NEW ORLEANS, Oct. 16, 2008 (GLOBE NEWSWIRE) -- Whitney Holding Corporation (Nasdaq:WTNY) earned $7.0 million in the quarter ended September 30, 2008, compared with net income of $12.9 million for the second quarter of 2008 and $48.8 million for 2007's third quarter. Earnings were $.11 per diluted share for the third quarter of 2008, $.20 for the current year's second quarter and $.71 for the third quarter of 2007. The results for the third quarter of 2008 include casualty losses and expenses from Hurricanes Gustav and Ike totaling $2.1 million ($1.3 million after-tax, or $.02 per diluted share for the quarter.) During the third quarter of 2007, Whitney reached a settlement on insurance claims arising from the hurricanes that struck portions of its market area in the late summer of 2005. With this settlement, the Company recognized a gain of $31.3 million ($19.9 million after-tax, or $.29 per diluted share for the quarter.)
"As we noted in our preliminary release on third quarter results, earnings continue to be impacted by the fragile economy and real estate valuation issues, particularly in Florida," said John C. Hope, III, Chairman and CEO. "While we are disappointed in the need for another large provision, we were pleased to see continued balance sheet strength through quarterly loan growth, stable noninterest-bearing deposits, a stable net interest margin and a strong level of capital."
"Given the strong level of capital, we have been able to continue to reward our shareholders and pay our quarterly dividend," said Hope. "We are well-capitalized and intend to remain so. However, we are prepared to reconsider our dividend payout if credit problems persist. Information continues to become available about the government relief package for financial institutions announced earlier this week that will allow us to evaluate possible opportunities available to the Company that would be in the long-term best interest of our shareholders."
"Today we are focused on addressing credit issues while continuing to be a source of strength and stability for our customers --- just as Whitney has done for the past 125 years," said Hope. "We are addressing the challenges present in the current environment and, as you can see from our results, we are still making some money, we are still well-capitalized, we have sufficient levels of liquidity and we are continuing to implement our strategic plan."
HIGHLIGHTS OF THIRD QUARTER FINANCIAL RESULTS
Loans and Earning Assets
Loans totaled $8.1 billion at the end of the third quarter of 2008, which was up 8%, or $625 million, from September 30, 2007, and up 1%, or $115 million, from the end of 2008's second quarter. Loans comprised 81% of average earning assets in the third quarter of 2008, up from 76% in the year-earlier period and 79% in the second quarter of 2008. Loan demand from Whitney's Houston, Texas market, was the major contributor to the loan growth from the second quarter of 2008.
Deposits and Funding
Average deposits in the third quarter of 2008 were stable compared to the second quarter of 2008, while deposits at quarter end were down 3% from June 30, 2008. Noninterest-bearing deposits for the current quarter were up about 1% on both an average and end-of-period basis from 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 31% in the third quarter of 2008, which was down slightly from 2008's second quarter. Higher-cost interest-bearing funds, which include time deposits and borrowings, funded 37% of average earning assets in 2008's third quarter, up slightly from the second quarter of 2008.
Net Interest Income
Net interest income (TE) for the third quarter of 2008 was essentially unchanged from the second quarter of 2008. Both average earning assets and the net interest margin were relatively stable between these periods. The funding mix shifted further toward higher-cost sources between these periods, mainly from additional short-term borrowings and public funds time deposits.
Whitney's net interest income (TE) for the third quarter of 2008 decreased 5% compared to the third quarter of 2007. Average earning assets were up 1% between these periods, and the mix of assets shifted fairly strongly in favor of loans. The net interest margin (TE) was down 29 basis points from the year-earlier period, mainly reflecting the steep reduction in benchmark rates for the large variable-rate segment of Whitney's loan portfolio toward the end of 2007 that continued into 2008. The rates on approximately 31% of the loan portfolio at September 30, 2008 were tied to changes in Libor benchmarks, with another 25% tied to prime. The reduction in funding costs from declining market rates was partially offset by the impact of a shift toward higher-cost funding sources between these periods.
Provision for Credit Losses and Credit Quality
Whitney provided $40.0 million for credit losses in the third quarter of 2008, compared to $35.0 million in 2008's second quarter and a $9.0 million provision in the third quarter of 2007. Net loan charge-offs in 2008's third quarter were $24.5 million or 1.22% of average loans on an annualized basis, compared to $16.9 million in the second quarter of 2008 and $2.4 million in the third quarter of 2007. The allowance for loan losses increased $15.5 million during the current quarter and represented 1.55% of total loans at September 30, 2008, up from 1.38% at the end of 2008's second quarter and 1.10% a year earlier.
Continuing weaknesses in the residential real estate markets, primarily in Florida and coastal Alabama, accounted for approximately $25 million of the provision and approximately $11 million of the gross charge-offs for the third quarter of 2008, mainly related to loans for residential development. Problem commercial and industrial (C&I) credits added approximately $5 million to the provision for the third quarter of 2008 and accounted for approximately $10 million of charge-offs for the period. Management 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 $4 million related to charge-offs on consumer and other smaller credits and $1 million associated with changes in noncriticized credits.
The total of loans criticized through the Company's credit risk-rating process was $586 million at September 30, 2008, which represented 7% of total loans and a net increase of $121 million from June 30, 2008. The increase was largely concentrated in loans for residential development, the majority of which were from the Florida and Alabama markets. Included in the criticized loan total at September 30, 2008 were $235 million of nonperforming loans, up a net $88 million from June 30, 2008. Total foreclosed assets and surplus property increased to $19.6 million at September 30, 2008, up from $14.5 million at June 30, 2008, mainly related to residential development and investment properties as well as some surplus land originally intended for a branch site.
Noninterest Income
Excluding the insurance settlement gain in the third quarter of 2007 that was noted earlier, noninterest income for 2008's third quarter increased 10%, or $2.3 million, from the year-earlier period. Deposit service charge income in the third quarter of 2008 was up 5%, or $.4 million, aided mainly by reduced earnings credits allowed on certain commercial deposit accounts. Fee income from Whitney's secondary mortgage market operations decreased 18% reflecting difficult financial and housing market conditions. The categories comprising other noninterest income, excluding the insurance settlement gain, increased a combined $2.1 million compared to the third quarter of 2007, with positive contributions from most recurring revenue sources, including $1.6 million of earnings on the $150 million of life insurance policies purchased under a program implemented in late May 2008.
Noninterest income decreased 3%, or $.7 million, compared to 2008's second quarter. There were small declines in most recurring revenue sources, other than from the life insurance program, most of which can be at least partly attributed to recent financial and credit market conditions and overall economic conditions. Net gains on sales of and other revenue from grandfathered assets were down $.3 million from the $.6 million total recognized in the second quarter of 2008.
Noninterest Expense
Noninterest expense in the third quarter of 2008 increased 1%, or $1.3 million, from 2007's third quarter. The current year's period included $2.1 million for uninsured casualty losses and expenses arising from Hurricanes Gustav and Ike that struck parts of the Company's market area in September.
Whitney's personnel expense decreased 2%, or $1.0 million, between these periods, primarily due to a decrease in compensation associated with management incentive programs and the impact of a 3% reduction in the average full-time equivalent staff level.
Net occupancy expense increased 6%, or $.5 million, compared to the third quarter of 2007. Increased expenses related to de novo branch expansion, higher energy costs and nonrecurring or periodic facility repairs were partly offset by a reduction in the cost of insurance. Equipment and data processing expense increased 6%, or $.3 million, driven in part by the cost of new customer-oriented applications associated with strategic initiatives and by branch expansion. The $.3 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 and other noninterest expense were impacted by higher costs associated with problem loan collection efforts. Other noninterest expense in the third quarter of 2008 also included the $2.1 million storm-related item mentioned earlier and increased deposit insurance expense with the change to the new assessment system in 2008.
Excluding storm-related items, noninterest expense for 2008's third quarter was up 2%, or $1.9 million, compared to the second quarter of 2008. Personnel expense increased $.9 million, although this was mainly related to a reduction in share-based compensation in the second quarter of 2008 that resulted from a periodic reassessment of multi-year performance estimates. Net occupancy expense was up $.7 million on nonrecurring repair costs and seasonal increases in energy costs. Increased loan collection efforts impacted both legal and other professional services and the other noninterest expense categories. Deposit insurance expense was up $.6 million after the one-time credit granted in connection with the new assessment system was fully utilized in the second quarter of 2008.
Capital
Regulatory capital ratios at September 30, 2008 remained well above those required for the Company and Whitney National Bank to be considered well-capitalized institutions. The Company's tangible common equity ratio was 7.89% at the end of 2008's third quarter which was stable with the ratio at June 30, 2008, but down from 8.24% at year-end 2007. Whitney's regulatory leverage ratio was 8.14% at September 30, 2008 compared to 8.27% at the end of the second quarter of 2008 and 8.79% at December 31, 2007. The decline in the ratios from the end of 2007 reflected the completion of a share repurchase program and a dividend payout in excess of earnings over this period.
Conference Call and Additional Financial Information
Management will host a conference call today at 3:30 p.m. CT to review third 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 (800) 753-0420 or (913) 312-9330. 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 October 22, 2008 by dialing (888) 203-1112 or (719) 457-0820, passcode 2427618.
This earnings release, including additional financial tables related to third 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, expectations regarding future dividend payments, capital adequacy and capital ratios, allowance for loan losses and credit quality trends.
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 public filings with the Securities and Exchange Commission, 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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FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------
(dollars in Third Third Nine Months Ended
thousands, except Quarter Quarter September 30
per share data) 2008 2007 2008 2007
=====================================================================
INCOME DATA
Net interest
income $111,435 $116,718 $336,105 $348,455
Net interest
income
(tax-equivalent) 112,601 118,245 339,760 353,086
Provision for
credit losses 40,000 9,000 89,000 7,000
Noninterest income 25,472 54,455 80,122 102,601
Net securities
gains in
noninterest
income 67 (1) 67 (1)
Noninterest
expense 89,549 88,229 259,068 263,334
Net income 7,048 48,766 49,777 120,810
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QUARTER-END BALANCE
SHEET DATA
Loans $8,077,775 $7,452,905 $8,077,775 $7,452,905
Investment
securities 1,812,025 1,875,096 1,812,025 1,875,096
Earning assets 9,943,868 9,738,123 9,943,868 9,738,123
Total assets 10,987,447 10,604,834 10,987,447 10,604,834
Noninterest
-bearing deposits 2,809,923 2,639,020 2,809,923 2,639,020
Total deposits 8,054,431 8,387,235 8,054,431 8,387,235
Shareholders'
equity 1,183,001 1,253,809 1,183,001 1,253,809
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AVERAGE BALANCE
SHEET DATA
Loans $8,007,507 $7,362,491 $7,853,872 $7,278,450
Investment
securities 1,853,581 1,916,927 1,997,942 1,865,161
Earning assets 9,892,165 9,746,184 9,922,077 9,562,005
Total assets 10,902,329 10,633,674 10,846,118 10,443,686
Noninterest
-bearing deposits 2,771,101 2,686,189 2,722,253 2,718,156
Total deposits 8,230,249 8,480,098 8,275,705 8,394,819
Shareholders'
equity 1,192,535 1,224,940 1,211,902 1,193,984
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PER SHARE DATA
Earnings per share
Basic $.11 $.72 $.77 $1.80
Diluted .11 .71 .76 1.78
Cash dividends
per share $.31 $.29 $.93 $.87
Book value
per share, end
of period $18.49 $18.53 $18.49 $18.53
Tangible book
value per share,
end of period $13.13 $13.35 $13.13 $13.35
Trading data
High sales price $33.02 $30.32 $33.02 $33.26
Low sales price 13.96 23.02 13.96 23.02
End-of-period
closing price 24.25 26.38 24.25 26.38
Trading volume 72,540,716 28,674,777 171,546,268 57,966,204
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RATIOS
Return on average
assets .26% 1.82% .61% 1.55%
Return on average
shareholders'
equity 2.35 15.79 5.49 13.53
Net interest
margin 4.53 4.82 4.57 4.93
Dividend payout
ratio 285.63 40.70 120.98 49.02
Average loans as a
percentage of
average deposits 97.29 86.82 94.90 86.70
Efficiency ratio 64.89 51.09 61.71 57.79
Allowance for loan
losses as a
percentage of
loans, end
of period 1.55 1.10 1.55 1.10
Annualized net
charge-offs
(recoveries) as a
percentage of
average loans 1.22 .13 .87 .08
Nonperforming
assets as a
percentage of
loans plus
foreclosed assets
and surplus
property, end of
period 3.15 1.22 3.15 1.22
Average
shareholders'
equity as a
percentage of
average total
assets 10.94 11.52 11.17 11.43
Tangible common
equity as a
percentage of
tangible assets,
end of period 7.89 8.81 7.89 8.81
Leverage ratio,
end of period 8.14 9.19 8.14 9.19
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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
---------------------------------------------------------------------
(dollars in
thousands, Third Second First Fourth Third
except per Quarter Quarter Quarter Quarter Quarter
share data) 2008 2008 2008 2007 2007
=====================================================================
INCOME DATA
Net interest
income $111,435 $111,125 $113,545 $116,336 $116,718
Net interest
income
(tax-
equivalent) 112,601 112,344 114,815 117,782 118,245
Provision for
credit losses 40,000 35,000 14,000 10,000 9,000
Noninterest
income 25,472 26,174 28,476 24,080 54,455
Net
securities
gains in
noninterest
income 67 -- -- -- (1)
Noninterest
expense 89,549 85,590 83,929 85,774 88,229
Net income 7,048 12,874 29,855 30,244 48,766
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QUARTER-END
BALANCE SHEET
DATA
Loans $8,077,775 $7,962,543 $7,723,508 $7,585,701 $7,452,905
Investment
securities 1,812,025 1,955,692 2,131,446 1,985,237 1,875,096
Earning assets 9,943,868 9,955,091 9,882,369 10,122,071 9,738,123
Total assets 10,987,447 11,016,323 10,781,912 11,027,264 10,604,834
Noninterest-
bearing
deposits 2,809,923 2,773,086 2,724,396 2,740,019 2,639,020
Total
deposits 8,054,431 8,266,880 8,295,298 8,583,789 8,387,235
Shareholders'
equity 1,183,001 1,183,078 1,214,425 1,228,736 1,253,809
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AVERAGE BALANCE
SHEET DATA
Loans $8,007,507 $7,866,942 $7,685,478 $7,542,040 $7,362,491
Investment
securities 1,853,581 2,025,397 2,116,433 1,979,044 1,916,927
Earning assets 9,892,165 9,929,683 9,944,709 9,857,897 9,746,184
Total assets 10,902,329 10,838,912 10,796,496 10,716,391 10,633,674
Noninterest-
bearing
deposits 2,771,101 2,747,125 2,647,995 2,679,261 2,686,189
Total deposits 8,230,249 8,220,223 8,377,141 8,406,547 8,480,098
Shareholders'
equity 1,192,535 1,213,461 1,229,921 1,257,220 1,224,940
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PER SHARE DATA
Earnings
per share
Basic $.11 $.20 $.46 $.45 $.72
Diluted .11 .20 .45 .45 .71
Cash dividends
per share $.31 $.31 $.31 $.29 $.29
Book value per
share, end
of period $18.49 $18.51 $18.90 $18.67 $18.53
Tangible book
value per
share, end
of period $13.13 $13.12 $13.51 $13.37 $13.35
Trading data
High sales
price $33.02 $26.32 $27.49 $28.35 $30.32
Low sales
price 13.96 17.85 21.12 22.46 23.02
End-of-period
closing
price 24.25 18.30 24.79 26.15 26.38
Trading
volume 72,540,716 53,522,061 45,483,491 30,514,264 28,674,777
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RATIOS
Return on
average
assets .26% .48% 1.11% 1.12% 1.82%
Return on
average
shareholders'
equity 2.35 4.27 9.76 9.54 15.79
Net interest
margin 4.53 4.54 4.64 4.75 4.82
Dividend
payout ratio 285.63 155.49 67.23 64.16 40.70
Average loans
as a
percentage of
average
deposits 97.29 95.70 91.74 89.72 86.82
Efficiency
ratio 64.89 61.79 58.57 60.46 51.09
Allowance for
loan losses
as a
percentage of
loans, end
of period 1.55 1.38 1.19 1.16 1.10
Annualized net
charge-offs
(recoveries)
as a
percentage of
average loans 1.22 .86 .53 .21 .13
Nonperforming
assets as a
percentage of
loans plus
foreclosed
assets and
surplus
property, end
of period 3.15 2.03 1.96 1.64 1.22
Average
shareholders'
equity as a
percentage of
average total
assets 10.94 11.20 11.39 11.73 11.52
Tangible
common equity
as a
percentage of
tangible
assets, end
of period 7.89 7.86 8.32 8.24 8.81
Leverage
ratio, end
of period 8.14 8.27 8.45 8.79 9.19
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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)