indicate that we are slightly asset sensitive~~demonstrate an increase in net interest income as rates rise and a decline should rates fall as compared to the stable rate environment assumed for the base case.

Net Interest Income (te) at Risk

Estimated

Change in

increase (decrease)

interest rate

in net interest income (te)

(basis points)

Year 1

Year 2

+100

2.05
%

2.78
%

+200

3.69
%

4.57
%

+300

4.81
%

5.38
%



Net Interest Income (te) at Risk
	Estimated
Change in	increase (decrease)
interest rate	in net interest income (te)
(basis points)	Year 1		Year 2
(100)	(2.66)	%	(5.56)	%
+100	2.16	%	3.29	%
+200	4.07	%	5.91	%
+300	5.39	%	7.61	%

Note: Decrease in interest rates ~~discontinued~~limited to 100 basis points in the current rate environment

The foregoing disclosures related to our market risk should be read in conjunction with our audited consolidated financial statements, related notes and management’s discussion and analysis for the year ended December 31, ~~2015~~2016 included in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Item 4. Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, ~~2016,~~2017, the Company’s disclosure controls and procedures were effective.

Our management, including the Chief Executive Officer and Chief Financial Officer, identified no change in our internal control over financial reporting that occurred during the ~~nine-month~~three month period ended September 30, ~~2016,~~2017, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company, including subsidiaries, is party to various legal proceedings arising in the ordinary course of business. We do not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a material adverse effect on our consolidated financial position or liquidity.

Item 1A. Risk Factors

There were no changes to the risk factors that were previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

The risks described may not be the only risks facing us. Additional risks and uncertainties not currently known to us or that are currently considered to not be material also may materially adversely affect our business, financial condition, and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds

On August 28, 2015 the Company approved a stock purchase program authorizing the repurchase of up to 5% of its outstanding stock, or approximately 3.9 million shares, until September 2016. The plan expired on September 30, 2016. Under this plan, the Company repurchased 741,393 shares of its common stock at an average price of $27.44 per share. There were no share repurchases under this plan in 2016.

None.

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Item 6. ~~Exhibits.~~Exhibits

(a) Exhibits:



Exhibit		Filed	Incorporated by Reference
Number	Description	Herewith	Form	Exhibit	Filing Date
3.1	Composite Articles of the Company		10-K	3.1	2/24/2017
3.2	Amended and Restated Bylaws		10-K	3.2	2/24/2017
10.1	Notice of Lease by and between HPT New Orleans OSS, LLC and Whitney Bank	X
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101	XBRL Interactive Data	X

~~Exhibit~~

~~Number~~

~~Description~~

~~3.1~~

Composite Articles of the Company (filed as Exhibit 2.1 to the Company's Form 10-K for the year ended December 31, 2014 (file No. 01-36872) filed with the Commission on February 27, 2015 and incorporated herein by reference.

~~3.2~~

Amended and Restated Bylaws, dated October 29, 2015 (filed as Exhibit 3.2 to the Company's Form 8-K (File No. 0-13089) filed with the Commission on November 4, 2015 and incorporated herein by reference.

~~10.1~~

Separation and Restrictive Covenant Agreement, between the Company and Edward G. Francis, dated April 7, 2016 (filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 2016 (file No. 01-36872) filed with the Commission on May 9, 2016 and incorporated herein by reference).

~~10.2~~

First Amendment to Credit Agreement and Waiver, dated May 3, 2016 (filed as Exhibit 10.4 to the Company's Form 10-Q for the quarter ended March 31, 2016 (file No. 01-36872) filed with the Commission on May 9, 2016 and incorporated herein by reference).

~~31.1~~

~~Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~

~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1~~

~~Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~

~~Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101~~

~~XBRL Interactive Data.~~

5760

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Hancock Holding Company

	By:	/s/ John M. Hairston
		John M. Hairston
		President & Chief Executive Officer
		(Principal Executive Officer)

		/s/ Michael M. Achary
		Michael M. Achary
		Chief Financial Officer
		(Principal Financial Officer)

	Date:	November ~~8, 2016~~7, 2017

5861



				Unamortized
				Debt
				Issuance
(in thousands)		Principal		Costs
Subordinated notes payable, maturing June 2045	$	150,000	$	5,000
Subordinated notes payable, maturing April 2017		95,511		-
Term note payable, maturing December 2018		111,575		642
Other long-term debt		112,266		-
Total	$	469,352		5,642



	Available		HTM Securities				Loss on
	for Sale		Transferred		Employee		Effective Cash
(in thousands)	Securities		from AFS		Benefit Plans		Flow Hedges		Total
Balance, December 31, 2014	$	18,001	$	(19,074)	$	(48,626)	$	(375)	$	(50,074)
Other comprehensive income before income taxes:
Net change in unrealized gain		163		—		—		2,011		2,174
Reclassification of net (gain) losses realized and included in earnings		(165)		—		2,373		—		2,208
Valuation adjustment for employee benefit plans		—		—		(959)		—		(959)
Amortization of unrealized net loss on securities transferred to HTM		—		2,609		—		—		2,609
Income tax (benefit) expense		(73)		953		513		732		2,125
Balance, September 30, 2015	$	18,072	$	(17,418)	$	(47,725)	$	904	$	(46,167)
Balance, December 31, 2015	$	4,268	$	(16,795)	$	(67,890)	$	(178)	$	(80,595)
Other comprehensive income before income taxes:
Net change in unrealized gain		38,835		—		—		1,162		39,997
Reclassification of net (gain) losses realized and included in earnings		(1,435)		—		4,395		—		2,960
Valuation adjustment for employee benefit plans		—		—		(6,347)				(6,347)
Amortization of unrealized net loss on securities transferred to HTM		—		2,736		—		—		2,736
Income tax expense (benefit)		13,701		1,029		(714)		424		14,440
Balance, September 30, 2016	$	27,967	$	(15,088)	$	(69,128)	$	560	$	(55,689)