In order to enhance shareholder value, Hancock Holding Company (HBHC) has announced a new capital deployment plan. Apart from declaring a regular quarterly cash dividend, the company authorized a new share repurchase program.
Hancock’s board of directors authorized a buyback of up to 5% of common shares outstanding. As of Mar 31, 2013, the common shares outstanding were approximately 85 million.
Concurrently, Hancock announced a regular second quarter 2013 cash dividend of 24 cents per share. This dividend will be paid on Jun 14 to shareholders of record as of Jun 5.
Even through the financial crisis, when many large banks such as Bank of America Corporation (BAC), Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) reduced their dividends, Hancock maintained the same dividend level of 24 cents per share. Notably, the company has consistently paid this dividend since the third quarter of 2006, which was increased by 9% from the second quarter.
Hancock has been meaningfully deployed cash. In 2011, the company completed the acquisition of Whitney Holding Corporation. This transaction added $11.7 billion in assets, $6.5 billion in loans and $9.2 billion in deposits to the company’s balance sheet. Moreover, the deal tremendously boosted its financial performance and improved market share as well.
We expect Hancock’s organic and inorganic growth strategies, coupled with a stable liquidity position to be strong catalysts. Moreover, steady capital position and enhanced capital deployment actions are anticipated to raise investors’ confidence in the stock. However, persistently rising operating expenses, a low rate environment and increased regulations are likely to marginally dent its performance in the near term.
Currently, Hancock carries a Zacks Rank #4 (Sell).
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