May 12, 1995
Securities and Exchange Commission
450 Fifth St., N.W.
Judiciary Plaza
Washington, D.C. 20549-1004
Via Edgar Electronic Filing System
In Re: File Number 0-1026
Gentlemen:
Pursuant to regulations of the Securities and Exchange
Commission, submitted herewith for filing on behalf of Whitney Holding
Corporation (the "Company") is the Company's Report on Form 10-Q for the period
ended March 31, 1995.
This filing is being effected by direct transmission to the
Commission's EDGAR System.
Sincerely,
/s/Edward B. Grimball
----------------------------
Edward B. Grimball
Executive Vice President &
Chief Financial Officer
(504) 586-7570
EBG/drm
<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, 1995
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
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
228 St. Charles Avenue, New Orleans, Louisiana 70130
-------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(504) 586-7272
------------------------------------------------------------
(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 14,760,339 shares
were outstanding on April 30, 1995.
An exhibit index appears on page 17.
Page 1 of 20 Pages
<PAGE>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Part I. Financial Information
<TABLE>
<CAPTION>
Page
<S> <C>
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 20 Pages
<PAGE>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
March 31, December 31
ASSETS 1995 1994
---------- ----------
(unaudited)
<S> <C> <C>
Cash and due from financial institutions................................... $175,843 $196,850
Investment in securities:
Securities available for sale (at fair value)......................... 138,101 137,335
Securities held to maturity (fair value of $1,325,450 in 1995 and
$1,350,581 in 1994).................................................... 1,344,919 1,395,643
Federal funds sold......................................................... 40,000 17,600
Loans...................................................................... 1,119,005 1,060,167
Less reserve for possible loan losses...................................... 37,458 34,425
---------- ----------
Loans, net.............................................................. 1,081,547 1,025,742
Bank premises and equipment, net........................................... 67,410 63,209
Other real estate owned, net............................................... 7,052 6,685
Accrued income receivable.................................................. 28,839 31,580
Other assets............................................................... 53,634 38,013
---------- ----------
TOTAL ASSETS..................................................... $2,937,345 $2,912,657
========== ==========
LIABILITIES
Deposits:
Non-interest-bearing demand deposits.................................. $771,160 $768,811
Interest-bearing deposits............................................. 1,654,848 1,642,252
---------- ----------
Total deposits.................................................... 2,426,008 2,411,063
Federal funds purchased and securities sold under repurchase agreements.... 172,539 179,806
Dividends payable.......................................................... 2,948 2,488
Other liabilities.......................................................... 27,635 21,621
---------- ----------
TOTAL LIABILITIES................................................ $2,629,130 $2,614,978
---------- ----------
SHAREHOLDERS' EQUITY
Common stock, no par value: 40,000,000 shares authorized, 15,352,101
shares issued and 14,743,047 shares outstanding in 1995, 15,242,505
shares issued and 14,634,701 shares outstanding in 1994, after
deduction of treasury stock............................................ $2,800 $2,800
Capital surplus............................................................ 54,142 51,608
Retained earnings.......................................................... 261,160 256,041
Net unrealized loss on securities available for sale, net of tax effect
of $1,273 in 1995 and $2,755 in 1994.................................... (2,363) (5,118)
---------- ----------
Total............................................................ 315,739 305,331
Treasury stock at cost, 609,054 shares in 1995 and 607,804
shares in 1994, and unearned restricted stock compensation.............. 7,524 7,652
---------- ----------
TOTAL SHAREHOLDERS' EQUITY....................................... $308,215 $297,679
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY....................................... $2,937,345 $2,912,657
========== ==========
</TABLE>
Page 3 of 20 Pages
<PAGE>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts, unaudited) FOR THE 3 MONTHS
ENDED MARCH 31,
1995 1994
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans.......................................... $23,731 $18,079
Interest and dividends on investments-
U.S. Treasury and agency securities........................... 16,674 17,686
Mortgage-backed securities.................................... 2,320 2,725
Obligations of states and political subdivisions.............. 1,652 1,565
Federal Reserve and corporate securities...................... 432 604
Interest on federal funds sold...................................... 444 883
---------- ----------
TOTAL................................................... $45,253 $41,542
---------- ----------
INTEREST EXPENSE
Interest on deposits................................................ $12,261 $10,428
Interest on federal funds purchased and securities
sold under repurchase agreement............................... 2,292 1,793
---------- ----------
TOTAL................................................... $14,553 $12,221
---------- ----------
Net interest income................................................. $30,700 $29,321
Provision for possible loan losses:
Expense of providing loss reserves.............................. - -
Loss reserve reduction.......................................... - (10,000)
---------- ----------
Net interest income after provision possible for loan losses........ $30,700 $39,321
---------- ----------
NON-INTEREST INCOME
Gain on sale of securities.......................................... - -
Other non-interest income........................................... 8,135 9,049
---------- ----------
TOTAL................................................... $8,135 $9,049
---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits...................................... $14,002 $13,030
Occupancy of bank premises, net..................................... 1,756 1,666
Other non-interest expenses......................................... 11,337 10,195
---------- ----------
TOTAL................................................... $27,095 $24,891
---------- ----------
Income before income taxes ......................................... $11,740 $23,479
Income tax expense.................................................. 3,699 7,762
---------- ----------
Net income.......................................................... $8,041 $15,717
========== ==========
Earnings per share.................................................. $0.55 $1.09
========== ==========
Weighted average number of
shares outstanding............................................... 14,706,185 14,452,250
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 4 of 20 Pages
<PAGE>
<TABLE>
<CAPTION>
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
FOR THE 3 MONTHS
ENDED MARCH 31,
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................................................$ 8,041 $ 15,717
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation................................................................................... 1,733 1,506
Provision for (Reduction of) reserves for possible loan losses................................. - (10,000)
Provision for losses on OREO and other problem assets.......................................... 3 44
Amortization of intangible assets and unearned restricted stock
compensation................................................................................ 916 976
Amortization of premiums and discounts on investment securities,
net......................................................................................... 3,594 3,569
Gains on sales of OREO and other property...................................................... (323) (1,826)
Deferred tax expense (benefit)................................................................. (878) 2,127
Increase (Decrease) in accrued income taxes.................................................... 4,553 5,035
(Increase) Decrease in accrued income receivable and other assets.............................. (1,382) (4,710)
Increase (Decrease) in accrued expenses and other liabilities.................................. 1,243 (781)
------------ ------------
Net cash provided by operating activities......................................................$ 17,500 $ 11,657
------------ ------------
Cash flows from investing activities:
Proceeds from maturities of investment securities held to maturity................................$ 65,000 $ 457,941
Proceeds from maturities of investment securities available for sale.............................. 3,475 17,493
Purchases of investment securities held to maturity............................................... (4,404) (504,099)
Purchases of investment securities available for sale............................................. - (10,100)
Net (increase) decrease in loans.................................................................. (12,300) 64,998
Net (increase) decrease in federal funds sold..................................................... (2,647) (40,500)
Proceeds from sales of OREO and other property.................................................... 283 2,128
Capital expenditures.............................................................................. (3,124) (788)
Net cash (paid) received in business acquisition.................................................. (3,695) 35,659
Other............................................................................................. 691 (181)
------------ ------------
Net cash provided by (used in) investing activities...............................................$ 43,279 $ 22,551
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in non-interest-bearing demand deposits...................................$ (11,509) $ (23,053)
Net increase (decrease) in interest-bearing deposits other than
certificates of deposit........................................................................ (60,813) (46,395)
Net increase (decrease) in certificates of deposit................................................ (2,242) (1,069)
Net increase (decrease) in federal funds purchased and securities
sold under repurchase agreements............................................................... (7,267) 43,073
Exercise of stock options......................................................................... - 113
Sale of common stock under employee savings plan and dividend
reinvestment plan.............................................................................. 2,533 76
Dividends paid.................................................................................... (2,488) (1,925)
------------ ------------
Net cash provided by (used in) financing activities...............................................$ (81,786) $ (29,180)
------------ ------------
Net increase (decrease) in cash and cash equivalents.................................................$ (21,007) $ 5,028
Cash and cash equivalents at the beginning of the period............................................. 196,850 187,447
------------ ------------
Cash and cash equivalents at the end of the period...................................................$ 175,843 $ 192,475
============ ============
Interest income received.............................................................................$ 47,106 $ 39,990
============ ============
Interest expense paid................................................................................$ 13,868 $ 11,759
============ ============
Net federal income taxes paid........................................................................$ 0 $ 600
============ ============
The accompanying notes are an integral part of these financial statements.
Page 5 of 24 Pages
</TABLE>
<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 consolidated financial statements of the Company include the
accounts of Whitney Holding Corporation and its wholly-owned subsidiaries,
Whitney National Bank ("WNB") and Whitney Bank of Alabama ("WBA"). 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, 1994.
Certain balances in prior periods have been reclassified to conform with
this period's financial presentation.
(2) RESERVE FOR POSSIBLE LOAN LOSSES
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment
of a Loan," as amended by SFAS No. 118. Under this new standard, a loan is
considered impaired when it is probable that all contractual amounts will not be
collected as they become due. The extent of impairment is measured based on a
comparison of the recorded investment in the loan with either the expected cash
flows discounted using the loan's original effective interest rate or, in the
case of certain collateral-dependent loans, the fair value of the underlying
collateral. The measure of impairment is included in the reserve for possible
loan losses.
The provisions of SFAS No. 114 were not applied by the Company to measure
impairment for large groups of similar loans with relatively small balances,
such as consumer credit line loans and consumer installment loans. As allowed
under the standard, these loans may be collectively evaluated for impairment.
The guidance in SFAS No. 114 does not represent a significant departure from
existing procedures followed by the Company in evaluating the overall adequacy
of the reserve for possible loan losses. Furthermore, loans evaluated for
impairment would also meet the criteria currently in use by the Company to
identify loans on which the accrual of interest should be discontinued. As such,
the adoption of this new standard had no significant impact on the Company's
financial position or results of operations.
For the first quarter of 1995, the recorded investment in loans identified
as impaired under SFAS No. 114 averaged approximately $9 million. The extent of
impairment of these loans measured in accordance with SFAS No. 114 was
approximately $0.6 million at March 31, 1995. This amount is included in the
reserve for possible loan losses.
Page 6 of 20 Pages
<PAGE>
(3) BUSINESS ACQUISITION
On February 17, 1995, Whitney Bank of Alabama, a newly formed
state-chartered banking subsidiary of the Company, purchased the assets and
assumed the deposit liabilities of the five Mobile branch offices of The Peoples
Bank, Elba, Alabama. The assets acquired and deposits assumed totalled
approximately $90 million, including $47 million in loans. The purchase price
was approximately $12 million. Operating results from the date of acquisition
are included in the accompanying consolidated statements of operations for the
first quarter of 1995.
(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 have been granted to certain officers
and directors in prior periods. Incorporating these common stock equivalents
into the calculation of earnings per share using the treasury method does not
materially affect the reported results on either a primary or fully-diluted
basis.
Page 7 of 20 Pages
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
Whitney Holding Corporation earned $8.0 million for the first quarter of
1995, or $0.55 per share. For the first quarter of 1994, the Company earned
$15.7 million or $1.09 per share, including the effect of a $10.0 million
reduction in the level of the reserve for possible loan losses. Net of tax, this
reserve reduction contributed $6.5 million or $0.45 per share to first quarter
1994 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.
The $1.2 million decrease in earnings for the first quarter of 1995 as
compared to 1994's first quarter earnings, excluding the effect of the reserve
reduction, is primarily the result of a $1.5 million reduction in the net gain
recognized on sales of other real estate owned ("OREO"). First quarter net
interest income in 1995 increased $1.4 million or 4.7% compared to the first
quarter of 1994. The taxable-equivalent net interest margin was 4.89% in 1995,
an increase of 38 basis points from 4.51% in 1994. Non-interest income, other
than from OREO sales, increased $0.6 million in 1995's first quarter from the
comparable period in 1994. Non-interest expense increased $2.2 million between
these periods reflecting in large part the effects of the Baton Rouge and Mobile
acquisitions discussed below.
The following compares the annualized return on average total assets and the
return on average shareholders' equity for the three-month periods ended March
31, 1995 and 1994. Tax-effected loan loss reserve adjustments were not
annualized in calculating these returns.
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Return on average assets:
Total return 1.12% 2.13%
Return, before effect of reserve reduction 1.12% 1.25%
Return on average shareholders' equity:
Total return 10.76% 24.20%
Return, before effect of reserve reduction 10.76% 14.19%
</TABLE>
Non-performing assets continued their steady decrease of the past several
years in the first quarter of 1995. At March 31, 1995, non-performing assets
were $21.3 million, down $0.8 million or 3.6% from year end 1994, and $16.2
million or 46% from March 31, 1994. The reserve for possible loan losses was
$37.5 million on March 31, 1995, an amount which represented 264% of
non-performing loans and 3.4% of total loans. At year end 1994, the reserve
coverage was 224% of non-performing loans and 3.3% of total loans.
For the first quarter of 1995, average earning assets were $2.61 billion, a
decrease of $90 million or 3.3% from $2.70 billion for the first quarter of
1994. This decrease reflects mainly the loss of certain correspondent bank
funding sources to industry consolidation as well as to a general tightening in
industry liquidity with improved economic conditions and increased loan demand,
both of which are evident in the $80 million decrease in the Company's average
sales of overnight federal funds. Average total deposits outstanding also
decreased between these periods, by $60 million or 2.5%, as rising market
interest rates during 1994 attracted some deposit funds to higher yielding
alternative investment instruments.
Page 8 of 20 Pages
<PAGE>
Average loans outstanding increased $143 million or 15.5% in 1995 compared
to the first quarter of 1994. This loan growth is attributable both to the
acquisitions in Baton Rouge and Mobile and to strengthening loan demand in the
Company's market areas. At March 31, 1995, total loans outstanding were $1.12
billion, an increase of $59 million or 5.6% over the $1.06 billion of total
loans outstanding at the end of 1994.
The growth in average loans outstanding was funded primarily from maturities
of investment securities. The Company's average investment in securities
decreased by $150 million or 9.0% to $1.51 billion in the first quarter of 1995
from $1.66 in the comparable period of 1994. At March 31, 1995, the total
investment in securities was $1.48 billion, a decrease of $50 million or 3.3%
from year end 1994.
On February 17, 1995, Whitney Bank of Alabama, a newly formed
state-chartered banking subsidiary of the Company, purchased the assets and
assumed the deposit liabilities of the five Mobile branch offices of The Peoples
Bank, Elba, Alabama. The fair value of the tangible assets acquired totalled
approximately $90 million, including $47 million in loans and $34 million in
investment securities and federal funds sold. WBA assumed non-interest-bearing
demand deposits of $14 million and interest-bearing transaction, savings and
time deposits totalling $76 million. The purchase price was approximately $12
million. Operating results from the date of acquisition are included in the
accompanying consolidated statements of operations for the first quarter of
1995.
On March 31, 1994, the Company and WNB purchased substantially all of the
assets and assumed the deposits 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 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. As part of the acquisition price, which totalled
approximately $9 million, Whitney Holding Corporation issued 90,909 shares of
its common stock with a value of $2 million. The operating results from this
acquisition were reflected in the Company's consolidated statements of
operations beginning with the second quarter of 1994.
The Company declared a dividend of $0.20 per share in the first quarter of
1995, payable April 3, 1995. This represented an 18% increase from the previous
quarter's dividend of $0.17 per share.
Page 9 of 20 Pages
<PAGE>
FINANCIAL CONDITION
Loans
With improved economic conditions in the Company's market area, which is
primarily southern Louisiana and Mississippi and, most recently, southern
Alabama, together with a more aggressive effort to market the Banks' retail and
commercial loan products, the Company was able to report growth in average loans
outstanding for the first quarter of 1995 of $143 million or 15.5% when compared
to the first quarter of 1994 and $43 million or 4.2% when compared to 1994's
fourth quarter. The Baton Rouge acquisition in March, 1994 and, to a lesser
extent, the Mobile acquisition in February, 1995 also contributed to the growth
in average loans.
Total loans outstanding of $1.12 billion at March 31, 1995 were $59 million
above the total outstanding at year end 1994 and $142 million above the total of
a year earlier. During 1994, the Company continued to expand its lending
resources, market areas and loan products, and management expects to continue
and intensify these efforts in 1995 as the Banks compete to place high quality
credits in the communities they serve.
Deposits and Short-Term Borrowings
The Company's average total deposits outstanding decreased $60 million to
$2.39 billion in the first quarter of 1995 as compared to $2.45 billion in the
first quarter of 1994. As is shown in Table 1, total average lower cost
deposits, particularly regular savings deposits and NOW and MMDA deposits,
decreased $105 million, a decrease attributable to the higher-rate investment
alternatives that became available to bank customers during the past year.
Average time deposits, which includes both core deposits and certificates of
deposit of $100,000 and over, increased $45 million between these periods. The
Company has continued to emphasize offering core deposit products that respond
to current market conditions.
The Company's short-term borrowings consist of purchases of federal funds
and sales of securities under repurchase agreements. Such borrowings are a
source of funding for certain short-term lending facilities and part of the
Company's services to correspondent banks and certain other customers. For the
first quarter of 1995, average short-term borrowings decreased $71 million
compared to the same period in 1994, a decrease attributable in part to improved
economic conditions and a corresponding increase in demand for funds otherwise
available for sale to the Company and in part to the loss of certain
correspondent relationships to consolidation within the banking industry.
Investment in Securities
The Company's total investment in securities was $1.48 billion at March 31,
1995, a decrease of approximately $50 million or 3.3% from the December 31, 1994
total of $1.53 billion. The average total investment securities portfolio
outstanding declined $150 million between the first quarter of 1994 and the
first quarter of 1995. Funds from maturing investments, particularly U. S.
government agency securities and mortgage-backed securities, have been used to
satisfy increased loan demand and deposit outflows.
The mix of period-end and average investments has remained relatively
stable, with U. S. Treasury and government agency securities, excluding
mortgage-backed issues, representing approximately 80% of the totals. The
weighted-average maturity of the overall portfolio of securities was 26 months
at March 31, 1995 as compared with 30 months at March 31, 1994. As is shown in
Page 10 of 20 Pages
<PAGE>
Table 1, the weighted-average taxable-equivalent portfolio yield for the first
quarter of 1995 was 5.84%, an increase of 15 basis points from the 5.69% yield
in the first quarter of 1994.
Asset Quality
Overall asset quality has exhibited a trend of steady improvement over the
past four years. As is shown in Table 2, this trend continued in the first
quarter of 1995. Non-performing assets totalled $21.3 million at March 31, 1995,
some $0.8 million or 3.6% below the $22.1 million total at year end 1994 and
$18.5 million or 46% lower than the total from a year earlier. For the first
quarter of 1995, the Company successfully recovered $2.6 million of previously
charged-off loans. For the same period, the Company identified only $1.3 million
of loans to be charged off. The Company was in a net recovery position of
approximately $4.9 million in the first quarter of 1994 when recoveries totalled
$6.4 million.
The reserve for possible loan losses is maintained at a level believed by
management to be adequate to absorb potential losses in the portfolio. With the
significant recoveries in the first quarter of 1994 and the continued
improvement in overall asset quality, the Company was able to return $10 million
of the reserve for possible loan losses to income in that quarter. No provision
or reserve reduction was required for the first quarter of 1995. The reserve for
possible loan losses represented 264% of non-performing loans at March 31, 1995.
At year end 1994 this reserve coverage was 224%.
Whitney National 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. The net operating
income from these property interests, primarily related to oil and gas royalties
and real estate rentals, was approximately $45,000 for each of the first
quarters of 1995 and 1994. No significant dispositions of these property
interests were made during the year ended December 31, 1994 or the first three
months of 1995. Future dispositions may result in the recognition of substantial
gains.
Capital Adequacy
The Company's regulatory capital ratios declined slightly between December
31, 1994 and March 31, 1995. This decline is attributable mainly to the
acquisition of intangible assets as part of the purchase of the Mobile banking
operations in February, 1995. Intangible assets generally must be deducted from
both regulatory capital and risk-weighted assets before calculating regulatory
capital ratios. Also contributing to this increase was the shift in the asset
mix to loans which are generally assigned a risk-weighting higher than for
investment securities in the capital ratio calculation.
The Company's regulatory capital ratios are shown here compared to the
minimums currently required for regulatory classification as a "well
capitalized" institution. The regulatory capital ratios for the Banks were also
well in excess of minimum requirements at March 31, 1995.
<TABLE>
<CAPTION>
Required for
March 31, December 31, well-capitalized
1995 1994 institution
------------ ------------ ----------------
<S> <C> <C> <C>
Tier 1 risk-based
capital ratio 19.56% 20.70% 6.00%
Total risk-based
capital ratio 20.83% 21.97% 10.00%
Tier 1 leverage
capital ratio 9.70% 9.84% 5.00%
</TABLE>
Page 11 of 20 Pages
<PAGE>
RESULTS OF OPERATIONS
Net Interest Income
Taxable-equivalent net interest income for the first quarter increased $1.5
million or 5% over the same period in 1994. The net interest margin increased to
4.89% in 1995 from 4.51% in 1994. A combination of factors contributed to this
increase, the components of which are detailed in Table 1.
Taxable-equivalent interest income in 1995 increased by approximately $3.8
million or 9.1% over the first quarter of 1994. Loan interest income increased
$5.7 million or 32% between these periods. Approximately 60% of this increase
was driven by the $143 million growth in average loans outstanding, with the
remaining portion driven by the rise in the effective yield on the Company's
loan portfolio. Market interest rates generally rose throughout 1994, and bank
prime rates increased a full 2.5 percentage points from the first quarter of
1994 to the first quarter of 1995. The effective yield on the Company's average
loan portfolio, approximately 40% of which reprices with changes in prime,
increased 1.12 percentage points over this same period.
Taxable-equivalent interest income on investments securities in 1995
decreased $1.5 million or 6.2% compared to the first quarter of 1994, a decrease
which is consistent with the $150 million reduction in the average investment in
securities between these periods. The effective yield on the Company's
investment securities portfolio is not as immediately responsive to rising
market rates as are its loan yields. The effective portfolio yield was 5.84% for
the first quarter of 1995 and 5.69% for the comparable period of 1994, an
increase of 15 basis points.
Interest expense increased approximately $2.3 million or 19% in 1995's first
quarter as compared to the same period in 1994, despite a $125 million reduction
in total interest-bearing liabilities outstanding between these periods. This
increase reflects the impact of rising rates during 1994, the rate structures of
the markets in which the Company has made acquisitions since the beginning of
1994, and a shift in the deposit mix toward core time deposits from other lower
cost deposit categories, a shift which is also partly attributable to recent
acquisitions. The overall cost of funds rate on interest-bearing liabilities was
3.23% for the first quarter of 1995 and 2.55% in 1994's first quarter, an
increase of 68 basis points.
Other Income and Expense
Non-interest income decreased from $9.0 million in the first quarter of 1994
to $8.1 million in 1995, a decrease of $0.9 million or 10%. Excluding a $1.5
million reduction in the net gain recognized on sales of OREO between these
periods, non-interest income increased $0.6 million or 8.1% in 1995 over the
first quarter of 1994. Income from service charges on deposit accounts, which
accounted for approximately 52% of adjusted non-interest income in each of these
quarters, increased 6.7% between 1994 and 1995, largely reflecting the impact of
acquisitions. Fee income from credit card related operations and from services
which support the international activities of the Company's customers also
increased between these periods, reflecting both economic conditions as well as
enhanced products and successful marketing efforts.
Salaries and employee benefits expense totalled approximately $14.0 million
for the first quarter of 1995 compared to $13.0 million for the first quarter of
1994, an increase of $1.0 million or 7.5%. The majority of this increase can be
attributed to the new banking operations acquired in Baton Rouge and Mobile. The
remainder of the 1995 increase resulted from merit pay increases and various
employee and management incentives.
Page 12 of 20 Pages
<PAGE>
Excluding personnel-related expenses, non-interest expense increased $1.2
million or 10.4% between the first quarter of 1994 and 1995's first quarter.
Acquisitions increased non-interest expense by approximately $0.6 million as
compared to 1994, with the increase concentrated primarily in occupancy expense
and the amortization of intangible assets. Enhancements to the Company's data
processing systems and automation capabilities as well as expansion of its ATM
network contributed to a $0.2 million or 21.8% increase for 1995 in the expense
for furnishings and equipment. Taxes and insurance expense also increased
approximately $0.2 million in 1995 as the Company's improved earnings and equity
were added to the assessment base used to compute certain state ad valorem
taxes.
Income Taxes
Including the tax effect of reductions in the reserve for possible loan
losses, the Company provided for income taxes at an overall effective rate of
31.5% for the first quarter of 1995 and a 33.1% rate for the comparable period
of 1994. The effective rates in each period differ from the statutory rates of
35% primarily because of the tax exempt income earned on investments in state
and municipal obligations.
Accounting Changes
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, as amended by SFAS No. 118, which
addresses the accounting by creditors for impairment of certain loans. The
Company's reserve for possible loan losses at March 31, 1995 includes a measure
of impairment related to those loans identified for evaluation under the new
standard. This measurement is based on a comparison of the recorded investment
in each impaired loan with either the expected cash flows discounted using the
loan's original effective interest rate or, in the case of certain
collateral-dependent loans, the fair value of the underlying collateral.
Adoption of this standard did not have a material impact on the Company's
financial position or results of operations.
Page 13 of 20 Pages
<PAGE>
LIQUIDITY AND OTHER MATTERS
Liquidity
The Company, WNB and WBA 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 and by carefully
managing the maturity structure of the investment portfolios. The funds provided
by current operations and forecasts of loan repayments are also considered in
the liquidity management process.
The Banks enter 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 Banks have 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 $53 million or 2.4% to $2.15 billion in the first
quarter of 1995 from $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, 1995, approximately $350 million or 25% of the portfolio of
investment securities held to maturity was scheduled to mature within one year.
As addition $138 million of investment securities was classified as available
for sale at the end of 1995's first quarter, although management's determination
of this classification does not derive primarily from liquidity considerations.
The Banks had $658 million in unfunded loan commitments outstanding at March
31, 1995, an increase of $76 million from the level at December 31, 1994.
Contingent obligations under letters of credit and financial guarantees
decreased slightly between these dates to a total of $68 million at March 31,
1995. Available credit card lines were $30 million at this date, essentially
unchanged from year end 1994. Draws under these financial commitments should not
place any unusual strain on the Company's liquidity position.
Page 14 of 20 Pages
<PAGE>
<TABLE>
<CAPTION>
Table 1
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
(dollars in thousands, unaudited)
First Quarter Ended March 31,
------------------------------------------------------------
1995 1994
----------------------------- -----------------------------
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).............................. $1,064,678 $23,797 9.05 % $921,564 $18,057 7.93 %
------------------------------------------------------------
U. S. Treasury securities................................... $991,162 $13,320 5.45 % $970,891 $13,006 5.43 %
U.S. government agency securities........................... 230,287 3,354 5.83 361,925 4,680 5.17
Mortgage-backed securities (3).............................. 137,523 2,320 6.75 175,023 2,725 6.40
State and municipal securities
(tax equivalent) (1)................................... 124,586 2,542 8.16 116,686 2,408 8.25
Corporate bonds and other securities........................ 28,963 432 5.97 38,430 604 6.29
------------------------------------------------------------
Total investment in securities............................ $1,512,521 $21,968 5.84 % $1,662,955 $23,423 5.69 %
------------------------------------------------------------
Federal funds sold.......................................... 30,377 444 5.93 % 113,218 883 3.16 %
------------------------------------------------------------
Total interest-earning assets............................. $2,607,576 $46,209 7.15 % $2,697,737 $42,363 6.35 %
------------------------------------------------------------
Cash and due from financial institutions.................... 179,653 192,658
Bank premises and equipment, net............................ 64,846 59,754
Other real estate owned, net................................ 6,871 16,000
Other assets................................................ 76,193 69,132
Reserve for possible loan losses............................ (35,567) (46,160)
---------- ----------
Total assets.............................................. $2,899,572 $2,989,121
========== ==========
LIABILITIES
Savings deposits............................................ $484,496 $3,204 2.68 % $562,928 $3,771 2.72 %
NOW and MMDA deposits....................................... 568,305 2,612 1.86 589,002 2,610 1.80
Time deposits............................................... 579,041 6,445 4.51 533,936 4,047 3.07
------------------------------------------------------------
Total interest-bearing deposits........................... $1,631,842 $12,261 3.05 % $1,685,866 $10,428 2.51 %
------------------------------------------------------------
Federal funds purchased and
repurchase agreements..................................... 183,706 2,292 5.06 % 254,752 1,793 2.85 %
------------------------------------------------------------
Total interest-bearing liabilities........................ $1,815,548 $14,553 3.25 % $1,940,618 $12,221 2.55 %
------------------------------------------------------------
Demand deposits, non-interest-bearing....................... 753,668 759,563
Other liabilities........................................... 27,346 25,517
Shareholders' equity........................................ 303,010 263,423
Total liabilities and shareholders' ---------- ----------
equity................................................. $2,899,572 $2,989,121
========== ==========
Net interest income/margin
(tax equivalent) (1).................................. $31,656 4.89 % $30,142 4.51 %
======= ===== ======= =====
<FN>
(1) Tax equivalent amounts are calculated using a marginal federal income tax rate of 35% for 1995 and 1994.
(2) Average balance includes nonaccruing loans of $13,754 in 1995 and $31,456 in 1994.
(3) Average balance includes unrealized gain (loss) on securities available for sale of ($5,887) in 1995 and $4,741 in
1994. These amounts are excluded in calculating the yield.
</FN>
</TABLE>
Page 15 of 20 Pages
<PAGE>
<TABLE>
<CAPTION>
TABLE 2.
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
RESERVE FOR POSSIBLE LOAN LOSSES
(by quarter, in millions, unaudited)
1995 1994
------ --------------------------
1st 4th 3rd 2nd 1st
------ --------------------------
<S> <C> <C> <C> <C> <C>
Reserve, beginning of quarter........................... $34.4 $42.7 $41.4 $39.4 $44.5
Balance acquired through acquisition.................... 1.8 - - - -
Provision for possible loan losses:
Expense of providing loss reserves.................. - - - - -
Reduction of loss reserves.......................... - (10.0) (6.1) - (10.0)
Loans charged off....................................... (1.3) (0.9) (0.9) (0.3) (1.5)
Recoveries.............................................. 2.6 2.6 8.3 2.3 6.4
------ --------------------------
Reserve, end of quarter................................. $37.5 $34.4 $42.7 $41.4 $39.4
====== ==========================
</TABLE>
<TABLE>
<CAPTION>
TABLE 3.
WHITNEY HOLDING CORPORATION AND SUBSIDIARIES
NON-PERFORMING ASSETS AND OTHER SELECTED DATA
(end of quarter, dollars in millions, unaudited)
1995 1994
------ --------------------------
1st 4th 3rd 2nd 1st
------ --------------------------
<S> <C> <C> <C> <C> <C>
Non-performing loans $14.2 $15.4 $17.5 $22.0 $26.4
Other real estate owned, net................................ 7.1 6.7 7.4 7.4 13.4
Other foreclosed assets..................................... - - 0.1 - -
------ --------------------------
Total non-performing assets................................. $21.3 $22.1 $25.0 $29.4 $39.8
====== ==========================
Net gain on sales of OREO................................... $0.3 $0.1 $0.3 $1.1 $1.8
====== ==========================
Reserve for possible
loan losses as a percent of:
Total non-performing loans .............................. 264% 224% 243% 188% 149%
Total loans.............................................. 3.4% 3.3% 4.1% 4.2% 4.0%
Non-performing loans as a percent of
total loans.............................................. 1.27% 1.45% 1.69% 2.22% 2.70%
Non-performing assets as a percent of
total assets............................................. 0.72% 0.80% 0.87% 1.01% 1.28%
</TABLE>
Page 16 of 20 Pages
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) (3) Exhibits:
Exhibit 3.1 - Copy of Composite Charter, incorporated by
reference to the Company's March 31, 1993 Form 10-Q
Exhibit 3.2 - Copy of Bylaws, as amended, incorporated by
reference to the Company's March 31, 1993 Form 10-Q
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
From 10-Q
Exhibit 10.7 - Executive agreement between Whitney Holding
Corporation, Whitney National Bank and Joseph W. May,
effective December 13, 1993, incorporated by reference to the
Company's 1993 Form 10-K
Exhibit 10.8 - Executive agreement between Whitney Holding
Corporation, Whitney National Bank and John C. Hope, III,
effective October 28, 1994, incorporated by reference to the
Company's 1994 Form 10-K
Exhibit 10.9 - Long-term incentive program, incorporated by
reference to the Company's 1991 Form 10-K
Exhibit 10.10 - Executive compensation plan, incorporated by
reference to the Company's 1991 Form 10-K
Exhibit 10.11 - 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 10.12 - 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
Page 17 of 20 Pages
<PAGE>
Exhibit 10.13 - Directors' Compensation Plan, incorporated by
reference to the Company's Proxy Statement dated March 24,
1994
Exhibit 27 - Financial Data Schedule
(b) No report on Form 8-K was required to be filed by the Registrant during the
first quarter of 1995.
Page 18 of 20 Pages
<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)
Date:May 12, 1995 By: /s/Edward B. Grimball
--------------- ---------------------------
Edward B. Grimball
Executive Vice President &
Chief Financial Officer
Page 19 of 20 Pages
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 175,843
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 40,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 138,101
<INVESTMENTS-CARRYING> 1,344,919
<INVESTMENTS-MARKET> 1,325,450
<LOANS> 1,119,005
<ALLOWANCE> 37,458
<TOTAL-ASSETS> 2,937,345
<DEPOSITS> 2,426,008
<SHORT-TERM> 172,539
<LIABILITIES-OTHER> 30,583
<LONG-TERM> 0
<COMMON> 2,800
0
0
<OTHER-SE> 305,415
<TOTAL-LIABILITIES-AND-EQUITY> 2,937,345
<INTEREST-LOAN> 23,731
<INTEREST-INVEST> 21,078
<INTEREST-OTHER> 444
<INTEREST-TOTAL> 45,253
<INTEREST-DEPOSIT> 12,261
<INTEREST-EXPENSE> 14,553
<INTEREST-INCOME-NET> 30,700
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 27,095
<INCOME-PRETAX> 11,740
<INCOME-PRE-EXTRAORDINARY> 11,740
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,041
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
<YIELD-ACTUAL> 7.15
<LOANS-NON> 14,208
<LOANS-PAST> 559
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 34,425
<CHARGE-OFFS> 1,238
<RECOVERIES> 2,618
<ALLOWANCE-CLOSE> 37,458
<ALLOWANCE-DOMESTIC> 31,283
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 6,175
</TABLE>
