HWC 10-Q Quarter ended Sept. 30, 2011

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2011

OR

For the transition period from to

Commission File Number 0-13089

HANCOCK HOLDING COMPANY

(Exact name of registrant as specified in its charter)

(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 x 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 x No ¨

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

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

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

84,703,448 common shares were outstanding as of October 31, 2011 for financial statement purposes.

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Hancock Holding Company

Index

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Hancock Holding Company and Subsidiaries

(Unaudited)

(In thousands, except share data)

See notes to unaudited condensed consolidated financial statements.

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Hancock Holding Company and Subsidiaries

(Unaudited)

(In thousands, except per share amounts)

See notes to unaudited condensed consolidated financial statements.

2

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Hancock Holding Company and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share and per share data)

See notes to unaudited condensed consolidated financial statements.

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Hancock Holding Company and Subsidiaries

(Unaudited)

(In thousands)

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Hancock Holding Company and Subsidiaries

Notes to Condensed and Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements of Hancock Holding Company and all majority-owned subsidiaries (the “Company”) included herein are unaudited; however, they include all adjustments all of which are of a normal recurring nature which, in the opinion of management, are necessary to present fairly the Company’s Condensed Consolidated Balance Sheets at September 30, 2011 and December 31, 2010, the Company’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2011 and 2010, the Company’s Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Although the Company believes the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to the Company’s organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in this 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 2010 Annual Report on Form 10-K. The results of operations for the nine months ended September 30, 2011 are not necessarily indicative of the results expected for the full year.

Use of Estimates

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with general practices followed by the banking industry. These accounting principles require management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. On an ongoing basis, the Company evaluates its estimates, including those related to purchase accounting, the allowance for loan losses, intangible assets and goodwill, income taxes, pension and postretirement benefit plans and contingent liabilities. The Company evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Tightened credit markets, volatile equity markets, sustained high unemployment levels and declines in consumer spending have combined to increase the uncertainty inherent in such estimates and assumptions. Allowance for loan losses, deferred income taxes, and goodwill are potentially subject to material changes in the near term. Actual results could differ significantly from those estimates.

Critical Accounting Policies

In the third quarter, as part of the integration of policies between Hancock and Whitney, the Company prospectively changed its policy for specific reserve analysis from loans greater than $250,000 to loans greater than $500,000, resulting in the removal of approximately $2.8 million in loans from the specific reserve. The Company increased the unallocated reserve to ensure adequate coverage for these loans.

There have been no other material changes or developments in the Company’s evaluation of accounting estimates and underlying assumptions or methodologies that the Company believes to be Critical Accounting Policies and estimates as disclosed in our Form 10-K, for the year ended December 31, 2010.

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Hancock Holding Company and Subsidiaries

Notes to Condensed and Consolidated Financial Statements – (continued)

(Unaudited)

2. Acquisition of Whitney Holding Corporation

On June 4, 2011, Hancock acquired all of the outstanding common stock of Whitney Holding Corporation (Whitney), a bank holding company based in New Orleans, Louisiana, in a stock and cash transaction. Whitney common shareholders received 0.418 shares of Hancock common stock in exchange for each share of Whitney stock, resulting in Hancock issuing 40,794,261 common shares at a fair value of $1.3 billion. Whitney’s preferred stock and common stock warrant issued under TARP were purchased by the Company for $307.7 million as part of the merger transaction. In total, the purchase price was approximately $1.6 billion including the value of the options to purchase common stock.

On September 16, 2011, seven Whitney Bank branches located on the Mississippi Gulf Coast and one branch located in Bogalusa, LA with approximately $47 million in loans and $180 million in deposits were divested in order to resolve branch concentration concerns of the U.S. Department of Justice relating to the merger.

The Whitney transaction was accounted for using the purchase method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition. Assets acquired totaled $11.7 billion, including $6.5 billion in loans, $2.6 billion of investment securities, and $780 million of intangibles. Liabilities assumed were $10.1 billion, including $9.2 billion of deposits.

Preliminary goodwill of $514 million was calculated as the excess of the consideration exchanged over the net identifiable assets acquired and represents the value expected from the synergies created from combining the businesses as well as the economies of scale expected from combining the operations of the two companies.

The following table provides the assets purchased, the liabilities assumed and the consideration transferred:

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Hancock Holding Company and Subsidiaries

Notes to Condensed and Consolidated Financial Statements – (continued)

(Unaudited)

2. Acquisition of Whitney Holding Corporation (continued)

The following table (in thousands) provides a reconciliation of goodwill and other indefinite lived intangibles:

The operating results of the Company for the period ended September 30, 2011 include the operating results of the acquired assets and assumed liabilities for the 118 days subsequent to the acquisition date of June 4, 2011. Whitney’s operations contributed approximately $128.9 million in revenue, net of interest expense, and an estimated $25.6 million in net income for the period from the acquisition and is included in the consolidated financial statements. Whitney’s results of operations prior to the acquisition are not included in Hancock’s consolidated statement of income.

Merger related charges of $46.6 million associated with the Whitney acquisition are included in noninterest expense for 2011. Such expenses were for professional services and other temporary help fees associated with the conversion of systems and integration of operations; costs related to branch and office consolidations, costs related to termination of existing contractual arrangements for various services, marketing and promotion expenses, retention and severance and incentive compensation costs, travel costs, and printing, supplies and other costs.

The following unaudited pro forma information presents the results of operations for three months ended and nine months ended September 30, 2011 and 2010, as if the acquisition had occurred at the beginning of the earliest period presented. These adjustments include the impact of certain purchase accounting adjustments such as intangible assets amortization, fixed assets depreciation and reversal of Whitney’s provision. In addition, the $46.6 million in merger expenses discussed above are included in each year. Additionally, the Company expects to achieve further operating cost savings and other business synergies as a result of the acquisition which are not reflected in the pro forma amounts. These unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the acquisition occurred at the beginning of each period presented, nor are they intended to represent or be indicative of future results of operations.

In many cases, determining the fair value of the acquired assets and assumed liabilities required the Company to estimate future cash flows associated with those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant estimates related to the valuation of acquired loans. For such loans, the excess of cash flows expected to be collected as of the acquisition date over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the expected cash flows at acquisition date reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with GAAP, there was no carry-over of Whitney’s previously established allowance for credit losses.

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Hancock Holding Company and Subsidiaries

Notes to Condensed and Consolidated Financial Statements – (continued)

(Unaudited)

2. Acquisition of Whitney Holding Corporation (continued)

The acquired loans were divided into loans with evidence of credit quality deterioration which are accounted for under ASC 310-30 (acquired impaired) and loans that do not meet this criteria, which are accounted for under ASC 310-20 (acquired performing). In addition, the loans were further categorized into different loan pools by loan types. The Company determined expected cash flows on the acquired loans based on the best available information at the date of acquisition. If new information is obtained about circumstances as of the acquisition date that impact cash flows, management will revise the related purchase accounting adjustments in accordance with accounting for business combinations.

Loans at the acquisition date of June 4, 2011 are presented in the following table.

The following table presents information about the acquired impaired loans at acquisition (in thousands).

The fair value of the acquired performing loans at June 4, 2011, was $5.9 billion. The gross contractually required principal and interest payments receivable for acquired performing loans was $6.8 billion.

The fair value of net assets acquired includes certain contingent liabilities that were recorded as of the acquisition date. Whitney has been named as a defendant in various pending legal actions and proceedings arising in connection with its activities as a financial services institution. Some of these legal actions and proceedings include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Whitney is also involved in investigations and/or proceedings by governmental and self-regulatory agencies. Due to the number of variables and assumptions involved in assessing the possible outcome of these legal actions, sufficient information did not exist to reasonably estimate the fair value of these contingent liabilities. As such, these contingencies have been measured in accordance with accounting guidance on contingencies which states that a loss is recognized when it is probable of occurring and the loss amount can be reasonably estimated.

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Hancock Holding Company and Subsidiaries

Notes to Condensed and Consolidated Financial Statements – (continued)

(Unaudited)

2. Acquisition of Whitney Holding Corporation (continued)

In connection with the Whitney acquisition, on June 4, 2011, the Company recorded a liability for contingent payments to certain employees for arrangements that were in existence prior to acquisition. The fair value of this liability was $59.6 million. The Company also recorded a liability with a fair value of $14.0 million for a contractual contingency assumed in connection with Whitney’s obligations under contracts for a systems conversion and replacement initiative. This initiative was suspended in anticipation of the acquisition. Substantially all of these liabilities are expected to be paid within one year from acquisition date.

Long-term debt consisted of the following (in thousands):

As part of the merger, the Company assumed Whitney National Bank’s $150 million par value subordinated notes which carry an interest rate of 5.875% and mature April 1, 2017. These notes qualify as capital for the calculation of the regulatory ratio of total capital to risk-weighted assets. Beginning in the second quarter of 2012, these notes will be subject to a 20% reduction in the amount allowed as capital for each year as they approach maturity.

During the second quarter of 2011, the Company borrowed $140 million under a term loan facility at a variable rate based on LIBOR plus 2.00% per annum. The note matures on June 3, 2013 and is pre-payable at any time and the Company is subject to covenants customary in financings of this nature which are not expected to impact operations. The Company must maintain the following financial covenants: maximum ratio of consolidated non-performing assets to consolidated total loans and OREO excluding covered loans of 4.0% through June 2012 and 3.5% thereafter; consolidated net worth of $2.1 billion which will increase each subsequent quarter by 50% of consolidated net income but will not decrease for any losses and will increase by 100% for issuance of common stock. The Company must also maintain a Tier 1 leverage ratio of greater than or equal to 7%; Tier 1 risk based capital ratio of greater than or equal to 9.5%; and total risk based capital ratio of greater than or equal to 11.5%. The Company remained in compliance with the covenants as of September 30, 2011 except that the Tier 1 leverage ratio on Hancock Bank was 6.93%, 7 basis points lower than required. The Company has taken action to regain compliance with this covenant.

In the merger with Whitney, the Company also assumed $16.8 million of obligations under subordinated debentures payable to unconsolidated trusts that issued trust preferred securities. The Company received regulatory approval to call these debentures, and redeemed $6.5 million in the third quarter. The remaining $10.3 million was redeemed on October 24, 2011.

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Hancock Holding Company and Subsidiaries

Notes to Condensed and Consolidated Financial Statements – (continued)

(Unaudited)

3. Long-Term Debt (continued)

Substantially all of the other long-term debt consists of borrowings associated with tax credit fund activities. These borrowings mature at various dates beginning in 2015 through 2018.

4. Derivatives

Risk Management Objective of Using Derivatives

The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments, currently related to our variable rate borrowing and fixed rate loans. The Company has also entered into interest rate derivative agreements as a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book with respect to its customer derivatives in order to minimize its net risk exposure resulting from such agreements.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value (in thousands) of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of September 30, 2011 and December 31, 2010.