NEW ORLEANS, July 27, 2010 (GLOBE NEWSWIRE) -- Whitney Holding Corporation (Nasdaq:WTNY) (the "Company") reported a net loss of $18.0 million for the second quarter of 2010 compared to net losses of $6.3 million and $21.3 million, respectively, in the first quarter of 2010 and in the second quarter of 2009. Including the $4.1 million dividend paid each quarter to the U.S. Treasury on the preferred stock issued under TARP, the loss per diluted common share was $.23 for the second quarter of 2010, $.11 for the first quarter of 2010 and $.38 for the second quarter of 2009.
"We are disappointed that the economy remained sluggish during the second quarter and did not show the signs of improvement we were expecting," said John C. Hope, III, Chairman and CEO. "It has become increasingly difficult to predict the timing of a solid economic recovery, and this, coupled with the impact the Gulf oil spill appears to be having on business activity in our markets, has tempered our optimism for the remainder of 2010. The continued good performance from our core businesses, and the traction we are gaining as we implement the initiatives in our Strategic Plan, are being overshadowed by the impact of current economic conditions on our credit metrics. However, our long-term earnings capacity, the underlying strengths of our franchise and our capital position all remain strong."
HIGHLIGHTS OF SECOND QUARTER FINANCIAL RESULTS
Loans and Earning Assets
Total loans at the end of the second quarter of 2010 were $8.0 billion, down $94 million, or 1%, from March 31, 2010. Funding of new relationships, mainly in Louisiana markets, and stability in the existing loan portfolio helped partially offset the decline from gross charge-offs, foreclosures and problem loan sales.
Average loans for the second quarter of 2010 totaled $8.1 billion, down $159 million, or 2%, compared to the first quarter of 2010. Average earning assets of $10.3 billion were also down 2%.
Deposits and Funding
Average deposits in the second quarter of 2010 were $8.9 billion, down $131 million, or less than 2%, from the first quarter of 2010. Total period-end deposits at June 30, 2010 of $8.8 billion were also down less than 2% compared to March 31, 2010.
Noninterest-bearing deposits of $3.2 billion at June 30, 2010 were down $69 million, or 2%, from the end of the first quarter of 2010, while average noninterest-bearing deposits were virtually unchanged between these periods. Noninterest-bearing demand deposits comprised almost 37% of total average deposits and funded approximately 32% of average earning assets for the quarter. The percentage of funding from all noninterest-bearing sources totaled 37%. Higher-cost interest-bearing funds, which include time deposits and borrowings, funded 26% of average earning assets in the second quarter of 2010 unchanged from the first quarter of 2010.
Net Interest Income
The lower level of earning assets was the main factor behind a decrease of $.8 million, or less than 1%, in net interest income (TE) for the second quarter of 2010 compared to the first quarter of 2010. The net interest margin (TE) of 4.15% was unchanged from the first quarter, with both asset yields and funding costs declining moderately between these periods.
Provision for Credit Losses and Credit Quality
Whitney provided $59.0 million for credit losses in the second quarter of 2010, an increase of $21.5 million from the first quarter of 2010, and down $15.0 million from the second quarter of 2009. As was the case in the past several quarters, the majority of the current quarter's provision, $35 million, or 60%, came from the Florida portfolio and was predominantly related to real estate credits individually evaluated for impairment. Approximately $6 million of the Florida provision was related to problem note sales.
The second quarter provision also included $5 million based on an assessment of the impact of the recent oil spill on tourism in Gulf Coast beach communities. An increase in the level of criticized loans in Texas contributed to most of the remainder of the provision in the second quarter.
Net loan charge-offs in the second quarter of 2010 were $53.3 million, or 2.65% of average loans on an annualized basis, compared to $37.1 million, or 1.81% of average loans, in the first quarter of 2010. Approximately 63% of total gross charge-offs came from credits serviced in the Florida market, mainly commercial and residential-related real estate.
The allowance for loan losses represented 2.88% of total loans at June 30, 2010, up from 2.77% at March 31, 2010 and 2.50% at June 30, 2009.
Classified loans – identified as having a well-defined weakness – totaled $886 million at June 30, 2010, virtually unchanged from March 31, 2010. Special mention loans – deserving close attention because of a potential weakness – totaled $266 million, a net increase of approximately $75 million from the first quarter of 2010. The Company's criticized loan portfolio is the total of classified and special mention loans. As noted in our pre-release on July 13, 2010, and as discussed in prior quarters, the sluggish economic environment continues to impact various types of credits across our footprint. During the second quarter, classified loans serviced from Louisiana markets increased $27 million, while those serviced from Texas increased $24 million. The majority of the increase in Louisiana was related to commercial and industrial (C&I) credits, while the majority of the increase in Texas was related to commercial real estate (CRE) credits. Classified loans decreased $38 million in Florida and $19 million in Alabama from the first quarter of 2010, reflecting mainly charge-offs, foreclosures and note sales.
Management continues to believe that many of the newly classified and special mention credits have lower loss potential compared to the losses incurred on credits impacted by the real estate market problems in Florida.
Nonperforming loans, a subset of classified loans, totaled $451 million at June 30, 2010, a net increase of $15 million from March 31, 2010. Slightly over 50% of nonperforming loans came from Whitney's Florida markets, with 21% from Louisiana, 16% from Texas and 11% from Alabama/Mississippi. Nonperforming loans individually evaluated for impairment, a subset of total nonperforming loans, totaled $376 million at June 30, 2010. Cumulative charge-offs and the current impaired loss allowance on these loans represented approximately 37% of the contractual principal balances on these credits. Foreclosed assets totaled $92 million at June 30, 2010, a net increase of approximately $31 million from March 31, 2010.
Impact of the Gulf Coast Oil Spill
On April 20, 2010 the Deepwater Horizon drilling rig, which was operating in the deep waters of the Gulf of Mexico, exploded and sank, resulting in a substantial oil leak from the wellhead. The spill has caused, and continues to cause, significant disruption to the Gulf's fishing and tourism industries. In addition, a six-month drilling moratorium on deepwater rigs was imposed by the U.S. Government, directly impacting 33 rigs and indirectly impacting numerous others. The owner of the well, BP p.l.c., has committed to compensate those impacted by the oil spill and has established a fund to pay claims.
Whitney management and bankers continue to review credits and talk to both customers and industry experts to determine the potential impact of the spill on the Company's loan portfolio. This review focused initially on three areas: (1) identifying and evaluating our direct exposure to fishing, seafood processing and marinas, (2) assessing the short-term and long-term impact on oil and gas (O&G) industry companies, including the impact of the moratorium, and (3) evaluating the impact on our customers in coastal communities that rely heavily on summer tourism.
The Bank's direct exposure to the fishing, seafood processing and marina industries totaled approximately $35 million in outstanding at June 30, 2010 and management currently expects minimal impact to the businesses of our customers within this sector.
Loans outstanding to the O&G sector totaled $762 million, or approximately 10% of total loans at June 30, 2010. Based on discussions with customers in this industry, and currently available information, management expects minimal near-term impact to their business operations and to the performance of our loans in this portfolio sector. Management's current assessment could change depending upon the length of the moratorium on deepwater drilling in the Gulf and the ultimate impact of this disaster on the cost of drilling operations in the future.
Management has identified approximately $270 million in loans outstanding that could be directly and indirectly impacted by a downturn in tourism, and management is closely monitoring this portion of the loan portfolio. As noted earlier, the provision for credit losses in the second quarter of 2010 included $5 million based on the assessment of the estimated impact of the oil spill on tourism-related businesses in these Gulf Coast beach communities.
Noninterest Income
Noninterest income for the second quarter of 2010 was up $3.5 million, or 12%, from the first quarter of 2010.
Most recurring sources of income registered increases, reflecting increased activity and the benefit of recent marketing campaigns. Deposit service charge income was up 2%, or $.2 million, bankcard fees increased 10%, or $.5 million, and secondary mortgage market income was up 9%, or approximately $.2 million, during the quarter. Management expects that the new consumer protection regulations that are being implemented in the third quarter of 2010 and the expiration of the federal tax credit for new homebuyers could result in modestly lower levels of fee income for the remainder of 2010.
Other noninterest income for the second quarter was up $2.5 million compared to the first quarter, including a $1.3 million insurance settlement gain related to the hurricanes in 2008 and a gain of $.8 million from the sale of surplus banking property.
Noninterest Expense
Total noninterest expense for the second quarter of 2010 increased less than 1%, or $.4 million, from the first quarter of 2010.
Total personnel expense for the second quarter of 2010 decreased $.4 million, or less than 1%, from the first quarter of 2010. Employee compensation increased $1.7 million mainly as a result of the company-wide annual merit increase and final adjustments to 2009 annual sales-based incentive plan compensation in the first quarter of 2010. No management cash bonus was accrued during the first half of 2010 or during all of 2009. Employee benefits declined $2.0 million during the second quarter on reductions in the annual cost of retirement benefit plans and a normal decrease in payroll taxes from beginning of year levels.
Loan collection costs, together with foreclosed asset management expenses and provisions for valuation losses, totaled $6.0 million in the second quarter of 2010, down from $6.3 million in the first quarter of 2010. Legal and other professional services were up $4.1 million during the second quarter and included services associated with collection of problem credits, technology initiatives, and compliance and other regulatory projects.
Other noninterest expense was down $3.3 million in the second quarter of 2010. The first quarter of 2010 included an estimated $4.5 million loss resulting from repurchase obligations on certain mortgage loans originated and sold by a recently acquired entity. The second quarter of 2010 included $.4 million for the value of the annual directors' stock award and an additional $.5 million in deposit insurance assessments.
Capital
"We believe our strong capital base will allow us to remain opportunistic in disposing of problem assets," said Hope. The Company's tangible common equity ratio increased to 8.49% at June 30, 2010, compared to 8.38% at March 31, 2010. The Company's leverage ratio at June 30, 2010 declined to 10.48% compared to 10.61% at March 31, 2010. The slight decline was mainly related to an adjustment in the amount of deferred tax assets disallowed for regulatory capital calculations. Regulatory capital ratios remain above those required for the Company and Whitney National Bank to be considered well-capitalized institutions.
Conference Call and Additional Financial Information
Management will host a conference call today at 3:00 p.m. CDT to review second quarter 2010 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/">http://www.whitneybank.com. To participate in the Q&A portion of the call, dial (877) 354-4079 or (408) 427-3700.
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 August 3, 2010 by dialing (800) 642-1687 or (706) 645-9291, passcode 86132986.
This earnings release, including additional financial tables and a slide presentation related to second quarter results, is posted in the Investor Relations section of the Company's website at http://investor.whitneybank.com/releases.cfm?ReleasesType=Earnings&Year=2010.
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, and we intend such forward-looking statements to be covered by the safe harbor provisions therein and are including this statement for purposes of invoking these safe-harbor provisions. 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 credit quality metrics in the loan portfolio and specific industry and geographic segments within the loan portfolio, future profitability, the impact of the oil spill in the Gulf on Whitney's loan portfolio, the timing and strength of any economic recovery, impact from new regulations, the overall capital strength of Whitney and its ability to dispose of problem assets.
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)
| WHITNEY HOLDING CORPORATION AND SUBSIDIARIES | ||||||
| FINANCIAL HIGHLIGHTS | ||||||
| Second | First | Second | Six Months Ended | |||
| Quarter | Quarter | Quarter | June 30 | |||
| (dollars in thousands, except per share data) | 2010 | 2010 | 2009 | 2010 | 2009 | |
| INCOME DATA | ||||||
| Net interest income | $105,869 | $106,629 | $110,572 | $212,498 | $222,187 | |
| Net interest income (tax-equivalent) | 106,810 | 107,584 | 111,820 | 214,394 | 224,744 | |
| Provision for credit losses | 59,000 | 37,500 | 74,000 | 96,500 | 139,000 | |
| Noninterest income | 31,761 | 28,247 | 32,431 | 60,008 | 61,697 | |
| Net securities gains in noninterest income | -- | -- | -- | -- | -- | |
| Noninterest expense | 110,147 | 109,706 | 111,807 | 219,853 | 208,655 | |
| Net income (loss) | (17,993) | (6,280) | (21,301) | (24,273) | (32,440) | |
| Net income (loss) to common shareholders | (22,060) | (10,347) | (25,368) | (32,407) | (40,532) | |
| QUARTER-END BALANCE SHEET DATA | ||||||
| Loans | $ 7,979,371 | $ 8,073,498 | $ 8,791,840 | $ 7,979,371 | $ 8,791,840 | |
| Investment securities | 2,076,313 | 2,042,307 | 1,942,365 | 2,076,313 | 1,942,365 | |
| Earning assets | 10,214,267 | 10,395,252 | 10,861,061 | 10,214,267 | 10,861,061 | |
| Total assets | 11,416,761 | 11,580,806 | 11,975,082 | 11,416,761 | 11,975,082 | |
| Noninterest-bearing deposits | 3,229,244 | 3,298,095 | 3,081,617 | 3,229,244 | 3,081,617 | |
| Total deposits | 8,819,051 | 8,961,957 | 9,144,041 | 8,819,051 | 9,144,041 | |
| Shareholders' equity | 1,674,166 | 1,676,240 | 1,487,994 | 1,674,166 | 1,487,994 | |
| AVERAGE BALANCE SHEET DATA | ||||||
| Loans | $ 8,051,668 | $ 8,210,283 | $ 8,945,911 | $ 8,130,537 | $ 9,006,994 | |
| Investment securities | 2,021,359 | 2,008,095 | 1,906,932 | 2,014,764 | 1,896,105 | |
| Earning assets | 10,314,161 | 10,482,211 | 11,062,643 | 10,397,722 | 11,058,646 | |
| Total assets | 11,503,150 | 11,656,777 | 12,140,311 | 11,579,539 | 12,149,729 | |
| Noninterest-bearing deposits | 3,255,019 | 3,260,794 | 3,082,248 | 3,257,891 | 3,116,242 | |
| Total deposits | 8,895,731 | 9,026,703 | 9,212,882 | 8,960,855 | 9,166,202 | |
| Shareholders' equity | 1,676,468 | 1,684,537 | 1,520,609 | 1,680,480 | 1,526,916 | |
| COMMON SHARE DATA | ||||||
| Earnings (loss) per share | ||||||
| Basic | $( .23) | $( .11) | $( .38) | $( .34) | $( .60) | |
| Diluted | ( .23) | ( .11) | ( .38) | ( .34) | ( .60) | |
| Cash dividends per share | $ .01 | $ .01 | $ .01 | $ .02 | $ .02 | |
| Book value per share, end of period | $14.29 | $14.32 | $17.63 | $14.29 | $17.63 | |
| Tangible book value per share, end of period | $9.65 | $9.67 | $10.93 | $9.65 | $10.93 | |
| Trading data | ||||||
| High sales price | $15.29 | $14.53 | $15.33 | $15.29 | $16.16 | |
| Low sales price | 9.25 | 9.05 | 8.33 | 9.05 | 8.17 | |
| End-of-period closing price | 9.25 | 13.79 | 9.16 | 9.25 | 9.16 | |
| Trading volume | 75,477,402 | 67,377,896 | 62,308,611 | 142,855,298 | 111,204,886 | |
| RATIOS | ||||||
| Return on average assets | (.63)% | (.22)% | (.70)% | (.42)% | (.54)% | |
| Return on average common equity | (6.41) | (3.02) | (8.30) | (4.72) | (6.63) | |
| Net interest margin (TE) | 4.15 | 4.15 | 4.05 | 4.15 | 4.09 | |
| Average loans to average deposits | 90.51 | 90.96 | 97.10 | 90.73 | 98.26 | |
| Efficiency ratio | 79.49 | 80.77 | 77.51 | 80.12 | 72.84 | |
| Annualized expenses to average assets | 3.83 | 3.76 | 3.68 | 3.80 | 3.43 | |
| Allowance for loan losses to loans, end of period | 2.88 | 2.77 | 2.50 | 2.88 | 2.50 | |
| Annualized net charge-offs to average loans | 2.65 | 1.81 | 2.09 | 2.22 | 1.75 | |
| Nonperforming assets to loans plus foreclosed assets and surplus property, end of period | 6.73 | 6.12 | 5.17 | 6.73 | 5.17 | |
| Average shareholders' equity to average total assets | 14.57 | 14.45 | 12.53 | 14.51 | 12.57 | |
| Tangible common equity to tangible assets, end of period | 8.49 | 8.38 | 6.42 | 8.49 | 6.42 | |
| Leverage ratio, end of period | 10.48 | 10.61 | 9.21 | 10.48 | 9.21 | |
| 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). | ||||||
| The tangible common equity to tangible assets ratio is total shareholders' equity less preferred stock and intangible assets divided by total assets less intangible assets. | ||||||