Form 11-K HANCOCK HOLDING CO For: Dec 31

 



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 11-K

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(Mark One)

☒     Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934



For the fiscal year ended December 31, 2015



OR



☐      Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934



For the transition period from ______________ to ________________



Commission File Number 0-13089



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Hancock Holding Company 401(k) Savings Plan and Trust





HANCOCK HOLDING COMPANY

One Hancock Plaza

2510 14th Street

Gulfport, Mississippi 39501





 

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HANCOCK HOLDING COMPANY 401(k) SAVINGS PLAN

Employer Identification Number 64-0693170

Plan Number: 003



Audited Financial Statements

Years Ended December 31, 2015 and 2014



CONTENTS





 



 

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Report of Independent Registered Public Accounting Firm



To the Participants and Plan Administrators

of the Hancock Holding Company 401(k) Savings Plan



We have audited the accompanying statements of net assets available for benefits of the Hancock Holding Company 401(k) Savings Plan (the Plan) as of December 31, 2015 and 2014, and the related statements of changes in net assets available for benefits for the years ended December 31, 2015 and 2014. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Hancock Holding Company 401(k) Savings Plan as of December 31, 2015 and 2014, and the changes in its net assets available for benefits for the years ended December 31, 2015 and 2014, in conformity with U.S. generally accepted accounting principles.



The supplemental information in the accompanying schedule of assets held for investment purposes as of December 31, 2015 has been subjected to audit procedures performed in conjunction with the audit of the Hancock Holding Company 401(k) Savings Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but include supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedule is fairly stated in all material respects in relation to the financial statements as a whole.



/s/ Postlethwaite & Netterville, APAC

Metairie, Louisiana

June 27, 2016











 

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See accompanying notes.

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See accompanying notes.

 



 

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Note 1.  Description of the Plan



The following description of the Hancock Holding Company 401(k) Savings Plan (the "Plan") provides only general information.  Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions.



General



The Plan is a defined contribution plan established under the provisions of Section 401(a) of the Internal Revenue Code ("IRC"), which includes a qualified cash or deferred arrangement as described in Section 401(k) of the IRC for eligible employees of Hancock Holding Company and its subsidiaries (the “Company”). All full-time and part-time employees of the Company who have completed 60 days of continuous service and are age 18 or older are eligible to participate.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").



Plan Administration



Whitney Bank (renamed from Hancock Bank effective March 31, 2014), the "Trustee", a subsidiary of Hancock Holding Company, holds the Plan's investments and executes transactions for the Plan.  The Plan is administered by an officer of Whitney Bank.  The Plan utilizes the services of EPIC Advisors, Inc. as the third-party administrator.



Contributions



Eligible employees may elect to defer up to the Internal Revenue Service ("IRS") limitations, $18,000 for 2015 and $17,500 for 2014. In addition, participants age 50 and over have the option to contribute up to an additional $6,000 for 2015 and $5,500 for 2014, in pretax contributions through the Plan’s catch-up contribution provisions. The Company matches 100 percent of the first 1 percent of compensation deferred by a participant, and 50 percent of the next 5 percent of eligible compensation deferred. Eligible employees who are not participating in the Plan and have not actively opted out of participation are automatically enrolled at an initial 3 percent deferral rate.



Participant Accounts



Each participant's account is credited with the participant's contributions, the Company's matching contribution, and earnings and losses and is also charged with an allocation of administrative expenses to the extent such expenses are paid by the Plan.  All allocations are based on participant earnings or account balances, as defined by the Plan.



The Plan provides benefits based solely upon the amounts contributed to the participant's account and any income, expenses and gains and losses on investment, which may be allocated to such participant's account.



Vesting



The Company's matching contributions and associated earnings or losses vest immediately after the participant has completed two years of service. All participants vest 100 percent upon reaching retirement age, or upon termination of employment due to death or permanent disability.





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Note 1.  Description of the Plan - Continued



Forfeitures



Forfeitures of employer matching contributions and allocated earnings and losses thereon are used to reduce employer contributions and Plan expenses.  At December 31, 2015 and 2014, the forfeited amounts available for reducing future employer contributions and Plan expenses were $323,817 and $375,553, respectively.  During 2015, $236,983 of forfeitures was used to reduce employer contributions.  There were no forfeitures used to reduce employer contributions in 2014. 



Investment Options



The Plan allows participants to direct contributions into various investment options.  These options include mutual funds, money market funds, a common collective trust fund, and Hancock Holding Company common stock.



Notes Receivable from Participants



Participants are allowed to borrow from their accounts in amounts ranging from a minimum of $1,000 to a maximum of 50 percent of the account balance, not to exceed $50,000. Loan maturities generally range from 1-5 years with one loan available at any time.  The loans are collateralized by the balance in the participant's account and are to bear interest at the prime rate as reported in the Wall Street Journal plus 1 percent or such other rate determined by the Plan Administrator on a uniform and consistent basis.  The interest rate on outstanding loan balances ranged between 4.25 percent and 9.25 percent for 2015 and 2014.  Principal and interest is paid ratably through payroll deductions.  Upon origination of a loan, participants are charged an administrative fee that is reflected in administrative expenses in the statement of changes in net assets available for benefits. Participant loans are presented as notes receivable from participants in the statements of net assets available for plan benefits.



The Plan administrator declares a default if the participant fails to pay any regular installment of principal and interest when due and such failure continues until the last day of the calendar quarter following the quarter in which the failure first occurred.  Should a default occur and be continuing, the trustee will report the amount of the principal and accrued interest as a deemed distribution as of the last day of the calendar year in which the default occurs.  Management has evaluated participant notes receivable for collectability and has determined that no allowance is considered necessary.



Payment of Benefits



Benefits are generally payable on termination of employment, retirement, attainment of age 59.5, death, or disability.  Benefits may be paid by either lump-sum payment, periodic payments over an actuarially determined period, or rolled over into a qualified plan, subject to regulatory requirements.  Hardship distributions are also available from participants' elective deferral accounts, subject to regulatory requirements.  Distributions from participant rollover sources can be withdrawn at any time.















 

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Note 2.  Summary of Significant Accounting Policies



Basis of Presentation



The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.



Investment Valuation and Income Recognition



All Plan investments as of December 31, 2015 and 2014 are held by the Trustee and are reported at fair value.  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Mutual funds and common stock are valued at quoted market prices that represent the value of shares held by the plan at year end. See Note 7 for further discussion and disclosure related to fair value measurements.



Purchases and sales of investments are recorded on a trade-date basis. Any trades not settled as of year end are recorded as Investment Sales Receivable or Investment Purchases Payable in the Statements of Net Assets Available for Benefits. Dividends are recorded on the ex-dividend date.  Realized and unrealized gains and losses on the Plan's investments are included in net appreciation in the fair value of investments in the statements of changes in net assets available for benefits.



Participant notes receivable are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis.



Payment of Benefits



Benefits are recorded when paid. 



Administrative Expenses



Administrative expenses related to record keeping for the Plan are paid by the Plan to an unrelated third-party.  Those expenses not paid by the Plan are paid for by the Company, which include all trustee fees to Whitney Bank.  The Plan paid $190,707 and $129,115 for administrative expenses related to the Plan for the years ended December 31, 2015 and 2014, respectively.



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Note 2. Summary of Significant Accounting Policies - Continued



New Accounting Pronouncements

In May 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share (or its Equivalent).” This ASU removes the requirement to make certain disclosures and to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per practical expedient. The amendments in ASU 2015-07 are effective for public entities for interim and annual periods beginning after December 15, 2015. The amendment is required to be applied retrospectively and early adoption is permitted. The Company has early adopted and applied the amendments for the year ended December 31, 2015. Other than requiring a change to the disclosures, the adoption of this standard did not have a material impact on the financial statements.

In July 2015, the FASB issued ASU No. 2015-12, “Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contributions Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient,” which is part of the FASB’s Simplification Initiative for employee benefit plans. Part I of this ASU clarifies that contract value is the only required measurement for Fully Benefit-Responsive Investment Contracts (“FBRICs”) and clarifies that indirect investments in FBRICs should no longer be reflected as FBRICs and therefore, should be reported at fair value. Part II of this ASU eliminates the current GAAP requirements for plans to disclose individual investments that represent five percent or more of the net assets available for benefits, and the net appreciation or depreciation for investments by general type for both participant-directed investments and nonparticipant-directed investments. It also allows investments to be disaggregated by general type and eliminates the requirement to disaggregate investments by class. Further, significant investment strategies for an investment in a fund that files a U. S. Department of Labor Form 5500, Annual Return/Report of Employee Benefit Plan, as direct filing entity when the plan measures that investment using the net asset value practical expedient are no longer required. The provisions of this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015. Parts I and II are to be applied retrospectively and early adoption is permitted. The Company has early adopted and applied the amendments for the year ended December 31, 2015. Other than requiring a change to the disclosures, the adoption of Parts I and II of this standard did not have a material impact on the financial statements.

The common collective trust (“CCT”) investment, which is further described in Note 7, invests in FBRICs.  Accordingly, under the new accounting pronouncements adopted in 2015, the CCT is considered an indirect investment in FBRICs which is carried at fair value using net asset value practical expedient.  Therefore, it is no longer carried at contract value in the statement of net assets and is not categorized within the fair value hierarchy.  This accounting and financial reporting has been applied retroactively to 2014.





Note 3.  Tax Status



The Plan has received a favorable determination letter dated June 13, 2012, stating that the Plan is qualified under Section 401 of the IRC and is therefore exempt from federal income taxes. Although the Plan has been amended since receiving the determination letter, the Plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable provisions of the IRC.



The Plan had no uncertain tax positions at December 31, 2015 or 2014.  If interest and penalties are incurred related to uncertain tax positions, such amounts are recognized in income tax expense.









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Note 4.  Related Party Transactions



The Trustee is a subsidiary of Hancock Holding Company.  Transactions between the Plan and Trustee, or the Plan and the sponsor (Hancock Holding Company), are considered to be exempt party-in-interest transactions. Mutual fund investments where Whitney Bank acts as an investment advisor totaled $106,780,442 and $105,984,546 as of December 31, 2015 and 2014, respectively. Additionally, at December 31, 2015 and 2014, the Plan owned $22,470,643  (892,755 shares) and $25,888,450 (843,272 shares) respectively, in Hancock Holding Company common stock.  During 2015 and 2014, the Plan recorded $811,633 and $806,931, respectively, in dividend income on Hancock Holding Company common stock. The Plan paid no administrative fees to the Trustee during 2015 and 2014.



Note 5.  Risks and Uncertainties



The Plan invests in various investment securities.  Investment securities are exposed to various risks such as interest rate, market and credit risks.  Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits.



 

Note 6.  Plan Termination



Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event that the Plan is terminated, participants would become 100 percent vested in their account.



 

Note 7.  Fair Value Measurements



Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value.  That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:









The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.



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Note 7.  Fair Value Measurements - Continued



The following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis.  There have been no changes in the methodologies used at December 31, 2015 and 2014.



Mutual funds and money market funds: Valued at the closing price reported on the active market on which the individual securities are traded.    



Employer securities: These common stocks are valued at the closing price reported on the active market on which the individual securities are traded. 



Common collective trust fund:  Reported at fair value using net asset value per share (or its equivalent) as a practical expedient and not classified in the fair value hierarchy in accordance with Subtopic 820-10.  The fair values presented in the hierarchy tables are intended to permit reconciliation of the fair value hierarchy to the investments at fair value as presented in the Statements of Net Assets Available for Benefits.



The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.



The following table sets forth by level, within the fair value hierarchy, the Plan's assets measured at fair value on a recurring basis as of December 31, 2015 and 2014:









 

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Note 8.   Reconciliation of Financial Statements to Form 5500



The following is a reconciliation of the financial statements to the Plan’s Form 5500 at December 31, 2015 and 2014:











The following is a reconciliation of investment income per the financial statement for the years ended December 31, 2015 and 2014, to the corresponding amounts shown on the Plan’s Form 5500:







    



 

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SIGNATURES

 

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other person who administer the employee benefit plan) have duly caused this annual report to be signed on their behalf by the undersigned hereunto duly authorized.





 

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EXHIBIT INDEX



__________

*      Filed herewith

 



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Exhibit 23.1

 

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in Registration Statement Nos. 333-05081 and 333-185731 on Form S-8 of Hancock Holding Company for Hancock Holding Company 401(k) Savings Plan (the “Plan”), of our report dated June 27, 2016, relating to the financial statements and supplemental schedule of the Plan, which appears in this Annual Report on Form 11-K of the Plan as of and for the year ended December 31, 2015.  

 

Metairie, Louisiana

June 27, 2016 

30th Floor – Energy Centre    •    1100 Poydras Street    •    New Orleans, LA 70163-3000    •    Tel: 504.569.2978

One Galleria Blvd., Suite 2100    •    Metairie, LA 70001    •    Tel: 504.837.5990    •    Fax: 504.834.3609

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