NEW ORLEANS, April 23, 2009 (GLOBE NEWSWIRE) -- Whitney Holding Corporation (Nasdaq:WTNY) (the "Company") recorded a net loss of $11.1 million for the quarter ended March 31, 2009. Including dividends on preferred stock, the loss to common shareholders was $15.2 million or $.22 per diluted common share. The Company earned $8.2 million, or $.12 per diluted common share, for the fourth quarter of 2008 and $29.9 million, or $.45 per diluted common share, for 2008's first quarter.
"We expected, and continue to expect, that 2009 will be a challenging year in light of projections for the economy," said John C. Hope, III, Chairman and CEO. "However, we are disappointed to report a net loss for the first quarter of 2009. As we previously disclosed, there are several factors that we expected to negatively impact earnings. These included the compression in our net interest margin, reduced loan demand, an increase in certain previously identified expenses and continued elevated credit costs. As the deterioration in residential real estate values continued, mainly in Florida, our criticized and impaired loans increased, and our net charge-offs increased. As a result, we took additional steps to further strengthen our allowance for loan losses." At the end of the first quarter of 2009, the allowance to loans was 2.17%, an increase of 40 basis points from year-end.
"While we did have challenges, and while we expect continued pressure on credit quality, what gives me the most comfort during these unpredictable times is the strength of our current capital base." At the end of the first quarter of 2009, Whitney's tangible common equity ratio was 6.68%, up from 6.49% at year end.
The impact of the acquisition of Parish National Corporation (Parish) is reflected in the Company's financial information from the November 7, 2008 acquisition date.
KEY COMPONENTS OF FIRST QUARTER FINANCIAL RESULTS
Loans and Earning Assets
Total loans at the end of the first quarter of 2009 were down $129 million from December 31, 2008, primarily within the commercial and industrial (C&I) portfolio. As was anticipated and previously discussed, economic conditions are restraining loan demand through the early part of 2009. Whitney continues to fund new relationships and renew existing ones, but the level of overall demand has been insufficient to cover paydowns and maturities, including some seasonal reductions from the end of 2008. This situation is not expected to change over the near term.
Average loans for the first quarter of 2009 were up 4%, or $368 million, compared to the fourth quarter of 2008, and earning assets increased 3%, or $335 million, on average, with each increase mainly reflecting the first full-quarter impact of the Parish acquisition.
Deposits and Funding
Deposits at March 31, 2009 decreased less than 1% from December 31, 2008. Average deposits in the first quarter of 2009 were up 5%, or $472 million, compared to the fourth quarter of 2008, approximately half of which was related to the full quarter impact of Parish.
A campaign targeted at acquiring new households and attracting new business accounts added approximately $200 million in money market accounts during the first quarter of 2009. Year-end deposit balances included some seasonal inflows.
Demand deposits comprised 35% of total average deposits and funded approximately 28% of average earning assets for the first quarter of 2009 and the percentage of funding from all noninterest-bearing sources totaled 33%, up from 31% in 2008's fourth quarter. Higher-cost interest-bearing funds, which include time deposits and borrowings, funded 35% of average earning assets in 2009's first quarter, down from 39% in the fourth quarter of 2008.
Net Interest Income
Net interest income (TE) for the first quarter of 2009 decreased 7%, or $8.0 million, compared to the fourth quarter of 2008. The fewer days in the current period would have caused a reduction of approximately $1.8 million, other factors held constant. Average earning assets grew 3% between these periods, while the net interest margin (TE) compressed by 36 basis points to 4.13% from 4.49%. The net interest margin in the fourth quarter of 2008 benefited an estimated 30 basis points from the abnormally wide spreads between LIBOR rates and other benchmark rates used to reset variable-rate loans. This benefit was reduced as the LIBOR spreads trended closer to historical relationships in the early part of 2009. The rates on approximately 30% of the loan portfolio at March 31, 2009 vary based on LIBOR benchmarks. Rate floors on approximately 40% of our variable rate loans partially offset the impact of the reduced spreads and overall lower rate environment.
Provision for Credit Losses and Credit Quality
Whitney provided $65.0 million for credit losses in the first quarter of 2009, compared to $45.0 million in 2008's fourth quarter. Net loan charge-offs in 2009's first quarter were $31.9 million or 1.41% of average loans on an annualized basis, compared to $19.7 million in the fourth quarter of 2008. The allowance for loan losses increased $33.1 million during the current quarter and represented 2.17% of total loans at March 31, 2009, up from 1.77% at year end 2008.
The total of loans criticized through the Company's credit risk-rating process was $883 million at March 31, 2009, which represented 10% of total loans and a net increase of $113 million from December 31, 2008. Of the total increase, $62 million came from C&I credits from a variety of industries mainly in Louisiana and Texas. Criticized commercial real estate (CRE) loans increased $43 million from the end of 2008, with the majority from Florida markets and concentrated in loans secured by either income-producing properties or owner-user properties. There was little change in criticized CRE loans for residential or commercial construction or land development or acquisition over the same period.
The overall increase in criticized loans included $36 million related to the energy industry and $8 million related to the hospitality sector, although management does not currently believe the stresses on these industries will have a significant impact on Whitney's overall credit quality metrics.
Continuing weaknesses in residential-related real estate markets, primarily in Whitney's Florida markets, accounted for approximately $26 million of the provision for credit losses for the first quarter of 2009, compared with $25 million for the fourth quarter of 2008. These loans, which are mainly for residential development or for rental operations, also accounted for $20 million of the gross charge-offs in 2009's first quarter. Loans for commercial real estate development or investment accounted for approximately $12 million of the provision and $8 million of charge-offs in the current quarter, mainly related to further deterioration of previously criticized loans in the Tampa, Florida area. Problem C&I credits, mainly in Louisiana and Texas, added approximately $10 million to the provision and $3 million to charge-offs for the first quarter of 2009. Management added another $10 million to the allowance and provision based on its regular assessment of current economic conditions and other qualitative factors.
Noninterest Income
Noninterest income for 2009's first quarter increased 8%, or $2.2 million, from the fourth quarter of 2008. Deposit service charge income in the first quarter of 2009 was up 7%, or $.7 million, on higher commercial account fees and the full quarter impact of Parish. The growth in commercial fees was driven mainly by a reduction in the earnings credit allowance in the low market rate environment.
Fee income from Whitney's secondary mortgage market operations grew 37%, or $.5 million, as strong refinancing activity and the addition of Parish's operations drove a significant increase in loan production. A seasonal decline in bank card fees compared to the fourth quarter of 2008 was offset by moderate growth from several other recurring revenue sources included in other noninterest income. Other noninterest income for the first quarter of 2009 also included a $1.0 million distribution from one of the Company's grandfathered foreclosed assets. This distribution has been a recurring first quarter event and totaled $1.2 million for the first quarter of 2008.
Noninterest Expense
Total noninterest expense for the first quarter of 2009 increased $4.8 million from 2008's fourth quarter. An $8.9 million increase in total personnel expense was partly offset by a $1.2 million reduction in legal and professional fees and a $3.3 million reduction in other noninterest expense items.
As was noted last quarter, personnel expense for the fourth quarter of 2008 included reductions in management bonus and sales-based incentive plan compensation that were based on updated performance estimates. The change in these two compensation categories made up $3.0 million of the $3.9 million increase in employee compensation from 2008's fourth quarter, with the remainder reflecting the full quarter impact of Parish and normal salary adjustments. Employee benefits expense increased $5.1 million from the fourth quarter of 2008. In addition to the normal rise in payroll taxes at the beginning of each year and the impact of Parish, this increase was related mainly to higher pension and other retirement benefit plan costs for 2009, as outlined in our annual report on Form 10-K, as well as some fourth quarter benefit expense reductions on plan amendments.
The decline in legal and other professional fees reflected mainly $1.2 million of professional services in the fourth quarter of 2008 for the Parish system conversion. Legal expense remains elevated from the cost of services associated with problem loan collection efforts. Costs associated with problem loan collections and foreclosed asset management also continued to inflate the other noninterest expense total in 2009's first quarter.
The overall decrease in other noninterest expense was partly due to a $1.9 million charge during the fourth quarter of 2008 related to the planned closure of certain branch facilities in early 2009 that was approved as part of the ongoing implementation of Whitney's strategic plan. Declines in various other recurring expense categories helped offset a $1.6 million increase in FDIC insurance expense from the new higher rate structure introduced for 2009.
Capital
Regulatory capital ratios have been and remain well above those required for the Company and Whitney National Bank to be considered well-capitalized institutions. The reduction in the quarterly common dividend from $.20 in the fourth quarter of 2008 to $.01 in the first quarter of 2009 preserved approximately $12 million of common equity. The Company's tangible common equity ratio was 6.68% at the end of 2009's first quarter compared to 6.49% at December 31, 2008. Whitney's regulatory leverage ratio was 9.47% at March 31, 2009 and 9.87% at December 31, 2008.
Conference Call and Additional Financial Information
Management will host a conference call today at 11:00 a.m. CDT to review first quarter 2009 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) 289-0461 or (913) 312-1487. 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 28, 2009 by dialing (888) 203-1112 or (719) 457-0820, passcode 4162691.
This earnings release, including additional financial tables related to first quarter 2009 results, is posted in the Investor Relations section of the Company's web site at http://investor.whitneybank.com/releases.cfm?ReleasesType=Earnings&Year=2009.
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.
The Whitney Holding Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5777
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 loan demand, capital strength and credit quality trends in the overall portfolio and specific industry segments within the portfolio.
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 Whitney's forward-looking statements include, but are not limited to, those risk factors 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.
(WTNY-E)
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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) 2009 2008 2008 2008 2008
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INCOME DATA
Net interest
income $ 111,615 $ 119,540 $ 111,435 $ 111,125 $ 113,545
Net interest
income (tax-
equivalent) 112,924 120,902 112,601 112,344 114,815
Provision for
credit losses 65,000 45,000 40,000 35,000 14,000
Noninterest
income 29,266 27,050 25,472 26,174 28,476
Net securities
gains in
noninterest
income -- -- 67 -- --
Noninterest
expense 96,848 92,026 89,549 85,590 83,929
Net income
(loss) (11,139) 8,808 7,048 12,874 29,855
Net income
(loss) to
common
shareholders (15,164) 8,220 7,048 12,874 29,855
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QUARTER-END
BALANCE SHEET
DATA
Loans $8,953,307 $9,081,850 $8,077,775 $7,962,543 $7,723,508
Investment
securities 1,889,161 1,939,355 1,812,025 1,955,692 2,131,446
Earning
assets 10,908,643 11,209,246 9,943,868 9,955,091 9,882,369
Total assets 12,020,481 12,380,501 10,987,447 11,016,323 10,781,912
Noninterest-
bearing
deposits 3,176,783 3,233,550 2,809,923 2,773,086 2,724,396
Total deposits 9,212,361 9,261,594 8,054,431 8,266,880 8,295,298
Shareholders'
equity 1,522,085 1,525,478 1,183,001 1,183,078 1,214,425
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AVERAGE BALANCE
SHEET DATA
Loans $9,068,755 $8,700,317 $8,007,507 $7,866,942 $7,685,478
Investment
securities 1,885,158 1,876,338 1,853,581 2,025,397 2,116,433
Earning
assets 11,054,605 10,719,892 9,892,165 9,929,683 9,944,709
Total assets 12,159,252 11,777,922 10,902,329 10,838,912 10,796,496
Noninterest-
bearing
deposits 3,150,615 2,975,869 2,771,101 2,747,125 2,647,995
Total deposits 9,119,000 8,646,612 8,230,249 8,220,223 8,377,141
Shareholders'
equity 1,533,293 1,264,714 1,192,535 1,213,461 1,229,921
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COMMON SHARE
DATA
Earnings
(loss) per
share
Basic $ (.22) $ .12 $ .11 $ .20 $ .45
Diluted (.22) .12 .11 .20 .45
Cash dividends
per share $ .01 $ .20 $ .31 $ .31 $ .31
Book value per
share, end
of period $ 18.22 $ 18.29 $ 18.49 $ 18.51 $ 18.90
Tangible book
value per
share, end
of period $ 11.46 $ 11.48 $ 13.13 $ 13.12 $ 13.51
Trading data
High sales
price $ 16.16 $ 26.37 $ 33.02 $ 26.32 $ 27.49
Low sales
price 8.17 14.14 13.96 17.85 21.12
End-of-period
closing price 11.45 15.99 24.25 18.30 24.79
Trading
volume 48,896,275 42,771,277 72,540,716 53,522,061 45,483,491
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RATIOS
Return on
average
assets (.37)% .30% .26% .48% 1.11%
Return on
average
common equity (4.96) 2.67 2.35 4.27 9.76
Net interest
margin 4.13 4.49 4.53 4.54 4.64
Average loans
to average
deposits 99.45 100.62 97.29 95.70 91.74
Efficiency
ratio 68.11 62.20 64.89 61.79 58.57
Annualized
expenses to
average assets 3.19 3.13 3.29 3.16 3.11
Allowance for
loan losses
to loans,
end of period 2.17 1.77 1.55 1.38 1.19
Annualized net
charge-offs
to average
loans 1.41 .91 1.22 .86 .53
Nonperforming
assets to
loans plus
foreclosed
assets and
surplus
property, end
of period 4.50 3.61 3.15 2.03 1.96
Average
shareholders'
equity to
average total
assets 12.61 10.74 10.94 11.20 11.39
Tangible
common equity
to tangible
assets, end
of period 6.68 6.49 7.89 7.86 8.32
Leverage ratio,
end of period 9.47 9.87 8.17 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).