Shares of Hancock Holding Company HBHC gained marginally to close at $27.40 on Friday, after the company’s board of directors approved a new share repurchase program. The approval authorizes the company to buy back up to 3.9 million shares, or nearly 5% of the total common stock outstanding.
As per the announcement, Hancock will repurchase in the open market or through negotiated transactions at management’s discretion. The new repurchase program, which is set to expire on Sep 30, 2016, was approved during the August meeting of the company’s board.
Moreover, the execution is subject to the company’s internal limitations as well as 10b-18 of the Securities and Exchange Commission (“SEC”), apart from other regulatory requisites.
In March 2015, Hancock completed the previous stock repurchase program approved by the board on Jul 16, 2014. The plan authorized the repurchase of up to 5% or around 4.1 million shares of its outstanding stock.
In addition, the company pays regular quarterly dividends, which furthers boosts investors’ confidence in the stock. On Aug 3, the company declared a stock cash dividend of 24 cents per share. The dividend will be paid on Sep 15 to shareholders of record as of Sep 4.
While the current move reflects Hancock’s robust balance sheet as well as commitment to return value to shareholders with its steady capital deployment activities, the company’s long-term debt of $507.3 million as of Jun 30, 2015, may limit the use of capital for the same going forward.
However, a consistent rise in non-interest-bearing deposits will help lower the funding cost for the company and the capital generated from these deposits will support the company’s ability to continue investing in the future periods along with undertaking shareholder-friendly moves.
Further, Hancock’s focus on streamlining its business in an effort to reduce expenses and improve efficiency is expected to pay off with the company expecting to achieve efficiency ratio in the range of 57–59% by 2016 through further review of office areas and branch network. This will help boost the company’s profitability going forward.
Currently, Hancock carries a Zacks Rank #3 (Hold). Some better-ranked southeastern banks include Carolina Financial Corporation CARO, Fidelity Southern Corporation LION and Customers Bancorp, Inc. CUBI. All these stocks sport a Zacks Rank #1 (Strong Buy).
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