On Jun 24, 2014, we issued an updated research report on Hancock Holding Company (HBHC). The company’s efforts to lower expenses and improve efficiency will continue to support its financials going forward. However, sluggish economic recovery and a still low interest rate environment make us apprehensive.
Hancock is in the process of streamlining its operations through branch rationalization. The initiatives have started bearing fruits as reflected by a consistent decline in operating expenses in the last few quarters. Also, the company remains on track to achieve a targeted aggregate cost saving of $50 million by 2014.
Further, in first-quarter 2014, decline in operating expenses had more than offset the fall in top line. This, along with decrease in provision for loan losses, mainly aided Hancock in reporting better-than-expected earnings.
On the flip side, persistent pressure on net interest margin remains a major concern for Hancock. We expect the margin pressure to continue in the near term due to softness in new loan demand as well as a continually low interest-rate environment. Also, stringent regulatory environment remains another near-term concern.
Further, the Zacks Consensus Estimate over the last 60 days has remained unchanged at $2.36 per share for 2014 and $2.50 per share for 2015.
Presently, Hancock has a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
Some better-ranked banks include Capital Bank Financial Corp. (CBF), Middleburg Financial Corp. (MBRG) and Popular, Inc. (BPOP). All these stocks sport a Zacks Rank #1 (Strong Buy).
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