HWC 10-Q Quarterly Report June 30, 2017

HANCOCK WHITNEY CORP

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10-Q 1 hbhc-20170630x10q.htm 10-Q Form 10Q_Taxonomy2016

Table of Contents

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


☐	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 14 th 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 definition s 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 common shares were outstanding as of August 1 , 201 7 .

Table of Contents

Ha ncock Holding Company

Index


Part I. Financial Information		Page Number
ITEM 1.	Financial Statements
	Consolidat ed Balance Sheets – June 30, 2017 (unaudited) and December 31, 201 6	5
	Consolidated Statements of Income (unaudited) – Three and Six months ended June 30, 2017 and 201 6	6
	Consolidated Statements of Comprehensive Income (unaudited) – Three and Six months ended June 30 , 2 017 and 20 16	7
	Consolidated Statements of Changes in Stockhold ers’ Equity - (unaudited) – Six months ended June 30, 2017 and 2016	8
	Consolidated Statements of Cash Flows (unaudited) - Six months ended June 30, 2017 and 201 6	9
	Notes to Consolidated Financial Statements (unaudited) – June 30 , 201 7	10
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	60
ITEM 4.	Controls and Procedures	61
Part II. Other Information
ITEM 1.	Legal Proceedings	61
ITEM 1A.	Risk Factors	61
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
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
Signatures

Table of Contents

Hancock Holding Company

Glossary of Defined Terms

AFS – available for sale securities

AOCI – accumulated other comprehensive income

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

bp(s) – basis point(s)

C&I – commercial and industrial loans

CD – certificate of deposit

CDE – Community Development Entity

CMO – Collateralized Mortgage Obligation

Company – Hancock Holding Company and its wholly-owned subsidiaries

CRE – commercial real estate

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

FASB – Financial Accounting Standards Board

FDIC – Federal Deposit Insurance Corporation

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

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

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

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

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

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

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

credit structure.

FHLB – Federal Home Loan Bank

FNBC – First NBC Bank

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

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

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

Hancock – Hancock Holding Company

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

HTM – held to maturity securities

LIBOR – London Interbank Offered Rate

LIHTC – Low Income Housing Tax Credit

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

NAICS – North American Industry Classification System

n/m – not meaningful

OCI – other comprehensive income

OFI – Louisiana Office of Financial Institutions

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

Parent Company – Hancock Holding Company

PCI – purchased credit impaired loans

Repos – securities sold under agreements to repurchase

Table of Contents

SEC – U.S. Securities and Exchange Commission

Securities Act – Securities Act of 1933, as amended

te – tax able equivalent adjustment

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

TSR – total shareholder return

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

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

Table of Contents

Part I. Financial Information

Item 1 . Financial Statements

Hancock Holding Company and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



	June 30,		December 31,
(in thousands, except share data)	2017		2016
ASSETS
Cash and due from banks	$	365,225	$	372,689
Interest-bearing bank deposits		125,577		77,235
Federal funds sold		851		942
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
Loans held for sale		26,787		34,064
Loans		18,473,841		16,752,151
Less: allowance for loan losses		(221,865)		(229,418)
Loans, net		18,251,976		16,522,733
Property and equipment, net of accumulated depreciation of $237,304 and $231,127		365,345		361,612
Prepaid expenses		24,985		18,038
Other real estate, net		17,996		18,884
Accrued interest receivable		75,787		65,887
Goodwill		740,265		621,193
Other intangible assets, net		101,694		87,757
Life insurance contracts		536,912		480,406
FDIC loss share receivable		3,234		16,219
Deferred tax asset, net		89,882		104,435
Other assets		235,217		176,080
Total assets	$	26,630,569	$	23,975,302
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing	$	7,887,867	$	7,658,203
Interest-bearing		13,554,948		11,766,063
Total deposits		21,442,815		19,424,266
Short-term borrowings		1,810,907		1,225,406
Long-term debt		407,876		436,280
Accrued interest payable		8,024		9,574
Other liabilities		146,985		160,008
Total liabilities		23,816,607		21,255,534
Stockholders' equity
Common stock		291,358		291,358
Capital surplus		1,716,584		1,698,253
Retained earnings		910,459		850,689
Accumulated other comprehensive loss, net		(104,439)		(120,532)
Total stockholders' equity		2,813,962		2,719,768
Total liabilities and stockholders' equity	$	26,630,569	$	23,975,302
Common shares authorized (par value of $3.33 per share)		350,000		350,000
Common shares issued		87,495		87,495
Common shares outstanding		84,738		84,235

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Income

(Unaudited)



	Three months e nded				Six months e nded
	June 30,				June 30,

(in thousands, except per share data)	2017		2016		2017		2016
Interest income:
Loans, including fees	$	194,180	$	156,717	$	366,961	$	310,830
Loans held for sale		236		249		453		408
Securities-taxable		24,402		23,049		47,769		47,006
Securities-tax exempt		5,628		3,011		11,035		4,813
Short-term investments		1,731		480		2,474		1,090
Total interest income		226,177		183,506		428,692		364,147
Interest expense:
Deposits		18,364		12,603		31,183		24,336
Short-term borrowings		4,232		909		7,173		1,902
Long-term debt		3,864		5,025		8,928		10,104
Total interest expense		26,460		18,537		47,284		36,342
Net interest income		199,717		164,969		381,408		327,805
Provision for loan losses		14,951		17,196		30,942		77,232
Net interest income after provision for loan losses		184,766		147,773		350,466		250,573
Noninterest income:
Service charges on deposit accounts		20,061		18,394		39,267		36,777
Trust fees		11,506		12,089		22,717		23,313
Bank card and ATM fees		13,687		11,954		26,155		23,302
Investment and annuity fees		5,271		5,043		9,870		9,976
Secondary mortgage market operations		4,241		4,176		7,808		7,088
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
Securities transactions		—		768		—		1,114
Total noninterest income		67,487		63,694		130,978		121,880
Noninterest expense:
Compensation expense		82,145		70,233		155,244		143,234
Employee benefits		15,500		14,004		31,520		29,718
Personnel expense		97,645		84,237		186,764		172,952
Net occupancy expense		13,080		10,394		23,837		20,750
Equipment expense		3,964		3,080		7,678		6,854
Data processing expense		16,798		14,370		32,195		28,577
Professional services expense		10,353		7,712		21,629		15,333
Amortization of intangibles		5,757		5,005		10,462		10,129
Telecommunications and postage		3,738		3,272		7,205		6,633
Deposit insurance and regulatory fees		6,983		6,049		13,473		11,446
Other real estate (income) expense, net		(2,515)		350		(2,528)		1,118
Other expense		27,667		16,473		46,297		33,182
Total noninterest expense		183,470		150,942		347,012		306,974
Income before income taxes		68,783		60,525		134,432		65,479
Income taxes		16,516		13,618		33,151		14,733
Net income	$	52,267	$	46,907	$	101,281	$	50,746
Earnings per common share-basic	$	0.60	$	0.59	$	1.17	$	0.64
Earnings per common share-diluted	$	0.60	$	0.59	$	1.17	$	0.64
Dividends paid per share	$	0.24	$	0.24	$	0.48	$	0.48
Weighted average shares outstanding-basic		84,614		77,523		84,489		77,512
Weighted average shares outstanding-diluted		84,867		77,680		84,755		77,676

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)



	Three months e nded				Six months e nded
	June 30,				June 30,
(in thousands)	2017		2016		2017		2016
Net income	$	52,267	$	46,907	$	101,281	$	50,746
Other comprehensive income:
Net change in unrealized gain on securities available for sale and hedges		12,661		16,629		13,845		45,601
Reclassification of net losses realized and included in earnings		1,718		711		3,105		1,802
Valuation adjustment for pension plan amendment		17,315		—		17,315		—
Other valuation adjustments for employee benefit plan		(10,782)		—		(10,782)		—
Amortization of unrealized net loss on securities transferred to held to maturity		1,099		830		1,749		1,628
Other comprehensive income before income taxes		22,011		18,170		25,232		49,031
Income tax expense		7,938		6,645		9,139		17,977
Other comprehensive income net of income taxes		14,073		11,525		16,093		31,054
Comprehensive income	$	66,340	$	58,432	$	117,374	$	81,800

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)



								Accumulated
								Other
								Comprehensive
	Common Stock			Capital		Retained		Income (Loss),
(in thousands, except per share data)	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
Net income	—		—		—		101,281		—		101,281
Other comprehensive income	—		—		—		—		16,093		16,093
Comprehensive income	—		—		—		101,281		16,093		117,374
Cash dividends declared ( $0.48 per common share)	—		—		—		(41,594)		—		(41,594)
Common stock activity, long-term incentive plan	—		—		16,801		83		—		16,884
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

See notes to unaudited consolidated financial statements.

Table of Contents

Hancock Holding Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



	Six months ended
	June 30,
(in thousands)	2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	101,281	$	50,746
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,960		14,344
Provision for loan losses		30,942		77,232
(Gain) loss on other real estate owned		(2,408)		127
Deferred tax expense (benefit)		5,415		(10,663)
Increase in cash surrender value of life insurance contracts		(7,430)		(5,384)
Loss (gain) on disposal of other assets		1,455		(4,690)
Net decrease (increase) in loans held for sale		8,177		(21,170)
Net amortization of securities premium/discount		14,944		12,905
Amortization of intangible assets		10,462		10,129
Amortization of FDIC indemnification asset		2,427		3,139
Stock-based compensation expense		8,360		7,164
Decrease in interest payable and other liabilities		(24,405)		(2,683)
Net payments to FDIC for loss share claims		(935)		(159)
Decrease in FDIC loss share receivable		8,613		7,426
Decrease in other assets		8,259		37,117
Other, net		3,595		2,525
Net cash provided by operating activities		182,712		178,105
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
Purchases of securities available for sale		(425,096)		(461,139)
Proceeds from maturities of securities held to maturity		174,662		190,721
Purchases of securities held to maturity		(554,442)		(282,190)
Net decrease in short-term investments		317,042		412,396
Proceeds from sales of loans		—		106,660
Net increase in loans		(385,823)		(470,732)
Purchase of life insurance contracts		(50,000)		(40,000)
Purchases of property and equipment		(12,649)		(3,950)
Proceeds from sales of property and equipment		16		671
Proceeds from sales of other real estate		12,311		8,995
Net cash paid for FNBC I acquisition		(322,708)		—
Net cash received for FNBC II acquisition		798,367		—
Other, net		(38,414)		2,989
Net cash used in investing activities		(115,567)		(246,454)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		90,040		467,973
Net decrease in short-term borrowings		(11,134)		(328,537)
Repayments of long-term debt		(121,837)		(28,836)
Net proceeds from issuance of long-term debt		83		5,885
Dividends paid		(41,594)		(38,238)
Cash paid for taxes with forfeited shares of stock		(3,124)		(380)
Proceeds from exercise of stock options		11,427		36
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
CASH AND DUE FROM BANKS, BEGINNING		372,689		303,874
CASH AND DUE FROM BANKS, ENDING	$	365,225	$	313,428
SUPPLEMENTAL INFORMATION FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans	$	2,855	$	10,526

See notes to unaudited consolidated financial statements.

Table of Contents

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, ne cessary to present 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 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 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. 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 cou nterparty 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 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.

2. Acquisitions

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

On April 28, 2017, the Louisiana Office of Financial Institutions (“OFI”) closed FNBC and appointed the FDIC as receiver. Whitney signed a purchase and assumption agreement with the FDIC to acquire certain additional assets and liabilities of FNBC, referred to as the FNBC II transaction. Whitney continued operations of FNBC’s 29 branch locations ( 24 in Louisiana and five in Florida) and acquired select assets and assumed select liabilities, 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 million in cash ( $640 million in preliminary settlements for the net liabilities assumed and $158 million in branch cash acquired).

Under the FNBC II purchase and assumption agreement, Whitney had an option to purchase (or assume the leases for) the branch and non-branch locations, including furniture, fixtures, and equipment subsequent to the date of the transaction, subject to FDIC approval. This option was exercised for seven branches and will add additional acquired assets from this transaction in the third quarter of 2017. A final cash settlement with the FDIC is expected to occur in the second half of 2017.

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.

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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.

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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 acquire d . 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

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3 . Securities

The amortized cost and estimated fair value of securities classified as available for sale and held to maturity follow.



Securities Available for Sale
(in thousands)	June 30, 2017								December 31, 2016

			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency securities	$	76,146	$	—	$	1,306	$	74,840	$	56,751	$	—	$	1,923	$	54,828
Municipal obligations		250,598		499		5,941		245,156		253,228		113		11,186		242,155
Residential mortgage-backed securities		1,860,644		9,765		16,310		1,854,099		1,620,191		10,592		19,428		1,611,355
Commercial mortgage-backed securities		449,912		463		17,277		433,098		425,750		—		23,159		402,591
Collateralized mortgage obligations		183,987		254		552		183,689		202,580		490		591		202,479
Corporate debt securities		3,500		—		—		3,500		3,500		—		—		3,500
	$	2,824,787	$	10,981	$	41,386	$	2,794,382	$	2,562,000	$	11,195	$	56,287	$	2,516,908



Securities Held to Maturity
(in thousands)	June 30, 2017								December 31, 2016
			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. Treasury and government agency securities	$	50,000	$	—	$	64	$	49,936	$	50,000	$	—	$	44	$	49,956
Municipal obligations		730,599		7,205		9,614		728,190		648,093		2,147		20,175		630,065
Residential mortgage-backed securities		796,190		7,402		1,315		802,277		862,162		4,329		3,068		863,423
Commercial mortgage-backed securities		75,705		—		2,637		73,068		75,739		—		4,038		71,701
Collateralized mortgage obligations		1,221,960		1,690		10,592		1,213,058		864,226		1,420		10,674		854,972
	$	2,874,454	$	16,297	$	24,222	$	2,866,529	$	2,500,220	$	7,896	$	37,999	$	2,470,117

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



Debt Securities Available for Sale	Amortized		Fair
(in thousands)	Cost		Value
Due in one year or less	$	7,945	$	7,970
Due after one year through five years		38,273		38,767
Due after five years through ten years		997,109		980,311
Due after ten years		1,781,460		1,767,334
Total available for sale debt securities	$	2,824,787	$	2,794,382

	Amortized		Fair
Debt Securities Held to Maturity	Cost		Value
Due in one year or less	$	9,995	$	10,058
Due after one year through five years		108,634		109,069
Due after five years through ten years		851,644		845,017
Due after ten years		1,904,181		1,902,385
Total held to maturity securities	$	2,874,454	$	2,866,529

The Company held no securities c lassified as trading at June 30 , 2017 or December 31, 2016.

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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

			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	74,308		1,306	$	—	$	—	$	74,308	$	1,306
Municipal obligations		213,557		5,941		—		—		213,557		5,941
Residential mortgage-backed securities		1,315,878		16,245		2,539		65		1,318,417		16,310
Commercial mortgage-backed securities		407,937		17,277		—		—		407,937		17,277
Collateralized mortgage obligations		74,282		552		—		—		74,282		552
Equity securities		—		—		—		—		—		—
	$	2,085,962	$	41,321	$	2,539	$	65	$	2,088,501	$	41,386



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

			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	54,788	$	1,923	$	—	$	—	$	54,788	$	1,923
Municipal obligations		228,588		11,186		—		—		228,588		11,186
Residential mortgage-backed securities		1,087,644		19,359		3,738		69		1,091,382		19,428
Commercial mortgage-backed securities		402,591		23,159		—		—		402,591		23,159
Collateralized mortgage obligations		83,701		591		—		—		83,701		591
Corporate debt securities		—		—		—		—		—
	$	1,857,312	$	56,218	$	3,738	$	69	$	1,861,050	$	56,287

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

			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	49,936	$	64	$	—	$	—	$	49,936	$	64
Municipal obligations		432,877		9,311		7,204		303		440,081		9,614
Residential mortgage-backed securities		268,110		1,315		—		—		268,110		1,315
Commercial mortgage-backed securities		73,068		2,637		—		—		73,068		2,637
Collateralized mortgage obligations		842,667		7,113		134,129		3,479		976,796		10,592
	$	1,666,658	$	20,440	$	141,333	$	3,782	$	1,807,991	$	24,222

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

			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and government agency securities	$	49,956	$	44	$	—	$	—	$	49,956	$	44
Municipal obligations		494,470		19,706		11,750		469		506,220		20,175
Residential mortgage-backed securities		278,369		3,068		—		—		278,369		3,068
Commercial mortgage-backed securities		71,701		4,038		—		—		71,701		4,038
Collateralized mortgage obligations		618,739		7,296		115,375		3,378		734,114		10,674
	$	1,513,235	$	34,152	$	127,125	$	3,847	$	1,640,360	$	37,999

The unrealized losses primarily relate to changes in market rates on fixed-rate 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 o f 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 sales of securities were approximately $213.9 million with no gross gain or loss and $102.3 million with a gross gain of $ 1.1 million and no loss for the six months ended June 30, 2 017 and 2016 , respectively .

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

4. Loans and Allowance for Loan Losses

The Company generally makes loans in its market areas of south Mississippi, southern and central Alabama, south Louisiana, the Houston, Texas areas 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,
(in thousands)	2017		2016
Commercial non-real estate	$	8,093,104	$	7,613,917
Commercial real estate - owner occupied		2,078,332		1,906,821
Total commercial & industrial		10,171,436		9,520,738
Commercial real estate - income producing		2,401,673		2,013,890
Construction and land development		1,313,522		1,010,879
Residential mortgages		2,493,923		2,146,713
Consumer		2,093,287		2,059,931
Total loans	$	18,473,841	$	16,752,151

The following briefly describes the composition of each loan category.

Commercial and industrial

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

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

Commercial real estate – owner occupied loans consist of commercial mortgages on properties where repayment is generally dependent on the cash flow from the ongoing operations and activities of the borrower. Like commercial non-real estate, these loans

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are primarily made based on the identified cash flows of the borrower, but also have the added strength of the value of underlying real estate collateral.

Commercial real estate – income producing

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

Construction and land development

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

Residential Mortgages

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

Consumer

Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans include both direct and indirect loans. Direct nonresidential consumer loans are made to finance the purchase of personal property, including automobiles, recreational vehicles and boats, and for other personal purposes (secured and unsecured), and deposit account secured loans. Indirect nonresidential 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.

Allowance for Loan Losses

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



			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

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			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

Impaired Loans

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



	June 30,		December 31,
(in thousands)	2017		2016
Commercial non-real estate	$	167,710	$	249,037
Commercial real estate - owner occupied		11,750		14,413
Total commercial & industrial		179,460		263,450
Commercial real estate - income producing		13,438		13,954
Construction and land development		2,821		4,550
Residential mortgages		28,158		23,665
Consumer		14,342		12,351
Total loans	$	238,219	$	317,970

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Nonaccrual loans include loans modified in troubled debt restructurings (“TDRs”) of $96.3 million and $81.9 million at June 30, 2017 and December 31, 2016, respectively. Total TDRs, both accruing and nonaccruing, were $186.8 million as of June 30, 2017 and $121.7 million at December 31, 2016. All TDRs are individually evaluated for impairment.

The table below details TDRs that were modified during the six months ended June 30, 2017 and June 30, 2016 by portfolio class.



	Six months ended
($ in thousands)		June 30, 2017						June 30, 2016
			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
			Outstanding		Outstanding				Outstanding		Outstanding
		Number of	Recorded		Recorded			Number of	Recorded		Recorded
Troubled Debt Restructurings:		Contracts	Investment		Investment		Contracts		Investment		Investment
Commercial non-real estate		37	$	92,976	$	92,976		17	$	57,915	$	57,915
Commercial real estate - owner occupied		4		3,734		3,734		—		—		—
Total commercial & industrial		41		96,710		96,710		17		57,915		57,915
Commercial real estate - income producing		5		6,486		6,486		—		—		—
Construction and land development		—		—		—		—		—		—
Residential mortgages		6		1,098		1,098		4		432		432
Consumer		1		40		42		—		—		—
Total loans		53	$	104,334	$	104,336		21	$	58,347	$	58,347

The TDRs during the six months ended June 30, 2017 reflected in the table above include $28.4 million of loans with extended amortization terms or other payment concessions, $40.2 million of loans with significant covenant waivers and $35.7 million with other modifications. The TDRs during the six months ended June 30, 2016 include $31.0 million of loans with extended terms or other payment concessions and $27.3 million of other modifications.

No TDRs that subsequently defaulted within twelve months of modification were recorded in the six months ended June 30, 2017 or 2016.

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



	June 30, 2017
		Recorded investment		Recorded investment		Unpaid
(in thousands)		without an allowance		with an allowance		principal balance		Related allowance
Commercial non-real estate	$	107,555	$	142,701	$	260,544	$	22,758
Commercial real estate - owner occupied		3,514		3,966		7,570		280
Total commercial & industrial		111,069		146,667		268,114		23,038
Commercial real estate - income producing		5,678		9,235		15,349		1,402
Construction and land development		831		16		1,820		1
Residential mortgages		2,338		1,128		3,984		172
Consumer		1		1,052		1,055		283
Total loans	$	119,917	$	158,098	$	290,322	$	24,896


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

The tables below present the average balances and interest income for total impaired loans for the three and six months ended June 30, 2017 and 2016. Interest income recognized represents interest on accruing loans modified in a TDR.



	Three months ended
	June 30, 2017				June 30, 2016
	Average		Interest		Average			Interest
	recorded		income		recorded			income
(in thousands)	investment		recognized		investment			recognized
Commercial non-real estate	$	241,122	$	597	$	216,907	$	493
Commercial real estate - owner occupied		5,687		18		5,959		14
Total commercial & industrial		246,809		615		222,866		507
Commercial real estate - income producing		14,257		34		8,242		22
Construction and land development		1,219		—		7,660		—
Residential mortgages		3,352		3		976		2
Consumer		1,601		3		112		1
Total loans	$	267,238	$	655	$	239,856	$	532

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	Six months ended
	June 30, 2017				June 30, 2016
	Average		Interest		Average			Interest
	recorded		income		recorded			income
(in thousands)	investment		recognized		investment			recognized
Commercial non-real estate	$	246,374	$	934	$	179,117	$	847
Commercial real estate - owner occupied		5,384		22		5,836		29
Total commercial & industrial		251,758		956		184,953		876
Commercial real estate - income producing		14,372		77		9,072		43
Construction and land development		1,492		—		10,905		—
Residential mortgages		3,572		5		932		4
Consumer		1,876		5		109		2
Total loans	$	273,070	$	1,043	$	205,971	$	925

Aging Analysis

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



													Recorded
					Greater than								investment
	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
(in thousands)
Commercial non-real estate	$	27,751	$	27,974	$	91,987	$	147,712	$	7,945,392	$	8,093,104	$	13,088
Commercial real estate - owner occupied		4,532		1,189		6,321		12,042		2,066,290		2,078,332		424
Total commercial & industrial		32,283		29,163		98,308		159,754		10,011,682		10,171,436		13,512
Commercial real estate - income producing		3,369		2,319		5,040		10,728		2,390,945		2,401,673		1,989
Construction and land development		6,250		619		1,980		8,849		1,304,673		1,313,522		—
Residential mortgages		25,433		12,208		22,088		59,729		2,434,194		2,493,923		2,801
Consumer		15,764		5,843		7,600		29,207		2,064,080		2,093,287		88
Total	$	83,099	$	50,152	$	135,016	$	268,267	$	18,205,574	$	18,473,841	$	18,390



													Recorded
					Greater than								investment
	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
(in thousands)
Commercial non-real estate	$	19,722	$	1,909	$	68,505	$	90,136	$	7,523,781	$	7,613,917	$	384
Commercial real estate - owner occupied		3,008		581		6,310		9,899		1,896,922		1,906,821		52
Total commercial & industrial		22,730		2,490		74,815		100,035		9,420,703		9,520,738		436
Commercial real estate - income producing		838		50		5,026		5,914		2,007,976		2,013,890		216
Construction and land development		694		171		5,300		6,165		1,004,714		1,010,879		1,563
Residential mortgages		24,599		8,816		14,369		47,784		2,098,929		2,146,713		1
Consumer		18,621		7,441		9,147		35,209		2,024,722		2,059,931		823
Total	$	67,482	$	18,968	$	108,657	$	195,107	$	16,557,044	$	16,752,151	$	3,039

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Credit Quality Indicators

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



	June 30, 2017
(in thousands)	Commercial non-real estate		Commercial real estate - owner-occupied		Total commercial & industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	6,897,989	$	1,859,185	$	8,757,174	$	2,214,329	$	1,233,082	$	12,204,585
Pass-Watch		298,254		55,146		353,400		117,247		58,024		528,671
Special Mention		215,373		43,219		258,592		13,840		7,591		280,023
Substandard		678,032		120,782		798,814		56,247		14,825		869,886
Doubtful		3,456		—		3,456		10		—		3,466
Loss		—		—		—		—		—		—
Total	$	8,093,104	$	2,078,332	$	10,171,436	$	2,401,673	$	1,313,522	$	13,886,631

	December 31, 2016
(in thousands)	Commercial non-real estate		Commercial real estate - owner-occupied		Total commercial & industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	6,364,348	$	1,719,114	$	8,083,462	$	1,873,644	$	968,505	$	10,925,611
Pass-Watch		203,311		47,676		250,987		78,309		22,592		351,888
Special Mention		181,763		40,299		222,062		22,492		4,142		248,696
Substandard		846,793		99,732		946,525		39,434		15,640		1,001,599
Doubtful		17,702		—		17,702		11		—		17,713
Loss		—		—		—		—		—		—
Total	$	7,613,917	$	1,906,821	$	9,520,738	$	2,013,890	$	1,010,879	$	12,545,507



	June 30, 2017						December 31, 2016
(in thousands)	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
Nonperforming		30,959		14,430		45,389		23,665		13,174		36,839
Total	$	2,493,923	$	2,093,287	$	4,587,210	$	2,146,713	$	2,059,931	$	4,206,644

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

Commercial :

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

Pass-Watch – credits in this category are of sufficient risk to cause concern. This category is reserved for credits that display negative performance trends. The “Watch” grade should be regarded as a transition category.

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

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

Doubtful – an asset that has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

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

Residential and Consumer:

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

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

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Purchased Credit Impaired Loans

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



	June 30, 2017				December 31, 2016
	Carrying				Carrying
	Amount		Accretable		Amount		Accretable
(in thousands)	of Loans		Yield		of Loans		Yield
Balance at beginning of period	$	190,915	$	113,686	$	225,838	$	129,488
Payments received, net		(36,950)		(6,258)		(55,194)		(11,024)
Accretion		9,190		(9,190)		20,271		(20,271)
Increase in expected cash flows based on actual cash flows and changes in cash flow assumptions		—		4,405		—		5,358
Net transfers from nonaccretable difference to accretable yield		—		5,183		—		10,135
Balance at end of period	$	163,155	$	107,826	$	190,915	$	113,686

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

Loans purchased in the 2009 acquisition of Peoples First Community Bank were covered by two loss share agreements between the FDIC and the Company. In the second quarter of 2017, the Company reached an agreement with the FDIC to terminate 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 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 .




	June 30,		June 30,
(in thousands)	2017		2016
Beginning Balance	$	16,219	$	29,868
Amortization		(2,427)		(3,139)
Charge-offs, write-downs and other recoveries		(2,442)		(2,683)
External expenses qualifying under loss share agreement		79		307
Adjustment due to changes in cash flow projections		(2,526)		(3,437)
Net payments to FDIC		934		159
Write-down for termination of loss share agreement		(6,603)		—
Ending balance	$	3,234	$	21,075

Residential Mortgage Loans in Process of Foreclosure

Included in loans are $4.2 million and $10. 1 million of consumer loans secured by single family residential real estate that are in process of foreclosure as of June 30, 2017 and December 31, 2016, 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 million and $3.1 million of foreclosed single family residential properties in other real estate owned as of June 30, 2017 and December 31, 2016, respectively.

5. Securities Sold under Agreements to Repurchase

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 million and $358.1 million at June 30, 2017 and December 31, 2016, respectively . The Company borrows funds on a secured basis by selling securities under agreements to repurchase, mainly in connection with treasury management services offered to its deposit customers. As the Company maintains effective control over assets sold under agreements to repurchase, the securities continue to be carried on the consolidated statements of financial condition. Because the Company acts as borrower transferring assets to the counterparty, and the agreements mature daily, the Company’s risk is limited.

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6 . Derivatives

Risk Management Objective of Using Derivatives

The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments, currently related to select pools of variable rate loans and 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.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the notional 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 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.





					June 30, 2017			December 31, 2016
				Derivative (1)						Derivative (1)
(in thousands)	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
Interest rate swaps	Fair Value		363,000		—		518		—		—		—
		$	1,113,000	$	18	$	8,137	$	1,100,000	$	—	$	7,787
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
Risk participation agreements	N/A		111,667		39		117		84,732		50		105
Forward commitments to sell residential mortgage loans	N/A		87,204		7		825		75,676		900		221
Interest rate-lock commitments on residential mortgage loans	N/A		66,483		563		5		46,840		189		228
Foreign exchange forward contracts	N/A		56,016		1,606		1,562		56,152		771		729
			1,451,737		19,751		20,520		1,242,791		20,315		19,645
Total derivatives		$	2,564,737	$	19,769	$	28,657	$	2,342,791	$	20,315	$	27,432
Less: netting adjustment (3)					(2,894)		(16,444)				—		—
Total derivative assets/liabilities				$	16,875	$	12,213			$	20,315	$	27,432

(1)

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

(2)

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

(3)

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

Cash Flow Hedges of Interest Rate Risk

The Company is party to various interest rate swap agreements designated and qualify ing as cash flow hedges of the Company’s forec asted variable cash flows for pool s of variable rate loans. For each agreement, the Company receives interest at a fixed rate and p ays at a variable rate. The swap agreements at June 30, 2017 expire as follows: notional amount of $250 million expire in 2019 ; $200 million expire in 2020 ; and $300 million expire in 2022 .

During the terms of the swap agreements, the effective portion of changes in the fair value of the derivative instruments are recorded in Accumulated Other Comprehensive Income (“AOCI”) and subsequently reclassified into earnings in the periods that the hedged forecasted variabl e-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 derivative s recognized directly in earnings during the three or six months ended June 30, 2017 and 2016 .

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Fair Value Hedges of Interest Rate Risk

During 2017, the Company entered into interest rate swap agreements that modify the Company’s exposure to interest rate risk by effectively converting a portion of the Company’s brokered certificates of deposit from fixed rates to variable rates. The maturities and call features of these interest rate swaps match the features of the hedged deposits. As interest rates fall, the decline in the value of the certificates of deposit is offset by the increase in the value of the interest rate swaps. Conversely, as interest rates rise, the value of the underlying deposits increase, but the value of the interest rate swaps decrease, resu lting 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.

Derivatives Not Designated as Hedges

Customer interest rate derivative program

The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking customers to facilitate their risk management strategies. The Bank enters into offsetting agreements with unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

Risk participation agreements

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

Mortgage banking derivatives

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

Customer foreign exchange forward contract derivatives

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

Effect of Derivative Instruments on the Income Statement

Derivative 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 million and $3.1 million for the three and six months ended June 30, 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 was ($0.2) million and ($0.1) million for the three and six months ended June 30, 2017, respectively and $0.7 million and $1.0 million for the three and six months ended June 30, 2016, respectively. For the six months ended June 30, 2017, t he fair value hedge s entered into during the period reduced interest expense on deposits by $0.4 million and reduced noninterest income by $0.1 million due to ineffectiveness .

Credit risk-related Contingent Features

Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in ce rtain 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 .

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Offsetting Assets and Liabilities

The Bank’s derivative instruments to 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 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 and Decemb er 31, 2016 is presented in the following tables.



(in thousands)			Gross Amounts Offset in		Net Amounts Presented in		Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts Recognized		the Statement of Financial Position		the Statement of Financial Position		Financial Instruments		Cash Collateral		Net Amount
As of June 30, 2017
Derivative Assets	$	5,308	$	(3,963)	$	1,345	$	1,345	$	—	$	—

Derivative Liabilities	$	22,155	$	(16,392)	$	5,763	$	1,345	$	7,099	$	(2,681)



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

Derivative Liabilities	$	26,846	$	—	$	26,846	$	4,788	$	19,095	$	2,963

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

7 . Stockholders’ Equity

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

Common Shares Outstanding

Shares outstanding exclude treasury shares of 1.0 million and 1.3 million at June 30 , 2017 and December 31, 2016, respectively, with a first-in-first-out cost basis of $17. 6 million and $24.1 mi llion at June 30, 2017 and December 31, 2016 , respectively. Shares outstanding also exclude unvested restricted share awards of 1. 7 million and 2.0 million at June 30, 2017 and December 31, 2016, respectively.

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A ccumulated Other Comprehensive Income (Loss)

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



	Available		HTM Securities
	for Sale		Transferred		Employee		Cash
(in thousands)	Securities		from AFS		Benefit Plans		Flow Hedges		Total
Balance, December 31, 2015	$	4,268	$	(16,795)	$	(67,890)	$	(178)	$	(80,595)
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain		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 .

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 associa ted 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 loans described in Note 6 will be reclassified into income over the life of the hedge. Gains (losses) in AOCI are net of deferred income taxes.

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



	Six months ended
Amount reclassified from AOCI (a)	June 30,				Affected line item on
(in thousands)		2017		2016	the income statement
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
Tax effect		657		625	Income taxes
Net of tax		(1,092)		(1,003)	Net income
Amortization of defined benefit pension and post-retirement items		(3,105)		(2,916)	Employee benefits expense (b)
Tax effect		1,114		1,066	Income taxes
Net of tax		(1,991)		(1,850)	Net income
Total reclassifications, net of tax	$	(3,083)	$	(2,129)	Net income

(a)

Amounts in parenthesis indicate reduction in net income.

(b)

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

8 . Other Noninterest Income

Components of other noninterest income are as follows.



	Three months e nded				Six months ended
	June 30,				June 30,
(in thousands)	2017		2016		2017		2016
Income from bank-owned life insurance	$	2,883	$	4,501	$	5,535	$	7,051
Credit related fees		2,898		2,267		5,776		4,624
Derivative income		2,680		533		3,145		394
Net (loss) gain on sale of assets		(60)		1,801		4,065		3,566
Safety deposit box income		391		413		840		891
Other miscellaneous		4,082		2,041		6,388		4,376
Total other noninterest income	$	12,874	$	11,556	$	25,749	$	20,902

9 . Other Noninterest Expense

Components of other noninterest expense are as follows.



	Three months e nded				Six months e nded
	June 30,				June 30,
(in thousands)	2017		2016		2017		2016
Advertising	$	4,984	$	2,693	$	8,061	$	5,050
Ad valorem and franchise taxes		3,519		2,340		6,555		4,643
Printing and supplies		1,330		1,065		2,508		2,176
Insurance expense		807		829		1,624		1,664
Travel expense		1,350		1,079		2,409		2,028
Entertainment and contributions		1,982		2,001		3,765		3,633
Tax credit investment amortization		1,213		1,833		2,425		3,576
Write-down for termination of FDIC l oss share agreement		6,603		—		6,603		—
Other miscellaneous		5,879		4,633		12,347		10,412
Total other noninterest expense	$	27,667	$	16,473	$	46,297	$	33,182

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10 . Earnings Per Share

Hancock 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 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 e nded				Six months ended
	June 30,				June 30,
(in thousands, except per share data)	2017		2016		2017		2016
Numerator:
Net income to common shareholders	$	52,267	$	46,907	$	101,281	$	50,746
Net income allocated to participating securities - basic and diluted		1,166		1,136		2,322		1,233
Net income allocated to common shareholders - basic and diluted	$	51,101	$	45,771	$	98,959	$	49,513
Denominator:
Weighted-average common shares - basic	$	84,614	$	77,523	$	84,489	$	77,512
Dilutive potential common shares		253		157		266		164
Weighted-average common shares - diluted	$	84,867	$	77,680	$	84,755	$	77,676
Earnings per common share:
Basic	$	0.60	$	0.59	$	1.17	$	0.64
Diluted	$	0.60	$	0.59	$	1.17	$	0.64

Potential common shares consist of employee and director stock options. These potential common shares do not enter into the calculation of diluted earnings per share if the impact would be anti-dilutive, i.e., increase earnings per share or reduce a loss per share. Weighted-average anti-dilutive potential common shares totaled 19 , 397 and 17 , 701 , respectively , for the three and six months ended June 30 , 2017 . Weighted-average anti-dilutive potential common shares totaled 5 48 , 821 and 6 02 , 809 , respectively, for the three and six months ended June 30, 2016.

11 . Retirement Plans

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

The 401(k) Plan was amended for participants whose benefits are frozen under the Pension Plan, to add an enhanced Company contribution beginning January 1, 2018, in the amount of 2% , 4% or 6% of such participant’s eligible 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 a nonqualified defined benefit plan covering certa in 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.

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



					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

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

12 . Share-Based Payment Arrangements

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

A summary of option activity for the six months ended June 30 , 201 7 is presented below.



				Weighted
				Average
		Weighted		Remaining
		Average		Contractual	Aggregate
	Number of	Exercise		Term	Intrinsic
Options	Shares	Price		(Years)	Value ($000)
Outstanding at January 1, 2017	456,258	$	35.91		$	3,734
Exercised/Released	(330,644)		34.56			4,065
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

The total intrins ic value of options exercised for the six months ended June 30 , 2017 was $ 4 . 1 million. There was no total intrinsic value of options exercised for the six months ended June 30 , 2016 .

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



			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Nonvested at January 1, 2017	2,152,119	$	32.15
Granted	61,099		42.09
Vested	(201,137)		30.18
Forfeited	(38,670)		32.37
Nonvested at June 30, 2017	1,973,411	$	32.65

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As of June 30 , 2017 , there was $ 43 . 8 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 years . The total fair value of shares which vested during the six months ended June 30 , 2017 and 2016 was $ 1 0. 0 million and $ 2 . 0 million , respectively.

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

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13 . Fair Value

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

Fair Value of Assets and Liabilities Measured on a Recurring Basis

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



	June 30, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	—	$	74,840	$	—	$	74,840
Municipal obligations		—		245,156		—		245,156
Corporate debt securities		—		3,500		—		3,500
Residential mortgage-backed securities		—		1,854,099		—		1,854,099
Commercial mortgage-backed securities		—		433,098		—		433,098
Collateralized mortgage obligations		—		183,689		—		183,689
Total available for sale securities		—		2,794,382		—		2,794,382
Derivative assets (1)		—		16,875		—		16,875
Total recurring fair value measurements - assets	$	—	$	2,811,257	$	—	$	2,811,257
Liabilities
Derivative liabilities (1)	$	—	$	12,213	$	—	$	12,213
Total recurring fair value measurements - liabilities	$	—	$	12,213	$	—	$	12,213

(1)

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



	December 31, 2016
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Available for sale debt securities:
U.S. Treasury and government agency securities	$	—	$	54,828	$	—	$	54,828
Municipal obligations		—		242,155		—		242,155
Corporate debt securities		—		3,500		—		3,500
Residential mortgage-backed securities		—		1,611,355		—		1,611,355
Commercial mortgage-backed securities		—		402,591		—		402,591
Collateralized mortgage obligations		—		202,479		—		202,479
Total available for sale securities		—		2,516,908		—		2,516,908
Derivative assets (1)		—		20,315		—		20,315
Total recurring fair value measurements - assets	$	—	$	2,537,223	$	—	$	2,537,223
Liabilities
Derivative liabilities (1)	$	—	$	27,432	$	—	$	27,432
Total recurring fair value measurements - liabilities	$	—	$	27,432	$	—	$	27,432

(1)

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

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

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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 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.

Fair Value of Assets Measured on a Nonrecurring Basis

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

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

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

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



	June 30, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Collateral-dependent impaired loans	$	—	$	137,653	$	—	$	137,653
Other real estate owned		—		—		8,447		8,447
Total nonrecurring fair value measurements	$	—	$	137,653	$	8,447	$	146,100



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

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 i nstruments are discussed below.

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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 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 and December 31, 2016 .



	June 30, 2017
							Total Fair		Carrying
(in thousands)	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
Available for sale securities		—		2,794,382		—		2,794,382		2,794,382
Held to maturity securities		—		2,866,529		—		2,866,529		2,874,454
Loans, net		—		137,653		17,954,752		18,092,405		18,251,976
Loans held for sale		—		26,787		—		26,787		26,787
Derivative financial instruments		—		16,875		—		16,875		16,875
Financial liabilities:
Deposits	$	—	$	—	$	21,432,877	$	21,432,877	$	21,442,815
Federal funds purchased		76,798		—		—		76,798		76,798
Securities sold under agreements to repurchase		482,109		—		—		482,109		482,109
FHLB short-term borrowings		1,252,000		—		—		1,252,000		1,252,000
Long-term debt		—		407,409		—		407,409		407,876
Derivative financial instruments		—		12,213		—		12,213		12,213

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

14 . Recent Accounting Pronouncements

Accounting Standards Adopted in 2017

In March 2017, the FASB issued Accounting Standards Update (“ ASU ”) 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,” which amends the amortization period for certain purchased callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not, however, require an accounting change for securities held at a discount; instead, the discount continues 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. These amendments are effective for fiscal years, and for interim period within those fiscal years, beginning after December 15, 2018. The Company early adopted this amendment and, in accordance with the standards, the Company began amortizing the premium for certain purchased callable debt securities to the earliest call date. The adoption of this guidance did not have a material impact on the Company’s financial condition or results of operations.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , ” to improve the accounting for employee share-based payments. Several aspects of the accounting for share-based payment award transactions are simplified, including income tax consequences; classification of awards as either equity or liabilities; and classification on the statement of cash flows. The amendments were effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods and we adopted the guidance effective January 1, 2017. In accordance with the standard, the Company elected to account for forfeitures of stock-based compensation as they occur 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 financial condition or results of operations , however, the change in treatment of excess tax benefits and tax deficiencies could result in volatility of future earnings, depending on changes in the Company’s stock price .

Issued but Not Yet Adopted Accounting Standards

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

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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 Cost s, ” 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.

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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. The Company expects the guidance will result in an increase in the allowance for loan losses given the change from covering losses inherent in the portfolio to covering losses over the remaining expected life of the portfolio and the nonaccretable difference on purchased credit impaired loans moving to an allowance (offset by an increase in the carrying value of the related loans). The guidance will also 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 the exception of short-term leases) will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely unchanged. Lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities are required to apply the amendments for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently assessing this pronouncement and the impact of adoption by reviewing its existing lease contracts and service contracts that may include embedded leases. The Company expects a gross-up of its Consolidated Balance Sheets as a result of recognizing lease liabilities and right of use assets; the extent of such is under evaluation. The Company does not expect material changes to 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 or result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It also requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently assessing this pronouncement; however, the adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

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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.

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

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements that we may make include statements regarding balance sheet and revenue growth, the provision for loans losses, loan growth expectations, management’s predictions about charge-offs for loans, including energy-related credits, the impact of changes in oil and gas prices on our energy portfolio, and the downstream impact on businesses that support the energy sector, especially in the Gulf Coast region, the impact of the First NBC transactions on our performance and financial condition, including our ability to successfully integrate the business, deposit trends, credit quality trends, net interest margin trends, future expense levels, success of revenue-generating initiatives, projected tax rates, future profitability, improvements in expense to revenue (efficiency) ratio, purchase accounting impacts such as accretion levels, and the financial impact of regulatory requirements. Also, any statement that does not describe 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 stat ements can be found in Part I, Item 1A. “ Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in other periodic reports that we file with the SEC.

OVERVIEW

Non-GAAP Financial Measures

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

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

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

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

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

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

Acquisition s

On March 10, 2017, the Company completed a transaction with First NBC Bank (“ FNBC ”) , whereby the Company 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

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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, 2 017, the Company 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 clos ure of FNBC. Pursuant to the Agreement, Whitney Bank acquired selected assets and liabilities of FNBC from the FDIC and continued to operate the 29 branch locations (24 in Louisiana and five in Florida). This transaction is referred to as the FNBC II transaction throughout this document.

Under the Agreement, Whitney acquired/assumed the following assets and liabilities:

Approximately $1. 6 billion in deposits and customer repurchase agreements at an average cost of 0.92%

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

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

Whitney received approximately $798 million of cash in the transaction ($640 million in preliminary settlements from the FDIC for 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 assume d any other obligations, of First NBC Bank Holding Company.

Systems conversions and consolidation 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 and are financially compelling, which will help us achieve our long term goals.

For additional information on both transactions, see Notes to Consolidated Financial Statements – Note 2 - Acquisitions.

Recent Economic and Industry Developments

Current Economic Environment

Most of Hancock’s market area reflected a modest to moderate expansion in economic activity in the latter part of the second quarter of 2017, according to the Federal Reserve’s Summary of Commentary on Current Economic Conditions (“Beige Book”). Energy-related businesses operating mainly in Hancock’s south Louisiana and Houston, Texas markets again showed improvement in the current quarter. Demand for oil field services improved with the increase in rig count; however, there is concern that the current pace of growth may not be sustainable. While overall oil and gas outlooks are positive, continued volatility in the sector is expected.

The commercial real estate market continued to improve in most of our footprint, with growing demand for office and industrial space in certain market areas. Commercial construction activity also increased in these sectors. Continued improvement is expected in the commercial real estate market.

The residential real es tate market experienced slow but steady growth across our footprint , with construction activity up year-over-year. Home prices increased modestly, with buyers remaining price sensitive. Apartment demand was strong i n all markets. Leasing activity improved in Houston, as the market conditions are beginning to stabilize. New home sales and construction activity are expected to remain flat or improve slightly in the near term in all of our markets , with many builders focusing on bringing modestly-priced homes to the market .

Retail sales activity and consumer spending were mixed with merchants expecting sales to remain flat. Auto sales declined throug hout 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 indicated that hiring had tightened during the second quarter, citing upward wage pressure, especially for experienced personnel .

Loan demand across the geographic markets that Hancock serves improved. Loan volumes increased primarily in residential with commercial and industrial loans and real estate (commercial and residential) loan growth slowing . Economic outlooks were mostly optimistic ; however, several contacts expressed concern about the regulatory environment . Overall, the economic outlook remains

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positive, as most businesses expect activity to increase over the next year .

Highlights of Second Quarter 2017 Financial Results

Net inc ome in the second quarter of 2017 was $52.3 million, or $0.60 per diluted common share, compared to $49.0 million, or $0.57 per dil uted common share, in the first quarte r of 2017 and $46.9 million, or $0.59 per di luted common share, in the second quarter of 2016 . The second quarter of 2017 includes nonoperating expenses 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. The first quarter of 2017 included $2.1 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 related to the FNBC II transaction in the third quarter of 2017.

Highlights o f the Company’s second quarter 2017 results (compared to first quarter 2017 ):

In cludes a full quarter impact fro m the FNBC I transaction (March 10, 2017) and a partial quarter impact from the FNBC II transaction (April 28, 2017)

Reached an agreement with the FDIC to terminate the 2009 loss share agreements for the Peoples First acquisition; expenses include a $6.6 million ($0.05 per share) write-down of the receivable

Reported earnings increased $3.3 million, or 7%

Loans increased $269 million and deposits increased $1.5 billion

Acquired approximately $1.5 billion of deposits and approximately $0.2 billion in loans in the FNBC II transaction

Energy loans declined $59 million and comprise 6.7% of total loans, down from 7.1%; allowance for the energy po rtfolio totals approximately $83.4 million, or 6.8% of energy loans

Core pre-provision net revenue (PPNR) of $101.6 million, up $8.3 million, or 9%

Net interest margin (NIM) of 3.43%, up 6 basis points (bps)

Tangible common equity (TCE) ratio down 29 bps to 7.65%, mainly related to growth in assets and the addition of $44 million of intangible assets from the FNBC II transaction

The FNBC I and II transactions have positively impacted our franchise, and we expect to generate additional value as we move into the second half 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, in 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 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, and down from 1.41% at June 30, 2016. There is no allowance for loan lo sses on 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 th e 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.

RESULTS OF OPERATIONS

Net Interest Income

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 Fed eral 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 a n 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.

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The reported net interest margin was 3.43% for the second quarter of 2017, up 6 bps from the first quarter of 2017. The core net interest margin for the second quarter of 2017 was 3.29% , unchanged from the first quarter of 2017. The loan yield , excluding purchase accounting adjustments, was up 1 3 bps. Partially offsetting this improvement was a 7 bp increase in the cost of funds. The increase in the cost of funds was primarily related to the higher cost deposits acquired in the FNBC II transaction , offset in part by lower long-term debt rates with the payoff of a matured subordinated note on April 1, 2017 totaling $95.5 million.

Compared to the second quarter of 2016, 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 to the first quarter of 2017 , primarily the impact of 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 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

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.

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



	Three months ended
	June 30, 2017						March 31, 2017						June 30, 2016
(dollars in millions)	Volume		Interest		Rate		Volume		Interest		Rate		Volume		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	%
Residential mortgage loans		2,399.4		22.3	3.71			2,185.9		21.3	3.90			2,015.3		20.7		4.12
Consumer loans		2,080.0		29.3	5.64			2,058.5		26.6	5.24			2,053.9		26.2		5.12
Loan fees & late charges				(0.2)						(0.1)						(0.6)
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
Loans held for sale		22.4		0.2	4.22			21.3		0.2	4.08			29.1		0.2		3.43
US Treasury and government agency securities		125.9		0.7	2.08			116.3		0.6	2.04			50.0		0.2		1.68
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
Municipals (te) (a)		983.0		9.3	3.81			942.1		9.0	3.84			531.4		5.5		4.13
Other securities		64.4		0.3	1.91			3.7		—	1.96			5.0		—		1.89
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
Total short-term investments		704.5		1.7	0.99			408.3		0.7	0.74			409.3		0.5		0.47
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	%
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	%
Time deposits		2,575.7		6.5	1.01			2,340.0		5.1	0.89			2,556.7		5.7		0.90
Public funds		2,539.5		3.8	0.59			2,547.9		3.2	0.50			2,302.1		2.2		0.39
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
Short-term borrowings		2,232.8		4.2	0.77			2,127.3		2.9	0.56			1,351.2		0.9		0.27
Long-term debt		428.3		3.9	3.61			458.0		5.1	4.42			471.9		5.0		4.26
Total borrowings		2,661.1		8.1	1.22			2,585.3		8.0	1.24			1,823.1		5.9		1.30
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	%
Net interest-free funding sources		8,514.4						8,399.1						7,685.5
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	%
Net interest spread (te) (a)			$	208.3	3.19	%			$	190.0	3.15	%			$	171.2		3.05	%
Net interest margin	$	24,338.1	$	208.3	3.43	%	$	22,770.0	$	190.0	3.37	%	$	21,147.0	$	171.2		3.25	%

(a)

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

(b)

Includes nonaccrual loans.

(c)

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

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	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	%

(a)

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

(b)

Includes nonaccrual loans.

(c)

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

Due to the significant 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 .



	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(dollars in millions)	2017			2017			2016			2017			2016
Net interest income	$	199.7		$	181.7		$	165.0		$	381.4		$	327.8
Taxable-equivalent adjustment (te) (a)		8.6			8.3			6.2			16.9			11.5
Net interest income (te) (a)		208.3			190.0			171.2			398.3			339.3
Purchase accounting adjustments
Loan discount accretion		8.8			5.0			5.9			13.8			12.3
Bond premium amortization		(0.4)			(0.4)			(0.6)			(0.8)			(1.4)
Net purchase accounting accretion		8.4			4.6			5.3			13.0			10.9
Core net interest income (te) (a)	$	199.9		$	185.4		$	165.9		$	385.3		$	328.4
Average earning assets	$	24,338.1		$	22,770.0		$	21,147.0		$	23,558.4		$	21,028.9
Net interest margin - reported		3.43	%		3.37	%		3.25	%		3.40	%		3.24	%
Net purchase accounting adjustments		0.14	%		0.08	%		0.10	%		0.11	%		0.10	%
Core net interest margin		3.29	%		3.29	%		3.15	%		3.29	%		3.14	%

(a)

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

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Provision for Loan Losses

During the second quarter of 2017, the Company recorded a total provision for loan losses of $15.0 million, down $1.0 million from the first quarter of 2017 and down $2.2 million from the second quarter of 2016. For the six months ended June 30, 2017, the Company recorded a total 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 in provision expense related to the energy portfolio.

The section in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Allowance for Loan Losses and Asset Quality” provides additional information on changes in the allowance for loan losses and general credit quality.

Noninterest Income

Noninterest income totaled $67.5 million for the second quarter of 2017, up $4.0 million, or 6%, from the first quarter of 2017 and up $3.8 million, or 6%, compared to the second quarter of 2016. 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 to the prior quarter. Most fee income lines are also up when comparing the three and six months ended June 30, 2017 and 2016.

The components of noninterest income are presented in th e following table 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
Service charges on deposit accounts	$	20,061	$	19,206	$	18,394	$	39,267	$	36,777
Trust fees		11,506		11,211		12,089		22,717		23,313
Bank card and ATM fees		13,687		12,468		11,954		26,155		23,302
Investment and annuity fees		5,271		4,599		5,043		9,870		9,976
Secondary mortgage market operations		4,241		3,567		4,176		7,808		7,088
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)
Income from bank-owned life insurance		2,883		2,652		4,501		5,535		7,051
Credit related fees		2,898		2,878		2,267		5,776		4,624
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
Other miscellaneous		4,082		2,306		2,041		6,388		4,376
Securities transactions		—		—		768		—		1,114
Total noninterest operating income		67,487		59,139		63,694		126,626		121,880
Nonoperating income items		—		4,352		—		4,352		—
Total noninterest income	$	67,487	$	63,491	$	63,694	$	130,978	$	121,880

Service charges on deposits totaled $ 20 .1 million for the second quarter of 2017, up $0.9 million, or 4 %, from the first quarter of 2017 and up $1.7 million, or 9%, from the second quarter of 2016. These increases were primarily due to an increase in consumer overdraft fees , approximately half of which related to the addition of FNBC deposits.

Bank card and ATM fees totaled $ 13.7 million for the quarter ended June 30, 2017, compared to $12.5 million in the first quarter of 2017. Compared to the second quarter of 2016, ban k card and ATM fees were up $1.7 million, or 14 % due to an increase in credit card and merchant fees.

Se condary mortgage market operations fee income increased $0.7 million, or 1 9 %, from the first quarter of 2017 , and were relatively flat compared to th e second quarter of 2016. A $16 million increase in production and a higher percentage of loans sold in the secondary market were th e primary factors in the linked quarter increase. Mortgage loan originations for the second quarter of 2017 totaled $361 million, compared to $345 million in the first quarter of 2017 and $339 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 compared to the second 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 i nvestment and annuity fees is attributable to both a sales initiative on fee-based investment products, including sales to former FNBC

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customers, and an overall appreciation in asset value as a result of favorable market conditions . Insurance commissions were up compared to the first quarter 201 7 , but down compared to the second quarter of 2016, due to changes in ancillary sales methodology, decreased seasonal demand and residual claims related to major flooding in Louisiana in 2016.

Income from bank-owned life insuran ce increased $0.2 million, or 9 % compared to the first quarter of 2017, but was down $1.6 million, or 36%, compared to 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.

Income on our customer interest rate derivative program resulted in a $2.7 million net gain for the second quarter of 2017 compared to net gains of $0 .5 million i n both the first quarter of 2017 and the second quarter of 2016. This income can be volatile in nature and is dependent upon both customer sales activity and 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 million in the second quarter of 2017, up $1.8 million linked quarter and $2.0 million compared to the second quarter of 2016. Other miscellaneous fee income for second quarter 2017 includes a $1.0 million co-arranger fee related to a health care credit facility and $0.7 million in additional income from a Small Business Investment Company. While these fees are part 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.

Noninterest Expense

Noninterest expense for the second quarter of 2017 was $183.5 million, up $19.9 million, or 12%, from the first quarter of 2017, and up $32.5 million, or 22%, from the second quarter of 2016. Excluding nonoperating expense items, noninterest expense for the second quarter of 2017 totaled $172.9 million, an increase of $15.8 million, or 10% linked quarter and up $21.9 million, or 15% from the second 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.

Nonoperating expenses in both the second and first quarters of 2017 included acquisition-related costs associated with the FNBC transactions totaling $4.0 million and $6.5 million, respectively. The second quarter 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. There were no nonoperating expenses for the second quarter of 2016. 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

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	Three months ended						Six months ended
	June 30,		March 31,		June 30,		June 30,
(in thousands)	2017		2017		2016			2017		2016
Nonoperating expense
Personnel expense	$	1,435	$	107	$	—		1,542		3,974
Net occupancy and equipment expense		276		1		—		277		—
Professional services expense		2,200		4,627		—		6,827		181
Other real estate expense, net		(1,511)		—		—		(1,511)		323
Advertising		901		130		—		1,031		—
Write-down related to FDIC loss share termination		6,603						6,603
Other expense		713		1,598		—		2,311		500
Total nonoperating expenses	$	10,617	$	6,463	$	—	$	17,080	$	4,978

The following discussion of the components of operating expenses 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 million for the second quarter of 2017, up $7.2 million, or 8% linked quarter, due to annual merit increase s , higher 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. Year over year, personnel expense was up $12.0 million, or 14%.

Occupancy and equipment expenses totaled $16.8 million in the second quarter of 2017, up $2.3 million, or 16%, from the first quarter of 2017 and up $3.3 million, or 24%, compared to the second 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 gains on ORE dispositions exceeded ORE expense by $1.0 million compared to near breakeven linked quarter and $0.3 million of net expense in the second quarter of 2017. Management does not expect this level of ORE gains to be sustainable in future quarters.

All other expenses, excluding amortization of intangibles and nonoperating expense items, totaled $55.1 million for the second quarter of 2017, up $6.2 million, or 13%, from the first quarter of 2017, and up $7.2 million, or 15% compared to the second quarter of 2016. These increases were primarily seen in the professional services, data processing and advertising categories , including $2.2 million of temporary operating cost related to the FNBC transactions.

Income Taxes

The effective income tax rate for the second quarter of 2017 was approximately 24.0%, compared to 25.3% in the first quarter of 2017 and 22.5% in the second quarter of 2016. Management expects the effective tax rate for 2017 will be in the range of 25% to 27%, excluding the impact of employee share-based compensation. The adoption of the new accounting standard for employee share-based compensation results in stock compensation having a direct impact on income tax expense and therefore, 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 income tax expense and the effective tax rate will vary from quarter to quarter. For the second quarter of 2017, excess 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 minimal and in the fourth quarter of 2017 will result in an additional income tax benefit of approximately $3.7 million. This estimate is based on the share price as of the end of the second quarter and does not include the impact of stock option exercises.

The Company’s effective tax rate 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 of tax credits have 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 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.

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The Company has invested in NMTC projects through investments in its own Community Development Entity (“CDE”), as well as, other unrelated CDEs. These investments will generate approximately $104 million in federal and state tax credits. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years.

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

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



	Three months ended						Six months ended
	June 30,		March 31,		June 30,		June 30,
(in thousands)	2017		2017		2016		2017		2016
Taxes computed at statutory rate	$	24,074	$	22,977	$	21,184	$	47,051	$	22,918
Tax credits:
QZAB/QSCB		(643)		(642)		(681)		(1,285)		(1,378)
NMTC - Federal and State		(1,679)		(1,679)		(2,009)		(3,358)		(3,839)
LIHTC		—		—		24		—		12
Total tax credits		(2,322)		(2,321)		(2,666)		(4,643)		(5,205)
State income taxes, net of federal income tax benefit		1,133		843		762		1,976		1,055
Tax-exempt interest		(4,719)		(4,673)		(3,407)		(9,392)		(6,460)
Bank-owned life insurance		(1,046)		(947)		(1,573)		(1,993)		(2,463)
Impact from interim estimated effective tax rate		821		1,880		(879)		2,701		4,503
Employee share-based compensation		(1,367)		(434)		—		(1,801)		—
Other, net		(58)		(690)		197		(748)		385
Income tax expense	$	16,516	$	16,635	$	13,618	$	33,151	$	14,733

Selected Financial Data

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



	Three months ended						Six months ended
	June 30,		March 31,		June 30,		June 30,
	2017		2017		2016		2017		2016
Common Share Data
Earnings per share:
Basic	$	0.60	$	0.57	$	0.59	$	1.17	$	0.64
Diluted	$	0.60	$	0.57	$	0.59	$	1.17	$	0.64
Cash dividends paid	$	0.24	$	0.24	$	0.24	$	0.48	$	0.48
Book value per share (period-end)	$	33.21	$	32.70	$	31.77	$	33.21	$	31.77
Tangible book value per share (period-end)	$	23.27	$	23.19	$	22.50	$	23.27	$	22.50
Weighted average number of shares (000s):
Basic		84,614		84,365		77,523		84,489		77,512
Diluted		84,867		84,624		77,680		84,755		77,676
Period-end number of shares (000s)		84,738		84,517		77,538		84,738		77,538
Market data:
High sales price	$	52.94	$	49.50	$	27.84	$	52.94	$	27.84
Low sales price	$	42.70	$	41.71	$	21.93	$	41.71	$	20.01
Period-end closing price	$	49.00	$	45.55	$	26.11	$	49.00	$	26.11
Trading volume (000s) (a)		39,035		45,119		41,668		84,154		97,987

(a)

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

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	Three months ended						Six months ended
	June 30,		March 31,		June 30,		June 30,
(in thousands)	2017		2017		2016		2017		2016
Income Statement:
Interest income	$	226,177	$	202,515	$	183,506	$	428,692	$	364,147
Interest income (te) (a)		234,741		210,813		189,702		445,554		375,686
Interest expense		26,460		20,824		18,537		47,284		36,342
Net interest income (te) (a)		208,281		189,989		171,165		398,270		339,344
Provision for loan losses		14,951		15,991		17,196		30,942		77,232
Noninterest income		67,487		63,491		63,694		130,978		121,880
Noninterest expense (excluding amortization of intangibles)		177,713		158,837		145,937		336,550		296,845
Amortization of intangibles		5,757		4,705		5,005		10,462		10,129
Income before income taxes		68,783		65,649		60,525		134,432		65,479
Income tax expense		16,516		16,635		13,618		33,151		14,733
Net income	$	52,267	$	49,014	$	46,907	$	101,281	$	50,746



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

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

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

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	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
($ in thousands)	2017			2017			2016			2017			2016
Asset Quality Information
Nonaccrual loans (a)	$	238,219		$	262,649		$	265,722		$	238,219		$	265,722
Restructured loans - still accruing		90,502			47,267			35,974			90,502			35,974
Total nonperforming loans		328,721			309,916			301,696			328,721			301,696
Other real estate (ORE) and foreclosed assets		18,049			17,156			23,374			18,049			23,374
Total nonperforming assets	$	346,770		$	327,072		$	325,070		$	346,770		$	325,070
Accruing loans 90 days past due (a)	$	18,390		$	590		$	7,982		$	18,390		$	7,982
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)
Allowance for loan losses		221,865			213,550			226,086			221,865			226,086
Provision for loan losses		14,951			15,991			17,196			30,942			77,232
Ratios:
Nonperforming assets to loans, ORE and foreclosed assets		1.88	%		1.79	%		2.02	%		1.88	%		2.02	%
Accruing loans 90 days past due to loans		0.10	%		0.00	%		0.05	%		0.10	%		0.05	%
Nonperforming assets + accruing loans 90 days past due to loans, ORE and foreclosed assets		1.97	%		1.80	%		2.07	%		1.97	%		2.07	%
Net charge-offs - non-purchased credit impaired to average loans		0.13	%		0.70	%		0.20	%		0.41	%		0.37	%
Allowance for loan losses to period-end loans		1.20	%		1.17	%		1.41	%		1.20	%		1.41	%
Allowance for loan losses to nonperforming loans + accruing loans 90 days past due		63.92	%		68.77	%		73.01	%		63.92	%		73.01	%

(a)

Nonaccrual loans and accruing loans past due 90 days or more do not include purchased credit impaired loans with an accretable yield. Included in nonaccrual loans are $ 96.3 million, $112.6 million, and $34.8 million in restructured loans at June 30, 2017 , March 31, 2017 , and June 30, 2016 , respectively.

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	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
	June 30,		March 31,		June 30,		June 30,		June 30,
(in thousands)	2017		2017		2016		2017		2016
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
Loans held for sale		22,389		21,328		29,053		21,862		21,937
Securities (b)		5,241,735		5,037,286		4,648,807		5,140,075		4,588,449
Short-term investments		704,560		408,343		409,323		557,270		464,155
Earning assets		24,338,130		22,770,001		21,147,029		23,558,398		21,028,849
Allowance for loan losses		(216,851)		(226,503)		(220,679)		(221,650)		(201,971)
Goodwill and other intangible assets		826,097		729,766		721,031		778,198		723,563
Other assets		1,578,877		1,483,242		1,491,210		1,531,322		1,485,112
Total assets	$	26,526,253	$	24,756,506	$	23,138,591	$	25,646,268	$	23,035,553
Noninterest-bearing deposits	$	7,769,932	$	7,462,258	$	7,079,426	$	7,616,945	$	7,056,553
Interest-bearing transaction and savings deposits		8,047,426		6,897,660		6,779,565		7,475,719		6,797,634
Interest-bearing public fund deposits		2,539,424		2,547,874		2,302,096		2,543,626		2,237,766
Time deposits		2,575,779		2,340,066		2,556,668		2,458,574		2,407,802
Total interest-bearing deposits		13,162,629		11,785,600		11,638,329		12,477,919		11,443,202
Total deposits		20,932,561		19,247,858		18,717,755		20,094,864		18,499,755
Short-term borrowings		2,232,845		2,127,256		1,351,227		2,180,342		1,458,015
Long-term debt		428,292		458,050		471,924		443,089		477,636
Other liabilities		145,989		190,253		167,680		167,998		169,271
Stockholders' equity		2,786,566		2,733,089		2,430,005		2,759,975		2,430,876
Total liabilities & stockholders' equity	$	26,526,253	$	24,756,506	$	23,138,591	$	25,646,268	$	23,035,553

(a)

Includes nonaccrual loans.

(b)

Average secur ities do not include unrealiz ed holding gains/losses on available for sale securities.

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


	Three months ended									Six months ended
		June 30,			March 31,			June 30,			June 30,			June 30,
($ in thousands)		2017			2017			2016			2016			2016
Net interest income	$	199,717		$	181,691		$	164,969		$	381,408		$	327,805
Tax-equivalent adjustment (te)(a)		8,564			8,298			6,196			16,862			11,539
Net interest income (te)	$	208,281		$	189,989		$	171,165		$	398,270		$	339,344
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
Net interest income (te) - core	$	199,878		$	185,426		$	165,923		$	385,304		$	328,464
Average earning assets	$	24,338,130		$	22,770,001		$	21,147,029		$	23,558,398		$	21,028,849
Net interest margin - reported		3.43	%		3.37	%		3.25	%		3.40	%		3.24	%
Net purchase accounting adjustments		0.14	%		0.08	%		0.10	%		0.11	%		0.10	%
Net interest margin - core		3.29	%		3.29	%		3.15	%		3.29	%		3.14	%

Core revenue (te) and co re pre-tax, 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

(a)

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

(b)

Includes net loan discount accretion arising from business combinations.

(c)

Includes net investment premium amortization arising from business combinations.

(d)

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

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LIQUIDITY

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

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, as well as maturities and repayments of investment securities. Short-term investments such as federal funds sold, securities purchased under agreements to resell and interest-bearing deposits with the Federal Reserve Bank or with other commercial banks are additional sources of liquidity to meet cash flow requirements. Free securities represent unpledged securities that can be sold or used as collateral for borrowings, and include unpledged securities assigned to short-term dealer repurchase agreements or to the Federal Reserve Bank discount window. As shown in the table below, our ratio of free securities to total securities was 33.57 % at June 30, 2017 , compared to 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. The total of pledged securities at June 30, 2017 was down $227 million compared to March 31,2017 as collateral related to seasonal public fund tax deposits was released. Total securities at June 30, 2017 were $0.9 billion higher than at June 30, 2016.



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

The liability portion of the balance sheet provides liquidity mainly through the Company’s ability to use cash sourced from various customers’ interest-bearing and noninterest-bearing deposit and sweep accounts. Core deposits consist of total deposits excluding certificates of deposits (“CDs”) of $250,000 or more and brokered deposits. The ratio of core deposits to total deposits was 93.05% at June 30, 2017, compared to 92.93% at March 31, 2017 and 91.99% at June 30, 2016. Core deposits totaled $20.0 billion at June 30, 2017, an increase of $1.4 billion from March 31, 2017 , and up $2.6 b illion from June 30, 2016 . These increases were primarily due to the FNBC transactions. Brokered deposits totaled $758 million as of June 30, 2017, a $42 million, or 5%, decrease from March 31, 2017, and down $201 million compared to June 30, 2016. 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, the Bank had borrowed $1.3 billion from the FHLB and had approximately $2.6 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 outstanding borrowings with the Federal Reserve at any date in the last 12 months.

Wholesale funds, which are comprised of short-term borrowings and long-term debt, were 11.12% of core deposits at June 30, 2017, compared to 14.30% at March 31, 2017 and 9.03% at June 30, 2016. The linked quarter decrease primarily related to the FNBC II transaction which added approximately $1.5 billion in 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 was primarily due to an increase 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 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 lo an-to- deposit ratio (average loans outstanding for the reporting period divided by average d eposits outstanding). The loan-to- deposit ratio measures the amount of funds the Company lends out for each dollar of deposi ts on hand. The Company’s loan-to- deposit ratio for the second quarter of 2017 was 87.76%, compared to 89.90% linked quarter and 85.80% at June 30, 2016. The l oan - 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. T he Company has established an int ernal target range for the loan-to- deposit ratio from 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 months ended June 30, 2017 and 2016 .

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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.

CAPITAL RESOURCES

Stockholders’ equity totaled $2.8 billion at June 30, 2017, up $50 million, or 2% compared to March 31, 2017 and up $3 51 million, or 1 4 % from June 30, 2016 . The tangible common equity ratio was 7.65% at June 30, 2017, compared to 7.94% at March 31, 2017 and 7.81% at June 30, 2016. The decline in the ratio from prior periods was due to the effect of the assets acquired in the FNBC transactions. Partially offsetting the year-over-year decrease was the $259 million stock issuance in the fourth quarter of 2016. The Company has established an internal target for the tangible common equity ratio of at least 8.00%. However, management will allow the Company’s tangible common equity ratio to drop below 8.00% on a temporary basis if it believes that the shortfall can be replenished through normal operations.

At June 30, 2017 , the regulatory capital ratios of the Company and the Bank were down compared to March 31, 2017 and December 31, 2016, due to the FNBC transactions, but remained well in excess of current regulatory minimum requirements, as indicated in the table below. The Company and the Bank have been categorized as “well-capitalized” in the most recent notices received from our regulators and both 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 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,
	Capitalized		2017		2017		2016		2016		2016
Total capital (to risk weighted assets)
Hancock Holding Company	10.00	%	11.76	%	11.91	%	13.21	%	12.15	%	11.96	%
Whitney Bank	10.00	%	11.33	%	11.52	%	11.57	%	11.81	%	11.70	%
Tier 1 common equity capital (to risk weighted assets)
Hancock Holding Company	6.50	%	10.01	%	10.16	%	11.26	%	10.09	%	9.94	%
Whitney Bank	6.50	%	10.28	%	10.49	%	10.39	%	10.56	%	10.48	%
Tier 1 capital (to risk weighted assets)
Hancock Holding Company	8.00	%	10.01	%	10.16	%	11.26	%	10.09	%	9.94	%
Whitney Bank	8.00	%	10.28	%	10.49	%	10.39	%	10.56	%	10.48	%
Tier 1 leverage capital
Hancock Holding Company	5.00	%	8.21	%	8.79	%	9.56	%	8.35	%	8.22	%
Whitney Bank	5.00	%	8.44	%	9.09	%	8.83	%	8.76	%	8.69	%

Regulatory definitions:

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

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BALANCE SHEET ANALYSIS

Securities

Investment in securities totaled $5.7 billion at June 30, 2017, up $668 million , or 13%, 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 n ominal average yield of 2.35%. At June 30, 2017, securities available for sale totaled $2.8 billion and securities held to maturity totaled $2. 9 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 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, the average maturity of the portfolio was 5.53 years with an effective duration of 4.84 years and a nominal weighted-average yield of 2.35%. Management simulations indicate that the effective duration would increase to 5.08 years with a 100 bps increase in the yield curve and to 5.20 years with a 200 bps increase. At December 31, 2016, the average maturity of the portfolio was 5.79 years with an effective duration of 5.07 years and a nominal weighted -average yield of 2.35%. The average maturity of the portfolio at June 30, 2016 was 5.0 years, while the duration was 3.39 years, and the nominal weighted average yield was 2.43%.

Loans

Total loans at June 30 , 2017 were $18.5 billion, up approximately $269 million, or 1.5%, from March 31, 2017. The increase includes approximately $16 5 million of loans from the FNBC II transaction (net of the fair value discount ). Loans to energy-related companies decreased $59 million and non energy shared national credits decreased $82 million during the second quarter. There was loan growth throughout the markets across our footprint and in our mortgage and equipment finance lines of business.

During the quarter, the Company reached an agreement with the FDIC to terminate the remaining portion of its 2009 loss share agreement . In the second quarter of 2017, the Company wrote down the indemnification asset by $6.6 million to $3.2 million, the amount received from the FDIC in the third 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.

The following table shows the composition of our loan portfolio.



		June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)		2017		2017		2016		2016		2016
Total loans:
Commercial non-real estate	$	8,093,104	$	8,074,287	$	7,613,917	$	7,133,928	$	7,132,519
Commercial real estate - owner occupied		2,078,332		2,047,451		1,906,821		1,901,825		1,916,200
Total commercial and industrial		10,171,436		10,121,738		9,520,738		9,035,753		9,048,719
Commercial real estate - income producing		2,401,673		2,505,104		2,013,890		1,990,309		2,024,471
Construction and land development		1,313,522		1,252,667		1,010,879		946,592		880,588
Residential mortgages		2,493,923		2,266,263		2,146,713		2,037,162		2,017,650
Consumer		2,093,287		2,059,096		2,059,931		2,061,005		2,064,368
Total loans	$	18,473,841	$	18,204,868	$	16,752,151	$	16,070,821	$	16,035,796

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

Table of Contents

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



	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 & industrial loans:
Real Estate and Rental and Leasing	$	1,258,221	13	%	$	1,119,937	11	%	$	975,821	10	%	$	980,484	11	%	$	986,502	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
Health Care and Social Assistance		1,116,411	11			1,076,164	11			1,010,135	11			953,900	10			900,604	10
Public Administration		848,475	8			839,005	8			796,742	8			717,629	8			686,179	8
Manufacturing (a)		793,016	8			769,118	8			729,926	8			637,194	7			655,493	7
Retail Trade (a)		810,512	8			755,059	8			682,775	7			632,175	7			645,073	7
Finance and Insurance		519,983	5			478,473	5			507,339	5			451,469	5			463,953	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
Other Services (except Public Administration)		369,202	4			342,155	3			308,802	3			292,669	3			292,482	3
Accommodation and Food Services		347,773	3			338,241	3			270,693	3			295,625	3			294,607	3
Other (a)		502,518	5			835,022	8			722,610	8			665,097	7			674,419	7
Total commercial & industrial loans	$	10,171,436	100	%	$	10,121,738	100	%	$	9,520,738	100	%	$	9,035,753	100	%	$	9,048,719	100	%

(a) The Company's energy related lending portfolio includes certain balances within each of these selected industry categories as the definition is b ased on source of revenue. The energy relate d lending portfolio totaled $1.2 billion, $1.3 billion, $1.4 billi on, $1.4 billion, and $1.5 billion, at June 30, 2017, March 31, 2017, December 31, 2016 , September 30, 2016, and June 30, 2016, respectively.

At June 30 , 2017, commercial and industrial (“C&I”) loans, including both non-real estate and owner occupied real estate secured loans, totaled approximately $10.2 billion, an increase of $49.7 million, or 0.5%, from March 31, 2017. Included in C&I are $1.2 billion in energy-related loans, which are comprised of credits to both the exploration and production segment and the support services segme nt. Energy loans comprised 6.7 % of total loans at June 30 , 2017 , down from 12.4% in fourth quarter of 2014, the beginning of the cycle . Payoffs and paydowns of approximately $134 million were partially offset by approximately $75 million in draws on existing lines of credit. Management has a strategic target to bring the level of energy loans to total loans to 5%.

The Bank lends mainly to middle-market and smaller commercial entities , although it participates in larger shared-credit loan facilities. Shared national credits funded at June 30, 2017 totaling approximately $2.1 billion, or 11% of total loans, were down $114 million compared to March 31, 2017 and down $ 7 6 million from June 30, 2016. Approximately $781 million of shared national credits were with energy-related customers at June 30, 2017, down approximately $32 million from March 31, 2017 and down $198 million from June 30, 2016.

Commercial real estate – income producing loans totaled approximately $2.4 billion at June 30, 2017, a decrease of $103 million, or 4%, from March 31, 2017. The majority of the decrease in commercial real estate – income producing loans was related to the multi-family property type . The following table details commercial real estate – income producing by property types for the last five quarters.

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	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 billion at June 30, 2017, increased approximately $61 million from March 31, 2017. Residential mortgages increased $228 million, in part, due to the FNBC II acquisition and partly due to the Company’s revenue-generating initiatives. Consumer loans increased $34 million during the second quarter of 2017.

Allowance for Loan Losses and Asset Quality

The Company's total allowance for loan losses was $221.9 million at June 30, 2017, compared to $213.6 million at March 31, 2017 . The ratio of the allowance for loan losses to period-end loans increased to 1.20%, compared to 1.17% for 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. Management believes the allowance level for the energy portfolio, as built in previous quarters, remains adequate.

During the second quarter of 2017, Hancock recorded a total provision for loan losses of $15.0 million, down $1.0 million from $16.0 million in the first quarter of 2017.

Net charge-offs from the non-purchased credit impaired loan portfolio were $6.0 million, or 0.13%, of average total loans on an annualized basis in the second quarter of 2017, down from $29.9 million, or 0.70%, of average total loans in the first quarter of 2017. There were no charge-offs related to energy credits in the second quarter 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.


( 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	%

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 customers to service their debt. Part of the ongoing monitoring includes a review of customers’ balance sheets, leverage ratios, collateral values and other critical lending metrics. As previously noted, even with improving oil prices, management expects a continued lag in the recovery of energy service and support credits. Reserve-based lending credits are showing signs of improvement given the stabilization in oil prices, and we expect improvement in land-based services and non-drilling services in the Gulf of Mexico to follow. However, a s new information becomes available, additional risk rating downgrades could occur, which could lead to additional loan loss provisions, a higher allowance for loan losses, and additional charge-offs. Management believes that any additional losses will be manageable and that capital will remain solid. Based upon information currently available, management is maintaining the estimate that net charge-offs from energy-related credits could approximate $65 million to $95 million over the duration of the cycle, which started in the fourth quarter of 2014. To date, the Company has recorded approximately $65

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million in 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 Annual Report on Form 10-K for the year ended December 31, 2016 for further discussion of the Company’s energy portfolio and its potential impact on the allowance for loan losses.

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



	Three months ended									Six months ended

	June 30,			March 31,			June 30,			June 30,
(in thousands)	2017			2017			2016			2017			2016
Allowance for loan losses at beginning of period	$	213,550		$	229,418		$	217,794		$	229,418		$	181,179
Loans charged-off:
Non-purchased credit impaired loans (a):
Commercial non real estate		1,427			24,791			4,545			26,218			22,212
Commercial real estate - owner-occupied		488			29			416			517			1,199
Total commercial & industrial		1,915			24,820			4,961			26,735			23,411
Commercial real estate - income producing		153			7			76			160			191
Construction and land development		77			37			482			114			592
Residential mortgages		401			289			417			690			592
Consumer		6,568			8,539			5,425			15,107			11,268
Total non-purchased credit impaired charge-offs		9,114			33,692			11,361			42,806			36,054
Purchased credit impaired loans:
Commercial non real estate		—			—			—			—			—
Commercial real estate - owner-occupied		—			—			—			—			28
Total commercial & industrial		—			—			—			—			28
Commercial real estate - income producing		—			—			—			—			1
Construction and land development		4			54			—			58			18
Residential mortgages		27			59			23			86			23
Consumer		14			139			8			153			8
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
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
Provision for loan losses before FDIC benefit - purchased credit impaired loans		(912)			(2,236)			(1,059)			(3,148)			(3,744)
Benefit attributable to FDIC loss share agreement		696			1,830			1,248			2,526			3,437
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
Increase (decrease) in FDIC loss share receivable		(696)			(1,830)			(1,248)			(2,526)			(3,437)
Allowance for loan losses at end of period	$	221,865		$	213,550		$	226,086		$	221,865		$	226,086
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
Allowance for loan losses to period-end loans		1.20	%		1.17	%		1.41	%		1.20	%		1.41

(a)

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

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



	June 30,			December 31,
(in thousands)	2017			2016
Loans accounted for on a nonaccrual basis: (a)
Commercial non-real estate	$	80,572		$	170,703
Commercial non-real estate - restructured		87,138			78,334
Total commercial non-real estate		167,710			249,037
Commercial real estate - owner occupied		10,200			13,432
Commercial real estate - owner-occupied - restructured		1,550			981
Total commercial real estate - owner-occupied		11,750			14,413
Total commercial & industrial		179,460			263,450
Commercial real estate - income producing		7,322			13,147
Commercial real estate - income producing - restructured		6,116			807
Total commercial real estate - income producing		13,438			13,954
Construction and land development		2,526			3,652
Construction and land development - restructured		295			898
Total construction and land development		2,821			4,550
Residential mortgage		26,973			22,814
Residential mortgage - restructured		1,185			851
Total residential mortgage		28,158			23,665
Consumer		14,342			12,351
Consumer - restructured		—			—
Total consumer		14,342			12,351
Total nonaccrual loans	$	238,219		$	317,970
Restructured loans - still accruing:
Commercial non-real estate	$	82,483		$	32,887
Commercial real estate - owner occupied		3,221			493
Total commercial & industrial		85,704			33,380
Commercial real estate - income producing		3,899			5,939
Construction and land development		—			—
Residential mortgage		508			259
Consumer		391			240
Total restructured loans - still accruing		90,502			39,818
Total nonperforming loans		328,721			357,788
ORE and foreclosed assets		18,049			18,943
Total nonperforming assets (b)	$	346,770		$	376,731
Loans 90 days past due still accruing	$	18,390		$	3,039
Total restructured loans	$	186,786		$	121,689
Ratios:
Nonperforming assets to loans plus ORE and foreclosed assets		1.88	%		2.25	%
Allowance for loan losses to nonperforming loans and accruing loans 90 days past due		63.92	%		63.58	%
Loans 90 days past due still accruing to loans		0.10	%		0.02	%

(a)

Nonaccrual loans and accruing loans past due 90 days or more do not include acquired credit-impaired loans which were written down to fair value upon acquisition and accrete interest income the remaining life of the loan.

(b)

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

Nonperforming assets totaled $347 million at June 30, 2017, down $30 million, or 8%, from December 31, 2016, but up $20 million , or 6%, from March 31, 2017 and up $22 million from June 30, 2016. During the second quarter of 2017, total nonperforming loans increased approximately $19 million, after a drop of almost $100 million in the first quarter. ORE and other foreclosed assets increased approximately $1 million in the second quarter of 2017, following a $2 million decrease in the first quarter. Nonperforming assets as a percent of total loans, ORE and other foreclosed assets was 1.88% at June 30, 2017, up 9 bps from March 31, 2017 . This ratio stood at 2.25% at December 31, 2016 and 2.02% at June 30, 2016.

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Short-Term Investments

Short-term liquidity assets are held to ensure funds are available to meet the cash flow needs of both borrowers and depositors. Short-term liquidity investments, including interest-bearing bank deposits and federal funds sold, were $ 126 million at June 30 , 2017. This total was up $75 million from the prior quarter end and down $27 million from June 30, 2016. These assets are highly volatile on a daily basis depending upon movement in customer loan and deposit accounts. Average short-term investments of $705 million for the second quarter of 2017 were up $296 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. See the Liquidity section above for further discussion regarding the Company’s management of its short-t erm investment portfolio and the impact upon its liquidity in general.

Deposits

Total deposits were $ 21.4 billion at June 30, 2017, up $1.5 billion, or 8% from March 31, 2017, and up $2.6 billion, or 14%, from June 30, 2016. Average deposits for the second quarter of 2017 were $20.9 billion, up $1.7 billion, or 9%, from the first quarter of 2017 and up $2.2 billion, or 12% , from the second quarter of 2016. The FNBC transaction s added $ 0.4 b illion to deposits during the first quarter and $1. 5 billion in the second quarter of 2017.

Noninterest-bearing demand deposits were $7. 9 billion at June 30, 2017, up $ 166 million, or 2 %, linked quarter, and $ 736 million, or 10%, year over year. The FNBC transactions added noninterest-bearing demand deposits of $ 285 million. Noninterest-bearing demand deposits comprised 36.8% of total deposits at June 30, 2017, compared to 38.8% at March 31, 2017, and 38.0% at June 30 , 2016.

Interest-bearing transaction and savings accounts of $ 8.4 billion at June 30, 2017 increased $1. 2 billion, or 17 %, compared to March 31, 2017 and $1. 6 billion, or 24 %, compared to June 30, 2016. Deposits assumed in the FNBC transactions accounted for the majority of these increases.

Interest-bearing public fund deposits totaled $2.5 billion at June 30, 2017, down slightly from 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 billion at June 30, 2017. The $174 millio n increase from March 31, 2017 was primarily due to an increase in public fund CDs and recapture of funds from CDs that the FDIC paid out as part of FNBC’s closure.

Short-Term Borrowings

At June 30 , 2017, short-term borrowings totaled $1.8 billion, down $311 million from March 31, 2017, as FHLB borrowings decreased $40 9 million, and securities sold u nder agreements to repurchase in creased $37 million . Short -term borrow ings increased $71 6 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.

Average quarter-to-date short-term borrowings of $2.2 billion in the second quarter of 2017 were up $106 million, or 5% compared to the first quarter of 2017, and up $88 2 million, or 65% compared to the second quarter of 2016. Customer repurchase agreements and FHLB borrowings are the major sources of short-term borrowings. Customer repurchase agreements are offered mainly to commercial customers to assist them with their cash management strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for corporate or investment purposes. While customer repurchase agreements provide a recurring source of funds to the Bank, the amounts available over time can be volatile. FHLB borrowings are funds from the Federal Home Loan Bank that are collateralized by single family and commercial real estate loans incl uded in the B ank’s loan portfolio, subject to specific criteria.

Long- T erm Debt

At June 30, 2017, long-term debt totaled $408 million, down $117 million from March 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. The Company was in compliance with all covenants, as amended, as of June 30, 2017.

OFF-BALANCE SHEET ARRANGEMENTS

Loan Commitments and Letters of Credit

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

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

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

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

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



			Expiration Date
			Less than		1-3		3-5		More than
(in thousands)	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
Letters of credit		388,386		296,069		81,651		10,518		148
Total	$	6,888,305	$	3,225,644	$	1,633,844	$	1,111,058	$	917,759

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1 4 to our Consolidated Financial Statements included elsewhere in this report.

Ite m 3. Quantitative and Qualitative Disclosures About Market Risk

Our net incom e 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 produ cts and services. In order to manage the exposure s to interest rate risk, manageme nt 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 and maturity characteristics of the existing and projected balance sheet.

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The table below presents the results of simulations run as of June 30, 2017 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.



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	%

No te: 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 .

Item 4. Co ntrols and Procedures

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

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

PART II . OTHER INFORMATION

Item 1 . Legal Proceedings

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

Item 1A . Risk Factors

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

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

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

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

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Item 6 . Exhibits

(a) Exhibits :



Exhibit		Filed	Incorporated by Reference
Number	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
3.2	Amended and Restated Bylaws		10-K	3.2	2/24/2017
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	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101	XBRL Interactive Data	X

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SIG NATURES

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


	Hancock Holding Company

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

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

	Date:	August 4 , 201 7

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Part I Item 1. Financial Statements Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Item 4. Co Part II. Other Information Part II Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 6. Exhibits

HWC 10-Q Quarter ended June 30, 2017