NEW ORLEANS, April 22, 2008 (PRIME NEWSWIRE) -- Whitney Holding Corporation (Nasdaq:WTNY) earned $29.9 million in the quarter ended March 31, 2008, compared with net income of $30.2 million for the fourth quarter of 2007 and $37.0 million for 2007's first quarter. Earnings were $.45 per diluted share in both 2008's first quarter and the fourth quarter of 2007 compared to $.55 for the first quarter of 2007.
"Results for the first quarter of 2008 were as expected in light of the difficult operating environment," said John C. Hope, III, Chairman and CEO. "We benefited from several gains during the quarter while continuing to manage through current credit issues. Increased levels of criticized and nonperforming assets resulted in a higher provision and net charge-off ratio. While the economic environment also impacted our net interest margin, our proactive and aggressive management, combined with a strong balance sheet, helped us maintain a solid margin. A continued focus on cost control initiatives resulted in a decline in many expenses. And we continued to repurchase our shares in the first quarter, increased our quarterly dividend and remain a highly capitalized company."
The Company's financial information includes the results from acquired operations since the acquisition dates. Whitney completed its acquisition of Signature Financial Holdings, Inc. ("Signature"), the parent of Signature Bank, headquartered in St. Petersburg, Florida, on March 2, 2007.
HIGHLIGHTS OF FIRST QUARTER FINANCIAL RESULTS
Loans and Earning Assets
Total loans at the end of the first quarter of 2008 were up 6%, or $470 million, from March 31, 2007, and 2%, or $138 million, compared to year-end 2007. Loans comprised 77% of average earning assets in first quarter of 2008 and in both the fourth and first quarters of 2007. The overall mix of earning assets was little changed in each of these periods.
Loan demand and customer development activity in Texas and Whitney's Louisiana markets outside the metropolitan New Orleans area were the major contributors to the organic loan growth over the year, with smaller contributions from the Alabama and Mississippi markets. Compared to March 31, 2007, loans serviced by Whitney Bankers in Houston grew by 29% year over year, and those serviced in Louisiana markets outside New Orleans grew 16%. At March 31, 2008, the percentage of loans serviced from the Company's geographic markets was as follows: metropolitan New Orleans, 37%; other Louisiana markets, 18%; Texas, 16%; Alabama and Mississippi, 11%; the Tampa Bay metropolitan area, 11%; and the Florida panhandle, 7%. Market conditions continue to restrain loan demand in Florida and contributed to a 4% decrease since the first quarter of 2007 in loans serviced from our market areas in this state.
Deposits and Funding
Total deposits at March 31, 2008 were 3% below the totals at both the end of 2007's first quarter and December 31, 2007. Average deposits in the first quarter of 2008 were down less than 1% compared to the fourth quarter of 2007, but increased 2% from the first quarter of 2007. The decrease in deposits from year-end 2007 was mainly from higher-cost time deposits, including deposits held in certain treasury-management products used mainly by commercial customers, and public funds deposits.
Noninterest-bearing deposits comprised 32% of average total deposits in the first quarter of 2008. These demand deposits funded approximately 27% of average earning assets for the period and the percentage of funding from all noninterest-bearing sources totaled 32% in the first quarter of 2008. Higher-cost interest-bearing funds, which include time deposits and borrowings, funded 35% of average earning assets in 2008's first quarter, the same as in the fourth quarter of 2007 and up from 32% in the year-earlier period.
Net Interest Income
Whitney's net interest income (TE) for the first quarter of 2008 decreased $1.6 million, or 1%, compared to the first quarter of 2007. The additional day in the current period would have added as much as $1 million, other factors held constant. Average earning assets were up 7%, or $676 million, between these periods. The net interest margin (TE) was 4.64% for the first quarter of 2008, down 44 basis points from the year-earlier period. The overall yield on earning assets decreased 82 basis points from the first quarter of 2007, mainly reflecting the steep reduction in benchmark rates for the large variable-rate segment of Whitney's loan portfolio toward the end of 2007 and continuing into 2008. The rates on approximately 29%, or $2.3 billion, of the loan portfolio at March 31, 2008 were tied to changes in Libor benchmarks, with another 25%, or $1.9 billion, tied to prime. The cost of funds decreased 38 basis points between the first quarters of 2007 and 2008 as the impact of a shift toward higher-cost funding sources between these periods was offset by reductions in offered rates as market rates fell.
Net interest income (TE) for the first quarter of 2008 was down $3.0 million, or 2.5 %, compared to the fourth quarter of 2007, with approximately $1 million of this decrease related to the number of days in each period. Average earning assets increased 1% between these periods, while the net interest margin declined by 11 basis points. Earning assets yielded 56 basis points less in the first quarter of 2008, while the cost of funds decreased 45 basis points. The funding mix was little changed between these periods.
Overall, Whitney continues to be moderately asset sensitive over the near term. As the general economic outlook has weakened, management has anticipated downward pressure on market interest rates and is continuing to aggressively manage its deposit and loan rates to mitigate the impact of the rate environment on its net interest income.
Provision for Credit Losses and Credit Quality
Whitney made a $14.0 million provision for credit losses in the first quarter of 2008, compared to $10.0 million in 2007's final quarter and a $2.0 million negative provision in the first quarter of 2007. Net loan charge-offs in 2008's first quarter were $10.2 million or .53% of average loans on an annualized basis, compared to $3.9 million in the fourth quarter of 2007 and minimal net charge-offs in prior year's first quarter. The allowance for loan losses increased to 1.19% of total loans at March 31, 2008, up from 1.06% a year earlier.
The total of loans criticized through the Company's credit risk-rating process was $392 million at March 31, 2008, which represents 5% of total loans. Almost 70% of the $87 million increase during the quarter was related to four credits identified as warranting special attention, which is the least severe of the criticized categories. Each of these loans came from a different industry and geographic market. Loans for residential development, investment and other residential purposes comprised approximately 40% of the criticized loan total at March 31, 2008, mainly concentrated in Florida. Nonresidential real estate loans accounted for approximately 30% of the criticized total, with the underlying collateral fairly evenly divided between income-producing properties and owner-occupied properties. Loans to traditional commercial and industrial relationships comprised approximately 25% of the criticized total, with no significant concentrations related to industries or markets.
Included in the total of criticized loans at March 31, 2008 is $139 million of nonperforming loans, up a net $19 million from December 31, 2007. Over 75% of the loans added to the nonperforming total during the first quarter of 2008 had been included in the Company's criticized total in earlier periods, including one $10 million credit for an Alabama commercial real estate project. Total foreclosed assets and surplus property increased to $12.0 million at March 31, 2008, up from $4.6 million at December 31, 2007, mainly related to residential development properties.
Noninterest Income
Noninterest income increased $4.4 million from the first quarter of 2007. Whitney recognized a $2.3 million gain in the first quarter of 2008 from the mandatory redemption of a portion of its Visa shares in connection with Visa's restructuring and initial public offering. Deposit service charge income in the first quarter of 2008 was up 14%, or $1.0 million, aided by both improved pricing and reduced earnings credits allowed on certain commercial deposit accounts. Bank card fees, both credit and debit cards, increased a combined 10%, or $.4 million, compared to the first quarter of 2007 on higher transaction volume, and trust service fees grew 10%, or $.3 million. Fee income from Whitney's secondary mortgage market operations was down moderately from the year-earlier period reflecting the ongoing relatively broad weakness in the overall housing market. Excluding the Visa share redemption gain, the categories comprising other noninterest income increased a combined $.5 million compared to the first quarter of 2007, with positive contributions from most all recurring revenue sources. Net gains on sales of and other revenue from foreclosed assets totaled $2.7 million in the first quarter of 2008, a decrease of $.3 million from the total recognized in the first quarter of 2007.
Noninterest income for the first quarter of 2008 was also up $4.4 million compared to 2007's fourth quarter, including the Visa gain and an additional $2.1 million in gains and other revenue from foreclosed assets. Income from recurring revenue sources was down slightly between these periods, mainly reflecting some expected seasonal fluctuations.
Noninterest Expense
Noninterest expense in the first quarter of 2008 decreased 3%, or $2.5 million, from 2007's first quarter. Whitney's personnel expense increased less than 1% between the periods, with employee compensation down 1%, or $.4 million, and the cost of employee benefits up 8%, or $.7 million. Compensation added for Signature's staff and normal salary adjustments was offset by a decrease in compensation associated with management incentive programs and the impact of a 2% reduction in the average full-time equivalent staff level between these periods, excluding the acquired staff. The increase in the cost of employee benefits resulted mainly from expected increases for retirement benefits and health benefits.
Net occupancy expense increased 6%, or $.5 million, compared to the first quarter of 2007 mainly related to the facilities acquired with Signature, de novo branch expansion and the completion of capital projects on storm-damaged facilities. Equipment and data processing expense increased 6%, or $.4 million, driven in part by the cost of new customer-oriented applications associated with strategic initiatives. Legal and other professional fees decreased $.7 million from the first quarter of 2007 which included the cost of work to integrate Signature into Whitney's systems. In connection with Visa's IPO in the first quarter of 2008, the Company reversed a $1.0 million liability it had recorded in the fourth quarter of 2007 for its obligation to share in certain of Visa's litigation losses.
Normalized for the impact of the reversal of the Visa litigation liability, noninterest expense for 2008's first quarter was essentially unchanged compared to the fourth quarter of 2007. As a part of a strategic initiative to reduce the efficiency ratio, management is continuing to develop action plans to drive down expenses where possible and realign corporate investments.
Capital
Whitney's tangible common equity ratio increased to 8.32% at the end of 2008's first quarter from 8.22% at March 31, 2007. The Company's leverage ratio was 8.45% at March 31, 2008 compared to 9.02% a year earlier.
During the first quarter of 2008, Whitney repurchased 1,630,765 shares of its common stock at an average cost of $25.11 per share. To date the company has repurchased 3,525,856 shares at an average price of $25.65 under the program announced in November 2007. A total of 4 million shares can be repurchased under this program which extends through December 2008. The Company also announced a 7% increase in its quarterly dividend to $.31 per common share for the first quarter of 2008.
Conference Call and Additional Financial Information
Management will host a conference call today at 3:30 p.m. CT to review first quarter 2008 results. Analysts and investors may dial in and participate in the question/answer session. A live listen-only webcast of the call will be available under the Investor Relations section of our website at http://www.whitneybank.com. To participate in the Q&A portion of the call, dial (877) 397-0291 or (719) 325-4871. An audio archive of the conference call will be available under the Investor Relations section of our website. A replay of the call will also be available through April 27, 2008 by dialing (888) 203-1112 or (719) 457-0820, passcode 1484942.
This earnings release, including additional financial tables related to first quarter 2008 results, is posted in the Investor Relations section of the Company's web site at http://investor.whitneybank.com/releases.cfm?ReleasesType=Earnings&Year=2008.
Whitney Holding Corporation, through its banking subsidiary Whitney National Bank, serves the five-state Gulf Coast region stretching from Houston, Texas; across southern Louisiana and the coastal region of Mississippi; to central and south Alabama; the panhandle of Florida; and the Tampa Bay metropolitan area of Florida.
Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide projections of results of operations or of financial condition or state other forward-looking information, such as expectations about future conditions and descriptions of plans and strategies for the future. The forward-looking statements made in this release include, but may not be limited to, comments on the Company's interest rate sensitivity and its plans to reduce expenses as part of strategic initiatives.
Whitney's ability to accurately project results or predict the effects of future plans or strategies is inherently limited. Although Whitney believes that the expectations reflected in its forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ from those expressed in the Company's forward-looking statements include, but are not limited to, those outlined in Whitney's filings with the SEC, which are available at the SEC's internet site (http://www.sec.gov).
You are cautioned not to place undue reliance on these forward-looking statements. Whitney does not intend, and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law.
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WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
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QUARTERLY TRENDS
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(dollars
in
thousands, First Fourth Third Second First
except per Quarter Quarter Quarter Quarter Quarter
share data) 2008 2007 2007 2007 2007
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INCOME DATA
Net
interest
income $113,545 $116,336 $116,718 $116,896 $114,841
Net
interest
income
(tax-
equivalent) 114,815 117,782 118,245 118,444 116,397
Provision
for credit
losses 14,000 10,000 9,000 -- (2,000)
Noninterest
income 28,476 24,080 54,455 24,097 24,049
Net
securities
losses in
noninterest
income -- -- (1) -- --
Noninterest
expense 83,929 85,774 88,229 88,661 86,444
Net income 29,855 30,244 48,766 35,052 36,992
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QUARTER-END BALANCE SHEET DATA
Loans $ 7,723,508 $ 7,585,701 $ 7,452,905 $ 7,368,404 $ 7,253,581
Investment
securities 2,131,446 1,985,237 1,875,096 1,910,271 1,849,425
Earning
assets 9,882,369 10,122,071 9,738,123 9,697,723 9,674,585
Total
assets 10,781,912 11,027,264 10,604,834 10,608,267 10,589,660
Noninter-
est-
bearing
deposits 2,724,396 2,740,019 2,639,020 2,736,966 2,757,885
Total
deposits 8,295,298 8,583,789 8,387,235 8,512,778 8,524,235
Share-
holders'
equity 1,214,425 1,228,736 1,253,809 1,208,940 1,198,137
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AVERAGE BALANCE SHEET DATA
Loans $ 7,685,478 $ 7,542,040 $ 7,362,491 $ 7,352,171 $ 7,118,002
Investment
secur-
ities 2,116,433 1,979,044 1,916,927 1,848,965 1,828,618
Earning
assets 9,944,709 9,857,897 9,746,184 9,665,684 9,268,902
Total
assets 10,796,496 10,716,391 10,633,674 10,558,237 10,133,651
Non-
interest-
bearing
deposits 2,647,995 2,679,261 2,686,189 2,743,566 2,725,139
Total
deposits 8,377,141 8,406,547 8,480,098 8,479,666 8,221,857
Share-
holders'
equity 1,229,921 1,257,220 1,224,940 1,211,032 1,145,101
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PER SHARE DATA
Earnings
per share
Basic $.46 $.45 $.72 $.52 $.56
Diluted .45 .45 .71 .51 .55
Cash
dividends
per share $.31 $.29 $.29 $.29 $.29
Book value
per share,
end of
period $18.90 $18.67 $18.53 $17.88 $17.76
Trading data
High
sales
price $27.49 $28.35 $30.32 $31.92 $33.26
Low sales
price 21.12 22.46 23.02 29.69 29.07
End-of-
period
closing
price 24.79 26.15 26.38 30.10 30.58
Trading
volume 45,483,491 30,514,264 28,674,777 13,035,329 16,256,098
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RATIOS
Return
on average
assets 1.11% 1.12% 1.82% 1.33% 1.48%
Return
on average
shareholders'
equity 9.76 9.54 15.79 11.61 13.10
Net
interest
margin 4.64 4.75 4.82 4.91 5.08
Dividend
payout
ratio 67.23 64.16 40.70 56.23 53.16
Average
loans as
a percentage
of average
deposits 91.74 89.72 86.82 86.70 86.57
Efficiency
ratio 58.57 60.46 51.09 62.20 61.55
Allowance
for loan
losses as
a percentage
of loans,
end of period 1.19 1.16 1.10 1.02 1.06
Annualized
net
charge-offs
(recoveries)
as a
percentage
of average
loans .53 .21 .13 .13 (.01)
Nonper-
forming
assets
as a
percentage
of loans
plus foreclosed
assets
and surplus
property,
end of
period 1.96 1.64 1.22 .81 .76
Average
share-
holders'
equity
as a
percentage
of average
total assets 11.39 11.73 11.52 11.47 11.30
Tangible
common
equity
as a
percentage
of tangible
assets,
end of
period 8.32 8.24 8.81 8.34 8.22
Leverage
ratio,
end of
period 8.45 8.79 9.19 8.90 9.02
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Tax-equivalent (TE) amounts are calculated using a federal income
tax rate of 35%.
The efficiency ratio is noninterest expense to total net interest (TE)
and noninterest income (excluding securities gains and losses).
(WTNY-E)