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Hancock's Ratings Affirmed by Fitch

Zacks Equity Research

Last week, Fitch Ratings reiterated its credit ratings on Hancock Holding Company (HBHC). The step has been taken following the conclusion of the peer review of 16 mid-tier regional banks. The group includes banks with total assets ranging from $10-$36 billion.

Fitch maintained Hancock’s long-term and short-term Issuer Default Ratings (:IDR) at ‘BBB’ and ‘F2’, respectively. Further, the agency affirmed the company’s outlook at ‘Stable’.

The rating affirmations came at the back of Hancock’s traditional operating policy, which has helped the company retain its profitability even during the financial crisis. Moreover, strong capital ratios are the other reason for the ratings reiteration.

Further, Hancock is gradually integrating Whitney Holding Corporation, which it acquired in 2011. This acquisition has resulted in a more spread-out loan portfolio, greater growth prospects as well as the facilitated cross-selling products.

Along with this, Hancock is expected to continue its expense management. Also, Fitch expects earnings to grow over the mid to long term with significant loan growth and cross selling opportunities.

However, Fitch is of the opinion that the advantage of the rating outlook would diminish if the company seeks to perk up profitability over a longer term. On the other hand, another acquisition of the same proportion as the Whitney deal can bring down the ratings if Hancock opts for a reshuffle of its own operations.

Apart from Hancock, Fitch has affirmed the IDRs of Associated Banc-Corp (ASBC), BOK Financial Corporation (BOKF) and Cullen/Frost Bankers, Inc. (CFR), among others. Sufficient capital levels, robust earnings and funding profile of these companies, along with strong asset quality, prompted Fitch to affirm the ratings.

Currently, Hancock retains a Zacks Rank #3 (Hold).

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