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 ~~June 30, 2017~~March 31, 2018


☐	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, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “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.

~~84,742,940~~85,287,037 common shares were outstanding as of ~~August 1, 2017.~~April 30, 2018.

Table of Contents

Hancock Holding Company

Index


Part I. Financial Information		Page Number
ITEM 1.	Financial Statements
	Consolidated Balance Sheets (unaudited) – ~~June 30, 2017 (unaudited)~~March 31, 2018 and December 31, ~~2016~~2017		5
	Consolidated Statements of Income (unaudited) – Three Months Ended March 31, 2018 and ~~Six months ended June 30,~~ 2017 ~~and 2016~~		6
	Consolidated Statements of Comprehensive Income (unaudited) – Three Months Ended March 31, 2018 and ~~Six months ended June 30,~~ 2017 ~~and 2016~~		7
	Consolidated Statements of Changes in Stockholders’ Equity - (unaudited) – ~~Six months ended June 30,~~Three Months Ended March 31, 2018 and 2017 ~~and 2016~~		8
	Consolidated Statements of Cash Flows (unaudited) - ~~Six months ended June 30, 2017~~Three Months Ended March 31, 2018 and ~~2016~~2017		9
	Notes to Consolidated Financial Statements (unaudited) – ~~June 30,~~March 31, 2018 and 2017		10
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		38 33
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		60 54
ITEM 4.	Controls and Procedures		61 54
Part II. Other Information
ITEM 1.	Legal Proceedings		61 55
ITEM 1A.	Risk Factors		61 55
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		61 56
ITEM 3.	Default on Senior Securities		N/A
ITEM 4.	Mine Safety Disclosures		N/A
ITEM 5.	Other Information		N/A
ITEM 6.	Exhibits		62 56
Signatures

Table of Contents

Hancock Holding Company

Glossary of Defined Terms

AFS – available for sale securities

AOCI – accumulated other comprehensive income or loss

ALLL– allowance for loan and lease losses

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

BOLI – Bank-owned life insurance

bp(s) – basis point(s)

C&I – commercial and industrial loans

Capital One – Capital One, National Association

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 – The former New Orleans, Louisiana based First NBC Bank that failed on April 28, 2017

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

HFC – Harrison Finance Company, a former consumer finance subsidiary

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

Table of Contents

Parent Company – Hancock Holding Company

PCI – purchased credit impaired loans

Repos – securities sold under agreements to repurchase

~~Table of Contents~~

SEC – U.S. Securities and Exchange Commission

Securities Act – Securities Act of 1933, as amended

Tax Act – Tax Cuts and Jobs Act of 2017

te – taxable equivalent adjustment, or the term used to indicate that a financial measure is presented on a fully taxable equivalent basis

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)



	June 30,		December 31,		March 31,		December 31,
(in thousands, except share data)	2017		2016
(in thousands, except per share data)					2018		2017
ASSETS
Cash and due from banks	$	365,225	$	372,689	$	253,860	$	386,948
Interest-bearing bank deposits		125,577		77,235		61,288		92,157
Federal funds sold		851		942		253		227
Securities available for sale, at fair value (amortized cost of $2,824,787 and $2,562,000)		2,794,382		2,516,908
Securities held to maturity (fair value of $2,866,529 and $2,470,117)		2,874,454		2,500,220
Securities available for sale, at fair value (amortized cost of $3,008,951 and $2,949,057)						2,915,648		2,910,869
Securities held to maturity (fair value of $2,952,295 and $2,962,010)						3,014,428		2,977,511
Loans held for sale		26,787		34,064		21,827		39,865
Loans		18,473,841		16,752,151		19,092,504		19,004,163
Less: allowance for loan losses		(221,865)		(229,418)		(210,713)		(217,308)
Loans, net		18,251,976		16,522,733		18,881,791		18,786,855
Property and equipment, net of accumulated depreciation of $237,304 and $231,127		365,345		361,612
Property and equipment, net of accumulated depreciation of $218,540 and $214,998						334,254		333,663
Prepaid expenses		24,985		18,038		29,669		28,015
Other real estate, net		17,996		18,884		13,963		14,862
Accrued interest receivable		75,787		65,887		80,812		82,191
Goodwill		740,265		621,193		745,523		745,523
Other intangible assets, net		101,694		87,757		85,021		90,640
Life insurance contracts		536,912		480,406		544,427		541,081
FDIC loss share receivable		3,234		16,219
Deferred tax asset, net		89,882		104,435		52,735		53,979
Other assets		235,217		176,080		261,838		251,700
Total assets	$	26,630,569	$	23,975,302	$	27,297,337	$	27,336,086
LIABILITIES AND STOCKHOLDERS' EQUITY								��
Liabilities
Liabilities:
Deposits
Noninterest-bearing	$	7,887,867	$	7,658,203	$	8,230,060	$	8,307,497
Interest-bearing		13,554,948		11,766,063		14,255,662		13,945,705
Total deposits		21,442,815		19,424,266		22,485,722		22,253,202
Short-term borrowings		1,810,907		1,225,406		1,452,097		1,703,890
Long-term debt		407,876		436,280		300,443		305,513
Accrued interest payable		8,024		9,574		11,801		8,680
Other liabilities		146,985		160,008		151,236		179,852
Total liabilities		23,816,607		21,255,534		24,401,299		24,451,137
Stockholders' equity
Stockholders' equity:
Common stock		291,358		291,358		292,716		292,716
Capital surplus		1,716,584		1,698,253		1,723,689		1,718,117
Retained earnings		910,459		850,689		1,060,182		1,008,518
Accumulated other comprehensive loss, net		(104,439)		(120,532)		(180,549)		(134,402)
Total stockholders' equity		2,813,962		2,719,768		2,896,038		2,884,949
Total liabilities and stockholders' equity	$	26,630,569	$	23,975,302	$	27,297,337	$	27,336,086
Common shares authorized (par value of $3.33 per share)		350,000		350,000		350,000		350,000
Common shares issued		87,495		87,495		87,903		87,903
Common shares outstanding		84,738		84,235		85,285		85,200



	Three months ended				Six months ended
	June 30,				June 30,				Three Months Ended
									March 31,
(in thousands, except per share data)	2017		2016		2017		2016		2018		2017
Interest income:
Loans, including fees	$	194,180	$	156,717	$	366,961	$	310,830	$	205,847	$	172,781
Loans held for sale		236		249		453		408		221		217
Securities-taxable		24,402		23,049		47,769		47,006		29,301		23,367
Securities-tax exempt		5,628		3,011		11,035		4,813		5,537		5,407
Short-term investments		1,731		480		2,474		1,090		489		743
Total interest income		226,177		183,506		428,692		364,147		241,395		202,515
Interest expense:
Deposits		18,364		12,603		31,183		24,336		26,959		12,819
Short-term borrowings		4,232		909		7,173		1,902		5,351		2,941
Long-term debt		3,864		5,025		8,928		10,104		3,421		5,064
Total interest expense		26,460		18,537		47,284		36,342		35,731		20,824
Net interest income		199,717		164,969		381,408		327,805		205,664		181,691
Provision for loan losses		14,951		17,196		30,942		77,232		12,253		15,991
Net interest income after provision for loan losses		184,766		147,773		350,466		250,573		193,411		165,700
Noninterest income:
Service charges on deposit accounts		20,061		18,394		39,267		36,777		21,448		19,206
Trust fees		11,506		12,089		22,717		23,313		11,335		11,211
Bank card and ATM fees		13,687		11,954		26,155		23,302		14,458		12,468
Investment and annuity fees		5,271		5,043		9,870		9,976
Investment and annuity fees and insurance commissions										6,125		5,264
Secondary mortgage market operations		4,241		4,176		7,808		7,088		3,401		3,567
Insurance commissions and fees		1,174		1,240		1,839		2,547
Amortization of FDIC loss share receivable		(1,327)		(1,526)		(2,427)		(3,139)
Other income		12,874		11,556		25,749		20,902		9,485		11,775
Securities transactions		—		768		—		1,114
Total noninterest income		67,487		63,694		130,978		121,880		66,252		63,491
Noninterest expense:
Compensation expense		82,145		70,233		155,244		143,234		80,100		73,099
Employee benefits		15,500		14,004		31,520		29,718		19,874		19,080
Personnel expense		97,645		84,237		186,764		172,952		99,974		92,179
Net occupancy expense		13,080		10,394		23,837		20,750		11,010		10,757
Equipment expense		3,964		3,080		7,678		6,854		3,546		3,714
Data processing expense		16,798		14,370		32,195		28,577		16,449		15,397
Professional services expense		10,353		7,712		21,629		15,333		9,255		11,276
Amortization of intangibles		5,757		5,005		10,462		10,129		5,618		4,705
Telecommunications and postage		3,738		3,272		7,205		6,633		3,850		3,467
Deposit insurance and regulatory fees		6,983		6,049		13,473		11,446		7,948		6,490
Other real estate (income) expense, net		(2,515)		350		(2,528)		1,118		210		(13)
Other expense		27,667		16,473		46,297		33,182		12,931		15,570
Total noninterest expense		183,470		150,942		347,012		306,974		170,791		163,542
Income before income taxes		68,783		60,525		134,432		65,479		88,872		65,649
Income taxes		16,516		13,618		33,151		14,733		16,397		16,635
Net income	$	52,267	$	46,907	$	101,281	$	50,746	$	72,475	$	49,014
Earnings per common share-basic	$	0.60	$	0.59	$	1.17	$	0.64	$	0.83	$	0.57
Earnings per common share-diluted	$	0.60	$	0.59	$	1.17	$	0.64	$	0.83	$	0.57
Dividends paid per share	$	0.24	$	0.24	$	0.48	$	0.48	$	0.24	$	0.24
Weighted average shares outstanding-basic		84,614		77,523		84,489		77,512		85,241		84,365
Weighted average shares outstanding-diluted		84,867		77,680		84,755		77,676		85,423		84,624



								Accumulated											Accumulated
								Other											Other
								Comprehensive											Comprehensive
	Common Stock			Capital		Retained		Income (Loss),				Common Stock			Capital		Retained		Income (Loss),
(in thousands, except per share data)	Shares issued	Amount		Surplus		Earnings		net			Total	Shares Issued	Amount		Surplus		Earnings		net			Total
Balance, December 31, 2015	87,491	$	291,346	$	1,424,448	$	777,944	$	(80,595)	$	2,413,143
Net income	—		—		—		50,746		—		50,746
Other comprehensive income	—		—		—		—		31,054		31,054
Comprehensive income	—		—		—		50,746		31,054		81,800
Cash dividends declared ($0.48 per common share)	—		—		—		(38,238)		—		(38,238)
Common stock activity, long-term incentive plan	—		—		6,624		—		—		6,624
Issuance of stock from dividend reinvestment	—		—		36		—		—		36
Balance, June 30, 2016	87,491	$	291,346	$	1,431,108	$	790,452	$	(49,541)	$	2,463,365

Balance, December 31, 2016	87,495	$	291,358	$	1,698,253	$	850,689	$	(120,532)	$	2,719,768	87,495	$	291,358	$	1,698,253	$	850,689	$	(120,532)	$	2,719,768
Net income	—		—		—		101,281		—		101,281	—		—		—		49,014		—		49,014
Other comprehensive income	—		—		—		—		16,093		16,093	—		—		—		—		2,020		2,020
Comprehensive income	—		—		—		101,281		16,093		117,374	—		—		—		49,014		2,020		51,034
Cash dividends declared ($0.48 per common share)	—		—		—		(41,594)		—		(41,594)
Cash dividends declared ($0.24 per common share)												—		—		—		(20,793)		—		(20,793)
Common stock activity, long-term incentive plan	—		—		16,801		83		—		16,884	—		—		12,815		43		—		12,858
Issuance of stock from dividend reinvestment and stock purchase plan	—		—		1,530		—		—		1,530
Balance, June 30, 2017	87,495	$	291,358	$	1,716,584	$	910,459	$	(104,439)	$	2,813,962
Issuance of stock from dividend reinvestment												—		—		755		—		—		755
Balance, March 31, 2017												87,495	$	291,358	$	1,711,823	$	878,953	$	(118,512)	$	2,763,622

Balance, December 31, 2017												87,903	$	292,716	$	1,718,117	$	1,008,518	$	(134,402)	$	2,884,949
Net income												—		—		—		72,475		—		72,475
Other comprehensive income												—		—		—		—		(46,147)		(46,147)
Comprehensive income												—		—		—		72,475		(46,147)		26,328
Cash dividends declared ($0.24 per common share)												—		—		—		(20,881)		—		(20,881)
Common stock activity, long-term incentive plan												—		—		4,735		70		—		4,805
Issuance of stock from dividend reinvestment and stock purchase plans												—		—		837		—		—		837
Balance, March 31, 2018												87,903	$	292,716	$	1,723,689	$	1,060,182	$	(180,549)	$	2,896,038



	Six months ended				Three Months Ended
	June 30,				March 31,
(in thousands)	2017		2016		2018		2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	101,281	$	50,746	$	72,475	$	49,014
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,960		14,344		6,551		6,915
Provision for loan losses		30,942		77,232		12,253		15,991
(Gain) loss on other real estate owned		(2,408)		127		210		(54)
Deferred tax expense (benefit)		5,415		(10,663)
Deferred tax expense						14,790		7,156
Increase in cash surrender value of life insurance contracts		(7,430)		(5,384)		(3,346)		(3,636)
Loss (gain) on disposal of other assets		1,455		(4,690)
Net decrease (increase) in loans held for sale		8,177		(21,170)
Loss on disposal of other assets						73		229
Loss on sale of business						1,145		—
Net decrease in loans held for sale						18,172		13,966
Net amortization of securities premium/discount		14,944		12,905		8,453		7,323
Amortization of intangible assets		10,462		10,129		5,618		4,705
Amortization of FDIC indemnification asset		2,427		3,139		—		1,100
Stock-based compensation expense		8,360		7,164		4,883		4,209
Decrease in interest payable and other liabilities		(24,405)		(2,683)		(32,568)		(33,323)
Net payments to FDIC for loss share claims		(935)		(159)		—		(1,131)
Decrease in FDIC loss share receivable		8,613		7,426		—		902
Decrease in payable to FDIC for loan servicing						(11,107)		—
Decrease in other assets		8,259		37,117		6,821		21,362
Other, net		3,595		2,525		71		1,600
Net cash provided by operating activities		182,712		178,105		104,494		96,328
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale		213,877		102,335
Proceeds from maturities of securities available for sale		157,290		186,790		80,155		81,116
Purchases of securities available for sale		(425,096)		(461,139)		(142,052)		(60,484)
Proceeds from maturities of securities held to maturity		174,662		190,721		93,408		92,684
Purchases of securities held to maturity		(554,442)		(282,190)		(134,020)		(87,847)
Net decrease in short-term investments		317,042		412,396		30,843		9,428
Proceeds from sales of loans		—		106,660		12,211		33,279
Net increase in loans		(385,823)		(470,732)		(196,328)		(306,745)
Purchase of life insurance contracts		(50,000)		(40,000)
Purchases of property and equipment		(12,649)		(3,950)		(7,904)		(7,329)
Proceeds from sales of property and equipment		16		671		42		17
Proceeds from sales of other real estate		12,311		8,995		1,641		3,099
Net cash paid for FNBC I acquisition		(322,708)		—
Net cash received for FNBC II acquisition		798,367		—
Cash paid for acquisition, net of cash received						—		(322,708)
Proceeds from the sale of business, net of cash sold						77,081		—
Other, net		(38,414)		2,989		(8,915)		(39,588)
Net cash used in investing activities		(115,567)		(246,454)		(193,838)		(605,078)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		90,040		467,973		232,638		99,583
Net decrease in short-term borrowings		(11,134)		(328,537)
Net increase (decrease) in short-term borrowings						(251,793)		385,777
Repayments of long-term debt		(121,837)		(28,836)		(5,268)		(4,475)
Net proceeds from issuance of long-term debt		83		5,885		83		41
Dividends paid		(41,594)		(38,238)		(20,881)		(20,793)
Cash paid for taxes with forfeited shares of stock		(3,124)		(380)
Payroll tax remitted on net share settlement of equity awards						(142)		(163)
Proceeds from exercise of stock options		11,427		36		782		8,650
Proceeds from dividend reinvestment and stock purchase plan		1,530		—
Net cash (used in) provided by financing activities		(74,609)		77,903
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS		(7,464)		9,554
Proceeds from dividend reinvestment and stock purchase plans						837		755
Net cash provided by (used in) financing activities						(43,744)		469,375
NET DECREASE IN CASH AND DUE FROM BANKS						(133,088)		(39,375)
CASH AND DUE FROM BANKS, BEGINNING		372,689		303,874		386,948		372,689
CASH AND DUE FROM BANKS, ENDING	$	365,225	$	313,428	$	253,860	$	333,314
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans	$	2,855	$	10,526	$	1,305	$	1,031

Table of Contents

HANCOCK HOLDING COMPANY AND SUBSIDIARIES

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, ~~2016.~~2017. 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. Select Stockholders’ Equity line items in the Consolidated Balance Sheets and Statements of Changes in Stockholders’ Equity have been 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 derivative assets and liabilities rather than collateral, effective January 3, 2017, as discussed in Note 6 – Derivatives. These changes in presentation 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, ~~2016.~~ 2017. Refer to Note 15 – Recent Accounting Pronouncements for a discussion of accounting standards adopted during the quarter ended March 31, 2018.

2. Acquisitions and Divestiture

On March 10, 2017, the Company, through its banking subsidiary, Whitney Bank (“Whitney”), ~~completed the acquisition of~~acquired certain assets and assumed certain 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 ~~signed~~entered into a purchase and assumption agreement with the FDIC, ~~to acquire certain additional assets and liabilities of FNBC,~~ referred to as the FNBC II transaction. Pursuant to the agreement, Whitney ~~continued operations of FNBC’s 29 branch locations (24 in Louisiana and five in Florida) and~~ acquired ~~select~~selected assets and assumed ~~select~~selected liabilities of the former FNBC, including substantially all of the transaction and savings deposits. Whitney paid a premium of $35 million to the FDIC for the earnings stream acquired and received ~~$798~~approximately $800 million in cash ($~~640~~642 million ~~in preliminary settlements~~from the FDIC for the net liabilities assumed and $158 million in branch cash acquired). 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 nor Whitney Bank acquired any assets, common stock, preferred stock or debt, or assumed any other obligations, of First NBC Bank Holding Company.

~~Under~~Pending Business Combination

In December 2017, the ~~FNBC II purchase~~Company announced entry into an agreement to acquire the bank-managed high net worth individual and ~~assumption agreement, Whitney had an option~~institutional investment management and trust business from Capital One, National Association (“Capital One”). The transaction is expected 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, subject to FDIC approval. This option was exercised for seven branches and will add additional acquired assets from this transactionclose in ~~the~~early third quarter 2018, pending regulatory approval and the satisfaction of ~~2017. A~~customary and other closing conditions.

Divestiture

On March 9, 2018, the Company sold its consumer finance subsidiary, Harrison Finance Company (“HFC”). The Company recorded a loss on the sale of $1.1 million based on the preliminary cash settlement of $78.3 million, with a final cash settlement ~~with the FDIC is~~ expected to occur in the second ~~half~~quarter of ~~2017.~~2018.

~~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 acquisition date preliminary fair value of the assets acquired and liabilities assumed, consideration, and the resulting goodwill recorded in each of the FNBC I and FNBC II transactions, and in the aggregate.

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

500

12,337
Accrued interest receivable

2,969

885

3,854
Identifiable intangible assets

3,900

20,500

24,400
Other assets

63

4,097

4,160
    Total identifiable assets

1,233,148

946,138

2,179,286

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

(673,165)

(443,664)
Consideration

Cash (paid) received

(325,564)

640,435

314,871
Unsettled net consideration receivable from FDIC

—

9,721

9,721
    Total consideration

(325,564)

650,156

324,592
    Goodwill

$
96,063

$
23,009

$
119,072

The loans acquired were recorded at estimated fair value at the acquisition dates with no carryover of the related allowance for loan losses. The acquired loans were considered to be performing (“purchased credit performing”) based on such factors as past due status, nonaccrual status and are accounted for under Accounting Standards Codification (“ASC”) 310-20. The unpaid principal balance of the loans acquired totaled $1.4 billion, of which approximately $47.6 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 $57.5 million will be accreted into income over the estimated lives of the loan pools established in the valuation.

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 consist of $460 million in variable-rate term notes; $200 million matures in 2025 and $260 million matures in 2026. These notes re-price quarterly and may be re-paid at the Company’s option, either in whole or in-part, on any quarterly re-pricing date. Also included in short-term borrowings are $51 million in fixed-rate term notes that mature in 2017. The long-term borrowings include $93.1 million in fixed-rate term notes; $88 million that mature in 2018, $3.2 million that mature in 2019, and $1.9 million that mature in 2023. Short-term borrowings in the FNBC II transaction consisted of securities sold under repurchase agreements.

Identifiable intangible assets consist of core deposit intangibles totaling $24.4 million that are being amortized using sum of years’ digits over the asset’s life of eight years for the FNBC I transaction and nine years for the FNBC II transaction. Goodwill totaling $119 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 liabilities assumed over the net consideration received. The tax basis of goodwill generated from these transactions is expected to be deductible for federal income tax purposes.


~~Goodwill balance at December 31, 2016~~	$	~~621,193~~
~~Additions:~~
~~Goodwill from FNBC I~~		~~96,063~~
~~Goodwill from FNBC II~~		~~23,009~~
~~Goodwill balance at June 30, 2017~~	$	~~740,265~~

Goodwill for the FNBC I transaction was adjusted by $495,000 in the second quarter of 2017 related to changes to a property valuation. The Company expects to adjust goodwill for the FNBC II transaction as we finalize purchase accounting and complete the final settlement with the FDIC.

~~Table of Contents~~

The operating results of the Company for the three and six months ended June 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 six months ended June 30, 2017 for both the FNBC I and FNBC II transactions combined. The Company expects to incur additional merger-related expense in the third quarter of 2017.

(in thousands)

Three months ended June 30, 2017

Six months ended June 30, 2017
Personnel expense
$
1,435

$
1,542
Net occupancy and equipment expense

276

277
Professional services expense

2,200

6,827
Other real estate

(1,511)

(1,511)
Advertising expense

901

1,031
Other expense

713

2,311
Total merger-related expenses
$
4,014

$
10,477

~~Table of Contents~~

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)		June 30, 2017								December 31, 2016									March 31, 2018								December 31, 2017

				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
U.S. Treasury and government agency securities		$	76,146	$	—	$	1,306	$	74,840	$	56,751	$	—	$	1,923	$	54,828		$	97,431		—		3,547		93,884	$	99,535	$	—	$	2,263	$	97,272
Municipal obligations			250,598		499		5,941		245,156		253,228		113		11,186		242,155			245,164		211		8,084		237,291		245,997		1,135		3,346		243,786
Residential mortgage-backed securities			1,860,644		9,765		16,310		1,854,099		1,620,191		10,592		19,428		1,611,355			1,787,382		3,552		47,391		1,743,543		1,729,989		5,611		20,387		1,715,213
Commercial mortgage-backed securities			449,912		463		17,277		433,098		425,750		—		23,159		402,591			715,360		—		35,088		680,272		704,518		480		17,863		687,135
Collateralized mortgage obligations			183,987		254		552		183,689		202,580		490		591		202,479			158,114		—		2,956		155,158		165,518		4		1,559		163,963
Corporate debt securities			3,500		—		—		3,500		3,500		—		—		3,500			5,500		—		—		5,500		3,500		—		—		3,500
		$	2,824,787	$	10,981	$	41,386	$	2,794,382	$	2,562,000	$	11,195	$	56,287	$	2,516,908		$	3,008,951	$	3,763	$	97,066	$	2,915,648	$	2,949,057	$	7,230	$	45,418	$	2,910,869



Securities Held to Maturity	Securities Held to Maturity																	Securities Held to Maturity
(in thousands)		June 30, 2017								December 31, 2016									March 31, 2018								December 31, 2017
				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
U.S. Treasury and government agency securities		$	50,000	$	—	$	64	$	49,936	$	50,000	$	—	$	44	$	49,956		$	50,000		—		576		49,424	$	50,000	$	—	$	289	$	49,711
Municipal obligations			730,599		7,205		9,614		728,190		648,093		2,147		20,175		630,065			707,581		1,315		13,453		695,443		723,094		8,323		4,245		727,172
Residential mortgage-backed securities			796,190		7,402		1,315		802,277		862,162		4,329		3,068		863,423			695,655		721		10,624		685,752		725,748		4,175		2,690		727,233
Commercial mortgage-backed securities			75,705		—		2,637		73,068		75,739		—		4,038		71,701			316,966		—		11,400		305,566		317,185		40		3,915		313,310
Collateralized mortgage obligations			1,221,960		1,690		10,592		1,213,058		864,226		1,420		10,674		854,972			1,244,226		391		28,507		1,216,110		1,161,484		572		17,472		1,144,584
		$	2,874,454	$	16,297	$	24,222	$	2,866,529	$	2,500,220	$	7,896	$	37,999	$	2,470,117		$	3,014,428	$	2,427	$	64,560	$	2,952,295	$	2,977,511	$	13,110	$	28,611	$	2,962,010

The following table presents the amortized cost and estimated fair value of debt securities available for sale and held to maturity at ~~June 30, 2017~~March 31, 2018 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.



Debt Securities Available for Sale	Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	7,945	$	7,970	$	7,388	$	7,408
Due after one year through five years		38,273		38,767		45,623		45,740
Due after five years through ten years		997,109		980,311		1,249,127		1,202,997
Due after ten years		1,781,460		1,767,334		1,706,813		1,659,503
Total available for sale debt securities	$	2,824,787	$	2,794,382	$	3,008,951	$	2,915,648

	Amortized		Fair
Debt Securities Held to Maturity	Cost		Value		Amortized		Fair
(in thousands)					Cost		Value
Due in one year or less	$	9,995	$	10,058	$	4,190	$	4,205
Due after one year through five years		108,634		109,069		132,047		131,197
Due after five years through ten years		851,644		845,017		1,478,419		1,446,343
Due after ten years		1,904,181		1,902,385		1,399,772		1,370,550
Total held to maturity securities	$	2,874,454	$	2,866,529	$	3,014,428	$	2,952,295

The Company held no securities classified as trading at ~~June 30, 2017~~March 31, 2018 or December 31, ~~2016.~~2017.

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



Available for Sale
June 30, 2017	Losses < 12 months				Losses 12 months or >				Total

March 31, 2018													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	$	74,308		1,306	$	—	$	—	$	74,308	$	1,306	$	43,521		1,214		50,362		2,333	$	93,883	$	3,547
Municipal obligations		213,557		5,941		—		—		213,557		5,941		54,330		948		169,119		7,136		223,449		8,084
Residential mortgage-backed securities		1,315,878		16,245		2,539		65		1,318,417		16,310		654,990		14,667		850,853		32,724		1,505,843		47,391
Commercial mortgage-backed securities		407,937		17,277		—		—		407,937		17,277		279,631		8,091		400,641		26,997		680,272		35,088
Collateralized mortgage obligations		74,282		552		—		—		74,282		552		122,186		2,324		32,972		632		155,158		2,956
Equity securities		—		—		—		—		—		—
	$	2,085,962	$	41,321	$	2,539	$	65	$	2,088,501	$	41,386	$	1,154,658	$	27,244	$	1,503,947	$	69,822	$	2,658,605	$	97,066



Available for Sale
December 31, 2016	Losses < 12 months				Losses 12 months or >				Total

December 31, 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	$	54,788	$	1,923	$	—	$	—	$	54,788	$	1,923	$	45,616	$	42	$	51,157	$	2,221	$	96,773	$	2,263
Municipal obligations		228,588		11,186		—		—		228,588		11,186		2,768		11		173,530		3,335		176,298		3,346
Residential mortgage-backed securities		1,087,644		19,359		3,738		69		1,091,382		19,428		461,835		4,195		898,099		16,192		1,359,934		20,387
Commercial mortgage-backed securities		402,591		23,159		—		—		402,591		23,159		203,618		995		411,046		16,868		614,664		17,863
Collateralized mortgage obligations		83,701		591		—		—		83,701		591		128,174		1,076		35,488		483		163,662		1,559
Corporate debt securities		—		—		—		—		—
	$	1,857,312	$	56,218	$	3,738	$	69	$	1,861,050	$	56,287	$	842,011	$	6,319	$	1,569,320	$	39,099	$	2,411,331	$	45,418

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



Held to maturity
June 30, 2017	Losses < 12 months				Losses 12 months or >				Total

March 31, 2018													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	$	49,936	$	64	$	—	$	—	$	49,936	$	64	$	—		—		49,424		576	$	49,424	$	576
Municipal obligations		432,877		9,311		7,204		303		440,081		9,614		341,011		4,530		221,438		8,923		562,449		13,453
Residential mortgage-backed securities		268,110		1,315		—		—		268,110		1,315		403,985		4,090		224,200		6,534		628,185		10,624
Commercial mortgage-backed securities		73,068		2,637		—		—		73,068		2,637		234,468		6,845		71,098		4,555		305,566		11,400
Collateralized mortgage obligations		842,667		7,113		134,129		3,479		976,796		10,592		672,660		12,567		441,866		15,940		1,114,526		28,507
	$	1,666,658	$	20,440	$	141,333	$	3,782	$	1,807,991	$	24,222	$	1,652,124	$	28,032	$	1,008,026	$	36,528	$	2,660,150	$	64,560



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

December 31, 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	$	49,956	$	44	$	—	$	—	$	49,956	$	44	$	—	$	—	$	49,711	$	289	$	49,711	$	289
Municipal obligations		494,470		19,706		11,750		469		506,220		20,175		14,603		19		230,960		4,226		245,563		4,245
Residential mortgage-backed securities		278,369		3,068		—		—		278,369		3,068		8,815		99		230,277		2,591		239,092		2,690
Commercial mortgage-backed securities		71,701		4,038		—		—		71,701		4,038		174,882		744		72,499		3,171		247,381		3,915
Collateralized mortgage obligations		618,739		7,296		115,375		3,378		734,114		10,674		570,289		5,653		472,536		11,819		1,042,825		17,472
	$	1,513,235	$	34,152	$	127,125	$	3,847	$	1,640,360	$	37,999	$	768,589	$	6,515	$	1,055,983	$	22,096	$	1,824,572		28,611

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 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~~There were no sales of securities ~~were approximately $213.9 million with no gross gain or loss and $102.3 million with a gross gain~~during either of ~~$1.1 million and no loss for~~ the ~~six~~three months ended ~~June 30, 2017 and 2016, respectively.~~ March 31, 2018 or 2017.

Securities with carrying values totaling ~~$3.8~~$3.4 billion and $3.3 billion at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017, respectively, were pledged as collateral, primarily to secure public deposits or securities sold under agreements to repurchase.

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



	June 30,		December 31,		March 31,		December 31,
(in thousands)	2017		2016		2018		2017
Commercial non-real estate	$	8,093,104	$	7,613,917	$	8,336,222	$	8,297,937
Commercial real estate - owner occupied		2,078,332		1,906,821		2,185,543		2,142,439
Total commercial & industrial		10,171,436		9,520,738		10,521,765		10,440,376
Commercial real estate - income producing		2,401,673		2,013,890		2,394,862		2,384,599
Construction and land development		1,313,522		1,010,879		1,413,878		1,373,421
Residential mortgages		2,493,923		2,146,713		2,732,821		2,690,472
Consumer		2,093,287		2,059,931		2,029,178		2,115,295
Total loans	$	18,473,841	$	16,752,151	$	19,092,504	$	19,004,163

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 tangible or intangible business assets such as accounts receivable, inventory, ownership, enterprise value 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 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 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 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 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.

The following ~~schedule shows~~tables show activity in the allowance for loan losses by portfolio class for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ as well as the corresponding recorded investment in loans at the end of each period. Charge-off, recovery and provision activity in the purchased credit impaired portfolio previously segregated has been collapsed into the remainder of the portfolio’s activity as it is no longer material, and the respective reclassifications have been made to the prior period to conform to the current presentation.

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

Six months ended June 30, 2017
Allowance for loan losses:

Beginning balance

$
147,052

$
11,083

$
158,135

$
13,509

$
6,271

$
25,361

$
26,142

$
229,418
Purchased credit impaired activity:

Charge-offs

—

—

—

—

(58)

(86)

(153)

(297)
Recoveries

2

93

95

—

39

19

71

224
Net provision for loan losses

(46)

(245)

(291)

(61)

(148)

(10)

(112)

(622)
Decrease in FDIC loss share receivable

(47)

—

(47)

—

—

(2,344)

(135)

(2,526)
Non-purchased credit impaired activity:

Charge-offs

(26,218)

(517)

(26,735)

(160)

(114)

(690)

(15,107)

(42,806)
Recoveries

1,816

243

2,059

398

716

262

3,475

6,910
Net provision for loan losses

14,804

1,441

16,245

(146)

343

868

14,254

31,564
Ending balance

$
137,363

$
12,098

$
149,461

$
13,540

$
7,049

$
23,380

$
28,435

$
221,865
Ending balance:

Allowance:

Individually evaluated for impairment

$
22,758

$
280

$
23,038

$
1,402

$
1

$
172

$
283

$
24,896
Amounts related to purchased credit impaired loans

395

742

1,137

192

239

12,622

942

15,132
Collectively evaluated for impairment

114,210

11,076

125,286

11,946

6,809

10,586

27,210

181,837
Total allowance

$
137,363

$
12,098

$
149,461

$
13,540

$
7,049

$
23,380

$
28,435

$
221,865
Loans:

Individually evaluated for impairment

$
250,256

$
7,480

$
257,736

$
14,913

$
847

$
3,466

$
1,053

$
278,015
Purchased credit impaired loans

5,422

9,848

15,270

6,247

4,160

129,198

8,280

163,155
Collectively evaluated for impairment

7,837,426

2,061,004

9,898,430

2,380,513

1,308,515

2,361,259

2,083,954

18,032,671
Total loans

$
8,093,104

$
2,078,332

$
10,171,436

$
2,401,673

$
1,313,522

$
2,493,923

$
2,093,287

$
18,473,841

~~Table of Contents~~



			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
	Three Months Ended March 31, 2018
Allowance for loan losses:
Beginning balance	$	127,918	$	12,962	$	140,880	$	13,709	$	7,372	$	24,844	$	30,503	$	217,308
Charge-offs		(9,335)		(851)		(10,186)		—		(10)		(192)		(8,048)		(18,436)
Recoveries		4,146		88		4,234		63		29		116		1,794		6,236
Net provision for loan losses		3,877		1,421		5,298		(787)		2,533		150		5,059		12,253
Reduction as a result of sale of subsidiary		—		—		—		—		—		—		(6,648)		(6,648)
Ending balance	$	126,606	$	13,620	$	140,226	$	12,985	$	9,924	$	24,918	$	22,660	$	210,713

Allowance at end of period:
Individually evaluated for impairment	$	20,356	$	2,475	$	22,831	$	1,261	$	1	$	276	$	232	$	24,601
Amounts related to purchased credit impaired loans		471		495		966		576		173		11,720		612		14,047
Collectively evaluated for impairment		105,779		10,650		116,429		11,148		9,750		12,922		21,816		172,065
Total allowance	$	126,606	$	13,620	$	140,226	$	12,985	$	9,924	$	24,918	$	22,660	$	210,713
Loans at end of period:
Individually evaluated for impairment	$	323,913	$	30,318	$	354,231	$	14,071	$	113	$	8,338	$	617	$	377,370
Purchased credit impaired loans		8,510		8,384		16,894		4,361		5,843		116,409		5,876		149,383
Collectively evaluated for impairment		8,003,799		2,146,841		10,150,640		2,376,430		1,407,922		2,608,074		2,022,685		18,565,751
Total loans	$	8,336,222	$	2,185,543	$	10,521,765	$	2,394,862	$	1,413,878	$	2,732,821	$	2,029,178	$	19,092,504

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

Six months ended June 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)

(23)

(8)

(78)
Recoveries

8

120

128

2

53

3

106

292
Net provision for loan losses

79

(170)

(91)

26

(117)

1,165

(1,290)

(307)
Decrease in FDIC loss share receivable

39

—

39

—

—

(3,378)

(98)

(3,437)
Non-purchased credit impaired activity:

Charge-offs

(22,212)

(1,199)

(23,411)

(191)

(592)

(592)

(11,268)

(36,054)
Recoveries

1,802

238

2,040

268

1,125

480

3,039

6,952
Net provision for loan losses

61,628

1,857

63,485

6,654

(1,087)

466

8,021

77,539
Ending balance

$
150,772

$
10,676

$
161,448

$
12,799

$
5,006

$
23,474

$
23,359

$
226,086
Ending balance:

Allowance:

Individually evaluated for impairment

$
12,885

$
183

$
13,068

$
72

$
1

$
167

$
41

$
13,349
Amounts related to purchased credit impaired loans

572

1,015

1,587

741

575

15,430

1,257

19,590
Collectively evaluated for impairment

137,315

9,478

146,793

11,986

4,430

7,877

22,061

193,147
Total allowance

$
150,772

$
10,676

$
161,448

$
12,799

$
5,006

$
23,474

$
23,359

$
226,086
Loans:

Individually evaluated for impairment

$
232,785

$
5,898

$
238,683

$
7,803

$
1,247

$
1,068

$
166

$
248,967
Purchased credit impaired loans

10,483

15,428

25,911

10,752

8,761

151,674

12,826

209,924
Collectively evaluated for impairment

6,889,251

1,894,874

8,784,125

2,005,916

870,580

1,864,908

2,051,376

15,576,905
Total loans

$
7,132,519

$
1,916,200

$
9,048,719

$
2,024,471

$
880,588

$
2,017,650

$
2,064,368

$
16,035,796



			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
	Three Months Ended March 31, 2017
Allowance for loan losses:
Beginning balance	$	147,052	$	11,083	$	158,135	$	13,509	$	6,271	$	25,361	$	26,142	$	229,418
Charge-offs		(24,791)		(29)		(24,820)		(7)		(91)		(348)		(8,678)		(33,944)
Recoveries		938		275		1,213		375		471		113		1,743		3,915
Net provision for loan losses		8,101		193		8,294		(266)		69		376		7,518		15,991
Decrease in FDIC loss share receivable		(31)		—		(31)		—		—		(1,696)		(103)		(1,830)
Ending balance	$	131,269	$	11,522	$	142,791	$	13,611	$	6,720	$	23,806	$	26,622	$	213,550

Allowance at end of period:
Individually evaluated for impairment	$	15,017	$	76	$	15,093	$	1,114	$	1	$	94	$	199	$	16,501
Amounts related to purchased credit impaired loans		411		787		1,198		213		283		13,286		1,019		15,999
Collectively evaluated for impairment		115,841		10,659		126,500		12,284		6,436		10,426		25,404		181,050
Total allowance	$	131,269	$	11,522	$	142,791	$	13,611	$	6,720	$	23,806	$	26,622	$	213,550
Loans at end of period:
Individually evaluated for impairment	$	231,988	$	3,894	$	235,882	$	13,599	$	1,592	$	3,236	$	2,149	$	256,458
Purchased credit impaired loans		6,693		12,468		19,161		7,669		4,326		138,260		9,951		179,367
Collectively evaluated for impairment		7,835,606		2,031,089		9,866,695		2,483,836		1,246,749		2,124,767		2,046,996		17,769,043
Total loans	$	8,074,287	$	2,047,451	$	10,121,738	$	2,505,104	$	1,252,667	$	2,266,263	$	2,059,096	$	18,204,868

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.



	June 30,		December 31,		March 31,		December 31,
(in thousands)	2017		2016		2018		2017
Commercial non-real estate	$	167,710	$	249,037	$	179,203	$	152,863
Commercial real estate - owner occupied		11,750		14,413		27,387		25,989
Total commercial & industrial		179,460		263,450		206,590		178,852
Commercial real estate - income producing		13,438		13,954		15,633		14,574
Construction and land development		2,821		4,550		3,724		3,807
Residential mortgages		28,158		23,665		35,069		40,480
Consumer		14,342		12,351		14,163		15,087
Total loans	$	238,219	$	317,970	$	275,179	$	252,800

Nonaccrual loans include nonaccruing loans modified in troubled debt restructurings (“TDRs”) of ~~$96.3~~$118.0 million and ~~$81.9~~$99.2 million at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. Total TDRs, both accruing and nonaccruing, were ~~$186.8~~$284.5 million ~~as of June 30, 2017~~at March 31, 2018 and ~~$121.7~~$219.7 million at December 31, ~~2016.~~2017. All TDRs are individually evaluated for impairment. At March 31, 2018 and December 31, 2017, the Company had unfunded commitments of $8.5 million and $7.3 million, respectively, to borrowers whose loan terms have been modified in a TDR.

The table below details by portfolio class TDRs that were modified during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and ~~June 30, 2016 by portfolio class.~~ 2017:



	Six months ended												Three Months Ended
($ in thousands)		June 30, 2017						June 30, 2016						March 31, 2018						March 31, 2017
			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		37	$	92,976	$	92,976		17	$	57,915	$	57,915		13	$	55,482	$	55,482		9	$	38,659	$	38,659
Commercial real estate - owner occupied		4		3,734		3,734		—		—		—		1		5,909		5,909		1		656		656
Total commercial & industrial		41		96,710		96,710		17		57,915		57,915		14		61,391		61,391		10		39,315		39,315
Commercial real estate - income producing		5		6,486		6,486		—		—		—		1		1,564		1,564		2		5,527		5,527
Construction and land development		—		—		—		—		—		—		1		43		43		—		—		—
Residential mortgages		6		1,098		1,098		4		432		432		—		—		—		1		250		250
Consumer		1		40		42		—		—		—		1		222		222		—		—		—
Total loans		53	$	104,334	$	104,336		21	$	58,347	$	58,347		17	$	63,220	$	63,220		13	$	45,092	$	45,092

The TDRs modified during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 reflected in the table above include ~~$28.4~~$48.4 million of loans with extended amortization terms or other payment concessions, ~~$40.2~~$14.6 million ~~of loans~~ with significant covenant waivers and ~~$35.7~~$0.2 million with other modifications. The TDRs modified during the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 include ~~$31.0~~$27.4 million of loans with extended amortization terms or other payment concessions, $10.7 million with significant covenant waivers and ~~$27.3~~$6.9 million ofwith other modifications.

For the three month periods ended March 31, 2018 and 2017, there were no loans modified in a TDR within the previous twelve months that subsequently defaulted ~~within twelve months of modification were recorded in~~during the ~~six months ended June 30, 2017 or 2016.~~respective periods.

The tables below present loans that are individually evaluated for impairment disaggregated by portfolio class at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. 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.



	June 30, 2017								March 31, 2018
		Recorded investment		Recorded investment		Unpaid				Recorded investment		Recorded investment		Unpaid
(in thousands)		without an allowance		with an allowance		principal balance		Related allowance		without an allowance		with an allowance		principal balance		Related allowance
Commercial non-real estate	$	107,555	$	142,701	$	260,544	$	22,758	$	108,898	$	215,015	$	335,178	$	20,356
Commercial real estate - owner occupied		3,514		3,966		7,570		280		6,064		24,254		30,997		2,475
Total commercial & industrial		111,069		146,667		268,114		23,038		114,962		239,269		366,175		22,831
Commercial real estate - income producing		5,678		9,235		15,349		1,402		6,055		8,016		14,269		1,261
Construction and land development		831		16		1,820		1		100		13		114		1
Residential mortgages		2,338		1,128		3,984		172		5,861		2,477		11,682		276
Consumer		1		1,052		1,055		283		14		603		718		232
Total loans	$	119,917	$	158,098	$	290,322	$	24,896	$	126,992	$	250,378	$	392,958	$	24,601


	December 31, 2016								December 31, 2017
		Recorded investment		Recorded investment		Unpaid				Recorded investment		Recorded investment		Unpaid
(in thousands)		without an allowance		with an allowance		principal balance		Related allowance		without an allowance		with an allowance		principal balance		Related allowance
Commercial non-real estate	$	150,650	$	120,612	$	295,445	$	28,187	$	116,682	$	151,199	$	285,685	$	16,129
Commercial real estate - owner occupied		4,261		2,007		6,646		246		16,927		4,564		24,829		793
Total commercial & industrial		154,911		122,619		302,091		28,433		133,609		155,763		310,514		16,922
Commercial real estate - income producing		10,447		4,929		15,708		466		5,101		10,429		15,687		1,326
Construction and land development		1,106		832		2,903		38		100		263		363		11
Residential mortgages		2,877		1,470		4,865		91		8,245		2,395		13,855		189
Consumer		—		2,154		2,155		267		—		1,292		1,294		118
Total loans	$	169,341	$	132,004	$	327,722	$	29,295	$	147,055	$	170,142	$	341,713	$	18,566

The tables below present the average balances and interest income for total impaired loans for the three ~~and six~~ months ended ~~June 30, 2017~~ March 31, 2018

and ~~2016.~~2017. Interest income recognized represents interest on accruing loans modified in a TDR.



	Three months ended								Three Months Ended
	June 30, 2017				June 30, 2016				March 31, 2018				March 31, 2017
	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	$	241,122	$	597	$	216,907	$	493	$	295,897	$	1,586	$	251,625	$	337
Commercial real estate - owner occupied		5,687		18		5,959		14		25,905		66		5,081		4
Total commercial & industrial		246,809		615		222,866		507		321,802		1,652		256,706		341
Commercial real estate - income producing		14,257		34		8,242		22		14,801		25		14,487		43
Construction and land development		1,219		—		7,660		—		238		—		1,766		—
Residential mortgages		3,352		3		976		2		9,489		5		3,792		2
Consumer		1,601		3		112		1		955		9		2,152		2
Total loans	$	267,238	$	655	$	239,856	$	532	$	347,285	$	1,691	$	278,903	$	388

The tables below present the age analysis of past due loans by portfolio class at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. 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
June 30, 2017	past due		past due		past due		past due		Current		Loans		still accruing
March 31, 2018															past due		past due		past due		past due		Current		Loans		still accruing
(in thousands)
Commercial non-real estate	$	27,751	$	27,974	$	91,987	$	147,712	$	7,945,392	$	8,093,104	$	13,088	$	45,309	$	18,497	$	130,360	$	194,166	$	8,142,056	$	8,336,222	$	20,330
Commercial real estate - owner occupied		4,532		1,189		6,321		12,042		2,066,290		2,078,332		424		7,464		115		22,138		29,717		2,155,826		2,185,543		1,360
Total commercial & industrial		32,283		29,163		98,308		159,754		10,011,682		10,171,436		13,512		52,773		18,612		152,498		223,883		10,297,882		10,521,765		21,690
Commercial real estate - income producing		3,369		2,319		5,040		10,728		2,390,945		2,401,673		1,989		928		1,954		8,419		11,301		2,383,561		2,394,862		2,771
Construction and land development		6,250		619		1,980		8,849		1,304,673		1,313,522		—		6,537		416		3,115		10,068		1,403,810		1,413,878		259
Residential mortgages		25,433		12,208		22,088		59,729		2,434,194		2,493,923		2,801		32,815		4,496		20,122		57,433		2,675,388		2,732,821		1,170
Consumer		15,764		5,843		7,600		29,207		2,064,080		2,093,287		88		16,083		5,124		7,542		28,749		2,000,429		2,029,178		573
Total	$	83,099	$	50,152	$	135,016	$	268,267	$	18,205,574	$	18,473,841	$	18,390	$	109,136	$	30,602	$	191,696	$	331,434	$	18,761,070	$	19,092,504	$	26,463



													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, 2016	past due		past due		past due		past due		Current		Loans		still accruing
December 31, 2017															past due		past due		past due		past due		Current		Loans		still accruing
(in thousands)
Commercial non-real estate	$	19,722	$	1,909	$	68,505	$	90,136	$	7,523,781	$	7,613,917	$	384	$	62,766	$	10,761	$	92,982	$	166,509	$	8,131,428	$	8,297,937	$	21,989
Commercial real estate - owner occupied		3,008		581		6,310		9,899		1,896,922		1,906,821		52		8,493		648		15,517		24,658		2,117,781		2,142,439		2,032
Total commercial & industrial		22,730		2,490		74,815		100,035		9,420,703		9,520,738		436		71,259		11,409		108,499		191,167		10,249,209		10,440,376		24,021
Commercial real estate - income producing		838		50		5,026		5,914		2,007,976		2,013,890		216		5,315		2,165		6,081		13,561		2,371,038		2,384,599		489
Construction and land development		694		171		5,300		6,165		1,004,714		1,010,879		1,563		4,113		1,056		3,412		8,581		1,364,840		1,373,421		477
Residential mortgages		24,599		8,816		14,369		47,784		2,098,929		2,146,713		1		33,621		10,554		30,537		74,712		2,615,760		2,690,472		2,208
Consumer		18,621		7,441		9,147		35,209		2,024,722		2,059,931		823		22,959		7,816		8,553		39,328		2,075,967		2,115,295		571
Total	$	67,482	$	18,968	$	108,657	$	195,107	$	16,557,044	$	16,752,151	$	3,039	$	137,267	$	33,000	$	157,082	$	327,349	$	18,676,814	$	19,004,163	$	27,766

The following tables present the credit quality indicators by segments and portfolio class of loans at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.



	June 30, 2017												March 31, 2018
(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	$	6,897,989	$	1,859,185	$	8,757,174	$	2,214,329	$	1,233,082	$	12,204,585	$	7,250,715	$	1,954,384	$	9,205,099	$	2,268,358	$	1,334,456	$	12,807,913
Pass-Watch		298,254		55,146		353,400		117,247		58,024		528,671		269,657		51,856		321,513		58,092		59,208		438,813
Special Mention		215,373		43,219		258,592		13,840		7,591		280,023		100,005		35,971		135,976		9,344		6,279		151,599
Substandard		678,032		120,782		798,814		56,247		14,825		869,886		715,827		143,332		859,159		59,068		13,935		932,162
Doubtful		3,456		—		3,456		10		—		3,466		18		—		18		—		—		18
Loss		—		—		—		—		—		—
Total	$	8,093,104	$	2,078,332	$	10,171,436	$	2,401,673	$	1,313,522	$	13,886,631	$	8,336,222	$	2,185,543	$	10,521,765	$	2,394,862	$	1,413,878	$	14,330,505

	December 31, 2016												December 31, 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	$	6,364,348	$	1,719,114	$	8,083,462	$	1,873,644	$	968,505	$	10,925,611	$	7,190,604	$	1,896,366	$	9,086,970	$	2,223,245	$	1,291,638	$	12,601,853
Pass-Watch		203,311		47,676		250,987		78,309		22,592		351,888		293,069		82,913		375,982		83,444		60,804		520,230
Special Mention		181,763		40,299		222,062		22,492		4,142		248,696		80,649		27,456		108,105		13,244		4,788		126,137
Substandard		846,793		99,732		946,525		39,434		15,640		1,001,599		733,558		135,704		869,262		64,658		16,191		950,111
Doubtful		17,702		—		17,702		11		—		17,713		57		—		57		8		—		65
Loss		—		—		—		—		—		—
Total	$	7,613,917	$	1,906,821	$	9,520,738	$	2,013,890	$	1,010,879	$	12,545,507	$	8,297,937	$	2,142,439	$	10,440,376	$	2,384,599	$	1,373,421	$	14,198,396



	June 30, 2017						December 31, 2016						March 31, 2018						December 31, 2017
(in thousands)	Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total		Residential mortgage		Consumer		Total
Performing	$	2,462,964	$	2,078,857	$	4,541,821	$	2,123,048	$	2,046,757	$	4,169,805	$	2,696,582	$	2,014,442	$	4,711,024	$	2,647,784	$	2,099,637	$	4,747,421
Nonperforming		30,959		14,430		45,389		23,665		13,174		36,839		36,239		14,736		50,975		42,688		15,658		58,346
Total	$	2,493,923	$	2,093,287	$	4,587,210	$	2,146,713	$	2,059,931	$	4,206,644	$	2,732,821	$	2,029,178	$	4,761,999	$	2,690,472	$	2,115,295	$	4,805,767

Changes in the carrying amount of purchased credit impaired loans and related accretable yield are presented in the following table for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and the year ended December 31, ~~2016.~~2017.



	June 30, 2017				December 31, 2016				March 31, 2018				December 31, 2017
	Carrying				Carrying				Carrying				Carrying
	Amount		Accretable		Amount		Accretable		Amount		Accretable		Amount		Accretable
(in thousands)	of Loans		Yield		of Loans		Yield		of Loans		Yield		of Loans		Yield
Balance at beginning of period	$	190,915	$	113,686	$	225,838	$	129,488	$	153,403	$	62,517	$	190,915	$	113,686
Addition of cost recovery loans - FNBC I										—		—		15,000		—
Payments received, net		(36,950)		(6,258)		(55,194)		(11,024)		(8,288)		(1,703)		(69,591)		(7,412)
Accretion		9,190		(9,190)		20,271		(20,271)		4,268		(4,268)		17,079		(17,079)
Increase in expected cash flows based on actual cash flows and changes in cash flow assumptions		—		4,405		—		5,358		—		(956)		—		(30,379)
Net transfers from nonaccretable difference to accretable yield		—		5,183		—		10,135		—		—		—		3,701
Balance at end of period	$	163,155	$	107,826	$	190,915	$	113,686	$	149,383	$	55,590	$	153,403	$	62,517

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

~~Loans~~three months ended March 31, 2017, certain of the Company’s purchased ~~in the 2009 acquisition of Peoples First Community Bank~~credit impaired loans were covered by two loss share agreements ~~between~~with the ~~FDIC~~FDIC. The Company had a receivable representing an indemnification asset arising from the agreements. The receivable was accounted for separately from the covered loans as the agreements were not contractually part of the loans and ~~the Company. In the second quarter of 2017,~~were not transferrable should the Company ~~reached an agreement with~~have disposed of the ~~FDIC to terminate~~loans. The agreements were terminated by the ~~agreements on the remaining covered loan balances, totaling $154 million at June 30, 2017. The~~ Company ~~wrote down the indemnification asset by $6.6 million to the settlement amount of $3.2 million in the second quarter of 2017, with the final payment to occur in~~during the third quarter of 2017.

~~The following schedule shows activity in the FDIC loss share receivable for the six months ended June 30, 2017 and 2016.~~

Included in loans are ~~$4.2~~$7.8 million and ~~$10.1~~$7.5 million of consumer loans secured by single family residential real estate that are in process of foreclosure as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. 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, the Company also held ~~$2.7~~$3.7 million and ~~$3.1~~$3.4 million of foreclosed single family residential properties in other real estate owned as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

Included in short-term borrowings are customer securities sold under agreements to repurchase (“repurchase agreements”) that mature daily and are secured by U.S. agency securities totaling ~~$482.1~~$443.2 million and ~~$358.1~~$430.6 million at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, 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.

On January 1, 2018, the Company adopted the provisions of Accounting Standards Update (ASU) 2017-12, “Derivatives and Hedging,” using the modified retrospective transition approach. As a result of adoption of the update, the Company is making certain adjustments to its existing designation documentation for active hedging relationships to take advantage of specific provisions of the update. Adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations. Following is a discussion of the provisions of the guidance relevant to the Company:

The provisions of the update eliminate the concept of ineffectiveness from an accounting perspective. The guidance provides that, as long as a hedging instrument is designated and the results of the effectiveness testing support that the instrument qualifies for hedge accounting treatment, there will be no periodic measurement or recognition of ineffectiveness. Rather, the full impact of hedge gains and losses will be recognized in the period in which the hedged transactions impact the entity’s earnings.

Amounts in Accumulated Other Comprehensive Income that are included in the assessment of effectiveness should be reclassified into earnings in the same period in which the hedged forecasted transactions impact earnings. As such, the Company will recognize all reclassifications out of Other Comprehensive Income in the same statement of income line item in which the earnings effect of the hedged item is presented.

The update also states that if the designated hedged risk changes during the life of the hedging relationship, an entity may continue to apply hedge accounting as long as the hedging instrument is highly effective at achieving offsetting cash flows attributable to the revised hedged risk. Regardless of the description of the hedged transactions contained in the initial designation documentation, the Company intends to utilize this provision in the updated guidance to the extent possible.

The update allows an entity to make a one-time transition election regarding the fair value measurement methodology applied to fair value hedges in place at adoption. The Company did not elect either of the one-time transition options; rather, it will continue to measure the hedged items as documented in the initial hedge documentation.

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 and ~~fixed-rate~~fixed rate brokered deposits. The Bank also 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.

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 ~~June 30, 2017~~March 31, 2018 and December 31, 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.2017.





					June 30, 2017			December 31, 2016								March 31, 2018					December 31, 2017
				Derivative (1)						Derivative (1)							Derivative (1)						Derivative (1)
(in thousands)	Type of Hedge		Notional or Contractual Amount	Assets		Liabilities		Notional or Contractual Amount		Assets		Liabilities		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	$	750,000	$	18	$	7,619	$	1,100,000	$	—	$	7,787	Cash Flow	$	875,000	$	1,752	$	12,667	$	875,000	$	—	$	14,020
Interest rate swaps	Fair Value		363,000		—		518		—		—		—	Fair Value		483,110		—		3,948		483,110		—		2,475
		$	1,113,000	$	18	$	8,137	$	1,100,000	$	—	$	7,787		$	1,358,110	$	1,752	$	16,615	$	1,358,110	$	—	$	16,495
Derivatives not designated as hedging instruments:
Interest rate swaps (2)	N/A	$	1,130,367	$	17,536	$	18,011	$	979,391	$	18,405	$	18,362	N/A	$	1,184,109	$	20,680	$	20,710	$	1,144,789	$	15,408	$	15,857
Risk participation agreements	N/A		111,667		39		117		84,732		50		105	N/A		121,479		13		61		119,951		23		109
Forward commitments to sell residential mortgage loans	N/A		87,204		7		825		75,676		900		221	N/A		81,326		847		454		80,462		1,000		290
Interest rate-lock commitments on residential mortgage loans	N/A		66,483		563		5		46,840		189		228	N/A		61,904		376		789		53,724		186		782
Foreign exchange forward contracts	N/A		56,016		1,606		1,562		56,152		771		729	N/A		42,815		3,096		3,062		42,260		2,453		2,419
			1,451,737		19,751		20,520		1,242,791		20,315		19,645			1,491,633		25,012		25,076		1,441,186		19,070		19,457
Total derivatives		$	2,564,737	$	19,769	$	28,657	$	2,342,791	$	20,315	$	27,432		$	2,849,743	$	26,764	$	41,691	$	2,799,296	$	19,070	$	35,952
Less: netting adjustment (3)					(2,894)		(16,444)				—		—					(14,081)		(19,162)				(4,913)		(21,563)
Total derivative assets/liabilities				$	16,875	$	12,213			$	20,315	$	27,432				$	12,683	$	22,529			$	14,157	$	14,389

The Company is party to 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~~During the three months ended March 31, 2018, the Company terminated five of its shorter-term swap agreements ~~at June 30, 2017 expire as follows:~~with notional ~~amount~~amounts totaling $450 million and entered into five longer-term agreements with notional amounts totaling $450 million. The Company paid termination fees of ~~$250~~approximately $10.6 million ~~expire in 2019; $200~~to settle the interest rate swap liabilities, and the resulting accumulated other comprehensive loss will be amortized over the remaining maturities of the designated instruments. Amortization of other comprehensive loss on terminated cash flow hedges totaled $1.0 million ~~expire in 2020; and $300 million expire in 2022.~~

~~During~~for the ~~terms~~three months ended March 31, 2018. The notional amounts of the swap agreements ~~the effective portion of changes~~ in ~~the fair value of the derivative instruments are recorded~~place at March 31, 2018 expire as follows: $425 million in ~~Accumulated Other Comprehensive Income (“AOCI”)~~2022; $350 million in 2023; and ~~subsequently reclassified into earnings~~$100 million in the periods that the hedged forecasted variable-rate interest payments affect earnings. The impact on AOCI is reflected in Note 7. There was no ineffective portion of the change in fair value of the derivatives recognized directly in earnings during the three or six months ended June 30, 2017 and 2016.2024.

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 ~~increase,~~increases, but the value of the interest rate swaps ~~decrease,~~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 of noninterest income.~~

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

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.

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.

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.

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 ~~$2.7~~$1.5 million and ~~$3.1~~$0.5 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, ~~respectively, and $0.5 million and $0.4 million for the three and six months ended June 30, 2016,~~ respectively. The impact to interest income from cash flow hedges, including amortization of comprehensive loss on terminated cash flow hedges, was ~~($0.2)~~$(0.6) million and ~~($0.1)~~$0.1 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, ~~respectively and $0.7~~respectively. Interest expense as a result of mark to market adjustments of fair value hedges was $0.1 million and ~~$1.0~~$(0.1) million for the three ~~and six~~ months ended ~~June 30, 2016, respectively. For the six months ended June 30, 2017, the fair value hedges entered into during the period reduced interest expense on deposits by $0.4 million~~March 31, 2018 and ~~reduced noninterest income by $0.1 million due to ineffectiveness.~~ 2017.

Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in certain circumstances, such as 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 June 30, 2017, the aggregate fair value of derivative instruments with credit risk-related contingent features that were in a net liability position was $16.8 million.~~

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 financial position. Offsetting information in regards to all derivative assets and liabilities, including accrued interest, subject to these master netting agreements at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 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 June 30, 2017
As of March 31, 2018
Derivative Assets	$	5,308	$	(3,963)	$	1,345	$	1,345	$	—	$	—	$	18,822	$	(14,314)	$	4,508	$	1,517	$	—	$	2,991

Derivative Liabilities	$	22,155	$	(16,392)	$	5,763	$	1,345	$	7,099	$	(2,681)	$	18,081	$	(16,497)	$	1,584	$	1,517	$	4,770	$	(4,703)



(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, 2016
As of December 31, 2017
Derivative Assets	$	4,788	$	—	$	4,788	$	4,788	$	—	$	—	$	7,155	$	(5,007)	$	2,148	$	2,148	$	—	$	—

Derivative Liabilities	$	26,846	$	—	$	26,846	$	4,788	$	19,095	$	2,963	$	24,015	$	(20,077)	$	3,938	$	2,148	$	4,099	$	(2,309)

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

The presentation of the components of stockholders’ equity was modified from prior filings to consolidate treasury stock into surplus in the consolidated balance sheets and statements of changes in stockholders’ equity in order to simplify the presentation. Additional information on treasury stock is reflected in the common shares outstanding section below.

~~Shares~~Common shares outstanding ~~exclude~~excludes treasury shares ~~of 1.0~~totaling 1.1 million and ~~1.3~~1.2 million at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, with a first-in-first-out cost basis of ~~$17.6~~$24.4 million and ~~$24.1~~$25.5 million at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. Shares outstanding also ~~exclude~~excludes unvested restricted share awards ~~of 1.7 million and 2.0~~totaling 1.5 million at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016, respectively.~~2017.

The components of ~~AOCI~~Accumulated Other Comprehensive Loss 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

41,990

—

—

3,611

45,601
Reclassification of net (gain) loss realized and included in earnings

(1,114)

—

2,916

—

1,802
Amortization of unrealized net loss on securities transferred to HTM

—

1,628

—

—

1,628
Income tax expense

14,970

625

1,066

1,316

17,977
Balance, June 30, 2016

$
30,174

$
(15,792)

$
(66,040)

$
2,117

$
(49,541)
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)

14,687

—

—

(842)

13,845
Reclassification of net losses realized and included in earnings

—

—

3,105

—

3,105
Valuation adjustment for pension plan amendment (a)

—

—

17,315

—

17,315
Other valuation adjustments for employee benefit plan

—

—

(10,782)

—

(10,782)
Amortization of unrealized net loss on securities transferred to HTM

—

1,749

—

—

1,749
Income tax expense (benefit)

5,333

657

3,458

(309)

9,139
Balance, June 30, 2017

$
(19,325)

$
(13,300)

$
(66,321)

$
(5,493)

$
(104,439)

~~(a)~~

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



	Available		HTM Securities
	for Sale		Transferred		Employee		Cash
(in thousands)	Securities		from AFS		Benefit Plans		Flow Hedges		Total
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		2,319		—		—		(1,135)		1,184
Reclassification of net (gain) loss realized and included in earnings		—		—		1,387		—		1,387
Amortization of unrealized net loss on securities transferred to HTM		—		650		—		—		650
Income tax expense (benefit)		843		266		504		(412)		1,201
Balance, March 31, 2017	$	(27,203)	$	(14,008)	$	(71,618)	$	(5,683)	$	(118,512)
Balance, December 31, 2017	$	(29,512)	$	(14,585)	$	(79,078)	$	(11,227)	$	(134,402)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)		(55,114)		—		—		(7,130)		(62,244)
Reclassification of net losses realized and included in earnings		—		—		1,177		619		1,796
Other valuation adjustments for employee benefit plan		—		—		—				—
Amortization of unrealized net loss on securities transferred to HTM		—		755		—		—		755
Income tax expense (benefit)		(12,508)		171		267		(1,476)		(13,546)
Balance, March 31, 2018	$	(72,118)	$	(14,001)	$	(78,168)	$	(16,262)	$	(180,549)

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 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. 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~~variable rate loans described in Note 6 will be reclassified into income over the life of the hedge. Accumulated other comprehensive loss resulting from the terminated interest rate swaps will be amortized over the remaining maturities of the designated instruments. Gains (losses) in AOCI are net of deferred income taxes.

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



	Six months ended					Three Months Ended
Amount reclassified from AOCI (a)	June 30,				Affected line item on	March 31,				Affected line item on
(in thousands)		2017		2016	the income statement		2018		2017	the statement of income
Gain on sale of AFS securities	$	—	$	1,114	Securities transactions
Tax effect		—		(390)	Income taxes
Net of tax		—		724	Net income
Amortization of unrealized net loss on securities transferred to HTM		(1,749)		(1,628)	Interest income		(755)		(650)	Interest income
Tax effect		657		625	Income taxes		171		266	Income taxes
Net of tax		(1,092)		(1,003)	Net income		(584)		(384)	Net income
Amortization of defined benefit pension and post-retirement items		(3,105)		(2,916)	Employee benefits expense (b)		(1,177)		(1,387)	Other noninterest expense (b)
Tax effect		1,114		1,066	Income taxes		267		504	Income taxes
Net of tax		(1,991)		(1,850)	Net income		(910)		(883)	Net income
Reclassification of unrealized gain on cash flow hedges							336		—	Interest income
Tax effect							(76)		—	Income taxes
Net of tax							260			Net income
Amortization of loss on terminated cash flow hedges							(954)		—	Interest income
Tax effect							216		—	Income taxes
Net of tax							(738)		—	Net income
Total reclassifications, net of tax	$	(3,083)	$	(2,129)	Net income	$	(1,972)	$	(1,267)	Net income

Effective January 1, 2018, the Company adopted the amended provisions of the Financial Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” using the modified retrospective approach. The standard applies to most of the Company’s noninterest income, with a significant portion of the Company’s revenue excluded from the scope of the standard, including interest and loan origination fees associated with financial instruments, gains and losses on investment securities, derivatives and sales of financial instruments.

The Company’s evaluation of contracts for compliance with the standard did not identify any material changes to the timing of revenue recognition as the standard was largely consistent with the existing guidance and current practices. Therefore, the adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations and there was no cumulative effect adjustment to opening retained earnings. However, upon adoption the Company has begun presenting certain underwriting costs (previously offset against Investment and Annuity Fees), as well as certain subadvisor costs (previously offset against Trust Fees) gross as noninterest expense, neither of which are material to operating results.

Due to the nature of the Company’s primary sources of revenue, there are no significant receivables, contract assets or contract liabilities not otherwise disclosed. The Company has assessed that its current disclosures are consistent with the requirements of the standard to present revenue disaggregated in to categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The following provides additional qualitative disclosures about the Company’s noninterest income and revenue recognition policies.

Service charges on deposit accounts include transaction based fees for non-sufficient funds, account analysis fees, and other service charges on deposits, including monthly account service fees. Non-sufficient funds fees are recognized at the time when the account overdraft occurs in accordance with regulatory guidelines. Account analysis fees consist of fees charged on certain business deposit accounts based upon account activity as well as other monthly account fees, are recorded under the accrual method of accounting as services are performed.

Other service charges are earned by providing depositors safeguard and remittance of funds as well as by providing other elective services for depositors that are performed upon the depositor’s request. Charges for deposit services for the safeguard and remittance of funds are recognized at the end of the statement cycle, after services are provided, as the customer retains funds in the account. Revenue for other elective services is earned at the point in time the customer uses the service.

Trust fee income represents revenue generated from asset management services provided to individuals, businesses, and institutions. The Company has a fiduciary responsibility to the beneficiary of the trust to perform agreed upon services which can include investing assets, periodic reporting, and providing tax information regarding the trust. In exchange for these trust and custodial services, the Company collects fee income from beneficiaries as contractually determined via fee schedules. The Company’s performance obligation is primarily satisfied over time as the services are performed and provided to the customer. These fees are recorded under the accrual method of accounting as the services are performed. The Company generally acts as the principal in these transactions and records revenue and expenses on a gross basis.

Bank card and ATM fees include credit card, debit card and ATM transaction revenue. The majority of this revenue is card interchange fees earned through a third party network. Performance obligations are satisfied for each transaction when the card is used and the funds are remitted. The network establishes interchange fees that the merchant remits for each transaction, and costs are incurred from the network for facilitating the interchange with the merchant. Card fees also include merchant services fees earned for providing merchants with card processing capabilities.

ATM income is generated from allowing customers to withdraw funds from other banks’ machines and from allowing a non-customer cardholder to withdraw funds from the Company’s machines. The Company satisfies its performance obligations for each transaction at the point in time that the withdrawal is processed.

Bank card and ATM fee income is recorded on accrual basis as services are provided with the related expense reflected in data processing expense.

Investment and annuity services fee income represents income earned from investment and advisory services. The Company provides its customers with access to investment products through the use of third party carriers to meet their financial needs and investment objectives. Upon selection of an investment product, the customer enters into a policy with the carrier. The performance obligation is satisfied by fulfilling its responsibility to acquire the investment for which a commission fee is earned from the carrier based on agreed-upon fee percentages on a trade date basis. The Company has a contractual relationship with a third party broker dealer to

provide full service brokerage and investment advisory activities. As the agent in the arrangement, the Company recognizes the investment services commissions on a net basis. Investment revenue also includes portfolio management fees, which represent monthly fees charged on a contractual basis to customers for the management of their investment portfolios and are recorded under the accrual method of accounting on a gross basis, with expenses recorded in the appropriate expense line item.

This revenue line item includes investment banking income, which includes fees for services arising from securities offerings or placements in which the Company acts as a principal. Revenue is recognized at the time the underwriting is completed and the revenue is reasonably determinable.

Insurance commission revenue is recognized, net of cost, as of the effective date of the insurance policy as the Company’s performance obligation is connecting the customer to the insurance products. The Company also receives contingent commissions from insurance companies as additional incentive for achieving specified premium volume goals and/or the loss experience of the insurance placed. Contingent commissions from insurance companies are recognized when determinable, which is generally when such commissions are received or when we receive data from the insurance companies that allows the reasonable estimation of these amounts.

Secondary mortgage market operations revenue is primarily comprised of service release premiums earned on the sale of closed-end mortgage loans to other financial institutions or government agencies that are recognized in revenue as each sales transaction occurs.

Bank-owned life insurance income primarily represents income earned from the appreciation of cash surrender value of insurance contracts held and the proceeds of insurance benefits. Revenue from the proceeds of insurance benefits is recognized at the time a claim is confirmed.

Credit-related fee income includes letters of credit fees and unused commercial commitment fees. Revenue for letters of credit fees is recognized over time. Revenue for unused commercial commitment fees are recognized based on contractual terms, generally when collected.

Income from derivatives consists primarily of interest rate swap fees, net of fair value adjustments for customer derivatives and the related offsetting agreements with unrelated financial institutions for which the derivative instruments are not designated as hedges. This line item also includes the resulting gain or loss from ineffectiveness on derivatives that are designated as hedged items.

Gain (loss) on sales of assets reflects the excess (deficiency) of proceeds received over the carrying amount assets sold plus cost to sell for various assets other than foreclosed real estate. Gain or loss on the sale of assets are recognized as each transaction occurs.

Other miscellaneous income represents a variety of revenue streams, including safe deposit box income, wire transfer fees, syndication fees and any other income not reflected above. Income is recorded once the performance obligation is satisfied, generally on the accrual basis or on a cash basis if not material and/or considered constrained.



	Three months ended				Six months ended				Three Months Ended
	June 30,				June 30,				March 31,
(in thousands)	2017		2016		2017		2016		2018		2017
Advertising	$	4,984	$	2,693	$	8,061	$	5,050	$	2,526	$	3,077
Ad valorem and franchise taxes		3,519		2,340		6,555		4,643
Corporate value and franchise taxes										3,440		3,036
Printing and supplies		1,330		1,065		2,508		2,176		1,286		1,178
Insurance expense		807		829		1,624		1,664
Travel expense		1,350		1,079		2,409		2,028		1,066		1,059
Entertainment and contributions		1,982		2,001		3,765		3,633		2,518		1,783
Tax credit investment amortization		1,213		1,833		2,425		3,576		874		1,212
Write-down for termination of FDIC loss share agreement		6,603		—		6,603		—
Other retirement expense										(4,463)		(3,060)
Other miscellaneous		5,879		4,633		12,347		10,412		5,684		7,285
Total other noninterest expense	$	27,667	$	16,473	$	46,297	$	33,182	$	12,931	$	15,570

~~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~~nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents.

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



	Three months ended				Six months ended				Three Months Ended
	June 30,				June 30,				March 31,
(in thousands, except per share data)	2017		2016		2017		2016		2018		2017
Numerator:
Net income to common shareholders	$	52,267	$	46,907	$	101,281	$	50,746	$	72,475	$	49,014
Net income allocated to participating securities - basic and diluted		1,166		1,136		2,322		1,233		1,366		1,156
Net income allocated to common shareholders - basic and diluted	$	51,101	$	45,771	$	98,959	$	49,513	$	71,109	$	47,858
Denominator:
Weighted-average common shares - basic	$	84,614	$	77,523	$	84,489	$	77,512	$	85,241	$	84,365
Dilutive potential common shares		253		157		266		164		182		259
Weighted-average common shares - diluted	$	84,867	$	77,680	$	84,755	$	77,676	$	85,423	$	84,624
Earnings per common share:
Basic	$	0.60	$	0.59	$	1.17	$	0.64	$	0.83	$	0.57
Diluted	$	0.60	$	0.59	$	1.17	$	0.64	$	0.83	$	0.57

Potential common shares consist of ~~employee~~stock options, nonvested performance-based awards, and ~~director stock options.~~nonvested restricted share awards deferred under the Company’s nonqualified deferred compensation plan. 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~~There were no anti-dilutive potential common shares excluded from the calculation of diluted earnings per share for the three months ended March 31, 2018. Weighted average anti-dilutive potential common shares totaled ~~19,397 and 17,701, respectively,~~15,986 for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017. ~~Weighted-average anti-dilutive potential common shares totaled 548,821 and 602,809, respectively, for the three and six months ended June 30, 2016.~~

~~During the second quarter of 2017, the~~The Company ~~amended both~~sponsors a qualified defined benefit pension plan, the Hancock Holding Company Pension Plan and Trust Agreement (“Pension Plan”), ~~a qualified defined benefit plan,~~covering certain eligible associates. Eligibility is based on minimum age and service-related requirements. During the ~~Hancock Holding Company 401(k) Savings Plan and Trust Agreement (“401 (k) Plan”), a defined contribution plan. The~~second quarter of 2017, 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~~provided that the accrued ~~benefit~~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~~were to be frozen as of January 1, 2018 and ~~will~~therefore not ~~thereafter~~ increase. AsThe Company makes contributions to the Pension Plan in amounts sufficient to meet funding requirements set forth in federal employee benefit and tax laws, plus such additional amounts as the Company may determine to be appropriate. The Company was not required to make a ~~result~~contribution to the Pension Plan in 2017, and does not anticipate making a contribution in 2018.

The Company also offers a defined contribution retirement benefit plan (401(k) plan), the Hancock Holding Company 401(k) Savings Plan and Trust Agreement (“401(k) Plan”), that covers substantially all associates who have been employed 60 days and meet a minimum age requirement and employment classification criteria. The Company matches 100% of the ~~plan amendments, pension assets~~first 1% of compensation saved by a participant, and ~~the benefit obligations were re-measured. As of June 30, 2017, pension assets totaled $537.6 million and the benefit obligation totaled $476.9 million. The impact~~50% of the ~~amendment to~~next 5% of compensation saved. Newly eligible associates are automatically enrolled at an initial 3% savings rate unless the ~~benefit obligation was a reduction~~associate actively opts out of ~~$17.3 million.~~

participation in the plan. The 401(k) Plan was also amended during the second quarter of 2017 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 compensation, based on the participant’s age and 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~~sponsors a nonqualified defined benefit plan covering certain legacy Whitney employees that was frozen as of December 31, 2012 and no future benefits are accrued under this plan.

The Company 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.

~~No contribution to the pension plans is required in 2017 to meet minimum funding requirements, and~~Effective January 1, 2018, the Company ~~has no plans to make a contribution~~adopted ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs.” In accordance with the Update, only the service component of net periodic benefit cost is included in the Employee Benefits line item on the Company’s Consolidated Statements of Income. All other components have been included in Other Noninterest Expense. Prior period amounts have been reclassified to conform to current ~~year.~~presentation.

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 1617 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 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.2017.

A summary of stock option activity for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 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, 2017	456,258	$	35.91		$	3,734
Outstanding at January 1, 2018							88,301	$	34.84	2.8	$	1,294
Exercised/Released	(330,644)		34.56			4,065	(24,793)		35.12			495
Cancelled/Forfeited	(538)		32.09			6	—		—			—
Expired	(2,570)		64.74				—		—			—
Outstanding at June 30, 2017	122,506	$	38.98	2.80	$	1,507
Exercisable at June 30, 2017	122,506	$	38.98	2.80	$	1,507
Outstanding at March 31, 2018							63,508	$	34.73	2.6	$	1,078
Exercisable at March 31, 2018							63,508	$	34.73	2.6	$	1,078

The total intrinsic value of options exercised for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017 was ~~$4.1 million. There was no total intrinsic value~~$0.5 million and $3.3 million, respectively.

The Company’s restricted and ~~performance shares in the table below~~performance-based share awards to certain employees and directors are subject to service requirements. A summary of the status of the Company’s nonvested restricted and ~~performance shares~~performance-based share awards as of ~~June 30, 2017~~March 31, 2018 and changes during the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, 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, 2017	2,152,119	$	32.15
Nonvested at January 1, 2018				1,708,942	$	37.05
Granted	61,099		42.09	54,710		48.22
Vested	(201,137)		30.18	(9,587)		35.90
Forfeited	(38,670)		32.37	(30,376)		35.25
Nonvested at June 30, 2017	1,973,411	$	32.65
Nonvested at March 31, 2018				1,723,689	$	37.44

As of ~~June 30, 2017,~~March 31, 2018, there was ~~$43.8~~$47.5 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 ~~3.2~~3.3 years. The total fair value of shares which vested during ~~the six~~three months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ was ~~$10.0~~$0.3 million and ~~$2.0~~$0.5 million, respectively.

During the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, the Company granted ~~23,489~~26,147 performance ~~shares~~share awards subject to a total shareholder return (“TSR”) performance metric with a grant date fair value of ~~$42.92~~$51.13 per share and ~~23,489~~26,147 performance shares subject to ~~a core~~an operating earnings per share performance metric with a grant date fair value of ~~$38.26~~$44.84 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 4443 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.

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.

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.



	June 30, 2017								March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	—	$	74,840	$	—	$	74,840	$	—	$	93,884	$	—	$	93,884
Municipal obligations		—		245,156		—		245,156		—		237,291		—		237,291
Corporate debt securities		—		3,500		—		3,500		—		5,500		—		5,500
Residential mortgage-backed securities		—		1,854,099		—		1,854,099		—		1,743,543		—		1,743,543
Commercial mortgage-backed securities		—		433,098		—		433,098		—		680,272		—		680,272
Collateralized mortgage obligations		—		183,689		—		183,689		—		155,158		—		155,158
Total available for sale securities		—		2,794,382		—		2,794,382		—		2,915,648		—		2,915,648
Derivative assets (1)		—		16,875		—		16,875		—		12,682		—		12,682
Total recurring fair value measurements - assets	$	—	$	2,811,257	$	—	$	2,811,257	$	—	$	2,928,330	$	—	$	2,928,330
Liabilities
Derivative liabilities (1)	$	—	$	12,213	$	—	$	12,213	$	—	$	22,529	$	—	$	22,529
Total recurring fair value measurements - liabilities	$	—	$	12,213	$	—	$	12,213	$	—	$	22,529	$	—	$	22,529

Securities classified as level 2 include obligations of U.S. Government agencies and U.S. 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.

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 presented.

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.



	June 30, 2017								March 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	137,653	$	—	$	137,653	$	—	$	205,945	$	—	$	205,945
Other real estate owned		—		—		8,447		8,447		—		—		5,493		5,493
Total nonrecurring fair value measurements	$	—	$	137,653	$	8,447	$	146,100	$	—	$	205,945	$	5,493	$	211,438



	December 31, 2016								December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	169,888	$	—	$	169,888	$	—	$	184,205	$	—	$	184,205
Other real estate owned		—		—		13,968		13,968		—		—		6,928		6,928
Total nonrecurring fair value measurements	$	—	$	169,888	$	13,968	$	183,856	$	—	$	184,205	$	6,928	$	191,133

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.

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 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 ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.



	June 30, 2017										March 31, 2018
							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	$	491,653	$	—	$	—	$	491,653	$	491,653	$	315,401	$	—	$	—	$	315,401	$	315,401
Available for sale securities		—		2,794,382		—		2,794,382		2,794,382		—		2,915,648		—		2,915,648		2,915,648
Held to maturity securities		—		2,866,529		—		2,866,529		2,874,454		—		2,952,295		—		2,952,295		3,014,428
Loans, net		—		137,653		17,954,752		18,092,405		18,251,976		—		205,945		18,337,770		18,543,715		18,881,791
Loans held for sale		—		26,787		—		26,787		26,787		—		21,827		—		21,827		21,827
Derivative financial instruments		—		16,875		—		16,875		16,875		—		12,682		—		12,682		12,682
Financial liabilities:
Deposits	$	—	$	—	$	21,432,877	$	21,432,877	$	21,442,815	$	—	$	—	$	22,438,772	$	22,438,772	$	22,485,722
Federal funds purchased		76,798		—		—		76,798		76,798		25,967		—		—		25,967		25,967
Securities sold under agreements to repurchase		482,109		—		—		482,109		482,109		443,151		—		—		443,151		443,151
FHLB short-term borrowings		1,252,000		—		—		1,252,000		1,252,000		982,979		—		—		982,979		982,979
Long-term debt		—		407,409		—		407,409		407,876		—		297,555		—		297,555		300,443
Derivative financial instruments		—		12,213		—		12,213		12,213		—		22,529		—		22,529		22,529

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 early adopted this standard effective January 1, 2018 and has made certain adjustments to its existing designation documentation for active hedging relationships in order to take advantage of specific provisions in the new guidance and to fully align its documentation with the ASU. The adoption of this standard did not have a material impact on its financial condition or results of operations. See further discussion in Note 6 – Derivatives.

In March 2017, the FASB issued ~~Accounting Standards Update (“ASU”) 2017-08, “Receivables~~ASU 2017-07, “Compensation – ~~Nonrefundable Fees~~Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and ~~Other~~Net Periodic Postretirement Benefit Costs, ~~(Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,~~” ~~which amends~~to improve the ~~amortization period for certain purchased callable debt securities held at a premium.~~presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments require that an employer report the ~~premium~~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 ~~amortized to~~presented in the ~~earliest call date.~~income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments ~~do not, however, require an accounting change for securities held at a discount; instead,~~also allow only the ~~discount continues~~service cost component to be ~~amortized to maturity. The amendments in this ASU more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities.~~eligible for capitalization when applicable. These amendments are effective for ~~fiscal years, and~~public business entities for ~~interim period within those fiscal years,~~annual periods beginning after December 15, ~~2018.~~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 Company ~~early~~ adopted ~~this amendment~~the standard effective January 1, 2018 and the amendments were applied retrospectively for the presentation of the service cost component and the other components of net periodic pension and postretirement benefit costs in ~~accordance with~~ the ~~standards,~~statement of income. Refer to Note 12 – Retirement Plans – for detail on the ~~Company began amortizing the premium~~components of net periodic pension and post-retirement benefit costs that were reclassified for ~~certain purchased callable debt securities to the earliest call date.~~each reporting period. The ~~adoption~~provisions of this ~~guidance~~update apply only to presentation and therefore did not have a material impact on the Company’s financial condition or results of operations.

In ~~March 2016,~~May 2014, the FASB issued ASU ~~2016-09, “Compensation - Stock Compensation~~2014-09, “Revenue from Contracts with Customers (Topic ~~718): Improvements~~606),” affecting any entity that enters into contracts with customers to ~~Employee Share-Based Payment Accounting,”~~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 ~~improve~~depict the ~~accounting~~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 ~~employee share-based payments. Several aspects~~those goods or services. Most revenue associated with financial instruments, including interest and loan origination fees, is outside the scope of the ~~accounting~~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 ~~share-based payment award transactions are simplified, including income tax consequences; classification~~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 ~~awards as either equity or liabilities;~~a contract with a customer and ~~classification on the statement of cash flows. The amendments were effective for public business entities for annual periods beginning after December 15, 2016,~~other clarifying guidance and ~~interim periods within those annual periods and we adopted~~technical corrections. Entities could elect to adopt the guidance either on a full or modified retrospective basis. The standard was effective and the Company adopted this guidance on January 1, ~~2017. In accordance~~2018, using the modified retrospective approach. The Company inventoried and evaluated its contracts with customers for compliance with the ~~standard,~~standard. The Company did not identify material changes to the ~~Company elected to account for forfeitures~~timing of ~~stock-based compensation as they occur~~revenue recognition and ~~will now reclass dividends paid on forfeited shares to compensation expense from retained earnings. Classification of shares forfeited for taxes are reflected in~~ the statement of cash flows as a financing rather than operating activity, with all historical periods restated. In addition, the Company began recognizing excess tax benefits and tax deficiencies during the period to income (rather than in equity) on a prospective basis. Our adoption of this guidance did not have a material impact on ~~the Company’s~~its financial condition or results of ~~operations, however,~~operations. See Note 8 - Revenue Recognition for additional information regarding the ~~change in treatment~~implementation of ~~excess tax benefits and tax deficiencies could result in volatility of future earnings, depending~~this standard.

Additionally, the following ASUs were applicable to the Company January 1, 2018, but did not have a significant impact on ~~changes in~~ the Company’s ~~stock price.~~ consolidated financial statements:

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 is currently assessing this pronouncement and the impact of adoption, but it is not expected to have a material impact on the Company’s 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 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance, meaning early adoption should be within the first interim period if an employer issues interim financial statements. 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. The Company is currently assessing this pronouncement and the impact of adoption, but it 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. The Company is currently assessing this pronouncement and is considering early adoption, but it 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. The Company is currently assessing this pronouncement and the impact of adoption on the Company’s financial condition and 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. The Company is currently assessing this pronouncement and the impact of adoption; 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 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. This guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

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 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 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 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, 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 not planning to early ~~adopt.~~adopt this guidance. The Company ~~expects~~has begun the implementation process by engaging a third party consultant and forming a cross-functional working group comprised of individuals from various areas including credit, finance, risk management and information technology. Three work streams have been created to complete balance sheet scoping, execute system implementation, and develop the expected credit loss models. While the Company has not yet quantified the financial impact of adoption, the expectation is that application of this guidance will result in an increase in the allowance for loan losses given the change in methodology from covering losses inherent in the portfolio to covering losses over the remaining expected life of the portfolio, and the reclassification of nonaccretable difference on purchased credit impaired loans ~~moving~~ to an allowance (offset by an increase in the carrying value of the related loans). ~~The~~Application of the guidance ~~will~~is also expected to result in the establishment of an allowance for credit loss on held to maturity debt securities. The amount of the increase in these allowances will be impacted by the portfolio composition and quality at the adoption date as well as economic conditions and 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~~With the exception of short-term ~~leases)~~leases, lessees will be required to recognize a lease liability ~~which is a~~representing the lessee’s obligation to make lease payments arising from a lease, measured on a discounted ~~basis;~~basis, and a right-of-use asset ~~which is an asset that represents~~representing 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~~Consequently, lessees will no longer be ~~provided with~~able to utilize leases a source of off-balance sheet financing. Lessor accounting is largely unchanged under the new guidance, except for clarification of the definition of initial direct costs which may impact the timing of recognition of those costs. Public business entities are required to apply the amendments for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In the first quarter of 2018, the FASB issued a targeted improvement standard that allows an additional transition method to the new lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which the entity adopts the new lease requirements would continue to be in accordance with current GAAP (Topic 840), including disclosures. The Company ~~is currently assessing~~plans to elect this ~~pronouncement and the impact~~transition method. The Company has begun its review of ~~adoption by reviewing its~~ existing lease ~~contracts~~ and service contracts that may include embedded leases. The Company also begun the process of upgrading its existing third-party leasing software that will be used for implementation, with a targeted completion date in the fourth quarter of 2018. 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 ~~the recognition of operating lease expense in~~ its consolidated results of ~~operations.~~

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial 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 oroperations as a 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; however, the adoptionapplication 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 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 is still in process of gathering an inventory and evaluating all contracts with customers and does not plan to early adopt the guidance. The Company plans to use the modified retrospective approach for reporting and make a cumulative effect adjustment to the beginning balance of retained earnings. The preliminary analysis suggests this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

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

This report contains forward-looking statements within the meaning and protections 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~~Important factors that could cause actual results to differ materially from the forward-looking statements we make in this annual report are set forth in this Quarterly Report on Form 10-Q and in other reports or documents that we ~~may make~~file from time to time with the SEC and include, ~~statements regarding balance sheet and revenue growth,~~but are not limited to, the following:

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 “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~~2017 and in other periodic reports that we file with the SEC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used to describe ~~Hancock’s~~our performance. A reconciliation of those measures to GAAP measures are provided within the ~~appropriate sections~~selected financial data section of this Item. The following is a summary of these non-GAAP measures and an explanation as to why they are deemed useful.

Consistent with Securities and Exchange Commission Industry Guide 3, ~~the Company presents~~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 astatutory federal tax ~~rate~~rates of 21% and 35% for 2018 and 2017, respectively, to increase tax-exempt interest income to a ~~taxable-equivalent~~taxable equivalent basis. ~~The Company believes~~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.

~~Over the past several quarters we have disclosed our focus on strategic initiatives that were designed to replace declining levels~~

We present certain additional non-GAAP financial 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~~company’s performance period over period, as well as ~~providing~~to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives.

These non-GAAP measures may reference the concepts “core” or “operating.” We use the term “core” to describe a financial measure that excludes income or expense arising from accretion or amortization of fair value adjustments recorded as part of purchase accounting. We use the term “operating” to describe a financial measure that excludes income or expense considered to be nonoperating in nature. Items identified as nonoperating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business.

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

~~We define~~ ~~Core Revenue~~ asManagement believes that core net interest income and ~~noninterest income less the amortization~~core net interest margin provide investors with meaningful financial measures of the ~~FDIC loss share receivable related to loans acquired in an FDIC assisted transaction and other nonoperating revenues.~~ Company’s performance over time.

We define ~~Core~~Operating Revenue as net interest income (te) and noninterest income less nonoperating revenue. We define Operating Pre-Provision Net Revenueas ~~core~~operating revenue (te) less noninterest expense, excluding ~~intangible amortization and other~~ nonoperating items. Management believes that ~~core pre-tax,~~operating pre-provision net revenue 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.

We define Operating Earnings as reported net income excluding nonoperating items net of income tax. We define Operating Earnings per Share as operating earnings expressed as an amount available to each common shareholder on a diluted basis.

On March 10, 2017, ~~the Company~~we, through our wholly-owned subsidiary, Whitney Bank (“Whitney”), completed a transaction with First NBC Bank (“FNBC”), whereby ~~the Company~~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 assumed $604 million in FHLB borrowings. The operational conversion of the branch locations occurred in the second quarter of

2017, along with the simultaneous closure of 10 overlapping branches. This transaction is referred to as the FNBC I transaction throughout this document.

On April 28, 2017, ~~the Company~~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 OFI’s closure of FNBC. This transaction is referred to as the FNBC II transaction throughout this document. Pursuant to the Agreement, Whitney ~~Bank~~ acquired selected assets and liabilities of FNBC from the FDIC and continued to operate the 29 former FNBC branch locations ~~(24~~until systems conversion, which occurred in ~~Louisiana~~July 2017. In the third quarter of 2017, Whitney exercised its option to acquire seven former FNBC locations and ~~five in Florida). This transaction is referred to as the FNBC II transaction throughout this document.~~ closed and consolidated 25 overlapping branch locations.

Under the Agreement, Whitney ~~acquired/~~assumed approximately $1.6 billion in deposits and customer repurchase agreements and acquired $165 million in performing loans, and $791 million in other assets. Whitney paid a premium of $35 million to the ~~following assets~~FDIC for the earnings stream acquired and ~~liabilities:~~

~~Whitney~~ received approximately ~~$798 million of cash in the transaction ($640~~$800 million in ~~preliminary settlements~~cash ($642 million from the FDIC for the net liabilities assumed and $158 million in branch cash acquired).

Whitney had an option to purchase (or assume the leases for) FNBC’s branch and non-branch locations, including furniture, fixtures, and equipment subsequent to the date of the transaction. The option to acquire seven locations was exercised, adding additional acquired assets from this transaction in the third quarter of 2017. The final settlement with the FDIC is expected to occur in the second half of 2017. In connection with its election to retain seven former FNBC locations, Whitney closed four of its existing branches considered to be overlapping.

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 nor Whitney Bank acquired any assets, common stock, preferred stock or debt, or assumed any other obligations, of First NBC Bank Holding Company.

~~Systems conversions~~In December 2017, we announced our entry into an agreement to acquire the bank-managed high net worth individual and ~~consolidation~~institutional investment management and trust business from Capital One. The transaction is expected to close in early third quarter of ~~the FNBC II operations occurred in July 2017. Management believes these low risk in-market transactions strengthen our position in the Greater New Orleans area~~2018, subject to regulatory approvals and ~~are financially compelling, which~~other customary conditions. The combination is expected to bring assets under administration and assets under management to approximately $26 billion and $10 billion, respectively, and produce combined annual revenue of $70 to $75 million. Additionally, it will ~~help us achieve our long term goals.~~provide opportunity to develop relationships for other private, wholesale and retail services.

~~For additional information~~On March 9, 2018, we sold our consumer finance subsidiary, Harrison Finance Company (“HFC”), due to a change in corporate strategy. The subsidiary operated in 35 branches with 137 employees and had $95 million in loans as of December 31, 2017. The transaction resulted in a loss on ~~both transactions, see Notes to Consolidated Financial Statements – Note 2 - Acquisitions.~~sale totaling $1.1 million.

Most of ~~Hancock’s~~our market area ~~reflected~~experienced a modest to moderate expansion in economic activity induring the ~~latter part of the second~~first quarter of ~~2017,~~2018, according to the Federal Reserve’s Summary of Commentary on Current Economic Conditions (“Beige Book”). ~~Energy-related~~Overall, the economic outlook remains positive, however there is some uncertainty on the impact of the new tariffs on trade. Energy related businesses operating mainly in ~~Hancock’s~~our south Louisiana and Houston, Texas markets ~~again showed improvement in the current quarter. Demand~~continued to expand. U.S. land based drilling and completion activity was up, and outlook remains positive for ~~oilfield services improved with the increase in rig count; however, there is concern that the current pace~~2018. However, competitive markets for labor and equipment may constrain further acceleration of ~~growth may not be sustainable. While overall oil and gas outlooks are positive, continued volatility in the sector is expected.~~activity.

The commercial real estate market continued to improve in most of our footprint, with growing demand for ~~office and industrial space in certain~~multifamily construction. In the Houston market, ~~areas.~~apartment rent growth accelerated. Commercial construction activity ~~also increased~~was flat to slightly up, with a continued improvement in ~~these sectors.~~general economic conditions. Continued improvement is expected in the commercial real estate ~~market.~~market in 2018.

The residential real estate market ~~experienced slow~~has a varied outlook, with new home construction improving, and overall home sales flat to slightly down, but ~~steady growth across~~rising moderately in our ~~footprint, with~~Houston market. Residential real estate contacts signaled continued improvement in general economic conditions. Builders report flat to slightly higher construction activity ~~up year-over-year. Home prices increased modestly, with buyers remaining price sensitive. Apartment demand was strong~~and an increase in ~~all markets. Leasing~~home prices. Construction activity ~~improved in Houston, as the market conditions are beginning to stabilize. New home sales and construction activity are~~is expected to ~~remain~~be flat or ~~improve~~increase slightly inover the ~~near term in all of our markets, with many builders focusing on bringing modestly-priced homes to the market.~~next three months.

Retail sales activity and consumer spending ~~were mixed with merchants expecting sales to remain flat.~~outlook was positive. Auto sales ~~declined throughout~~gained traction in our Houston market but demand for vehicles weakened in our other markets. The labor market remained tight and overall wage growth was modest. Employment growth was steady, with challenges continuing in filling high demand and high growth sectors, particularly in the Company’s footprint, possibly due to lenders tightening credit restrictions amid increasing delinquencies. Employment increased at a moderate pace over the reporting period, while wage increases remained steady as compared to the last reporting period. Energy companies indicatedinformation technology, long-haul transportation, construction and medical fields.

Overall economic reports indicate that ~~hiring had tightened during the second quarter, citing upward wage pressure, especially~~loan demand was strong, with growth in commercial real estate loans, but with demand for ~~experienced personnel.~~

~~Loan demand across the geographic markets that Hancock serves improved. Loan volumes increased primarily in~~ residential ~~with commercial and industrial~~real estate loans and ~~real estate (commercial and residential)~~consumer loans flat to down. Our new loan ~~growth slowing. Economic outlooks~~production in the first quarter 2018 was strong, however, payoffs were ~~mostly optimistic; however, several contacts expressed concern about the regulatory environment. Overall, the economic outlook remains~~

~~positive, as most businesses expect activity to increase over the next year.~~elevated, resulting in lower than expected loan growth.

Net income infor the ~~second~~first quarter of ~~2017~~2018 was ~~$52.3~~$72.5 million, or ~~$0.60~~$.83 per diluted common share (EPS), compared to $55.4 million, or $.64 EPS in the fourth quarter of 2017 and $49.0 million, or ~~$0.57 per diluted common share,~~$.57 EPS, in the first quarter of ~~2017 and $46.9 million, or $0.59 per diluted common share, in the second~~2017. The first quarter of ~~2016.~~2018 includes $7.0 million ($.07 per share after-tax impact) of nonoperating items related to the sale of the consumer finance subsidiary, the pending Capital One trust and asset management transaction, the brand consolidation project and a one-time all hands bonus. The ~~second~~fourth quarter of 2017 ~~includes nonoperating expenses~~included an estimated $19.5 million charge ($.22 per share) for the re-measurement of net deferred tax assets related to the FNBC I and II transactions of approximately $4.0 million ($0.03 per share), and a $6.6 million ($0.05 per share) expense related to the termination of Hancock’s loss share agreements with the FDIC for its Peoples First acquisition in December 2009.Tax Act. The first quarter of 2017 included ~~$2.1~~$6.5 million of nonoperating ~~items ($0.01 per share) and there were no nonoperating items in the second quarter of 2016. The Company expects to have additional nonoperating items~~costs related to the FNBC III transaction in($0.05 per share after-tax impact), partially offset by a $4.4 million nonoperating gain from the ~~third quarter~~sale of ~~2017.~~selected Hancock Horizon funds ($0.03 per share after-tax impact).

Highlights of ~~the Company’s second quarter 2017 results (compared~~Our First Quarter 2018 Results (Compared to ~~first quarter~~Fourth Quarter 2017):

~~The FNBC I~~Results for first quarter of 2018 were solid, reflecting positive impacts from a lower provision for loan loss, lower operating expenses, and ~~II transactions have positively impacted~~a lower income tax rate, partially offset by negative impacts of tax reform on our ~~franchise,~~TE income, the loss on sale of our consumer finance business, typical first quarter seasonality and wethe impact of today’s rate environment on our capital ratios.

We intend to consolidate the Hancock and Whitney brands during the second quarter of 2018, pending shareholder approval, after which time the Company and Bank expect to ~~generate additional value~~operate as ~~we move into~~Hancock Whitney Corporation and Hancock Whitney Bank, respectively. The brand consolidation is a natural progression of our business that allows the ~~second half~~simplification of 2017. The two transactions, however, also temporarily added cost. In addition to merger-related costs identified as nonoperating items, results also include other nonpermanent costs estimated at $7 million, or $0.05 per share, incertain operations, while honoring the second quarter. These nonpermanent expenses include costs of operating the 29 branches FNBC had when closed by the OFI, and maintaining FNBC’s separate operations to keep customers served, and to process work for the FDIC. These expenses were temporarily elevated as we worked through systems conversions and consolidation of overlapping branches. We expect these nonpermanent operating costs to decrease in the third quarter of 2017 and be eliminated by the fourth quarter of this year.

~~The total allowance for loan losses was $221.9 million at June 30, 2017, up $8.3 million from March 31, 2017 and down $4.2 million from June 30, 2016. The ratio~~legacies of the ~~allowance for loan losses to period-end loans was 1.20% at June 30, 2017, up from 1.17% at March 31, 2017,~~iconic brands of Hancock and ~~down from 1.41% at June 30, 2016. There is no allowance for loan losses on~~Whitney that have existed since the loans purchased in FNBC I or FNBC II transactions; however, a $58 million loan mark was applied to these loans at acquisition. The allowance for credits in the energy portfolio totaled $83.4 million, or 6.8% of energy loans, at June 30, 2017, down from $83.7 million, or 6.5% of energy loans, at March 31, 2017 and $111.1 million, or 7.5% of energy loans, at June 30, 2016. There were no energy charge-offs in the current quarter.late 1800s.

Net interest income (te) for the second quarter of 2017 was $208.3 million, an $18.3 million, or 10% increase from the first quarter of 2017. Core net interest income was up $14.5 million. Net interest income (te) for the second quarter of 2017 increased $37.1 million, or 22%, compared to the second quarter of 2016, while core net interest income was up $34.0 million, or 20%. The linked quarter increase is primarily attributable to a full quarter impact from the FNBC I transaction loan portfolio acquisition, as well as a full quarter impact from the March 2017 Federal Reserve rate increase. Net interest income was also impacted by the approximately $1.5 billion of higher cost deposits acquired in the FNBC II transaction, which were at an average cost of just under 1%. Most of the funds received in the FNBC II transaction were deployed to pay down FHLB borrowings and to bolster the investment securities portfolio.

Net interest income (te) for the first quarter of 2018 was $209.6 million, a $7.4 million, or 3%, decrease from the fourth quarter of 2017. Over the same period, core net interest income decreased $6.2 million. Net interest income (te) for the first quarter of 2018 increased $19.6 million, or 10%, compared to the first quarter of 2017, while core net interest income was up $17.4 million, or 9%. The linked quarter decrease is primarily attributable to a $4.2 million impact of tax reform on the TE adjustment resulting from the change in the statutory tax rate, approximately $3.3 million from two fewer accrual days, and $1.7 million reversal of interest on nonaccrual loans.

The ~~reported~~ net interest margin was ~~3.43%~~3.37% for the ~~second~~first quarter of ~~2017, up 6~~2018, down 11 bps from the ~~first~~fourth quarter of 2017. The core net interest margin for the ~~second~~first quarter of ~~2017~~2018 was ~~3.29%~~3.26%, ~~unchanged~~down 9 bps from the ~~first~~fourth quarter of 2017. The net interest margin was down 8 bps related to the impact of the lower tax rate on the TE adjustment, 3 bps related to reversals of interest on nonaccrual loans and 2 bps related to the sale of the consumer finance company. Excluding those items, the net interest margin would have been up 2 bps and the core net interest margin was up 4 bps. The loan yield ~~excluding purchase accounting adjustments,~~of 4.43% is down 3 bps compared to fourth quarter of 2017, which reflects negative impacts from the lower tax rate of 6 bps and sale of the consumer finance subsidiary of 3 bps. The securities yield of 2.46% was ~~up 13 bps. Partially offsetting this improvement was~~down 4 bps compared to fourth quarter of 2017, which reflects a ~~7 bp increase in the cost~~negative impact of ~~funds.~~10 bps from tax reform. The ~~increase in the~~ cost of funds was ~~primarily related~~up 8 bps to ~~the higher cost deposits acquired in the FNBC II transaction, offset~~.58%, due in part ~~by lower long-term debt rates with the payoff of a matured subordinated note on April 1, 2017 totaling $95.5 million.~~to promotional pricing campaigns aimed at attracting and retaining deposits.

~~Compared to the second quarter of 2016, the~~The net interest margin ~~increased 18 bps and the core margin~~ was ~~up 14 bps. The major factors in these increases are largely the same as for the comparison~~flat to the first quarter of 2017 ~~primarily~~at 3.37%, and the core net interest margin was down 3 bps, with comparability also affected by the 8 bps impact of tax reform, the FNBC transactions and ~~the four Federal Reserve rate hikes. The securities yield was up 14 bps due to a more favorable mix of higher-yielding securities.~~

~~Net~~rising interest ~~income (te) for the first six months of 2017 totaled $398.3 million, a $59 million, or 17%, increase from the first half of~~rates.

~~2016. Core net interest income was up $56.9 million. Interest earned on loans, excluding purchase accounting accretion, increased~~

$56.6 million as average total loans grew $1.9 billion, or 12%, due to the FNBC transactions and organic loan growth. A $552 million, or 12%, increase in average investment securities and a 15 bps increase in the yield resulted in a $10.3 million increase in interest earned on investment securities. Higher-yielding municipal securities comprised almost 19% of the investment securities portfolio, nearly double the percentage in 2016.

~~The reported net interest margin for the first six months of 2017 was 3.40%, up 16 bps from the same period in 2016. Core margin was 3.29%, up 15 bps from the six months ended June 30, 2016.~~

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




																				Three Months Ended

	Three months ended																			March 31, 2018						December 31, 2017						March 31, 2017
	June 30, 2017						March 31, 2017						June 30, 2016
(dollars in millions)	Volume		Interest		Rate		Volume		Interest		Rate		Volume		Interest		Rate			Average Balance		Interest		Rate		Average Balance		Interest		Rate		Average Balance		Interest		Rate
Average earning assets
Commercial & real estate loans (te) (a)	$	13,890.1	$	148.4	4.29	%	$	13,058.7	$	130.4	4.04	%	$	11,990.7	$	115.0		3.86	%	$	14,224.4	$	150.9	4.30	%	$	14,096.1	$	154.5	4.35	%	$	13,058.7	$	130.4		4.04	%
Residential mortgage loans		2,399.4		22.3	3.71			2,185.9		21.3	3.90			2,015.3		20.7		4.12			2,718.4		27.9	4.10			2,642.3		26.3	3.99			2,185.9		21.3		3.90
Consumer loans		2,080.0		29.3	5.64			2,058.5		26.6	5.24			2,053.9		26.2		5.12			2,085.7		29.0	5.64			2,101.1		29.8	5.63			2,058.5		26.6		5.24
Loan fees & late charges				(0.2)						(0.1)						(0.6)					—		0.5	—			—		0.6	—			—		(0.1)		—
Total loans (te) (a) (b)		18,369.5		199.8	4.36			17,303.1		178.2	4.16			16,059.9		161.3		4.03			19,028.5		208.3	4.43			18,839.5		211.2	4.46			17,303.1		178.2		4.16
Loans held for sale		22.4		0.2	4.22			21.3		0.2	4.08			29.1		0.2		3.43			32.2		0.2	2.75			22.2		0.2	3.28			21.3		0.2		4.08
US Treasury and government agency securities		125.9		0.7	2.08			116.3		0.6	2.04			50.0		0.2		1.68			148.4		0.8	2.21			144.5		0.8	2.21			116.3		0.6		2.04
Mortgage-backed securities and collateralized mortgage obligations		4,068.4		22.8	2.23			3,975.2		22.1	2.22			4,062.3		22.0		2.16			4,785.3		27.9	2.33			4,682.2		26.2	2.24			3,975.2		22.1		2.22
Municipals (te) (a)		983.0		9.3	3.81			942.1		9.0	3.84			531.4		5.5		4.13			960.1		7.6	3.18			971.1		9.3	3.82			942.1		9.0		3.84
Other securities		64.4		0.3	1.91			3.7		—	1.96			5.0		—		1.89			3.5		—	2.06			3.7		—	2.03			3.7		—		1.96
Total securities (te) (a) (c)		5,241.7		33.1	2.52			5,037.3		31.7	2.52			4,648.7		27.7		2.38			5,897.3		36.3	2.46			5,801.5		36.3	2.50			5,037.3		31.7		2.52
Total short-term investments		704.5		1.7	0.99			408.3		0.7	0.74			409.3		0.5		0.47			148.3		0.5	1.34			149.5		0.4	1.07			408.3		0.7		0.74
Total earning assets (te) (a)	$	24,338.1	$	234.8	3.87	%	$	22,770.0	$	210.8	3.74	%	$	21,147.0	$	189.7		3.60	%	$	25,106.3	$	245.3	3.95	%	$	24,812.7	$	248.1	3.98	%	$	22,770.0	$	210.8		3.74	%
Average interest-bearing liabilities
Interest-bearing transaction and savings deposits	$	8,047.4	$	8.1	0.40	%	$	6,897.7	$	4.5	0.27	%	$	6,779.6	$	4.7		0.28	%	$	8,043.2	$	9.1	0.46	%	$	7,927.3	$	8.3	0.42	%	$	6,897.7	$	4.5		0.27	%
Time deposits		2,575.7		6.5	1.01			2,340.0		5.1	0.89			2,556.7		5.7		0.90			2,979.0		9.7	1.32			2,936.4		8.7	1.17			2,340.0		5.1		0.89
Public funds		2,539.5		3.8	0.59			2,547.9		3.2	0.50			2,302.1		2.2		0.39			3,070.1		8.1	1.07			2,803.5		6.6	0.93			2,547.9		3.2		0.50
Total interest-bearing deposits		13,162.6		18.4	0.56			11,785.6		12.8	0.44			11,638.4		12.6		0.44			14,092.3		26.9	0.78			13,667.2		23.6	0.68			11,785.6		12.8		0.44
Short-term borrowings		2,232.8		4.2	0.77			2,127.3		2.9	0.56			1,351.2		0.9		0.27			1,823.1		5.4	1.17			1,763.2		4.1	0.92			2,127.3		2.9		0.56
Long-term debt		428.3		3.9	3.61			458.0		5.1	4.42			471.9		5.0		4.26			305.1		3.4	4.48			312.7		3.4	4.37			458.0		5.1		4.42
Total borrowings		2,661.1		8.1	1.22			2,585.3		8.0	1.24			1,823.1		5.9		1.30			2,128.2		8.8	1.66			2,075.9		7.5	1.45			2,585.3		8.0		1.24
Total interest-bearing liabilities		15,823.7		26.5	0.67	%		14,370.9		20.8	0.59	%		13,461.5		18.5		0.55	%		16,220.5		35.7	0.89	%		15,743.1		31.1	0.79	%		14,370.9		20.8		0.59	%
Net interest-free funding sources		8,514.4						8,399.1						7,685.5							8,885.8						9,069.6						8,399.1
Total cost of funds	$	24,338.1	$	26.5	0.44	%	$	22,770.0	$	20.8	0.37	%	$	21,147.0	$	18.5		0.35	%	$	25,106.3	$	35.7	0.58	%	$	24,812.7	$	31.1	0.50	%	$	22,770.0	$	20.8		0.37	%
Net interest spread (te) (a)			$	208.3	3.19	%			$	190.0	3.15	%			$	171.2		3.05	%			$	209.6	3.05	%			$	217.0	3.19	%			$	190.0		3.15	%
Net interest margin	$	24,338.1	$	208.3	3.43	%	$	22,770.0	$	190.0	3.37	%	$	21,147.0	$	171.2		3.25	%	$	25,106.3	$	209.6	3.37	%	$	24,812.7	$	217.0	3.48	%	$	22,770.0	$	190.0		3.37	%

Six months ended

June 30, 2017

June 30, 2016

(dollars in millions)

Volume

Interest

Rate

Volume

Interest

Rate
Average earning assets

Commercial & real estate loans (te) (a)

$
13,476.6

$
278.8

4.17
%

$
11,851.9

$
226.7

3.84
%
Residential mortgage loans

2,293.3

43.6

3.80

2,036.9

42.0

4.12

Consumer loans

2,069.3

55.8

5.44

2,065.5

52.5

5.11

Loan fees & late charges

(0.3)

(1.4)

Total loans (te) (a) (b)

17,839.2

377.9

4.26

15,954.3

319.8

4.03

Loans held for sale

21.9

0.5

4.15

21.9

0.4

3.72

US Treasury and government agency securities

121.1

1.2

2.06

50.0

0.4

1.68

Mortgage-backed securities and collateralized mortgage obligations

4,022.0

44.8

2.23

4,097.6

44.8

2.19

Municipals (te) (a)

962.7

18.4

3.83

435.3

9.1

4.18

Other securities

34.2

0.3

1.90

5.6

0.1

1.87

Total securities (te) (a) (c)

5,140.0

64.7

2.52

4,588.5

54.4

2.37

Total short-term investments

557.3

2.5

0.90

464.2

1.1

0.47

Total earning assets (te) (a)

$
23,558.4

$
445.6

3.80
%

$
21,028.9

$
375.7

3.59
%
Average interest-bearing liabilities

Interest-bearing transaction and savings deposits

$
7,475.7

$
12.6

0.34
%

$
6,797.6

$
9.4

0.28
%
Time deposits

2,458.6

11.6

0.96

2,407.8

10.7

0.89

Public funds

2,543.6

6.9

0.55

2,237.8

4.3

0.38

Total interest-bearing deposits

12,477.9

31.1

0.50

11,443.2

24.4

0.43

Short-term borrowings

2,180.3

7.3

0.67

1,458.0

1.9

0.26

Long-term debt

443.1

8.9

4.03

477.6

10.1

4.23

Total borrowings

2,623.4

16.2

1.23

1,935.6

12.0

1.24

Total interest-bearing liabilities

15,101.3

47.3

0.63
%

13,378.8

36.4

0.55
%
Net interest-free funding sources

8,457.1

7,650.1

Total cost of funds

$
23,558.4

$
47.3

0.40
%

$
21,028.9

$
36.4

0.35
%
Net interest spread (te) (a)

398.3

3.17
%

339.3

3.04
%
Net interest margin

$
23,558.4

$
398.3

3.40
%

$
21,028.9

$
339.3

3.24
%

Due to the significant contribution from purchase accounting accretion related to 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.

During the ~~second~~first quarter of ~~2017, the Company~~2018, we recorded a ~~total~~ provision for loan losses of ~~$15.0~~$12.3 million, down ~~$1.0~~$2.7 million from the fourth quarter of 2017 and down $3.7 million from the first quarter of ~~2017 and down $2.2~~2017.

Net charge-offs totaled $12.2 million, ~~from~~which represents 0.26% of average total loans on an annualized basis in the ~~second~~first quarter of ~~2016. For~~2018, compared to $20.8 million, or 0.44% of average total loans in the ~~six months ended June 30, 2017,~~fourth quarter of 2017. Net charge-offs from energy credits in the ~~Company recorded a total~~first quarter of 2018 were $4.3 million and included gross charges of $7.6 million, and recoveries totaling $3.3 million. There were $8.4 million in net charges-offs related to energy credits in the fourth quarter of 2017.

The provision for loan losses ~~of $30.9 million, compared to $77.2 million for the six months ended June 30, 2016. The first half of 2016 included $50 million~~reflects a continued decline in ~~provision expense related to~~ the energy ~~portfolio.~~

allowance, offset by an increase in nonenergy reserves. The ~~section in “Item 2. Management’s Discussion and Analysis~~discussion of ~~Financial Condition and Results of Operations –~~ Allowance for Loan Losses and Asset ~~Quality”~~Quality later in this Item provides additional information on changes in the allowance for loan losses and general credit quality.

Noninterest income totaled ~~$67.5~~$66.3 million for the ~~second~~first quarter of 2018, down $3.4 million, or 5%, from the fourth quarter of 2017 and up ~~$4.0~~$2.8 million, or 6%4%, compared to the first quarter of 2017. Excluding nonoperating items, noninterest income totaled $67.4 million for the first quarter of 2018, down $2.3 million, or 3%, from the fourth quarter of 2017 and up $8.3 million, or 14%, from the first quarter of 2017. The decrease was largely driven by a decline in gain on sales of assets as the fourth quarter of 2017 included a $2.9 million gain from a bulk sale of loans, and ~~up $3.8 million, or 6%,~~a decline in service charges on deposits, partially offset by increases in most other revenue sources. The increase compared to the ~~second~~first quarter of ~~2016.~~ 2017 was largely driven by higher service charges on deposit accounts, bank card and ATM fees and income from derivatives

Included in the first quarter of 2018 is a loss on the sale of the finance company of $1.1 million and included in the first quarter of 2017 is a $4.4 million gain related to the sale of selected Hancock Horizon funds, ~~classified as nonoperating. Virtually all categories experienced significant growth when compared~~both considered to ~~the prior quarter. Most fee income lines are also up when comparing the three and six months ended June 30, 2017 and 2016.~~ be nonoperating items.

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



	Three months ended						Six months ended				Three Months Ended
	June 30,		March 31,		June 30,		June 30,				March 31,		December 31,		March 31,
(in thousands)	2017		2017		2016		2017		2016		2018		2017		2017
Service charges on deposit accounts	$	20,061	$	19,206	$	18,394	$	39,267	$	36,777	$	21,448	$	22,455	$	19,206
Trust fees		11,506		11,211		12,089		22,717		23,313		11,335		11,079		11,211
Bank card and ATM fees		13,687		12,468		11,954		26,155		23,302		14,458		14,234		12,468
Investment and annuity fees		5,271		4,599		5,043		9,870		9,976
Investment and annuity fees and insurance commissions												6,125		5,802		5,264
Secondary mortgage market operations		4,241		3,567		4,176		7,808		7,088		3,401		3,244		3,567
Insurance commissions and fees		1,174		665		1,240		1,839		2,547
Amortization of FDIC loss share receivable		(1,327)		(1,100)		(1,526)		(2,427)		(3,139)		—		—		(1,100)
Income from bank-owned life insurance		2,883		2,652		4,501		5,535		7,051		3,070		2,841		2,652
Credit related fees		2,898		2,878		2,267		5,776		4,624		2,722		2,843		2,878
Derivative income		2,680		465		533		3,145		394
Net (loss) gain on sale of assets		(60)		(227)		1,801		(287)		3,566
Safety deposit box income		391		449		413		840		891
Income from derivatives												1,523		1,385		465
Gain (loss) on sales of assets												(62)		3,013		(227)
Other miscellaneous		4,082		2,306		2,041		6,388		4,376		3,377		2,792		2,755
Securities transactions		—		—		768		—		1,114
Total noninterest operating income		67,487		59,139		63,694		126,626		121,880	$	67,397	$	69,688	$	59,139
Nonoperating income items		—		4,352		—		4,352		—		(1,145)		—		4,352
Total noninterest income	$	67,487	$	63,491	$	63,694	$	130,978	$	121,880	$	66,252	$	69,688	$	63,491

Service charges on deposits totaled ~~$20.1~~$21.4 million for the ~~second~~first quarter of ~~2017, up $0.9~~2018, down $1.0 million, or 4%, from the ~~first~~fourth quarter of 2017 and up ~~$1.7~~$2.2 million, or 9%12%, from the ~~second~~first quarter of ~~2016. These increases were~~2017. The decrease from the prior quarter was due to a seasonal increase in customer balances in the fourth quarter 2017, and the increase over the first quarter of 2017 was primarily due to an increase in consumer overdraft fees ~~approximately half of which related to~~and new sustained overdraft fees, along with the ~~addition of~~larger deposit base following the FNBC ~~deposits.~~transactions.

Bank card and ATM fees totaled ~~$13.7~~$14.5 million for ~~the quarter ended June 30, 2017, compared to $12.5 million in~~ the first quarter of ~~2017.~~2018, up $0.2 million, or 2%, from the fourth quarter of 2017, due mostly to activity in the merchant business. Compared to the ~~second~~first quarter of ~~2016,~~2017, bank card and ATM fees were up ~~$1.7~~$2.0 million, or ~~14%~~16%, due to ~~an increase in credit card and merchant fees.~~ increased activity.

~~Secondary~~Fee income from secondary mortgage market operations ~~fee income increased $0.7~~was up $0.2 million, or ~~19%~~5%, from fourth quarter of 2017 with a slightly higher sales activity, and down $0.2 million, or 5%, from the first quarter of ~~2017, and were relatively flat compared to the second quarter of 2016. A $16~~2017.

Trust fees increased $0.3 million, ~~increase in production and a higher percentage of loans sold in the secondary market were the primary factors in the~~or 2%, linked quarter, ~~increase. Mortgage loan originations for the second quarter~~due in part to higher market values of ~~2017 totaled $361 million, compared to $345 million in~~assets managed. For the first quarter of ~~2017 and $339~~2018, trust fees increased $0.1 million, ~~in the second quarter of 2016.~~

~~Trust fees, investment and annuity fees, and insurance commissions and fees totaled $18.0 million in the second quarter of 2017, up $1.5 million linked quarter and down $0.4 million~~or 1%, compared to the ~~second~~first quarter of 2016. The decline in trust fees compared to the second quarter of 2016 was, in part, due to the sale of the Hancock Horizon funds mentioned above. The linked quarter increase in investment and annuity fees is attributable to both a sales initiative on fee-based investment products, including sales to former FNBC2017.

~~customers,~~Investment and ~~an overall appreciation in asset value as a result of favorable market conditions. Insurance~~ ~~commissions were up~~annuity fees and insurance commisisons increased $0.3 million, or 6%, compared to ~~the~~fourth quarter 2017 and increased $0.9 million, or 16%, compared to first quarter ~~2017, but down compared to the second quarter of 2016,~~2017. The increases are mainly due to ~~changes~~higher sales volumes in ~~ancillary sales methodology, decreased seasonal demand~~annuities, mutual funds and ~~residual claims related to major flooding in Louisiana in 2016.~~ bond trading.

Income from bank-owned life insurance increased $0.2 million, or 9%8%, compared to the fourth quarter of 2017, and increased $0.4 million, or 16%, compared to the first quarter of 2017. The increase over the first quarter of 2017 ~~but was down $1.6~~is due to an additional policy investment of $50 million ~~or 36%, compared to~~made in the second quarter of 2016. An additional $50 million investment in bank-owned policies in the second quarter drove the linked quarter increase, while the second quarter of 2016 experienced an abnormally high level of income from death benefit claims.2017.

Income on our customer interest rate derivative program resulted in a ~~$2.7~~$1.5 million net gain for the ~~second~~first quarter of ~~2017~~2018 compared to net gains of $1.4 million in the fourth quarter of 2017 and $0.5 million ~~in both~~for the first quarter of ~~2017 and the second quarter of 2016.~~2017. This income can be volatile ~~in nature~~ and is dependent upon both customer sales activity ~~and~~as well as market value adjustments due to interest rate movement. ~~Management believes the derivative fee income for the quarter is approximately $1.0 million higher than a normal run rate.~~

~~Other miscellaneous income totaled $4.1~~Gain (loss) on sales of assets was down $3.1 million infrom the ~~second~~fourth quarter of 2017 and up ~~$1.8~~$0.2 million ~~linked quarter and $2.0 million compared to~~from the ~~second~~first quarter of ~~2016. Other miscellaneous fee income for second quarter~~2017. The fourth and first quarters of 2017 ~~includes a $1.0~~included the previously mentioned $2.9 million ~~co-arranger fee related to a health care credit facility~~gain on the sale of loans and ~~$0.7~~$4.4 million ~~in additional income from a Small Business Investment Company. While these fees are part~~gain on the sale of ~~our normal operations, they can be unpredictable as to future timing and amount and are driving most of the increase compared to prior periods.~~selected Hancock Horizon funds, respectively.

Noninterest expense for the ~~second~~first quarter of 2018 was $170.8 million, up $2.7 million, or 2%, from the fourth quarter of 2017, ~~was $183.5 million,~~and up ~~$19.9~~$7.2 million, or ~~12%~~4%, from the first quarter of ~~2017, and up $32.5 million, or 22%, from the second quarter of 2016.~~2017. Excluding nonoperating expense items, ~~noninterest~~total operating expense for the ~~second~~first quarter of ~~2017~~2018 totaled ~~$172.9~~$164.9 million, ~~an increase~~a decrease of ~~$15.8~~$3.1 million, or ~~10%~~2%, linked quarter and up ~~$21.9~~$7.9 million, or ~~15%~~5%, from the ~~second~~first quarter of 2016. For the first six months of 2017, total noninterest expense was $347.0 million, a $40.0, or 13% increase over 2016. Excluding nonoperating expense items, noninterest expense for the first half of 2017 totaled $329.9 million, up $27.9 million, or 9% over 2016.2017.

Nonoperating expenses in ~~both~~ the ~~second and~~ first ~~quarters~~quarter of ~~2017~~2018 included ~~acquisition-related~~ costs associated with a one-time all hands bonus, the ~~FNBC transactions totaling $4.0 million~~brand consolidation project, the sale of the consumer finance company and ~~$6.5 million, respectively. The second quarter~~the pending acquisition of ~~2017 also includes a $6.6 million expense due to the termination of a FDIC loss share agreement associated with the People’s First transaction in 2009.~~Capital One’s trust and asset management business. There were no nonoperating expenses ~~for~~in the ~~second~~fourth quarter of ~~2016.~~2017. The nonoperating expenses in the first quarter of 2017 related to the FNBC I transaction. The components of noninterest expense and nonoperating expense are presented in the following tables for the indicated periods.

Three months ended

Six months ended

June 30,

March 31,

June 30,

June 30,
(in thousands)

2017

2017

2016

2017

2016
Operating expense

Compensation expense

$
80,876

$
73,005

$
70,233

$
153,881

$
139,671
Employee benefits

15,334

16,007

14,004

31,341

29,307
Personnel expense

96,210

89,012

84,237

185,222

168,978
Net occupancy expense

12,969

10,762

10,394

23,731

20,750
Equipment expense

3,799

3,708

3,080

7,507

6,854
Data processing expense

16,755

15,395

14,370

32,150

28,577
Professional services expense

8,153

6,649

7,712

14,802

15,152
Amortization of intangibles

5,757

4,705

5,005

10,462

10,129
Telecommunications and postage

3,698

3,467

3,272

7,165

6,633
Deposit insurance and regulatory fees

6,983

6,490

6,049

13,473

11,446
Other real estate expense, net

(1,004)

(13)

350

(1,017)

795
Advertising

4,083

2,947

2,693

7,030

5,050
Ad valorem and franchise taxes

3,519

3,036

2,340

6,555

4,643
Printing and supplies

1,324

1,174

1,065

2,498

2,176
Insurance expense

807

817

829

1,624

1,664
Travel expense

1,206

1,044

1,079

2,250

2,028
Entertainment and contributions

1,974

1,767

2,001

3,741

3,633
Tax credit investment amortization

1,213

1,212

1,833

2,425

3,576
Other miscellaneous

5,407

4,907

4,633

10,314

9,912
Total operating expense

$
172,853

$
157,079

$
150,942

$
329,932

$
301,996
Nonoperating expense items

10,617

6,463

—

17,080

4,978
Total noninterest expense

$
183,470

$
163,542

$
150,942

$
347,012

$
306,974

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

As noted earlier, expenses related to the FNBC I and II transactions include nonpermanent costs in addition to those identified as nonoperating. These nonpermanent expenses include costs to maintain certain operations of the former FNBC, including 29 branch locations and other back office functions prior to systems conversion and consolidation of overlapping branches. Management estimates that these nonpermanent costs were approximately $7 million, or $0.05 per share, in the second quarter of 2017. We expect these nonpermanent operating costs to decrease through the third quarter of 2017 and be eliminated by the fourth quarter of 2017.

Personnel expense totaled ~~$96.2~~$96.4 million for the ~~second~~first quarter of ~~2017, up $7.2~~2018, down $3.2 million, or ~~8% linked~~3%, from the previous quarter due to ~~annual merit increases, higher~~a decrease in incentive and bonus and incentive costs and $4.5 million related to the addition of personnel from FNBC. Approximately $3.5 million of the additional personnel costs are expected to be eliminated once consolidations are complete.expense, partially offset by seasonal increase in benefit costs. Year over year, personnel expense was up ~~$12.0~~$4.3 million, or ~~14%.~~5%, primarily due to merit increases.

Occupancy and equipment expenses totaled ~~$16.8~~$14.4 million in ~~the second quarter of 2017, up $2.3 million, or 16%, from~~ the first quarter of 2018, down $0.5 million, or 4%, from the fourth quarter of 2017 and ~~up $3.3 million, or 24%, compared~~flat to the ~~second~~first quarter of ~~2016 due, in part, to approximately $1.1 million in costs related to acquired branches to be consolidated in the second half of~~ 2017.

~~Net~~ORE expense for the first quarter of 2018 was $0.2 million compared to small net gains on ORE dispositions ~~exceeded ORE expense by $1.0~~of $0.3 million ~~compared to near breakeven~~in the linked quarter and ~~$0.3 million of net expense~~small gain in the ~~second~~first quarter of 2017. Management ~~does not expect this~~believes the current quarter reflects a more typical level of ORE ~~gains to be sustainable in future quarters.~~expense.

All other expenses, excluding amortization of intangibles and nonoperating expense items, totaled ~~$55.1~~$48.3 million for the ~~second~~first quarter of 2018, up $0.3 million, or 1%, from the fourth quarter of 2017, and up ~~$6.2~~$2.5 million, or ~~13%~~5%, from the first quarter of ~~2017, and up $7.2 million, or 15% compared to~~2017. The increases from the ~~second~~first quarter of ~~2016. These increases were primarily seen in the~~2017 include professional services, regulatory fees, data processing and ~~advertising categories, including $2.2 million of temporary operating cost related to the FNBC transactions.~~entertainment, partially offset with decreases in other retirement expense and advertising.

The effective income tax rate for the ~~second~~first quarter of 2018 was approximately 18.5%, compared to 20.8% in the fourth quarter of 2017 ~~was approximately 24.0%, compared to~~(exclusive of the $19.5 million of income tax expense resulting from re-measurement of the deferred tax asset) and 25.3% in the first quarter of ~~2017 and 22.5%~~2017. The decrease in ~~the second quarter of 2016. Management expects~~ the effective tax rate ~~for 2017 will be in~~was primarily due to the ~~range of 25% to 27%, excluding the impact of employee share-based compensation. The adoption~~enactment of the ~~new accounting standard for employee share-based compensation results in stock compensation having a direct impact~~Tax Cuts and Jobs Act (“Tax Act”) on December 22, 2017. The Tax Act significantly revised U.S. corporate income tax ~~expense and therefore,~~laws by, among other things, lowering the ~~effective tax rate. Depending upon the Company’s share price and the number of shares vesting during the period, the impact of stock compensation on~~statutory corporate federal income tax ~~expense~~rate from 35% to 21%, eliminating or reducing the deductibility of certain meals and entertainment expenses, limiting the ~~effective~~deduction of FDIC insurance premiums as well as modifying the deductibility of executive compensation through the elimination of the performance-based compensation exception and changes to the definition of a covered employee.

As a result of the reduced tax rate, ~~will vary from quarter to quarter. For the second quarter of 2017, excess~~we re-measured our deferred tax benefits from employee share-based compensation decreased income tax expense by $1.4 million. The Company currently estimates that vesting of restricted stock awards in the third quarter of 2017 will be minimalassets and inliabilities during the fourth quarter of 2017 ~~will result~~resulting in ~~an additional~~incremental income tax expense of $19.5 million. The re-measurement charge was comprised of $25.3 million related to certain items included in AOCI and a provisional income tax benefit of ~~approximately $3.7 million.This estimate is based on~~$5.8 million related to items included in continuing operations. Pursuant to the ~~share price as~~SEC’s Staff Accounting Bulletin No. 118, entities have a measurement period not to exceed one year from the enactment date of the ~~end of the second quarter and does not include~~Tax Act to record provisional amounts related to the impact of ~~stock option exercises.~~ the Tax Act. As of March 31, 2018, no adjustment has been made to the initial provisional benefit recorded. We are still in the process of collecting information, finalizing calculations and awaiting additional guidance from the IRS or other regulatory agencies. Any such adjustments could materially impact income tax expense in the period in which the adjustments are made.

~~The Company’s~~Our effective tax rate historically varies from the ~~35%~~ federal statutory rate primarily because of tax-exempt income and tax credits. Interest income on bonds issued by or loans to state and municipal governments and authorities, and earnings from the BOLI program are the major components of tax-exempt income. The main ~~sources~~source of tax credits ~~have~~has been investments in 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 ~~Markets~~Market Tax Credit (“NMTC”) 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. The Tax Act repealed the provision related to tax credit bonds effective for bonds issued after December 31, 2017. As such, these bonds are no longer viable alternatives for lowering our effective tax rate.

~~The Company has~~We have invested in NMTC projects through investments in ~~its own~~our Community Development Entity (“CDE”), as well as other unrelated CDEs. These investments ~~will~~are expected to 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.

We intend to continue making investments in tax credit ~~projects and qualified bonds.~~projects. However, ~~its~~our 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~~we expect to realize benefits from federal and state tax credits totaling ~~$7.8~~$6.1 million, ~~$5.6~~$3.6 million and ~~$3.2~~$1.6 million for 2019, 2020 and 2021, respectively. In February 2018, ~~2019,~~the U.S. Department of Treasury announced the 2017 New Market Tax Credit allocation. We were awarded a New Market Tax Credit allocation that will allow us to invest $50 million in tax credit projects and ~~2020, respectively.~~receive a total of $19.5 million in tax credits to be recognized over a seven-year period.

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



	Three months ended						Six months ended				Three Months Ended
	June 30,		March 31,		June 30,		June 30,				March 31,		December 31,		March 31,
(in thousands)	2017		2017		2016		2017		2016		2018		2017		2017
Taxes computed at statutory rate	$	24,074	$	22,977	$	21,184	$	47,051	$	22,918	$	18,663	$	33,140	$	22,977
Tax credits:
QZAB/QSCB		(643)		(642)		(681)		(1,285)		(1,378)		(759)		(642)		(642)
NMTC - Federal and State		(1,679)		(1,679)		(2,009)		(3,358)		(3,839)		(1,379)		(1,679)		(1,679)
LIHTC		—		—		24		—		12
LIHTC and other credits												—		(88)		—
Total tax credits		(2,322)		(2,321)		(2,666)		(4,643)		(5,205)		(2,138)		(2,409)		(2,321)
State income taxes, net of federal income tax benefit		1,133		843		762		1,976		1,055		2,044		1,594		843
Tax-exempt interest		(4,719)		(4,673)		(3,407)		(9,392)		(6,460)		(2,786)		(4,849)		(4,673)
Bank-owned life insurance		(1,046)		(947)		(1,573)		(1,993)		(2,463)
Life insurance contracts												(930)		(2,119)		(947)
Employee share-based compensation												(140)		(3,821)		(434)
Impact of deferred tax asset re-measurment												—		19,520		—
Impact from interim estimated effective tax rate		821		1,880		(879)		2,701		4,503		356		(2,230)		1,880
Employee share-based compensation		(1,367)		(434)		—		(1,801)		—
FDIC Assessment Disallowance												747		—		—
Other, net		(58)		(690)		197		(748)		385		581		411		(690)
Income tax expense	$	16,516	$	16,635	$	13,618	$	33,151	$	14,733	$	16,397	$	39,237	$	16,635

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



	Three months ended						Six months ended				Three Months Ended
	June 30,		March 31,		June 30,		June 30,				March 31,		December 31,		March 31,
	2017		2017		2016		2017		2016		2018		2017		2017
Common Share Data
Earnings per share:
Basic	$	0.60	$	0.57	$	0.59	$	1.17	$	0.64	$	0.83	$	0.64	$	0.57
Diluted	$	0.60	$	0.57	$	0.59	$	1.17	$	0.64	$	0.83	$	0.64	$	0.57
Cash dividends paid	$	0.24	$	0.24	$	0.24	$	0.48	$	0.48	$	0.24	$	0.24	$	0.24
Book value per share (period-end)	$	33.21	$	32.70	$	31.77	$	33.21	$	31.77	$	33.96	$	33.86	$	32.70
Tangible book value per share (period-end)	$	23.27	$	23.19	$	22.50	$	23.27	$	22.50	$	24.22	$	24.05	$	23.19
Weighted average number of shares (000s):
Basic		84,614		84,365		77,523		84,489		77,512		85,241		85,044		84,365
Diluted		84,867		84,624		77,680		84,755		77,676		85,423		85,303		84,624
Period-end number of shares (000s)		84,738		84,517		77,538		84,738		77,538		85,285		85,200		84,517
Market data:
High sales price	$	52.94	$	49.50	$	27.84	$	52.94	$	27.84	$	56.40	$	53.35	$	49.50
Low sales price	$	42.70	$	41.71	$	21.93	$	41.71	$	20.01	$	49.48	$	46.18	$	41.71
Period-end closing price	$	49.00	$	45.55	$	26.11	$	49.00	$	26.11	$	51.70	$	49.50	$	45.55
Trading volume (000s) (a)		39,035		45,119		41,668		84,154		97,987		35,459		29,308		45,119



	Three months ended						Six months ended				Three Months Ended
	June 30,		March 31,		June 30,		June 30,				March 31,		December 31,		March 31,
(in thousands)	2017		2017		2016		2017		2016		2018		2017		2017
Income Statement:
Interest income	$	226,177	$	202,515	$	183,506	$	428,692	$	364,147	$	241,395	$	239,173	$	202,515
Interest income (te) (a)		234,741		210,813		189,702		445,554		375,686		245,358		248,122		210,813
Interest expense		26,460		20,824		18,537		47,284		36,342		35,731		31,126		20,824
Net interest income (te) (a)		208,281		189,989		171,165		398,270		339,344		209,627		216,996		189,989
Provision for loan losses		14,951		15,991		17,196		30,942		77,232		12,253		14,986		15,991
Noninterest income		67,487		63,491		63,694		130,978		121,880		66,252		69,688		63,491
Noninterest expense (excluding amortization of intangibles)		177,713		158,837		145,937		336,550		296,845		165,173		162,178		158,837
Amortization of intangibles		5,757		4,705		5,005		10,462		10,129		5,618		5,885		4,705
Income before income taxes		68,783		65,649		60,525		134,432		65,479		88,872		94,686		65,649
Income tax expense		16,516		16,635		13,618		33,151		14,733		16,397		39,237		16,635
Net income	$	52,267	$	49,014	$	46,907	$	101,281	$	50,746	$	72,475	$	55,449	$	49,014

Earnings excluding nonoperating items
Net income											$	72,475	$	55,449	$	49,014
Nonoperating income												1,145		—		(4,352)
Nonoperating expense												5,853		—		6,463
Income tax benefit												(1,216)		—		(739)
Income tax resulting from re-measurement of deferred tax asset												—		19,520		—
Nonoperating items, net of applicable income tax benefit												5,782		19,520		1,372
Operating earnings												78,257		74,969		50,386



		Three Months ended
		March 31,			December 31,			March 31,
		2018			2017			2017
Performance Ratios
Return on average assets		1.08	%		0.82	%		0.80	%
Return on average common equity		10.23	%		7.67	%		7.27	%
Return on average tangible common equity		14.41	%		10.81	%		9.92	%
Earning asset yield (te) (a)		3.95	%		3.98	%		3.74	%
Total cost of funds		0.58	%		0.50	%		0.37	%
Net interest margin (te) (a)		3.37	%		3.48	%		3.37	%
Noninterest income to total revenue (te) (a)		24.01	%		24.31	%		25.05	%
Average loan/deposit ratio		86.32	%		86.57	%		89.90	%
FTE employees (period-end)		3,775			3,887			3,819
Capital Ratios
Common stockholders' equity to total assets		10.61	%		10.55	%		10.84	%
Tangible common equity ratio (b)		7.80	%		7.73	%		7.94	%

Select performance measures excluding nonoperating items
Operating earnings per share - diluted (d)	$	0.90		$	0.86		$	0.58
Return on average assets - operating		1.17	%		1.10	%		0.83	%
Return on average common equity - operating		11.05	%		10.37	%		7.48	%
Return on average tangible common equity - operating		15.56	%		14.62	%		10.20	%
Efficiency ratio (c)		57.51	%		56.57	%		61.16	%
Noninterest income as a percent of total revenue (te) - operating		24.33	%		24.31	%		23.74	%

Three months ended

Six months ended

June 30,

March 31,

June 30,

June 30,

2017

2017

2016

2017

2016
Performance Ratios

Return on average assets

0.79
%

0.80
%

0.82
%

0.80
%

0.44
%
Return on average common equity

7.52
%

7.27
%

7.76
%

7.40
%

4.20
%
Return on average tangible common equity

10.69
%

9.92
%

11.04
%

10.31
%

5.98
%
Earning asset yield (te) (a)

3.87
%

3.74
%

3.60
%

3.80
%

3.59
%
Total cost of funds

0.44
%

0.37
%

0.35
%

0.40
%

0.35
%
Net interest margin (te) (a)

3.43
%

3.37
%

3.25
%

3.40
%

3.24
%
Noninterest income to total revenue (te) (a)

24.47
%

25.05
%

27.12
%

24.75
%

26.43
%
Efficiency ratio (b)

60.59
%

61.16
%

62.14
%

60.86
%

63.28
%
Average loan/deposit ratio

87.76
%

89.90
%

85.80
%

88.77
%

86.24
%
FTE employees (period-end)

4,162

3,819

3,723

4,162

3,723

Capital Ratios

Common stockholders' equity to total assets

10.57
%

10.84
%

10.68
%

10.57
%

10.68
%
Tangible common equity ratio (c)

7.65
%

7.94
%

7.81
%

7.65
%

7.81
%

(a)

Taxable equivalent (te) amounts are calculated using the applicable statutory federal income tax rate.



	Three months ended									Six months ended						Three Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,			March 31,			December 31,			March 31,
($ in thousands)	2017			2017			2016			2017			2016			2018			2017			2017
Asset Quality Information
Nonaccrual loans (a)	$	238,219		$	262,649		$	265,722		$	238,219		$	265,722		$	275,179		$	252,800		$	262,649
Restructured loans - still accruing		90,502			47,267			35,974			90,502			35,974			166,520			120,493			47,267
Total nonperforming loans		328,721			309,916			301,696			328,721			301,696			441,699			373,293			309,916
Other real estate (ORE) and foreclosed assets		18,049			17,156			23,374			18,049			23,374			26,630			27,542			17,156
Total nonperforming assets	$	346,770		$	327,072		$	325,070		$	346,770		$	325,070		$	468,329		$	400,835		$	327,072
Accruing loans 90 days past due (a)	$	18,390		$	590		$	7,982		$	18,390		$	7,982		$	12,724		$	27,766		$	590
Net charge-offs - non-purchased credit impaired		5,985			29,911			7,803			35,896			29,102
Net charge-offs - purchased credit impaired		(45)			118			(147)			73			(214)
Net charge-offs																	12,200			20,800			30,029
Allowance for loan losses		221,865			213,550			226,086			221,865			226,086			210,713			217,308			213,550
Provision for loan losses		14,951			15,991			17,196			30,942			77,232			12,253			14,986			15,991
Ratios:
Nonperforming assets to loans, ORE and foreclosed assets		1.88	%		1.79	%		2.02	%		1.88	%		2.02	%		2.45	%		2.11	%		1.79	%
Accruing loans 90 days past due to loans		0.10	%		0.00	%		0.05	%		0.10	%		0.05	%		0.07	%		0.15	%		0.00	%
Nonperforming assets + accruing loans 90 days past due to loans, ORE and foreclosed assets		1.97	%		1.80	%		2.07	%		1.97	%		2.07	%		2.52	%		2.25	%		1.80	%
Net charge-offs - non-purchased credit impaired to average loans		0.13	%		0.70	%		0.20	%		0.41	%		0.37	%
Net charge-offs to average loans																	0.26	%		0.44	%		0.70	%
Allowance for loan losses to period-end loans		1.20	%		1.17	%		1.41	%		1.20	%		1.41	%		1.10	%		1.14	%		1.17	%
Allowance for loan losses to nonperforming loans + accruing loans 90 days past due		63.92	%		68.77	%		73.01	%		63.92	%		73.01	%		46.37	%		54.18	%		68.77	%




	March 31,		December 31,		September 30,			June 30,	March 31,
(in thousands)	2018		2017		2017		2017		2017
Period-End Balance Sheet
Total loans, net of unearned income (a)	$	19,092,504	$	19,004,163	$	18,786,285	$	18,473,841	$	18,204,868
Loans held for sale		21,827		39,865		23,236		26,787		20,883
Securities		5,930,076		5,888,380		5,624,552		5,668,836		5,001,273
Short-term investments		61,541		92,384		111,725		126,428		51,273
Earning assets		25,105,948		25,024,792		24,545,798		24,295,892		23,278,297
Allowance for loan losses		(210,713)		(217,308)		(223,122)		(221,865)		(213,550)
Goodwill		745,523		745,523		739,403		740,265		716,761
Other intangible assets, net		85,021		90,640		96,525		101,694		86,952
Other assets		1,571,558		1,692,439		1,658,151		1,714,583		1,616,566
Total assets	$	27,297,337	$	27,336,086	$	26,816,755	$	26,630,569	$	25,485,026
Noninterest-bearing deposits	$	8,230,060	$	8,307,497	$	7,896,384	$	7,887,867	$	7,722,279
Interest-bearing transaction and savings deposits		8,058,793		8,181,554		7,893,546		8,402,133		7,162,760
Interest-bearing public funds deposits		3,108,008		3,040,318		2,762,048		2,537,030		2,595,263
Time deposits		3,088,861		2,723,833		2,981,881		2,615,785		2,441,718
Total interest-bearing deposits		14,255,662		13,945,705		13,637,475		13,554,948		12,199,741
Total deposits		22,485,722		22,253,202		21,533,859		21,442,815		19,922,020
Short-term borrowings		1,452,097		1,703,890		1,737,151		1,810,907		2,121,932
Long-term debt		300,443		305,513		331,179		407,876		525,082
Other liabilities		163,037		188,532		351,291		155,009		152,370
Stockholders' equity		2,896,038		2,884,949		2,863,275		2,813,962		2,763,622
Total liabilities & stockholders' equity	$	27,297,337	$	27,336,086	$	26,816,755	$	26,630,569	$	25,485,026

June 30,

March 31,

December 31,

September 30,

June 30,
(in thousands)

2017

2017

2016

2016

2016
Period-End Balance Sheet

Total loans, net of unearned income (a)

$
18,473,841

$
18,204,868

$
16,752,151

$
16,070,821

$
16,035,796
Loans held for sale

26,787

20,883

34,064

42,545

42,297
Securities

5,668,836

5,001,273

5,017,128

4,843,112

4,806,370
Short-term investments

126,428

51,273

78,177

128,920

153,159
Earning assets

24,295,892

23,278,297

21,881,520

21,085,398

21,037,622
Allowance for loan losses

(221,865)

(213,550)

(229,418)

(236,061)

(226,086)
Goodwill

740,265

716,761

621,193

621,193

621,193
Other intangible assets, net

101,694

86,952

87,757

92,523

97,409
Other assets

1,714,583

1,616,566

1,614,250

1,545,677

1,533,652
Total assets

$
26,630,569

$
25,485,026

$
23,975,302

$
23,108,730

$
23,063,790
Noninterest-bearing deposits

$
7,887,867

$
7,722,279

$
7,658,203

$
7,543,041

$
7,151,416
Interest-bearing transaction and savings deposits

8,402,133

7,162,760

6,910,466

6,620,373

6,754,513
Interest-bearing public funds deposits

2,537,030

2,595,263

2,563,758

2,394,148

2,354,234
Time deposits

2,615,785

2,441,718

2,291,839

2,327,915

2,556,706
Total interest-bearing deposits

13,554,948

12,199,741

11,766,063

11,342,436

11,665,453
Total deposits

21,442,815

19,922,020

19,424,266

18,885,477

18,816,869
Short-term borrowings

1,810,907

2,121,932

1,225,406

1,075,956

1,095,107
Long-term debt

407,876

525,082

436,280

463,710

468,028
Other liabilities

155,009

152,370

169,582

194,460

220,421
Stockholders' equity

2,813,962

2,763,622

2,719,768

2,489,127

2,463,365
Total liabilities & stockholders' equity

$
26,630,569

$
25,485,026

$
23,975,302

$
23,108,730

$
23,063,790



	Three months ended						Six months ended				Three Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,		March 31,		December 31,		March 31,
(in thousands)	2017		2017		2016		2017		2016		2018		2017		2017
Average Balance Sheet
Total loans, net of unearned income (a)	$	18,369,446	$	17,303,044	$	16,059,846	$	17,839,191	$	15,954,308	$	19,028,490	$	18,839,537	$	17,303,044
Loans held for sale		22,389		21,328		29,053		21,862		21,937		32,194		22,231		21,328
Securities (b)		5,241,735		5,037,286		4,648,807		5,140,075		4,588,449		5,897,290		5,801,451		5,037,286
Short-term investments		704,560		408,343		409,323		557,270		464,155		148,309		149,457		408,343
Earning assets		24,338,130		22,770,001		21,147,029		23,558,398		21,028,849		25,106,283		24,812,676		22,770,001
Allowance for loan losses		(216,851)		(226,503)		(220,679)		(221,650)		(201,971)		(216,796)		(225,769)		(226,503)
Goodwill and other intangible assets		826,097		729,766		721,031		778,198		723,563		833,269		833,162		729,766
Other assets		1,578,877		1,483,242		1,491,210		1,531,322		1,485,112		1,514,321		1,553,438		1,483,242
Total assets	$	26,526,253	$	24,756,506	$	23,138,591	$	25,646,268	$	23,035,553	$	27,237,077	$	26,973,507	$	24,756,506
Noninterest-bearing deposits	$	7,769,932	$	7,462,258	$	7,079,426	$	7,616,945	$	7,056,553	$	7,951,121	$	8,095,563	$	7,462,258
Interest-bearing transaction and savings deposits		8,047,426		6,897,660		6,779,565		7,475,719		6,797,634		8,043,176		7,927,250		6,897,660
Interest-bearing public fund deposits		2,539,424		2,547,874		2,302,096		2,543,626		2,237,766		3,070,079		2,803,547		2,547,874
Time deposits		2,575,779		2,340,066		2,556,668		2,458,574		2,407,802		2,979,043		2,936,397		2,340,066
Total interest-bearing deposits		13,162,629		11,785,600		11,638,329		12,477,919		11,443,202		14,092,298		13,667,194		11,785,600
Total deposits		20,932,561		19,247,858		18,717,755		20,094,864		18,499,755		22,043,419		21,762,757		19,247,858
Short-term borrowings		2,232,845		2,127,256		1,351,227		2,180,342		1,458,015		1,823,033		1,763,189		2,127,256
Long-term debt		428,292		458,050		471,924		443,089		477,636		305,117		312,719		458,050
Other liabilities		145,989		190,253		167,680		167,998		169,271		192,695		267,367		190,253
Stockholders' equity		2,786,566		2,733,089		2,430,005		2,759,975		2,430,876		2,872,813		2,867,475		2,733,089
Total liabilities & stockholders' equity	$	26,526,253	$	24,756,506	$	23,138,591	$	25,646,268	$	23,035,553	$	27,237,077	$	26,973,507	$	24,756,506

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


	Three months ended									Six months ended						Three Months Ended
		June 30,			March 31,			June 30,			June 30,			June 30,		March 31,			December 31,			September 30,			June 30,			March 31,
($ in thousands)		2017			2017			2016			2016			2016			2018			2017			2017			2017			2017
Net interest income	$	199,717		$	181,691		$	164,969		$	381,408		$	327,805		$	205,664		$	208,047		$	202,857		$	199,717		$	181,691
Tax-equivalent adjustment (te)(a)		8,564			8,298			6,196			16,862			11,539			3,963			8,949			8,579			8,564			8,298
Net interest income (te)	$	208,281		$	189,989		$	171,165		$	398,270		$	339,344		$	209,627		$	216,996		$	211,436		$	208,281		$	189,989
Purchase accounting adjustments
Net loan discount accretion (b)		8,801			5,017			5,878			13,818			12,236
Net investment premium amortization (c)		(398)			(454)			(636)			(852)			(1,356)
Net purchase accounting adjustments		8,403			4,563			5,242			12,966			10,880
Loan discount accretion (b)																	7,108			8,280			7,711			8,801			5,017
Bond premium amortization (c)																	(315)			(320)			(364)			(398)			(454)
Total net purchase accounting adjustments (d)																	6,793			7,960			7,347			8,403			4,563
Net interest income (te) - core	$	199,878		$	185,426		$	165,923		$	385,304		$	328,464		$	202,834		$	209,036		$	204,089		$	199,878		$	185,426
Average earning assets	$	24,338,130		$	22,770,001		$	21,147,029		$	23,558,398		$	21,028,849		$	25,106,283		$	24,812,676		$	24,487,426		$	24,338,130		$	22,770,001
Net interest margin - reported		3.43	%		3.37	%		3.25	%		3.40	%		3.24	%		3.37	%		3.48	%		3.44	%		3.43	%		3.37	%
Net purchase accounting adjustments		0.14	%		0.08	%		0.10	%		0.11	%		0.10	%		0.11	%		0.13	%		0.12	%		0.14	%		0.08	%
Net interest margin - core		3.29	%		3.29	%		3.15	%		3.29	%		3.14	%		3.26	%		3.35	%		3.32	%		3.29	%		3.29	%

Operating revenue (te) and ~~core pre-tax,~~operating pre-provision net revenue (te)

Three months ended
Six months ended

June 30,

March 31,

June 30,

June 30,

June 30,
(in thousands)

2017

2017

2016

2017

2016
Net interest income
$
199,717

$
181,691

$
164,969

$
381,408

$
327,805
Noninterest income

67,487

63,491

63,694

130,978

121,880
Total revenue
$
267,204

$
245,182

$
228,663

$
512,386

$
449,685
Tax-equivalent adjustment (a)

8,564

8,298

6,196

16,862

11,539
Purchase accounting adjustments - revenue (d)

(7,076)

(3,463)

(3,716)

(10,539)

(7,742)
Nonoperating revenue

—

(4,352)

—

(4,352)

—
Core revenue (te)
$
268,692

$
245,665

$
231,143

$
514,357

$
453,482
Noninterest expense

(183,470)

(163,542)

(150,942)

(347,012)

(306,974)
Intangible amortization

5,757

4,705

5,005

10,462

10,129
Nonoperating items

10,617

6,463

—

17,080

4,978
Core pre-tax, pre-provision net revenue (te)
$
101,596

$
93,291

$
85,206

$
194,887

$
161,615


	Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
(in thousands)	2018		2017		2017		2017		2017
Net income	$	72,475	$	55,449	$	58,902	$	52,267	$	49,014
Net income allocated to participating securities		(1,366)		(1,104)		(1,244)		(1,166)		(1,156)
Net income available to common shareholders		71,109		54,345	$	57,658	$	51,101		47,858
Nonoperating items, net of applicable income tax		5,782		19,520		7,405		6,902		1,372
Nonoperating items allocated to participating securities		(109)		(390)		(156)		(154)		(32)
Operating earnings available to common shareholders	$	76,782	$	73,475		64,907		57,849	$	49,198
Weighted average common shares - diluted		85,423		85,303		84,980		84,867		84,624
Earnings per share -diluted	$	0.83	$	0.64	$	0.68	$	0.60	$	0.57
Operating earnings per share - diluted	$	0.90	$	0.86	$	0.76	$	0.68	$	0.58

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 ~~33.57%~~43.35% at ~~June 30,~~March 31, 2018, compared to 44.15% at December 31, 2017 ~~compared to~~and 20.29% at March 31, 2017 and 28.39% at June 30, 2016. The total amount of free securities at June 30, 2017 increased by $0.9 billion compared to the prior quarter as total securities rose by $0.7 billion due in part to the deployment of excess liquidity from the FNBC II transaction.2017. The total of pledged securities at ~~June 30, 2017~~March 31, 2018 was ~~down $227~~$3.4 billion, up $76 million ~~compared to March 31,2017 as collateral related to seasonal public fund tax deposits was released.~~from December 31, 2017. Total securities at ~~June 30, 2017~~March 31, 2018 were $0.9 billion higher than at ~~June 30, 2016.~~March 31, 2017.



	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
Liquidity Metrics	2017		2017		2016		2016		2016		2018		2017		2017		2017		2017
Free securities / total securities	33.57	%	20.29	%	23.46	%	23.97	%	28.39	%	43.35	%	44.15	%	36.61	%	33.57	%	20.29	%
Core deposits / total deposits	93.05	%	92.93	%	93.22	%	93.03	%	91.99	%	90.84	%	93.03	%	91.70	%	93.05	%	92.93	%
Wholesale funds / core deposits	11.12	%	14.30	%	9.18	%	8.76	%	9.03	%	8.58	%	9.71	%	10.47	%	11.12	%	14.30	%
Quarter-to-date average loans /quarter-to-date average deposits	87.76	%	89.90	%	86.31	%	85.64	%	85.80	%	86.32	%	86.57	%	87.08	%	87.76	%	89.90	%

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~~deposit (“CDs”) of $250,000 or more and brokered deposits. The ratio of core deposits to total deposits was ~~93.05%~~90.84% at ~~June 30,~~March 31, 2018, compared to 93.03% at December 31, 2017 ~~compared to~~and 92.93% at March 31, ~~2017 and 91.99% at June 30, 2016.~~2017. Core deposits totaled ~~$20.0~~$20.4 billion at ~~June 30,~~March 31, 2018, a decrease of $0.3 billion from December 31, 2017, ~~an increase of $1.4~~and up $1.9 billion from March 31, 2017. The increase from March 31, 2017 ~~and up $2.6 billion from June 30, 2016. These increases were~~was primarily due to the FNBC ~~transactions.~~II transaction. Brokered deposits totaled ~~$758 million~~$1.2 billion as of ~~June 30, 2017,~~March 31, 2018, a ~~$42 million, or 5%, decrease from March~~$0.4 billion increase compared to December 31, 2017 and ~~down $201 million compared to June 30, 2016.~~March 31, 2017. The ~~Company’s~~ use of brokered deposits as a funding source is subject to strict parameters regarding the 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, the Bank has a line of credit with the FHLB that is secured by blanket pledges of certain mortgage loans. At ~~June 30, 2017,~~March 31, 2018, the Bank had ~~borrowed $1.3~~borrowings of approximately $1.0 billion ~~from the FHLB~~ and had approximately ~~$2.6~~$3.5 billion available under this line. The Bank also has unused borrowing capacity at the Federal Reserve’s discount window of approximately $2.2 ~~billion. The Company did not have any~~billion; there were no outstanding borrowings with the Federal Reserve at any date induring the ~~last 12 months.~~twelve months ended March 31, 2018.

Wholesale funds, which are comprised of short-term borrowings and long-term debt, were ~~11.12%~~8.58% of core deposits at ~~June 30,~~March 31, 2018, compared to 9.71% at December 31, 2017 ~~compared to~~and 14.30% at March 31, ~~2017 and 9.03% at June 30, 2016.~~2017. The linked quarter decrease primarily related to ~~the FNBC II transaction which added approximately $1.5 billion~~a $0.3 million decrease in both wholesale funds and core deposits. Cash received in the transaction allowed the Company to pay down approximately $800 million of FHLB borrowings. In addition, long-term debt decreased $117 million, primarily due to the payoff of the Company’s subordinated debt that matured in April 2017. The ~~year-over-year increase~~year over year decrease was primarily due to ~~an increase~~a decrease in FHLB borrowings. ~~FHLB borrowings totaled $1.3 billion at June 30, 2017 compared to $1.7 billion at March 31, 2017 and $0.7 billion at June 30, 2016. The Company~~Management has established an internal target ~~range~~ for 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~~Our loan-to-deposit ratio for the ~~second~~first quarter of ~~2017~~2018 was ~~87.76%~~86.32%, compared to 86.57% at December 31, 2017 and 89.90% ~~linked quarter and 85.80%~~ at June 30, 2016. The loan-to-deposit ratio for the second quarter of 2017 was impacted by the $1.5 billion in deposits acquired in the FNBC II transaction, while the first quarter of 2017 ratio was impacted by the $1.2 billion of loans and $0.4 billion of deposits acquired in the FNBC I transaction. The CompanyMarch 31, 2017. Management 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 ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and ~~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 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 to provide liquidity in an amount sufficient to fund a minimum of at least six quarters of anticipated common stockholder dividends.

Stockholders’ equity totaled ~~$2.8~~$2.9 billion at ~~June 30, 2017,~~March 31, 2018, up ~~$50~~$11 million, or ~~2% compared to March~~less than 1% from December 31, 2017 and up ~~$351~~$132 million, or ~~14%~~5%, from ~~June 30, 2016.~~March 31, 2017. The tangible common equity ratio was ~~7.65%~~7.80% at ~~June 30,~~March 31, 2018, compared to 7.73% at December 31, 2017 ~~compared to~~and 7.94% at March 31, ~~2017 and 7.81% at June 30, 2016.~~2017. The ~~decline~~increase in the ratio from prior ~~periods was~~quarter is due to net tangible earnings, partially offset by the ~~effect of~~change in accumulated other comprehensive loss. The decrease from March 31, 2017 was primarily related to the increase in tangible assets ~~acquired~~and the increase in goodwill and core deposits related to the FNBC ~~transactions. Partially offsetting~~transactions, and the ~~year-over-year decrease was the $259 million stock issuance~~change in ~~the fourth quarter of 2016.~~accumulated other comprehensive loss, partially offset by net tangible earnings. 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.

~~At June 30, 2017, the~~The regulatory capital ratios of the Company and the Bank ~~were down compared to~~as of March 31, ~~2017~~2018 continued to improve and ~~December 31, 2016, due to the FNBC transactions, but remained~~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, ~~2016~~2017 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-		June 30,		March 31,		December 31,		September 30,		June 30,		Well-		March 31,		December 31,		September 30,		June 30,		March 31,
	Capitalized		2017		2017		2016		2016		2016		Capitalized		2018		2017		2017		2017		2017
Total capital (to risk weighted assets)
Hancock Holding Company	10.00	%	11.76	%	11.91	%	13.21	%	12.15	%	11.96	%	10.00	%	12.00	%	11.90	%	11.84	%	11.76	%	11.91	%
Whitney Bank	10.00	%	11.33	%	11.52	%	11.57	%	11.81	%	11.70	%	10.00	%	11.60	%	11.55	%	11.35	%	11.33	%	11.52	%
Tier 1 common equity capital (to risk weighted assets)
Hancock Holding Company	6.50	%	10.01	%	10.16	%	11.26	%	10.09	%	9.94	%	6.50	%	10.35	%	10.21	%	10.10	%	10.01	%	10.16	%
Whitney Bank	6.50	%	10.28	%	10.49	%	10.39	%	10.56	%	10.48	%	6.50	%	10.63	%	10.54	%	10.31	%	10.28	%	10.49	%
Tier 1 capital (to risk weighted assets)
Hancock Holding Company	8.00	%	10.01	%	10.16	%	11.26	%	10.09	%	9.94	%	8.00	%	10.35	%	10.21	%	10.10	%	10.01	%	10.16	%
Whitney Bank	8.00	%	10.28	%	10.49	%	10.39	%	10.56	%	10.48	%	8.00	%	10.63	%	10.54	%	10.31	%	10.28	%	10.49	%
Tier 1 leverage capital
Hancock Holding Company	5.00	%	8.21	%	8.79	%	9.56	%	8.35	%	8.22	%	5.00	%	8.51	%	8.43	%	8.34	%	8.21	%	8.79	%
Whitney Bank	5.00	%	8.44	%	9.09	%	8.83	%	8.76	%	8.69	%	5.00	%	8.75	%	8.72	%	8.53	%	8.44	%	9.09	%

~~Investment~~Investments in securities totaled ~~$5.7~~$5.9 billion at ~~June 30, 2017,~~March 31, 2018, up ~~$668~~$41.7 million, or ~~13%~~less than 1%, from December 31, 2017, and up $928.8 million from March 31, 2017 and $862 million from June 30, 2016. During the second quarter of 2017, the Company purchased approximately $810 million of mortgage-backed securities and municipal securities at a nominal average yield of 2.35%.2017. At ~~June 30, 2017,~~March 31, 2018, securities available for sale totaled ~~$2.8~~$2.9 billion and securities held to maturity totaled ~~$2.9~~$3.0 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 ~~June 30, 2017,~~March 31, 2018, the average maturity of the portfolio was ~~5.53~~6.15 years with an effective duration of ~~4.84~~4.87 years and a nominal weighted-average yield of ~~2.35%~~2.47%. Management simulations indicate that the effective duration would increase to ~~5.08~~4.81 years with a 100 bps increase in the yield curve and to ~~5.20~~4.89 years with a 200 bps increase. At December 31, ~~2016,~~2017, the average maturity of the portfolio was ~~5.79~~5.78 years with an effective duration of ~~5.07~~4.74 years and a nominal weighted-average yield of ~~2.35%~~2.41%. The average maturity of the portfolio at ~~June 30, 2016~~March 31, 2017 was ~~5.0~~5.80 years, while the duration was ~~3.39~~5.0 years, and the nominal weighted average yield was ~~2.43%~~2.35%.

Total loans at ~~June 30, 2017~~March 31, 2018 were ~~$18.5~~$19.1 billion, up approximately ~~$269~~$88 million, ~~or 1.5%,~~ from ~~March~~December 31, ~~2017. The increase includes approximately $165 million of~~2017, with growth in commercial loans, from the FNBC II transaction (net of the fair value discount). Loans to energy-related companies decreased $59 million and nonenergy shared national credits decreased $82 million during the second quarter. There was loan growth throughout the markets across our footprint and in our mortgageincluding healthcare and equipment finance, as well as mortgage and indirect lines of business.

~~During~~Growth in loans is net of a $95 million decrease related to the ~~quarter,~~sale of the ~~Company reached an agreement with~~consumer finance company during the ~~FDIC to terminate the remaining portion of its 2009 loss share agreement. In the second~~first quarter of ~~2017, the Company wrote down the indemnification asset by $6.6 million~~2018. Loans to ~~$3.2 million, the amount received from the FDIC in the third~~energy related companies remained relatively flat during first quarter of ~~2017. The remaining loan balances that were covered under the agreement totaled $154 million at June 30, 2017, with a reserve totaling $15 million.~~2018.



		June 30,		March 31,		December 31,		September 30,		June 30,	March 31,		December 31,		September 30,		June 30,		March 31,
(in thousands)		2017		2017		2016		2016		2016	2018		2017		2017		2017		2017
Total loans:
Commercial non-real estate	$	8,093,104	$	8,074,287	$	7,613,917	$	7,133,928	$	7,132,519	$	8,336,222	$	8,297,937	$	8,129,429	$	8,093,104	$	8,074,287
Commercial real estate - owner occupied		2,078,332		2,047,451		1,906,821		1,901,825		1,916,200		2,185,543		2,142,439		2,076,014		2,078,332		2,047,451
Total commercial and industrial		10,171,436		10,121,738		9,520,738		9,035,753		9,048,719		10,521,765		10,440,376		10,205,443		10,171,436		10,121,738
Commercial real estate - income producing		2,401,673		2,505,104		2,013,890		1,990,309		2,024,471		2,394,862		2,384,599		2,511,808		2,401,673		2,505,104
Construction and land development		1,313,522		1,252,667		1,010,879		946,592		880,588		1,413,878		1,373,421		1,373,048		1,313,522		1,252,667
Residential mortgages		2,493,923		2,266,263		2,146,713		2,037,162		2,017,650		2,732,821		2,690,472		2,596,692		2,493,923		2,266,263
Consumer		2,093,287		2,059,096		2,059,931		2,061,005		2,064,368		2,029,178		2,115,295		2,099,294		2,093,287		2,059,096
Total loans	$	18,473,841	$	18,204,868	$	16,752,151	$	16,070,821	$	16,035,796	$	19,092,504	$	19,004,163	$	18,786,285	$	18,473,841	$	18,204,868

~~The Company’s~~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.

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.~~portfolio.



	June 30,				March 31,				December 31,				September 30,				June 30,				March 31,				December 31,				September 30,				June 30,				March 31,
	2017				2017				2016				2016				2016				2018				2017				2017				2017				2017
			Pct of				Pct of				Pct of				Pct of				Pct of				Pct of				Pct of				Pct of				Pct of				Pct of
($ in thousands)	Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total		Balance		Total
Commercial & industrial loans:
Health Care and Social Assistance																					$	1,159,214	11	%	$	1,118,288	11	%	$	1,023,939	10	%	$	1,084,644	11	%	$	1,076,164	11	%
Real Estate and Rental and Leasing	$	1,258,221	13	%	$	1,119,937	11	%	$	975,821	10	%	$	980,484	11	%	$	986,502	11	%		1,154,304	11			1,122,389	11			1,134,451	12			1,116,117	11			1,119,937	11
Mining, Quarrying, and Oil and Gas Extraction (a)		1,133,314	11			1,211,006	12			1,320,294	14			1,311,480	15			1,382,496	15			972,580	9			992,179	10			1,074,822	11			1,131,279	11			1,211,006	12
Health Care and Social Assistance		1,116,411	11			1,076,164	11			1,010,135	11			953,900	10			900,604	10
Retail Trade (a)																						869,662	8			757,998	7			761,418	7			774,414	8			755,059	8
Public Administration		848,475	8			839,005	8			796,742	8			717,629	8			686,179	8			857,736	8			840,773	8			832,638	8			848,543	8			839,005	8
Manufacturing (a)		793,016	8			769,118	8			729,926	8			637,194	7			655,493	7			795,014	8			745,744	7			726,339	7			769,161	8			769,118	8
Retail Trade (a)		810,512	8			755,059	8			682,775	7			632,175	7			645,073	7
Transportation and Warehousing (a)																						651,869	6			609,011	6			563,263	6			569,923	6			556,468	5
Construction																						626,013	6			619,956	6			564,444	6			521,926	5			519,663	5
Wholesale Trade (a)																						536,791	5			578,037	6			513,086	5			492,910	5			490,569	5
Educational Services																						440,272	4			462,595	4			438,247	4			434,955	4			428,248	4
Finance and Insurance		519,983	5			478,473	5			507,339	5			451,469	5			463,953	5			437,547	4			501,157	5			559,092	5			503,551	5			478,473	5
Wholesale Trade (a)		503,336	5			490,569	5			486,940	5			461,133	5			452,973	5
Construction		553,403	5			519,663	5			478,926	5			447,206	5			441,160	5
Transportation and Warehousing (a)		587,985	6			556,468	5			468,377	5			428,936	5			422,649	5
Educational Services		438,195	4			428,248	4			421,035	4			421,114	5			429,810	5
Professional, Scientific, and Technical Services (a)		389,092	4			362,610	4			340,323	4			339,642	4			320,319	4			433,169	4			429,637	4			356,560	3			371,055	4			362,610	4
Other Services (except Public Administration)		369,202	4			342,155	3			308,802	3			292,669	3			292,482	3			371,913	4			356,787	3			349,711	3			348,080	3			342,155	3
Accommodation and Food Services		347,773	3			338,241	3			270,693	3			295,625	3			294,607	3			357,693	3			324,619	3			340,551	3			305,421	3			338,241	3
Other (a)		502,518	5			835,022	8			722,610	8			665,097	7			674,419	7			857,988	9			981,206	9			966,882	10			899,457	8			835,022	8
Total commercial & industrial loans	$	10,171,436	100	%	$	10,121,738	100	%	$	9,520,738	100	%	$	9,035,753	100	%	$	9,048,719	100	%	$	10,521,765	100	%	$	10,440,376	100	%	$	10,205,443	100	%	$	10,171,436	100	%	$	10,121,738	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 the borrower’s source of revenue. The energy related lending portfolio totaled ~~$1.2~~approximately $1.1 billion ~~$1.3 billion, $1.4 billion, $1.4 billion,~~at March 31, 2018, December 31, 2017 and ~~$1.5~~September 30, 2017, $1.2 billion at June 30, 2017, and $1.3 billion at March 31, ~~2017, December 31, 2016, September 30, 2016, and June 30, 2016, respectively.~~2017.

At ~~June 30, 2017,~~March 31, 2018, commercial and industrial (“C&I”) loans, including both non-real estate and owner occupied real estate secured loans, totaled approximately ~~$10.2~~$10.5 billion, an increase of ~~$49.7~~$81.4 million, or ~~0.5%~~1%, from ~~March~~December 31, 2017. Included in C&I are ~~$1.2~~$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 ~~6.7%~~5.5% of total loans at ~~June 30, 2017,~~March 31, 2018, down from 12.4% in fourth quarter of 2014, the beginning of the downturn in the energy cycle. Payoffs and paydowns of approximately ~~$134~~$76 million and charge-offs of approximately $7.6 million were partially offset by approximately ~~$75~~$85 million in draws on existing lines of credit. Management has a strategic target to ~~bring~~reduce the ~~level~~concentration 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 ~~June 30, 2017~~March 31, 2018 totaling approximately ~~$2.1~~$1.7 billion, or ~~11%~~9%, of total loans were down ~~$114~~$368 million ~~compared to March~~from December 31, 2017, ~~and down $76~~primarily due to a change in the definition of a shared national credit from an aggregate loan commitment threshold of $20 million ~~from June 30, 2016.~~to $100 million. Approximately ~~$781~~$474 million of shared national credits under the new definition were with ~~energy-related~~energy related customers at ~~June 30, 2017, down approximately $32 million from~~ March 31, ~~2017 and down $198 million from June 30, 2016.~~2018.

Commercial real estate – income producing loans totaled approximately $2.4 billion at ~~June 30, 2017, a decrease~~March 31, 2018, an increase of ~~$103~~$10.3 million, or 4%0.4%, from ~~March~~December 31, 2017. The majority of the ~~decrease~~increase in commercial real estate – income producing loans was related to the ~~multi-family property type.~~multifamily and hotel/motel properties. The following table details commercial real estate – income producing by property types for the last five quarters.



	March 31,				December 31,				September 30,				June 30,				March 31,
	2018				2017				2017				2017				2017
			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	$	521,607	22	%	$	526,929	22	%	$	550,720	22	%	$	511,708	22	%	$	565,673	23	%
Office		436,789	18			441,539	19			472,169	19			481,626	20			482,121	19
Multifamily		379,932	15			341,783	14			339,656	13			347,583	15			444,188	18
Hotel/Motel		336,724	14			328,238	14			299,796	12			296,996	12			307,170	12
Industrial		270,812	11			272,133	11			327,048	13			269,985	11			268,138	11
Other		448,998	19			473,977	20			522,419	21			493,775	21			437,814	17
Total commercial real estate - income producing loans	$	2,394,862	100	%	$	2,384,599	100	%	$	2,511,808	100	%	$	2,401,673	100	%	$	2,505,104	100	%

June 30,

March 31,

December 31,

September 30,

June 30,

2017

2017

2016

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

$
538,979

23
%

$
565,673

23
%

$
466,168

22
%

$
483,026

24
%

$
505,146

25
%
Office

535,210

22

482,121

19

371,029

19

382,191

19

360,677

18

Multifamily

347,583

15

444,188

18

346,612

17

314,539

16

366,608

18

Industrial

310,154

13

307,170

12

289,482

14

292,037

15

285,897

14

Hotel/Motel

345,556

14

268,138

11

179,016

9

129,209

6

131,750

7

Other

324,191

13

437,814

17

361,583

19

389,307

20

374,393

18

Total commercial real estate - income producing loans

$
2,401,673

100
%

$
2,505,104

100
%

$
2,013,890

100
%

$
1,990,309

100
%

$
2,024,471

100
%

Construction and land development loans, totaling approximately ~~$1.3~~$1.4 billion at ~~June 30, 2017,~~March 31, 2018, increased approximately ~~$61~~$40.5 million from ~~March~~December 31, 2017. Residential mortgages increased ~~$228~~$42.3 million and consumer loans decreased $86.1 million during the first quarter of 2018. The decrease in ~~part,~~consumer loans is primarily the result of the sale of our consumer finance company in the first quarter of 2018.

While our first quarter 2018 loan production was strong, we experienced lower than expected growth, due to the ~~FNBC II acquisition~~sale of our consumer finance company and ~~partly due to the Company’s revenue-generating initiatives. Consumer loans increased $34 million during the~~a high volume of large payoffs. We currently expect end of period loan growth for second quarter 2018 of ~~2017.~~

approximately $250 to $300 million and the full year 2018 loan growth in the range of 5% to 6%.

The Company's total allowance for loan losses was ~~$221.9~~$210.7 million at ~~June 30, 2017,~~March 31, 2018, compared to ~~$213.6~~$217.3 million at ~~March~~December 31, 2017. The ratio of the allowance for loan losses to period-end loans ~~increased~~decreased 4 bps to ~~1.20%~~1.10%, compared to ~~1.17%~~1.14% at December 31, 2017. The decrease in allowance as well as coverage is largely driven by the sale of the consumer finance company, which had an allowance of $6.6 million at the time of sale. The allowance for loan losses on the energy portfolio decreased by $7.6 million, while the allowance on the nonenergy portfolio was increased by roughly the same amount. Energy prices improved compared the prior quarter ~~end. The increase in coverage is primarily driven by higher non-energy reserves that were increased to strengthen coverage as we continue to grow~~ and ~~diversify that portfolio. Energy prices, while down from the prior quarter, have remained relatively stable and there is some improvement in energy~~ criticized loan levels ~~across all portfolios.~~continued to decline. Management believes the allowance level for the energy portfolio, as built in previous quarters, remains ~~adequate.~~adequate and we are continuing to allow it to decline as we work through problem credits. The increase in the nonenergy allowance reflects a continued trend of increasing criticized balances and increased growth and diversification of the portfolio.

~~During the second quarter~~The Company’s balance of criticized commercial loans totaled $1.1 billion at both March 31, 2018 and December 31, 2017, ~~Hancock recorded~~with an increase in nonenergy criticized loans of $35 million, offset by a ~~total provision for loan losses~~decrease in energy of ~~$15.0~~$27 million. Commercial criticized loans are down $105 million ~~down $1.0 million from $16.0 million in~~compared to the first quarter of ~~2017.~~

~~Net charge-offs from~~2017, with the ~~non-purchased credit impaired loan~~energy portfolio ~~were $6.0~~down $214 million, ~~or 0.13%~~offset by an increase in non- energy of $109 million. Criticized loans are defined as those having potential weaknesses that deserve management’s close attention (risk-rated special mention, substandard and doubtful), including both accruing and nonaccruing loans. The increase in nonenergy criticized loans is comprised of ~~average~~loans that are diversified as to both industry and geography and the level as a percent of total loans ~~on an annualized basis in the second quarter~~is not outside of ~~2017, down from $29.9 million, or 0.70%,~~historical norms. As of ~~average total~~March 31, 2018, criticized loans in the ~~first quarter~~energy portfolio were $523 million, or approximately 50% of ~~2017. There were no charge-offs~~that portfolio. Energy related ~~to energy credits in the second quarter~~loans delinquent for more than 30 days, including accrual and nonaccrual loans, totaled $101 million, or 10%, of ~~2017. Energy charge-offs were approximately $23.0 million in the first quarter of 2017.~~

~~The following table provides a breakout of the Company’s allowance for loan loss for~~ the energy portfolio ~~allocated by sector, as of June 30, 2017.~~at March 31, 2018.

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~~our energy related customers to service their ~~debt.�� Part of the ongoing monitoring includes a review~~debt, including reviews of customers’ balance sheets, leverage ratios, collateral values and other critical lending metrics. ~~As previously noted,~~We note that even with ~~improving oil~~the rise in commodity prices, ~~management expects~~we expect a ~~continued~~ lag in the recovery of energy service and support ~~credits. Reserve-based~~credits, with the key to resolution being stabilized prices over the longer-term. Many reserve based lending credits ~~are showing~~continue to show signs of improvement, ~~given the stabilization in oil prices, and~~however, we ~~expect~~are seeing limited improvement in ~~land-based~~the support sector, with the expectation for land based services to recover more quickly than drilling and ~~non-drilling~~nondrilling services in the Gulf of Mexico to follow. However, 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.~~support offshore production. Based upon information currently available, management is maintaining the estimate that net charge-offs from ~~energy-related~~energy related credits could ~~approximate $65 million to~~be as high as $95 million over the duration of the cycle, which started in the fourth quarter of 2014. To date, ~~the Company has~~we have recorded approximately ~~$65~~

$81 million in ~~energy-related~~energy related net charge-offs since the start of the cycle. ~~There were no charge offs in the second quarter of 2017.~~ See Item 7 in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for further discussion of ~~the Company’s~~our energy portfolio and its potential impact on the allowance for loan losses.

The following table provides a breakout of the allowance for loan loss for the energy portfolio, allocated by sector, as of March 31, 2018 and December 31, 2017.

Net charge-offs were $12.2 million, or 0.26%, of average total loans on an annualized basis in the first quarter of 2018, down from $20.8 million, or 0.44%, of average total loans in the fourth quarter of 2017. Net charge-offs of energy credits in the first quarter of 2018 totaled $4.3 million, consisting of gross charge-offs of $7.6 million, net of recoveries of $3.3 million. There were approximately $8.4 million of net charge-offs related to energy credits and $5.5 million of net charge-offs related to nonenergy commercial loans in the fourth quarter of 2017. Consumer loan charge-offs were down $0.9 million compared to fourth quarter due to the sale of the consumer finance company during the first quarter of 2018.

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



	Three months ended									Six months ended
															Three Months Ended
	June 30,			March 31,			June 30,			June 30,					March 31,			December 31,			March 31,
(in thousands)	2017			2017			2016			2017			2016		2018			2017			2017
Allowance for loan losses at beginning of period	$	213,550		$	229,418		$	217,794		$	229,418		$	181,179	$	217,308		$	223,122		$	229,418
Loans charged-off:
Non-purchased credit impaired loans (a):
Commercial non real estate		1,427			24,791			4,545			26,218			22,212		9,335			16,232			24,791
Commercial real estate - owner-occupied		488			29			416			517			1,199		851			31			29
Total commercial & industrial		1,915			24,820			4,961			26,735			23,411		10,186			16,263			24,820
Commercial real estate - income producing		153			7			76			160			191		—			99			7
Construction and land development		77			37			482			114			592		10			26			91
Total commercial																10,196			16,388			24,918
Residential mortgages		401			289			417			690			592		192			354			348
Consumer		6,568			8,539			5,425			15,107			11,268		8,048			8,586			8,678
Total non-purchased credit impaired charge-offs		9,114			33,692			11,361			42,806			36,054
Purchased credit impaired loans:
Total charge-offs																18,436			25,328			33,944
Commercial non real estate		—			—			—			—			—		4,146			1,084			938
Commercial real estate - owner-occupied		—			—			—			—			28		88			401			275
Total commercial & industrial		—			—			—			—			28		4,234			1,485			1,213
Commercial real estate - income producing		—			—			—			—			1		63			333			375
Construction and land development		4			54			—			58			18		29			553			471
Total commercial																4,326			2,371			2,059
Residential mortgages		27			59			23			86			23		116			725			113
Consumer		14			139			8			153			8		1,794			1,432			1,743
Total purchased credit impaired charge-offs		45			252			31			297			78
Total charge-offs		9,159			33,944			11,392			43,103			36,132
Recoveries of loans previously charged-off:
Non-purchased credit impaired loans (a):
Commercial non real estate		880			936			993			1,816			1,802
Commercial real estate - owner-occupied		43			200			197			243			238
Total commercial & industrial		923			1,136			1,190			2,059			2,040
Commercial real estate - income producing		23			375			124			398			268
Construction and land development		268			448			520			716			1,125
Residential mortgages		154			108			179			262			480
Consumer		1,761			1,714			1,545			3,475			3,039
Total non-purchased credit impaired recoveries		3,129			3,781			3,558			6,910			6,952
Purchased credit impaired loans:
Commercial non real estate		—			2			5			2			8
Commercial real estate - owner-occupied		18			75			85			93			120
Total commercial & industrial		18			77			90			95			128
Commercial real estate - income producing		—			—			1			—			2
Construction and land development		16			23			18			39			53
Residential mortgages		14			5			2			19			3
Consumer		42			29			67			71			106
Total purchased credit impaired recoveries		90			134			178			224			292
Total recoveries		3,219			3,915			3,736			7,134			7,244		6,236			4,528			3,915
Net charge-offs - non-purchased credit impaired loans		5,985			29,911			7,803			35,896			29,102
Net charge-offs - purchased credit impaired loans		(45)			118			(147)			73			(214)
Total net charge-offs		5,940			30,029			7,656			35,969			28,888		12,200			20,800			30,029
Provision for loan losses before FDIC benefit - purchased credit impaired loans		(912)			(2,236)			(1,059)			(3,148)			(3,744)
Decrease in allowance as a result of sale of subsidiary																(6,648)			—			—
Provision for loan losses before FDIC benefit																12,253			14,986			14,161
Benefit attributable to FDIC loss share agreement		696			1,830			1,248			2,526			3,437		—			—			1,830
Provision for loan losses non-purchased credit impaired loans		15,167			16,397			17,007			31,564			77,539
Provision for loan losses, net		14,951			15,991			17,196			30,942			77,232		12,253			14,986			15,991
Increase (decrease) in FDIC loss share receivable		(696)			(1,830)			(1,248)			(2,526)			(3,437)		—			—			(1,830)
Allowance for loan losses at end of period	$	221,865		$	213,550		$	226,086		$	221,865		$	226,086	$	210,713		$	217,308		$	213,550
Ratios:
Gross charge-offs - non-purchased credit impaired to average loans		0.20	%		0.79	%		0.28	%		0.48	%		0.45
Recoveries - non-purchased credit impaired to average loans		0.07	%		0.09	%		0.09	%		0.08	%		0.09
Net charge-offs - non-purchased credit impaired to average loans		0.13	%		0.70	%		0.20	%		0.41	%		0.37
Gross charge-offs to average loans																0.39	%		0.53	%		0.79	%
Recoveries to average loans																0.13	%		0.10	%		0.09	%
Net charge-offs to average loans																0.26	%		0.44	%		0.70	%
Allowance for loan losses to period-end loans		1.20	%		1.17	%		1.41	%		1.20	%		1.41		1.10	%		1.14	%		1.17	%

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.



	June 30,			December 31,			March 31,			December 31,
(in thousands)	2017			2016			2018			2017
Loans accounted for on a nonaccrual basis: (a)
Commercial non-real estate	$	80,572		$	170,703		$	70,773		$	63,387
Commercial non-real estate - restructured		87,138			78,334			108,430			89,476
Total commercial non-real estate		167,710			249,037			179,203			152,863
Commercial real estate - owner occupied		10,200			13,432			25,011			23,549
Commercial real estate - owner-occupied - restructured		1,550			981			2,376			2,440
Total commercial real estate - owner-occupied		11,750			14,413			27,387			25,989
Total commercial & industrial		179,460			263,450
Commercial real estate - income producing		7,322			13,147			10,176			9,054
Commercial real estate - income producing - restructured		6,116			807			5,457			5,520
Total commercial real estate - income producing		13,438			13,954			15,633			14,574
Construction and land development		2,526			3,652			3,711			3,791
Construction and land development - restructured		295			898			13			16
Total construction and land development		2,821			4,550			3,724			3,807
Residential mortgage		26,973			22,814			33,385			38,703
Residential mortgage - restructured		1,185			851			1,684			1,777
Total residential mortgage		28,158			23,665			35,069			40,480
Consumer		14,342			12,351			14,163			15,087
Consumer - restructured		—			—			—			—
Total consumer		14,342			12,351			14,163			15,087
Total nonaccrual loans	$	238,219		$	317,970		$	275,179		$	252,800
Restructured loans - still accruing:
Commercial non-real estate	$	82,483		$	32,887		$	152,612		$	114,224
Commercial real estate - owner occupied		3,221			493			10,308			1,578
Total commercial & industrial		85,704			33,380
Commercial real estate - income producing		3,899			5,939			2,522			3,827
Construction and land development		—			—			—			—
Residential mortgage		508			259			475			480
Consumer		391			240			603			384
Total restructured loans - still accruing		90,502			39,818			166,520			120,493
Total nonperforming loans		328,721			357,788			441,699			373,293
ORE and foreclosed assets		18,049			18,943			26,630			27,542
Total nonperforming assets (b)	$	346,770		$	376,731		$	468,329		$	400,835
Loans 90 days past due still accruing	$	18,390		$	3,039
Loans 90 days past due still accruing (c)							$	12,724		$	27,766
Total restructured loans	$	186,786		$	121,689		$	284,480		$	219,722
Ratios:
Nonperforming assets to loans plus ORE and foreclosed assets		1.88	%		2.25	%		2.45	%		2.11	%
Allowance for loan losses to nonperforming loans and accruing loans 90 days past due		63.92	%		63.58	%		46.37	%		54.18	%
Loans 90 days past due still accruing to loans		0.10	%		0.02	%		0.07	%		0.15	%

Nonperforming assets totaled ~~$347~~$468.3 million at ~~June 30, 2017, down $30~~March 31, 2018, up $67.5 million, or 8%16.8%, from December 31, ~~2016, but~~2017, and up ~~$20~~$141.3 million ~~or 6%,~~ from March 31, ~~2017 and up $22 million from June 30, 2016.~~2017. During the ~~second~~first quarter of ~~2017,~~2018, total nonperforming loans increased approximately ~~$19~~$68.4 million ~~after a drop~~from December 31, 2017, and $131.8 million from March 31, 2017. Most of ~~almost $100~~the linked quarter increase in nonperforming loans is attributable to the energy portfolio, and approximately $3.9 million of the increase is attributable to the remainder of the portfolio. The $64.5 million increase in ~~the first quarter. ORE and other foreclosed assets increased approximately $1 million in the second quarter of~~nonperforming energy loans from December 31, 2017 ~~following a $2 million decrease in the first quarter.~~was related to accruing restructured support nondrilling credits. Nonperforming assets as a percent of total loans, ORE and other foreclosed assets was ~~1.88%~~2.45% at ~~June 30,~~March 31, 2018, up 34 bps from December 31, 2017 and up 966 bps from March 31, 2017. ~~This ratio stood at 2.25% at December 31, 2016 and 2.02% at June 30, 2016.~~

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 ~~$126~~$61.5 million at ~~June 30, 2017.~~March 31, 2018. This ~~total was up $75~~represents a decrease of $30.8 million from ~~the prior quarter end~~December 31, 2017 and ~~down $27~~an increase of $10.3 million ~~from June 30, 2016.~~compared to March 31, 2017. These assets are highly volatile on a daily basis depending upon movement in customer loan and deposit accounts. Average short-term investments of ~~$705~~$148.3 million for the ~~second~~first quarter of 2018 were down $1.1 million compared to the fourth quarter of 2017, ~~were up $296~~and down $260.0 million compared to the first quarter of ~~2017, and up $295 million compared to the second quarter of 2016. Year-to-date average short-term investments were $557 million, an increase of $93 million from the first six months of 2016.~~2017. See the Liquidity section above for further discussion regarding the ~~Company’s~~ management of ~~its~~our short-term investment portfolio and the impact upon ~~its~~our liquidity in general.

Total deposits were ~~$21.4~~$22.5 billion at ~~June 30, 2017,~~March 31, 2018, up ~~$1.5 billion,~~$232.5 million, or 8%1%, from ~~March~~December 31, 2017, and up $2.6 billion, or ~~14%~~13%, from ~~June 30, 2016.~~March 31, 2017. Average deposits for the ~~second~~first quarter of 2018 were $22.0 billion, up $280.7 million, or 1%, from the fourth quarter of 2017 ~~were $20.9 billion,~~and up ~~$1.7~~$2.8 billion, or 9%15%, from the first quarter of ~~2017 and up $2.2 billion, or 12%, from~~2017. The deposits assumed in the ~~second quarter of 2016. The~~ FNBC transactions ~~added $0.4~~made up $1.1 billion toof the increase in total deposits ~~during~~and $1.4 billion in average deposits over the first quarter ~~and $1.5 billion in the second quarter of~~ 2017.

Noninterest-bearing demand deposits were ~~$7.9~~$8.2 billion at ~~June 30, 2017, up $166~~March 31, 2018, down $77.4 million, or 2%less than 1%, linked quarter, and ~~$736~~up $507.8 million, or ~~10%~~7%, year over year. The FNBC transactions added noninterest-bearing demand deposits of ~~$285 million.~~$211.0 million, compared to the first quarter of 2017. Noninterest-bearing demand deposits comprised ~~36.8%~~37% of total deposits at ~~June 30,~~March 31, 2018 and December 31, 2017, ~~compared to 38.8%~~and 39% at March 31, ~~2017, and 38.0% at June 30, 2016.~~2017.

Interest-bearing transaction and savings accounts of ~~$8.4~~$8.1 billion at ~~June 30,~~March 31, 2018 decreased $122.8 million, or 2%, compared to December 31, 2017 and increased ~~$1.2~~$0.9 billion, or ~~17%~~13%, compared to March 31, 2017. The majority of the increase over the first quarter of 2017 ~~and $1.6 billion, or 24%, compared~~was related to ~~June 30, 2016. Deposits assumed in~~ the FNBC ~~transactions accounted for the majority of these increases.~~ transactions.

Interest-bearing public fund deposits totaled ~~$2.5~~$3.1 billion at ~~June 30,~~March 31, 2018, up $67.7 million, or 2% from December 31, 2017 ~~down slightly from~~and up $512.7 million, or 20%, compared to March 31, 2017. ~~This category was up $183 million, or 8% compared to June 30, 2016.~~ Time deposits other than public funds totaled ~~$2.6~~$3.1 billion at ~~June 30, 2017. The $174 million increase from~~ March 31, 2018 up $365.0 million from December 31, 2017, ~~was primarily due to~~which includes an increase in ~~public fund~~brokered CDs ~~and recapture~~ of ~~funds from CDs that the FDIC paid out as part of FNBC’s closure.~~$345.1 million.

At ~~June 30, 2017,~~March 31, 2018, short-term borrowings totaled ~~$1.8~~$1.5 billion, down ~~$311~~$251.8 million from ~~March~~December 31, 2017, as FHLB borrowings decreased ~~$409~~$149.6 million, and ~~securities sold under agreements to repurchase increased $37~~federal funds purchased decreased $114.8 million. Short-term borrowings ~~increased $716~~decreased $669.8 million from June 30, 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.March 31, 2017.

Average ~~quarter-to-date~~ short-term borrowings of ~~$2.2~~$1.8 billion in the ~~second~~first quarter of 2018 were up $59.8 million, or 3%, compared to the fourth quarter of 2017, ~~were up $106~~and down $304.2 million, or 5%14%, compared to the first quarter of ~~2017, and up $882 million, or 65% compared to the second quarter of 2016.~~2017. 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 loan portfolio, subject to specific criteria.

At ~~June 30, 2017,~~March 31, 2018, long-term debt totaled ~~$408~~$300.4 million, down ~~$117~~$5.1 million from ~~March~~December 31, ~~2017, primarily due to the payoff of the company’s $96 million in subordinated debt that matured in April, as well as the paydown of $17 million of long-term FHLB borrowings.~~2017. The Company was in compliance with all contractual covenants, as amended, related to long-term debt as of ~~June 30, 2017.~~March 31, 2018.

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 and Bank must include unfunded commitments meeting certain criteria in ~~its~~ risk-weighted capital ~~calculation.~~calculations.

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 ~~June 30, 2017~~March 31, 2018 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	$	6,499,919	$	2,929,575	$	1,552,193	$	1,100,540	$	917,611	$	6,962,514	$	2,859,578	$	1,612,277	$	1,224,069	$	1,266,590
Letters of credit		388,386		296,069		81,651		10,518		148		344,045		295,753		44,361		3,799		132
Total	$	6,888,305	$	3,225,644	$	1,633,844	$	1,111,058	$	917,759	$	7,306,559	$	3,155,331	$	1,656,638	$	1,227,868	$	1,266,722

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, ~~2016.~~2017.

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~~Estimates are based 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.

~~See~~Refer to Note 1415 to our Consolidated Financial Statements included elsewhere in this report.

~~Our~~The Company’s net income is materially dependent on net interest income. The Company’s primary market risk is interest rate risk which stems from uncertainty with respect to absolute and relative levels of future market interest rates that affect ~~our~~ financial products and services. In order to manage the exposures to interest rate risk, management measures the sensitivity of 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 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.

The table below presents the results of simulations run as of ~~June 30, 2017~~March 31, 2018 for year 1 and year 2, assuming the indicated instantaneous and sustained parallel shift in the yield curve at the measurement date. The results 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.

Note: Decrease in interest rates 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, 2016~~ included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

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 ~~June 30, 2017,~~March 31, 2018, 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 ~~three-month~~three month period ended ~~June 30, 2017,~~March 31, 2018, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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.

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

2017. 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. The following risk factor regarding cybersecurity matters has been included in this Quarterly Report on Form 10-Q in response to the SEC’s Statement and Guidance on Public Company Cybersecurity Disclosures published on February 26, 2018.

Our operational and communications systems and infrastructure may fail or may be the subject of a breach or cyber-attack that, if successful, could adversely affect our business and disrupt business continuity.

We depend on our ability to process, record and monitor a large number of client transactions and to communicate with clients and other institutions on a continuous basis. As client, industry, public and regulatory expectations regarding operational and information security have increased, our operational systems and infrastructure continue to be safeguarded and monitored for potential failures, disruptions and breakdowns, whether as a result of events beyond our control or otherwise.

Our business, financial, accounting, data processing, or other operating systems and facilities may stop operating properly or become disabled or damaged as a result of a number of factors, including events that are wholly or partially beyond our control. For example, there could be sudden increases in client transaction volume; electrical or telecommunications outages; natural disasters such as earthquakes, tornadoes, floods, and hurricanes; disease pandemics; events arising from local or larger scale political or social matters, including terrorist acts; occurrences of employee error, fraud, or malfeasance; and, as described below, cyber-attacks.

Although we have business continuity plans and other safeguards in place, our operations and communications may be adversely affected by significant and widespread disruption to our systems and infrastructure that support our businesses and clients. While we continue to evolve and modify our business continuity plans, there can be no assurance in an escalating threat environment that they will be effective in avoiding disruption and business impacts. Our insurance may not be adequate to compensate us for all resulting losses, and the cost to obtain adequate coverage may increase for us or the industry.

Security risks for financial institutions such as ours have dramatically increased in recent years, in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication, resources and activities of hackers, terrorists, activists, organized crime, and other external parties, including nation state actors. In addition, clients may use devices or software to access our products and services that are beyond our control environment, which may provide additional avenues for attackers to gain access to confidential information. Although we have information security procedures and controls in place, our technologies, systems, networks, and clients’ devices and software may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, change or destruction of our or our clients’ confidential, proprietary and other information (including personal identifying information of individuals), or otherwise disrupt our or our clients’ or other third parties’ business operations. Other U.S. financial institutions and financial service companies have reported breaches in the security of their websites or other systems, including attempts to shut down access to their networks and systems in an attempt to extract compensation from them to regain control. Financial institutions have experienced distributed denial-of-service attacks, a sophisticated and targeted attack intended to disable or degrade internet service or to sabotage systems.

We and others in our industry are regularly the subject of attempts by attackers to gain unauthorized access to our networks, systems, and data, or to obtain, change, or destroy confidential data (including personal identifying information of individuals) through a variety of means, including computer viruses, malware, and phishing. In the future, these attacks may result in unauthorized individuals obtaining access to our confidential information or that of our clients, or otherwise accessing, damaging, or disrupting our systems or infrastructure.

We are continuously enhancing our controls, processes and practices designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access. This continued enhancement will require us to expend additional resources, including to investigate and remediate any information security vulnerabilities that may be detected. Despite our ongoing investments in security resources, talent, and business practices, we are unable to assure that security measures will be effective.

If our systems and infrastructure were to be breached, damaged, or disrupted, or if we were to experience a loss of our confidential information or that of our clients, we could be subject to serious negative consequences, including disruption of our operations,

damage to our reputation, a loss of trust in us on the part of our clients, vendors or other counterparties, client attrition, reimbursement or other costs, increased compliance costs, significant litigation exposure and legal liability, or regulatory fines, penalties or intervention. Any of these could materially and adversely affect our results of operations, our financial condition, and/or our share price.

~~There were no purchases made by the issuer or any affiliated purchaser of the issuer’s equity securities for the six months ended June 30, 2017.~~

Exhibit

Filed

Incorporated by Reference

Filed

Incorporated by Reference

Number

Description

Herewith

Form

Exhibit

Filing Date

Description

Herewith

Form

Exhibit

Filing Date

2.1

Purchase Agreement by and between Whitney Bank and First NBC Bank

8-K

1.1

1/1/2017

3.1

Composite Articles of the Company

10-K

3.1

2/24/2017

Composite Articles of the Company

10-K

3.1

2/26/2018

3.2

Amended and Restated Bylaws

10-K

3.2

2/24/2017

Amended and Restated Bylaws

10-K

3.2

2/26/2018

10.1

First Amendment to Credit Agreement and Waiver

10-Q

10.4

5/9/2016

10.2

Form of Performance Stock Award Agreement (TSR) (approved in 2017)

10-Q

10.2

5/5/2017

10.3

Form of Performance Stock Award Agreement (EPS) (approved in 2017)

10-Q

10.3

5/5/2017

10.4

Purchase and Assumption Agreement with the FDIC

8-K

99.1

4/28/2017

10.5

401(k) Plan Amendments

8-K

10.1

6/28/2017

10.6

Pension Plan Amendment

8-K

10.2

6/28/2017

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

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.


		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		500		12,337
Accrued interest receivable		2,969		885		3,854
Identifiable intangible assets		3,900		20,500		24,400
Other assets		63		4,097		4,160
Total identifiable assets		1,233,148		946,138		2,179,286

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		(673,165)		(443,664)
Consideration
Cash (paid) received		(325,564)		640,435		314,871
Unsettled net consideration receivable from FDIC		—		9,721		9,721
Total consideration		(325,564)		650,156		324,592
Goodwill	$	96,063	$	23,009	$	119,072


(in thousands)		Three months ended June 30, 2017		Six months ended June 30, 2017
Personnel expense	$	1,435	$	1,542
Net occupancy and equipment expense		276		277
Professional services expense		2,200		6,827
Other real estate		(1,511)		(1,511)
Advertising expense		901		1,031
Other expense		713		2,311
Total merger-related expenses	$	4,014	$	10,477



					Other Post-
(in thousands)	Pension Benefits				retirement Benefits
Three months ended June 30,	2017		2016		2017		2016
Service cost	$	4,093	$	3,611	$	47	$	45
Interest cost		4,291		4,023		179		203
Expected return on plan assets		(9,576)		(8,554)		—		—
Amortization of net loss		1,766		1,426		(48)		53
Net periodic benefit cost	$	574	$	506	$	178	$	301

Six months ended June 30, 2017
Service cost	$	7,843	$	6,876	$	95	$	74
Interest cost		8,414		9,011		359		409
Expected return on plan assets		(18,326)		(17,445)		—		—
Amortization of net loss		3,201		2,894		(96)		22
Net periodic benefit cost	$	1,132	$	1,336	$	358	$	505


(in millions)	Outstanding Balance		Allocated Allowance for Loan and Lease Losses		Allowance for Loan and Lease Losses as a % of Loans
Upstream (reserve-based lending)	$	400	$	21.6		5.4	%
Midstream		66		1.3		2.0
Support - drilling		161		11.7		7.3
Support - nondrilling		604		48.8		8.1
Total	$	1,231	$	83.4		6.8	%



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)	(2.89)	%	(5.05)	%
+100	2.91	%	3.57	%
+200	5.10	%	5.94	%
+300	6.87	%	7.56	%



	Estimated Increase
	(Decrease) in NII
Change in Interest Rates	Year 1		Year 2
(basis points)
- 100	(1.36)	%	(2.79)	%
+100	1.91	%	2.53	%
+200	3.43	%	4.41	%
+300	4.62	%	5.68	%


	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
		Senior Executive Vice President & Chief Financial Officer
		~~(Principal Financial Officer)~~Date: May 8, 2018

	~~Date:~~	~~August 4, 201~~7