NEW ORLEANS, July 22, 2008 (PRIME NEWSWIRE) -- Whitney Holding Corporation (Nasdaq:WTNY) earned $12.9 million in the quarter ended June 30, 2008, compared with net income of $29.9 million for the first quarter of 2008 and $35.1 million for 2007's second quarter. Earnings were $.20 per diluted share for the second quarter of 2008, $.45 for the current year's first quarter and $.51 for the second quarter of 2007.
"Earnings for the quarter reflected stable core results that were overshadowed by credit," said John C. Hope, III, Chairman and CEO. "As we announced earlier this month the quarter was impacted by a few commercial and industrial (C&I) credits mainly in Louisiana that had been part of our watch process for a number of quarters, as well as continued pressures in the Florida and coastal Alabama markets. The C&I issues are not systemic, but unfortunately they happened at a time when another part of our portfolio was experiencing pressures. The combination of these two events led to what we believe are appropriately higher allowance, provision and charge-off ratios given current market conditions."
HIGHLIGHTS OF SECOND QUARTER FINANCIAL RESULTS
Loans and Earning Assets
Loans totaled $8.0 billion at the end of the second quarter of 2008, which was up 8%, or $594 million, from June 30, 2007, and up 3%, or $239 million, from the end of 2008's first quarter. Loans comprised 79% of average earning assets in the second quarter of 2008, up from 76% in the year-earlier period and 77% in the first quarter of 2008. Loan demand from the metropolitan New Orleans area, primarily in C&I lending, was the major contributor to the loan growth from the first quarter of 2008, with smaller contributions from Texas and Whitney's Louisiana markets outside New Orleans.
Deposits and Funding
Total deposits at June 30, 2008 were relatively stable compared to March 31, 2008 and 3% below the total at the end of 2007's second quarter. Average deposits in the second quarter of 2008 were down 2% from the first quarter of 2008 and 3% from the year-earlier period. The decreases in deposits were mainly from higher-cost time deposits, including deposits held in certain treasury-management products used mainly by commercial customers.
Noninterest-bearing deposits comprised 33% of average total deposits in the second quarter of 2008. These demand deposits funded approximately 28% of average earning assets for the period and the percentage of funding from all noninterest-bearing sources totaled 32% in the second quarter of 2008, which was little-changed from both 2008's first quarter and the second quarter of 2007. Higher-cost interest-bearing funds, which include time deposits and borrowings, funded 36% of average earning assets in 2008's second quarter, up from 35% in the first quarter of 2008 and 34% in the year-earlier period.
Net Interest Income
Whitney's net interest income (TE) for the second quarter of 2008 decreased $6.1 million, or 5%, compared to the second quarter of 2007. Average earning assets were up 3%, or $264 million, between these periods. The net interest margin (TE) was 4.54% for the second quarter of 2008, down 37 basis points from the year-earlier period. The overall yield on earning assets decreased 129 basis points from the second 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 30%, or $2.4 billion, of the loan portfolio at June 30, 2008 were tied to changes in Libor benchmarks, with another 24%, or $1.9 billion, tied to prime. The cost of funds decreased 92 basis points between the second quarters of 2007 and 2008 as the impact of a shift toward higher-cost funding sources between these periods was offset by reductions in funding rates as market rates fell.
Net interest income (TE) for the second quarter of 2008 was down $2.5 million, or 2%, compared to the first quarter of 2008. Average earning assets were relatively stable between these periods, while the net interest margin declined by 10 basis points. Earning assets yielded 48 basis points less in the second quarter of 2008, while the cost of funds decreased 38 basis points. The funding mix was little changed between these periods as a reduction in higher-cost deposit funding was replaced with short-term borrowings.
Provision for Credit Losses and Credit Quality
Whitney made a $35.0 million provision for credit losses in the second quarter of 2008, compared to $14.0 million in 2008's first quarter and no provision in the second quarter of 2007. Net loan charge-offs in 2008's second quarter were $16.9 million or .86% of average loans on an annualized basis, compared to $10.2 million in the first quarter of 2008 and $2.3 million in the second quarter of 2007. The allowance for loan losses increased $18.1 million during the current quarter and represented 1.38% of total loans at June 30, 2008, up from 1.19% at the end of 2008's first quarter and 1.02% a year earlier.
As noted earlier, there was deterioration in a few C&I credits that added approximately $11 million to the provision for the second quarter of 2008 and accounted for approximately $10 million of charge-offs for the period. Continuing weaknesses in the real estate markets in Florida and coastal Alabama led to a provision of approximately $14 million and approximately $4.5 million of charge-offs for the second quarter of 2008, mainly related to loans for residential development. Management also added approximately $4 million to the allowance and provision based on its regular assessment of current economic conditions and other qualitative factors. The quarterly provision also included approximately $5 million related to charge-offs on consumer and other smaller credits and $1 million associated with loan growth.
The total of loans criticized through the Company's credit risk-rating process was $465 million at June 30, 2008, which represented 6% of total loans and a net increase of $73 million from March 31, 2008. The increase was concentrated in loans for residential development in the Florida and Alabama markets. Included in the criticized loan total at June 30, 2008 was $147 million of nonperforming loans, up a net $8.0 million from March 31, 2008. Total foreclosed assets and surplus property increased to $14.5 million at June 30, 2008, up from $12.0 million at March 31, 2008, mainly related to residential development and investment properties.
Noninterest Income
Noninterest income increased $2.1 million from the second quarter of 2007. Deposit service charge income in the second quarter of 2008 was up 13%, or $1.0 million, aided mainly by reduced earnings credits allowed on certain commercial deposit accounts. Bank card fees, both credit and debit cards, increased a combined 9%, or $.4 million, compared to the second quarter of 2007 on higher transaction volume. Trust service fees increased moderately and fee income from Whitney's secondary mortgage market operations grew 13% despite difficult financial and housing market conditions. The categories comprising other noninterest income increased a combined $.5 million compared to the second quarter of 2007, with positive contributions from most all recurring revenue sources.
The decline in noninterest income compared to 2008's first quarter reflected certain nonrecurring or occasional revenue items recognized in the earlier period. In the first quarter of 2008, Whitney recognized a $2.3 million gain from the mandatory redemption of a portion of its Visa shares in connection with Visa's restructuring and initial public offering (IPO). Net gains on sales of and other revenue from foreclosed assets totaled $.8 million in the second quarter of 2008, but this was down $1.8 million from the total recognized in the first quarter of 2008, substantially all related to grandfathered property interests. Noninterest income from recurring revenue sources for the second quarter of 2008 was up approximately $2.3 million compared to current year's first quarter.
Noninterest Expense
Noninterest expense in the second quarter of 2008 decreased 3%, or $3.1 million, from 2007's second quarter. Whitney's personnel expense decreased 4%, or $2.2 million, between the periods, with employee compensation down 6%, or $2.5 million, and the cost of employee benefits up 4%, or $.3 million. The compensation added for normal salary adjustments was more than offset by a decrease in compensation associated with management incentive programs and the impact of a 3% reduction in the average full-time equivalent staff level between these periods. The increase in the cost of employee benefits resulted mainly from expected increases for health and retirement benefits.
Net occupancy expense decreased 3%, or $.2 million, compared to the second quarter of 2007. Reductions in the cost of insurance and in nonrecurring or periodic facility repairs offset increased expenses related to de novo branch expansion and higher energy costs. Equipment and data processing expense increased 11%, or $.6 million, driven in part by the cost of new customer-oriented applications associated with strategic initiatives and by branch expansion. The $.7 million reduction in telecommunication and postage expense mainly reflected the elimination of some redundant communication services used during an upgrade project in 2007. Legal and other professional fees increased $.5 million from the second quarter of 2007, primarily associated with the implementation of strategic initiatives.
Upon Visa's IPO in the first quarter of 2008, the Company reversed a $1.0 million liability it had previously recorded 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 second quarter was up less than 1%, or $.7 million, compared to the first quarter of 2008. Deposit insurance expense increased as the one-time credit granted on the change to the new assessment system was fully utilized, and higher costs were incurred in the second quarter of 2008 on loan collection efforts and for professional services related to strategic initiatives.
Capital
Regulatory capital ratios at June 30, 2008 remained well above those required for the Company and Whitney National Bank to be considered well-capitalized institutions. A decline in Whitney's capital-to-asset ratios in the second quarter of 2008 mainly reflected asset growth, the completion of a share repurchase program as discussed below and a dividend payout in excess of earnings for the quarter. The Company's tangible common equity ratio decreased to 7.86% at the end of 2008's second quarter from 8.34% at June 30, 2007 and 8.32% March 31, 2008. The Company's regulatory leverage ratio was 8.27% at June 30, 2008 compared to 8.90% a year earlier and 8.45% at the end of the first quarter of 2008.
During the second quarter of 2008, Whitney repurchased 409,023 shares of its common stock at an average cost of $23.32 per share. This completed the share repurchase program announced in November 2007. Under this program Whitney repurchased a total of 3,934,879 shares at an average cost of $25.41 per share.
Conference Call and Additional Financial Information
Management will host a conference call today at 3:30 p.m. CT to review second 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) 675-4757 or (719) 325-4876. 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 July 27, 2008 by dialing (888) 203-1112 or (719) 457-0820, passcode 6654860.
This earnings release, including additional financial tables related to second 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 about trends in credit quality in certain sectors of the loan portfolio and on the Company's 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.
(WTNY-E)
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WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
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FINANCIAL HIGHLIGHTS
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Second Second Six Months Ended
Quarter Quarter June 30
(dollars in thousands,
except per share data) 2008 2007 2008 2007
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INCOME DATA
Net interest income $ 111,125 $ 116,896 $ 224,670 $ 231,737
Net interest income
(tax-equivalent) 112,344 118,444 227,159 234,841
Provision for credit
losses 35,000 -- 49,000 (2,000)
Noninterest income 26,174 24,097 54,650 48,146
Net securities
gains in
noninterest income -- -- -- --
Noninterest expense 85,590 88,661 169,519 175,105
Net income 12,874 35,052 42,729 72,044
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QUARTER-END BALANCE
SHEET DATA
Loans $ 7,962,543 $ 7,368,404 $ 7,962,543 $ 7,368,404
Investment
securities 1,955,692 1,910,271 1,955,692 1,910,271
Earning assets 9,955,091 9,697,723 9,955,091 9,697,723
Total assets 11,016,323 10,608,267 11,016,323 10,608,267
Noninterest-bearing
deposits 2,773,086 2,736,966 2,773,086 2,736,966
Total deposits 8,266,880 8,512,778 8,266,880 8,512,778
Shareholders' equity 1,183,078 1,208,940 1,183,078 1,208,940
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AVERAGE BALANCE
SHEET DATA
Loans $ 7,866,942 $ 7,352,171 $ 7,776,211 $ 7,235,734
Investment
securities 2,025,397 1,848,965 2,070,915 1,838,847
Earning assets 9,929,683 9,665,684 9,937,197 9,468,389
Total assets 10,838,912 10,558,237 10,817,704 10,347,117
Noninterest-bearing
deposits 2,747,125 2,743,566 2,697,560 2,734,404
Total deposits 8,220,223 8,479,666 8,298,682 8,351,475
Shareholders' equity 1,213,461 1,211,032 1,221,691 1,178,249
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PER SHARE DATA
Earnings per share
Basic $ .20 $ .52 $ .66 $ 1.08
Diluted .20 .51 .65 1.06
Cash dividends per
share $ .31 $ .29 $ .62 $ .58
Book value per
share,end of
period $ 18.51 $ 17.88 $ 18.51 $ 17.88
Trading data
High sales price $ 26.32 $ 31.92 $ 27.49 $ 33.26
Low sales price 17.85 29.69 17.85 29.07
End-of-period
closing price 18.30 30.10 18.30 30.10
Trading volume 53,522,061 13,035,329 99,005,552 29,291,427
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RATIOS
Return on average
assets .48% 1.33% .79% 1.40%
Return on average
shareholders'
equity 4.27 11.61 7.03 12.33
Net interest margin 4.54 4.91 4.59 4.99
Dividend payout
ratio 155.49 56.23 93.83 54.65
Average loans as a
percentage of
average deposits 95.70 86.70 93.70 86.64
Efficiency ratio 61.79 62.20 60.15 61.88
Allowance for loan
losses as a
percentage of
loans, end of
period 1.38 1.02 1.38 1.02
Annualized net
charge-offs
(recoveries) as a
percentage of
average loans .86 .13 .70 .06
Nonperforming assets
as a percentage of
loans plus
foreclosed assets
and surplus
property, end of
period 2.03 .81 2.03 .81
Average shareholders'
equity as a
percentage of
average total assets 11.20 11.47 11.29 11.39
Tangible common
equity as a
percentage of
tangible assets,
end of period 7.86 8.34 7.86 8.34
Leverage ratio, end
of period 8.27 8.90 8.27 8.90
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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)
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WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
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QUARTERLY TRENDS
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Second First
Quarter Quarter
(dollars in thousands, except per share data) 2008 2008
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INCOME DATA
Net interest income $ 111,125 $ 113,545
Net interest income (tax-equivalent) 112,344 114,815
Provision for credit losses 35,000 14,000
Noninterest income 26,174 28,476
Net securities gains in noninterest income -- --
Noninterest expense 85,590 83,929
Net income 12,874 29,855
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QUARTER-END BALANCE SHEET DATA
Loans $ 7,962,543 $ 7,723,508
Investment securities 1,955,692 2,131,446
Earning assets 9,955,091 9,882,369
Total assets 11,016,323 10,781,912
Noninterest-bearing deposits 2,773,086 2,724,396
Total deposits 8,266,880 8,295,298
Shareholders' equity 1,183,078 1,214,425
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AVERAGE BALANCE SHEET DATA
Loans $ 7,866,942 $ 7,685,478
Investment securities 2,025,397 2,116,433
Earning assets 9,929,683 9,944,709
Total assets 10,838,912 10,796,496
Noninterest-bearing deposits 2,747,125 2,647,995
Total deposits 8,220,223 8,377,141
Shareholders' equity 1,213,461 1,229,921
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PER SHARE DATA
Earnings per share
Basic $ .20 $ .46
Diluted .20 .45
Cash dividends per share $ .31 $ .31
Book value per share, end of period $ 18.51 $ 18.90
Trading data
High sales price $ 26.32 $ 27.49
Low sales price 17.85 21.12
End-of-period closing price 18.30 24.79
Trading volume 53,522,061 45,483,491
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RATIOS
Return on average assets .48% 1.11%
Return on average shareholders' equity 4.27 9.76
Net interest margin 4.54 4.64
Dividend payout ratio 155.49 67.23
Average loans as a percentage of average
deposits 95.70 91.74
Efficiency ratio 61.79 58.57
Allowance for loan losses as a percentage of
loans, end of period 1.38 1.19
Annualized net charge-offs (recoveries) as a
percentage of average loans .86 .53
Nonperforming assets as a percentage of loans
plus foreclosed assets and surplus
property, end of period 2.03 1.96
Average shareholders' equity as a percentage
of average total assets 11.20 11.39
Tangible common equity as a percentage of
tangible assets, end of period 7.86 8.32
Leverage ratio, end of period 8.27 8.45
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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)
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WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
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QUARTERLY TRENDS
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Fourth Third Second
Quarter Quarter Quarter
(dollars in thousands, except
per share data) 2007 2007 2007
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INCOME DATA
Net interest income $ 116,336 $ 116,718 $ 116,896
Net interest income
(tax-equivalent) 117,782 118,245 118,444
Provision for credit losses 10,000 9,000 --
Noninterest income 24,080 54,455 24,097
Net securities gains in
noninterest income -- (1) --
Noninterest expense 85,774 88,229 88,661
Net income 30,244 48,766 35,052
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QUARTER-END BALANCE SHEET DATA
Loans $ 7,585,701 $ 7,452,905 $ 7,368,404
Investment securities 1,985,237 1,875,096 1,910,271
Earning assets 10,122,071 9,738,123 9,697,723
Total assets 11,027,264 10,604,834 10,608,267
Noninterest-bearing deposits 2,740,019 2,639,020 2,736,966
Total deposits 8,583,789 8,387,235 8,512,778
Shareholders' equity 1,228,736 1,253,809 1,208,940
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AVERAGE BALANCE SHEET DATA
Loans $ 7,542,040 $ 7,362,491 $ 7,352,171
Investment securities 1,979,044 1,916,927 1,848,965
Earning assets 9,857,897 9,746,184 9,665,684
Total assets 10,716,391 10,633,674 10,558,237
Noninterest-bearing deposits 2,679,261 2,686,189 2,743,566
Total deposits 8,406,547 8,480,098 8,479,666
Shareholders' equity 1,257,220 1,224,940 1,211,032
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PER SHARE DATA
Earnings per share
Basic $ .45 $ .72 $ .52
Diluted .45 .71 .51
Cash dividends per share $ .29 $ .29 $ .29
Book value per share, end
of period $ 18.67 $ 18.53 $ 17.88
Trading data
High sales price $ 28.35 $ 30.32 $ 31.92
Low sales price 22.46 23.02 29.69
End-of-period closing price 26.15 26.38 30.10
Trading volume 30,514,264 28,674,777 13,035,329
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RATIOS
Return on average assets 1.12% 1.82% 1.33%
Return on average
shareholders' equity 9.54 15.79 11.61
Net interest margin 4.75 4.82 4.91
Dividend payout ratio 64.16 40.70 56.23
Average loans as a
percentage of average
deposits 89.72 86.82 86.70
Efficiency ratio 60.46 51.09 62.20
Allowance for loan losses
as a percentage of loans,
end of period 1.16 1.10 1.02
Annualized net charge-offs
(recoveries) as a
percentage of average loans .21 .13 .13
Nonperforming assets as a
percentage of loans plus
foreclosed assets and
surplus property, end of
period 1.64 1.22 .81
Average shareholders' equity
as a percentage of average
total assets 11.73 11.52 11.47
Tangible common equity as a
percentage of tangible
assets, end of period 8.24 8.81 8.34
Leverage ratio, end of period 8.79 9.19 8.90
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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)