<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- -------------------
Commission file number 0-1026
WHITNEY HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Louisiana 72-6017893
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(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
228 St. Charles Avenue, New Orleans, Louisiana 70130
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(Address of principal executive offices)
(Zip Code)
(504) 586-7272
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
The Company has only one class of common stock, of which 14,550,124 shares
were outstanding on April 30, 1994.
An exhibit index appears on page 17.
Page 1 of 18
<PAGE>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets..........................................3
Consolidated Statements of Operations................................4
Consolidated Statements of Cash Flows................................5
Notes to Financial Statements........................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K...............................17
Signature.................................................................18
</TABLE>
Page 2 of 18
<PAGE>
WHITNEY HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(dollars in thousands, unaudited) March 31, December 31,
1994 1993
---------- ----------
<S> <C> <C>
ASSETS (unaudited)
Cash and due from financial institutions $192,475 $187,447
Investment in securities:
Securities available for sale............... 170,349 182,030
Securities held to maturity (fair value of
$1,511,952 in 1994 and $1,483,044 in 1993) 1,505,257 1,451,716
Federal funds sold............................... 152,800 110,000
Loans............................................ 977,367 975,728
Less reserve for possible loan losses............ 39,418 44,485
---------- ----------
Loans, net.................................... 937,949 931,243
Bank premises and equipment, net................. 63,322 60,175
Other real estate owned, net..................... 13,368 16,126
Accrued income receivable........................ 31,189 29,142
Other assets..................................... 44,809 34,661
TOTAL ASSETS........................... $3,111,518 $3,002,540
========== ==========
LIABILITIES
Deposits:
Non-interest-bearing demand deposits........ $784,833 $784,410
Interest-bearing deposits................... 1,767,707 1,720,893
---------- ----------
Total deposits.......................... 2,552,540 2,505,303
Federal funds purchased and securities sold under
repurchase agreements.......................... 258,241 215,168
Dividends payable................................ 2,169 1,925
Other liabilities................................ 26,524 21,106
---------- ----------
TOTAL LIABILITIES...................... $2,839,474 $2,743,502
SHAREHOLDERS' EQUITY
Common stock, no par value: 40,000,000 shares
authorized, 15,216,803 shares issued and
14,548,762 shares outstanding in 1994,
15,123,535 shares issued and 14,446,957
in 1993, after deduction of treasury stock $2,800 $2,800
Capital surplus.................................. 50,006 47,897
Retained earnings................................ 226,079 212,533
Net unrealized gain on securities available for
sale, net of tax effect of $160 in 1994 and
$1,660 in 1993................................. 295 3,083
---------- ----------
Total.................................. 279,180 266,313
Treasury stock at cost, 668,041 shares in 1994
676,578 shares in 1993, and unearned
restricted stock compensation................. 7,136 7,275
---------- ----------
TOTAL SHAREHOLDERS' EQUITY............. $272,044 $259,038
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY............. $3,111,518 $3,002,540
========== ==========
</TABLE>
Page 3 of 18
<PAGE>
WHITNEY HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(in thousands, except per-share amounts, FOR THE 3 MONTHS
unaudited) ENDED MARCH 31,
1994 1993
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans.................. $18,079 $18,522
Interest and dividends on investments-
U.S. Treasury and agency securities...... 17,686 17,645
Mortgage-backed securities............... 2,725 3,212
Obligations of states and political
subdivisions............................. 1,565 1,280
Federal Reserve and corporate securities. 604 615
Interest on federal funds sold.............. 883 913
---------- ----------
TOTAL........................... $41,542 $42,187
---------- ----------
INTEREST EXPENSE
Interest on deposits........................ $10,428 $11,052
Interest on federal funds purchased and
securities sold under repurchase agreement 1,793 1,661
---------- ----------
TOTAL........................... $12,221 $12,713
---------- ----------
Net interest income......................... $29,321 $29,474
Provision possible for loan losses:
Expense of providing loss reserves...... - -
Loss reserve reduction.................. (10,000) -
---------- ----------
Net interest income after provision
for possible loan losses.................. $39,321 $29,474
---------- ----------
NON-INTEREST INCOME
Gain on sale of securities.................. - -
Other non-interest income................... 9,049 7,193
---------- ----------
TOTAL........................... $9,049 $7,193
---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits.............. $13,030 $11,628
Occupancy of bank premises, net............. 1,666 1,561
Other non-interest expenses................. 10,195 13,309
---------- ----------
TOTAL........................... $24,891 $26,498
---------- ----------
Income before income taxes and effect
of accounting changes................... $23,479 $10,169
Income tax expense ......................... 7,762 3,051
---------- ----------
Income before effect of accounting changes.. $15,717 $7,118
Cumulative effect of accounting changes, net - 634
---------- ----------
Net income ................................. $15,717 $7,752
EARNINGS PER SHARE:
Income before cumulative effect
of accounting changes................. $1.09 $0.49
Cumulative effect of accounting change - 0.05
Net Income............................ $1.09 $0.54
Weighted average number of
shares outstanding.......................... 14,452,250 14,405,346
</TABLE>
Page 4 of 18
<PAGE>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
<TABLE>
<CAPTION>
For the 3 Months
Ended March 31,
1994 1993
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................................. $ 15,717 $ 7,752
Adjustments to reconcile net income to cash provided by (used in)
operating activities:
Cumulative effects of accounting changes.................................. - (634)
Depreciation.............................................................. 1,506 1,415
Provision for (Reduction of) reserves for possible loan losses............ (10,000) -
Provision for losses on OREO and other problem assets..................... 44 2,113
Amortization of intangible assets and unearned restricted stock
compensation........................................................... 976 940
Amortization of premiums and discounts on investment securities, net...... 3,569 2,860
(Gains) Losses on sales of OREO and other property........................ (1,826) (644)
Deferred tax expense (benefit)............................................ 2,127 (186)
Increase (Decrease) in accrued income taxes............................... 5,035 3,235
(Increase) Decrease in accrued income receivable and other assets......... (4,710) (6,039)
Increase (Decrease) in accrued expenses and other liabilities............. (781) 2,167
---------- ----------
Net cash provided by (used in) operating activities....................... 11,657 11,429
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities held to maturity........... 457,941 350,484
Proceeds from maturities of investment securities available for sale......... 17,493 -
Purchases of investment securities held to maturity.......................... (504,099) (397,239)
Purchases of investments available for sale.................................. (10,100) -
Net (increase) decrease in loans............................................. 64,998 94,978
Net (increase) decrease in federal funds sold................................ (40,500) (4,155)
Proceeds from sales of OREO and other property............................... 2,128 6,031
Capital expenditures......................................................... (788) (1,171)
Net cash (paid) received in business acquisition............................. 35,659 -
Other........................................................................ (181) (432)
---------- ----------
Net cash provided by (used in) investing activities.......................... 22,551 48,496
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in non-interest-bearing demand deposits.............. (23,053) (95,637)
Net increase (decrease) in interest-bearing deposits other than
certificates of deposit................................................... (46,395) 11,094
Net increase (decrease) in certificates of deposit........................... (1,069) (30,972)
Net increase (decrease) in federal funds purchased and securities sold under
repurchase agreements..................................................... 43,073 12,150
Exercise of stock options.................................................... 113 8
Sale of common stock under employee savings plan............................. 76 -
Dividends paid............................................................... (1,925) (960)
---------- ----------
Net cash provided by (used in) financing activities.......................... (29,180) (104,317)
---------- ----------
Net increase (decrease) in cash and cash equivalents............................ 5,028 (44,392)
Cash and cash equivalents at the beginning of the period........................ 187,447 218,226
---------- ----------
Cash and cash equivalents at the end of the period.............................. $ 192,475 $ 173,834
========== ==========
Interest income received........................................................ $ 39,990 $ 39,067
========== ==========
Interest expense paid........................................................... $ 11,759 $ 12,523
========== ==========
Federal income taxes paid....................................................... $ 600 $ -
========== ==========
</TABLE>
Page 5 of 18
<PAGE>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Whitney Holding Corporation and its subsidiaries (the "Company") follow
accounting and reporting policies generally accepted within the banking
industry. The accompanying consolidated financial statements of the Company
include the accounts of its wholly-owned subsidiary Whitney National Bank (the
"Bank"). All adjustments have been made which, in the opinion of management,
are necessary to fairly state the financial results for the interim periods
presented.
Pursuant to rules and regulations of the Securities and Exchange
Commission, certain financial information and disclosures have been condensed
or omitted in preparing the consolidated financial statements presented in
this quarterly report on Form 10-Q. The Company recommends that these
financial statements be read in conjunction with the Company's annual report
on Form 10-K for the year ended December 31, 1993.
Certain balances in prior periods have been reclassified to conform with
this period's financial presentation.
(2) INVESTMENT IN SECURITIES
Effective December 31, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Under SFAS No. 115, debt securities which the
Company both positively intends and has the ability to hold to maturity are
carried at cost. These criteria are not considered satisfied when a security
is available to be sold in response to changes in rates, prepayment rates,
liquidity needs or other reasons as part of an overall asset/liability
management strategy. Upon the adoption of SFAS No. 115, investments in
mortgage-backed securities were reclassified as securities available for sale
and are being reported at fair value. The tax-effected net unrealized holding
gain or loss on these securities is reported as a separate component of
shareholders' equity at March 31, 1994 and December 31, 1993. In accordance
with SFAS No. 115, financial statements for periods prior to adoption have not
been restated to reflect this change in accounting principle.
(3) BUSINESS ACQUISITION
On March 31, 1994, the Bank purchased substantially all of the assets
and assumed the deposit accounts and certain other liabilities of Baton Rouge
Bank and Trust Company. Included in the tangible assets acquired, whose fair
value totalled approximately $118 million, were cash and cash items of $41
million, investment securities and federal funds sold of $13 million, and $59
million in commercial, real estate mortgage and personal loans, as well as six
banking offices in the Baton Rouge area. The deposits assumed included
approximately $24 million in non-interest-bearing demand deposits and $94
million in interest-bearing transaction, savings and time deposit accounts.
The operating results from this acquisition will be reflected in the
consolidated income statements beginning with the second quarter of 1994.
As part of the acquisition price, which totalled approximately $9
million, Whitney Holding Corporation issued 90,909 shares of its common stock.
The value of these shares of approximately $2 million was added to capital
surplus.
Page 6 of 18
<PAGE>
(4) EARNINGS PER SHARE
Earnings per share is calculated using the weighted average number of
shares outstanding during each period presented. Potentially dilutive common
stock equivalents consist of stock options which were granted to certain
officers in current and prior periods. Incorporating these common stock
equivalents into the calculation of earnings per share using the treasury
method does not materially affect the reported result whether on a primary or
fully-diluted basis.
All share and per-share data in this quarterly report reflect the three-
for-two splits of the Company's stock that was effective February 22, 1993 and
November 29, 1993.
Page 7 of 18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
For the first quarter of 1994, Whitney Holding Corporation had after-tax
earnings of $15.7 million, or $1.09 per share. These results include the
effect of a $10.0 million reduction in the level of the Bank's reserve for
possible loan losses, which, after recognition of the related deferred tax
expense of $3.5 million, contributed $6.5 million, or $0.45 per share, to
first quarter net income. Excluding the impact of this reserve reduction, the
Company had after-tax earnings of $9.2 million, or $0.64 per share, for the
first quarter of 1994. This represents an increase of $1.4 million from the
$7.8 million, or $0.54 per share, earned in the first quarter of 1993.
The increase in earnings in 1994 before the effect of the reduction in
the reserve for possible loan losses was attributable both to an increase in
non-interest income as well as to an overall reduction in non-interest
expense. Net interest income was virtually unchanged between the first
quarters of 1994 and 1993.
With recent rises in market interest rates, the Bank may experience some
compression in its interest margin. The Bank's management has attempted to
position the maturity and repricing of its various portfolios and funding
sources to lessen the effect a change in rate environment would have on its
interest margin and net interest income.
The following compares the annualized return on average total assets and
on average shareholders' equity for the three-month periods ended March 31,
1994 and 1993.
<TABLE>
<CAPTION>
<S> <C>
Return on average assets:
1994: Total return 2.13%
Effect of reserve reduction 0.88%
Return, net of effect of reserve reduction 1.25%
1993 1.09%
Return on average shareholders' equity:
1994: Total return 24.20%
Effect of reserve reduction 10.01%
Return, net of effect of reserve reduction 14.19%
1993 16.65%
</TABLE>
Average earning assets for the quarter ended March 31, 1994, excluding
nonaccruing loans, increased $129 million or 5% to $2.67 billion from $2.54
billion for the first quarter of 1993. This increase was achieved through the
rehabilitation or liquidation of non-performing assets, the reinvestment of
operating cash flows, and modest growth in the average deposit base.
Non-performing assets decreased $56.0 million, or approximately 58%,
from $95.8 million on March 31, 1993, to $39.8 million on March 31, 1994.
Since December 31, 1993, non-performing assets have been reduced some $10.1
million or 20%. The reserve for possible loan losses, after the $10 million
reduction, was $39.4 million on March 31, 1994, an amount which represented
149% of non-performing loans and 2.7% of total loans. At year end 1993, the
reserve coverage was 132% of non-performing loans and 3.5% of total loans on
that date.
Page 8 of 18
<PAGE>
Loan demand in the Company's market area remained sluggish in 1994's
first quarter. Average loans totalled $922 million for the first quarter of
1994 compared with $943 million for the quarter ended December 31, 1993, a
decline of 2.2%. Average loans have decreased 6.0% or $59.4 million from the
first quarter of 1993 to the first quarter of 1994.
Average total deposits showed modest growth of $25 million in the first
quarter of 1994 compared to the quarter ended December 31, 1993. When
compared with the same period in 1993, average deposits in 1994's first
quarter are up $16 million or 1%.
The Company's average investment in securities grew by $56 million or 3%
in the first quarter of 1994 from the final quarter of 1993, as funds not
needed to meet loan demand were made available to purchase investment
securities. In comparison to the first quarter of 1993, average investments
have increased $163 million or 10.9% in the first quarter of 1994, from $1.50
billion to $1.66 billion.
On March 31, 1994, the Bank purchased substantially all of the assets
and assumed the deposit accounts and certain other liabilities of Baton Rouge
Bank and Trust Company. Included in the acquired assets, which totalled
approximately $118 million, were $59 million in commercial, real estate
mortgage and personal loans, and six banking offices in the Baton Rouge area.
The deposits assumed included approximately $24 million in non-interest-
bearing demand deposits and $94 million in interest-bearing transaction,
savings and time deposit accounts. The Whitney will continue to operate all
six branch locations.
As part of the acquisition price, Whitney Holding Corporation issued
90,909 shares of its common stock.
The Company declared a dividend of $0.15 per share in the first quarter
of 1994, payable April 1, 1994.
Page 9 of 18
<PAGE>
FINANCIAL CONDITION
Loans
Economic conditions in the Company's market area, which is primarily
southern Louisiana and Mississippi, have in recent years slowed the overall
demand for loans and have prompted efforts by many commercial loan customers
to reduce their existing debt levels. Over this period, the Bank also
consciously reduced its exposure to credits whose performance had been
adversely affected by these economic conditions. The decrease in average
loans outstanding during the first quarter of 1994 as compared with 1993 is
largely a reflection of the prevailing economic conditions. This decrease was
primarily concentrated in the commercial loan category.
With the Baton Rouge acquisition, total loans outstanding of $977
million at March 31, 1994 were $29 million above the total of $948 million
outstanding at the end of 1993's first quarter. Seasonal fluctuations in the
credit needs of certain industries serviced by the Bank as well as other
paydowns are reflected in smaller increase in total loans outstanding from
year end 1993 to the end of 1994's first quarter.
Deposits
Average total deposits increased $16 million to $2.45 billion in the
first quarter of 1994 as compared to $2.43 billion in the first quarter of
1993. As is shown in Table 1, virtually all of this increase was in lower
cost deposits, particularly regular savings deposits and non-interest-bearing
demand deposits. Average time deposits, which includes both core deposits and
certificates of deposit of $100,000 and over, were essentially unchanged
between these periods. The Company has continued to emphasize offering core
deposit products that respond to current market conditions while still
yielding customers a meaningful rate of return.
Investment in Securities
The Company's total investment in securities was $1.676 billion at March
31, 1994, an increase of approximately $42 million or 2.6% from the December
31, 1993 total of $1.634 billion. The average total investment securities
portfolio outstanding rose $163 million between the first quarter of 1993 and
the first quarter of 1994.
As shown in Table 1, the major portion of the increased investment
activity was directed to U. S. Treasury and government agency securities,
excluding mortgage-backed issues. The mix of period-end and average
investments has remained relatively stable, with Treasury and agency
securities representing approximately 80% of the totals.
The weighted-average maturity of the overall portfolio of securities was
30 months at March 31, 1994, down from 35 months at March 31, 1993. The
weighted-average taxable-equivalent portfolio yield for the first quarter of
1994 was 5.69%, a decrease of 60 basis points from the 6.29% yield in the
first quarter of 1993.
Asset Quality
Overall asset quality has exhibited a trend of steady improvement over
the past several years. As is shown in Table 2, during the first quarter of
1994, the Bank continued to be successful in its efforts to reduce all
categories of its non-performing assets through the full rehabilitation of
nonaccruing loans, the workout of troubled credits, or the sale of repossessed
loan collateral.
Page 10 of 18
<PAGE>
Non-performing assets totalled $39.8 million at March 31, 1994, some
$10.1 million or 20% below the $49.9 million total at year end 1993 and $56.0
million or 58% lower than the total from a year earlier. For the first
quarter of 1994, the Bank was successful in increasing its recovery of
previously charged-off loans by $3.7 million as compared to the same period in
1993. At the same time, the Bank identified only $1.5 million of loans to be
charged off in the first quarter of 1994, a decrease of $2.3 million from
1993.
The reserve for possible loan losses is maintained at a level believed
by management to be adequate to absorb potential losses in the portfolio. The
$10 million reduction in the reserve for possible loan losses during the first
quarter of 1994 is a reflection of the trend of improvement in overall asset
quality and management's determination that efforts to deal with asset quality
issues have yielded lasting positive results. After the reduction, the
reserve for possible loan losses represented 149% of non-performing loans at
March 31, 1994. At year end 1993 this reserve coverage was 132%.
The Bank has several property interests which were acquired through
routine banking transactions generally prior to 1933 and which are recorded in
its financial records at a nominal value. Management continually investigates
ways to maximize the return on these assets. No significant dispositions of
these property interests were made during the year ended December 31, 1993 or
the first three months of 1994. Future dispositions may result in the
recognition of substantial gains.
Capital Adequacy
The strong earnings reported for the first three months of 1994,
including the effect of a reduction in the reserve for loan losses, are
reflected in the increase in the Company's and the Bank's regulatory capital
ratios between December 31, 1993 and March 31, 1994. Also contributing to
this increase was the shift in the asset mix to investments in securities
which are assigned a risk-weighting lower than for loans in the capital ratio
calculations. For purposes of these calculations, capital does not currently
include the net unrealized gain or loss on securities available for sale which
is reported as a separate component of shareholders' equity.
The Company's regulatory capital ratios, which are essentially the same
as those calculated for the Bank, are shown here compared to the minimums
currently required for regulatory classification as a "well capitalized"
institution:
<TABLE>
<CAPTION>
Required for
March 31, December 31, well-capitalized
1994 1993 institution
============================================
<S> <C> <C> <C>
Tier 1 risk-based
capital ratio 19.26% 18.92% 6.00%
Total risk-based
capital ratio 20.54% 20.19% 10.00%
Tier 1 leverage
capital ratio 8.21% 8.23% 5.00%
</TABLE>
Page 11 of 18
<PAGE>
RESULTS OF OPERATIONS
Net Interest Income
Taxable-equivalent net interest income was virtually unchanged between
the first quarters of 1994 and 1993, while the net interest margin declined to
4.51% in 1994 from 4.67% in 1993. A combination of factors contributed to
this increase, the components of which are detailed in Table 1.
Interest expense decreased approximately $500 thousand in 1994 as
compared to 1993, despite a modest increase in average total deposits. This
reflects both the favorable impact on the cost of funds of declining rates in
recent years as well as the shift in the mix of deposits to non-interest-
bearing and lower cost deposits between these periods.
Interest income also decreased by approximately $500 thousand, both as a
result of the decline in the yield on the investment securities portfolio and
as the mix of interest-earning assets shifted away from loans to lower
yielding investments in securities. The effective yield on the overall loan
portfolio, including cash basis income recognized on nonaccruing loans, did
not display the same decline as for investment securities. The impact of the
decline in investment security yields on net interest income was further
mitigated by the $129 million overall increase in average earning assets,
excluding nonaccruing loans, from the first quarter of 1993 to the first
quarter of 1994.
Other Income and Expense
Non-interest income rose to $9.0 million in the first quarter of 1994,
an increase of $1.8 million or 25.8% over the $7.2 million reported for the
first quarter of 1993. Increase in fee income accounted for approximately
$700 thousand of this overall increase, including income from service charges
on deposit accounts, trust services, credit card and mortgage-banking
operations, and international banking services. In addition, the net gain on
sales of other real estate owned ("OREO") in 1994's first quarter was $1.1
million higher than that realized in the first quarter of 1993. There were no
securities sales during the first quarter of either 1994 or 1993.
Salaries and employee benefits expense totalled approximately $13.0
million for the first quarter of 1994 compared to $11.6 million for the first
quarter of 1993, an increase of $1.4 million or 12.0%. This increase relates
mainly to the expense of the 401(k) employee savings plan implemented in the
fourth quarter of 1993 and to the expense of various compensation-related
incentives.
Total other non-interest expense declined $3.1 million or 23.3% to
$10.2 million for the first quarter of 1994 from $13.3 million in the first
quarter of 1993. The major reductions occurred in expenses related to problem
assets. Provisions for losses on OREO an other problem assets during the
quarter were $2.1 million lower in 1994 as compared to 1993. In addition, a
recovery of legal fees associated with a problem asset resolution in the first
quarter of 1994 contributed to a $700 thousand reduction in overall legal
expense from 1993's first quarter. The expense of regulatory fees and
assessments has also decreased between these quarterly periods, by
approximately $400 thousand. With the Company's recent strong financial
results, however, there has been an increase of approximately $300 thousand in
the expense for state ad valorem tax that is calculated in part based on the
Company's equity and earnings.
Page 12 of 18
<PAGE>
Income Taxes
The Company provided for income taxes at an overall effective rate of
33.0% for the first quarter of 1994, up from 30.0% for the comparable period
of 1993. The effective rates in each period differ from the statutory rates
of 35% in 1994 and 34% in 1993 primarily because of the tax exempt income
earned on investments in state and municipal obligations. The higher
effective rate in 1994 is largely the result of a lower proportion of tax-
exempt to pre-tax income for 1994 compared to 1993. The Company reviews its
estimated annual effective tax rate throughout the year.
The tax effect of the loan loss reserve reduction discussed earlier
served to decrease the Company's net deferred tax asset by $3.5 million. The
net deferred tax asset is included with other assets in the consolidated
balance sheets.
Accounting Changes
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," and SFAS No. 109, "Accounting for Income Taxes," both effective as
of January 1, 1993. Recording the cumulative effects of these accounting
changes resulted in a nonrecurring increase in net income of $634,000 for the
first quarter of 1993. Further details concerning these accounting changes
are provided in the Company's report on Form 10-Q for the quarter ended March
31, 1993, and in its report on Form 10-K for the year ended December 31, 1993.
Effective December 31, 1993, the Company adopted SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities." The
statement specifies criteria for classifying investments as either trading
securities, securities held to maturity, or securities available for sale, and
establishes reporting standards for each classification.
Management considered the Company's existing investment portfolio and
underlying asset/liability management policies and strategies in light of the
new standard and determined that its investments in mortgage-backed securities
met the criteria for classification as securities available for sale. These
securities were reported at their estimated fair values at March 31, 1994 and
December 31, 1993. The tax-effected net unrealized holding gain or loss on
these securities is reported as a separate component of shareholders' equity
in the consolidated balance sheets. The remaining portfolio of securities has
been classified as held to maturity and continues to be reported at amortized
cost. The Company currently maintains no trading portfolio.
Page 13 of 18
<PAGE>
LIQUIDITY AND OTHER MATTERS
Liquidity
The Company and the Bank manage liquidity to ensure their ability to
satisfy customer demand for credit, to fund deposit withdrawals, to meet
operating and other corporate obligations, and to take advantage of investment
opportunities, all in a timely and cost-effective manner. Traditionally,
these liquidity needs have been met by maintaining a strong base of core
deposits within the Bank and by carefully managing the maturity structure of
the Bank's investment portfolio. The funds provided by current operations and
forecasts of loan repayments are also considered in the liquidity management
process.
The Bank enters into short-term borrowing arrangements by purchasing
federal funds and selling securities under repurchase agreements, mainly as
part of its services to correspondent banks and certain other customers.
Neither the Company nor the Bank has had to access short or long term debt
markets as part of liquidity management.
Average core deposits, defined as all deposits other than time deposits
of $100,000 or more, grew some $13 million from $2.19 billion in the first
quarter of 1993 to $2.20 billion in 1994's first quarter. Core deposits
comprised approximately 90% of total average deposits for both of these
periods.
As of March 31, 1994, $404 million or 24.3% of the overall investment
securities portfolio, including securities available for sale, was scheduled
to mature within one year. Securities maturing within one year as of December
31, 1993, totalled $330 million or 20.2% of the investment portfolio at that
date.
The Bank had $459 million in unfunded loan commitments outstanding at
March 31, 1994, an increase of $60 million from the level at December 31,
1993. Contingent obligations under letters of credit and financial guarantees
increased slightly between these dates to a total of $59 million at March 31,
1994. Available credit card lines were $26 million at this date, essentially
unchanged from year end 1993. Draws under these financial commitments should
not place any unusual strain on the Company's liquidity position.
Page 14 of 18
<PAGE>
TABLE 1
WHITNEY HOLDING CORPORATION
ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
(dollars in thousands, unaudited)
<TABLE>
<CAPTION>
FIRST QUARTER 1994 FIRST QUARTER 1993
--------------------------- ----------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------- ------- ------ ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans (tax equivalent) (1),(2)...................... $921,564 $18,057 7.93 % $980,968 $18,572 7.67 %
---------- ------- ------ ---------- -------- ------
U.S. Treasury securities............................ $970,891 $13,006 5.43 % $833,232 $12,529 6.10 %
U.S. government agency securities................... 361,925 4,680 5.17 361,738 5,116 5.66
Mortgage-backed securities(3)....................... 175,023 2,725 6.40 185,629 3,212 6.92
State and municipal securities (tax equivalent)(1).. 116,686 2,408 8.25 86,461 1,940 8.98
Corporate bonds and other securities................ 38,430 604 6.29 32,907 615 7.48
Total investment in securities......................... $1,662,955 $23,423 5.69 % $1,499,967 $23,412 6.29 %
---------- ------- ------ ---------- ------- ------
Federal funds sold..................................... 113,218 883 3.16 % 123,954 913 2.99 %
---------- ------- ------ ---------- ------- ------
Total interest-earning assets.......................... $2,697,737 $42,363 6.35 % $2,604,889 $42,897 6.65 %
---------- ------- ------ ---------- ------- ------
Cash and due from financial institutions............ 192,658 191,653
Bank premises and equipment, net.................... 59,754 62,533
Other real estate owned, net........................ 16,000 39,209
Other assets........................................ 69,132 84,720
Reserve for possible loan losses.................... (46,160) (99,916)
---------- ----------
Total assets........................................... $2,989,121 $2,883,088
========== ==========
LIABILITIES
Savings deposits.................................... $562,928 $3,771 2.72 % $547,758 $3,933 2.91 %
NOW and MMDA deposits............................... 589,002 2,610 1.80 624,826 3,275 2.13
Time deposits....................................... 533,936 4,047 3.07 529,956 3,844 2.94
---------- ------- ------ ---------- ------- ------
Total interest-bearing deposits........................ $1,685,866 $10,428 2.51 % $1,702,540 $11,052 2.63 %
---------- ------- ------ ---------- ------- ------
Federal funds purchased and
repurchase agreements........................... 254,752 1,793 2.85 % 243,069 1,661 2.77 %
---------- ------- ------ ---------- ------- ------
Total interest-bearing liabilities..................... $1,940,618 $12,221 2.55 % $1,945,609 $12,713 2.65 %
---------- ------- ------ ---------- ------- ------
Demand deposits, non-interest-bearing............... 759,563 727,284
Other liabilities................................... 25,517 21,340
Shareholders' equity................................ 263,423 188,855
---------- ----------
Total liabilities and shareholders' equity............. $2,989,121 $2,883,088
========== ==========
Net interest income/margin (tax equivalent)(1)...... $30,142 4.51 % $30,184 4.67 %
======= ====== ======= ======
<FN>
(1) Tax equivalent amounts are calculated using a marginal federal income tax
rate of 35% for 1994 and 34% for 1993.
(2) Average balance includes nonaccruing loans of $31,456 in 1994 and $67,428
in 1993.
(3) Average balance in 1994 includes unrealized gain on securities available
for sale of $4,741. This gain is excluded in the yield calculation.
</TABLE>
Page 15 of 18
<PAGE>
TABLE 2.
WHITNEY HOLDING CORPORATION
NON-PERFORMING ASSETS AND OTHER SELECTED DATA
<TABLE>
<CAPTION>
(end of quarter, dollars in millions, unaudited)
1994 1993 1992
----- -------------------------- ------------------------------
1st 4th 3rd 2nd 1st 4th 3rd 2nd 1st
----- ----- ----- ----- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Nonaccruing loans................................... $26.4 $33.6 $34.8 $39.8 $58.0 $70.6 $95.0 $114.1 $94.4
Restructured loans.................................. - - - - - - - - 0.1
----- ----- ----- ----- ----- ------ ------ ------ ------
Total non-performing loans....................... 26.4 33.6 34.8 39.8 58.0 70.6 95.0 114.1 94.5
Other real estate owned, net........................ 13.4 16.1 18.0 22.3 37.5 40.2 52.5 60.2 67.0
Other foreclosed assets............................. - 0.2 0.2 0.2 0.3 0.4 1.4 2.6 2.2
----- ----- ----- ----- ----- ------ ------ ------ ------
Total non-performing assets......................... $39.8 $49.9 $53.0 $62.3 $95.8 $111.2 $148.9 $176.9 $163.7
===== ===== ===== ===== ===== ====== ====== ====== ======
Reserve for possible loan losses.................... $39.4 $44.5 $42.0 $49.6 $97.5 $98.6 $100.3 $101.5 $103.2
===== ===== ===== ===== ===== ====== ====== ====== ======
Loans charged off during quarter, net of recoveries. ($4.9) ($2.5) ($2.4) ($2.1) $1.1 $1.7 $2.0 $4.3 $4.0
===== ===== ===== ===== ===== ====== ====== ====== ======
Net gain (loss) on sales of OREO during quarter..... $1.8 $0.8 $0.3 $1.8 $0.7 $0.3 $0.1 $0.3 $0.6
===== ===== ===== ===== ===== ====== ====== ====== ======
Reserve for possible
loan losses as a percentage of:
Total non-performing loans....................... 149% 132% 121% 125% 168% 140% 106% 89% 109%
Total loans...................................... 4.0% 4.6% 4.6% 5.2% 10.0% 9.4% 9.0% 8.8% 8.8%
Non-performing loans as a percent of
total loans...................................... 2.70% 3.45% 3.80% 4.20% 6.12% 6.75% 8.91% 10.2% 8.05%
Non-performing assets as a percent of
total assets..................................... 1.28% 1.66% 1.85% 2.18% 3.33% 3.77% 5.33% 6.37% 5.74%
</TABLE>
Page 16 of 18
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.1 - Stock Option Agreement between Whitney Holding Corporation
and William L. Marks, incorporated by reference to the Company's 1990 Form
10-K
Exhibit 10.2 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and William L. Marks, incorporated by reference to
the Company's June 30, 1993 Form 10-Q
Exhibit 10.3 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and R. King Milling, incorporated by reference to the
Company's June 30, 1993 Form 10-Q
Exhibit 10.4 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Edward B. Grimball, incorporated by reference to
the Company's June 30, 1993 Form 10-Q
Exhibit 10.5 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Kenneth A. Lawder, Jr., incorporated by reference
to the Company's June 30, 1993 Form 10-Q
Exhibit 10.6 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and G. Blair Ferguson, incorporated by reference to
the Company's September 30, 1993 Form 10-Q
Exhibit 10.7 - Executive agreement between Whitney Holding Corporation,
Whitney National Bank and Joseph W. May, incorporated by reference to the
Company's 1993 Form 10-K
Exhibit 10.8 - Long-term incentive program, incorporated by reference to
the Company's 1991 Form 10-K
Exhibit 10.9 - Executive compensation plan, incorporated by reference to
the Company's 1991 Form 10-K
Exhibit 10.10 - Form of restricted stock agreement between Whitney Holding
Corporation and certain of its officers, incorporated by reference to the
Company's June 30, 1992 Form 10-Q
Exhibit 10.11 - Form of stock option agreement between Whitney Holding
Corporation and certain of its officers, incorporated by reference to the
Company's June 30, 1992 Form 10-Q
Exhibit 10.12 - Directors' Compensation Plan, incorporated by reference to
the Company's Proxy Statement dated March 24, 1994
(b) There were no reports filed on Form 8-K during the quarter for which this
report is filed.
Page 17 of 18
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITNEY HOLDING CORPORATION
(Registrant)
May 11, 1994 /s/ Edward B. Grimball
Date:_______________ By:___________________________
Edward B. Grimball
Executive Vice President &
Chief Financial Officer
Page 18 of 18
